SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
Form 10-Q
QUARTERLY REPORT
PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1994
Commission File Number: 0-16648
________________________________________________
B-E HOLDINGS, INC.
DELAWARE 39-1593043
P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN 53172
(414) 768-4000
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding August 10, 1994
Class C Common Stock, par value $.01
per share 9,173,032
Class D Common Stock, par value $.01
per share 96,827
<PAGE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information:
Consolidated Condensed Balance Sheets -
June 30, 1994 and December 31, 1993 3-5
Consolidated Condensed Statements of Operations -
Quarters and six months ended June 30, 1994
and 1993 6-7
Consolidated Condensed Statements of Cash Flows -
Six months ended June 30, 1994 and 1993 8-9
Notes to Consolidated Condensed Financial
Statements 10-13
Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-21
Part II. Other Information 22-24
Signature Page 25
<PAGE>
<TABLE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
June 30, December 31, June 30, December 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C> <C>
ASSETS LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT ASSETS: (DEFICIENCY IN ASSETS)
Cash and cash CURRENT LIABILITIES:
equivalents $ 16,870,802 $ 13,696,244 Accounts payable and
Restricted funds accrued expenses $ 28,855,969 $ 53,665,642
on deposit - 512,173 Liability to customers
Receivables 32,662,100 25,731,294 on uncompleted contracts
Inventories - Note 5 69,604,655 63,671,237 and warranties 3,617,163 8,196,401
Prepaid expenses and Income taxes 668,259 448,493
other assets 2,082,582 1,630,226 Short-term obligations 192,798 -
____________ ____________ Current maturities of
Total Current Assets 121,220,139 105,241,174 long-term debt - Note 7 8,642,482 4,954,196
____________ ____________
OTHER ASSETS: 41,976,671 67,264,732
Restricted funds Long-term debt classified
on deposit 5,587,688 6,024,659 as a current
Goodwill - net 16,888,553 17,003,213 liability - Note 7 771,750 201,979,324
Intangible assets - net 6,830,271 7,780,263 ____________ ____________
Other assets 1,141,546 2,480,555
____________ ____________ Total Current
30,448,058 33,288,690 Liabilities 42,748,421 269,244,056
PROPERTY, PLANT AND EQUIPMENT: DEFERRED LIABILITIES:
Cost 88,629,594 87,511,688 Income taxes 259,595 157,544
Less accumulated Liability to customers on
depreciation (44,483,860) (41,141,094) uncompleted contracts
____________ ____________ and warranties 4,495,983 4,587,014
44,145,734 46,370,594 Postretirement benefits 15,494,702 15,590,236
Deferred plant closing
expenses and other 5,972,050 7,298,284
____________ ____________
26,222,330 27,633,078
LONG-TERM DEBT, less
amounts classified as
current liabilities
and liabilities subject
to compromise - Note 7 83,269 768,728
LIABILITIES SUBJECT
TO COMPROMISE - Note 4 252,906,911 -
PREFERRED STOCK -
Notes 4 and 8
Series A Redeemable, subject
to compromise in 1994 -
par value $.01 share,
liquidation preference
$25 share plus accrued
dividends, 2,412,791.57
shares in 1994 and 1993
issued and outstanding
(aggregate liquidation/
redemption preference
$71,091,180 at June 30,
1994 and $70,088,379 at
December 31, 1993) 71,091,180 30,301,570
Series B - par value
and liquidation preference
$.01 per share, issued and
outstanding 6,291,805
shares 62,918 62,918
COMMON STOCKHOLDERS' INVESTMENT
(DEFICIENCY IN ASSETS):
Class C - par value $.01 per
share, authorized 20,000,000
shares, issued and outstanding
9,175,872 shares in 1994
and 9,176,427 shares
in 1993 91,759 91,764
Class D - par value $.01 per
share, authorized 20,000,000
shares, issued and outstanding
93,987 shares in 1994 and
88,154 shares in 1993 940 882
Warrants - authorized
10,000,000, issued and
outstanding 1,114 in 1994
and 6,392 in 1993 169 971
Accumulated deficit (192,877,347) (138,994,351)
Cumulative foreign
currency translation
adjustments (4,516,619) (4,209,158)
____________ ____________
(197,301,098) (143,109,892)
____________ ____________ ____________ ____________
$195,813,931 $184,900,458 $195,813,931 $184,900,458
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Net shipments $ 50,607,986 $ 53,979,424 $ 93,963,086 $101,083,686
Interest, royalties and miscellaneous 1,510,489 147,810 1,861,229 475,272
____________ ____________ ____________ ____________
52,118,475 54,127,234 95,824,315 101,558,958
____________ ____________ ____________ ____________
Costs and Expenses:
Cost of products sold 42,468,318 45,615,273 79,033,051 85,526,831
Product development, selling,
administrative, and
miscellaneous expenses 7,845,652 8,865,415 15,367,996 17,546,470
Interest expense (contractual
interest for 1994 - $9,220,095
and $18,498,886, respectively -
Note 4 2,437,477 8,572,178 8,650,041 17,076,183
____________ ____________ ____________ ____________
52,751,447 63,052,866 103,051,088 120,149,484
____________ ____________ ____________ ____________
Loss before reorganization items, income
taxes and cumulative effects of changes
accounting principles (632,972) (8,925,632) (7,226,773) (18,590,526)
Reorganization items - pre-petition -
Note 4 71,194 730,452 1,255,200 1,171,157
Reorganization items - post-petition -
Note 4 2,121,556 - 3,874,514 -
____________ ____________ ____________ ____________
Loss before income taxes and cumulative
effects of changes in accounting
principles (2,825,722) (9,656,084) (12,356,487) (19,761,683)
Income taxes 272,146 176,006 737,701 846,775
____________ ____________ ____________ ____________
Loss before cumulative effects of changes
in accounting principles (3,097,868) (9,832,090) (13,094,188) (20,608,458)
Cumulative effects of changes in accounting
principles for:
Postretirement benefits - - - (11,744,109)
Income taxes - - - 446,724
____________ ____________ ____________ ____________
Net loss (3,097,868) (9,832,090) (13,094,188) (31,905,843)
Redeemable preferred stock accretion -
pre-petition - (167,527) (105,548) (318,423)
Redeemable preferred stock dividends -
pre-petition - (79,895) (40,453) 196,121
Redeemable preferred stock reorganization
item - Note 4 - - (40,554,805) -
____________ ____________ ____________ ____________
Net loss attributable to
common stockholders $ (3,097,868) $(10,079,512) $(53,794,994) $(32,028,145)
Weighted average of common shares
outstanding 9,269,859 9,176,758 9,267,497 8,638,071
Net loss per share of common stock:
Loss before cumulative effects of changes
in accounting principles $( .33) $(1.07) $(1.41) $(2.38)
Cumulative effects of changes in accounting
principles for:
Postretirement benefits - - - (1.36)
Income taxes - - - .05
______ ______ ______ ______
Net loss (.33) (1.07) (1.41) (3.69)
Redeemable preferred stock dividends
and accretion - pre-petition - (.03) (.01) (.02)
Redeemable preferred stock
reorganization item - - (4.38) -
______ ______ ______ ______
Net loss per share attributable to
