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EXHIBIT 99.2
BUCYRUS INTERNATIONAL, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)
JUNE 30, 1997
----------------------------------------------------
HISTORICAL
-------------------
PRO FORMA COMBINED
BUCYRUS MARION ADJUSTMENTS(1)(2) PRO FORMA
-------- ------- ----------------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............. $ 11,350 $ 240 $ 452 (3) $ 12,042
Receivables............................ 54,271 9,679 63,950
Inventories............................ 74,587 37,427 112,014
Prepaid expenses and other current
assets............................... 5,091 91 (1,892)(4) 3,290
-------- ------- -------- --------
Total Current Assets................... 145,299 47,437 (1,440) 191,296
OTHER ASSETS:
Restricted funds on deposit............ 1,079 -- 1,079
Goodwill............................... -- --
Intangible assets -- net............... 8,101 1,372 662 (5) 10,135
Other assets........................... 6,395 361 3,200 (6) 9,956
-------- ------- -------- --------
15,575 1,733 3,862 21,170
PROPERTY, PLANT AND EQUIPMENT -- NET:.... 37,639 9,146 (7,925)(5) 38,860
-------- ------- -------- --------
$198,513 $58,316 $ (5,503) $251,326
======== ======= ======== ========
LIABILITIES AND COMMON SHAREHOLDERS'
INVESTMENT
CURRENT LIABILITIES:
Accounts payable and accrued
expenses............................. $ 41,712 $ 9,401 $ (5,599)(7) $ 45,514
Payable to affiliated entity........... -- 839 (839)(7) --
Liabilities to customers on uncompleted
contracts and warranties............. 7,170 4,011 11,181
Income taxes........................... 2,042 -- 2,042
Short-term obligations................. 11,438 -- 45,000 56,438
Current maturities of long-term debt... 416 -- 416
-------- ------- -------- --------
Total Current Liabilities.............. 62,778 14,251 38,562 115,591
LONG-TERM LIABILITIES:
Deferred income taxes.................. 138 -- 138
Liabilities to customers on uncompleted
contracts and warranties............. 3,239 -- 3,239
Postretirement benefits................ 10,800 6,725 (6,725)(7) 10,800
Deferred expenses and other............ 12,152 4,344 (4,344)(7) 12,152
-------- ------- -------- --------
26,329 11,069 (11,069) 26,329
LONG-TERM DEBT, less current maturities.. 68,339 -- 68,339
COMMON SHAREHOLDERS' INVESTMENT:
Common stock........................... 105 -- 105
Additional paid-in capital............. 57,739 -- 57,739
Unearned stock compensation............ (2,395) -- (2,395)
Accumulated deficit.................... (13,023) -- (13,023)
Cumulative translation adjustment...... (1,359) -- (1,359)
Combined equity........................ -- 32,996 (32,996) --
-------- ------- -------- --------
41,067 32,996 (32,996) 41,067
-------- ------- -------- --------
$198,513 $58,316 $ (5,503) $251,326
======== ======= ======== ========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Balance Sheet.
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BUCYRUS INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(1) A summary of sources and uses of proceeds for the Marion Acquisition was as
follows:
SOURCES OF FUNDS:
Gross proceeds from the Bridge Loan....................... $45,000
-------
Total Sources of Funds...................................... $45,000
=======
USES OF FUNDS:
Estimated purchase price for Marion*...................... $36,451
Bridge Loan borrowing costs of $3,463 less $1,338 paid by
the Company as of June 30, 1997........................ 2,125
Transaction costs of $6,195 (primarily relocation costs),
less $463 paid by the Company as of June 30, 1997...... 5,732
Increase to on-hand cash balances......................... 692
-------
Total Uses of Funds......................................... $45,000
=======
- -------------------------
* The purchase price of Marion was approximately $40,120 plus or minus the
change in Marion's net assets from January 31, 1997, to the closing date. At
June 30, 1997, the change in the net assets is a decrease of $3,669 which
would reduce the estimated purchase price to $36,451.
