BUCYRUS INTERNATIONAL INC, 10-Q, 1997-08-14

BUCYRUS INTERNATIONAL INC
10-Q, 1997-08-14
MINING MACHINERY & EQUIP (NO OIL & GAS FIELD MACH & EQUIP)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 1-871

BUCYRUS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 39-0188050
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN
53172
(Address of Principal Executive Offices)
(Zip Code)

(414) 768-4000
(Registrant's Telephone Number, Including Area Code)

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 by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

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 11, 1997

Common Stock, $.01 par value 10,534,574

<PAGE>

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX

Page No.

Part I. FINANCIAL INFORMATION:

Item 1 - Financial Statements (Unaudited)

Consolidated Condensed Statements of Earnings -
Quarters and six months ended June 30, 1997
and 1996 3

Consolidated Condensed Balance Sheets -
June 30, 1997 and December 31, 1996 4-5

Consolidated Condensed Statements of Cash Flows -
Six months ended June 30, 1997 and 1996 6-7

Notes to Consolidated Condensed Financial
Statements 8

Item 2 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9-13

Part II. OTHER INFORMATION:

Item 4 - Submission of Matters to a Vote of
Security Holders 14

Item 6 - Exhibits and Reports on Form 8-K 14-15

Signature Page 16

<PAGE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars In Thousands, Except Per Share Amounts)

Quarter Ended June 30, Six Months Ended June 30,
1997 1996 1997 1996

Revenues:
Net sales $ 83,876 $ 69,364 $ 143,762 $ 130,820
Other income 351 248 615 464
__________ __________ __________ __________
84,227 69,612 144,377 131,284
__________ __________ __________ __________
Costs and Expenses:
Cost of products sold 68,256 57,360 116,261 107,023
Product development,
selling,
administrative and
miscellaneous
expenses 9,692 8,919 18,345 17,854
Interest expense 2,042 2,093 3,956 4,173
__________ __________ __________ __________
79,990 68,372 138,562 129,050
__________ __________ __________ __________

Earnings before
income taxes 4,237 1,240 5,815 2,234

Income taxes 1,729 628 2,392 1,324
__________ __________ __________ __________

Net earnings $ 2,508 $ 612 $ 3,423 $ 910

Weighted average number
of common and common
equivalent shares
outstanding 10,353,305 10,234,574 10,345,443 10,234,574

Net earnings per share
of common stock $ .24 $ .06 $ .33 $ .09

See notes to consolidated condensed financial statements.

<PAGE>

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
June 30, December 31, June 30, December 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C> <C>
ASSETS LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash Accounts payable and
equivalents $ 11,350 $ 15,763 accrued expenses $ 41,712 $ 33,765
Receivables 54,271 32,085 Liabilities to customers
Inventories 74,587 70,889 on uncompleted contracts
Prepaid expenses and and warranties 7,170 3,579
other current assets 5,091 2,504 Income taxes 2,042 1,469
________ ________ Short-term obligations 11,438 3,186
Total Current Assets 145,299 121,241 Current maturities of
long-term debt 416 428
OTHER ASSETS: ________ ________
Restricted funds Total Current
on deposit 1,079 1,079 Liabilities 62,778 42,427
Intangible assets - net 8,101 8,545
Other assets 6,395 6,003 LONG-TERM LIABILITIES:
________ ________ Deferred income taxes 138 148
15,575 15,627 Liabilities to customers on
uncompleted contracts
PROPERTY, PLANT AND EQUIPMENT: and warranties 3,239 3,277
Cost 47,060 43,409 Postretirement benefits 10,800 11,064
Less accumulated Deferred expenses
depreciation (9,421) (7,382) and other 12,152 11,891
________ ________ ________ ________
37,639 36,027 26,329 26,380
LONG-TERM DEBT, less
current maturities 68,339 66,627

COMMON SHAREHOLDERS' INVESTMENT:
Common stock - par value
$.01 per share, authorized
20,000,000 shares, issued
and outstanding 10,534,574
shares 105 105
Additional paid-in capital $ 57,739 $ 57,739
Unearned stock compensation (2,395) (2,815)
Accumulated deficit (13,023) (16,446)
Cumulative translation
adjustment (1,359) (1,122)
________ ________
41,067 37,461
________ ________ ________ ________
$198,513 $172,895 $198,513 $172,895

See notes to consolidated condensed financial statements.
</TABLE>

<PAGE>

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)

Six Months Ended June 30,
1997 1996

Cash Flows From Operating Activities
Net earnings $ 3,423 $ 910
Adjustments to reconcile net earnings
to net cash used in operating
activities:
Depreciation 2,179 1,980
Amortization 534 584
Stock compensation expense 420 116
In kind interest on the Secured
Notes due December 14, 1999 - 3,767
(Gain) loss on sale of property,
plant and equipment (4) 246
Changes in assets and liabilities,
net of effects from purchase of
Von's Welding, Inc.:
Receivables (22,176) (8,319)
Inventories (3,807) 2,727
Other current assets (2,541) (524)
Other assets 148 (275)
Current liabilities other than
income taxes, short-term
obligations and current
maturities of long-term debt 11,395 (2,017)
Income taxes 564 (1,007)
Long-term liabilities other
than deferred income taxes (651) (1,432)
_________ _________
Net cash used in operating activities (10,516) (3,244)
_________ _________
Cash Flows From Investing Activities
Decrease in restricted funds on deposit - 1,800
Purchases of property, plant
and equipment (2,433) (1,305)
Proceeds from sale of property, plant
and equipment 34 806
Purchase of Von's Welding, Inc., net
of cash acquired (818) -
_________ _________
Net cash (used in) provided by
investing activities (3,217) 1,301
_________ _________
Cash Flows From Financing Activities
Proceeds from issuance of project
financing obligations 5,672 2,971
Reduction of project financing
obligations - (2,701)
Net increase (decrease) in other
short-term obligations 1,961 (878)
Proceeds from issuance of long-term
debt 1,712 -
_________ _________
Net cash provided by (used in)
financing activities 9,345 (608)
_________ _________
Effect of exchange rate
changes on cash (25) (113)
_________ _________
Net decrease in cash and
cash equivalents (4,413) (2,664)
Cash and cash equivalents at
beginning of period 15,763 11,150
_________ _________
Cash and cash equivalents at
end of period $ 11,350 $ 8,486

Supplemental Disclosures of Cash Flow Information

1997 1996
Cash paid during the period for:
Interest $ 334 $ 122
Income taxes - net of refunds 839 1,401

Supplemental Schedule of Noncash Investing and Financing Activities

The Company purchased all of the common stock of Von's Welding, Inc. In
conjunction with the acquisition, liabilities were assumed as follows:

1997

Fair value of assets acquired $ 1,956
Purchase of common stock 885
________
Liabilities assumed $ 1,071

See notes to consolidated condensed financial statements.

<PAGE>

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. In the opinion of Bucyrus International, Inc. (the "Company"), the
consolidated condensed financial statements contain all adjustments
(consisting of normal recurring accruals) 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.

2. Certain notes and other information have been condensed or omitted from
these interim consolidated condensed financial statements. Therefore, these
statements should be read in conjunction with the Company's 1996 Annual
Report on Form 10-K filed with the Securities and Exchange Commission on
March 20, 1997.

3. Inventories consist of the following:

June 30, December 31,
1997 1996
(Dollars in Thousands)

Raw materials and parts $ 10,201 $ 10,628
Costs relating to
uncompleted contracts 5,881 4,183
Customers' advances offset
against costs incurred on
uncompleted contracts (2,704) (1,816)
Work in process 13,115 13,746
Finished products (primarily
replacement parts) 48,094 44,148
________ ________
$ 74,587 $ 70,889

4. Net earnings per share of common stock for the quarter and six months ended
June 30, 1997 are based on the weighted average number of common and common
equivalent shares outstanding during the period. Restricted common stock
is considered to be issued and outstanding and is included in the net
earnings per share calculation using the treasury stock method. Net
earnings per share of common stock for the quarter and six months ended
June 30, 1996 are based on the weighted average number of common shares
outstanding since common stock equivalents were not significant.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share". The Company will adopt
this statement for the year ending December 31, 1997 and will restate prior
period earnings per share as required. Adoption of this statement will not
have an impact on the Company's reported earnings per share for the quarters
and six months ended June 30, 1997 and 1996.

<PAGE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information is provided to assist in the understanding of
Bucyrus International, Inc.'s (the "Company") operations for the quarter and six
months ended June 30, 1997 and 1996.

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, 1997 and December 31, 1996 were as
follows:

June 30, December 31,
1997 1996
(Dollars in Thousands)

Working capital $ 82,521 $ 78,814
Current ratio 2.3 to 1 2.9 to 1

The decrease in the current ratio was primarily due to increased liabilities
in order to support the increased production of machines.

Equipment Assurance Limited has pledged $1,056,000 of its cash to secure its
reimbursement obligations for outstanding letters of credit at June 30, 1997.
This collateral amount is classified as Restricted Funds on Deposit in the
Consolidated Condensed Balance Sheets.

