Bucyrus International (BUCY) 10-Q 2009 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

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 001-00871

BUCYRUS INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	39-0188050
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

P. O. BOX 500

1100 MILWAUKEE AVENUE

SOUTH MILWAUKEE, WISCONSIN

(Address of Principal Executive Offices)

53172

(Zip Code)

(414) 768-4000

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    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 May 6, 2009
Common Stock, $.01 par value	75,137,899

Bucyrus International, Inc.

INDEX

			Page No.
PART I.	FINANCIAL INFORMATION:
	Item 1 -	Financial Statements (Unaudited)
		Consolidated Condensed Statements of Earnings – Quarters ended March 31, 2009 and 2008	3
		Consolidated Condensed Statements of Comprehensive Income – Quarters ended March 31, 2009 and 2008	4
		Consolidated Condensed Balance Sheets – March 31, 2009 and December 31, 2008	5
		Consolidated Condensed Statements of Cash Flows – Quarters ended March 31, 2009 and 2008	7
		Notes to Consolidated Condensed Financial Statements	8
	Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3 -	Quantitative and Qualitative Disclosures About Market Risk	34
	Item 4 -	Controls and Procedures	35
PART II.	OTHER INFORMATION:
	Item 1 -	Legal Proceedings	36
	Item 1A -	Risk Factors	36
	Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	36
	Item 3 -	Defaults Upon Senior Securities	36
	Item 4 -	Submission of Matters to a Vote of Security Holders	36
	Item 5 -	Other Information	36
	Item 6 –	Exhibits	36
Signature Page			37

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Bucyrus International, Inc.

Consolidated Condensed Statements of Earnings (Unaudited)

	Quarters Ended March 31,
	2009			2008
	(Dollars in thousands, except per share amounts)
Sales	$	605,744		$	516,981
Costs of products sold		435,559			375,396
Gross profit		170,185			141,585
Selling, general and administrative expenses		61,053			59,481
Research and development expenses		9,376			8,151
Amortization of intangible assets		5,164			6,421
Operating earnings		94,592			67,532
Interest income		(1,586	)		(2,202	)
Interest expense		6,864			8,116
Other expense		5,025			767
Earnings before income taxes		84,289			60,851
Income tax expense		27,388			19,770
Net earnings	$	56,901		$	41,081
Net earnings per share data
Basic:
Net earnings per share	$	0.76		$	0.55
Weighted average shares		74,451,449			74,340,258
Diluted:
Net earnings per share	$	0.76		$	0.55
Weighted average shares		74,956,271			75,205,158

See notes to consolidated condensed financial statements.

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Bucyrus International, Inc.

Consolidated Condensed Statements of

Comprehensive Income (Unaudited)

	Quarters Ended March 31,
	2009			2008
	(Dollars in thousands)
Net earnings	$	56,901		$	41,081
Other comprehensive (loss) income:
Currency translation adjustments		(14,765	)		9,345
Change in pension and postretirement unrecognized costs, net of income tax (benefit) expense of ($45) and $335, respectively		(208	)		659
Derivative fair value changes, net of income tax benefit of $1,432 and $4,568, respectively		(3,659	)		(9,881	)
Other comprehensive (loss) income		(18,632	)		123
Comprehensive income	$	38,269		$	41,204

See notes to consolidated condensed financial statements.

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Bucyrus International, Inc.

Consolidated Condensed Balance Sheets (Unaudited)

	March 31, 2009			December 31, 2008
	(Dollars in thousands, except per share amounts)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	64,786		$	102,396
Receivables – net		584,041			636,486
Inventories		673,523			616,710
Deferred income taxes		42,478			53,133
Prepaid expenses and other		32,843			26,045
Total Current Assets		1,397,671			1,434,770
OTHER ASSETS:
Goodwill		325,124			330,211
Intangible assets – net		218,319			230,451
Other assets		65,593			68,823
Total Other Assets		609,036			629,485
PROPERTY, PLANT AND EQUIPMENT:
Cost		608,380			609,647
Less accumulated depreciation		(127,219	)		(121,251	)
Total Property, Plant and Equipment		481,161			488,396
TOTAL ASSETS	$	2,487,868		$	2,552,651

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Bucyrus International, Inc.

Consolidated Condensed Balance Sheets (Unaudited) (Continued)

	March 31, 2009			December 31, 2008
	(Dollars in thousands, except per share amounts)
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES:
Accounts payable	$	218,387		$	229,173
Accrued expenses		189,691			209,453
Liabilities to customers on uncompleted contracts and warranties		268,630			252,304
Income taxes		71,482			70,091
Current maturities of long-term debt and short-term obligations		14,619			69,291
Total Current Liabilities		762,809			830,312
LONG-TERM LIABILITIES:
Deferred income taxes		47,669			52,895
Pension, postretirement and other		193,614			218,181
Total Long-Term Liabilities		241,283			271,076
LONG-TERM DEBT, less current maturities		496,021			501,755
COMMON STOCKHOLDERS’ INVESTMENT:
Common stock – par value $0.01 per share, authorized 200,000,000 shares, issued 75,349,152 shares and 75,079,266 shares, respectively		751			751
Additional paid-in capital		680,076			678,226
Treasury stock – 217,200 shares		(851	)		(851	)
Accumulated earnings		423,369			368,340
Accumulated other comprehensive loss		(115,590	)		(96,958	)
Total Common Stockholders’ Investment		987,755			949,508
TOTAL LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT	$	2,487,868		$	2,552,651

See notes to consolidated condensed financial statements.

6

Bucyrus International, Inc.

Consolidated Condensed Statements of Cash Flows (Unaudited)

	Quarters Ended March 31,
	2009			2008
	(Dollars in thousands)
Net Cash Provided By Operating Activities	$	43,771		$	153,025
Cash Flows Used In Investing Activities
Purchases of property, plant and equipment		(15,011	)		(21,180	)
Proceeds from disposal of property, plant and equipment		168			2,328
Purchases of investments		(7,642	)		(2,273	)
Proceeds from sale of investments		2,465			—
Other		6			(503	)
Net cash used in investing activities		(20,014	)		(21,628	)
Cash Flows Used In Financing Activities
Net repayments of revolving credit facilities		(55,157	)		(15,130	)
Repayments of term loan facility		(2,159	)		(1,273	)
Proceeds from other bank borrowings and long-term debt		1,524			—
Payments of other bank borrowings and long-term debt		(82	)		(2,810	)
Net proceeds from issuance of common stock		—			366
Payments under capital lease agreements		(128	)		—
Tax (expense) benefit related to share-based payment awards		(197	)		732
Dividends paid		(1,861	)		(1,858	)
Other		(194	)		—
Net cash used in financing activities		(58,254	)		(19,973	)
Effect of exchange rate changes on cash		(3,113	)		4,062
Net (decrease) increase in cash and cash equivalents		(37,610	)		115,486
Cash and cash equivalents at beginning of period		102,396			61,112
Cash and cash equivalents at end of period	$	64,786		$	176,598
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	9,469		$	10,581
Income taxes – net of refunds		7,839			9,076
Supplemental Disclosure of Non-cash Investing Activities
Capital expenditures included in accounts payable	$	3,605		$	—

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Bucyrus International, Inc.

