Bucyrus International (BUCY) 10-Q 7 May 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information
	3 Months Ended Mar. 31, 2010	May. 05, 2010
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-03-31
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Trading Symbol	BUCY
Entity Registrant Name	BUCYRUS INTERNATIONAL INC
Entity Central Index Key	0000740761
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		81,001,759

Consolidated Condensed Statemen

Consolidated Condensed Statements of Earnings (USD $)
In Thousands, except Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Sales	$607,525	$605,744
Costs of products sold	432,243	435,559
Gross profit	175,282	170,185
Selling, general and administrative expenses	87,134	61,053
Research and development expenses	13,243	9,376
Amortization of intangible assets	8,990	5,164
Operating earnings	65,915	94,592
Interest income	(1,349)	(1,586)
Interest expense	11,059	6,864
Other expense	1,835	5,025
Earnings before income taxes	54,370	84,289
Income tax expense	19,356	27,388
Net earnings	$35,014	$56,901
Basic:
Net earnings per share	0.45	0.76
Weighted average shares	77,299,009	74,451,449
Diluted:
Net earnings per share	0.45	0.76
Weighted average shares	78,661,173	74,956,271

1_Consolidated Condensed Statem

Consolidated Condensed Statements of Comprehensive Income (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Net earnings	$35,014	$56,901
Other comprehensive loss:
Currency translation adjustments	(21,706)	(14,765)
Change in pension and postretirement unrecognized costs, net of income tax expense (benefit) of $221 and ($45), respectively	(2,356)	(208)
Derivative fair value changes, net of income tax benefit of $3,828 and $1,432, respectively	(3,341)	(3,659)
Other comprehensive loss	(27,403)	(18,632)
Comprehensive income	$7,611	$38,269

2_Consolidated Condensed Statem

Consolidated Condensed Statements of Comprehensive Income (Parenthetical) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Change in pension and postretirement unrecognized costs, income tax expense (benefit)	$221	($45)
Derivative fair value changes, income tax benefit	$3,828	$1,432

Consolidated Condensed Balance

Consolidated Condensed Balance Sheets (USD $)
In Thousands	Mar. 31, 2010	Dec. 31, 2009
CURRENT ASSETS:
Cash and cash equivalents	$241,933	$101,084
Receivables - net	717,740	741,815
Inventories	1,142,333	627,289
Deferred income taxes	32,843	45,024
Prepaid expenses and other	58,117	40,861
Total Current Assets	2,192,966	1,556,073
OTHER ASSETS:
Goodwill	760,048	351,333
Intangible assets - net	702,051	220,780
Other assets	109,667	61,505
Total Other Assets	1,571,766	633,618
PROPERTY, PLANT AND EQUIPMENT:
Cost	747,345	672,260
Less accumulated depreciation	(162,802)	(157,839)
Total Property, Plant and Equipment	584,543	514,421
TOTAL ASSETS	4,349,275	2,704,112
CURRENT LIABILITIES:
Accounts payable	265,701	155,857
Accrued expenses	221,963	172,865
Liabilities to customers on uncompleted contracts and warranties	249,779	183,097
Income taxes	55,845	45,811
Current maturities of long-term debt and short-term obligations	17,483	7,566
Total Current Liabilities	810,771	565,196
LONG-TERM LIABILITIES:
Deferred income taxes	100,139	82,260
Pension and other	226,382	198,000
Total Long-Term Liabilities	326,521	280,260
LONG-TERM DEBT, less current maturities	1,484,995	499,666
COMMON STOCKHOLDERS' INVESTMENT:
Common stock - par value $0.01 per share, authorized 200,000,000 shares, issued 81,225,897 shares and 75,234,366 shares, respectively	811	753
Additional paid-in capital	1,050,114	687,756
Treasury stock - 217,200 shares	(851)	(851)
Accumulated earnings	706,520	673,535
Accumulated other comprehensive loss	(29,606)	(2,203)
Total Common Stockholders' Investment	1,726,988	1,358,990
TOTAL LIABILITIES AND COMMON STOCKHOLDERS' INVESTMENT	$4,349,275	$2,704,112

