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 September 30, 1998
OR
[ ] 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 November 10, 1998
Common Stock, $.01 par value 1,438,100
<PAGE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. FINANCIAL INFORMATION:
Item 1 - Financial Statements (Unaudited)
Consolidated Condensed Statements of Operations -
Quarters and nine months ended September 30, 1998
and 1997 4
Consolidated Condensed Statements of Comprehensive
Income (Loss) - Quarters and nine months ended
September 30, 1998 and 1997 5
Consolidated Condensed Balance Sheets -
September 30, 1998 and December 31, 1997 6-7
Consolidated Condensed Statements of Cash Flows -
Nine months ended September 30, 1998 and 19978-9
Notes to Consolidated Condensed Financial
Statements 10-27
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 28-37
Part II. OTHER INFORMATION:
Item 6 - Exhibits and Reports on Form 8-K 38
Signature Page 39
<PAGE>
<TABLE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)
<CAPTION>
Quarter Nine Months
Ended September 24- July 1- Ended January 1 -
September 30, September 30, September 23, September 30, September 23,
1998 1997 1997 1998 1997
(Predecessor) (Predecessor)
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 76,149 $ 10,429 $ 67,703 $ 229,890 $ 211,465
Other income 275 23 674 791 1,289
_________ _________ _________ _________ _________
76,424 10,452 68,377 230,681 212,754
_________ _________ _________ _________ _________
Costs and Expenses:
Cost of products sold 60,737 7,437 55,254 190,856 171,515
Product development,
selling, administrative
and miscellaneous
expense 11,182 790 8,770 34,830 27,115
Interest expense 4,819 355 2,350 14,023 6,306
Nonrecurring items - - 10,051 - 10,051
_________ _________ _________ _________ _________
76,738 8,582 76,425 239,709 214,987
_________ _________ _________ _________ _________
Earnings (loss) before
income taxes (314) 1,870 (8,048) (9,028) (2,233)
Income taxes 554 601 249 1,202 2,641
_________ _________ _________ _________ _________
Net earnings (loss) $ (868) $ 1,269 $ (8,297) $ (10,230) $ (4,874)
Net earnings (loss) per
share of common stock:
Basic $ (.60) $ .89 $ (.81) $ (7.13) $ (.48)
Diluted $ (.60) $ .89 $ (.78) $ (7.13) $ (.47)
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIESITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars In Thousands)
<CAPTION>
Quarter Nine Months
Ended September 24- July 1- Ended January 1 -
September 30, September 30, September 23, September 30, September 23,
1998 1997 1997 1998 1997
(Predecessor) (Predecessor)
<S> <C> <C> <C> <C> <C>
Net earnings (loss) $ (868) $ 1,269 $ (8,297) $ (10,230) $ (4,874)
Other comprehensive
income (loss) -
foreign currency
translation
adjustments, net
of income taxes (618) 268 (1,202) (5,208) (1,439)
________ _________ _________ _________ _________
Comprehensive income
(loss) $ (1,486) $ 1,537 $ (9,499) $ (15,438) $ (6,313)
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars In Thousands, Except Per Share Amounts)
<CAPTION>
September 30, December 31, September 30, December 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C> <C>
ASSETS LIABILITIES AND COMMON
CURRENT ASSETS: SHAREHOLDERS' INVESTMENT
Cash and cash CURRENT LIABILITIES:
equivalents $ 15,141 $ 15,071 Accounts payable and
Receivables 55,167 49,443 accrued expenses $ 46,279 $ 51,906
Inventories 109,582 115,015 Liabilities to customers
Prepaid expenses and on uncompleted contracts
other current assets 6,964 4,496 and warranties 13,246 8,316
________ ________ Income taxes 1,341 2,070
Short-term obligations 826 583
Total Current Assets 186,854 184,025 Current maturities of
long-term debt 431 267
OTHER ASSETS: ________ ________
Restricted funds Total Current
on deposit 473 1,056 Liabilities 62,123 63,142
Goodwill 72,438 65,929
Intangible assets - net 43,128 44,796 LONG-TERM LIABILITIES:
Other assets 9,651 12,677 Liabilities to customers on
________ ________ uncompleted contracts
and warranties 5,636 3,850
125,690 124,458 Postretirement benefits 14,538 14,665
Deferred expenses
PROPERTY, PLANT AND EQUIPMENT: and other 14,773 17,585
Cost 109,535 99,339 ________ ________
Less accumulated
depreciation (8,890) (1,715) 34,947 36,100
________ ________ LONG-TERM DEBT, less
current maturities 198,524 174,612
100,645 97,624
COMMON SHAREHOLDERS' INVESTMENT:
Common stock - par value
$.01 per share, authorized
1,600,000 shares, issued and
outstanding 1,438,100 shares
at September 30, 1998; authorized
1,000 shares, issued and
outstanding 1,000 shares
at December 31, 1997 14 -
Additional paid-in capital 143,796 143,030
Accumulated deficit (17,388) (7,158)
Other aggregate
comprehensive income (8,827) (3,619)
________ ________
117,595 132,253
________ ________ ________ ________
$413,189 $406,107 $413,189 $406,107
<FN>
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)
Nine Months
Ended September 24- January 1 -
September 30, September 30, September 23,
1998 1997 1997
(Predecessor)
Net Cash Used In
Operating Activities $ (16,335) $ (5,772) $ (6,600)
Cash Flows From
Investing Activities
Payment to cash out stock
options and stock
appreciation rights - (6,944) -
Decrease in restricted
funds on deposit 583 23 -
Purchases of property,
plant and equipment (9,578) (38) (4,331)
Proceeds from sale of
property, plant
and equipment 1,185 99 1,227
Acquisition of Bucyrus
International, Inc. - (189,622) -
Purchase of Von's Welding,
Inc., net of cash
acquired - - (841)
Purchase of surface mining
equipment business of
Global Technologies, Inc. - - (36,720)
Receivable from Global
Technologies, Inc. - - (5,275)
_________ _________ _________
Net cash used in investing
activities (7,810) (196,482) (45,940)
_________ _________ _________
Cash Flows From Financing
Activities
Proceeds from issuance
of project financing
obligations - - 5,672
Net increase in long-term
debt and other bank
borrowings 24,319 112,687 2,206
Payment of acquisition and
refinancing expenses - (9,678) (1,476)
Payment of bridge loan fees - - (3,361)
(Payment of) proceeds from
bridge loan - (45,000) 45,000
Proceeds from issuance of
common stock 780 - -
Capital contribution - 143,030 -
_________ _________ _________
Net cash provided by
financing activities 25,099 201,039 48,041
_________ _________ _________
Effect of exchange rate
changes on cash (884) (77) 417
_________ _________ _________
Net increase (decrease) in
cash and cash equivalents 70 (1,292) (4,082)
Cash and cash equivalents
at beginning of period 15,071 11,681 15,763
_________ _________ _________
Cash and cash equivalents
at end of period $ 15,141 $ 10,389 $ 11,681
Supplemental Disclosures of
Cash Flow Information
Cash paid during the
period for:
Interest $ 16,966 $ 2,023 $ 3,881
Income taxes - net
of refunds 1,158 - 1,218
Supplemental Schedule of Noncash Investing and Financing Activities
On August 26, 1997, the Company purchased certain assets and liabilities of
the surface mining equipment business of Global Industrial Technologies, Inc.
("Global" see Note 3). In conjunction with the acquisition, liabilities were
assumed as follows:
1997
Fair value of assets acquired $ 52,406
Cash paid - net of receivable from Global (36,720)
Liabilities assumed $ 15,686
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 and other adjustments as stated
below) 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 1997
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 30, 1998.
3. On August 21, 1997, the Company entered into an Agreement and Plan of
Merger (the "AIP Agreement") with American Industrial Partners
Acquisition Company, LLC ("AIPAC"), which is wholly-owned by American
Industrial Partners Capital Fund II, L.P. ("AIP"), and Bucyrus
Acquisition Corp. ("BAC"), a wholly-owned subsidiary of AIPAC. On
August 26, 1997, pursuant to the AIP Agreement, BAC commenced an offer to
purchase for cash 100% of the outstanding shares of common stock of the
Company at a price of $18.00 per share (the "AIP Tender Offer").
Consummation of the AIP Tender Offer occurred on September 24, 1997, and
BAC was merged with and into the Company on September 26, 1997 (the "AIP
Merger"). The Company was the surviving entity in the AIP Merger and is
currently wholly-owned by AIPAC. The purchase of all of the Company's
outstanding shares of common stock by AIPAC resulted in a change in
control of voting interest.