Notes to Consolidated Condensed Financial Statements (Unaudited)

1. Nature of Operations

Bucyrus International, Inc. (the “Company”) is a leading designer, manufacturer and marketer of high productivity mining equipment for surface and underground mining. The Company operates in two business segments: surface mining and underground mining. Major markets for the surface mining industry are copper, coal, oil sands and iron ore. The major market for the underground mining industry is coal. Most of the Company’s surface mining customers are large multinational corporations with operations in the various major surface mining markets throughout the world. Most of the Company’s underground mining customers are multinational coal mining corporations but tend to be smaller in size than the Company’s surface mining customers. The Company has more customers overall in its underground mining segment than in its surface mining segment. In addition to the manufacture of original equipment, an important part of the Company’s business consists of aftermarket sales, such as supplying parts, maintenance and repair services and technical advice, as well as refurbishing and relocating older, installed original equipment. The Company has manufacturing facilities in Australia, China, Germany, Poland and the United States and service and sales centers in Australia, Brazil, Canada, Chile, China, the Czech Republic, England, India, Mexico, Peru, Russia, South Africa and the United States.

2. Basis of Presentation

In the opinion of Company management, the consolidated condensed financial statements contain all adjustments necessary to present fairly the financial results for all periods presented. Certain items are included in these statements based on estimates for the entire year. Actual results in future periods may differ from the estimates.

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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2009.

3. Derivative Financial Instruments

On January 1, 2009, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 161, “Disclosure about Derivative Instruments and Hedging Activities” (“SFAS 161”), which requires enhanced disclosures regarding an entity’s derivatives and hedging activities.

The Company enters into certain derivative financial instruments to mitigate foreign exchange rate risk of specific foreign currency denominated transactions and manage and preserve the economic value of cash flows in non-functional currencies. The Company also enters into certain derivative financial instruments to mitigate interest rate risk. The Company has designated substantially all of these contracts as either cash flow hedges or fair value hedges in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”). The Company does not use derivative financial instruments for trading or other speculative purposes.

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The contractual amounts of the Company’s outstanding foreign currency forward contracts at March 31, 2009, by currency, were as follows:

	Buy		Sell
	(Dollars in thousands)
United States dollar	$	24,288	$	14,211
Australian dollar		32,693		14,878
Brazilian real		—		4,155
British pounds sterling		15,344		1,105
Chilean peso		17,166		482
Czech koruna		113,628		—
Euro		434,913		2,763
South African rand		—		1,644
	$	638,032	$	39,238

Based upon March 31, 2009 exchange rates, all of the Company’s outstanding contracts were recorded at fair value.

The Company conducts its business on a multinational basis in a wide variety of foreign currencies and hedges foreign currency exposures arising from various receivables, liabilities and expected inventory purchases. Derivative instruments that are utilized to hedge the foreign currency risk associated with anticipated inventory purchases in foreign currencies are designated as cash flow hedges. Gains and losses on these instruments, to the extent that they have been effective, are deferred in accumulated other comprehensive income (loss) and recognized in earnings when the related inventory is sold. Ineffectiveness related to these hedge instruments that was reclassified to the statement of earnings was $3.6 million of losses for the quarter ended March 31, 2009, which includes $4.0 million of losses as a result of the discontinuance of cash flow hedges because the original forecasted transaction did not occur within the original specified time period or within an additional two-month period of time thereafter. The maturity of these instruments generally does not exceed 24 months. The accumulated other comprehensive loss, net of tax, related to foreign currency forward contracts was $24.0 million at March 31, 2009. The Company estimates that $17.9 million will be reclassified into earnings over the next 12 months.

To manage a portion of its exposure to changes in LIBOR-based interest rates on its variable rate debt, the Company has entered into interest rate swap agreements to effectively fix the interest payments on $468.0 million ($375.0 million plus €70.0 million) of its term loan. All of the swaps in place at March 31, 2009 have been designated as cash flow hedges of LIBOR-based interest payments. In accordance with SFAS 133, the effective portion of the change in fair value of the derivatives is recorded in accumulated other comprehensive income (loss), while any ineffective portion is recorded as an adjustment to interest expense. The differential paid or received on the interest rate swap is recognized as an adjustment to interest expense. Interest rate swaps in place at March 31, 2009 were as follows (dollars in thousands):

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Amount		Interest Rate (1)		Maturity Date
$	150,000	4.8800	%	May 4, 2010 (2)
$	50,000	5.0940	%	May 4, 2010
$	50,000	2.1750	%	January 30, 2012
$	50,000	2.4000	%	January 28, 2013
$	50,000	2.5975	%	January 28, 2014
$	19,929	1.9600	%	March 31, 2012
$	13,286	2.2800	%	March 31, 2013
$	33,215	2.5180	%	March 31, 2014
$	19,929	2.4900	%	March 31, 2014
$	25,000	2.2100	%	April 1, 2014
$	6,643	2.4900	%	April 1, 2014

(1) Excludes applicable spread of 1.50% to 1.75%

(2) This swap, together with a $150 million interest rate swap entered into in 2007, which was terminated in 2008, effectively fixes the interest rate at 4.88%.

The Company recognized $0.5 million of interest expense for the quarter ended March 31, 2009 related to the ineffective portion of its interest rate swaps. The accumulated other comprehensive loss related to interest rate swaps was $10.4 million, net of tax, at March 31, 2009. The Company estimates that $1.6 million, net of tax, will be reclassified into earnings over the next 12 months which will adjust the interest rate on $150 million of the term loan to 4.88%.

The fair value of the Company’s cash flow hedges related to foreign currency forward contracts and interest rate swaps and the accounts in the consolidated condensed balance sheet in which the gross amounts are included at March 31, 2009 were as follows:

	Prepaid Expenses and Other		Other Long- Term Assets		Accrued Expenses		Pension, Postretirement Benefits and Other
Interest rate swaps	$	—	$	—	$	19,054	$	—
Foreign currency forward contracts		2,496		246		17,117		7,346
Total designated	$	2,496	$	246	$	36,171	$	7,346

10

The gross derivative gains and losses included in the consolidated condensed statement of comprehensive income and the consolidated condensed statement of earnings related to cash flow hedges for the quarter ended March 31, 2009 were as follows:

	(Gain) / Loss Recognized in Other Comprehensive Income
	(Dollars in thousands)
Interest rate swaps	$	5,314
Foreign currency forward contracts		(224	)
Total	$	5,090
	(Gain) / Loss Reclassified From Other Comprehensive Income to Earnings			Statement of Earnings Line Item
	(Dollars in thousands)
Interest rate swaps	$	549		Interest expense
Foreign currency forward contracts		1,974		Cost of products sold
Foreign currency forward contracts		3,448		Other expense
Foreign currency forward contracts		(6,450	)	Selling, general and administrative expenses
Total	$	(479	)
	(Gain) /Loss Recognized in Income Due to Ineffectiveness and Amounts Excluded From Effectiveness Testing			Statement of Earnings Line Item
	(Dollars in thousands)
Foreign currency forward contracts	$	3,637		Selling, general and administrative expenses
The gross gains and losses from derivatives not designated as hedging instruments included in the consolidated condensed statement of earnings for the quarter ended March 31, 2009 were as follows:
	Amount			Statement of Earnings Line Item
	(Dollars in thousands)
Foreign currency forward contracts	$	2,375		Selling, general and administrative expenses

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Derivative instruments are subject to significant concentrations of credit risk to the banking industry. The Company manages counterparty credit risk by only entering into derivative contracts with large commercial financial institutions. The maximum amount of loss, not considering netting arrangements, if any, which the Company would incur if counterparties to derivative instruments fail to meet their obligations, was $2.7 million as of March 31, 2009. At March 31, 2009, the Company had no knowledge of any of counterparty default.

