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 September 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-871
BUCYRUS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 39-0188050
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN
53172
(Address of Principal Executive Offices)
(Zip Code)
(414) 768-4000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (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 November 7, 2003
Common Stock, $.01 par value 1,507,300
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. FINANCIAL INFORMATION:
Item 1 - Financial Statements (Unaudited)
Consolidated Condensed Statements of Operations -
Quarters and nine months ended September 30, 2003
and 2002 3
Consolidated Condensed Statements of Comprehensive
Income (Loss) - Quarters and nine months ended
September 30, 2003 and 2002 4
Consolidated Condensed Balance Sheets -
September 30, 2003 and December 31, 2002 5-6
Consolidated Condensed Statements of Cash Flows -
Nine months ended September 30, 2003 and 2002 7
Notes to Consolidated Condensed Financial
Statements 8-23
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 24-29
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk 30
Item 4 - Disclosure Controls and Procedures 31
Forward-Looking Statements 32
Part II. OTHER INFORMATION:
Item 1 - Legal Proceedings 33
Item 2 - Changes in Securities and Use of Proceeds 33
Item 3 - Defaults Upon Senior Securities 33
Item 4 - Submission of Matters to a Vote of
Security Holders 33
Item 5 - Other Information 33
Item 6 - Exhibits and Reports on Form 8-K 33
Signature Page 34
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars In Thousands, Except Per Share Amounts)
Quarters Ended September 30, Nine Months Ended September 30,
2003 2002 2003 2002
Revenues:
Net sales $ 84,754 $ 75,897 $ 232,589 $ 215,954
Other income 117 77 265 218
__________ __________ __________ __________
84,871 75,974 232,854 216,172
__________ __________ __________ __________
Costs and Expenses:
Cost of products sold 66,647 61,198 183,519 175,054
Engineering and field
service, selling,
administrative and
miscellaneous expenses 13,335 10,417 35,535 30,682
Interest expense 4,339 4,753 13,334 14,028
__________ __________ __________ __________
84,321 76,368 232,388 219,764
__________ __________ __________ __________
Earnings (loss) before
income taxes 550 (394) 466 (3,592)
Income taxes 2,057 1,632 3,791 3,277
__________ __________ __________ __________
Net loss $ (1,507) $ (2,026) $ (3,325) $ (6,869)
Net loss per share
of common stock:
Basic $ (1.02) $ (1.41) $ (2.29) $ (4.78)
Diluted $ (1.02) $ (1.41) $ (2.29) $ (4.78)
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Dollars in Thousands)
Quarters Ended September 30, Nine Months Ended September 30,
2003 2002 2003 2002
Net loss $ (1,507) $ (2,026) $ (3,325) $ (6,869)
Other comprehensive income (loss) -
foreign currency translation
adjustments 2,303 (1,721) 7,835 (3,095)
__________ __________ __________ __________
Comprehensive income (loss) $ 796 $ (3,747) $ 4,510 $ (9,964)
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(Dollars In Thousands, Except Per Share Amounts)
September 30, December 31, September 30, December 31,
2003 2002 2003 2002
ASSETS LIABILITIES AND COMMON
CURRENT ASSETS: SHAREHOLDERS' INVESTMENT
Cash and cash (DEFICIENCY IN ASSETS)
equivalents $ 6,686 $ 4,189 CURRENT LIABILITIES:
Receivables 55,392 52,770 Accounts payable and
Inventories 121,712 114,312 accrued expenses $ 50,367 $ 59,216
Prepaid expenses and Liabilities to customers
other current assets 6,914 6,186 on uncompleted contracts
________ ________ and warranties 17,441 7,850
Income taxes 4,436 3,443
Total Current Assets 190,704 177,457 Short-term obligations - 495
Current maturities of
OTHER ASSETS: long-term debt 309 431
Restricted funds ________ ________
on deposit 1,685 1,485 Total Current
Goodwill 55,860 55,860 Liabilities 72,553 71,435
Intangible assets - net 36,427 37,662
Other assets 9,667 11,935 LONG-TERM LIABILITIES:
________ ________ Liabilities to customers on
uncompleted contracts
103,639 106,942 and warranties 2,000 2,000
Post retirement benefits 12,932 12,751
PROPERTY, PLANT AND EQUIPMENT: Deferred expenses, pension
Cost 109,926 106,565 and other 41,467 42,583
Less accumulated Interest payable to Holdings 23,968 18,436
depreciation (52,907) (44,086) ________ ________
________ ________
80,367 75,770
57,019 62,479
LONG-TERM DEBT, less
current maturities 201,361 207,804
COMMON SHAREHOLDERS' INVESTMENT
(DEFICIENCY IN ASSETS):
Common stock - par value
$.01 per share, authorized
1,700,000 shares, issued
1,516,350 and 1,444,650
shares, respectively 15 14
Additional paid-in capital 148,416 147,715
Treasury stock - 9,050
shares, at cost (851) (851)
Accumulated deficit (104,527) (101,202)
Accumulated other
comprehensive loss (45,972) (53,807)
________ ________
(2,919) (8,131)
________ ________ ________ ________
$351,362 $346,878 $351,362 $346,878
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars In Thousands)
Nine Months Ended September 30,
2003 2002
Net Cash Provided By Operating
Activities $ 11,909 $ 2,679
__________ __________
Cash Flows From Investing Activities
Increase in restricted funds on deposit (200) (924)
Proceeds from sale of The Principal
Financial Group shares - 2,974
Purchases of property, plant
and equipment (1,987) (4,067)
Proceeds from sale of property, plant
and equipment 257 168
Net proceeds from sale and
leaseback transaction - 6,657
__________ __________
Net cash provided by (used in)
investing activities (1,930) 4,808
__________ __________
Cash Flows From Financing Activities
Net repayments of revolving credit
facilities (6,647) (5,160)
Net decrease in long-term debt and
other bank borrowings (413) (375)
Payment of refinancing expenses (1,306) (1,939)
Proceeds from issuance of common stock 72 -
__________ __________
Net cash used in financing activities (8,294) (7,474)
__________ __________
Effect of exchange rate changes
on cash 812 133
__________ __________
Net increase in cash
and cash equivalents 2,497 146
Cash and cash equivalents at
beginning of period 4,189 7,218
__________ __________
Cash and cash equivalents at
end of period $ 6,686 $ 7,364
Supplemental Disclosures of Cash Flow Information
2003 2002
Cash paid during the period for:
Interest $ 9,591 $ 10,131
Income taxes - net of refunds 4,160 1,684
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
1. In the opinion of Bucyrus International, Inc. (the "Company"), the
consolidated condensed financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial results for the interim periods. Certain items are included in
these statements based on estimates for the entire year. The Company's
operations are classified as one operating segment. The Company is
currently substantially wholly-owned by Bucyrus Holdings, LLC
("Holdings").
