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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-871
BUCYRUS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 39-0188050
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN
53172
(Address of Principal Executive Offices)
(Zip Code)
(414) 768-4000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ ] No [ X ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Yes [ ] No [X]
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, 2004
Class A Common Stock, $.01 par value 12,978,500
Class B Common Stock, $.01 par value 7,021,077
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Item 1 - Financial Statements (Unaudited)
Consolidated Condensed Statements of Operations -
Quarters and six months ended June 30, 2004
and 2003 4
Consolidated Condensed Statements of
Comprehensive Income (Loss) - Quarters and
six months ended June 30, 2004 and 2003 5
Consolidated Condensed Balance Sheets -
June 30, 2004 and December 31, 2003 6-7
Consolidated Condensed Statements of Cash Flows -
Six months ended June 30, 2004 and 2003 8
Notes to Consolidated Condensed Financial
Statements 9-25
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 26-36
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk 37
Item 4 - Controls and Procedures 38
Forward-Looking Statements 39
PART II. OTHER INFORMATION:
Item 1 - Legal Proceedings 40
Item 2 - Changes in Securities, Use of Proceeds
and Issuer Purchases of Equity Securities 40
Item 3 - Defaults Upon Senior Securities 40
Item 4 - Submission of Matters to a Vote of
Security Holders 40
Item 5 - Other Information 40
Item 6 - Exhibits and Reports on Form 8-K 41
Signature Page 37
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
Quarters Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Sales $116,967 $ 86,953 $214,095 $147,835
Cost of products sold 92,180 70,548 169,651 116,872
________ ________ ________ ________
Gross profit 24,787 16,405 44,444 30,963
Selling, general and
administrative expenses 14,206 9,960 28,262 18,751
Research and development
expenses 1,280 930 2,634 2,084
Amortization of intangible
assets 411 412 823 824
________ ________ ________ ________
Operating earnings 8,890 5,103 12,725 9,304
Interest expense 4,166 4,472 8,291 8,995
Other (income)
expense - net 373 189 718 393
________ ________ ________ ________
Earnings (loss) before
income taxes 4,351 442 3,716 (84)
Income tax expense 1,722 928 3,102 1,734
________ ________ ________ ________
Net earnings (loss) $ 2,629 $ (486) $ 614 $ (1,818)
======== ======== ======== ========
Net earnings (loss)
per share data:
Basic:
Net earnings (loss)
per share $ .22 $(.04) $ .05 $(.16)
Weighted average shares 12,058,400 11,500,560 12,058,400 11,492,720
Diluted:
Net earnings (loss)
per share $ .21 $(.04) $ .05 $(.16)
Weighted average shares 12,687,687 11,500,560 12,716,552 11,492,720
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Dollars in Thousands)
Quarters Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Net earnings (loss) $ 2,629 $ (486) $ 614 $ (1,818)
Other comprehensive
income (loss)-
Foreign currency
translation adjustments (3,048) 3,956 (4,043) 5,532
________ ________ ________ ________
Comprehensive income (loss) $ (419) $ 3,470 $ (3,429) $ 3,714
======== ======== ======== ========
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
June 30, December 31, June 30, December 31,
2004 2003 2004 2003
LIABILITIES AND COMMON
ASSETS SHAREHOLDERS' INVESTMENT
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash Accounts payable and
equivalents $ 6,541 $ 6,075 accrued expenses $ 67,282 $ 59,591
Receivables - net 66,819 73,111 Liabilities to customers
Inventories 112,725 115,898 on uncompleted contracts
Prepaid expenses and and warranties 12,817 19,030
other current assets 7,147 8,209 Income taxes 2,121 4,314
________ ________ Borrowings under senior
secured revolving credit
Total Current Assets 193,232 203,293 facility and other
short-term obligations 19,353 37,420
OTHER ASSETS: Current maturities of
Restricted funds long-term debt 342 376
on deposit 563 578 ________ ________
Goodwill 55,860 55,860
Intangible assets - net 34,901 35,724 Total Current Liabilities 101,915 120,731
Other assets 7,012 9,255
________ ________ LONG-TERM LIABILITIES:
Liabilities to customers on
98,336 101,417 uncompleted contracts
and warranties 800 800
PROPERTY, PLANT AND EQUIPMENT: Postretirement benefits 13,372 13,130
Cost 114,535 112,955 Deferred expenses,
Less accumulated pension and other 32,496 32,449
depreciation (60,604) (55,522) Payable to American
________ ________ Industrial Partners 5,803 5,527
Interest payable to
53,931 57,433 Holdings 23,660 25,810
________ ________
76,131 77,716
LONG-TERM DEBT, less
current maturities 153,719 153,973
(including $75,635 of
Senior Notes held by
Holdings)
COMMON SHAREHOLDERS'
INVESTMENT:
Common stock - par value
$.01 per share, authorized
13,600,000 shares, issued
12,130,800 shares 121 15
Additional paid-in capital 156,912 149,578
Treasury stock -
72,400 shares, at cost (851) (851)
Accumulated deficit (104,169) (104,783)
Accumulated other
comprehensive loss (38,279) (34,236)
________ ________
13,734 9,723
________ ________ ________ ________
$345,499 $362,143 $345,499 $362,143
======== ======== ======== ========
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
Six Months Ended June 30,
2004 2003
Net Cash Provided By Operating Activities $ 21,609 $ 9,274
________ ________
Cash Flows From Investing Activities
Decrease in restricted funds
on deposit 15 104
Purchases of property, plant
and equipment (2,346) (1,086)
Proceeds from sale of property, plant
and equipment 57 15
________ ________
Net cash used in investing activities (2,274) (967)
________ ________
Cash Flows From Financing Activities
Net repayments of revolving credit
facility (19,066) (4,784)
Net increase (decrease) in long-term
debt and other bank borrowings 711 (378)
Payment of financing expenses (208) (1,303)
Proceeds from issuance of common stock - 36
________ ________
Net cash used in financing activities (18,563) (6,429)
________ ________
Effect of exchange rate changes
on cash (306) 586
________ ________
Net increase in cash and
cash equivalents 466 2,464
Cash and cash equivalents at
beginning of period 6,075 4,189
________ ________
Cash and cash equivalents at
end of period $ 6,541 $ 6,653
======== ========
Supplemental Disclosures of Cash Flow Information
2004 2003
Cash paid during the period for:
Interest $ 8,446 $ 5,259
Income taxes - net of refunds 4,623 2,891
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
1. In the opinion of Bucyrus International, Inc. (the "Company"), the
consolidated condensed financial statements contain all adjustments
(consisting only of normal recurring accruals) necessary to present
fairly the financial results for the interim periods. Certain items
are Included in these statements based on estimates for the entire
year. The Company's operations are classified as one operating
segment. At June 30, 2004, the Company was substantially wholly-owned
by Bucyrus Holdings, LLC ("Holdings"), which was controlled by
American Industrial Partners ("AIP").
2. Certain notes and other information have been condensed or omitted from
these interim consolidated condensed financial statements. Therefore,
these statements should be read in conjunction with the Company's 2003
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 30, 2004.
3. On July 22, 2004, the Company announced the completion of an initial
public offering of 12,362,500 shares of its Class A common stock at $18
per share, from which the Company received net proceeds, after
commissions and estimated expenses, of approximately $129,600,000. The
Company sold 7,941,177 shares in the offering and AIP sold 4,421,323
shares, 1,612,500 of which were sold through exercise by the
underwriters of their over-allotment option. The shares sold by AIP
were Class B shares, which converted to Class A shares upon their sale
by AIP. As a result, the Company's outstanding capital stock, on an
undiluted basis, consists of 7,021,077 shares of Class B common stock,
all of which are owned by AIP, and 12,978,500 shares of Class A common
stock. As a general matter, as to all matters submitted to a vote of
the stockholders, each share of Class A common stock has one vote and
each share of Class B common stock has two votes.
4. Inventories consist of the following:
June 30, December 31,
2004 2003
(Dollars in Thousands)
Raw materials and parts $ 15,841 $ 11,655
Work in process 13,208 20,433
Finished products (primarily
replacement parts) 83,676 83,810
________ ________
$112,725 $115,898
======== ========
5. On June 9, 2004, the Company's Board of Directors authorized an eight-
for-one stock split which increased the number of authorized shares of
common stock of the Company as of that date to 13,600,000 shares and
increased the number of issued and outstanding shares to 12,058,400
shares.
