UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-50858
BUCYRUS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of
Incorporation or Organization)
P. O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WISCONSIN
(Address of Principal Executive Offices)
(Registrants Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 per share
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes x No ¨
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act. Yes ¨ No x
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No o
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrants knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act. (check one): Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o No x
aggregate market value of the registrants common stock held by non-affiliates was $737.4 million
as of June 30, 2005, which was the last business day of the registrants most recently completed
second fiscal quarter.
of March 9, 2006, 21,033,884 shares of Class A common stock of the Registrant were outstanding.
Incorporated by Reference:
Portions of the Companys 2005 Annual Report to Shareholders are incorporated by reference
in Part II.
Portions of the Companys Proxy Statement for the Annual Meeting of Shareholders to be held
on May 3, 2006 are incorporated by reference in Part III.
report includes market share and industry data and forecasts that Bucyrus International, Inc. (the
Company) has obtained from internal company surveys, market research, consultant surveys,
publicly available information and industry publications and surveys. Information regarding historical
equipment sales, industry surveys of equipment installation and industry aftermarket purchasing and
sales information are derived primarily from databases maintained by the Parker Bay Company, which
specializes in providing market research for the mining and earthmoving equipment industries. Third
party surveys, publications, consultant surveys and forecasts generally state that the information
contained therein has been obtained from sources believed to be reliable, but there can be no assurance
as to the accuracy and completeness of such information. The Company has not independently verified
any of the data from third party sources nor has it ascertained the underlying economic assumptions
relied upon therein. Similarly, internal company surveys and reports, industry forecasts and market
research, which the Company believes to be reliable based upon managements knowledge of the
industry, have not been verified by any independent sources. In addition, the Company does not know
what assumptions regarding general worldwide or country specific economic growth were used in preparing
the forecasts cited in this report. Except where otherwise noted, statements as to its position relative
to the Companys competitors or as to market share refer to the most recent available data.
report contains statements that constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be
identified by the use of predictive, future tense or forward-looking terminology, such as believes,
anticipates, expects, estimates, intends, may,
will or similar terms. You are cautioned that any such forward-looking statements are
not guarantees of future performance and involve significant risks and uncertainties, and that actual
results may differ materially from those contained in the forward-looking statements as a result
of various factors, some of which are unknown. The factors that could adversely affect the Companys
actual results and performance include, without limitation:
customers stockpiles and production capacity, including customers ability to procure tires
for loading trucks, as well as production and consumption rates of copper, coal, iron, oil and other
ores and minerals;
the Companys plant capacity;
raw material supply and subcontractor capacity;
the cash flows of customers;
consolidation among customers and suppliers;
work stoppages at customers, suppliers or providers of transportation;
the timing, severity and duration of customer and industry buying cycles;
unforeseen patent, tax, product, environmental, employee health or benefit, or
contractual liabilities that affect the Company;
nonrecurring restructuring and other special charges incurred by the Company;
changes in accounting or tax rules or regulations that affect the Company;
changes in the relative values of currencies;
the Companys leverage and debt service obligations;
the Companys success in recruiting and retaining key managers and employees;
labor costs and labor relations; and
review of important factors above is not exhaustive, and should be read in conjunction with the Risk
Factors described in Item 1A below and the other cautionary statements included in this report.
All forward-looking statements attributable to the Company are expressly qualified in their entirety
by the foregoing cautionary statements. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Company was incorporated in Delaware in 1927 as the successor to a business which began producing
excavation machines in 1880. After 1987, the Company began exclusively producing surface mining equipment.
On August 21, 1997, the Company entered into a merger agreement with Bucyrus Holdings LLC (Holdings)
(formerly known as American Industrial Partners Acquisition Company) and a wholly owned subsidiary
of Holdings. Pursuant to the merger agreement, Holdings subsidiary purchased the Companys
common stock. The subsidiary was merged with and into the Company, as the surviving entity on September 26,
1997, at which time the Company became a wholly owned subsidiary of Holdings. The Company concurrently
entered into a management services agreement with American Industrial Partners (AIP).
In 2000, AIP and its affiliates made a further investment in the Company through its purchase from
third party investors of approximately $75.6 million of the Companys Senior Notes due
2007. The Senior Notes were redeemed, and the management services agreement was terminated, in connection
with the Companys initial public offering in July 2004 (see Liquidity and Capital Resources
section of ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS for further discussion on the Companys initial public offering). Upon the completion
of this initial public offering and a secondary public offering of additional Company shares held
by AIP in November 2004, the Company was no longer controlled by AIP.
Company designs, manufactures and markets draglines, electric mining shovels and rotary blasthole
drills used for surface mining and provides the aftermarket replacement parts and service for these
machines. There are only two global manufacturers of a full line of this large excavation machinery
and the Company believes it has the largest installed base of this equipment in the world and the
leading market share in draglines and large rotary blasthole drills. The Companys products
are sold to customers throughout the world in every market where surface mining is conducted with
mining is safer, has lower extraction costs and is growing faster than underground mining. Growth
is driven by increased demand for surface mined commodities such as copper (South America), oil sands
(Canada) and coal (Australia, South Africa, Canada, the Western United States, and increasingly,
China and India). The Company has established a leading position in these important surface mining
regions. The Company believes that coal surface mining in China and India holds significant potential
for long-term growth. The Company sold a large dragline to a Chinese mining company in 2004 and completed
shipping the major components for this machine in late 2005. The erection of the dragline is in process
and will be completed in 2006.
Company sells both original equipment manufactured (OEM) and aftermarket parts and service.
OEM machine sales are closely correlated with the strength of commodity markets and maintain and
augment the Companys almost $12.5 billion (calculated by estimated replacement value)
installed base, which provides the foundation for aftermarket activities. The Companys aftermarket
parts and service operations, which are more stable and more profitable than its OEM sales, accounted
for approximately 70% of sales over the last ten years. Over that period and throughout commodities
cycles, the Companys aftermarket sales have sustained a compound annual growth rate of 11%,
increasing every year except for one year (1999) in which sales declined 2%. The Company has a broad
and established global presence with a network of
26 sales and service offices located in all countries with major surface mining operations. The Company
manufactures its OEM machines and the majority of aftermarket parts at its facilities in South Milwaukee,
Wisconsin and Milwaukee, Wisconsin. The Company has announced a multi-phase expansion of its manufacturing
facilities in South Milwaukee, Wisconsin; see ITEM 2 - PROPERTIES for further discussion
of this expansion program.