2. Certain notes and other information have been condensed or omitted from
these interim consolidated condensed financial statements. Therefore,
these statements should be read in conjunction with the Company's 2002
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 31, 2003.
3. Inventories consist of the following:
September 30, December 31,
2003 2002
(Dollars in Thousands)
Raw materials and parts $ 14,768 $ 15,509
Work in process 18,090 17,817
Finished products (primarily
replacement parts) 88,854 80,986
________ ________
$121,712 $114,312
4. Basic and diluted net loss per share of common stock were computed by
dividing net loss by the weighted average number of shares of common
stock outstanding. The shares outstanding used to compute the diluted
loss per share exclude outstanding options to purchase 127,800 and
199,500 shares of the Company's common stock as of September 30, 2003 and
2002, respectively. The options were excluded because their inclusion
would have been antidilutive. The numerators and the denominators of the
basic and diluted net loss per share of common stock calculations are as
follows:
Quarters Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(Dollars in Thousands, Except
Per Share Amounts)
Basic and Diluted
Net loss $ (1,507) $ (2,026) $ (3,325) $ (6,869)
Weighted average
shares outstanding 1,473,787 1,435,600 1,449,126 1,435,600
Net loss per share $ (1.02) $ (1.41) $ (2.29) $ (4.78)
5. The Company accounts for stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees," as allowed by Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). The
following table illustrates the effect on net loss and net loss per share
as if the fair value-based method provided by SFAS 123 had been applied
for all outstanding and unvested awards in each period:
Quarters Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(Dollars In Thousands, Except Per Share Amounts)
Reported net loss $ (1,507) $ (2,026) $ (3,325) $ (6,869)
Add: Stock-based employee
compensation expense
recorded for stock
options, net of
related tax effects (8) - 630 -
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related tax effects (5) (74) (81) (219)
________ ________ ________ ________
Pro forma net
earnings (loss) $ (1,520) $ (2,100) $ (2,776) $ (7,088)
Net earnings (loss) per
share of common stock
(basic and diluted):
As reported $ (1.02) $ (1.41) $ (2.29) $ (4.78)
Pro forma (1.03) (1.46) (1.92) (4.94)
6. Intangible assets consist of the following:
September 30, 2003 December 31, 2002
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Amount Amortization
(Dollars in Thousands)
Amortized intangible
assets:
Engineering drawings $ 25,500 $ (7,675) $ 25,500 $ (6,719)
Bill of material
listings 2,856 (860) 2,856 (752)
Software 2,288 (1,377) 2,288 (1,206)
________ ________ ________ ________
$ 30,644 $ (9,912) $ 30,644 $ (8,677)
Unamortized intangible
assets:
Trademarks/Trade Names $ 12,436 $ 12,436
Intangible pension
asset 3,259 3,259
________ ________
$ 15,695 $ 15,695
The aggregate intangible amortization expense for the quarters ended
September 30, 2003 and 2002 was $412,000. The aggregate intangible
amortization expense for the nine months ended September 30, 2003 and
2002 was $1,235,000. The estimated future amortization expense of
intangible assets as of September 30, 2003 is as follows:
(Dollars in Thousands)
2003 (remaining three months) $ 412
2004 1,647
2005 1,647
2006 1,647
2007 1,585
2008 1,417
Future 12,377
________
$ 20,732
7. Expenditures for ongoing compliance with environmental regulations that
relate to current operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past
operations and which do not contribute to current or future revenue
generation are expensed. Liabilities are recorded when environmental
assessments indicate that remedial efforts are probable and the costs can
be reasonably estimated. Estimates of the liability are based upon
currently available facts, existing technology and presently enacted laws
and regulations. These liabilities are included in the Consolidated
Condensed Balance Sheets at their undiscounted amounts. Recoveries are
evaluated separately from the liability and, if appropriate, are recorded
separately from the associated liability in the Consolidated Condensed
Balance Sheets.
The Company records provisions for estimated warranty and other related
costs at the time of sale based on historical warranty loss experience
and periodically adjusts these provisions to reflect actual experience.
The following is a reconciliation of the changes in accrued warranty
costs for the nine months ended September 30, 2003:
(Dollars in Thousands)
Balance at December 31, 2002 $ 3,597
Expense provision 2,799
Charges to reserve (1,153)
________
Balance at September 30, 2003 $ 5,243
The Company is normally subject to numerous product liability claims,
many of which relate to products no longer manufactured by the Company or
its subsidiaries, and other claims arising in the ordinary course of
business. The Company has insurance covering most of said claims,
subject to varying deductibles up to $3,000,000, and has various limits
of liability depending on the insurance policy year in question. It is
the view of management that the final resolution of said claims and other
similar claims which are likely to arise in the future will not
individually or in the aggregate have a material effect on the Company's
financial position, results of operations or cash flows, although no
assurance to that effect can be given.
The Company has been named as a co-defendant in 285 personal injury
liability asbestos cases, involving approximately 1,400 plaintiffs, which
are pending in various state courts. In all of these cases, insurance
carriers have accepted or are expected to accept the defense of such
cases. These cases are in preliminary stages and the Company does not
believe that costs associated with these matters will have a material
effect on the Company's financial position, results of operations or cash
flows, although no assurance to that effect can be given.
8. Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," requires the reporting of comprehensive income
(loss) in addition to net income (loss) from operations. Comprehensive
income (loss) is a more inclusive financial reporting method that
includes disclosure of financial information that historically has not
been recognized in the calculation of net income (loss). The Company
reports comprehensive income (loss) and accumulated other comprehensive
loss which includes net loss, foreign currency translation adjustments
and minimum pension liability adjustments. Information on accumulated
other comprehensive loss is as follows:
Minimum Accumulated
Cumulative Pension Other
Translation Liability Comprehensive
Adjustments Adjustments Loss
(Dollars in Thousands)
Balance at December 31, 2002 $(24,614) $(29,193) $(53,807)
Changes - Nine Months ended
September 30, 2003 7,835 - 7,835
________ ________ ________
Balance at September 30, 2003 $(16,779) $(29,193) $(45,972)
9. The Company's payment obligations under its 9-3/4% Senior Notes due 2007
(the "Senior Notes") are guaranteed by certain of the Company's wholly-
owned subsidiaries (the "Guarantor Subsidiaries"). Such guarantees are
full, unconditional and joint and several. Separate financial statements
of the Guarantor Subsidiaries are not presented because the Company's
management has determined that they would not be material to investors.
