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, 2000
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, 2000
Common Stock, $.01 par value 1,442,150
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, 2000 and 1999 4
Consolidated Condensed Statements of
Comprehensive Income (Loss) - Quarters ended
March 31, 2000 and 1999 5
Consolidated Condensed Balance Sheets -
March 31, 2000 and December 31, 1999 6-7
Consolidated Condensed Statements of Cash Flows -
Quarters ended March 31, 2000 and 1999 8
Notes to Consolidated Condensed Financial
Statements 9-18
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 19-24
PART II. OTHER INFORMATION:
Item 6 - Exhibits and Reports on Form 8-K 25
Signature Page 26
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,
2000 1999
Revenues:
Net sales $ 65,992 $ 74,610
Other income 114 535
__________ __________
66,106 75,145
__________ __________
Costs and Expenses:
Cost of products sold 57,983 60,359
Engineering and field service,
selling, administrative and
miscellaneous expenses 14,105 11,444
Interest expense 5,349 4,757
__________ __________
77,437 76,560
__________ __________
Loss before income taxes (11,331) (1,415)
Income taxes (benefit) 165 681
__________ __________
Net loss $ (11,496) $ (2,096)
Net loss per share
of common stock:
Basic $ (7.97) $ (1.45)
Diluted $ (7.97) $ (1.45)
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(Dollars in Thousands)
Quarter Ended March 31,
2000 1999
Net loss $(11,496) $ (2,096)
Other comprehensive loss -
foreign currency translation
adjustments (1,515) (2,075)
________ ________
Comprehensive loss $(13,011) $ (4,171)
See notes to consolidated condensed financial statements.
<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,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
LIABILITIES AND COMMON
ASSETS SHAREHOLDERS' INVESTMENT
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash Accounts payable and
equivalents $ 8,739 $ 8,369 accrued expenses $ 61,064 $ 64,640
Receivables 62,002 61,023 Liabilities to customers
Inventories 120,592 125,132 on uncompleted contracts
Prepaid expenses and and warranties 8,026 4,876
other current assets 7,095 5,502 Income taxes 928 353
________ ________ Short-term obligations 154 445
Current maturities of
Total Current Assets 198,428 200,026 long-term debt 7,426 7,518
________ ________
OTHER ASSETS:
Restricted funds Total Current Liabilities 77,598 77,832
on deposit 94 89
Goodwill 68,710 69,335 LONG-TERM LIABILITIES:
Intangible assets - net 39,801 40,357 Liabilities to customers on
Other assets 11,427 11,375 uncompleted contracts
________ _______ and warranties 4,340 4,367
Postretirement benefits 13,966 13,984
120,032 121,156 Deferred expenses and other 11,609 12,645
________ ________
PROPERTY, PLANT AND EQUIPMENT:
Cost 115,507 115,376 29,915 30,996
Less accumulated LONG-TERM DEBT, less
depreciation (22,140) (19,571) current maturities 223,175 214,009
________ ________
COMMON SHAREHOLDERS' INVESTMENT:
93,367 95,805 Common stock - par value
$.01 per share, authorized
1,700,000 shares, issued
shares 1,444,650 14 14
Additional paid-in capital 144,451 144,451
Treasury stock -
2,500 shares, at cost (196) (196)
Note receivable from
shareholders (524) (524)
Accumulated deficit (49,493) (37,997)
Accumulated other
comprehensive
income (loss) (13,113) (11,598)
________ ________
81,139 94,150
________ ________ ________ ________
$411,827 $416,987 $411,827 $416,987
<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)
Quarter Ended March 31,
2000 1999
Net Cash Provided By (Used in)
Operating Activities $ (8,062) $ 9,543
________ ________
Cash Flows From Investing Activities
(Increase) decrease in restricted
funds on deposit (5) 3
Purchases of property, plant
and equipment (780) (2,040)
Proceeds from sale of property, plant
and equipment 572 42
________ ________
Net cash used in investing activities (213) (1,995)
________ ________
Cash Flows From Financing Activities
Net increase (decrease) in long-term
debt and other bank borrowings 8,783 (9,362)
Purchase of treasury stock - (75)
________ ________
Net cash provided by (used in)
financing activities 8,783 (9,437)
________ ________
Effect of exchange rate changes on cash (138) (438)
________ ________
Net increase (decrease) in cash
and cash equivalents 370 (2,327)
Cash and cash equivalents at
beginning of period 8,369 8,821
________ ________
Cash and cash equivalents at
end of period $ 8,739 $ 6,494
Supplemental Disclosures of Cash Flow Information
2000 1999
Cash paid during the
period for:
Interest $ 8,495 $ 8,089
Income taxes - net of refunds 132 143
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 1999
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 30, 2000.
