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, 1999
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 August 11, 1999
Common Stock, $.01 par value 1,442,100
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. FINANCIAL INFORMATION:
Item 1 - Financial Statements (Unaudited)
Consolidated Condensed Statements of Operations -
Quarters and six months ended June 30, 1999
and 1998 4
Consolidated Condensed Statements of Comprehensive
Income (Loss) - Quarters and six months ended
June 30, 1999 and 1998 5
Consolidated Condensed Balance Sheets -
June 30, 1999 and December 31, 1998 6-7
Consolidated Condensed Statements of Cash Flows -
Six months ended June 30, 1999 and 1998 8
Notes to Consolidated Condensed Financial
Statements 9-20
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 21-25
Part II. OTHER INFORMATION:
Item 6 - Exhibits and Reports on Form 8-K 26
Signature Page 27
<TABLE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)
<CAPTION>
Quarters Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 90,549 $ 80,041 $ 165,159 $ 153,741
Other income 237 281 772 516
__________ __________ __________ __________
90,786 80,322 165,931 154,257
__________ __________ __________ __________
Costs and Expenses:
Cost of products sold 73,563 63,538 133,922 130,119
Engineering and field
service, selling,
administrative and
miscellaneous expenses 12,804 11,475 24,248 23,648
Interest expense 4,727 4,735 9,484 9,204
__________ __________ __________ __________
91,094 79,748 167,654 162,971
__________ __________ __________ __________
Earnings (loss) before
income taxes (308) 574 (1,723) (8,714)
Income taxes 448 867 1,129 648
__________ __________ __________ __________
Net loss $ (756) $ (293) $ (2,852) $ (9,362)
Net loss per share
of common stock:
Basic $ (.52) $ (.20) $ (1.98) $ (6.53)
Diluted $ (.52) $ (.20) $ (1.98) $ (6.53)
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in Thousands)
<CAPTION>
Quarters Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net loss $ (756) $ (293) $ (2,852) $ (9,362)
Other comprehensive income (loss) -
foreign currency translation
adjustments (1,049) (4,209) (3,124) (4,590)
__________ __________ __________ __________
Comprehensive loss $ (1,805) $ (4,502) $ (5,976) $ (13,952)
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars In Thousands, Except Per Share Amounts)
<CAPTION>
June 30, December 31, June 30, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C> <C>
ASSETS LIABILITIES AND COMMON
CURRENT ASSETS: SHAREHOLDERS' INVESTMENT
Cash and cash CURRENT LIABILITIES:
equivalents $ 8,474 $ 8,821 Accounts payable and
Receivables 56,037 61,727 accrued expenses $ 56,702 $ 54,950
Inventories 121,137 113,226 Liabilities to customers
Prepaid expenses and on uncompleted contracts
other current assets 6,515 6,381 and warranties 9,229 3,168
________ ________ Income taxes 1,030 950
Short-term obligations 569 513
Total Current Assets 192,163 190,155 Current maturities of
long-term debt 1,013 1,006
OTHER ASSETS: ________ ________
Restricted funds Total Current
on deposit 468 476 Liabilities 68,543 60,587
Goodwill 70,585 71,835
Intangible assets - net 41,469 42,573 LONG-TERM LIABILITIES:
Other assets 11,308 11,526 Liabilities to customers on
________ ________ uncompleted contracts
and warranties 5,350 5,414
123,830 126,410 Postretirement benefits 14,058 14,188
Deferred expenses
PROPERTY, PLANT AND EQUIPMENT: and other 13,641 14,585
Cost 118,245 110,960 ________ ________
Less accumulated
depreciation (15,261) (10,330) 33,049 34,187
________ ________ LONG-TERM DEBT, less
current maturities 203,404 202,308
102,984 100,630
COMMON SHAREHOLDERS' INVESTMENT:
Common stock - par value
$.01 per share, authorized
1,700,000 shares, issued
1,443,850 shares 14 14
Additional paid-in capital 144,371 144,296
Treasury stock - 1,750
shares, at cost (156) -
Notes receivable from
shareholders (475) (400)
Accumulated deficit (18,274) (15,422)
Accumulated other
comprehensive income (11,499) (8,375)
________ ________
113,981 120,113
________ ________ ________ ________
$418,977 $417,195 $418,977 $417,195
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
Six Months Ended June 30,
1999 1998
Net Cash Provided By (Used In)
Operating Activities $ 9,822 $ (8,549)
__________ __________
Cash Flows From Investing Activities
Decrease in restricted funds on deposit 3 673
Purchases of property, plant
and equipment (3,897) (6,724)
Proceeds from sale of property, plant
and equipment 94 1,188
Purchase of Bennett & Emmott (1986) Ltd. (7,005) -
__________ __________
Net cash used in investing activities (10,805) (4,863)
__________ __________
Cash Flows From Financing Activities
Net increase (decrease) in long-term
debt and other bank borrowings 1,226 17,954
Proceeds from issuance of common
stock - 780
Purchase of treasury stock (156) -
__________ __________
Net cash provided by (used in)
financing activities 1,070 18,734
__________ __________
Effect of exchange rate
changes on cash (434) (909)
__________ __________
Net increase (decrease) in
cash and cash equivalents (347) 4,413
Cash and cash equivalents at
beginning of period 8,821 15,071
__________ __________
Cash and cash equivalents at
end of period $ 8,474 $ 19,484
Supplemental Disclosures of Cash Flow Information
1999 1998
Cash paid during the period for:
Interest $ 9,414 $ 8,763
Income taxes - net of refunds 787 142
See notes to consolidated condensed financial statements.
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. The Company's
operations are classified as one operating segment.
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 1998
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 29, 1999.