The following supplemental financial information sets forth, on an
unconsolidated condensed basis, statement of operations, balance sheet
and statement of cash flow information for the Company (the "Parent
Company"), for the Guarantor Subsidiaries and for the Company's non-
guarantor subsidiaries (the "Other Subsidiaries"). The supplemental
financial information reflects the investments of the Company in the
Guarantor Subsidiaries and Other Subsidiaries using the equity method of
accounting. The Company has determined that it is not practicable to
allocate goodwill, intangible assets and deferred income taxes to the
Guarantor Subsidiaries and Other Subsidiaries. Parent Company amounts
for net earnings (loss) and common shareholders' investment differ from
consolidated amounts as intercompany profit in subsidiary inventory has
not been eliminated in the Parent Company statement but has been
eliminated in the Consolidated Totals.
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Quarter Ended September 30, 2003
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Revenues:
Net sales $ 44,479 $ 11,019 $ 49,851 $(20,595) $ 84,754
Other income 477 1 442 (803) 117
________ ________ ________ ________ ________
44,956 11,020 50,293 (21,398) 84,871
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 32,527 10,308 43,382 (19,570) 66,647
Engineering and field
service, selling,
administrative
and miscellaneous
expenses 8,482 569 4,365 (81) 13,335
Interest expense 4,601 354 187 (803) 4,339
________ ________ ________ ________ ________
45,610 11,231 47,934 (20,454) 84,321
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (654) (211) 2,359 (944) 550
Income taxes 142 6 1,909 - 2,057
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (796) (217) 450 (944) (1,507)
Equity in net earnings of
consolidated subsidiaries 233 - - (233) -
________ ________ ________ ________ ________
Net earnings (loss) $ (563) $ (217) $ 450 $ (1,177) $ (1,507)
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Quarter Ended September 30, 2002
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Revenues:
Net sales $ 36,201 $ 12,743 $ 42,412 $(15,459) $ 75,897
Other income 490 1 249 (663) 77
________ ________ ________ ________ ________
36,691 12,744 42,661 (16,122) 75,974
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 29,426 12,629 33,670 (14,527) 61,198
Engineering and field
service, selling,
administrative
and miscellaneous
expenses 5,877 487 4,053 - 10,417
Interest expense 4,880 368 168 (663) 4,753
________ ________ ________ ________ ________
40,183 13,484 37,891 (15,190) 76,368
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (3,492) (740) 4,770 (932) (394)
Income taxes (benefit) (345) 19 1,958 - 1,632
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (3,147) (759) 2,812 (932) (2,026)
Equity in net earnings of
consolidated subsidiaries 2,053 - - (2,053) -
________ ________ ________ ________ ________
Net earnings (loss) $ (1,094) $ (759) $ 2,812 $ (2,985) $ (2,026)
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Nine Months Ended September 30, 2003
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Revenues:
Net sales $131,559 $ 28,299 $125,428 $(52,697) $232,589
Other income 2,456 2 1,227 (3,420) 265
________ ________ ________ ________ ________
134,015 28,301 126,655 (56,117) 232,854
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 101,473 27,540 105,141 (50,635) 183,519
Engineering and field
service, selling,
administrative
and miscellaneous
expenses 20,864 1,558 13,325 (212) 35,535
Interest expense 14,073 1,032 1,649 (3,420) 13,334
________ ________ ________ ________ ________
136,410 30,130 120,115 (54,267) 232,388
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (2,395) (1,829) 6,540 (1,850) 466
Income taxes 369 18 3,404 - 3,791
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (2,764) (1,847) 3,136 (1,850) (3,325)
Equity in net earnings of
consolidated subsidiaries 1,289 - - (1,289) -
________ ________ ________ ________ ________
Net earnings (loss) $ (1,475) $ (1,847) $ 3,136 $ (3,139) $ (3,325)
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Operations
Nine Months Ended September 30, 2002
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Revenues:
Net sales $109,610 $ 38,200 $112,752 $(44,608) $215,954
Other income 2,537 2 667 (2,988) 218
________ ________ ________ ________ ________
112,147 38,202 113,419 (47,596) 216,172
________ ________ ________ ________ ________
Costs and Expenses:
Cost of products sold 90,348 36,872 90,688 (42,854) 175,054
Engineering and field
service, selling,
administrative
and miscellaneous
expenses 17,123 1,462 12,097 - 30,682
Interest expense 14,245 1,018 1,753 (2,988) 14,028
________ ________ ________ ________ ________
121,716 39,352 104,538 (45,842) 219,764
________ ________ ________ ________ ________
Earnings (loss) before
income taxes and
equity in net earnings of
consolidated subsidiaries (9,569) (1,150) 8,881 (1,754) (3,592)
Income taxes (benefit) (84) 18 3,343 - 3,277
________ ________ ________ ________ ________
Earnings (loss) before
equity in net earnings of
consolidated subsidiaries (9,485) (1,168) 5,538 (1,754) (6,869)
Equity in net earnings of
consolidated subsidiaries 4,370 - - (4,370) -
________ ________ ________ ________ ________
Net earnings (loss) $ (5,115) $ (1,168) $ 5,538 $ (6,124) $ (6,869)
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets
September 30, 2003
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ - $ 22 $ 6,664 $ - $ 6,686
Receivables 16,370 7,483 31,539 - 55,392
Intercompany receivables 91,437 1,148 24,371 (116,956) -
Inventories 65,269 6,252 56,740 (6,549) 121,712
Prepaid expenses and
other current assets 579 73 6,262 - 6,914
________ ________ ________ _________ ________
Total Current Assets 173,655 14,978 125,576 (123,505) 190,704
OTHER ASSETS:
Restricted funds on deposit - - 1,685 - 1,685
Goodwill 55,660 - 200 - 55,860
Intangible assets 36,427 - - - 36,427
Other assets 8,341 - 1,326 - 9,667
Investment in subsidiaries 20,087 - - (20,087) -
________ ________ ________ _________ ________
120,515 - 3,211 (20,087) 103,639
PROPERTY, PLANT AND
EQUIPMENT - net 39,671 6,220 11,128 - 57,019
________ ________ ________ _________ ________
$333,841 $ 21,198 $139,915 $(143,592) $351,362
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
(DEFICIENCY IN ASSETS)
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 34,971 $ 2,143 $ 13,730 $ (477) $ 50,367
Intercompany payables 741 30,016 81,575 (112,332) -
Liabilities to customers
on uncompleted contracts
and warranties 13,423 203 3,815 - 17,441
Income taxes 287 21 4,128 - 4,436
Current maturities of
long-term debt - 44 265 - 309
________ ________ ________ _________ ________
Total Current Liabilities 49,422 32,427 103,513 (112,809) 72,553
