SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________
Form 10-Q
QUARTERLY REPORT
PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996
Commission File Number: 1-871
__________________________________________
BUCYRUS INTERNATIONAL, INC.
DELAWARE 39-0188050
P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN 53172
(414) 768-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding August 7, 1996
Common Stock, par value $.01 per share 10,234,574
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. FINANCIAL INFORMATION:
Item 1 - Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets -
June 30, 1996 and December 31, 1995 3-4
Consolidated Condensed Statements of Operations -
Quarters and six months ended June 30, 1996
and 1995 5
Consolidated Condensed Statements of Cash Flows -
Six months ended June 30, 1996 and 1995 6-7
Notes to Consolidated Condensed Financial
Statements 8-10
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11-16
Part II. OTHER INFORMATION:
Item 1 - Legal Proceedings 17-18
Item 4 - Submission of Matters to a Vote of
Security Holders 18-19
Item 6 - Exhibits and Reports on Form 8-K 19
Signature Page 20
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars In Thousands, Except Per Share Amounts)
June 30, December 31, June 30, December 31,
1996 1995 1996 1995
ASSETS LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash Accounts payable and
equivalents $ 8,486 $ 11,150 accrued expenses $ 35,422 $ 37,487
Receivables 43,453 35,603 Liabilities to customers
Inventories 70,458 73,566 on uncompleted contracts
Prepaid expenses and and warranties 5,414 8,222
other current assets 1,940 1,414 Income taxes 2,449 3,463
________ ________ Short-term obligations 5,724 5,573
Total Current Assets 124,337 121,733 Current maturities of
long-term debt 805 1,658
OTHER ASSETS: ________ ________
Restricted funds Total Current
on deposit 1,077 2,877 Liabilities 49,814 56,403
Intangible assets - net 8,783 9,021
Other assets 5,115 4,760 LONG-TERM LIABILITIES:
________ ________ Deferred income taxes 191 183
14,975 16,658 Liabilities to customers on
uncompleted contracts
PROPERTY, PLANT AND EQUIPMENT: and warranties 3,105 3,127
Cost 39,634 39,387 Postretirement benefits 11,066 11,527
Less accumulated Deferred expenses
depreciation (5,624) (3,740) and other 12,196 10,097
________ ________ ________ ________
34,010 35,647 26,558 24,934
LONG-TERM DEBT, less
current maturities 61,788 58,021
COMMON SHAREHOLDERS' INVESTMENT:
Common stock - par value
$.01 per share, authorized
20,000,000 shares, issued
and outstanding 10,234,574
shares 102 102
Additional paid-in capital $ 57,742 $ 54,259
Unearned stock compensation (3,366) -
Accumulated deficit (18,414) (19,324)
Cumulative translation
adjustment (902) (357)
________ ________
35,162 34,680
________ ________ ________ ________
$173,322 $174,038 $173,322 $174,038
<FN>
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)
Quarter Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
Revenues:
Net sales $ 69,364 $ 55,709 $ 130,820 $ 112,582
Other income 248 289 464 619
__________ __________ __________ __________
69,612 55,998 131,284 113,201
__________ __________ __________ __________
Costs and Expenses:
Cost of products sold 57,360 47,783 107,023 97,477
Product development, selling,
administrative and
miscellaneous expenses 8,919 8,689 17,854 16,427
Interest expense 2,093 1,509 4,173 3,016
Reorganization items - 473 - 473
__________ __________ __________ __________
68,372 58,454 129,050 117,393
__________ __________ __________ __________
Earnings (loss) before
income taxes 1,240 (2,456) 2,234 (4,192)
Income taxes 628 529 1,324 852
__________ __________ __________ __________
Net earnings (loss) $ 612 $ (2,985) $ 910 $ (5,044)
Weighted average number of
common shares outstanding 10,234,574 10,173,237 10,234,574 10,171,835
Net earnings (loss) per share
of common stock $ .06 $ (.29) $ .09 $ (.50)
<FN>
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
Six Months Ended June 30,
1996 1995
Cash Flows From Operating Activities
Net earnings (loss) $ 910 $ (5,044)
Adjustments to reconcile net earnings
(loss) to net cash used in
operating activities:
Depreciation 1,980 1,820
Amortization 584 597
Stock compensation 117 -
In kind interest on the Secured
Notes due December 14, 1999 3,767 2,735
Loss (gain) on sale of property,
plant and equipment 246 (28)
Changes in assets and liabilities:
Receivables (8,319) (8,009)
Inventories 2,727 1,966
Other current assets (524) 56
Other assets (275) (62)
Current liabilities other than
income taxes, short-term
obligations and current
maturities of long-term debt (2,018) 2,609
Income taxes (1,007) (594)
Long-term liabilities other
than deferred income taxes (1,432) (1,213)
_________ _________
Net cash used in operating activities (3,244) (5,167)
_________ _________
Cash Flows From Investing Activities
Decrease in restricted funds on deposit 1,800 -
Purchases of property, plant
and equipment (1,305) (1,584)
Proceeds from sale of property, plant
and equipment 806 49
_________ _________
Net cash provided by (used in)
investing activities 1,301 (1,535)
_________ _________
Cash Flows From Financing Activities
Proceeds from issuance of project
financing obligations 2,971 880
Reduction of project financing
obligations (2,701) (4,260)
Net (decrease) increase in other
bank borrowings (878) 1,317
_________ _________
Net cash used in financing activities (608) (2,063)
_________ _________
Effect of exchange rate
changes on cash (113) (40)
_________ _________
Net decrease in cash and
cash equivalents (2,664) (8,805)
Cash and cash equivalents at
beginning of period 11,150 16,209
_________ _________
Cash and cash equivalents at
end of period $ 8,486 $ 7,404
Supplemental Disclosures of Cash Flow Information
1996 1995
Cash paid during the period for:
Interest on long-term debt
and bank borrowings $ 122 $ 117
Income taxes - net of refunds 1,401 1,250
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Effective May 23, 1996, Bucyrus-Erie Company changed its name to Bucyrus
International, Inc. (the "Company"). In the opinion of the Company, the
consolidated condensed financial statements contain all adjustments
(consisting of normal recurring accruals and other adjustments as stated
in Note 4) necessary to present fairly the financial results for the
interim periods. Certain items are included in these statements based on
estimates for the entire year. Also, certain warranty expenses
previously included in product development and selling expense are now
included in cost of products sold, and certain engineering expenses
previously included in cost of products sold are now included in product
development expense. Reclassifications have been made to the 1995
consolidated condensed financial statements to present them on a basis
consistent with the current year.
2. Certain notes and other information have been condensed or omitted from
these interim consolidated condensed financial statements. Therefore,
these statements should be read in conjunction with the Company's 1995
annual report on Form 10-K filed with the Securities and Exchange
Commission on April 1, 1996.
3. Inventories consist of the following:
June 30, December 31,
1996 1995
(Dollars in Thousands)
Raw materials and parts $ 11,884 $ 12,138
Costs relating to
uncompleted contracts 8,044 5,861
Customers' advances offset
against costs incurred on
uncompleted contracts (4,104) (2,440)
Work in process 11,251 13,511
Finished products (primarily
replacement parts) 43,383 44,496
________ ________
$ 70,458 $ 73,566
4. Reorganization items included in the Consolidated Condensed Statements of
Operations for the quarter and six months ended June 30, 1995 consist of
additional legal and professional fees incurred in connection with the
bankruptcy proceedings in 1994.
5. Effective May 23, 1996, the Company instituted the 1996 Employees' Stock
Incentive Plan (the "Plan"). Under the Plan, 300,000 shares of
restricted stock and options to purchase 200,000 shares of the Company's
common stock ("Common Stock") have been granted. The grants under the
Plan result in additional compensation expense to the Company.
Compensation related to future periods is shown as an offset to
additional paid-in capital within common shareholders' investment in the
Consolidated Condensed Balance Sheets.