Net earnings (loss) per share of common stock for prior periods has been
calculated on a retroactive basis to reflect the stock split. The
following is a reconciliation of the numerators and the denominators of
the basic and diluted net earnings per share of common stock
calculations in 2004:
Six Months
Quarter Ended Ended
June 30, 2004 June 30, 2004
(Dollars in Thousands,
Except Per Share Amounts)
Net earnings $2,629 $ 614
====== ======
Weighted average shares outstanding 12,058,400 12,058,400
========== ==========
Basic net earnings per share $ .22 $ .05
====== ======
Weighted average shares outstanding 12,058,400 12,058,400
Effect of dilutive stock options 629,287 658,152
__________ __________
Weighted average shares
outstanding - diluted 12,687,687 12,716,552
========== ==========
Diluted net earnings per share $ .21 $ .05
====== ======
The weighted average shares outstanding used to compute the diluted loss
per share for the quarter and six months ended June 30, 2003 exclude
outstanding options to purchase 1,309,208 shares of the Company's common
stock as of June 30, 2003. The options were excluded because their
inclusion would have been antidilutive.
6. The Company accounts for stock options in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," as allowed by Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). The
following table illustrates the effect on net earnings (loss) and net
earnings (loss) per share as if the fair value-based method provided by
SFAS 123 had been applied for all outstanding and unvested awards in
each period:
Quarters Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
(Dollars in Thousands, Except Per Share Amounts)
Reported net earnings
(loss) $ 2,629 $ (486) $ 614 $ (1,818)
Add: Non-cash stock-based
employee compensation
expense recorded for
stock options, net of
related tax effects 3,293 638 7,441 638
Deduct: Total non-cash
stock-based employee
compensation expense
determined under fair
value based method for
all awards, net of
related tax effects (4) (73) (8) (145)
________ ________ ________ ________
Pro forma net earnings
(loss) $ 5,918 $ 79 $ 8,047 $ (1,325)
======== ======== ======== ========
Net earnings (loss) per
share of common stock:
As reported:
Basic $ .22 $ (.04) $ .05 $ (.16)
Diluted .21 (.04) .05 (.16)
Pro forma:
Basic .49 .01 .67 (.12)
Diluted .47 .01 .63 (.12)
7. Intangible assets consist of the following:
June 30, 2004 December 31, 2003
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Amount Amortization
(Dollars in Thousands)
Amortized intangible
assets:
Engineering drawings $ 25,500 $ (8,631) $ 25,500 $ (7,994)
Bill of material
listings 2,856 (966) 2,856 (895)
Software 2,288 (1,549) 2,288 (1,434)
________ ________ ________ ________
$ 30,644 $(11,146) $ 30,644 $(10,323)
======== ======== ======== ========
Unamortized intangible
assets:
Trademarks/Trade names $ 12,436 $ 12,436
Intangible pension
asset 2,967 2,967
________ ________
$ 15,403 $ 15,403
======== ========
The estimated future amortization expense of intangible assets as of
June 30, 2004 is as follows:
(Dollars in Thousands)
2004 (remaining six months) $ 823
2005 1,647
2006 1,647
2007 1,585
2008 1,418
2009 1,418
Future 10,960
________
$ 19,498
========
8. The Company's operations and properties are subject to a broad range of
federal, state, local and foreign laws and regulations relating to
environmental matters, including laws and regulations governing
discharges into the air and water, the handling and disposal of solid
and hazardous substances and wastes, and the remediation of
contamination associated with releases of hazardous substances at the
Company's facilities and at off-site disposal locations. These laws
are complex, change frequently and have tended to become more stringent
over time. Future events, such as compliance with more stringent laws
or regulations, more vigorous enforcement policies of regulatory
agencies or stricter or different interpretations of existing laws,
could require additional expenditures by the Company, which may be
material.
Environmental problems have not interfered in any material respect with
the Company's manufacturing operations to date. The Company has an
ongoing program to address any potential environmental problems. While
no assurance can be given, the Company believes that expenditures for
compliance and remediation will not have a material effect on its
capital expenditures, results of operations or competitive position.
Warranty Liability
The Company recognizes the cost associated with its warranty policies on
its products at the time of sale. The amount recognized is based on
historical experience. The following is a reconciliation of the changes
in accrued warranty costs for the six months ended June 30, 2004 and
2003:
Six Months Ended June 30,
2004 2003
(Dollars in Thousands)
Balance at January 1 $ 4,311 $ 3,597
Provision 1,835 1,428
Charges (978) (581)
________ ________
Balance at June 30 $ 5,168 $ 4,444
======== ========
Product Liability
The Company is normally subject to numerous product liability claims,
many of which relate to products no longer manufactured by the Company
or its subsidiaries, and other claims arising in the ordinary course of
business. The Company has insurance covering most of said claims,
subject to varying deductibles up to $3,000,000, and has various limits
of liability depending on the insurance policy year in question. It is
the view of management that the final resolution of said claims and
other similar claims which are likely to arise in the future will not
individually or in the aggregate have a material effect on the Company's
financial position, results of operations or cash flows, although no
assurance to that effect can be given.
Asbestos Liability
The Company has been named as a co-defendant in approximately 295
personal injury liability cases alleging damages due to exposure to
asbestos and other substances, involving approximately 1,483 plaintiffs.
The cases are pending in courts in nine states. In all of these cases,
insurance carriers have accepted or are expected to accept defense.
These cases are in various pre-trial stages. The Company does not
believe that costs associated with these matters will have a material
effect on its financial position, results of operations or cash flows,
although no assurance to that effect can be given.
Other Litigation
A wholly-owned Australian subsidiary of the Company is a defendant in a
suit pending in the Supreme Court of Queensland in Australia, brought on
May 5, 2002, relating to a contractual claim. The plaintiff, pursuant
to a contract with the Company's subsidiary, agreed to erect a dragline
sold by the Company to a customer for use at its mine site. The
plaintiff asserts various contractual claims related to breach of
contract damages and other remedies for approximately $3,600,000
Australian dollars related to its contention that it is owed amounts
for services rendered under the contract. The Company's subsidiary
has asserted counterclaims against the plaintiff in connection with
certain aspects of the work performed. The Company has established
a reserve for its estimate of the resolution of this matter. At this
time discovery is ongoing and it is not possible to evaluate the
outcome of the claim nor the range of potential loss, if any.
9. Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," requires the reporting of comprehensive income
(loss) in addition to net earnings (loss) from operations. Comprehensive
income (loss) is a more inclusive financial reporting method that
includes disclosure of financial information that historically has not
been recognized in the calculation of net earnings (loss). The Company
reports comprehensive income (loss) and accumulated other comprehensive
income (loss) which includes net earnings (loss), foreign currency
translation adjustments and minimum pension liability adjustments.
Information on accumulated other comprehensive loss is as follows:
Minimum Accumulated
Cumulative Pension Other
Translation Liability Comprehensive
Adjustments Adjustments Loss
(Dollars in Thousands)
Balance at December 31, 2003 $ (9,028) $(25,208) $(34,236)
Changes - Six months ended
June 30, 2004 (4,043) - (4,043)
________ ________ ________
Balance at June 30, 2004 $(13,071) $(25,208) $(38,279)
======== ======== ========
10. The Company has several pension and retirement plans covering
substantially all of its employees in the United States. The Company
also provides certain health care benefits to age 65 and life
insurance benefits for certain eligible retired United States
employees.
The components of net periodic pension cost consisted of the following:
Quarters Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
(Dollars in Thousands)
Service cost $ 444 $ 393 $ 887 $ 785
Interest cost 1,332 1,269 2,642 2,538
Expected return on
plan assets (1,266) (1,008) (2,522) (2,015)
Amortization of prior
service cost 51 48 102 97
Amortization of
actuarial loss 401 483 572 965
________ ________ ________ ________
Net cost $ 962 $ 1,185 $ 1,681 $ 2,370
======== ======== ======== ========
The components of other net periodic postretirement benefits cost (health
care and life insurance) consisted of the following:
Quarters Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
(Dollars in Thousands)
Service cost $ 195 $ 137 $ 385 $ 273
Interest cost 307 235 571 471
Amortization of prior
service cost (55) (45) (110) (91)
Amortization of
actuarial loss 77 58 168 116
________ ________ ________ ________
Net cost $ 524 $ 385 $ 1,014 $ 769
======== ======== ======== ========
During the first six months of 2004, the Company contributed
approximately $1,598,000 to its pension plans and $781,000 for the
payment of benefits from its postretirement benefit plan. The Company
presently anticipates contributing an additional $2,501,000 to its
pension plans and $926,000 for the payment of benefits from its
postretirement benefit plan during the remainder of 2004.