3_Consolidated Condensed Balanc

Consolidated Condensed Balance Sheets (Parenthetical) (USD $)
	Mar. 31, 2010	Dec. 31, 2009
Common stock, par value	0.01	0.01
Common stock, authorized	200,000,000	200,000,000
Common stock, issued	81,225,897	75,234,366
Treasury stock, shares	217,200	217,200

4_Consolidated Condensed Statem

Consolidated Condensed Statements of Cash Flows (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Net Cash Provided By Operating Activities	$190,488	$43,771
Cash Flows Used In Investing Activities
Purchases of property, plant and equipment	(9,064)	(15,011)
Proceeds from disposal of property, plant and equipment	2,631	168
Purchases of investments	(743)	(7,642)
Proceeds from sale of investments	2,536	2,465
Acquisition of Terex Mining, net of cash acquired	(1,004,143)
Other	(1,593)	6
Net cash used in investing activities	(1,010,376)	(20,014)
Cash Flows Provided By (Used In) Financing Activities
Borrowings from revolving credit facilities	205,900
Repayments of revolving credit facilities	(205,900)
Net repayments of revolving credit facilities		(55,157)
Proceeds from term loan facility	1,000,000
Repayments of term loan facility	(1,269)	(2,159)
Proceeds from other long-term debt and other bank borrowings	1,465	1,524
Payments of other long-term debt and other bank borrowings	(1,627)	(82)
Dividends paid	(2,026)	(1,861)
Payment of financing costs	(35,226)
Other	(35)	(519)
Net cash provided by (used in) financing activities	961,282	(58,254)
Effect of exchange rate changes on cash	(545)	(3,113)
Net increase (decrease) in cash and cash equivalents	140,849	(37,610)
Cash and cash equivalents at beginning of period	101,084	102,396
Cash and cash equivalents at end of period	241,933	64,786
Cash paid during the period for:
Interest	9,219	9,469
Income taxes - net of refunds	12,565	7,839
Supplemental Disclosure of Non-Cash Investing Activities
Capital expenditures included in accounts payable	390	3,605
Supplemental Schedule of Non-Cash Investing and Financing Activities
Fair value of assets acquired	1,694,589
Cash consideration	(1,048,525)
Consideration in the Company's common shares, based on the February 19, 2010 per share closing price of $62.64	(363,922)
Liabilities assumed	$282,142

5_Consolidated Condensed Statem

Consolidated Condensed Statements of Cash Flows (Parenthetical) (USD $)
	Mar. 31, 2010
Consideration in the Company's common shares, per share closing price	62.64

Nature of Operations

Nature of Operations
	3 Months Ended Mar. 31, 2010
Nature of Operations	1. Nature of Operations Bucyrus International, Inc. (the Company) is a leading designer, manufacturer and marketer of safe and high productivity mining equipment. 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 Companys surface mining customers are large multinational corporations with operations in the various major surface mining markets throughout the world. Most of the Companys underground mining customers are multinational coal mining corporations, but tend to be smaller in size than the Companys 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 Companys 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, the Czech Republic, Germany, Mexico, the United Kingdom and the United States and service and sales centers in Australia, Brazil, Canada, Chile, China, England, India, Indonesia, Mexico, Peru, Russia, South Africa and the United States.

Basis of Presentation

Basis of Presentation
	3 Months Ended Mar. 31, 2010
Basis of Presentation	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 Companys 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March1, 2010.