3. Inventories consist of the following:
March 31, December 31,
2000 1999
(Dollars in Thousands)
Raw materials and parts $ 12,927 $ 13,470
Costs relating to
uncompleted contracts 2,689 1,000
Customers' advances offset
against costs incurred on
uncompleted contracts (589) -
Work in process 20,114 16,193
Finished products (primarily
replacement parts) 85,451 94,469
________ ________
$120,592 $125,132
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,
2000 1999
(Dollars in Thousands, Except
Per Share Amounts)
Basic and Diluted
Net loss $ (11,496) $ (2,096)
Weighted average shares outstanding 1,442,150 1,442,442
Net loss per share $ (7.97) $ (1.45)
5. In 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of
FASB Statement No. 133" ("SFAS 133"). SFAS 133 is now effective for
fiscal years beginning after June 15, 2000. 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. The Company
may implement SFAS 133 as of the beginning of any fiscal quarter. SFAS
133 cannot be applied retroactively. 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 its
financial position or results of operations.
6. Due to a reduction in new orders, the Company reduced a portion of its
manufacturing production workforce through a layoff and also reduced the
number of its salaried employees. These activities resulted in a
restructuring charge of $2,695,000 in the first quarter of 2000. Such
amount primarily relates to severance payments and related matters and is
included in Engineering and Field Service, Selling, Administrative and
Miscellaneous Expenses in the Consolidated Condensed Statement of
Operations.
7. 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 March 31, 2000
(Dollars in Thousands)
<CAPTION>
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 35,280 $ 9,502 $ 36,148 $(14,938) $ 65,992
Other income 1,811 1 88 (1,786) 114
________ ________ ________ ________ ________
37,091 9,503 36,236 (16,724) 66,106
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 31,742 9,316 30,868 (13,943) 57,983
Engineering and field
service, selling,
administrative and
miscellaneous expenses 10,144 406 3,555 - 14,105
Interest expense 5,126 429 1,580 (1,786) 5,349
________ ________ ________ ________ ________
47,012 10,151 36,003 (15,729) 77,437
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and equity
in net loss of
consolidated subsidiaries (9,921) (648) 233 (995) (11,331)
Income taxes (benefit) 455 (260) (30) - 165
________ ________ ________ ________ ________
Earnings (loss) before
equity in net loss of
consolidated subsidiaries (10,376) (388) 263 (995) (11,496)
Equity in net loss of
consolidated subsidiaries (125) - - 125 -
________ ________ ________ ________ ________
Net earnings (loss) $(10,501) $ (388) $ 263 $ (870) $(11,496)
</TABLE>
<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>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets
March 31, 2000
(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 $ - $ 47 $ 8,692 $ - $ 8,739
Receivables 35,912 6,428 19,662 - 62,002
Intercompany receivables 72,116 1,277 11,633 (85,026) -
Inventories 71,173 3,333 47,501 (1,415) 120,592
Prepaid expenses and
other current assets 784 267 6,044 - 7,095
________ ________ ________ ________ ________
Total Current Assets 179,985 11,352 93,532 (86,441) 198,428
OTHER ASSETS:
Restricted funds on deposit - - 94 - 94
Goodwill 68,710 - - - 68,710
Intangible assets - net 39,778 23 - - 39,801
Other assets 9,306 - 2,121 - 11,427
Investment in subsidiaries 17,212 - - (17,212) -
________ ________ ________ _________ ________
135,006 23 2,215 (17,212) 120,032
PROPERTY, PLANT AND
EQUIPMENT - net 70,060 8,815 14,492 - 93,367
________ ________ ________ _________ ________
$385,051 $ 20,190 $110,239 $(103,653) $411,827
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 41,649 $ 1,781 $ 17,925 $ (291) $ 61,064
Intercompany payables 1,056 20,927 56,048 (78,031) -
Liabilities to customers