Company concentrates on producing technologically advanced and productive machines that allow the
Companys customers to conduct cost-efficient operations. The Company is the only surface mining
manufacturer of alternating current (AC) drive draglines and electric mining shovels
and offers advanced computer control systems which allow technicians at its headquarters to remotely
monitor and adjust its machines all around the world via the Internet.
equipment the Company manufactures and services is primarily used to mine copper, coal, oil sands
and iron ore. Growth in demand for these commodities is a function of, among other things, economic
activity, population increases and continuing improvements in standards of living in many areas of
the world. While the Companys aftermarket parts and service sales have grown consistently,
mine operators tend to purchase OEM equipment when they anticipate sustained strength in the commodities
markets. Prices for copper, coal, oil and iron ore have increased significantly as compared to prior
years. Factors that could support sustained demand for these key commodities include continued economic
growth in China, India and the developing world and renewed economic strength in industrialized countries.
Companys equipment is primarily used by large multinational companies engaged in surface mining
for a variety of commodities. Surface mining equipment for copper, coal, oil sands and iron ore operations
have accounted for the largest percentage of industry demand. In recent years, copper and oil sands
mining operations have accounted for an increasing share of the Companys sales of OEM machines
and aftermarket parts and services, although recently activity relating to coal has been increasing.
Copper. Copper is a basic material used in residential and commercial construction, electrical equipment,
transportation, industrial machinery and durable consumer goods. According to the Copper Development
Association, on average each Western single family home contains approximately 440 pounds of copper
and each automobile contains approximately 50 pounds of copper. Copper is predominantly surface mined.
Demand for copper is being driven by accelerating economic growth in the developing world and continued
consumption in the developed world. Developing world demand is compounded because developing markets
do not have the advantage of large pools of recycled copper scrap, which historically has accounted
for approximately half of United States copper consumption. Chinas copper consumption continues
to grow, rising by 10.5% from January 2005 through October 2005 when compared to 2004, with projections
that usage will continue to rise by 10% per year for the rest of this decade. According to the International
Copper Study Group (ICSG), in 2004, worldwide mine production of copper was 32 billion
pounds and is projected to increase to 33 billion pounds in 2005 and 34.7 billion pounds in
2006. In addition, total expansion of annual mine capacity from 2004 to 2008 is expected to be approximately
6.4 billion pounds. The projected expansions exclude additional
production that could come from existing capacity at mines that are currently on care and maintenance
or temporary cutback.
Coal. Coal is the worlds most abundant low-cost energy source and is a critical element of energy
policy. There are two types of coal: steam coal used to generate electricity and coking coal required
to produce steel. Demand for coking coal has recently risen in tandem with the increased demand for
steel. The largest coal producers are China, the United States, India, Australia, Russia and South
Africa. Within the United States, environmental legislation and increases in the prices for natural
gas have caused demand for low sulfur surface mined coal to increase. There has been a shift in coal
mining activity from high sulfur coal reserves in the Midwestern states to low sulfur coal, which
is primarily surface mined, in the Powder River Basin area in Wyoming and in Montana. According to
the Energy Information Administration (EIA), a statistical agency of the United States
Department of Energy, in every year since 1974, levels of surface mining in the United States have
exceeded levels of underground mining. In 2004 (the most recent year for which data is available),
the EIA has estimated that approximately two-thirds of all coal was surface mined.
and India, which together account for 37% of the worlds population, have fast-growing economies
and limited domestic energy sources other than coal. In China, coal is primarily mined underground,
but surface mining is growing and in an attempt to support Chinas growing economy, China is
increasingly adopting modern surface mining methods and using western equipment to access its coal
reserves. According to the Chinese government, China produced approximately 1.96 billion short
tons of coal in 2004, a 15% increase over 2003. China is expected to produce 2.05 billion tons of
coal in 2005. Coal is predominately surface mined in India. According to Indias Ministry of
Coal, India produced 422 million short tons of coal in 2005 and, according to Coal India Limited,
demand is expected to be 578 million tons by 2011.
Oil Sands. A geological formation of oil sands exists in the Athabasca region of northern Alberta, Canada.
Oil sands are a viscous mixture of sand, bitumen, clay and water with the consistency of cold molasses.
The oil sands are believed to contain the equivalent of over 300 billion barrels of oil, of
which 175 billion has already been established as commercially viable. For reference, according
to 2005 EIA data, the oil reserves of Saudi Arabia contain approximately 260 billion barrels.
According to Canadian government sources, Albertas oil sands currently account for about one-third
of Canadas petroleum production, and in 2005, the Alberta Ministry of Energy anticipates that
about one-half of Canadian crude oil production and 10% of North American production will come from
the oil sands. Surface mining methods account for approximately 65% of current production in the
oil sands region. In 1999, the Company acquired certain assets of an Alberta-based Canadian company
with extensive experience in the field repair and service of heavy machinery for the surface mining
industry. This acquisition enabled the Company to establish a sales and service infrastructure and
further strengthen its position in the oil sands area of Western Canada.
Iron Ore. Iron ore is the only source of primary iron used to make steel and is mined in more than 50
countries. Substantially all iron ore is surface mined. In recent years, the five largest producers,
accounting for approximately 75% of world production, have been China, Brazil, Australia, Russia
and India. The market for iron ore is largely a function of the demand for steel. Steel is used to
produce, among other things, automobiles and other motor vehicles, mass transit and rail transport
equipment, structural components for building and infrastructure, including bridges, railroads and
factories, and industrial parts. According to the U.S. Geological Survey,
worldwide production of iron ore in 2004 was 1.34 billion tons and is estimated to be 1.52 billion
tons in 2005. Growth is driven by Chinese industrialization as well as additional requirements for
steel in the developed and developing world.
Other Minerals. Surface mining machines are also used to mine molybdenum, phosphate, bauxite, gold and diamonds.
Companys line of OEM machines includes draglines, electric mining shovels and rotary blasthole
Draglines. Draglines are primarily used in coal mining applications to remove overburden by dragging a
large bucket through the overburden and carrying it away. The Companys 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 $20 million to over $80 million per dragline. Draglines are the largest and
most expensive type of surface mining equipment, but offer customers the lowest cost per ton of material
moved. The average life of a dragline is approximately 40 years.
