BUCY » Topics » We have entered a new line of business in which certain of our competitors have substantially more experience than we do.

This excerpt taken from the BUCY 10-K filed Feb 29, 2008.

We have entered a new line of business in which certain of our competitors have substantially more experience than we do.

Through the DBT acquisition, we have entered the market for the production, sale and service of original equipment and spare parts and service for the underground mining industry, including equipment used in longwall mining, room and pillar mining, mineral processing, automation and control, transportation and material handling applications. Prior to the DBT acquisition, we manufactured and serviced original equipment only for surface mining applications and not for the underground mining industry. We cannot assure you that the business strategies applicable to our operations with respect to surface mining, or the manner in which we have implemented those strategies, will be effective in the underground mining market, or that we will be able to develop and implement alternative successful strategies, including strategies used to increase aftermarket sales and services. If we are unable to effectively manage our underground mining equipment operations or compete against our competitors who are more established in the underground mining industry, our operating results could be materially adversely affected.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

 

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ITEM 2. PROPERTIES

Our principal surface mining manufacturing operations are located in South Milwaukee, Wisconsin on approximately 66 acres of land. Subsequent to the completion of the third phase of our multi-phase expansion discussed below, this facility will be comprised of several buildings totaling approximately 1,111,000 square feet of floor space, including approximately 984,000 square feet for manufacturing and manufacturing support. A portion of this facility houses our corporate headquarters and surface mining research and development facilities. 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 specialized machine tools and equipment for fabrication, welding and assembly of our surface mining machinery, including draglines, electric mining shovels and rotary blasthole drills, are well-maintained, in good condition and in regular use. We lease the majority of the land and buildings in the South Milwaukee complex which includes 855,000 square feet of manufacturing and office space. The term of the lease is 20 years through 2021 with the option to renew the lease for up to five five-year terms at our option. Annual rent under the lease is $1.1 million through 2016. The lease is a net lease under which we are responsible for associated taxes, utilities and insurance. We continue to own the remainder of the land and buildings in South Milwaukee.

In response to sustained order strength for surface mining equipment, we are in the process of completing the third phase of a multi-phase capacity expansion of our manufacturing facilities in South Milwaukee. The first phase of our expansion provided 110,000 square feet of new space for welding and machining of large electric mining shovel components north of Rawson Avenue and was substantially complete at the end of the third quarter of 2006. The second phase of our expansion program further expanded our new facility north of Rawson Avenue from 110,000 square feet to over 350,000 square feet of welding, machining and outdoor hard-goods storage space. Construction was completed in April 2007. The aggregate cost of phase one and two of our expansion program was $56.6 million. The third phase of our expansion program is intended to help us meet the continued growth of demand for our surface mining equipment and their components. The third phase includes the renovation and expansion of manufacturing buildings and offices at our existing facilities south of Rawson Avenue. Our focus is on modernizing our facilities and improving manufacturing and administrative efficiencies. The steps for accomplishing phase three are scheduled to maximize manufacturing throughput during both the renovation and construction processes. We expect that phase three construction will cost approximately $74 million and be completed by the end of the first quarter of 2008. When completed, we expect that the additional manufacturing capacity provided by our multi-phase expansion program will allow us to significantly increase the total number of electric mining shovels and draglines that we are able to produce in any given year.

We lease a facility in Milwaukee, Wisconsin, which has approximately 94,250 square feet of floor space and approximately 130,740 square feet of yard space for welding operations in our surface mining business. The lease expires in January 2015.

Our principal underground mining manufacturing operations are located in Houston, Pennsylvania, Pulaski, Virginia, Daphne, Alabama and Lünen, Germany.

Houston, Pennsylvania. This facility is located on approximately 35 acres of land and is comprised of a manufacturing plant and a three story office building. The manufacturing plant is one building totaling approximately 174,000 square feet of floor space, including approximately

 

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143,000 square feet for manufacturing and 31,000 square feet for manufacturing support and office space. The office building totals approximately 40,000 square feet. The manufacturing building at this facility is constructed principally of structural steel with outer walls of concrete block and sheet metal cladding. The office building is mainly constructed of concrete and exterior glass. The manufacturing building and equipment therein, which include specialized machine tools, racking, forklifts, lift trucks, various sized cranes, and equipment for fabrication, welding and assembly of our underground mining machinery, including longwall mining, room and pillar mining, and belt systems equipment are well-maintained, in good condition and in regular use. Both our manufacturing building and office building are owned.