The Company also has cross-currency foreign currency-denominated debt obligations that are designated as hedges of the foreign currency exposure associated with its net investments in non-U.S. operations. The currency effects of the debt obligations are reflected in other comprehensive income (loss) where they offset translation gains and losses recorded on the Company’s net investments in Germany. The Company recognized a gain of $4.1 million in other comprehensive income (loss) related to net investment hedges in the quarter ended March 31, 2009.

The Company also uses natural hedges to mitigate risks associated with foreign currency exposures. For example, oftentimes the Company has non-functional currency denominated receivables from customers for which the exposure is partially mitigated by a corresponding non-functional currency payable to a vendor.

4. Comprehensive Income (Loss)

SFAS No. 130, “Reporting Comprehensive Income,” requires the reporting of comprehensive income (loss) in addition to net income (loss). 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 income (loss). The Company reports comprehensive income (loss) and accumulated other comprehensive loss in the Consolidated Statements of Common Stockholders’ Investment. Accumulated other comprehensive loss, net of income taxes, was as follows:

	March 31, 2009			December 31, 2008
	(Dollars in thousands)
Currency translation adjustments	$	(45,986	)	$	(31,221	)
Pension and postretirement benefit unrecognized costs		(35,241	)		(35,033	)
Derivative fair value adjustment		(34,363	)		(30,704	)
Accumulated other comprehensive loss	$	(115,590	)	$	(96,958	)

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5. Inventories

Inventories consisted of the following:

	March 31, 2009		December 31, 2008
	(Dollars in thousands)
Raw materials and parts	$	96,863	$	103,586
Work in process		242,678		242,224
Finished products (primarily replacement parts)		333,982		270,900
	$	673,523	$	616,710

6. Goodwill and Intangible Assets

Intangible assets consisted of the following:

	March 31, 2009					December 31, 2008
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
	(Dollars in thousands)
Amortized intangible assets:
Technology	$	112,761	$	(17,942	)	$	115,580	$	(15,972	)
Customer relationships		109,316		(10,221	)		115,400		(9,333	)
Engineering drawings		25,500		(14,687	)		25,500		(14,369	)
Other		5,855		(4,699	)		5,855		(4,646	)
	$	253,432	$	(47,549	)	$	262,335	$	(44,320	)
Unamortized intangible assets – Trademarks/Trade names	$	12,436				$	12,436

Changes in the carrying amount of goodwill for the quarter ended March 31, 2009 were as follows:

	Surface Mining		Underground Mining
	(Dollars in thousands)
Balance at January 1, 2009	$	47,306	$	282,905
Currency translation		—		(5,087	)
Balance at March 31, 2009	$	47,306	$	277,818

13

The estimated future amortization expense of intangible assets as of March 31, 2009 was as follows (dollars in thousands):

2009 (remaining nine months)	$	12,036
2010		16,049
2011		16,049
2012		16,049
2013		16,049
2014		16,049
Future		113,602
	$	205,883

7. Long-Term Debt and Financing Arrangements

The Company’s credit facilities include a secured revolving credit facility of $357.5 million, an unsecured German revolving credit facility of €65.0 million, each of which mature on May 4, 2012, and a term loan facility of $400.0 million plus €75.0 million with a maturity date of May 4, 2014. The entire secured revolving credit facility may be used for letters of credit. At December 31, 2008, the Company classified the entire revolving credit facility balance of $55.2 million as current maturities of long-term debt and short-term obligations because it intended to repay the outstanding balance early in 2009.

At March 31, 2009, the Company had no borrowings under its secured revolving credit facility or its unsecured German credit facility. The amount potentially available for borrowings under the secured revolving credit facility at March 31, 2009 was $274.1 million, after taking into account $83.4 million of issued letters of credit. The amount potentially available for borrowings under its unsecured German credit facility at March 31, 2009 was $46.2 million (€34.8 million), after taking into account $40.1 million (€30.2 million) of issued letters of credit. At March 31, 2009, the Company had borrowings under its term loan facility of $492.3 million ($394.0 million plus €73.9 million) at a weighted average annual interest rate of 2.61%, plus the applicable spread. To manage a portion of its exposure to changes in LIBOR-based interest rates, the Company has entered into interest rate swap agreements that effectively fix the interest payments on $468.0 million ($375.0 million plus €70.0 million) of outstanding borrowings under its term loan facility at a weighted average interest rate of 3.5%, plus the applicable spread. Two of these swaps totaling $31.6 million ($25.0 million plus €5.0 million) became effective on April 1, 2009.

8. Common Stockholders’ Investment

On April 30, 2008, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation increasing the number of authorized shares of common stock from 75 million to 200 million. Also on April 30, 2008, the Company announced a two-for-one split of its common stock in the form of a 100% stock dividend. The stock dividend was paid on May 27, 2008 to stockholders of record on May 13, 2008 and the Company’s common stock began trading on a split-adjusted basis on May 28, 2008. All previously reported net earnings per share and number of shares in the accompanying consolidated financial statements and notes thereto have been adjusted to reflect this stock split.

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At March 31, 2009, the Company’s issued and outstanding shares consist only of common stock. Holders of common stock are entitled to one vote per share on all matters to be voted on by the Company’s common stockholders.

9. Stock-Based Compensation

The Company recognizes compensation expense for nonvested shares, stock appreciation rights (“SARs”) and stock options over the requisite service period for vesting of the award. Total stock-based compensation expense included in the Company’s Consolidated Statements of Earnings was $2.4 million and $1.8 million for the quarters ended March 31, 2009 and 2008, respectively.

In the first quarter of 2009, the Company issued 295,300 nonvested shares to certain employees pursuant to the Bucyrus International, Inc. Omnibus Incentive Plan 2007 (the “Omnibus Plan”). These shares fully cliff vest on December 31, 2012. Nonvested share activity during the quarter ended March 31, 2009 was as follows:

	Number of Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2009	206,688	$	31.59
Granted	295,300	$	13.51
Vested	—		—
Outstanding at March 31, 2009	501,988	$	20.95

At March 31, 2009, there was $7.0 million of unrecognized compensation expense related to nonvested share grants. This cost is expected to be recognized over a weighted-average period of approximately 2.7 years. The grant date fair value was based on the fair market value of the Company’s common stock on the date of grant. At March 31, 2009, the Company expected approximately 425,000 shares to vest and these shares had an aggregate intrinsic value of $6.4 million and a weighted-average remaining contractual term of 2.8 years.