3. Inventories consist of the following:
June 30, December 31,
1999 1998
(Dollars in Thousands)
Raw materials and parts $ 19,444 $ 16,987
Costs relating to
uncompleted contracts 5,147 4,503
Customers' advances offset
against costs incurred on
uncompleted contracts (4,073) (2,296)
Work in process 21,203 22,724
Finished products (primarily
replacement parts) 79,416 71,308
$121,137 $113,226
4. Basic and diluted net loss per share of common stock were computed by
dividing net loss by the weighted average number of shares of common
stock outstanding. Although the Company has stock options outstanding,
none of these options are dilutive. The numerators and the denominators
of the basic and diluted net loss per share of common stock calculations
are as follows:
Quarters Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
(Dollars in Thousands, Except
Per Share Amounts)
Basic and Diluted
Net loss $ (756) $ (293) $ (2,852) $ (9,362)
Weighted average
shares outstanding 1,442,405 1,438,100 1,442,423 1,434,868
Net loss per share $ (.52) $ (.20) $ (1.98) $ (6.53)
5. 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, 2000.
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. At the date
of initial application, the Company shall choose to either (a) recognize
as an asset or liability in the consolidated balance sheet all embedded
derivative instruments that are required to be separated from their host
contracts or (b) select either January 1, 1998 or January 1, 1999 as a
transition date for embedded derivatives. If the Company chooses to
select a transition date, it shall recognize as separate assets and
liabilities only those derivatives embedded in hybrid instruments issued,
acquired, or substantively modified by the Company on or after the
selected transition date. That choice is not permitted to be applied to
only some of the Company's individual hybrid instruments and must be
applied on an all-or-none basis.
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.
6. 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.
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Quarter Ended June 30, 1999
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 63,450 $ 10,055 $ 50,420 $(33,376) $ 90,549
Other income 1,108 1 181 (1,053) 237
________ ________ ________ ________ ________
64,558 10,056 50,601 (34,429) 90,786
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 53,226 8,610 44,789 (33,062) 73,563
Engineering and field
service, selling
administrative
and miscellaneous
expenses 8,304 616 3,884 - 12,804
Interest expense 4,584 450 746 (1,053) 4,727
________ ________ ________ ________ ________
66,114 9,676 49,419 (34,115) 91,094
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (1,556) 380 1,182 (314) (308)
Income taxes (37) 152 333 - 448
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (1,519) 228 849 (314) (756)
Equity in net earnings of
consolidated subsidiaries 1,077 - - (1,077) -
________ ________ ________ ________ ________
Net earnings (loss) $ (442) $ 228 $ 849 $ (1,391) $ (756)
</TABLE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Quarter Ended June 30, 1998
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 49,117 $ 8,011 $ 36,231 $(13,318) $ 80,041
Other income 779 - 214 (712) 281
________ ________ ________ ________ ________
49,896 8,011 36,445 (14,030) 80,322
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 39,822 7,006 29,628 (12,918) 63,538
Engineering and field
service, selling,
administrative
and miscellaneous
expenses 6,799 587 4,089 - 11,475
Interest expense 4,636 129 682 (712) 4,735
________ ________ ________ ________ ________
51,257 7,722 34,399 (13,630) 79,748
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (1,361) 289 2,046 (400) 574
Income taxes 17 115 735 - 867
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (1,378) 174 1,311 (400) (293)
Equity in net earnings of
consolidated subsidiaries 1,485 - - (1,485) -
________ ________ ________ ________ ________
Net earnings (loss) $ 107 $ 174 $ 1,311 $ (1,885) $ (293)
</TABLE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Six Months Ended June 30, 1999
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $114,745 $ 19,465 $ 83,188 $(52,239) $165,159
Other income 2,454 1 320 (2,003) 772
________ ________ ________ ________ ________
117,199 19,466 83,508 (54,242) 165,931
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 96,093 17,408 72,146 (51,725) 133,922
Engineering and field
service, selling,
administrative
and miscellaneous
expenses 16,021 1,147 7,080 - 24,248
Interest expense 9,287 828 1,372 (2,003) 9,484
________ ________ ________ ________ ________
121,401 19,383 80,598 (53,728) 167,654
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (4,202) 83 2,910 (514) (1,723)
Income taxes 281 33 815 - 1,129
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (4,483) 50 2,095 (514) (2,852)
Equity in net earnings of
consolidated subsidiaries 2,145 - - (2,145) -
________ ________ ________ ________ ________
Net earnings (loss) $ (2,338) $ 50 $ 2,095 $ (2,659) $ (2,852)
</TABLE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Six Months Ended June 30, 1998
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 93,871 $ 16,175 $ 69,534 $(25,839) $153,741
Other income 1,529 1 414 (1,428) 516
________ ________ ________ ________ ________
95,400 16,176 69,948 (27,267) 154,257
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 81,775 14,386 59,247 (25,289) 130,119
Engineering and field
service, selling,
administrative
and miscellaneous
expenses 14,115 1,361 8,172 - 23,648
Interest expense 9,011 249 1,372 (1,428) 9,204
________ ________ ________ ________ ________
104,901 15,996 68,791 (26,717) 162,971
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (9,501) 180 1,157 (550) (8,714)
Income taxes 198 72 378 - 648
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (9,699) 108 779 (550) (9,362)
Equity in net earnings of
consolidated subsidiaries 887 - - (887) -
________ ________ ________ ________ ________
Net earnings (loss) $ (8,812) $ 108 $ 779 $ (1,437) $ (9,362)
</TABLE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets
June 30, 1999
(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 $ - $ 27 $ 8,447 $ - $ 8,474
