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 March 31, 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 May 6, 1994
Class C Common Stock, par value $.01
per share 9,177,910
Class D Common Stock, par value $.01
per share 91,949
<PAGE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information:
Consolidated Condensed Balance Sheets -
March 31, 1994 and December 31, 1993 3-4
Consolidated Condensed Statements of Operations -
Quarters ended March 31, 1994 and 1993 5-6
Consolidated Condensed Statements of Cash Flows -
Quarters ended March 31, 1994 and 1993 7-8
Notes to Consolidated Condensed Financial Statements 9-12
Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-19
Part II. Other Information 20-23
Signature Page 24
<PAGE>
<TABLE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
March 31, December 31, March 31, 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 $ 15,971,936 $ 13,696,244 Accounts payable and
Restricted funds accrued expenses $ 22,040,551 $ 53,665,642
on deposit - 512,173 Liability to customers
Receivables 29,279,593 25,731,294 on uncompleted contracts
Inventories - Note 5 65,887,710 63,671,237 and warranties 3,307,251 8,196,401
Prepaid expenses and Income taxes 419,868 448,493
other assets 2,191,171 1,630,226 Current maturities of
____________ ____________ long-term debt - Note 7 7,568,077 4,954,196
Total Current Assets 113,330,410 105,241,174 ____________ ____________
33,335,747 67,264,732
OTHER ASSETS: Long-term debt classified
Restricted funds as a current
on deposit 5,570,866 6,024,659 liability - Note 7 742,500 201,979,324
Goodwill - net 16,886,124 17,003,213 ____________ ____________
Intangible assets - net 7,305,267 7,780,263
Other assets 1,216,323 2,480,555 Total Current
____________ ____________ Liabilities 34,078,247 269,244,056
30,978,580 33,288,690
DEFERRED LIABILITIES:
PROPERTY, PLANT AND EQUIPMENT: Income taxes 202,706 157,544
Cost 88,006,463 87,511,688 Liability to customers on
Less accumulated uncompleted contracts
depreciation (42,618,568) (41,141,094) and warranties 4,522,647 4,587,014
____________ ____________ Postretirement benefits 15,527,178 15,590,236
45,387,895 46,370,594 Deferred plant closing
expenses and other 6,083,125 7,298,284
____________ ____________
26,335,656 27,633,078
LONG-TERM DEBT, less
amounts classified as
current liabilities
and liabilities subject
to compromise - Note 7 549,325 768,728
LIABILITIES SUBJECT
TO COMPROMISE - Note 4 251,798,728 -
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 March 31,
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
9,178,241 shares in 1994
and 9,176,427 shares
in 1993 91,782 91,764
Class D - par value $.01 per
share, authorized 20,000,000
shares, issued and outstanding
91,618 shares in 1994 and
88,154 shares in 1993 916 882
Warrants - authorized
10,000,000, issued and
outstanding 1,114 in 1994
and 6,392 in 1993 169 971
Accumulated deficit (189,779,479) (138,994,351)
Cumulative foreign
currency translation
adjustments (4,532,557) (4,209,158)
____________ ____________
(194,219,169) (143,109,892)
____________ ____________ ____________ ____________
$189,696,885 $184,900,458 $189,696,885 $184,900,458
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Quarter Ended March 31,
1994 1993
Revenues:
Net shipments $ 43,355,100 $ 47,104,262
Interest, royalties and
miscellaneous 350,740 327,462
____________ ____________
43,705,840 47,431,724
____________ ____________
Costs and Expenses:
Cost of products sold 36,564,733 39,911,558
Product development, selling,
administrative, and miscellaneous
expenses 7,522,344 8,681,055
Interest expense (contractual
interest for 1994 - $9,278,791;
1993 - $8,504,005) - Note 4 6,212,564 8,504,005
____________ ____________
50,299,641 57,096,618
____________ ____________
Loss before reorganization items,
income taxes and cumulative
effects of changes in
accounting principles (6,593,801) (9,664,894)
Reorganization items -
pre-petition - Note 4 1,184,006 440,705
Reorganization items -
post-petition - Note 4 1,752,958 -
____________ ____________
Loss before income taxes and
cumulative effects of changes
in accounting principles (9,530,765) (10,105,599)
Income taxes 465,555 670,769
____________ ____________
Loss before cumulative effects of
changes in accounting principles (9,996,320) (10,776,368)
Cumulative effects of changes in
accounting principles for:
Postretirement benefits - (11,744,109)
Income taxes - 446,724
_____________ ____________
Net loss (9,996,320) (22,073,753)
Redeemable preferred stock
accretion - pre-petition (105,548) (150,896)
Redeemable preferred stock
dividends - pre-petition (40,453) 276,016
Redeemable preferred stock
reorganization item - Note 4 (40,554,805) -
____________ ____________
Net loss attributable to
common stockholders $(50,697,126) $(21,948,633)
Weighted average of common
shares outstanding 9,265,109 8,046,393
Net loss per share of common stock:
Loss before cumulative effects of
changes in accounting principles $ (1.08) $ (1.34)
Cumulative effects of changes in
accounting principles for:
Postretirement benefits - (1.46)
Income taxes - .06
________ ________
Net loss (1.08) (2.74)
Redeemable preferred stock dividends
and accretion - pre-petition (.01) .01
Redeemable preferred stock
reorganization item (4.38) -
________ ________
Net loss per share attributable to
common stockholders $ (5.47) $ (2.73)
See accompanying notes to consolidated condensed financial statements.
