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EXHIBIT 99.3

Excerpts from the Preliminary Offering Memorandum dated August 27, 1997,
relating to the Company's $150,000,000 Senior Notes due 2007.

SOURCES AND USES OF FUNDS

The Offering, the Marion Acquisition, the Bridge Loan and the repayment
thereof, the repayment of the Company's 10.5% Secured Notes due December 14,
1999 (the "Secured Notes"), the AIP Merger, the initial borrowings under the
Revolving Credit Facility, and the payment of fees and expenses in connection
with the foregoing are collectively referred to in this Offering Memorandum as
the "Transactions." The following table illustrates the sources and uses of
funds relating to the Transactions assuming the Transactions were all
consummated on June 30, 1997.

SOURCES USES
------- ----
(DOLLARS IN MILLIONS)

Revolving Credit Facility(1).......... $ 23.3 Pay consideration in AIP Tender Offer
Notes................................. 150.0 and AIP Merger(2)................... $196.6
AIP Equity Contribution(3)............ 143.0 Repay Secured Notes(4)................ 65.8
Cash on hand(5)....................... 5.0 Repay Bridge Loan(6).................. 45.0
------ Repay existing credit facility(5)..... 0.4
Fees and expenses..................... 13.5
------
Total Sources.................... $321.3 Total Uses....................... $321.3
====== ======

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(1) Bucyrus has a commitment from Bank One, Wisconsin, to enter into a new
credit agreement which will provide for a $75 million senior secured
revolving credit facility, with a $25 million sublimit for standby letters
of credit (the "Revolving Credit Facility"). The Revolving Credit Facility
is expected to be used to finance working capital and capital expenditures.
Availability under the Revolving Credit Facility is limited to a borrowing
base formula, which at June 30, 1997, would have permitted borrowings and
letters of credit totaling $68.7 million. See "Revolving Credit Facility."
Effectiveness of the Revolving Credit Facility is a condition to
consummation of the Offering.

(2) Assumes that the Short-Form Merger (as defined) is effected. If the
Short-Form Merger is not effected, BAC will use proceeds from the AIP Equity
Contribution and an equity contribution from, or arranged

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by, AIP (the "AIP Bridge Equity") to effect the AIP Tender Offer. In
such case, upon consummation of the AIP Merger, the AIP Bridge Equity will
be repurchased and the consideration in the AIP Merger will be paid with a
portion of the proceeds from the Offering, which the Company intends to
invest in short-term investment-grade securities pending such use.

(3) Upon consummation of the AIP Tender Offer, AIP will contribute $143.0
million in cash as common equity to BAC (the "AIP Equity Contribution").

(4) Does not include interest accrued on the Secured Notes at the rate of 10.5%
per annum from June 30, 1997, which interest will be funded with additional
cash on hand.

(5) The actual balance of the existing credit facility may be different on the
date the Transactions are actually consummated; therefore, the amount of the
existing credit facility to be repaid and the amount of either cash on hand
or borrowings under the Revolving Credit Facility actually used to
consummate the Transactions may be different at the time of such
consummation.

(6) Does not include interest accrued on the Bridge Loan at the Adjusted
Eurodollar Rate, as defined in the Bridge Loan Agreement, plus 5% per annum
from August 26, 1997, which interest will be funded with additional cash on
hand. The initial rate was 10.625%. The Bridge Loan was incurred to finance
the Marion Acquisition and related fees and expenses.

RISK FACTORS

Prospective purchasers of the Notes should consider carefully the risk
factors set forth below, as well as the other information set forth in this
Offering Memorandum.

This Offering Memorandum contains statements which constitute forward
looking statements within the meaning of Section 27A of the Securities Act.
Discussions containing such forward looking statements may be found under the
captions "Offering Memorandum Summary," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and "Business," as well as
elsewhere within the Offering Memorandum. Forward looking statements include
statements regarding the intent, belief or current expectations of the Company,
primarily with respect to the future operating performance of the Company or
related industry developments. When used in this Offering Memorandum, terms such
as "anticipate," "believe," "estimate," "expect," "indicate," "may be,"
"objective," "plan," "predict," and "will be" are intended to identify such
statements. Prospective purchasers of the Notes are cautioned that any such
forward looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ from those described
in the forward looking statements as a result of various factors, many of which
are beyond the control of the Company. Forward looking statements are based upon
management's expectations at the time they are made. Actual results could differ
materially from those projected in the forward looking statements as a result of
the risk factors set forth below and the matters set forth in the Offering
Memorandum generally. The Company cautions the reader, however, that this list
of factors may not be exhaustive.

SUBSTANTIAL LEVERAGE; RESTRICTIVE LOAN COVENANTS

Upon completion of the Offering, the Company will have substantial
indebtedness and significant debt service obligations. As of June 30, 1997, on a
pro forma basis after giving effect to the Transactions, the Company would have
had total long-term indebtedness, including current maturities, of $176.2
million, as well as undrawn borrowings under the Revolving Credit Facility of
$47.0 million. The Indenture will permit the Company to incur additional
indebtedness, including secured indebtedness, subject to certain limitations.
See "Offering Memorandum Summary -- Sources and Uses of Funds,"
"Capitalization," and "Description of the Notes -- Certain Covenants."

The Company's high degree of leverage could have important consequences to
the Noteholders, including, without limitation: (i) a substantial portion of the
Company's cash from operations will be committed to the payment of debt service
and will not be available to the Company for other purposes; (ii) the Company's
ability to obtain additional financing in the future for working capital
expenditures or acquisitions may be limited; (iii) a substantial decrease in net
operating cash flows or an increase in expenses could make it difficult for the
Company to meet its debt service requirements and force it to modify its
operations; (iv) the Company may be more highly leveraged than its competitors,
which may place it at a competitive disadvantage; (v) certain indebtedness under
the Revolving Credit Facility will be at variable rates of interest, which will
cause the Company to be vulnerable to increases in interest rates; and (vi) all
of the indebtedness outstanding under the Revolving Credit Facility will be
secured by substantially all the assets of the Company and will become due prior
to the time the principal on the Notes will become due. Any inability of the
Company to service its indebtedness or obtain additional financing as needed
would have a material adverse effect on the Company. See "Revolving Credit
Facility" and "Description of the Notes."

The Company believes that based upon anticipated levels of operations after
the Marion Acquisition (assuming the timely integration of Marion's business
into that of the Company) it will be able to meet its debt service obligations,
including interest payments in respect of the Notes. If, however, the Company
cannot generate sufficient cash flow from operations to meet its obligations,
the Company may be required to refinance its debt or to dispose of assets to
obtain funds for such purpose. There is no assurance that refinancings or asset
dispositions could be effected on

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satisfactory terms or would be permitted by the terms of the Revolving Credit
Facility or the Indenture. See "-- Realization of Benefits of the Marion
Acquisition; Integration of Marion."

The Revolving Credit Facility and the Indenture will contain numerous
covenants that will limit the discretion of management with respect to certain
business matters and place significant restrictions on, among other things, the
ability of the Company to incur additional indebtedness, to create liens or
other encumbrances, to make certain payments or investments, loans and
guarantees and to sell or otherwise dispose of assets and merge or consolidate
with another entity. See "Revolving Credit Facility" and "Description of the
Notes -- Certain Covenants." The Revolving Credit Facility will also contain a
number of financial covenants that will require the Company to maintain certain
financial ratios (including a consolidated fixed charge coverage ratio, a
consolidated interest coverage ratio, and a consolidated leverage ratio) and
tests (including maintenance of the Company's net worth at a specified level). A
failure to comply with the obligations contained in the Revolving Credit
Facility or the Indenture could result in an event of default under the
Revolving Credit Facility or an Event of Default (as defined herein) under the
Indenture that, if not cured or waived, would permit acceleration of the
relevant debt and acceleration of debt under other instruments that may contain
cross-acceleration or cross-default provisions. Other indebtedness of the
Company and its subsidiaries could contain amortization and other prepayment
provisions, or financial or other covenants, more restrictive than those
applicable to the Notes.

REALIZATION OF BENEFITS OF THE MARION ACQUISITION; INTEGRATION OF MARION

Management has estimated that significant cost savings can be achieved as a
result of the integration of Marion into the Company. The estimates of potential
cost savings are forward looking statements that are inherently uncertain.
Actual cost savings, if any, could differ materially from those projected. All
of these forward looking statements are based on estimates and assumptions made
by management of the Company, which although believed to be reasonable, are
inherently uncertain and difficult to predict; therefore, undue reliance should
not be placed upon such estimates.

Full realization of the potential benefits and savings of the Marion
Acquisition will be dependent upon a variety of factors, including (i) retention
of a substantial portion of Marion's net sales, particularly aftermarket sales;
(ii) achievement of significant reductions in operating costs through the
consolidation of operations and the restructuring of engineering, manufacturing,
selling, and administrative functions; and (iii) expansion of the Company's
presence in several markets where Marion has established relationships with
local mining interests and government authorities. Any material delays or
unexpected costs incurred in connection with the integration of Marion into the
Company could have a material adverse effect on the Company and its results of
operations, liquidity, and financial condition.

The integration of Marion will require substantial attention from the
Company's management team. The diversion of management's attention, as well as
any other difficulties which may be encountered in the transition and
integration process, could have a material adverse effect on the revenue and
operating results of the Company. There can be no assurance that the Company
will be able to integrate the operations of the Company and Marion successfully
or the extent to which the Company will be able to realize the potential
benefits of the Marion Acquisition or the timing of any such benefits. Failure
to achieve a substantial portion of these benefits within the time frame
expected by the Company could have a material adverse effect on the Company,
including its ability to make payments on the Notes. See "Unaudited Pro Forma
Combined Condensed Financial Statements" and "Business -- Integration
Strategies."