Mining Shovels. Mining shovels are primarily used to load copper, coal, oil sands, 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 a larger load, allowing them to move greater
volumes of rock and minerals, while hydraulic shovels are diesel powered, smaller and more maneuverable.
An electric mining shovel offers significantly lower cost per ton of mineral mined as compared to
a hydraulic shovel. Electric mining shovels are characterized in terms of hoisting capability and
dipper capacity. The Company offers a full line of electric mining shovels, with available hoisting
capability of up to 120 tons. Dipper capacities range from 7 to 90 cubic yards. Prices range from
approximately $2 million to $20 million per shovel, with the selling price of the Companys
most popular shovels being in the upper part of this range. The Companys electric mining shovels
have an average life of approximately 15 years.
Blasthole Drills. Many 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 blasthole drills are used to drill these holes and are usually described in terms of the diameter
of the hole they bore. The Company offers a line of rotary blasthole drills ranging in hole diameter
size from 6.0 inches to 17.5 inches and ranging in price from approximately $0.6 million to
$4 million per drill, depending on machine size and other variable features. The selling price of
the Companys most popular drills is in the upper part of this range. The average life of a
rotary blasthole drill is approximately 15 years.
Company has a comprehensive aftermarket business that supplies replacement and upgrade parts and
services for the Companys installed base of operating equipment. Over the life of a machine,
customer purchases of aftermarket parts and services generally exceed the original purchase price
of the machine. The Companys aftermarket offerings include engineered replacement parts, maintenance
and repair labor, technical advice, refurbishment and relocation of machines, comprehensive structural
and mechanical engineering, non-destructive testing,
repairs and rebuilds of machine components, product and component upgrades, turnkey erections, equipment
operation and complete equipment management under comprehensive, long-term maintenance and repair
contracts. The Company also distributes less sophisticated components which are consumed in the normal
course of operating these machines. A substantial portion of the Companys 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, Peru and
South Africa. The Company also maintains a continuous physical presence at certain customers
domestic and overseas mine sites in some of these countries, as well as in Argentina, in connection
with its maintenance and repair contract operations.
Company realizes higher margins on sales of aftermarket parts and services than on sales of OEM machines.
Moreover, because these machines tend to operate continuously in all market conditions with expected
lives ranging from 15 to 40 years and have predictable parts and maintenance needs, the Companys
aftermarket business is inherently more stable and predictable than the market for OEM machines,
which is closely correlated with expectations of sustained strength in commodity markets.
mining customers are increasingly outsourcing the skills involved in maintaining large and complex
surface mining equipment. The Company offers comprehensive maintenance and repair contracts to address
this trend. 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, some of these contracts call for the Companys personnel to operate
the equipment being serviced. Maintenance and repair contracts are beneficial to the Companys
customers because they promote high levels of equipment reliability and performance, allowing the
customer to concentrate on mining production. Maintenance and repair contracts typically have terms
of three to five years with provisions for renewal and early termination. New mines in areas such
as Argentina, Australia, Canada, Chile and Peru are the Companys primary targets for maintenance
and repair contracts because it is difficult and expensive for mining companies to establish the
necessary infrastructure for ongoing maintenance and repair in remote regions of these countries.
Companys aftermarket parts and service sales have generally grown consistently over the past
ten years. For most of the Companys customers, production continues even during periods of
lower commodity prices, maintaining demand for aftermarket parts and services, although will-fitter
competition tends to intensify during periods of commodity price weakness. The Company has improved
performance in key areas that motivate customers to purchase its aftermarket parts and services by
reducing lead times, increasing on-time delivery and implementing an information technology infrastructure
to better serve and market to its customers. The Company believes its emphasis on quality and technology
has further increased customer motivation to use more of its aftermarket parts and services. The
Company believes that its continued focus on on-time delivery, competitive lead times and enhanced
information technology systems combined with its comprehensive offerings of quality aftermarket components
and installation services and its development of key supplier alliances position it to compete effectively
for most aftermarket opportunities.
July 2004, the Company completed the acquisition of Contel Plus Automation & Drive
Systems (Proprietary) Limited (Contel), a world-class provider of electrical and machine
upgrade systems with sales of approximately $1 million in 2003. This acquisition has allowed
the Company to combine Contels machine upgrade experience with its OEM machine knowledge to
full range of electrical upgrades and service for its OEM machines. The Company continues to look for
small acquisitions to help it enhance its aftermarket service business.
of the Companys customers are large multinational corporations with operations in each of the
major surface mining markets. In recent years, customers have reduced their operating costs by employing
larger, more efficient machines such as those produced by the Company and have become increasingly
sophisticated in their use and understanding of technology. The Companys focus on incorporating
advanced technology such as AC drives and advanced controls has increased customer adoption of the
Companys product offerings. Further, the Company believes these developments have contributed
to increased demand for its aftermarket parts and service since the Company is well equipped to provide
the more sophisticated parts, product technical knowledge and service required by customers who use
more complex and efficient machines.
the past five years, the Companys customers have conducted their most significant operations
in the United States, South America, South Africa, Australia, Canada, China and India. The Company
expects China and India to experience the most growth in surface mining in the future. In the aggregate,
customers spent $180.6 million, $132.8 million and $65.6 million on the Companys
OEM machines and $394.4 million, $321.4 million and $272.1 million on aftermarket
parts and services in 2005, 2004 and 2003, respectively. These amounts are projected to increase
in 2006 as OEM machine sales increases are driven by customer expectations of sustained strength
in the copper, coal, oil sands and iron ore markets, ongoing and rapid industrialization in China
and other parts of the developing world, demand for minerals in the developed world and the rising
cost of non-coal energy sources. Customers purchases of OEM products may lag behind such increases
in commodity prices because of the time needed to acquire the appropriate mining permits and establish
the relevant infrastructure. Aftermarket sales are expected to increase as customers continue the
trend of utilizing the Company parts and services in a broader range of applications on their installed
base of equipment. The Companys customers use the Companys aftermarket parts and services
because the Companys high quality, reliable and durable products and services are well suited
to the long productive lives of its OEM machines. However, some surface mine operators may find it
more economical to buy lower quality and less durable parts from will-fitters for equipment that
is near the end of its useful life.
Companys customers operate under a high fixed cost structure. Small savings on the initial
purchase of OEM machines are lost if they lead to less efficient machines and greater down time.