Receivables 28,782 4,836 22,419 - 56,037
Intercompany receivables 75,858 2,524 3,548 (81,930) -
Inventories 70,806 4,671 46,722 (1,062) 121,137
Prepaid expenses and
other current assets 870 559 5,086 - 6,515
________ ________ ________ _________ ________
Total Current Assets 176,316 12,617 86,222 (82,992) 192,163
OTHER ASSETS:
Restricted funds on deposit - - 468 - 468
Goodwill 70,585 - - - 70,585
Intangible assets - net 41,376 93 - - 41,469
Other assets 9,354 - 1,954 - 11,308
Investment in subsidiaries 23,087 - - (23,087) -
________ ________ ________ _________ ________
144,402 93 2,422 (23,087) 123,830
PROPERTY, PLANT AND
EQUIPMENT - net 74,271 14,437 14,276 - 102,984
________ ________ ________ _________ ________
$394,989 $ 27,147 $102,920 $(106,079) $418,977
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 39,677 $ 1,598 $ 15,677 $ (250) $ 56,702
Intercompany payables 260 23,774 53,180 (77,214) -
Liabilities to customers
on uncompleted contracts
and warranties 8,463 - 766 - 9,229
Income taxes 199 26 805 - 1,030
Short-term obligations 140 - 429 - 569
Current maturities of
long-term debt 175 - 838 - 1,013
________ ________ ________ _________ ________
Total Current Liabilities 48,914 25,398 71,695 (77,464) 68,543
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 4,775 - 575 - 5,350
Postretirement benefits 13,531 - 527 - 14,058
Deferred expenses and other 12,461 244 936 - 13,641
________ ________ ________ _________ ________
30,767 244 2,038 - 33,049
LONG-TERM DEBT, less
current maturities 195,799 - 7,605 - 203,404
COMMON SHAREHOLDERS'
INVESTMENT 119,509 1,505 21,582 (28,615) 113,981
________ ________ ________ _________ ________
$394,989 $ 27,147 $102,920 $(106,079) $418,977
</TABLE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets
December 31, 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 $ - $ 60 $ 8,761 $ - $ 8,821
Receivables 32,414 3,926 25,387 - 61,727
Intercompany receivables 77,179 1,855 1,365 (80,399) -
Inventories 67,052 4,728 43,056 (1,610) 113,226
Prepaid expenses and
other current assets 763 596 5,022 - 6,381
________ ________ ________ _________ ________
Total Current Assets 177,408 11,165 83,591 (82,009) 190,155
OTHER ASSETS:
Restricted funds on deposit - - 476 - 476
Goodwill 71,835 - - - 71,835
Intangible assets - net 42,441 132 - - 42,573
Other assets 9,556 - 1,970 - 11,526
Investment in subsidiaries 25,725 - - (25,725) -
________ ________ ________ _________ ________
149,557 132 2,446 (25,725) 126,410
PROPERTY, PLANT AND
EQUIPMENT - net 75,286 14,894 10,450 - 100,630
________ ________ ________ _________ ________
$402,251 $ 26,191 $ 96,487 $(107,734) $417,195
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 42,501 $ 1,597 $ 11,185 $ (333) $ 54,950
Intercompany payables - 22,906 54,808 (77,714) -
Liabilities to customers
on uncompleted contracts
and warranties 2,526 - 642 - 3,168
Income taxes 186 28 736 - 950
Short-term obligations 513 - - - 513
Current maturities of
long-term debt 168 - 838 - 1,006
________ ________ ________ _________ ________
Total Current Liabilities 45,894 24,531 68,209 (78,047) 60,587
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 4,839 - 575 - 5,414
Postretirement benefits 13,645 - 543 - 14,188
Deferred expenses and other 13,052 206 1,327 - 14,585
________ ________ ________ _________ ________
31,536 206 2,445 - 34,187
LONG-TERM DEBT, less
current maturities 200,746 - 1,562 - 202,308
COMMON SHAREHOLDERS'
INVESTMENT 124,075 1,454 24,271 (29,687) 120,113
________ ________ ________ _________ ________
$402,251 $ 26,191 $ 96,487 $(107,734) $417,195
</TABLE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
Six Months Ended June 30, 1999
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Net Cash Provided By
Operating Activities $ 8,316 $ 276 $ 1,230 $ - $ 9,822
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Decrease in restricted
funds on deposit - - 3 - 3
Purchases of property,
plant and equipment (2,913) (321) (663) - (3,897)
Proceeds from sale of
property, plant and
equipment - 12 82 - 94
Purchase of Bennett &
Emmott (1986) Ltd. - - (7,005) - (7,005)
________ ________ ________ ________ ________
Net cash used in
investing activities (2,913) (309) (7,583) - (10,805)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Net increase in long-term
debt and other
bank borrowings (5,247) - 6,473 - 1,226
Purchase of treasury stock (156) - - - (156)
________ ________ ________ ________ ________
Net cash provided by (used
in) financing activities (5,403) - 6,473 - 1,070
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - (434) - (434)
________ ________ ________ ________ ________
Net decrease in cash and
cash equivalents - (33) (314) - (347)
Cash and cash equivalents
at beginning of period - 60 8,761 - 8,821
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 27 $ 8,447 $ - $ 8,474
</TABLE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
Six Months Ended June 30, 1998
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Net Cash Used In
Operating Activities $(14,073) $ 1,136 $ 4,388 $ - $ (8,549)
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Decrease in restricted
funds on deposit - - 673 - 673
Purchases of property,
plant and equipment (4,965) (1,212) (547) - (6,724)
Proceeds from sale of
property, plant and
equipment - - 1,188 - 1,188
________ ________ ________ ________ ________
Net cash provided by
(used in) investing
activities (4,965) (1,212) 1,314 - (4,863)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Net increase in long-term
debt and other
bank borrowings 18,258 - (304) - 17,954
Proceeds from issuance
of common stock 780 - - - 780
________ ________ ________ ________ ________
Net cash provided by
financing activities 19,038 - (304) - 18,734
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - (909) - (909)
________ ________ ________ ________ ________
Net increase (decrease)
in cash and cash
equivalents - (76) 4,489 - 4,413
Cash and cash equivalents
at beginning of period - 103 14,968 - 15,071
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 27 $ 19,457 $ - $ 19,484
</TABLE>
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
the Company's operations for the quarters and six months ended June 30, 1999
and 1998.