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 2,000 - - - 2,000
Postretirement benefits 12,591 - 341 - 12,932
Deferred expenses, pension
and other 40,707 317 443 - 41,467
Interest payable to Holdings 23,968 - - - 23,968
________ ________ ________ _________ ________
79,266 317 784 - 80,367
LONG-TERM DEBT, less
current maturities 197,376 1,192 2,793 - 201,361
COMMON SHAREHOLDERS'
INVESTMENT (DEFICIENCY
IN ASSETS) 7,777 (12,738) 32,825 (30,783) (2,919)
________ ________ ________ _________ ________
$333,841 $ 21,198 $139,915 $(143,592) $351,362
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Balance Sheets
December 31, 2002
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ - $ 24 $ 4,165 $ - $ 4,189
Receivables 20,100 6,006 26,664 - 52,770
Intercompany receivables 76,916 347 24,222 (101,485) -
Inventories 63,648 7,493 49,705 (6,534) 114,312
Prepaid expenses and
other current assets 845 311 5,030 - 6,186
________ ________ ________ _________ ________
Total Current Assets 161,509 14,181 109,786 (108,019) 177,457
OTHER ASSETS:
Restricted funds on deposit 758 - 727 - 1,485
Goodwill 55,660 - 200 - 55,860
Intangible assets - net 37,662 - - - 37,662
Other assets 10,135 - 1,800 - 11,935
Investment in subsidiaries 13,525 - - (13,525) -
________ ________ ________ _________ ________
117,740 - 2,727 (13,525) 106,942
PROPERTY, PLANT AND
EQUIPMENT - net 45,098 6,866 10,515 - 62,479
________ ________ ________ _________ ________
$324,347 $ 21,047 $123,028 $(121,544) $346,878
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
(DEFICIENCY IN ASSETS)
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 40,390 $ 2,103 $ 17,009 $ (286) $ 59,216
Intercompany payables 117 27,915 70,855 (98,887) -
Liabilities to customers
on uncompleted contracts
and warranties 4,584 286 2,980 - 7,850
Income taxes 335 29 3,079 - 3,443
Short-term obligations - - 495 - 495
Current maturities of
long-term debt 126 44 261 - 431
________ ________ ________ _________ ________
Total Current Liabilities 45,552 30,377 94,679 (99,173) 71,435
LONG-TERM LIABILITIES:
Liabilities to customers
on uncompleted contracts
and warranties 2,000 - - - 2,000
Postretirement benefits 12,381 - 370 - 12,751
Deferred expenses,
pension and other 41,240 335 1,008 - 42,583
Interest payable to
Holdings 18,436 - - - 18,436
________ ________ ________ _________ ________
74,057 335 1,378 - 75,770
LONG-TERM DEBT, less
current maturities 204,023 1,226 2,555 - 207,804
COMMON SHAREHOLDERS'
INVESTMENT (DEFICIENCY
IN ASSETS) 715 (10,891) 24,416 (22,371) (8,131)
________ ________ ________ _________ ________
$324,347 $ 21,047 $123,028 $(121,544) $346,878
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
Nine Months Ended September 30, 2003
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Net Cash Provided By
Operating Activities $ 8,364 $ 67 $ 3,478 $ - $ 11,909
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Decrease (increase)
in restricted funds
on deposit 758 - (958) - (200)
Purchases of property,
plant and equipment (1,362) (35) (590) - (1,987)
Proceeds from sale of
property, plant and
equipment 247 - 10 - 257
________ ________ ________ ________ ________
Net cash used in
investing activities (357) (35) (1,538) - (1,930)
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Net repayments of revolving
credit facilities (6,647) - - - (6,647)
Net decrease in long-term
and other bank borrowings (126) (34) (253) - (413)
Payment of refinancing
expenses (1,306) - - - (1,306)
Proceeds from issuance
of common stock 72 - - - 72
________ ________ ________ ________ ________
Net cash used in financing
activities (8,007) (34) (253) - (8,294)
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - 812 - 812
________ ________ ________ ________ ________
Net increase (decrease) in
cash and cash equivalents - (2) 2,499 - 2,497
Cash and cash equivalents
at beginning of period - 24 4,165 - 4,189
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 22 $ 6,664 $ - $ 6,686
Bucyrus International, Inc. and Subsidiaries
Consolidating Condensed Statements of Cash Flows
Nine Months Ended September 30, 2002
(Dollars in Thousands)
Parent Guarantor Other Consolidated
Company Subsidiaries Subsidiaries Eliminations Total
Net Cash Provided By (Used
In) Operating Activities $ (5,859) $ 1,843 $ 6,695 $ - $ 2,679
________ ________ ________ ________ ________
Cash Flows From Investing
Activities
Increase in restricted funds
on deposit (730) - (194) - (924)
Proceeds from sale of
The Principal Financial
Group shares 2,974 - - - 2,974
Purchases of property,
plant and equipment (1,627) (1,544) (896) - (4,067)
Proceeds from sale of
property, plant and
equipment 27 - 141 - 168
Net proceeds from sale and
leaseback transaction 6,657 - - - 6,657
________ ________ ________ ________ ________
Net cash provided by (used
in) investing activities 7,301 (1,544) (949) - 4,808
________ ________ ________ ________ ________
Cash Flows From Financing
Activities
Net proceeds from (repayments
of) revolving credit
facilities 572 - (5,732) - (5,160)
Net increase (decrease)
in long-term debt and
other bank borrowings (176) 898 (1,097) - (375)
Payment of refinancing
expenses (1,838) - (101) - (1,939)
________ ________ ________ ________ ________
Net cash provided by
(used in) financing
activities (1,442) 898 (6,930) - (7,474)
________ ________ ________ ________ ________
Effect of exchange rate
changes on cash - - 133 - 133
________ ________ ________ ________ ________
Net increase (decrease) in
cash and cash equivalents - 1,197 (1,051) - 146
Cash and cash equivalents
at beginning of period - 28 7,190 - 7,218
________ ________ ________ ________ ________
Cash and cash equivalents
at end of period $ - $ 1,225 $ 6,139 $ - $ 7,364
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information is provided to assist in the understanding of
the Company's operations for the quarters and nine months ended September 30,
2003 and 2002.
In connection with acquisitions involving the Company, assets and
liabilities were adjusted to their estimated fair values. The consolidated
condensed financial statements include the related amortization charges
associated with the fair value adjustments.
Critical Accounting Policies
In preparing the Company's consolidated financial statements, management
follows accounting principles generally accepted in the United States. These
principles require the Company to make certain estimates and apply judgments
that affect our financial position and results of operations. The Company
continually reviews its accounting policies and financial information
disclosures. There have been no material changes in such policies or
estimates as reported in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002.