(2) The Marion Acquisition included trade receivables, inventory, selected
current assets, selected other long-term assets, machinery and equipment,
trade payables and selected current liabilities. The estimated allocation of
the purchase price of Marion was as follows:
PURCHASE PRICE:
Cash...................................................... $36,451
Liabilities assumed....................................... 7,813
Transaction costs (primarily relocation costs)............ 6,195
-------
$50,459
=======
ALLOCATION OF PURCHASE PRICE:
Receivables............................................... $ 9,679
Inventories............................................... 37,427
Intangible assets (primarily engineering drawings)........ 2,034
Other assets.............................................. 98
Machinery and equipment................................... 1,221
-------
$50,459
=======
(3) Reflects the net increase in cash related to the purchase of Marion:
Gross proceeds from the Bridge Loan......................... $ 45,000
Purchase of Marion.......................................... (36,451)
Payment of transaction costs................................ (5,732)
Payment of borrowing costs incurred in connection with the
Bridge Loan............................................... (2,125)
Elimination of Marion cash not acquired by the Company...... (240)
--------
$ 452
========
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BUCYRUS INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS) -- (CONTINUED)
(4) The reduction in prepaid expenses reflects the following:
Reclassification of Bridge Loan borrowing costs and
transaction costs that have been paid by the Company as of
June 30, 1997............................................. $(1,801)
Elimination of Marion assets not acquired by the Company.... (91)
-------
$(1,892)
=======
(5) The adjustments reflect the write-up to fair market value.
- Inventory has been adjusted to its fair value as required by Accounting
Principles Board Opinion No. 16. This adjustment primarily relates to
finished parts which are being valued at their selling price, less cost to
sell, less a selling profit.
- Intangible assets consist of engineering drawings and are expected to be
amortized over 20 years.
- Plant and equipment will be amortized over the estimated useful lives of the
respective assets using the straight-line method for financial reporting
purposes. Estimated useful lives are expected to be 20 years for buildings
and improvements and 10 years for machinery and equipment.
- The Company intends to review its property, plant and equipment and
intangible assets and obtain appraisals of these assets in order to
determine what revisions, if any, should be made to individual accounts.
The Company does not expect the appraised values to be materially
different than the values assigned in these pro forma financial statements.
(6) Reflects the following:
Capitalization of borrowing costs incurred by the Company in
connection with the Bridge Loan........................... $3,463
Elimination of Marion assets not acquired by the Company.... (263)
------
$3,200
======
(7) These adjustments represent the elimination of liabilities not assumed by
the Company.
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BUCYRUS INTERNATIONAL, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL
--------------------------
BUCYRUS MARION
YEAR ENDED YEAR ENDED
DECEMBER 31, OCTOBER 31, PRO FORMA COMBINED
1996 1996 ADJUSTMENTS PRO FORMA
------------ ----------- ----------- ---------
Net sales.......................... $263,786 $109,625 $373,411
Cost of products sold.............. 215,126 93,026 $(7,404)(2)(4) 300,748
-------- -------- ------- --------
Gross profit....................... 48,660 16,599 7,404 72,663
Product development, selling,
administrative, and miscellaneous
expenses......................... 36,470 16,514 (3,076)(3)(4) 49,908
Allocation of parent corporation
administrative and overhead
expenses......................... 2,200 (2,200)(3) --
-------- -------- ------- --------
Operating earnings................. 12,190 (2,115) 12,680 22,755
Other income....................... 1,003 555 1,558
-------- -------- ------- --------
Earnings before interest expense
and income taxes................. 13,193 (1,560) 12,680 24,313
Interest expense................... 8,557 228 4,553 (5) 13,338
-------- -------- ------- --------
Earnings (loss) before income
taxes............................ 4,636 (1,788) 8,127 10,975
Income taxes....................... 1,758 (662) 2,746 (6) 3,842
-------- -------- ------- --------
Net earnings (loss)................ $ 2,878 $ (1,126) $ 5,381 $ 7,133
======== ======== ======= ========
Primary Earnings Per Share:
Weighted average number
of common and common
equivalent shares
outstanding (in thousands)......... 10,259 10,259
======== ========
Net earnings per share
of common stock.................... $ 0.28 $ 0.70
======== ========
Fully Diluted Earnings Per Share:
Weighted average number
of common and common
equivalent shares
outstanding (in thousands)......... 10,281 10,281
======== ========
Net earnings per share
of common stock.................... $ 0.28 $ 0.69
======== ========
OTHER DATA:
EBITDA (as defined
herein) (7) $ 19,247 $ 434 $14,339 $ 34,020
Capital expenditures $ 4,996 $ 1,761 $ 6,757
Ratio of earnings to
fixed charges (8) 1.6x
========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Statements
of Operations.