6. Net earnings (loss) per share of common stock is based on the weighted
average number of common shares outstanding during the period. Common
stock equivalents are not significant.
7. Jackson National Life Insurance Company ("JNL"), currently the holder of
approximately 41.31% of Common Stock, has filed a claim (the "JNL 503(b)
Claim") against the Company for reimbursement of approximately $3,300,000
for professional fees and disbursements incurred in connection with the
Company's chapter 11 proceedings pursuant to Section 503(b) of the
Bankruptcy Code. Pursuant to a settlement agreement dated May 23, 1995,
JNL agreed that, in the event that the JNL 503(b) Claim is allowed in
whole or in part by the Bankruptcy Court, in lieu of requiring payment of
any award in cash, JNL will accept payment in Common Stock at a price
equal to $5.6375 per share (the average closing price of such stock on
the NASDAQ Stock Market on June 20, 21, 22, 23 and 26, 1995). By order
dated June 3, 1996, the Bankruptcy Court ruled that JNL would be awarded
the sum of $500. JNL has appealed the decision. The Company has been
advised by legal counsel that in said counsel's opinion the JNL 503(b)
Claim is without merit; however, 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
consolidated condensed financial statements.
Concurrently with the trial of the JNL 503(b) Claim, the Bankruptcy Court
considered the final fee application of the law firm of Milbank, Tweed,
Hadley & McCloy ("Milbank"), who rendered services as reorganization
counsel for the Company in connection with the chapter 11 proceedings.
The Milbank claim was approximately $2,330,000, of which 80% had
previously been paid by the Company on an interim basis. By order dated
June 3, 1996, the Bankruptcy Court ruled that Milbank would receive 80%
of the claimed amount as full and final compensation, thereby resulting
in no further payments being due and owing to Milbank on the claim. JNL
appealed the decision of the Bankruptcy Court not to order disgorgement
of amounts already paid to Milbank. Milbank has not appealed the
decision.
The Company's wholly-owned subsidiary, Boonville Mining Services, Inc.
("BMSI"), was 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 Global Industrial Technologies, Inc. (the
"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, constituted a misappropriation of the Plaintiffs' trade
secrets relating to Marion Power Shovel Company, a division of Global
Industrial Technologies, Inc. BMSI had denied these claims. On June 17,
1996, BMSI settled the litigation which will result in an immaterial
effect on earnings.
The Company was one of fifty-three entities who had been named by the
United States 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. The Company was so named as a
result of allegations that it disposed of foundry sand at the Millcreek
dumpsite in the 1970's. The United States Department of Justice filed
suit in the United States District Court for the Western District of
Pennsylvania in 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. In May, 1996, the Company paid the United
States government $600,000 in settlement of the aforementioned cost
recovery action. This amount was previously included in liabilities in
the Consolidated Condensed Balance Sheets. In addition, the EPA has
ordered the Company and certain other PRPs to perform the soil capping
portion of the remediation at the Millcreek site. The anticipated
remediation costs to be incurred by the Company are included in
liabilities in the Consolidated Condensed Balance Sheets.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information is provided to assist in the understanding of
Bucyrus International, Inc.'s (the "Company") operations for the quarter and
six months ended June 30, 1996 and 1995.
The reorganization of the Company under chapter 11 of the Bankruptcy Code
was effective December 14, 1994 (the "Effective Date"). The reorganization
was accounted for 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.
The consolidated condensed financial statements include the related
amortization charges associated with the fair value adjustments.
Net Sales
Net sales for the quarter and six months ended June 30, 1996 were
$69,364,000 and $130,820,000, respectively, compared with $55,709,000 and
$112,582,000 for the quarter and six months ended June 30, 1995, respectively.