The consolidated condensed financial statements as of September 30, 1998
and December 31, 1997 and for the quarter and nine months ended
September 30, 1998 were prepared under a basis of accounting that
reflects the fair value of the assets acquired and liabilities assumed,
and the related expenses and all debt incurred in connection with the
acquisition of the Company by AIPAC. The Predecessor consolidated
condensed financial statements for the period January 1, 1997 to
September 23, 1997 were prepared using the Company's previous basis of
accounting which was based on the principles of fresh start reporting
adopted in 1994 upon emergence from bankruptcy. Accordingly, the
consolidated condensed financial statements for periods subsequent to the
date of the consummation of the AIP Tender Offer are not comparable to
the consolidated condensed financial statements of the Predecessor.
On August 26, 1997, the Company consummated the acquisition (the "Marion
Acquisition") of certain assets and liabilities of The Marion Power
Shovel Company, a subsidiary of Global Industrial Technologies, Inc.
("Global"), and of certain subsidiaries and divisions of Global that
represented Global's surface mining equipment business in Australia,
Canada and South Africa (collectively referred to herein as "Marion").
The Company financed the Marion Acquisition and related expenses by
utilizing on August 26, 1997 an unsecured bridge loan (the "Bridge Loan")
provided by a former affiliate of the Company, in the amount of
$45,000,000. The Bridge Loan was repaid in full on September 24, 1997.
The acquisition of Marion by the Company was accounted for as a purchase
and, accordingly, the assets acquired and liabilities assumed by the
Company were recorded at their estimated fair values.
<PAGE>
During the nine months ended September 30, 1998, the Company finalized
the allocations of the purchase prices relating to the acquisition of the
Company by AIPAC and the Marion Acquisition. The adjustments primarily
related to warranty, severance and litigation accruals and resulted in a
net increase to goodwill of $8,488,000.
4. Inventories consist of the following:
September 30, December 31,
1998 1997
(Dollars in Thousands)
Raw materials and parts $ 16,452 $ 14,896
Costs relating to uncompleted
contracts 7,312 4,861
Customers' advances offset against
costs incurred on uncompleted
contracts (6,493) (2,976)
Work in process 23,102 21,238
Finished products (primarily
replacement parts) 69,209 76,996
$ 109,582 $ 115,015
In connection with the acquisition of the Company by AIPAC, inventories
were adjusted to estimated fair value. This adjustment was charged to
cost of products sold as the inventory was sold. At December 31, 1997,
the remaining estimated fair value adjustment included in inventory was
$6,925,000, all of which was charged to cost of products sold during the
quarter ended March 31, 1998.
5. On March 17, 1998, the Company's Board of Directors authorized a stock
split which increased the number of authorized shares of common stock of
the Company to 1,600,000 shares. Simultaneous with this authorization,
AIPAC cancelled 9.976% of its interest in its 1,000 shares of common
stock of the Company and received 1,430,300 shares for its remaining
interest. Also on this date, certain members of management of the
Company purchased 7,800 shares of common stock of the Company which
increased the number of issued and outstanding common shares to
1,438,100.
6. Basic net earnings (loss) per share of common stock were computed by
dividing net earnings (loss) by the weighted average number of shares of
common stock outstanding. Diluted net earnings (loss) per share of
common stock were calculated after giving effect to dilative securities.
The following is a reconciliation of the numerators and the denominators
of the basic and diluted net earnings (loss) per share of common stock
calculations:
<PAGE>
<TABLE>
<CAPTION>
Quarter Nine Months
Ended September 24- July 1 - Ended January 1 -
September 30, September 30, September 23, September 30, September 23,
1998 1997 1997 1998 1997
(Predecessor) (Predecessor)
<S> <C> <C> <C> <C> <C>
Basic
Net earnings (loss) $ (868) $ 1,269 $ (8,297) $ (10,230) $ (4,874)
Weighted average
shares outstanding 1,438,100 1,430,300 10,267,907 1,435,957 10,259,260
Net earnings (loss)
per share $ (.60) $ .89 $ (.81) $ (7.13) $ (.48)
Diluted
Net earnings (loss) $ (868) $ 1,269 $ (8,297) $ (10,230) $ ( 4,874)
Weighted average shares
outstanding - basic 1,438,100 1,430,300 10,267,907 1,435,957 10,259,260
Effect of dilutive
securities - stock
options, stock
appreciation rights
and resticted stock - - 355,087 - 174,840
__________ __________ __________ __________ __________
Weighted average shares
outstanding - diluted 1,438,100 1,430,300 10,622,994 1,435,957 10,434,100
Net earnings (loss)
per share $ (.60) $ .89 $ (.78) $ (7.13) $ (.47)
</TABLE>
<PAGE>
7. In June, 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS 133 requires that changes in
the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset
related results on the hedged item in the income statement, and requires
that the Company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting.
SFAS 133 is effective for fiscal years beginning after June 15, 1999.
The Company may also implement SFAS 133 as of the beginning of any fiscal
quarter after issuance (that is, fiscal quarters beginning June 16, 1998
and thereafter). SFAS 133 cannot be applied retroactively. SFAS 133
must be applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts that were issued, acquired, or
substantively modified after December 31, 1997 (and, at the Company's
election, before January 1, 1998).
Based on the Company's current transactions involving derivative
instruments and hedging, management believes adoption of SFAS 133 will
not have a material effect on the Company's financial position or results
of operations.
The Company will also be required to adopt Statement of Position
No. 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" ("SOP 98-1") no later than January 1, 1999.
The Company is currently reviewing its accounting for costs of computer
software developed or obtained for internal use for compliance with the
guidelines established in the SOP.
8. The Company's payment obligations under its 9-3/4% Senior Notes due 2007
(the "Senior Notes") are guaranteed by certain of the Company's wholly-
owned subsidiaries (the "Guarantor Subsidiaries"). Such guarantees are
full, unconditional and joint and several. Separate financial statements
of the Guarantor Subsidiaries are not presented because the Company's
management has determined that they would not be material to investors.
The following supplemental financial information sets forth, on an
unconsolidated basis, statement of operations, balance sheet and
statement of cash flow information for the Company (the "Parent
Company"), for the Guarantor Subsidiaries and for the Company's non-
guarantor subsidiaries (the "Other Subsidiaries"). The supplemental
financial information reflects the investments of the Company in the
Guarantor and Other Subsidiaries using the equity method of accounting.
Parent Company amounts for net earnings (loss) and common shareholders'
investment differ from consolidated amounts as intercompany profit in
subsidiary inventory has not been eliminated in the Parent Company
statement but has been eliminated in the Consolidated Totals.
