SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
Form 10-Q
QUARTERLY REPORT
PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1994
Commission File Number: 1-871
________________________________________________
BUCYRUS-ERIE COMPANY
DELAWARE 39-0188050
P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN 53172
(414) 768-4000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding August 10, 1994
Class A Common Stock, par value $.01
per share 100
<PAGE>
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information:
Consolidated Condensed Balance Sheets -
June 30, 1994 and December 31, 1993 3-4
Consolidated Condensed Statements of Operations -
Quarters and six months ended June 30,
1994 and 1993 5-6
Consolidated Condensed Statements of Cash Flows -
Six months ended June 30, 1994 and 1993 7-8
Notes to Consolidated Condensed Financial
Statements 9-13
Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-21
Part II. Other Information 22-23
Signature Page 24
<PAGE>
<TABLE>
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
June 30, December 31, June 30, December 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C> <C>
ASSETS LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT ASSETS: (DEFICIENCY IN ASSETS)
Cash and cash CURRENT LIABILITIES:
equivalents $ 14,604,757 $ 12,419,585 Accounts payable and
Restricted funds accrued expenses $ 25,421,643 $ 51,084,351
on deposit - 512,173 Liability to customers
Receivables - Note 6 31,243,377 24,608,865 on uncompleted contracts
Inventories - Note 5 62,479,510 57,231,179 and warranties 2,837,960 7,576,250
Prepaid expenses and Income taxes 297,140 232,037
other assets 1,998,025 1,574,597 Notes payable - Note 6 - 295,131
____________ ____________ Short-term obligations 192,798 -
Total Current Assets 110,325,669 96,346,399 Current maturities of
long-term debt - Note 8 7,052,677 3,430,311
OTHER ASSETS: ____________ ____________
Restricted funds 35,802,218 62,618,080
on deposit 5,587,688 6,024,659 Long-term debt classified
Notes receivable-Note 6 11,309,898 10,636,880 as a current
Goodwill - net 12,673,654 12,942,226 liability - Note 8 - 201,239,574
Intangible assets - net 6,830,271 7,780,263 ____________ ____________
Other assets 1,034,341 2,480,555 Total Current
____________ ____________ Liabilities 35,802,218 263,857,654
37,435,852 39,864,583
DEFERRED LIABILITIES:
PROPERTY, PLANT AND EQUIPMENT: Income taxes 80,336 85,992
Cost 83,833,002 83,029,462 Liability to customers on
Less accumulated uncompleted contracts
depreciation (42,904,857) (39,845,214) and warranties 4,495,983 4,587,014
____________ ____________ Postretirement benefits 15,494,702 15,590,236
40,928,145 43,184,248 Deferred plant closing
expenses and other 5,972,050 7,298,284
____________ ____________
26,043,071 27,561,526
LONG-TERM DEBT, less
amounts classified as
current liabilities
and liabilities subject
to compromise - Note 8 83,269 768,728
LIABILITIES SUBJECT
TO COMPROMISE - Note 4 253,179,998 -
PREFERRED STOCK -
Notes 4 and 9
Series A Redeemable, subject
to compromise in 1994 -
par value $.01 share,
liquidation preference
$25 share plus accrued
dividends, 2,412,791.57
shares in 1994 and 1993
issued and outstanding
(aggregate liquidation/
redemption preference
$71,091,180 at June 30,
1994 and $70,088,379 at
December 31, 1993) 71,091,180 30,301,570
COMMON STOCKHOLDERS' INVESTMENT
(DEFICIENCY IN ASSETS):
Common Stock - par value $.01
per share, authorized
1,000 shares, issued and
outstanding 100 shares 1 1
Warrants - authorized
10,000,000, issued and
outstanding 1,114 in 1994
and 6,392 in 1993 169 971
Accumulated deficit (194,054,265) (140,332,981)
Cumulative foreign
currency translation
adjustments (3,455,975) (2,762,239)
____________ ____________
(197,510,070) (143,094,248)
____________ ____________ ____________ ____________
$188,689,666 $179,395,230 $188,689,666 $179,395,230
See accompanying notes to consolidated condensed financial statements
</TABLE>
<TABLE>
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Net shipments $ 46,285,461 $ 47,993,979 $ 82,884,494 $ 90,401,095
Interest, royalties and miscellaneous 1,947,911 1,080,173 3,080,888 2,331,493
____________ ____________ ____________ ____________
48,233,372 49,074,152 85,965,382 92,732,588
____________ ____________ ____________ ____________
Costs and Expenses:
Cost of products sold 39,220,975 41,306,221 70,872,858 77,925,598
Product development, selling,
administrative, and
miscellaneous expenses 7,123,772 8,010,433 13,915,846 15,857,750
Interest expense (contractual
interest for 1994 - $9,180,535
and $18,417,523, respectively-Note 4 2,391,883 8,508,186 8,560,249 16,945,129
____________ ____________ ____________ ____________
48,736,630 57,824,840 93,348,953 110,728,477
____________ ____________ ____________ ____________
Loss before reorganization items, income
taxes and cumulative effects of changes
accounting principles (503,258) (8,750,688) (7,383,571) (17,995,889)
Reorganization items - pre-petition-Note 4 71,194 730,452 1,255,200 1,171,157
Reorganization items - post-petition-Note 4 2,006,657 - 3,760,293 -
____________ ____________ ____________ ____________
Loss before income taxes and cumulative
effects of changes in accounting
principles (2,581,109) (9,481,140) (12,399,064) (19,167,046)
Income taxes 267,925 106,985 533,411 702,523
____________ ____________ ____________ ____________
Loss before cumulative effects of changes
in accounting principles (2,849,034) (9,588,125) (12,932,475) (19,869,569)
Cumulative effects of changes in accounting
principles for:
Postretirement benefits - - - (11,744,109)
Income taxes - - - 368,968
____________ ____________ ____________ ____________
Net loss (2,849,034) (9,588,125) (12,932,475) (31,244,710)
Redeemable preferred stock accretion -
pre-petition - (167,527) (105,548) (318,423)
Redeemable preferred stock dividends -
pre-petition - (79,895) (40,453) 196,121
Redeemable preferred stock reorganization
item - Note 4 - - (40,554,805) -
____________ ____________ ____________ ____________
Net loss attributable to common
stockholders $ (2,849,034) $ (9,835,547) $(53,633,281) $(31,367,012)
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
1994 1993
Cash Flows From Operating Activities
Net loss $ (12,932,475) $(31,244,710)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 3,801,672 3,597,509
Amortization of purchase adjustments
and financing fees 1,852,345 2,110,373
Deferred rent (interest) on sale and
leaseback financing arrangement 3,340,958 2,765,307
Amortization of debt discount 71,179 224,747
(Gain) loss on sale of property,
plant and equipment (9,780) 7,746
Cumulative effects of changes in
accounting principles - 11,375,141
Non-cash reorganization items 1,079,805 -
Changes in assets and liabilities
including items subject to
compromise:
Increase in receivables (6,880,982) (6,451,109)
Increase in inventories (5,740,751) (3,878,866)
(Increase) decrease in other