Sales of repair parts and services for the quarter and six months ended
June 30, 1996 were $41,954,000 and $81,797,000, respectively, which is an
increase of 6.9% and 5.0% from the quarter and six months ended June 30, 1995,
respectively. Both increases were primarily due to increased sales at
Minserco, Inc., a mining service subsidiary of the Company. Machine sales for
the quarter and six months ended June 30, 1996 were $27,410,000 and
$49,023,000, respectively, which is an increase of 66.5% and 41.4% from the
quarter and six months ended June 30, 1995, respectively. Both increases were
due to increased blast hole drill and electric mining shovel sales, primarily
in copper markets.
Cost of Products Sold
Cost of products sold for the quarter ended June 30, 1996 was $57,360,000
or 82.7% of net sales compared with $47,783,000 or 85.8% of net sales for the
quarter ended June 30, 1995. For the six months ended June 30, 1996, cost of
products sold was $107,023,000 or 81.8% of net sales compared with $97,477,000
or 86.6% of net sales for the six months ended June 30, 1995. Included in
cost of products sold for the quarter and six months ended June 30, 1995 was
$2,912,000 and $5,717,000, respectively, as a result of the fair value
adjustment to inventory. This adjustment was made in accordance with the
principles of fresh start reporting adopted in 1994 and was charged to cost of
products sold as the inventory was sold. Excluding the effect of the
inventory fair value adjustment, cost of products sold for the quarter and six
months ended June 30, 1995 was 80.5% and 81.5%, respectively. The decrease in
gross margin percentage for the quarter ended June 30, 1996, not including
this fair value adjustment, was primarily due to higher machine sales which
have a lower gross margin than parts and service sales.
Product Development, Selling, Administrative and Miscellaneous Expenses
Product development, selling, administrative and miscellaneous expenses
for the quarter ended June 30, 1996 were $8,919,000 or 12.9% of net sales
compared with $8,689,000 or 15.6% of net sales for the quarter ended June 30,
1995. The amounts for the six months ended June 30, 1996 and 1995 were
$17,854,000 or 13.6% of net sales and $16,427,000 or 14.6% of net sales,
respectively. The dollar increases in 1996 were primarily due to higher
product development and service costs to provide increased support to
customers.
Interest Expense
Interest expense for the quarter and six months ended June 30, 1996 was
$2,093,000 and $4,173,000, respectively, compared with $1,509,000 and
$3,016,000 for the quarter and six months ended June 30, 1995, respectively.
The increases in 1996 were primarily due to an increase in the interest rate
on the Secured Notes due December 14, 1999 ("Secured Notes") from 10.5% to 13%
effective December 14, 1995. Also, interest on the Secured Notes was accrued
on a higher principal balance in 1996 since all interest to date has been paid
in kind. The Company has the option of paying interest on the Secured Notes
in cash at 10.5% or in kind at 13%. For the quarter and six months ended
June 30, 1996, interest was accrued at 13% since the Company paid this
interest in kind. During the third quarter, the Company will be evaluating
the possibility of paying the December 31, 1996 interest payment in cash.
Income Taxes
Income tax expense consists primarily of foreign taxes at applicable
statutory rates.
Net Earnings (Loss)
Net earnings for the quarter and six months ended June 30, 1996 were
$612,000 and $910,000, respectively, compared with a net loss of $2,985,000
and $5,044,000 for the quarter and six months ended June 30, 1995,
respectively. The increases in net earnings were primarily due to increased
sales volume and improved gross margin, offset by increased interest expense.
Net loss for the quarter and six months ended June 30, 1995 includes
$2,510,000 and $4,878,000 (net of income taxes), respectively, of the
inventory fair value adjustment related to fresh start reporting which was
charged to cost of products sold. Non-cash depreciation and amortization
charges included in net earnings for the quarter and six months ended June 30,
1996 were $1,293,000 and $2,564,000, respectively, compared with $1,224,000
and $2,417,000, respectively, for the quarter and six months ended June 30,
1995.
Backlog and New Orders
The Company's consolidated backlog on June 30, 1996 was $184,117,000
compared with $118,024,000 at December 31, 1995 and $71,576,000 at June 30,
1995. Machine backlog at June 30, 1996 was $92,959,000, which is an increase
of 41.3% from December 31, 1995 and an increase of 441.2% from June 30, 1995.
