SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
Form 10-K
ANNUAL REPORT
PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Year Ended December 31, 1994
Commission File Number: 1-871
________________________________________________
BUCYRUS-ERIE COMPANY
DELAWARE 39-0188050
P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN 53172
(414) 768-4000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each Class
Common Stock, par value $.01 per share
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 14, 1995, was approximately $25,212,080 (based on the
last sale price of the Company's Common Stock as reported by The NASDAQ Stock
Market, Inc.).
ITEM 1. BUSINESS
Bucyrus-Erie Company (the "Company") was incorporated in Delaware in
1927 as the successor to a business which commenced in 1880. On February 4,
1988, the Company became a wholly-owned subsidiary of B-E Holdings, Inc.
("Holdings"), a Delaware corporation, pursuant to an Agreement and Plan of
Merger dated as of July 28, 1987, as amended, among Holdings, the Company and
B-E Merger Sub, Inc., a wholly-owned subsidiary of Holdings (the "1988
Merger"). The Company was a wholly-owned subsidiary of Holdings until
December 14, 1994 when Holdings was merged with and into the Company pursuant
to the terms of the Second Amended Joint Plan of Reorganization of B-E
Holdings, Inc. and Bucyrus-Erie Company under chapter 11 of the Bankruptcy
Code, as modified December 1, 1994 (the "Amended Plan"). The Company designs,
manufactures and markets large excavation machinery used for surface mining,
and supplies replacement parts and service for such machines. The Company's
principal products are large walking draglines, electric mining shovels and
blast hole drills, which are used by customers who mine coal, iron ore,
copper, phosphate, bauxite and other minerals throughout the world.
The Restructuring
On February 22, 1993, the Company and Holdings announced their
intention to pursue a restructuring of their capital structures (the
"Restructuring") and commenced negotiations for a prepackaged chapter 11
financial restructuring with certain of their secured and unsecured creditors.
On January 12, 1994, the Company's Registration Statement on Form S-4 bearing
Registration No. 33-73904, which included the Disclosure Statement and Proxy
Statement-Prospectus (the "Disclosure Statement") for the solicitation of
votes for the prepackaged joint plan of reorganization of Holdings and the
Company under chapter 11 of the Bankruptcy Code (the "Prepackaged Plan"), was
declared effective by the Securities and Exchange Commission. The
solicitation process for acceptance of the Prepackaged Plan was completed on
February 14, 1994. On February 18, 1994 (the "Petition Date"), Holdings and
the Company commenced voluntary petitions under chapter 11 of the Bankruptcy
Code (Case Nos. 94-20786-RAE and 94-20787-RAE, respectively) in the U.S.
Bankruptcy Court, Eastern District of Wisconsin (the "Bankruptcy Court"). On
June 20, 1994, the Bankruptcy Court directed the Company and Holdings to
resolicit acceptances from their creditors and stockholders using amended
disclosure materials. During the second and third quarters of 1994, the
Company and Holdings held discussions with interested parties regarding
possible modifications to the Prepackaged Plan which resulted in the
formulation of the Amended Plan.
The solicitation process for acceptance of the Amended Plan was
completed on October 31, 1994 and on December 1, 1994 the Bankruptcy Court
confirmed the Amended Plan. On December 14, 1994 (the "Effective Date"), the
Amended Plan became effective and the Company and Holdings consummated the
Restructuring through the implementation of the Amended Plan. None of the
Company's or Holdings' subsidiaries were involved in the bankruptcy
proceedings. The Amended Plan provided for payment in full of the allowed
claims of the Company's vendors, suppliers and other trade creditors. The
claims of current and retired employees of the Company were not affected by
the Amended Plan and they will continue to receive full benefits under
existing pension and welfare plans.
The purpose of the Restructuring is to improve and enhance the long-
term viability of the Company by adjusting its capitalization to reflect
current and projected operating performance levels. Specifically, the Amended
Plan was designed to reduce the Company's overall indebtedness and its
corresponding debt service obligations by exchanging all outstanding senior
unsecured debt securities for common equity.
On the Effective Date, Holdings merged with and into the Company
pursuant to the Amended Plan and the Agreement and Plan of Merger dated as of
December 14, 1994 between Holdings and the Company (the "Merger Agreement").
Pursuant to the Amended Plan and the Merger Agreement, the Company issued
10,170,417 shares of its common stock, par value $.01 per share (the "Common
Stock"). The Company issued 10,000,004 shares of Common Stock to holders of
Holdings' and the Company's unsecured debt securities and Holdings' equity
securities in exchange for such securities, and 170,413 shares of Common Stock
were issued to Bell Helicopter Textron, Inc. ("Bell Helicopter") in settlement
of a lawsuit against the Company. See ITEM 3. LEGAL PROCEEDINGS AND OTHER
CONTINGENCIES.
On the Effective Date pursuant to the Amended Plan, the Company
issued an aggregate principal amount of $52,072,000 of Secured Notes due
December 14, 1999 (the "Secured Notes") to South Street Corporate Recovery
Fund I, L.P., South Street Leveraged Corporate Recovery Fund, L.P., and South
Street Corporate Recovery Fund I (International), L.P. (collectively, the
"South Street Funds") in exchange for the Company's outstanding Series A
10.65% Senior Secured Notes due July 1, 1995 and Series B 16.5% Senior Secured
Notes due January 1, 1996 (collectively, the "Old South Street Notes")and the
Company's obligations under a sale and leaseback financing arrangement. See
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES. Pursuant to the
Amended Plan, the Company entered into a Credit Agreement with Bank One,
Milwaukee, National Association ("Bank One"). See ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
LIQUIDITY AND CAPITAL RESOURCES.
MARKETS, PRINCIPAL PRODUCTS AND METHODS OF DISTRIBUTION
The surface mining industry consists of three primary markets: coal
mining, hard rock mining and phosphate production. Coal mining historically
has accounted for approximately 70% of industry demand for the Company's
machines and replacement parts, with hard rock mining accounting for 20% and
phosphate and other applications accounting for the remaining 10%. In recent
years, the share of hard rock mining has been increasing. Steam coal
production for power generation represents approximately 85% of total coal
mining activity. The demand for steam coal is based largely on the demand for
electric power and the price and availability of competing sources of such
power including oil, natural gas and nuclear power. Because steam coal is
mined both in underground and in surface mines, the relative cost of competing
mining methods is an important variable affecting equipment demand.
Prior to the 1973 Arab oil embargo, the mining machinery industry could
have been characterized as a cyclical, long-term growth industry. Its
cyclical characteristic resulted from the cost relationship among competing
fuel alternatives and mineral use and its long-term growth characteristic
resulted from increases in overall energy consumption and mineral use tied to
worldwide economic growth. However, with the oil embargo came an
unprecedented increase in the demand for coal mining equipment. As a result,
mining machinery production capacity was expanded dramatically, reflecting
expectations that oil prices would continue to rise and tend to increase
demand for substitute natural resources, including coal in particular.
Consequently, the industry experienced dramatic growth through the early and
mid-1970's. By the late 1970's, the installed base of mining machinery had
increased substantially. However, at that time, macroeconomic conditions
began to change. The effects of a worldwide recession, escalating interest
rates, energy conservation efforts and an increase in the world's supply of
oil, together with the large installed base of recently manufactured mining
machinery, resulted in a sharp drop in demand for new mining machinery. More
recently, the coal segment of the U.S. market has been severely impacted by
the Clean Air Act causing numerous mid-western higher sulfur coal mines to be
closed or to have outputs drastically curtailed; many machines have been shut
down while a few have been relocated to lower sulfur mines in eastern
Appalachia and Wyoming's Powder River Basin where excess production capacity
and stagnant demand has driven coal prices downward. Consequently, meaningful
new machine shipments to domestic coal customers cannot be expected until
after the mid 1990's. Major potential international coal mining markets for
the Company's equipment and replacement parts have been negatively impacted by
the worldwide economic slump as evidenced by Japanese steelmakers imposing
price cuts on Australian coking coal producers as well as tonnage reductions
during negotiations in 1993 and 1994. In the longer term it is anticipated
that growing electricity demand around the world and increasing depths of
available coal will continue to drive demand for the Company's machines.
Lately there have been positive increases in coal prices in Europe and Japan
looks to be poised to increase coal prices in 1995 for the first time in
several years.
While iron ore demand decreased with the worldwide recession of 1992 and
1993, and Japanese and European iron ore buyers lowered ore contract prices
significantly in 1992 and again in 1993, there was a marked increase in iron
ore production in late 1994 that should be sustained through 1995.
Furthermore, the Company anticipates that some iron ore producers will
continue to invest in replacing aged electric mining shovel and blast hole
drill fleets in an effort to reduce ore production costs. Copper prices have
increased significantly and it appears as if they may stabilize at this level
in the near term. This increase in copper prices has resulted in continued
demand from this market segment for electric mining shovels and blast hole
drills.
The Company's line of mining machinery includes a full range of large
walking draglines, electric mining shovels and blast hole drills. Walking
draglines and electric mining shovels are used in a broad range of
applications, including removal of overburden in mining operations, loading of
coal, iron and copper ore, other minerals such as phosphate, bauxite, gold and
silver, and a variety of other digging and loading applications. Blast hole
drills are used for boring holes to be used in blasting rock and ore in mines.
Draglines have the highest average price per unit of the Company's machine
categories. Draglines are primarily used to remove overburden located over a
coal or mineral deposit. To accomplish this, the machine drags a large bucket
through the overburden and deposits such overburden in a remote spoil pile.
Draglines are typically described in terms of their "bucket size", which can
range from 9 to 220 cubic yards. The Company's draglines weigh from 500 to
7,500 tons. The Company currently offers a full line of models ranging in
price from $5,000,000 to $40,000,000.
Electric mining shovels are primarily used to load coal, copper ore, iron
ore, other mineral-bearing materials, overburden and rock into some form of
haulage system such as truck or conveyor. Shovels are characterized in terms
of their weight and dipper capacity. The Company offers a full line of
electric mining shovels, weighing from 400 to 1,000 tons and having dipper
capacities from 12 to 80 cubic yards. Prices range from $3,000,000 to
$7,000,000 per shovel.
Most surface mines require breakage of rock, overburden or ore by
explosives. To accomplish this, it is necessary to bore out a pattern of
holes into which the explosives are placed. Blast hole drills are used to
drill the holes, and these machines are usually described in terms of the
diameter of the hole which they bore. The Company offers a full line of blast
hole drills ranging in hole diameter size from 6.0 inches to 17.5 inches and
in selling price from approximately $300,000 to $2,000,000, depending on
machine size and variable features.
Because of their size and weight, the Company's mining machines are
shipped in sub-assembled units to the job site, where they are assembled for
operation with the assistance of Company technicians. A number of the
Company's smaller dragline products are modular, permitting shortened machine
field assembly time and more economical teardown and movement of machines
between non-contiguous mine sites. The planning and on-site coordination of
machine erection is a critical component of the Company's service to its
customers.
In addition, the Company manufactures and sells replacement parts and
components for its mining machines and supplies comprehensive after-sales
service for its entire line of mining machinery. The average useful life of
draglines is 20 to 30 years, and of shovels and drills is up to 20 years. The
Company has a large installed base of surface mining machinery, which has
provided a stream of parts sales. These sales comprise a substantial portion
of the Company's revenues. The Company also provides after-sales service for
certain equipment of other original equipment manufacturers ("OEMs"). In
general, the Company realizes higher margins on sales of parts than it does on
sales of new mining machines. In recent years, gross margins on machines have
been low to negative because of lower prices resulting from overcapacity,
although gross margins on replacement parts have been positive. Accordingly,
most or all of the Company's operating profits are derived from parts sales.
In the United States, mining machinery is sold directly by Company
personnel and through a distributor. Outside of the United States, this
equipment is sold by Company personnel, through independent distributors and
through the Company's subsidiaries located in Australia, Brazil, Canada,
Chile, England, India, Mauritius and South Africa. The Company's mining
machines range in price up to $40,000,000. Typical payment terms for large
draglines and electric mining shovels require a down payment and periodic
progress payments, so that a substantial portion of the price is received by
the time shipment is made to the customer. Sales contracts for machines are
predominantly at fixed prices which, where possible, reflect estimated future
cost increases. The primary market for the Company's replacement parts and
service is provided by the owners of the Company's equipment. Most sales of
replacement parts call for prices in effect at the time of order. Recently,
prices from the Company's vendors have remained stable and, coupled with fixed
and stable prices to the Company's customers, have resulted in minor
inflationary increases on the Company's reported net shipments.
A wholly-owned subsidiary of the Company, Minserco, Inc. ("Minserco"),
provides mining services in the following areas: comprehensive structural and
mechanical engineering, non-destructive testing, rebuilt machine components,
product and component upgrades, contract maintenance and turnkey repair,
erection and machine moves. Minserco has completed a number of large projects
and has others in process in the United States and select overseas locations.
Another wholly-owned subsidiary, Boonville Mining Services, Inc. ("BMSI"),
operates as a separate, independent enterprise and provides replacement parts
and repair and rebuild services for surface mining machinery.
COMPETITION
The Company encounters strong competition from a small number of
manufacturers in the sales of its mining machinery products in both domestic
and foreign markets. The Company manufactures walking draglines, with its
principal competitors being Harnischfeger Corporation and Marion Power Shovel
Company, a division of Indresco Inc. The Company manufactures electric mining
shovels, with its principal competitor in this line being Harnischfeger
Corporation. The Company produces large diameter rotary blast hole drills,
and has several competitors in this product line. Methods of competition are
diverse and include product design and performance, service, delivery,
application engineering, pricing, financing terms and other commercial
factors.
For most Bucyrus-Erie machine owners, the Company is the primary source
for replacement parts. The Company, however, encounters strong competition in
parts sales in both domestic and foreign markets and intense competition in
some domestic markets. The Company's competition in parts sales consists
primarily of "will-fitters," which are smaller firms that produce copies of
the parts manufactured by the Company and other OEMs, and which generally sell
such parts at prices lower than those of the OEMs. The Company has a variety
of programs to attract large volume customers for its replacement parts.
Although will-fitters engage in significant price competition in parts sales,
the Company believes that it possesses certain non-price advantages over will-
fitters. Will-fitters are in many cases unable to duplicate the exact
specifications of genuine Company parts and because the use of parts not
manufactured by the Company can void the warranty on a Company machine. The
Company generally provides a one year warranty on its machines, with certain
components being under warranty for longer periods. The Company also believes
that its engineering and manufacturing technology and marketing expertise
exceeds that of its will-fit competitors.
CUSTOMERS
The Company's customers include most of the large surface mining operators
around the world. A substantial portion of the Company's customers is engaged
in the surface mining of coal which, in turn, is used to produce electric
power. Other customers include companies engaged in the surface mining of
iron ore, copper, phosphate, bauxite and other minerals. In 1994, one
customer, BHP Minerals International Inc., received approximately 20% of the
Company's consolidated net shipments. In 1993 and 1992, no customer received
shipments of greater than 10% of the Company's consolidated net shipments.
The Company is not dependent upon any one customer.
BACKLOG
The backlog of firm orders for the Company was $72,346,000 at December 31,
1994 and $74,023,000 at December 31, 1993. As of December 31, 1994,
approximately 11% of the backlog is not expected to be filled during 1995.
MATERIALS
The Company purchases from outside vendors the semi- and fully-processed
materials (principally structural steel, castings and forgings) required for
its manufacturing operations, and other items, such as electrical equipment,
which are incorporated directly into the end product, and the foreign
subsidiaries of the Company purchase components and manufacturing services
from local subcontractors and some components from the Company. Certain
additional components are sometimes purchased from subcontractors, either to
improve deliveries in times of high demand or to reduce costs. Because of
numerous factors resulting in preference for local content in certain
countries, local subcontractors are normally used to manufacture a substantial
portion of the components required in the Company's foreign manufacturing
operations. The Company believes that its competitors are subject to the same
conditions as the Company.
INVENTORIES
Inventories of the Company on December 31, 1994 were $82,393,000 (42% of
net shipments) compared with $63,671,000 (32% of net shipments) on
December 31, 1993. In accordance with the principles of fresh start reporting
as required by AICPA Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code", inventory as of the
Effective Date was recorded at estimated fair value. The fair value
adjustment totaled $10,427,000 and is being charged to cost of products sold
as the inventory is sold. The fair value adjustment remaining in the December
31, 1994 inventory balance was $10,065,000. At December 31, 1994 and December
31, 1993, $51,889,000 and $37,863,000, respectively, were held as finished
goods inventory (primarily replacement parts) to meet delivery requirements of
customers.
PATENTS, LICENSES AND FRANCHISES
The Company has a number of United States and foreign patents, patent
applications and patent licensing agreements. It does not consider its
business to be materially dependent upon any patent, patent application,
patent license agreement or group thereof.
RESEARCH AND DEVELOPMENT
Expenditures by the Company for design and development of new products and
improvements of existing mining machinery products, including overhead,
aggregated $5,622,000 in 1994 including $2,573,000 of research and development
activities directly related to shipments. Expenditures for 1993 were
$6,939,000 including $2,042,000 for research and development activities
directly related to shipments. The corresponding expenditures for 1992 were
$7,420,000 and $4,116,000, respectively. The Company expenses all engineering
and product development costs as incurred with amounts charged to Cost of
Products Sold, if such activities are directly related to specific customer
contracts, or to Product Development Expense.
ENVIRONMENTAL FACTORS
Environmental problems have not interfered in any material respect with
the Company's manufacturing operations. The Company believes that its
compliance with statutory requirements respecting environmental quality will
not materially affect its capital expenditures, earnings or competitive
position. The Company has an ongoing program to address any potential
environmental problems.
Current federal and state legislation regulating surface mining and
reclamation may affect some of the Company's customers, principally with
respect to the cost of complying with, and delays resulting from, reclamation
and environmental requirements. The Company's products are used for
reclamation as well as for mining, which has a positive effect on the demand
for such products and replacement parts therefor.
EMPLOYEES
As of December 31, 1994, the Company employed 1,059 persons. Three-year
contracts with unions representing hourly workers at the South Milwaukee,
Wisconsin and Memphis, Tennessee facilities expire in August, 1997 and August,
1995, respectively.
SEASONAL FACTORS
The Company does not consider a material portion of its business to be
seasonal.
FOREIGN OPERATIONS
The Company's products are manufactured by subcontractors and licensees in
eight countries other than the United States and are sold internationally by
the Company's and its subsidiaries' sales personnel, manufacturers'
representatives and distributors.
In 1981, the Company entered into a licensing agreement with Mitsui
Engineering and Shipbuilding Co., Ltd. ("M.E.S."), a leading Japanese
shipbuilder and manufacturer of steel structures, heavy machinery and chemical
plants, for the manufacture and sale by M.E.S. of Company designed electric
mining shovels. In December, 1985, the Company entered into a licensing
agreement with China National Non-Ferrous Metals Industry Corporation
("C.N.N.C.") which provides for the manufacture and sale by C.N.N.C. of
Bucyrus-Erie 195-BI electric mining shovels. This agreement was amended in
April, 1994 to include certain components of the 195-BII model.
In 1994, the Company's foreign sales in all segments, consisting of
exports from the United States and sales by consolidated foreign subsidiaries,
totaled $132,000,000. The corresponding figures in 1993 and in 1992 were
$139,000,000 and $156,000,000, respectively. Approximately $60,000,000 of the
Company's backlog of firm orders on December 31, 1994 represented orders for
export shipments, as compared with approximately $60,000,000 on December 31,
1993 and $76,000,000 on December 31, 1992. The Company and its U.S.
subsidiaries normally price their products in U.S. dollars. Foreign
subsidiaries normally procure and price their products in their local
currency. Accordingly, in the usual case there are no material foreign
currency transaction gains and losses borne by the Company. The Company
believes that profitability of its export sales does not vary materially from
the profitability of its domestic sales. A substantial portion of the
Company's consolidated net sales and operating earnings is attributable to
operations located abroad. In recent years, approximately 60 to 70% of the
Company's consolidated net sales were to customers located outside the United
States. Foreign operations are subject to special risks that can materially
affect sales and earnings of the Company, including currency exchange rate
fluctuations, government expropriation, exchange controls, political
instability and other risks. A portion of the Company's consolidated net
sales is to customers in South Africa, where such risks may be greater. The
value, in U.S. dollars, of the Company's investments in its foreign
subsidiaries, and of dividends paid to the Company by those subsidiaries, will
be affected by changes in exchange rates. Further information regarding
foreign operations is included in ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.
CLASSES OF SIMILAR PRODUCTS
Net shipments by the Company by class of similar products for the past
three years were as follows:
1994 1993 1992
(Dollars in Millions)
Shovels and
Draglines $164.5 85% $167.7 84% $198.2 82%
Drills 27.5 14 29.1 15 42.5 17
ITEM 2. PROPERTIES
The Company's principal manufacturing plant in the United States is
located in South Milwaukee, Wisconsin and is owned in fee. This plant
comprises approximately 1,038,000 square feet of floor space. A portion of
this facility houses the corporate offices of the Company. The major
buildings at this facility are constructed principally of structural steel,
concrete and brick and have sprinkler systems and other devices for protection
against fire. The buildings and equipment therein, which include machine
tools and equipment for fabrication and assembly of the Company's mining
machinery, including draglines, electric mining shovels and blast hole drills,
are well maintained, in good condition and in regular use.
The Company leases a facility in Memphis, Tennessee, having approximately
110,000 square feet of floor space, which is used as a central parts
warehouse. The current lease is for five years commencing in July, 1991 and
contains an option to renew for an additional ten years.
BMSI leases a facility in Boonville, Indiana which has approximately
60,000 square feet of floor space on a 5.84 acre parcel of land. The facility
has the manufacturing capability of large machining, gear cutting, heavy
fabricating, rebuilding, and stress relieving. The major manufacturing
buildings are constructed principally of structural steel with metal siding.
ITEM 3. LEGAL PROCEEDINGS AND OTHER CONTINGENCIES
CHAPTER 11 PLAN OF REORGANIZATION
On February 18, 1994, the Company and Holdings commenced voluntary
petitions under chapter 11 of the Bankruptcy Code in the Bankruptcy Court
(Case Nos. 94-20786-RAE and 94-20787-RAE). On December 1, 1994, the
Bankruptcy Court issued an order confirming the Amended Plan, and on
December 14, 1994, the Amended Plan became effective and the Company and
Holdings consummated the Restructuring contemplated by the Amended Plan.