on uncompleted contracts
and warranties 5,207 - 2,819 - 8,026
Income taxes 164 55 709 - 928
Short-term obligations 154 - - - 154
Current maturities of
long-term debt 386 - 7,040 - 7,426
________ ________ ________ _________ ________
Total Current Liabilities 48,616 22,763 84,541 (78,322) 77,598
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 4,305 - 35 - 4,340
Postretirement benefits 13,475 - 491 - 13,966
Deferred expenses and other 10,053 495 1,061 - 11,609
________ ________ ________ _________ ________
27,833 495 1,587 - 29,915
LONG-TERM DEBT, less
current maturities 219,344 - 3,831 - 223,175
COMMON SHAREHOLDERS'
INVESTMENT 89,258 (3,068) 20,280 (25,331) 81,139
________ ________ ________ _________ ________
$385,051 $ 20,190 $110,239 $(103,653) $411,827
</TABLE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets
December 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 $ - $ 23 $ 8,346 $ - $ 8,369
Receivables 34,851 3,065 22,936 171 61,023
Intercompany receivables 68,233 2,712 10,912 (81,857) -
Inventories 73,147 3,669 50,579 (2,263) 125,132
Prepaid expenses and
other current assets 652 473 4,377 - 5,502
________ ________ ________ _________ ________
Total Current Assets 176,883 9,942 97,150 (83,949) 200,026
OTHER ASSETS:
Restricted funds on deposit - - 89 - 89
Goodwill 69,335 - - - 69,335
Intangible assets - net 40,310 47 - - 40,357
Other assets 8,958 - 2,417 - 11,375
Investment in subsidiaries 19,147 - - (19,147) -
________ ________ ________ _________ ________
137,750 47 2,506 (19,147) 121,156
PROPERTY, PLANT AND
EQUIPMENT - net 71,875 9,067 14,863 - 95,805
________ ________ ________ _________ ________
$386,508 $ 19,056 $114,519 $(103,096) $416,987
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 40,185 $ 1,607 $ 23,139 $ (291) $ 64,640
Intercompany payables 905 19,749 55,882 (76,536) -
Liabilities to customers
on uncompleted contracts
and warranties 4,200 - 676 - 4,876
Income taxes 150 46 157 - 353
Short-term obligations 150 - 295 - 445
Current maturities of
long-term debt 413 - 7,105 - 7,518
________ ________ ________ _________ ________
Total Current Liabilities 46,003 21,402 87,254 (76,827) 77,832
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 4,332 - 35 - 4,367
Postretirement benefits 13,480 - 504 - 13,984
Deferred expenses and other 11,316 334 995 - 12,645
________ ________ ________ _________ ________
29,128 334 1,534 - 30,996
LONG-TERM DEBT, less
current maturities 210,105 - 3,904 - 214,009
COMMON SHAREHOLDERS'
INVESTMENT 101,272 (2,680) 21,827 (26,269) 94,150
________ ________ ________ _________ ________
$386,508 $ 19,056 $114,519 $(103,096) $416,987
</TABLE>
<TABLE>
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
Quarter Ended March 31, 2000
(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 $ (8,914) $ 49 $ 803 $ - $ (8,062)
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Increase in restricted
funds on deposit - - (5) - (5)
Purchases of property,
plant and equipment (303) (25) (452) - (780)
Proceeds from sale of
property, plant and
equipment - - 572 - 572
________ ________ ________ ________ ________
Net cash provided by (used
in)investing activities (303) (25) 115 - (213)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Net decrease in long-term
debt and other bank
borrowings 9,217 - (434) - 8,783
Purchase of treasury stock - - - - -
________ ________ ________ ________ ________
Net cash provided by (used
in) financing activities 9,217 - (434) - 8,783
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - (138) - (138)
________ ________ ________ ________ ________
Net decrease in cash
and cash equivalents - 24 346 - 370
Cash and cash equivalents
at beginning of period - 23 8,346 - 8,369
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 47 $ 8,692 $ - $ 8,739
</TABLE>
<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>
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, 2000 and 1999.