common stockholders $ (.33) $(1.10) $(5.80) $(3.71)
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
1994 1993
Cash Flows From Operating Activities
Net loss $(13,094,188) $(31,905,843)
Adjustments to reconcile net loss
to net cash provided by (used
in) operating activities:
Depreciation 3,971,909 3,769,752
Amortization of purchase
adjustments and financing fees 1,968,642 2,226,397
Deferred rent (interest) on
sale and leaseback
financing arrangement 3,340,958 2,765,307
Amortization of debt discount 71,179 224,747
(Gain) loss on sale of property,
plant and equipment (12,244) 7,680
Cumulative effects of changes in
accounting principles - 11,297,385
Non-cash reorganization items 1,079,805 -
Changes in assets and liabilities
including items subject to
compromise:
Increase in receivables (7,014,449) (5,867,220)
Increase in inventories (5,986,473) (4,426,142)
(Increase) decrease in other
current assets (455,487) 36,312
Decrease in other assets 103,212 159,819
Increase in current liabilities
other than income taxes,
short-term obligations
and current maturities
of long-term debt 16,997,606 10,892,176
Increase (decrease) in
income taxes 367,794 (1,583,050)
Decrease in deferred liabilities
other than income taxes (571,693) (1,717,351)
____________ ____________
Net cash provided by (used in)
operating activities 766,571 (14,120,031)
____________ ____________
Cash Flows From Investing Activities
Decrease in restricted
funds on deposit 949,144 3,162,931
Purchases of property, plant
and equipment (1,524,630) (1,418,582)
Proceeds from sale of property, plant
and equipment 64,934 54,067
____________ ____________
Net cash (used in) provided by
investing activities (510,552) 1,798,416
____________ ____________
Cash Flows From Financing Activities
Payment of current maturities of
long-term debt (27,473) (372,879)
Payment of other obligations - net (183,036) -
Proceeds from exercise of warrants 53 28,227
Proceeds from issuance of long-term
project financing obligations 5,366,628 3,938,420
Reduction of long-term project
financing obligations (2,029,342) -
____________ ____________
Net cash provided by
financing activities 3,126,830 3,593,768
____________ ____________
Effect of exchange rate changes
on cash (208,291) 253,819
____________ ____________
Net increase (decrease) in cash
and cash equivalents 3,174,558 (8,474,028)
Cash and cash equivalents at
beginning of period 13,696,244 16,019,517
____________ ____________
Cash and cash equivalents at
end of period $ 16,870,802 $ 7,545,489
Supplemental Disclosures of Cash Flow Information
1994 1993
Cash paid (received) during
the period for:
Interest on long-term debt
and bank borrowings $ 172,859 $ 222,229
Income taxes - net of refunds (43,301) 1,239,214
Reorganization items 2,269,200 1,171,157
Supplemental Schedule of Non-Cash Investing and Financing Activities
Prior to the Petition Date, the Company increased the carrying amount of the
Series A redeemable preferred stock by amounts representing the estimated fair
value of the pre-petition dividends not declared or paid, but which are
payable under mandatory redemption features. The Company also recorded
preferred stock discount accretion on these securities prior to the Petition
Date. As of the Petition Date, the Company increased the carrying amount of
the Series A redeemable preferred stock to the amount of the allowed claim in
the Prepackaged Plan. The amounts as reflected in the consolidated condensed
financial statements were as follows:
1994 1993
Redeemable preferred stock
dividends at net book value $ 129,257 $ 150,800
Redeemable preferred stock accretion 105,548 318,423
Write-up to amount of allowed
claim in the Prepackaged Plan 40,554,805 -
____________ ____________
$ 40,789,610 $ 469,223
See accompanying notes to consolidated condensed financial statements.
<PAGE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. On February 18, 1994 (the "Petition Date"), B-E Holdings, Inc. ("the
Company") and Bucyrus-Erie Company ("Bucyrus") commenced voluntary
petitions under chapter 11 of the Bankruptcy Code and filed a prepackaged
joint plan of reorganization (the "Prepackaged Plan") in the United States
Bankruptcy Court, Eastern District of Wisconsin (the "Bankruptcy Court").
Pursuant to the Bankruptcy Code, the business and affairs of the Company
and Bucyrus are being conducted as debtors-in-possession by their
respective officers and directors, subject to the supervision and orders
of the Bankruptcy Court.
The Company and Bucyrus have reported recurring losses from operations
which have resulted in a common stockholders' net deficiency in assets,
and they have been unable to generate sufficient cash flow to meet their
obligations and sustain their operations. In addition, the Company and
Bucyrus have refrained from paying interest due on certain long-term debt
obligations and are not in compliance with their debt agreements, which
has resulted in certain debt holders accelerating the due dates of the
related obligations. These matters raise substantial doubt about the
Company's, Bucyrus' and their subsidiaries' abilities to continue as going
concerns.
The accompanying consolidated condensed financial statements have been
prepared on the basis of generally accepted accounting principles
applicable to a going concern; such principles assume realization of
assets and payment of liabilities in the normal course of business. The
appropriateness of using the going concern basis is also dependent upon,
among other things, confirmation of a plan of reorganization, future
successful operations and the ability to generate sufficient cash from
operations and financing sources to meet obligations.
The accompanying consolidated condensed financial statements do not
purport to reflect or provide for the consequences of the bankruptcy
proceedings, including the result if the Bankruptcy Court does not approve
the Prepackaged Plan. If the Company and Bucyrus are unable to obtain
such approval, and no other consensual plan of reorganization can be
agreed upon under chapter 11 of the Bankruptcy Code, the Company and
Bucyrus believe it is possible that a liquidation under chapter 7 of the
Bankruptcy Code will occur and that no net proceeds would be available for
distribution to the holders of the Company's and Bucyrus' equity
securities and, possibly, various classes of the Company's and Bucyrus'
debt securities. Such consolidated condensed financial statements do not
purport to show (a) as to assets, their realizable value on a liquidation
basis or their availability to satisfy liabilities; (b) as to pre-petition
liabilities, the amounts that may be allowed for claims or contingencies,
or the status of priority thereof; (c) as to stockholder accounts, the
effect of any changes that may be made in the capitalization of the
Company and Bucyrus; or (d) as to operations, the effect of any changes
that may be made in their business. The outcome of these matters is not
presently determinable.