Furthermore, their operations are often conducted in remote areas and the large capital investment
and long lead time associated with the purchase and erection of a machine encourages customers to
select reliable and efficient machines and to keep these machines in continuous operation for as
long as possible. As a result, customers are focused on quality as well as price and expect the Company
to offer comprehensive aftermarket parts and services to increase efficiency and reduce down time.
Company does not consider itself to be dependent upon any single customer, although on an annual
basis a single customer may account for a meaningful percentage of sales, particularly new machine
sales. In 2005, 2004 and 2003, one customer, BHP Billiton, accounted for approximately 14%, 12%,
and 17%, respectively, of the Companys sales. The Companys top five customers in each
of 2005, 2004 and 2003 collectively accounted for approximately 38%,
36% and 43%, respectively, of the Companys sales. This trend reflects the consolidation of the
early 2004, the Company completed the worldwide installation of Baan, the enterprise resource planning
(ERP) system that was initially installed for its United States operations in August 1999.
The ERP system allows the Company to rapidly analyze information in real time on a regional, customer,
product line and commodity basis. Through the ERP system the Company can monitor numerous functions,
including engineering, distribution, inventory and finance. The Company can collect data regarding
its customers buying patterns and pricing history and deliver this information in real time
to its management to assist in their decision making. The Companys ERP system also allows it
to apply company wide performance metrics, which the Company uses to evaluate and improve its operations.
Company believes it can utilize its information technology infrastructure to generate new sales,
particularly aftermarket sales. The Companys system allows it to monitor its worldwide inventory,
determine when the Company or the Companys suppliers can deliver parts and track on time delivery
performance, which together enables the Company to improve the accuracy of its quoted lead times,
thereby increasing customer satisfaction and inventory turns. The Company is developing strategies
to increase sales and more effectively compete on price, delivery and available inventory because
it can identify success rates on quotations for specific parts and customers and can record and communicate
determinations as to the reasons for lost sales. The Company can ensure consistency and optimize
pricing by monitoring pricing trends of individual parts sold worldwide. The Company is able to use
its system to examine data related to its installed base, categorized by commodities, customers,
and specific machines, to discern trends and formulate strategies for adding incremental sales. Information
on global vendor sourcing and cost will enable the Company to identify and utilize lower cost sources of supply.
Company also offers advanced computer control systems to customers which monitor machine operating
data, allow for operational analyses and optimization and monitor material moved to help prevent
overloading. This system is available on all new machines and can be added to over 40% of the units
in the Companys installed base. The control systems on the machines transmit this information
to a remote base station located in a mine office. This allows for real time worldwide access by
the Companys employees and customers to machine information for machine status tracking and
fault resolution. This significantly reduces delay in machine repairs and provides important information
on the operation and performance of the machine, allowing technicians to upgrade software and troubleshoot
and adjust machines without visiting mine sites.
machines and aftermarket parts and services are primarily sold directly by Company personnel both
in the United States and in foreign markets. Sales outside the United States are made through Company
offices located in Australia, Brazil, Canada, Chile, China, England, India, Peru and South Africa
and, in some markets, by independent sales representatives.
payment terms for new equipment require a down payment, and require customers to make progress payments.
Lead times for large OEM machines generally vary from four to nine months, but can be two years or
more for a dragline. The Company generally
attempts to obtain committed raw materials pricing through arrangements with suppliers for periods
of up to a year. Recently, the Company has incurred raw materials surcharges, and has been able to
include terms providing for recovery of these cost increases in contracts. 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.
Companys largest foreign markets are Australia, Canada, Chile, South Africa, China, India and
Peru. The Company employs direct marketing strategies in these markets as well as developing markets
such as Indonesia, Jordan, Mauritania and Turkey. A substantial portion of the Companys sales
and operating earnings is attributable to operations located outside the United States. Over the
past five years, approximately 75% of the Companys OEM machine sales and aftermarket sales
have been in international markets. The Companys foreign sales, consisting of exports from
the United States and sales by consolidated foreign subsidiaries, totaled $428.8 million in
2005, $327.4 million in 2004 and $260.4 million in 2003. Approximately $552.2 million
or 84% of the Companys backlog of firm orders at December 31, 2005 represented orders
for export sales compared with $352.9 million or 81% at December 31, 2004 and $198.6 million
or 85% at December 31, 2003.
machine sales in foreign markets are supported by the Companys established network of foreign
subsidiaries and overseas offices that directly market its products and provide ongoing services
and replacement parts for equipment installed abroad. The availability and convenience of the services
provided through this worldwide network ensure the efficient operation of Company equipment by its
customers, promote high margin aftermarket sales of parts and services, and give the Company a sustained
local presence to promote new machine orders.
Company sells OEM machines, including those sold directly to foreign customers, and most of its aftermarket
parts in United States dollars, with limited aftermarket parts sales denominated in the local currencies
of Australia, Canada, South Africa, Brazil and the United Kingdom. Aftermarket services are paid
for primarily in local currency, with a natural partial currency hedge through payment for local
labor in local currency. In the aggregate, approximately 75% of the Companys 2005 sales were
priced in United States dollars. The value, in United States dollars, of the Companys 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 significant currency hedges,
although it may enter into arrangements to hedge specific non-United States dollar denominated contracts.
Companys only global competitor in electric mining shovels and draglines is the P&H division
of Joy Global Inc., although for certain applications the Companys electric mining shovels
may also compete against hydraulic shovels made by other manufacturers. In rotary blasthole drills,
the Companys primary competitors are the P&H division of Joy Global Inc. and Atlas
Copco AB, which recently acquired a drilling equipment business from Ingersoll-Rand Company Limited.
In China and Russia, the Company also faces limited competition from regional and domestic equipment
manufacturers; however, such competition is not material to the Companys core markets. Methods
of competition are diverse and include price, lead times, operating costs, machine productivity,
design and performance, reliability, service, delivery and other commercial
factors. Long-standing relationships the Company and its competitors have with customers and their
decision makers can provide a strong incumbency advantage in retaining business and securing new
most owners of the Companys machines, the Company is the primary replacement source for highly
engineered, integral components. Competition in replacement parts sales consists primarily of independent
firms called will-fitters that produce copies of the parts manufactured by the Company and other
original equipment manufacturers. The Companys principal OEM competitor also participates in
this business. These copies are generally sold at lower prices for use on older machines, and are
generally acknowledged to be of lower quality than parts produced by the manufacturer of the original
equipment. The Company also faces significant competition from manufacturers and distributors in
the sale of consumable replacement parts which the Company does not manufacture, including wire rope,
non-specialized parts and electrical parts, as well as aftermarket services competition from these
market participants and local machining and repair shops.