The increases in machine backlog were in both electric mining shovel and blast
hole drill volume. Repair parts and service backlog at June 30, 1996 was
$91,158,000, which is an increase of 74.6% from December 31, 1995 and an
increase of 67.6% from June 30, 1995. The increases in repair parts and
service backlog were primarily at foreign locations and reflect new orders
related to long-term maintenance and repair contracts which will be completed
in the next three to five years.
New orders for the quarter and six months ended June 30, 1996 were
$53,628,000 and $196,913,000, respectively, which is an increase of 11.5% and
76.1% from the quarter and six months ended June 30, 1995, respectively. New
machine orders for the quarter and six months ended June 30, 1996 were
$18,182,000 and $76,172,000, respectively, which is an increase of 688.1% and
190.8% from the quarter and six months ended June 30, 1995, respectively. The
increases in new machine orders were in both electric mining shovel and blast
hole drill volume and represent strong machine sales activity, primarily
related to copper markets. New repair parts and service orders for the
quarter and six months ended June 30, 1996 were $35,446,000 and $120,741,000,
respectively, which is a decrease of 22.6% and increase of 41.0% from the
quarter and six months ended June 30, 1995, respectively. The decrease for
the quarter ended June 30, 1996 was due to reduced repair parts orders and
reduced maintenance and repair contract orders at foreign locations. The
increase for the six months ended June 30, 1996 was primarily due to large
maintenance and repair contract orders at foreign locations in the first
quarter of 1996. Blast hole drill and electric mining shovel inquiries from
South America and China remain steady. The recent decline in copper prices is
not expected to have a material impact on the Company in the short-term. The
North American market for electric mining shovels and blast hole drills
remains steady in iron ore, copper and the low sulphur coal fields in the
Western United States. Pricing on new machines has been improving recently
while pricing on repair parts has remained steady.
Capitalization
The long-term debt to equity ratio as of June 30, 1996 and December 31,
1995 was 1.8 to 1 and 1.7 to 1, respectively.
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 June 30, 1996 and December 31, 1995 were
as follows:
June 30, December 31,
1996 1995
(Dollars in Thousands)
Working capital $ 74,523 $ 65,330
Current ratio 2.5 to 1 2.2 to 1
The table below summarizes the Company's cash position at June 30, 1996:
Restricted Unrestricted
Location Cash Cash Total
(Dollars in Thousands)
United States $ - $ 2,260 $ 2,260
Foreign Subsidiaries 21 5,655 5,676
Equipment Assurance Limited 1,056 571 1,627
________ ________ ________
$ 1,077 $ 8,486 $ 9,563
A portion of the unrestricted cash at the foreign subsidiaries is not
readily repatriatable because it is required for working capital purposes at
these respective locations.
Approximately $2,900,000, including accrued interest, is required to be
refunded to the Internal Revenue Service for an excess refund received in
1993. The Company reached an agreement with the Internal Revenue Service
which allows for semi-annual payments over five years at 8% interest
commencing September 15, 1996.
Equipment Assurance Limited has pledged $1,056,000 of its cash to secure
its reimbursement obligations for outstanding letters of credit at June 30,
1996. This collateral amount is classified as Restricted Funds on Deposit in
the Consolidated Condensed Balance Sheets.
