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 March 31, 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 May 10, 1999
Common Stock, $.01 par value 1,442,350
<PAGE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Item 1 - Financial Statements (Unaudited)
Consolidated Condensed Statements of Operations -
Quarters ended March 31, 1999 and 1998 4
Consolidated Condensed Statements of
Comprehensive Income (Loss) - Quarters ended
March 31, 1999 and 1998 5
Consolidated Condensed Balance Sheets -
March 31, 1999 and December 31, 1998 6-7
Consolidated Condensed Statements of Cash Flows -
Quarters ended March 31, 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
<PAGE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Quarter Ended March 31,
1999 1998
Revenues:
Net sales $ 74,610 $ 73,700
Other income 535 235
__________ __________
75,145 73,935
__________ __________
Costs and Expenses:
Cost of products sold 60,359 66,581
Engineering and field service,
selling, administrative and
miscellaneous expenses 11,444 12,173
Interest expense 4,757 4,469
__________ __________
76,560 83,223
__________ __________
Loss before income taxes (1,415) (9,288)
Income taxes (benefit) 681 (219)
__________ __________
Net loss $ (2,096) $ (9,069)
Net loss per share
of common stock:
Basic $ (1.45) $ (6.33)
Diluted $ (1.45) $ (6.33)
See notes to consolidated condensed financial statements.
<PAGE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(Dollars in Thousands)
Quarter Ended March 31,
1999 1998
Net loss $ (2,096) $ (9,069)
Other comprehensive income (loss) -
foreign currency translation
adjustments (2,075) (381)
________ ________
Comprehensive loss $ (4,171) $ (9,450)
See notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
March 31, December 31, March 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C> <C>
LIABILITIES AND COMMON
ASSETS SHAREHOLDERS' INVESTMENT
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash Accounts payable and
equivalents $ 6,494 $ 8,821 accrued expenses $ 54,774 $ 54,950
Receivables 51,967 61,727 Liabilities to customers
Inventories 119,654 113,226 on uncompleted contracts
Prepaid expenses and and warranties 11,123 3,168
other current assets 6,844 6,381 Income taxes 1,152 950
________ ________ Short-term obligations 146 513
Current maturities of
Total Current Assets 184,959 190,155 long-term debt 1,009 1,006
________ ________
OTHER ASSETS:
Restricted funds Total Current Liabilities 68,204 60,587
on deposit 473 476
Goodwill 71,210 71,835 LONG-TERM LIABILITIES:
Intangible assets - net 42,017 42,573 Liabilities to customers on
Other assets 11,370 11,526 uncompleted contracts
________ _______ and warranties 5,385 5,414
Postretirement benefits 14,109 14,188
125,070 126,410 Deferred expenses and other 12,545 14,585
________ ________
PROPERTY, PLANT AND EQUIPMENT:
Cost 112,194 110,960 32,039 34,187
Less accumulated LONG-TERM DEBT, less
depreciation (12,803) (10,330) current maturities 193,310 202,308
________ ________
COMMON SHAREHOLDERS' INVESTMENT:
99,391 100,630 Common stock - par value
$.01 per share, authorized
1,700,000 shares, issued
and outstanding 1,442,350
and 1,443,100 shares at
March 31, 1999 and
December 31, 1998,
respectively 14 14
Additional paid-in capital 144,296 144,296
Treasury stock (75) -
Note receivable from
shareholder (400) (400)
Accumulated deficit (17,518) (15,422)
Accumulated other
comprehensive income (10,450) (8,375)
________ ________
115,867 120,113
________ ________ ________ ________
$409,420 $417,195 $409,420 $417,195
<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)
Quarter Ended March 31,
1999 1998
Net Cash Provided By (Used in)
Operating Activities $ 9,543 $(19,676)
________ ________
Cash Flows From Investing Activities
Decrease in restricted funds on deposit 3 -
Purchases of property, plant
and equipment (2,040) (3,095)
Proceeds from sale of property, plant
and equipment 42 988
________ ________
Net cash used in investing activities (1,995) (2,107)
________ ________
Cash Flows From Financing Activities
Net increase (decrease) in long-term
debt and other bank borrowings (9,362) 22,310
Proceeds from issuance of common stock - 780
Purchase of treasury stock (75) -
________ ________
Net cash provided by (used in)
financing activities (9,437) 23,090
________ ________
Effect of exchange rate changes on cash (438) (246)
________ ________
Net increase (decrease) in cash
and cash equivalents (2,327) 1,061
Cash and cash equivalents at
beginning of period 8,821 15,071
________ ________
Cash and cash equivalents at
end of period $ 6,494 $ 16,132
Supplemental Disclosures of Cash Flow Information
1999 1998
Cash paid during the
period for:
Interest $ 8,089 $ 7,739
Income taxes - net of refunds 143 50
See notes to consolidated condensed financial statements.