current assets (430,150) 50,748
Increase in notes receivable
and other assets (222,605) (881,095)
Increase in current liabilities
other than income taxes
and current maturities
of long-term debt 16,206,954 11,370,548
Increase (decrease) in income taxes 202,771 (1,568,997)
Decrease in deferred liabilities
other than income taxes (571,693) (1,717,351)
____________ ____________
Net cash used in operating activities (232,752) (14,240,009)
____________ ____________
Cash Flows From Investing Activities
Decrease in restricted
funds on deposit 949,144 3,162,931
Purchases of property, plant
and equipment (1,479,410) (1,383,087)
Proceeds from sale of property, plant
and equipment 54,597 52,071
____________ ____________
Net cash (used in) provided by
investing activities (475,669) 1,831,915
____________ ____________
Cash Flows From Financing Activities
Payment of current maturities of
long-term debt (27,473) (26,045)
Increase in notes payable - 9,820
Payment of other obligations - net (183,036) -
Proceeds from issuance of long-term
project financing obligations 5,366,628 3,938,420
Reduction of long-term project
financing obligations (2,029,342) -
____________ ____________
Net cash provided by financing
activities 3,126,777 3,922,195
____________ ____________
Effect of exchange rate changes
on cash (233,184) 70,482
____________ ____________
Net increase (decrease) in cash
and cash equivalents 2,185,172 (8,415,417)
Cash and cash equivalents at
beginning of period 12,419,585 15,666,805
____________ ____________
Cash and cash equivalents at
end of period $ 14,604,757 $ 7,251,388
Supplemental Disclosures of Cash Flow Information
1994 1993
Cash paid (received) during
the period for:
Interest on long-term debt
and bank borrowings $ 76,288 $ 79,407
Income taxes - net of refunds (102,059) 1,239,214
Reorganization items 2,269,200 1,171,157
Supplemental Schedule of Non-Cash Investing and Financing Activities
Prior to the Petition Date, the Company increased the carrying amount of the
Series A redeemable preferred stock by amounts representing the estimated fair
value of the pre-petition dividends not declared or paid, but which are
payable under mandatory redemption features. The Company also recorded
preferred stock discount accretion on these securities prior to the Petition
Date. As of the Petition Date, the Company increased the carrying amount of
the Series A redeemable preferred stock to the amount of the allowed claim in
the Prepackaged Plan. The amounts as reflected in the consolidated condensed
financial statements were as follows:
1994 1993
Redeemable preferred stock
dividends at net book value $ 129,257 $ 150,800
Redeemable preferred stock accretion 105,548 318,423
Write-up to amount of allowed
claim in the Prepackaged Plan 40,554,805 -
____________ ____________
$ 40,789,610 $ 469,223
See accompanying notes to consolidated condensed financial statements.
<PAGE>
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. On February 18, 1994 (the "Petition Date"), B-E Holdings, Inc.
("Holdings") and Bucyrus-Erie Company ("the Company") commenced voluntary
petitions under chapter 11 of the Bankruptcy Code and filed a prepackaged
joint plan of reorganization (the "Prepackaged Plan") in the United
States Bankruptcy Court, Eastern District of Wisconsin (the "Bankruptcy
Court"). Pursuant to the Bankruptcy Code, the business and affairs of
Holdings and the Company are being conducted as debtors-in-possession by
their respective officers and directors, subject to the supervision and
orders of the Bankruptcy Court.
Holdings and the Company have reported recurring losses from operations
which have resulted in a common stockholders' net deficiency in assets,
and they have been unable to generate sufficient cash flow to meet their
obligations and sustain their operations. In addition, Holdings and the
Company have refrained from paying interest due on certain long-term debt
obligations and are not in compliance with their debt agreements, which
has resulted in certain debt holders accelerating the due dates of the
related obligations. These matters raise substantial doubt about
Holdings', the Company's and their subsidiaries' abilities to continue as
going concerns.
The accompanying consolidated condensed financial statements have been
prepared on the basis of generally accepted accounting principles
applicable to a going concern; such principles assume realization of
assets and payment of liabilities in the normal course of business. The
appropriateness of using the going concern basis is also dependent upon,
among other things, confirmation of a plan of reorganization, future
successful operations and the ability to generate sufficient cash from
operations and financing sources to meet obligations.
The accompanying consolidated condensed financial statements do not
purport to reflect or provide for the consequences of the bankruptcy
proceedings, including the result if the Bankruptcy Court does not
approve the Prepackaged Plan. If Holdings and the Company are unable to
obtain such approval, and no other consensual plan of reorganization can
be agreed upon under chapter 11 of the Bankruptcy Code, Holdings and the
Company believe it is possible that a liquidation under chapter 7 of the
Bankruptcy Code will occur and that no net proceeds would be available
for distribution to the holders of Holdings' and the Company's equity
securities and, possibly, various classes of Holdings' and the Company's
debt securities. Such consolidated financial statements do not purport
to show (a) as to assets, their realizable value on a liquidation basis
or their availability to satisfy liabilities; (b) as to pre-petition
liabilities, the amounts that may be allowed for claims or contingencies,
or the status and priority thereof; the amounts that may be allowed for
claims or contingencies, or the status of priority thereof; (c) as to
stockholder accounts, the effect of any changes that may be made in the
capitalization of Holdings and the Company; or (d) as to operations, the
effect of any changes that may be made in their business. The outcome of
these matters is not presently determinable.
2. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of
normal recurring accruals and other adjustments as stated in subsequent
notes) necessary to present fairly the financial results for the interim
periods. Certain items are included in these statements based on
estimates for the entire year. Also, certain reclassifications have been
made to the 1993 financial statements to present them on a basis
consistent with the current year.
3. Certain notes and other information have been condensed or omitted from
these interim financial statements and, therefore, these statements
should be read in conjunction with the Company's 1993 annual report on
Form 10-K filed with the Securities and Exchange Commission on April 15,
1994.