11. The Company's payment obligations under its 9-3/4% Senior Notes due
2007 (the "Senior Notes") were, as of June 30, 2004, guaranteed by
certain of the Company's wholly-owned subsidiaries (the "Guarantor
Subsidiaries"). Such guarantees are full, unconditional and joint
and several. Separate financial statements of the Guarantor
Subsidiaries are not presented because the Company's management has
determined that they would not be material to investors. The
following supplemental financial information sets forth, on an
unconsolidated basis, statement of operations, balance sheet and
statement of cash flow information for the Company (the "Parent
Company"), for the Guarantor Subsidiaries and for the Company's non-
guarantor subsidiaries (the "Other Subsidiaries"). The supplemental
financial information reflects the investments of the Company in the
Guarantor Subsidiaries and Other Subsidiaries using the equity method
of accounting. The Company has determined that it is not practicable
to allocate goodwill, intangible assets and deferred income taxes to
the Guarantor Subsidiaries and Other Subsidiaries. Parent Company
amounts for net earnings (loss) and common shareholders' investment
differ from consolidated amounts as intercompany profit in subsidiary
inventory has not been eliminated in the Parent Company statement but
has been eliminated in the Consolidated Totals.
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statement of Operations
Quarter Ended June 30, 2004
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Sales $ 71,125 $ 13,273 $ 57,640 $(25,071) $116,967
Cost of products sold 56,505 12,313 47,559 (24,197) 92,180
________ ________ ________ ________ ________
Gross profit 14,620 960 10,081 (874) 24,787
Selling, general and
administrative expenses 9,022 469 4,789 (74) 14,206
Research and development
expenses 1,280 - - - 1,280
Amortization of
intangible assets 411 - - - 411
________ ________ ________ ________ ________
Operating earnings 3,907 491 5,292 (800) 8,890
Interest expense 4,388 353 538 (1,113) 4,166
Other (income) expense - net (390) - (350) 1,113 373
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and equity
in net earnings of
consolidated subsidiaries (91) 138 5,104 (800) 4,351
Income tax expense 168 4 1,550 - 1,722
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (259) 134 3,554 (800) 2,629
Equity in net earnings of
consolidated subsidiaries 3,688 - - (3,688) -
________ ________ ________ ________ ________
Net earnings $ 3,429 $ 134 $ 3,554 $ (4,488) $ 2,629
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statement of Operations
Quarter Ended June 30, 2003
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Sales $ 52,105 $ 9,730 $ 42,148 $(17,030) $ 86,953
Cost of products sold 42,706 9,296 35,047 (16,501) 70,548
________ ________ ________ ________ ________
Gross profit 9,399 434 7,101 (529) 16,405
Selling, general and
administrative expenses 5,514 443 4,083 (80) 9,960
Research and development
expenses 930 - - - 930
Amortization of
intangible assets 412 - - - 412
________ ________ ________ ________ ________
Operating earnings (loss) 2,543 (9) 3,018 (449) 5,103
Interest expense 4,721 345 176 (770) 4,472
Other (income) expense - net (152) (1) (428) 770 189
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and equity
in net earnings of
consolidated subsidiaries (2,026) (353) 3,270 (449) 442
Income taxes 60 6 862 - 928
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (2,086) (359) 2,408 (449) (486)
Equity in net earnings of
consolidated subsidiaries 2,049 - - (2,049) -
________ ________ ________ ________ ________
Net earnings (loss) $ (37) $ (359) $ 2,408 $ (2,498) $ (486)
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statement of Operations
Six Months Ended June 30, 2004
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Sales $132,267 $ 25,813 $103,754 $(47,739) $214,095
Cost of products sold 103,359 24,009 88,425 (46,142) 169,651
________ ________ ________ ________ ________
Gross profit 28,908 1,804 15,329 (1,597) 44,444
Selling, general and
administrative expenses 18,185 1,081 9,143 (147) 28,262
Research and development
expenses 2,634 - - - 2,634
Amortization of
intangible assets 823 - - - 823
________ ________ ________ ________ ________
Operating earnings 7,266 723 6,186 (1,450) 12,725
Interest expense 8,726 692 1,078 (2,205) 8,291
Other (income) expense - net (787) - (700) 2,205 718
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and equity
in net earnings of
consolidated subsidiaries (673) 31 5,808 (1,450) 3,716
Income tax expense 509 7 2,586 - 3,102
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (1,182) 24 3,222 (1,450) 614
Equity in net earnings of
consolidated subsidiaries 3,246 - - (3,246) -
________ ________ ________ ________ ________
Net earnings $ 2,064 $ 24 $ 3,222 $ (4,696) $ 614
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statement of Operations
Six Months Ended June 30, 2003
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Sales $ 87,080 $ 17,280 $ 75,577 $(32,102) $147,835
Cost of products sold 68,946 17,232 61,759 (31,065) 116,872
________ ________ ________ ________ ________
Gross profit 18,134 48 13,818 (1,037) 30,963
Selling, general and
administrative expenses 8,948 989 8,945 (131) 18,751
Research and development
expenses 2,084 - - - 2,084
Amortization of
intangible assets 824 - - - 824
________ ________ ________ ________ ________
Operating earnings (loss) 6,278 (941) 4,873 (906) 9,304
Interest expense 9,472 678 1,462 (2,617) 8,995
Other (income) expense - net (1,453) (1) (770) 2,617 393
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and equity
in net earnings of
consolidated subsidiaries (1,741) (1,618) 4,181 (906) (84)
Income tax expense 227 12 1,495 - 1,734
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (1,968) (1,630) 2,686 (906) (1,818)
Equity in net earnings of
consolidated subsidiaries 1,056 - - (1,056) -
________ ________ ________ ________ ________
Net earnings (loss) $ (912) $ (1,630) $ 2,686 $ (1,962) $ (1,818)
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheet
June 30, 2004
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ - $ 15 $ 6,526 $ - $ 6,541
Receivables - net 24,632 9,531 32,065 591 66,819
Intercompany receivables 88,594 896 25,829 (115,319) -
Inventories 53,505 6,278 58,915 (5,973) 112,725
Prepaid expenses and
other current assets 1,722 7 5,418 - 7,147
________ ________ ________ _________ ________
Total Current Assets 168,453 16,727 128,753 (120,701) 193,232
OTHER ASSETS:
Restricted funds on deposit 245 - 318 - 563
Goodwill 55,660 - 200 - 55,860
Intangible assets - net 34,901 - - - 34,901
Other assets 5,055 - 1,957 - 7,012
Investment in subsidiaries 26,730 - - (26,730) -
________ ________ ________ _________ ________
122,591 - 2,475 (26,730) 98,336
PROPERTY, PLANT AND
EQUIPMENT - net 37,475 5,603 10,853 - 53,931
________ ________ ________ _________ ________
$328,519 $ 22,330 $142,081 $(147,431) $345,499
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
(DEFICIT)
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 50,156 $ 3,139 $ 14,187 $ (200) $ 67,282
Intercompany payables 296 29,515 78,734 (108,545) -
Liabilities to customers
on uncompleted contracts
and warranties 9,081 353 3,383 - 12,817
Income taxes 446 45 1,630 - 2,121
Borrowings under senior
secured revolving credit
facility and other short-
term obligations 18,354 - 999 - 19,353
Current maturities of
long-term debt - 48 294 - 342
________ ________ ________ _________ ________
Total Current Liabilities 78,333 33,100 99,227 (108,745) 101,915
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 800 - - - 800
Postretirement benefits 13,059 - 313 - 13,372
Deferred expenses,
pension and other 31,174 843 479 - 32,496
Payable to American
Industrial Partners 5,803 - - - 5,803
Interest payable
to Holdings 23,660 - - - 23,660
________ ________ ________ _________ ________
74,496 843 792 - 76,131
LONG-TERM DEBT, less current
maturities (including
$75,635 of Senior Notes
held by Holdings) 150,000 1,154 2,565 - 153,719
COMMON SHAREHOLDERS'
INVESTMENT (DEFICIT) 25,690 (12,767) 39,497 (38,686) 13,734
________ ________ ________ _________ ________
$328,519 $ 22,330 $142,081 $(147,431) $345,499
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheet
December 31, 2003
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ - $ 16 $ 7,222 $ (1,163) $ 6,075
Receivables - net 24,325 8,687 39,335 764 73,111
Intercompany receivables 84,418 632 31,833 (116,883) -
Inventories 58,405 5,980 60,132 (8,619) 115,898
Prepaid expenses and
other current assets 1,722 56 6,431 - 8,209
________ ________ ________ _________ ________
Total Current Assets 168,870 15,371 144,953 (125,901) 203,293
OTHER ASSETS:
Restricted funds on deposit 245 - 333 - 578
Goodwill 55,660 - 200 - 55,860
Intangible assets - net 35,724 - - - 35,724
Other assets 7,184 - 2,071 - 9,255
Investment in subsidiaries 26,618 - - (26,618) -
________ ________ ________ _________ ________
125,431 - 2,604 (26,618) 101,417
PROPERTY, PLANT AND
EQUIPMENT - net 39,701 6,028 11,704 - 57,433
________ ________ ________ _________ ________
$334,002 $ 21,399 $159,261 $(152,519) $362,143
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
(DEFICIT)
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 39,929 $ 2,584 $ 17,097 $ (19) $ 59,591
Intercompany payables - 29,311 88,178 (117,489) -
Liabilities to customers
on uncompleted contracts
and warranties 11,522 628 6,880 - 19,030
Income taxes 478 45 3,791 - 4,314
Borrowings under senior
secured revolving credit