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 Companys engineering and manufacturing technology
and marketing expertise exceed that of its will-fit competitors, who in many cases are unable to
duplicate the exact specifications of the Companys parts. Moreover, the use of parts not manufactured
by the Company can void the warranty on a new Company machine, which generally runs for one year,
with certain components under warranty for longer periods.
Company purchases from outside suppliers raw 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 Companys foreign subsidiaries purchase
components and manufacturing services both from local suppliers and from the Company. Certain additional
components are sometimes purchased from suppliers, either to expedite delivery schedules in times
of high demand or to reduce costs. Moreover, in countries where local content requirements exist,
local subcontractors can occasionally be used to manufacture the required components.
Company obtains all of the AC electrical drive components for its products exclusively from Siemens
Energy & Automation, Inc. (Siemens), a United States subsidiary of Siemens
AG. The Companys products incorporate electrical equipment, including AC drive systems and
computer hardware and software, which the Company believes provides its products with an efficiency
advantage. The Company purchases these electrical systems, produced by Siemens, under a contract
that has been continuously renewed since 1976. In February 2006, the Company entered into a new ten-year
supply agreement with Siemens. The contract provides for Siemens to supply the Company with electrical
systems for the Companys manufactured machinery under specified pricing parameters with exclusivity
provisions applying to both parties. The contract also includes limited warranties on parts and services
supplied by Siemens. Additionally, the Company and Siemens have entered into particular contracts
or arrangements with respect to the development of joint technology for application to specific projects.
The Company is not dependent upon any other sole source supplier.
In recent years, demand for steel and consolidation in the steel industry have resulted in pronounced cost increases for steel. The Company generally attempts to obtain committed raw materials pricing,
through arrangements with its suppliers, for up to a year. Also, in recent years, the Company has
incurred raw materials surcharges and has been able to include terms providing for recovery of these
cost increases in contracts entered into since 2004. The Company has done business with a majority
of its principal vendors for more than two decades and believes that it benefits from good relations
with these vendors. Through commercial arrangements, forward pricing and contractual cost pass-throughs,
management believes it has minimized exposure to price increases and surcharges for raw materials.
design, engineering and manufacturing of most of the Companys machines and manufactured aftermarket
parts is done at its 1,048,000 square foot South Milwaukee, Wisconsin complex. The Company has announced
a multi-phase expansion of its manufacturing facilities in South Milwaukee, Wisconsin; see ITEM 2
PROPERTIES for further discussion of this expansion program. The Company uses large, heavy
manufacturing equipment in the machining, welding and assembly of OEM machines and manufactured aftermarket
parts. The Companys OEM machines typically consist of thousands of parts, many of which are
specialized. OEM machines and the majority of aftermarket parts are customized based on customer
requirements. The size and weight of these OEM machines dictate that the machines be shipped to the
job site in sub-assembled units where they are assembled for operation with the assistance of the
Companys technicians. Planning and on-site coordination of machine assembly is a critical component
of the Companys service to its customers. To reduce lead times and ensure that customer delivery
requirements are met, the Company maintains an inventory of sub-assembled units and parts to meet
forecasted customer demands. As of December 31, 2005, the Company had $133.5 million of inventory.
Company has numerous United States and foreign patents, patent applications and patent licensing
agreements. The Company does not consider its business to be materially dependent upon any patent,
patent application, patent license agreement or group thereof.
for design and development of new products and improvements of existing mining machinery products,
including overhead, aggregated $7.2 million in 2005, $5.6 million in 2004 and $4.6 million
in 2003. The increases in 2005 and 2004 were in part due to expenditures related to the continuing
development of electrical and machine upgrade systems.
December 31, 2005, the Company employed approximately 2,125 persons, approximately 860 of whom
are located outside the United States. Approximately 360 of the Companys United States employees
are unionized. The Companys non-United States workforce is not unionized, with the exception
of a portion of the staff of certain Chilean operations. The Company considers its relationship with
its unionized and non-unionized workers to be good. The five and one-half year contract with the
United Steel Workers of America representing hourly workers at the South Milwaukee, Wisconsin facility
and the three-year contract with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen
and Helpers of America representing hourly workers at the Memphis, Tennessee facility expire in April 2010
and September 2008, respectively.
Financial information about the Companys business segment and geographic areas of operation
is contained in ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA and ITEM 15 EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES.
of the Companys annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and any amendments to these reports filed with the Securities and Exchange Commission
(SEC) subsequent to the completion of the Companys initial public offering on July
28, 2004 are available free of charge through the Companys internet site (www.Bucyrus.com)
as soon as practicable after filing with the SEC.
of the Companys Code of Ethics for the Principal Executive Officer and Senior Financial Officers
are available free of charge by contacting the Company at 1100 Milwaukee Ave., South Milwaukee, Wisconsin
An investment in the Companys Class A common stock involves a number of risks and uncertainties.
The Companys business, prospects, financial condition, results of operations and cash flows
could be materially and adversely affected by the following risks, or other risks and uncertainties
that the Company has not yet identified or that it currently considers to be immaterial. In that
event, the trading price of the Companys Class A common stock could decline, and you could
lose part or all of your investment.
Company produces most of its equipment and aftermarket parts at its manufacturing plant in South
Milwaukee, Wisconsin. If operations at this facility were to be disrupted as a result of equipment
failures, natural disasters, work stoppages, power outages or other reasons, the Companys business
and results of operations could be adversely affected. Interruptions in production would increase
costs and reduce sales. The Companys facilities are
also subject to the risk of catastrophic loss due to fires, explosions or adverse weather conditions.