In the first quarter of 2009, the Company also granted SARs to certain employees pursuant to the Omnibus Plan. The SARs vest incrementally and can be settled in shares only. SAR activity during the quarter ended March 31, 2009 was as follows:

	Number of Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2009	1,207,540	$	14.20
Granted	1,198,350	$	7.37
Exercised	—		—
Outstanding at March 31, 2009	2,405,890	$	10.80
Vested and exercisable at March 31, 2009	407,565	$	11.72

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At March 31, 2009, there was $13.5 million of unrecognized compensation expense related to SARs that are vested or expected to vest. This expense is expected to be recognized over a weighted-average period of approximately 2.9 years. The grant date fair value of the SARs was calculated using the Black-Scholes pricing model. The assumptions used in this model were as follows:

Risk-free interest rate	2.82	%
Expected stock price volatility	58.0	%
Expected life	6.5 years
Dividend yield	.70	%

The risk-free interest rate was based on the U.S. Government Treasury strips rate on the date of grant and with a maturity equal to the expected life of the SARs. The expected stock price volatility was based on the historical activity of the Company’s common stock. The expected life was calculated using the simplified method for “plain-vanilla” issuances. The expected dividend yield was based on the annual dividends which have been paid on the Company’s common stock.

10. Pension Benefits

Pension expense consisted of the following:

	Pension Benefits
	Quarters Ended March 31,
	2009			2008
	(Dollars in thousands)
Service cost	$	1,299		$	545
Interest cost		3,081			2,221
Expected return on assets		(1,675	)		(800	)
Amortization of:
Prior service cost		125			(25	)
Actuarial loss		529			150
Net periodic benefit cost	$	3,359		$	2,091

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11. Net Earnings Per Share

The reconciliation of the numerators and the denominators of the basic and diluted net earnings per share of common stock calculations for the quarters ended March 31, 2009 and 2008 was as follows:

	Quarters Ended March 31,
	2009		2008
	(Dollar in thousands, except per share amounts)
Net earnings	$	56,901	$	41,081
Weighted average shares outstanding		74,451,449		74,340,258
Basic net earnings per share	$	0.76	$	0.55
Weighted average shares outstanding		74,451,449		74,340,258
Effect of dilutive stock options, nonvested shares, stock appreciation rights and performance shares		504,822		864,900
Weighted average shares outstanding – diluted (1)		74,956,271		75,205,158
Diluted net earnings per share	$	0.76	$	0.55

(1) Grants of nonvested shares and stock appreciation rights representing approximately an additional 1,260,000 shares were outstanding for the quarter ended March 31, 2009 but were not included in the computation of diluted earnings per share because their effect would have been antidilutive.

Effective January 1, 2009, the Company implemented Financial Accounting Standards Board (“FASB”) Staff Position EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, Earnings per Share. Under the guidance of FSP EITF 03-6-1, unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and shall be included in the computation of earnings-per-share pursuant to the two-class method. The Company’s awards do not have nonforfeitable rights to dividends or dividend equivalents; therefore, the adoption of FSP EITF 03-6-1 did not have any impact on the Company’s financial position or results of operations.

12. Segment Information

The Company has two reportable segments, surface mining and underground mining, which are based on the internal organization used by management for making operating decisions, measuring and evaluating financial performance, and allocating resources, as well as based on the similarity of customers served, distinctive products and services, common use of facilities and economic results attained.

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The accounting policies of the Company’s segments are the same as those described in Note A to the Company’s 2008 consolidated financial statements. The operating earnings for each segment do not include interest expense, other expense and a provision for income taxes. Corporate expenses consist primarily of costs related to employees who provide services across both of the Company’s segments. There are no significant intersegment sales. Identifiable assets are those used in the operations of each segment.

Segment information for the quarters ended March 31, 2009 and 2008 was as follows:

	Quarter Ended March 31, 2009
	Sales		Operating Earnings			Depreciation and Amortization		Capital Expenditures		Total Assets
	(Dollars in thousands)
Surface mining	$	311,003	$	65,032		$	5,669	$	8,591	$	1,082,901
Underground mining		294,741		37,347			8,930		2,610		1,404,967
Total operations		605,744		102,379			14,599		11,201		2,487,868
Corporate		—		(7,787	)		—		—		—
Consolidated total	$	605,744		94,592			14,599	$	11,201	$	2,487,868
Interest income				(1,586	)		—
Interest expense				6,864			—
Other expense				5,025			1,021
Earnings before income taxes			$	84,289		$	15,620
	Quarter Ended March 31, 2008
	Sales		Operating Earnings			Depreciation and Amortization		Capital Expenditures		Total Assets
	(Dollars in thousands)
Surface mining	$	284,058	$	54,344		$	4,592	$	15,589	$	885,597
Underground mining		232,923		19,249			10,814		5,596		1,382,268
Total operations		516,981		73,593			15,406		21,185		2,267,865
Corporate		—		(6,061	)		—		—		—
Consolidated total	$	516,981		67,532			15,406	$	21,185	$	2,267,865
Interest income				(2,202	)		—
Interest expense				8,116			—
Other expense				767			767
Earnings before income taxes			$	60,851		$	16,173

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13. Contingencies

Environmental, product warranty and liability and legal matters as of March 31, 2009 were as follows:

Environmental

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 required 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 believes that its compliance with statutory requirements respecting environmental quality will not materially affect its capital expenditures, earnings or competitive position. The Company has an ongoing program to address potential environmental problems.

Certain environmental laws, such as the Federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), provide for strict, joint and several liability for investigation and remediation of spills and other releases of hazardous substances. Such laws may apply to conditions at properties currently or formerly owned or operated by an entity or its predecessors, as well as to conditions at properties at which wastes or other contamination attributable to an entity or its predecessors come to be located.

The Company has previously been named as a potentially responsible party under CERCLA and analogous state laws at other sites throughout the United States. The Company believes it has determined its remediation liabilities with respect to the sites discussed above and does not believe that any such remaining liabilities, if any, either individually or in the aggregate, will have a material adverse effect on its financial position, results of operations or cash flows, although no assurance to that effect can be given. The Company may incur additional liabilities with respect to these sites in the future, the costs of which could be material, and may incur remediation liability in the future with respect to sites formerly or currently owned or operated by the Company or with respect to off-site disposal locations, the costs of which could be material.

Over the past three years, expenditures for ongoing compliance, remediation, monitoring and cleanup have been immaterial. The Company believes that expenditures for compliance and remediation will not have a material adverse effect on its financial position, results of operations or cash flows, although no assurance to that effect can be given.

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Product Warranty

The Company recognizes the cost associated with its warranty policies on its products as revenue is recognized. The amount recognized is based on historical experience. The changes in accrued warranty costs for the quarters ended March 31, 2009 and 2008 were as follows:

	2009			2008
	(Dollars in thousands)
Balance at January 1	$	53,586		$	70,909
Provision		3,201			1,704
Charges		(3,322	)		(3,987	)
Currency translation		(1,757	)		4,152
Balance at March 31	$	51,708		$	72,778

Product Liability

The Company is 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 in federal and state courts. Such claims are generally related to property damage and to personal injury. The Company’s products are operated by its employees and its customers’ employees and independent contractors at various work sites in the United States and abroad. In the United States, workers’ claims against employers related to workplace injuries are generally limited by state workers’ compensation statutes, but such limitations do not apply to equipment suppliers. The Company has insurance covering most of these claims and has various limits of liability depending on the insurance policy year in question. At the time a liability associated with a claim becomes probable and can be reasonably estimated, the Company accrues for the liability by a charge to earnings. For all other cases, an estimate of the costs associated with the matters cannot be made due to the inherent uncertainties in the litigation process; however, the Company believes that the final resolution of these 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 its 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 numerous personal injury liability cases alleging damages due to exposure to asbestos and other substances. The Company has insurance covering most of these cases and has various limits of liability depending on the insurance policy year in question. At the time a liability associated with a case becomes probable and can be reasonably estimated, the Company accrues for the liability by a charge to earnings. For all other cases, an estimate of the costs associated with the matters cannot be made due to the inherent uncertainties in the litigation process; however, the Company does not believe that these costs 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

The Company is involved in various other litigation arising in the normal course of business. The Company does not believe that its recovery or liability, if any, under any such pending litigation will have a material effect on the its financial position, results of operations or cash flows, although no assurance to that effect can be given.