Liquidity and Capital Resources
Liquidity
Working capital and current ratio are two financial measurements which
provide an indication of the Company's ability to meet its short-term
obligations. These measurements at September 30, 2003 and December 31, 2002
were as follows:
September 30, December 31,
2003 2002
(Dollars in Thousands)
Working capital $118,151 $106,022
Current ratio 2.6 to 1 2.5 to 1
EBITDA for the quarters and nine months ended September 30, 2003 was
$8,342,000 and $24,003,000, respectively, compared with $8,252,000 and
$21,674,000 for the quarter and nine months ended September 30, 2002,
respectively. EBITDA is presented (i) because EBITDA is used by the Company
to measure its liquidity; and (ii) because the Company believes EBITDA is
frequently used by securities analysts, investors and other interested parties
in evaluating the performance and enterprise value of companies in general,
and in evaluating the liquidity of companies with significant debt service
obligations and their ability to service their indebtedness. The EBITDA
calculation is not an alternative to operating income under generally accepted
accounting principles ("GAAP") as an indicator of operating performance or to
cash flows as a measure of liquidity. The following table reconciles Net Cash
Provided by Operating Activities as shown in the Consolidated Condensed
Statements of Cash Flows to EBITDA:
Quarters Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(Dollars in Thousands)
Net cash provided
by operating
activities $ 2,635 $ 8,688 $ 11,909 $ 2,679
Changes in
assets and
liabilities (290) (6,818) (3,922) 1,685
Stock compensation
expense 8 - (630) -
Gain (loss) on sale
of fixed assets (407) (3) (479) 5
Interest expense 4,339 4,753 13,334 14,028
Income tax
expense 2,057 1,632 3,791 3,277
________ ________ ________ ________
EBITDA $ 8,342 $ 8,252 $ 24,003 $ 21,674
The Company has a Loan and Security Agreement with GMAC Commercial
Finance, LLC (the "Loan and Security Agreement") which provides the Company
with a $76,000,000 senior secured revolving credit facility. The Loan and
Security Agreement was amended on November 13, 2003 to provide an additional
$7,400,000 senior secured term loan to enable the Company to pay certain
interest during 2004 on its Senior Notes as discussed in the next paragraph.
The Loan and Security Agreement, as amended, expires on January 8, 2005.
Outstanding borrowings under the revolving portion of the Loan and Security
Agreement bear interest equal to either the prime rate plus an applicable
margin (2% to 2.25%) or LIBOR plus an applicable margin (3.5% to 3.75%) and
are subject to a borrowing base formula based on receivables and inventory.
Outstanding borrowings under the $7,400,000 term loan bear interest equal to
either the prime rate plus 1.5% or LIBOR plus 2.5%. Borrowings at
September 30, 2003 and December 31, 2002 were $47,376,000 and $54,023,000,
respectively, at a weighted average interest rate of 5% and 6.3%,
respectively, and were classified as long-term debt. Substantially all of the
domestic assets of the Company (excluding real property) and the receivables
and inventory of the Company's Canadian subsidiary are pledged as collateral
under the Loan and Security Agreement. In addition, all outstanding capital
stock of the Company and its domestic subsidiaries as well as 65% of the
capital stock of the Company's foreign subsidiaries are pledged as collateral.
At September 30, 2003, the amount available for borrowings under the revolving
portion of the Loan and Security Agreement, net of mandatory reserves, was
$11,665,000.
The Company has outstanding $150,000,000 of 9-3/4% Senior Notes due 2007
(the "Senior Notes"). Interest thereon is payable each March 15 and
September 15. During 2000, Holdings (see Note 1 to the financial statements
in this Report) acquired $75,635,000 of the Company's Senior Notes. Holdings
had agreed as part of the Loan and Security Agreement and a previous credit
agreement to defer the receipt of interest on these Senior Notes during the
life of the agreements. However, in connection with the amendment of the Loan
and Security Agreement on November 13, 2003, Holdings is permitted to receive
the interest payable on the Senior Notes held by them on March 15, 2004 and
September 15, 2004. The Company must use the proceeds of the $7,400,000 term
loan portion of the Loan and Security Agreement to make the March 15, 2004 and
September 15, 2004 interest payments with respect to the Senior Notes held by
Holdings. The amendment of the Loan and Security Agreement also allows
Holdings to sell or transfer any of the Senior Notes held by it. At September
30, 2003 and December 31, 2002, $23,968,000 and $18,436,000, respectively, of
interest was accrued and payable to Holdings.
Both the Loan and Security Agreement and the Senior Notes indenture
contain certain covenants which may affect the Company's liquidity and capital
resources. The Loan and Security Agreement contains a number of financial
covenants which, among other items, require the Company (A) to maintain
certain financial ratios, including: (i) leverage ratio (as defined); and
(ii) fixed charge coverage ratio; and (B) to maintain minimum levels of EBITDA
as defined ("Adjusted EBITDA"). At September 30, 2003, the Company was in
compliance with all covenants. The Company is required to maintain a minimum
Adjusted EBITDA level of $25,000,000 for the year ended December 31, 2003.
The Company's failure to satisfy any of the financial covenants in the Loan
and Security Agreement would constitute an Event of Default under the Loan and
Security Agreement which would give the lenders the right to accelerate the
indebtedness thereunder, and, because of the cross-default provisions of the
Senior Notes indenture, would also give rise to the potential acceleration of
the Company's indebtedness on the Senior Notes, all of which could have a
material adverse impact on the Company's financial condition. The following
table reconciles Net Cash Provided by Operating Activities as shown in the
Consolidated Condensed Statements of Cash Flows to Adjusted EBITDA as defined
in the Loan and Security Agreement:
Quarters Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(Dollars in Thousands)
Net cash provided
by operating
activities $ 2,635 $ 8,688 $ 11,909 $ 2,679
Changes in
assets and
liabilities (290) (6,818) (3,922) 1,685
Interest income (121) (64) (228) (171)
Interest expense 4,339 4,753 13,334 14,028
Income tax
expense 2,057 1,632 3,791 3,277
Management service
fee accrual
adjustment 1,863 482 1,168 1,233
________ ________ ________ ________
Adjusted EBITDA $ 10,483 $ 8,673 $ 26,052 $ 22,731
On April 30, 2002, Bucyrus Canada Limited, a wholly-owned subsidiary of
the Company, entered into a C$3,510,000 mortgage loan collateralized by its
land, buildings and certain building attachments. The balance outstanding at
September 30, 2003 and December 31, 2002 was C$3,322,000 and C$3,425,000,
respectively. The term of the mortgage loan is 15 years at an initial rate of
7.55% which is fixed for the first five years. The mortgage loan contains a
number of financial covenants which, among other items, require Bucyrus Canada
Limited to maintain certain financial ratios on an annual basis. At
September 30, 2003, Bucyrus Canada Limited was in compliance with all
applicable covenants.