2. In the opinion of the Company, the accompanying consolidated condensed
financial statements contain all adjustments (consisting of normal
recurring accruals and other adjustments as stated in subsequent notes)
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. Also, certain reclassifications have been made to the 1993
financial statements to present them on a basis consistent with the
current year.
3. Certain notes and other information have been condensed or omitted from
these interim financial statements and, therefore, these statements should
be read in conjunction with the Company's 1993 annual report on Form 10-K
filed with the Securities and Exchange Commission on April 15, 1994.
4. The accompanying consolidated condensed financial statements have been
prepared in accordance with Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP
90-7"). Accordingly, revenues and expenses resulting from the
reorganization of the Company and Bucyrus are recorded as earned and
incurred and reported separately as reorganization items in the
accompanying Consolidated Condensed Statements of Operations. Interest
expense subsequent to the Petition Date on the unsecured debt of the
Company and Bucyrus, excluding debt of the foreign subsidiaries, is not
being accrued. In addition, liabilities and the redeemable preferred
stock subject to compromise under the bankruptcy proceedings are now
reported at the amount of the allowed claims in the Prepackaged Plan and
are segregated from other liabilities in the Consolidated Condensed
Balance Sheet at June 30, 1994.
Liabilities Subject to Compromise as of June 30, 1994 consist of the
following:
10% Senior Notes of Bucyrus $ 74,628,000
Resettable Senior Notes of Bucyrus 60,000,000
Series A 12-1/2% Senior Debentures of the Company 22,917,756
9% Sinking Fund Debentures of Bucyrus 804,000
Lease Obligation of Bucyrus under sale
and leaseback financing arrangement 29,518,833
Series A 10.65% Senior Secured Notes of Bucyrus 11,500,000
Series B 16.5% Senior Secured Notes of Bucyrus 5,250,000
Accounts payable and accrued expenses 8,070,861
Accrued interest 34,435,731
Liability to customers on uncompleted contracts
and warranties 4,450,000
Other 1,331,730
____________
Total $252,906,911
The Company has received approval from the Bankruptcy Court to pay or
otherwise honor certain pre-petition machine contracts, customer warranty
claims, and obligations owing to employees, including but not limited to,
wages and salaries, payroll taxes, benefits, expenses and insurance
premiums. Accordingly, such liabilities have not been classified as
Liabilities Subject to Compromise.
Reorganization items included in the Consolidated Condensed Statements of
Operations consist of the following:
Quarter Ended June 30, Six Months Ended June 30,
1994 1993 1994 1993
Legal and pro-
fessional fees -
pre-petition $ 71,194 $ 730,452 $ 1,255,200 $ 1,171,157
Legal and pro-
fessional fees -
post-petition 2,202,430 - 2,913,726 -
Net write-down of
debt to amount
of allowed claim
in the Prepackaged
Plan - - (33,122) -
Interest income (80,874) - (119,017) -
Write-off capitalized
financing costs - - 1,112,927 -
____________ ____________ ____________ ____________
Subtotal 2,192,750 730,452 5,129,714 1,171,157
Write-up of
redeemable
preferred stock
to amount of
allowed claim
in the Pre-
packaged Plan - - 40,554,805 -
____________ ____________ ____________ ____________
Total $ 2,192,750 $ 730,452 $ 45,684,519 $ 1,171,157
5. Inventories are summarized as follows:
June 30, December 31,
1994 1993
Raw materials and parts $ 12,774,522 $ 10,324,233
Inventoried costs relating to
uncompleted contracts 3,301,333 670,835
Work in process 13,693,272 15,344,264
Finished products (primarily
replacement parts) 40,739,636 37,863,277
Customers' advances offset
against costs incurred on
uncompleted contracts (904,108) (531,372)
____________ ____________
$ 69,604,655 $ 63,671,237
6. Net loss per share has been computed based on the average number of common
shares outstanding during the period. Warrants, Series B Convertible
Preferred Stock and stock options outstanding are not included in the per
share calculations because they are anti-dilutive. If the Company's
Prepackaged Plan is approved, the issuance of new common stock will
further dilute current equity interests.
7. In accordance with SOP 90-7, all long-term debt of the Company and
Bucyrus, except for the project financing obligations and debt of foreign
subsidiaries, has been reclassified to Liabilities Subject to Compromise.
Prior year comparative balances have not been reclassified to conform with
current year balances stated under SOP 90-7. Long-term debt is comprised
of the following:
June 30, December 31,
1994 1993
10% Senior Notes of Bucyrus,
in default $ - $ 74,701,142
Resettable Senior Notes of Bucyrus,
in default - 60,000,000
Series A 12-1/2% Senior Debentures
of the Company, in default - 22,843,780
9% Sinking Fund Debentures of
Bucyrus, in default - 766,777
Lease Obligation of Bucyrus under sale
and leaseback financing arrangement,
in default - 26,177,875
Series A 10.65% Senior Secured Notes
of Bucyrus, in default - 11,500,000
Series B 16.5% Senior Secured Notes
of Bucyrus, in default - 5,250,000
Project financing obligations
of Bucyrus 6,997,165 3,659,879
Other 2,500,336 2,802,795
____________ ____________
9,497,501 207,702,248
Less:
Current maturities of
long-term debt (8,642,482) (4,954,196)
Amounts classified as a
current liability (771,750) (201,979,324)
____________ ____________
Amounts classified as
long-term debt $ 83,269 $ 768,728
8. The Company did not declare a dividend in cash or in kind on March 15,
1993, September 15, 1993 or March 15, 1994 on its Series A 12-1/2%
Cumulative Exchangeable Preferred Stock ("Series A Preferred Stock"). In
accordance with SOP 90-7, the Company has increased the carrying amount of
the Series A Preferred Stock (which includes the unpaid dividends of March
15, 1993 and September 15, 1993 and the accrued dividend for the period of
September 16, 1993 through February 18, 1994) in the accompanying
Consolidated Condensed Balance Sheet to the amount of the allowed claim in
the Prepackaged Plan.
9. The following balance sheet separates the Consolidated Condensed Balance
Sheet as of June 30, 1994, into the assets, liabilities and stockholders'
investment (deficiency in assets) of those entities that are in bankruptcy
proceedings and those that are not in bankruptcy proceedings.