<PAGE>
B-E HOLDINGS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended March 31,
1994 1993
Cash Flows From Operating Activities
Net loss $ (9,996,320) $(22,073,753)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 2,021,109 1,908,915
Amortization of purchase adjustments
and financing fees 1,025,345 1,115,445
Deferred rent (interest) on sale and
leaseback financing arrangement 1,670,479 1,364,742
Amortization of debt discount 71,179 107,346
(Gain) loss on sale of property,
plant and equipment (515) 3,511
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 (3,548,629) (1,635,059)
Increase in inventories (2,369,754) (5,513,870)
Increase in other current
assets (560,418) (163,546)
(Increase) decrease in
other assets (95,754) 57,275
Increase in current liabilities
other than income taxes
and current maturities
of long-term debt 10,849,004 5,483,582
Increase (decrease) in
income taxes 96,612 (593,773)
Decrease in deferred liabilities
other than income taxes (288,655) (1,585,393)
____________ ____________
Net cash used in operating activities (46,512) (10,227,193)
____________ ____________
Cash Flows From Investing Activities
Decrease in restricted
funds on deposit 965,966 2,370,880
Purchases of property, plant
and equipment (992,626) (736,080)
Proceeds from sale of property, plant
and equipment 29,570 1,977
____________ ____________
Net cash provided by
investing activities 2,910 1,636,777
____________ ____________
Cash Flows From Financing Activities
Payment of current maturities of
long-term debt - (346,834)
Payment of other obligations (281,745) -
Proceeds from exercise of warrants 53 28,183
Proceeds from issuance of long-term
project financing obligations 2,669,741 -
Net cash provided by (used in) ____________ ____________
financing activities 2,388,049 (318,651)
____________ ____________
Effect of exchange rate
changes on cash (68,755) (144,133)
____________ ____________
Net increase (decrease) in cash
and cash equivalents 2,275,692 (9,053,200)
Cash and cash equivalents at
beginning of period 13,696,244 16,019,517
____________ ____________
Cash and cash equivalents at
end of period $ 15,971,936 $ 6,966,317
Supplemental Disclosures of Cash Flow Information
1994 1993
Cash paid (received) during
the period for:
Interest on long-term debt
and bank borrowings $ 110,826 $ 63,794
Income taxes - net of refunds (47,313) 355,152
Reorganization items 2,155,900 440,705
Supplemental Schedule of Non-Cash Investing and Financing Activities
The Company has 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 has 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 105,548 150,896
Write-up to amount of allowed
claim in the Prepackaged Plan 40,554,805 -
____________ ____________
$ 40,789,610 $ 301,696
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 March 31, 1994.