4. The accompanying consolidated condensed financial statements have been
prepared in accordance with Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP
90-7"). Accordingly, revenues and expenses resulting from the
reorganization of the Company are recorded as earned and incurred and
reported separately as reorganization items in the accompanying
Consolidated Condensed Statements of Operations. Interest expense
subsequent to the Petition Date on the unsecured debt of Holdings and the
Company, excluding debt of the foreign subsidiaries, is not being
accrued. In addition, liabilities and the redeemable preferred stock
subject to compromise under the bankruptcy proceedings are now reported
at the amount of the allowed claims in the Prepackaged Plan and are
segregated from other liabilities in the Consolidated Condensed Balance
Sheet at June 30, 1994.
Liabilities Subject to Compromise as of June 30, 1994 are comprised of
the following:
10% Senior Notes of the Company $ 74,628,000
Resettable Senior Notes of the Company 60,000,000
Series A 12-1/2% Senior Debentures of Holdings 22,917,756
9% Sinking Fund Debentures of the Company 804,000
Lease Obligation of the Company under sale
and leaseback financing arrangement 29,518,833
Series A 10.65% Senior Secured Notes of the Company 11,500,000
Series B 16.5% Senior Secured Notes of the Company 5,250,000
Accounts payable and accrued expenses 8,066,699
Accrued interest 34,435,731
Liability to customers on uncompleted contracts
and warranties 4,450,000
Notes payable 297,949
Other 1,311,030
____________
Total $253,179,998
The Company has received approval from the Bankruptcy Court to pay or
otherwise honor certain pre-petition machine contracts, customer warranty
claims, and obligations owing to employees, including but not limited to,
wages and salaries, payroll taxes, benefits, expenses and insurance
premiums. Accordingly, such liabilities have not been classified as
Liabilities Subject to Compromise.
Reorganization items included in the Consolidated Condensed Statements of
Operations consist of the following:
Quarter Ended June 30, Six Months Ended June 30,
1994 1993 1994 1993
Legal and pro-
fessional fees -
pre-petition $ 71,194 $ 730,452 $ 1,255,200 $ 1,171,157
Legal and pro-
fessional fees -
post-petition 2,080,575 - 2,791,871 -
Net write-down of
debt to amount
of allowed claim
in the Prepackaged
Plan - - (33,122) -
Interest income (73,918) - (111,383) -
Write-off
capitalized
financing
costs - - 1,112,927 -
____________ ____________ ____________ ____________
Subtotal 2,077,851 730,452 5,015,493 1,171,157
Write-up of
redeemable
preferred
stock to amount
of allowed
claim in the
Prepackaged
Plan - - 40,554,805 -
____________ ____________ ____________ ____________
Total $ 2,077,851 $ 730,452 $ 45,570,298 $ 1,171,157
5. Inventories are summarized as follows:
June 30, December 31,
1994 1993
Raw materials and parts $ 12,774,522 $ 10,324,233
Inventoried costs relating to
uncompleted contracts 3,301,333 670,835
Work in process 13,039,751 15,344,264
Finished products (primarily
replacement parts) 34,268,012 31,423,219
Customers' advances offset
against costs incurred on
uncompleted contracts (904,108) (531,372)
____________ ____________
$ 62,479,510 $ 57,231,179
6. The Consolidated Condensed Statements of Operations for the six months
ended June 30, 1994 and 1993 and the Consolidated Condensed Balance
Sheets as of June 30, 1994 and December 31, 1993 include transactions and
balances with Holdings (the Company's parent), Wisconsin Holdings Pty.
Limited and Bucyrus Europe Holdings Limited (both affiliates of the
Company) as follows: Net Shipments - $2,419,667 and $824,478,
respectively; Cost of Products Sold - $2,124,433 and $675,390,
respectively; Interest, Royalties and Miscellaneous - $1,256,729 and
$1,884,050, respectively; Interest Expense - $2,818 and $9,820,
respectively; Receivables - $1,439,687 and $1,540,410, respectively;
Notes Receivable - $11,309,898 and $10,636,880, respectively; Notes
Payable - $297,949 (included in Liabilities Subject to Compromise) and
$295,131, respectively.
As stated in the first paragraph of Part 1. Financial Information -
Management's Discussion and Analysis of Financial Condition and Results
of Operations, the Company is required to use the "push down" method of
accounting which requires that certain long-term debt, preferred stock
and warrants that are legal liabilities of Holdings (and not of the
Company) be included, for accounting purposes, in the financial
statements of the Company. As a result, when the Company loaned money to
Holdings to pay interest on Holdings' Series A 12-1/2% Senior Debentures,
no accounting entry related to this intercompany loan was reflected since
the interest expense was already recorded in the Company's financial
statements. The legal amount outstanding related to the Company's loans
to Holdings that is not reflected in the Consolidated Condensed Balance
Sheet at June 30, 1994 is $20,548,386.
7. Net loss per share is not meaningful since only 100 shares of common
stock are outstanding and all of these shares are owned by Holdings.
8. In accordance with SOP 90-7, all long-term debt of the Company and
Holdings, except for the project financing obligations and debt of
foreign subsidiaries, has been reclassified to Liabilities Subject to
Compromise. Prior year comparative balances have not been reclassified
to conform with current year balances stated under SOP 90-7. Long-term
debt is comprised of the following:
June 30, December 31,
1994 1993
10% Senior Notes of the Company,
in default $ - $ 74,701,142
Resettable Senior Notes of the
Company, in default - 60,000,000
Series A 12-1/2% Senior Debentures
of Holdings, in default - 22,843,780
9% Sinking Fund Debentures of the
Company, in default - 766,777
Lease Obligation of the Company
under sale and leaseback financing
arrangement, in default - 26,177,875
Series A 10.65% Senior Secured Notes
of the Company, in default - 11,500,000
Series B 16.5% Senior Secured Notes
of the Company, in default - 5,250,000
Project financing obligations
of the Company 6,997,165 3,659,879
Other 138,781 539,160
____________ ____________
7,135,946 205,438,613
Less:
Current maturities of
long-term debt (7,052,677) (3,430,311)
Amounts classified as a
current liability - (201,239,574)
____________ ____________
Amounts classified as long-term debt $ 83,269 $ 768,728
9. Holdings did not declare a dividend in cash or in kind on March 15, 1993,
September 15, 1993 or March 15, 1994 on its Series A 12-1/2% Cumulative
Exchangeable Preferred Stock ("Series A Preferred Stock"). In accordance
with SOP 90-7, Holdings has increased the carrying amount of the Series A
Preferred Stock (which includes the unpaid dividends of March 15, 1993
and September 15, 1993 and the accrued dividend for the period of
September 16, 1993 through February 18, 1994) in the accompanying
Consolidated Condensed Balance Sheet to the amount of the allowed claim
in the Prepackaged Plan.