Debtors- Non-
In- Bankrupt
Possession Entities Eliminations Consolidated
(Dollars in Thousands)
Current assets $ 76,537 $ 45,333 $ (650) $121,220
Property, plant &
equipment, net 36,457 7,689 - 44,146
Other assets 81,308 8,527 (59,387) 30,448
Due from
affiliates 19,661 1,939 (21,600) -
________ ________ ________ ________
Total assets $213,963 $ 63,488 $(81,637) $195,814
Current
liabilities $ 29,807 $ 13,093 $ (151) $ 42,749
Long-term debt - 83 - 83
Other liabilities 275,468 3,661 - 279,129
Due to affiliates 398 19,330 (19,728) -
Preferred stock 71,154 - - 71,154
Stockholders'
investment
(deficiency in
assets) (162,864) 27,321 (61,758) (197,301)
________ ________ ________ ________
Total liabilities
and stockholders'
investment
(deficiency in
assets) $213,963 $ 63,488 $(81,637) $195,814
<PAGE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
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 quarter ended June 30, 1994. The acquisition
of Bucyrus-Erie Company ("Bucyrus") by the Company on February 4, 1988 was
accounted for as a purchase and, accordingly, the assets and liabilities of
the Company were recorded at their estimated fair values as of the acquisition
date. The excess of the related purchase cost over the fair value of
identifiable net assets has been allocated to goodwill. The financial
statements include the related depreciation and amortization charges
associated with the fair value adjustments since the date of the acquisition.
Corporate Reorganization
On February 22, 1993, the Company and Bucyrus announced their intention to
pursue a restructuring of their capital structures. Subsequent to the
Company's and Bucyrus' announcement of their intention to pursue a
restructuring and, at the suggestion of the Company and Bucyrus, holders of
the Series A 12-1/2% Senior Debentures and the 10% Senior Notes, and other
persons in an ex officio capacity, formed the Public Debtholders Committee for
the purpose of negotiating a consensual plan of restructuring (the
"Restructuring") which would be accomplished as part of a joint "prepackaged"
plan of reorganization of the Company and Bucyrus under chapter 11 of the
Bankruptcy Code (the "Prepackaged Plan"). The purpose of the Restructuring is
to improve and enhance the long-term viability of the Company and Bucyrus by
adjusting their capitalization to reflect current and projected operating
performance levels. Specifically, the Prepackaged Plan is designed to reduce
the Company's and Bucyrus' overall indebtedness and their corresponding debt
service obligations by exchanging all of their senior unsecured debt
securities for common equity. In September, 1993, the Company, Bucyrus and
the negotiating subcommittee of the Public Debtholders Committee executed a
non-binding agreement in principle containing certain principal terms of the
Restructuring, including the principal components of the equity allocation
under the Prepackaged Plan among the Company's and Bucyrus' senior unsecured
debtholders and the Company's stockholders (the "Agreement in Principle").
The Company and Bucyrus also obtained a commitment (the "Commitment
Letter") from Bank One, Milwaukee, N.A. ("Bank One"), Continental Bank, N.A.
and Bank One, Dayton, N.A. (collectively, the "New Lenders") to provide,
subject to certain terms and conditions, a $50 million secured credit facility
(the "New Credit Agreement"), consisting of a term loan and a revolving line
of credit, on the effective date of the Prepackaged Plan the proceeds of which
would be used to repay the Bucyrus Secured Obligations (as defined below) and
for working capital and other general corporate purposes. The New Lenders
agreed in the Commitment Letter to use their best efforts to obtain
commitments from one or more additional lenders to provide an additional $10
million in revolving credit under the New Credit Agreement. The Commitment
Letter, and the New Lenders' commitment thereunder, expired on March 31, 1994.
The Company and Bucyrus are in discussions with the New Lenders and other
financial institutions which have expressed an interest in participating in
post-confirmation credit facilities. In the event that some or all of the New
Lenders do not extend the Commitment Letter and/or the Company and Bucyrus are
unable to secure commitments from one or more additional financial
institutions, the Prepackaged Plan contains an alternative $50 million post-
confirmation credit facility which would be extended by the Bucyrus Secured
Lenders as described in the immediately succeeding paragraph.
After reaching an agreement with the Public Debtholders Committee,
during the third quarter of 1993, the Company and Bucyrus began discussions
with Greycliff Partners Limited ("Greycliff") acting on behalf of the holders
(the "Bucyrus Secured Lenders") of Bucyrus' Series A 10.65% Senior Secured
Notes, Series B 16.5% Senior Secured Notes and obligations of Bucyrus under
its sale and leaseback financing arrangement (the "Sale Leaseback" and,
together with the Senior Secured Notes, the "Bucyrus Secured Obligations").
In September, 1993, the Company, Bucyrus and the Bucyrus Secured Lenders
executed a Summary of Principal Terms for Stipulation on Adequate Protection
and Use of Cash Collateral, Debtor-in-Possession Financing Facility and Post-
Confirmation Credit Facilities (the "Initial South Street Term Sheet") which
was subject to the approval of the Public Debtholders Committee. On
December 8, 1993, following negotiations between the Public Debtholders
Committee and Greycliff, the Company, Bucyrus and the Bucyrus Secured Lenders
executed a Summary of Principal Terms for (A) Stipulation on Adequate
Protection and Use of Cash Collateral, (B) Post-Petition Credit Facility and
(C) Post-Confirmation Credit Facilities (the "South Street Term Sheet") which
contained additional negotiated concessions. The South Street Term Sheet sets
forth the terms of, among other things, a stipulation on adequate protection
and use of cash collateral and a debtor-in-possession financing facility to be
extended by the Bucyrus Secured Lenders (the "Post-Petition Credit Facility").
The South Street Term Sheet also provides for a post-confirmation credit
facility consisting of (i) a $5 million revolving loan and (ii) a $45 million
term loan which would be extended by the Bucyrus Secured Lenders in the event
that the conditions contained in the Commitment Letter are not satisfied or
waived on or prior to the confirmation date of the Prepackaged Plan (the
"South Street Financing Agreement").
On March 17, 1994, the Company and Bucyrus obtained an order from the
United States Bankruptcy Court, Eastern District of Wisconsin (the "Bankruptcy
Court") approving an agreement (the "Cash Collateral Stipulation") with the
Bucyrus Secured Lenders and Bank One authorizing the use of cash collateral
during the period ending July 15, 1994. As adequate protection for the use of
cash collateral, the Bankruptcy Court has authorized Bucyrus to grant to the
Bucyrus Secured Lenders and Bank One replacement liens on certain of Bucyrus'
assets along with superpriority administrative expense claims. The Company
and Bucyrus have reached an agreement with the Secured Lenders and Bank One
with respect to an extension of the Cash Collateral Stipulation to
December 31, 1994, subject to approval of the Bankruptcy Court.