CYCLICAL NATURE OF INDUSTRY; POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

The Company's business is cyclical in nature and sensitive to changes in
general economic conditions, including fluctuations in market prices for coal
and energy alternatives to coal, copper,

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iron ore, and phosphate. These businesses are in turn influenced by a variety of
factors beyond the Company's control, including interest rates and general
economic conditions throughout the world. As a result of this cyclicality, the
Company has experienced, and in the future could experience, reduced net sales
and margins, which may affect the Company's ability to satisfy its debt service
obligations, including payments on the Notes, on a timely basis. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

The Company's net sales and operating results may fluctuate significantly
from period to period. Given the large sales price of the Company's machinery,
one or a limited number of machines may account for a substantial portion of net
sales in any particular period. As a result, in any given period, a single
customer may account for a large percentage of net sales. Losing the business of
any of its top customers could have an adverse effect upon the results of
operations and financial condition of the Company. Although the Company
recognizes net sales on a percentage-of-completion basis for new machines, the
timing of one or a small number of contracts in any particular period may
nevertheless affect operating results. In addition, net sales and gross profit
may fluctuate depending upon the size and the requirements of the particular
contracts entered into in that period. As a result of these and other factors,
the Company may experience significant fluctuations in net sales and operating
results in future periods. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

FOREIGN OPERATIONS

Both the Company and Marion have significant operations in foreign
countries and derive a substantial portion of their net sales from foreign
markets. During 1996, $279.6 million, or approximately 75%, of the Company's pro
forma net sales were generated outside the United States.

The value of the Company's foreign sales and earnings may vary with
currency exchange rate fluctuations. To the extent that the Company does not
take steps to mitigate the effects of changes in relative values, changes in
currency exchange rates could have an adverse effect upon the Company's results
of operations, which in turn could adversely affect the Company's ability to
meet its debt service obligations, including payments on the Notes. Furthermore,
international manufacturing, sales and service operations are subject to other
inherent risks, including labor unrest, political instability, restrictions on
transfer of funds, export duties and quotas, domestic and foreign customs and
tariffs, current and changing regulatory environments, difficulty in obtaining
distribution support, and potentially adverse tax consequences. There can be no
assurance that these factors

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will not have a material adverse effect on the Company or its international
operations or sales. See "Business -- Foreign Operations."

COMPETITION

The Company operates in a highly competitive environment. It competes
directly and indirectly with other manufacturers of draglines, mining shovels
(both electric and hydraulic), and rotary blast hole drills, as well as with
manufacturers of parts and components for all of the foregoing. Some of the
Company's competitors are larger, have greater financial resources, and may be
less leveraged than the Company. See "Business -- Competition."

ENVIRONMENTAL AND RELATED MATTERS

Based upon the Company's experience to date, the Company believes that the
future cost of compliance with existing environmental laws, regulations and
ordinances (or liability for known environmental claims) will not have a
material adverse effect on the Company's business, financial condition and
results of operations. Nevertheless, future events, such as compliance with more
stringent laws or regulations, or more vigorous enforcement policies of
regulatory agencies or stricter or different interpretations of existing laws
could require additional expenditures by the Company which may be material.
Certain laws, such as the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA" or "Superfund") provide for strict joint and several
liability for investigation and remediation of spills and other releases of
hazardous substances. Such laws may apply to conditions at properties presently
or formerly owned or operated by an entity or its predecessors, as well as to
conditions at properties at which wastes or other contamination attributable to
an entity or its predecessors come to be located. The Company is currently a
Potentially Responsible Party ("PRP") under CERCLA at several sites. While no
assurance can be given, the Company believes that expenditures for compliance
and remediation will not have a material effect on its capital expenditures,
earnings or competitive position. See "Business -- Environmental Matters."

LABOR RELATIONS

As of July 31, 1997, 418 of the 797 employees at the Company's South
Milwaukee facility were represented by the United Steelworkers of America Union.
In May 1997, the union ratified a new four-year agreement with the Company that
expires on April 30, 2001. Although the Company believes that its relations with
its employees are satisfactory, a dispute between the Company and its employees
could have a material adverse effect on the Company. See "Business --
Employees."

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The reorganization of the Company under Chapter 11 of the Bankruptcy Code
was effective December 14, 1994. 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 financial statements for periods
subsequent to December 14, 1994, include the related amortization charges
associated with the fair value adjustments.

As a result of the implementation of fresh start reporting, the
consolidated financial statements of the Company are not comparable to the
consolidated financial statements of periods prior to December 14, 1994. The
consolidated financial statements presented for prior periods are not the
Company's, but instead are those of B-E Holdings, Inc. (the "Predecessor
Company"), the former parent of the Company, which was merged with and into the
Company on December 14, 1994.

RESULTS OF OPERATIONS

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 AND 1996

NET SALES. Net sales for the first six months of 1997 were $143.8 million
compared with $130.8 million for the first six months of 1996. Net sales of
repair parts and services were $88.6 million, which is an increase of 8% from
the first six months of 1996. The increase in repair parts and service net sales
occurred primarily at foreign locations. Net machine sales were $55.1 million,
which is an increase of 13% from the first six months of 1996. Net sales of
electric mining shovels increased 39% from the first six months of 1996. The
increase in electric mining shovel volume was primarily in copper markets. Net
sales of blast hole drills decreased 28% from the first six months of 1996.
There has been an overall decline in worldwide blast hole drill sales activity
in 1997.

OTHER INCOME. Other income, which consists primarily of interest income,
was $0.6 million and $0.5 million for the six months ended June 30, 1997 and
1996, respectively.

COST OF PRODUCTS SOLD. Cost of products sold for the first six months of
1997 was $116.3 million, or 81% of net sales, compared with $107.0 million, or
82% of net sales, for the first six months 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 six months of 1997 were $18.3 million, or 13% of net
sales, compared with $17.9 million, or 14% of net sales, for the first six
months of 1996.

INTEREST EXPENSE. Interest expense for the first six months of 1997 was
$4.0 million compared with $4.2 million for the first six months 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 six
months of 1997, interest was accrued at 10.5% since the Company paid this
interest in cash. For the first six months 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 was paid in kind through December
31, 1996.

INCOME TAXES. For the six months ended June 30, 1997, income tax expense
consists primarily of foreign taxes at applicable statutory rates and a non-cash
income tax provision on United States taxable income at applicable statutory
rates. For the component of the United States tax provision relating to tax
benefits realized from reductions in the valuation allowance established as of

December 14, 1994 (the date the Company reorganized under chapter 11 of the
Bankruptcy Code), a corresponding $0.5 million reduction of intangible assets
was recorded in accordance with AICPA Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code". For the
component of the United States tax provision relating to reductions in the
valuation allowance established after December 14, 1994, an income tax benefit
was recorded.

For the six months ended June 30, 1996, income tax expense consists
primarily of foreign taxes at applicable statutory rates. For United States tax
purposes there was a loss for which there was no income tax benefit.

NET EARNINGS. Net earnings for the first six months of 1997 were $3.4
million compared with $0.9 million for the first six months of 1996. The
increase in net earnings was primarily due to increased sales volume and
improved gross margin percentage.

INVENTORY, BACKLOG AND NEW ORDERS. The Company maintains a substantial
inventory of partially manufactured machines and components, as well as finished
goods inventory, primarily consisting of replacement parts, in order to reduce
lead times and respond quickly to customers' delivery requirements. Inventories
at June 30, 1997 were $74.6 million (27% of net sales for the twelve months
ended June 30, 1997), compared with $70.5 million (28% of net sales for the
twelve months ended June 30, 1996) at June 30, 1996. At June 30, 1997 and 1996,
$48.1 million and $43.4 million, respectively, were held as finished goods
inventory.

The Company's consolidated backlog at June 30, 1997, was $215.8 million
compared with $158.7 million at December 31, 1996, and $184.1 million at June
30, 1996. Machine backlog at June 30, 1997, was $103.8 million, which is an
increase of 112% from December 31, 1996, and an increase of 12% from June 30,
1996. The Company has received a letter of intent from BHP Coal Pty. Ltd., an
Australian mining company, to purchase a 257OWS walking dragline which is
scheduled for completion by December 31, 1999. This is expected to generate net
sales of approximately $60.2 million and is included in machine backlog at June
30, 1997. Machine backlog for electric mining shovels and blast hole drills has
decreased 53% from June 30, 1996. Repair parts and service backlog at June 30,
1997 was $112.0 million, which is an increase of 2% from December 31, 1996, and
an increase of 23% from June 30, 1996. The increase in repair parts and service
backlog from June 30, 1996, was at both United States and foreign locations.
Backlog includes the dollar value of orders placed for new equipment as well as
parts and services, including estimates of revenues expected to be generated
from MARCs, minus dollars billed through manufacturing contracts, which are
billed on a percentage of completion basis. MARC revenue estimates are based on
payments expected for parts and for maintenance and operational services over
the life of each contract, some of which have terms through 2002.

New orders for the first six months of 1997 were $200.8 million, which is
an increase of 2% from the first six months of 1996. New machine orders were
$109.9 million, which is an increase of 44% from the first six months of 1996.
Included in new machine orders for the first six months of 1997 was
approximately $60.2 million for the aforementioned 257OWS walking dragline for
BHP Coal Pty. Ltd. of Australia. New machine orders for electric mining shovels
for the first six months of 1997 were even with last year while new machine
orders for blast hole drills have decreased. There has been an overall decline
in worldwide blast hole drill orders in 1997, which was anticipated as a result
of a temporary lower demand for copper. During the first six months 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 six months. 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. New repair parts and service
orders were $90.9 million for the first six months of 1997, which is a decrease
of 25% from the first six months of 1996. Included in new repair parts and
service orders for the first six months of 1996 were large maintenance and
repair contract orders at foreign locations.

COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994

NET SALES. Net sales for 1996 were $263.8 million compared with $231.9
million for 1995. Net sales of repair parts and services for 1996 were $156.4
million, which is an increase of 1% from 1995. This increase consists of an
increase in net sales at Minserco, Inc., a mining service subsidiary of the
Company, offset by a decrease in net sales of repair parts, primarily at foreign
locations. Net machine sales for 1996 were $107.4 million, which is an increase
of 40% from 1995. The increase in net machine sales was primarily due to
increased electric mining shovel shipments, primarily in copper markets.

Net sales for 1995 were $231.9 million compared with $194.0 million for
1994. Net sales of repair parts and services for 1995 were $155.4 million, which
is an increase of 8% from 1994. The increase in repair parts and service net
sales was primarily due to increased repair parts net sales at foreign locations
as a result of higher demand for replacement parts. Net machine sales for 1995
were $76.5 million, which is an increase of 55% from 1994. The increase was due
to increased blast hole drill and electric mining shovel shipments, primarily in
copper, coal, and iron ore markets.