BANKRUPTCY CODE SECTION 503(b) CLAIM FOR REIMBURSEMENT OF PROFESSIONAL FEES
Jackson National Life Insurance Company ("JNL"), the holder of
approximately 41.58% of the Company's Common Stock, has filed a claim against
the Company for reimbursement of professional fees and disbursements incurred
in connection with the Company's chapter 11 proceedings pursuant to Section
503(b) of the Bankruptcy Code in the amount of approximately $3,300,000. The
basis of the claim by JNL is the asserted benefit which the work of the
professionals retained by JNL in the Company's chapter 11 case conferred upon
the creditors of the Company generally. On March 15, 1995, the Company's
Board of Directors designated a committee of independent directors (the
"Special Committee"), comprised of Messrs. Bartlett, Mork, Poole and Victor,
to determine steps to be taken by the Company with respect to JNL's Section
503(b) claim. The Special Committee unanimously determined that the Company
should file an objection to JNL's Section 503(b) claim. On March 31, 1995,
the Company filed an objection to JNL's Section 503(b) claim with the
Bankruptcy Court on the basis that JNL has failed to satisfy the standards
prevailing under the Bankruptcy Code for an award of expenses under Section
503(b) of the Bankruptcy Code. A scheduling conference regarding JNL's
Section 503(b) claim was held on April 5, 1995 in the Bankruptcy Court. A
status conference has been scheduled for June 2, 1995. JNL has publicly
announced that, if JNL's Section 503(b) claim were allowed by the Bankruptcy
Court, JNL would consider receiving shares of the Company's Common Stock from
the Company in lieu of requiring payment in cash. The Company and the Special
Committee have been advised by counsel to the Company that in such counsel's
opinion JNL's Section 503(b) claim is without merit; however, the outcome of
this matter cannot presently be determined.
CONTINGENT LIABILITIES RELATING TO SALES OF ASSETS AND SUBSIDIARIES AND
PRODUCT LIABILITY
The Company has assumed or retained certain liabilities relating to
divested assets and subsidiaries, including, among others, product liability
claims relating to Brad Foote Gear Works, Inc. ("Brad Foote"), Western Gear
Machinery Co., Sky Climber, Inc. and its former construction machinery
business.
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. At
December 31, 1994, there were 19 product liability claims in various courts of
law pending against the Company or one of its subsidiaries or for which the
Company was responsible as a result of its divestiture agreements. The
Company has insurance covering most of said claims, subject to varying
deductibles, ranging from $300,000 to $3,000,000, and normally is not a factor
in the final disposition of claims. It has various limits of liability
depending on the insurance policy year in question. The Company expects, in
light of its past experience in defending similar claims, 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
adverse effect on the Company and its subsidiaries considered as a whole,
although no assurance to that effect can be given.
In February, 1989, Bell Helicopter sued the Company, the Company's
inactive subsidiary, Brad Foote (which is now known as BWC Gear, Inc.
("BWC")), and the purchaser of all of the assets of Brad Foote (the "BF
Purchaser") in the District Court of Tarrant County, Texas, over allegedly
defective gear boxes which were manufactured by BWC and the BF Purchaser under
Bell Helicopter purchase orders that were originally placed with BWC, but
which were assigned by BWC to the BF Purchaser as part of the sale of assets
of Brad Foote. Bell Helicopter sought compensatory damages of approximately
$30,350,000 plus punitive damages (the "Bell Helicopter Claim"). On January
26, 1994, BWC, the Company, Holdings and Bell Helicopter entered into a
settlement agreement and release (the "Bell Settlement Agreement"), pursuant
to which, Bell Helicopter agreed effective as of December 23, 1993 to settle
the Bell Helicopter Claim in consideration of receiving an allowed claim
against the Company in the amount of $3,350,000 in the chapter 11 bankruptcy
proceedings. Pursuant to the Amended Plan, on the Effective Date, Bell
Helicopter received $350,000 in cash and 170,413 shares of the Company's
Common Stock in respect of its allowed claim. On the Effective Date, the
Company was released from all liability in respect of the Bell Helicopter
Claim.
CONTINGENT ENVIRONMENTAL CLAIMS
The Company is one of 53 entities who have been named by the U.S.
Environmental Protection Agency ("EPA") as potentially responsible parties
("PRPs") with regard to the Millcreek dumpsite, Erie County, Pennsylvania,
which is on the National Priorities List of sites for cleanup under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"). The Company was so named as a result of allegations
that it disposed of foundry sand at said site in the 1970's. The U.S.
Department of Justice ("DOJ") filed suit in the U.S. District Court for the
Western District of Pennsylvania in October, 1989, against the Millcreek site
owners and the haulers who allegedly transported waste to the site, for
recovery of past cleanup costs incurred at the site, currently estimated by
the EPA to be approximately $12,000,000. The Company, along with a number of
other defendants, has reached agreement in principle on a settlement of the
aforementioned cost recovery action which would have obligated the Company to
pay approximately $600,000. The government increased its estimate of future
operation and maintenance costs, and the settling defendants are negotiating
with the government over methods of payment of these increased costs. Thirty-
seven PRPs, including the Company, have received Administrative Orders issued
by the EPA pursuant to Section 106(a) of CERCLA to perform the soil capping
portion of the remediation at the Millcreek site. Based on the number of
substantial corporations among the PRPs identified by the EPA as connected with
the Millcreek dump site and the potential availability of at least some
insurance coverage, the Company believes that it will have no material
liability with respect to resolution of this situation, although no assurance
to that effect can be given.
In December, 1990, the Wisconsin Department of Natural Resources ("WDNR")
conducted a pre-remedial screening site inspection on property owned by the
Company located at 1100 Milwaukee Avenue in South Milwaukee, Wisconsin.
Approximately 35 acres of this site were allegedly used as a landfill by the
Company until approximately 1983. The Company disposed of certain
manufacturing wastes at the site, including primarily foundry sand. The
results of the site inspection did not indicate that the site presented a
substantial threat to health or safety or to the environment. To date, the
Company has received no further communications from the WDNR regarding this
site and is not aware of any initiative by the WDNR to require any further
action with respect to this site. Consequently, the Company has not regarded,
and does not regard, this site as presenting a material contingent liability.
There can be no assurance, however, that additional investigation by the WDNR
will not be conducted with respect to this site at some later date or that
this site will not in the future require removal or remedial actions to be
performed by the Company, the costs of which could, depending on the
circumstances, be significant.
JNL LAWSUIT
On September 24, 1993, JNL filed an amended complaint in a civil action in
the United States District Court, Southern District of New York, against
Goldman, Sachs & Co. ("Goldman Sachs"), Broad Street Investment Fund, L.P.
("Broad Street"), individually and as class representatives, Greycliff
Partners, Ltd., Mikael Salovaara, Alfred C. Eckert III, South Street Corporate
Recovery Fund I, L.P., South Street Leveraged Corporate Recovery Fund, L.P.,
South Street Corporate Recovery Fund I (International), L.P. (Messrs.
Salovaara and Eckert, Greycliff Partners, Ltd., such South Street funds and
Greycliff Partners are collectively referred to as the "Greycliff
Defendants"), Firstar Trust Company, National Association ("Firstar"), as
trustee and class representative, State Street Bank and Trust Company of
Connecticut, National Association ("State Street"), as trustee and Does 1-100.
On October 27, 1993, JNL amended its complaint to name the Company, Holdings
and Messrs. William B. Winter, then Chairman of the Board of the Company,
Phillip W. Mork, the Company's President and a Director, Norbert J. Verville,
the Company's Vice President - Finance and Treasurer and then a Director, and
Ray G. Olander, the former Vice Chairman and Director of the Company, as
additional defendants. On March 7, 1995, JNL again amended its complaint
(such amended complaint is referred to as the "JNL Complaint") to name David
M. Goelzer, the Company's Vice President, Secretary and General Counsel,
Messrs. Winter, Verville and Olander (collectively with Mr. Goelzer, the
"Management Defendants"), State Street, the Greycliff Defendants and Does 1-
100, as defendants (collectively, the "Defendants").
The JNL Complaint seeks unspecified money damages and other equitable
relief in connection with (i) JNL's purchase of the Company's Resettable
Senior Notes (the "Resettable Notes") and (ii) certain of the Defendants'
alleged orchestration of a series of financings for the Company and Holdings,
including the 1988 Merger, a 1989 exchange offer by the Company, the
transactions relating to the Old South Street Notes, the Company's sale and
leaseback financing arrangement and the issuance of the Resettable Notes and
certain other related transactions (collectively, the "Becor Transactions")
which are alleged to have had the effect of rendering the Company insolvent,
incapable of competing in its markets and unable to pay its creditors,
including JNL. The JNL Complaint alleges that the Defendants accomplished the
Becor Transactions through violations of federal securities laws and
fraudulent conveyance statutes, common law fraud, negligent misrepresentation
and breaches of fiduciary and other duties by the Management Defendants. On
December 17, 1993, Firstar filed cross-claims against each of the Company and
Holdings seeking judgment on the principal of, interest on and other amounts
due and owing under the Company's 10% Senior Notes (interest rate reset to 16%
as of January 1, 1993) due 1996 (the "10% Senior Notes") and Holdings' Series
A 12-1/2% Senior Debentures due 2002 (the "Series A Debentures"), and filed a
notice of motion for summary judgment on such cross-claims.
As a result of the Company's and Holdings' chapter 11 petitions,
prosecution of the claims asserted in the JNL Complaint was stayed against the
Company and Holdings as of the Petition Date. On the Effective Date, pursuant
to the Amended Plan, JNL exchanged the Resettable Notes for 4,057,203 shares
of the Company's Common Stock. In February, 1995, pursuant to a stipulation
among JNL, the Company and Holdings, the District Court formally dismissed the
JNL Complaint as it relates to the Company and Holdings. Firstar's cross-
claims in respect of the 10% Senior Notes and the Series A Debentures were
discharged pursuant to the Amended Plan. In November, 1994, JNL entered into
a settlement agreement with Goldman Sachs and Broad Street, two defendants
named in JNL's amended complaints filed on September 24, 1993 and October 27,
1993. The terms of such settlement agreement were not disclosed. Mr. Mork
was released by JNL in November, 1994 and was not named as a defendant in the
JNL Complaint. The Management Defendants have rights to indemnification from
the Company for any costs and expenses incurred by them in connection with the
JNL Complaint pursuant to the Amended Plan and the Company's Restated Bylaws.
The Company has been informed by counsel to the Management Defendants that in
said counsel's opinion it is probable that the Management Defendants have
meritorious defenses to all claims asserted in the JNL Complaint; however, the
outcome of this matter cannot currently be determined.
DRESSER INDUSTRIES LAWSUIT
BMSI is a defendant in an amended complaint filed in the Marion County Common
Pleas Court, Marion County, Ohio on September 24, 1992 by Dresser Industries,
Inc. and Indresco Inc. ("Plaintiffs"), alleging that BMSI's purchase of
drawings and other assets of C&M of Indiana, a division of Construction and
Mining Services, Inc., and BMSI's use of these and other drawings allegedly
acquired subsequently, constitute a misappropriation of Plaintiffs' trade
secrets relating to Marion Power Shovel Company, a division of Indresco Inc.
Plaintiffs seek $40 million in compensatory damages, $80 million in punitive
damages, an injunction against future use of Plaintiffs' trade secrets, and
costs and reasonable attorneys fees. The Company has been advised by counsel
to BMSI that in said counsel's opinion the claims against BMSI can be said to
be greatly exaggerated. No claim has been asserted directly against the
Company. BMSI has denied all of the claims asserted in Plaintiffs' amended
complaint and intends to vigorously defend against those claims. The Company
has been informed by counsel to BMSI that in said counsel's opinion BMSI will
be able to assert meritorious defenses to this action; however, the outcome of
this matter cannot currently be determined. The Company does not believe it
is probable that BMSI will have material liability in this suit.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
As noted above, during September, 1994 and October, 1994, the Company and
Holdings solicited acceptances of the Amended Plan from their creditors and
stockholders. On October 31, 1994, the solicitation period expired, and all
classes of the Company's and Holdings' debt securities and Holdings'
stockholders voting on the Prepackaged Plan voted to accept the Prepackaged
Plan, other than the holders of Holdings' Series B Convertible Preferred
Stock, Goldman Sachs and Broad Street. Following execution of a settlement
agreement among Goldman Sachs, Broad Street and JNL (the terms of which were
not disclosed), Goldman Sachs and Broad Street withdrew their objections to
confirmation of the Amended Plan. On December 1, 1994, the Amended Plan was
confirmed by the Bankruptcy Court and on December 14, 1994 the Amended Plan
became effective and the Company and Holdings consummated the Restructuring
through the implementation of the Amended Plan.
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock was issued on December 14, 1994 pursuant to the
Amended Plan and the Merger Agreement in exchange for all of the Company's and
Holdings' outstanding unsecured debt securities and Holdings' outstanding
equity securities. Since December 22, 1994, the Company's Common Stock has
been traded over the counter under the trading symbol BCYR. Prior to
December 23, 1994, there was no established public trading market for the
Company's Common Stock. Based solely on information provided to the Company
by the National Association of Securities Dealers, Inc., for the period from
December 23, 1994 through December 31, 1994: (a) 24,185 shares of the
Company's Common Stock were traded over the counter, and (b) the high sale
price for the Company's Common Stock was $7 3/4 per share and the low sale
price was $6 per share.
As of March 14, 1995, there were 2,220 stockholders of record of the
Company's Common Stock.
Prior to the Effective Date, the Company was a wholly-owned subsidiary of
Holdings and no dividends were declared on its common equity during its two
most recent fiscal years. Since the Effective Date, no dividends were
declared on the Company's Common Stock.
The Credit Agreement, as defined in ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, prohibits the
Company from making any dividends or other distributions upon the Company's
Common Stock, other than dividends payable solely in the Company's Common
Stock or other equity securities of the Company. The Indenture relating to
the Secured Notes prohibits the Company from declaring or paying any dividend
or making any distribution in respect of the Company's Common Stock (other
than dividends or distributions payable solely in shares of its Common Stock
or in options, warrants or other rights to acquire its Common Stock), if at
the time thereof an Event of Default (as defined in such Indenture) or an
event that with the lapse of time or the giving of notice, or both, would
constitute an Event of Default (as defined in such Indenture) shall have
occurred and be continuing.
ITEM 6. SELECTED FINANCIAL DATA
(Dollars In Thousands Except Per Share Amounts)
Reorganized
Company (b) Predecessor Company (c)
December 14 - January 1 -
December 31, December 13, Years Ended December 31,
1994 1994 1993 1992 1991 1990
Consolidated Statements
of Operations Data:
Net shipments $ 7,810 $186,174 $198,464 $242,468 $249,053 $240,866
Loss before
extraordinary gain
and cumulative
effects of changes
in accounting
principles $ (552) $(22,833) $(40,692) $(16,747) $(15,735) $(13,010)
Net earnings (loss) $ (552) $119,647 $(51,990) $(16,747) $(15,735) $(14,013)
Net earnings (loss)
attributable
to common
shareholders $ (552) $ 78,946 $(52,629) $(19,138) $(19,473) $(16,901)
Loss per share
before extra-
ordinary gain
and cumulative
effects of changes
in accounting
principles $ (.05) $ (2.46) $ (4.56) $ (2.64) $ (2.47) $ (2.05)
Net earnings (loss)
per share $ (.05) $ 12.91 $ (5.82) $ (2.64) $ (2.47) $ (2.21)
Net earnings (loss)
per share
attributable
to common
shareholders $ (.05) $ 8.52 $ (5.89) $ (3.01) $ (3.06) $ (2.66)
Cash dividends per
common share $ - $ - $ - $ - $ - $ -
Consolidated Balance
Sheets Data:
Total assets $177,954 N/A $184,900 $204,090 $205,436 $231,227
Long-term debt $ 53,169 N/A $ 769(a) $ 165(a) $158,219 $157,436
Redeemable
preferred stock N/A N/A $ 30,302 $ 29,310 $ 26,342 $ 22,805
<FN>
(a) Amounts are net of $201,979 at December 31, 1993 and $197,334 at December 31, 1992, of long-term debt
classified as a current liability as discussed in ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
(b) As a result of the reorganization and implementation of fresh start reporting as of the Effective Date
the financial statements of the Reorganized Company are not comparable to the financial statements of
the Predecessor Company. See ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA for additional
information.
(c) See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information describes the Company's operations as set
forth in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA and ITEM 6.
SELECTED FINANCIAL DATA. Upon consummation of the Amended Plan, an
extraordinary gain of $142,480,271 was recognized which represented
forgiveness of debt, including accrued interest, write-off of associated
financing fees and settlement of the Bell Helicopter claim, reduced by the
estimated fair value of the Common Stock issued to the holders of Holdings'
and the Company's unsecured debt securities and Bell Helicopter. Holdings and
the Company have accounted for the reorganization by using the principles of
fresh start reporting, as required by AICPA Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code."
Under the principles of fresh start reporting, total assets were recorded at
their assumed reorganization value, with the reorganization value allocated to
identifiable tangible and intangible assets on the basis of their estimated
fair value, and liabilities were adjusted to the present values of amounts to
be paid where appropriate. In addition, the accumulated deficit of
$60,136,850 and cumulative foreign currency adjustments of $3,217,977 were
eliminated. As a result of the implementation of fresh start reporting, the
financial statements of the Reorganized Company (the survivor of the merger of
Holdings with and into the Company) after consummation of the Amended Plan are
not comparable to the financial statements of prior periods. The financial
statements presented for prior periods are not the Company's, but instead are
those of Holdings (Holdings is referred to as the "Predecessor Company"), the
former parent of the Company. The acquisition of the Company by Holdings on
February 4, 1988 was accounted for as a purchase and, accordingly, the assets
and liabilities of Holdings were recorded at their estimated fair values as of
the acquisition date. The excess of the related purchase cost over the fair
value of identifiable net assets was allocated to goodwill. The Predecessor
Company consolidated financial statements included the related depreciation
and amortization charges associated with the fair value adjustments since the
date of the acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Working capital and current ratio are two financial measurements which
provide an indication of the Company's ability to meet its short-term
obligations. These measurements at December 31, 1994, 1993 and 1992 were as
follows:
1994 1993 1992
(Reorganized (Predecessor Company)
Company)
Working capital (deficiency)
(in millions) $ 77.8 $(164.0) $(121.9)
Current ratio 2.6 to 1 .4 to 1 .5 to 1
The increase in working capital and the current ratio for the year ended
December 31, 1994 was primarily due to the forgiveness of debt, principal and
interest, upon consummation of the Amended Plan. The decrease in working
capital and the current ratio for the year ended December 31, 1993 was
primarily due to the accrual of interest expense. Due to the Restructuring,
the accrued interest on Holdings' and the Company's unsecured debt securities
was not paid.
The table below summarizes the Company's cash position at December 31,
1994:
Restricted Unrestricted
Location Cash Cash Total
United States $ - $ 9,543,633 $ 9,543,633
Foreign Subsidiaries 18,898 5,848,035 5,866,933
Equipment Assurance Limited 3,655,866 816,911 4,472,777
___________ ___________ ___________
$ 3,674,764 $16,208,579 $19,883,343
Of the $9,543,633 of unrestricted cash in the United States,
approximately $3,400,000 is required for payment of expenses that were
incurred in connection with the Restructuring (primarily legal and
professional fees) and approximately $2,700,000 is required to be refunded to
the Internal Revenue Service for an excess refund received in 1993. A portion
of the unrestricted cash at the foreign subsidiaries and Equipment Assurance
Limited ("EAL"), an off-shore insurance subsidiary of the Company, is not
readily repatriatable because it is required for working capital purposes at
these respective locations.
The following table reconciles Loss Before Income Taxes, Extraordinary
Gain and Cumulative Effects of Changes in Accounting Principles to earnings
before reorganization items, inventory fair value adjustment charged to cost
of products sold, interest, taxes, depreciation and amortization ("Adjusted
EBITDA"):
Reorganized
Company Predecessor Company
December 14 - January 1 -
December 31, December 13, Years Ended December 31,
1994 1994 1993 1992
Loss before
income taxes,
extraordinary
gain and
cumulative
effects of
changes in
accounting
principles $ (427,114) $(21,438,431) $(39,775,632) $(15,807,117)
Reorganization
items - 9,337,797 4,387,266 -
Inventory fair
value adjustment
charged to cost
of products
sold 362,246 - - -
Non cash expenses:
Depreciation 145,060 7,356,734 7,614,551 7,874,227
Amortization
of goodwill,
intangible assets
and other items 23,032 3,678,806 4,444,693 4,987,856
Deferred rent
(interest) on sale
and leaseback
financing
arrangement
(Predecessor
Company) and
payment in kind
interest on the
Secured Notes
(Reorganized
Company) 258,190 7,286,686 5,749,264 2,178,611
Amortization of
debt discount - 71,179 473,969 4,378,419
____________ ____________ ____________ ____________
Cash available
for use before
non-cash interest
expense, income
taxes and
cumulative
effects of
changes in
accounting
principles 361,414 6,292,771 (17,105,889) 3,611,996
Cash interest
expense (1) 25,981 6,552,825 28,841,951 21,589,194
____________ ____________ ____________ ____________
Adjusted EBITDA $ 387,395 $ 12,845,596 $ 11,736,062 $ 25,201,190
<FN>
(1) Includes all accrued but unpaid interest prior to the Petition Date.
Contractual interest of $20,250,230 on the unsecured debt of the Predecessor
Company did not accrue subsequent to the Petition Date. Excludes amortization
of debt discount, deferred rent (interest) on the sale and leaseback financing
arrangement and interest on the Secured Notes that will be paid in kind.
On the Effective Date pursuant to the Amended Plan, the Company issued
an aggregate principal amount of $52,072,000 of Secured Notes due December 14,
1999 to the South Street Funds in exchange for the Old South Street Notes and
the Company's obligations under a sale and leaseback financing arrangement.
Interest on the Secured Notes accrues at a rate of 10.5% per annum until
December 14, 1995. Thereafter, interest accrues at a rate of 10.5% per annum,
if paid in cash, or 13.0% per annum, if paid in kind. The Credit Agreement
(as defined below) requires accrued interest on the Secured Notes, which
aggregated $258,000 through December 31, 1994, to be paid in kind prior to
January 1, 1996, and thereafter restricts the cash payment of principal and
interest on the Secured Notes unless certain ratios and conditions are met.
