UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-871
BUCYRUS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 39-0188050
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN
53172
(Address of Principal Executive Offices)
(Zip Code)
(414) 768-4000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark whether the registrant 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 May 12, 1997
Common Stock, $.01 par value 10,534,574
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Item 1 - Financial Statements (Unaudited)
Consolidated Condensed Statements of Earnings -
Quarters ended March 31, 1997 and 1996 3
Consolidated Condensed Balance Sheets -
March 31, 1997 and December 31, 1996 4-5
Consolidated Condensed Statements of Cash Flows -
Quarters ended March 31, 1997 and 1996 6-7
Notes to Consolidated Condensed Financial
Statements 8
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-13
PART II. OTHER INFORMATION:
Item 6 - Exhibits and Reports on Form 8-K 14
Signature Page 15
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars in Thousands, Except Per Share Amounts)
Quarter Ended March 31,
1997 1996
Revenues:
Net sales $ 59,886 $ 61,456
Other income 264 216
__________ __________
60,150 61,672
__________ __________
Costs and Expenses:
Cost of products sold 48,005 49,663
Product development, selling,
administrative and miscellaneous
expenses 8,653 8,935
Interest expense 1,914 2,080
__________ __________
58,572 60,678
__________ __________
Earnings before income taxes 1,578 994
Income taxes 663 696
__________ __________
Net earnings $ 915 $ 298
Weighted average number of
common and common equivalent
shares outstanding 10,276,957 10,234,574
Net earnings per share
of common stock $ .09 $ .03
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
March 31, December 31, March 31, December 31,
1997 1996 1997 1996
ASSETS LIABILITIES AND COMMON
CURRENT ASSETS: SHAREHOLDERS' INVESTMENT
Cash and cash CURRENT LIABILITIES:
equivalents $ 9,138 $ 15,763 Accounts payable and
Receivables 35,771 32,085 accrued expenses $ 39,025 $ 33,765
Inventories 80,269 70,889 Liabilities to customers
Prepaid expenses and on uncompleted contracts
other current assets 3,373 2,504 and warranties 2,184 3,579
________ ________ Income taxes 1,200 1,469
Total Current Assets 128,551 121,241 Short-term obligations 5,622 3,186
Current maturities of
OTHER ASSETS: long-term debt 410 428
Restricted funds ________ ________
on deposit 1,079 1,079 Total Current Liabilities 48,441 42,427
Intangible assets - net 8,426 8,545
Other assets 6,119 6,003 LONG-TERM LIABILITIES:
________ _______ Deferred income taxes 142 148
15,624 15,627 Liabilities to customers on
uncompleted contracts
PROPERTY, PLANT AND EQUIPMENT: and warranties 3,266 3,277
Cost 44,636 43,409 Postretirement benefits 10,977 11,064
Less accumulated Deferred expenses and other 11,649 11,891
depreciation (8,404) (7,382) ________ ________
________ ________ 26,034 26,380
36,232 36,027 LONG-TERM DEBT, less
current maturities 67,054 66,627
COMMON SHAREHOLDERS' INVESTMENT:
Common stock - par value
$.01 per share, authorized
20,000,000 shares, issued
and outstanding 10,534,574
shares 105 105
Additional paid-in capital $ 57,739 $ 57,739
Unearned stock compensation (2,605) (2,815)
Accumulated deficit (15,531) (16,446)
Cumulative translation
adjustment (830) (1,122)
________ ________
38,878 37,461
________ ________ ________ ________
$180,407 $172,895 $180,407 $172,895
<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)
Quarter Ended March 31,
1997 1996
Cash Flows From Operating Activities
Net earnings $ 915 $ 298
Adjustments to reconcile net earnings
to net cash used in operating
activities:
Depreciation 1,087 994
Amortization 267 277
Stock compensation expense 210 -
In kind interest on the Secured
Notes due December 14, 1999 - 1,885
(Gain) loss on sale of property,
plant and equipment (5) 24
Changes in assets and liabilities:
Receivables (3,548) (1,170)
Inventories (9,194) (1,021)
Other current assets (849) (480)
Other assets (115) 9
Current liabilities other than
income taxes, short-term
obligations and current
maturities of long-term debt 3,841 (1,548)
Income taxes (295) (822)
Long-term liabilities other
than deferred income taxes (589) (776)
________ ________
Net cash used in operating activities (8,275) (2,330)
________ ________
Cash Flows From Investing Activities
Decrease in restricted funds on deposit - 1,800
Purchases of property, plant
and equipment (1,178) (742)
Proceeds from sale of property, plant
and equipment 12 11
________ ________
Net cash (used in) provided by
investing activities (1,166) 1,069
________ ________
Cash Flows From Financing Activities
Proceeds from issuance of project
financing obligations 2,431 1,891
Net increase (decrease) in other
bank borrowings 11 (457)
Proceeds from issuance of long-term debt 427 -
________ ________
Net cash provided by financing activities 2,869 1,434
________ ________
Effect of exchange rate changes on cash (53) (57)
________ ________
Net (decrease) increase in cash
and cash equivalents (6,625) 116
Cash and cash equivalents at
beginning of period 15,763 11,150
________ ________
Cash and cash equivalents at
end of period $ 9,138 $ 11,266
1997 1996
Cash paid during the
period for:
Interest $ 220 $ 71
Income taxes - net of refunds 777 543
See notes to consolidated condensed financial statements.
