Joy Global (JOY) Module 10: Incorporating Additional Information

1. Joy Global (JOY) Module 10: Incorporating Additional Information Thomas Maguire 3/26/2014

2. Joy Global Background • Manufactures and services mining equipment • Focus on: Coal, Copper, Iron Ore, Oil Sands, and Gold • Revenue split between • Surface Mining Equipment • Underground Mining Machinery

3. Introduction • Over the first nine modules, we have covered a basic valuation of Joy Global • Focused on Balance Sheet and Income Statement– including comprehensive income • However, there is a wealth of more information that we can cover • We limited ourselves to info contained on the face of the financial statements despite the further info available in footnotes and from other sources

4. Goals when Gathering Additional Info • Two goals • To focus more clearly on identification of enterprise operating activities and financing activities • Using the data to facilitate improved forecasting • If we improve the quality of the info we gather, we can change our segregation of enterprise and financing activities and our expectations of future payoffs, and in turn, change our estimation of value

5. Joy Global’s Balance Sheet

6. Joy Global’s Balance Sheet

7. Additional Information on Joy Global’s Assets • Systematically we go down the balance sheet assets seeking further information • Deferred Income Taxes– Assets and Related Liabilities • Further detail in this area can help improve our separation of enterprise and financing activities • Joy Global’s footnote 8 to the financial statements gives details to the root of timing differences between financial and tax reporting that have given rise to these deferred income taxes

8. Additional Information on Joy Global’s Assets

9. Additional Information on Joy Global’s Assets We must check to make sure there is no additionally liability not disclosed in the footnote

10. Additional Information on Joy Global’s Assets • Now, we turn to property, plant and equipment: • Though Joy does not have a separate footnote for PP&E like many other companies do, we can find some important information under Footnote 2, summary of significant accounting policies • Though we know these items will all be classified as operating activities, we can benefit from the additional information in forecasting the amount of fixed assets necessary to support future growth

11. Additional Information on Joy Global’s Assets • Goodwill and Intangible Assets • In footnote 7 of Joy Global’s Financial Report we find breakdowns of intangible assets as well as goodwill

12. Additional Information on Joy Global’s Assets

13. Additional Information on Joy Global’s Assets

14. Additional Information on Joy Global’sLiabilities & SH’s Equity Similar to how we combed through the footnotes to look at assets, we must now turn to liabilities and equities on the balance sheet looking to drill down

15. Additional Information on Joy Global’s Liabilities & SH’s Equity Warranty reserves (Accrued Warranties) are addressed in footnote 9 to the financial statements, providing a table that reconciles the changes in the product warranty reserve

16. Additional Information on Joy Global’s Liabilities & SH’s Equity Joy Global additionally provides a breakdown of debt and capital lease obligations in Footnote 10 to the financial statements:

17. Additional Information on Joy Global’s Liabilities & SH’s Equity • Footnote 17 to the Financial Statements provides detail on retiree benefits including: • Change in Benefit Obligation • Change in Plan Assets • Funded Status • Amounts Recognized in the Consolidated Balance Sheet

18. Additional Information on Joy Global’s Liabilities & SH’s Equity

19. Additional Information on Joy Global’s Liabilities & SH’s Equity • Footnote 11 to the Financial Statements provides additional information on shareholder’s equity: • There are 150,000,000 shares of authorized common stock • 50,000,000 of which were distributed in connection with July 12, 2001 emergence from bankruptcy • August 28, 2013 BOD authorized the company to repurchase up to $1.0 Billion in shares of common stock until August 19, 2016 • During Q4 2013 the company purchased 4,105,000 shares of common stock for approximately $214.1 million

20. Additional Information on Joy Global’s Revenues and Expenses Lastly, we must filter through the footnotes to expand our information on the income statement

21. Joy Global Income Statement

22. Additional Information on Joy Global’s Revenues and Expenses • Footnote 19 to the financial statements provides detailed information for the company’s two segments: • Underground Mining Machinery • Surface Mining Equipment • The breakout also includes: • Corporate & Eliminations

23. Additional Information on Joy Global’s Revenues and Expenses

24. Additional Information on Joy Global’s Revenues and Expenses Sales are also broken down by geographic segment:

25. Additional Information on Joy Global’s Revenues and Expenses Joy’s Financial Statements provide an analysis of discontinued operations in Footnote 4

26. Reconciliation of SH’s Equity

27. Looked for BUT, Unable to Find • Looking to investigate, what makes up “other” accounts • Also, what makes up S,G & A • Not detailed in footnotes! • Good Investor Relations Question!

28. Questions? Thank You!