Acquisitions

Acquisitions
	3 Months Ended Mar. 31, 2010
Acquisitions	3. Acquisitions On February19, 2010, the Company completed its acquisition of Terex Corporations mining equipment business (Terex Mining) for $1.0 billion in cash and 5,809,731 shares of the Companys common stock, subject to certain post-closing net assets, net debt and other adjustments. The financial results for the quarter ended March31, 2010 include the net assets and results of operations of Terex Mining since the February19, 2010 date of acquisition as well as the preliminary acquisition accounting adjustments and acquisition costs related to the Terex Mining acquisition. As a result, the Companys financial results for the first quarter of 2010 are not necessarily comparative to the results for the first quarter of 2009 or as of December31, 2009 and may not be indicative of future results. Terex Mining has been integrated into the surface mining segment. Terex Mining is a worldwide manufacturer of hydraulic excavators, off-highway haul trucks and drills, which are complementary to the Companys existing product lines. As a result of this acquisition, the Company has significantly expanded its product portfolio, which will allow it to compete in a larger portion of the mining machinery market. These factors contributed to a purchase price resulting in the recognition of goodwill. Total goodwill acquired was $421.4 million, of which $230.6 million is deductible for income tax purposes. The acquisition of Terex Mining was accounted for under the acquisition method of accounting for business combinations in accordance with generally accepted accounting principles in the United States. Under this method, the total consideration transferred to consummate the acquisition was allocated to the tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the closing date of the acquisition. The principles of acquisition method of accounting require extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. Accordingly, the allocation of the consideration transferred in the table below is preliminary and will be adjusted upon completion of the final valuation of the assets acquired and liabilities assumed. Such adjustments could be significant. The final valuation is expected to be completed as soon as practicable but no later than 12 months after the closing date of the acquisition. The Companys management is in the process of determining the net asset value (as defined in the asset and share purchase agreement) of Terex Mining as of the closing date of the acquisition in connection with a potential adjustment to the purchase price. During the course of this process, the Company has identified certain material potential adjustments to specific items on the balance sheet of Terex Mining as of the closing date of the acquisition, which may result in a significant downward adjustment to the preliminary consideration transferred. The Company is also in the process of reviewing Terex Minings financial statement classifications for conformity with

Derivative Financial Instrument

Derivative Financial Instruments
	3 Months Ended Mar. 31, 2010
Derivative Financial Instruments	4. Derivative Financial Instruments 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. The Company does not use derivative financial instruments for trading or other speculative purposes. The contractual amounts of the Companys outstanding foreign currency forward contracts, by currency, were as follows: March 31, 2010 December 31, 2009 Buy Sell Buy Sell (Dollars in thousands) United States dollar $ 17,145 $ 62,586 $ 11,000 $ 55,763 Australian dollar 11,668 117,598 29,485 18,548 Brazilian real 3,693 3,912 British pounds sterling 1,143 1,280 14,025 2,106 Canadian dollar 4,880 51,602 8,492 Chilean peso 1,346 37,798 1,250 Czech koruna 115 264 Euro 148,719 17,391 213,299 5,639 Peruvian sol 2,160 1,525 Polish zloty 174 1,894 Russian ruble 106 4,497 675 3,595 South African rand 85 628 1,584 $ 184,035 $ 262,781 $ 306,546 $ 104,308 Based upon March31, 2010 exchange rates, all of the Companys 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 and cash collections of accounts receivable 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 or the accounts receivable is recorded. Ineffectiveness related to these hedge instruments that was recognized in the Consolidated Condensed Statements of Earnings consisted of losses of $0.5 million and $3.6 million for the quarters ended March31, 2010 and 2009, respectively. The maturity of these instruments generally does not exceed 21 months. The Consolidated Condensed Statements of Earnings also includes zero and $4.0 million of losses for the quarters ended March31, 2010 and 2009, respectively, 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 the two months thereafter. The accumulated other comprehensive loss, net of tax, related to foreign currency forward contracts was $1.7 million and $1.6 mi

Comprehensive Income

Comprehensive Income (Loss)
	3 Months Ended Mar. 31, 2010
Comprehensive Income (Loss)	5. Comprehensive Income (Loss) The Company reports comprehensive income (loss) in addition to net earnings (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 earnings (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: March31, 2010 December31, 2009 (Dollars in thousands) Currency translation adjustments $ 9,483 $ 31,189 Pension and postretirement benefit unrecognized costs (29,108 ) (26,752 ) Derivative fair value adjustments (9,981 ) (6,640 ) Accumulated other comprehensive loss ($29,606 ) ($2,203 )

Inventories

Inventories
	3 Months Ended Mar. 31, 2010
Inventories	6. Inventories Inventories consisted of the following: March31, 2010 December 31, 2009 (Dollars in thousands) Raw materials and parts $ 128,099 $ 75,111 Work in process 350,181 202,221 Finished products (primarily replacement parts) 664,053 349,957 $ 1,142,333 $ 627,289