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of Bucyrus International, Inc. (the "Company"), the
consolidated condensed financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial results for the interim periods. Certain items are included in
these statements based on estimates for the entire year.
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 1996
annual report on Form 10-K filed with the Securities and Exchange
Commission on March 20, 1997.
3. Inventories consist of the following:
March 31, December 31,
1997 1996
(Dollars in Thousands)
Raw materials and parts $ 11,526 $ 10,628
Costs relating to
uncompleted contracts 5,212 4,183
Customers' advances offset
against costs incurred on
uncompleted contracts (879) (1,816)
Work in process 15,537 13,746
Finished products (primarily
replacement parts) 48,873 44,148
________ ________
$ 80,269 $ 70,889
4. Net earnings per share of common stock for the quarter ended March 31,
1997 is based on the weighted average number of common and common
equivalent shares outstanding during the period. Restricted common stock
is considered to be issued and outstanding and is included in the net
earnings per share calculation using the treasury stock method. Net
earnings per share of common stock for the quarter ended March 31, 1996
is based on the weighted average number of common shares outstanding
since common stock equivalents were not significant.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share". The
Company will adopt this statement for the year ending December 31, 1997
and will restate prior period earnings per share as required. Adoption
of this statement will not have an impact on the Company's reported
earnings per share for the quarters ended March 31, 1997 and 1996.
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 quarters
ended March 31, 1997 and 1996.
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 March 31, 1997 and December 31, 1996 were
as follows:
March 31, December 31,
1997 1996
(Dollars in Thousands)
Working capital $ 80,110 $ 78,814
Current ratio 2.7 to 1 2.9 to 1
The decrease in the current ratio was primarily due to increased current
liabilities in order to support increased inventory levels in anticipation of
future machine sales.
The table below summarizes the Company's cash position at March 31, 1997:
Restricted Unrestricted
Location Cash Cash Total
(Dollars in Thousands)
United States $ - $ 5,510 $ 5,510
Foreign Subsidiaries 23 3,040 3,063
Equipment Assurance Limited 1,056 588 1,644
_______ _______ _______
$ 1,079 $ 9,138 $10,217
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.
Equipment Assurance Limited has pledged $1,056,000 of its cash to secure
its reimbursement obligations for outstanding letters of credit at March 31,
1997. This collateral amount is classified as Restricted Funds on Deposit in
the Consolidated Condensed Balance Sheets.
The Company is presenting below a calculation of earnings before interest
expense, income taxes, depreciation, amortization, stock compensation and
(gain) loss on sale of fixed assets ("Adjusted EBITDA"). Since cash flow from
operations is very important to the Company's future, the Adjusted EBITDA
calculation provides a summary review of cash flow performance. In addition,
the Company is required to maintain certain minimum Adjusted EBITDA levels
under its bank credit agreement (see below). The Adjusted EBITDA calculation
is not an alternative to operating income under generally accepted accounting
principles as an indicator of operating performance or to cash flows as a
measure of liquidity. The following table reconciles Earnings Before Income
Taxes to Adjusted EBITDA:
Quarter Ended March 31,
1997 1996
(Dollars in Thousands)
Earnings before income taxes $ 1,578 $ 994
Non-cash expenses:
Depreciation 1,087 994
Amortization 267 277
Stock compensation 210 -
(Gain) loss on sale of fixed assets (5) 24
In kind interest on the Secured
Notes due December 14, 1999
("Secured Notes") - 1,885
Cash interest expense 1,914 195
________ ________
Adjusted EBITDA $ 5,051 $ 4,369
The Company has a Credit Agreement (the "Credit Agreement") with Bank
One, Wisconsin ("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 Credit Agreement are secured
by a security interest on substantially all of the Company's property (other
than land and buildings). At March 31, 1997, the Company had $368,000 of
borrowings outstanding under the Loan Facility and $6,658,000 of the L/C
Facility was being used. Under the Project Financing Facility, the Company
has a line of credit for $13,000,000 to support four current orders. Bank One
has participated a portion of the Project Financing Facility to The Bank of
Nova Scotia. Availability is based on the amount of inventory being financed
and any accounts receivable relating to such project and was approximately
$5,100,000 at March 31, 1997. There were no borrowings under the Project
Financing Facility at March 31, 1997.