10. The following balance sheet separates the Consolidated Condensed Balance
Sheet as of June 30, 1994, into the assets, liabilities and stockholders'
investment (deficiency in assets) of those entities that are in
bankruptcy proceedings and those that are not in bankruptcy proceedings.
Debtors- Non-
In- Bankrupt
Possession Entities Eliminations Consolidated
(Dollars in Thousands)
Current assets $ 76,505 $ 33,308 $ (927) $108,886
Property, plant &
equipment, net 36,457 4,471 - 40,928
Other assets 74,728 3,269 (51,871) 26,126
Due from
affiliates 26,030 1,706 (14,986) 12,750
________ ________ ________ ________
Total assets $213,720 $ 42,754 $(67,784) $188,690
Current
liabilities $ 29,750 $ 6,182 $ (129) $ 35,803
Long-term debt - 83 - 83
Other liabilities 275,443 3,482 - 278,925
Due to affiliates 696 13,293 (13,691) 298
Preferred stock 71,091 - - 71,091
Stockholders'
investment
(deficiency
in assets) (163,260) 19,714 (53,964) (197,510)
________ ________ ________ ________
Total liabilities
and stockholders'
investment
(deficiency in
assets) $213,720 $ 42,754 $(67,784) $188,690
<PAGE>
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following information is provided to assist in the understanding of
the Company's operations for the quarter ended June 30, 1994. The Merger (see
the Company's 1993 Form 10-K for further information related to the Merger)
has had a significant impact on the financial statements of the Company since
such statements reflect the "push down" method of accounting related to
purchase adjustments. The "push down" method of accounting requires that
certain long-term debt, preferred stock and warrants that are legal
liabilities of B-E Holdings, Inc. ("Holdings") (and not of the Company) be
included, for accounting purposes, in the financial statements of the Company.
The acquisition of the Company by Holdings was accounted for as a purchase
and, accordingly, the assets and liabilities of Holdings were recorded at
their estimated fair values as of the acquisition date. The excess of the
related purchase cost over the fair value of identifiable net assets has been
allocated to goodwill. The financial statements include the related
depreciation and amortization charges associated with the fair value
adjustments since the date of the acquisition.
Corporate Reorganization
On February 22, 1993, Holdings and the Company announced their intention
to pursue a restructuring of their capital structures. Subsequent to
Holdings' and the Company's announcement of their intention to pursue a
restructuring and, at the suggestion of Holdings and the Company, holders of
the Series A 12-1/2% Senior Debentures and the 10% Senior Notes, and other
persons in an ex officio capacity, formed the Public Debtholders Committee for
the purpose of negotiating a consensual plan of restructuring (the
"Restructuring") which would be accomplished as part of a joint "prepackaged"
plan of reorganization of Holdings and the Company under chapter 11 of the
Bankruptcy Code (the "Prepackaged Plan"). The purpose of the Restructuring is
to improve and enhance the long-term viability of Holdings and the Company by
adjusting their capitalization to reflect current and projected operating
performance levels. Specifically, the Prepackaged Plan is designed to reduce
Holdings' and the Company's overall indebtedness and their corresponding debt
service obligations by exchanging all of their senior unsecured debt
securities for common equity. In September, 1993, Holdings, the Company, and
the negotiating subcommittee of the Public Debtholders Committee executed a
non-binding agreement in principle containing certain principal terms of the
Restructuring, including the principal components of the equity allocation
under the Prepackaged Plan among Holdings' and the Company's senior unsecured
debtholders and Holdings' stockholders (the "Agreement in Principle").
Holdings and the Company also obtained a commitment (the "Commitment
Letter") from Bank One, Milwaukee, N.A. ("Bank One"), Continental Bank, N.A.
and Bank One, Dayton, N.A. (collectively, the "New Lenders") to provide,
subject to certain terms and conditions, a $50 million secured credit facility
(the "New Credit Agreement"), consisting of a term loan and a revolving line
of credit, on the effective date of the Prepackaged Plan the proceeds of which
would be used to repay the Bucyrus Secured Obligations (as defined below) and
for working capital and other general corporate purposes. The New Lenders
agreed in the Commitment Letter to use their best efforts to obtain
commitments from one or more additional lenders to provide an additional $10
million in revolving credit under the New Credit Agreement. The Commitment
Letter, and the New Lenders' commitment thereunder, expired on March 31, 1994.
Holdings and the Company are in discussions with the New Lenders and other
financial institutions which have expressed an interest in participating in
post-confirmation credit facilities. In the event that some or all of the New
Lenders do not extend the Commitment Letter and/or Holdings and the Company
are unable to secure commitments from one or more additional financial
institutions, the Prepackaged Plan contains an alternative $50 million post-
confirmation credit facility which would be extended by the Bucyrus Secured
Lenders as described in the immediately succeeding paragraph.
After reaching an agreement with the Public Debtholders Committee, during
the third quarter of 1993, Holdings and the Company began discussions with
Greycliff Partners Limited ("Greycliff") acting on behalf of the holders (the
"Bucyrus Secured Lenders") of the Company's Series A 10.65% Senior Secured
Notes, Series B 16.5% Senior Secured Notes and obligations of the Company
under its sale and leaseback financing arrangement (the "Sale Leaseback" and,
together with the Senior Secured Notes, the "Bucyrus Secured Obligations").
In September, 1993, Holdings, the Company, and the Bucyrus Secured Lenders
executed a Summary of Principal Terms for Stipulation on Adequate Protection
and Use of Cash Collateral, Debtor-in-Possession Financing Facility and Post-
Confirmation Credit Facilities (the "Initial South Street Term Sheet") which
was subject to the approval of the Public Debtholders Committee. On
December 8, 1993, following negotiations between the Public Debtholders
Committee and Greycliff, Holdings, the Company, and the Bucyrus Secured
Lenders executed a Summary of Principal Terms for (A) Stipulation on Adequate
Protection and Use of Cash Collateral, (B) Post-Petition Credit Facility and
(C) Post-Confirmation Credit Facilities (the "South Street Term Sheet") which
contained additional negotiated concessions. The South Street Term Sheet sets
forth the terms of, among other things, a stipulation on adequate protection
and use of cash collateral and a debtor-in-possession financing facility to be
extended by the Bucyrus Secured Lenders (the "Post-Petition Credit Facility").