Liabilities Subject to Compromise as of March 31, 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 27,848,354
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 9,102,680
Accrued interest 33,957,034
Liability to customers on uncompleted contracts
and warranties 4,450,000
Other 1,340,904
____________
Total $251,798,728
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 March 31,
1994 1993
Legal and professional
fees - pre-petition $ 1,184,006 $ 440,705
Legal and professional
fees - post-petition 711,296 -
Net write-down of debt to amount
of allowed claim in the
Prepackaged Plan (33,122) -
Interest income (38,143) -
Write-off capitalized financing costs 1,112,927 -
___________ ___________
Subtotal 2,936,964 440,705
Write-up of redeemable preferred
stock to amount of allowed claim
in the Prepackaged Plan 40,554,805 -
___________ ___________
Total $43,491,769 $ 440,705
5. Inventories are summarized as follows:
March 31, December 31,
1994 1993
Raw materials and parts $ 11,452,832 $ 10,324,233
Inventoried costs relating to
uncompleted contracts 5,409,518 670,835
Work in process 12,061,256 15,344,264
Finished products (primarily
replacement parts) 38,215,187 37,863,277
Customers' advances offset
against costs incurred on
uncompleted contracts (1,251,083) (531,372)
____________ ____________
$ 65,887,710 $ 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:
March 31, 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 6,329,620 3,659,879
Other 2,530,282 2,802,795
____________ ____________
8,859,902 207,702,248
Less:
Current maturities of long-term debt (7,568,077) (4,954,196)
Amounts classified as a
current liability (742,500) (201,979,324)
____________ ____________
Amounts classified as long-term debt $ 549,325 $ 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 March 31, 1994, into the assets, liabilities and
stockholders' investment (deficiency in assets) of those entities that
filed bankruptcy and those subsidiaries around which the Company and
Bucyrus are being reorganized.
Debtors- Non-
In- Bankrupt
Possession Entities Eliminations Consolidated
(Dollars in Thousands)
Current assets $ 72,392 $ 42,351 $( 1,413) $113,330
Property, plant &
equipment, net 37,854 7,534 - 45,388
Other assets 83,442 8,275 (60,738) 30,979
Due from
affiliates 17,577 1,153 (18,730) -
________ ________ _________ ________
Total assets $211,265 $ 59,313 $ (80,881) $189,697
Current liabilities $ 23,230 $ 10,904 $ (56) $ 34,078
Long-term debt 440 109 - 549
Other liabilities 274,498 3,637 - 278,135
Due to affiliates 175 17,615 (17,790) -
Preferred stock 71,154 - - 71,154
Stockholders'
investment
(deficiency in
assets) (158,232) 27,048 (63,035) (194,219)
________ ________ _________ ________
Total liabilities
and stockholders'
investment
(deficiency in
assets) $211,265 $ 59,313 $ (80,881) $189,697
<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 March 31, 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"). 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 continuing discussions with the New Lenders to
secure extension of the Commitment Letter and the credit facilities
contemplated thereby prior to confirmation of the Prepackaged Plan. The
Company and Bucyrus are also in discussions with additional 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 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. Following further review of its liquidity and
short-term cash needs, Bucyrus determined on March 7, 1994 to defer
consideration of the Post-Petition Credit Facility as well as an alternative
post-petition secured credit facility proposed by Jackson National Life
Insurance Company ("JNL").
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. 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 commenced 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.
The Company and Bucyrus commenced voluntary petitions under chapter 11 of
the Bankruptcy Code notwithstanding that JNL, the holder of the Resettable
Notes, voted against the Prepackaged Plan (as such holder had previously
publicly announced it would do). 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 Company and Bucyrus
intend (and the Prepackaged Plan so provides) to seek confirmation of the
Prepackaged Plan under the "cram down" provisions and will ask the Bankruptcy
Court to confirm the Prepackaged Plan over the objection of the holder of the
Resettable Notes. The Company and Bucyrus believe that the Prepackaged Plan
meets the "cram down" requirements set forth in the Bankruptcy Code, although
no assurance to this effect can be given. Although the Company and Bucyrus
believe that requisite acceptances of the Prepackaged Plan have been received
and that the Prepackaged Plan meets the "cram down" requirements of the
Bankruptcy Code, 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 Prepackaged Plan. In addition,
confirmation and consummation of the Prepackaged Plan are subject to further
conditions described in the Prepackaged Plan, and there can be no assurance
that these will be satisfied, or, if not satisfied, waived or waivable by the
Company and Bucyrus.
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 March 31, 1994, the unused
portion of the letter of credit facility under the Letter of Credit Agreement
was $8,818,090. 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.
The Prepackaged Plan
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. 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 Prepackaged Plan. None of the subsidiaries of the Company
and Bucyrus are parties to the Prepackaged Plan.
Purpose Of The Restructuring
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.
Liquidity Pending Consummation Of The Restructuring
Until the Prepackaged Plan is implemented on the Effective Date (as
defined in the Prepackaged 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.