The Company is presenting below a calculation of earnings before interest
expense, income taxes, depreciation, amortization, stock compensation and (gain)
loss on sale of fixed assets ("Adjusted EBITDA"). Since cash flow from
operations is very important to the Company's future, the Adjusted EBITDA
calculation provides a summary review of cash flow performance. In addition,
the Company is required to maintain certain minimum Adjusted EBITDA levels under
its bank credit agreement (see below). The Adjusted EBITDA calculation is not
an alternative to operating income under generally accepted accounting
principles as an indicator of operating performance or to cash flows as a
measure of liquidity. The following table reconciles Earnings Before Income
Taxes to Adjusted EBITDA:

Quarter Ended June 30, Six Months Ended June 30,
1997 1996 1997 1996
(Dollars in Thousands)
Earnings before
income taxes $ 4,237 $ 1,240 $ 5,815 $ 2,234
Non-cash expenses:
Depreciation 1,092 986 2,179 1,980
Amortization 267 307 534 584
Stock compensation 210 116 420 116
Loss (gain) on sale
of fixed assets 1 222 (4) 246
In kind interest on
the Secured Notes
due December 14,
1999 ("Secured
Notes") - 1,882 - 3,767
Cash interest
expense 2,042 211 3,956 406
________ ________ ________ ________
Adjusted EBITDA $ 7,849 $ 4,964 $ 12,900 $ 9,333

The Company has a Credit Agreement (the "Credit Agreement") with Bank One,
Wisconsin ("Bank One"). The Credit Agreement, as amended, contains a credit
facility for working capital and general corporate purposes (the "Loan
Facility"), a letter of credit facility (the "L/C Facility") and a project
financing loan facility (the "Project Financing Facility"). Under the Loan
Facility, the Company may borrow up to $2,500,000, provided that it meets
certain earnings before interest, taxes, depreciation and amortization tests,
as defined. Borrowings under the Loan Facility mature on April 30, 1998.
Under the L/C Facility, Bank One has agreed to issue letters of credit
through April 30, 1998 in an aggregate amount not in excess of $15,000,000 minus
the then outstanding aggregate borrowings by the Company under the Loan
Facility, provided that no letter of credit may expire after April 30, 1999.
Under the Project Financing Facility, Bank One may make project financing
loans to the Company from time to time. Borrowings under the Credit
Agreement are secured by a security interest in substantially all of the
Company's property (other than land and buildings). At June 30, 1997, the
Company had $381,000 of borrowings outstanding under the Loan Facility and
$4,790,000 of the L/C Facility was being used. Under the Project Financing
Facility, the Company has a line of credit to support three current orders.
Bank One has participated a portion of the Project Financing Facility to
The Bank of Nova Scotia. Availability is based on the amount of inventory
being financed and any accounts receivable relating to such project and was
approximately $4,100,000 at June 30, 1997. Availability under the Project
Financing Facility can be increased by the unused portion of the L/C Facility.
There were no borrowings under the Project Financing Facility at June 30, 1997.

The agreements relating to the Secured Notes and the Credit Agreement permit
additional project financing from the lenders to manufacture mining machinery or
other products pursuant to binding purchase contracts. Project financing
borrowings are secured by the inventory being financed and any accounts
receivable relating to such project. Project financing borrowings mature not
later than the date of the final payment by the customer under the applicable
purchase contract. At June 30, 1997, the Company had $8,102,000 of outstanding
project financing borrowings not related to the Project Financing Facility.
These borrowings are classified as Short-Term Obligations in the Consolidated
Condensed Balance Sheets.

The Company believes that current levels of cash and liquidity, together
with funds generated by operations, funds available from its Credit Agreement
and other project financing arrangements will be sufficient to permit the
Company to satisfy its debt service requirements and fund operating activities
for the foreseeable future. The Company is subject to significant business,
economic and competitive uncertainties that are beyond its control.
Accordingly, there can be no assurance that the Company's financial resources
will be sufficient for the Company to satisfy its debt service obligations
and fund operating activities under all circumstances.

At June 30, 1997, the Company had approximately $2,338,000 of open approved
capital appropriations. Included in this amount is the remaining $1,243,000 to
be spent for a new service shop facility in Chile which is being financed
primarily with a local bank in Chile.

In addition, the Company has committed approximately $5,500,000 of a
potential $20,000,000 machine shop tool modernization project. The initial
machine tools have been leased and the remaining machine tools are expected to
be financed or leased.

CAPITALIZATION

The long-term debt to equity ratio as of June 30, 1997 and December 31, 1996
was 1.7 to 1 and 1.8 to 1, respectively.

RESULTS OF OPERATIONS

Net Sales

Net sales for the quarter and six months ended June 30, 1997 were
$83,876,000 and $143,762,000, respectively, compared with $69,364,000 and
$130,820,000 for the quarter and six months ended June 30, 1996, respectively.
Net sales for the second quarter of 1997 were higher than the first quarter due
to increased repair parts and service net sales and the timing of machine
sales. This increased net sales volume in the second quarter is not necessarily
indicative of the results expected for the remainder of 1997. Net sales of
repair parts and services for the quarter and six months ended June 30, 1997
were $51,222,000 and $88,614,000, respectively, which is an increase of 22.1%
and 8.3% from the quarter and six months ended June 30, 1996, respectively.
Both increases in repair parts and service net sales were primarily at foreign
locations. Net machine sales for the quarter and six months ended June 30, 1997
were $32,654,000 and $55,148,000, respectively, which is an increase of 19.1%
and 12.5% from the quarter and six months ended June 30, 1996, respectively.
Net sales of electric mining shovels for the quarter and six months ended
June 30, 1997 increased 47.3% and 38.6%, respectively, from the quarter and
six months ended June 30, 1996. The increases in electric mining shovel
volume were primarily in copper markets. Net sales of blast hole drills for
the quarter and six months ended June 30, 1997 decreased 29.3% and 28.2%,
respectively, from the quarter and six months ended June 30, 1996. There has
been an overall decline in worldwide blast hole drill sales activity in 1997.

Cost of Products Sold

Cost of products sold for the quarter ended June 30, 1997 was $68,256,000
or 81.4% of net sales compared with $57,360,000 or 82.7% of net sales for the
quarter ended June 30, 1996. For the six months ended June 30, 1997, cost of
products sold was $116,261,000 or 80.9% of net sales compared with $107,023,000
or 81.8% of net sales for the six months ended June 30, 1996. The increases in
the gross margin percentages were primarily due to improved machine margins.

Product Development, Selling, Administrative and Miscellaneous Expenses

Product development, selling, administrative and miscellaneous expenses for
the quarter ended June 30, 1997 were $9,692,000 or 11.6% of net sales compared
with $8,919,000 or 12.9% of net sales for the quarter ended June 30, 1996. The
amounts for the six months ended June 30, 1997 and 1996 were $18,345,000 or
12.8% of net sales and $17,854,000 or 13.6% of net sales, respectively.

Interest Expense

Interest expense for the quarter and six months ended June 30, 1997 was
$2,042,000 and $3,956,000, respectively, compared with $2,093,000 and $4,173,000
for the quarter and six months ended June 30, 1996, respectively. The Company
has the option of paying interest on the Secured Notes in cash at 10.5% or in
kind (issuance of additional Secured Notes) at 13%. For the quarter and six
months ended June 30, 1997, interest was accrued at 10.5% since the Company paid
this interest in cash. For the quarter and six months ended June 30, 1996,
interest was accrued at 13% since the Company paid this interest in kind.

Income Taxes

For the quarter and six months ended June 30, 1997, income tax expense
consists primarily of foreign taxes at applicable statutory rates and a non-cash
income tax provision on United States taxable income at applicable statutory
rates. For the component of the United States tax provision relating to tax
benefits realized from reductions in the valuation allowance established as of
December 14, 1994 (the date the Company reorganized under chapter 11 of the
Bankruptcy Code), a corresponding $506,000 reduction of intangible assets was
recorded in accordance with AICPA Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code". For the
component of the United States tax provision relating to reductions in the
valuation allowance established after December 14, 1994, an income tax benefit
was recorded.

For the quarter and six months ended June 30, 1996, income tax expense
consists primarily of foreign taxes at applicable statutory rates. For United
States tax purposes, there was a loss for which no income tax benefit was
recorded.

Net Earnings

Net earnings for the quarter and six months ended June 30, 1997 were
$2,508,000 and $3,423,000, respectively, compared with $612,000 and $910,000 for
the quarter and six months ended June 30, 1996, respectively. The increases in
net earnings were primarily due to increased sales volume and improved gross
margin.

Backlog and New Orders

The Company's consolidated backlog on June 30, 1997 was $215,767,000
compared with $158,727,000 at December 31, 1996 and $184,117,000 at June 30,
1996. Machine backlog at June 30, 1997 was $103,756,000, which is an increase
of 111.7% from December 31, 1996 and an increase of 11.6% from June 30, 1996.
The Company has received a letter of intent from BHP Coal Pty. Ltd., an
Australian mining company, to purchase a 2570WS walking dragline which is
scheduled for completion by December 31, 1999. The order is valued at
approximately $60,000,000 and is included in machine backlog at June 30, 1997.
Machine backlog for electric mining shovels and blast hole drills has decreased
53.1% from June 30, 1996. Repair parts and service backlog at June 30, 1997 was
$112,011,000, which is an increase of 2.1% from December 31, 1996 and an
increase of 22.9% from June 30, 1996. The increase in repair parts and service
backlog from June 30, 1996 was at both United States and foreign locations.

New orders for the quarter and six months ended June 30, 1997 were
$139,488,000 and $200,802,000, respectively, which is an increase of 160.1% and
2.0% from the quarter and six months ended June 30, 1996, respectively. New
machine orders for the quarter and six months ended June 30, 1997 were
$91,486,000 and $109,884,000, respectively, which is an increase of 403.2% and
44.3% from the quarter and six months ended June 30, 1996, respectively.
Included in new machine orders for the quarter and six months ended June 30,
1997 was approximately $60,000,000 for the aforementioned 2570WS walking
dragline for BHP Coal Pty. Ltd. of Australia. New machine orders for electric
mining shovels for the six months ended June 30, 1997 were even with last year
while new machine orders for blast hole drills have decreased. There has been
an overall decline in worldwide blast hole drill orders in 1997 which was
anticipated as a result of a temporary lower demand for copper. New repair
parts and service orders for the quarter and six months ended June 30, 1997
were $48,002,000 and $90,918,000, respectively, which is an increase of
35.4% and a decrease of 24.7% from the quarter and six months ended
June 30, 1996, respectively. The increase in new repair parts and service
orders for the quarter ended June 30, 1997 was at both United States and
foreign locations. Included in new repair parts and service orders for the
first quarter of 1996 were large maintenance and repair contract orders at
foreign locations.