Goodwill and Intangible Assets

Goodwill and Intangible Assets
	3 Months Ended Mar. 31, 2010
Goodwill and Intangible Assets	7. Goodwill and Intangible Assets Intangible assets consisted of the following: March31, 2010 December31, 2009 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization (Dollars in thousands) Amortized intangible assets: Technology $ 421,777 ($29,839 ) $ 121,085 ($26,846 ) Customer relationships 261,478 (17,638 ) 118,791 (15,584 ) Trademarks and brand names 46,860 (12,752 ) 12,000 (12,000 ) Engineering drawings 25,500 (15,962 ) 25,500 (15,644 ) Backlog 10,800 (8,984 ) 8,000 (8,000 ) Other 8,887 (4,912 ) 5,855 (4,813 ) $ 775,302 ($90,087 ) $ 291,231 ($82,887 ) Unamortized intangible assets Trademarks/Trade names $ 16,836 $ 12,436 Changes in the carrying amount of goodwill were as follows: Surface Mining Underground Mining (Dollars in thousands) Balance at January1, 2010 $ 47,306 $ 304,027 Goodwill acquired during the year 421,371 Currency translation (12,656 ) Balance at March31, 2010 $ 468,677 $ 291,371 The estimated future amortization expense of intangible assets as of March31, 2010 was as follows (dollars in thousands): 2010 (remaining nine months) $ 37,889 2011 45,948 2012 45,948 2013 45,939 2014 45,612 2015 45,427 Future 418,452 $ 685,215

Long-Term Debt and Financing Ar

Long-Term Debt and Financing Arrangements
	3 Months Ended Mar. 31, 2010
Long-Term Debt and Financing Arrangements	8. Long-Term Debt and Financing Arrangements Long-term debt consisted of the following: March31, 2010 December31, 2009 (Dollars in thousands) Term loan facility $ 1,477,171 $ 496,599 Other 25,307 10,633 1,502,478 507,232 Less current maturities of long-term debt and short-term obligations (17,483 ) (7,566 ) $ 1,484,995 $ 499,666 During the first quarter of 2010, the Company amended its credit facilities to finance the acquisition of Terex Mining. The amended credit facilities include a secured revolving credit facility of $525.0 million ($35.0 million has a maturity date of May4, 2012 and $490.0 million has a maturity date of May4, 2014) and an unsecured German revolving credit facility of 65.0million which matures on May4, 2014. The amended credit facilities also include secured term loan facilities consisting of (i)$1,280.0 million ($390.0 million matures on May4, 2014 and $890.0 million matures on February19, 2016); (ii)A$124.0 million ($113.5 million at March31, 2010) with a maturity date of February19, 2016; and (iii)73.1million ($98.6 million at March31, 2010) with a maturity date of May4, 2014. The entire new secured revolving credit facility is eligible to be used for letters of credit. Borrowings under the secured revolving credit facility that mature on May 4, 2012 and May 4, 2014 bear interest, payable no less frequently than quarterly, at (i) LIBOR or EURIBOR, plus the applicable spread; or (ii) a base rate determined by reference to the United States prime lending rate, the federal funds rate, or one month LIBOR plus 1.00%, plus the applicable spread. The unsecured German revolving credit facility bears interest, payable no less frequently than quarterly, at EURIBOR, plus the applicable spread. Under each revolving credit facility, the Company pays 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 for revolving credit facilities that mature on May4, 2012, and 0.50% for revolving credit facilities that mature on May4, 2014, and when applicable, customary letter of credit fees. Borrowings under the term loan facility that mature on May4, 2014 bear interest, payable no less frequently than quarterly, at (i)LIBOR, plus the applicable spread, for United States dollar denominated loans; and (ii)EURIBOR, plus the applicable spread, for euro denominated loans. Borrowings under the term loan facility that mature on February19, 2016 bear interest, payable no less frequently than quarterly, at (i)LIBOR (subject to a 1.50% floor), plus the applicable spread (based on the Companys total leverage ratio), for United States dollar denominated base rate loans; and (ii)an offered rate of interest based on deposits of Australian dollars, plus (a)the difference between three-month LIBOR and 1.50% (if greater), and (b)between 2.75% and 3.00% (based on the Companys total leverage ratio), for Australian dollar denominated base rate loans. The credit facilities contain operating a