facility and other short-
term obligations 37,420 - - - 37,420
Current maturities of
long-term debt - 49 327 - 376
________ ________ ________ _________ ________
Total Current Liabilities 89,349 32,617 116,273 (117,508) 120,731
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 800 - - - 800
Postretirement benefits 12,801 - 329 - 13,130
Deferred expenses,
pension and other 31,599 397 453 - 32,449
Payable to American
Industrial Partners 5,527 - - - 5,527
Interest payable to
Holdings 25,810 - - - 25,810
________ ________ ________ _________ ________
76,537 397 782 - 77,716
LONG-TERM DEBT, less
current maturities
(including $75,635
of Senior Notes held
by Holdings) 150,000 1,176 2,797 - 153,973
COMMON SHAREHOLDERS'
INVESTMENT (DEFICIT) 18,116 (12,791) 39,409 (35,011) 9,723
________ ________ ________ _________ ________
$334,002 $ 21,399 $159,261 $(152,519) $362,143
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statement of Operations
Six Months Ended June 30, 2004
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Net Cash Provided By (Used
In) Operating Activities $ 21,159 $ 47 $ (760) $ 1,163 $ 21,609
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Decrease in restricted
funds on deposit - - 15 - 15
Purchases of property,
plant and equipment (1,894) (25) (427) - (2,346)
Proceeds from sale of
property, plant and
equipment 9 - 48 - 57
________ ________ ________ ________ ________
Net cash used in
investing activities (1,885) (25) (364) - (2,274)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Payments of revolving
credit facility (19,066) - - - (19,066)
Net increase (decrease)
in other long-term debt
and bank borrowings - (23) 734 - 711
Payment of financing
expenses (208) - - - (208)
________ ________ ________ ________ ________
Net cash provided by (used
in) financing activities (19,274) (23) 734 - (18,563)
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - (306) - (306)
________ ________ ________ ________ ________
Net increase (decrease)
in cash and cash
equivalents - (1) (696) 1,163 466
Cash and cash equivalents
at beginning of period - 16 7,222 (1,163) 6,075
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 15 $ 6,526 $ - $ 6,541
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statement of Cash Flows
Six Months Ended June 30, 2003
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Net Cash Provided By
Operating Activities $ 6,691 $ 26 $ 2,557 $ - $ 9,274
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Decrease in restricted
funds on deposit 21 - 83 - 104
Purchases of property,
plant and equipment (655) (5) (426) - (1,086)
Proceeds from sale of
property, plant and
equipment 3 2 10 - 15
Dividends paid to parent 117 - (117) - -
________ ________ ________ ________ ________
Net cash used in
investing activities (514) (3) (450) - (967)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Proceeds from revolving
credit facilities (4,784) - - - (4,784)
Net decrease in other
long-term debt and
bank borrowings (126) (22) (230) - (378)
Payment of financing
expenses (1,303) - - - (1,303)
Proceeds from issuance
of common stock 36 - - - 36
________ ________ ________ ________ ________
Net cash used in
financing activities (6,177) (22) (230) - (6,429)
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - 586 - 586
________ ________ ________ ________ ________
Net increase in cash and
cash equivalents - 1 2,463 - 2,464
Cash and cash equivalents
at beginning of period - 24 4,165 - 4,189
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 25 $ 6,628 $ - $ 6,653
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Business
The Company designs, manufactures and markets large excavation
machinery used for surface mining, and provides comprehensive
aftermarket services, supplying replacement parts and offering
maintenance and repair contracts and services for these machines. The
Company manufactures its OEM products and the majority of its
aftermarket parts at its facility in South Milwaukee, Wisconsin. The
Company's principal OEM products are draglines, electric mining shovels
and rotary blasthole drills, which are used primarily by customers who
mine copper, coal, oil sands and iron ore throughout the world. In
addition, the Company provides aftermarket services in mining centers
throughout the world, including Argentina, Australia, Brazil, Canada,
Chile, China, England, India, Peru, South Africa and the United States.
The largest markets for this mining equipment have been in the United
States, South America, Australia, South Africa and Canada. In the
future, China, India and Canada are expected to be increasingly
important markets.
The market for OEM machines is closely correlated with customer
expectations of sustained strength in prices of surface-mined
commodities. Growth in demand for these commodities is a function of,
among other things, economic activity, population increases and
continuing improvements in standards of living in many areas of the
world. In 2001 and 2002, the market prices of many surface-mined
commodities were generally weak. In 2003 and during the first six
months of 2004, market prices for copper, coal, iron ore and oil
increased. Factors that could support sustained demand for these key
commodities include continued economic growth in China, India and the
developing world, and renewed economic strength in industrialized
countries.
The Company's aftermarket parts and service operations, which have
accounted for approximately 70% of sales over the past ten years, tend
to be more consistent than OEM machine sales. The Company's complex
machines are typically kept in continuous operation from 15 to 40 years,
requiring regular maintenance and repair throughout their productive
lives. The size of the Company's installed base of surface mining
equipment and its ability to provide on-time delivery of reliable parts
and prompt service are important drivers of aftermarket sales.
While the Company continues to forecast increased revenues
attributable to increased demand related to both aftermarket parts sales
and OEM machine sales relative to prior periods of weaker OEM sales, the
Company maintains ongoing efforts to improve efficiency and contain
costs. The Company has recorded restructuring charges in recent years.
While the Company does not anticipate significant restructuring charges
in future years, the Company does continually evaluate all opportunities
for reductions of headcount. The Company does not believe these
previous reductions will impact its ability to respond to increased
demand for its products.
A substantial portion of the Company's sales and operating earnings
is attributable to operations located outside the United States. The
Company sells OEM machines, including those sold directly to foreign
customers, and most of its aftermarket parts in United States dollars,
with limited aftermarket parts sales denominated in the local currencies
of Australia, Canada, South Africa, Brazil, Chile and the United
Kingdom. Aftermarket services are paid for primarily in local currency
which is naturally hedged by the Company's payment of local labor in
local currency. In the aggregate, approximately 70% of the Company's
2003 sales were priced in United States dollars.
Over the past three years, during a period of generally weak
commodity prices, the Company increased gross profits by improving
manufacturing overhead variances, achieving productivity gains and
growing its high margin aftermarket parts and services business.
Following is a discussion of key measures which contributed to the
Company's operating results.
Key Measures
Commodity Prices
Demand for the Company's OEM machines is driven in large part by
the prices of certain commodities, such as copper, coal, oil and iron
ore. The prices of these commodities have risen in recent periods,
particularly in the fourth quarter of 2003 and first quarter of 2004.
Prices moderated to some degree in the second quarter of 2004. The
following table shows selected commodity prices at June 30, 2004 and as
of December 31, 2003, 2002 and 2001:
June 30, December 31,
2004 2003 2002 2001
Copper $/lb.(1) $ 1.22 $ 1.05 $ .70 $ .66
Japanese coking coal $/tonne(2) $71.54 $42.97 $40.97 $42.23
Asian steam coal marker $/tonne(3) $76.25 $54.82 $31.22 $31.46
Heavy oil $/barrel(4) $23.39 $18.39 $19.63 $ 8.57
South American iron ore $/tonne (5) $37.90 $31.95 $29.31 $30.03
__________
(1) Source: London Metal Exchange.
(2) Source: The Institute for Energy Economics, Japan. Latest price
available is as of May 31, 2004.
(3) Source: McCloskey Coal News.
(4) Source: Sproule Associates, Ltd. The prices quoted are for Hardisty
(Canada) Heavy Crude Oil and were converted from Canadian to United
States dollars based on the prevailing exchange rate on each applicable
measurement date.
(5) Source: Skillings Mining Review.
On-Time Delivery and Lead Times
Due to the high fixed cost structure of the Company's customers, it
is critical that they avoid equipment down-time. On-time delivery and
reduced lead time of aftermarket parts and services allow customers to
reduce downtime and is therefore a key measure of customer service, and
the Company believes they are fundamental drivers of aftermarket
customer demand. The Company's on-time delivery percentage in the
aftermarket, based on achieved promised delivery dates to customers, has
increased from approximately 74% in 2001 to 92% for 2003 and 93% for the
first six months of 2004. Lead times for deliveries were approximately
the same in the first six months of 2004 as compared to 2003.