Pulaski, Virginia. This facility is located on approximately 17 acres of land and is comprised of 14 acres for a manufacturing building and three acres for a warehouse. The building totals approximately 145,000 square feet of floor space, including approximately 126,000 square feet for manufacturing and 19,000 square feet for manufacturing support and office space. The warehouse totals approximately 38,000 square feet for manufacturing support. Both buildings are constructed principally of structural steel framing with outer walls of concrete block and sheet metal cladding. The buildings and equipment therein, which include specialized machine tools, racking, forklifts, lift trucks, various sized cranes, and equipment for fabrication, welding and assembly of our underground mining machinery, including longwall mining, room and pillar mining, and belt systems equipment are well-maintained, in good condition and in regular use. Our principal manufacturing location is owned. The warehouse location is leased through April 30, 2009, with an annual lease value of $76,194. This is a net lease in which we are responsible for utilities, taxes, and insurance on personal property and the landlord is responsible for taxes and insurance for any real property. The lease provides the option to renew requiring 45 days notice in writing.

Daphne, Alabama. This facility is located on approximately seven acres of land which comprises a manufacturing plant and an office building. The facility totals 68,000 square feet of floor space including 62,000 square feet for manufacturing and 6,000 square feet for offices. The manufacturing building at this facility is constructed principally of structural steel. The manufacturing building and equipment therein, which includes machines, machine tools, and equipment for fabrication, extrusion, assembly, welding, drilling, testing and transportation of our belt systems, including Exalon conveyor rollers and conveyor pulleys, are well-maintained, in good condition and in regular use. This facility is owned.

Lünen, Germany. This facility is located on approximately 53 acres of land which comprises a manufacturing plant and an office building. The manufacturing plant totals approximately 958,000 square feet, including approximately 546,000 square feet for manufacturing, approximately 412,000 square feet for manufacturing support, and approximately 17,000 square feet for research and development. The manufacturing building at this facility is constructed principally of structural steel, concrete and brick. The manufacturing building and equipment therein, which includes machines, machine tools, and equipment for fabrication, assembly, welding, drilling, blasting, testing and transportation of our underground mining machinery; including longwalls, shearers and AFC plows are well-maintained, in good condition and in regular use. Both our manufacturing building and office building are owned.

Bucyrus Canada Limited, a wholly owned surface mining subsidiary, owns a facility in Edmonton, Alberta, Canada. An outstanding mortgage loan at Bucyrus Canada Limited is collateralized by this facility.

 

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We own or lease administrative and sales offices in Australia, Brazil, Canada, Chile, China, England, India, Mexico, Peru, Russia, South Africa and the United States and have repair facilities in the United States, Australia, Brazil, Canada, Chile and South Africa.

All of our domestic assets, as defined, are pledged as collateral under our credit agreement.

We believe that our domestic and foreign properties, including the ongoing expansion, taken together with our ability to purchase goods and services from outside vendors and perform work at customer sites, are sufficient to meet our production needs.

 

ITEM 3. LEGAL PROCEEDINGS
This excerpt taken from the BUCY 10-Q filed May 10, 2007.

We have entered a new line of business in which certain of our competitors have substantially more experience than we do.

Through the DBT acquisition, we have entered the market for the production, sale and service of original equipment and spare parts and service for the underground mining industry, including equipment used in longwall mining, room and pillar mining, mineral processing, automation and control, transportation and material handling applications. Prior to the DBT acquisition, we manufactured and serviced original equipment only for surface mining applications and not for the underground mining industry. We cannot assure you that the business strategies applicable to our operations with respect to surface mining, or the manner in which we have implemented those strategies, will be effective in the underground mining market, or that we will be able to develop and implement alternative successful strategies, including strategies used to increase aftermarket sales and services. If we are unable to effectively manage our underground mining equipment operations or compete against our competitors who are more established in the underground mining industry, our operating results could be materially adversely affected.

 

Item 2.

   Unregistered Sales of Equity Securities and Use of Proceeds.
   Not applicable.

Item 3.

   Defaults Upon Senior Securities.
   Not applicable.

Item 4.

   Submission of Matters to a Vote of Security Holders.
   Not applicable.

Item 5.

   Other Information.
   Not applicable.

Item 6.

   Exhibits.
   See Exhibit Index on last page of this report.

 

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EXCERPTS ON THIS PAGE:

10-K
Feb 29, 2008
10-Q
May 10, 2007
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