<PAGE>
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of Bucyrus International, Inc. (the "Company"), the
consolidated condensed financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial results for the interim periods. Certain items are included in
these statements based on estimates for the entire year. 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:
March 31, December 31,
1999 1998
(Dollars in Thousands)
Raw materials and parts $ 19,712 $ 16,987
Costs relating to
uncompleted contracts 8,138 4,503
Customers' advances offset
against costs incurred on
uncompleted contracts (4,314) (2,296)
Work in process 19,293 22,724
Finished products (primarily
replacement parts) 76,825 71,308
________ ________
$119,654 $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:
Quarter Ended March 31,
1999 1998
(Dollars in Thousands, Except
Per Share Amounts)
Basic and Diluted
Net loss $ (2,096) $ (9,069)
Weighted average shares outstanding 1,442,442 1,431,600
Net loss per share $ (1.45) $ (6.33)
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, 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 adopted Statement of Position No. 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" during
the fourth quarter of 1998.
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.
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Quarter Ended March 31, 1999
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 51,295 $ 9,410 $ 32,768 $(18,863) $ 74,610
Other income 1,346 - 139 (950) 535
________ ________ ________ ________ ________
52,641 9,410 32,907 (19,813) 75,145
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 42,867 8,798 27,357 (18,663) 60,359
Engineering and field
service, selling,
administrative and
miscellaneous expenses 7,717 531 3,196 - 11,444
Interest expense 4,703 378 626 (950) 4,757
________ ________ ________ ________ ________
55,287 9,707 31,179 (19,613) 76,560
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and equity
in net earnings of
consolidated subsidiaries (2,646) (297) 1,728 (200) (1,415)
Income taxes (benefit) 318 (119) 482 - 681
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (2,964) (178) 1,246 (200) (2,096)
Equity in net earnings of
consolidated subsidiaries 1,068 - - (1,068) -
________ ________ ________ ________ ________
Net earnings (loss) $ (1,896) $ (178) $ 1,246 $ (1,268) $ (2,096)
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Quarter Ended March 31, 1998
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 44,754 $ 8,164 $ 33,303 $(12,521) $ 73,700
Other income 750 1 200 (716) 235
________ ________ ________ ________ ________
45,504 8,165 33,503 (13,237) 73,935
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 41,953 7,380 29,619 (12,371) 66,581
Engineering and field
service, selling,
administrative and
miscellaneous expenses 7,316 774 4,083 - 12,173
Interest expense 4,375 120 690 (716) 4,469
________ ________ ________ ________ ________
53,644 8,274 34,392 (13,087) 83,223
________ ________ ________ ________ ________
Loss before income taxes
and equity in net
loss of consolidated
subsidiaries (8,140) (109) (889) (150) (9,288)
Income taxes (benefit) 181 (43) (357) - (219)
________ ________ ________ ________ ________
Loss before equity
in net loss of
consolidated subsidiaries (8,321) (66) (532) (150) (9,069)
Equity in net loss of
consolidated subsidiaries (598) - - 598 -
________ ________ ________ ________ ________
Net loss $ (8,919) $ (66) $ (532) $ 448 $ (9,069)
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets
March 31, 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 $ - $ 45 $ 6,449 $ - $ 6,494
Receivables 27,935 4,650 19,382 - 51,967
Intercompany receivables 72,912 1,749 1,786 (76,447) -
Inventories 70,771 4,888 43,740 255 119,654
Prepaid expenses and
other current assets 1,151 464 5,229 - 6,844