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14. Fair Value Measurements

On January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which establishes a framework for measuring fair value and expands disclosure about such fair value measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 classifies the inputs used to measure the fair value into the following hierarchy:

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or Inputs other than quoted prices that are observable for the assets or liabilities
Level 3	Unobservable inputs for the assets or liabilities

The Company has determined that its financial assets and liabilities are level 2 in the fair value hierarchy. The Company’s financial assets and liabilities that were accounted for at fair value at March 31, 2009 were as follows (dollars in thousands):

Assets:
Foreign currency exchange contracts (1)	$	2,742
Total assets at fair value	$	2,742
Liabilities:
Foreign currency exchange contracts (1)	$	24,463
Interest rate swaps (2)		19,054
Total liabilities at fair value	$	43,517

(1) Based on observable market transactions of forward currency prices.

(2) Based on observable market transactions of forward LIBOR or EURIBOR rates.

15. Recent Accounting Pronouncements

In December 2007, FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which provides revised guidance on how acquirers recognize and measure the consideration transferred, assets acquired, liabilities assumed, noncontrolling interests, and goodwill acquired at their fair values as of that date. SFAS 141(R) is effective, on a prospective basis, for fiscal years beginning after December 15, 2008. Effective January 1, 2009, the Company is accounting for business combinations in accordance with SFAS 141(R). Its adoption did not have a material effect on the Company’s financial position or results of operations for the quarter ended March 31, 2009.

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Item 2. Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Forward-Looking Statements

The following discussion and analysis and information contained elsewhere in this report contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of predictive, future tense or forward-looking terminology, such as “believes,” “anticipates,” “expects,” “estimates,” “intends,” “may,” “will” or similar terms. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those contained in the forward-looking statements as a result of various factors, some of which are unknown. The factors that could cause our actual results to differ materially from those anticipated in such forward-looking statements and could adversely affect our actual results of operations and financial condition include, without limitation:

• the cyclical nature of the sale of original equipment due to fluctuations in market prices for coal, copper, oil, iron ore and other minerals, changes in general economic conditions, changes in interest rates, changes in customers’ replacement or repair cycles, consolidation in the mining industry and competitive pressures;

• changes in global financial markets and global economic conditions;

• our customers deferring, delaying or canceling capital investments due to volatility and tightening of credit markets, unprecedented financial market conditions and a global recession;

• disruption of our plant operations due to equipment failures, natural disasters or other reasons;

• our ability to attract and retain skilled labor;

• our production capacity;

• our ability to purchase component parts or raw materials from key suppliers at acceptable prices and/or on the required time schedule;

• our dependence on the commodity price of coal and other conditions in the coal market;

• our reliance on significant customers;

• the loss of key customers or key members of management;

• the risks and uncertainties of doing business in foreign countries, including emerging markets, and foreign currency risks;

• the highly competitive nature of the mining industry;

• our ability to continue to offer products containing innovative technology that meets the needs of our customers;

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• costs and risks associated with regulatory compliance and changing regulations affecting the mining industry and/or electric utilities;

• product liability, environmental and other potential litigation;

• work stoppages at our company, our customers, our suppliers or providers of transportation;

• our ability to satisfy underfunded pension and postretirement obligations;

• our ability to protect intellectual property; and

• the availability of operating cash to service our indebtedness

The foregoing factors do not constitute an exhaustive list of factors that could cause actual results to differ materially from those anticipated in forward-looking statements, and should be read in conjunction with the other cautionary statements and risk factors included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2009. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Preamble

All references to the “Company,” “us,” “we” and “our” in the following discussion and analysis means, unless the context indicates otherwise, Bucyrus International, Inc. together with its consolidated subsidiaries.

Business

We are a leading designer and manufacturer of high productivity mining equipment for the extraction of coal, copper, oil sands, iron ore and other minerals in major mining centers throughout the world. In addition to the manufacture of original equipment, we also provide the aftermarket replacement parts and service for this equipment. We operate in two business segments: surface mining and underground mining. All of our products and services are marketed under theBucyrus name. We have manufacturing facilities in Australia, China, Germany, Poland and the United States and service and sales centers in Australia, Brazil, Canada, Chile, China, the Czech Republic, England, India, Mexico, Peru, Russia, South Africa and the United States. The largest markets for our original equipment and aftermarket parts and service have historically been in Australia, Canada, China, Germany, India, South Africa, South America and the United States. In the future, we expect that the United States, Australia, Brazil, Canada, China, India and Russia will be increasingly important markets for our surface mining equipment and that the United States, China, Russia, Eastern Europe and India will be increasingly important markets for our underground mining equipment.

A substantial portion of our sales and operating earnings is attributable to our operations located outside the United States. We generally sell our surface mining original equipment, including that sold directly to foreign customers, and most of our aftermarket parts in United States dollars. Our underground mining original equipment is generally sold in either United States dollars or euros. A portion of our aftermarket parts sales are also denominated in the local currencies of Australia, Brazil, Canada, South Africa and the United Kingdom. Aftermarket services are paid for primarily in local currency, which is naturally hedged by our payment of local labor in local currency.

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In our surface mining segment, overall quoting activity for our original equipment in the first quarter of 2009 decreased compared to the fourth quarter of 2008. The decrease was primarily in electric mining shovels and blasthole drills. Quoting activity for draglines remained consistent with fourth quarter 2008 levels. We currently expect the reduced level of demand for our original equipment to continue for the reminder of 2009. New orders for our surface mining aftermarket parts and service increased for the first quarter of 2009 compared to the fourth quarter of 2008. Our quoting activity in the first quarter of 2009 remained consistent with the fourth quarter of 2008.

In our underground mining segment, quoting activity for our original equipment declined from the fourth quarter of 2008, which we believe was primarily caused by low spot coal prices causing our customers to delay original equipment orders and extend the life of existing machines. Our underground mining segment quoting activity for aftermarket parts and service in the first quarter of 2009 remained consistent with fourth quarter 2008 levels.