In connection with acquisitions involving the Company, assets and
liabilities have been adjusted to their estimated fair values. 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 June 30, 1999 and December 31, 1998 were
as follows:
June 30, December 31,
1999 1998
(Dollars in Thousands)
Working capital $123,620 $129,568
Current ratio 2.8 to 1 3.1 to 1
The decrease in working capital and current ratio was primarily due to an
increase in liabilities to customers on uncompleted contracts.
The Company is presenting below a calculation of earnings (loss) before
interest expense, income taxes, depreciation, amortization, (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 the Revolving Credit
Facility (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:
Quarters Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
(Dollars in Thousands)
Earnings (loss)
before income
taxes $ (308) $ 574 $ (1,723) $ (8,714)
Non-cash expenses:
Depreciation 2,716 2,599 5,460 5,099
Amortization 1,408 1,414 2,813 2,729
(Gain) loss on sale
of fixed assets 43 (12) 28 (35)
Inventory fair
value adjustment
charged to cost
of products
sold - - - 6,925
Interest expense 4,727 4,735 9,484 9,204
Adjusted EBITDA $ 8,586 $ 9,310 $ 16,062 $ 15,208
The Company has a credit agreement with Bank One, Wisconsin 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. The Revolving Credit Agreement expires on May 31,
2002. 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 June 30, 1999 were $45,100,000 at a weighted
average interest rate of 7.9%. The issuance of standby letters of credit
under the Revolving Credit Facility and certain other bank facilities reduces
the amount available for direct borrowings under the Revolving Credit
Facility. At June 30, 1999, there were $18,451,000 of standby letters of
credit outstanding under the various bank facilities. 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 June 30, 1999 was $15,930,000.
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 June 30, 1999, the Company had approximately $1,956,000 of open
capital appropriations. The Company's capital additions for the six months
ended June 30, 1999 were $3,897,000 compared with $6,724,000 for the six
months ended June 30, 1998. In the near term, the Company currently
anticipates spending closer to the 1999 level.
Capitalization
The long-term debt to equity ratio at June 30, 1999 and December 31, 1998
was 1.8 to 1 and 1.7 to 1, respectively. The long-term debt to total
capitalization ratio at June 30, 1999 and December 31, 1998 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 six months ended June 30, 1999 were
$90,549,000 and $165,159,000, respectively, compared with $80,041,000 and
$153,741,000 for the quarter and six months ended June 30, 1998, respectively.
Net sales of repair parts and services for the quarter and six months ended
June 30, 1999 were $54,612,000 and $106,002,000, respectively, which is a
decrease of $3,311,000 or 5.7% and $3,336,000 or 3.1% from the quarter and six
months ended June 30, 1998, respectively. Both decreases in repair parts and
service net sales were primarily at foreign locations. Net machine sales for
the quarter and six months ended June 30, 1999 were $35,937,000 and
$59,157,000, respectively, which is an increase of 62.5% and 33.2% from the
quarter and six months ended June 30, 1998, respectively. The increases were
primarily in dragline volume and reflect the orders for three partial
draglines in India in 1998 and one dragline in Australia in 1997.
Cost of Products Sold
Cost of products sold for the quarter ended June 30, 1999 was $73,563,000
or 81.2% of net sales compared with $63,538,000 or 79.4% of net sales for the
quarter ended June 30, 1998. For the six months ended June 30, 1999, cost of
products sold was $133,922,000 or 81.1% of net sales compared with
$130,119,000 or 84.6% of net sales for the six months ended June 30, 1998.
During the second quarter of 1998, the Company reduced cost of sales by
$1,210,000 as a result of a change in the Company's short-term disability
plan. Included in cost of products sold for the six months ended June 30,
1998 were charges of $6,925,000 recorded in the first quarter of 1998 as a
result of the fair value adjustments to inventory being charged to cost of
products sold as the inventory was sold. The fair value adjustments were made
as a result of the acquisition of the Company by American Industrial Partners
Acquisition Company ("AIPAC"). Excluding the effect of the inventory fair
value adjustments, cost of products sold for the six months ended June 30,
1998 as a percentage of net sales was 80.1%. Also included in cost of
products sold for 1999 and 1998 was $2,326,000 and $2,162,000, respectively,
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.
Engineering and Field Service, Selling, Administrative and Miscellaneous
Expenses
Engineering and field service, selling, administrative and miscellaneous
expenses for the quarter ended June 30, 1999 were $12,804,000 or 14.1% of net
sales compared with $11,475,000 or 14.3% of net sales for the quarter ended
June 30, 1998. The amounts for the six months ended June 30, 1999 and 1998
were $24,248,000 or 14.7% of net sales and $23,648,000 or 15.4% of net sales,
respectively. Included in the amounts for the quarter and six months ended
June 30, 1999 was $508,000 of severance expense. The amounts for the quarter
and six months ended June 30, 1998 were reduced by $563,000 as a result of a
change in the Company's short-term disability plan.
Interest Expense
Interest expense for the quarter and six months ended June 30, 1999 was
$4,727,000 and $9,484,000, respectively, compared with $4,735,000 and
$9,204,000 for the quarter and six months ended June 30, 1998, respectively.
Included in interest expense for the quarter and six months ended June 30,
1999 was $3,657,000 and $7,313,000, respectively, related to the Senior Notes
compared with $3,615,000 and $7,231,000, respectively, for the quarter and six
months ended June 30, 1998.
Income Taxes
Income tax expense consists primarily of foreign taxes at applicable
statutory rates. For the six months ended June 30, 1998, income tax expense
is net of a $658,000 benefit related to the foreign fair value adjustment to
inventory charged to cost of products sold. For United States tax purposes,
there were losses for which no income tax benefit was recorded.