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, 2000 and December 31, 1999 were
as follows:
March 31, December 31,
2000 1999
(Dollars in Thousands)
Working capital $120,830 $122,194
Current ratio 2.6 to 1 2.6 to 1
The Company is presenting below a calculation of loss before interest
expense, income taxes, depreciation, amortization and (gain) loss on sale of
fixed assets ("Adjusted EBITDA"). Since cash flow from operations is very
important to the Company's future, the Adjusted EBITDA calculation provides a
summary review of cash flow performance. In addition, the Company is required
to maintain certain minimum Adjusted EBITDA levels under 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,
2000 1999
(Dollars in Thousands)
Loss before income taxes $(11,331) $ (1,415)
Non-cash expenses:
Depreciation 2,899 2,744
Amortization 1,427 1,405
(Gain) loss on sale of fixed assets (50) (15)
Interest expense 5,349 4,757
________ ________
Adjusted EBITDA (1) $ (1,706) $ 7,476
(1) Adjusted EBITDA for the quarter ended March 31, 2000 includes a
$2,695,000 restructuring charge primarily related to severance payments
and related matters.
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 credit agreement, as amended, expires on
July 3, 2001. 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, 2000 were $68,700,000 at a weighted
average interest rate of 9.1%. 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, 2000, there were $4,800,000 of standby letters of
credit outstanding under all Company 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, 2000 was $4,192,000, which is
net of $1,463,000 that is to be used for the September 15, 2000 interest
payment on the Senior Notes.
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.
Both the Revolving Credit Facility and the Senior Notes Indenture contain
certain covenants which may affect the Company's liquidity and capital
resources. The Revolving Credit Facility contains a number of financial
covenants that, among other items, require the Company (A) to maintain certain
financial ratios, including: (i) ratio of adjusted funded debt to EBITDA (as
defined); (ii) fixed charge coverage ratio; and (iii) interest coverage ratio;
and (B) to maintain a minimum net worth. On March 14, 2000, the Revolving
Credit Facility was amended to grant the Company a period of time during 2000
whereby the Company will not be subject to certain of the financial covenants
contained in the Revolving Credit Facility. Subsequent to this period of
time, the Company will be subject to revised financial covenants under the
Revolving Credit Facility, which management believes are achievable. As a
result, borrowings continue to be presented as long-term.
In 1999, Bucyrus Canada Limited, a wholly-owned subsidiary of the
Company, entered into a C$15,000,000 credit facility with The Bank of Nova
Scotia. Proceeds from this facility were used to acquire certain assets of
Bennett & Emmott (1986) Ltd. ("Bennett & Emmott") on April 30, 1999. The
C$10,000,000 revolving term loan portion of this facility expires on December
31, 2000 and bears interest at the bank's prime lending rate plus 1.50%. The
C$5,000,000 non-revolving term loan portion is payable in monthly installments
over five years and bears interest at the bank's prime lending rate plus 2%.
This credit facility contains covenants which, among other things, requires
Bucyrus Canada Limited to maintain a minimum current ratio and tangible net
worth. At March 31, 2000, Bucyrus Canada Limited was in compliance with these
covenants.
The Company believes that current levels of cash and liquidity, together
with funds expected to be 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, 2000, the Company had approximately $1,726,000 of open
capital appropriations. The Company's capital expenditures for the quarter
ended March 31, 2000 were $780,000 compared with $2,040,000 for the quarter
ended March 31, 1999. In the near term, the Company currently anticipates
spending closer to the 2000 level.
Capitalization
The long-term debt to equity ratio at March 31, 2000 and December 31,
1999 was 2.8 to 1 and 2.3 to 1, respectively. The long-term debt to total
capitalization ratio at March 31, 2000 and December 31, 1999 was .7 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 2000 were $65,992,000 compared with
$74,610,000 for the first quarter of 1999. Net sales of repair parts and
services for the first quarter of 2000 were $51,736,000 compared with
$51,390,000 for the first quarter of 1999. Machine sales for the first
quarter of 2000 were $14,256,000, which is a decrease of 38.6% from the first
quarter of 1999. The decrease was primarily in electric mining shovels.
Machine sales continue to be affected by low mineral prices.
Cost of Products Sold
Cost of products sold for the first quarter of 2000 was $57,983,000 or
87.9% of net sales compared with $60,359,000 or 80.9% of net sales for the
first quarter of 1999. The increase in the cost of products sold percentage
for 2000 was primarily due to unfavorable manufacturing variances resulting
from lower manufacturing activity associated with lower bookings in 1999, the
mix of the aftermarket items shipped and lower machine margins. Included in
cost of products sold for 2000 and 1999 was $1,172,000 and $1,159,000,
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 in 1997 by Bucyrus Holdings, LLC (formerly known as American
Industrial Partners Acquisition Company, LLC).