Backlog and New Orders

Our backlog level, which represents unfilled orders for our products and services, allows us to more accurately forecast our upcoming sales and plan our production accordingly. Our backlog also provides us with a relatively predictive level of expected 2009 sales and cash flows. Due to the high cost of some of our original equipment, our backlog is subject to volatility, particularly over relatively short periods. A portion of our surface mining backlog is related to multi-year maintenance and repair contracts that will generate revenue in future years. Our backlog at March 31, 2009 and December 31, 2008, as well as the portion of our backlog which is expected to be recognized within 12 months of these dates, was as follows:

	March 31, 2009		December 31, 2008		% Change
	(Dollars in thousands)
Surface Mining:
Total	$	1,298,387	$	1,367,242	(5.0	)%
Next 12 months	$	782,746	$	906,884	(13.7	)%
Underground Mining:
Total	$	1,043,305	$	1,135,212	(8.1	)%
Next 12 months	$	876,671	$	806,074	8.8	%
Total:
Total	$	2,341,692	$	2,502,454	(6.4	)%
Next 12 months	$	1,659,417	$	1,712,958	(3.1	)%

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New orders were as follows:

	Quarters Ended March 31,				% Change
	2009		2008
	(Dollars in thousands)
Surface Mining:
Original equipment	$	95,557	$	260,790	(63.4	)%
Aftermarket parts and service		146,591		354,709	(58.7	)%
		242,148		615,499	(60.7	)%
Underground Mining:
Original equipment		98,017		353,108	(72.2	)%
Aftermarket parts and service		104,817		124,384	(15.7	)%
		202,834		477,492	(57.5	)%
Total:
Original equipment		193,574		613,898	(68.5	)%
Aftermarket parts and service		251,408		479,093	(47.5	)%
	$	444,982	$	1,092,991	(59.3	)%

The decrease in surface mining original equipment new orders in the first quarter of 2009 was primarily due to fewer electric mining shovel orders in the quarter, which we believe resulted primarily from reduced demand for commodities mined by our equipment as a result of the global economic recession. Included in surface mining aftermarket parts and service new orders for the first quarter of 2009 was $5.8 million related to multi-year maintenance and repair contracts that will generate revenue in future years, compared to $209.8 million in the first quarter of 2008, which included one exceptionally large order. These contracts vary in size and are not typically received on a regular basis. Underground original equipment new orders for the first quarter of 2008 included an order in the Czech Republic for five longwall systems. Approximately $16.0 million of new orders in our underground mining backlog at December 31, 2008 were cancelled during the first quarter of 2009. New orders for the first quarter of 2009 were negatively impacted by approximately $25.0 million due to the effect of the stronger U.S. dollar on sales denominated in foreign currencies compared to the first quarter of 2008.

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Results of Operations

Quarter Ended March 31, 2009 Compared to Quarter Ended March 31, 2008

	Quarters Ended March 31,
	2009				2008
	Amount		% of Sales		Amount		% of Sales
	(Dollars in thousands)
Sales	$	605,744	—		$	516,981	—
Gross profit	$	170,185	28.1	%	$	141,585	27.4	%
Selling, general and administrative expenses	$	61,053	10.1	%	$	59,481	11.5	%
Operating earnings	$	94,592	15.6	%	$	67,532	13.1	%
Net earnings	$	56,901	9.4	%	$	41,081	7.9	%

Sales

Sales consisted of the following:

	Quarters Ended March 31,				% Change
	2009		2008
	(Dollars in thousands)
Surface Mining:
Original equipment	$	146,976	$	143,008	2.8	%
Aftermarket parts and service		164,027		141,050	16.3	%
		311,003		284,058	9.5	%
Underground Mining:
Original equipment		181,068		141,116	28.3	%
Aftermarket parts and service		113,673		91,807	23.8	%
		294,741		232,923	26.5	%
Total:
Original equipment		328,044		284,124	15.5	%
Aftermarket parts and service		277,700		232,857	19.3	%
	$	605,744	$	516,981	17.2	%

The increase in surface mining original equipment sales for the first quarter of 2009 compared to the first quarter of 2008 was primarily in electric mining shovels, offset by a decrease in sales from draglines. The increase in electric mining shovel sales was primarily due to our increased capacity as a result of the expansion of our manufacturing facility in South Milwaukee, Wisconsin. The increase in surface mining aftermarket parts and service sales was primarily in the Chilean and Australian markets. Moderate increases in sales to customers in Brazil and China offset a decline in Canada. First quarter 2009 surface mining sales were negatively impacted by $16.8 million due to the effect of the stronger U.S. dollar on sales denominated in foreign currencies compared to the first quarter of 2008.

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The increase in underground mining original equipment sales for the first quarter of 2009 compared to the first quarter of 2008 was primarily the result of strong longwall system sales related to a large order in the Czech Republic received in early 2008. The increase in underground mining aftermarket parts and service sales was primarily in the United States. First quarter 2009 underground mining sales were negatively impacted by $20.6 million due to the effect of the stronger U.S. dollar on sales denominated in foreign currencies compared to the first quarter of 2008.

Gross Profit

Gross profit for the first quarter of 2009 was $170.2 million, or 28.1% of sales, compared to $141.6 million, or 27.4% of sales, for the first quarter of 2008. Gross profit was affected by purchase accounting adjustments as a result of the acquisition of DBT GmbH (“DBT”) in 2007 as follows:

	Quarters Ended March 31,
	2009			2008
	(Dollars in thousands)
(Increase) decrease due to purchase accounting adjustments	$	(485	)	$	8,747
Gross margin increase (reduction)		0.1	%		(1.7	)%

The increase in gross profit was primarily due to increased surface and underground mining sales. Excluding the effect of purchase accounting adjustments, gross profit was 28.0% of sales for the first quarter of 2009 compared to 27.4% of sales for the first quarter of 2008, with the decrease due primarily to the mix of original equipment orders in our underground mining segment. The warranty reserve balance at March 31, 2009 has declined from March 31, 2008 primarily due to the improved reliability of our equipment which results in a lower reserve requirement, primarily in the underground mining segment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the first quarter of 2009 were $61.1 million, or 10.1% of sales, compared to $59.5 million, or 11.5% of sales, for the first quarter of 2008.

Research and Development Expenses

Research and development expenses for the first quarter of 2009 were $9.4 million, or 1.5% of sales, compared to $8.2 million, or 1.6% of sales, for the first quarter of 2008. The increase was primarily due to further development of our surface mining original equipment products.

Amortization of Intangible Assets

Amortization of intangible assets acquired in the DBT acquisition was $4.9 million for the first quarter of 2009, compared to $5.8 million for the first quarter of 2008. Amortization of intangible assets acquired in the DBT acquisition is expected to be approximately $3.5 million to $4.0 million per quarter through April 2019.

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Operating Earnings

Operating earnings were as follows:

	Quarters Ended March 31,						% Change
	2009			2008
	(Dollars in thousands)
Surface mining	$	65,032		$	54,344		19.7	%
Underground mining		37,347			19,249		94.0	%
Total operations		102,379			73,593		39.1	%
Corporate		(7,787	)		(6,061	)	(28.5	)%
Consolidated total	$	94,592		$	67,532		40.1	%

The increase in operating earnings for the first quarter of 2009 was primarily due to increased gross profit as a result of higher sales in both of our segments. Operating earnings for our underground mining segment were reduced by purchase accounting adjustments related to the acquisition of DBT of $4.1 million for the first quarter of 2009, compared to $14.3 million for the first quarter of 2008. Amortization of intangible assets acquired in the DBT acquisition is expected to be approximately $3.5 million to $4.0 million per quarter through April 2019.