PENDING TRANSACTIONS

On July 23, 1997, the Company and Global Industrial Technologies, Inc.
("Global") announced that they have entered into a definitive agreement for
Global to sell the assets of The Marion Power Shovel Company ("Marion") to the
Company for $40,100,000. The closing of the transaction is expected to be
completed in August, 1997.

The Company expects to finance its acquisition of Marion utilizing a
$45,000,000 unsecured bridge loan (the "Bridge Loan") to be provided by PPM
America Special Investments Fund, L.P. (the "PPM Fund"), an affiliate of Jackson
National Life Insurance Company, the Company's largest shareholder. The Company
obtained a commitment dated April 14, 1997 from the PPM Fund to provide the
Bridge Loan ("Bridge Loan Commitment").

To date, the Company has not closed the Bridge Loan but pursuant to the
Letter of Intent with American Industrial Partners Capital Fund II, L.P.
("American Industrial Partners") (see below), the Company has agreed to close
the Bridge Loan at the time it consummates the Marion Acquisition.

Upon execution of the Bridge Loan Commitment, the Company paid a $550,000
Proposal and Commitment Fee to the PPM Fund. The Bridge Loan Commitment
provides for a fee of $450,000 (the "Facility Fee") to be paid upon the
signing of a definitive purchase agreement for Marion. The Bridge Loan
Commitment provided for a closing date of the Marion Acquisition of not
later than July 15, 1997. On June 30, 1997, the Company and the PPM Fund
agreed to extend the deadline for the closing date until August 30, 1997
(the "Extension Agreement"). As a condition to the Extension Agreement,
however, the PPM Fund required the Company to pay a $337,500 Extension Fee
and to pay the $450,000 Facility Fee at the time the Extension Agreement
was signed.

Although the Bridge Loan Commitment provided for certain compensation to be
paid to the PPM Fund in addition to the $1,337,500 in Commitment, Extension, and
Facility Fees already paid and certain other customary fees and charges, the
Company and the PPM Fund have agreed in principle to amend and restate the terms
of the Bridge Loan Commitment. However, the Company believes that it is
premature because it may be speculative and potentially misleading to describe
in this report what may be the provisions of the Bridge Loan Commitment, or to
estimate the amount and nature of the compensation which may be received by the
PPM Fund thereunder. The Company intends to file a further report summarizing
the terms of the Bridge Loan Commitment and to include the amended and restated
Bridge Loan Commitment as an exhibit to such report promptly after such
information becomes available.

On July 31, 1997, the Company announced that it has entered into a letter
of intent with American Industrial Partners, providing for the acquisition of
the Company by American Industrial Partners or one of its affiliates. Under
the terms of the letter of intent, American Industrial Partners would acquire
all of the shares of the Company at a price of $18 per share. The
transaction is subject to customary contingencies, including the execution of
a definitive agreement, financing, and shareholder, board of directors and
regulatory approvals. The transaction is not expected to have any effect on
the Company's aforementioned acquisition of Marion.

A copy of the Letter of Intent was filed as an exhibit to the Company's
current report on Form 8-K filed on August 4, 1997. The parties are presently
in the process of negotiating the definitive agreement contemplated by the
Letter of Intent. There can be no assurance that the acquisition by American
Industrial Partners will be consummated or, if consummated, that it will be
consummated on the terms set forth in the Letter of Intent.

<PAGE>

PART II
OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders.

On April 30, 1997, the Company held its annual meeting of
shareholders. The following indicates the matters which were
submitted to a vote of shareholders and the votes on such matters:

(a) The shareholders elected the following seven directors to serve
for the ensuing year:

Craig Scott Bartlett, Jr.:
Votes for: 10,183,249; Authority to Vote Withheld: 9,102;
Broker Non-Votes: 0.

Willard R. Hildebrand:
Votes for: 10,183,251; Authority to Vote Withheld: 9,100;
Broker Non-Votes: 0.

Frank W. Miller:
Votes for: 10,182,843; Authority to Vote Withheld: 9,508;
Broker Non-Votes: 0.

Joseph J. Radecki, Jr.:
Votes for: 10,183,251; Authority to Vote Withheld: 9,100;
Broker Non-Votes: 0.

F. John Stark, III:
Votes for: 10,183,199; Authority to Vote Withheld: 9,152;
Broker Non-Votes: 0.

Russell W. Swansen:
Votes for: 10,183,199; Authority to Vote Withheld: 9,152;
Broker Non-Votes: 0.

Armour F. Swanson:
Votes for: 10,183,197; Authority to Vote Withheld: 9,154;
Broker Non-Votes: 0.

(b) The shareholders ratified the appointment of Arthur Andersen LLP
to serve as independent auditors. Votes For: 10,181,251; Votes
Against: 4,287; Abstentions: 6,813.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits:

See Exhibit Index on last page of this report, which is
incorporated herein by reference.

(b) Reports on Form 8-K:

1. Items Reported:

A. Press release, dated April 8, 1997, issued by the
Company and Global announcing a letter of intent
relating to the proposed acquisition by the Company of
the assets of Marion from Global.

B. Press release, dated July 11, 1997, announcing financial
and operating results for the quarter and six months
ended June 30, 1997.

C. Press release, dated July 23, 1997, announcing the
execution of a definitive agreement for the acquisition
by the Company of the assets of Marion and the assets of
certain related businesses from Global.

D. Press release, dated July 31, 1997, announcing the
execution of a Letter of Intent with American Industrial
Partners, providing for the acquisition of the Company
by American Industrial Partners or one of its
affiliates.

E. Letter of Intent, dated July 30, 1997, between the
Company and American Industrial Partners, providing for
the acquisition of the Company by American Industrial
Partners or one of its affiliates.

2. Financial Statements: None

3. Date: August 1, 1997

<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 INTERNATIONAL, INC.
(Registrant)

Date August 14, 1997 /s/Craig R. Mackus
Craig R. Mackus
Secretary and Controller
Principal Accounting Officer

Date August 14, 1997 /s/Willard R. Hildebrand
Willard R. Hildebrand
President and CEO

<PAGE>

BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1997

Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference Herewith Number

10.1 Credit Agreement, Exhibit 10.1 to
dated as of Registrant's
December 14, 1994, Current Report
between Bank One, on Form 8-K,
Milwaukee, National dated December 14,
Association and 1994 ("Registrant's
Bucyrus-Erie Company December 14, 1994
("Credit Agreement"). 8-K").

10.2 Amendment No. 1 to Exhibit 10.1(a)
Credit Agreement to Registrant's
dated June 22, 1995. Quarterly Report
on Form 10-Q for
quarter ended
September 30, 1995
("Registrant's
September 30, 1995
10-Q").

10.3 Amendment No. 2 to Exhibit 10.1(b)
Credit Agreement to Registrant's
dated August 31, 1995. September 30, 1995
10-Q.

10.4 Amendment No. 3 to Exhibit 10.4 to
Credit Agreement dated Registrant's
October 27, 1995. Annual Report on
Form 10-K dated
March 25, 1996
("Registrant's
1995 10-K").

10.5 Amendment No. 4 to Exhibit 10.5 to
Credit Agreement dated Registrant's
December 29, 1995. 1995 10-K.

10.6 Amendment No. 5 to Exhibit 10.6 to
Credit Agreement dated Registrant's
December 29, 1995. 1995 10-K.

10.7 Amendment No. 6 to Exhibit 10.7 to
Credit Agreement dated Registrant's
February 1, 1996. 1995 10-K.

10.8 Amendment No. 7 to Exhibit 10.8 to
Credit Agreement dated Registrant's
February 8, 1996. 1995 10-K.

10.9 Amendment No. 8 to Exhibit 10.9 to
Credit Agreement dated Registrant's
May 17, 1996. Annual Report on
Form 10-K dated
March 11, 1997
("Registrant's
1996 10-K").

10.10 Amendment No. 9 to Exhibit 10.10 to
Credit Agreement dated Registrant's
May 20, 1996. 1996 10-K.

10.11 Amendment No. 10 to Exhibit 10.11 to
Credit Agreement dated Registrant's
May 20, 1996. 1996 10-K.

10.12 Amendment No. 11 to Exhibit 10.12 to
Credit Agreement dated Registrant's
December 31, 1996. 1996 10-K.

10.13 Amendment No. 12 to Exhibit 10.13 to
Credit Agreement dated Registrant's
March 14, 1997. Quarterly Report
on Form 10-Q for
quarter ended
March 31, 1997.

10.14 Amendment No. 13 to X
Credit Agreement dated
June 26, 1997.

10.15 Letter Agreement dated X
March 7, 1997 between
Jefferies & Company, Inc.
and Bucyrus International,
Inc.

10.16 Letter Agreement dated X
July 30, 1997 between
Jefferies & Company, Inc.
and Bucyrus International,
Inc.

10.17 Employment Agreement X
between Bucyrus
International, Inc.
as Employer and
C. R. Mackus as
Employee dated as of
May 21, 1997.

10.18 Employment Agreement X
between Bucyrus
International, Inc.
as Employer and
M. G. Onsager as
Employee dated as of
May 21, 1997.

10.19 Employment Agreement X
between Bucyrus
International, Inc.
as Employer and
T. B. Phillips as
Employee dated as of
May 21, 1997.

10.20 Employment Agreement X
between Bucyrus
International, Inc.
as Employer and
T. W. Sullivan as
Employee dated as of
May 21, 1997.

10.21 Bucyrus International, X
Inc. 1997 Employees'
Stock Option Awards
Program

27 Financial Data Schedule X
(EDGAR filing only.)

99.1 Press release announcing X
early termination by the
Federal Trade Commission
under the Hart-Scott-Rodino
Antitrust Improvements
Act of 1976 for the
acquisition by Bucyrus
International, Inc. of
the assets of The Marion
Power Shovel Company and
the assets of certain
related businesses from
Global Industrial
Technologies, Inc.