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 has been scheduled for June 16, 1994 by the Bankruptcy Court. If the
Bankruptcy Court approves the solicitation pursuant to the Disclosure
Statement at such hearing, the Bankruptcy Court has indicated that it will
schedule a hearing on confirmation of the Prepackaged Plan shortly thereafter.
Net Shipments and Net Loss
Net shipments for the first quarter of 1994 were $43,355,100 compared
with $47,104,262 for the first quarter of 1993. Shipments of repair parts and
services were even with the first quarter of 1993 and machine shipments
decreased 27.0%. The decrease in machine shipments was primarily due to
decreased blast hole drill shipments of $3,053,000. The pricing for machines
and repair parts has continued to remain steady with the changes primarily
related to volume.
Net loss for the first quarter of 1994 was $9,996,320 compared with a net
loss of $22,073,753 for the first quarter of 1993. The decrease in net loss
was primarily due to reduced interest expense in the first quarter of 1994 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 the first quarter of 1994. Also included in net
losses for the first quarter of 1994 and 1993 were amortizations of non-cash
purchase accounting and financing charges of $2,105,463 and $2,028,457,
respectively.
The Company's consolidated backlog on March 31, 1994 was $84,160,178
compared with $74,023,040 on December 31, 1993 and $82,935,708 on March 31,
1993. Machine backlog is up 15.6% from December 31, 1993 and up 8.1% from
March 31, 1993. Both increases are primarily in electric mining shovels
volume. Repair parts and service backlog is up 12.7% from December 31, 1993
and down 1.8% from March 31, 1993. The increase from December 31, 1993 is
primarily at domestic locations.
New orders for the first quarter of 1994 increased $15,838,000 or 42.1%
over the first quarter of 1993. New machine orders increased $12,855,000 or
740.9%, primarily due to increased electric mining shovel volume. New repair
parts and service orders increased $2,983,000 or 8.3%. This increase was at
both domestic and 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.
Cost of Products Sold
Cost of products sold for the first quarter of 1994 was $36,564,733 or
84.3% of shipments compared with $39,911,558 or 84.7% of shipments for the
first quarter of 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 losses of $357,760 for the
first quarter of 1994 compared with $704,051 for the first quarter of 1993.
The losses occurred primarily 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 first quarter of 1994 were $7,522,344 or 17.4% of shipments compared
with $8,681,055 or 18.4% of shipments for the first quarter of 1993. The
decrease was primarily due to reduced product development expense as a result
of increased work on specific customer contracts.
Interest Expense
Interest expense for the first quarter of 1994 was $6,212,564 compared
with $8,504,005 for the first quarter of 1993. The decrease was 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, the Company's Series A 12-1/2% Senior Debentures and
Bucyrus' 9% Sinking Fund Debentures.
Income Taxes
The Company has federal net operating loss carryforwards of approximately
$112,900,000 expiring in the years 2003 through 2009, available to offset
future federal taxable income. The Company also has approximately $78,500,000
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 March 31, 1994 and December 31, 1993 were
as follows:
March 31, December 31,
1994 1993
Working capital (deficiency) (in millions) $ 79.3 $(164.0)
Current ratio 3.3 to 1 .4 to 1
The increase in working capital for the quarter ended March 31, 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 March 31,
1994 and December 31, 1993, respectively, and long-term debt classified as a
current liability of $742,500 and $201,979,324 at March 31, 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:
March 31, December 31,
1994 1993
Working capital (in millions) $ 80.0 $ 38.0
Current ratio 3.4 to 1 1.6 to 1
The table below summarizes the Company's cash position at March 31, 1994:
Restricted Unrestricted
Location Cash Cash Total
United States $ 2,340,000 $ 9,985,112 $12,325,112
Foreign Subsidiaries - 4,354,465 4,354,465
Equipment Assurance Limited 3,230,866 1,632,359 4,863,225
___________ ___________ ___________
$ 5,570,866 $15,971,936 $21,542,802
The unrestricted cash at the foreign subsidiaries and Equipment Assurance
Limited ("EAL"), an off-shore insurance subsidiary of Bucyrus, is not readily
repatriatable because it is 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 March 31,
1994 1993
Loss before reorganization items,
income taxes and cumulative effects
of changes in accounting principles $ (6,593,801) $ (9,664,894)
Non-cash expenses:
Depreciation expense - historical 1,012,170 1,103,249
Depreciation and amortization of purchase
adjustments and financing fees 2,034,284 1,921,111
Deferred rent (interest) on sale and
leaseback financing arrangement 1,670,479 1,364,742
Amortization of debt discount 71,179 107,346
____________ ____________
Cash used in operations after interest
expense and before reorganization items,
income taxes and cumulative effects of
changes in accounting principles (1,805,689) (5,168,446)
Cash interest expense (1) 4,470,906 7,031,917
Cash provided from operations before ____________ ____________
interest expense, reorganization
items, income taxes and
cumulative effects of changes in
accounting principles $ 2,665,217 $ 1,863,471
(1) Includes accrued but unpaid interest 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 March
31, 1994, the unused portion of the letter of credit facility under the Letter
of Credit Agreement was $8,818,090. 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 March 31, 1994. These collateral amounts are
classified as Restricted Funds on Deposit in the Consolidated Condensed
Balance Sheets.