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Quarter Ended September 30, 1998
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 50,015 $ 11,114 $ 28,688 $(13,668) $ 76,149
Other income 1,052 - 273 (1,050) 275
51,067 11,114 28,961 (14,718) 76,424
Costs and Expenses:
Cost of products sold 40,105 9,904 24,446 (13,718) 60,737
Product development,
selling, administrative
and miscellaneous
expenses 7,430 517 3,235 - 11,182
Interest expense 4,734 225 910 (1,050) 4,819
52,269 10,646 28,591 (14,768) 76,738
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (1,202) 468 370 50 (314)
Income taxes (benefit) (96) 187 463 - 554
Earnings (loss) before
equity in net earnings
of consolidated
subsidiaries (1,106) 281 (93) 50 (868)
Equity in net earnings
of consolidated
subsidiaries 188 - - (188) -
Net earnings (loss) $ (918) $ 281 $ (93) $ (138) $ (868)
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
For the Period September 24, 1997 to September 30, 1997
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 6,615 $ 782 $ 4,286 $ (1,254) $ 10,429
Other income 62 - 14 (53) 23
6,677 782 4,300 (1,307) 10,452
Costs and Expenses:
Cost of products sold 4,774 632 3,226 (1,195) 7,437
Product development,
selling, administrative
and miscellaneous
expenses 496 34 260 - 790
Interest expense 340 8 60 (53) 355
5,610 674 3,546 (1,248) 8,582
Earnings before income
taxes and equity in
net earnings of
consolidated subsidiaries 1,067 108 754 (59) 1,870
Income taxes 373 42 186 - 601
Earnings before equity
in net earnings of
consolidated subsidiaries 694 66 568 (59) 1,269
Equity in net earnings of
consolidated subsidiaries 634 - - (634) -
Net earnings $ 1,328 $ 66 $ 568 $ (693) $ 1,269
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
For the Period July 1, 1997 to September 23, 1997 - Predecessor
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 39,372 $ 7,245 $ 28,846 $ (7,760) $ 67,703
Other income 774 - 106 (206) 674
40,146 7,245 28,952 (7,966) 68,377
Costs and Expenses:
Cost of products sold 33,591 6,236 23,009 (7,582) 55,254
Product development,
selling, administrative
and miscellaneous
expenses 4,865 559 2,315 1,031 8,770
Interest expense 2,043 89 424 (206) 2,350
Nonrecurring items 10,051 - - - 10,051
50,550 6,884 25,748 (6,757) 76,425
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (10,404) 361 3,204 (1,209) (8,048)
Income taxes (benefit) (775) 141 883 - 249
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (9,629) 220 2,321 (1,209) (8,297)
Equity in net earnings of
consolidated subsidiaries 2,541 - - (2,541) -
Net earnings (loss) $ (7,088) $ 220 $ 2,321 $ (3,750) $ (8,297)
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Nine Months Ended September 30, 1998
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $143,886 $ 27,289 $ 98,222 $(39,507) $229,890
Other income 2,581 1 687 (2,478) 791
146,467 27,290 98,909 (41,985) 230,681
Costs and Expenses:
Cost of products sold 121,880 24,290 83,693 (39,007) 190,856
Product development,
selling, administrative
and miscellaneous
expenses 21,545 1,878 11,407 - 34,830
Interest expense 13,745 474 2,282 (2,478) 14,023
157,170 26,642 97,382 (41,485) 239,709
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (10,703) 648 1,527 (500) (9,028)
Income taxes 102 259 841 - 1,202
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (10,805) 389 686 (500) (10,230)
Equity in net earnings of
consolidated subsidiaries 1,075 - - (1,075) -
Net earnings (loss) $ (9,730) $ 389 $ 686 $ (1,575) $(10,230)
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
For the Period January 1, 1997 to September 23, 1997 - Predecessor
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $126,962 $ 23,836 $ 84,658 $(23,991) $211,465
Other income 1,696 1 274 (682) 1,289
128,658 23,837 84,932 (24,673) 212,754
Costs and Expenses:
Cost of products sold 107,735 20,240 67,278 (23,738) 171,515
Product development,
selling, administrative
and miscellaneous
expenses 15,167 1,871 9,024 1,053 27,115
Interest expense 5,818 248 922 (682) 6,306
Nonrecurring items 10,051 - - - 10,051
138,771 22,359 77,224 (23,367) 214,987
Earnings (loss) before income
taxes and equity
in net earnings of
consolidated subsidiaries (10,113) 1,478 7,708 (1,306) (2,233)
Income taxes (benefit) (412) 576 2,477 - 2,641
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (9,701) 902 5,231 (1,306) (4,874)
Equity in net earnings of
consolidated subsidiaries 6,133 - - (6,133) -
Net earnings (loss) $ (3,568) $ 902 $ 5,231 $ (7,439) $ (4,874)
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets
September 30, 1998
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ - $ 30 $ 15,111 $ - $ 15,141
Receivables 28,508 7,765 18,894 - 55,167
Intercompany receivables 60,174 1,484 671 (62,329) -
Inventories 70,212 2,603 37,091 (324) 109,582
Prepaid expenses and
other current assets 602 449 5,913 - 6,964
Total Current Assets 159,496 12,331 77,680 (62,653) 186,854
OTHER ASSETS:
Restricted funds on deposit - - 473 - 473
Goodwill 72,438 - - - 72,438
Intangible assets - net 42,972 156 - - 43,128
Other assets 9,538 - 113 - 9,651
Investment in subsidiaries 25,703 - - (25,703) -
150,651 156 586 (25,703) 125,690
PROPERTY, PLANT AND
EQUIPMENT - net 83,239 6,549 10,857 - 100,645
$393,386 $ 19,036 $ 89,123 $(88,356) $413,189
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets (Continued)
September 30, 1998
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 32,279 $ 2,151 $ 12,082 $ (233) $ 46,279
Intercompany payables - 14,976 44,939 (59,915) -
Liabilities to customers
on uncompleted contracts
and warranties 11,338 450 1,458 - 13,246
Income taxes 406 5 930 - 1,341
Short-term obligations 541 - 285 - 826
Current maturities of
long-term debt 164 - 267 - 431
Total Current Liabilities 44,728 17,582 59,961 (60,148) 62,123
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 5,061 - 575 - 5,636
Postretirement benefits 13,986 - 552 - 14,538
Deferred expenses and other 12,968 340 1,465 - 14,773
32,015 340 2,592 - 34,947
LONG-TERM DEBT, less
current maturities 196,543 - 1,981 - 198,524
COMMON SHAREHOLDERS'
INVESTMENT 120,100 1,114 24,589 (28,208) 117,595
$393,386 $ 19,036 $ 89,123 $(88,356) $413,189
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets
December 31, 1997
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ - $ 103 $ 14,968 $ - $ 15,071
Receivables 27,583 3,695 18,856 (691) 49,443
Intercompany receivables 53,751 1,763 847 (56,361) -
Inventories 67,958 1,890 46,888 (1,721) 115,015
Prepaid expenses and
other current assets 978 354 3,164 - 4,496
Total Current Assets 150,270 7,805 84,723 (58,773) 184,025
OTHER ASSETS:
Restricted funds on deposit - - 1,056 - 1,056
Goodwill 65,929 - - - 65,929
Intangible assets - net 44,570 226 - - 44,796
Other assets 10,101 33 2,543 - 12,677
Investment in subsidiaries 34,093 - - (34,093) -
154,693 259 3,599 (34,093) 124,458
PROPERTY, PLANT AND
EQUIPMENT - net 83,218 3,563 10,843 - 97,624
$388,181 $ 11,627 $ 99,165 $(92,866) $406,107
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets (Continued)
December 31, 1997
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 38,858 $ 2,362 $ 10,550 $ 136 $ 51,906
Intercompany payables 105 6,042 49,055 (55,202) -
Liabilities to customers
on uncompleted contracts
and warranties 7,086 31 1,199 - 8,316
Income taxes 359 59 1,652 - 2,070
Short-term obligations 409 - 174 - 583
Current maturities of
long-term debt - - 267 - 267
Total Current Liabilities 46,817 8,494 62,897 (55,066) 63,142
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 3,270 - 580 - 3,850
Postretirement benefits 14,099 - 566 - 14,665
Deferred expenses and other 15,820 412 1,353 - 17,585
33,189 412 2,499 - 36,100
LONG-TERM DEBT, less
current maturities 172,215 - 2,397 - 174,612
COMMON SHAREHOLDERS'
INVESTMENT 135,960 2,721 31,372 (37,800) 132,253
$388,181 $ 11,627 $ 99,165 $(92,866) $406,107
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
Nine Months Ended September 30, 1998
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Net Cash Provided By (Used
In) Operating Activities $(19,675) $ 2,670 $ 670 $ - $(16,335)
Cash Flows From Investing
Activities
Decrease in restricted
funds on deposit - - 583 - 583
Purchases of property,
plant and equipment (5,728) (2,743) (1,107) - (9,578)
Proceeds from sale of
property, plant and
equipment - - 1,185 - 1,185
Net cash provided by
(used in) investing
activities (5,728) (2,743) 661 - (7,810)
Cash Flows From Financing
Activities
Net increase in long-term
debt and other
bank borrowings 24,623 - (304) - 24,319
Proceeds from issuance
of common stock 780 - - - 780
Net cash provided by (used in)
financing activities 25,403 - (304) - 25,099
Effect of exchange rate
changes on cash - - (884) - (884)
Net (decrease) increase
in cash and cash
equivalents - (73) 143 - 70
Cash and cash equivalents
at beginning of period - 103 14,968 - 15,071
Cash and cash equivalents
at end of period $ - $ 30 $ 15,111 $ - $ 15,141
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
For the Period September 24, 1997 to September 30, 1997
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Net Cash Provided By (Used
In) Operating Activities $ (7,605) $ 446 $ 1,387 $ - $ (5,772)
Cash Flows From Investing
Activities
Payment to cash out stock
options and stock
appreciation rights (6,944) - - - (6,944)