EXHIBIT 10.14
FORM 10-Q
QUARTER ENDED JUNE 30, 1997

THIRTEENTH AMENDMENT TO
CREDIT AGREEMENT

THIS THIRTEENTH AMENDMENT TO CREDIT AGREEMENT, dated as of
June 26, 1997, amends and supplements the Credit Agreement dated as of
December 14, 1994, as amended (the "Credit Agreement"), between BUCYRUS
INTERNATIONAL, INC. (the "Company") and BANK ONE, WISCONSIN (the "Bank").

RECITAL

The Company and the Bank desire to amend and supplement the Credit
Agreement as provided below.

AGREEMENTS

In consideration of the promises and agreements set forth in the
Credit Agreement, as amended hereby, the Company and the Bank agree as
follows:

1. Definition and References. Capitalized terms not defined
herein have the meanings assigned in the Credit Agreement. Upon the
fulfillment of the conditions set forth in section 3 below, all references to
the Credit Agreement contained in the Loan Documents shall mean the Credit
Agreement as amended by this Thirteenth Amendment to Credit Agreement.

2. Amendment. Subsections 2.16(b)(ix) and (x) of the Credit
Agreement are created to read as follows:

(ix) Project Financing Loan No. 9. The Bank agrees
to make advances, (in a minimum amount of $250,000 and in a
multiple of $50,000 above such minimum), subject to the terms and
conditions set forth in this Agreement, to finance the
construction of a 495-BI shovel, a 395-BIII shovel and related
equipment and accessories ("Project No. 9") to be sold by the
Company to Mexicana de Cananea, S.A. de C.V. and Mexicana de
Cobre, S.A. de C.V., respectively, pursuant to Purchase Order Nos.
84-14-24-1654-7 and 84-14-24-1653-7 dated March 4, 1997 (the
"Grupo Mexico Contract"), as follows:

(a) Maximum Loan Amount: $7,500,000 until the
495-BI shovel is shipped and paid for (less any retainage);
thereafter, $5,000,000.

(b) Limitation on Advances: The unpaid
principal balance of Project Financing Note No. 9 shall not at any
time prior to the shipment of the 495-BI shovel exceed the lesser
of (i) the Maximum Loan Amount or (ii) an amount equal to 100% of
the cost (determined in accordance with GAAP in a manner
consistent with the Company's historical accounting practices) of
the work-in-process inventory comprising Project No. 9 and (iii)
100% of the remaining payments (i.e., the contract purchase price
less payments already received) under the Grupo Mexico Contract.

After shipment of the 495-BI shovel, the unpaid
principal balance of Project Financing Note No. 9 shall not exceed
the lesser of (x) the Maximum Loan Amount, (y) the sum of 100% of
the cost (determined in accordance with GAAP in a manner
consistent with the Company's historical accounting practices) of
the remaining work-in-process inventory comprising Project No. 9
plus 100% of the amounts invoiced under the Grupo Mexico Contract
and (z) 100% of the remaining payments (i.e., the contract
purchase price less payments already received) under the Grupo
Mexico Contract

(c) Maturity Date: The aggregate principal
amount of Project Financing Note No. 9 and all accrued interest
shall be due upon the first to occur of (i) the receipt by the
Company of the final payment under the Grupo Mexico Contract or
(ii) December 31, 1997.

(d) Interest Rate: Reference Rate or the
Adjusted Libor Rate with the Applicable Libor Margin being 2.75%;
each Libor Rate Loan must be in a minimum amount of $250,000 and
have an Interest Period of one month.

(e) Interest Payment Dates: The last Business
Day of each month and on the Maturity Date.

(f) Facility Fee: (i) If the Credit Agreement
is not refinanced by August 15, 1997 (or such later date specified
by the Bank in writing), the Company agrees to pay $2,500 to the
Bank on such date; (ii) if the Project Financing Reserve is
reduced by the mutual agreement of the Company and the Bank, the
Company agrees to pay to the Bank on the date of such reduction a
fee equal to the greater of [1] 1/2 of 1% of the reduction in the
Project Financing Reserve or [2] $10,000; and (iii) if the Credit
Agreement is refinanced with another financial institution prior
to the Maturity Date, the Company agrees to pay to the Bank on the
date of such refinancing a fee of $25,000.

(g) Commitment Fee: As consideration for the
commitment of the Bank to provide the Project Financing to the
Company, the Company agrees to pay to the Bank on the last
Business Day of each month, commencing August 29, 1997, and on the
Maturity Date, a commitment fee equal to 1/4 of 1% per year on the
difference between the Maximum Loan Amount and the daily average
outstanding principal balance of Project Financing Note No. 9
during the preceding month or other applicable period. The
commitment fee shall begin to accrue on August 15, 1997 and no
commitment fee shall be payable for the period prior to that date.

(h) Prepayment of Project Financing Note No.
9: The Company may prepay Project Note No. 9 in whole or in part
at any time upon two Business Days prior notice to the Bank. The
Company shall prepay Project Financing Note No. 9 immediately upon
receipt (i) from the Bank of a notice (containing calculations in
reasonable detail) to the effect that the outstanding principal
balance of Project Financing Note No. 9 exceeds the limits set
forth in subsection (b) above in an amount equal to such excess
and (ii) of a payment on the Grupo Mexico Contract in an amount
equal to such payment. Any principal prepayment shall first be
applied to the amount, if any, of Project Financing Note No. 9
consisting of Reference Rate Loans and the balance to Libor Rate
Loans. Upon any principal prepayment of a Libor Rate Loan, the
Company shall also pay accrued interest thereon and any amount due
under section 2.14(c).

(i) Project Financing Reserve: 100%.

(i) Use of Proceeds: The Company shall use
the proceeds of Project Loan No. 9 solely to pay costs associated
with Project No. 9.

(x) Project Financing Loan No. 10. The Bank agrees
to make advances, (in a minimum amount of $250,000 and in a
multiple of $50,000 above such minimum), subject to the terms and
conditions set forth in this Agreement, to finance the
construction of a Model 495-B shovel and related equipment and
accessories ("Project No. 10") to be sold by the Company to Phelps
Dodge ("Phelps Dodge") pursuant to a Purchase Order No. 51400 (the
"Phelps Dodge Contract"), as follows:

(a) Maximum Loan Amount: $5,000,000.

(b) Limitation on Advances: Prior to shipment
of the shovel, the unpaid principal balance of Project Financing
Note No. 10 shall not at any time exceed the lesser of (i) the
Maximum Loan Amount or (ii) an amount equal to 100% of the cost
(determined in accordance with GAAP in a manner consistent with
the Company's historical accounting practices) of the work-in-
process inventory comprising Project No. 10 and (iii) 100% of the
remaining payments (i.e., the contract purchase price less
payments already received) under the Phelps Dodge Contract.

After shipment of the shovel, the unpaid principal
balance of Project Financing Note No. 10 shall not at any time
exceed the lesser of (i) the Maximum Loan Amount or (b) 100% of
the outstanding amount invoiced by the Company under the Phelps
Dodge Contract and (iii) 100% of the remaining payments (i.e., the
contract purchase price less payments already received) under the
Phelps Dodge Contract

(c) Maturity Date: The aggregate principal
amount of Project Financing Note No. 10 and all accrued interest
shall be due upon the first to occur of (i) the receipt by the
Company of the final payment under the Phelps Dodge Contract or
(ii)August 31, 1997.

(e) Interest Payment Dates: The last Business
Day of each month and on the Maturity Date.

(f) Facility Fee: (i) If the Credit Agreement
is not refinanced by August 15, 1997 (or such later date specified
by the Bank in writing), the Company agrees to pay $2,500 to the
Bank on such date, (ii) if the Project Financing Reserve is
reduced by the mutual agreement of the Company and the Bank, the
Company agrees to pay to the Bank on the date of such reduction a
fee equal to the greater of [1] 1/2 of 1% of the reduction in the
Project Financing Reserve or [2] $10,000 and (iii) if the Credit
Agreement is refinanced with another financial institution prior
to the Maturity Date, the Company agrees to pay to the Bank on the
date of such refinancing a fee of $25,000. There fees are in
addition to any fees payable under section 2.16(b)(ix)(f).

(g) Commitment Fee: As consideration for the
commitment of the Bank to provide the Project Financing to the
Company, the Company agrees to pay to the Bank on the Maturity
Date, a commitment fee equal to 1/4 of 1% per year on the
difference between the Maximum Loan Amount and the daily average
outstanding principal balance of Project Financing Note No. 10
during the period from August 15, 1997 to the Maturity Date. The
commitment fee shall begin to accrue on August 15, 1997 and no
commitment fee shall be payable for the period prior to that date.

(h) Prepayment of Project Financing Note No.
10: The Company may prepay Project Note No. 10 in whole or in
part at any time upon two Business Days prior notice to the Bank.
The Company shall prepay Project Financing Note No. 10 immediately
upon receipt (i) from the Bank of a notice (containing
calculations in reasonable detail) to the effect that the
outstanding principal balance of Project Financing Note No. 10
exceeds the limits set forth in subsection (b) above in an amount
equal to such excess and (ii) of a payment on the Phelps Dodge
Contract in an amount equal to such payment. Any principal
prepayment shall first be applied to the amount, if any, of
Project Financing Note No. 10 consisting of Reference Rate Loans
and the balance to Libor Rate Loans. Upon any principal
prepayment of a Libor Rate Loan, the Company shall also pay
accrued interest thereon and any amount due under section 2.14(c).

(h) Project Financing Reserve: 100%.

(i) Use of Proceeds: The Company shall use
the proceeds of Project Loan No. 10 solely to pay costs associated
with Project No. 10.