Engineering and Field Service, Selling, Administrative and Miscellaneous
Expenses
Engineering and field service, selling, administrative and miscellaneous
expenses for the first quarter of 2000 were $14,105,000 or 21.4% of net sales
compared with $11,444,000 or 15.3% of net sales for the first quarter of 1999.
Due to a reduction in new orders, the Company reduced a portion of its
manufacturing production workforce through a layoff and also reduced the
number of its salaried employees. As a result, a $2,695,000 restructuring
charge primarily related to severance payments and related matters was
recorded in the first quarter of 2000.
Interest Expense
Interest expense for the first quarter of 2000 was $5,349,000 compared
with $4,757,000 for the first quarter of 1999. Included in interest expense
for 2000 and 1999 was $3,656,000 related to the Senior Notes. Also included
in interest expense for 2000 was $190,000 of interest expense related to debt
incurred for the acquisition and operation of Bennett & Emmott. The remainder
of the increase in interest expense was due to increased borrowings under the
Revolving Credit Facility.
Income Taxes (Benefit)
Income tax expense (benefit) consists primarily of foreign taxes at
applicable statutory rates. For United States tax purposes, there were losses
for which no income tax benefit was recorded.
Net Loss
Net loss for the first quarter of 2000 was $11,496,000 compared with net
loss of $2,096,000 for the first quarter of 1999. Non-cash depreciation and
amortization charges included in the net loss for the first quarter of 2000
and 1999 were $4,326,000 and $4,149,000, respectively.
Backlog and New Orders
The Company's consolidated backlog at March 31, 2000 was $174,694,000
compared with $187,278,000 at December 31, 1999 and $241,579,000 at March 31,
1999. Machine backlog at March 31, 2000 was $29,714,000, which is a decrease
of 27.5% from December 31, 1999 and a decrease of 70.1% from March 31, 1999.
In 1997, the Company executed a contract with an Australian mining company for
the sale of a Model 2570WS dragline which was completed in the first quarter
of 2000. Included in backlog at December 31, 1999 and March 31, 1999 was
$2,376,000 and $21,084,000, 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, 2000 was $144,980,000, compared with $146,281,000 at December 31,
1999 and $142,207,000 at March 31, 1999.
New orders for the first quarter of 2000 were $53,408,000 compared with
$53,732,000 for the first quarter of 1999. New machine orders were
$2,973,000, which is a decrease of 66.6% from the first quarter of 1999, and
included one blasthole drill which was in inventory at December 31, 1999. New
repair parts and service orders for the first quarter of 2000 were
$50,435,000, which is an increase of 12.5% from the first quarter of 1999.
Both new machine orders and parts and service orders continue to be affected
by the low worldwide price of copper and coal and the lower demand for other
minerals.
Quantitative and Qualitative Disclosures About Market Risk
The Company's market risk is impacted by changes in interest rates and
foreign currency exchange rates.
Interest Rates
The Company's interest rate exposure relates primarily to debt
obligations in the United States. The Company manages its borrowings under
the Revolving Credit Facility through the selection of LIBOR based borrowings
or prime-rate based borrowings. If market conditions warrant, interest rate
swaps may be used to adjust interest rate exposures, although none have been
used to date. The Company believes that a 10% change in the Company's
weighted average interest rate at March 31, 2000 would not have a material
effect on the Company's financial position, results of operations or cash
flows.
Foreign Currency
The Company manages foreign currency exchange rate exposure by utilizing
some natural hedges to mitigate some of its transaction and commitment
exposures, and may utilize forward contracts in certain situations. Based on
the Company's overall foreign currency exchange rate exposure at March 31,
2000, the Company believes that a 10% change in foreign currency exchange
rates will not have a material effect on the Company's financial position,
results of operations or cash flows.
Forward-Looking Statements
This Report includes "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. Discussions
containing such forward-looking statements may be found in this section and
elsewhere within this Report. Forward-looking statements include statements
regarding the intent, belief or current expectations of the Company, primarily
with respect to the future operating performance of the Company or related
industry developments. When used in this Report, terms such as "anticipate,"
"believe," "estimate," "expect," "indicate," "may be," "objective," "plan,"
"predict," and "will be" are intended to identify such statements. Readers
are cautioned that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and that actual
results may differ from those described in the forward-looking statements as a
result of various factors, many of which are beyond the control of the
Company. Forward-looking statements are based upon management's expectations
at the time they are made. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from
such expectations ("Cautionary Statements") are described generally below and
disclosed elsewhere in this Report. All subsequent written or oral forward-
looking statements attributable to the Company or persons acting on behalf of
the Company are expressly qualified in their entirety by the Cautionary
Statements.