Otherwise, interest on the Secured Notes is payable in kind at the discretion
of the Company during the term of the Secured Notes. The Secured Notes are
secured by a security interest on substantially all of the Company's property
(other than real estate) in favor of Harris Trust and Savings Bank, as
Collateral Agent (the "Collateral Agent"), which is subordinated to the
security interest in favor of Bank One securing up to $16,000,000 in
indebtedness and other amounts owing under the Credit Agreement (as defined
below). The Company has also granted a security interest in favor of the
Collateral Agent in the shares of the Company's U.S. subsidiaries and 65% of
the shares of certain non-U.S. subsidiaries (collectively, the "Pledged
Shares").
Pursuant to the Amended Plan, the Company entered into a Credit
Agreement dated as of December 14, 1994, with Bank One (the "Credit
Agreement"). The Credit Agreement contains a credit facility for working
capital and general corporate purposes (the "Loan Facility") and a letter of
credit facility (the "L/C Facility"). Under the Loan Facility, the Company
may borrow up to $5,000,000 through December 31, 1995, and from January 1,
1996 through December 31, 1996, the Company may borrow up to $2,500,000,
provided that it meets certain earnings before interest, taxes, depreciation
and amortization tests, as defined. Borrowings under the Loan Facility mature
on December 31, 1996 and interest is payable at the Company's option either at
a rate equal to Bank One's reference rate plus 0.75% per annum or an adjusted
LIBOR rate plus 2.75% per annum. Under the L/C Facility, Bank One has agreed
to issue letters of credit for the benefit of the Company through December 31,
1996 in an aggregate amount not in excess of $15,000,000 minus the then
outstanding aggregate borrowings by the Company under the Loan Facility,
provided that no letter of credit may expire after December 31, 1997.
Borrowings under the Credit Agreement are secured by a security interest on
substantially all of the Company's property (other than real estate),
including the Pledged Shares, which, to the extent described above, is senior
to the security interest created in favor of the Collateral Agent. As of
December 31, 1994, the Company did not have any borrowings outstanding under
the Loan Facility and $6,373,000 of the L/C Facility was being used.
The agreements relating to the Secured Notes and the Credit Agreement
permit project financing which enables the Company to borrow money to pay
costs associated with the manufacture of mining machinery or other products
pursuant to binding purchase contracts. Project financing borrowings are
secured by the inventory being financed and any accounts receivable relating
to such inventory. Project financing borrowings mature not later than the
date of the final payment by the customer under the applicable purchase
contract. As of December 31, 1994, the Company had $6,237,000 of outstanding
project financing borrowings.
The Company believes that, as a result of the Restructuring, current and
projected levels of liquidity, together with funds generated by operations,
will be sufficient to permit the Company to satisfy its debt service
requirements and fund operating activities for the foreseeable future. The
Company is subject to significant business, economic and competitive
uncertainties that are beyond its control. Accordingly, there can be no
assurance that the Company's financial resources will be sufficient for the
Company to satisfy its debt service obligations and fund operating activities
under all circumstances.
The Company had outstanding letters of credit and guarantees of
$9,578,000 at December 31, 1994. Of this amount, $6,373,000 is related to the
Credit Agreement with the remainder provided by various banks and insurance
companies.
As required under various agreements, EAL has pledged $3,655,866 of its
cash to secure its reimbursement obligations for outstanding letters of credit
and a subsidiary's bank debt at December 31, 1994. This collateral amount is
classified as Restricted Funds on Deposit in the Consolidated Balance Sheets.
At December 31, 1994, the Company had approximately $1,039,000 of open
approved capital appropriations. The Company does not anticipate any
substantial increase in the level of annual capital expenditures in 1995.
The Company provides certain health care benefits to age 65 and life
insurance benefits for certain eligible retired United States employees.
Substantially all of Company's employees may become eligible for those
benefits if they reach early retirement age while working for the Company.
The Company funds the majority of the costs of such benefits as they are
incurred. The Company's obligation for these benefits as of December 31, 1994
was $13,237,000.
PROFITABILITY MEASUREMENTS
Ratios of returns on net shipments, assets employed and shareholders'
investment are not meaningful at this time for the Company due to losses
incurred.
CAPITALIZATION
As a result of the Restructuring, the long-term debt to equity ratio as
of December 31, 1994 was 1.0 to 1. Financial ratios for prior periods are not
meaningful at this time for the Company due to losses incurred.
RESULTS OF OPERATIONS
Net Shipments and Net Earnings (Loss)
Net shipments for 1994 were $193,984,451 compared with $198,464,139 for
1993. Shipments of repair parts and services increased 1.6% from 1993 and
machine shipments decreased 12.0%. The decrease in machine shipments was
primarily due to reduced electric mining shovel shipments. The pricing for
machines and repair parts has been stable during these periods.
Net shipments for 1993 were $198,464,139 compared with $242,468,428 for
1992. Shipments of repair parts and services decreased 5.3% from 1992 and
machine shipments decreased 39.0%. The decrease in repair parts and service
shipments was primarily due to decreased repair parts shipments at foreign
locations. This decrease was due to lower demand for replacement parts. The
decrease in machine shipments was primarily due to an absence of dragline
shipments in 1993. The pricing for machines and repair parts has continued to
remain steady with the changes primarily related to volume.
Net earnings for 1994 were $119,094,721 compared with a net loss of
$51,989,651 for 1993. The increase in earnings for 1994 was primarily due to
reduced interest expense of $20,870,323, an extraordinary gain on debt
discharge of $142,480,271 and a net charge in 1993 of $11,297,385 for the
cumulative effects of changes in accounting principles as a result of adoption
of Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" ("SFAS 106") and Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), partially offset by an increase in reorganization items of $4,950,531
in 1994. Also included in net earnings (loss) were non-cash depreciation and
amortization charges of $11,203,632 and $12,059,244 for 1994 and 1993,
respectively.
Net loss for 1993 was $51,989,651 compared with a net loss of
$16,747,090 for 1992. Included in net loss for 1993 was a net charge of
$11,297,385 for the cumulative effects of changes in accounting principles as
a result of adoption of SFAS 106 and SFAS 109. Also included in net losses
for 1993 and 1992 were non-cash depreciation and amortization charges of
$12,059,244 and $12,862,083, respectively. The increase in net loss was
primarily due to reduced gross margin from lower repair parts volume,
restructuring costs and increased interest expense.
The Company's consolidated backlog on December 31, 1994 was $72,346,000
compared with $74,023,000 on December 31, 1993 and $92,386,000 on December 31,
1992. Machine backlog is down .8% from December 31, 1993. Repair parts and
service backlog is down 3.1% from December 31, 1993, primarily due to a
reduction at domestic locations.
New orders for 1994 increased 6.8% from 1993. New machine orders for
1994 were 18.1% higher than 1993, primarily due to increased demand in copper
markets. New repair parts and service orders for 1994 increased 3.4% from
1993, primarily due to increases at foreign locations.
The Company believes expansion of coal and iron ore production in China
and coal production in India, new copper projects in South America and
replacement of old equipment in iron ore mines should provide near term
machine sales potential. Continued upgrading of existing machines along with
movement of existing large draglines by operators to new mine sites and normal
drill and shovel parts demand should result in steady shipments of repair
parts worldwide in the next twelve months. Although the movement and
upgrading of existing draglines should positively impact parts sales in 1995,
these options continue to further reduce the worldwide demand for new
draglines. In addition, the United States coal market continues to be
negatively impacted by the effects of The Clean Air Act.
Interest, Royalties and Miscellaneous
Interest, royalties and miscellaneous for 1994 was $3,054,956 compared
with $1,735,239 for 1993. The increase was primarily due to a favorable
insurance settlement of $1,350,000 in 1994.
Interest, royalties and miscellaneous for 1993 was $1,735,239 compared
with $4,349,186 for 1992. The decrease was primarily due to the reversal of
$794,000 of reserves of EAL resulting from an evaluation of the adequacy of
these reserves in the fourth quarter of 1993 compared with a reversal of
$1,500,000 in 1992, $1,022,757 of interest income on federal income tax
refunds in 1992 and a reduction in interest income of $440,548 resulting from
lower invested cash balances.
Cost of Products Sold
Cost of products sold for 1994 was $163,892,682 or 84.5% of shipments
compared with $166,921,197 or 84.1% of shipments for 1993 and $200,723,826 or
82.8% of shipments for 1992. The changes in the cost of products sold
percentages were primarily the result of the mix of products sold.
Included in cost of products sold for 1994 was $362,000 as a result of
the fair value adjustment to inventory. This adjustment was made in
accordance with the principles of fresh start reporting and is being charged
to cost of products sold as the inventory is sold. The Company expects the
remaining adjustment of $10,065,000 to be charged to cost of products sold
during 1995.
Included in cost of products sold were foreign currency translation
losses of $212,860 for 1994 compared with $695,011 for 1993 and $245,916 for
1992. The losses occurred primarily in Brazil and were the result of applying
Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation".
Product Development, Selling, Administrative and Miscellaneous Expenses
Product development, selling, administrative and miscellaneous expenses
for 1994 were $31,479,612 or 16.2% of shipments compared with $33,601,363 or
16.9% of shipments in 1993 and $33,754,681 or 13.9% of shipments in 1992. The
decrease in 1994 from 1993 was primarily due to reduced product development
expense as a result of increased work on specific customer contracts. The
percentage increase in 1993 compared with 1992 was primarily due to decreased
shipments in 1993.
Interest Expense
Interest expense for 1994 was $14,194,861 compared with $35,065,184 for
1993. The decrease was primarily due to not accruing interest subsequent to
the Petition Date on Holdings' and the Company's unsecured debt securities
which included the Company's 10% Senior Notes, the Company's Resettable Senior
Notes, the Company's 9% Sinking Fund Debentures and Holdings' Series A 12-1/2%
Senior Debentures.
Interest expense for 1993 was $35,065,184 compared with $28,146,224 for
1992. The increase was primarily due to an increase in the annual interest
rates on the 10% Senior Notes to 16% per annum and on the Resettable Senior
Notes to 15% per annum resulting in an increase in interest expense of
$4,477,680 and $1,500,000, respectively, an increase in rent of $3,570,653,
which, for accounting purposes, is classified as interest, on a sale and
leaseback financing arrangement and an increase in interest of $1,257,889 on
the Old South Street Notes, partially offset by a reduction in debt discount
amortization of $3,904,450. Of the $35,065,184 of interest expense for 1993,
$33,927,205 was accrued and unpaid interest on debt securities that were in
default.
Reorganization Items
Reorganization items represent the expenses incurred as a result of the
commencement of the Restructuring and the Company's efforts to reorganize
under chapter 11 of the Bankruptcy Code. Reorganization items in 1994 consist
of $8,023,309 of legal and professional fees, $41,121,683 to adjust debt and
redeemable preferred stock to the amount of the allowed claims in the Amended
Plan and a $1,112,927 write-off of capitalized financing costs. These
expenses were partially offset by $365,317 of interest income earned from the
Petition Date through December 13, 1994 on accumulated cash balances of
Holdings and the Company. In 1993, reorganization items consist entirely of
legal and professional fees.
Income Taxes
The provision for income taxes reflects the effects of applying SFAS 109
in 1994 and 1993 and Statement of Financial Accounting Standards No. 96,
"Accounting for Income Taxes", in 1992 and the recognition of foreign tax
expense at applicable statutory rates. The cumulative effect of adopting SFAS
109 on the Predecessor Company's financial statements was a tax benefit of
$446,724 ($.05 per share) which has been included in the Consolidated
Statement of Operations for the year ended December 31, 1993. In 1992, the
Company reversed a portion of prior years' accruals for income taxes at an
inactive subsidiary which was determined to be no longer necessary as a result
of favorable settlements of state tax disputes during the year, resulting in a
$2,000,000 reduction of income tax expense.
A more detailed discussion of income taxes can be found in ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTE I.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Reorganized
Company Predecessor Company
December 14 - January 1 -
December 31, December 13, Years Ended December 31,
1994 1994 1993 1992
REVENUES:
Net shipments $ 7,810,105 $186,174,346 $198,464,139 $242,468,428
Interest, royalties and miscellaneous 79,385 2,975,571 1,735,239 4,349,186
____________ ____________ ____________ ____________
7,889,490 189,149,917 200,199,378 246,817,614
____________ ____________ ____________ ____________
COSTS AND EXPENSES:
Cost of products sold - Notes C and L 6,886,084 157,006,598 166,921,197 200,723,826
Product development, selling, administrative,
and miscellaneous expenses - Note L 1,146,349 30,333,263 33,601,363 33,754,681
Interest expense (Predecessor contractual
interest not recognized in 1994 -
$20,250,230) - Note G 284,171 13,910,690 35,065,184 28,146,224
Reorganization items - Notes A and B - 9,337,797 4,387,266 -
____________ ____________ ____________ ____________
8,316,604 210,588,348 239,975,010 262,624,731
____________ ____________ ____________ ____________
Loss before income taxes, extraordinary
gain and cumulative effects of changes
in accounting principles (427,114) (21,438,431) (39,775,632) (15,807,117)
Income taxes - Note I 125,276 1,394,729 916,634 939,973
____________ ____________ ____________ ____________
Loss before extraordinary gain and
cumulative effects of changes in
accounting principles (552,390) (22,833,160) (40,692,266) (16,747,090)
Extraordinary gain - Note A - 142,480,271 - -
Cumulative effects of changes in
accounting principles for:
Postretirement benefits - Note K $ - $ - $(11,744,109) $ -
Income taxes - Note I - - 446,724 -
____________ ____________ ____________ ____________
Net earnings (loss) (552,390) 119,647,111 (51,989,651) (16,747,090)
Redeemable preferred stock dividends -
Note H - (40,453) 50,459 (1,868,912)
Preferred stock accretion - Note H - (105,548) (689,481) (522,004)
Reorganization item - preferred stock -
Notes A and H - (40,554,805) - -
____________ ____________ ____________ ____________
Net earnings (loss) attributable
to common shareholders $ (552,390) $ 78,946,305 $(52,628,673) $(19,138,006)
Net earnings (loss) per share of common
stock - Note M:
Loss before extraordinary gain and
cumulative effects of changes
in accounting principles $( .05) $(2.46) $(4.56) $(2.64)
Extraordinary gain - 15.37 - -
Cumulative effects of changes in
accounting principles for:
Postretirement benefits - - (1.31) -
Income taxes - - .05 -
______ ______ ______ ______
Net earnings (loss) (.05) 12.91 (5.82) (2.64)
Preferred stock dividends, accretion and
reorganization item - (4.39) (.07) (.37)
______ ______ ______ ______
Net earnings (loss) attributable to
common shareholders $( .05) $ 8.52 $(5.89) $(3.01)
See notes to consolidated financial statements.
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
1994 1993 1994 1993
(Reorganized (Predecessor (Reorganized (Predecessor
(Company) (Company) Company) Company)
LIABILITIES AND SHAREHOLDERS'
ASSETS - Notes B and G INVESTMENT (DEFICIENCY IN ASSETS)
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash equivalents Accounts payable and
- Notes C and O $ 16,208,579 $ 13,696,244 accrued expenses - Notes B,
Restricted funds on F, J and K $ 31,703,558 $ 53,665,642
deposit - Note C - 512,173 Liability to customers on
Receivables - Notes D uncompleted contracts,
and O 26,219,945 25,731,294 warranties and other -
Inventories - Notes C Notes A and C 7,238,504 8,196,401
and E 82,393,121 63,671,237 Income taxes-Notes B and I 2,819,743 448,493
Prepaid expenses and Current maturities of long-
other assets 1,855,961 1,630,226 term debt - Note G 7,123,272 4,954,196
____________ ____________ ____________ ____________
Total Current Assets 126,677,606 105,241,174 48,885,077 67,264,732
OTHER ASSETS: Long-term debt classified
Restricted funds on as a current liability -
deposit - Note C 3,674,764 6,024,659 Notes A and G - 201,979,324
Goodwill - Note C - 17,003,213 ____________ ____________
Intangible assets - Note C 9,497,149 7,780,263
Other assets - Note I 2,414,087 2,480,555 Total Current Liabilities 48,885,077 269,244,056
____________ ____________
DEFERRED LIABILITIES:
15,586,000 33,288,690 Income taxes - Notes
B and I 122,331 157,544
PROPERTY, PLANT AND EQUIPMENT Liabilities to customers
- Note C: on uncompleted contracts
Land 1,521,678 2,132,556 and warranties - Note C 3,260,814 4,587,014
Buildings and improvements 5,262,122 18,985,480 Postretirement benefits -
Machinery and equipment 29,113,022 66,393,652 Notes B and K 11,828,446 15,590,236
Less accumulated Deferred expenses
depreciation (206,457) (41,141,094) and other - Note B 7,070,735 7,298,284
____________ ____________ ____________ ____________
35,690,365 46,370,594 22,282,326 27,633,078
LONG-TERM DEBT, less
amounts classified as
current liabilities -
Notes A, B and G 53,169,481 768,728
COMMITMENTS AND CONTINGENCIES -
Notes A, G and O
PREFERRED STOCK - Notes A,
B and H:
Series A Redeemable - par
value $.01 per share,
liquidation preference
$25 per share, 2,412,792
shares issued and
outstanding (aggregate
liquidation/redemption
preference $70,088,379) - 30,301,570
Series B - par value $.01
per share, issued and
outstanding 6,291,805
shares - 62,918
COMMON SHAREHOLDERS' INVESTMENT
(DEFICIENCY IN ASSETS) -
Notes A, B and H:
Reorganized Company:
Common Stock - par value $.01
per share, authorized
20,000,000 shares, issued
and outstanding 10,170,417
shares 101,704 -
Additional paid-in
capital 53,898,296 -
Accumulated deficit (552,390) -
Cumulative foreign currency
translation adjustments 169,477 -
Predecessor Company:
Class C - par value $.01
per share, issued and
outstanding 9,176,427
shares - 91,764
Class D - par value $.01
shares, issued and
outstanding 88,154 shares - 882
Warrants - issued and
outstanding 6,392 - 971
Accumulated deficit - (138,994,351)
Cumulative foreign currency
translation adjustments - (4,209,158)
____________ ____________
53,617,087 (143,109,892)
____________ ____________ ____________ ____________
$177,953,971 $184,900,458 $177,953,971 $184,900,458
<FN>
See notes to consolidated financial statements.
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Reorganized
Company Predecessor Company
December 14 - January 1 -
December 31, December 13, Years Ended December 31,
1994 1994 1993 1992
Cash Flows From Operating Activities
Net earnings (loss) $ (552,390) $119,647,111 $(51,989,651) $(16,747,090)
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in)
operating activities:
Depreciation 145,060 7,356,734 7,614,551 7,874,227
Amortization of goodwill, intangible assets
and other items 23,032 3,678,806 4,444,693 4,987,856
Deferred rent (interest) on sale and leaseback
financing arrangement - 7,286,686 5,749,264 2,178,611
Payment in kind interest on the Secured Notes 258,190 - - -
Amortization of debt discount - 71,179 473,969 4,378,419
Loss (gain) on sale of property, plant
and equipment 5,105 37,372 (42,022) 145,393
Non-cash reorganization items - 1,679,805 - -
Extraordinary gain - (142,480,271) - -
Cumulative effects of changes in
accounting principles - - 11,297,385 -
Changes in assets and liabilities:
Decrease (increase) in receivables 4,318,474 (4,616,173) 944,456 (2,156,599)
(Increase) decrease in inventories (61,102) (7,539,570) 2,193,570 (2,302,307)
(Increase) decrease in other current assets (73,296) 124,866 772,295 (1,999,034)
Decrease (increase) in other assets 14,629 505,013 (621,953) (746,345)
(Decrease) increase in current liabilities
other than income taxes and current
maturities of long-term debt (5,162,406) 17,548,053 22,301,377 (16,770,104)
Increase (decrease) in income taxes 301,696 543,127 (1,566,057) (1,724,874)
Decrease in deferred liabilities
other than income taxes (153,879) (2,112,065) (7,390,729) (2,863,872)
____________ ____________ ____________ ____________
Net cash provided by (used in)
operating activities (936,887) 1,730,673 (5,818,852) (25,745,719)
____________ ____________ ____________ ____________
Cash Flows From Investing Activities
(Increase) decrease in restricted funds
on deposit (205) 2,862,843 3,273,815 (5,711,880)
Purchases of property, plant and equipment (190,460) (2,615,888) (2,989,482) (3,750,148)
Proceeds from sale of property, plant
and equipment - 125,263 284,054 52,233
____________ ____________ ____________ ____________
Net cash provided by (used in)
investing activities (190,665) 372,218 568,387 (9,409,795)
____________ ____________ ____________ ____________
Cash Flows From Financing Activities
Payment of current maturities of long-term debt - (833,843) (1,137,847) (1,195,518)
Proceeds from issuance of long-term
project financing obligations 1,619,525 7,891,323 8,516,241 -
Reduction of long-term project
financing obligations - (6,933,696) (4,856,362) -
(Payments of) proceeds from other obligations - (375,834) 375,834 -
Proceeds from issuance of long-term debt - - - 16,750,000
Proceeds from sale and leaseback
financing arrangement - - - 18,250,000
Proceeds from exercise of warrants - 64 29,039 -
Proceeds from exercise of stock options - - 753 -
____________ ____________ ____________ ____________
Net cash provided by (used in)
financing activities 1,619,525 (251,986) 2,927,658 33,804,482
____________ ____________ ____________ ____________
Effect of exchange rate changes on cash (4,840) 174,297 (466) 171,601
____________ ____________ ____________ ____________
Net increase (decrease) in cash
and cash equivalents 487,133 2,025,202 (2,323,273) (1,179,431)
Cash and cash equivalents at beginning
of period 15,721,446 13,696,244 16,019,517 17,198,948
____________ ____________ ____________ ____________
Cash and cash equivalents at end of period $ 16,208,579 $ 15,721,446 $ 13,696,244 $ 16,019,517
============ ============ ============ ============
Supplemental Disclosures of Cash Flow Information
Cash paid (received) during the period for:
Interest on long-term debt and
bank borrowings $ 19,595 $ 344,895 $ 4,209,125 $ 21,653,287
Reorganization items (1) 484,380 4,582,027 3,600,258 -
Income taxes (2) 12,257 (259,426) 380,087 1,743,726
(1) The 1994 amount for the Predecessor Company is net of interest income received of $365,317.
(2) These amounts are net of federal and state income tax refunds of $908,299 (including $838
for the Reorganized Company) in 1994, $1,071,261 in 1993 and $870,655 in 1992.