Net Earnings (Loss)
Net loss for the quarter and six months ended June 30, 1999 was $756,000
and $2,852,000, respectively, compared with a net loss of $293,000 and
$9,362,000 for the quarter and six months ended June 30, 1998, respectively.
Included in net loss for the six months ended June 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 six months ended June 30, 1999 were $4,124,000 and $8,273,000,
respectively, compared with $4,013,000 and $7,828,000, respectively, for the
quarter and six months ended June 30, 1998.
Backlog and New Orders
The Company's consolidated backlog on June 30, 1999 was $207,400,000
compared with $262,457,000 at December 31, 1998 and $197,441,000 at June 30,
1998. Machine backlog at June 30, 1999 was $82,280,000, which is a decrease
of 27.6% from December 31, 1998 and an increase of 3.3% from June 30, 1998.
During 1999, there has been a decrease in both electric mining shovel and
dragline backlog. 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 early in the year 2000. Included
in backlog at June 30, 1999, December 31, 1998 and June 30, 1998 was
$10,017,000, $27,273,000 and $45,630,000, respectively, related to this
machine. During the fourth quarter of 1998, the Company sold four electric
mining shovels and three blasthole drills to a customer in Peru for a new
copper mine in that country. Also, during the fourth quarter of 1998, the
Company sold three partial draglines to a customer in India. Repair parts and
service backlog at June 30, 1999 was $125,120,000, which is a decrease of
15.9% from December 31, 1998 and an increase of 6.2% from June 30, 1998. The
increase in repair parts and service backlog from June 30, 1998 was primarily
due to a maintenance and repair contract sold in connection with the
aforementioned machine sales to the customer in Peru.
New orders for the quarter and six months ended June 30, 1999 were
$56,369,000 and $110,101,000, respectively, which is a decrease of 19.4% and
18.5% from the quarter and six months ended June 30, 1998, respectively. New
machine orders for the quarter and six months ended June 30, 1999 were
$18,845,000 and $27,735,000, respectively, which is an increase of 5.5% and
3.2% from the quarter and six months ended June 30, 1998, respectively. New
machine orders for electric mining shovels have decreased while new machine
orders for blasthole drills have increased. New repair parts and service
orders for the quarter and six months ended June 30, 1999 were $37,524,000 and
$52,082,000, respectively, which is a decrease of 28.0% and 23.9% from the
quarter and six months ended June 30, 1998, respectively. New orders for both
machines and repair parts and service continue to be affected by the softness
in mineral prices.
The Bennett & Emmott Acquisition
On April 30, 1999, the Company consummated the acquisition of Bennett
& Emmott (1986) Ltd. ("Bennett & Emmott"), a privately owned Canadian company
with extensive experience in the field repair and service of heavy machinery
for the surface mining industry. In addition to the surface mining industry,
Bennett & Emmott services a large number of customers in the pulp and paper,
sawmill, oil and natural gas industries in Western Canada, the Northwest
Territories and the Yukon. The company provides design and manufacturing
services, as well as in-house and field repair and testing of electrical and
mechanical equipment. Bennett & Emmott also distributes compressors,
generators and related products.
Year 2000 Issues
The Company has assessed and continues to assess the impact of year 2000
issues on its operations. Disclosures relating to year 2000 issues are
included in the Company's 1998 Annual Report on Form 10-K. On August 2, 1999,
the Company's South Milwaukee operations began operating on its new computer
system. While the primary purpose of this replacement was to improve the
efficiency and effectiveness of the Company's existing computer system, Year
2000 Issues were also addressed as a part of the system replacement. The
system replacement for other domestic subsidiary operations is expected to be
completed by the end of 1999. There have been no additional material
developments relating to year 2000 issues during the six months ended June 30,
1999.
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 second quarter of
1999.
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 11, 1999 /s/Craig R. Mackus
Craig R. Mackus
Secretary and Controller
Principal Accounting Officer
Date August 11, 1999 /s/Stephen R. Light
Stephen R. Light
President and CEO
BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
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 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.
2.4 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
Registrant effective to 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.
3.5 Amendment to By-laws of Exhibit 3.5
Registrant effective to Registrant's
December 16, 1998. Annual Report on
Form 10-K for
the year ended
December 31, 1998.
3.6 Certificate of Amendment to Exhibit 3.6
Restated Certificate of to Registrant's
Incorporation adopted Annual Report on
December 16, 1998. Form 10-K for
the year ended
December 31, 1998.
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 10.1 to
September 24, 1997 between Registrant's
Bank One, Wisconsin and Current Report
Registrant. on Form 8-K
filed with the
Commission on
October 10, 1997.
(a) First amendment dated Exhibit 10.1(a)
July 21, 1998 to Credit to Registrant's
Agreement. Quarterly Report
on Form 10-Q
filed with the
Commission on
November 16, 1998.
(b) Second amendment dated Exhibit 10.1(b)
September 30, 1998 to to Registrant's
Credit Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 1998.
(c) Third amendment dated X
April 20, 1999 to Credit
Agreement.
10.2* Separation Agreement X
between Registrant
and D. J. Smoke dated
July 22, 1999.
27.1 Financial Data Schedule X
(Edgar filing only.)
__________________________
* A management contract or compensatory plan or arrangement.
EXHIBIT 10.1(c)
FORM 10-Q
QUARTER ENDED JUNE 30, 1999
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of
April 20, 1999, amends and supplements the Credit Agreement dated as of
September 24, 1997, as amended by the First Amendment to Credit
Agreement dated as of July 21, 1998 and the Second Amendment to Credit
Agreement dated as of September 30, 1998 (as so amended, 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 Third Amendment by
all of the parties hereto and fulfillment of the conditions specified in
section 3, all references to the Credit Agreement set forth in the Loan
Documents shall mean the Credit Agreement as amended by this Third
Amendment to Credit Agreement.