OTHER INCOME. Other income, which consists primarily of interest income,
was $1.0 million, $1.3 million, and $3.1 million for 1996, 1995, and 1994,
respectively. Included in the amount for 1994 was a favorable insurance
settlement of $1.4 million.

COST OF PRODUCTS SOLD. Cost of products sold for 1996 was $215.1 million,
or 82% of net sales, compared with $205.6 million, or 89% of net sales, for
1995, and $164.1 million, or 85% of net sales, for 1994. Included in cost of
products sold for 1995 and 1994 were charges of $10.1 million and $0.4 million,
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. Also included in cost of products sold for 1995 was a charge of $4.4
million for the scrapping and disposal of excess inventory which related to
certain older and discontinued machine models. Excluding the effects of the
inventory fair value adjustment and excess inventory charge, cost of products
sold as a percentage of net sales for 1995 was 82%.

PRODUCT DEVELOPMENT, SELLING, ADMINISTRATIVE, AND MISCELLANEOUS
EXPENSES. Product development, selling, administrative, and miscellaneous
expenses for 1996 were $36.5 million, or 14% of net sales, compared with $34.2
million, or 15% of net sales, in 1995, and $31.3 million, or 16% of net sales,
in 1994. The dollar increase for 1996 was primarily due to higher product
development and service costs to provide increased support to customers.

INTEREST EXPENSE. Interest expense for 1996 was $8.6 million compared with
$6.3 million for 1995. The increase for 1996 was primarily due to an increase in
the interest rate on the Secured Notes from 10.5% to 13% effective December 14,
1995, for interest paid in kind by adding the interest to the principal balance.
Also, interest on the Secured Notes was accrued on a higher principal balance in
1996 since all interest was paid in kind through December 31, 1996. The Company
has the option of paying interest on the Secured Notes in cash at 10.5% or in
kind at 13%.

Interest expense for 1995 was $6.3 million compared with $14.2 million for
1994. The decrease was primarily due to the exchange of unsecured debt
securities of B-E Holdings, Inc. and the Company for shares of the Company's
common stock in connection with the Company's reorganization.

RESTRUCTURING EXPENSES. Restructuring expenses of $2.6 million in 1995
consist of employee severance expenses recorded to reflect the cost of reduced
employment and the severance costs related to the resignation of three officers
of the Company. See Note B to the Company's audited financial statements
appearing elsewhere herein.

REORGANIZATION ITEMS. Reorganization items represent the expenses incurred
as a result of the Company's efforts to reorganize under Chapter 11 of the
Bankruptcy Code. In 1995, reorganization items consist entirely of legal and
professional fees. Reorganization items in 1994 consist of $8.0 million of legal
and professional fees, $41.1 million to adjust debt and redeemable preferred
stock to the amount of the allowed claims in the Amended Plan, and a $1.1
million write-off of capitalized financing costs. These expenses were partially
offset by $0.4 million of interest income earned from the Petition Date through
December 13, 1994, on accumulated cash balances of B-E Holdings, Inc. and the
Company.

INCOME TAXES. Income tax expense consists primarily of foreign taxes at
applicable statutory rates.

NET EARNINGS (LOSS). Net earnings for 1996 were $2.9 million compared with
a net loss of $18.8 million for 1995. During 1995, the Company undertook a
restructuring of its corporate headquarters and foreign subsidiaries and
completed an evaluation of its inventories and other items. The Company, in
evaluating its inventory, determined that excess levels existed for certain
older and discontinued machine models. Accordingly, a charge of $4.4 million was
made in 1995 for the eventual scrapping and disposal of this inventory.
Severance costs of $2.6 million were also recorded to reflect the cost of
reduced employment at the corporate headquarters and foreign subsidiaries, and
the resignation of three former officers. In addition, a $1.0 million charge
resulting from the reestimation of certain customer warranty reserves was
recorded in 1995, and a $0.9 million charge was made for reorganization items
related to issues continuing from the bankruptcy proceedings. Net loss for 1995
also included $8.6 million (net of income taxes) of the inventory fair value
adjustment related to fresh start reporting.

Net loss for 1995 was $18.8 million compared with net earnings of $119.1
million for 1994. Included in net earnings for 1994 was an extraordinary gain on
debt discharge of $142.5 million which was partially offset by reorganization
items of $9.3 million.

INVENTORY, BACKLOG, AND NEW ORDERS. Inventories at December 31, 1996, were
$70.9 million (27% of net sales) compared with $73.6 million (32% of net sales)
at December 31, 1995, and $82.4 million (42% of net sales) at December 31, 1994.
At December 31, 1996, 1995, and 1994, $44.1 million, $44.5 million, and $51.9
million, respectively, were held as finished goods inventory.

The Company's consolidated backlog on December 31, 1996 was $158.7 million
compared with $118.0 million at December 31, 1995 and $72.3 million at December
31, 1994. Machine backlog at December 31, 1996 was $49.0 million, which is a
decrease of 26% from December 31, 1995. The decrease in machine backlog from
December 31, 1995 was primarily in electric mining shovel volume. Repair parts
and service backlog at December 31, 1996 was $109.7 million, which is an
increase of 110% from December 31, 1995. The increase in repair parts and
service backlog from December 31, 1995, was 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 1996 were $304.5 million, which is an increase of 10% from
1995. New machine orders for 1996 were $90.6 million, which is a decrease of 22%
from 1995. The decrease in new machine orders for 1996 was primarily in electric
mining shovel volume and represented low machine net sales activity during the
second half of 1996, primarily related to copper markets. New repair parts and
service orders for 1996 were $213.9 million, which is an increase of 33% from
1995. The increase in repair parts and service orders for 1996 was primarily due
to large maintenance and repair contract orders at foreign locations in the
first three months of 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 December 31, 1994, 1995, and 1996, and June
30, 1997, were as follows:

DECEMBER 31,
----------------------------------- JUNE 30,
1994 1995 1996 1997
---- ---- ---- --------
(DOLLARS IN THOUSANDS)

Working capital.................................... $ 78,208 $ 65,330 $ 78,814 $ 82,521
Current ratio (ratio of current assets to current
liabilities)..................................... 2.6 to 1 2.2 to 1 2.9 to 1 2.3 to 1

The decrease in the current ratio from December 31, 1996 to June 30, 1997,
was primarily due to increased liabilities in order to support increased
production of machines. The increase in working capital and the current ratio
for the year ended December 31, 1996, was primarily due to a decrease in current
liabilities to customers on uncompleted contracts and warranties and a decrease
in outstanding project financing borrowings. The decrease in working capital and
the current ratio for the year ended December 31, 1995, was primarily due to the
inventory fair value adjustment of $10.1 million being charged to cost of
products sold as the inventory was sold and an inventory obsolescence provision
of $4.4 million. See "Results of Operations -- Comparison of Fiscal Years Ended
December 31, 1996, 1995, and 1994 -- Cost of Products Sold."

Equipment Assurance Limited, a subsidiary of Bucyrus, has pledged $1.1
million of its cash to secure its reimbursement obligations for outstanding
letters of credit at June 30, 1997. This collateral amount is classified as
Restricted Funds on Deposit in the Company's Consolidated Condensed Balance
Sheets.

The Company believes that current levels of cash and liquidity, together
with funds generated by operations, funds available from the Revolving Credit
Facility, and other project financing arrangements will be sufficient to permit
the Company to satisfy its debt service requirements and fund operating
activities through at least 1998. 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. See "Revolving Credit
Facility."

The Company had outstanding letters of credit and guarantees of $6.1
million at June 30, 1997. Of this amount, $4.7 million is related to the
Company's existing credit agreement with Bank One, Wisconsin, with the remainder
provided by various banks and insurance companies.

At June 30, 1997, the Company had approximately $2.3 million of approved
but unspent capital appropriations. Included in this amount is the remaining
$1.2 million to be spent for a new service shop facility in Chile which is being
financed primarily with a local bank in Chile.

In addition, at June 30, 1997, the Company had committed approximately $5.5
million of a planned $20.0 million machine shop tool modernization project. The
initial machine tools have been financed with operating leases and the remaining
machine tools are expected to be financed using internally generated cash,
borrowings under the Revolving Credit Facility, or operating leases.

EBITDA

For purposes of this Offering Memorandum (other than "Description of
the Notes"), "EBITDA" is defined as earnings (loss) before (i) income taxes;
(ii) interest expense; (iii) extraordinary gain; (iv) depreciation; (v)
amortization; (vi) non-cash stock compensation; (vii) loss (gain) on sale of
fixed assets; (viii) restructuring expenses; (ix) reorganization items; (x)
inventory fair-value adjustment charged to cost of products sold; (xi) the AIP
Management Fee, which will be subordinated to the Notes and will not be
incurred by the Company until after the AIP Merger is consummated; and (xii) in
1995 only, a non-cash charge related to the scrapping and disposal of excess
inventory related to certain older and discontinued machine models. Since cash
flow from operations is very important to the Company's future, the EBITDA
calculation provides a summary review of cash flow performance. In addition,
the Revolving Credit Facility requires the calculation of EBITDA for certain
ratios and covenants. 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. The following
table reconciles the Company's historical earnings (loss) before income taxes
and extraordinary gain to EBITDA (as defined herein).