The South Street Term Sheet also provides for a post-confirmation credit
facility consisting of (i) a $5 million revolving loan and (ii) a $45 million
term loan which would be extended by the Bucyrus Secured Lenders in the event
that the conditions contained in the Commitment Letter are not satisfied or
waived on or prior to the confirmation date of the Prepackaged Plan (the
"South Street Financing Agreement").
On March 17, 1994, Holdings and the Company obtained an order from the
United States Bankruptcy Court, Eastern District of Wisconsin (the "Bankruptcy
Court") approving an agreement (the "Cash Collateral Stipulation") with the
Bucyrus Secured Lenders and Bank One authorizing the use of cash collateral
during the period ending July 15, 1994. As adequate protection for the use of
cash collateral, the Bankruptcy Court has authorized the Company to grant to
the Bucyrus Secured Lenders and Bank One replacement liens on certain of the
Company's assets along with superpriority administrative expense claims.
Holdings and the Company have reached an agreement with the Secured Lenders
and Bank One with respect to an extension of the Cash Collateral Stipulation
to December 31, 1994, subject to approval of the Bankruptcy Court.
The Solicitation
Following the announcement of the Agreement in Principle, the Initial
South Street Term Sheet and the Commitment Letter, Holdings and the Company
filed a Disclosure Statement and Proxy Statement-Prospectus (the "Disclosure
Statement") for the solicitation of votes for the Prepackaged Plan with the
Securities and Exchange Commission (the "SEC"). On January 12, 1994, the
Company's Registration Statement on Form S-4 bearing Registration
No. 33-73904, which included the final version of the Disclosure Statement
dated January 12, 1994 detailing the terms of the Prepackaged Plan, was
declared effective by the SEC. The Prepackaged Plan provides for Holdings to
merge with and into the Company (the survivor of such merger is referred to as
the "Reorganized Company"). The Reorganized Company would issue common stock
("New Common Stock") and warrants to purchase New Common Stock ("New
Warrants") to holders of Holdings' and the Company's unsecured debt securities
and equity securities. The Bucyrus Secured Obligations would be refinanced on
the terms set forth in the Prepackaged Plan with a portion of the proceeds
from the New Credit Agreement or the South Street Financing Agreement.
On January 14, 1994, Holdings and the Company distributed the Disclosure
Statement to holders of record on December 29, 1993 of all classes of
Holdings' and the Company's debt securities and Holdings' equity securities
soliciting from such holders acceptances of the Prepackaged Plan. The
solicitation period for accepting or rejecting the Prepackaged Plan ended at
5:00 PM EST on February 14, 1994. All classes of Holdings' and the Company's
bondholders and Holdings' stockholders voting on the Prepackaged Plan voted to
accept the Prepackaged Plan, except for JNL, the holder of the Company's
Resettable Senior Notes ("Resettable Notes"). On February 18, 1994 (the
"Petition Date"), following expiration of the solicitation period, Holdings
and the Company filed voluntary petitions under chapter 11 of the Bankruptcy
Code, and filed the Prepackaged Plan in the Bankruptcy Court, Case Nos. 94-
20786-RAE and 94-20787-RAE. Holdings' and the Company's chapter 11 cases have
been assigned to United States Bankruptcy Judge Russell A. Eisenberg.
Hearing On The Disclosure Statement
As required under the Bankruptcy Code, a hearing to consider whether the
solicitation of acceptances or rejections of the Prepackaged Plan pursuant to
the Disclosure Statement satisfied the applicable provisions of the Bankruptcy
Code was held on June 16, 1994 by the Bankruptcy Court. At the conclusion of
the hearing, the Bankruptcy Court directed reballoting by creditors and equity
security holders on the Prepackaged Plan. The reballoting will be based on a
supplement to the Disclosure Statement and on the terms of the Modified Plan,
as described below. Among other things, the supplement will deal with matters
that have come to light since the Petition Date and matters relating to
litigation claims asserted by JNL, the largest creditor of the Company. The
Bankruptcy Court further directed that the supplement to the Disclosure
Statement be submitted for the Bankruptcy Court's approval at a hearing
scheduled for July 14, 1994, which has since been adjourned to August 18,
1994, with reballoting to occur promptly thereafter.
Holdings and the Company are engaged in discussions and negotiations with
all of their financial creditor constituencies regarding modifications to the
Prepackaged Plan (as so modified, the "Modified Plan"). The Bankruptcy Court
also extended the duration of Holdings' and the Company's exclusive right to
solicit acceptances with respect to a plan of reorganization through
October 14, 1994. Subsequently, the Bankruptcy Court scheduled a hearing on
confirmation of the Modified Plan to commence on November 28, 1994.
Holdings and the Company intend to seek confirmation of the Modified Plan
and will ask the Bankruptcy Court to confirm the Modified Plan either with the
consent of all creditor classes or, if necessry, under the "cram down"
provisions of the Bankruptcy Code, over the objection of one or more classes.
The Bankruptcy Code provides a procedure, known as "cram down", under which a
plan of reorganization may be confirmed despite the non-acceptance by an
impaired class. The Bankruptcy Court must find that all statutory conditions
to confirmation have been met, and accordingly, there can be no assurance that
the Bankruptcy Court will confirm the Modified Plan. In addition,
confirmation and consummation of the Modified Plan are subject to further
conditions to be described in the Modified Plan, and there can be no assurance
that these will be satisfied, or, if not satisfied, waived or waivable by
Holdings and the Company.
Appointment of Examiner
On May 26, 1994, the Bankruptcy Court ordered the appointment of an
examiner in the Company's chapter 11 case. On May 27, 1994, the Bankruptcy
Court entered an order in the Company's chapter 11 case approving the
appointment of Salvatore A. Barbatano, a partner at the law firm of Rudnick &
Wolf of Chicago, as the examiner. The examiner filed a preliminary report
with the Bankruptcy Court on June 13, 1994.
Post-Petition Letter Of Credit Agreement
On April 14, 1994, Holdings and the Company obtained an order from the
Bankruptcy Court authorizing the Company to enter into a post-petition letter
of credit financing agreement (the "Letter of Credit Agreement") with Bank One
to meet its on-going business needs following the Petition Date. Pursuant to
the Letter of Credit Agreement, Bank One has agreed to issue (a) stand-by
letters of credit in an amount, which when added to the aggregate amount
available for drawing under certain stand-by letters of credit issued by Bank
One prior to the Petition Date, does not exceed $12,500,000 and (b) commercial
letters of credit in an amount not to exceed $250,000. As of June 30, 1994,
the unused portion of the letter of credit facility under the Letter of Credit
Agreement was $9,295,512. As security for the financing under the Letter of
Credit Agreement, the Bankruptcy Court has authorized the Company to pledge
cash collateral to Bank One and to grant liens and security interests to Bank
One over certain accounts receivable of the Company and inventory of the
Company generated on or after the Petition Date and certain other assets. The
Letter of Credit Agreement expires on October 31, 1994, unless extended, and
stand-by letters of credit issued pursuant to the Letter of Credit Agreement
may not terminate later than April 30, 1995 without the consent of Bank One.
