GLOBAL REACH. LEADlNG TECHNOLOGY. - Zonebourse.com

Operating Income
The following table sets forth fiscal 2008 and fiscal 2007 operating income as derived from our Consolidated
Statement of Income:
Fiscal 2008 Fiscal 2007
Operating % Operating %
In thousands Income (loss) of Net Sales Income (loss) of Net Sales
Operating income (loss):
Underground Mining Machinery $ 348,830 20.1% $ 285,860 20.1%
Surface Mining Equipment 227,382 15.9% 217,825 19.4%
Crushing & Conveying 27,856 8.2% - -
Corporate Expense (34,759) - (30,410) -
Eliminations (18,105) - - -
Total $ 551,204 16.1% $ 473,275 18.6%
Operating income for Underground Mining Machinery increased to $348.8 million in fiscal 2008, or 20.1% of
sales, as compared to $285.9 million in fiscal 2007, or 20.1% of sales. The increase in operating income was
principally due to the impact of higher volume of $132.0 million and lower pension expense of $12.6 million,
partially offset by the impact of a greater mix of lower margin original equipment of $37.0 million, and increased
performance based incentive compensation of $23.8 million.
Operating income for Surface Mining Equipment increased to $227.4 million in fiscal 2008, or 15.9% of sales,
as compared to $217.8 million in fiscal 2007, or 19.4% of sales. The increase in operating income was principally
due to increased sales volume of $88.2 million offset by the settlement of a maintenance and repair contract in
Australia of $23.0 million, increased performance based incentive compensation of $16.3 million, the retiree benefit
cost associated upon the execution of the Steelworkers agreement in Milwaukee of $5.4 million and increased
selling, general and administrative expenses to support the global mining infrastructure.
Operating income for Crushing & Conveying included $19.6 million of purchase accounting charges in fiscal
2008.
Corporate expense increased by $4.3 million due to increased performance-based compensation, legal fees and
severance costs.
The eliminations represent the Stamler crushing equipment which is sold through the Underground Mining
Machinery and Surface Mining Equipment segment but managed as part of the Crushing & Conveying segment.
Product Development, Selling and Administrative Expense
Product development, selling and administrative expense for fiscal 2008 was $441.5 million as compared to
$358.5 million for fiscal 2007. The increase in product development, selling and administrative expense was
primarily due to $27.4 of additional expenses related to the Continental acquisition, $16.9 million of higher selling
expenses related to increased business activity and $28.3 increase in administrative costs due to increased incentive
based compensation of $17.2 million and global infrastructure development.
Provision for Income Taxes
The effective income tax rates from continuing operations were 29.2% and 37.7%, for fiscal 2008 and fiscal
2007, respectively. Income tax expense from continuing operations decreased to $154.0 million in fiscal 2008 as
compared to $169.3 million in fiscal 2007. The main drivers of the variance in tax rates and income tax expense
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