The agreements relating to the Secured Notes and the Credit Agreement
permit additional project financing from the lenders 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 March 31, 1997, the Company had $4,861,000
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 March 31, 1997, the Company had approximately $2,780,000 of open
approved capital appropriations. Included in this amount is the remaining
$1,463,000 to be spent for a new service shop facility in Chile which is being
financed primarily with a local bank in Chile and the remaining $204,000 to be
spent for land and a new facility in South Africa.
In addition, the Company has committed $5,500,000 of a potential
$20,000,000 machine shop tool modernization project. The initial machine
tools have been leased and the remaining machine tools are expected to be
financed or leased.
CAPITALIZATION
The long-term debt to equity ratio at March 31, 1997 and December 31,
1996 was 1.7 to 1 and 1.8 to 1, respectively.
RESULTS OF OPERATIONS
Net Sales
Net sales for the first quarter of 1997 were $59,886,000 compared with
$61,456,000 for the first quarter of 1996. Sales of repair parts and services
were $37,392,000, which is a decrease of 6.2% from the first quarter of 1996.
The decrease in repair parts and service sales was primarily at United States
locations. Machine sales were $22,494,000, which is an increase of 4.1% from
the first quarter of 1996. Sales of electric mining shovels increased 26.2%
and sales of blast hole drills decreased 27.1%. The increase in electric
mining shovel volume was primarily in copper markets.
Cost of Products Sold
Cost of products sold for the first quarter of 1997 was $48,005,000 or
80.2% of net sales compared with $49,663,000 or 80.8% of net sales for the
first quarter of 1996. The increase in gross margin percentage was primarily
due to improved machine margins.
Product Development, Selling, Administrative and Miscellaneous Expenses
Product development, selling, administrative and miscellaneous expenses
for the first quarter of 1997 were $8,653,000 or 14.4% of net sales compared
with $8,935,000 or 14.5% of net sales for the first quarter of 1996.
Interest Expense
Interest expense for the first quarter of 1997 was $1,914,000 compared
with $2,080,000 for the first quarter of 1996. The Company has the option of
paying interest on the Secured Notes in cash at 10.5% or in kind (issuance of
additional Secured Notes) at 13%. For the first quarter of 1997, interest was
accrued at 10.5% since the Company currently intends to pay this interest in
cash. For the first quarter of 1996, interest was accrued at 13% since the
Company paid this interest in kind. Interest was accrued on a higher
principal balance in 1997 since all interest paid to date has been paid in
kind.
Income Taxes
Income tax expense consists primarily of foreign taxes at applicable
statutory rates.
Net Earnings
Net earnings for the first quarter of 1997 were $915,000 compared with
$298,000 for the first quarter of 1996. The increase in net earnings was
primarily due to an improved gross margin percentage, reduced product
development, selling, administrative and miscellaneous expenses and reduced
interest expense.
Backlog and New Orders
The Company's consolidated backlog at March 31, 1997 was $160,155,000
compared with $158,727,000 at December 31, 1996 and $199,853,000 at March 31,
1996. Machine backlog at March 31, 1997 was $44,924,000, which is a decrease
of 8.4% from December 31, 1996 and a decrease of 56.0% from March 31, 1996.
The decrease in machine backlog from December 31, 1996 was in blast hole drill
volume. The decrease in machine backlog from March 31, 1996 was in both
electric mining shovel and blast hole drill volume. Repair parts and service
backlog at March 31, 1997 was $115,231,000, which is an increase of 5.0% from
December 31, 1996 and an increase of 18.0% from March 31, 1996.
New orders for the first quarter of 1997 were $61,314,000, which is a
decrease of 57.2% from the first quarter of 1996. New machine orders were
$18,398,000, which is a decrease of 68.3% from the first quarter of 1996.
During the first quarter of 1996, a multiple machine order was received from
one South American customer in the copper market resulting in new machine
orders substantially higher than historical levels in that quarter. As a
result of a decline in copper prices in 1996 from historically high levels,
demand from this market segment has remained low. However, due to a
resurgence in copper prices in late 1996, which the Company expects to
continue through 1997, there should be continued demand from this market
segment for electric mining shovels and blast hole drills. There also was an
increase in iron ore production in late 1994 that was sustained through 1995
and 1996. The Company anticipates that some iron ore producers will continue
to replace aged electric mining shovel and blast hole drill fleets with new
machines in an effort to reduce iron ore production costs. Also, price
increases for hard coking coal in 1995 and 1996 have brought new demand for
machines in western Canada and Australia in recent months. On April 16, 1997,
the Company announced that it has received a letter of intent from BHP Coal
Pty. Ltd. of Australia to purchase a 2570WS walking dragline. The estimated
value of the contract is in excess of $61,000,000 ($80,000,000 Australian).