Operation During Chapter 11 Proceedings
Holdings and the Company intend to operate in the ordinary course during
their chapter 11 cases and intend to take all steps necessary to ensure that
their vendors, trade creditors, employees and customers with warranty or other
claims are unimpaired by the Modified Plan. None of the subsidiaries of
Holdings and the Company will be parties to the Modified Plan.
Liquidity Pending Consummation Of The Restructuring
Until the Modified Plan is implemented on the Effective Date (as defined
in the Modified Plan), Holdings and the Company will be required to rely on
their internal cash resources to operate their businesses and pay other costs.
The Company believes that it will have sufficient cash resources and financing
to meet trade obligations and cover operating and restructuring expenses
during the pendency of their chapter 11 cases. During the pendency of their
chapter 11 cases, Holdings and the Company intend to pay all post-petition
operating expenses (including trade obligations) in the ordinary course of
business.
Net Shipments and Net Loss
Net shipments for the quarter and six months ended June 30, 1994 were
$46,285,461 and $82,884,494, respectively, compared with $47,993,979 and
$90,401,095 for the quarter and six months ended June 30, 1993, respectively.
Shipments of repair parts and services for the quarter ended June 30, 1994
increased 9.9% from the quarter ended June 30, 1993 primarily due to increased
shipments at Minserco, Inc. For the six months ended June 30, 1994, shipments
of repair parts and services increased 1.9% from the six months ended June 30,
1993 primarily due to increased shipments at foreign locations. Machine
shipments for the quarter ended June 30, 1994 decreased 27.2% from the quarter
ended June 30, 1993 and for the six months ended June 30, 1994 decreased 27.0%
from the six months ended June 30, 1993. Both decreases were primarily due to
decreased electric mining shovel and blast hole drill shipments. The pricing
for machines and repair parts has continued to remain steady during these
periods.
Net loss for the quarter and six months ended June 30, 1994 was $2,849,034
and $12,932,475, respectively, compared with a net loss of $9,588,125 and
$31,244,710 for the quarter and six months ended June 30, 1993, respectively.
The decrease in net loss for the quarter ended June 30, 1994 was primarily due
to reduced interest expense. The decrease in net loss for the six months
ended June 30, 1994 was primarily due to reduced interest expense and
$11,375,141 for the cumulative effects of changes in accounting principles as
a result of adoption of Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions", and
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" in the first quarter of 1993, partially offset by increased
reorganization items in 1994. Also included in net losses were amortizations
of non-cash purchase accounting and financing charges of $1,845,819 and
$3,893,865 for the quarter and six months ended June 30, 1994, respectively,
and $1,995,316 and $3,966,546 for the quarter and six months ended June 30,
1993, respectively.
The Company's consolidated backlog on June 30, 1994 was $66,975,469
compared with $59,143,004 on December 31, 1993 and $91,118,373 on June 30,
1993. Machine backlog is up 11.7% from December 31, 1993 and down 41.1% from
June 30, 1993. The increase from December 31, 1993 was primarily in blast
hole drill volume and the decrease from June 30, 1993 was primarily in
electric mining shovel volume. Repair parts and service backlog is up 14.5%
from December 31, 1993 and down 9.5% from June 30, 1993. The increase from
December 31, 1993 is primarily at domestic locations.
New orders for the quarter ended June 30, 1994 decreased 39.3% from the
quarter ended June 30, 1993 and for the six months ended June 30, 1994
decreased 12.9% from the six months ended June 30, 1993. New machine orders
for the quarter ended June 30, 1994 decreased 69.9% from the quarter ended
June 30, 1993 and for the six months ended June 30, 1994 decreased 35.2% from
the six months ended June 30, 1993. The decrease in both comparisons was
primarily due to decreased electric mining shovel volume. During the second
quarter of 1993, the Company received an order from Mitsubishi Corporation for
Anshan Iron & Steel Company in China for eight electric mining shovels for
approximately $38 million. New repair parts and service orders for the
quarter ended June 30, 1994 decreased 1.7% from the quarter ended June 30,
1993 and for the six months ended June 30, 1994 increased 1.2% from the six
months ended June 30, 1993. The decrease in the quarterly comparison was
primarily due to decreases at domestic locations and the increase in the year-
to-date comparison was primarily due to increases at foreign locations. The
Company believes expansion of coal production in China and India, new copper
projects in South America and replacement of old equipment in iron ore mines
should provide near term machine sales potential. Continued upgrading of
machines along with movement of large draglines to new mine sites, and normal
drill and shovel parts demand should result in increased shipments of repair
parts worldwide in the next twelve months. However, the United States coal
market continues to be negatively impacted by the effects of The Clean Air
Act. The Company is not able to determine the impact, if any, of the recent
election in South Africa on future shipments by the Company in South Africa,
however, the impact to date has not been severely negative.
Interest, Royalties and Miscellaneous
Interest, royalties and miscellaneous for the quarter and six months ended
June 30, 1994 were $1,947,911 and $3,080,888, respectively, compared with
$1,080,173 and $2,331,493 for the quarter and six months ended June 30, 1993,
respectively. The increase in the quarterly and year-to-date comparisons was
primarily due to a favorable insurance settlement of $1,350,000 in the second
quarter of 1994.
Cost of Products Sold
Cost of products sold for the quarter ended June 30, 1994 was $39,220,975
or 84.7% of shipments compared with $41,306,221 or 86.1% of shipments for the
quarter ended June 30, 1993. For the six months ended June 30, 1994, cost of
products sold was $70,872,858 or 85.5% of shipments compared with $77,925,598
or 86.2% of shipments for the six months ended June 30, 1993. The change in
the cost of products sold percentage was primarily the result of the mix of
products sold. Included in cost of products sold were foreign currency
translation gains of $146,112 for the quarter ended June 30, 1994 and losses
of $211,648 for the six months ended June 30, 1994 compared with gains of
$132,850 for the quarter ended June 30, 1993 and losses of $571,201 for the
six months ended June 30, 1993. The gains and losses occurred in Brazil and
were the result of applying Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation".