The following table reconciles Earnings (Loss) Before Income Taxes to
earnings before interest, income taxes, depreciation, amortization, loss
(gain) on sale of fixed assets, reorganization items and inventory fair value
adjustment charged to cost of products sold ("Adjusted EBITDA"):
Quarter Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
(Dollars in Thousands)
Earnings (loss)
before income taxes $ 1,240 $ (2,456) $ 2,234 $ (4,192)
Reorganization items - 473 - 473
Inventory fair value
adjustment charged
to cost of products
sold - 2,912 - 5,717
Non-cash expenses:
Depreciation 986 926 1,980 1,820
Amortization 307 298 584 597
Loss (gain) on sale
of fixed assets 222 (22) 246 (28)
In kind interest on
the Secured Notes 1,882 1,368 3,767 2,735
Cash interest
expense 211 141 406 281
________ ________ ________ ________
Adjusted EBITDA $ 4,848 $ 3,640 $ 9,217 $ 7,403
The Company has a Credit Agreement (the "Credit Agreement") with Bank
One, Milwaukee, National Association ("Bank One"). The Credit Agreement, as
amended, contains a credit facility for working capital and general corporate
purposes (the "Loan Facility"), a letter of credit facility (the "L/C
Facility") and a project financing loan facility (the "Project Financing
Facility"). Under the Loan Facility, 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 April 30, 1998. Under the L/C Facility, Bank One has agreed to issue
letters of credit through April 30, 1998 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
April 30, 1999. Under the Project Financing Facility, Bank One may make
project financing loans to the Company from time to time. Borrowings under
the Project Financing Facility bear interest at the Company's option either at
a rate equal to Bank One's reference rate or an adjusted LIBOR rate plus a
variable margin. Borrowings under the Credit Agreement are secured by a
security interest on substantially all of the Company's property (other than
real estate). At June 30, 1996, the Company had $293,000 of borrowings
outstanding under the Loan Facility and $11,720,000 of the L/C Facility was
being used.
Under the Project Financing Facility, the Company has a line of credit
for $18,500,000 to support two current orders. Usage is based on the
inventory being financed and any accounts receivable relating to such project.
Availability at June 30, 1996 is $11,000,000. There were no borrowings under
the Project Financing Facility at June 30, 1996.
The agreements relating to the Secured Notes and the Credit Agreement
permit additional project financing to manufacture 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 project. Project financing borrowings mature not later than
the date of the final payment by the customer under the applicable purchase
contract. At June 30, 1996, the Company had $5,403,000 of outstanding project
financing borrowings not related to the Project Financing Facility. These
borrowings are classified as Short-Term Obligations in the Consolidated
Condensed Balance Sheets.
The Company believes that current levels of cash and liquidity, together
with funds generated by operations, funds available from its Credit Agreement
and other project financing arrangements 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.
At June 30, 1996, the Company had approximately $1,603,000 of open
capital appropriations. In July, the Company initiated a $3,000,000 expansion
of its service shop facility in Chile, which will be financed primarily with a
local bank in Chile. In addition, the Company commenced the $2,200,000 first
phase of a potential $14,000,000 machine shop tool modernization project. The
first phase equipment, together with $2,800,000 of machine tools previously
ordered, will be financed or leased. The modernization project is expected to
reduce operating costs, improve parts and mining machine production cycle
times and reduce work in process inventory levels.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
Jackson National Life Insurance Company ("JNL"), currently the holder
of approximately 41.31% of the Company's common stock ("Common
Stock"), has filed a claim (the "JNL 503(b) Claim") against the
Company for reimbursement of approximately $3,300,000 for
professional fees and disbursements incurred in connection with the
Company's chapter 11 proceedings pursuant to Section 503(b) of the
Bankruptcy Code. Pursuant to a settlement agreement dated May 23,
1995, JNL agreed that, in the event that the JNL 503(b) Claim is
allowed in whole or in part by the Bankruptcy Court, in lieu of
requiring payment of any award in cash, JNL will accept payment in
Common Stock at a price equal to $5.6375 per share (the average
closing price of such stock on the NASDAQ Stock Market on June 20,
21, 22, 23 and 26, 1995). By order dated June 3, 1996, the
Bankruptcy Court ruled that JNL would be awarded the sum of $500.
JNL has appealed the decision. The Company has been advised by legal
counsel that in said counsel's opinion the JNL 503(b) Claim is
without merit; however, 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
consolidated condensed financial statements.