(j) Delivery of Phelp Dodge Contract: The Company
will deliver a copy of the executed purchase order for Project No. 10 to the
Bank before requesting an advance under Project Loan No. 10.

3. Closing Conditions. This Thirteenth Amendment to Credit
Agreement shall be effective upon its execution and delivery by the Company
and the Bank and the receipt by the Bank of:

(a) Project Financing Note Nos. 9 and 10, duly executed by
the Company;

(b) An opinion of counsel to the Company satisfactory to
the Bank; and

4. Representations and Warranties. The Company represents and
warrants to the Bank that:

(a) The execution and delivery of this Thirteenth
Amendment and Project Financing Note Nos. 9 and 10 are within the Company's
corporate power and corporate authority, have been duly authorized by all
necessary corporate action on the part of the Company, are not in violation of
any existing law, rule or regulation of any governmental agency or authority,
any order or decision of any court, the certification of incorporation or by-
laws of the Company or the terms of any agreement, restriction or undertaking
to which the Company is a party or by which it is bound, do not require the
approval or consent of the shareholders of the Company, any governmental body,
agency or authority or any other person or entity.

(b) The representations and warranties set forth in
section 3 of the Credit Agreement are true and correct in all material
respects as of the date of this Thirteenth Amendment to Credit Agreement and
no Default or Event of Default has occurred and is continuing.

5. Cash Interest Payment. The Bank consents to the Company
making a cash interest payment on June 30, 1997 of the interest accrued on the
Secured Notes during the period from January 1, 1997 through June 30, 1997.

6. Costs and Expenses. The Company agrees to pay all costs and
expenses (including reasonable attorneys' fees) paid or incurred by the Bank
in connection with the execution and delivery of this Thirteenth Amendment and
the consummation of the transactions contemplated hereby.

7. Full Force and Effect. The Company and the Bank confirm
that the Credit Agreement, as amended hereby, remains in full force and
effect.
BANK ONE, WISCONSIN
BY /s/William E. Shaw, VP
William E. Shaw, Vice President

BUCYRUS INTERNATIONAL, INC.

BY /s/John F. Bosbous
Its Assistant Treasurer

<PAGE>

PROJECT FINANCING NOTE NO. 9

$7,500,000 Milwaukee, Wisconsin
June 26, 1997

FOR VALUE RECEIVED, on or before the Maturity Date set forth in
section 2.16(b)(ix) of the Credit Agreement referred to below, the
undersigned, BUCYRUS INTERNATIONAL, INC., a Delaware corporation, promises to
pay to the order of BANK ONE, WISCONSIN (the "Bank") the principal sum of
Seven Million Five Hundred Thousand Dollars, or such lesser amount as is shown
to be outstanding according to the records of the Bank, together with interest
on the principal balance outstanding from time to time at such rates and
payable at such times as set forth in the Credit Agreement.

Payments of both principal and interest are to be made in
immediately available funds in lawful currency of the United States of America
at the office of the Bank, 111 East Wisconsin Avenue, Milwaukee, Wisconsin, or
such other place as the holder hereof shall designate to the undersigned in
writing.

This Note is Project Financing Note No. 9 issued pursuant to the
Credit Agreement dated as of December 14, 1994, as amended, between the
undersigned and the Bank, to which Agreement reference is made for rights and
obligations as to prepayment and acceleration of maturity.

The undersigned agrees to pay all costs of collection, including
reasonable attorneys' fees.

BUCYRUS INTERNATIONAL, INC.

BY /s/John F. Bosbous
Its Assistant Treasurer

<PAGE>

PROJECT FINANCING NOTE NO. 10

$5,000,000 Milwaukee, Wisconsin
June 26, 1997

FOR VALUE RECEIVED, on or before the Maturity Date set forth in
section 2.16(b)(x) of the Credit Agreement referred to below, the undersigned,
BUCYRUS INTERNATIONAL, INC., a Delaware corporation, promises to pay to the
order of BANK ONE, WISCONSIN (the "Bank") the principal sum of Five Million
Dollars, or such lesser amount as is shown to be outstanding according to the
records of the Bank, together with interest on the principal balance
outstanding from time to time at such rates and payable at such times as set
forth in the Credit Agreement.

This Note is Project Financing Note No. 10 issued pursuant to the
Credit Agreement dated as of December 14, 1994, as amended, between the
undersigned and the Bank, to which Agreement reference is made for rights and
obligations as to prepayment and acceleration of maturity.

The undersigned agrees to pay all costs of collection, including
reasonable attorneys' fees.

BUCYRUS INTERNATIONAL, INC.

BY /s/John F. Bosbous
Its Assistant Treasurer

EXHIBIT 10.15
FORM 10-Q
QUARTER ENDED JUNE 30, 1997

Jefferies & Company, Inc.

11100 Santa Monica Boulevard, 10th Floor
Los Angles, California 90025
Telephone (310) 575-5200 (800) 933-6656
CORPORATE FINANCE Fax (310) 575-5165

March 7, 1997

Mr. Williard R. Hildebrand
Chief Executive Officer
BUCYRUS INTERNATIONAL, INC.
1100 Milwaukee Avenue
South Milwaukee, WI 53172

Dear Mr. Hildebrand:

This letter agreement (the "Agreement") confirms that Bucyrus
International, Inc. (the "Company") has engaged Jefferies & Company, Inc.
("Jefferies" or the "Financial Advisor") to act as exclusive financial advisor
to the Company in connection with the Company's proposed acquisition (the
"Acquisition") of Marion Power Shovel ("Marion").

1. Retention. The Company hereby retains Jefferies as its exclusive
financial advisor in connection with the Acquisition.

2. Information on the Company. The Company recognizes and confirms
that in rendering services hereunder, the Financial Advisors have been, prior
to the date hereof, and hereinafter will be, using and relying on and assuming
the accuracy of, without independent verification, data, material and other
information with respect to the Company, furnished to the Financial Advisors
by or on behalf of the Company and their agents, counsel, employees and
representatives (the "Information").

The Financial Advisor with perform due diligence; however, the Company
recognizes and confirms that the Financial Advisor: (a) will use and rely
primarily on the Information and on information available from generally
recognized public sources in performing the services contemplated by this
Agreement without having independently verified the same; (b) does not assume
responsibility for the accuracy or completeness of the Information and such
other information, (c) will not make an appraisal of any assets of the Company
or Marion; and (d) retains the right to continue to perform due diligence on
the Company during the course of the engagement. The Company represents and
warrants that any prospectus, placement memorandum or similar disclosure
materials utilized by the Company in connection with the Acquisition will not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
in which they were made, not false or misleading. The Financial Advisor
agrees to keep the Information confidential so long as it is and remains non-
public, unless disclosure is required by law or requested by any government,
regulatory or self-regulatory agency or body, and the Financial Advisor will
not make use thereof, except in connection with our services hereunder for the
Company.

3. Use of Name. The Company agrees that any reference to the
Financial Advisor in any release, communication, or material distributed to
prospective purchasers of the Notes, is subject to the Financial Advisor's
prior written approval. If the Financial Advisor resigns prior to the
dissemination of any such release, communication or material, no reference
shall be made therein to the Financial Advisor despite any prior written
approval which may have been given therefor.

4. Use of Advice. No advice rendered by the Financial Advisor in
connection with the services performed by the Financial Advisor pursuant to
this Agreement will be quoted by either party hereof, nor will any such advice
be referred to, in any report, document, release or other communication,
whether written or oral, prepared, issued or transmitted by such party or any
person or corporation controlling, controlled by or under common control with
such party or any director, officer, employee, agent or representative of any
such party, without the prior written authorization of both parties hereto,
except to the extent required by law (in which case the appropriate party
shall so advise the other in writing prior to such use an shall consult with
the other with respect to the form and timing of disclosure), provided that
the foregoing shall not prohibit appropriate internal communication or
reference with respect to such advice internally within such parties.

5. Compensation. In full payment for services rendered and to be
rendered hereunder by Jefferies, the Company agrees to pay to Jefferies as
follows:

(a) In consideration of the services rendered by Jefferies
hereunder as exclusive financial advisor in connection with the Acquisition,
the Company agrees to pay to Jefferies in cash, immediately upon execution of
this Agreement, $100,000 as a one-time retainer fee (the "Retainer").

(b) The Company agrees to pay Jefferies a fee of $150,000 in
cash for delivery of any fairness opinion issued in conjunction with the
Acquisition contemplated herein, payable immediately upon execution of such
fairness opinion.

(c) In consideration of the services rendered by Jefferies
hereunder as exclusive financial advisor in connection with the Acquisition,
the Company agrees to pay to Jefferies in cash upon the successful
consummation of the Acquisition, $250,000 as a success fee (the "Success
Fee").

(d) In addition to the compensation to be paid to Jefferies as
provided in Sections 5(a), 5(b) and 5(c) hereof, the Company shall pay to, or
on behalf of, Jefferies, promptly as billed, all out-of-pocket expenses
incurred by Jefferies in connection with its services to be rendered hereunder
(including, without limitation, the fees and disbursements of Jefferies'
counsel, travel and lodging expenses, word processing charges, messenger and
duplicating services, facsimile expenses and other customary expenditures).

(e) Jefferies may resign at any time and the Company may
terminate Jefferies' services at any time, each by giving notice to the other.
If Jefferies resigns or the Company terminates Jefferies' services for any
reason, Jefferies and its counsel shall be entitled to receive all of the
amounts due pursuant to Sections 5(a), 5(b), 5(c) and 5(d) hereof up to and
including the effective date of such termination or resignation, as the case
may be. In addition, if Jefferies' services hereunder are terminated by the
Company, and the Company completes a transaction similar to the Acquisition
contemplated herein within one year of Jefferies being terminated, then the
Company shall pay Jefferies within five (5) days of the closing of such
transaction in cash the fees as outlined in Sections 5(a), 5(b) and 5(c), as
applicable.