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BUCYRUS INTERNATIONAL, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL FOR THE
SIX MONTHS ENDED
JUNE 30, 1997
------------------- PRO FORMA COMBINED
BUCYRUS MARION ADJUSTMENTS PRO FORMA
-------- ------- ----------- ---------
Net sales.......................... $143,762 $31,549 $(1,410)(1) $173,901
Cost of products sold.............. 116,261 27,824 (3,943)(2)(4) 140,142
-------- ------- ------- --------
Gross profit....................... 27,501 3,725 2,533 33,759
Product development, selling,
administrative, and miscellaneous
expenses......................... 18,345 7,254 (2,731)(3)(4) 22,868
Allocation of parent corporation
administrative and overhead
expenses......................... -- 1,246 (1,246)(3) --
-------- ------- ------- --------
Operating earnings................. 9,156 (4,775) 6,510 10,891
Other income....................... 615 50 665
-------- ------- ------- --------
Earnings before interest expense
and income taxes................. 9,771 (4,725) 6,510 11,556
Interest expense................... 3,956 780 1,611 (5) 6,347
-------- ------- ------- --------
Earnings (loss) before income
taxes............................ 5,815 (5,505) 4,899 5,209
Income taxes....................... 2,392 (2,125) 1,557 (6) 1,824
-------- ------- ------- --------
Net earnings (loss)................ $ 3,423 $(3,380) $ 3,342 $ 3,385
======== ======= ======= ========
Primary Earnings Per Share:
Weighted average number
of common and common
equivalent shares
outstanding (in thousands)......... 10,345 10,345
======== ========
Net earnings per share
of common stock.................... $ 0.33 $ 0.33
======== ========
Fully Diluted Earnings Per Share:
Weighted average number
of common and common
equivalent shares
outstanding (in thousands).......... 10,503 10,503
======== ========
Net earnings per share
of common stock..................... $ 0.33 $ 0.32
======== ========
OTHER DATA:
EBITDA (as defined
herein) (7) $ 12,900 $(3,718) $ 5,647 $ 14,829
Capital expenditures $ 2,433 $ 683 $ 3,116
Ratio of earnings to
fixed charges (8) 1.8x
See accompanying Notes to Unaudited Pro Forma Combined Condensed Statements
of Operations.
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BUCYRUS INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(1) Represents the adjustment to net sales to conform Marion's revenue
recognition policy for shovels (shipment method) to the Company's percentage
of completion method. The adjustment for 1996 is immaterial and is not
included in the 1996 Pro Forma Combined Condensed Statement of Operations.
(2) Reflects the following:
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
Elimination of depreciation on buildings which are not
being purchased by the Company.......................... $ (91) $ (46)
Elimination of the LIFO provision......................... (484) --
Reversal of provision for warranties on planetary gearing
on certain draglines not assumed by the Company pursuant
to the purchase contract................................ (1,400) --
Adjustment to cost of sales to conform Marion's revenue
recognition policy for shovels (shipment method) to the
Company's percentage of completion method............... -- (1,182)
Adjustment to depreciation expense based on the assigned
fair value of machinery and equipment................... (443) (222)
Elimination of manufacturing costs related to non-acquired
assets and non-assumed employees (see below)............ (4,986) (2,493)
------- -------
$(7,404) $(3,943)
======= =======
As part of the purchase contract, the Company did not acquire the
manufacturing facility of Marion. The elimination of direct costs related to
this facility, including maintenance, security, taxes, insurance, etc.
results in reductions of approximately $2,239 and $1,120 for the year ended
December 31, 1996 and the six months ended June 30, 1997, respectively. This
does not include depreciation savings reflected in the table above.