Decrease in restricted
funds on deposit - - 23 - 23
Purchases of property,
plant and equipment (6) (17) (15) - (38)
Proceeds from sale of
property, plant and
equipment 115 - (16) - 99
Acquisition of Bucyrus
International, Inc. (189,622) - - - (189,622)
________ ________ ________ ________ ________
Net cash used in
investing activities (196,457) (17) (8) - (196,482)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Net increase in long-term
debt and other
bank borrowings 113,518 (427) (404) - 112,687
Payment of acquisition
and refinancing expenses (9,678) - - - (9,678)
Payment of bridge loan (27,024) - (17,976) - (45,000)
Capital contribution from
American Industrial
Partners 143,030) - - - 143,030
Change in intercompany
accounts (17,976) - 17,976 - -
________ ________ ________ ________ ________
Net cash provided by (used in)
financing activities 201,870 (427) (404) - 201,039
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - (77) - (77)
________ ________ ________ ________ ________
Net (decrease) increase
in cash and cash
equivalents (2,192) 2 898 - (1,292)
Cash and cash equivalents
at beginning of period 2,192 619 8,870 - 11,681
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 621 $ 9,768 $ - $ 10,389
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
For the Period January 1, 1997 to September 23, 1997 - Predecessor
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Net Cash Provided By (Used
In) Operating Activities $ (9,085) $ 804 $ 1,681 $ - $ (6,600)
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Purchases of property,
plant and equipment (985) (114) (3,202) - (4,331)
Proceeds from sale of
property, plant and
equipment 5 - 1,222 - 1,227
Purchase of Von's Welding,
Inc., net of cash
acquired (841) - - - (841)
Purchase of surface mining
equipment business
of Global (15,827) - (20,893) - (36,720)
Receivable from Global (6,346) - 1,071 - (5,275)
Change in intercompany
accounts (1,846) - 1,846 - -
Dividends paid to parent 150 - (150) - -
________ ________ ________ ________ ________
Net cash used in investing
activities (25,690) (144) (20,106) - (45,940)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Proceeds from issuance
of project financing
obligations 5,672 - - - 5,672
Net increase in long-term
debt and other
bank borrowings 36 (190) 2,360 - 2,206
Payment of acquisition
and refinancing expenses (1,476) - - - (1,476)
Payment of bridge loan fees (3,361) - - - (3,361)
Proceeds from bridge loan 27,024 - 17,976 - 45,000
________ ________ ________ ________ ________
Net cash provided by (used in)
financing activities 27,895 (190) 20,336 - 48,041
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - 417 - 417
________ ________ ________ ________ ________
Net (decrease) increase
in cash and cash
equivalents (6,880) 470 2,328 - (4,082)
Cash and cash equivalents
at beginning of period 9,072 149 6,542 - 15,763
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ 2,192 $ 619 $ 8,870 $ - $ 11,681
________ ________ ________ ________ ________
</TABLE>
<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 quarters and
nine months ended September 30, 1998 and 1997.
This Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, each as amended. Discussions containing such forward-
looking statements may be found in this section, as well as elsewhere within
this Report. Forward-looking statements include statements regarding the
intent, belief or current expectations of the Company, primarily with respect
to the future operating performance of the Company or related industry
developments. When used in this Report, terms such as "anticipate,"
"believe," "estimate," "expect," "indicate," "may be," "objective," "plan,"
"predict," and "will be" are intended to identify such statements. Readers
are cautioned that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and that actual
results may differ from those described in the forward-looking statements as a
result of various factors, many of which are beyond the control of the
Company. Forward-looking statements are based upon management's expectations
at the time they are made. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from
such expectations ("Cautionary Statements") are disclosed in this Report, in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997
under the caption "Item 1. Business," and in the Prospectus contained in the
Registration Statement on Form S-4 filed by the Registrant on November 12,
1997 (Registration No. 333-39359) under the captions "Risk Factors --
Substantial Leverage; Restrictive Loan Covenants," "-- Realization of Benefits
of the Marion Acquisition; Integration of Marion," "-- Cyclical Nature of
Industry; Potential Fluctuations in Operating Results," "-- Foreign
Operations," "-- Competition," "-- Principal Shareholder," "-- Environmental
and Related Matters," and "-- Labor Relations". All subsequent written or
oral forward-looking statements attributable to the Company or persons acting
on behalf of the Company are expressly qualified in their entirety by the
Cautionary Statements.
In connection with the acquisition of the Company by AIPAC and the
Marion Acquisition, the assets and liabilities of the acquired companies have
been adjusted to their estimated fair values. Also, upon emergence from
bankruptcy in 1994, total assets were recorded at their assumed reorganization
value, with the reorganization value allocated to identifiable tangible and
intangible assets on the basis of their estimated fair value, and liabilities
were adjusted to the present values of amounts to be paid where appropriate.
The consolidated financial statements include the related amortization charges
associated with the fair value adjustments.
Liquidity and Capital Resources
Liquidity
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 September 30, 1998 and December 31, 1997
were as follows:
September 30, December 31,
1998 1997
(Dollars in Thousands)
Working capital $ 124,731 $120,883
Current ratio 3.0 to 1 2.9 to 1
The Company is presenting below a calculation of earnings (loss) before
interest expense, income taxes, depreciation, amortization, non-cash stock
compensation, (gain) loss on sale of fixed assets and inventory fair value
adjustment charged to cost of products sold ("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
(Loss) Before Income Taxes to Adjusted EBITDA:
<PAGE>
<TABLE>
<CAPTION>
Quarter Nine Months
Ended September 24- July 1- Ended January 1 -
September 30, September 30, September 23, September 30, September 23,
1998 1997 1997 1998 1997
(Predecessor) (Predecessor)
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Earnings (loss)
before income
taxes $ (314) $ 1,870 $ (8,048) $ (9,028) $ (2,233)
Non-cash expenses:
Nonrecurring items (1) - - 10,051 - 10,051
Depreciation 2,532 186 946 7,631 3,125
Amortization 1,589 101 236 4,318 770
Non-cash stock
compensation - - 257 - 677
(Gain) loss on sale
of fixed assets 6 22 (271) (29) (275)
Inventory fair
value adjustment
charged to cost
of products
sold - 300 283 6,925 283
Interest expense 4,819 355 2,350 14,023 6,306
Adjusted EBITDA $ 8,632 $ 2,834 $ 5,804 $ 23,840 $ 18,704
<FN>
(1) Nonrecurring items consist of $6,690,000 of expense to cash out the outstanding stock options and
stock appreciation rights in connection with the acquisition of the Company by AIPAC and $3,361,000 of loan
fees incurred in connection with the Bridge Loan that was utilized to purchase Marion. The loan fees were
expensed when the Bridge Loan was repaid.
</TABLE>
<PAGE>
The Company entered into a three-year credit agreement with Bank One,
Wisconsin on September 24, 1997 which provides the Company with a $75,000,000
senior secured revolving credit facility (the "Revolving Credit Facility")
with a $25,000,000 sublimit for standby letters of credit. Borrowings under
the Revolving Credit Facility bear interest at variable rates and are subject
to a borrowing base formula based on receivables, inventory and machinery and
equipment. Direct borrowings under the Revolving Credit Facility at
September 30, 1998 were $45,700,000 at a weighted average interest rate of
8.4%. The issuance of standby letters of credit reduces the amount available
for direct borrowings under the Revolving Credit Facility. At September 30,
1998, there were $2,830,000 of standby letters of credit outstanding under the
Revolving Credit Facility. The Revolving Credit Facility is secured by
substantially all of the assets of the Company, other than real property and
35% of the stock of its foreign subsidiaries, and is guaranteed by the
Guarantor Subsidiaries who have also pledged substantially all of their assets
as security. The amount available for direct borrowings under the Revolving
Credit Facility at September 30, 1998 was $19,158,000.
The Company has outstanding $150,000,000 of its Senior Notes which were
issued pursuant to an indenture dated as of September 24, 1997 among the
Company, the Guarantors, and Harris Trust and Savings Bank, as Trustee (the
"Senior Notes Indenture"). Interest thereon is payable each March 15 and
September 15.
The Company believes that current levels of cash and liquidity, together
with funds generated by operations and funds available from the Revolving
Credit Facility, 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.