(f) No fee paid or payable to Jefferies or any of its affiliates
shall be credited against any other fee paid or payable to Jefferies or any of
its affiliates.

6. Representations and Warranties. The Company represents and
warrants to Jefferies that this Agreement has been duly authorized, executed
and delivered by the Company; and, assuming the due execution by the Financial
Advisor, constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company, in accordance with its terms. The Company
represents that, to the best of its knowledge, the Information will not, when
delivered and at the closing of the Acquisition, contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein in light of the circumstances under which they were made
not misleading. The Company agrees to advise the Financial Advisor promptly
of the occurrence of any event or any other change prior to the closing known
to it which results in the Information containing any untrue statement of a
material fact or omitting to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.

7. Indemnity. In partial consideration of the services to be
rendered hereunder the Company agrees to indemnify Jefferies and certain other
indemnified persons in accordance with Schedule A attached hereto.

8. Survival of Certain Provisions. The indemnity and contribution
agreements contained in Schedule A to this Agreement, the representations and
warranties of the Company contained in Section 6 of this Agreement, and the
provisions of Sections 3, 4, 5 and this Section 9 of this Agreement shall
remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of the Financial Advisor, or by or on
behalf of any affiliate of the Financial Advisor or any person controlling
either, (b) completion of the Acquisition, (c) the resignation of the
Financial Advisor or any termination of the Financial Advisor's services or
(d) any expiration or termination of this Agreement, and shall be binding
upon, and shall inure to the benefit of, any successors, assigns, heirs and
personal representatives of the Company, the Financial Advisor, and the
Indemnified Persons identified in Schedule A.

9. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered (a) if to the
Company, at the address set forth above, and (b) if to Jefferies, at the
offices of Jefferies at 11100 Santa Monica Boulevard, Suite 1000, Los Angeles,
California 90025, Attention: Jerry M. Gluck, Executive Vice President and
General Counsel.

10. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.

11. Third Party Beneficiaries. This Agreement has been and is made
solely for the benefit of the Company, the Financial Advisor and the other
Indemnified Persons referred to in Schedule A hereof and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement.

12. Construction. This Agreement incorporates the entire
understanding of the parties and supersedes all previous agreements relating
to the subject matter hereof should they exist and shall be governed by, and
construed in accordance with, the laws of the State of New York, without
regard to principles of conflicts of law.

13. Headings. The section headings in this Agreement have been
inserted as a matter of convenience of reference and are not part of this
Agreement.

14. Press Announcements. At any time after the consummation or other
public announcement of the Acquisition, the Financial Advisor may place an
announcement in such newspapers and publications as it may choose, stating
that the Financial Advisor has acted as exclusive financial advisor to the
Company in connection with the Acquisition contemplated by this Agreement.

15. Amendment. This Agreement may not be modified or amended except
in a writing duly executed by the parties hereto.

16. Term. Except as provided herein, this Agreement shall run from
the date of this letter to a date of one year thereafter, unless extended by
mutual consent of the parties (the "Term").

Please sign and return an original and one copy of this letter to the
undersigned to indicate your acceptance of the terms set forth herein,
whereupon this letter and your acceptance shall constitute a binding agreement
between the Company and Jefferies as of the date first above written.

Sincerely,

JEFFERIES & COMPANY, INC.

By /s/Joseph J. Radecki, Jr.
Joseph J. Radecki, Jr.
Executive Vice President

Accepted and Agreed:
BUCYRUS INTERNATIONAL, INC.

By /s/W.R. Hildebrand
Mr. Williard R. Hildebrand
Chief Executive Officer

<PAGE>

SCHEDULE A

March 7, 1997

JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, CA 90025

Ladies and Gentlemen:

This letter agreement is entered into pursuant to, and in order to
induce Jefferies & Company, Inc. ("Jefferies" or the "Financial Advisor") to
enter into, the engagement letter dated March 7, 1997 (the "Agreement")
between Bucyrus International, Inc. (the "Company") and Jefferies. Unless
otherwise noted, all capitalized terms used herein shall have the meanings set
forth in the Agreement.

Since Jefferies will be acting on behalf of the Company in connection
with the transactions contemplated by the Agreement, and as part of the
consideration for the agreement of Jefferies to furnish its services pursuant
to such Agreement, the Company agrees to indemnify and hold harmless Jefferies
and its affiliates and their officers, directors, partners, counsel, employees
and agents, and any other persons controlling Jefferies or any of its
respective affiliates within the meaning of either Section 15 of the
Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934,
and the respective agents, employees, officers, directors, partners, counsel
and shareholders of such persons (Jefferies and each such other person being
referred to as an "Indemnified Person"), to the fullest extent lawful, from
and against all claims, liabilities, losses, damages and expenses (or actions
in respect thereof) related to or arising out of (i) actions taken or omitted
to be taken by the Company, its affiliates, employees or agents, (ii) actions
taken or omitted to be taken by any Indemnified Person (including acts or
omissions constituting ordinary negligence) pursuant to the terms of, or in
connection with services rendered pursuant to, the Agreement or any
transaction or proposed transaction contemplated thereby or any Indemnified
Person's role in connection therewith, provided, however, that the Company
shall not be responsible for any losses, claims, damages, liabilities or
expenses of any Indemnified Person to the extent that it is finally judicially
determined that they result solely from actions taken or omitted to be taken
by such Indemnified Person in bad faith or to be due primarily to such
Indemnified Person's gross negligence, and (iii) any untrue statement or
alleged untrue statement of a material fact contained in the Information, or
in any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading.

Each Indemnified Person shall give prompt written notice to the Company
after the receipt by such Indemnified Person of any written notice of the
commencement of any action, suit or proceeding for which such Indemnified
Person will claim indemnification or contribution pursuant to this Agreement.
The Company shall have the right, exercisable by giving written notice to an
Indemnified Person within 10 business days after the receipt of written notice
from such Indemnified Person of such commencement, to assume, at its expense,
the defense of any such action, suit or proceeding; provided, however, that an
Indemnified Person shall have the right to employ counsel in any such action,
suit or proceeding, and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified
Person unless: (i) the Company fails to assume the defense of such action,
suit or proceeding or fails to employ separate counsel reasonably satisfactory
to such Indemnified Person in any such action, suit or proceeding; or (ii) the
Company and such Indemnified Person shall have been advised by counsel that
there may be one or more defenses available to such Indemnified Person which
are in conflict with, different from or additional to those available to the
Company, any of its affiliates, or another Indemnified Person, as the case may
be (in which case, if such Indemnified Person notifies the Company in writing
that it elects to employ separate counsel at the expense of the Company, the
Company shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Indemnified Person); it being understood,
however, that the Company shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time acting for each
Indemnified Person in any one jurisdiction. The Company shall not settle or
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any pending or threatened action, claim, suit or proceeding in which
any Indemnified Person is or could be a party and as to which indemnification
or contribution could have been sought by such Indemnified Person hereunder
(whether or not such Indemnified Person is a party thereto), unless such
Indemnified Person has given its prior written consent or the settlement,
compromise, consent or termination includes an express unconditional release
of such Indemnified Person, satisfactory in form and substance to such
Indemnified Person, from all losses, claims, damages or liabilities arising
out of such action, claim, suit or proceeding.

If for any reason (other than the bad faith or gross negligence of an
Indemnified Person as provided above) the foregoing indemnity is unavailable
to an Indemnified Person or insufficient to hold and Indemnified Person
harmless, then the Company, to the fullest extent permitted by law, shall
contribute to the amount paid or payable by such Indemnified Person as a
result of such claims, liabilities, losses, damages or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and by Jefferies on the other, from the transaction or
proposed transaction under the Agreement or, if allocation on that basis is
not permitted under applicable law, in such proportion as is appropriate to
reflect not only the relative benefits received by the Company on the one hand
and by Jefferies on the other, but also the relative fault of the Company and
Jefferies, as well as any relevant equitable considerations. Notwithstanding
the provisions hereof, the aggregate contribution of all Indemnified Persons
to all claims, liabilities, losses, damages and expenses shall not exceed the
amount of fees actually received by Jefferies pursuant to the Agreement. It
is hereby further agreed that the relative benefits to the Company on the one
hand and Jefferies on the other with respect to any transaction or proposed
transaction contemplated by the Agreement shall be deemed to be in the same
proportion as (i) the total value of the transaction bears to (ii) the fees
paid to Jefferies with respect to such transaction. The relative fault of the
Company on the one hand and Jefferies on the other with respect to the
transaction shall be determined by reference to, among other things, whether
any untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or by Jefferies and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. No Indemnified Person shall have any liability to the Company or
any other officer, director, employee or affiliate thereof in connection with
the services rendered pursuant to the Agreement except for any liability for
claims, liabilities, losses or damages finally judicially determined to have
resulted primarily from actions taken or omitted to be taken by such
Indemnified Person in bad faith or as a result of gross negligence. The
indemnity, contribution and expense reimbursement obligations set forth herein
(i) shall be in addition to any liability the Company may have to any
Indemnified Person at common law or otherwise, (ii) shall survive the
expiration of the Term, (iii) shall apply to any modification of Jefferies'
engagement and shall remain in full force and effect following the completion
or termination of the Agreement, (iv) shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of Jefferies
or any other Indemnified Person and (v) shall be binding on any successor or
assign of the Company and successors or assigns to all or substantially all of
the Company's business and assets.

In addition, the Company agrees to reimburse the Indemnified Persons for
all expenses (including fees and expenses of counsel) as they are incurred in
connection with investigating, preparing or defending any such action or
claim, whether or not in connection with litigation in which any Indemnified
Person is a named party. If any of Jefferies' personnel appears as witnesses,
are deposed or are otherwise involved in the defense of any action against
Jefferies, the Company or the Company's directors, the Company will pay
Jefferies (i) with respect to each day that one of Jefferies' professional
personnel appears as a witness or is deposed and/or (ii) with respect to each
day that one of Jefferies' professional personnel is involved in the
preparation therefor, (a) a fee of $2,000 per day for each such person with
respect to each appearance as a witness or for a deposition and (b) at a rate
of $200 per hour with respect to each hour of preparation for any such
appearance and the Company will reimburse Jefferies for all reasonable
expenses incurred by Jefferies by reason of any of its personnel being
involved in any such action.