Supplemental Schedule of Non-Cash Investing and Financing Activities
(A) Prior to the Petition Date, the Company increased the carrying amount of the Series A redeemable preferred stock by
amounts representing the estimated fair value of the pre-petition dividends not declared or paid, but which were payable
under mandatory redemption features. The Company also recorded preferred stock discount accretion on these securities prior
to the Petition Date. As of the Petition Date, the Company increased the carrying amount of the Series A redeemable
preferred stock to the amount of the allowed claim in the Prepackaged Plan. The amounts as reflected in the consolidated
financial statements were as follows:
Predecessor Company
January 1 -
December 13, Years Ended December 31,
1994 1993 1992
Redeemable preferred stock dividends at net book value $ 129,257 $ 301,600 $ 2,446,187
Redeemable preferred stock accretion 105,548 689,481 522,004
Write-up of redeemable preferred stock issued at a discount to
amount of allowed claim in the Amended Plan 40,554,805 - -
____________ ____________ ____________
$ 40,789,610 $ 991,081 $ 2,968,191
(B) Pursuant to the Amended Plan, the Reorganized Company issued shares of New Common Stock in exchange for the unsecured
debt securities of Holdings and Bucyrus and the equity securities of Holdings. Also, as of the Effective Date, the
Reorganized Company adopted the principles of fresh start reporting. See Notes A and B of the Notes to the Consolidated
Financial Statements.
See notes to consolidated financial statements.
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' INVESTMENT (DEFICIENCY IN ASSETS)
Periods Ended December 31, 1994 and December 13, 1994 and
Years Ended December 31, 1993 and 1992
Cumulative
Foreign
Additional Currency
Common Stock Paid-In Accumulated Translation
Class A Class C Class D New Warrants Capital Deficit Adjustments
Predecessor Company
Balance at
January 1, 1992 $ 63,547 $ - $ - $ - $ 636,962 $ - $ (66,935,022) $ (156,846)
Conversion of
Class A common
stock to Class
C common stock
6,354,724
shares) (63,547) 63,547
Net loss (16,747,090)
Preferred stock
accretion (522,004)
Preferred stock
dividends (2,446,187)
Translation
adjustments (2,895,418)
_________ _________ _________ _________ _________ ___________ _____________ ___________
Balance at
December 31, 1992 - 63,547 - - 636,962 - (86,650,303) (3,052,264)
Exercise of
warrants
(2,903,832
shares) 29,039 (440,961) 440,961
Expiration of
warrants (195,030) 195,030
Conversion of
Class C common
stock to Class
D common stock
(88,154 shares) (882) 882
Exercise of
options
(6,025 shares) 60 693
Net loss (51,989,651)
Preferred stock
accretion (423,169) (266,312)
Preferred stock
dividends (213,515) (88,085)
Translation
adjustments (1,156,894)
_________ _________ _________ _________ _________ ___________ _____________ ___________
Balance at
December 31,
1993 $ - 91,764 $ 882 $ - $ 971 - (138,994,351) (4,209,158)
Exercise of
warrants (6,392
shares) 64 (971) 971
Conversion of
Class C common
stock to Class
D common stock
(20,926 shares) (209) 209
Net earnings 119,647,111
Preferred stock
accretion (105,548)
Preferred stock
dividends (129,257)
Reorganization
item -
preferred stock (40,554,805)
Translation
adjustments 991,181
Cancellation of
former equity
and elimination
of accumulated
deficit and
cumulative
foreign currency
translation
adjustments (91,619) (1,091) (971) 60,136,850 3,217,977
Issuance of new
common stock
(10,170,417
shares) $ 101,704 53,898,296
_________ _________ _________ _________ _________ ___________ _____________ ___________
Balance at
December 13,
1994 $ - $ - $ - $ 101,704 $ - $53,898,296 $ - $ -
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' INVESTMENT (DEFICIENCY IN ASSETS) (CONTINUED)
Periods Ended December 31, 1994 and December 13, 1994 and
Years Ended December 31, 1993 and 1992
Cumulative
Foreign
Additional Currency
Common Paid-In Accumulated Translation
Reorganized Company Stock Capital Deficit Adjustments
Balance at December 14, 1994 $ 101,704 $53,898,296 $ - $ -
Net loss - December 14
to December 31, 1994 (552,390)
Translation adjustments -
December 14 to
December 31, 1994 169,477
_________ ___________ __________ _________
Balance at December 31, 1994 $ 101,704 $53,898,296 $ (552,390) $ 169,477
<FN>
See notes to consolidated financial statements.
BUCYRUS-ERIE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Periods Ended December 31, 1994 and December 13, 1994 and
Years Ended December 31, 1993 and 1992
Note A - Reorganization:
On February 18, 1994 (the "Petition Date"), B-E Holdings, Inc.
("Holdings") and its wholly-owned subsidiary, Bucyrus-Erie Company
("Bucyrus"), commenced voluntary petitions under chapter 11 of the
Bankruptcy Code and filed a prepackaged joint plan of reorganization
in the United States Bankruptcy Court, Eastern District of Wisconsin
(the "Bankruptcy Court"). No subsidiaries of Holdings or Bucyrus
were included in the filing.
On December 1, 1994 (the "Confirmation Date"), the Bankruptcy Court
entered an order confirming the Second Amended Joint Plan of
Reorganization of Holdings and Bucyrus as modified on December 1,
1994 (the "Amended Plan"). The effective date of the Amended Plan
was December 14, 1994 (the "Effective Date"). During the period from
the Petition Date through December 13, 1994, the business and affairs
of Holdings and Bucyrus were conducted as debtors-in-possession by
their respective officers and directors, subject to the supervision
and orders of the Bankruptcy Court.
On the Effective Date, Holdings merged with and into Bucyrus (the
survivor of such merger is referred to as the "Reorganized Company")
pursuant to the Amended Plan and the Agreement and Plan of Merger
dated as of December 14, 1994 between Holdings and Bucyrus (the
"Merger Agreement"). Pursuant to the Amended Plan and the Merger
Agreement, the Reorganized Company issued 10,170,417 shares of its
common stock, par value $.01 per share (the "New Common Stock"). The
Reorganized Company issued 10,000,004 shares of New Common Stock to
holders of Holdings' and Bucyrus' unsecured debt securities and
Holdings' equity securities in exchange for such securities as
described below:
For each $1,000
principal amount of: The holder received:
10% Senior Notes (interest
rate reset to 16% as of
January 1, 1993) due
1996 of Bucyrus . . . . . . 67.1374 shares of New Common Stock
Resettable Senior Notes
due 1996 of Bucyrus . . . . 67.62005 shares of New Common Stock
9% Sinking Fund Debentures
due 1999 of Bucyrus . . . . 63.0427 shares of New Common Stock
Series A 12-1/2% Senior
Debentures due 2002
of Holdings . . . . . . . . 17.4228 shares of New Common Stock
For each 100 shares of:
Series A 12-1/2% Cumulative
Exchangeable Preferred
Stock, par value $.01 per
share, of Holdings. . . . . 6.6477 shares of New Common Stock
Series B Convertible
Preferred Stock, par
value $.01 per share,
of Holdings . . . . . . . . 0.5153 shares of New Common Stock
Class C Common Stock, par
value $.01 per share,
of Holdings . . . . . . . . 0.5153 shares of New Common Stock
Class D Common Stock, par
value $.01 per share,
of Holdings . . . . . . . . 0.5153 shares of New Common Stock
The Reorganized Company issued 170,413 shares of New Common Stock and
paid $350,000 in cash to Bell Helicopter Textron, Inc. ("Bell
Helicopter") in settlement of Bell Helicopter's claims against
Bucyrus and an inactive subsidiary of Bucyrus asserted in a civil
action.
Also on the Effective Date pursuant to the Amended Plan, the
Reorganized Company issued an aggregate principal amount of
$52,072,000 of Secured Notes due December 14, 1999 (the "Secured
Notes") in exchange for the outstanding Series A 10.65% Senior
Secured Notes due July 1, 1995 of Bucyrus, the outstanding Series B
16.5% Senior Secured Notes due January 1, 1996 of Bucyrus, the
obligations of Bucyrus under its sale and leaseback financing
arrangement and accrued interest, the sum of said items being
$54,571,403. The Reorganized Company also entered into a new credit
agreement with Bank One, Milwaukee, National Association ("Bank
One"). See Note G for further discussion of the new debt and credit
agreements of the Reorganized Company.
Upon consummation of the Amended Plan, an extraordinary gain on debt
discharge of $142,480,271 was recognized, which consists of the
following:
Carrying value of unsecured debt securities
of Holdings and Bucyrus $158,349,756
Accrued interest on unsecured debt
securities of Holdings and Bucyrus 31,662,581
Concession on Series A and B Senior Secured
Notes and obligation under sale and leaseback
financing arrangement 2,499,403
Settlement of Bell Helicopter claim 3,000,000
Write-off previously recorded capitalized
financing costs (309,053)
____________
195,202,687
Estimated fair value of New Common Stock
issued for unsecured debt securities
and Bell Helicopter claim 52,722,416
____________
Total Extraordinary Gain $142,480,271
For financial statement purposes, there was no income tax expense
recognized.
Reorganization items included in the Consolidated Statements of
Operations consist of the following:
January 1 to Year Ended
December 13, 1994 December 31, 1993
Legal and professional
fees - pre and
post-petition $ 8,023,309 $ 4,387,266
Net adjustment of debt
to amount of allowed
claim in the
Prepackaged Plan 566,878 -
Interest income (365,317) -
Write-off previously
recorded capitalized
financing costs 1,112,927 -
____________ ____________
Total $ 9,337,797 $ 4,387,266
Write-up of redeemable
preferred stock issued
at a discount to amount
of allowed claim in the
Prepackaged Plan $ 40,554,805 $ -
Note B - Financial Reporting Relating to Reorganization Proceedings:
Holdings and Bucyrus have accounted for the reorganization by using
the principles of fresh start reporting, as required by AICPA
Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" ("SOP 90-7"). Under the
principles of fresh start reporting, total assets were recorded at
their assumed reorganization value, with the reorganization value
allocated to identifiable tangible and intangible assets on the basis
of their estimated fair value, and liabilities were adjusted to the
present values of amounts to be paid where appropriate.
The total reorganization value assigned to the assets was calculated
by using market capitalization and net present value discounted cash
flow valuation methodologies. In the market capitalization approach,
ranges of reorganization value were developed by multiplying
representative levels of the Reorganized Company's revenues and
earnings before interest, taxes, depreciation and amortization
("EBITDA") by the risk adjusted trading multiples of the guideline
companies, taking into account perceived differences such as
operating margins, historical revenue growth and cyclicality,
profitability, industry capital structure, geographic location and
market position between the guideline companies and the Reorganized
Company. In the net present value discounted cash flow approach, the
unleveraged, after-tax cash flows of the Reorganized Company and
estimated terminal value were calculated using projections for the
period from 1995 to 1998. The terminal value was determined based on
a weighting of multiples of the Reorganized Company's projected 1998
revenues and EBITDA, plus growth to each at 4.5 percent;
additionally, consideration was also given to a model which
capitalizes terminal year debt-free net cash flow. The resulting
amounts were discounted to present value at rates selected to
approximate the Reorganized Company's adjusted weighted average cost
of capital. The market capitalization and net present discounted
cash flow approaches were then compared, and the value of excess cash
and certain non-operating assets was added and certain nonoperating
liabilities subtracted to arrive at a reorganization equity value of
$54,000,000 for the Reorganized Company which resulted in a
reorganization value assigned to the assets of $181,389,776.
As a result of the implementation of fresh start reporting, the
financial statements of the Reorganized Company after consummation of
the Amended Plan are not comparable to the financial statements of
prior periods.
The effect of the Amended Plan and the implementation of fresh start
reporting on the Consolidated Balance Sheet as of December 13, 1994
was as follow:
Confirmation of Amended Plan Reorganized
December 13, 1994 Fresh Company
Preconfirmation Reorganization Start Balance
Balance Sheet Adjustments Adjustments Sheet
Assets
Current Assets:
Cash and cash
equivalents $ 13,731,446 $ 1,990,000 (1) $ 15,721,446
Receivables 30,459,539 30,459,539
Inventories 71,882,724 $ 10,427,499 (7) 82,310,223
Prepaid expenses and
other assets 1,802,419 (6,714)(8) 1,795,705
____________ ____________ ____________ ____________
Total Current Assets 117,876,128 1,990,000 10,420,785 130,286,913
Restricted funds
on deposit 6,014,506 (2,340,000)(2) 3,674,506
Goodwill 16,623,174 (16,623,174)(9) -
Intangible assets 6,041,899 3,478,282 (10) 9,520,181
Other assets 351,486 (309,053)(3) 2,371,210 (8) 2,413,643
Property, plant and
and equipment 42,039,880 (6,545,347)(11) 35,494,533
____________ ____________ ____________ ____________
$188,947,073 $ (659,053) $ (6,898,244) $181,389,776
============ ============ ============ ============
Liabilities and
Shareholders'
Investment (Deficiency
in Assets)
Current Liabilities:
Accounts payable and
accrued expenses $ 35,990,490 $ 1,853,282 (12) $ 37,843,772
Liabilities to customers
on uncompleted contracts,
warranties and other 6,032,585 6,032,585
Income taxes 1,235,773 1,432,280 (8) 2,668,053
Current maturities of
long-term debt 5,500,910 5,500,910
____________ ____________ ____________
Total Current
Liabilities 48,759,758 3,285,562 52,045,320
Income taxes 213,562 (91,231)(8) 122,331
Liabilities to
customers on
uncompleted
contracts and
warranties 3,260,814 3,260,814
Postretirement
benefits 15,496,980 (3,657,305)(13) 11,839,675
Deferred expenses
and other 7,032,934 180,098 (12) 7,213,032
Long-term debt 836,604 52,072,000 (4) 52,908,604
Liabilities subject
to compromise:
Exchanged for equity 193,362,337 (193,362,337)(5) -
Exchanged for debt 54,571,403 (54,571,403)(5) -
Preferred stock 71,154,098 (71,154,098)(6) -
Common stock 92,710 8,994 (14) 101,704
Additional paid-in
capital 971 123,867,520 (15) (69,970,195)(15) 53,898,296
Accumulated deficit (202,617,121) 142,480,271 (16) 60,136,850 (17) -
Cumulative foreign
currency translation
adjustments (3,217,977) 3,217,977 (17) -
____________ ____________ ____________ ____________
$188,947,073 $ (659,053) $ (6,898,244) $181,389,776
<FN>
(1) Restricted cash that became unrestricted less $350,000 cash paid to Bell Helicopter.
(2) Restricted cash that became unrestricted.
(3) Write-off capitalized financing costs.
(4) Record new Secured Notes.
(5) Discharge or exchange of debt ($208,564,317), accrued interest ($36,019,423) and Bell Helicopter
claim ($3,350,000).
(6) Exchange of preferred stock for New Common Stock.
(7) Adjust inventory to estimated fair value.
(8) Adjust deferred tax assets and liabilities to estimated fair value.
(9) Write-off of goodwill.
(10) Adjust intangible assets to the extent of available reorganization value.
(11) Adjust property, plant and equipment to the extent of available reorganization value.
(12) Adjust pension liability to excess of projected benefit obligation over plan assets.
(13) Adjust postretirement benefits liability to amount of accumulated postretirement benefit obligation.
(14) Record exchange of Holdings' common stock ($92,710) and issuance of New Common Stock ($101,704).
(15) Adjust equity to $54,000,000.
(16) Extraordinary gain on debt discharge.
(17) Eliminate balances as of Effective Date.
Note B - Financial Reporting Relating to Reorganization Proceedings:
(Continued)
Interest income earned from the Petition Date through December 13,
1994 on accumulated cash balances of Holdings and Bucyrus, and
expenses resulting from the reorganization of Holdings and Bucyrus,
were recorded as earned and incurred, respectively, and reported
separately as reorganization items in the accompanying Consolidated
Statements of Operations. Interest expense subsequent to the
Petition Date on the unsecured debt securities of Holdings and
Bucyrus, excluding debt of the foreign subsidiaries, was not accrued.
In addition, liabilities and the redeemable preferred stock subject
to compromise under the bankruptcy proceedings were reported at the
amount of the allowed claims in the Amended Plan.
Note C - Summary of Accounting Policies:
Basis of Presentation
The Reorganized Company has accounted for the reorganization by using
the principles of fresh start reporting as required by SOP 90-7.
Accordingly, the financial statements of the Reorganized Company are
not comparable to the financial statements of prior periods. The
Predecessor consolidated financial statements are those of Holdings
which include the accounts and operating results of its wholly-owned
subsidiary, Bucyrus.
The acquisition of Bucyrus by Holdings on February 4, 1988 was
accounted for as a purchase and, accordingly, the assets and
liabilities of Holdings were recorded at their estimated fair values
as of the acquisition date. The excess of the related purchase cost
over the fair value of identifiable net assets was allocated to
goodwill. The Predecessor Company consolidated financial statements
included the related depreciation and amortization charges associated
with the fair value adjustments since the date of the acquisition.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of all subsidiaries. All significant intercompany
transactions, profits and accounts are eliminated. The foreign
subsidiaries' accounts are translated into U.S. dollars in accordance
with Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation". In addition to the translation adjustments
reported in the Consolidated Balance Sheets, cost of products sold
includes translation losses of $213,000 (including a translation gain
of $2,000 for the Reorganized Company) in 1994, $695,000 in 1993 and
$246,000 in 1992.
Cash and Cash Equivalents
All highly liquid investments with maturities of three months or less
when purchased are considered to be cash equivalents. The carrying
amount reported in the Consolidated Balance Sheets for cash and cash
equivalents approximates its fair value.
Restricted Funds on Deposit
Restricted funds on deposit represent cash and temporary investments
used to support the issuance of standby letters of credit and other
obligations. The carrying amount reported in the Consolidated
Balance Sheets for restricted funds on deposit approximates its fair
value.
Inventories
Inventory was recorded at estimated fair value as of the Effective
Date in accordance with the principles of fresh start reporting. At
December 31, 1994 and December 31, 1993, inventories are stated at
lower of cost (first-in, first-out method) or market (replacement
cost or estimated net realizable value). Advances from customers are
netted against inventories to the extent of related accumulated
costs. Advances in excess of related costs and earnings on
uncompleted contracts are classified as a liability to customers.
Property, Plant and Equipment
As of the Effective Date, property, plant and equipment was recorded
at estimated fair value to the extent of available reorganization
value and accumulated depreciation was eliminated in accordance with
the principles of fresh start reporting. Additions made subsequent
to the Effective Date are recorded at cost. Depreciation is provided
over the estimated useful lives of respective assets using the
straight-line method for financial reporting and accelerated methods
for income tax purposes. Estimated useful lives used for financial
statement purposes range from ten to forty years for buildings and
improvements and three to twelve years for machinery and equipment.
Income from Sales Contracts
Income from long-term sales contracts is recorded using the
percentage-of-completion method. At the time a loss on a contract
becomes known, the entire amount of the estimated ultimate loss is
recognized in the financial statements. Included in the current
portion of Liability to Customers on Uncompleted Contracts,
Warranties and Other are advances in excess of related costs and
earnings on uncompleted contracts of $2,050,000 at December 31, 1994
and $1,037,000 at December 31, 1993.
Intangibles
As of the Effective Date, intangible assets were recorded at
estimated fair value to the extent of available reorganization value
and accumulated amortization was eliminated in accordance with the
principles of fresh start reporting. Intangible assets consist of
engineering drawings and bill-of-material listings which are being
amortized on a straight-line basis over 20 years (30 years for the
Predecessor Company). At December 31, 1994 and 1993, accumulated
amortization for intangible assets was $23,000 and $11,220,000,
respectively. Predecessor Company goodwill was written off as of the
Effective Date in accordance with the principles of fresh start
reporting. Predecessor Company goodwill was amortized on a straight-
line basis over 30 years.
Warranty
Estimated product warranty costs are accrued using the percentage of
completion method for long-term sales contracts and at the time the
products are shipped for all other shipments.
Reclassifications
Certain reclassifications have been made to the 1993 financial
statements to present them on a basis consistent with those for the
periods ended December 13, 1994 and December 31, 1994.
Note D - Receivables:
Receivables at December 31, 1994 and 1993 include $3,490,000 and
$4,817,000, respectively, of recoverable costs and related earnings
from long-term contracts which were not billed or billable at that
date. Billings on long-term contracts are made in accordance with
the payment terms as defined in the individual contracts. All of
these amounts will become billable in the following fiscal year.
Current receivables are reduced by an allowance for losses of
$691,000 at December 31, 1994 and $803,000 at December 31, 1993.
Note E - Inventories:
Inventories are summarized as follows:
1994 1993
Raw materials and parts $ 13,528,834 $ 10,324,233
Inventoried costs relating to
uncompleted contracts 6,525,606 1,361,864
Customers' advances offset
against costs incurred on
uncompleted contracts (2,619,351) (531,372)
Work in process 13,069,191 14,653,235
Finished products (primarily
replacement parts) 51,888,841 37,863,277
____________ ____________
$ 82,393,121 $ 63,671,237
As of December 31, 1994, the remaining estimated fair value
adjustment included in inventory was $10,065,253.
Note F - Accounts Payable and Accrued Expenses:
Accounts payable and accrued expenses are comprised of the following:
1994 1993
Trade accounts payable $ 12,718,751 $ 9,348,688
Wages and salaries 3,206,514 3,900,486
Accrued interest (1) 201,506 29,641,684
Reorganization items 3,378,593 787,008
Excess refund from
Internal Revenue Service 2,700,000 2,700,000
Miscellaneous accrued
expenses 9,498,194 7,287,776
____________ ____________
$ 31,703,558 $ 53,665,642
(1) The balance at December 31, 1993 includes $29,528,849 of accrued
but unpaid interest on notes and debentures that were
subsequently exchanged for debt or equity.