PREDECESSOR
COMPANY
------------ YEARS ENDED SIX MONTHS ENDED
JANUARY 1- DECEMBER 14- DECEMBER 31, JUNE 30,
DECEMBER 13, DECEMBER 31, ------------------ -----------------
1994 1994 1995 1996 1996 1997
------------ ------------ ---- ---- ---- ----
(DOLLARS IN THOUSANDS)

Earnings (loss) before income taxes and
extraordinary gain.................... $(21,438) $(427) $(16,258) $ 4,636 $ 2,234 $ 5,815
Restructuring expenses.................. -- -- 2,577 -- -- --
Reorganization items.................... 9,338 -- 919 -- -- --
Inventory fair value adjustment charged
to cost of products
sold.................................. -- 362 10,065 -- -- --
Non-cash expenses:
Depreciation.......................... 7,356 145 3,671 3,882 1,980 2,179
Amortization.......................... 3,679 23 1,194 1,142 584 534
Stock compensation.................... -- -- -- 668 116 420
(Gain) loss on sale of fixed assets... 37 5 (166) 362 246 (4)
Payment in kind interest on the
Secured Notes and deferred rent
(interest) on sale and leaseback
financing arrangement (Predecessor
Company)............................ 7,287 258 5,691 7,783 3,767 --
Amortization of debt discount......... 71 -- -- -- -- --
Cash interest expense(1)................ 6,553 26 563 774 406 3,956
-------- ----- -------- ------- ------- -------
Adjusted EBITDA(2)(3)................... 12,883 392 8,256 19,247 9,333 12,900
Excess inventory charge(3).............. -- -- 4,416 -- -- --
-------- ----- -------- ------- ------- -------
EBITDA (as defined herein)(3)........... $ 12,883 $ 392 $ 12,672 $19,247 $ 9,333 $12,900
======== ===== ======== ======= ======= =======

- -------------------------
(1) Cash interest expense for the Predecessor Company includes all accrued but
unpaid interest prior to February 18, 1994, the date the Predecessor Company
commenced voluntary petitions under Chapter 11 of the Bankruptcy Code (the
"Petition Date"). Contractual interest of $20.3 million on the unsecured
debt of the Predecessor Company did not accrue subsequent to the Petition
Date. Excludes interest on the Secured Notes that has been paid in kind,
amortization of debt discount, and deferred rent (interest) on the sale and
leaseback financing arrangement.

(2) The Company has historically reported "Adjusted EBITDA" in its financial
disclosures to highlight the effects that fresh start accounting,
restructuring expenses, and reorganization items have on reported net
earnings.

(3) For the year ended December 31, 1995, the Company recognized a charge of
$4.4 million to cost of products sold for the scrapping and disposal of
excess inventory which related to certain older and discontinued machine
models. See Note E to the Company's audited financial statements appearing
elsewhere herein. The Company is presenting an alternative calculation of
EBITDA (as defined herein) as compared to Adjusted EBITDA, to reflect the
non-cash impact of this charge for comparison purposes.

BUSINESS

GENERAL

The Company (formerly known as Bucyrus-Erie Company) was incorporated in
Delaware in 1927 as the successor to a business that has been in continuous
operation since 1880. The Company is one of the world's leading manufacturers of
large-scale excavation equipment used in surface mining and other earth moving
operations, including rotary blast hole drills, electric mining shovels, and
draglines. Bucyrus machines are used throughout the world by customers who mine
coal, iron ore, copper, gold, phosphate, bauxite, oil sands, and other minerals,
as well as for land reclamation activities.

An important part of the Company's business consists of aftermarket sales,
such as supplying parts, providing maintenance and repair services, providing
technical advice, as well as refurbishing and relocating older, installed
machines. The importance of aftermarket products and services in this industry
is a function of the equipment's size, expense, complexity, and long life.
Through domestic and foreign subsidiaries and overseas offices, the Company
offers a global network of comprehensive direct marketing services and
aftermarket support, which is critical to enhance machine longevity and
productivity in the field. This network caters primarily to the Company's own
installed equipment base; however, it also provides repair parts and maintenance
services for other manufacturers' equipment on a limited basis.

For the fiscal year ended December 31, 1996, the Company had total net
sales of $263.8 million, comprised of $107.4 million (41%) in new equipment
sales and $156.4 million (59%) in aftermarket parts and service sales, and had
EBITDA (as defined herein) of $19.2 million. See the Company's consolidated
financial statements appearing elsewhere herein.

THE MARION ACQUISITION

On August 26, 1997, the Company consummated the Marion Acquisition. The
purchase price for Marion was $40.1 million, subject to post-closing adjustments
which would have reduced the purchase price by approximately $3.7 million if the
Marion Acquisition had taken place on June 30, 1997. For the fiscal year ended
October 31, 1996, Marion had total net sales of $109.6 million, comprised of
$36.4 million (33%) in new equipment sales and $73.2 million (67%) in
aftermarket parts and service sales.

The Company financed the Marion Acquisition and related fees and expenses
utilizing a $45.0 million unsecured bridge loan (the "Bridge Loan") provided by
the PPM Fund, an affiliate of PPM America, Inc. and JNL, currently the Company's
largest shareholder. A portion of the proceeds of the Offering will be used to
refinance the Bridge Loan. See "Offering Memorandum Summary -- Sources and Uses
of Funds."

Like the Company, Marion manufactures large surface mining excavation
equipment, primarily draglines and electric mining shovels, and has a
significant aftermarket parts and services business supporting its installed
base of over 300 machines throughout the world. The aftermarket business
provides Marion-engineered components and replacement parts, as well as ongoing
electrical and mechanical service assistance on an as-required basis. Marion's
principal customers for both new machines and aftermarket parts and services are
operators of surface coal mines worldwide. Coal producers accounted for
approximately 70% of Marion's total net sales in recent years, with copper, iron
ore, phosphate rock and oil sands mining primarily accounting for the balance.
Australia, Canada, India, South Africa, and the United States are Marion's
largest geographical markets, although sales volume by country varied
substantially from year to year. In recent years, approximately 70% of Marion's
total net sales were in markets outside the United States.

The Marion Acquisition provides a number of benefits to the Company,
including a substantial increase in the Company's worldwide installed equipment
base, expansion of the Company's

presence in several important markets, and the opportunity to achieve
significant cost savings. See "Risk Factors -- Realization of Benefits of the
Marion Acquisition; Integration of Marion."

INCREASED INSTALLED EQUIPMENT BASE. The Marion Acquisition increased
the Company's installed equipment base from approximately 900 machines to
nearly 1,200 machines worldwide, providing the Company with significantly
greater opportunities to market its aftermarket parts and services.

EXPANDED PRESENCE IN POTENTIALLY HIGH GROWTH MARKETS. The Marion
Acquisition provides the Company with an increased strategic presence in
markets that are anticipated to experience substantial growth over the next
several years, such as India and Russia, through Marion's established
relationships with local mining interests and governmental authorities.

SIGNIFICANT COST SAVINGS. The Marion Acquisition results in pro forma
cost savings of $12.5 million for fiscal 1996 as described below, and $5.9
million for the six months ended June 30, 1997, through the consolidation
of manufacturing operations and the rationalization of engineering and
administrative functions. In addition, the Company has identified an
estimated $3.0 million in potential annual cost savings that are not
reflected in the pro forma financial results. The cost savings reflected in
the pro forma results and summarized below, and other anticipated cost
savings, are based on assumptions and expectations that the Company
believes to be reasonable, but are dependent on a variety of important
factors. See "Risk Factors -- Realization of Benefits of the Marion
Acquisition; Integration of Marion" and "Unaudited Pro Forma Combined
Condensed Financial Statements."

The Company will consolidate all of Marion's manufacturing operations
into the Company's existing facilities as Marion's manufacturing facility
was not acquired as part of the Marion Acquisition. This results in pro
forma manufacturing cost savings of $5.0 million for fiscal 1996, and $2.5
million for the six months ended June 30, 1997, including reductions in
direct facility costs, fixed manufacturing administrative costs, and
nonpayroll manufacturing costs. Cost savings of $2.2 million (excluding
depreciation) for fiscal 1996, and $1.1 million for the six months ended
June 30, 1997, are attributed to the elimination of direct costs related to
the operation of Marion's primary facility in Marion, Ohio. The Company has
hired only certain of Marion's manufacturing employees, resulting in pro
forma cost savings of $1.8 million for fiscal 1996, and $0.9 million for
the six months ended June 30, 1997. The elimination of overhead expenses
relating to manufacturing, including corporate allocations, travel costs,
and consulting expenses, results in pro forma cost savings of $1.0 million
for fiscal 1996, and $0.5 million for the six months ended June 30, 1997.
Management believes that the Company has adequate capacity to integrate
Marion's manufacturing operations.

The Marion Acquisition also results in pro forma cost savings of $7.5
million for fiscal 1996, and $3.4 million for the six months ended June 30,
1997, through the consolidation of duplicative product development,
general, and administrative functions. The Company has hired only certain
of Marion's administrative employees, with the associated elimination of
salaries and related expenses resulting in pro forma cost savings of $4.3
million for fiscal 1996, and $2.1 million for the six months ended June 30,
1997. The elimination of general and administrative overhead expenses,
primarily relating to allocated corporate expenses, results in pro forma
cost savings of $2.2 million for fiscal 1996, and $1.2 million for the six
months ended June 30, 1997. In late 1996, Marion eliminated various
full-time engineering positions, resulting in pro forma cost savings of
$1.0 million for fiscal 1996. Based on a department-by-department analysis,
management believes that the Company's current operations, which will be
supplemented by employees hired from Marion, will be adequately staffed for
the foreseeable future; however, there can be no assurance that this will
be the case.

The Company expects to generate the $3.0 million in additional cost
savings not reflected in the pro forma financial results by reducing direct
labor costs, consolidating engineering functions, eliminating marketing
personnel, and closing certain parts and service locations. The

Company has hired only certain of Marion's engineering and marketing staff
which is expected to result in incremental annual cost saving of
approximately $1.3 million. The Company's current engineering staff, along
with selected individuals from Marion's engineering staff, is expected to
be adequate to handle the engineering function. Application of the
Company's direct labor operating efficiencies to the former Marion
operations is expected to result in annual cost savings of approximately
$1.3 million. Since Marion operates administrative and sales offices, parts
warehouses and repair facilities in the same geographical areas as the
Company, the consolidation of these functions is expected to result in
annual cost savings of approximately $0.4 million.

After giving pro forma effect to the Marion Acquisition, the Company's net
sales for fiscal 1996 would have been $373.4 million, comprised of $143.8
million (39%) of new equipment sales and $229.6 million (61%) of aftermarket
sales, and in fiscal 1996 EBITDA (as defined herein) would have been $34.0
million. See "Unaudited Pro Forma Combined Condensed Financial Statements."