Interest Expense

Interest expense was $6.9 million for the first quarter of 2009 compared to $8.1 million for the first quarter of 2008. The decrease in interest expense in 2009 was primarily due to lower interest rates on our term loan debt.

Net Earnings

Net earnings for the first quarter of 2009 were $56.9 million, or $0.76 per share on a fully diluted basis, compared to $41.1 million, or $0.55 per share on a fully diluted basis, for the first quarter of 2008. Net earnings were reduced (increased) in 2009 by amortization of purchase accounting adjustments related to the acquisition of DBT as follows:

	Quarters Ended March 31,
	2009			2008
	(Dollars in thousands)
Inventory fair value adjustment charged to cost of product sold	$	—		$	8,859
Amortization of intangible assets		4,715			5,796
Depreciation of fixed assets		(655	)		(355	)
Operating earnings		4,060			14,300
Income tax benefit		1,333			4,782
Total	$	2,727		$	9,518

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Foreign Currency Fluctuations

The following table summarizes the approximate effect of changes in foreign currency exchange rates on our sales, gross profit and operating earnings for the quarters ended March 31, 2009 and 2008, in each case compared to the same period in the prior year:

	Quarters Ended March 31,
	2009			2008
	(Dollars in thousands)
(Decrease) increase in sales	$	(37,346	)	$	6,025
(Decrease) increase in gross profit	$	(10,876	)	$	885
(Decrease) increase in operating earnings	$	(5,744	)	$	312

EBITDA

EBITDA was as follows:

	Quarters Ended March 31,						% Change
	2009			2008
	(Dollars in thousands)
EBITDA	$	105,187		$	82,938		26.8	%
EBITDA as a percent of sales		17.4	%		16.0	%

EBITDA is defined as net earnings before interest income, interest expense, income taxes, depreciation and amortization. EBITDA includes the impact of non-cash stock compensation expense, severance expenses, loss on disposal of fixed assets and the inventory fair value purchase accounting adjustment charged to cost of products sold. EBITDA is a measurement not recognized in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should not be viewed as an alternative to GAAP measures of performance. EBITDA is presented because (i) we use EBITDA to measure our liquidity and financial performance and (ii) we believe 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 following table reconciles net earnings as reported in our Consolidated Condensed Statements of Earnings to EBITDA and reconciles EBITDA to net cash provided by operating activities as reported in our Consolidated Condensed Statements of Cash Flows:

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	Quarters Ended March 31,
	2009			2008
	(Dollars in thousands)
Net earnings	$	56,901		$	41,081
Interest income		(1,586	)		(2,202	)
Interest expense		6,864			8,116
Income tax expense		27,388			19,770
Depreciation		9,435			8,670
Amortization (1)		6,185			7,503
EBITDA (2)		105,187			82,938
Changes in assets and liabilities		(31,137	)		93,389
Non-cash stock compensation expense		2,384			1,822
Loss on disposal of fixed assets		3			560
Interest income		1,586			2,202
Interest expense		(6,864	)		(8,116	)
Income tax expense		(27,388	)		(19,770	)
Net cash provided by operating activities	$	43,771		$	153,025
Net cash used in investing activities	$	(20,014	)	$	(21,628	)
Net cash used in financing activities	$	(58,254	)	$	(19,973	)

(1) Includes amortization of intangible assets and debt issuance costs.

(2) Certain charges that were deducted in calculating EBITDA for each of the periods presented is presented in the following table. These items include (a) non-cash stock compensation expense related to our equity incentive plans, (b) severance expenses for personnel changes in the ordinary course, (c) loss on disposals of fixed assets in the ordinary course, and (d) the inventory fair value purchase accounting adjustment related to the acquisition of DBT charged to cost of products sold. We believe this table, when reviewed in connection with our presentation of EBITDA, provides additional information that is useful to our management and investors for measuring comparative operating performance between time periods and among companies. In addition to EBITDA, our management assesses the charges presented in this table when preparing our annual operating budget and financial projections. Specifically, we believe that this table allows our management and investors to assess our operating performance during the periods these charges were incurred, on a consistent basis with the periods during which these charges were not incurred.

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	Quarters Ended March 31,
	2009		2008
	(Dollars in thousands)
Non-cash stock compensation expense	$	2,384	$	1,822
Severance expense		296		280
Loss on disposal of fixed assets		3		560
Inventory fair value adjustment charged to cost of products sold		—		8,859
	$	2,683	$	11,521

Liquidity and Capital Resources

Description of Credit Facilities

Our credit facilities include a secured revolving credit facility of $357.5 million, an unsecured German revolving credit facility of €65.0 million, each of which mature on May 4, 2012, and a term loan facility of $400.0 million plus €75.0 million with a maturity date of May 4, 2014. The entire secured revolving credit facility may be used for letters of credit. At December 31, 2008, we classified the entire revolving credit facility balance of $55.2 million as current maturities of long-term debt and short-term obligations because we intended to repay the outstanding balance early in 2009.

Borrowings under our secured revolving credit facility bear interest, payable no less frequently than quarterly, at (1) LIBOR plus between 1.25% and 1.75% (based on our total leverage ratio) for U.S. dollar denominated LIBOR loans, (2) a base rate determined by reference to the greater of the U.S. prime lending rate and the federal funds rate plus between 0.25% and 0.75% (based on our total leverage ratio) for U.S. dollar denominated base rate loans and (3) EURIBOR plus between 1.25% and 1.75% (based on our total leverage ratio) for Euro denominated loans. The interest rates under our secured revolving credit facility are subject to change based on the total leverage ratio. The unsecured German revolving credit facility bears interest, payable no less frequently than quarterly, at EURIBOR plus 1.75%. Under each revolving credit facility, we have agreed to pay a commitment fee based on the unused portion of such facilities, payable quarterly, at rates ranging from 0.25% to 0.50% depending on the total leverage ratio, and when applicable, customary letter of credit fees. Borrowings under our term loan facility bear interest, payable no less frequently than quarterly, at (a) LIBOR plus 1.50% for U.S. dollar denominated LIBOR loans, (2) the base rate plus 0.50% for U.S. dollar denominated base rate loans and (3) EURIBOR plus 1.75% for Euro denominated loans.

At March 31, 2009, we had no borrowings under our secured revolving credit facility or our unsecured German credit facility. The amount potentially available for borrowings under our secured revolving credit facility at March 31, 2009 was $274.1 million, after taking into account $83.4 million of issued letters of credit. The amount potentially available for borrowings under our unsecured German credit facility at March 31, 2009 was $46.2 million (€34.8 million), after taking into account $40.1 million (€30.2 million) of issued letters of credit. At March 31, 2009, we had borrowings under our term loan facility of $492.3 million ($394.0 million plus €73.9 million) at a weighted average annual interest rate of 2.61%, plus the applicable spread. To manage a portion of our exposure to changes in LIBOR-based interest rates, we have entered into interest rate swap agreements that effectively fix the interest payments on $468.0 million ($375.0

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million plus €70.0 million) of outstanding borrowings under our term loan facility at a weighted average interest rate of 3.5%, plus the applicable spread. Two of these swaps totaling $31.6 million ($25.0 million plus €5.0 million) became effective on April 1, 2009.