At March 31, 1994, the Company's subsidiaries had approximately $874,000
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.
JNL Litigation
As disclosed in the Company's annual report on Form 10-K for the year
ended December 31, 1993 (the "1993 10-K"), Jackson National Life
Insurance Company ("JNL"), the sole holder of the Resettable Senior
Notes, on October 27, 1993 amended its complaint filed in a civil
action in the United States District Court, Southern District of New
York to name the Company, Bucyrus and certain of their current and
former directors as defendants (the "JNL Lawsuit"). On November 22,
1993, JNL and the indenture trustee for the Resettable Senior Notes
filed a notice of motion for partial summary judgment relating to
JNL's claim for the principal of and accrued interest on the
Resettable Senior Notes. On December 17, 1993, the indenture trustee
for the 10% Senior Notes and the Series A 12-1/2% Senior Debentures, a
defendant in the lawsuit instituted by JNL, filed cross-claims against
the Company and Bucyrus seeking judgment on the principal of, interest
on and other amounts due and owing under the 10% Senior Notes and the
Series A 12-1/2% Senior Debentures, and filed a notice of motion for
summary judgment on such cross-claims. As a result of the Company's
and Bucyrus' chapter 11 petitions, prosecution of all such claims,
cross-claims and motions has been stayed against the Company and
Bucyrus as of the Petition Date.
The information contained in Item 3 of the 1993 10-K under "JNL
COMPLAINT" is incorporated herein by reference.
Bell Helicopter Settlement
In February, 1989, Bell Helicopter Textron, Inc. ("Bell Helicopter")
sued Bucyrus, Bucyrus' inactive subsidiary, Brad Foote (which is now
known as BWC Gear, Inc. ("BWC")), and the purchaser of all of the
assets of Brad Foote (the "BF Purchaser") in the District Court of
Tarrant County, Texas, over certain allegedly defective gear boxes
which were manufactured by BWC and the BF Purchaser under Bell
Helicopter purchase orders that were originally placed with BWC, but
which were assigned by BWC to the BF Purchaser as part of the sale of
assets of Brad Foote. Bell Helicopter sought compensatory damages of
approximately $30,350,000 plus punitive damages against all defendants
based on various theories of liability (the "Bell Helicopter Claim").
On December 23, 1993, BWC, Bucyrus, the Company and Bell Helicopter
executed a letter of intent setting forth the terms of a settlement
of the Bell Helicopter Claim and agreeing to the treatment of the
Bell Helicopter Claim on the terms set forth in the Prepackaged Plan.