The Company increased on-time deliveries in 2003 and the first six
months of 2004 and reduced lead times from 2001 to 2002 and retained
improvements in 2003 and the first six months of 2004 despite increasing
component complexity by focusing on development of key shop floor
metrics, improved communication between sales, manufacturing and
shipping, daily or weekly meetings to resolve issues, changing of
shipment methods and the hiring of an additional supervisory person
dedicated to on-time delivery. Information resources useful in
accomplishing many of these improvements are now available from the
Company's enterprise resource planning ("ERP") system.
Productivity
Sales per full time employee is a measure of the Company's
operational efficiency. Sales per full time equivalent employee were
$248,000 for the first six months of 2004 and $219,000 for 2003 compared
with $186,000 for 2001. This productivity increase is primarily due to
the application of worldwide sales and inventory ERP systems, and
personnel upgrades which collectively allowed sales to grow with minimal
changes in headcount.
Warranty Claims
Product quality is another key driver of customer satisfaction and,
as a result, sales. Management uses warranty claims as a percentage of
total sales as one objective benchmark to evaluate product quality.
During 2003 and the first six months of 2004, warranty claims as a
percentage of total sales were less than 1%.
Backlog
Backlog is a tool which allows management to forecast sales and
production requirements. Due to the high cost of some OEM products,
backlog is subject to volatility, particularly over relatively short
periods. A portion of the Company's backlog is related to multi-year
contracts that will generate revenue in future years. The following
table shows backlog at June 30, 2004 and December 31, 2003 as well as
the portion of backlog which is or was expected to be recognized within
12 months of these dates:
June 30, December 31,
2004 2003
(Dollars in Thousands)
Next 12 months $151,454 $122,263
Total $267,714 $233,642
Inventory
Inventory is one of the Company's significant assets. As of June
30, 2004 the Company had $112,725,000 in inventory. Inventory turned at
a rate of approximately 2.7 times during the first six months of 2004,
which the Company believes is in line with other manufacturers of
surface mining equipment. Inventory turns is calculated based on cost
of sales and the average inventory balance during the prior twelve
months. The Company believes that it has appropriately recorded at the
lower of cost or market any slow moving or obsolete inventory in its
financial statements. The factors that could reduce the carrying value
of inventory include reduced demand for aftermarket parts due to
decreased sales volumes attributable to new or improved technology or
customers discontinuing the use of older model machines, which could
render inventory obsolete or excess. With the exception of the normal
inventory obsolescence provision recorded in the ordinary course of
business, the Company does not anticipate recording any inventory
impairments.
Results of Operations
Quarter And Six Months Ended June 30, 2004 Compared to Quarter And
Six Months Ended June 30, 2003
Sales
Sales for the quarter and six months ended June 30, 2004 were
$116,967,000 and $214,095,000, respectively, compared with $86,953,000
and $147,835,000, for the quarter and six months ended June 30, 2003,
respectively. Sales of aftermarket parts and services for the second
quarter of 2004 were $83,185,000, an increase of 31.0% from $63,513,000
for the second quarter of 2003. Sales of aftermarket parts and services
for the six months ended June 30, 2004 were $152,649,000, an increase of
30.3% from $117,150,000 for the six months ended June 30, 2003. The
increases were primarily due to an increase in customer equipment
utilization and discretionary spending. Machine sales for the second
quarter of 2004 were $33,782,000, an increase of 44.1% from $23,440,000
for the second quarter of 2003. Machine sales for the six months ended
June 30, 2004 were $61,446,000, an increase of 100.2% from $30,685,000
for the six months ended June 30, 2003. Approximately $2,825,000 and
$7,132,000 of the increases in sales for the quarter and six months
ended June 30, 2004, respectively, was attributable to a weakening
United States dollar, which primarily impacted aftermarket sales (see
"Foreign Currency Fluctuations" below).
Gross Profit
Gross profit for the second quarter of 2004 was $24,787,000 or
21.2% of sales compared with $16,405,000 or 18.9% of sales for the
second quarter of 2003. Gross profit for the six months ended June 30,
2004 was $44,444,000 or 20.8% compared with $30,963,000 or 20.9% for the
six months ended June 30, 2003. The increase in gross profit was
primarily due to an increase in sales. The increase in the gross profit
percentage for the second quarter of 2004 was primarily due to
manufacturing overhead variance improvements of approximately $1,300,000
compared with 2003 due to continuing cost controls and higher
manufacturing volumes. Also included in gross profit for the six months
ended June 30, 2004 and 2003 was $2,580,000 and $2,530,000,
respectively, of additional depreciation expense as a result of purchase
price allocation to plant and equipment in connection with American
Industrial Partners' ("AIP") acquisition of the Company. Approximately
$550,000 and $1,320,000 of the increase in gross profit in the quarter
and six months ended June 30, 2004, respectively, was attributable to a
weakening United States dollar (see "Foreign Currency Fluctuations"
below).
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the quarter ended
June 30, 2004 were $14,206,000 or 12.1% of sales compared to $9,960,000
or 11.5% of sales for the quarter ended June 30, 2003. Selling, general
and administrative expenses for the six months ended June 30, 2004 were
$28,262,000 or 13.2% of sales compared to $18,751,000 or 12.7% of sales
for the six months ended June 30, 2003. Selling, general and
administrative expenses for quarter and six months ended June 30, 2004
include $3,293,000 and $7,441,000, respectively, related to non-cash
stock-based employee compensation compared to $638,000 for the quarter
and six months ended June 30, 2003. This expense represents the charge
recorded relating to the existing book value stock option plan accounted
for in accordance with Emerging Issues Task Force ("EITF") Issue No. 87-
23. Selling expenses for the quarter and six months ended June 30, 2004
increased by $945,000 and $1,983,000, respectively, primarily due to
increased sales efforts in South America and higher foreign costs as a
result of the weakened U.S. dollar. AIP expenses pursuant to the
Management Services Agreement for the quarter and six months ended June
30, 2004 were $550,000 and $1,050,000, respectively, compared with
$389,000 and $799,000 for the quarter and six months ended June 30,
2003, respectively. Foreign currency transaction gains for the quarter
and six months ended June 30, 2004 were $199,000 and $844,000,
respectively, compared with a loss of $38,000 and $281,000 for the
quarter and six months ended June 30, 2003, respectively.
Research and Development Expenses
Research and development expenses for the quarter and six months
ended June 30, 2004 were $1,280,000 and $2,634,000, respectively,
compared with $930,000 and $2,084,000 for the quarter and six months
ended June 30, 2003, respectively.
Amortization of Intangible Assets
Amortization of intangible assets, consisting of engineering
drawings, bill of material listings and software, was $411,000 and
$823,000 for the quarter and six months ended June 30, 2004,
respectively, compared with $412,000 and $824,000 for the quarter and
six months ended June 30, 2003, respectively.
Operating Earnings
Operating earnings for the second quarter of 2004 were $8,890,000
or 7.6% of sales, compared with $5,103,000 of 5.9% of sales, for the
second quarter of 2003. Operating earnings for the six months ended
June 30, 2004 were $12,725,000 or 5.9% of sales, compared with
$9,304,000 or 6.3% of sales for the quarter ended June 30, 2003. The
improvement in 2004 was due to the factors discussed above.
Interest Expense
Interest expense for the quarter and six months ended June 30, 2004
was $4,166,000 and $8,291,000, respectively, compared with $4,472,000
and $8,995,000 for the quarter and six months ended June 30, 2003,
respectively. The decrease in interest expense in 2004 was primarily
due to reduced borrowings.
Other Income and Expense - Net
Other income and expense - net was $373,000 and $718,000 of expense
for the quarter and six months ended June 30, 2004, respectively,
compared with $189,000 and $393,000 of expense for the quarter and six
months ended June 30, 2003, respectively. Debt issuance cost
amortization was $422,000 and $833,000 for the quarter and six months
ended June 30, 2004 compared with $292,000 and $541,000 for the quarter
and six months ended June 30, 2003, respectively. These amounts include
costs related to the Loan and Security Agreement entered into on March
7, 2002 (see "Liquidity and Capital Resources - Financing Cash Flows"
below).
Income Taxes
Income tax expense for the quarters and six months ended June 30,
2004 and 2003 consists primarily of foreign taxes at applicable
statutory rates. As of June 30, 2004, the Company had approximately
$25,325,000 of federal net operating loss carryforwards that expire in
the years 2007 through 2021 to offset against future federal taxable
income.