Any interruption in production capability could require the Company to make large capital expenditures
to remedy the situation, which could negatively affect its profitability and cash flows. The Company
maintains property damage insurance which it believes to be adequate to provide for reconstruction
of its facilities and equipment, as well as business interruption insurance to mitigate losses resulting
from any production interruption or shutdown caused by an insured loss. However, any recovery under
this insurance policy may not offset the lost sales or increased costs that may be experienced during
the disruption of operations. Lost sales may not be recoverable under the policy and longer-term
business disruptions could result in a loss of customers. If this were to occur, future sales levels,
and therefore profitability, could be adversely affected.
ongoing recovery of the world economy, as well as in the Companys sales, has extensively used
the Companys available production capacity as well as the production capacity in many industries
upon which it is dependent. The Companys backlog of firm orders was $658.6 million at December
31, 2005 compared to $436.3 million at December 31, 2004. The Companys forecast for 2006 assumes
continued good world economic growth, as well as continued growth of its sales. The Company has begun
a multi-phase expansion program at its South Milwaukee facility that will substantially increase
its production capacity. However, the Companys production capacity may not be expanded soon
enough, or to a sufficient extent, to satisfy customer demand for its products, which could adversely
affect future sales levels and Company profitability.
Company purchases all of its AC drives and certain other electrical parts from Siemens. The loss
of Siemens, the Companys only sole source supplier, could have a material adverse effect on
its business. The Company also purchases track links, castings and forgings from suppliers with whom
it has had long-standing relationships. Although these are not sole source suppliers, the loss of
these suppliers could affect the Companys ability to maintain or lower costs. If the Company
had to develop alternative sources of supply, the ability to supply parts to its customers when needed
could be impaired, business could be lost and margins could be reduced.
addition, the Company uses substantial quantities of wide-plate steel in its production processes.
There have been significant recent increases in steel prices. If the Company is unable to recover
price increases for raw materials it will experience reduced margins. Any significant future delays
in obtaining production inputs and other supplies could harm the Companys business and results
of operations. In addition, there recently has been consolidation within the steelmaking industry,
which could impede its ability to rely on competitive balance and long-standing business relationships
to procure steel on economical terms and in a timely manner.
Companys business is dependent on securing and maintaining customers by promptly delivering
reliable, high-performance products. The Company does not consider itself
to be dependent upon any single customer; however, on an annual basis a single customer may account
for a large percentage of sales, particularly OEM machine sales. In 2005, 2004 and 2003, BHP Billiton,
the Companys single largest customer, accounted for approximately 14%, 12% and 17%, respectively,
of its sales. The products that the Company may sell to any particular customer depend on the size
of that customers capital expenditure budget devoted to surface mining plans in a particular
year and on the results of competitive bids for major projects. Additionally, the Companys
top five customers in each of 2005, 2004 and 2003 collectively accounted for approximately 38%, 36%
and 43%, respectively, of its sales. The trend reflects the recent consolidation of the mining industry.
In addition, key sectors of the surface mining industry are dominated by a few enterprises, some
of whom are the Companys customers. While the Company is not dependent on any one customer,
the loss of one or more of its significant customers could, at least on a short-term basis, have
an adverse effect on results of operations.
of December 31, 2005, approximately 360 of the Companys employees at its South Milwaukee and
Memphis facilities were unionized. The five and one-half year contract with the United Steel Workers
of America representing hourly workers at its South Milwaukee facility and the three-year contract
with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America
representing workers at its Memphis, Tennessee warehouse facility expire in April 2010 and September
2008, respectively. Although the Company believes that its relations with employees are good, a dispute
between the Company and its employees could disrupt its operations. Certain of the Companys
mine site operations and production and other facilities are located in areas of high union concentration
or in nations with laws favorable to unionization, and, as a result, such operations and facilities
are susceptible to union organizing activity. In addition, the workforces of many of its suppliers
and its transportation providers are unionized. If they are disrupted by labor issues, delivery of
parts and materials to the Company could be reduced or delayed. Many of the Companys customers
have unionized work forces, and work stoppages experienced by its customers could cause the Company
to lose sales or incur increased costs.
Company is subject to environmental and occupational safety and health laws and regulations in the
United States and other countries. Environmental requirements are complex, change frequently and
have tended to become more stringent over time. The Company cannot assure its complete historical
or future compliance with all of these requirements. The Company may also incur material costs and
liabilities in connection with these requirements in excess of amounts reserved. In addition, increased
environmental regulation of the mining industry in North America and overseas could increase costs
to the Company or to its customers and adversely affect the sales of its products and future operating
earnings. These requirements may change in the future in a manner that could have a material adverse
effect on its business, results of operations and financial condition. The Company has made and will
continue to make capital and other expenditures to comply with environmental requirements.
Companys ability to operate profitably and expand its operations depends in part on its ability
to attract and retain skilled manufacturing workers, equipment operators, engineers and other technical
personnel. Demand for these workers is currently high and the supply is limited, particularly in
the case of skilled and experienced engineers and machinists. As a result, the Companys growth
may be limited by the scarcity of skilled labor. Even if the Company is able to attract and retain
employees, competition for them may increase total compensation costs. Additionally, a significant
increase in the wages paid by competing employers could result in a reduction in its skilled labor
force, increases in the rates of wages the Company must pay or both. If compensation costs increase
or the Company cannot attract and retain skilled labor, operating earnings would be reduced and production
capacity and growth potential would be impaired.
Company derives the majority of its sales from foreign markets where it has substantial operations.
During 2005, the Company generated $428.8 million, or approximately 75%, of its sales outside
the United States. A significant portion of this business is conducted in emerging markets located
in Asia, Africa and South America.
in political, regulatory or economic conditions have the potential to adversely affect the Companys
international operations and its financial results. These factors principally include:
trade protection measures and price controls;
trade sanctions and embargos;
import or export licensing requirements;
economic downturns, civil disturbances or political instability;
nationalization and expropriation; and
potentially burdensome taxation.
addition, many of the nations in which the Company operates have developing legal and economic systems,
adding a level of uncertainty to its operations in those countries relative to those that would be
above factors, and related unpredictability, could place the value of the Companys operations
and business relationships in overseas markets at risk.