The Solicitation
Following the announcement of the Agreement in Principle, the Initial
South Street Term Sheet and the Commitment Letter, the Company and Bucyrus
filed a Disclosure Statement and Proxy Statement-Prospectus (the "Disclosure
Statement") for the solicitation of votes for the Prepackaged Plan with the
Securities and Exchange Commission (the "SEC"). On January 12, 1994, Bucyrus'
Registration Statement on Form S-4 bearing Registration No. 33-73904, which
included the final version of the Disclosure Statement dated January 12, 1994
detailing the terms of the Prepackaged Plan, was declared effective by the
SEC. The Prepackaged Plan provides for the Company to merge with and into
Bucyrus (the survivor of such merger is referred to as the "Reorganized
Company"). The Reorganized Company would issue common stock ("New Common
Stock") and warrants to purchase New Common Stock ("New Warrants") to holders
of the Company's and Bucyrus' unsecured debt securities and equity securities.
The Bucyrus Secured Obligations would be refinanced on the terms set forth in
the Prepackaged Plan with a portion of the proceeds from the New Credit
Agreement or the South Street Financing Agreement.
On January 14, 1994, the Company and Bucyrus distributed the Disclosure
Statement to holders of record on December 29, 1993 of all classes of the
Company's and Bucyrus' debt securities and the Company's equity securities
soliciting from such holders acceptances of the Prepackaged Plan. The
solicitation period for accepting or rejecting the Prepackaged Plan ended at
5:00 PM EST on February 14, 1994. All classes of the Company's and Bucyrus'
bondholders and the Company's stockholders voting on the Prepackaged Plan
voted to accept the Prepackaged Plan, except for JNL, the holder of Bucyrus'
Resettable Senior Notes ("Resettable Notes"). On February 18, 1994 (the
"Petition Date"), following expiration of the solicitation period, the Company
and Bucyrus filed voluntary petitions under chapter 11 of the Bankruptcy Code,
and filed the Prepackaged Plan in the Bankruptcy Court, Case Nos. 94-20786-RAE
and 94-20787-RAE. The Company's and Bucyrus' chapter 11 cases have been
assigned to United States Bankruptcy Judge Russell A. Eisenberg.
Hearing On The Disclosure Statement
As required under the Bankruptcy Code, a hearing to consider whether the
solicitation of acceptances or rejections of the Prepackaged Plan pursuant to
the Disclosure Statement satisfied the applicable provisions of the Bankruptcy
Code was held on June 16, 1994 by the Bankruptcy Court. At the conclusion of
the hearing, the Bankruptcy Court directed reballoting by creditors and equity
security holders on the Prepackaged Plan. The reballoting will be based on a
supplement to the Disclosure Statement and on the terms of the Modified Plan,
as described below. Among other things, the supplement will deal with matters
that have come to light since the Petition Date and matters relating to
litigation claims asserted by JNL, the largest creditor of Bucyrus. The
Bankruptcy Court further directed that the supplement to the Disclosure
Statement be submitted for the Bankruptcy Court's approval at a hearing
scheduled for July 14, 1994, which has since been adjourned to August 18,
1994, with reballoting to occur promptly thereafter.
The Company and Bucyrus are engaged in discussions and negotiations with
all of their financial creditor constituencies regarding modifications to the
Prepackaged Plan (as so modified, the "Modified Plan"). The Bankruptcy Court
also extended the duration of the Company's and Bucyrus' exclusive right to
solicit acceptances with respect to a plan of reorganization through
October 14, 1994. Subsequently, the Bankruptcy Court scheduled a hearing on
confirmation of the Modified Plan to commence on November 28, 1994.
The Company and Bucyrus intend to seek confirmation of the Modified Plan
and will ask the Bankruptcy Court to confirm the Modified Plan either with the
consent of all creditor classes or, if necessary, under the "cram down"
provisions of the Bankruptcy Code, over the objection of one or more classes.
The Bankruptcy Code provides a procedure, known as "cram down", under which a
plan of reorganization may be confirmed despite the non-acceptance by an
impaired class. The Bankruptcy Court must find that all statutory conditions
to confirmation have been met, and accordingly, there can be no assurance that
the Bankruptcy Court will confirm the Modified Plan. In addition,
confirmation and consummation of the Modified Plan are subject to further
conditions to be described in the Modified Plan, and there can be no assurance
that these will be satisfied, or, if not satisfied, waived or waivable by the
Company and Bucyrus.
Appointment of Examiner
On May 26, 1994, the Bankruptcy Court ordered the appointment of an
examiner in Bucyrus' chapter 11 case. On May 27, 1994, the Bankruptcy Court
entered an order in Bucyrus' chapter 11 case approving the appointment of
Salvatore A. Barbatano, a partner at the law firm of Rudnick & Wolf of
Chicago, as the examiner. The examiner filed a preliminary report with the
Bankruptcy Court on June 13, 1994.
Post-Petition Letter Of Credit Agreement
On April 14, 1994, the Company and Bucyrus obtained an order from the
Bankruptcy Court authorizing Bucyrus to enter into a post-petition letter of
credit financing agreement (the "Letter of Credit Agreement") with Bank One to
meet its on-going business needs following the Petition Date. Pursuant to the
Letter of Credit Agreement, Bank One has agreed to issue (a) stand-by letters
of credit in an amount, which when added to the aggregate amount available for
drawing under certain stand-by letters of credit issued by Bank One prior to
the Petition Date, does not exceed $12,500,000 and (b) commercial letters of
credit in an amount not to exceed $250,000. As of June 30, 1994, the unused
portion of the letter of credit facility under the Letter of Credit Agreement
was $9,295,512. As security for the financing under the Letter of Credit
Agreement, the Bankruptcy Court has authorized Bucyrus to pledge cash
collateral to Bank One and to grant liens and security interests to Bank One
over certain accounts receivable of Bucyrus and inventory of Bucyrus generated
on or after the Petition Date and certain other assets. The Letter of Credit
Agreement expires on October 31, 1994, unless extended, and stand-by letters
of credit issued pursuant to the Letter of Credit Agreement may not terminate
later than April 30, 1995 without the consent of Bank One.
Operation During Chapter 11 Proceedings
The Company and Bucyrus intend to operate in the ordinary course during
their chapter 11 cases and intend to take all steps necessary to ensure that
their vendors, trade creditors, employees and customers with warranty or other
claims are unimpaired by the Modified Plan. None of the subsidiaries of the
Company and Bucyrus will be parties to the Modified Plan.
Liquidity Pending Consummation Of The Restructuring
Until the Modified Plan is implemented on the Effective Date (as defined
in the Modified Plan), the Company and Bucyrus will be required to rely on
their internal cash resources to operate their businesses and pay other costs.
Bucyrus believes that it will have sufficient cash resources and financing to
meet trade obligations and cover operating and restructuring expenses during
the pendency of their chapter 11 cases. During the pendency of their chapter
11 cases, the Company and Bucyrus intend to pay all post-petition operating
expenses (including trade obligations) in the ordinary course of business.