BUSINESS STRATEGY

Following an in-depth, strategic review of management and operations in
1995, the Board of Directors refocused the Company's business strategy and hired
a new management team, including Willard R. Hildebrand, President and Chief
Executive Officer, and Daniel J. Smoke, Vice President and Chief Financial
Officer. In addition, the Board increased the responsibilities of four other
senior officers who had been with the Company for an average of 23 years. AIP
intends to continue the Company's existing business strategy, which includes the
following key elements:

GROW THE AFTERMARKET BUSINESS. The Company has increased its focus on
the important aftermarket business because of its attractive profit margins
and its greater stability and predictability compared to the market for new
equipment. In addition, providing aftermarket support, which is critical to
maintain machine longevity and productivity in the field, enhances the
Company's ability to secure new machine orders in the future. The Company's
focus on its aftermarket business is reflected in a number of recently
implemented strategic initiatives that include: (i) working with suppliers
to increase stock levels of replacement parts to shorten response times to
customer inquiries; (ii) installation of a new computerized parts quoting
system to improve responsiveness to customer inquiries; (iii) forming a
dedicated engineering team to focus on reducing manufacturing costs for
replacement parts; (iv) enhancing relationships with key suppliers in order
to reduce raw material and purchased part costs; (v) expanding the
Company's facilities in important foreign markets, such as Chile and South
Africa; (vi) investing additional capital in the Company's domestic repair
and service subsidiaries, Boonville Mining Services, Inc. and Minserco,
Inc.; and (vii) purchasing Von's Welding, Inc., an aftermarket supplier of
mining machinery parts and services, located in Gillette, Wyoming, in North
America's most important coal mining region.

The Company has formed relationships with key suppliers of Bucyrus
products to reduce costs, advance product technology, and improve customer
support. In addition, the Company is working with suppliers to increase
their average stock levels of parts in an effort to improve response time
to customer inquiries. Since 1995, average stock levels have increased from
approximately $1.0 million to approximately $5.5 million.

Because approximately 64% of the Company's installed equipment base is
located in international markets, and 76% of the Company's new machine
sales over the past five years have been to international customers, the
Company is committed to providing first-rate customer service on a
worldwide basis. In 1996 and 1997, the Company invested capital in a new
expanded service center and office complex in Antofagasta, Chile, which
will primarily service nearby copper mining customers, and an important new
warehouse facility located in Middleburg, in the heart of the South African
coal fields.

Domestically, the Company remains committed to strengthening
operations at its two wholly-owned subsidiaries, Boonville Mining Services,
Inc. ("BMSI") and Minserco, Inc. ("Minserco"). BMSI provides replacement
parts and repair and rebuild services for surface mining equipment
manufactured both by the Company and by its competitors. Among other
things, BMSI competes directly with "will-fitters" who sell non-OEM and
knock off replacement parts, and provides additional manufacturing capacity
for the Company. Minserco services the mining industry with comprehensive
structural and mechanical engineering, non-destructive testing, repairs and
rebuilds of machine components, product and component upgrades, contract
maintenance, turnkey erections, and machine moves. Minserco's new orders
have increased from $13.7 million in 1994 to $28.5 million in 1996. In June
1997, the Company purchased 100% of the stock of Von's Welding, Inc.
("Von's") for approximately $2.0 million, including the assumption of
approximately $1.1 million in liabilities. Von's, located in Gillette,
Wyoming, is engaged in the business of providing replacement parts and
aftermarket services for mining equipment and trucks. Von's business will
be consolidated into Minserco, which will maintain Von's operating facility
and employees. This acquisition will enhance the Company's presence and
ability to provide tooling and repair services and replacement parts in
North America's most important coal mining region.

INCREASE OEM QUALITY AND PROFITABILITY. The Company is committed to
increasing the profitability of OEM sales by improving the design and
engineering of its existing line of machines, as well as developing new
products. During 1996, the Company's engineering and service functions were
significantly restructured in response to feedback from a customer focus
group formed to provide direction to the Company's engineering development
activities. A continuation of this close relationship with customers is
fundamental to the Company's objective to become more market driven.
Specific goals included reducing lead times, improving product quality and
reliability, and improving profit margins and OEM sales. To further these
goals, the Company has increased its investment in work-in-process
inventory to reduce delivery times for new equipment orders. The Company's
commitment to quality has been formally recognized by its receipt of ISO
9001 Certification from Det Norske Veritas, one of the world's leading
standards organizations.

MODERNIZE PLANT AND EQUIPMENT. During 1996, the Company began a number
of initiatives to modernize its manufacturing facilities in order to reduce
lead times and inventory levels, provide quicker turn around, and reduce
overall costs of manufacturing both new machines and replacement parts. The
most significant initiative is a three-year, $20 million modernization
program at the Company's South Milwaukee facility. The program includes
replacing approximately 47 older, less efficient machines with 14
technologically advanced machines, and upgrading 10 existing machine tools.
Some older machines will be retained by the Company to replace the
manufacturing capacity of certain Marion machines that will not be
transferred to the Company's South Milwaukee facility. As of June 30, 1997,
approximately $5.5 million had been committed to this project and seven of
the 14 machines had been installed, with the remainder scheduled for
installation by early 1999. The significant reduction in the number of
machines will open floor space, allowing the Company to increase capacity
and to complete the fabrication of Marion's current in-progress inventory
in South Milwaukee. Following the completion of the modernization program,
the Company expects to realize significant annual cost savings not
reflected in the pro forma financial results through the reduction of
labor, overhead, and raw materials costs.

FOCUS ON STRATEGIC MARKETS. Although 76% of the Company's net sales of
new machines have come from foreign markets during the past five years
(primarily Australia, Chile, China, and South Africa), management believes
that North America (primarily western Canada, the western United States,
and Mexico) continues to be one of the world's most important markets for
surface mining equipment. Therefore, the Company's focus includes the
strategic placement of its new, quality-engineered electric mining shovels
in high-profile North American installa-

13
18

tions. The Company sold the first of these shovels in Canada in 1995, and
in the United States and Mexico in 1996. The Company believes that these
installations will create opportunities for increased new machine sales in
North America. Management has been encouraged by repeat orders in 1997 for
two additional shovels from one of these customers, and the receipt of a
shovel order from a new North American customer that has historically
purchased all its equipment from the Company's primary competitor.

EXPAND MARC PROGRAM. The Company is aggressively promoting its
Maintenance and Repair Contracts, under which mine operators outsource to
the Company all regular maintenance services, repair functions and, in some
cases, operation of the equipment serviced. MARCs offer the Company a
generally predictable, high-margin revenue stream. New mines are the
primary target for MARCs because it is difficult and expensive for a mining
company to establish infrastructures for necessary and ongoing maintenance
and repair in undeveloped or remote areas. The Company currently operates
eight MARCs and is seeking to expand the MARC program. See "-- Aftermarket
Parts and Services."

While a number of these initiatives have not been fully implemented and the
anticipated benefits have not yet been fully realized, from 1995 to 1996 the
Company's net sales increased 14%, from $231.9 million to $263.8 million, and
EBITDA (as defined herein) improved from $12.7 million (5.5% of net sales) to
$19.2 million (7.3% of net sales). For the first six months of 1997, as compared
to the first six months of 1996, net sales increased 10%, from $130.8 million to
$143.8 million, and EBITDA (as defined herein) improved from $9.3 million (7.1%
of net sales) to $12.9 million (9.0% of net sales). The Company's consolidated
backlog increased 36% from $158.7 million at December 31, 1996 to $215.8 million
at June 30, 1997. The Marion Acquisition provides the Company with increased
opportunities to implement these initiatives, particularly with respect to
Marion's aftermarket business.

INTEGRATION STRATEGIES

Following a detailed review of Marion's business, the Company has developed
a comprehensive plan to integrate Marion's operations into those of the Company.
The Marion Acquisition results in substantial pro forma cost savings, primarily
through the consolidation of Marion's manufacturing operations into the
Company's existing facilities and the rationalization of engineering and
administrative functions. In addition, the Marion Acquisition enhances the
Company's product offering and, through application of the Company's established
business strategies, creates opportunities to capture additional new machine and
aftermarket sales. See "Risk Factors -- Realization of Benefits of the Marion
Acquisition; Integration of Marion" and "Unaudited Pro Forma Combined Condensed
Financial Statements."

CONSOLIDATION OF OPERATIONS. Management expects to realize significant
cost savings through the integration of Marion's manufacturing operations
into those of the Company. The Company will relocate some of Marion's
production machinery and fabricating equipment from the Marion facility to
the Company's manufacturing operations in South Milwaukee, Wisconsin, and
Boonville, Indiana. Machinery and tooling that cannot be used in the
Company's existing facilities will be sold. The estimated annual cost
savings from the consolidation of manufacturing operations included in the
pro forma adjustments are approximately $5.0 million. The Company will
commence the integration of Marion's manufacturing operations as soon as
possible.

CONSOLIDATION OF SALES, SERVICE, AND ADMINISTRATIVE
FUNCTIONS. Management expects to realize significant cost savings through
the rationalization of Marion's and the Company's sales, service, and
administrative functions. The Company has performed a detailed,
department-by-department assessment of Marion's existing administrative
functions and has identified a number of redundant and duplicative
positions and functions, the elimination of which results in pro forma
annual cost savings of $6.5 million. The pro forma statements do not

include any consolidation of sales functions, although it is anticipated
that numerous positions will be eliminated. In addition, because Marion
operates administrative and sales offices, parts warehouses, and repair
facilities in the same geographical areas as the Company, the consolidation
plan includes closing certain of the former Marion facilities, including
warehouses and/or repair facilities in Ohio, Wyoming, Alberta, Quebec, and
South Africa. These cost savings are not reflected in the pro forma
adjustments. In Australia, the Company plans to close its administrative
and sales offices and operate out of facilities acquired from Marion.
Although numerous duplicative positions will be eliminated, certain key
personnel from Marion's offices, warehouses, and repair facilities will be
hired and integrated into the Company's administrative, sales, and service
staff.

CONSOLIDATION OF ENGINEERING FUNCTIONS. The Company has hired certain
of Marion's best-qualified engineers and technicians to assist with the
integration process and the continued development and production of high
quality machines. As of December 31, 1996, Marion had already eliminated
various engineering positions, resulting in the $1.0 million in annual cost
savings reflected in the pro forma adjustments. The anticipated elimination
of additional engineering positions is expected to generate additional cost
savings that are not reflected in the pro forma adjustments. The Company
currently employs an engineering staff of 70 and believes that this staff,
in conjunction with the hiring of certain Marion engineers, will provide
the Company with sufficient engineering support for the foreseeable future;
however, there can be no assurance that this will be the case.