Companys Australian, Canadian, South African, Brazilian, Chilean and British aftermarket parts
sales are denominated in the currencies of those nations, and the majority of its service sales are
denominated in these and other local currencies. Although a portion of the expenses of providing
overseas services are denominated in local currencies, the cost of goods associated with overseas
sales are generally incurred in United States dollars. As a result, an increase in the value of the
United States dollar relative to these nations currencies would decrease the United States
dollar equivalent of aftermarket sales earned abroad without decreasing the United States dollar
value of a portion of the expenses associated with overseas sales. The Company does not hedge currency
exposures related to its aftermarket business,
which is naturally hedged only in part through the incurrence of part of the associated labor, operating
expenses and ancillary costs in local currencies.
controls, devaluations, trade restrictions and other disruptions in currency convertibility and in
the market for currency exchange could limit the Companys ability to convert revenues earned
abroad into United States dollars in a timely way. This could adversely affect its ability to service
its United States dollar indebtedness, fund its United States dollar costs, finance capital expenditures
and pay dividends on its common stock.
Companys success substantially depends upon its ability to attract and retain qualified employees
and upon the ability of senior management and other key employees to implement its business strategy
and maintain and grow customer and supplier relationships. The Company believes there are only a
limited number of available qualified executives in its industry. Although the Company is not aware
of any planned departures, it relies substantially upon the services of Timothy W. Sullivan. The
loss of his services or the services of other members of the Companys management team or the
inability to attract and retain other talented personnel could impede the further implementation
of its business strategy, which could have a material adverse effect on its business. The Company
does not currently maintain key man life insurance policies for any of its employees. In addition,
competition for qualified employees among companies that rely heavily on engineering and technology
is intense, and the loss of qualified employees or an inability to attract, retain and motivate additional
highly skilled employees required for the operation and expansion of its business could have a materially
adverse affect on its business.
all of the Companys United States employees participate in its defined benefit pension plan.
At December 31, 2005, the Companys unfunded pension liability totaled approximately $40 million.
Declines in interest rates or the market values of the securities held by the plans, or other adverse
changes, could materially increase the under funded status of its plans and affect the level and
timing of required cash contributions in 2006 and after.
The Companys continued success depends in part on the ability to protect intellectual property
Companys future success depends in part upon the ability to protect intellectual property.
The Company relies principally on nondisclosure agreements and other contractual arrangements and
trade secret law and, to a lesser extent, trademark and patent law, to protect its intellectual property,
including jointly developed intellectual property. However, these measures could prove inadequate
to protect intellectual property from infringement by others or to prevent misappropriation of its
proprietary rights. In addition, the laws and enforcement mechanisms of some foreign countries do
not protect proprietary rights to the same extent as do United States laws. The Companys inability
to protect its proprietary information and enforce intellectual property rights through infringement
or other enforcement proceedings could have a material adverse effect on its business, financial
condition and results of operations.
sale and servicing of complex, large scale machinery used in a variety of locations and climates,
and integrating a variety of manufactured and purchased components entails an inherent risk of suit
and liability relating to the operation and performance of the machinery and the health and safety
of the workers who operate and come into contact with the machinery. The Company maintains product
liability and other insurance to cover claims of this nature. The Companys policies, however,
are subject to deductibles and recovery limitations as well as limitations on contingencies covered.
Suits against the Company could be resolved in a manner that materially and adversely affects its
financial condition, and the Company could be subject to future material product liability or other
tort or contractual suits.
Company has been named as a co-defendant as of December 31, 2005, in approximately 309 personal injury
liability cases alleging damages caused by exposure to asbestos and other substances. The Company
has secured the dismissal and resolution of a number of previous claims alleging similar fact patterns.
The particular circumstances of many of these cases are difficult to assess because the claims allege
exposure to a variety of substances from various sources over varying historical periods and assert
the culpability of multiple defendants. The Company has insurance coverage, subject to various deductible
and other coverage limitations, for the historical periods during which the pending claims of which
the Company is aware allege exposure. It is possible that claims could be brought with respect to
subsequent periods or that insurance coverage in respect of periods for which coverage was obtained
will not be adequate to satisfy adverse judgments and other claim resolutions. If these suits are
resolved in an adverse manner the Companys financial position could be adversely affected.
In addition, the Company could be named as a defendant in future suits alleging damages due to exposure
to asbestos and other substances.
Company operates in a highly competitive industry. In the aftermarket, the Company competes with
numerous will-fitters. The Companys only global competitor in electric mining shovels and draglines
is the P&H division of Joy Global Inc., although for certain applications its electric mining
shovels may also compete against hydraulic shovels made by other manufacturers. In the market for
rotary blasthole drills, the Companys primary competitors are the P&H division of Joy Global Inc.
and Atlas Copco AB, which recently acquired a drilling equipment business from Ingersoll-Rand Company
Limited. Certain of the Companys competitors may be larger or have greater financial resources.
In China and Russia, the Company also faces some limited competition from regional and domestic equipment
manufacturers. Methods of competition are diverse and include price, customer relationships, lead
times, operating costs, product productivity, design and performance, reliability, service, delivery
and other commercial factors. If the Company cannot compete effectively with existing or future competitors,
its operating results could be materially adversely affected.
the Companys customers purchasing patterns are affected by a variety of factors beyond
its control, its sales and operating results may fluctuate significantly from period to period. Given
the large sales price of the Companys machinery, one or a limited number of machines may account
for a substantial portion of sales in any particular period. Although the Company recognizes 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, sales and gross
profit may fluctuate depending upon the size and the requirements of the particular contracts entered
into in that period.
sale of new machines is cyclical in nature and sensitive to changes in general economic conditions,
including fluctuations in market prices for copper, coal, oil, iron ore and other minerals as well
as alternatives to these minerals. Many factors affect the supply and demand for minerals and oil
and thus may affect the Companys sale of products and services, including:
the level of production;
the levels of mineral inventories;
the expected cost of developing new reserves;
the cost of conducting surface mining operations;
the level of surface mining activity;
worldwide economic activity;
substitution of new or competing inputs and mining methods;
national government political requirements;
environmental regulation; and
demand for mining services or surface mining equipment utilization rates decrease significantly,
then demand for the Companys products and services will decrease. As a result of this cyclicality,
the Company has experienced, and in the future could experience, extended periods of reduced sales
Companys principal customers are surface mining companies. Many of these customers supply coal
as a power generating source for the production of electricity in the United States and other industrialized
regions. The operations of these mining companies are geographically diverse and are subject to or
affected by a wide array of regulations in the jurisdictions where they operate, including those
with a direct impact on mining activities and those indirectly affecting their businesses, such as
applicable environmental laws and an array of regulations governing the operation of electric utilities.