Foreign Currency Fluctuations
The following table summarizes the approximate effect of changes in
foreign currency exchange rates on the Company's sales, gross profit and
operating earnings for the quarters and six months ended June 30, 2004
and 2003, in each case compared to the same quarter in the prior year:
Quarters Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
(Dollars in Thousands)
Increase in sales $ 2,825 $ 2,540 $ 7,132 $ 4,903
Increase in gross profit 550 503 1,320 798
Increase in
operating earnings 328 167 354 330
EBITDA
Earnings before interest, taxes, depreciation and amortization
("EBITDA") for the quarter and six months ended June 30, 2004 was
$12,044,000 and $19,052,000, respectively, compared with $8,245,000 and
$15,554,000 for the quarter and six months ended June 30, 2003,
respectively. EBITDA is presented (i) because EBITDA is used by the
Company to measure its liquidity and financial performance and (ii)
because the Company believes EBITDA is frequently used by securities
analysts, investors and other interested parties in evaluating the
performance and enterprise value of companies in general, and in
evaluating the liquidity of companies with significant debt service
obligations and their ability to service their indebtedness. The EBITDA
calculation is not an alternative to operating earnings under generally
accepted accounting principles, or GAAP, as an indicator of operating
performance or of cash flows as a measure of liquidity. The following
table reconciles Net Earnings (Loss) as shown in the Consolidated
Condensed Statements of Operations to EBITDA and reconciles EBITDA to
Net Cash Provided by Operating Activities as shown in the Consolidated
Condensed Statements of Cash Flows:
Quarters Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
(Dollars in Thousands)
Net earnings (loss) $ 2,629 $ (486) $ 614 $ (1,818)
Interest income (49) (80) (114) (107)
Interest expense 4,166 4,472 8,291 8,995
Income taxes 1,722 928 3,102 1,734
Depreciation 2,742 2,701 5,503 5,373
Amortization (1) 834 710 1,656 1,377
________ ________ ________ ________
EBITDA (2)(3) 12,044 8,245 19,052 15,554
Changes in assets
and liabilities 10,651 5,774 6,382 3,632
Non-cash stock
compensation expense (4) 3,293 638 7,441 638
Loss on sale of fixed
assets 5 15 13 72
Interest income 49 80 114 107
Interest expense (4,166) (4,472) (8,291) (8,995)
Income tax expense (1,722) (928) (3,102) (1,734)
________ ________ ________ ________
Net cash provided by
operating activities $ 20,154 $ 9,352 $ 21,609 $ 9,274
======== ======== ======== ========
Net cash used in
investing activities $ (1,573) $ (665) $ (2,274) $ (967)
======== ======== ======== ========
Net cash provided by
(used in) financing
activities $(16,159) $ (7,708) $(18,563) $ (6,429)
======== ======== ======== ========
(1) Includes amortization of intangible assets and debt issuance costs.
(2) This calculation varies from the calculation in the Company's Loan
and Security Agreement.
(3) EBITDA is reduced by AIP expenses pursuant to the Management Services
Agreement as well as fees paid to AIP or its affiliates and advisors
for services performed for the Company outside the scope of the
Management Services Agreement. These amounts for the quarters ended
June 30, 2004 and 2003 and the six months ended June 30, 2004 and
2003 totaled $613,000, $542,000, $1,157,000 and $997,000,
respectively. EBITDA is also reduced by restructuring charges
(severance) for the quarters ended June 30, 2004 and 2003 and six
months ended June 30, 2004 and 2003 of $116,000, $155,000, $170,000
and $282,000, respectively.
(4) Non-cash stock compensation expense represents the charge recorded
relating to the Company's book value stock option plan accounted for
in accordance with EITF Issue No. 87-23.
Liquidity and Capital Resources
Initial Public Offering (IPO)
On July 22, 2004, the Company announced the completion of an
initial public offering of 12,362,500 shares of its Class A common stock
at $18 per share, from which the Company received net proceeds, after
commissions and estimated expenses, of approximately $129,600,000. The
Company sold 7,941,177 shares in the offering and AIP sold 4,421,323
shares, 1,612,500 of which were sold through exercise by the
underwriters of their over-allotment option. On July 28, 2004, the net
proceeds from the stock sale together with $100,000,000 from a new
senior secured credit facility were used to retire all of the Senior
Notes and accrued interest, repay all borrowings under the Loan and
Security Agreement (see "Liquidity and Capital Resources - Financing
Cash Flows" below) and pay all amounts owed AIP under the Management
Services Agreement.
Cash Requirements
During the remainder of 2004, the Company anticipates strong cash
flows from operations due to continued strength in aftermarket parts
sales as well as increased demand for new machines. In expanding
markets, customers are generally contractually obligated to make
progress payments under purchase contracts for machine orders. As a
result, the Company does not anticipate significant outside financing
requirements to fund production of these machines and does not believe
that new machine sales will have a negative effect on its liquidity. If
additional borrowings are necessary during 2004, the Company believes it
has sufficient capacity under its new senior secured credit facility.
The Company's capital expenditures for the six months ended June
30, 2004 were $2,346,000 compared with $1,086,000 for the six months
ended June 30, 2003. The Company expects a modest increase in capital
expenditures over the next twelve months as a result of increased sales
activity.
At June 30, 2004, there were $17,351,000 of standby letters of
credit outstanding under all Company bank facilities.
The Company believes that cash flows from operations will be
sufficient to fund its cash requirements in 2004. During the first six
months of 2004, the Company repaid $19,066,000 in borrowings under its
previous senior secured credit facility.
Sources and Uses of Cash
While the Company had $6,541,000 of cash and cash equivalents as of
June 30, 2004, this cash is located at various foreign subsidiaries and
is used for working capital purposes. Cash receipts in the United
States are applied against the revolving portion of the Company's senior
secured credit facility as discussed below.
Operating Cash Flows
During the first six months of 2004, the Company generated cash
from operating activities of $21,609,000 compared to $9,274,000 in the
first six months of 2003. The increase in cash flows from operating
activities was driven primarily by increased profitability and reduced
working capital requirements.
Receivables
The Company recognizes revenues on its machine orders using the
percentage-of-completion method. Accordingly, accounts receivable are
generated when revenue is recognized, which can be before the funds are
collected or in some cases, before the customer is billed. As of June
30, 2004 the Company had $66,819,000 of accounts receivable compared to
$73,111,000 of accounts receivable at December 31, 2003. This decrease
was primarily due to high fourth quarter sales in 2003 that were
collected in 2004.
Liabilities to Customers on Uncompleted Contracts and Warranties
Customers generally make down payments at the time of the order
for a new machine as well as progress payments throughout the
manufacturing process. In accordance with SOP No. 81-1, these payments
are recorded as Liabilities to Customers on Uncompleted Contracts and
Warranties. The decrease of $6,213,000 from December 31, 2003 to June
30, 2004 was due to the recognition of revenue on long-term machine
contracts for which customer payments were received in 2003.
Financing Cash Flows
On July 28, 2004, the Company entered into a new senior secured
credit facility with Goldman Sachs Credit Partners L.P. and GMAC
Commercial Finance, LLC. The new senior secured credit facility
provides the Company with a senior secured term loan of $100,000,000 and
a senior secured revolving credit facility of $50,000,000. The senior
secured term loan is payable in quarterly installments to July 2010,
subject to earlier prepayment provisions, and bears interest at the
prime rate plus an applicable margin (1% to 1.25%) or LIBOR plus an
applicable margin (2% to 2.25%). The senior secured revolving credit
facility expires on July 28, 2009 and bears interest at the prime rate
plus 1.25% or LIBOR plus 2.25%. Borrowings under the revolving portion
of the facility are subject to a borrowing base formula based on the
value of eligible receivables and inventory.
The new senior secured credit facility contains covenants limiting
the discretion of management with respect to key business matters and
places significant restrictions on, among other things, the Company's
ability to incur additional indebtedness, create liens or other
encumbrances, make certain payments or investments, loans and
guarantees, and sell or otherwise dispose of assets and merge or
consolidate with another entity. All of the Company's domestic assets
and the receivables and inventory of its Canadian subsidiary are pledged
as collateral under the new senior secured credit facility. In
addition, the outstanding capital stock of the Company's domestic
subsidiaries as well as the majority of the capital stock of its foreign
subsidiaries will be pledged as collateral. The Company is also
required to maintain certain financial ratios and minimum levels of
EBITDA (as defined).
Previously, the Company's primary source of financing was a Loan
and Security Agreement with GMAC Commercial Finance, LLC (the "Loan and
Security Agreement"), which as of June 30, 2004 provided the Company
with a $71,500,000 senior secured revolving credit facility. The Loan
and Security Agreement also provided an additional $7,400,000 senior
secured term loan to enable the Company to pay certain interest during
2004 on its Senior Notes as discussed below. Outstanding borrowings
under the revolving loan portion of the Loan and Security Agreement were
at an interest rate equal to either the prime rate plus an applicable
margin (2% to 2.25%) or LIBOR plus an applicable margin (3.5% to 3.75%)
and were subject to a borrowing base formula based on receivables and
inventory. Borrowings under the term loan portion were at an interest
rate equal to either the prime rate plus 1.5% or LIBOR plus 2.5%. Total
borrowings at June 30, 2004 were $18,354,000 at a weighted average
interest rate of 5.1%. At June 30, 2004, the amount available for
borrowings under the revolving portion of the Loan and Security
Agreement, net of mandatory reserves, was $34,869,000. All borrowings
under the Loan and Security Agreement were repaid with proceeds from the
Company's initial public offering and proceeds from the new credit
facility (see "Initial Public Offering (IPO)" above.)