On January 26, 1994, BWC, the Company, Bucyrus and Bell Helicopter
entered into a settlement agreement and release (the "Bell Settlement
Agreement"), pursuant to which, Bell Helicopter agreed effective as of
December 23, 1993 to settle the Bell Helicopter Claim in consideration
of receiving an Allowed Claim (as defined in the Prepackaged Plan)
against Bucyrus in the amount of $3,350,000 in the Prepackaged
Chapter 11 Cases. Bell Helicopter has agreed in the Bell Settlement
Agreement that under the Prepackaged Plan it shall receive in respect
of its Allowed Claim (a) $350,000 in cash on or as soon as practicable
after the effective date of the Prepackaged Plan and (b) an Allowed
Claim of $3,000,000 against Bucyrus in the Prepackaged Chapter 11
Cases which shall be treated pari passu with the holders of the 10%
Senior Notes, the Resettable Senior Notes and the 9% Sinking Fund
Debentures (collectively, "Bucyrus Debt Securities") and shall entitle
Bell Helicopter to receive approximately 1.62% of the common equity to
be issued pursuant to the Prepackaged Plan. The settlement of the
Bell Helicopter Claim contained in the Bell Settlement Agreement is
contingent upon (i) approval by the Bankruptcy Court of such
settlement on the terms set forth in the Prepackaged Plan and (ii) the
effective date of the Prepackaged Plan occurring prior to December 31,
1994. Upon consummation of the Prepackaged Plan, and assuming
approval of the settlement of the Bell Helicopter Claim by the
Bankruptcy Court, BWC, the Company and Bucyrus will be released from
all liability in respect of the Bell Helicopter Claim. The $3,350,000
settlement is reflected in the Company's Consolidated Condensed
Balance Sheet in Liabilities Subject to Compromise.
On January 27, 1994, the District Court of Tarrant County, Texas
entered an order pursuant to which the lawsuit instituted by Bell
Helicopter was stayed against Bucyrus and BWC until such time as a
motion is filed by Bell Helicopter, Bucyrus or BWC to lift such stay.
The order of the District Court also required the parties to report to
the District Court on or before December 31, 1994 as to the status of
the settlement of the Bell Helicopter Claim described above and
contemplated by the Prepackaged Plan, confirmation of the Prepackaged
Plan, and the prospects for entry of an order of dismissal in respect
of the Bell Helicopter Claim against Bucyrus and BWC.
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"). 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"). 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"). 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 $3,043,010
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"). 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 4. Submission of Matters to a Vote of Security Holders
As noted in Part I, in the first quarter of 1994, the Company and
Bucyrus solicited acceptances of the Prepackaged Plan from
stockholders and certain creditors of the Company and Bucyrus. On
February 14, 1994, the solicitation period expired, and all classes of
the Company's and Bucyrus' debt securities and the Company's
stockholders voting on the Prepackaged Plan voted to accept the
Prepackaged Plan, other than the holder of the Resettable Senior
Notes. On February 18, 1994, the Company and Bucyrus commenced
voluntary petitions under chapter 11 of the Bankruptcy Code and filed
the Prepackaged Plan in the U.S. Bankruptcy Court, Eastern District of
Wisconsin on that date.
The information contained in Item 7 of the 1993 10-K under "CORPORATE
RESTRUCTURING -- DEVELOPMENT, APPROVAL AND FILING OF THE PREPACKAGED
PLAN -- The Solicitation" is incorporated herein by reference.
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) Report on Form 8-K:
1. Items Reported: Announcement of the Company's and
Bucyrus' filing of the Prepackaged Plan, commencement of
their voluntary petitions under chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court,
Eastern District of Wisconsin and results of the
solicitation of acceptances of the Prepackaged Plan from
stockholders and certain creditors of the Company and
Bucyrus.
2. Financial Statements: None.
3. Date: February 18, 1994.
<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 May 12, 1994 Craig R. Mackus
Controller
Principal Accounting Officer
Date May 12, 1994 William B. Winter
Chairman of the Board and
Chief Executive Officer
<PAGE>
B-E HOLDINGS, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1994
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference Herewith Number
_______ ___________ ____________ ________ __________
99.1 Prepackaged Joint Plan of Exhibit 99.4
Reorganization of B-E to Registrant's
Holdings, Inc. and Bucyrus- Annual Report
Erie Company under chapter on Form 10-K
11 of the Bankruptcy Code for year ended
as filed with the United December 31, 1993
States Bankruptcy Court, ("Holdings' 1993
Eastern District of 10-K")
Wisconsin on February 18,
1994.
99.2 Settlement Agreement Exhibit 99.5
and Release entered to Holdings'
into effective as of 1993 10-K
December 23, 1993
between Bell Helicopter
Textron, Inc., BWC Gear,
Inc., Bucyrus-Erie
Company and B-E
Holdings, Inc. relating
to settlement of the
Bell Helicopter Claim.
99.3 Form of Post-Petition Exhibit 99.6
Credit and Security to Holdings'
Agreement between 1993 10-K
Bank One, Milwaukee,
N.A. and Bucyrus-Erie
Company relating to the
issuance of standby
letters of credit and
commercial letters of
credit.