Also as part of the purchase contract, the Company hired only specifically
identified Marion employees which reflected a department-by-department
evaluation of personnel required to handle the workload. Various
subsidiaries of Global have retained all liabilities related to employees
not permanently hired by the Company. The elimination of salaries and
benefits from administrative personnel in the fixed manufacturing
departments (plant management, purchasing, industrial relations, quality
assurance, etc.) who have not been hired results in savings of $1,773 and
$886 for the year ended December 31, 1996 and the six months ended June 30,
1997, respectively. An additional $974 and $487 for the year ended December
31, 1996 and the six months ended June 30, 1997, respectively, of
duplicative nonpayroll costs related to manufacturing (corporate
allocations, travel costs, outside consultants, and other manufacturing
items) have been identified.
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BUCYRUS INTERNATONAL, INC
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(3) As part of the purchase contract, the Company hired only specifically
identified Marion employees. In addition, the Company has identified
redundant functions and costs at Marion. These include:
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
Salaries and benefits from the elimination of specific
administrative departments (executive, treasury, human
resources, and finance)................................. $(2,982) $(1,492)
Additional non-payroll related costs related to the
administrative functions of Marion...................... (1,287) (644)
Corporate overhead charges allocated from the parent of
Marion.................................................. (2,200) (1,246)
Salaries and related costs from Marion's permanent
elimination of various engineering positions in December
1996.................................................... (1,000) --
------- -------
$(7,469) $(3,382)
======= =======
In addition, the adjustments to reflect the impact of purchase accounting
and the amortization of the Bridge Loan fees are as follows:
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
Adjustment to amortization of intangible assets based on
the assigned fair value of such assets.................. $ (728) $(324)
Adjustment to depreciation expense based on the assigned
fair value of machinery and equipment................... (542) (271)
Amortization of Bridge Loan fees over one year............ 3,463 -
------- -----
$ 2,193 $(595)
======= =====
(4) In addition to the above pro forma adjustments, the Company expects to
realize significant additional annual cost savings related to headcount
reductions and related expenses at Marion which have not been included in
the Pro Forma Combined Condensed Statements of Operations. The primary cost
savings are related to reduced direct labor costs, engineering and marketing
headcount reductions, and future closing of parts and service locations as
summarized below:
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
Direct labor reductions................................... $(1,319) $ (660)
Engineering and marketing salary and benefit reductions... (1,292) (646)
Elimination of duplicative parts and service locations.... (389) (194)
------- -------
$(3,000) $(1,500)
======= =======
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BUCYRUS INTERNATIONAL, INC
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(5) Reflects the following:
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
Interest on the Bridge Loan at an assumed interest rate of
10.625%.................................................. $ 4,781 $ 2,391
Reversal of Marion's historical interest expense........... (228) (780)
------- -------
$ 4,553 $ 1,611
======= =======
The effect of a 1/8 of 1% change in the interest rate on the Bridge Loan
is $56 per annum.
(6) Pro forma income taxes have been provided at local statutory rates by tax
jurisdiction. Income taxes provided on U.S. operations are offset by
pre-bankruptcy net operating loss carryforwards. The benefit of such net
operating loss carryforwards would be reflected as a reduction of
intangibles rather than the tax provision.
(7) "EBITDA" is defined as earnings (loss) before (i) income taxes; (ii)
interest expense; (iii) depreciation; (iv) amortization; (v) non-cash stock
compensation; (vi) loss (gain) on sale of fixed assets; and (vii)
inventory fair-value adjustment charged to cost of products sold. Since
cash flow from operations is very important to the Company's future, the
EBITDA calculation provides a summary review of cash flow performance.
EBITDA (as defined herein) should not be considered an alternative to
operating income determined in accordance with GAAP as an indicator of
operating performance or to cash flows from operating activities determined
in accordance with GAAP as a measure of liquidity.
(8) For purposes of computing the ratio of earnings to fixed charges,
earnings consist of earnings before income taxes and fixed charges.
Fixed charges consist of interest expense and amortization of debt fees.