EXPANSION OF AFTERMARKET BUSINESS. The Marion Acquisition
significantly increases the Company's aftermarket parts and service
business, which generated $73.2 million, or approximately 67% of Marion's
total net sales, during fiscal 1996. By converting Marion's aftermarket
customers to the Company's service and support programs as soon as
practicable, the Company seeks not only to maintain existing levels of
aftermarket sales, but to increase its aftermarket penetration of Marion
accounts. Although the Company already has relationships with substantially
all of Marion's customers, to better serve these customers, the Company has
hired a number of Marion's field personnel, who will continue to be
responsible for servicing Marion's installed equipment base. The Company
also believes that the Marion Acquisition creates additional opportunities
to expand BMSI's and Minserco's operations, helping the Company to become
more competitive in the aftermarket for parts and services.

INTEGRATION OF PRODUCTS AND TECHNOLOGY. Three of Marion's five
equipment models and its best technology will be integrated into the
Company's existing product lines. Marion manufactured two basic models of
electric mining shovels. The smaller model, which represented six of
Marion's nine electric mining shovels sold during the past two years and
has been particularly popular in India, will be incorporated into the
Company's product line. The larger model is similar to the Company's most
popular electric shovel model and will therefore be discontinued. Two of
Marion's smaller special purpose dragline models will be incorporated into
the Company's product line to complement the larger models currently
offered by the Company.

COSTS AND EXPENSES ASSOCIATED WITH THE MARION ACQUISITION. The Company
expects to incur one-time costs and expenses of approximately $6.2 million
in connection with the Marion Acquisition and the integration of Marion's
business into the Company's operations. These costs primarily relate to
moving certain equipment from Marion, Ohio, to the Company's existing
facilities, relocating personnel, and consolidating offices and warehouses.
Under the terms of the purchase agreement, Global retained ownership of
Marion's manufacturing facility in Marion, Ohio, and is responsible for all
severance costs, pension expenses, and postretirement medical and other
benefits associated with the closing of Marion's manufacturing operations.
The Company's existing facilities and equipment are anticipated to be
adequate to fulfill expected sales with little need for additional capital
expenditures other than previously planned modernization of specific
equipment; however, there can be no assurance that this will be the case.

INDUSTRY OVERVIEW

The large-scale surface mining equipment manufactured and serviced by the
Company is used primarily in coal, copper, and iron ore mines worldwide. Growth
in demand for these commodities is a function of population growth and
continuing improvements in standards of living in many areas of the world. The
market for new surface mining equipment is somewhat cyclical in nature due to
market fluctuations for these commodities; however, the aftermarket for parts
and services is more stable because these expensive, complex machines are
typically kept in continuous operation for 15 to 30 years and require regular
maintenance and repair throughout their productive lives.

Although total industry sales of new equipment have varied substantially
from year to year, management estimates that since 1987 total worldwide sales of
rotary blast hole drills, electric mining shovels and draglines have averaged
approximately $285 million annually. The largest markets for this mining
equipment have been in Australia, Canada, China, India, Russia, South Africa,
South America, and the United States. Together, these markets typically account
for approximately 90% of all new machines sold, although in any given year,
markets in other countries may assume greater importance. See "Risk Factors --
Cyclical Nature of Industry; Potential Fluctuations in Operating Results," and
"-- Competition."

MARKETS SERVED

While the Company's products are used in a variety of different types of
mining operations, including gold, phosphate, bauxite, and oil sands, as well as
for land reclamation, the Company manufactures surface mining equipment
primarily for large companies and quasi-governmental entities engaged in the
mining of coal, iron ore, and copper throughout the world. Until the late 1980s,
coal mining accounted for the largest percentage of industry demand for the
Company's machines, and it continues to be one of the largest users of
replacement parts and services. In recent years, however, copper and iron ore
mining operations have accounted for an increasingly greater share of new
machine sales. During the past five years, approximately 55% of the Company's
new equipment orders have gone to customers who mine copper, 32% to iron ore
mining customers, and 13% to coal mining customers. Nevertheless, while the
copper and iron ore mining industries have accounted for the majority of new
machine sales in recent years, the increasing worldwide demand for coal is
expected to continue and the Company expects that coal mining will account for
an increasing percentage of new machine sales over the next several years.

COPPER. From 1995 to 1996, copper consumption increased by 2.5% in the
United States, with European countries such as France, Germany, Italy and
Britain experiencing similar growth. This growth in demand is attributable
to both general economic growth, as well as increased use of copper in
high-tech industrial production. Unusual trading activity led to a sharp
decline in copper prices in mid-1996 from historically high levels; since
then, copper prices have recovered, and as a result, several new copper
projects have been put back on line and existing mines expanded in
Argentina, Chile, Indonesia, Mexico, and Sweden. These initiatives have
resulted in increased demand for the Company's excavation equipment in
these markets. In spite of the fluctuations during 1996, copper prices are
expected to remain relatively firm through 1997. According to Metal
Bulletin Research, an industry periodical, copper consumption is expected
to grow at approximately 2.3% in 1997.

IRON ORE. Although 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 an increase in iron ore production in late 1994 that was sustained
through 1995 when global consumption increased, creating additional demand
for steel. In 1995, iron ore was the most widely traded non-energy
commodity in both value and volume, and the iron ore market passed the one
billion tons level, setting a new record for the worldwide industry. Prices
for iron ore began to recover slightly in 1995 and 1996, climbing back

to 1992 levels. AME Mineral Economic analysts predict that iron ore
production will rise 10% by the year 2000.

COAL. The demand for steam coal, which represents approximately 85% of
total coal mining activity, is based largely on the demand for electric
power and the price and availability of competing sources of energy, such
as oil, natural gas, and nuclear power. Initially, the 1973 Arab oil
embargo resulted in an unprecedented increase in the demand for coal
production, reflecting expectations that oil prices would continue to rise.
Eventually the effects of a worldwide recession, escalating interest rates,
energy conservation efforts, and an increase in the world's supply of oil
resulted in a sharp drop in demand for coal. More recently, coal production
in the United States has been impacted by the Clean Air Act, causing higher
sulfur coal mines to be closed or to have outputs drastically curtailed.
Many machines have been shut down and 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 have driven coal prices
downward. Nevertheless, the increase in demand for coal in developing
countries with rapidly growing populations, such as India and China, has
stimulated coal mining production worldwide and is eventually expected to
increase both domestic and foreign demand for excavation equipment. The
Energy Information Administration is forecasting an increase in world
energy demand and an increase in world coal consumption.

The Company's excavation machines are used for land reclamation as well as
for mining, which has a positive effect on the demand for its products and
replacement parts and expands the Company's potential customer base. 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.

OEM PRODUCTS

The Company's line of original equipment manufactured ("OEM") products
includes a full range of rotary blast hole drills, electric mining shovels, and
draglines.

ROTARY BLAST HOLE DRILLS. Most surface mines require breakage or
blasting 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. Rotary blast hole drills are used to drill these holes, and are
usually described in terms of the diameter of the hole they bore. The
average life of a blast hole drill is 15 to 20 years.

The Company manufactures the world's top selling rotary blast hole
drills, having produced a majority of the estimated 69 drills sold in the
industry during 1995 and 1996. The Company offers a line of rotary blast
hole drills ranging in hole diameter size from 9.0 inches to 17.5 inches
and ranging in price from approximately $1.5 million to $2.8 million per
drill, depending on machine size and variable features.

In an effort to enhance drill sales and expand its market position,
during 1996 the Company introduced the Model 39R diesel hydraulic blast
hole drill, the Company's third drill model and first diesel hydraulic
blast hole drill. This innovative machine breaks new ground in
maneuverability and the ability to drill in difficult terrain, as well as
offering extraordinary drill productivity and functions unavailable in
other manufacturers' models.

ELECTRIC MINING SHOVELS. Mining shovels are primarily used to load
coal, copper ore, iron ore, other mineral-bearing materials, overburden, or
rock into trucks. There are two basic types of mining shovels, electric and
hydraulic. Electric mining shovels are able to handle larger shovels or
"dippers," allowing them to load greater volumes of rock and minerals,
while hydraulic shovels are smaller and more maneuverable. The Company
manufactures only electric mining shovels. The average life of an electric
mining shovel is 15 to 20 years.

Shovels are characterized in terms of 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 approximately $3 million to approximately $9 million per shovel.
The Company's most popular electric mining shovel model is the Model 495B,
which is known for its reliability and productivity.

The Company's electric mining shovels continue to be extremely popular
in the surface mining industry. In the developing coal mining market of
China and in the rapidly growing Chilean copper mining market, Bucyrus
shovels have accounted for the majority of new electric mining shovels
purchased since 1988. Among the Company's business strategies is the
strategic placement of new electric mining shovels in high-profile North
American mining installations.

DRAGLINES. Draglines are primarily used to remove overburden, which is
the earth located over a coal or mineral deposit, by dragging a large
bucket through the overburden, carrying it away and depositing it in a
remote spoil pile. The Company's draglines weigh from 500 to 7,500 tons,
and are typically described in terms of their "bucket size," which can
range from nine to 220 cubic yards. The Company currently offers a full
line of models ranging in price from $10 million to over $60 million per
dragline. The average life of a dragline is 20 to 30 years.

Draglines are the industry's largest and most expensive type of
equipment, and while sales are sporadic, each dragline represents a
significant sales opportunity. Management therefore remains committed to
maintaining the Company's ability to produce these machines. In June 1997,
the Company received a letter of intent from an Australian mining company
to build the world's fourth largest dragline, which is scheduled for
completion by December 31, 1999. This is expected to generate net sales of
approximately $60.2 million over the next two and a half years.

AFTERMARKET PARTS AND SERVICES

The Company has a comprehensive aftermarket business that supplies
replacement parts and services for the surface mining industry. Although the
vast majority of the Company's sales of aftermarket parts and services has been
in support of the large installed equipment base of over 900 Bucyrus machines
worldwide, the Company also manufactures parts and provides services for other
manufacturers' installed equipment. The Company's aftermarket services include
maintenance and repair labor, technical advice, refurbishment, and relocation of
older, installed machines, particularly draglines. The Company also provides
engineering, manufacturing, and servicing for the consumable rigging products
that attach to dragline buckets (such as dragline teeth and adapters, shrouds,
dump blocks, and chains) and shovel dippers (such as dipper teeth, adapters, and
heel bands).