Product Development, Selling, Administrative, and Miscellaneous Expenses
Product development, selling, administrative and miscellaneous expenses
for the quarter ended June 30, 1994 were $7,123,772 or 15.4% of shipments
compared with $8,010,433 or 16.7% of shipments for the quarter ended June 30,
1993. The amounts for the six months ended June 30, 1994 and 1993 were
$13,915,846 or 16.8% of shipments and $15,857,750 or 17.5% of shipments,
respectively. The decrease in the quarterly and year-to-date comparisons was
primarily due to reduced product development expense as a result of increased
work on specific customer contracts.
Interest Expense
Interest expense for the quarter and six months ended June 30, 1994 was
$2,391,883 and $8,560,249, respectively, compared with $8,508,186 and
$16,945,129 for the quarter and six months ended June 30, 1993, respectively.
The decreases were primarily due to not accruing interest subsequent to
February 18, 1994 on the Company's and Holdings' unsecured debt which includes
the Company's 10% Senior Notes, the Company's Resettable Senior Notes, the
Company's 9% Sinking Fund Debentures and Holdings' Series A 12-1/2% Senior
Debentures.
Income Taxes
The Company has federal net operating loss carryforwards of approximately
$109,500,000 expiring in the years 2003 through 2009, available to offset
future federal taxable income. The Company also has approximately $80,000,000
of state net operating loss carryforwards, which expire in the years 1997
through 2009, available to offset future state taxable income in states where
it has significant operations.
As previously discussed, Holdings and the Company have filed the
Prepackaged Plan with the Bankruptcy Court and commenced cases under chapter
11 of the Bankruptcy Code. The consummation of the Prepackaged Plan would
cause Holdings and the Company to undergo "ownership changes" within the
meaning of Section 382 of the Internal Revenue Code. Such ownership changes
will, depending on the outcome of the chapter 11 cases of Holdings and the
Company, including the effective date of the Prepackaged Plan and various
other matters, significantly restrict the utilization of Holdings' and the
Company's net operating loss and tax credit carryforwards.
Profitability Measurements
Ratios of returns on net shipments, assets employed, and shareholders'
investment are not meaningful at this time for the Company due to losses
incurred.
Liquidity and Capital Resources
Working capital and current ratio are two financial measurements which
provide an indication of the Company's ability to meet its short-term
obligations. These measurements at June 30, 1994 and December 31, 1993 were
as follows:
June 30, December 31,
1994 1993
Working capital (deficiency) (in millions) $ 74.5 $(167.5)
Current ratio 3.1 to 1 .4 to 1
The increase in working capital for the six months ended June 30,1994 was
primarily due to the reclassification of certain liabilities, primarily long-
term debt and accrued interest, to Liabilities Subject to Compromise. Working
capital includes restricted funds on deposit of zero and $512,173 at June 30,
1994 and December 31, 1993, respectively, and long-term debt classified as a
current liability of zero and $201,239,574 at June 30, 1994 and December 31,
1993, respectively. If the long-term debt had not been reclassified, working
capital and the current ratio would have been as follows:
June 30, December 31,
1994 1993
Working capital (in millions) $ 74.5 $ 33.7
Current ratio 3.1 to 1 1.5 to 1
The table below summarizes the Company's cash position at June 30, 1994:
Restricted Unrestricted
Location Cash Cash Total
United States $ 2,340,000 $ 10,843,739 $ 13,183,739
Foreign Subsidiaries 16,822 2,555,833 2,572,655
Equipment Assurance
Limited 3,230,866 1,205,185 4,436,051
____________ ____________ ____________
$ 5,587,688 $ 14,604,757 $ 20,192,445
The unrestricted cash at the foreign subsidiaries and Equipment Assurance
Limited ("EAL"), an off-shore insurance subsidiary of the Company, is
primarily required for working capital purposes at these respective locations.
In order to provide a better understanding of the Company's results from
operations, the following table reconciles Loss Before Reorganization Items,
Income Taxes and Cumulative Effects of Changes in Accounting Principles to
Cash Provided From Operations Before Interest Expense, Reorganization Items,
Income Taxes and Cumulative Effects of Changes in Accounting Principles:
Quarter Ended June 30, Six Months Ended June 30,
1994 1993 1994 1993
Loss before
reorganization items,
income taxes and
cumulative effects
of changes in
accounting
principles $ (503,258) $ (8,750,688) $ (7,383,571) $(17,995,889)
Non-cash expenses:
Depreciation
expense -
historical 902,866 943,295 1,831,331 1,966,083
Depreciation and
amortization of
purchase adjustments
and financing
fees 1,845,819 1,877,915 3,822,686 3,741,799
Deferred rent
(interest) on sale
and leaseback
financing
arrangement 1,670,479 1,400,565 3,340,958 2,765,307
Amortization of debt
discount - 117,401 71,179 224,747
____________ ____________ ____________ ____________
Cash provided from
(used in) operations
after interest
expense and before
reorganization
items, income taxes
and cumulative
effects of changes
in accounting
principles 3,915,906 (4,411,512) 1,682,583 (9,297,953)
Cash interest
expense (1) 721,404 6,990,220 5,148,112 13,955,075
Cash provided
from ____________ ____________ ____________ ____________
operations before
interest expense,
reorganization
items, income taxes
and cumulative
effects of changes
in accounting
principles $ 4,637,310 $ 2,578,708 $ 6,830,695 $ 4,657,122
(1) Includes accrued but unpaid interest prior to the Petition Date as a
result of the corporate reorganization and excludes amortization of debt
discount and deferred rent (interest) on the sale and leaseback financing
arrangement.
On July 24, 1992, the Company entered into a credit agreement with Bank
One which provides for the issuance from time to time by Bank One of standby
letters of credit for the account of the Company in an aggregate amount of up
to $12,500,000 at any one time, secured in part pursuant to a security
agreement and in part by cash provided by the Company, and certain other
commercial and standby letters of credit. The agreement expired on
February 28, 1994. On April 14, 1994, the Company and Holdings obtained an
order from the Bankruptcy Court authorizing the Company to enter into the
Letter of Credit Agreement with Bank One to meet its on-going business needs
following the Petition Date. Pursuant to the Letter of Credit Agreement, Bank
One has agreed to issue (a) stand-by letters of credit in an amount, which
when added to the aggregate amount available for drawing under certain stand-
by letters of credit issued by Bank One prior to the Petition Date, does not
exceed $12,500,000 and (b) commercial letters of credit in an amount not to
exceed $250,000. As of June 30, 1994, the unused portion of the letter of
credit facility under the Letter of Credit Agreement was $9,295,512. As
security for the financing under the Letter of Credit Agreement, the
Bankruptcy Court has authorized the Company to pledge cash collateral to Bank
One and to grant liens and security interests to Bank One over certain
accounts receivable of the Company and inventory of the Company generated on
or after the Petition Date and certain other assets. The Letter of Credit
Agreement expires on October 31, 1994 and stand-by letters of credit issued
pursuant to the Letter of Credit Agreement may not terminate later than
April 30, 1995 without the consent of Bank One. The Company has pledged to
Bank One $2,340,000 of its cash to secure its reimbursement obligations under
the Letter of Credit Agreement.