Our credit facilities contain operating and financial covenants that, among other things, could limit our ability to obtain additional sources of capital. Our financial covenants require that we maintain a total leverage ratio, calculated on a trailing four-quarter basis, of not more than 3.50 to 1.00. The total leverage ratio is calculated as the ratio of consolidated indebtedness (which is net of cash) to consolidated operating profit (which excludes, among other things, certain non-cash charges, as discussed more fully in the credit facilities). At March 31, 2009, we were in compliance with all covenants and other requirements in our credit facilities.

Cash Requirements

Our cash balance decreased to $64.8 million at March 31, 2009 from $102.4 million at December 31, 2008. The decrease was primarily the result of repaying $55.2 million of our revolving credit facility and contributing an additional $13.2 million to one of our pension plans.

Our customers generally are contractually obligated to make progress payments under purchase contracts for machine orders and certain large parts orders. As a result, we do not anticipate significant outside financing requirements to fund production of our original equipment and do not believe that original equipment sales will have a material adverse effect on our liquidity, although the issuance of letters of credit reduces the amount available for borrowings under our revolving credit facilities. If additional borrowings are necessary during the remainder of 2009, we believe we have sufficient capacity under our existing revolving credit facilities.

Inventory increased to $673.5 million at March 31, 2009 from $616.7 million at December 31, 2008. The increase was primarily due to the build up of work-in-process on orders and potential orders in our underground mining segment that have been delayed per our customers’ requests. These orders are expected to ship later this year. Consolidated inventory turns remain at 3.1.

Capital expenditures for the first quarter of 2009 were $11.2 million compared to $21.2 million for the first quarter of 2008. Included in capital expenditures for the first quarter of 2009 and 2008 were $4.1 million and $7.5 million, respectively, related to our surface mining expansion program and additional renovations of our South Milwaukee, Wisconsin facilities. We expect our capital expenditures in 2009 to be between $60.0 million and $70.0 million, which includes approximately $2.5 million to complete the expansion of our facility in Wyoming, approximately $8.0 million for the completion of phase three of our South Milwaukee, Wisconsin expansion and approximately $3.5 million for the additional renovations at our South Milwaukee, Wisconsin facility. We are closely monitoring our capital spending in relation to current economic conditions and business levels. We believe cash flows from operating activities and funds available under our revolving credit facilities will be sufficient to fund our expected capital expenditures during 2009.

At March 31, 2009, there were approximately $179.7 million of standby letters of credit outstanding under all of our bank facilities.

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At March 31, 2009, we had contractual obligations of approximately $6.7 million with respect to our surface mining expansion and renovation programs. At March 31, 2009, there have been no other material changes to the contractual obligations as presented in our Form 10-K for the year ended December 31, 2008.

In addition to the obligations noted above, we currently anticipate estimated cash funding requirements for interest, dividends and income taxes of approximately $24 million, $6 million and $105 million, respectively, during the remainder of 2009.

During the remainder of 2009, we anticipate continued positive cash flows from operations and expect our cash balances to increase throughout the remainder of the year. We believe that cash flows from operations and our existing revolving credit facilities will be sufficient to fund our cash requirements for the remainder of 2009. We also believe that cash flows from operations will be sufficient to repay any borrowings under our revolving credit facilities, as necessary, and all scheduled term loan payments.

Receivables

We recognize revenues on most original equipment 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. At March 31, 2009, we had $584.0 million of accounts receivable compared to $636.5 million of accounts receivable at December 31, 2008. Receivables at March 31, 2009 and December 31, 2008 included $253.1 million and $209.7 million, respectively, of revenues from long-term contracts which were not billable at these dates. Billed receivables decreased at March 31, 2009 due to large customer collections during the quarter. Customer requested delays of sold orders, poor conditions in global financial markets or global or regional recessionary economic conditions could cause us difficulty in collecting outstanding accounts receivable.

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 American Institute of Certified Public Accountants Statement of Position No. 81-1 “Accounting for Performance of Construction–Type and Certain Production-Type Contracts”, these payments are recorded as Liabilities to Customers on Uncompleted Contracts and Warranties.

Critical Accounting Policies and Estimates

See Critical Accounting Policies and Estimates in the Management’s Discussion and Analysis section of our 2008 Annual Report to Stockholders. There have been no material changes to these policies.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risk is impacted by changes in interest rates and foreign currency exchange rates.

Interest Rates

Our interest rate exposure relates primarily to floating rate debt obligations in the United States. We manage borrowings under our credit agreement through the selection of LIBOR based borrowings, EURIBOR based borrowings, or prime-rate based borrowings. To manage a portion of our exposure to changes in LIBOR-based interest rates on its variable rate debt, we have entered into interest rate swap agreements that effectively fix the interest payments on $468.0 million ($375.0 million plus €70.0 million) of our outstanding borrowings under our term loan facility. A sensitivity analysis was performed for our floating rate debt obligations as of March 31, 2009. Based on this analysis, we have determined that a 10% change in the weighted average interest rate as of March 31, 2009 would have the effect of changing our interest expense on an annual basis by approximately $0.1 million.

Foreign Currency

We sell most of our surface mining original equipment, including those sold directly to foreign customers, in United States dollars, and we sell most of our underground mining original equipment in either United States dollars or euros. We sell most of our underground mining aftermarket parts in either United States dollars or euros, also with limited aftermarket parts sales denominated in the local currencies of various foreign markets. We sell most of our surface mining aftermarket parts in United States dollars, with limited aftermarket parts sales denominated in the local currencies of Australia, Brazil, Canada, South Africa and the United Kingdom. Both surface mining and underground mining aftermarket services are paid primarily in local currency, with a natural partial currency hedge through payment for local labor in local currency. The value, in United States dollars, of our investments in our foreign subsidiaries and of dividends paid to us by those subsidiaries will be affected by changes in exchange rates. We enter into currency hedges to help mitigate currency exchange risks.

Currency controls, devaluations, trade restrictions and other disruptions in the currency convertibility and in the market for currency exchange could limit our ability to timely convert sales earned abroad into United States dollars, which could adversely affect our ability to service our United States dollar indebtedness, fund our United States dollar costs and finance capital expenditures and pay dividends on our common stock.

Based on our derivative instruments outstanding at March 31, 2009, a 10% change in foreign currency exchange rates would not have a material effect on our financial position, results of operations or cash flows.

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Item 4. Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer and Secretary, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2009. Based upon their evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer and Secretary concluded that the disclosure controls and procedures were effective as of March 31, 2009 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our 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 three quarters ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Not applicable.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

See Exhibit Index on last page of this report.

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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)
	/s/ Mark J. Knapp
	Mark J. Knapp
	Corporate Controller
Date: May 11, 2009	Principal Accounting Officer
	/s/ Craig R. Mackus
	Craig R. Mackus
	Chief Financial Officer and Secretary
Date: May 11, 2009	Principal Financial Officer
	/s/ Timothy W. Sullivan
	Timothy W. Sullivan
Date: May 11, 2009	President and Chief Executive Officer

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EXHIBIT INDEX

Exhibit Number	Description
10.1	Bucyrus International, Inc. Non-Employee Director Compensation effective April 1, 2009.
31.1	Certification of President 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 Financial Officer and Secretary pursuant to Section 302 of the Sarbanes-Oxley Act and Rules 13a-14(a)/15d-14(a).
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.