During 1996, the Company generated $156.4 million (59% of total net sales)
from its aftermarket business. In general, the Company realizes higher margins
on sales of parts and services than it does on sales of new machines. Moreover,
because the expected life of large, complex mining machines ranges from 15 to 30
years, the Company's aftermarket business is inherently more stable and
predictable than the fluctuating market for new products. Over the life of a
machine, net sales generated from aftermarket parts and services can exceed the
original purchase price.

Approximately 70% of the Company's aftermarket business relates to
providing parts and services to newer mining equipment operating in
international markets, while the remaining 30% of the aftermarket business
caters to equipment located in the United States, which is generally older. A
substantial portion of the Company's international repair and maintenance
services are provided through its global network of wholly-owned foreign
subsidiaries and overseas offices, operating in Australia, Brazil, Canada,
Chile, China, England, India, Mauritius, and South Africa. The Company's two
domestic subsidiaries, Minserco and BMSI, provide repair and maintenance
services

throughout North America. Minserco, which maintains offices in Florida, Texas,
West Virginia, and Wyoming, provides comprehensive structural and mechanical
engineering, non-destructive testing, repairs and rebuilds of machine
components, product and component upgrades, contract maintenance, turnkey
erections, and machine moves. Minserco's services are provided almost
exclusively to maintenance and repair of Bucyrus machines operating in North
America. BMSI, located in Boonville, Indiana, builds replacement parts and
provides repair and rebuild services both for Bucyrus machines and other
manufacturers' equipment. The majority of BMSI's business is located in North
America.

To comply with the increasing aftermarket demands of larger mining
customers, the Company offers comprehensive maintenance and repair contracts.
Under these contracts, the Company provides all replacement parts, regular
maintenance services, and necessary repairs for the excavation equipment at a
particular mine with an on-site support team. In addition, two of these
contracts call for Company personnel to operate the equipment serviced. MARCs
are highly beneficial to the Company's mining customers because they promote
high levels of equipment reliability and performance, allowing the customer to
concentrate on mining production. MARCs typically have terms of three to five
years with standard termination and renewal provisions, although some contracts
allow termination by the customer for any cause. In recent years, the Company
has aggressively promoted its MARC program because it provides the Company with
a predictable, high margin form of business. New mines in areas such as Chile
and Argentina are the primary targets for MARCs because it is difficult and
expensive for mining companies to establish the necessary infrastructures for
ongoing maintenance and repair in underdeveloped or remote locations. The
Company currently operates eight MARCs and has plans to expand this program.

CUSTOMERS

The Company does not consider itself dependent upon any single customer or
group of customers; however, on an annual basis a single customer may account
for a large percentage of sales, particularly new machine sales. For example,
during fiscal 1996, sales to Compania Minera Dona Ines de Collahuasi, S.A., a
Chilean copper mining company, accounted for approximately 14% of the Company's
net sales. In fiscal 1994 and 1995, BHP Coal Pty. Ltd., an Australian mining
company, accounted for approximately 20% and 22%, respectively, of the Company's
net sales, and approximately 26% and 17%, respectively, of Marion's net sales.
See "Risk Factors -- Cyclical Nature of Industry; Potential Fluctuations in
Operating Results."

MARKETING, DISTRIBUTION AND SALES

In the United States, new mining machinery is primarily sold directly by
Company personnel, and to a lesser extent, through a northern Minnesota
distributor who supplies customers in the iron ore mining regions of the Upper
Midwest. Outside of the United States, new equipment is sold by Company
personnel, through independent distributors and through the Company's
subsidiaries and offices located in Australia, Brazil, Canada, Chile, China,
England, India, Mauritius, and South Africa. Aftermarket parts and services are
primarily sold directly through the Company's foreign subsidiaries and offices
and through the Company's domestic subsidiaries, Minserco and BMSI. The Company
believes that marketing through its own global network of subsidiaries and
offices offers better customer service and support by providing customers with
direct access to the Company's technological and engineering expertise.

With the exception of the MARC business, all the Company's sales are on a
project-by-project basis. Typical payment terms for new equipment require a down
payment, and invoicing is done on a percent of completion basis, such that a
substantial portion of the purchase price is received by the time shipment is
made to the customer. Sales contracts for machines are predominantly at fixed
prices, with escalation clauses in certain cases. Most sales of replacement
parts call for prices in effect at the time of order. During 1996, price
increases from inflation had a relatively minor impact on the Company's reported
net sales.

FOREIGN OPERATIONS

A substantial portion of the Company's net sales and operating earnings is
attributable to operations located abroad. Over the past five years, 76% of the
Company's new machine sales have been in international markets. The Company's
foreign sales, consisting of exports from the United States and sales by
consolidated foreign subsidiaries, totaled $191.9 million in 1996, $169.1
million in 1995, and $131.8 million in 1994.

The Company's largest foreign markets are in Australia, Chile, China, and
South Africa. The Company also employs direct marketing strategies in developing
markets, such as Brazil, India, Indonesia, Jordan, Morocco, and Russia. In
recent years, Australia and South Africa have emerged as strong producers of
metallurgical coal, while Chile and South Africa have continued to be leading
producers of other minerals, primarily copper and gold, respectively. The
Company expects that India and Russia will become major coal producing regions
in the future. In India, the world's second most populous country, the demand
for coal as a major source of energy is expected to increase over the next
several decades.

New machine sales in foreign markets are supported by the Company's
established network of foreign subsidiaries and overseas offices that directly
market the Company's products and provide ongoing services and replacement parts
for equipment installed abroad. The availability and convenience of the services
provided through this worldwide network not only promotes high margin
aftermarket sales of parts and services, but also gives the Company an advantage
in securing new machine orders.

Bucyrus and its U.S. subsidiaries normally price their products, including
direct sales of new equipment to foreign customers, in U.S. dollars. Foreign
subsidiaries normally procure and price aftermarket replacement parts and repair
services in the local currency. Approximately 70% of the Company's net sales are
priced in U.S. dollars. 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. The Company does not
normally enter into currency hedges, although it may do so with regard to
certain individual contracts. See "Risk Factors -- Foreign Operations."

COMPETITION

There are a limited number of manufacturers of new surface mining
equipment. The Company is one of two manufacturers of electric mining shovels
and draglines. The Company's only competitor in electric mining shovels and
draglines is Harnischfeger Corporation, although electric mining shovels also
compete against hydraulic shovels of which there are at least six other
manufacturers. In rotary blast hole drills, the Company competes with at least
three other manufacturers, including Harnischfeger Corporation. Methods of
competition are diverse and include product design and performance, service,
delivery, application engineering, pricing, financing terms, and other
commercial factors. See "Risk Factors -- Competition."

For most owners of the Company's machines, the Company is the primary
replacement source for large, heavily engineered, integral components; however,
the Company encounters intense competition for sales of smaller, less
sophisticated, consumable replacement parts and repair services in certain
markets. The Company's competition in parts sales consists primarily of smaller,
independent firms called "will-fitters," that produce copies of the parts
manufactured by the Company and other original equipment manufacturers. These
copies are generally sold at lower prices than genuine parts produced by the
manufacturer. Management estimates that there are over 90 will-fitters competing
with the Company in the aftermarket business, almost exclusively in North
America, and that they accounted for an estimated 75% of North American sales in
the aftermarket parts and service business in 1996. Outside North America,
customers mainly rely upon the Company's subsidiaries to provide aftermarket
parts and services.

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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 possesses clear non-price advantages
over will-fitters. The Company's engineering and manufacturing technology and
marketing expertise exceed that of its will-fit competitors, who are in many
cases unable to duplicate the exact specifications of genuine Bucyrus parts.
Moreover, use of parts not manufactured by the Company can void the warranty on
a new Bucyrus machine, which generally runs for one year on new equipment, with
certain components being warranted for longer periods.

RAW MATERIALS AND SUPPLIES

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,
that are incorporated directly into the end product. The Company's foreign
subsidiaries purchase components and manufacturing services both from local
subcontractors and from Bucyrus. Certain additional components are sometimes
purchased from subcontractors, either to expedite delivery schedules in times of
high demand or to reduce costs. Moreover, in countries where local content
preferences or requirements exist, local subcontractors are used to manufacture
a substantial portion of the components required in the Company's foreign
manufacturing operations. Although the Company is not dependent upon any single
supplier, there can be no assurance that the Company will continue to have an
adequate supply of raw materials or components necessary to enable it to meet
the demand for its products. Competitors are believed to be subject to similar
conditions.

MANUFACTURING

A substantial portion of the design, engineering, and manufacturing of
Bucyrus machines is done at the Company's South Milwaukee plant. The size and
weight of these mining machines dictates that the machines be shipped to the job
site in sub-assembled units where they are assembled for operation with the
assistance of Company technicians. Planning and on-site coordination of machine
assembly is a critical component of the Company's service to its customers.
Moreover, to reduce lead time and assure that customer delivery requirements are
met, the Company maintains an inventory of sub-assembled units for frequently
utilized components of various types of equipment.

The Company manufactures and sells replacement parts and components and
provides comprehensive aftermarket service for its entire line of mining
machinery. The Company's large installed base of surface mining machinery
provides a steady stream of parts sales due to the long useful life of the
Company's machines, averaging 20 to 30 years for draglines and 15 to 20 years
for electric mining shovels and blast hole drills. Parts sales and aftermarket
services comprise a substantial portion of the Company's net sales. The Company
also provides aftermarket service for certain equipment of other original
equipment manufacturers through BMSI.

Although a majority of the Company's operating profits are derived from
sales of parts and services, the long-term prospects of the Company depend upon
maintaining a large installed equipment base worldwide. Therefore, the Company
remains committed to improving the design and engineering of its existing line
of machines, as well as developing new products. In 1996, a three year machine
shop modernization program began in the Company's South Milwaukee manufacturing
facility that involves a $20 million investment in the latest technology in the
machine tool industry. The program is aimed at reduced lead times, quicker
turnaround, reduced in-process inventory, and overall cost reduction. See "--
Business Strategy -- Plant and Equipment Modernization."

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PROPERTIES

The Company's principal manufacturing plant in the United States is located
in South Milwaukee, Wisconsin, and is owned by the Company. This plant comprises
approximately 1,038,000 square feet of floor space. A portion of this facility
houses the Company's corporate offices. 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, which has
approximately 110,000 square feet of floor space and is used as a central parts
warehouse. The current lease is for five years commencing in July 1996 and
contains an option to renew for an additional five 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.