Note G - Long-Term Debt and Financing Arrangements:
Long-term debt is comprised of the following;
1994 1993
Secured Notes due
December 14, 1999
(including payment in
kind interest of $258,190 $ 52,330,190 $ -
10% Senior Notes of Bucyrus
(interest rate reset to
16% as of January 1, 1993),
net of unamortized premium
of $73,142 based on
imputed interest rate
of 15.9% - 74,701,142
Resettable Senior Notes of
Bucyrus (interest rate
reset to 15% from 12-1/2%
as of January 1, 1993) - 60,000,000
Series A 12-1/2% Senior
Debentures of Holdings,
net of unamortized discount
of $13,958,102 based on
imputed interest rate
of 22.7% - 22,843,780
9% Sinking Fund Debentures
of Bucyrus, net of
unamortized discount of
$37,223 based on imputed
interest rate of 12.8% - 766,777
Lease Obligation of Bucyrus
under sale and leaseback
financing arrangement
(including deferred rent
(interest) of $7,927,875) - 26,177,875
Series A 10.65% Senior
Secured Notes of Bucyrus,
issued on July 24, 1992 - 11,500,000
Series B 16.5% Senior
Secured Notes of Bucyrus,
issued on July 24, 1992 - 5,250,000
Facility Loan Account of
Bucyrus Europe Holdings
Limited (530,000 pounds
sterling at December 31,
1994 and 1,030,000 pounds
sterling at December 31,
1993) at floating
interest rate 829,450 1,523,885
Bridge Loan Account of Bucyrus
Europe Limited (500,000
pounds sterling at
December 31, 1994 and
1993) at floating interest
rate (8.375% at December 31,
1994 and 7.625% at December 31,
1993), due 1996 782,500 739,750
Project financing obligations
of Bucyrus, interest rate of
6.75%, due in various amounts
through 1995 6,237,031 3,659,879
Other 113,582 539,160
____________ ____________
60,292,753 207,702,248
Less:
Current maturities of
long-term debt (7,123,272) (4,954,196)
Amounts classified as
a current liability - (201,979,324)
____________ ____________
Amounts classified as
long-term debt $ 53,169,481 $ 768,728
On the Effective Date pursuant to the Amended Plan, the Reorganized
Company issued its New Common Stock to holders of Holdings' and
Bucyrus' unsecured debt securities as discussed in Note A. Also on
the Effective Date pursuant to the Amended Plan, the Reorganized
Company issued its Secured Notes to South Street Corporate Recovery
Fund I, L.P., South Street Leveraged Corporate Recovery Fund, L.P.,
and South Street Corporate Recovery Fund I (International), L.P. in
exchange for Bucyrus' outstanding Series A 10.65% Senior Secured
Notes due July 1, 1995 and Series B 16.5% Senior Secured Notes due
January 1, 1996 (the "South Street Notes") and Bucyrus' obligations
under a sale and leaseback financing arrangement. Interest on the
Secured Notes accrues at a rate of 10.5% per annum until December 14,
1995. Thereafter, interest accrues at a rate of 10.5% per annum, if
paid in cash, or 13.0% per annum, if paid in kind. The Credit
Agreement (as defined below) requires accrued interest on the Secured
Notes, which aggregated $258,190 through December 31, 1994, to be
paid in kind prior to January 1, 1996, and thereafter restricts the
cash payment of principal and interest on the Secured Notes unless
certain ratios and conditions are met. Otherwise, interest on the
Secured Notes is payable in kind at the discretion of the Reorganized
Company during the term of the Secured Notes. The Secured Notes are
secured by a security interest on substantially all of the
Reorganized Company's property (other than real estate) in favor of
Harris Trust and Savings Bank, as Collateral Agent (the "Collateral
Agent"), which is subordinated to the security interest in favor of
Bank One securing up to $16,000,000 in indebtedness and other amounts
owing under the Credit Agreement (as defined below). The Reorganized
Company has also granted a security interest in favor of the
Collateral Agent in the shares of the Reorganized Company's U.S.
subsidiaries and 65% of the shares of certain non-U.S. subsidiaries
(collectively, the "Pledged Shares").
Pursuant to the Amended Plan, the Reorganized Company entered into a
Credit Agreement dated as of December 14, 1994, with Bank One (the
"Credit Agreement"). The Credit Agreement contains a credit facility
for working capital and general corporate purposes (the "Loan
Facility") and a letter of credit facility (the "L/C Facility").
Under the Loan Facility, the Reorganized Company may borrow up to
$5,000,000 through December 31, 1995, and from January 1, 1996
through December 31, 1996, the Reorganized Company may borrow up to
$2,500,000, provided that it meets certain earnings before interest,
taxes, depreciation and amortization tests, as defined. Borrowings
under the Loan Facility mature on December 31, 1996 and interest is
payable at the Reorganized Company's option either at a rate equal to
Bank One's reference rate plus 0.75% per annum or an adjusted LIBOR
rate plus 2.75% per annum. Under the L/C Facility, Bank One has
agreed to issue letters of credit for the benefit of the Reorganized
Company through December 31, 1996 in an aggregate amount not in
excess of $15,000,000 minus the then outstanding aggregate borrowings
by the Reorganized Company under the Loan Facility, provided that no
letter of credit may expire after December 31, 1997. Borrowings
under the Credit Agreement are secured by a security interest on
substantially all of the Reorganized Company's property (other than
real estate), including the Pledged Shares, which, to the extent
described above, is senior to the security interest created in favor
of the Collateral Agent. As of December 31, 1994, the Reorganized
Company did not have any borrowings outstanding under the Loan
Facility and $6,373,000 of the L/C Facility was being used.
The Credit Agreement prohibits the Reorganized Company from making
any dividends or other distributions upon the New Common Stock, other
than dividends payable solely in New Common Stock or other equity
securities of the Reorganized Company. The Indenture relating to the
Secured Notes prohibits the Reorganized Company from declaring or
paying any dividend or making any distribution in respect of the New
Common Stock (other than dividends or distributions payable solely in
shares of its New Common Stock or in options, warrants or other
rights to acquire New Common Stock), if at the time thereof an Event
of Default (as defined in such Indenture) or an event that with the
lapse of time or the giving of notice, or both, would constitute an
Event of Default (as defined in such Indenture) shall have occurred
and be continuing.
The agreements relating to the Secured Notes and the Credit Agreement
permit project financing which enables the Reorganized Company to
borrow money to pay costs associated with the manufacture of mining
machinery or other products pursuant to binding purchase contracts.
Project financing borrowings are secured by the inventory being
financed and any accounts receivable relating to such inventory.
Project financing borrowings mature not later than the date of the
final payment by the customer under the applicable purchase contract.
As of December 31, 1994, the Reorganized Company had $6,237,000 of
outstanding project financing borrowings.
In the second quarter of 1993, Bucyrus entered into a project
financing loan agreement with Mitsubishi International Corporation
for the manufacture of eight electric mining shovels. Borrowings by
Bucyrus under this agreement are used to finance a portion of the
production costs that Bucyrus will incur in the production of these
electric mining shovels and the borrowings are collateralized by the
electric mining shovels during the course of production. A portion
of the borrowings will be satisfied as each electric mining shovel is
completed and delivered. Interest accrues at an interest rate of
6.75% per annum and will be offset by an increase in the selling
price of each electric mining shovel to be paid by the purchaser
thereof.
On July 24, 1992, Bucyrus sold, in a sale and leaseback financing
arrangement, its principal manufacturing equipment (collectively, the
"Equipment") for an aggregate consideration of $18,250,000. Bucyrus
leased the Equipment back at a semi-annual rental which, for
accounting purposes, was classified as interest. The imputed
effective interest rates for 1994, 1993 and 1992 were 27.1%, 26.4%
and 27.4%, respectively. Pursuant to the Amended Plan, the Secured
Notes were issued in exchange for Bucyrus' obligations under the sale
and leaseback financing arrangement and the South Street Notes.
Repayment of the Facility Loan Account is due by December 31, 1995.
The interest rate is LIBOR (London Inter-Bank Market Rate for British
pounds sterling denominated deposits) plus a variable margin. The
interest rate was 8.8125% at December 31, 1994 and 7.875% at
December 31, 1993.
On February 22, 1993, Holdings and Bucyrus announced their intention
to pursue a reorganization of their capital structures. Subsequent
to that date, Holdings and Bucyrus did not pay the interest due on
various debt securities. At December 31, 1993, substantially all of
the debt securities issued by Holdings and Bucyrus were in default
causing them to be subject to acceleration by the requisite holders
thereof at any time. Accordingly, the amounts due under these
securities were classified as a current liability in the December 31,
1993 Consolidated Balance Sheet.
Maturities of long-term debt are the following for each of the next
five years:
1995 $ 7,123,272
1996 839,291
1997 -
1998 -
1999 52,330,190
As required under various agreements, Equipment Assurance Limited, an
off-shore insurance subsidiary of the Reorganized Company, has
pledged $3,655,866 of its cash to secure its reimbursement
obligations for outstanding letters of credit and bank debt at
December 31, 1994. Bucyrus Chile Ltda. has pledged $18,898 of its
cash for a bank guarantee at December 31, 1994. These collateral
amounts are classified as Restricted Funds on Deposit in the
Consolidated Balance Sheet.
Disclosure of the estimated fair value of certain financial
instruments is required in accordance with Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of
Financial Instruments" ("SFAS No. 107"). The estimated fair value of
long-term debt as of December 31, 1994 approximates recorded amounts
due to the recent adoption of fresh start reporting. Management
determined that it was not practicable or meaningful to present fair
value information regarding financial instruments as of December 31,
1993 due to uncertainties surrounding the bankruptcy proceedings.
Note H - Common Stock, Warrants and Preferred Stock
Pursuant to the Amended Plan, all equity securities of Holdings and
Bucyrus were cancelled and the certificate of incorporation and
bylaws of Bucyrus were amended and restated in connection with the
merger of Holdings with and into Bucyrus. The Reorganized Company is
authorized to issue 20,000,000 shares of New Common Stock. Holders
of New Common Stock are entitled to receive dividends as declared by
the Board of Directors of the Reorganized Company. The Credit
Agreement contains certain restrictions regarding the payment of
dividends or other distributions upon the New Common Stock. These
restrictions are discussed in Note G - Long-Term Debt and Financing
Arrangements. In the event of a liquidation, dissolution or winding
up of the Reorganized Company, the holders of New Common Stock are
entitled to share ratably in all of the assets of the Reorganized
Company available for distribution to its stockholders. Holders of
New Common Stock are entitled to one vote per share on each matter
submitted to a vote at any meeting of stockholders, including
elections of directors, and, except as required by law, the holders
of New Common Stock exclusively possess all voting power.
Pursuant to the Amended Plan, all holders of Holdings' and Bucyrus'
unsecured debt securities and Holdings' equity securities who have
accepted the Amended Plan by ballot or master ballot and all holders
of Holdings' and Bucyrus' unsecured debt securities and Holdings'
equity securities who are entitled to receive shares of New Common
Stock pursuant to the Amended Plan are deemed as of the Effective
Date to have irrevocably agreed without any further action:
(i) to cause the shares of the New Common Stock received pursuant
to the Amended Plan and all other shares of the New Common
Stock beneficially owned by any such holder following the
Effective Date to be voted for the election of each of the
Original Directors as directors of the Reorganized Company at
the 1996 Annual Meeting for a one-year term ending on the date
of the 1997 Annual Meeting and until their successors have been
duly elected and qualified; and
(ii) that any sale, transfer or other disposition, whether voluntary
or involuntary, by operation of law or otherwise of any shares
of the New Common Stock at any time prior to the 1996 Annual
Meeting (a "Transfer"; and any person to whom any shares of the
New Common Stock are Transferred is referred to as a
"Transferee") shall be made subject to the irrevocable
agreement to vote such shares of the New Common Stock for the
election of each of the Original Directors at the 1996 Annual
Meeting.
The irrevocable voting agreement described in (i) above is binding
upon all Transferees.
Warrants previously issued by Holdings were exercisable from
January 22, 1993 through March 24, 1993 (the "Warrant Exercise
Period"), for the purchase of one share of Holdings' Class C Common
Stock, par value $.01 per share. The exercise price of the warrants
was $.01 per share. During the Warrant Exercise Period, 2,903,832
warrants were exercised for an equal number of shares of Holdings'
Class C Common Stock. In addition to these shares, warrants were
exercised for 6,392 shares of Holdings' Class C Common Stock but such
stock was not issued because the respective former warrant holders
resided in states where registration or exemption permitting the sale
of such stock under state securities laws was still pending. In
1994, in connection with the Amended Plan, these 6,392 shares of
Class C Common Stock were issued and pursuant to the Amended Plan
were exchanged for shares of New Common Stock.
Holdings' stockholders previously adopted the B-E Holdings, Inc. 1988
Stock Option Plan, an employee stock option plan for the issuance of
either qualified incentive stock options or nonqualified stock
options, or any combination thereof, for up to 2,500,000 shares of
Holdings' Class C Common Stock at an exercise price based on the
defined "fair market value" of the shares. Pursuant to the Amended
Plan, all outstanding stock options granted by Holdings under the B-E
Holdings, Inc. 1988 Stock Option Plan that were not exercised on or
prior to the Effective Date were cancelled.
The following summary shows activity and outstanding balances from
time to time of options exercisable for shares of stock of Holdings:
Options
Reserved Outstanding Available
Balances, January 1, 1992
($1.375 - $2.3375) 2,500,000 2,014,690 485,310
Granted January 10, 1992
($0.375 - $0.4125) 476,110 (476,110)
Granted March 10, 1992 ($0.75) 6,000 (6,000)
Surrendered for cancellation,
options granted on June 22,
1989 at $2.125 - $2.3375 per
share, for an equal number
of options (570,000) 570,000
Granted April 30, 1992
($0.50 - $0.55) 570,000 (570,000)
Surrendered for cancellation, options
granted on April 23, 1990 ($1.375 -
$1.5125); February 25, 1991 ($1.50 -
$1.65); January 10, 1992 ($0.375 -
$0.4125); March 10, 1992 ($0.75); and
April 30, 1992 ($0.50 - $0.55), for an
equal number of options (2,372,760) 2,372,760
Granted August 14,
1992 ($0.125) 2,372,760 (2,372,760)
__________ __________ __________
Balances, December 31, 1992
($0.125 - $2.125) 2,500,000 2,496,800 3,200
Exercised ($0.125) (6,025) (6,025)
Lapsed ($0.125 - $2.125) (55,800) 55,800
__________ __________ __________
Balances, December 31, 1993
($0.125 - $2.125) 2,493,975 2,434,975 59,000
Cancellation pursuant to
Amended Plan (2,493,975) (2,434,975) (59,000)
__________ __________ __________
Balances, December 13, 1994 - - -
Dividends on Holdings' Series A 12-1/2% Cumulative Exchangeable
Preferred Stock ("Series A Preferred Stock") were payable in
additional shares of preferred stock, provided, however, that
Holdings could elect to pay dividends in such additional shares for
not more than an aggregate of 12 semi-annual payments. Such payments
were made beginning on September 15, 1988 and semi-annually
thereafter through September 15, 1992. Subsequent to that date,
Holdings did not declare or pay any dividends which resulted in an
event of default under the Restated Certificate of Incorporation of
Holdings. Holdings did, however, increase the carrying amount of the
Series A Preferred Stock in the accompanying Consolidated Balance
Sheets by amounts representing the estimated fair value of the
dividends that were not declared or paid through the Petition Date,
but which were payable under mandatory redemption features.
All Series A Preferred Stock was recorded at fair value. The
difference between the initial fair value of this stock and the
aggregate redemption value was accreted by a charge to retained
earnings (accumulated deficit) and a corresponding credit to the
carrying value of the Series A Preferred Stock during the period from
issuance to February 4, 2003 using the interest method.
As of the Petition Date, the carrying amount of the Series A
Preferred Stock was increased to the amount of the allowed claim in
the Prepackaged Plan resulting in a $40,554,805 reduction of net
earnings attributable to common shareholders.
Note I - Income Taxes
Holdings adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"), effective January 1,
1993. This statement superseded Statement of Financial Accounting
Standards No. 96, "Accounting for Income Taxes" ("SFAS 96"), which
was previously adopted by Holdings. The cumulative effect of
adopting SFAS 109 on Holdings' financial statements was a tax benefit
of $446,724 ($.05 per share) which has been included in the
Consolidated Statement of Operations for the year ended December 31,
1993.
SFAS 109 requires an asset and liability method which generally
requires the recognition of deferred tax assets and liabilities based
on the future tax consequences of events that have previously been
recognized in a company's financial statements or tax returns. In
addition, a valuation allowance is to be recognized if it is more
likely than not that some or all of the deferred tax asset will not
be realized.
The provision for income tax expense (benefit) consists of the
following:
Reorganized
Company Predecessor Company
December 14 - January 1 -
December 31, December 13, Years Ended December 31,
1994 1994 1993 1992
(Dollars in Thousands)
Federal income taxes:
Current $ - $ - $ - $ -
Deferred - - - (97)
_______ _________ _______ _______
- - - (97)
Foreign income taxes:
Current 90 956 778 2,925
Deferred - 259 (8) (27)
_______ _________ _______ _______
Total 90 1,215 770 2,898
Other (state and
local taxes):
Current 35 180 147 139
Adjustment of prior
years' accruals for
income taxes at
inactive subsidiary - - - (2,000)
_______ _________ _______ _______
Total 35 180 147 (1,861)
_______ _________ _______ _______
Total income tax
expense $ 125 $ 1,395 $ 917 $ 940
The provision for deferred income taxes in 1992 resulted from the
application of the alternative minimum tax system under SFAS 96 and
certain foreign items.
Loss before income taxes, extraordinary gain and cumulative effects
of changes in accounting principles consists of the following:
Reorganized
Company Predecessor Company
December 14 - January 1 -
December 31, December 13, Years Ended December 31,
1994 1994 1993 1992
(Dollars in Thousands)
United States $ (199) $ (23,972) $ (41,624) $ (22,097)
Foreign (228) 2,534 1,848 6,290
_________ _________ _________ _________
Total $ (427) $ (21,438) $ (39,776) $ (15,807)
Total income taxes differ from amounts expected by applying the
Federal statutory income tax rate to loss before income taxes,
extraordinary gain and cumulative effects of changes in accounting
principles for the following reasons:
Reorganized
Company Predecessor Company
December 14 - January 1 -
December 31, December 13, Years Ended December 31,
1994 1994 1993 1992
Tax Tax Tax Tax
Expense Expense Expense Expense
(Benefit) Percent (Benefit) Percent (Benefit) Percent (Benefit) Percent
(Dollars in Thousands)
Tax benefit at
Federal statutory
rate $ (150) (35.0)% $ (7,503) (35.0)% $(13,922) (35.0)% $ (5,374) (34.0)%
Loss for which no
U.S. tax benefit
was recorded 92 21.5 5,310 24.8 12,600 31.7 7,440 47.1
Impact of foreign
subsidiary income,
tax rates and tax
credits 179 41.9 187 .9 142 .4 536 3.4
Nondeductible
reorganization
expenses - - 3,268 15.2 1,535 3.8 - -
Bell Helicopter
settlement - - (439) (2.0) - - - -
Adjustment of prior
years' accruals for
income taxes at
inactive subsidiary - - - - - - (2,000) (12.7)
Other items 4 .9 572 2.6 562 1.4 338 2.1
________ ______ ________ ______ ________ ______ ________ ______
Total income
tax expense $ 125 29.3% $ 1,395 6.5% $ 917 2.3% $ 940 5.9%
In 1992, Holdings reversed a portion of prior years' accruals for
income taxes at an inactive subsidiary which was determined to be no
longer necessary as a result of favorable settlements of state tax
disputes during the year.
Significant components of deferred tax assets and deferred tax
liabilities are as follows:
December 31,
1994 1993
(Dollars in Thousands)
Deferred tax assets:
Postretirement benefits $ 4,881 $ 6,340
Inventory valuation
provisions 1,811 5,149
Accrued and other
liabilities 7,300 6,968
Tax loss carryforward 20,849 43,112
Tax credit carryforward 479 877
Other items 616 609
__________ __________
Total deferred tax assets 35,936 63,055
__________ __________
Deferred tax liabilities -
Excess of book basis over
tax basis of property,
plant and equipment and
intangible assets (10,003) (13,421)
Valuation allowance (25,326) (49,792)
__________ __________
Net deferred tax asset
(liability) recognized
in the Consolidated
Balance Sheet $ 607 $ (158)
Due to the recent history of net operating losses, a valuation
allowance is used to reduce the net deferred tax assets (after giving
effect to deferred tax liabilities) for domestic operations to an
amount that is more likely than not to be realized. For the period
January 1, 1994 through December 13, 1994, the valuation allowance
was decreased by $24,719,000, due primarily to the decrease of the
tax loss carryforward explained below. For the period December 14,
1994 through December 31, 1994 and the year ended December 31, 1993,
the valuation allowance was increased by $253,000 and $13,971,000,
respectively, to offset an increase in net deferred tax assets for
which no tax benefit was recognized.
The consummation of the Amended Plan on December 14, 1994 resulted in
an "ownership change" within the meaning of Section 382 of the
Internal Revenue Code. As a result, the amount of the federal net
operating loss carryforward ("NOL") available to the Reorganized
Company as of December 31, 1994 will be limited to $53,460,000
(expiring in years 2003 through 2009), the annual use of which will
be limited to $3,564,000 plus any unused limitation amount from prior
years.
Additionally, the Reorganized Company has available for federal
income tax purposes approximately $479,000 of alternative minimum tax
credit carryforward which carries forward indefinitely, but, because
of the above discussed annual limitations, will not be usable until
the year 2010.
The Reorganized Company also has a significant amount of state NOL's
(which expire in the years 1997 through 2009) available to offset
future state taxable income in states where it has significant
operations. Since the majority of states in which the Reorganized
Company files its state returns follow rules similar to federal
rules, it is expected that the usage of state NOL's will be limited
to approximately $53,000,000.
Cumulative undistributed earnings of foreign subsidiaries that are
considered to be permanently reinvested, and on which U.S. income
taxes have not been provided by the Reorganized Company, amounted to
approximately $11,000,000 at December 31, 1994. It is not
practicable to estimate the amount of additional tax which would be
payable upon repatriation of such earnings; however, due to foreign
tax credit limitations, additional tax at the U.S. income tax rate,
in addition to foreign withholding taxes, could be incurred.
Note J - Pension and Retirement Plans:
The Reorganized Company has several pension and retirement plans
covering substantially all employees. The plan covering domestic
salaried and certain non-union hourly employees provides pension
benefits that are based on the employee's highest rate of
compensation during five consecutive years out of the last ten
consecutive years of employment. The funding policy for that plan is
to contribute amounts at least equal to the minimum annual amount
required by applicable regulations. Plans covering hourly and
certain union members generally provide benefits of stated amounts
for each year of service. Contributions to these plans are funded
based on normal cost plus amortization of unfunded past service cost
over 30 to 40 years. In addition, the Reorganized Company has
certain unfunded supplemental retirement plans for which benefits are
payable out of the general funds of the Reorganized Company.