At June 30, 2004, the Company also had outstanding $150,000,000 of
its Senior Notes. Interest thereon was payable each March 15 and
September 15. During 2000, Holdings acquired $75,635,000 of the
Company's Senior Notes. Holdings agreed as part of the Loan and
Security Agreement and a previous credit agreement to defer the receipt
of interest on these Senior Notes. However, in connection with the
amendment of the Loan and Security Agreement on November 13, 2003,
Holdings was permitted to receive the interest payable on the Senior
Notes held by it on March 15, 2004 from borrowings under the $7,400,000
term loan portion of the Loan and Security Agreement. On March 15,
2004, the Company borrowed $3,687,000 under the term loan portion of the
Loan and Security Agreement and the required interest payment of the
same amount was made to Holdings. The Senior Notes were repaid with
proceeds from the Company's initial public offering and proceeds from
the new credit facility (see "Initial Public Offering (IPO)" above).
The terms of the Loan and Security Agreement and the Senior Notes
required the Company to maintain compliance with certain covenants. The
Company was in compliance with these covenants as of June 30, 2004.
Critical Accounting Policies and Estimates
See the Company's critical accounting policies discussed in the
Management's Discussion and Analysis of the Company's 2003 Annual Report
on Form 10-K. There have been no material changes to these policies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk is impacted by changes in interest rates
and foreign currency exchange rates.
Interest Rates
The Company's interest rate exposure relates primarily to floating
rate debt obligations in the United States. The Company manages its
borrowings under credit facilities through the selection of LIBOR-based
borrowings or prime-rate based borrowings. The Company's Senior Notes
were at a fixed interest rate. If market conditions warrant, interest
rate swaps may be used to adjust interest rate exposures, although none
have been used to date.
At June 30, 2004, a sensitivity analysis was performed for the
Company s floating rate debt obligations. Based on this sensitivity
analysis, the Company has determined that a 10% change in the Company's
weighted average interest rate at June 30, 2004 would have the effect of
changing the Company's interest expense on an annual basis by
approximately $95,000.
Foreign Currency
The Company sells new machines, including those sold directly to
foreign customers, and most of its aftermarket parts in United States
dollars. A limited amount of aftermarket parts sales are denominated in
the local currencies of Australia, Canada, Chile, South Africa, Brazil
and the United Kingdom which subjects the Company to foreign currency
risk. Aftermarket sales and a portion of the labor costs associated with
such activities are denominated or paid in local currencies. As a
result, a relatively strong United States dollar could decrease the
United States dollar equivalent of the Company's sales without a
corresponding decrease of the United States dollar value of certain
related expenses. The Company utilizes some foreign currency
derivatives to mitigate foreign exchange risk.
Currency controls, devaluations, trade restrictions and other
disruptions in the currency convertibility and in the market for
currency exchange could limit the Company's ability to timely convert
sales earned abroad into United States dollars, which could adversely
affect the Company's ability to service its United States dollar
indebtedness, fund its United States dollar costs and finance capital
expenditures and pay dividends on its common stock.
Based on the Company's derivative instruments outstanding at June
30, 2004, a 10% change in foreign currency exchange rates would not have
a material effect on the Company's financial position, results of
operations or cash flows.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 4 - CONTROLS AND PROCEDURES
As of the end of the period covered by this Report, an evaluation
was carried out under the supervision and with the participation of the
Company's management, including its Chief Executive Officer and
President and its Chief Financial Officer, Controller and Secretary, of
the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Securities Exchange Act of 1934 (the "Exchange Act")). Based upon
their evaluation of these disclosure controls and procedures, the Chief
Executive Officer and President and Chief Financial Officer, Secretary
and Controller concluded that the disclosure controls and procedures
were effective as of the end of the quarter ended June 30, 2004 to
ensure that material information relating to the Company including its
consolidated subsidiaries, was made known to them by others within those
entities, particularly during the period in which this Report was being
prepared.
There were no changes in the Company's internal control over
financial reporting (as such term is defined in Rules 13a-15(f) and 15d-
15(f) under the Exchange Act) that occurred during the quarter ended
June 30, 2004 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial
reporting.
It should be noted that any system of controls, however well
designed and operated, can provide only reasonable, and not absolute,
assurance that the objectives of the system are met. In addition, the
design of any control system is based in part upon certain assumptions
about the likelihood of future events. Because of these and other
inherent limitations of control systems, there can be no assurance that
any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.
FORWARD-LOOKING STATEMENTS
This Report includes "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Discussions containing such forward-looking statements may be
found in this section and elsewhere within this Report. Forward-looking
statements include statements regarding the intent, belief or current
expectations of the Company, primarily with respect to the future
operating performance of the Company or related industry developments.
When used in this Report, terms such as "anticipate," "believe,"
"estimate," "expect," "indicate," "may be," "objective," "plan,"
"predict," and "will be" are intended to identify such statements.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties,
and that actual results may differ from those described in the forward-
looking statements as a result of various factors, many of which are
beyond the control of the Company. Forward-looking statements are based
upon management's expectations at the time they are made. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that
could cause actual results to differ materially from such expectations
("Cautionary Statements") are described generally below and disclosed
elsewhere in this Report. All subsequent written or oral forward-
looking statements attributable to the Company or persons acting on
behalf of the Company are expressly qualified in their entirety by the
Cautionary Statements.
Factors that could cause actual results to differ materially from
those contemplated include:
Factors affecting customers' purchases of new equipment, rebuilds,
parts and services such as: production capacity, stockpiles, and
production and consumption rates of coal, copper, iron, gold and other
ores and minerals; the cash flows of customers; the cost and
availability of financing to customers and the ability of customers to
obtain regulatory approval for investments in mining projects;
consolidations among customers; work stoppages at customers or providers
of transportation; and the timing, severity and duration of customer
buying cycles.
Factors affecting the Company's general business, such as:
unforeseen patent, tax, product, environmental, employee health or
benefit, or contractual liabilities; nonrecurring restructuring and
other special charges; changes in accounting or tax rules or
regulations; reassessments of asset valuations for such assets as
receivables, inventories, fixed assets and intangible assets; leverage
and debt service; the Company's success in recruiting and retaining
managers and key employees; and the Company's wage stability and
cooperative labor relations; plant capacity and utilization.
Additional factors that could cause results to differ materially
from those contemplated are set forth under the caption "Risk Factors"
in the prospectus forming a part of the Company's registration statement
on Form S-1/A filed with the Securities and Exchange Commission on July
22, 2004.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material changes to the information set
forth in Item 3 - Legal Proceedings and Other Contingencies
of the Company's Annual Report on Form 10-K for the year
ended December 31, 2003 except as included in Other
Litigation in Note 8 to the June 30, 2004 consolidated
condensed financial statements.
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases
of Equity Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders
during the quarter covered by this Report.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: See Exhibit Index on last page of this
report, which is incorporated herein by reference.
(b) Reports on Form 8-K:
- A report on Form 8-K was filed on April 8, 2004 to
disclose the filing by the Company of a
registration statement on Form S-1 relating to an
initial public offering of the Company's common
stock.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUCYRUS INTERNATIONAL, INC.
(Registrant)
Date August 16, 2004 /s/Craig R. Mackus
Craig R. Mackus
Chief Financial Officer, Secretary
and Controller
Principal Accounting Officer
Date August 16, 2004 /s/Timothy W. Sullivan
Timothy W. Sullivan
President and Chief Executive Officer
BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2004
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
2.1 Agreement and Plan of Exhibit 1 to
Merger dated August 21, Registrant's
1997, between Registrant, Tender Offer
American Industrial Solicitation/
Partners Acquisition Recommendation
Company, LLC and Bucyrus Statement on
Acquisition Corp. Schedule 14D-9
filed with the
Commission on
August 26, 1997.
2.2 Certificate of Merger Exhibit 2.2 to
dated September 26, 1997, Registrant's
issued by the Secretary Current Report
of State of the State of on Form 8-K
Delaware. filed with the
Commission on
October 10, 1997.
3.1 Restated Certificate Exhibit 3.6 to
of Incorporation of Registrant's
Registrant. Annual Report on
Form 10-K for
the year ended
December 31, 1998.