Net Shipments and Net Loss
Net shipments for the quarter and six months ended June 30, 1994 were
$50,607,986 and $93,963,086, respectively, compared with $53,979,424 and
$101,083,686 for the quarter and six months ended June 30, 1993, respectively.
Shipments of repair parts and services for the quarter ended June 30, 1994
increased 3.8% from the quarter ended June 30, 1993 primarily due to increased
shipments at Minserco, Inc. For the six months ended June 30, 1994, shipments
of repair parts and services increased 2.2% from the six months ended June 30,
1993 primarily due to increased shipments at foreign locations. Machine
shipments for the quarter ended June 30, 1994 decreased 27.2% from the quarter
ended June 30, 1993 and for the six months ended June 30, 1994 decreased 27.1%
from the six months ended June 30, 1993. Both decreases were primarily due to
decreased electric mining shovel and blast hole drill shipments. The pricing
for machines and repair parts has continued to remain steady during these
periods.
Net loss for the quarter and six months ended June 30, 1994 was $3,097,868
and $13,094,188, respectively, compared with a net loss of $9,832,090 and
$31,905,843 for the quarter and six months ended June 30, 1993, respectively.
The decrease in net loss for the quarter ended June 30, 1994 was primarily due
to reduced interest expense. The decrease in net loss for the six months
ended June 30, 1994 was primarily due to reduced interest expense and
$11,297,385 for the cumulative effects of changes in accounting principles as
a result of adoption of Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions", and
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" in the first quarter of 1993, partially offset by increased
reorganization items in 1994. Also included in net losses were amortizations
of non-cash purchase accounting and financing charges of $1,904,699 and
$4,010,162 for the quarter and six months ended June 30, 1994, respectively,
and $2,054,113 and $4,082,570 for the quarter and six months ended June 30,
1993, respectively.
The Company's consolidated backlog on June 30, 1994 was $80,371,825
compared with $74,023,040 on December 31, 1993 and $104,394,162 on June 30,
1993. Machine backlog is up 11.7% from December 31, 1993 and down 41.1% from
June 30, 1993. The increase from December 31, 1993 was primarily in blast
hole drill volume and the decrease from June 30, 1993 was primarily in
electric mining shovel volume. Repair parts and service backlog is up 6.9%
from December 31, 1993 and down 7.0% from June 30, 1993. The increase from
December 31, 1993 is primarily at domestic locations.
New orders for the quarter ended June 30, 1994 decreased 37.9% from the
quarter ended June 30, 1993 and for the six months ended June 30, 1994
decreased 11.3% from the six months ended June 30, 1993. New machine orders
for the quarter ended June 30, 1994 decreased 69.9% from the quarter ended
June 30, 1993 and for the six months ended June 30, 1994 decreased 35.2% from
the six months ended June 30, 1993. The decrease in both comparisons was
primarily due to decreased electric mining shovel volume. During the second
quarter of 1993, Bucyrus received an order from Mitsubishi Corporation for
Anshan Iron & Steel Company in China for eight electric mining shovels for
approximately $38 million. New repair parts and service orders for the
quarter ended June 30, 1994 decreased 4.0% from the quarter ended June 30,
1993 and for the six months ended June 30, 1994 increased 2.1% from the six
months ended June 30, 1993. The decrease in the quarterly comparison was
primarily due to decreases at domestic locations and the increase in the year-
to-date comparison was primarily due to increases at foreign locations. The
Company believes expansion of coal production in China and India, new copper
projects in South America and replacement of old equipment in iron ore mines
should provide near term machine sales potential. Continued upgrading of
machines along with movement of large draglines to new mine sites, and normal
drill and shovel parts demand should result in increased shipments of repair
parts worldwide in the next twelve months. However, the United States coal
market continues to be negatively impacted by the effects of The Clean Air
Act. The Company is not able to determine the impact, if any, of the recent
election in South Africa on future shipments by the Company in South Africa,
however, the impact to date has not been severely negative.
Interest, Royalties and Miscellaneous
Interest, royalties and miscellaneous for the quarter and six months ended
June 30, 1994 were $1,510,489 and $1,861,229, respectively, compared with
$147,810 and $475,272 for the quarter and six months ended June 30, 1993,
respectively. The increase in the quarterly and year-to-date comparisons was
primarily due to a favorable insurance settlement of $1,350,000 in the second
quarter of 1994.
Cost of Products Sold
Cost of products sold for the quarter ended June 30, 1994 was $42,468,318
or 83.9% of shipments compared with $45,615,273 or 84.5% of shipments for the
quarter ended June 30, 1993. For the six months ended June 30, 1994, cost of
products sold was $79,033,051 or 84.1% of shipments compared with $85,526,831
or 84.6% of shipments for the six months ended June 30, 1993. The change in
the cost of products sold percentage was primarily the result of the mix of
products sold. Included in cost of products sold were foreign currency
translation gains of $146,112 for the quarter ended June 30, 1994 and losses
of $211,648 for the six months ended June 30, 1994 compared with gains of
$132,850 for the quarter ended June 30, 1993 and losses of $571,201 for the
six months ended June 30, 1993. The gains and losses occurred in Brazil and
were the result of applying Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation".
Product Development, Selling, Administrative, and Miscellaneous Expenses
Product development, selling, administrative and miscellaneous expenses
for the quarter ended June 30, 1994 were $7,845,652 or 15.5% of shipments
compared with $8,865,415 or 16.4% of shipments for the quarter ended June 30,
1993. The amounts for the six months ended June 30, 1994 and 1993 were
$15,367,996 or 16.4% of shipments and $17,546,470 or 17.4% of shipments,
respectively. The decrease in the quarterly and year-to-date comparisons was
primarily due to reduced product development expense as a result of increased
work on specific customer contracts.
Interest Expense
Interest expense for the quarter and six months ended June 30, 1994 was
$2,437,477 and $8,650,041, respectively, compared with $8,572,178 and
$17,076,183 for the quarter and six months ended June 30, 1993, respectively.
The decreases were primarily due to not accruing interest subsequent to
February 18, 1994 on the Company's and Bucyrus' unsecured debt which includes
Bucyrus' 10% Senior Notes, Bucyrus' Resettable Senior Notes, Bucyrus' 9%
Sinking Fund Debentures and the Company's Series A 12-1/2% Senior Debentures.
Income Taxes
The Company has federal net operating loss carryforwards of approximately
$115,900,000 expiring in the years 2003 through 2009, available to offset
future federal taxable income. The Company also has approximately $80,000,000
of state net operating loss carryforwards, which expire in the years 1997
through 2009, available to offset future state taxable income in states where
it has significant operations.