Sincerely,

BUCYRUS INTERNATIONAL, INC.

By /s/W. R. Hildebrand
Williard R. Hildebrand
Chief Executive Officer

Accepted and Agreed:
JEFFERIES & COMPANY, INC.

By /s/Joseph J. Radecki, Jr.
Joseph J. Radecki, Jr.
Executive Vice President

EXHIBIT 10.16
FORM 10-Q
QUARTER ENDED JUNE 30, 1997

Jefferies & Company, Inc.

11100 Santa Monica Boulevard, 10th Floor
Los Angles, California 90025
Telephone (310) 575-5200 (800) 933-6656
CORPORATE FINANCE Fax (310) 575-5165

July 30, 1997

Mr. Williard R. Hildebrand, II
Chief Executive Officer
BUCYRUS INTERNATIONAL, INC.
1100 Milwaukee Avenue
South Milwaukee, WI 53172

Dear Mr. Hildebrand:

This letter agreement (the "Agreement") confirms that Bucyrus
International, Inc. (the "Company") has engaged Jefferies & Company, Inc.
("Jefferies" or the "Financial Advisor") to act as exclusive financial advisor
to the Company in connection with the proposed acquisition of the Company (the
"Acquisition") by American Industrial Partners or another party (the
"Purchaser").

1. Retention. The Company hereby retains Jefferies as its exclusive
financial advisor in connection with the Acquisition.

2. Information on the Company. The Company recognizes and confirms
that in rendering services hereunder, the Financial Advisor has been, prior to
the date hereof, and hereinafter will be, using and relying on and assuming
the accuracy of, without independent verification, data, material and other
information with respect to the Company, furnished to the Financial Advisor by
or on behalf of the Company and their agents, counsel, employees and
representatives (the "Information").

The Company recognizes and confirms that the Financial Advisor: (a) will
use and rely primarily on the Information and on information available from
generally recognized public sources in performing the services contemplated by
this Agreement without having independently verified the same; (b) does not
assume responsibility for the accuracy or completeness of the Information and
such other information; (c) will not make an appraisal of any assets of the
Company or the Purchaser; and (d) retains the right to continue to perform due
diligence during the course of the engagement. The Company represents and
warrants that any prospectus, placement memorandum or similar disclosure
materials utilized by the Company in connection with the Acquisition will not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
in which they were made, not false or misleading. The Financial Advisor
agrees to keep the Information confidential so long as it is and remains non-
public, unless disclosure is required by law or requested by any government,
regulatory or self-regulatory agency or body, and the Financial Advisor will
not make use thereof, except in connection with our services hereunder for the
Company.

3. Use of Name. The Company agrees that any reference to the
Financial Advisor in any release, communication, or material distributed by
the Company, is subject to the Financial Advisor's prior written approval. If
the Financial Advisor resigns prior to the dissemination of any such release,
communication or material, no reference shall be made therein to the Financial
Advisor despite any prior written approval which may have been given therefor.

4. Use of Advice. Except as provided in Section 5(b) below, no
advice rendered by the Financial Advisor in connection with the services
performed by the Financial Advisor pursuant to this Agreement will be quoted
by either party hereto, nor will any such advice be referred to, in any
report, document, release or other communication, whether written or oral,
prepared, issued or transmitted by such party or any person or corporation
controlling, controlled by or under common control with such party or any
director, officer, employee, agent or representative of any such party,
without the prior written authorization of both parties hereto, except to the
extent required by law (in which case the appropriate party shall so advise
the other in writing prior to such use and shall consult with the other with
respect to the form and timing of disclosure), provided that the foregoing
shall not prohibit appropriate internal communication or reference with
respect to such advice internally within such parties.

5. Compensation. In full payment for services rendered and to be
rendered hereunder by Jefferies, the Company agrees to pay to
Jefferies as follows:

(a) In consideration of the services rendered by Jefferies
hereunder as exclusive financial advisor in connection with the Acquisition,
the Company agrees to pay to Jefferies in cash, immediately upon execution of
this Agreement, $250,000 as a one-time retainer fee (the "Retainer").

(b) The Company agrees to pay Jefferies a fee of $250,000 in
cash for the fairness opinion issued in conjunction with the Acquisition
contemplated herein, payable immediately upon delivery of such fairness
opinion.

(f) No fee paid or payable to Jefferies or any of its affiliates
shall be credited against any other fee paid or payable to Jefferies or any of
its affiliates.

7. Indemnity. In partial consideration of the services to be
rendered hereunder the Company agrees to indemnify Jefferies and certain other
Indemnified Persons in accordance with Schedule A attached hereto.

8. Survival of Certain Provisions. The indemnity and contribution
agreements contained in Section 7 and Schedule A to this Agreement, the
representations and warranties of the Company contained in Section 6 of this
Agreement, and the provisions of Sections 5 of this Agreement shall remain
operative and in full force and effect regardless of (a) any investigation
made by or on behalf of the Financial Advisor, or by or on behalf of any
affiliate of the Financial Advisor or any person controlling either, (b)
completion of the Acquisition, (c) the resignation of the Financial Advisor or
any termination of the Financial Advisor's services or (d) any expiration or
termination of this Agreement, and shall be binding upon, and shall inure to
the benefit of, any successors, assigns, heirs and personal representatives of
the Company, the Financial Advisor, and the Indemnified Persons identified in
Schedule A.

10. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.

13. Headings. The section headings in this Agreement have been
inserted as a matter of convenience of reference and are not part of this
Agreement.

15. Amendment. This Agreement may not be modified or amended except
in a writing duly executed by the parties hereto.

16. Term. Except as provided herein, this Agreement shall run from
the date of this letter to a date of one year thereafter, unless extended by
mutual consent of the parties (the "Term").

Sincerely,

JEFFERIES & COMPANY, INC.

By /s/David J. Losito
Joseph J. Radecki, Jr.
Executive Vice President

Accepted and Agreed:
BUCYRUS INTERNATIONAL, INC.

By /s/W.R. Hildebrand
Mr. Williard R. Hildebrand
Chief Executive Officer

<PAGE>

SCHEDULE A

July 30, 1997

JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, CA 90025

Ladies and Gentlemen:

This letter agreement is entered into pursuant to, and in order to
induce Jefferies & Company, Inc. ("Jefferies" or the "Financial Advisor") to
enter into, the engagement letter dated July 30, 1997 (the "Agreement")
between Bucyrus International, Inc. (the "Company") and Jefferies. Unless
otherwise noted, all capitalized terms used herein shall have the meanings set
forth in the Agreement.

Sincerely,

BUCYRUS INTERNATIONAL, INC.

By /s/W. R. Hildebrand
Williard R. Hildebrand
Chief Executive Officer

Accepted and Agreed:
JEFFERIES & COMPANY, INC.

By /s/David J. Losito
Joseph J. Radecki, Jr.
Executive Vice President

EXHIBIT 10.17
FORM 10-Q
QUARTER ENDED JUNE 30, 1997

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made this 21st day of May, 1997, by and
between BUCYRUS INTERNATIONAL, INC., a Delaware corporation (the "Company"),
and CRAIG R. MACKUS ("Employee").

WHEREAS, the Company desires to employ Employee as Secretary and
Controller, and Employee desires to accept the employment offered by the
Company.

NOW, THEREFORE, in consideration of the premises and for the mutual
consideration hereinafter set forth, the parties agree as follows:

1. Position. Employee shall be employed by the Company as Secretary
and Controller upon the terms and conditions contained herein.

2. Salary. During the term of this Agreement, the Company shall pay
Employee an annual base salary of One Hundred Thirty Thousand Three Hundred
Eighty Dollars ($130,380.00), minus applicable withholdings, in accordance
with the Company s normal payroll practices (the "Base Salary"). The Base
Salary is subject to merit increases in accordance with the Company s normal
salary merit increase review policy.

3. Benefit Plans. During the term of this Agreement, Employee shall
be entitled to participate in such employee benefit and fringe benefit plans
as the Company shall provide to other similarly situated management employees.

4. Duration and Termination.

(a) Duration. Subject to termination as provided below, this
Agreement and Employee's employment hereunder shall begin on the date hereof,
continue for a period of one (1) year, and automatically renew thereafter for
successive one year terms unless either party gives the other party sixty (60)
days written notice that this Agreement and Employee's employment shall
terminate on the last day of the original term or any renewal term, as the
case may be.

(b) Termination Without Cause. This Agreement and Employee's
employment may be terminated by either party without Cause (as defined in
Paragraph 4(c)) at any time by giving at least sixty (60) days written notice
to the other party of the intent to do so.

(c) Termination by the Company for Cause. The Company shall
have the right to terminate this Agreement and Employee's employment hereunder
in the event of any of the following (which shall constitute "Cause"): (i)
fraud, dishonesty, or misconduct by Employee in connection with the business
of the Company; (ii) commission by Employee of a felony; or (iii) a material
breach by Employee of the terms of this Agreement.

(d) Termination Upon Death or Disability. This Agreement and
Employee's employment hereunder shall immediately terminate in the event of
Employee's death or Disability (as hereinafter defined). For purposes of this
Agreement, Employee shall be deemed to have suffered a "Disability" in the
event that a physician selected by the Company determines that Employee, due
to a physical or mental condition, is unable to substantially perform his
duties hereunder for a period of at least ninety (90) days.