2. Amendments.
(a) The following defined terms are inserted, in
appropriate alphabetical order, into section 1 of the Credit Agreement:
"BCA" means Bucyrus Canada Acquisition, Ltd., a
corporation organized under the laws of the Province of Alberta
and Wholly-Owned Subsidiary of Bucyrus Canada.
"Bucyrus Canada" means Bucyrus Canada Limited, a
corporation organized under the laws of the Province of Ontario
and a Wholly-Owned Subsidiary of the Company.
"Canadian Acquisition" means the purchase by BCA
of certain assets of Bennett & Emmott (1986) Ltd. pursuant to the
terms of the Asset Purchase Agreement dated as of March 31, 1999
between BCA and Bennett & Emmott (1986) Ltd. and the purchase of
certain real estate pursuant to the Real Estate Sale Agreement
dated as of March 31, 1999 between BCA and Winfield Power Company
Limited (collectively, the "Canadian Purchase Agreement").
(b) The defined term "Revolving Termination Date" in
Section 1 of the Credit Agreement is amended by deleting the date
"September 24, 2000" in clause (a) and replacing it with the date
"May 31, 2002".
(c) Section 8.03 of the Credit Agreement is amended
by deleting the word "and" at the end of subsection (b) and inserting
the following immediately before the period at the end of subsection
(c):
and
(d) BCA may merge into Bucyrus Canada (with
Bucyrus Canada being the surviving corporation) immediately
following the consummation of the Canadian Acquisition
(d) Section 8.04 of the Credit Agreement is amended
by deleting the word "and" at the end of subsection (g) and inserting
the following immediately before the period at the end of subsection
(h):
and
(i) the Canadian Acquisition pursuant to the
Canadian Purchase Agreement
(e) Section 8.08 of the Credit Agreement is amended
by deleting the word "and" at the end of subsection (d) and inserting
the following immediately before the period at the end of subsection
(e):
and
(f) Guaranty Obligations incurred by the
Company with respect to the Indebtedness of Bucyrus Canada,
provided that the aggregate amount of such Guaranty Obligations
shall not exceed $1,500,000 at any time
(g) Subsections 8.16(a), (b) and (c) of the Credit
Agreement are amended to read as follows:
(a) Adjusted Funded Debt to EBITDA Ratio. The Company
shall not permit the Adjusted Funded Debt to EBITDA Ratio, as of
the end of any fiscal quarter, to exceed the applicable ratio set
forth in the following table:
Fiscal Quarters
Ending During Ratio
1998 6.3:1.0
1999 6.0:1.0
2000 5.7:1.0
2001 5.4:1.0
2002 and thereafter 5.1:1.0
(b) Fixed Charge Coverage Ratio. The Company shall not
permit the Fixed Charge Coverage Ratio, as of the end of any
fiscal quarter, to be less than the applicable ratio set forth in
the following table:
Fiscal Quarters
Ending During Ratio
1998 1.4:1.0
1999 1.5:1.0
2000 1.6:1.0
2001 1.7:1.0
2002 and thereafter 1.8:1.0
(c) Interest Coverage Ratio. The Company shall not permit
the Interest Coverage Ratio, as of the end of any fiscal quarter,
to be less than the applicable ratio set forth in the following
table:
Fiscal Quarters
Ending During Ratio
1998 1.6:1.0
1999 1.7:1.0
2000 1.8:1.0
2001 1.9:1.0
2002 and thereafter 2.0:1.0
3. Conditions to Effectiveness. This Third Amendment
shall be effective upon its execution and delivery by each of the
parties hereto and receipt by the Agent of:
(a) a copy for each Bank, certified to be true and
complete by the Secretary of the Company, of the Canadian Purchase
Agreement (including all exhibits and schedules thereto) and other
operative documents relating to the Canadian Acquisition; and
(b) a fee of $75,000.
4. Allocation of Fee. The Agent shall forward to each
Bank its Pro Rata Share of the fee referred to in section 3(b).
5. 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 Third
Amendment; and
(b) No Default or Event of Default exists as of the
date of this Third Amendment.
6. 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 Third Amendment.
7. Full Force and Effect. The Credit Agreement, as
amended hereby, remains in full force and effect.
BUCYRUS INTERNATIONAL, INC.
BY /s/ John F. Bosbous
Title: Treasurer
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/ M.D. Smith
Title: Agent Operations
FIRSTAR BANK MILWAUKEE, N.A.
BY /s/ Jeff Janza
Title: 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 10.2
FORM 10-Q
QUARTER ENDED JUNE 30, 1999
SEPARATION AGREEMENT
This Separation Agreement is made and entered into the 22nd
day of July, 1999 (the "Execution Date"), by and between Bucyrus
International, Inc., a Delaware corporation ("Bucyrus") and Daniel J.
Smoke ("Executive").
WHEREAS, Executive is employed as Chief Financial Officer of
Bucyrus pursuant to an Employment Agreement ("Employment Agreement")
dated November 7, 1996 and Amendment No. 1 to Employment Agreement
("Amendment No. 1") dated March 17, 1998 (hereinafter collectively
referred to as the "Amended Employment Agreement"); and
WHEREAS, the parties hereto have mutually determined to
terminate Executive's employment as specifically provided in this
Separation Agreement.
NOW, THEREFORE, for and in consideration of the mutual
promises and covenants herein contained and for good and valuable
consideration, the sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Termination of Prior Agreements. The parties agree
that on September 30, 1999, except as specifically provided in this
Separation Agreement, the Amended Employment Agreement and any
exhibits, amendments or addendums thereto, and any prior agreements and
understandings between the parties, whether oral or written are hereby
canceled, terminated and superseded by this Separation Agreement and
shall be of no further force or effect.