The following tables set forth the domestic plans' funded status, as
estimated by consulting actuaries, and amounts recognized in the
consolidated financial statements as of December 31, 1994 and 1993:
Status of all Plans
1994 1993
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
(Dollars in Thousands)
Actuarial present
value of benefit
obligations -
Accumulated benefit
obligation, including
vested benefits of
$45,622 and $455,
respectively, for
1994 and $48,045
and $722,
respectively,
for 1993 $ (48,785) $ (455) $ (52,789) $ (722)
Projected benefit
obligation for
services rendered
to date $ (53,802) $ (973) $ (59,974) $ (1,387)
Plan assets at
fair value,
primarily listed
stocks and
corporate and U.S.
government bonds 52,581 - 55,567 -
_________ _________ _________ _________
Projected benefit
obligation
(in excess of)
plan assets (1,221) (973) (4,407) (1,387)
Unrecognized net
loss from past
experience
different from
that assumed - - 2,946 645
Unrecognized prior
service cost - - 1,487 -
_________ _________ _________ _________
Pension asset
(liability)
recognized in
the Consolidated
Balance Sheets $ (1,221) $ (973) $ 26 $ (742)
In accordance with the requirements of fresh start reporting, the
pension liability recognized in the Consolidated Balance Sheet was
adjusted as of the Effective Date to equal the net excess of the
projected benefit obligation over the plans' assets.
The weighted average discount rate, rate of increase in future
compensation levels, and expected long-term rate of return on assets
used to develop the projected benefit obligation at December 31, 1994
were 8.5%, 5% and 9%, respectively. The corresponding rates used at
December 31, 1993 were 7%, 5% and 9%, respectively. The increase in
the discount rate resulted in an $8,300,000 decrease in the projected
benefit obligation.
The foreign subsidiaries do not have a material pension liability at
December 31, 1994 or December 31, 1993.
Net domestic periodic pension cost includes the following components:
Reorganized
Company Predecessor Company
December 14 - January 1 -
December 31, December 13, Years Ended December 31,
1994 1994 1993 1992
(Dollars in Thousands)
Service costs -
benefits earned
during the period $ 79 $ 1,591 $ 1,313 $ 1,289
Interest cost on
projected benefit
obligation 186 3,714 4,203 4,137
Actual return on
plan assets (27) (533) (4,723) (3,563)
Net amortization
and deferral (194) (4,231) (250) (1,714)
________ ________ ________ ________
Net periodic
pension cost $ 44 $ 541 $ 543 $ 149
The Reorganized Company has 401(k) Savings Plans available to
substantially all U.S. employees. Matching employer contributions
are made in accordance with plan provisions subject to certain
limitations. Matching employer contributions made in 1994 were
$655,000 (including $33,000 for the Reorganized Company) compared
with $679,000 in 1993 and $787,000 in 1992.
Note K - Postretirement Benefits Other Than Pensions:
The Reorganized Company provides certain health care benefits to age
65 and life insurance benefits for certain eligible retired United
States employees. Substantially all current employees may become
eligible for those benefits if they reach early retirement age while
working for the Reorganized Company. The majority of the costs of
such benefits are funded as they are incurred.
Effective January 1, 1993, Holdings adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("SFAS 106"). SFAS 106
requires the accrual of the estimated cost of postretirement benefits
(such as health care benefits) during the years an employee provides
services.
Holdings elected to recognize the cumulative effect of this
obligation on the immediate recognition basis. The cumulative effect
as of January 1, 1993 of adopting SFAS 106 was to increase accrued
postretirement health care costs by $11,744,109, which represented
the accumulated postretirement benefit obligation existing at
January 1, 1993 of $17,051,338 less $5,307,229 previously recorded in
acquisitions, and to increase the net loss by $11,744,109 ($1.31 per
share), which has been included in Holdings' Consolidated Statement
of Operations for the year ended December 31, 1993. For financial
statement purposes, there was no income tax benefit recognized.
The following table sets forth the plan's status, as estimated by
consulting actuaries, and amounts recognized in the consolidated
financial statements as of December 31, 1994 and 1993:
1994 1993
(Dollars in Thousands)
Accumulated postretirement
benefit obligation:
Retirees $ (7,336) $ (9,034)
Fully eligible active
plan participants (778) (233)
Other active plan
participants (5,123) (6,564)
__________ __________
(13,237) (15,831)
Unrecognized net gain - (1,191)
___________ __________
Accrued postretirement
benefit cost recognized
in the Consolidated
Balance Sheet $ (13,237) $ (17,022)
In accordance with the requirements of fresh start reporting, the
liability for postretirement benefits other than pensions was
adjusted as of the Effective Date to the accumulated postretirement
benefit obligation.
Net periodic postretirement benefit cost includes the following
components:
Reorganized
Company Predecessor Company
December 14 - January 1 - Year Ended
December 31, December 13, December 31,
1994 1994 1993
(Dollars In Thousands)
Service cost-benefits
earned during the
period $ 15 $ 303 $ 335
Interest cost on
accumulated post-
retirement benefit
obligation 51 1,003 1,294
________ ________ ________
Net periodic post-
retirement benefit
cost $ 66 $ 1,306 $ 1,629
The weighted average discount rate used in determining the
accumulated postretirement benefit obligation at December 31, 1994
and 1993 was 8.5% and 7%, respectively. The increase in the discount
rate resulted in a $1,600,000 decrease in the accumulated
postretirement benefit obligation. The assumed health care cost
trend rate used in measuring the accumulated postretirement benefit
obligation at December 31, 1994 is 12% for 1995, declining 1% each
year thereafter, to 5% in the year 2002 and beyond. A 1% increase in
the assumed health care cost trend rate for each year would increase
the accumulated postretirement benefit obligation as of December 31,
1994 by approximately $704,000 and would increase the net periodic
postretirement benefit cost for 1994 by approximately $110,000.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation at December 31, 1993
was 13% for 1994, declining 1% each year thereafter, to 5% in the
year 2001 and beyond. The unrecognized net gain at December 31, 1993
resulted principally from a lower than anticipated health care cost
trend rate in 1993, which was partially offset by a decrease in the
discount rate from 9% used at January 1, 1993 to 7% used at
December 31, 1993.
Holdings recognized $1,011,000 in 1992 as expense for postretirement
health care plans and life insurance benefits.
Note L - Research and Development:
Expenditures for design and development of new products and
improvements of existing mining machinery products, including
overhead, aggregated $5,622,000 (including $236,000 for the
Reorganized Company) in 1994 including $2,573,000 (zero for the
Reorganized Company) of research and development activities directly
related to shipments. Expenditures for 1993 were $6,939,000
including $2,042,000 for research and development activities directly
related to shipments. The corresponding expenditures for 1992 were
$7,420,000 and $4,116,000, respectively. All engineering and product
development costs are expensed as incurred with amounts charged to
Cost of Products Sold, if such activities are directly related to
specific customer contracts, or to Product Development Expense.
Note M - Calculation of Net Earnings (Loss) Per Share of Common Stock:
Net earnings (loss) per share of common stock is based on the
weighted average number of common shares outstanding. The weighted
average number of common shares outstanding for the period
December 14, 1994 to December 31, 1994, the period January 1, 1994 to
December 13, 1994 and years ended December 31, 1993 and 1992 were
10,170,417, 9,268,627, 8,933,393 and 6,354,724, respectively.
Net earnings (loss) attributable to common shareholders for the
Predecessor Company includes redeemable preferred stock dividends
declared and paid as well as dividends earned but not declared.
Note N - Foreign Operations, Export Sales and Significant Customers:
The Reorganized Company has subsidiaries located throughout the
world. A summary of the assets and liabilities of the foreign
subsidiaries included in the Consolidated Balance Sheets is as
follows:
December 31,
1994 1993
(Reorganized (Predecessor
Company) Company)
ASSETS
Current assets $ 45,760,000 $ 34,553,000
Long-term assets 8,934,000 14,958,000
____________ ____________
Total $ 54,694,000 $ 49,511,000
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current liabilities $ 12,845,000 $ 10,071,000
Non-current liabilities 2,376,000 2,190,000
Shareholders' investment 39,473,000 37,250,000
____________ ____________
Total $ 54,694,000 $ 49,511,000
Included in the Consolidated Statements of Operations are net
shipments and net earnings of the foreign subsidiaries, before
eliminations, of $71,219,000 and $4,134,000, respectively, for 1994,
$64,608,000 and $2,137,000, respectively, for 1993 and $82,633,000
and $6,122,000, respectively, for 1992.
The Reorganized Company designs, manufactures and sells products in a
single industry segment, Energy and Industrial Products. Operations
are conducted in the United States and through subsidiaries located
throughout the world.
Financial information by geographical area is summarized in the
following table. Each geographic area represents the origin of the
financial information presented. Transfers between geographic areas
represent intercompany export sales of U.S. produced goods and are
accounted for based on established sales prices between the related
companies. In computing operating earnings for non-U.S.
subsidiaries, no allocations of interest or income taxes have been
made. Eliminations for operating earnings (loss) include elimination
of general corporate expenses. Identifiable assets of subsidiaries
are those related to the operations of those subsidiaries. United
States assets consist of all other operating assets.
Western
Hemisphere Eastern
United (Other than Hemis- Elimi- Consoli-
States U.S.) phere nations dated
Combined periods
ended December 13,
1994 and
December 31, 1994:
Shipments to
unaffiliated
customers $ 122.8 $ 30.4 $ 40.8 $ 194.0
Transfers between
geographic areas 23.0 .3 $ (23.3)
_______ _______ _______ _______ _______
Total revenues $ 145.8 $ 30.4 $ 41.1 $ (23.3) $ 194.0
Operating earnings
(loss) $ (11.9) $ 2.7 $ 3.3 $ (1.8) $ (7.7)
Identifiable
assets $ 126.0 $ 29.3 $ 25.4 $ (2.7) $ 178.0
Year ended
December 31, 1993:
Shipments to
unaffiliated
customers $ 133.9 $ 24.0 $ 40.6 $ 198.5
Transfers between
geographic areas 13.7 .2 $ (13.9)
_______ _______ _______ _______ _______
Total revenues $ 147.6 $ 24.0 $ 40.8 $ (13.9) $ 198.5
Operating earnings
(loss) $ (6.5) $ 1.2 $ 2.5 $ (1.9) $ (4.7)
Identifiable
assets $ 137.4 $ 23.8 $ 25.7 $ (2.0) $ 184.9
Year ended
December 31, 1992:
Shipments to
unaffiliated
customers $ 159.8 $ 21.9 $ 60.8 $ 242.5
Transfers between
geographic
areas 19.3 $ (19.3)
_______ _______ _______ _______ _______
Total revenues $ 179.1 $ 21.9 $ 60.8 $ (19.3) $ 242.5
Operating earnings
(loss) $ 4.8 $ 3.0 $ 6.4 $ (1.9) $ 12.3
Identifiable
assets $ 148.8 $ 26.6 $ 32.0 $ (3.3) $ 204.1
Export shipments from United States operations amounted to $83.6
million (including $4.1 million for the Reorganized Company) in 1994,
$88.5 million in 1993 and $92.3 million in 1992. Included in these
amounts are shipments to affiliates of $23.0 million (including $1.4
million for the Reorganized Company), $13.7 million and $19.3
million, respectively. Export shipments by geographic area for 1994,
1993 and 1992 consisted of the following: Eastern Hemisphere - $28.3
million (including $5.5 million to affiliates), $44.7 million
(including $3.3 million to affiliates) and $50.2 million (including
$5.4 million to affiliates), respectively; Western Hemisphere - $55.3
million (including $17.5 million to affiliates), $43.8 million
(including $10.4 million to affiliates) and $42.1 million (including
$13.9 million to affiliates), respectively.
In 1994, one customer, BHP Minerals International Inc., received
approximately 20% of consolidated net shipments. In 1993 and 1992,
no customer received shipments of greater than 10% of consolidated
net shipments. The Reorganized Company is not dependent upon any one
customer.
Note O - Commitments, Contingencies and Credit Risks:
On March 7, 1995, Jackson National Life Insurance Company ("JNL")
amended a complaint (the "JNL Complaint") previously filed in a civil
action in the United States District Court, Southern District of New
York, to name certain current and/or former officers and directors of
Bucyrus (the "Management Defendants") and others (collectively with
the Management Defendants, the "Defendants"). The JNL Complaint
seeks unspecified money damages and other equitable relief from the
Management Defendants in connection with (i) JNL's purchase of
Bucyrus' Resettable Senior Notes and (ii) certain of the Defendants'
alleged orchestration of a series of financings for Bucyrus and
Holdings which are alleged to have had the effect of rendering
Bucyrus insolvent, incapable of competing in its markets and unable
to pay its creditors, including JNL. The Management Defendants have
rights to indemnification from the Reorganized Company for any costs
and expenses incurred by them in connection with the JNL Complaint
pursuant to the Amended Plan and the Reorganized Company's Restated
Bylaws. The Reorganized Company has been informed by counsel to the
Management Defendants that in said counsel's opinion it is probable
that the Management Defendants have meritorious defenses to all
claims asserted in the JNL Complaint; however, the outcome of this
matter cannot presently be determined. Accordingly, no provision for
any loss that may result upon resolution of this matter has been made
in the accompanying consolidated financial statements.
JNL, the holder of approximately 41.58% of the Reorganized Company's
New Common Stock, has filed an Application for Allowance of Expenses
with the Bankruptcy Court seeking reimbursement from the Reorganized
Company of approximately $3,300,000 for professional fees and
disbursements incurred by JNL from the Petition Date through the
Effective Date in connection with the chapter 11 proceedings pursuant
to Section 503(b) of the Bankruptcy Code. On March 15, 1995, the
Reorganized Company's Board of Directors designated a committee of
independent directors (the "Special Committee") to determine steps to
be taken by the Reorganized Company with respect to JNL's Section
503(b) claim. The Special Committee unanimously determined that the
Reorganized Company should file an objection to JNL's Section 503(b)
claim. On March 31, 1995, the Reorganized Company filed an objection
to JNL's Section 503(b) claim with the Bankruptcy Court on the basis
that JNL has failed to satisfy the standards prevailing under the
Bankruptcy Code for an award of expenses under Section 503(b) of the
Bankruptcy Code. JNL has publicly announced that, if JNL's Section
503(b) claim were allowed by the Bankruptcy Court, JNL would consider
receiving shares of the Reorganized Company's New Common Stock from
the Reorganized Company in lieu of requiring payment in cash. The
Reorganized Company and the Special Committee have been advised by
counsel to the Reorganized Company that in such counsel's opinion
JNL's 503(b) claim is without merit; however, the outcome of this
matter cannot presently be determined. Accordingly, no provision for
any loss that may result upon resolution of this matter has been made
in the accompanying consolidated financial statements.
The Reorganized Company is involved in various other litigation
arising in the normal course of business. It is the view of
management that the Reorganized Company's recovery or liability, if
any, under pending litigation is not expected to have a material
effect on financial position or results of operations, although no
assurance to that effect can be given.
The Reorganized Company had outstanding letters of credit and
guarantees of $9,578,000 at December 31, 1994. Of this amount,
$6,373,000 is related to the Credit Agreement with the remainder
provided by various banks and insurance companies.
The Reorganized Company has obligations under various operating
leases and rental and service agreements. The expense relating to
these agreements was $4,720,000 in 1994 (including $195,000 for the
Reorganized Company), $4,614,000 in 1993 and $4,961,000 in 1992.
Total commitments relating to all future periods under noncancellable
agreements at December 31, 1994 was approximately $12,156,000 which
includes minimum annual payments for the respective years ending
December 31, as follows:
1995 $ 4,088,000
1996 3,571,000
1997 1,833,000
1998 1,330,000
1999 659,000
After 1999 675,000
$ 12,156,000
A significant portion of consolidated net shipments are to customers
whose activities are related to the coal and hard rock mining
industry, including some who are located in foreign countries (see
Note N). The Reorganized Company generally extends credit to these
customers and, therefore, collection of receivables may be affected
by the mining industry economy and the economic conditions in the
countries where the customers are located. However, the Reorganized
Company closely monitors extension of credit and has not experienced
significant credit losses. Also, most foreign sales are made to
large, well-established companies. The Reorganized Company generally
requires collateral or guarantees on foreign sales to smaller
companies.
The Reorganized Company invests excess cash in low risk liquid
instruments. No losses have been experienced on such investments.
Note P - Quarterly Results - Unaudited:
Quarterly results are as follows:
Quarters Ended at End of
March June September December
Net shipments:
1994 - Reorganized
Company $ - $ - $ - $ 7,810
1994 - Predecessor 43,355 50,608 50,648 41,563
1993 - Predecessor 47,104 53,979 51,042 46,339
1992 - Predecessor 62,125 59,737 63,058 57,548
Gross profit:
1994 - Reorganized
Company $ - $ - $ - $ 924
1994 - Predecessor 6,790 8,140 8,940 5,298
1993 - Predecessor 7,193 8,364 8,338 7,648
1992 - Predecessor 11,723 11,978 9,824 8,220
Loss before extraordinary
gain and cumulative
effects of changes in
accounting principles:
1994 - Reorganized
Company $ - $ - $ - $ (552)
1994 - Predecessor (9,996) (3,098) (3,158) (6,581)
1993 - Predecessor (10,776) (9,832) (10,241) (9,843)
1992 - Predecessor (3,134) (3,538) (6,324) (3,751)
Net earnings (loss)
attributable to
common shareholders:
1994 - Reorganized
Company $ - $ - $ - $ (552)
1994 - Predecessor (50,697) (3,098) (3,158) 135,899
1993 - Predecessor (21,949) (10,080) (10,483) (10,117)
1992 - Predecessor (4,124) (4,586) (6,150) (4,278)
Per share loss before
extraordinary gain
and cumulative effects
of changes in accounting
principles per share of
common stock:
1994 - Reorganized
Company $ - $ - $ - $ (.05)
1994 - Predecessor (1.08) (.33) (.34) (.71)
1993 - Predecessor (1.34) (1.07) (1.11) (1.06)
1992 - Predecessor (.49) (.56) (1.00) (.59)
Weighted average shares
used in calculation:
1994 - Reorganized
Company - - - 10,170
1994 - Predecessor 9,265 9,270 9,270 9,270
1993 - Predecessor 8,046 9,177 9,188 9,260
1992 - Predecessor 6,355 6,355 6,355 6,355
<FN>
As a result of the implementation of fresh start reporting, the
results for the Reorganized Company are not comparable to the results
of prior periods.
Deloitte &
Touche LLP __________________________________________________________
411 East Wisconsin Avenue Telephone: (414) 271-3000
Milwaukee, Wisconsin 53202-4496
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Bucyrus-Erie Company:
We have audited the accompanying consolidated balance sheets of Bucyrus-Erie
Company and subsidiaries (the "Company") as of December 31, 1994 (Reorganized
Company balance sheet) and 1993 (Predecessor Company balance sheet), and the
related consolidated statements of operations, common shareholders' investment
(deficiency in assets) and cash flows for the period from December 14, 1994 to
December 31, 1994 (Reorganized Company operations) and the period from
January 1, 1994 to December 13, 1994 and the years ended December 31, 1993 and
1992 (Predecessor Company operations). Our audits also included the financial
statement schedule listed in the Index at Item 14. These financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As discussed in Note A to the consolidated financial statements, on
December 1, 1994, the Bankruptcy Court entered an order confirming an Amended
Joint Plan of Reorganization which became effective on December 14, 1994.
Accordingly, the accompanying consolidated financial statements and financial
statement schedule have been prepared in conformity with AICPA Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code," for the Reorganized Company as a new entity with assets,
liabilities, and a capital structure having carrying values not comparable
with prior periods as discussed in Note B to the consolidated financial
statements. Under the Amended Joint Plan of Reorganization, the Company's
parent, B-E Holdings, Inc., was merged into the Company as of the effective
date. The consolidated financial statements and financial statement schedule
for the periods prior to December 14, 1994 include the accounts and operating
results of the merged entities (Predecessor Company).
In our opinion, the Reorganized Company consolidated financial statements
present fairly, in all material respects, the financial position of Bucyrus-
Erie Company and subsidiaries as of December 31, 1994, and the results of
their operations and their cash flows for the period December 14, 1994 to
December 31, 1994 in conformity with generally accepted accounting principles.
Further, in our opinion, the Predecessor Company consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of the Predecessor Company and subsidiaries as of
December 31, 1993, and the results of their operations and their cash flows
for the period January 1, 1994 to December 13, 1994 and the years ended
December 31, 1993 and 1992 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information set forth
therein.
As discussed in Note O to the consolidated financial statements, Jackson
National Life Insurance Company ("JNL"), a shareholder who owns approximately
41.58% of Bucyrus-Erie Company, has filed an amended complaint in a civil
action against certain of the Company's current and/or former officers and
directors seeking unspecified money damages and other equitable relief in
connection with JNL's purchase of certain notes of the Predecessor Company
which were exchanged for common stock in the Reorganized Company. The current
and/or former officers and directors have rights to indemnification from the
Company and for any costs and expenses incurred by them in connection with the
JNL complaint pursuant to the Amended Joint Plan of Reorganization and the
Company's Restated Bylaws. The ultimate outcome of this matter cannot
presently be determined. Accordingly, no provision for any loss that may
result upon resolution of this matter has been made in the accompanying
consolidated financial statements.
In addition, as also discussed in Note O to the consolidated financial
statements, JNL has filed a claim against the Company for reimbursement of
professional fees and disbursements incurred in connection with the Company's
Chapter 11 proceedings pursuant to Section 503(b) of the Bankruptcy Code. The
Company has filed an objection to the claim. The ultimate outcome of this
matter cannot presently be determined. Accordingly, no provision for any loss
that may result upon resolution of this matter has been made in the
accompanying consolidated financial statements.
As discussed in Notes I and K to the consolidated financial statements,
effective January 1, 1993, the Company changed its methods of accounting for
income taxes and postretirement benefits to conform with Statements of
Financial Accounting Standards No. 109 and 106, respectively.