As previously discussed, the Company and Bucyrus have filed the
Prepackaged Plan with the Bankruptcy Court and commenced cases under chapter
11 of the Bankruptcy Code. The consummation of the Prepackaged Plan would
cause the Company and Bucyrus to undergo "ownership changes" within the
meaning of Section 382 of the Internal Revenue Code. Such ownership changes
will, depending on the outcome of the chapter 11 cases of the Company and
Bucyrus, including the effective date of the Prepackaged Plan and various
other matters, significantly restrict the utilization of the Company's and
Bucyrus' net operating loss and tax credit carryforwards.
Profitability Measurements
Ratios of returns on net shipments, assets employed, and shareholders'
investment are not meaningful at this time for the Company due to losses
incurred.
Liquidity and Capital Resources
Working capital and current ratio are two financial measurements which
provide an indication of the Company's ability to meet its short-term
obligations. These measurements at June 30, 1994 and December 31, 1993 were
as follows:
June 30, December 31,
1994 1993
Working capital (deficiency)
(in millions) $ 78.5 $(164.0)
Current ratio 2.8 to 1 .4 to 1
The increase in working capital for the six months ended June 30, 1994 was
primarily due to the reclassification of certain liabilities, primarily long-
term debt and accrued interest, to Liabilities Subject to Compromise. Working
capital includes restricted funds on deposit of zero and $512,173 at June 30,
1994 and December 31, 1993, respectively, and long-term debt classified as a
current liability of $771,750 and $201,979,324 at June 30, 1994 and December
31, 1993, respectively. If the long-term debt had not been reclassified,
working capital and the current ratio would have been as follows:
June 30, December 31,
1994 1993
Working capital (in millions) $ 79.2 $ 38.0
Current ratio 2.9 to 1 1.6 to 1
The table below summarizes the Company's cash position at June 30, 1994:
Restricted Unrestricted
Location Cash Cash Total
United States $ 2,340,000 $ 10,846,790 $ 13,186,790
Foreign Subsidiaries 16,822 4,818,827 4,835,649
Equipment Assurance
Limited 3,230,866 1,205,185 4,436,051
____________ ____________ ____________
$ 5,587,688 $ 16,870,802 $ 22,458,490
The unrestricted cash at the foreign subsidiaries and Equipment Assurance
Limited ("EAL"), an off-shore insurance subsidiary of Bucyrus, is primarily
required for working capital purposes at these respective locations.
In order to provide a better understanding of the Company's results from
operations, the following table reconciles Loss Before Reorganization Items,
Income Taxes and Cumulative Effects of Changes in Accounting Principles to
Cash Provided From Operations Before Interest Expense, Reorganization Items,
Income Taxes and Cumulative Effects of Changes in Accounting Principles:
Quarter Ended June 30, Six Months Ended June 30,
1994 1993 1994 1993
Loss before
reorganization items,
income taxes and
cumulative effects
of changes in
accounting
principles $ (632,972) $ (8,925,632) $ (7,226,773) $(18,590,526)
Non-cash expenses:
Depreciation
expense -
historical 989,398 1,035,077 2,001,568 2,138,326
Depreciation and
amortization of
purchase adjustments
and financing
fees 1,904,699 1,936,712 3,938,983 3,857,823
Deferred rent
(interest) on sale
and leaseback
financing
arrangement 1,670,479 1,400,565 3,340,958 2,765,307
Amortization of debt
discount 0 117,401 71,179 224,747
____________ ____________ ____________ ____________
Cash provided
from (used in)
operations after
interest expense
and before
reorganization items,
income taxes and
cumulative effects of
changes in accounting
principles 3,931,604 (4,435,877) 2,125,915 (9,604,323)
Cash interest
expense (1) 766,998 7,054,212 5,237,904 14,086,129
____________ ____________ ____________ ____________
Cash provided from
operations before
interest expense,
reorganization
items, income taxes
and cumulative
effects of changes
in accounting
principles $ 4,698,602 $ 2,618,335 $ 7,363,819 $ 4,481,806
(1) Includes accrued but unpaid interest prior to the Petition Date as a
result of the corporate reorganization and excludes amortization of debt
discount and deferred rent (interest) on the sale and leaseback financing
arrangement.
On July 24, 1992, Bucyrus entered into a credit agreement with Bank One
which provides for the issuance from time to time by Bank One of standby
letters of credit for the account of Bucyrus in an aggregate amount of up to
$12,500,000 at any one time, secured in part pursuant to a security agreement
and in part by cash provided by Bucyrus, and certain other commercial and
standby letters of credit. The agreement expired on February 28, 1994. On
April 14, 1994, the Company and Bucyrus obtained an order from the Bankruptcy
Court authorizing Bucyrus to enter into the Letter of Credit Agreement with
Bank One to meet its on-going business needs following the Petition Date.
Pursuant to the Letter of Credit Agreement, Bank One has agreed to issue (a)
stand-by letters of credit in an amount, which when added to the aggregate
amount available for drawing under certain stand-by letters of credit issued
by Bank One prior to the Petition Date, does not exceed $12,500,000 and (b)
commercial letters of credit in an amount not to exceed $250,000. As of June
30, 1994, the unused portion of the letter of credit facility under the Letter
of Credit Agreement was $9,295,512. As security for the financing under the
Letter of Credit Agreement, the Bankruptcy Court has authorized Bucyrus to
pledge cash collateral to Bank One and to grant liens and security interests
to Bank One over certain accounts receivable of Bucyrus and inventory of
Bucyrus generated on or after the Petition Date and certain other assets. The
Letter of Credit Agreement expires on October 31, 1994 and stand-by letters of
credit issued pursuant to the Letter of Credit Agreement may not terminate
later than April 30, 1995 without the consent of Bank One. Bucyrus has
pledged to Bank One $2,340,000 of its cash to secure its reimbursement
obligations under the Letter of Credit Agreement.
As required under various agreements, EAL has pledged $3,230,866 of its
cash to secure its reimbursement obligations for outstanding letters of credit
and an affiliate's bank debt at June 30, 1994. These collateral amounts are
classified as Restricted Funds on Deposit in the Consolidated Condensed
Balance Sheets.
At June 30, 1994, the Company's subsidiaries had approximately $735,000 of
open approved capital appropriations.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings and Other Contingencies
Voluntary Petitions under Chapter 11 of the Bankruptcy Code
On February 18, 1994 (the "Petition Date"), the Company and Bucyrus
commenced voluntary petitions under chapter 11 of the Bankruptcy
Code and filed the Prepackaged Plan in the United States Bankruptcy
Court, Eastern District of Wisconsin, Case Nos. 94-20786-RAE and
94-20787-RAE and thereby commenced cases under chapter 11 of the
Bankruptcy Code. The Company's and Bucyrus' prepackaged chapter 11
cases (the "Prepackaged Chapter 11 Cases") have been assigned to
United States Bankruptcy Judge Russell A. Eisenberg.
See Part I, "Appointment of Examiner" and "Hearing on the
Disclosure Statement."