2. Terms of Separation. The parties agree as follows:
(a) Executive's employment with Bucyrus will
terminate on September 30, 1999. Executive has been given two months
written notice of termination as provided in Paragraph 9(a) of the
Employment Agreement.
(b) From the Execution Date through September 30,
1999:
(1) Executive will not be required to be
physically in his office at Bucyrus.
(2) Executive will be on call to Bucyrus on an
"as needed basis". Provided, however, that Executive will be given
reasonable notice if travel is required, he will be reimbursed for all
out of pocket expenses, and further provided that the parties agree that
Executive will be unavailable to Bucyrus during the period August 15,
1999 to September 4, 1999.
(3) Executive will have use of his laptop
computer.
(c) Executive shall have use of his company
automobile until July 31, 1999, at which time he will return the
automobile to a representative of Bucyrus.
(d) The Change of Control provision of the Amended
Employment Agreement shall remain in effect through and until
September 30, 1999.
(e) After September 30, 1999, if Bucyrus requests
consulting services and Executive agrees to provide consulting services
to Bucyrus as an independent contractor, such consulting services will
be provided at a rate of $1,000.00 per day, plus expenses.
(f) For the period October 1, 1999 through
September 30, 2000 (the "Severance Period"), Executive shall be entitled
to a continuation of his Base Salary and, provided Executive continues
to pay the employee portion of the premium, his insurance benefits
(group health, life, dental and vision), all as provided in
Paragraph 9(d) of the Employment Agreement. During the Severance
Period, Executive shall also continue to accrue pension service under
the Bucyrus Salaried Employee Retirement Plan and can continue as a
participant in the Bucyrus International, Inc. Salaried Employees
Savings Plan.
(g) For the period October 1, 2000 to December 31,
2000 (the "Extended Severance Period"), Executive shall be entitled to a
continuation of his Base Salary and, provided Executive continues to pay
the employee portion of the premium, his insurance benefits (group
health, life, dental and vision). During the Extended Severance Period,
Executive shall also continue to accrue pension service under the
Bucyrus Salaried Employee Retirement Plan and can continue as a
participant in the Bucyrus International, Inc. Salaried Employee Savings
Plan. In exchange for the severance benefits provided during the
Extended Severance Period, Executive agrees:
(1) To waive, release, relinquish and
terminate any rights or claims to any Options under the Company's 1998
Management Stock Option Plan and under Section 4, Options, of Amendment
No. 1. Without limiting the generality of the preceding sentence
hereof, Executive specifically relinquishes any rights he may have under
Paragraph 4.4 of Amendment No. 1 relating to the vesting of Options in
the event of termination of employment.
(2) That on October 1, 1999, Bucyrus will
exercise its Repurchase Option under Section 3 of Stockholders Agreement
dated as of March 17, 1998 (the "Stockholders Agreement") and shall
repurchase the Management Shares of Bucyrus owned by the Executive
pursuant to the procedure set out in Paragraphs 3(a) and 3(b) of the
Stockholders Agreement. Executive agrees to sell all of the Management
Shares owned by the Executive as provided in Section 3, Repurchase
Option, of the Stockholders Agreement.
(h) The parties hereto agree that Paragraph 11,
Executive Covenants; Covenant Not to Compete, of the Employment
Agreement shall continue and remain in full force and effect and shall
not be replaced, superseded or terminated by this Separation Agreement.
In addition, the Confidentiality Agreement signed by Executive on
May 26, 1999 shall remain in full force and effect.
3. Release by Executive.
(a) In consideration of this Separation Agreement
and the monies and other good and valuable consideration provided to
Executive pursuant to this Separation Agreement, Executive hereby
irrevocably and unconditionally releases, waives and forever discharges
Bucyrus, any predecessor company or any affiliate or subsidiary
companies (the "Releasees"), from any and all actions, causes of action,
claims, demands, damages, rights, remedies and liabilities of whatever
kind or character, in law or equity, suspected or unsuspected, past or
present, that he has ever had or may now have (even if later asserted)
against the Releasees or any of them arising out of or related to
Executive's employment and positions with Bucyrus or the termination of
that employment and those positions, from the beginning of time,
including without limitation: (i) any claims arising from any federal,
state and/or local labor or civil rights laws including, without
limitation, the federal Civil Rights Acts of 1866, 1871, 1964 and 1991,
the Age Discrimination in Employment Act of 1967, as amended by, inter
alia, the Older Workers Benefit Protection Act of 1990, the Workers'
Adjustment and Retraining Notification Act, the Employee Retirement
Income Security Act of 1974, as amended, the Consolidated Omnibus Budget
Reconciliation Act of 1985 (except Executive shall have COBRA rights
arising out of the termination of his employment with Bucyrus), the
Americans with Disabilities Act of 1990, the Wisconsin Fair Employment
Act and employment and labor laws, as each may have been amended from
time to time, and (ii) any and all other claims occuring on or before
the Execution Date arising under or in regard to any contract, any and
all other federal, state or local constitutions, statutes, rules or
regulations, or under any common law right of any kind whatsoever, or
under the laws of any country or political subdivision, and including,
without limitation, any claim for any kind of tortious conduct
(including but not limited to any defamation, business tort or
intentional infliction of emotional distress), breach of contract,
promissory or equitable estoppel, breach of Bucyrus' policies, rules,
regulations, handbooks or manuals, breach of express or implied
covenants of good faith, wrongful termination, discharge or dismissal.
(b) Execution of this Separation Agreement by
Executive operates as a complete bar and defense against any and all
claims against the Releasees. If Executive should hereafter raise any
action, claim or proceeding against any of the Releasees, the Separation
Agreement may be raised as and shall constitute a complete bar to any
such action, claim or proceeding and the Releasees shall recover from
Executive all costs incurred including attorneys' fees. Nothing
contained herein is intended to prevent Executive from enforcing this
Separation Agreement.