________ ________ ________ ________ ________
Total Current Assets 172,769 11,796 76,586 (76,192) 184,959
OTHER ASSETS:
Restricted funds on deposit - - 473 - 473
Goodwill 71,210 - - - 71,210
Intangible assets - net 41,908 109 - - 42,017
Other assets 9,398 - 1,972 - 11,370
Investment in subsidiaries 23,954 - - (23,954) -
________ ________ ________ _________ ________
146,470 109 2,445 (23,954) 125,070
PROPERTY, PLANT AND
EQUIPMENT - net 74,956 14,753 9,682 - 99,391
________ ________ ________ _________ ________
$394,195 $ 26,658 $ 88,713 $(100,146) $409,420
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 41,602 $ 2,201 $ 11,304 $ (333) $ 54,774
Intercompany payables - 22,914 48,495 (71,409) -
Liabilities to customers
on uncompleted contracts
and warranties 10,421 - 702 - 11,123
Income taxes 248 31 873 - 1,152
Short-term obligations 146 - - - 146
Current maturities of
long-term debt 171 - 838 - 1,009
________ ________ ________ _________ ________
Total Current Liabilities 52,588 25,146 62,212 (71,742) 68,204
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 4,810 - 575 - 5,385
Postretirement benefits 13,575 - 534 - 14,109
Deferred expenses and other 11,157 236 1,152 - 12,545
________ ________ ________ _________ ________
29,542 236 2,261 - 32,039
LONG-TERM DEBT, less
current maturities 191,748 - 1,562 - 193,310
COMMON SHAREHOLDERS'
INVESTMENT 120,317 1,276 22,678 (28,404) 115,867
________ ________ ________ _________ ________
$394,195 $ 26,658 $ 88,713 $(100,146) $409,420
</TABLE>
<PAGE>
<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>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
Quarter Ended March 31, 1999
(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 $ 11,061 $ 220 $ (1,738) $ - $ 9,543
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Decrease in restricted
funds on deposit - - 3 - 3
Purchases of property,
plant and equipment (1,624) (243) (173) - (2,040)
Proceeds from sale of
property, plant and
equipment - 8 34 - 42
________ ________ ________ ________ ________
Net cash used in
investing activities (1,624) (235) (136) - (1,995)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Net decrease in long-term
debt and other bank
borrowings (9,362) - - - (9,362)
Purchase of treasury stock (75) - - - (75)
________ ________ ________ ________ ________
Net cash used in
financing activities (9,437) - - - (9,437)
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - (438) - (438)
________ ________ ________ ________ ________
Net decrease in cash
and cash equivalents - (15) (2,312) - (2,327)
Cash and cash equivalents
at beginning of period - 60 8,761 - 8,821
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 45 $ 6,449 $ - $ 6,494
</TABLE>
<PAGE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
Quarter Ended March 31, 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 $(21,044) $ 834 $ 534 $ - $(19,676)
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Purchases of property,
plant and equipment (2,032) (607) (456) - (3,095)
Proceeds from sale of
property, plant and
equipment - - 988 - 988
________ ________ ________ ________ ________
Net cash provided by
(used in) investing
activities (2,032) (607) 532 - (2,107)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Net increase in long-term
debt and other bank
borrowings 22,296 - 14 - 22,310
Capital contribution 780 - - - 780
________ ________ ________ ________ ________
Net cash provided by
financing activities 23,076 - 14 - 23,090
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - (246) - (246)
________ ________ ________ ________ ________
Net increase in cash
and cash equivalents - 227 834 - 1,061
Cash and cash equivalents
at beginning of period - 103 14,968 - 15,071
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 330 $ 15,802 $ - $ 16,132
</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
the Company's operations for the quarters ended March 31, 1999 and 1998.