/s/Deloitte & Touche LLP
April 10, 1995
Bucyrus-Erie Company and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
Periods Ended December 31, 1994 and December 13, 1994 and
Years Ended December 31, 1993 and 1992
Charges
Balance At (Credits) (Charges) Balance At
Beginning To Costs Credits End
Of Period And Expenses To Reserves* Of Period
Allowance for possible losses:
Predecessor Company
Year ended December 31, 1992:
Notes and accounts receivable -
current $ 763,000 $ 105,000 $ (53,000) $ 815,000
Year ended December 31, 1993:
Notes and accounts receivable -
current $ 815,000 $ 8,000 $ (20,000) $ 803,000
Period January 1 to December 13, 1994:
Notes and accounts receivable -
current $ 803,000 $ 40,000 $ (140,000) $ 703,000
Reorganized Company
Period December 14 to December 31, 1994:
Notes and accounts receivable -
current $ 703,000 $ - $ (12,000) $ 691,000
<FN>
* Uncollected receivables written off, net of recoveries, and translation adjustments
at the foreign subsidiaries.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
In connection with the consummation of the Amended Plan, the size of
the board of directors as of the Effective Date was fixed at seven directors,
and the persons named below were selected to serve as directors commencing as
of the Effective Date (the "Original Directors"). Mr. Mork was selected by
the Company's board of directors immediately prior to the Effective Date to
serve as a director upon the Effective Date (the "Bucyrus Director").
Mr. Bartlett, Mr. Poole and Mr. Victor were selected prior to the Effective
Date by the statutory creditors committee of unsecured creditors appointed
pursuant to Section 1102 of the Bankruptcy Code to serve as directors upon the
Effective Date (the "Committee Directors"). Mr. Radecki, Mr. Stark and Mr.
Swanson were selected prior to the Effective Date by JNL to serve as directors
upon the Effective Date (the "JNL Directors"). Each Original Director shall
serve from the Effective Date until the annual meeting of stockholders of the
Company to be held in 1996 (the "1996 Annual Meeting") and, pursuant to the
provisions of Section 5.04(c) of the Amended Plan described below, shall serve
from and after the 1996 Annual Meeting until the Company's annual meeting of
stockholders to be held in 1997 (the "1997 Annual Meeting"), and until their
successors have been duly elected and qualified. The first annual meeting of
stockholders of the Company following the Effective Date will be held in 1996
following completion of the Company's 1995 fiscal year.
Pursuant to Section 5.04(c) of the Amended Plan, all holders of
Holdings' and the Company's unsecured debt securities and Holdings' equity
securities who have accepted the Amended Plan by ballot or master ballot and
all holders of Holdings' and the Company's unsecured debt securities and
Holdings' equity securities who are entitled to receive shares of the
Company's Common Stock pursuant to the Amended Plan are deemed as of the
Effective Date to have irrevocably agreed without any further action:
(i) to cause the shares of the Company's Common Stock received
pursuant to the Amended Plan and all other shares of the
Company's Common Stock beneficially owned by any such holder
following the Effective Date to be voted for the election of
each of the Original Directors as directors of the Company at
the 1996 Annual Meeting for a one-year term ending on the
date of the 1997 Annual Meeting and until their successors
have been duly elected and qualified; and
(ii) that any sale, transfer or other disposition, whether
voluntary or involuntary, by operation of law or otherwise of
any shares of the Company's Common Stock at any time prior to
the 1996 Annual Meeting (a "Transfer"; and any person to whom
any shares of the Company's Common Stock are Transferred is
referred to as a "Transferee") shall be made subject to the
irrevocable agreement to vote such shares of the Company's
Common Stock for the election of each of the Original
Directors at the 1996 Annual Meeting.
Under Section 5.04(c) of the Amended Plan, the irrevocable voting agreement
described in (i) above is binding upon all Transferees. Any amendment or
modification of Section 5.04 of the Amended Plan at any time prior to the 1997
Annual Meeting is prohibited. Certain provisions of the Restated Certificate
of Incorporation of the Company (the "Restated Charter") and the Restated
Bylaws of the Company (the "Restated Bylaws") relating to the election,
number, tenure, qualifications and removal of and vacancies with respect to
the Company's board of directors cannot be amended or modified at any time
prior to the 1997 Annual Meeting.
The Restated Bylaws provide that if prior to the 1997 Annual Meeting,
a vacancy in the board of directors resulting from the death, resignation,
retirement or removal for cause (an "Original Director Vacancy Event") of an
Original Director occurs, then if such Original Director is (i) the Bucyrus
Director, the board of directors shall appoint an officer of the Company who
served in such capacity prior to the Effective Date or, in the absence of any
such person, an officer of the Company then serving in such capacity; (ii) a
JNL Director, the remaining JNL Directors (or their successors) shall appoint
the successor to such JNL Director, provided, however, if an Original Director
Vacancy Event occurs in respect of (x) all JNL Directors or (y) the remaining
JNL Director prior to the appointment of a successor to the other JNL
Director, then, if at the time the Original Director Vacancy Event described
in (x) or (y) occurs, JNL owns (1) 30% or more of the then issued and
outstanding shares of the Company's Common Stock, the President of JNL shall
appoint successors to such JNL Directors or (2) less than 30% of the then
issued and outstanding shares of the Company's Common Stock, a majority of the
remaining Original Directors shall appoint successors to such JNL Directors;
or (iii) a Committee Director, the remaining Committee Directors (or their
successors) shall appoint the successor to such Committee Director, provided,
however, if an Original Director Vacancy Event occurs in respect of (x) all
Committee Directors or (y) the remaining Committee Director prior to the
appointment of a successor to the other Committee Director, a majority of the
remaining Original Directors shall appoint successors to such Committee
Directors.
The Restated Charter provides that except as provided in the Restated
Bylaws in effect immediately after the Effective Date, the size of the board
of directors cannot be increased or decreased prior to the 1997 Annual
Meeting. The Restated Bylaws provide that prior to the 1997 Annual Meeting
the board of directors may be increased to more than seven members if a
resolution authorizing such increase is passed at a meeting of the board of
directors by a resolution adopted by (i) not less than two-thirds of the
number of directors fixed from time to time by the Restated Bylaws or (ii) a
majority of the board of directors in connection with any transaction
involving the Company that requires approval of the stockholders of the
Company under the General Corporation Law of the State of Delaware and that is
approved at such meeting, provided that in either case notice of the proposed
change was given in a notice provided no less than 24 hours prior to the
meeting of the board of directors.
Under the Amended Plan, JNL is prohibited from taking any action, or
causing any of its Affiliates (as defined in the Bankruptcy Code) to take any
action, to remove any Original Director other than a JNL Director (or any
successor to a JNL Director) prior to the 1997 Annual Meeting, provided that
such prohibition shall not apply to any action by JNL or any of its Affiliates
to remove any director of the Company (i) for any reason at any time when JNL
and its Affiliates in the aggregate (x) beneficially own less than 25% of all
of the outstanding shares of the Company's Common Stock or (y) do not
constitute the largest beneficial owner of the Company's Common Stock or (ii)
for cause.
The directors of the Company are as follows:
CRAIG SCOTT BARTLETT, JR., 61, Director of the Company since
December 14, 1994. Since 1990 he has been a consultant on banking matters,
and in conjunction with such activities was Senior Vice President and Chief
Credit Officer of MTB Bank, a private banking firm from 1992 to 1994. From
1984 to 1990, he was Executive Vice President, Senior Lending Officer and
Chairman, Credit Policy Committee, of National Westminster Bank USA. He
presently serves as a Director of MTB Bank, Darling International, Inc,
Harvard Industries, Inc, NVR, Inc., Triangle Wire & Cable, Inc., and The
Western Transmedia Company, Inc.
PHILLIP W. MORK, 55, President and a Director of the Company and
Bucyrus since February 4, 1988. Mr. Mork was President of the Mining
Machinery Division of Bucyrus ("MMD") from 1985 to 1988 and served as General
Manager of MMD from 1984 to 1985 and Director of Manufacturing for that
division from 1979 to 1984. From 1965, when he joined the Company, until 1979
he held various manufacturing positions including Plant Manager at the
Company's previously owned Evansville, Indiana and Pocatello, Idaho locations.
From 1963 to 1965 Mr. Mork was an infantry officer in the United States Army.
He graduated from the University of Wisconsin with Bachelor degrees in
Mechanical Engineering and Business Administration (Marketing). Mr. Mork is
currently a director of Trinity Memorial Hospital and the South Milwaukee
Savings Bank.
GEORGE A. POOLE, JR., 63, Director of the Company since December 14,
1994 and has been a private investor since July 1, 1985. Mr. Poole serves as
a Director of Rock Island Foods, Inc., Spreckels Industries, Inc., and U.S.
Home Corporation. He was a pilot in the United States Air Force and received
his BA degree from Yale University and his JD degree from Stanford School of
Law.
JOSEPH J. RADECKI, JR., 36, Director of the Company since
December 14, 1994. Mr. Radecki is currently Executive Vice President (1990)
of Jefferies & Company, Inc., an investment banking and advisory firm. Prior
to joining Jefferies & Company, Mr. Radecki was a First Vice President (from
1983 - 1990) in the International Capital Markets Group at Drexel Burnham
Lambert, Inc., where he specialized in financial restructurings and
recapitalizations. He has served as a director of Service America Corporation
and is currently on the Board of Directors of ECO-Network, an engineering and
technology related non-profit corporation. Mr. Radecki graduated magna cum
laude in 1980 from Georgetown University with a BA degree in Government and
Economics.
F. JOHN STARK, III, 36, Director of the Company since December 14,
1994. Mr. Stark is a Director, Senior Vice President (1990) and Counsel
(1990) and portfolio manager of the Special Investments Portfolio (1990) for
PPM America, Inc. He is also a director of Carolina Steel Corporation. Prior
to his employment at PPM America, Mr. Stark was employed by Washington Square
Capital and the law firm of Briggs and Morgan in Minneapolis, MN. He
received his A.B. from Wabash College and his JD degree from Vanderbilt
University School of Law.
RUSSELL W. SWANSEN, 37, Director of the Company since December 14,
1994. Mr. Swansen is the President (1990) of PPM America. Prior to joining
PPM America in 1990, Mr. Swansen was an Executive Vice President (1987) of
Washington Square Capital, a financial services subsidiary of the NWNL Co.
where he headed its investment advisory division and was a director of
Washington Square Mortgage Company, a residential mortgage banking firm. Mr.
Swansen earned his undergraduate degree at Gustavus Adolphus College and an
MBA from the University of Minnesota Graduate School of Business.
SAMUEL M. VICTOR, 39, Director of the Company since December 14,
1994. Mr. Victor is an Executive Vice President and a Principal of Chanin and
Company, an investment banking and financial advisory firm which he helped
form in 1990. Prior to joining Chanin and Company, Mr. Victor was a Vice
President (1988-1990) in the Corporate Finance Department of Drexel Burnham
Lambert, Inc., specializing in bankruptcies and restructurings. He is also a
director of BDK Holdings, Spectravision, Inc. and of the Los Angeles Child
Guidance Center. Mr. Victor received his BA degree from Cornell University
and his MBA from the UCLA Graduate School of Management.
The board of directors has designated three standing committees -
Audit Committee, Benefit Plan Committee and Compensation Committee. The
members of the Audit Committee are Messrs. Poole, Radecki and Stark. The
members of the Benefit Plan Committee are Messrs. Mork, Swansen, Verville
(Vice President - Finance and Treasurer of the Company) and Goelzer (Vice
President, Secretary and General Counsel of the Company). The members of the
Compensation Committee are Messrs. Bartlett, Mork and Stark.
Executive officers are elected for a term of one year at the regular
meeting of the board of directors held after each annual meeting of the
stockholders of the Company. In addition to Mr. Mork, whose biographical
summary is set forth above, the Company has the following executive officers:
DAVID M. GOELZER, 55, Vice President, Secretary and General Counsel.
Mr. Goelzer was appointed Vice President of the Company in 1992 and was
elected Secretary and General Counsel of the Company on February 4, 1988. He
was appointed General Attorney of the Company in 1980. From 1972 through 1980
he was Commercial Attorney and Assistant Secretary of the Company.
Mr. Goelzer has been with the Company since 1972.
CRAIG R. MACKUS, 43, Controller of the Company since February 4,
1988. Mr. Mackus was Division Controller and Assistant Corporate Controller
from 1985 to February 4, 1988, Manager of Corporate Accounting from 1981 to
1982 and 1984 to 1985 and Assistant Corporate Controller of Western Gear
Corporation from 1982 to 1984. Mr. Mackus joined the Company in 1974.
ELROY F. SCHWEITZER, 58, Vice President - Engineering of the Company
since February 4, 1988. Mr. Schweitzer was Chief Engineer - Walking Draglines
from 1984 to February 4, 1988, Chief Engineer - Intermediate Draglines/Blast
Hole Drills from 1983 to 1984, and Chief Development Engineer from 1982 to
1983. Mr. Schweitzer joined the Company in 1955.
TIMOTHY W. SULLIVAN, 41, will become Vice President - Marketing of
the Company effective upon Mr. Westerman's retirement. Presently, Mr.
Sullivan is the Director of Business Development (1994). Mr. Sullivan was
Director of Parts Sales and Subsidiary Operations from 1990 to 1994, and
Product Manager of Electric Mining Shovels and International Sales from 1986
to 1990. Mr. Sullivan joined the Company in 1976.
NORBERT J. VERVILLE, 58, Chief Commercial Officer, Chief Financial
Officer, Vice President - Finance and Treasurer of the Company since
February 4, 1988. Mr. Verville served as Assistant Treasurer of the Company
between 1986 and February 4, 1988. From 1978 to 1985 he was Managing Director
of Ruston-Bucyrus, Ltd. From 1971 to 1977 he was Financial Director - Ruston
Bucyrus, Ltd. Mr. Verville joined the Company in 1960. Mr. Verville is
currently a director of M&I South Shore Bank in South Milwaukee, Wisconsin.
JOHN H. WESTERMAN, 61, Vice President - Marketing of the Company
since February 4, 1988. Mr. Westerman was Vice President and General Sales
Manager of MMD from 1985 to February 4, 1988 and General Sales Manager of MMD
from 1979 to 1985. Mr. Westerman joined the Company in 1955. Mr. Westerman
has announced that he will retire effective March 31, 1995.
Unless otherwise indicated, each Director and executive officer
listed above is a citizen of the United States and the address of such person
is the Company's principal executive offices. There are no family
relationships among Directors and executive officers of the Company.
Mr. William B. Winter, who had served as Chairman of the Board and
Chief Executive Officer of the Company since 1988 and as a Director of the
Company since 1975, resigned from these positions on December 14, 1994 and
retired from the Company on December 31, 1994. The offices of the Chairman of
the Board and Chief Executive Officer of the Company remain vacant.
On February 16, 1995, the Company's Board of Directors decided to
seek proposals from consulting firms to perform a comprehensive review of the
Company's management structure and senior management team. An ad hoc
committee consisting of Messrs. Bartlett and Stark was designated to solicit
proposals from consulting firms and to make recommendations to the Board of
Directors as to a consulting firm to be retained by the Company to perform
such review. A request for proposals was sent by the ad hoc committee to a
number of consulting firms on March 16, 1995. Each of the consulting firms
was directed to provide a proposal to the Board of Directors by April 3, 1995.
The Company's Board of Directors is currently in the process of reviewing the
proposals received to date from consulting firms and has not yet chosen a
consulting firm to perform such review.
Item 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual
compensation paid for services rendered in all capacities to the Company and
its subsidiaries by the Company's Chief Executive Officer and by the four most
highly compensated executive officers (other than the Chief Executive Officer)
who were serving as executive officers at the end of fiscal 1994. Also
included is salary, bonus and option information for fiscal years 1992 and
1993. Directors did not receive any compensation for services provided to the
Company as directors or as members of any of the Board's committees.
Summary Compensation Table
Name and All Other
Principal Fiscal Options Compensation
Position Year Salary($) Bonus($) SARs(#)(1) ($) (2)
______________________________________________________________________________
W. B. Winter 1994 318,000 - - 4,620
Retired Chairman 1993 318,000 - - 4,497
of the Board and 1992 318,000 - 137,600 14,741
Chief Executive
Officer
P. W. Mork 1994 207,108 - - 4,620
President 1993 199,140 - - 4,497
1992 191,240 - 90,265 8,374
N. J. Verville 1994 164,750 - - 4,620
Chief Commercial 1993 155,294 - - 4,497
Officer, Chief 1992 151,084 - 81,485 6,672
Financial Officer
Vice President -
Finance and
Treasurer
D. M. Goelzer 1994 134,652 - - 4,040
Vice President, 1993 124,594 - - 3,738
Secretary and 1992 109,669 - 51,525 2,961
General Counsel
E. F. Schweitzer 1994 123,937 - - 3,718
Vice President - 1993 116,689 - - 3,501
Engineering 1992 113,265 - 53,670 3,608
<FN>
(1) On April 30, 1992, Holdings granted incentive stock options
pursuant to the B-E Holdings 1988 Stock Option Plan to W. B. Winter (30,000),
P. W. Mork (20,000), N. J. Verville (20,000), E. F. Schweitzer (13,000) and D.
M. Goelzer (12,000) at an exercise price of $0.50 per share, which was the
fair market value at that time of Holdings' warrants which was used in
determining the fair market value of the underlying securities ("fair market
value"). The April 30, 1992 grant was conditioned upon the optionee's
surrender of an equal number of options granted on June 22, 1989 at an
exercise price of $2.125 (except for the options granted to Mr. Winter at an
exercise price of $2.3375 or 110% of the market price since he held more than
10% of Holdings' common stock).
On August 14, 1992, all previously granted options, including those
granted on April 30, 1992, were exchanged by the optionees for an equal number
of options whose fair market value was $0.125 per share. Mr. Winter elected
to receive non-qualified stock options at $0.125 per share in place of the
incentive stock options which he surrendered. Non-qualified options are not
subject to the requirement that the option price for optionees holding more
than 10% of Holdings' common stock be 110% of the market price.
Pursuant to the Amended Plan, all options to purchase shares of
Holdings' Class C Common Stock granted pursuant to the B-E Holdings 1988 Stock
Option Plan which were not exercised prior to the Effective Date were
cancelled on the Effective Date and individuals holding such stock options did
not receive any distribution nor retain any property in Holdings or the
Company on account of such stock options.
(2) "All Other Compensation" for 1994 includes the employer match
under the Company's 401(k) savings plan: W. B. Winter ($4,620), P. W. Mork
($4,620), N. J. Verville ($4,620), D. M. Goelzer ($4,040) and E. F.
Schweitzer ($3,718). "All Other Compensation" for 1993 includes the employer
match under the Company's 401(k) savings plan: W. B. Winter ($4,497), P. W.
Mork ($4,497), N. J. Verville ($4,497), D. M. Goelzer ($3,738) and E. F.
Schweitzer ($3,501). "All Other Compensation" for 1992 includes the employer
match under the Company's 401(k) savings plan: W. B. Winter ($4,364), P. W.
Mork ($4,364), N. J. Verville ($4,364), D. M. Goelzer ($2,961) and E. F.
Schweitzer ($3,608). "All Other Compensation" for 1992 also includes $10,377
paid to W. B. Winter, $4,010 paid to P. W. Mork and $2,308 paid to N. J.
Verville under the Company's Executive Deferred Compensation Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No stock options or SAR's were granted to or exercised by any of the
directors or executive officers named in the Summary Compensation Table.
PENSION PLAN TABLE
The following table sets forth the estimated annual benefits payable
on a straight life annuity basis (prior to offset of one-half of estimated
Social Security benefits) to participating employees, including officers, upon
retirement at normal retirement age for the years of service and the average
annual earnings indicated under the Company's defined benefit pension plan.
Years of Service
Remuneration 35 30 25 20 15
$125,000 $ 76,563 $ 65,625 $ 54,688 $ 43,750 $ 32,813
150,000 91,875 78,750 65,625 52,500 39,375
175,000 107,188 91,875 76,563 61,250 45,938
200,000 122,500 105,000 87,500 70,000 52,500
225,000 137,813 118,125 98,438 78,750 59,063
250,000 153,125 131,250 109,375 87,500 65,625
300,000 183,750 157,500 131,250 105,000 78,750
400,000 245,000 210,000 175,000 140,000 105,000
450,000 275,625 236,250 196,875 157,500 118,125
500,000 306,250 262,500 218,750 175,000 131,250
Covered compensation for purposes of the Company's defined benefit
pension plan consists of the average of a participant's highest total salary
and bonus (excluding compensation deferred pursuant to any non-qualified plan)
for a consecutive five year period during the last ten calendar years of
service prior to retirement.
The years of credited service under the defined benefit pension plan
for each of the individuals named in the Summary Compensation Table are as
follows: Mr. Winter (35), Mr. Mork (29), Mr. Verville (33), Mr. Schweitzer
(33) and Mr. Goelzer (23).
Sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as
amended, limit the annual benefits which may be paid from a tax-qualified
retirement plan. As permitted by the Employee Retirement Income Security Act
of 1974, the Company has supplemental plans which authorize the payment out of
general funds of the Company of any benefits calculated under provisions of
the applicable retirement plan which may be above the limits under these
sections.
Employment Contracts, Termination Of Employment And Change-Of-Control
Arrangements
In 1992, the Company entered into employment agreements
("Agreements") with each of its executive officers (each, an "Employee"), with
the exception of Mr. Winter and Mr. Ray G. Olander (retired Vice Chairman of
the Company), whereby they agreed to continue in the Company's employ subject
to immediate termination by either party upon the giving of written notice,
and to render consulting services to the Company for a period of twelve (12)
months in the event of a termination by the Employee and thirty-six (36)
months in the event of termination by the Company or, in any event, not later
than when the Employee reaches his 65th birthday.
The Agreements are "triggered" when there is a change in control of
the Company. The Agreements provide that a change of control occurs upon the
occurrence of the following events: (i) there is a change in a majority of
the board of directors of the Company by reason of election of new directors
not nominated or elected by the board of directors of the Company, (ii) the
Company is merged or consolidated with any other corporation, (iii) 30 percent
or more of the voting common stock of the Company is acquired by a person or
affiliated group, or (iv) 50 percent or more of the assets of the Company is
acquired by a person or affiliated group.
If an Employee terminates his employment within one year after the
Agreement is triggered, he will continue to serve as a consultant for one year
after such termination and if the Company terminates his employment within
three years after the Agreement is triggered (the "Relevant Period"), the
Employee continues to serve as a consultant for three years after such
termination. The Employee's monthly compensation after such termination will
be equal to one-twelfth of his highest 12 consecutive months of compensation
(base salary and bonus) paid to him prior to his termination, adjusted for
inflation. The Employee can opt for a discounted cash settlement at the time
of termination. However, in no event will an Employee be paid an amount in
excess of the allowable parachute payment under Section 280G of the Internal
Revenue Code. It is necessary to stay within this limitation in order to
preserve the deductibility by the Company of compensation payments to the
Employee during the consultation period and to avoid payment by the Employee
of a non-deductible 20% excise tax on such payments.