Operating Losses
The Company is highly leveraged and low sales volumes in recent years
have had an adverse effect on the Company's liquidity. While the Company
believes that current levels of cash and liquidity, together with funds
generated by operations and funds available from the Loan and Security
Agreement, will be sufficient to permit the Company to satisfy its debt
service requirements and fund operating activities for the foreseeable future,
there can be no assurances to this effect and the Company continues to closely
monitor its operations.
The Company is subject to significant business, economic and competitive
uncertainties that are beyond its control. See "Forward-Looking Statements."
Accordingly, there can be no assurance that the Company's performance will be
sufficient for the Company to maintain compliance with the financial covenants
under the Loan and Security Agreement and the Senior Notes Indenture, satisfy
its debt service obligations and fund operating activities under all
circumstances. At this time, the Company continues to believe that future
cash flows will be sufficient to recover the carrying value of its long-lived
assets, including goodwill and other intangible assets.
Capital Resources
At September 30, 2003, the Company had approximately $3,352,000 of open
capital appropriations. The Company's capital expenditures for the nine
months ended September 30, 2003 were $1,987,000 compared with $4,067,000 for
the nine months ended September 30, 2002. During the next twelve months, the
Company expects to spend closer to 2002 levels.
Capitalization
The long-term debt to total capitalization ratio at September 30, 2003
and December 31, 2002 was 1.0 to 1. Total capitalization is defined as total
common shareholders' investment (deficiency in assets) plus long-term debt
plus current maturities of long-term debt and short-term obligations.
Results Of Operations
Net Sales
Net sales for the quarter and nine months ended September 30, 2003 were
$84,754,000 and $232,589,000, respectively, compared with $75,897,000 and
$215,954,000 for the quarter and nine months ended September 30, 2002,
respectively. Net sales of repair parts and services for the quarter and nine
months ended September 30, 2003 were $74,106,000 and $191,256,000,
respectively, which is an increase of 10.8% and 5.4% from the quarter and nine
months ended September 30, 2002, respectively. Net machine sales for the
quarter and nine months ended September 30, 2003 were $10,648,000 and
$41,333,000, respectively, which is an increase of 18.1% and 20.0% from the
quarter and nine months ended September 30, 2002, respectively. The changes
in net machine sales between periods were primarily due to fluctuations in
volume.
Cost of Products Sold
Cost of products sold for the quarter ended September 30, 2003 was
$66,647,000 or 78.6% of net sales compared with $61,198,000 or 80.6% of net
sales for the quarter ended September 30, 2002. For the nine months ended
September 30, 2003, cost of products sold was $183,519,000 or 78.9% of net
sales compared with $175,054,000 or 81.1% of net sales for the nine months
ended September 30, 2002. The decrease in cost of products sold as a
percentage of net sales for 2003 was primarily due to the improved mix of
aftermarket sales. Also included in cost of products sold for the nine months
ended September 30, 2003 and 2002 was $3,810,000 and $3,823,000, respectively,
of additional depreciation expense as a result of the fair value adjustment to
plant and equipment in connection with acquisitions involving the Company.
Engineering and Field Service, Selling, Administrative and Miscellaneous
Expenses
Engineering and field service, selling, administrative and miscellaneous
expenses for the quarter ended September 30, 2003 were $13,335,000 or 15.7% of
net sales compared with $10,417,000 or 13.7% of net sales for the quarter
ended September 30, 2002. The amounts for the nine months ended September 30,
2003 and 2002 were $35,535,000 or 15.3% of net sales and $30,682,000 or 14.2%
of net sales, respectively. Included in the amounts for the quarter and nine
months ended September 30, 2003 was $407,000 and $479,000, respectively, of
losses on disposals of fixed assets, as well as increased management incentive
accruals and an additional accrual related to management service fees. Also
included in the amount for the nine months ended September 30, 2003 was stock-
based employee compensation expense of $630,000 related to certain outstanding
stock options.
Interest Expense
Interest expense for the quarter and nine months ended September 30, 2003
was $4,339,000 and $13,334,000, respectively, compared with $4,753,000 and
$14,028,000 for the quarter and nine months ended September 30, 2002,
respectively. The decrease in interest expense in 2003 was primarily due to
reduced borrowings under the Loan and Security Agreement and reduced interest
rates on those borrowings. Included in interest expense for the quarters and
nine months ended September 30, 2003 and 2002 was $3,656,000 and $10,969,000,
respectively, related to the Senior Notes. The interest expense on the Senior
Notes for the quarters and nine months ended September 30, 2003 and 2002
includes $1,845,000 and $5,532,000, respectively, related to the Senior Notes
acquired by Holdings. Holdings has agreed as part of the Loan and Security
Agreement and a previous credit agreement to defer the receipt of interest on
these Senior Notes during the life of the agreements.
Income Taxes
Income tax expense consists primarily of foreign taxes at applicable
statutory rates.
Net Earnings (Loss)
Net loss for the quarter and nine months ended September 30, 2003 was
$1,507,000 and $3,325,000, respectively, compared with a net loss of
$2,026,000 and $6,869,000 for the quarter and nine months ended September 30,
2002, respectively. Non-cash depreciation and amortization charges for the
quarter and nine months ended September 30, 2003 were $3,453,000 and
$10,203,000, respectively, compared with $3,893,000 and $11,238,000,
respectively, for the quarter and nine months ended September 30, 2002.
New Orders and Backlog
New orders for the quarter and nine months ended September 30, 2003 were
$75,344,000 and $234,199,000, respectively compared with $143,553,000 and
$276,100,000 for the quarter and nine months ended September 30, 2002,
respectively. New machine orders for the quarter and nine months ended
September 30, 2003 were $4,373,000 and $33,368,000, respectively, compared
with $15,842,000 and $40,011,000 for the quarter and nine months ended
September 30, 2002, respectively. New repair parts and service orders for the
quarter and nine months ended September 30, 2003 were $70,971,000 and
$200,831,000, respectively, compared with $127,711,000 and $236,089,000 for
the quarter and nine months ended September 30, 2002, respectively. Included
in new repair parts and service orders for the quarter ended September 30,
2002 were orders received related to two maintenance and repair contracts.
The Company's consolidated backlog on September 30, 2003 was $247,305,000
compared with $245,695,000 at December 31, 2002 and $289,898,000 at
September 30, 2002. Machine backlog at September 30, 2003 was $26,464,000,
compared with $34,429,000 at December 31, 2002 and $38,095,000 at
September 30, 2002. Repair parts and service backlog at September 30, 2003
was $220,841,000, compared with $211,266,000 at December 31, 2002 and
$251,803,000 at September 30, 2002. A portion of this backlog is related to
multi-year contracts which will generate revenue in future years.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk is impacted by changes in interest rates and
foreign currency exchange rates.