Capital Resources
At September 30, 1998, the Company had approximately $5,389,000 of open
capital appropriations. In 1996, a machine shop modernization program began
at the Company's South Milwaukee, Wisconsin manufacturing facility that
involves a $20,000,000 investment in the latest technology in the machine tool
industry. The program is aimed at reduced lead times, quicker turnaround,
reduced in-process inventory and overall cost reduction. The Company has
spent approximately $7,000,000 to date on this program with the remaining
amount to be spent in the next several years.
Capitalization
The long-term debt to equity ratio at September 30, 1998 and
December 31, 1997 was 1.7 to 1 and 1.3 to 1, respectively. The long-term debt
to total capitalization ratio at September 30, 1998 and December 31, 1997 was
.6 to 1. Total capitalization is defined as total common shareholders'
investment plus long-term debt plus current maturities of long-term debt and
short-term obligations.
Results Of Operations
Net Sales
Net sales for the quarter and nine months ended September 30, 1998 were
$76,149,000 and $229,890,000, respectively, compared with $78,132,000 and
$221,894,000 for the quarter and nine months ended September 30, 1997,
respectively. Net sales of repair parts and services for the quarter and nine
months ended September 30, 1998 were $50,981,000 and $160,319,000,
respectively, which is a decrease of $3,638,000 or 6.7% and an increase of
$17,086,000 or 11.9% from the quarter and nine months ended September 30,
1997, respectively. The decrease for the quarter ended September 30, 1998 was
primarily at foreign locations. The increase for the nine months ended
September 30, 1998 was primarily due to the acquisition of Marion. Net
machine sales for the quarter and nine months ended September 30, 1998 were
$25,168,000 and $69,571,000, respectively, which is an increase of 7.0% and a
decrease of 11.6% from the quarter and nine months ended September 30, 1997,
respectively. The increase for the quarter ended September 30, 1998 was
primarily in dragline volume. The decrease for the nine months ended
September 30, 1998 was in both electric mining shovel and blast hole drill
volume, partially offset by increased dragline volume. As a result of a
decline in copper and coal prices in 1997 from historically high levels, the
demand for machines from these market segments has been low. In addition,
economic and political problems in Asia have negatively impacted demand for
the Company's machines and parts.
Cost of Products Sold
Cost of products sold for the quarter ended September 30, 1998 was
$60,737,000 or 79.8% of net sales compared with $62,691,000 or 80.2% of net
sales for the quarter ended September 30, 1997. For the nine months ended
September 30, 1998, cost of products sold was $190,856,000 or 83.0% of net
sales compared with $178,952,000 or 80.6% of net sales for the nine months
ended September 30, 1997. Included in cost of products sold for the nine
months ended September 30, 1998 were charges of $6,925,000 recorded in the
first quarter of 1998 as a result of the fair value adjustment to inventory
being charged to cost of products sold as the inventory was sold. The fair
value adjustment was made as a result of the acquisition of the Company by
AIPAC. Excluding the effects of the inventory fair value adjustment, cost of
products sold for the nine months ended September 30, 1998 as a percentage of
net sales was 80.0%. Also included in cost of products sold for 1998 was
$3,246,000 of additional depreciation expense as a result of the fair value
adjustment to plant and equipment in connection with the acquisition of the
Company by AIPAC.
Product Development, Selling, Administrative and Miscellaneous Expenses
Product development, selling, administrative and miscellaneous expenses
for the quarter ended September 30, 1998 were $11,182,000 or 14.7% of net
sales compared with $9,560,000 or 12.2% of net sales for the quarter ended
September 30, 1997. The amounts for the nine months ended September 30, 1998
and 1997 were $34,830,000 or 15.2% of net sales and $27,905,000 or 12.6% of
net sales, respectively. The dollar increases for the quarter and nine months
ended September 30, 1998 were primarily due to increased expenses to support
the Marion business acquired, and increased non-cash amortizations of
goodwill, intangible assets and financing fees that were recorded in
connection with the acquisition of the Company by AIPAC.
Interest Expense
Interest expense for the quarter and nine months ended September 30,
1998 was $4,819,000 and $14,023,000, respectively, compared with $2,705,000
and $6,661,000 for the quarter and nine months ended September 30, 1997,
respectively. Included in interest expense for the quarter and nine months
ended September 30, 1998 was $3,657,000 and $10,888,000, respectively, related
to the Senior Notes.
Nonrecurring Items
Nonrecurring items in 1997 consist of $6,690,000 of expense incurred to
cash out the outstanding options to purchase shares of the Company's common
stock and outstanding stock appreciation rights in connection with the
acquisition of the Company by AIP, and $3,361,000 of loan fees incurred in
connection with the Bridge Loan that was utilized to purchase Marion. The
Bridge Loan was subsequently refinanced on September 24, 1997.
Income Taxes
For the quarter and nine months ended September 30, 1998 and for the
periods ended September 23, 1997, income tax expense consists primarily of
foreign taxes at applicable statutory rates. For United States tax purposes,
there were losses for which no income tax benefit was recorded.
For the period September 24, 1997 to September 30, 1997, income tax
expense consists primarily of a non-cash income tax provision of $410,000 on
United States taxable income at applicable statutory rates and foreign taxes
at applicable statutory rates. The United States tax provision relates to tax
benefits realized from reductions in the valuation allowance established as of
September 24, 1997 (the date the Company was acquired by AIP). As a result, a
corresponding $410,000 reduction of goodwill was recorded.
Net Earnings (Loss)
Net loss for the quarter and nine months ended September 30, 1998 was
$868,000 and $10,230,000, respectively, compared with a net loss of $7,028,000
and $3,605,000 for the quarter and nine months ended September 30, 1997,
respectively. Included in net loss for the quarter and nine months ended
September 30, 1997 was $10,051,000 of nonrecurring items. Included in net
loss for the nine months ended September 30, 1998 was $6,267,000 (net of tax)
of the inventory fair value adjustment which was charged to cost of products
sold. Non-cash depreciation and amortization charges for the quarter and nine
months ended September 30, 1998 were $4,121,000 and $11,949,000, respectively,
compared with $1,469,000 and $4,182,000, respectively, for the quarter and
nine months ended September 30, 1997.
Backlog and New Orders
The Company's consolidated backlog at September 30, 1998 was
$178,238,000 compared with $216,021,000 at December 31, 1997 and $222,023,000
at September 30, 1997. Machine backlog at September 30, 1998 was $59,055,000,
which is a decrease of 39.2% from December 31, 1997 and a decrease of 39.1%
from September 30, 1997. The decreases from September 30, 1997 and
December 31, 1997 have been in all three of the Company's machine product
lines. During the second quarter of 1997, the Company executed a contract
with an Australian mining company for the sale of a Model 2570WS dragline
which is scheduled for completion by December 31, 1999. Included in backlog
at September 30, 1998, December 31, 1997 and September 30, 1997 was
$40,923,000, $51,644,000 and $55,399,000, respectively, related to this
machine. Repair parts and service backlog at September 30, 1998 was
$119,183,000, which is an increase of .3% from December 31, 1997 and a
decrease of 4.7% from September 30, 1997.
New orders for the quarter and nine months ended September 30, 1998 were
$56,946,000 and $192,107,000, respectively, which is a decrease of 32.5% and
32.6% from the quarter and nine months ended September 30, 1997, respectively.
New machine orders for the quarter and nine months ended September 30, 1998
were $4,586,000 and $31,471,000, respectively, which is a decrease of 72.6%
and 75.1% from the quarter and nine months ended September 30, 1997,
respectively. Included in new machine orders for and nine months ended
September 30, 1997 was approximately $57,000,000 for the aforementioned 2570WS
dragline. New machine orders for electric mining shovels and blast hole
drills in 1998 have decreased. As a result of a decline in copper and coal
prices in 1997 from historically high levels, the demand for machines from
these market segments has been low. In addition, economic and political
problems in Asia have negatively impacted demand for the Company's machines.
New repair parts and service orders for the quarter and nine months ended
September 30, 1998 were $52,360,000 and $160,636,000, respectively, which is a
decrease of 22.6% and an increase of 1.3% from the quarter and nine months
ended September 30, 1997, respectively. These orders for the quarter and nine
months ended September 30, 1997 reflect the acquisition of the Marion backlog.