5. Compensation upon Termination. Upon termination of Employee's
employment under this Agreement, all of the Company's obligation to pay
Employee compensation and provide benefits under this Agreement shall
terminate, except that in the event Employee's employment is terminated by the
Company based on notice provided by the Company pursuant to Paragraph 4(a) or
4(b), Employee shall be entitled to (1) continuation of his Base Salary and
health insurance and pension benefits (to the extent coverage terms permit)
for a period of one (1) year from the date of such termination (the "Severance
Period"), payable in accordance with the Company's normal payroll practices;
and (2) out-placement consulting services from a firm selected by the Company
at a total cost not to exceed Fifteen Thousand Dollars ($15,000). The Company
shall have the right to discontinue payments or other benefits hereunder in
the event Employee breaches the restrictions in Paragraph 7 or 8 or any such
restriction is determined to be unenforceable in any respect.

6. Change of Control.

(a) Definitions. For purposes of this Paragraph 6:

(i) "Act" shall mean the Securities Act of 1934.

(ii) A "Change of Control" of the Company shall be deemed
to have occurred when:

(A) Securities of the Company representing more than
50% of the combined voting power of the Company's then outstanding
voting securities are acquired, directly or indirectly, by any Person
who did not on the date of this Agreement own, directly or indirectly,
5% or more of the combined voting power of the Company's voting
securities outstanding on the date of this Agreement.

(B) A merger or consolidation of the Company with
any other corporation is completed as a result of which less than 50% of
the outstanding voting securities of the surviving or resulting entity
are owned by the former shareholders of the Company (other than a
shareholder who is an "affiliate," as defined in the Act, of any party
to such consolidation or merger).

(C) The sale of substantially all of the Company's
assets is completed to a corporation which is not a wholly-owned
subsidiary of the Company.

(iii) "Person" shall have the meaning used in
Section 3(a)(9) of the Act.

(iv) "Effective Date" shall mean the date a Change of
Control becomes effective.

(v) "Good Reason" shall mean the occurrence of any one or
more of the following events without Employee's
express written consent:

(A) (1) The assignment of Employee to duties
materially inconsistent with Employee's authorities, duties, responsibilities,
and status (including offices, titles, and reporting requirements) pursuant to
Paragraph 1, or (2) relocation of Employee's regular place of employment to a
location more than fifty (50) miles from the location as of the Effective
Date.

(B) A reduction by the Company in Employee's Base
Salary as in effect on the Effective Date.

(C) A material reduction in Employee's level of
participation in any of the Company's short- and/or long-term incentive
compensation plans, or employee benefit or retirement plans, policies or
practices, in which Employee participates as of the Effective Date.

(vi) "Qualifying Termination" shall mean any termination of
Employee's employment other than: (A) by the Company
for Cause (as defined in Paragraph 4(c) hereof); (B)
by reason of death, Disability (as defined in
Paragraph 4(d) hereof), or Retirement (as such term is
then defined in the Company's tax qualified defined
benefit retirement plan); or (C) by Employee pursuant
to Paragraph 4(a) or 4(b) without Good Reason. In the
event Employee shall terminate this Agreement for Good
Reason, Employee's notice of termination pursuant to
Paragraph 4(a) or 4(b) shall set forth the facts and
circumstances claimed to provide a basis for such
termination.

(b) Employment Termination. In the event of a Qualifying
Termination on, or within twelve (12) months after, the Effective Date, then
in addition to the compensation and benefits provided to Employee under the
provisions of Paragraph 5 of this Agreement, the Company shall, at the
expiration of the Severance Period, as an additional severance benefit, make a
lump sum payment to Employee in an amount equal to one-half of Employee's
annual Base Salary.

(c) Vesting of Options. In the event of a Qualifying
Termination on, or within twelve (12) months after, the Effective Date,
Employee's unvested Stock Options shall automatically be fully vested and
exercisable as of the Effective Date.

7. Confidentiality. Employee shall keep confidential and not divulge
to any other person or entity, during the term of employment or thereafter,
any Confidential Information of the Company. For purposes hereof,
"Confidential Information" shall mean any of the business secrets, trade
secrets, drawings, engineering data, plans, strategies, policies, methods,
marketing plans, customer purchasing history, customer lists, cost structures,
vendor pricing, contemplated product improvements and developments, repair and
failure frequencies and information, computer software and programs, or other
confidential information regarding the Company. All papers, books and records
and other property of every kind and description relating to the business and
affairs of the Company, whether or not prepared by Employee, shall be the sole
and exclusive property of the Company, and Employee shall surrender them to
the Company, as applicable, at any time upon request by the Company.

8. Covenant Not to Compete. In order to induce the Company to enter
into this Agreement, Employee hereby agrees that during the term of this
Agreement and for a period of one (1) year thereafter (exclusive of any period
of breach), Employee will not, without the prior written consent of the
Company, work for, be employed by or otherwise provide services (which are
substantially the same or similar to the services provided by Employee to the
Company) to, Harnischfeger Industries, Inc., ("Harnischfeger") or any
affiliated entity of Harnischfeger that engages in the business of
manufacturing, marketing, distributing or selling any surface mining equipment
that the Company or any of its subsidiaries or affiliates manufactures,
markets, distributes or sells at the time Employee ceases to be employed by
the Company.

Employee agrees that such restriction is fair and reasonably necessary
to protect the legitimate business interests of the Company, and that the
Company would suffer irreparable harm in the event of breach by Employee. As
a result, Employee agrees that the Company shall, in addition to other
remedies provided by law, be entitled to injunctive relief in the event of
breach by Employee.

9. Assignability. This Agreement may not be assigned without the
prior written consent of the parties; provided, however, this Agreement may be
assigned without consent to a successor of the business of the Company.

10. Notices. All notices hereunder shall be in writing and delivered
by hand, mailed within the continental United States by first class certified
mail, return receipt requested, postage prepaid, or telecopied, to the other
party.

11. Severability. If any provision of this Agreement shall be
determined to be invalid or unenforceable for any reason, such determination
shall not affect, impair or invalidate the remainder of this Agreement.

12. Choice of Forum and Law. Jurisdiction over disputes with regard
to this Agreement shall be exclusively in the courts of the State of
Wisconsin. This Agreement shall be construed in accordance with and governed
by the laws of the State of Wisconsin.

13. Entire Agreement. This Agreement contains the entire agreement of
the parties hereto, and supersedes all other oral or written agreements or
understandings between them regarding the subject matter hereof. This
Agreement may not be modified except by written agreement of the parties.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

BUCYRUS INTERNATIONAL, INC.

By: /s/W. R. Hildebrand
W. R. Hildebrand

/s/Craig R. Mackus
Craig R. Mackus, Employee

EXHIBIT 10.18
FORM 10-Q
QUARTER ENDED JUNE 30, 1997

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made this 21st day of May, 1997, by and
between BUCYRUS INTERNATIONAL, INC., a Delaware corporation (the "Company"),
and MICHAEL G. ONSAGER ("Employee").

WHEREAS, the Company desires to employ Employee as Vice President -
Engineering, and Employee desires to accept the employment offered by the
Company.

NOW, THEREFORE, in consideration of the premises and for the mutual
consideration hereinafter set forth, the parties agree as follows:

1. Position. Employee shall be employed by the Company as Vice
President - Engineering upon the terms and conditions contained herein.

2. Salary. During the term of this Agreement, the Company shall pay
Employee an annual base salary of One Hundred Fifteen Thousand Eight Dollars
($115,008.00), minus applicable withholdings, in accordance with the Company s
normal payroll practices (the "Base Salary"). The Base Salary is subject to
merit increases in accordance with the Company s normal salary merit increase
review policy.

4. Duration and Termination.

6. Change of Control.

(a) Definitions. For purposes of this Paragraph 6:

(i) "Act" shall mean the Securities Act of 1934.

(ii) A "Change of Control" of the Company shall be deemed
to have occurred when:

(A) Securities of the Company representing more than
50% of the combined voting power of the Company's then outstanding voting
securities are acquired, directly or indirectly, by any Person who did not on
the date of this Agreement own, directly or indirectly, 5% or more of the
combined voting power of the Company's voting securities outstanding on the
date of this Agreement.

(B) A merger or consolidation of the Company with
any other corporation is completed as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting entity are owned
by the former shareholders of the Company (other than a shareholder who is an
"affiliate," as defined in the Act, of any party to such consolidation or
merger).

(C) The sale of substantially all of the Company's
assets is completed to a corporation which is not a wholly-owned subsidiary of
the Company.

(iii) "Person" shall have the meaning used in
Section 3(a)(9) of the Act.

(iv) "Effective Date" shall mean the date a Change of
Control becomes effective.

(v) "Good Reason" shall mean the occurrence of any one or
more of the following events without Employee's
express written consent:

(B) A reduction by the Company in Employee's Base
Salary as in effect on the Effective Date.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

BUCYRUS INTERNATIONAL, INC.

By: /s/W. R. Hildebrand
W. R. Hildebrand

/s/Michael G. Onsager
Michael G. Onsager, Employee

EXHIBIT 10.19
FORM 10-Q
QUARTER ENDED JUNE 30, 1997

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made this 21st day of May, 1997, by and
between BUCYRUS INTERNATIONAL, INC., a Delaware corporation (the "Company"),
and THOMAS B. PHILLIPS ("Employee").

WHEREAS, the Company desires to employ Employee as Vice President-
Materials, and Employee desires to accept the employment offered by the
Company.

NOW, THEREFORE, in consideration of the premises and for the mutual
consideration hereinafter set forth, the parties agree as follows:

1. Position. Employee shall be employed by the Company as Vice
President-Materials upon the terms and conditions contained herein.

2. Salary. During the term of this Agreement, the Company shall pay
Employee an annual base salary of One Hundred Thirty Thousand Two Hundred
Dollars ($130,200.00), minus applicable withholdings, in accordance with the
Company s normal payroll practices (the "Base Salary"). The Base Salary is
subject to merit increases in accordance with the Company s normal salary
merit increase review policy.