Common Stockholders' Investment

Common Stockholders' Investment
	3 Months Ended Mar. 31, 2010
Common Stockholders' Investment	9. Common Stockholders Investment On February19, 2010, the Company issued 5,809,731 shares of its common stock as partial consideration for the acquisition of Terex Mining. At March31, 2010, the Companys issued and outstanding shares consisted only of common stock. Holders of common stock are entitled to one vote per share on all matters to be voted on by the Companys common stockholders.

Stock-Based Compensation

Stock-Based Compensation
	3 Months Ended Mar. 31, 2010
Stock-Based Compensation	10. Stock-Based Compensation The Company recognizes compensation expense for nonvested shares and stock appreciation rights (SARs) over the requisite service period for vesting of the award. Total stock-based compensation expense included in the Companys Consolidated Condensed Statements of Earnings was $1.9 million and $2.4 million for the quarters ended March31, 2010 and 2009, respectively. The Company has granted nonvested shares to certain employees pursuant to the Bucyrus International, Inc. Omnibus Incentive Plan 2007 (the Omnibus Plan). These shares fully cliff vest in their entirety at the end of the fourth calendar year from the grant date (inclusive of the year of grant) provided the employee remains employed by the Company until such date or has a qualifying retirement prior to such date. Compensation expense related to nonvested shares was $0.6 million and $0.9 million for the quarters ended March31, 2010 and 2009, respectively. Nonvested share activity during the quarter ended March31, 2010 was as follows: Numberof Shares Weighted-Average Grant Date Fair Value Outstanding at January 1, 2010 370,200 $ 20.97 Granted 70,600 $ 59.48 Forfeited (3,200 ) $ 25.16 Vested Outstanding at March 31, 2010 437,600 $ 27.15 At March31, 2010, 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 3 years. The grant date fair value was based on the fair market value of the Companys common stock on the date of grant. At March31, 2010, the Company expected approximately 398,000 shares to vest and these shares had an aggregate intrinsic value of $26.3 million and a weighted-average remaining contractual term of 2.5 years. The Company has granted SARs to certain employees pursuant to the Omnibus Plan. The SARs vest incrementally and can be settled in shares only. Compensation expense related to SARs was $1.3 million and $1.4 million for the quarters ended March31, 2010 and 2009, respectively. SAR activity during the quarter ended March31, 2010 was as follows: Number of Shares Weighted-Average Grant Date Fair Value Outstanding at January1, 2010 2,249,866 $ 10.87 Granted 265,200 $ 35.16 Forfeited (11,344 ) $ 13.28 Exercised (216,352 ) $ 9.74 Outstanding at March31, 2010 2,287,370 $ 13.69 Vested and exercisable at March31, 2010 741,332 $ 11.66 The 741,332 vested and exercisable shares at March31, 2010 had a weighted-average exercise price of $22.72 per share, an aggregate intrinsic value of $32.1 million and a weighted-average remaining contractual term of 6.6 years. At March31, 2010, approximately 2,090,000 of the outstanding SARs were vested or were expected to vest and these SARs had a weighted average exercise price of $19.21 per share, an intrinsic value of $83.9 million and a weighted-average remaining contractual life of 8 years. At March31, 2010, ther

Pension Benefits

Pension Benefits
	3 Months Ended Mar. 31, 2010
Pension Benefits	11. Pension Benefits Net pension periodic benefit cost consisted of the following: QuarterEndedMarch31, 2010 2009 (Dollars in thousands) Service cost $ 1,388 $ 1,299 Interest cost 2,931 3,081 Expected return on assets (1,378 ) (1,675 ) Amortization of: Prior service cost 114 125 Actuarial loss 683 529 Net pension periodic benefit cost $ 3,738 $ 3,359