As required under various agreements, EAL has pledged $3,230,866 of its
cash to secure its reimbursement obligations for outstanding letters of credit
and an affiliate's bank debt at June 30, 1994. These collateral amounts are
classified as Restricted Funds on Deposit in the Consolidated Condensed
Balance Sheets.
At June 30, 1994 the Company had approximately $735,000 of open approved
capital appropriations.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings and Other Contingencies
Voluntary Petitions under Chapter 11 of the Bankruptcy Code
On February 18, 1994 (the "Petition Date"), Holdings and the
Company commenced voluntary petitions under chapter 11 of the
Bankruptcy Code and filed the Prepackaged Plan in the United States
Bankruptcy Court, Eastern District of Wisconsin, Case Nos. 94-
20786-RAE and 94-20787-RAE and thereby commenced cases under
chapter 11 of the Bankruptcy Code. Holdings' and the Company's
prepackaged chapter 11 cases (the "Prepackaged Chapter 11 Cases")
have been assigned to United States Bankruptcy Judge Russell A.
Eisenberg.
See Part I, "Appointment of Examiner" and "Hearing on the
Disclosure Statement."
Item 3. Defaults Upon Senior Securities.
(i) Bucyrus 9% Sinking Fund Debentures. As disclosed in the 1993
10-K, the Company did not pay interest which was due and
payable on June 1, 1993 and December 1, 1993 on its 9%
Sinking Fund Debentures ("Sinking Fund Debentures"). In
addition, the Company did not pay interest which was due and
payable on June 1, 1994 on the Sinking Fund Debentures. The
applicable period of grace for such payments under the
indenture governing the Sinking Fund Debentures has expired,
resulting in an event of default thereunder. The indenture
trustee for the Sinking Fund Debentures, Chemical Bank, has
advised the Company of the occurrence of an event of default.
Each of such defaults was in an amount of $36,180, and the
total arrearage as of the Petition Date was $88,296.
(ii) Bucyrus Resettable Senior Notes. As disclosed in the 1993
10-K, the Company did not pay interest which was due and
payable on June 30, 1993 and December 31, 1993 on its
Resettable Senior Notes ("Resettable Senior Notes"). In
addition, the Company did not pay interest which was due and
payable on June 30, 1994 on the Resettable Senior Notes. The
applicable period of grace for such payments under the
indenture governing the Resettable Senior Notes has expired,
resulting in an event of default thereunder. Each of such
defaults was in an amount of $4,500,000, and the total
arrearage as of the Petition Date was $10,824,107 which
includes default interest. In addition, the interest payment
defaults which have occurred and are continuing in respect of
the Sinking Fund Debentures, the Senior Secured Notes and the
10% Senior Notes constitute an event of default under the
Resettable Senior Notes. On October 20, 1993, the indenture
trustee for the Resettable Senior Notes, at the direction of
JNL, the sole holder of the Resettable Senior Notes, sent a
notice of acceleration to the Company declaring all unpaid
principal of, and accrued interest on, the Resettable Senior
Notes to be immediately due and payable. On November 22,
1993, JNL, together with the indenture trustee for the
Resettable Senior Notes, filed a notice of motion for partial
summary judgment relating to its claim for all principal of
and interest on the Resettable Senior Notes in connection
with the JNL Lawsuit. As a result of Holdings' and the
Company's chapter 11 petitions, prosecution of such motion
for partial summary judgment has been stayed against the
Company and Holdings as of the Petition Date.
(iii) Bucyrus Series A 10.65% Senior Secured Notes and Series B
16.5% Senior Secured Notes. As disclosed in the 1993 10-K,
the Company did not pay interest which was due and payable on
June 30, 1993 and December 31, 1993 on its Series A 10.65%
Senior Secured Notes and Series B 16.5% Senior Secured Notes
(collectively, "Senior Secured Notes"). In addition, the
Company did not pay interest which was due and payable on
June 30, 1994 on the Senior Secured Notes. The applicable
period of grace for such payments under the indenture
governing the Senior Secured Notes has expired, resulting in
an event of default thereunder. The trustee under the Senior
Secured Notes, Norwest Bank Wisconsin, National Association
("Norwest") has advised the Company of the occurrence of an
event of default. Each of such defaults was in an amount of
$1,045,500, and the total arrearage on the date of filing
this report is approximately $3,658,000 which includes
default interest. In addition, the interest payment defaults
which have occurred and are continuing in respect of the
Sinking Fund Debentures, the Resettable Senior Notes and the
10% Senior Notes constitute an event of default under the
Senior Secured Notes.
(iv) Bucyrus 10% Senior Notes. As disclosed in the 1993 10-K, the
Company did not pay interest which was due and payable on
July 1, 1993 and January 1, 1994 on its 10% Senior Notes
("10% Senior Notes"). In addition, the Company did not pay
interest which was due and payable on July 1, 1994 on the 10%
Senior Notes. The applicable period of grace for such
payments under the indenture governing the 10% Senior Notes
has expired, resulting in an event of default thereunder.
Each of such defaults was in an amount of $5,970,240, and the
total arrearage as of the Petition Date was $13,575,189. On
November 24, 1993, Firstar, the indenture trustee for the 10%
Senior Notes, without instruction from the holders of such
securities, sent a notice of acceleration to the Company
declaring such securities to be immediately due and payable.
On December 17, 1993, Firstar, a defendant in the JNL
Lawsuit, filed a cross-claim against the Company seeking
judgment on the principal of, interest on and other amounts
due and owing under the 10% Senior Notes, and filed a notice
of motion for summary judgment on such cross-claim. As a
result of Holdings' and the Company's chapter 11 petitions,
prosecution of the cross-claim against the Company has been
stayed against the Company as of the Petition Date.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: None.
(b) Report on Form 8-K: No reports on Form 8-K were filed during
the second quarter.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUCYRUS-ERIE COMPANY
(Registrant)
Date August 15, 1994 /s/ Craig R. Mackus
Craig R. Mackus
Controller
Principal Accounting Officer
Date August 15, 1994 /s/ William B. Winter
Chairman of the Board and
Chief Executive Officer