Year 2000 Issues
Many computer software applications, hardware and equipment and
embedded chip systems identify dates using only the last two digits of the
year. These products may be unable to distinguish between dates in the
Year 2000 and dates in the year 1900. That inability (referred to as
the "Year 2000 Issue"), if not addressed, could cause applications,
equipment or systems to fail or provide incorrect information after
December 31, 1999, or when using dates after December 31, 1999. The
Company uses a number of computer software programs, operating systems,
and types of equipment with computer chips in its internal operations,
including applications used in its financial business systems, order
entry and manufacturing systems, manufacturing processes, and
administrative functions. To the extent that these contain source code
or computer chips that are unable to interpret appropriately the
upcoming calendar year 2000, distinguishing it from the year 1900, some
level of modification or possible replacement will be necessary.
State of Readiness
The Company has assessed and continues to assess the impact of the
Year 2000 Issue on its operations. The Company's assessments have
focused on the three major elements of the Year 2000 Issue: IT systems;
Non-IT systems; and third party relationships.
IT Systems
The Company is in the process of implementing a plan to upgrade its
existing computer system. While the primary purpose of this upgrade
is to improve the efficiency and effectiveness of the Company's system,
Year 2000 Issues are also being addressed as a part of the IT system
upgrade. Implementation of the upgrade for South Milwaukee operations
is expected to be completed by the first quarter of 1999 and
implementation of the plan for subsidiary operations is expected to be
completed by the end of 1999.
Non-IT Systems
A review of all equipment and processes used in manufacturing
operations to assess and address Year 2000 issues is nearly complete
and the Company expects that such equipment and processes will be
remediated to the extent necessary to assure Year 2000 compliance.
Third-Party Relationships
The Company's engineering department has reviewed all Company products
for Year 2000 compliance. A service advisory bulletin has been developed
which provides information regarding Year 2000 compliance of existing
products manufactured by the Company. This bulletin will describe the
service, if any, that will need to be performed to become compliant. The
Company intends to furnish all of its customers with this bulletin by
the end of 1998. In addition, the Company is conducting a survey of all
major suppliers which the Company expects will be completed by the end of
1998. This survey is intended to assure that all future products
manufactured by the Company will be Year 2000 compliant.
Risks and Contingency Plans
Although the Company believes its efforts will adequately address
Year 2000 Issues internally, it is possible that the Company will be
adversely affected by problems encountered by its suppliers. There can
be no assurance that, despite any supplier's certification of its ability
to do so, the supplier will be able to provide goods and services in a
manner that satisfactorily address Year 2000 Issues. The most liekly
worst case scenario would be a failure by the Company or one or more of
its vendors or suppliers to adequately and timely address the Year 2000
Issue, with the result being the interruption of manufacturing of the
Company's products for a undeterminable period of time.
Because the Company believes that its IT Systems upgade will
adequately address all material Year 2000 Issues, the Company has not
and does not expect to develop contingency plans with respect thereto.
Because the Company's survey of its major suppliers has not been
completed, the Company has not yet begun to assess the need for contingency
planning in this regard. To the extent that any major supplier is unable
to certify to the Company's satisfaction that its products (incorporated
into the Company's products) are Year 2000 compliant, or that its
ability to deliver raw materials, supplies or services to the Company
will not be adversely impacted by the Year 2000 Issue, the Company
may consider developing contingency plans (including the identification
of alternative suppliers) in the future.
The Company does not expect to develop contingency plans relating
to its products previously sold to customers, other than compliance
status.
Costs to Address the Company's Year 2000 Issues
The Company does not believe that Year 2000 Issues have adversely
impacted the timetable for implementation or the cost of its previously
planned IT System upgrade. The estimated incremental cost of the
IT System upgrade is $2,600,000.
General
The Company believes it is taking reasonable steps which, when
fully implemented, will prevent major business interruptions and will
minimize the Company's risk of exposure to liability to third parties
due to the Year 2000 Issue. There can be no assurance, however, that
the Company will be successful in its efforts. Further, the costs of
the Company's efforts to address the Year 2000 Issue and the dates on
which the Company believes it will complete the projects described
above are based upon management's best estimates. There also can be no
assurance that these estimates will prove to be accurate, and the
actual cost and progress on these projects could differ materially
from those currently anticipated. The statements herein regarding
future planning and events and the timetables and costs associated
therewith are "forward looking statements" within the meaning of the
Securities and Exchange Act of 1934. The reasonableness of the
Company's efforts, and the project time lines and budgets, were derived
based on information the Company believes to be reliable and by making
numerous assumptions regarding future events. Specific factors that
could cause actual results to differ include, but are not limited
to, (i) the Company's ability to assess, remediate, test and
implement all relevant computer hardware and software and embedded
technology, (ii) the Company's reliance on third-party assurances
and the variability of definitions of "Year 2000 compliance" which
may be used by such third parties, and (iii) the adequacy of the
Company's contingency plans, to the extent such contingency plans
are developed, and (iv) similar uncertainties.
<PAGE>
PART II
OTHER INFORMATION
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:
No reports on Form 8-K were filed during the third quarter of
1998.
<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 November 13, 1998 /s/Craig R. Mackus
Craig R. Mackus
Secretary and Controller
Principal Accounting Officer
Date November 13, 1998 /s/Willard R. Hildebrand
Willard R. Hildebrand
President and CEO
<PAGE>
BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
2.1 Agreement and Plan of Exhibit 1 to
Merger dated August 21, Registrant's
1997, between Registrant, Tender Offer
American Industrial Solicitation/
Partners Acquisition Recommendation
Company, LLC and Bucyrus Statement on
Acquisition Corp. Schedule 14D-9
filed with the
Commission on
August 26, 1997.
2.2 Certificate of Merger Exhibit 2.2 to
dated September 26, 1997, Registrant's
issued by the Secretary Current Report
of State of the State of on Form 8-K
Delaware. filed with the
Commission on
October 10, 1997.
2.3 Asset Purchase Agreement Exhibit 2.3 to
dated July 21, 1997, by Registration
and among The Marion Power Statement on
Shovel Company, Marion Form S-4 of
Power Shovel Pty Ltd, Registrant,
Intool International B.V., Boonville Mining
Global-GIX Canada Inc., Services, Inc.,
and Global Industrial Minserco, Inc., and
Technologies, Inc. (Sellers) Von's Welding, Inc.
and Registrant, Bucyrus (SEC Registration
(Australia) Proprietary No. 333-39359)
Ltd., Bucyrus (Africa)
(Proprietary) Limited, and
Bucyrus Canada Limited
(Buyers).
[OMITTED PROVISIONS SUBJECT
TO CONFIDENTIAL TREATMENT
BY ORDER OF THE SECURITIES
AND EXCHANGE COMMISSION.]
2.4 Second Amended Joint Plan Exhibit 2.1 to
of Reorganization of B-E Registrant's
Holdings, Inc. and Bucyrus- Current Report
Erie Company under Chapter on Form 8-K,
11 of the Bankruptcy Code, filed with the
as modified December 1, Commission and
1994, including Exhibits. dated December 1,
1994.
2.5 Order dated December 1, Exhibit 2.2 to
1994 of the U.S. Bankruptcy Registrant's
Court, Eastern District of Current Report
Wisconsin, confirming the on Form 8-K
Second Amended Joint Plan filed with the
of Reorganization of B-E Commission and
Holdings, Inc. and Bucyrus- dated December 1,
Erie Company under Chapter 1994.
11 of the Bankruptcy Code,
as modified December 1, 1994,
including Exhibits.
3.1 Restated Certificate Exhibit 3.1 to
of Incorporation of Registrant's
Registrant. Current Report
on Form 8-K
filed with the
Commission on
October 10, 1997.
3.2 By-laws of Registrant. Exhibit 3.2 to
Registrant's
Current Report
on Form 8-K
filed with the
Commission on
October 10, 1997.
3.3 Amendment to By-laws of Exhibit 3.2 to
Registrant effective Registrant's
November 5, 1997. Quarterly Report
on Form 10-Q for
the quarter ended
September 30, 1997.
3.4 Certificate of Amendment Exhibit 3.4
to Restated Certificate to Registrant's
of Incorporation adopted Annual Report on
March 17, 1998. Form 10-K for
the year ended
December 31, 1997.
4.1 Indenture of Trust dated Exhibit 4.1 to
as of September 24, 1997 Registration
among Registrant, Boonville Statement on
Mining Services, Inc., Form S-4 of
Minserco, Inc., and Von's Registrant,
Welding, Inc. and Harris Boonville Mining
Trust and Savings Bank, Services, Inc.,
Trustee. Minserco, Inc., and
Von's Welding, Inc.