In connection with acquisitions involving the Company, assets and
liabilities have been adjusted to their estimated fair values. The
consolidated condensed 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 March 31, 1999 and December 31, 1998 were
as follows:
March 31, December 31,
1999 1998
(Dollars in Thousands)
Working capital $116,755 $129,568
Current ratio 2.7 to 1 3.1 to 1
The decrease in working capital and the current ratio was primarily due
to a decrease in receivables and an increase in liabilities to customers on
uncompleted contracts.
The Company is presenting below a calculation of 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 Loss Before Income Taxes to Adjusted EBITDA:
Quarter Ended March 31,
1999 1998
(Dollars in Thousands)
Loss before income taxes $ (1,415) $ (9,288)
Non-cash expenses:
Depreciation 2,744 2,500
Amortization 1,405 1,315
(Gain) loss on sale of fixed assets (15) (23)
Inventory fair value adjustment
charged to cost of products sold - 6,925
Interest expense 4,757 4,469
________ ________
Adjusted EBITDA $ 7,476 $ 5,898
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 March 31,
1999 were $41,000,000 at a weighted average interest rate of 7.8%. 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 March 31, 1999, there were
$14,228,000 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
March 31, 1999 was $24,198,000.
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.
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 March 31, 1999, the Company had approximately $3,812,000 of open
capital appropriations.
Capitalization
The long-term debt to equity ratio at March 31, 1999 and December 31,
1998 was 1.7 to 1. The long-term debt to total capitalization ratio at
March 31, 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 first quarter of 1999 were $74,610,000 compared with
$73,700,000 for the first quarter of 1998. Net sales of repair parts and
services for the first quarter of 1999 were $51,390,000 compared with
$51,415,000 for the first quarter of 1998. Machine sales for the first
quarter of 1999 were $23,220,000, which is an increase of 4.2% from the first
quarter of 1998.
Cost of Products Sold
Cost of products sold for the first quarter of 1999 was $60,359,000 or
80.9% of net sales compared with $66,581,000 or 90.3% of net sales for the
first quarter of 1998. Included in cost of products sold for 1998 were
charges of $6,925,000 as a result of fair value adjustments 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 American
Industrial Partners Acquisition Company ("AIPAC"). Excluding the effects of
the inventory fair value adjustment, cost of products sold as a percentage of
net sales was 80.9%. Also included in cost of products sold for 1999 and 1998
was $1,159,000 and $1,022,000, 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 first quarter of 1999 were $11,444,000 or 15.3% of net sales
compared with $12,173,000 or 16.5% of net sales for the first quarter of 1998.
Interest Expense
Interest expense for the first quarter of 1999 was $4,757,000 compared
with $4,469,000 for the first quarter of 1998. Included in interest expense
for 1999 and 1998 was $3,656,000 and $3,616,000, respectively, related to the
Senior Notes.
Income Taxes (Benefit)
Income tax expense (benefit) consists primarily of foreign taxes at
applicable statutory rates, and is net of a $658,000 benefit related to the
foreign fair value adjustment to inventory charged to cost of products sold in
the first quarter of 1998. For United States tax purposes, there were losses
for which no income tax benefit was recorded.
Net Loss
Net loss for the first quarter of 1999 was $2,096,000 compared with net
loss of $9,069,000 for the first quarter of 1998. Net loss for the first
quarter of 1998 includes $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 included in the net loss for the first quarter of
1999 and 1998 were $4,149,000 and $3,815,000, respectively.
Backlog and New Orders
The Company's consolidated backlog at March 31, 1999 was $241,579,000
compared with $262,457,000 at December 31, 1998 and $207,537,000 at March 31,
1998. Machine backlog at March 31, 1999 was $99,372,000, which is a decrease
of 12.6% from December 31, 1998 and an increase of 18.5% from March 31, 1998.