Interest Rates
The Company's interest rate exposure relates primarily to debt
obligations in the United States. The Company manages its borrowings under
the Loan and Security Agreement through the selection of LIBOR based
borrowings or prime rate based borrowings. The Company's Senior Notes are at
a fixed rate. If market conditions warrant, interest rate swaps may be used
to adjust interest rate exposures, although none have been used to date. The
Company believes that a 10% change in its weighted average interest rate at
September 30, 2003 would have the effect of changing the Company's interest
expense on an annual basis by approximately $250,000.
Foreign Currency
Changes in foreign exchange rates can impact the Company's financial
position, results of operations and cash flows. The Company manages foreign
currency exchange rate exposure by utilizing some natural hedges to mitigate
some of its transaction and commitment exposures, and may utilize forward
contracts in certain situations. Based on the Company's derivative and other
foreign currency sensitive instruments outstanding at September 30, 2003, the
Company believes that a 10% change in foreign currency exchange rates will not
have a material effect on the Company's financial position, results of
operations or cash flows.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 4 - DISCLOSURE CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the Company's
reports under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is
accumulated and communicated to management, including the Chief Executive
Officer and Vice President-Finance and Secretary, as appropriate, to allow
timely decisions regarding required disclosure.
As of September 30, 2003, the Company carried out an evaluation, under
the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and Vice President-Finance and
Secretary, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures, as defined in Exchange Act Rule 15d-15(e).
Based upon that evaluation, the Company's Chief Executive Officer and its Vice
President-Finance and Secretary concluded that the Company's disclosure
controls and procedures are effective in enabling the Company to identify,
process, and report information required to be included in the Company's
periodic SEC filings within the required time period.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system are met. In addition, the design of any control
system is based in part upon certain assumptions about the likelihood of
future events. Because of these and other inherent limitations of control
systems, there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions, regardless of how
remote.
Changes in Internal Controls
There were no significant changes in the Company's internal controls or
to our knowledge, in other factors that could significantly affect our
disclosure controls and procedures subsequent to the evaluation date.
FORWARD-LOOKING STATEMENTS
This Report includes "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. Discussions
containing such forward-looking statements may be found in this section and
elsewhere within this Report. Forward-looking statements include statements
regarding the intent, belief or current expectations of the Company, primarily
with respect to the future operating performance of the Company or related
industry developments. When used in this Report, terms such as "anticipate,"
"believe," "could," "estimate," "expect," "indicate," "may be," "objective,"
"plan," "predict," and "will be" are intended to identify such statements.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ from those described in the forward-looking
statements as a result of various factors, many of which are beyond the
control of the Company. Forward-looking statements are based upon
management's expectations at the time they are made. Although the Company
believes that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations will prove to
have been correct. Important factors that could cause actual results to
differ materially from such expectations ("Cautionary Statements") are
described generally below and disclosed elsewhere in this Report and in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.
All subsequent written or oral forward-looking statements attributable to the
Company or persons acting on behalf of the Company are expressly qualified in
their entirety by the Cautionary Statements.
Factors that could cause actual results to differ materially from those
contemplated include:
Factors affecting customers' purchases of new equipment, rebuilds, parts
and services such as: production capacity, stockpiles, and production and
consumption rates of coal, copper, iron, gold and other ores and minerals; the
cash flows of customers; the cost and availability of financing to customers
and the ability of customers to obtain regulatory approval for investments in
mining projects; consolidations among customers; work stoppages at customers
or providers of transportation; and the timing, severity and duration of
customer buying cycles.
Factors affecting the Company's general business, such as: unforseen
patent, tax, product, environmental, employee health or benefit, or
contractual liabilities; nonrecurring restructuring and other special charges;
changes in accounting or tax rules or regulations; reassessments of asset
valuations for such assets as receivables, inventories, fixed assets and
intangible assets; leverage and debt service; our success in recruiting and
retaining managers and key employees; and our wage stability and cooperative
labor relations; plant capacity and utilization.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The Company has been named as a Potentially Responsible Party
("PRP") with respect to the clean up of the Chemical Recovery
Systems, Inc. site in Elyria, Ohio. As of September 30, 2003, the
de minimis settlement agreement that the EPA offered the Company
became effective. The Company paid $6,800 pursuant to the terms of
the de minimis settlement agreement. The Company is not aware of
any remaining liability at this time.
There have been no other material changes to the information set
forth under Item 3 - Legal Proceedings and Other Contingencies in
the Company's Annual Report on Form 10-K for the year ended
December 31, 2002.
Item 2. Changes in Securities and Use of Proceeds.
During the nine months ended September 30, 2003, the Company sold
71,700 shares of common stock to five members of management of the
Company at a price of $1 per share pursuant to the exercise of
stock options under the 1998 Management Stock Option Plan.
Exemption from registration of the shares sold under the Securities
Act of 1933 (the "Securities Act") is claimed under Section 4(2) of
the Securities Act because the offer and sale thereof was
restricted to a limited number of individuals, all of whom were
members of management of the Company, without any advertising or
other selling efforts commonly associated with a "public offering".
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the
quarter covered by this Report.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: See Exhibit Index on last page of this report,
which is incorporated herein by reference.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the third quarter of
2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUCYRUS INTERNATIONAL, INC.
(Registrant)
Date November 12, 2003 /s/C. R. Mackus
Craig R. Mackus
Vice President-Finance and Secretary
Principal Accounting Officer
Date November 12, 2003 /s/T. C. Rogers
Theodore C. Rogers
Chief Executive Officer
BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2003
Incorporated
Exhibit Herein By Filed
Number Description Reference Herewith
2.1 Agreement and Plan of Exhibit 1 to
Merger dated August 21, Registrant's
1997, between Registrant, Tender Offer
American Industrial Solicitation/
Partners Acquisition Recommendation
Company, LLC and Bucyrus Statement on
Acquisition Corp. Schedule 14D-9
filed with the
Commission on
August 26, 1997.
2.2 Certificate of Merger Exhibit 2.2 to
dated September 26, 1997, Registrant's
issued by the Secretary Current Report
of State of the State of on Form 8-K
Delaware. filed with the
Commission on
October 10, 1997.
2.3 Second Amended Joint Plan Exhibit 2.1 to
of Reorganization of B-E Registrant's
Holdings, Inc. and Bucyrus- Current Report
Erie Company under Chapter on Form 8-K,
11 of the Bankruptcy Code, filed with the
as modified December 1, Commission and
1994, including Exhibits. dated December 1,
1994.
2.4 Order dated December 1, Exhibit 2.2 to
1994 of the U.S. Bankruptcy Registrant's
Court, Eastern District of Current Report
Wisconsin, confirming the on Form 8-K
Second Amended Joint Plan filed with the
of Reorganization of B-E Commission and
Holdings, Inc. and Bucyrus- dated December 1,
Erie Company under Chapter 1994.