(SEC Registration
No. 333-39359)
4.2 Form of Guarantee of Included as
Boonville Mining Services, Exhibit E
Inc., Minserco, Inc. and to Exhibit 4.1
Von's Welding, Inc. dated above.
as of September 24, 1997
in favor of Harris Trust
and Savings Bank as Trustee
under the Indenture.
4.3 Form of Registrant's Exhibit 4.3 to
9-3/4% Senior Note due 2007. Registration
Statement on
Form S-4 of
Registrant, Boonville
Mining Services, Inc.,
Minserco, Inc., and
Von's Welding, Inc.
(SEC Registration
No. 333-39359)
10.1 Credit Agreement dated Exhibit 3.2 to
September 24, 1997 between Registrant's
Bank One, Wisconsin and Current Report
Registrant ("Credit on Form 8-K
Agreement"). filed with the
Commission on
October 10, 1997.
(a) First amendment dated X
July 21, 1998 to Credit
Agreement.
10.2 Management Services Agreement Exhibit 10.2 to
by and among Registrant, Registration
Boonville Mining Services, Statement on
Inc., Minserco, Inc. and Form S-4 of
Von's Welding, Inc. and Registrant,
American Industrial Partners. Boonville Mining
Services, Inc.,
Minserco, Inc., and
Von's Welding, Inc.
(SEC Registration
No. 333-39359)
10.3 Registration Agreement dated Exhibit 10.3 to
September 24, 1997 by and Registration
among Registrant, Boonville Statement on
Mining Services, Inc., Form S-4 of
Minserco, Inc. and Von's Registrant,
Welding, Inc. and Salomon Boonville Mining
Brothers, Inc., Jefferies & Services, Inc.,
Company, Inc. and Donaldson, Minserco, Inc., and
Lufkin & Jenrette Securities Von's Welding, Inc.
Corporation. (SEC Registration
No. 333-39359)
10.4 Joint Prosecution Agreement Exhibit 9 to
dated as of August 21, 1997 Registrant's
by and among Registrant and Tender Offer
Jackson National Life Solicitation/
Insurance Company. Recommendation
Statement on
Schedule 14D-9
filed with the
Commission on
August 26, 1997.
10.5 Settlement Agreement dated Exhibit 10 to
as of August 21, 1997, by Registrant's
and between Jackson National Tender Offer
Life Insurance Company and Solicitation/
Registrant. Recommendation
Statement on
Schedule 14D-9
filed with the
Commission on
August 26, 1997.
10.6 Letter Agreement dated Exhibit 10.15
March 7, 1997 between to Registrant's
Jefferies & Company, Inc. Quarterly Report
and Registrant. on Form 10-Q for
the quarter ended
June 30, 1997.
10.7 Letter Agreement dated Exhibit 10.16
July 30, 1997 between to Registrant's
Jefferies & Company, Inc. Quarterly Report
and Registrant. on Form 10-Q for
the quarter ended
June 30, 1997.
10.8 Employment Agreement Exhibit 10.27 to
between Registrant and Registrant's
W. R. Hildebrand dated Annual Report on
as of March 11, 1996. Form 10-K for
the year ended
December 31, 1995.
10.9 Employment Agreement Exhibit 10.38 to
between Registrant and Registrant's
D. J. Smoke dated as of Annual Report on
November 7, 1996. Form 10-K for
the year ended
December 31, 1996.
10.10 Employment Agreement Exhibit 10.17 to
between Registrant and Registrant's
C. R. Mackus dated as of Quarterly Report
May 21, 1997. on Form 10-Q for
the quarter ended
June 30, 1997.
10.11 Employment Agreement Exhibit 10.18 to
between Registrant and Registrant's
M. G. Onsager dated as of Quarterly Report
May 21, 1997. on Form 10-Q for
the quarter ended
June 30, 1997.
10.12 Employment Agreement Exhibit 10.19 to
between Registrant and Registrant's
T. B. Phillips dated as of Quarterly Report
May 21, 1997. on Form 10-Q for
the quarter ended
June 30, 1997.
10.13 Employment Agreement Exhibit 10.20 to
between Registrant and Registrant's
T. W. Sullivan dated as of Quarterly Report
May 21, 1997. on Form 10-Q for
the quarter ended
June 30, 1997.
10.14 Annual Management Incentive Exhibit 10.14
Plan for 1997, adopted by to Registrant's
Board of Directors Annual Report on
February 5, 1997. Form 10-K for
the year ended
December 31, 1997.
10.15 Amendment No. 1 dated Exhibit 10.15
March 5, 1998 to Employment to Registrant's
Agreement dated March 11, Annual Report on
1996 between Registrant Form 10-K for
and W. R. Hildebrand. the year ended
December 31, 1997.
10.16 Amendment No. 1 dated Exhibit 10.16
March 17, 1998 to Employment to Registrant's
Agreement dated November 7, Annual Report on
1996 between Registrant Form 10-K for
and D. J. Smoke. the year ended
December 31, 1997.
10.17 1998 Management Stock Option Exhibit 10.17
Plan. to Registrant's
Annual Report on
Form 10-K for
the year ended
December 31, 1997.
(a) Amendment No. 1 dated X
September 1, 1998 to 1998
Management Stock Option
Plan.
(b) Amendment No. 1 dated X
September 1, 1998 to
Stockholders Agreement.
10.18 Standby Letter of Credit Exhibit 10.18 to
Agreement dated July 21, Registrant's
1998 between Marine Bank Quarterly Report
and Savings and Registrant. on Form 10-Q for
the quarter ended
June 30, 1998.
21.1 Subsidiaries of Registrant. Exhibit 21.1 to
Registration
Statement on
Form S-4 of
Registrant,
Boonville Mining
Services, Inc.,
Minserco, Inc., and
Von's Welding, Inc.
(SEC Registration
No. 333-39359)
27.1 Financial Data Schedule X
(Edgar filing only.)
99.1 Management Agreement, Exhibit 99.2 to
dated July 21, 1995, Registrant's
between Registrant Current Report on
and Miller Associates. Form 8-K, dated
July 25, 1995.
99.2 Amendment dated Exhibit 99.2(a)
December 21, 1995 to to Registrant's
Management Agreement Annual Report on
with Miller Associates Form 10-K for
dated July 21, 1995. the year ended
December 31, 1995.
EXHIBIT 10.1(a)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of July 21,
1998, amends and supplements the Credit Agreement dated as of September 24,
1997 (the "Credit Agreement") among BUCYRUS INTERNATIONAL, INC., a Delaware
corporation (the "Company"), the financial institutions party thereto (the
"Banks"), THE BANK OF NOVA SCOTIA, as documentation agent, and BANK ONE,
WISCONSIN, as agent for the Banks and as letter of credit issuing bank.
RECITALS
The Company, the Banks, the Documentation Agent and the Agent
desire to amend the Credit Agreement as set forth below.
AGREEMENTS
In consideration of the promises and agreements set forth in the
Credit Agreement, as amended hereby, the parties agree as follows:
1. Definitions and References. Capitalized terms not defined
herein have the meanings ascribed to them in the Credit Agreement. Upon the
execution and delivery of this First Amendment by all of the parties hereto,
all references to the Credit Agreement set forth in the Loan Documents shall
mean the Credit Agreement as amended by this First Amendment to Credit
Agreement.
2. Amendments.
(a) The following definition is inserted, in appropriate
alphabetical order, into Section 1 of the Credit Agreement
"Bonded Project" means any project being undertaken by the Company
or a Subsidiary Guarantor with respect to which the Company or such
Subsidiary Guarantor has provided a performance bond or comparable
Surety Instrument to or for the benefit of the Person for whom such
project is being undertaken.
(b) The defined term "Qualified Domestic Finished Goods
and Raw Materials Inventory" in Section 1 of the Credit Agreement is amended
by the addition of the following sentence at the end of such definition:
Notwithstanding the foregoing, all finished goods and raw materials
inventory located at the site of a Bonded Project is not Qualified
Domestic Finished Goods and Raw Materials Inventory.
(c) The defined term "Qualified Domestic Net Unbilled
Progress Billing Receivables" in Section 1 of the Credit Agreement is amended
by the addition of the following sentence at the end of such definition:
Notwithstanding the foregoing, any such amount arising with respect to a
Bonded Project is not included in Qualified Domestic Net Unbilled
Progress Billing Receivables.
(d) The defined term "Qualified Domestic Work in Process
Inventory" in Section 1 of the Credit Agreement is amended by the addition of
the following sentence at the end of such definition:
Notwithstanding the foregoing, all work in process inventory located at
the site of a Bonded Project is not Qualified Domestic Work in Process
Inventory.