Factors that could cause actual results to differ materially from those
contemplated include:
Factors affecting customers' purchases of new equipment, rebuilds,
parts and services such as: production capacity, stockpiles, and
production and consumption rates of coal, copper, iron, gold and other
ores and minerals; the cash flows of customers; the cost and availability
of financing to customers and the ability of customers to obtain
regulatory approval for investments in mining projects; consolidations
among customers; work stoppages at customers or providers of
transportation; and the timing, severity and duration of customer buying
cycles.
Factors affecting the Company's general business, such as: unforseen
patent, tax, product, environmental, employee health or benefit, or
contractual liabilities; nonrecurring restructuring and other special
charges; changes in accounting or tax rules or regulations; reassessments
of asset valuations for such assets as receivables, inventories, fixed
assets and intangible assets; leverage and debt service; our success in
recruiting and retaining managers and key employees; and our wage
stability and cooperative labor relations; plant capacity and
utilization.
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
2000.
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 12, 2000 /s/Craig R. Mackus
Secretary and Controller
Principal Accounting Officer
Date May 12, 2000 /s/Theodore C. Rogers
President and Chief Executive Officer
BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
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 3.6 to
of Incorporation of Registrant's
Registrant. Annual Report on
Form 10-K for
the year ended
December 31, 1998.
3.2 By-laws of Registrant. Exhibit 3.5 to
Registrant's
Annual Report on
Form 10-K for
the year ended
December 31, 1998.
3.3 Certificate of Amendment X
to Certificate of
Formation of Bucyrus
Holdings, LLC, effective
March 25, 1999.
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 Exhibit 10.1(c)
April 20, 1999 to Credit to Registrant's
Agreement. Quarterly Report
on Form 10-Q
filed with the
Commission on
August 12, 1999.
(d) Fourth amendment dated Exhibit 10.1(a)
September 30, 1999 to to Registrant's
Credit Agreement. Quarterly Report
on Form 10-Q
filed with the
Commission on
November 12, 1999.
(e) Fifth amendment dated Exhibit 10.1(e)
March 14, 2000 to Credit to Registrant's
Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 1999.
10.2 Separation Agreement Exhibit 10.2
between Registrant to Registrant's
and D. J. Smoke dated Quarterly Report
July 22, 1999. on Form 10-Q
filed with the
Commission on
August 12, 1999.
10.3 Employment Agreement Exhibit 10.16
between Registrant and to Registrant's
M. W. Salsieder dated Annual Report on
June 23, 1999. Form 10-K for
the year ended
December 31, 1999.
10.4 Secured Promissory Note Exhibit 10.17
between Registrant and to Registrant's
M. W. Salsieder dated Annual Report on
June 23, 1999. Form 10-K for
the year ended
December 31, 1999.
10.5 Pledge Agreement Exhibit 10.18
between Registrant and to Registrant's
M. W. Salsieder dated Annual Report on
June 23, 1999. Form 10-K for
the year ended
December 31, 1999.
10.6 Consulting Agreement Exhibit 10.19
between Registrant and to Registrant's
Wayne T. Ewing dated Annual Report on
February 1, 2000. Form 10-K for
the year ended
December 31, 1999.
27.1 Financial Data Schedule X
(Edgar filing only.)
EXHIBIT 3.3
FORM 10-Q
QUARTER ENDED MARCH 31, 2000
CERTIFICATE OF AMENDMENT
Pursuant to Section 18-202 of the
Limited Liability Company Act
1. The name of the limited liability company
is American Industrial Partners Acquisition Company, LLC.
2. The Certificate of Formation is hereby
amended to change the name of the limited liability
company to Bucyrus Holdings, LLC.
3. Accordingly, Article 1. of the Certificate
of Formation shall, as amended, read as follows:
"1. The name of the limited liability
company is Bucyrus Holdings, LLC."
IN WITNESS WHEREOF, the undersigned authorized
person has executed this Certificate of Amendment this
25th day of March, 1999.
AMERICAN INDUSTRIAL PARTNERS
ACQUISITION COMPANY,LLC
By:/s/ Kenneth A. Pereira
Kenneth A. Pereira
Authorized Person
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