Item 3. Defaults Upon Senior Securities.
(a) (i) Holdings Series A 12-1/2% Senior Debentures. As
disclosed in the 1993 10-K, the Company did not pay
interest which was due and payable on March 15, 1993,
September 15, 1993 and March 15, 1994 on its Series A
12-1/2% Senior Debentures ("Series A Debentures"). The
amounts of such defaults were $2,543,291, $2,589,667 and
$2,547,444, respectively, (which amounts include
$265,797, $270,644 and $266,231, of interest with respect
to the $4,295,000 in principal amount of Series A
Debentures which Bucyrus owns), and the total arrearage
as of the Petition Date was $7,342,619. On November 24,
1993, the indenture trustee for the Series A Debentures
("Firstar"), without instruction from the holders of such
securities, sent a notice of acceleration to the Company
declaring such securities to be immediately due and
payable. On December 17, 1993, Firstar, a defendant in
the JNL Lawsuit, filed a cross-claim against the Company
seeking judgment on the principal of, interest on and
other amounts due and owing under the Series A
Debentures, and filed a notice of motion for summary
judgment on such cross-claim. As a result of the
Company's and Bucyrus' chapter 11 petitions, prosecution
of the cross-claim against the Company has been stayed
against the Company as of the Petition Date.
(ii) Bucyrus 9% Sinking Fund Debentures. As disclosed in the
1993 10-K, Bucyrus did not pay interest which was due and
payable on June 1, 1993 and December 1, 1993 on its 9%
Sinking Fund Debentures ("Sinking Fund Debentures"). In
addition, Bucyrus did not pay interest which was due and
payable on June 1, 1994 on the Sinking Fund Debentures.
The applicable period of grace for such payments under
the indenture governing the Sinking Fund Debentures has
expired, resulting in an event of default thereunder.
The indenture trustee for the Sinking Fund Debentures,
Chemical Bank, has advised Bucyrus of the occurrence of
an event of default. Each of such defaults was in an
amount of $36,180, and the total arrearage as of the
Petition Date was $88,296.
(iii) Bucyrus Resettable Senior Notes. As disclosed in the
1993 10-K, Bucyrus did not pay interest which was due and
payable on June 30, 1993 and December 31, 1993 on its
Resettable Senior Notes ("Resettable Senior Notes"). In
addition, Bucyrus did not pay interest which was due and
payable on June 30, 1994 on the Resettable Senior Notes.
The applicable period of grace for such payments under
the indenture governing the Resettable Senior Notes has
expired, resulting in an event of default thereunder.
Each of such defaults was in an amount of $4,500,000, and
the total arrearage as of the Petition Date was
$10,824,107 which includes default interest. In
addition, the interest payment defaults which have
occurred and are continuing in respect of the Sinking
Fund Debentures, the Senior Secured Notes and the 10%
Senior Notes constitute an event of default under the
Resettable Senior Notes. On October 20, 1993, the
indenture trustee for the Resettable Senior Notes, at the
direction of JNL, the sole holder of the Resettable
Senior Notes, sent a notice of acceleration to Bucyrus
declaring all unpaid principal of, and accrued interest
on, the Resettable Senior Notes to be immediately due and
payable. On November 22, 1993, JNL, together with the
indenture trustee for the Resettable Senior Notes, filed
a notice of motion for partial summary judgment relating
to its claim for all principal of and interest on the
Resettable Senior Notes in connection with the JNL
Lawsuit. As a result of the Company's and Bucyrus'
chapter 11 petitions, prosecution of such motion for
partial summary judgment has been stayed against Bucyrus
and the Company as of the Petition Date.
(iv) Bucyrus Series A 10.65% Senior Secured Notes and Series B
16.5% Senior Secured Notes. As disclosed in the 1993
10-K, Bucyrus did not pay interest which was due and
payable on June 30, 1993 and December 31, 1993 on its
Series A 10.65% Senior Secured Notes and Series B 16.5%
Senior Secured Notes (collectively, "Senior Secured
Notes"). In addition, Bucyrus did not pay interest which
was due and payable on June 30, 1994 on the Senior
Secured Notes. The applicable period of grace for such
payments under the indenture governing the Senior Secured
Notes has expired, resulting in an event of default
thereunder. The trustee under the Senior Secured Notes,
Norwest Bank Wisconsin, National Association ("Norwest")
has advised Bucyrus of the occurrence of an event of
default. Each of such defaults was in an amount of
$1,045,500, and the total arrearage on the date of filing
this report is approximately $3,658,000 which includes
default interest. In addition, the interest payment
defaults which have occurred and are continuing in
respect of the Sinking Fund Debentures, the Resettable
Senior Notes and the 10% Senior Notes constitute an event
of default under the Senior Secured Notes.
(v) Bucyrus 10% Senior Notes. As disclosed in the 1993 10-K,
Bucyrus did not pay interest which was due and payable on
July 1, 1993 and January 1, 1994 on its 10% Senior Notes
("10% Senior Notes"). In addition, Bucyrus did not pay
interest which was due and payable on July 1, 1994 on the
10% Senior Notes. The applicable period of grace for
such payments under the indenture governing the 10%
Senior Notes has expired, resulting in an event of
default thereunder. Each of such defaults was in an
amount of $5,970,240, and the total arrearage as of the
Petition Date was $13,575,189. On November 24, 1993,
Firstar, the indenture trustee for the 10% Senior Notes,
without instruction from the holders of such securities,
sent a notice of acceleration to Bucyrus declaring such
securities to be immediately due and payable. On
December 17, 1993, Firstar, a defendant in the JNL
Lawsuit, filed a cross-claim against Bucyrus seeking
judgment on the principal of, interest on and other
amounts due and owing under the 10% Senior Notes, and
filed a notice of motion for summary judgment on such
cross-claim. As a result of the Company's and Bucyrus'
chapter 11 petitions, prosecution of the cross-claim
against Bucyrus has been stayed against Bucyrus as of the
Petition Date.
(b) As disclosed in the 1993 10-K, the Company did not declare a
dividend in cash or in kind, due and payable on March 15, 1993,
September 15, 1993 and March 15, 1994, on its Series A 12-1/2%
Cumulative Exchangeable Preferred Stock ("Series A Preferred
Stock"). Each of such defaults was in an amount of $3,769,987.
The total arrearage as of the Petition Date was $10,771,391.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: None.
(b) Report on Form 8-K: No reports on Form 8-K were filed during
the second quarter.
<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.
B-E HOLDINGS, INC.
(Registrant)
Date August 15, 1994 /s/ Craig R. Mackus
Craig R. Mackus
Controller
Principal Accounting Officer
Date August 15, 1994 /s/ William B. Winter
Chairman of the Board and
Chief Executive Officer