(e) The defined term "Qualified North American Accounts
Receivable" in Section 1 of the Credit Agreement is amended by the addition of
the following paragraph at the end of such definition:
Notwithstanding the foregoing, all accounts receivable arising
from the performance of a Bonded Project are not Qualified North
American Accounts Receivable unless the Company furnishes to the Agent
evidence, reasonably satisfactory to the Agent, that the Bonded Project
has been completed and the provider of the performance bond or other
Surety Instrument relating to such Bonded Project has released such
performance bond or other Surety Instrument and has released all claims
it may have relating to the account receivable arising in connection
with such Bonded Project.
3. Letter of Credit No. STI00473. During such period as Letter
of Credit No. STI00473 is secured by collateral consisting of cash or cash
equivalents having a market value not less than the amount available for
drawing thereunder, (a) Letter of Credit No. STI00473 shall be deemed to be a
Nonfinancial Letter of Credit for purposes of calculating the fee payable
under Section 3.08 of the Credit Agreement and (b) the amount available for
drawing under Letter of Credit No. STI00473 shall be excluded from the
Effective Amount of all L/C Obligations for purposes of determining whether
the sum of the Effective Amount of all Revolving Loans plus the Effective
Amount of all L/C Obligations exceeds the Borrowing Base Amount. The
reduction in the fee referred to in clause (a) above shall be effective
retroactively as of September 24, 1997 and the resulting credit shall be
applied against the fee for Letters of Credit due on the last Business Day of
June 1998.
4. Representations and Warranties. The Company represents and
warrants to the Agent and each Bank that:
(a) The representations and warranties set forth in
Sections 6.02, 6.03 and 6.04 of the Credit Agreement are true and correct in
all material respects after giving effect to this First Amendment; and
(b) No Default or Event of Default exists as of the date
of this First Amendment.
5. Costs and Expenses. The Company agrees to pay all costs and
expenses (including reasonable attorneys' fees) paid or incurred by the Agent
in connection with this First Amendment.
6. Full Force and Effect. The Credit Agreement, as amended
hereby, remains in full force and effect.
BUCYRUS INTERNATIONAL, INC.
BY \s\Daniel J. Smoke
Title: VP FIN & CFO
BANK ONE, WISCONSIN, as Agent, Issuing
Bank and a Bank
BY \s\Mark P. Bruss
Title: Vice President
THE BANK OF NOVA SCOTIA, as
Documentation Agent and a Bank
BY \s\F. C. H. Ashby
Title: Senior Manager Loan Operations
FIRSTAR BANK MILWAUKEE, N.A.
BY \s\Jeff Janza
Title: Ass't. Vice President
FLEET CAPITAL CORPORATION
BY \s\Audrey A. Pengelly
Title: Senior Vice President
LASALLE NATIONAL BANK
BY \s\James A. Meyer
Title: First Vice President
BANK OF SCOTLAND
BY \s\Annie Chin Tat
Title: Senior Vice President
EXHIBIT 10.17(a)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
AMENDMENT NO. 1
BUCYRUS INTERNATIONAL, INC.
1998 MANAGEMENT STOCK OPTION PLAN
Effective as of the date hereof, the Bucyrus International, Inc.
1998 Management Stock Option Plan (the "Plan") is hereby amended as set forth
below. Capitalized terms not defined herein shall be as defined in the Plan.
1. The definition of "Employee" in Article II of the Plan is
hereby amended to include consultants and advisors of the Company or any of
its Subsidiaries.
2. Where applicable in accordance with the intent of this
Amendment No. 1, references in the Plan or in any Option Certificate or
Exercise Notice to "employee" or "employees" shall be deemed to include
reference to consultants and advisors of the Company or any of its
Subsidiaries, and references to "termination of employment" or similar phrases
shall be deemed to include reference to termination of service as a consultant
or advisor.
3. In all other respects, the provisions of the Plan as in
effect as of the date hereof shall remain in full force and effect.
Dated: September 1, 1998 BUCYRUS INTERNATIONAL, INC.
\s\W. R. Hildebrand
By: W. R. Hildebrand
Its: President and CEO
EXHIBIT 10.17(b)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
AMENDMENT NO. 1 TO THE STOCKHOLDERS AGREEMENT
This AMENDMENT NO. 1 TO THE STOCKHOLDERS AGREEMENT, dated as of
September 1, 1998 among BUCYRUS INTERNATIONAL, INC., a Delaware corporation
(the "Company"), AMERICAN INDUSTRIAL PARTNERS ACQUISITION COMPANY, LLC, a
Delaware limited liability company ("AIP") and each individual who hereafter
executed a counterpart of this Agreement (or otherwise agrees to be bound by
the provisions hereof) and who is listed on the Schedule of Stockholders
attached hereto as a Management Stockholder (the "Management Stockholders"
and, together with AIP and the Permitted Transferees, the "Stockholders").
WHEREAS, the parties hereto have agreed to amend the Stockholders
Agreement to revise the date through which the Fair Market Value of the Common
Stock shall be no less than $100.00 per share.
ACCORDINGLY, the parties hereto agree to amend the Stockholders
Agreement, effective as of the date first appearing above, as follows:
1. The proviso set forth in definition of "Fair Market Value"
appearing in SECTION 1. DEFINITIONS, shall be deleted in its entirety and
replaced with the following phrase: "provided, however, that prior to
March 31, 1999, the Fair Market Value shall not be less than $100.00 per share
of Common Stock."
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this counterpart
to this Amendment No. 1 to the Stockholders Agreement dated as of September 1,
1998 among Bucyrus International, Inc. and the other parties thereto.
Management Stockholders:
\s\W. R. Hildebrand
Willard R. Hildebrand*
ADDRESS:
1806 Princeton Court
Lake Forest, IL 60045
\s\Daniel J. Smoke
Daniel J. Smoke*
ADDRESS:
745 Spyglass Hill
Holland, MI 49424
\s\Craig R. Mackus
Craig R. Mackus
ADDRESS:
19675 Dorchester Drive
Brookfield, WI 53045
\s\Michael G. Onsager
Michael G. Onsager
ADDRESS:
8254 W. Southview Drive
Franklin, WI 53132
____________________
* With a copy to: Bulter, Rubin, Salarelli & Boyd,
1800 Three First National Plaza, 70 West Madison
Street, Chicago, IL 60602, Attn: Craig T. Boyd
<PAGE>
\s\Thomas B. Phillips
Thomas B. Phillips
ADDRESS:
3674 W. Southwood Drive
Franklin, WI 53132
\s\T. W. Sullivan
Timothy W. Sullivan
ADDRESS:
13000 W. Hawthorne Lane
New Berlin, WI 53151
\s\Neil Massey
Neil Massey
ADDRESS:
1950 Circlewood Drive
Racine, WI 53402
\s\F. Bruno
Frank Bruno
ADDRESS:
N2425 Ara Glenn Drive
Lake Geneva, WI 53147
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
the Stockholders Agreement as of the date first above written.
BUCYRUS INTERNATIONAL, INC.
By: \s\W. R. Hildebrand
Willard R. Hildebrand
AMERICAN INDUSTRIAL PARTNERS
ACQUISITION COMPANY, LLC
By: AMERICAN INDUSTRIAL PARTNERS
CAPITAL FUND II, L.P., its
Managing Member
By: AMERICAN INDUSTRIAL PARTNERS
II, L.P., its General Part-
ner
By: AMERICAN INDUSTRIAL PARTNERS
CORPORATION, its General
Partner
By: \s\W. Richard Bingham
W. Richard Bingham,
President
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 15,141
<SECURITIES> 0
<RECEIVABLES> 55,907
<ALLOWANCES> (740)
<INVENTORY> 109,582
<CURRENT-ASSETS> 186,854
<PP&E> 109,535
<DEPRECIATION> (8,890)
<TOTAL-ASSETS> 413,189
<CURRENT-LIABILITIES> 62,123
<BONDS> 198,524
0
0
<COMMON> 14
<OTHER-SE> 117,581
<TOTAL-LIABILITY-AND-EQUITY> 413,189
<SALES> 229,890
<TOTAL-REVENUES> 230,681
<CGS> 190,856
<TOTAL-COSTS> 190,856
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,023
<INCOME-PRETAX> (9,028)
<INCOME-TAX> 1,202
<INCOME-CONTINUING> (10,230)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,230)
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