Net Earnings Per Share

Net Earnings Per Share
	3 Months Ended Mar. 31, 2010
Net Earnings Per Share	12. 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 March31, 2010 and 2009 was as follows: Quarter Ended March31, 2010 2009 (Dollar in thousands, except per share amounts) Net earnings $ 35,014 $ 56,901 Weighted average shares outstanding 77,299,009 74,451,449 Basic net earnings per share $ 0.45 $ 0.76 Weighted average shares outstanding 77,299,009 74,451,449 Effect of dilutive stock options, nonvested shares, stock appreciation rights and performance shares 1,362,164 504,822 Weighted average shares outstanding diluted (1) 78,661,173 74,956,271 Diluted net earnings per share $ 0.45 $ 0.76 (1) Grants of nonvested shares and stock appreciation rights representing approximately an additional 5,000 and 1,260,000 shares were outstanding for the quarters ended March31, 2010 and 2009, respectively, but were not included in the computation of diluted net earnings per share because their effect would have been antidilutive.

Segment Information

Segment Information
	3 Months Ended Mar. 31, 2010
Segment Information	13. 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. Terex Mining has been integrated into the surface mining segment. The accounting policies of the Companys segments are the same as those described in NoteA to the Companys 2009 consolidated financial statements. 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 Companys segments. There are no significant intersegment sales. Identifiable assets are those used in the operations of each segment. Segment information for the quarters ended March31, 2010 and 2009 was as follows: Quarter Ended March31, 2010 Sales Operating Earnings Depreciation and Amortization Capital Expenditures Total Assets (Dollars in thousands) Surface mining (1) $ 397,571 $ 66,588 $ 13,393 $ 4,175 $ 2,878,288 Underground mining 209,954 21,268 8,558 2,549 1,470,987 Total operations 607,525 87,856 21,951 6,724 4,349,275 Corporate (21,941 ) Consolidated total $ 607,525 65,915 21,951 $ 6,724 $ 4,349,275 Interest income (1,349 ) Interest expense 11,059 Other expense 1,835 1,836 Earnings before income taxes $ 54,370 $ 23,787 (1) Operating earnings included inventory fair value adjustments charged to cost of products sold of $7.0 million. This amount is not included in the depreciation and amortization column. Quarter Ended March31, 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

Contingencies

Contingencies
	3 Months Ended Mar. 31, 2010
Contingencies	14. Contingencies Environmental, product warranty and liability and legal matters as of March31, 2010 were as follows: Environmental The Companys 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 Companys 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 Companys manufacturing operations to date. The Company believes that its compliance with statutory requirements respecting environmental quality 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. The Company has an ongoing program to proactively address potential environmental problems. 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. 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 March31, 2010 and 2009 were as follows: 2010 2009 (Dollarsinthousands) Balance at January1 $ 49,442 $ 53,586 Acquired balance (1) 39,099 Provisions 7,667 6,420 Settlements (6,801 ) (4,644 ) Changes in liability for pre-existing warranties, net (2,743 ) (1,897 ) Foreign currency translation (1,831 ) (1,757 ) Balance at March31 $ 84,833 $ 51,708 (1) The acquired balance is subject to adjustment pending the completion of the final valuation of the Terex Mining assets acquired and liabilities assumed. 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 Companys products are operated by its employees and its customers employees and independent contractors at various work sites

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Mar. 31, 2010
Fair Value Measurements	15. Fair Value Measurements Accounting guidance regarding fair value measurements 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. This guidance classifies the inputs used to measure the fair value into the following hierarchy: Level1 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 Companys financial assets and liabilities that were accounted for at fair value were as follows: March31,2010 December31,2009 (Dollars in thousands) Assets: Foreign currency exchange contracts (1) $ 1,574 $ 3,635 Interest rate swaps (2) 301 Total assets at fair value $ 1,574 $ 3,936 Liabilities: Foreign currency exchange contracts (1) $ 20,487 $ 6,434 Interest rate swaps (2) 12,989 7,447 Total liabilities at fair value $ 33,476 $ 13,881 (1) Based on observable market transactions of forward currency prices. (2) Based on observable market transactions of forward LIBOR or EURIBOR rates.