3.2 Certificate of Amendment Exhibit 3.2 to
to Restated Certificate Registration
of Incorporation dated Statement on
June 9, 2004. Form S-1/A of
Registrant
filed with the
Commission on
June 10, 2004.
3.3 Bylaws of Registrant. Exhibit 3.3 to
Registration
Statement on
Form S-1/A of
Registrant
filed with the
Commission on
June 10, 2004.
3.4 Form of Amended and Exhibit 3.4 to
Restated Certificate of Registration
Incorporation. Statement on
Form S-1A of
Registrant
filed with the
Commission on
July 6, 2004.
3.5 Form of Amended and Exhibit 3.5 to
Restated Bylaws. Registration
Statement on
Form S-1A of
Registrant
filed with the
Commission on
July 6, 2004.
4.1 Specimen Class A common Exhibit 4.1 to
stock certificate. Registration
Statement on
Form S-1A of
Registrant
filed with the
Commission on
July 20, 2004.
4.2 Specimen Class B common X
stock certificate.
4.3 Indenture of Trust dated Exhibit 4.1 to
as of September 24, 1997 Registration
among Registrant, Boonville Statement on
Mining Services, Inc., Form S-4 of
Minserco, Inc. and Von's Registrant,
Welding, Inc. and Harris Boonville Mining
Trust and Savings Bank, Services, Inc.,
Trustee. Minserco, Inc. and
Von's Welding, Inc.
(SEC Registration
No. 333-39359)
filed with the
Commission on
November 3, 1997.
(a) Letter dated Exhibit 4.1(a)
February 15, 2000 to Registrant's
evidencing change of Quarterly Report
Indenture Trustee. on Form 10-Q
filed with the
Commission on
November 6, 2000.
4.4 Form of Guarantee of Included as
Boonville Mining Services, Exhibit E
Inc., Minserco, Inc. and to Exhibit 4.1
Von's Welding, Inc. dated above.
as of September 24, 1997
in favor of Harris Trust
and Savings Bank as Trustee
under the Indenture.
4.5 Form of Registrant's Included as
9-3/4% Senior Note due 2007. Exhibit B
to Exhibit 4.1
above.
10.1 Letter Agreement Exhibit 10.7
between Registrant and to Registrant's
Timothy W. Sullivan Quarterly Report
dated August 8, 2000. on Form 10-Q
filed with the
Commission on
August 14, 2000.
10.2 Agreement of Debt Exhibit 10.21
Conversion between to Registrant's
Registrant and Annual Report on
Bucyrus Holdings, LLC Form 10-K for
dated March 22, 2001. the year ended
December 31, 2000.
10.3 Agreement to Purchase and Exhibit 10.18
Sell Industrial Property to Registrant's
between Registrant and Annual Report on
InSite Real Estate Form 10-K for
Development, L.L.C. the year ended
dated October 25, 2001. December 31, 2001.
10.4 Industrial Lease Agreement Exhibit 10.19
between Registrant and to Registrant's
InSite South Milwaukee, L.L.C. Annual Report on
dated January 4, 2002. Form 10-K for
the year ended
December 31, 2001.
10.5 Termination Benefits Agreement Exhibit 10.20
between Registrant and to Registrant's
John F. Bosbous dated Annual Report on
March 5, 2002. Form 10-K for
the year ended
December 31, 2001.
10.6 Termination Benefits Agreement Exhibit 10.21
between Registrant and to Registrant's
Thomas B. Phillips dated Annual Report on
March 5, 2002. Form 10-K for
the year ended
December 31, 2001.
10.7 Loan and Security Agreement Exhibit 10.22
by and among Registrant, to Registrant's
Minserco, Inc., Boonville Annual Report on
Mining Services, Inc. and Form 10-K for
GMAC Business Credit, LLC, the year ended
and Bank One, Wisconsin December 31, 2001.
dated March 7, 2002.
(a) First amendment dated Exhibit 10.16 (a)
December 31, 2002 to Loan to Registrant's
and Security Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2002.
(b) Second amendment dated Exhibit 10.16 (b)
January 9, 2003 to Loan to Registrant's
and Security Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2002.
(c) Letter agreement dated Exhibit 10.16 (c)
December 31, 2002 amending to Registrant's
Loan and Security Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2002.
(d) Third amendment dated Exhibit 10.10(d)
November 13, 2003 to Loan to Registrant's
and Security Agreement. Quarterly Report
on Form 10-Q
filed with the
Commission on
November 13, 2003.
(e) Fourth amendment dated Exhibit 10.28
March 8, 2004 to Loan and to Registrant's
Security Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2003.
10.8 Consulting Agreement Exhibit 10.30
between Registrant and to Registrant's
Wayne T. Ewing dated Form 10-K for
January 1, 2003. the year ended
December 31, 2003.
10.9 Stockholders Agreement, Exhibit 10.11
dated as of March 17, 1998, to Registrant's
among Registrant, American Form 10-K for
Industrial Partners the year ended
Acquisition Company, LLC December 31, 2003.
and each individual who
executes a counterpart
thereto.
10.10 Management Services Agreement Exhibit 10.2 to
by and among Registrant, Registration
Boonville Mining Services, Statement on
Inc., Minserco, Inc. and Form S-4 of
Von's Welding, Inc. and Registrant,
American Industrial Partners. Boonville Mining
Services, Inc.,
Minserco, Inc. and
Von's Welding, Inc.
(SEC Registration
No. 333-39359),
filed November 3, 1997.
10.11 Employment Agreement Exhibit 10.17 to
between Registrant and Registrant's
C. R. Mackus dated as of Quarterly Report
May 21, 1997. on Form 10-Q
filed with the
Commission on
August 14, 1997.
10.12 Annual Management Incentive Exhibit 10.14 to
Plan for 1997, adopted by Registrant's
Board of Directors Annual Report on
February 5, 1997. Form 10-K for
the year ended
December 31, 1997.
10.13 1998 Management Stock Option Exhibit 10.17 to
Plan. Registrant's
Annual Report on
Form 10-K for
the year ended
December 31, 1997.
10.14 Employment Agreement Exhibit 10.18 to
between Registrant and Registrant's
F. P. Bruno dated as of Annual Report on
December 1, 1997. Form 10-K for
the year ended
December 31, 1998.
10.15 Board of Directors Exhibit 10.17
Resolution dated to Registrant's
December 16, 1998 Annual Report on
amending the 1998 Form 10-K for
Management Stock the year ended
Option Plan. December 31, 2002.
10.16 Form of Registration Exhibit 10.20 to
Rights Agreement. Registration
Statement on
Form S-1/A of
Registrant
filed with the
Commission on
July 6, 2004.
10.17 Loan and Security Agreement Exhibit 99.2 to
dated July 28, 2004 Registrant's
by and among Registrant, Report on Form 8-K
Minserco, Inc., Boonville filed with the
Mining Services, Inc., the Commission on
guarantor named therein, July 29, 2004.
the lenders party thereto,
and GMAC Commercial Finance
LLC and Goldman Sachs Credit
Partners L.P.
10.18 2004 Equity Incentive Exhibit 10.22 to
Program. Registration
Statement on
Form S-1/A of
Registrant
filed with the
Commission on
July 16, 2004.
10.19 2004 Executive Officer Exhibit 10.23 to
Incentive Plan Registration
Statement on
Form S-1/A of
Registrant
filed with the
Commission on
July 16, 2004.
10.20 Non-Employee Directors Exhibit 10.24 to
Deferred Compensation Plan. Registration
Statement on
Form S-1/A of
Registrant
filed with the
Commission on
July 16, 2004.
10.21 Letter Agreement between X
Registrant and T. W. Sullivan
dated July 27, 2004.
14 Bucyrus International, Inc. Exhibit 14 to
Business Ethics and Conduct Registrant's
Policy. Annual Report on
Form 10-K for
the year ended
December 31, 2003.
21 Subsidiaries of Registrant. Exhibit 21 to
Registration
Statement on
Form S-1/A of
Registrant
filed with the
Commission on
June 10, 2004.
31.1 Certification of President X
and Chief Executive Officer
pursuant to Section 302
of the Sarbanes-Oxley
Act and Rules 13a-14(a)/
15d-14(a).
31.2 Certification of Chief X
Financial Officer, Secretary
and Controller pursuant to
Section 302 of the
Sarbanes-Oxley Act
and Rules 13a-14(a)/
15d-14(a).
32 Certifications pursuant to X
18 U.S.C. Section 1350,
as adopted pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002.
99.1 Letter from Registrant to Exhibit 99.1
Securities and Exchange to Registrant's
Commission dated March 27, Annual Report on
2002, with respect to Form 10-K for
representations received the year ended
from Arthur Andersen LLP. December 31, 2001.