Pursuant to the Amended Plan, the Agreements were modified with the
consent of the relevant Employees, and were assumed by the Company upon the
Effective Date. The Agreements were amended to (a) reduce the duration of the
consulting period upon the occurrence of an Employment Termination Event to 18
months (as opposed to the 36-month consulting period otherwise provided under
the Agreements) following the "change of control" event occurring on the
Effective Date upon consummation of the Amended Plan; and (b) reduce the
Relevant Period to 18 months following the "change of control" event occurring
on the Effective Date upon consummation of the Amended Plan (as opposed to the
36-month period otherwise provided under the Agreements). An "Employment
Termination Event" means (i) termination of an Employee's employment without
cause by the Company or (ii) an Employee's voluntary termination of his
employment after (A) a reduction of such Employee's position to a position of
lesser responsibility or a de facto reduction of such Employee's duties or
responsibility, (B) the reduction of his annual base salary or rate of maximum
potential bonus (unless such salary or bonus reduction is part of the
reduction of compensation applicable generally to all management employees of
the Company) or (C) the Company requires such Employee to move his residence
or principal place of business to any location unacceptable to such Employee.
During the consultation period, an Employee is permitted to accept
employment elsewhere without loss of the compensation provided for in the
Agreement, unless he accepts employment with a competitor. He will also be
provided with continuing insurance benefits. However, if he accepts full time
employment elsewhere, any insurance benefits he derives from such full time
employment will be considered primary insurance and the Company's insurance
benefits will apply only to the extent that they exceed benefits of the other
employer. Also, if the Employee elects monthly payments during the
Consultation Period, his rights under the Company's pension plans and 401(k)
savings plan continue unless he actually retires. In the event of a dispute
regarding rights and obligations under the Agreement, the Company is required
to pay the Employee's costs, including attorney fees, if the Employee
prevails.
A provision pertaining to a change in identity of the Chairman of the
Board of the Company was included only in the Agreements with Messrs. Mork and
Verville. This provision has been removed from both individuals' Agreements
by mutual consent. It provided that upon a change in the Chairman of the
Board of the Company (with or without a change in control), a one year
contract of employment with the Employee would become operative, unless such
Employee was the new Chairman. During the one year employment period, the
Employee was to serve in the same capacity as on the effective date of the one
year contract and was to devote his full time and attention to the business
and affairs of the Company. Base salary during the one year period would be
no less than the Employee's base salary on the effective date of the one year
contract and bonus plans and fringe benefits would conform to the Company's
standard practice for the one year period. Payment in full for the entire
year was required whether or not the Employee was terminated or died or became
disabled and in all cases payments were to be continued on the same basis as
if the Employee was continuing to work except that a lump sum payment would be
made if the Employee died.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the Effective Date, the Company did not have a separate
Compensation Committee. The board of directors of the Company, comprised of
Messrs. Winter (Chairman of the Board and Chief Executive Officer of the
Company until the Effective Date), Mork (President of the Company), Verville
(Chief Commercial Officer, Chief Financial Officer, Vice President-Finance and
Treasurer of the Company) and Goelzer (Vice President, Secretary and General
Counsel of the Company), functioned in that capacity. Since the Effective
Date, the board of directors has formed a Compensation Committee which will
review the Company's existing compensation policies and will thereafter
continue, modify or promulgate new ones. The Compensation Committee consists
of Mr. Bartlett, Mr. Mork, (President of the Company) and Mr. Stark.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership as of
March 14, 1995 of the Company's Common Stock by each person who is known to
the Company to be the beneficial owner of five percent or more of the
Company's Common Stock:
Title of Name and Address Amount and Nature of Percent of
Class of Beneficial Owner Beneficial Ownership Class(1)
Common Jackson National Life 4,228,382(2) 41.58%
Stock Insurance Company (2)
5901 Executive Drive
Lansing, MI 48911-5333
Common South Street Corporate 1,160,979(3) 11.42%(3)
Stock Fund I, L.P. (3)
South Street Leveraged
Corporate Recovery
Fund, L.P. (3)
South Street Corporate
Recovery Fund I
(International), L.P. (3)
c/o Greycliff Partners, Ltd.
45 Rockefeller Plaza
Suite 910
New York, NY 10111
Common Franklin Resources, Inc. 774,900(4) 7.62%
Stock 777 Mariners Island Blvd.
San Mateo, CA 94404
___________________________________________
<FN>
(1) Calculated on the basis of 10,170,417 shares of the Company's Common
Stock issued and outstanding.
(2) According to the Schedule 13D statement dated December 23, 1994, as
amended by Amendment No. 1 thereto dated April 4, 1995, (i) JNL has
shared voting power and shared dispositive power with PPM America, Inc.
over all such shares, (ii) PPM America, Inc. serves as the investment
advisor to JNL pursuant to a Discretionary Investment Management
Agreement between JNL and PPM America, Inc. dated as of April 14, 1993
and (iii) JNL and PPM America, Inc. are both indirect, wholly-owned
subsidiaries of Prudential Corporation plc, a corporation organized under
the laws of the United Kingdom.
(3) The information regarding the ownership of the three South Street Funds,
each a Delaware limited partnership, is based on a May 11, 1994 letter
(the "5/11/94 Letter") from counsel to the South Street Funds to counsel
to JNL summarizing the beneficial ownership position of the South Street
Funds in Bucyrus' 10% Senior Notes (interest rate reset to 16%) due 1996
(the "10% Notes"), Bucyrus' 9% Sinking Fund Debentures due 1999 (the "9%
Debentures") and Holdings' Series A 12-1/2% Senior Debentures due 2002
(the "12-1/2% Debentures"). The 5/11/94 letter indicates that
$13,006,000 in principal amount of 10% Notes, $458,000 in principal
amount of 9% Debentures and $14,861,000 in principal amount of the
12-1/2% Debentures were beneficially owned by the South Street Funds.
The South Street Funds have indicated to the Company that as of the
Effective Date, the 10% Notes, 9% Debentures and 12-1/2% Debentures
described in the 5/11/94 Letter were beneficially owned by them.
Pursuant to the Amended Plan the 10% Notes, 9% Debentures and the 12-1/2%
Debentures beneficially owned by the South Street Funds were converted
into 1,160,979 shares of the Company's Common Stock. The South Street
Funds have indicated that 914,908 shares of the Company's Common Stock
are beneficially owned by South Street Corporate Recovery Fund I, L.P.,
223,297 shares of the Company's Common Stock are beneficially owned by
South Street Leveraged Corporate Recovery Fund, L.P., and 22,774 shares
of the Company's Common Stock are beneficially owned by South Street
Corporate Recovery Fund I (International), L.P. JNL has objected to the
proofs of claim filed with the Bankruptcy Court by the indenture trustees
for the 10% Notes, 9% Debentures and 12-1/2% Debentures to the extent
that such proofs of claim related to debt securities beneficially owned
by the South Street Funds. As a result of such objection, the Company
believes that the shares of the Company's Common Stock beneficially owned
by the South Street Funds are being held in escrow by the South Street
Funds pursuant to an agreement between JNL and the South Street Funds
pending further order of the Bankruptcy Court with respect to JNL's
objection.
(4) Includes 741,331 shares of the Company's Common Stock beneficially owned
by Age High Income Fund. Age High Income Fund, a Colorado organization,
is a subsidiary of Franklin Resources, Inc., a Delaware corporation.
According to the Schedule 13G statement dated February 8, 1995 filed with
the Securities and Exchange Commission by Franklin Resources, Inc. and
Age High Income Fund, (i) Franklin Resources, Inc. has shared dispositive
power over and sole voting power over 774,900 shares of the Company's
Common Stock and (ii) Age High Income Fund has sole voting power over,
shared dispositive power over, the right to receive dividends from and
the right to receive proceeds from the sale of 741,331 shares of the
Company's Common Stock.
Executive Officers and Directors
The following table sets forth the beneficial ownership as of
March 14, 1995 of the Company's Common Stock by each director, each of the
executive officers named in the Summary Compensation Table above, and by all
directors and executive officers of the Company as a group.
Amount and Nature
Name of of Beneficial Percent of
Title of Class Beneficial Owner Ownership (1) Class(2)
Common Stock C. S. Bartlett, Jr. -0- -0-
Common Stock D. M. Goelzer 162 *
Common Stock P. W. Mork 3,242 *
Common Stock G. A. Poole, Jr. -0- -0-
Common Stock J. J. Radecki, Jr. (3) -0-
Common Stock E. F. Schweitzer 729 *
Common Stock F. J. Stark, III (4) -0-
Common Stock R. W. Swansen (5) -0-
Common Stock N. J. Verville 2,728 *
Common Stock S. M. Victor -0- *
Common Stock All directors and
executive officers
as a Group (12
persons including
the above-named) 9,778 *
___________________________________________________________
<FN>
* Less than 1%.
(1) The specified persons have sole voting power and sole investment power
as to all of the shares of the Company's Common Stock.
(2) Calculated on the basis of 10,170,417 shares of the Company's Common
Stock.
(3) Mr. Radecki was selected as a director of the Company by JNL (the
beneficial owner of 4,228,384 shares of the Company's Common Stock)
pursuant to the provisions of Section 5.04 of the Amended Plan.
Mr. Radecki disclaims beneficial ownership in all such Shares.
(4) Mr. Stark is a director and an officer of PPM America, Inc., which is
deemed to be the beneficial owner of 4,228,384 shares of Common Stock of
the Company. Mr. Stark disclaims beneficial ownership in all such
Shares.
(5) Mr. Swansen is a director and an officer of PPM America, Inc., which is
deemed to be the beneficial owner of 4,228,384 shares of Common Stock of
the Company. Mr. Swansen disclaims beneficial ownership in all such
Shares.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Registration Rights Agreement
On the Effective Date pursuant to the Amended Plan, the Company
entered into a Registration Rights Agreement (the "Registration Rights
Agreement") which grants rights to each person entitled to receive in the
aggregate 1,000,000 or more shares of the Company's Common Stock (a "Relevant
Holder") pursuant to the provisions of the Amended Plan. To the knowledge of
the Company, JNL is the only person or entity entitled to the benefits of the
Registration Rights Agreement. Pursuant to the Registration Rights Agreement,
a Relevant Holder has the right to (a) require the Company under certain
circumstances to file a registration statement under the Securities Act to
permit a public offering of the Company's Common Stock owned by such Relevant
Holders and (b) participate in certain other registrations of the Company's
Common Stock under the Securities Act made on behalf of the Company for other
holders of the Company's Common Stock. Under the terms of the Registration
Rights Agreement, Relevant Holders holding 15% or more of the shares of the
Company's Common Stock then entitled to the benefits of such agreement may
request the Company to file one or more registration statements under the
Securities Act with respect to their shares of the Company's Common Stock, and
the Company is required to use its best efforts to effect such registration
provided that the Company generally will not be required to effect more than
three such registrations. Relevant Holders also may participate in offerings
proposed by the Company. These rights are subject to certain conditions and
limitations, among them the right of the Company to postpone for a reasonable
period of time (but not exceeding 120 days) the requested filing of a
registration statement if the Company determines such registration would
interfere with a material corporate transaction, development or other
specified matters. Pursuant to the terms of the Registration Rights
Agreement, the Company must pay all expenses, other than fees and commissions
of underwriters, incident to the registration and sale of shares of the
Company's Common Stock held by Relevant Holders. The registration rights, if
not fully exercised, terminate on the third anniversary of the Effective Date.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page No.
(a) 1. FINANCIAL STATEMENTS
Bucyrus-Erie Company and Subsidiaries
(i) Consolidated Statements of Operations
for periods ended December 31, 1994
and December 13, 1994 and years ended
December 31, 1993 and 1992. 23
(ii) Consolidated Balance Sheets as
of December 31, 1994 and 1993. 25
(iii) Consolidated Statements of Cash Flows
for periods ended December 31, 1994
and December 13, 1994 and years ended
December 31, 1993 and 1992. 28
(iv) Consolidated Statements of Common
Shareholders' Investment (Deficiency
in Assets) for periods ended
December 31, 1994 and December 13,
1994 and years ended December 31,
1993 and 1992. 32
(v) Notes to Consolidated Financial
Statements for periods ended
December 31, 1994 and December 13,
1994 and years ended December 31,
1993 and 1992. 36
2. FINANCIAL STATEMENT SCHEDULE
Schedule II - Valuation and Qualifying
Accounts and Reserves 65
Independent Auditors' Report 63
All other schedules are omitted because they are inapplicable, not
required by the instructions or the information is included in the
consolidated financial statements or notes thereto.
(b) REPORTS ON FORM 8-K
A report on Form 8-K dated December 1, 1994 was filed on December 13,
1994 to report that the Amended Plan was confirmed by the Bankruptcy
Court.
A report on Form 8-K dated December 14, 1994 was filed on December 29,
1994 to report that (i) the transactions contemplated by the Amended
Plan were consummated and the Amended Plan was Effective and (ii) the
financial projections prepared in August 1993 by the Company contained
in the Company's Disclosure Statement and Proxy Statement-Prospectus
dated January 12, 1994 did not reflect the Company's current business
circumstances.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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-ERIE COMPANY
(Registrant)
By /s/ PHILLIP W. MORK April 17, 1995
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints D. M. Goelzer and P. W. Mork, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this report, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature and Title Date
/s/ C. SCOTT BARTLETT, JR. April 10, 1995
C. Scott Bartlett, Jr., Director
/s/ PHILLIP W. MORK April 17, 1995
Phillip W. Mork, President
and Director
/s/ GEORGE A. POOLE, JR. April 6, 1995
George A. Poole, Jr., Director
/s/ JOSEPH J. RADECKI, JR. April 13, 1995
Joseph J. Radecki, Jr., Director
/s/ F. JOHN STARK, III April 12, 1995
F. John Stark, III, Director
/s/ RUSSELL W. SWANSEN April 6, 1995
Russell W. Swansen, Director
/s/ SAMUEL M. VICTOR April 6, 1995
Samuel M. Victor, Director
/s/ NORBERT J. VERVILLE April 17, 1995
Norbert J. Verville, Vice
President - Finance, Treasurer
(Principal Financial Officer)
/s/ CRAIG R. MACKUS April 17, 1995
Craig R. Mackus, Controller
(Principal Accounting Officer)
BUCYRUS-ERIE COMPANY
EXHIBIT INDEX
TO
1994 ANNUAL REPORT ON FORM 10-K
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference Herewith Number
2.1 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, dated December 1,
as modified December 1, 1994 ("Registrant's
1994, including Exhibits. December 1, 1994
8-K").
2.2 Order dated December 1, Exhibit 2.2 to
1994 of the U.S. Bankruptcy Registrant's
Court, Eastern District of December 1,
Wisconsin, confirming the 1994 8-K.
Second Amended Joint Plan
of Reorganization of B-E
Holdings, Inc. and Bucyrus-
Erie Company under chapter
11 of the Bankruptcy Code,
as modified December 1, 1994.
2.3 Agreement and Plan of Exhibit 2.3 to
Merger, dated as of Registrant's
December 14, 1994, Current Report
between B-E Holdings, on Form 8-K,
Inc. and Bucyrus-Erie dated December 14,
Company. 1994 ("Registrant's
December 14, 1994
8-K").
3.1 Restated Certificate of Exhibit 3.1 to
Incorporation of Bucyrus- Registrant's
Erie Company. December 14, 1994
8-K.
3.2 Restated Bylaws of Bucyrus- Exhibit 3.2 to
Erie Company. Registrant's
December 14, 1994
8-K.
4.1 Specimen certificate of Exhibit 4.1 to
Common Stock, par value $.01 Registrant's
per share, of Bucyrus-Erie December 14, 1994
Company. 8-K.
4.2 Registration Rights Exhibit 4.2 to
Agreement, dated as of Registrant's
December 14, 1994, executed December 14, 1994
by Bucyrus-Erie Company. 8-K.
EI-1
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference Herewith Number
4.3 Indenture, dated as of Exhibit 4.3 to
December 14, 1994, between Registrant's
Bucyrus-Erie Company and December 14, 1994
Harris Trust and Savings 8-K.
Bank, as Trustee relating
to Bucyrus-Erie Company's
Secured Notes due
December 14, 1999.
4.4 Form of Bucyrus-Erie Exhibit 4.4 to
Company's Secured Notes Registrant's
due December 14, 1999. December 14, 1994
8-K.
4.5 Security Agreement, dated Exhibit 4.5 to
as of December 14, 1994, Registrant's
between Bucyrus-Erie December 14, 1994
Company and Harris Trust 8-K.
and Savings Bank, as
Collateral Agent.
10.1 Credit Agreement, dated Exhibit 10.1 to
as of December 14, 1994, Registrant's
between Bank One, Milwaukee, December 14, 1994
National Association and 8-K.
Bucyrus-Erie Company.
10.2 Security Agreement, dated Exhibit 10.2 to
as of December 14, 1994, Registrant's
between Bucyrus-Erie December 14, 1994
Company and Bank One, 8-K.
Milwaukee, National
Association.
10.3 Pledge Agreement, dated Exhibit 10.3 to
as of December 14, 1994, Registrant's
between Bucyrus-Erie December 14, 1994
Company and Bank One, 8-K.
Milwaukee, National
Association.
10.4 Intercreditor Agreement, Exhibit 10.4 to
dated as of December 14, Registrant's
1994, between Bank One, December 14, 1994
Milwaukee, National 8-K.
Association and Harris
Trust and Savings Bank, as
Collateral Agent.
10.5 Indemnification Agreement, Exhibit 10.5 to
dated as of November 30, Registrant's
1994, among Jackson December 14, 1994
National Life Insurance 8-K.
Company, B-E Holdings, Inc.
and Bucyrus-Erie Company.
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Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference Herewith Number
10.6 Bucyrus-Erie Company's X
1994 Management
Incentive Plan, adopted
by Bucyrus-Erie Company's
Board of Directors on
February 8, 1994.
10.7 (a) Becor Western Salaried Exhibit 10.4 (a)
Employees' Savings Plan to Registrant's
("1984 Savings Plan") as Annual Report on
amended and restated Form 10-K dated
effective January 1, April 14, 1994.
1984. ("Registrant's
1993 10-K")
(b) Amendments to 1984 Exhibit 10.5(b)
Savings Plan, Sections to Registrant's
3.3 and 4.4. Annual Report on
Form 10-K dated
March 29, 1990.
("Registrant's
1989 10-K")
(c) Amendments to 1984 Exhibit 10.5(c)
Savings Plan per U.S. to Registrant's
Internal Revenue Service 1989 10-K.
Notice 88-131.
(d) Amendments to 1984 Exhibit 10.5(d)
Savings Plan, Sections to Registrant's
1.23, 5.1, 5.2, 5.6, 1989 10-K.
5.9 and 6.2.
(e) Amendment to 1984 Exhibit 10.5(e)
Savings Plan, Section 1.5. to Registrant's
Annual Report on
Form 10-K dated
March 27, 1991.
("Registrant's
1990 10-K")
10.8 (a) Becor Western Salaried Exhibit 10.11 to
Employees' Retirement Plan B-E Holdings, Inc.
("BSERP"), as restated Annual Report on
through June 4, 1987. Form 10-K dated
March 29, 1988.
(b) Amendment to BSERP, Exhibit 10.6(b)
Section 13.01(iii). to Registrant's
1989 10-K.
(c) Amendments to BSERP, Exhibit 10.6(c)
Sections 1.23 and new to Registrant's
Supplements No. 6 and 10. 1989 10-K.
EI-3
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference Herewith Number
(d) Amendment to BSERP Exhibit 10.6(d)
per U.S. Internal Revenue to Registrant's
Service Notice 88-131. 1989 10-K.
(e) Amendment to BSERP, Exhibit 10.6(e)
Section 1.06. to Registrant's
1990 10-K.
10.9 (a) Bucyrus-Erie Company Exhibit 10.8(a)
1988 Supplementary to Registrant's
Retirement Benefit Plan 1989 10-K.
("1988 Supplementary
Retirement Plan") adopted
by Board of Directors
March 21, 1988.
(b) Amendments to 1988 Exhibit 10.8(b)
Supplementary Retirement to Registrant's
Plan, adopted by Board of 1989 10-K.
Directors September 13,
1988.
(c) Amendments to 1988 Exhibit 10.8(c)
Supplementary Retirement to Registrant's
Plan, adopted by Board 1990 10-K.
of Directors October 2,
1990.
10.10 Bucyrus-Erie Company Exhibit 19.5
1989 Executive Deferred to Registrant's
Compensation Agreements. Quarterly Report
on Form 10-Q for
quarter ended
June 30, 1989.
______________________________________________________________________________
EMPLOYMENT AND CONSULTING AGREEMENTS - EXHIBIT NUMBER 10.11 - 10.12
10.11 Form of Employment and Exhibit 19.4(a)
Consulting Agreement to Registrant's
between Bucyrus-Erie Quarterly Report
Company as Employer on Form 10-Q for
and P. W. Mork quarter ended
and N. J. Verville, June 30, 1992.
respectively, as ("Registrant's
Employees dated as of June 30, 1992
July 1, 1992. 10-Q")
EI-4
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference Herewith Number
(a) Amendment No. 1, X
dated November 28, 1994
to Employment and
Consulting Agreement
between Bucyrus-Erie
Company as Employer
and P. W. Mork
and N. J. Verville,
respectively, as Employees
dated as of July 1, 1992.
10.12 Form of Employment and Exhibit 19.4(b)
Consulting Agreement to Registrant's
between Bucyrus-Erie June 30, 1992
Company as Employer 10-Q.
and J. H. Westerman,
E. F. Schweitzer,
D. M. Goelzer,
C. R. Mackus,
G. R. Noel, and
T. W. Sullivan,
respectively, as
Employees dated as
of July 1, 1992.
(a) Amendment No. 1, X
dated November 28, 1994
(except for Mr. Westerman's
which was dated November 23,
1994), to Employment and
Consulting Agreement between
Bucyrus-Erie Company as
Employer and J. H. Westerman,
E. F. Schweitzer, D. M.
Goelzer, C. R. Mackus,
G. R. Noel, and T. W. Sullivan,
respectively, as Employees
dated as of July 1, 1992.
______________________________________________________________________________
21 List of Subsidiaries. X
27 Financial Data Schedule X
99.1 Settlement Agreement and Exhibit 99.5 to
Release entered into Registrant's 1993
effective as of 10-K.
December 23, 1993
between Bell Helicopter
Textron, Inc., BWC Gear,
Inc., Bucyrus-Erie
Company and B-E Holdings,
Inc. relating to
settlement of the Bell
Helicopter Claim.
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