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
March 31, 1999 and December 31, 1998 was $48,803,000 and $54,992,000,
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 March 31, 1999 was
$142,207,000, which is a decrease of 4.4% from December 31, 1998 and an
increase of 15.0% from March 31, 1998. The increase in repair parts and
service backlog from March 31, 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 first quarter of 1999 were $53,732,000, which is a
decrease of 17.6% from the first quarter of 1998. New machine orders were
$8,890,000, which is a decrease of 1.5% from the first quarter of 1998. As a
result of a decline in copper and coal prices from historically high levels,
the demand for machines from these market segments has been low. New repair
parts and service orders for the first quarter of 1999 were $44,842,000, which
is a decrease of 20.2% from the first quarter of 1998. The decrease was
primarily at foreign locations and is primarily due to low 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. There have been no
additional material developments relating to year 2000 issues during the first
quarter of 1999.
<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 first quarter of
1999.
<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 May 13, 1999 /s/Craig R. Mackus
Secretary and Controller
Principal Accounting Officer
Date May 13, 1999 /s/Stephen R. Light
President and Chief Executive Officer
<PAGE>
BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 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.
2.4 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
to Restated Certificate 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 to
Registrant effective 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 to
Restated Certificate of 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) to
July 21, 1998 to Credit Registrant's
Agreement. Quarterly Report
on Form 10-Q
filed with the
Commission on
November 16, 1998.
(b) Second amendment dated X
September 30, 1998 to
Credit Agreement.
27.1 Financial Data Schedule X
(Edgar filing only.)
EXHIBIT 10.1(b)
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of
September 30, 1998, amends and supplements the Credit Agreement dated as of
September 24, 1997, as amended (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.
RECITAL
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 Second Amendment to Credit Agreement by the
Company, the Agent and the Majority Banks, all references to the Credit
Agreement set forth in the Loan Documents shall mean the Credit Agreement as
amended by this Second Amendment to Credit Agreement.
2. Amendments to Credit Agreement.
(a) The defined term "ABL Trigger Event" in Section 1.01
of the Credit Agreement is deleted.
(b) Paragraph (b) of the defined term "Borrowing Base
Amount" in Section 1.01 of the Credit Agreement is amended by deleting the
second proviso (set forth in lines 26 through 32 on page 6 of the Credit
Agreement) thereto.
(c) Clause (5) of the second paragraph of the defined term
"Net Proceeds" in Section 1.01 of the Credit Agreement is amended to read as
follows:
(5) the issuance or sale by the Company of capital stock,
(d) The phrase ", after the occurrence and during the
continuance of any ABL Trigger Event," is deleted from clause (e) of the
defined term "Qualified Domestic Finished Goods and Raw Materials Inventory,"
from clause (g) of the defined term "Qualified Domestic Work in Process
Inventory," and in clauses (k) and (l) of the defined term "Qualified North
American Accounts Receivable" in Section 1.01 of the Credit Agreement.
(e) The following defined term is inserted, in appropriate
alphabetical order, into Section 1.01 of the Credit Agreement.
"Lease/Sublease Transaction" means the series of related
transactions pursuant to which (a) the Company or a Subsidiary sells a
product manufactured by the Company or a Subsidiary to a Person (other
than an Affiliate), (b) the Company or a Subsidiary leases that product
from such Person and (c) the Company subleases that product to another
Person (other than an Affiliate) or enters into an agreement under which
the Company or a Subsidiary will operate the product for the benefit of
such other Person.
(f) Section 1.03(c) of the Credit Agreement is created to
read as follows:
(c) Any gain or loss realized by the Company and its
Subsidiaries under GAAP as a result of the repayment in cash by a
Subsidiary of Indebtedness owed to the Company incurred in connection
with the Marion Acquisition shall be disregarded for purposes of
determining compliance by the Company with the financial covenants set
forth in Section 8.16 of the Credit Agreement and for purposes of
computing the Applicable Margin.
(g) Subsection 2.03(d) and 2.04(f) of the Credit Agreement
one each amended by deleting the word "four" and replacing it with "ten".
(h) Section 2.16 of the Credit Agreement is deleted.