The commercial sales contract is expected to be finalized in June, 1997. New
repair parts and service orders of $42,916,000 returned to historical levels,
decreasing 49.7% from the first quarter of 1996. Included in new repair parts
and service orders for the first quarter of 1996 were large maintenance and
repair contract orders at foreign locations.
PENDING ACQUISITION
On April 8, 1997, the Company and Global Industrial Technologies, Inc.
("Global") announced that they have entered into a letter of intent for Global
to sell the assets of The Marion Power Shovel Company to the Company. Subject
to Board of Director approval, both the Company and Global expect to sign a
definitive purchase and sale agreement by June 1, 1997. See the Company's
Form 8-K dated April 11, 1997 for additional information.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: See Exhibit Index on last page of this report, which
is incorporated herein by reference.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the first quarter of
1997.
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 May 13, 1997 /s/Craig R. Mackus
Secretary and Controller
Principal Accounting Officer
Date May 13, 1997 /s/Willard R. Hildebrand
President and Chief Executive Officer
BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1997
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference Herewith Number
3.2 Restated Bylaws of Exhibit 3.2 to
Bucyrus-Erie Company, Registrant's
as amended on Quarterly Report
August 1 and 2, 1995. on Form 10-Q for
quarter ended
September 30, 1995
("Registrant's
September 30, 1995
10-Q").
(a) Amendment to Exhibit 3.2(a) to
Section 5.3 and 5.4 Registrant's
of Article V of the September 30, 1995
Restated Bylaws of 10-Q.
Bucyrus-Erie Company
adopted by Board of
Directors at its
meeting of
August 1-2, 1995.
(b) Amendment to Exhibit 3.2(b) to
Section 4.2 of Registrant's
Article IV of the Annual Report on
Restated Bylaws of Form 10-K dated
Bucyrus-Erie Company March 25, 1996
adopted by Board of ("Registrant's
Directors at its 1995 10-K").
meeting of March 11,
1996.
(c) Amendment to Exhibit 3.2(c)
Section 4.10 of to Registrant's
Article IV of the Annual Report on
Restated Bylaws of Form 10-K dated
Bucyrus International, March 11, 1997
Inc. adopted by ("Registrant's
Board of Directors 1996 10-K").
at its meeting of
December 18, 1996.
(d) Unanimous consent X
resolution dated
March 5, 1997,
effective April 30,
1997 fixing the number
of directors at seven
(including Section 4.2
of Article IV of the
Restated Bylaws of
Bucyrus International,
Inc. showing the effect
of said resolution).
10.1 Credit Agreement, Exhibit 10.1 to
dated as of Registrant's
December 14, 1994, Current Report
between Bank One, on Form 8-K,
Milwaukee, National dated December 14,
Association and 1994 ("Registrant's
Bucyrus-Erie Company December 14, 1994
("Credit Agreement"). 8-K").
10.2 Amendment No. 1 to Exhibit 10.1(a)
Credit Agreement to Registrant's
dated June 22, 1995. September 30, 1995
10-Q.
10.3 Amendment No. 2 to Exhibit 10.1(b)
Credit Agreement to Registrant's
dated August 31, 1995. September 30, 1995
10-Q.
10.4 Amendment No. 3 to Exhibit 10.4 to
Credit Agreement dated Registrant's
October 27, 1995. 1995 10-K.
10.5 Amendment No. 4 to Exhibit 10.5 to
Credit Agreement dated Registrant's
December 29, 1995. 1995 10-K.
10.6 Amendment No. 5 to Exhibit 10.6 to
Credit Agreement dated Registrant's
December 29, 1995. 1995 10-K.
10.7 Amendment No. 6 to Exhibit 10.7 to
Credit Agreement dated Registrant's
February 1, 1996. 1995 10-K.
10.8 Amendment No. 7 to Exhibit 10.8 to
Credit Agreement dated Registrant's
February 8, 1996. 1995 10-K.
10.9 Amendment No. 8 to Exhibit 10.9 to
Credit Agreement dated Registrant's
May 17, 1996. 1996 10-K.
10.10 Amendment No. 9 to Exhibit 10.10 to
Credit Agreement dated Registrant's
May 20, 1996. 1996 10-K.
10.11 Amendment No. 10 to Exhibit 10.11 to
Credit Agreement dated Registrant's
May 20, 1996. 1996 10-K.
10.12 Amendment No. 11 to Exhibit 10.12 to
Credit Agreement dated Registrant's
December 31, 1996. 1996 10-K.
10.13 Amendment No. 12 to X
Credit Agreement dated
March 14, 1997.
27 Financial Data Schedule X