4. Miscellaneous Provisions.
(a) This Separation Agreement contains the entire
agreement between the parties hereto and supersedes any and all prior
agreements, arrangements, negotiations, discussions or understandings
between the parties relating to the subject matter hereof. No oral
understanding, statements, promises or inducements contrary to the terms
of this Separation Agreement exist. This Separation Agreement cannot be
changed or terminated orally. Should any provision of this Separation
Agreement be held invalid, illegal or unenforceable, it shall be deemed
to be modified so that its purpose can lawfully be effectuated and the
balance of this Separation Agreement shall remain in full force and
effect.
(b) This Separation Agreement shall extend to, be
binding upon, and inure to the benefit of the parties and their
respective successors, heirs and assigns.
(c) This Separation Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin. By
his execution hereof, Executive hereby waives any right he may have to
arbitration as against Bucyrus and any of the other Releasees, and, as
to any dispute with regard to this Separation Agreement, hereby submits
to the jurisdiction of the state and federal courts located in the State
of Wisconsin and further agrees not to assert that any action brought in
such jurisdiction has been brought in an inconvenient forum.
(d) This Separation Agreement may be executed in any
number of counterparts each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one
and the same agreement.
5. Effective Date/Revocation. Executive may revoke this
Separation Agreement in writing at any time during a period of seven (7)
calendar days after the Execution Date of this Separation Agreement by
the parties (the "Revocation Period"). This Separation Agreement shall
become effective and enforceable automatically on the date of actual
receipt by the Company of the Certificate of Non-Revocation of
Separation Agreement (the form of which is Exhibit A hereto) executed
and dated by Executive at least one day after expiration of the
Revocation Period (the "Effective Date").
6. Representations. Each party hereto represents,
warrants and acknowledges that in executing this Separation Agreement,
he or it does not rely and has not relied upon any representation or
statement made by any other party or any other party's agents,
representatives or attorneys with regard to the subject matter, basis or
effect of this Separation Agreement or otherwise, other than those
representations, warranties, assurances and statements contained in the
Separation Agreement itself.
7. Notices. Any notices or requests under this
Separation Agreement shall be in writing, addressed as follows:
(a) If to Executive:
Mr. Daniel J. Smoke
P. O. Box 130511
Ann Arbor, Michigan 48113
(b) If to Bucyrus:
Bucyrus International, Inc.
P. O. Box 500
1100 Milwaukee Avenue
South Milwaukee, WI 53172-0500
Attention: President and CEO
IN SIGNING THIS SEPARATION AGREEMENT, EXECUTIVE ACKNOWLEDGES
THAT: (A) HE HAS READ AND UNDERSTANDS THIS SEPARATION AGREEMENT AND HE
IS HEREBY ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO
SIGNING THIS SEPARATION AGREEMENT, (B) HE HAS SIGNED THIS SEPARATION
AGREEMENT VOLUNTARILY, ON THE ADVICE OF HIS ATTORNEY, AND UNDERSTANDS
THAT IT CONTAINS A FULL AND FINAL RELEASE OF ALL CLAIMS, AS SET FORTH IN
PARAGRAPH THREE AGAINST THE RELEASEES AS OF THE EXECUTION DATE OF THIS
SEPARATION AGREEMENT, (C) HE HAS BEEN OFFERED AT LEAST TWENTY-ONE (21)
CALENDAR DAYS TO CONSIDER THE MATTERS MEMORIALIZED IN THIS SEPARATION
AGREEMENT, AND (D) THIS SEPARATION AGREEMENT IS NOT MADE IN CONNECTION
WITH AN EXIT INCENTIVE OR OTHER EMPLOYMENT TERMINATION PROGRAM OFFERED
TO A GROUP OR CLASS OF EMPLOYEES.
IN WITNESS WHEREOF, the parties hereto have executed this
Separation Agreement in Wisconsin as of the day and year first above
written.
BUCYRUS INTERNATIONAL, INC.
By: /s/ F. Bruno
Name: F. P. Bruno
Title: V. P. Human Resources
/s/ Daniel J. Smoke
Daniel J. Smoke, Executive
EXHIBIT A
CERTIFICATE OF NON-REVOCATION OF
SEPARATION AGREEMENT
I hereby certify and represent that seven (7) calendar days have
passed since the parties have signed the Separation Agreement and that I
have NOT exercised my rights to revoke that Separation Agreement pursuant
to the Older Workers Benefit Protection Act of 1990. I understand that
Bucyrus International, Inc. on behalf of themselves and their subsidiaries
and affiliates, in providing me with benefits under the Separation
Agreement, is relying on this Certificate, and that I can no longer revoke
the Separation Agreement.
______________________________ _______________________ , 1999
Daniel J. Smoke Date of Execution
by Executive
IMPORTANT:
This Certificate should be signed, dated and returned to the
Company's Vice President and General Counsel, Michael W. Salsieder, no
earlier than on the eighth (8th) calendar day after the Separation
Agreement is executed by the parties.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 8,474
<SECURITIES> 0
<RECEIVABLES> 57,200
<ALLOWANCES> (1,163)
<INVENTORY> 121,137
<CURRENT-ASSETS> 192,163
<PP&E> 118,245
<DEPRECIATION> (15,261)
<TOTAL-ASSETS> 418,977
<CURRENT-LIABILITIES> 69,412
<BONDS> 203,404
0
0
<COMMON> 14
<OTHER-SE> 113,967
<TOTAL-LIABILITY-AND-EQUITY> 418,977
<SALES> 165,159
<TOTAL-REVENUES> 165,931
<CGS> 133,922
<TOTAL-COSTS> 133,922
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,484
<INCOME-PRETAX> (1,723)
<INCOME-TAX> 1,129
<INCOME-CONTINUING> (2,852)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,852)
<EPS-BASIC> (1.98)
<EPS-DILUTED> (1.98)
</TABLE>