Concurrently with the trial of the JNL 503(b) Claim, the Bankruptcy
Court considered the final fee application of the law firm of
Milbank, Tweed, Hadley & McCloy ("Milbank"), who rendered services as
reorganization counsel for the Company in connection with the
chapter 11 proceedings. The Milbank claim was approximately
$2,330,000, of which 80% had previously been paid by the Company on
an interim basis. By order dated June 3, 1996, the Bankruptcy Court
ruled that Milbank would receive 80% of the claimed amount as full
and final compensation, thereby resulting in no further payments
being due and owing to Milbank on the claim. JNL appealed the
decision of the Bankruptcy Court not to order disgorgement of amounts
already paid to Milbank. Milbank has not appealed the decision.
The Company's wholly-owned subsidiary, Boonville Mining Services,
Inc. ("BMSI"), was 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 Global Industrial
Technologies, Inc. (the "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, constituted a
misappropriation of the Plaintiffs' trade secrets relating to Marion
Power Shovel Company, a division of Global Industrial Technologies,
Inc. BMSI had denied these claims. On June 17, 1996, BMSI settled
the litigation which will result in an immaterial effect on earnings.
The Company was one of fifty-three entities who had been named by the
United States 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. The Company was
so named as a result of allegations that it disposed of foundry sand
at the Millcreek dumpsite in the 1970's. The United States
Department of Justice filed suit in the United States District Court
for the Western District of Pennsylvania in 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.
In May, 1996, the Company paid the United States government $600,000
in settlement of the aforementioned cost recovery action. This
amount was previously included in liabilities in the Consolidated
Condensed Balance Sheets. In addition, the EPA has ordered the
Company and certain other PRPs to perform the soil capping portion of
the remediation at the Millcreek site. The anticipated remediation
costs to be incurred by the Company are included in liabilities in
the Consolidated Condensed Balance Sheets.
Item 4. Submission of Matters to a Vote of Security Holders.
On May 23, 1996, the Company held its annual meeting of shareholders.
The following indicates the matters which were submitted to a vote of
shareholders and the votes on such matters:
(a) The shareholders elected the following two directors to serve
for the ensuing year:
Charles S. Macaluso:
Votes for: 7,066,203; Authority to Vote Withheld: 45,903
Frank W. Miller:
Votes for: 7,065,556; Authority to Vote Withheld: 46,550
The following seven original directors whose terms expire at
the 1997 Annual Meeting were deemed to be elected at the annual
meeting: C. Scott Bartlett, Jr., Williard R. Hildebrand,
George A. Poole, Jr., Joseph J. Radecki, Jr., F. John Stark,
III, Russell W. Swansen and Samuel M. Victor.
(b) The shareholders approved the 1996 Employees' Stock Incentive
Plan. Votes For: 5,134,164; Votes Against: 156,600;
Abstentions: 36,055; Broker Non-Votes: 1,785,287.
(c) The shareholders approved the Non-Employee Directors' Stock
Option Plan. Votes For: 5,085,307; Votes Against: 206,255;
Abstentions: 40,276; Broker Non-Votes: 1,780,268.
(d) The shareholders amended the Restated Certificate of
Incorporation to change the Company's name to Bucyrus
International, Inc. Votes For: 7,040,168; Votes Against:
38,058; Abstentions: 33,880; Broker Non-Votes: 0.
(e) The shareholders ratified the appointment of Arthur Andersen
LLP to serve as independent auditors. Votes For: 7,076,143;
Votes Against: 11,682; Abstentions: 24,181; Broker Non-Votes:
100.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
See Exhibit Index on last page of this report, which is
incorporated herein by reference.
(b) Report on Form 8-K:
No reports on Form 8-K were filed during the second quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUCYRUS INTERNATIONAL, INC.
(Registrant)
Date August 12, 1996 /s/Craig R. Mackus
Craig R. Mackus
Controller
Principal Accounting Officer
Date August 12, 1996 /s/Willard R. Hildebrand
Willard R. Hildebrand
President and CEO
BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1996
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference Herewith Number
27 Financial Data Schedule X
(EDGAR filing only.)