(i) Section 8.01 of the Credit Agreement is amended by
deleting the word "and" at the end of subsection 8.01(o) and inserting the
following at the end of subsection 8.01(p):
; and
(q) Liens in the sublease, the subleased equipment and the
sublease receivables arising pursuant to a Lease/Sublease Transaction
permitted under subsection 8.10(d);
(j) Subsection 8.02(a) of the Credit Agreement is amended
to read as follows:
(a) dispositions of inventory in the ordinary course of business
or pursuant to a Lease/Sublease Transaction permitted under subsection
8.10(d)
(k) Section 8.05 of the Credit Agreement is amended by
deleting the word "and" at the end of subsection 8.05(h) and by inserting the
following at the end of subsection 8.05(i):
; and
(j) Indebtedness incurred in connection with Lease/Sublease
Transactions permitted under subsection 8.10(d)
(l) Subsection 8.10(b) of the Credit Agreement is amended
to read as follows:
(b) operating leases (other than Lease/Sublease Transactions)
entered into by the Company or any Subsidiary after the Closing Date in
the ordinary course of business; provided that the aggregate annual
rental payments by the Company and its Subsidiaries pursuant to
operating leases (including operating leases permitted under clause (a)
but excluding Lease/Sublease Transactions) shall not exceed $8,000,000
during any fiscal year;
(m) Section 8.10 of the Credit Agreement is amended by
inserting the following at the end of subsection 8.10(c):
; and
(d) obligations arising in connection with Lease/Sublease
Transactions, provided that (i) the aggregate amount of scheduled rental
payments required to be made by the Company or a Subsidiary as lessee
under Lease/Sublease Transactions shall not exceed $30,000,000 at any
time and (ii) the amount by which [a] the aggregate amount of scheduled
rental payments required to by made by the Company or a Subsidiary as
lessee under Lease/Sublease Transactions exceeds [b] the aggregate
amount of rental or other payments scheduled to be received by the
Company or a Subsidiary under "Qualified Subleases", shall not exceed
$10,000,000 at any time. For purposes of this subsection 8.10(d), a
"Qualified Sublease" is a sublease to a Person (other than an
Affiliate), or an agreement with a Person (other than Affiliate) under
which the product will be operated by the Company or a Subsidiary for
the benefit of such Person, which (1) has a term not exceeding 10 years
and (2) for purposes of establishing the minimum rental or other payment
due, has an assumed residual value (expressed as a percentage of the
product cost) not greater than 40% at any time during the first five
years, 35% at any time during the sixth year, 30% at any time during the
seventh year, 25% at any time during the eighth year, 20% at any time
during the ninth year and 15% at any time during the tenth year.
(n) Subsection 8.15(a) of the Credit Agreement is amended
by deleting the phrase "no ABL Trigger Event has occurred and is continuing
and".
(o) 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 and thereafter 5.7:1.0
(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 and thereafter 1.6:1.0
(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 and thereafter 1.8:1.0
3. 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 Second Amendment to Credit
Agreement; and
(b) No Default or Event of Default exists as of the date
of this Second Amendment to Credit Agreement.
4. Cost 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 Second Amendment to Credit Agreement.
5. 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 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: Assistant 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
<TABLE> <S> <C>
<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,494
<SECURITIES> 0
<RECEIVABLES> 53,216
<ALLOWANCES> (1,249)
<INVENTORY> 119,654
<CURRENT-ASSETS> 184,959
<PP&E> 112,194
<DEPRECIATION> (12,803)
<TOTAL-ASSETS> 409,420
<CURRENT-LIABILITIES> 68,204
<BONDS> 193,310
0
0
<COMMON> 14
<OTHER-SE> 115,853
<TOTAL-LIABILITY-AND-EQUITY> 409,420
<SALES> 74,610
<TOTAL-REVENUES> 75,145
<CGS> 60,359
<TOTAL-COSTS> 60,359
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,757
<INCOME-PRETAX> (1,415)
<INCOME-TAX> 681
<INCOME-CONTINUING> (2,096)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,096)
<EPS-PRIMARY> (1.45)
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