The Company also has administrative and sales offices and, in some
instances, repair facilities and parts warehouses, at certain of its foreign
locations, including Australia, Brazil, Canada, Chile, China, India, and South
Africa. The Company plans to do business out of Marion's offices in Australia,
and close down the Company's existing leased offices there.

EMPLOYEES

As of July 31, 1997, the Company had approximately 1,413 full-time
employees, approximately 892 of whom were working primarily in the United
States. In addition, from time to time the Company employs part-time employees
to handle peak loads. Of the 797 employees at the Company's South Milwaukee
facility, 418 are represented by the United Steelworkers of America. In May
1997, the union ratified a new four year agreement with the Company that expires
on April 30, 2001. See "Risk Factors -- Labor Relations."

LEGAL PROCEEDINGS

JOINT PROSECUTION. Contemporaneously with the execution of the Stockholder
Agreement (see "Certain Relationships and Related Transactions -- Stockholder
Agreement"), the Company and JNL entered into a joint prosecution agreement (the
"Joint Prosecution Agreement") relating to various claims the Company and JNL
have or may have resulting from the Company's reorganization in 1994 under
Chapter 11 of the United States Bankruptcy Code (the "Chapter 11
Reorganization") against the law firm of Milbank, Tweed, Hadley & McCloy
("Milbank") for disgorgement of fees (the "Disgorgement Claim") and other claims
(collectively, the "Milbank Claims"). All proceeds of the Milbank Claims will be
allocated as follows: (i) first, to pay, or to reimburse the prior payment of,
all bona fide third-party costs, expenses and liabilities incurred on or after
September 1, 1997 in connection with prosecuting the Milbank Claims (the "Joint
Prosecution") including, without limitation, the reasonable fees and
disbursements of counsel and other professional advisors, which are to be
advanced by JNL; (ii) the next $8.675 million of proceeds from the Milbank
Claims, if any, will be paid to JNL, provided that the Company will retain 10%
of the proceeds of the Disgorgement Claim, if any, and will direct payment to
JNL of the balance of such proceeds; and (iii) all additional proceeds of the
Milbank Claims will be divided equally between JNL and the Company.
Notwithstanding the foregoing, the Company shall also receive the benefit of any
reduction of any obligation it may have to pay Milbank's outstanding fees if
any. JNL will indemnify the Company in respect of any liability resulting from
the Joint Prosecution other than in respect of legal fees and expenses incurred
prior to September 1, 1997. The Joint Prosecution Agreement will continue in
force irrespective of whether the AIP Merger is consummated. The Joint
Prosecution

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may involve lengthy and complex litigation and there can be no assurance whether
or when any recovery may be obtained or, if obtained, whether it will be in an
amount sufficient to result in the Company receiving any portion thereof under
the formula described above.

SETTLEMENT. During the pendency of the Chapter 11 Reorganization, JNL filed
a claim (the "503(b) Claim") against the Company with the United States
Bankruptcy Court, Eastern District of Wisconsin ("Bankruptcy Court") for
reimbursement of approximately $3.3 million of professional fees and
disbursements incurred in connection with the Chapter 11 Reorganization pursuant
to Section 503(b) of the Bankruptcy Code. By order dated June 3, 1996, the
Bankruptcy Court awarded JNL the sum of $500. JNL appealed the decision to the
United States District Court for the Eastern District of Wisconsin. On June 26,
1997, the District Court denied the appeal as moot but returned the matter to
the Bankruptcy Court for further proceedings with leave to appeal again after
further determination of the Bankruptcy Court. On July 11, 1997, JNL moved the
Bankruptcy Court for relief from the final judgment entered on the 503(b) Claim.
Pursuant to a Settlement Agreement between the Company and JNL dated as of
August 21, 1997, attached to this Schedule 14D-9 as Exhibit 10 and incorporated
herein by reference, subject to Bankruptcy Court approval, JNL will settle and
release the Company from the 503(b) Claim in consideration of a payment to JNL
by the Company of $200,000.

The Company is normally subject to numerous product liability claims, many
of which relate to products no longer manufactured by Bucyrus or its
subsidiaries, and other claims arising in the ordinary course of business. The
Company has insurance covering most of said claims, subject to varying
deductibles ranging from $0.3 million to $3.0 million, and has various limits of
liability depending on the insurance policy year in question. It is the view of
management that the final resolution of said claims and other similar claims
which are likely to arise in the future will not individually or in the
aggregate have a material effect on the Company's financial position or results
of operations, although no assurance to that effect can be given.

The Company is involved in various other litigation arising in the normal
course of business. It is the view of management that the Company's recovery or
liability, if any, under pending litigation is not expected to have a material
effect on the Company's financial position or results of operations, although no
assurance to that effect can be given.

ENVIRONMENTAL AND RELATED MATTERS

The Company's operations and properties are subject to a broad range of
federal, state, local and foreign laws and regulations relating to environmental
matters, including laws and regulations governing discharges into the air and
water, the handling and disposal of solid and hazardous substances and wastes,
and the remediation of contamination associated with releases of hazardous
substances at Company facilities and at off-site disposal locations. These laws
are complex, change frequently and have tended to become more stringent over
time. Future events, such as compliance with more stringent laws or regulations,
or more vigorous enforcement policies of regulatory agencies or stricter or
different interpretations of existing laws, could require additional
expenditures by the Company, which may be material. See "Risk Factors --
Environmental and Related Matters."

Certain environmental laws, such as CERCLA, provide for strict, joint and
several liability for investigation and remediation of spills and other releases
of hazardous substances. Such laws may apply to conditions at properties
presently or formerly owned or operated by an entity or its predecessors, as
well as to conditions at properties at which wastes or other contamination
attributable to an entity or its predecessors come to be located.

The Company was one of 53 entities named by the U.S. Environmental
Protection Agency ("EPA") as PRPs with regard to the Millcreek dumpsite, located
in Erie County, Pennsylvania, which is on the National Priorities List of sites
for cleanup under CERCLA. The Company was named as a result of allegations that
it disposed of foundry sand at the site in the 1970's. Both the

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United States government and the Commonwealth of Pennsylvania initiated actions
to recover cleanup costs; the Company has settled with both with respect to its
liability for past costs. In addition 37 potentially responsible parties
("PRPs"), including the Company, have received Administrative Orders issued by
the EPA pursuant to Section 106(a) of CERCLA to perform site capping and flood
control remediation at the Millcreek site. The Company is one of 18 parties
responsible for a share of the estimated $7.0 million in costs, which share is
presently proposed as per capita but may be subject to reallocation before the
conclusion of the case.

In December 1990, the Wisconsin Department of Natural Resources ("DNR")
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, primarily foundry sand. DNR's Final Site Screening Report,
dated April 16, 1993, summarized the results of additional investigation. A DNR
Decision Memo, dated July 21, 1991, which was based upon the testing results
contained in the Final Site Screening Report, recommended additional
groundwater, surface water, sediment and soil sampling. To date, the Company is
not aware of any initiative by the DNR 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 DNR 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 material.

Prior to 1985, a wholly owned indirect subsidiary of Bucyrus provided
comprehensive general liability insurance coverage for affiliate corporations.
The subsidiary issued such policies for occurrences during the years 1974 to
1984, which policies could involve material liability. Claims have been made
under certain of these policies for certain potential CERCLA liabilities of
former Bucyrus subsidiaries. It is possible that other claims could be asserted
in the future with respect to such policies. While the Company does not believe
that liability under such policies will result in material costs, this cannot be
guaranteed.

Along with multiple other parties, the Company or its subsidiaries are
currently PRPs under CERCLA and analogous state laws at three additional sites
at which Bucyrus and/or its subsidiaries (including the above referenced
insurance subsidiary by insurance claim) may incur future costs. While CERCLA
imposes joint and several liability on responsible parties, liability for each
site is likely to be apportioned among the parties. The Company does not believe
that its potential liability in connection with these sites or any other
discussed above, either individually or in the aggregate, will have a material
adverse effect on the Company's business, financial condition or results of
operations. However, the Company cannot guarantee that it will not incur cleanup
liability in the future with respect to sites formerly or presently owned or
operated by the Company, or with respect to off-site locations, the costs of
which could be material.

The Company has also been named as a defendant in seven pending premises
liability asbestos cases, which are proceeding both in the state courts of
Indiana and federal court. In all these cases, insurance carriers have accepted
the defense of such cases. These cases are in preliminary stages and while the
Company does not believe that costs associated with these matters will be
material, it cannot guarantee that this will be the case.

While no assurance can be given, the Company believes that expenditures for
compliance and remediation will not have a material effect on its capital
expenditures, earnings or competitive position.

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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, or patent
license agreement.

CHAPTER 11 REORGANIZATION

On February 4, 1988, the Company was acquired in a leveraged buyout by
former members of management and a group of investors led by Goldman, Sachs &
Co. and Broad Street Investment Fund (the "LBO"). The Company was acquired for
approximately $300 million of which only $2.0 million was equity.

Although the Company's strong aftermarket parts business covered most of
its cash flow requirements, it was insufficient to service the LBO debt and
simultaneously provide the working capital necessary to build new machines.
Moreover, the Company's former management employed a strategy of selling new
machines below cost in order to maintain market share and to compensate its
customers for the long lead times that resulted from the lack of sufficient
working capital to stock the components required to match the lead times of its
competitors.

While the Company experienced increasing net sales from 1988 to 1991, the
Company continued to increase its use of leverage. Additionally, in 1990 the
Company settled tax disputes for the years 1977 to 1982 that required an
additional $22 million of borrowings. Subsequently, in January 1993, in the
midst of a cyclical downturn in the mining industry, the Company's interest
expense obligations increased dramatically as the interest rates on several
issues of the Company's debt obligations reset resulting in the majority of the
Company's debt obligations accruing interest at effective rates ranging from 15%
to in excess of 20%. The Company subsequently announced its intention not to pay
interest on a large majority of its debt obligations, and in February 1994, the
Company filed a prepackaged plan of reorganization under Chapter 11 of the U.S.
Bankruptcy Code. In December 1994, the Company's plan of reorganization was
confirmed.