11 of the Bankruptcy Code,
as modified December 1, 1994,
including Exhibits.
3.1 Restated Certificate Exhibit 3.6 to
of Incorporation of Registrant's
Registrant. Annual Report on
Form 10-K for
the year ended
December 31, 1998.
3.2 By-laws of Registrant. Exhibit 3.5 to
Registrant's
Annual Report on
Form 10-K for
the year ended
December 31, 1998.
3.3 Certificate of Amendment Exhibit 3.3
to Certificate of to Registrant's
Formation of Bucyrus Quarterly Report
Holdings, LLC, effective on Form 10-Q
March 25, 1999. filed with the
Commission on
May 15, 2000.
4.1 Indenture of Trust dated Exhibit 4.1 to
as of September 24, 1997 Registration
among Registrant, Boonville Statement on
Mining Services, Inc., Form S-4 of
Minserco, Inc. and Von's Registrant,
Welding, Inc. and Harris Boonville Mining
Trust and Savings Bank, Services, Inc.,
Trustee. Minserco, Inc. and
Von's Welding, Inc.
(SEC Registration
No. 333-39359)
(a) Letter dated Exhibit 4.1(a)
February 15, 2000 to Registrant's
evidencing change of Quarterly Report
Indenture Trustee. on Form 10-Q
filed with the
Commission on
November 6, 2000.
4.2 Form of Guarantee of Included as
Boonville Mining Services, Exhibit E
Inc., Minserco, Inc. and to Exhibit 4.1
Von's Welding, Inc. dated above.
as of September 24, 1997
in favor of Harris Trust
and Savings Bank as Trustee
under the Indenture.
4.3 Form of Registrant's Exhibit 4.3 to
9-3/4% Senior Note due 2007. Registration
Statement on
Form S-4 of
Registrant, Boonville
Mining Services, Inc.,
Minserco, Inc. and
Von's Welding, Inc.
(SEC Registration
No. 333-39359)
10.1 Credit Agreement, dated Exhibit 10.1 to
September 24, 1997 between Registrant's
Bank One, Wisconsin and Current Report
Registrant. on Form 8-K
filed with the
Commission on
October 10, 1997.
(a) First amendment dated Exhibit 10.1(a)
July 21, 1998 to Credit to Registrant's
Agreement. Quarterly Report
on Form 10-Q
filed with the
Commission on
November 16, 1998.
(b) Second amendment dated Exhibit 10.1(b)
September 30, 1998 to to Registrant's
Credit Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 1998.
(c) Third amendment dated Exhibit 10.1(c)
April 20, 1999 to Credit to Registrant's
Agreement. Quarterly Report
on Form 10-Q
filed with the
Commission on
August 12, 1999.
(d) Fourth amendment dated Exhibit 10.1(a)
September 30, 1999 to to Registrant's
Credit Agreement. Quarterly Report
on Form 10-Q
filed with the
Commission on
November 12, 1999.
(e) Fifth amendment dated Exhibit 10.1(e)
March 14, 2000 to Credit to Registrant's
Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 1999.
(f) Sixth amendment dated Exhibit 10.1(f)
September 8, 2000 to to Registrant's
Credit Agreement. Quarterly Report
on Form 10-Q
filed with the
Commission on
November 6, 2000.
(g) Seventh amendment dated Exhibit 10.1(g)
March 20, 2001 to Credit to Registrant's
Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2000.
(h) Eighth amendment dated Exhibit 10.1(h)
January 4, 2002 to Credit to Registrant's
Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2001.
(i) Ninth amendment dated Exhibit 10.1(i)
January 22, 2002 to Credit to Registrant's
Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2001.
10.2 Consulting Agreement Exhibit 10.19
between Registrant and to Registrant's
Wayne T. Ewing dated Annual Report on
February 1, 2000. Form 10-K for
the year ended
December 31, 1999.
10.3 Letter Agreement Exhibit 10.7
between Registrant and to Registrant's
Timothy W. Sullivan Quarterly Report
dated August 8, 2000. on Form 10-Q
filed with the
Commission on
August 14, 2000.
10.4 Agreement of Debt Exhibit 10.21
Conversion between to Registrant's
Registrant and Annual Report on
Bucyrus Holdings, LLC Form 10-K for
dated March 22, 2001. the year ended
December 31, 2000.
10.5 Consulting Agreement Exhibit 10.8
between Registrant and to Registrant's
Willard R. Hildebrand Quarterly Report
dated July 25, 2001. on Form 10-Q
filed with the
Commission on
November 14, 2001.
10.6 Agreement to Purchase and Exhibit 10.18
Sell Industrial Property to Registrant's
between Registrant and Annual Report on
InSite Real Estate Form 10-K for
Development, L.L.C. the year ended
dated October 25, 2001. December 31, 2001.
10.7 Industrial Lease Agreement Exhibit 10.19
between Registrant and to Registrant's
InSite South Milwaukee, L.L.C. Annual Report on
dated January 4, 2002. Form 10-K for
the year ended
December 31, 2001.
10.8 Termination Benefits Agreement Exhibit 10.20
between Registrant and to Registrant's
John F. Bosbous dated Annual Report on
March 5, 2002. Form 10-K for
the year ended
December 31, 2001.
10.9 Termination Benefits Agreement Exhibit 10.21
between Registrant and to Registrant's
Thomas B. Phillips dated Annual Report on
March 5, 2002. Form 10-K for
the year ended
December 31, 2001.
10.10 Loan and Security Agreement Exhibit 10.22
by and among Registrant, to Registrant's
Minserco, Inc., Boonville Annual Report on
Mining Services, Inc. and Form 10-K for
GMAC Business Credit, LLC, the year ended
and Bank One, Wisconsin December 31, 2001.
dated March 7, 2002.
(a) First amendment dated Exhibit 10.16 (a)
December 31, 2002 to Loan to Registrant's
and Security Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2002.
(b) Second amendment dated Exhibit 10.16 (b)
January 9, 2003 to Loan to Registrant's
and Security Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2002.
(c) Letter agreement dated Exhibit 10.16 (c)
December 31, 2002 amending to Registrant's
Loan and Security Agreement. Annual Report on
Form 10-K for
the year ended
December 31, 2002.
(d) Third amendment dated X
November 13, 2003 to Loan
and Security Agreement.
10.11 Board of Directors Exhibit 10.17
Resolution dated to Registrant's
December 16, 1998 Annual Report on
amending the 1998 Form 10-K for
Management Stock the year ended
Option Plan. December 31, 2002.
31.1 Certification of Chief X
Executive Officer
pursuant to Section 302
of the Sarbanes-Oxley
Act.
31.2 Certification of Vice X
President-Finance and
Secretary pursuant to
Section 302 of the
Sarbanes-Oxley Act.