As a result of changes in regulations and laws relating to the operation of mines, the Companys
customers mining operations could be disrupted or curtailed by governmental authorities. The
high cost of compliance with mining and environmental regulations may also induce customers to discontinue
or limit their mining operations, and may discourage companies from developing new mines. Additionally,
government regulation of electric utilities may adversely impact the demand for coal to the extent
that such regulations cause electric utilities to select alternative energy sources and technologies
as a source of electric power. Initiatives to regulate mercury emissions, and initiatives targeting
acid rain or greenhouse gas emissions, could significantly depress coal consumption in Western economies.
Companys principal manufacturing plant in the United States is located in South Milwaukee,
Wisconsin. This plant comprises several buildings totaling approximately 1,048,000 square feet of
floor space, including approximately 798,000 square feet for manufacturing and manufacturing support.
A portion of this facility houses the Companys corporate headquarters and 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
and assembly of the Companys mining machinery, including draglines, electric mining shovels
and rotary blasthole drills, are well-maintained, in good condition and in regular use. On January 4,
2002, the Company completed a sale and leaseback transaction for a portion of the land and buildings
in the South Milwaukee complex including a 927,685 square foot manufacturing and office complex.
The term of the lease is twenty years with the option to renew the lease for up to five five-year
terms at the Companys option. Annual rent under the lease is $1.1 million in years 1 through
15, with rent in successive years subject to escalation as provided in the lease. The lease is a
net lease under which the Company is responsible for associated taxes, utilities and insurance. The
Company continues to own the remainder of the land and buildings in South Milwaukee.
August 24, 2005, the Company announced a multi-phase expansion program at its South Milwaukee facility.
The initial phase of building a new Rawson Avenue facility began in late 2005 and is expected to
be completed during the fourth quarter of 2006 at an approximate cost of $22 million. It will provide
110,000 square feet of new space for welding and machining of large electric shovel components. The
next phase, which has an approximate cost of $30 million, will expand the Rawson Avenue facility
to over 350,000 square feet of welding, machining and outdoor hard-goods storage space. The Company
has just started the next phase of expansion and expects to complete it in mid-2007.
February 1, 2005, the Company leases a facility in Milwaukee, Wisconsin, which has approximately
94,250 square feet of floor space and approximately 130,740 square feet of yard space, to be used
for expansion of its manufacturing operations. The lease expires in January 2010.
Company leases a facility in Memphis, Tennessee, which has approximately 90,000 square feet of floor
space and is used as a central parts warehouse. The lease expires in July 2007.
Canada Limited, a wholly owned subsidiary of the Company, owns a facility in Edmonton, Alberta, Canada.
An outstanding mortgage loan at Bucyrus Canada Limited is collateralized by this facility.
Company owns or leases administrative and sales offices in the United States, Australia, Brazil,
Canada, Chile, China, England, India, Peru and South Africa and has repair facilities in the United
States, Australia, Brazil, Canada, Chile and South Africa.
of the Companys domestic assets are pledged as collateral under its credit agreement. In addition,
the outstanding capital stock of the Companys domestic subsidiaries as well as the majority
of the capital stock of the Companys foreign subsidiaries are pledged as collateral.
Company believes that its domestic and foreign properties, taken together with the Companys
ability to purchase requirements from outside vendors and perform work at customer sites, appropriately
meet its needs.
Company is normally subject to numerous product liability claims, many of which relate to products
no longer manufactured by the Company or its subsidiaries, and other claims arising in the ordinary
course of business in federal and state courts. Such claims are generally related to property damage
and to personal injury. The Companys products are operated by the Company and the Companys
customers employees and independent contractors at various work sites in the United States
and abroad. In the United States, workers claims against employers related to workplace injuries
are generally limited by state workers compensation statutes, but such limitations do not apply
to equipment suppliers. In addition, independent contractors may not be subject to state workers
compensation regimes. The Company has insurance covering most of these claims, subject to varying
deductibles of up to $3 million, and various limits of liability depending on the insurance
policy year in question. It is the view of management that the final resolution of these 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 Companys financial position, results of operations or cash flows,
although no assurance to that effect can be given.
Company has been named as a co-defendant as of December 31, 2005 in approximately 309 personal
injury liability cases alleging damages due to exposure to asbestos and other substances, involving
approximately 902 plaintiffs. The cases are pending in courts in various states. In all of these
cases, insurance carriers have accepted or are expected to accept defense. These cases are in various
pre-trial stages. The Company does not believe that costs associated with these matters will have
a material effect on its financial position, results of operations or cash flows, although no assurance
to that effect can be given.
of the Companys wholly owned subsidiaries is a defendant in a suit pending in the United States
District Court for the Western District of Pennsylvania, brought on June 15, 2002, relating
to an incident in which a dragline operated by an employee of one of the Companys subsidiaries
tipped over. The owner of the dragline has sued an unaffiliated third-party on a negligence theory
for property damages and business interruption losses in a range of approximately $25 million
to $27 million. The unrelated third party has brought a third party action against the Companys
subsidiary. The Companys insurance carriers are defending the claim, but have not conceded
that the relevant policies cover the claim. At this time discovery is ongoing and it is not possible
to evaluate the outcome of the claim nor the range of potential loss, if any.
Company is also involved in various other litigation in the United States and abroad arising in the
normal course of business, including arbitration proceedings with unions representing the Companys
employees, as well as individual employees, and proceedings before and involving the National Labor
Relations Board. It is the view of management that the Companys recovery or liability, if any,
under pending litigation is not expected to have a material
effect on its financial position, results of operations, or cash flows, although no assurance to that
effect can be given.
to 1985, one of the Companys wholly owned, indirect subsidiaries, Equipment Assurance Limited
(EAL) provided comprehensive general liability insurance coverage for affiliated corporations,
including its operating company parent, and invested in risk pools as part of its reinsurance activities.
In 1987, the Company divested the operating company parent, but retained EAL. The subsidiary issued
policies for occurrences during the years 1974 to 1983. The successor in interest to the operating
parent of EAL has tendered to EAL for insurance coverage related to the defense and indemnity of
a civil action by the San Gabriel Valley Water Company of El Monte, California for costs to remediate
alleged water contamination and to buy replacement water. In December 2005, a preliminary settlement
agreement was reached which resulted in no cost to the Company or EAL.
is possible that other claims could be asserted in the future with respect to such policies or risk
pools. While the Company does not believe that liability under such policies or risk pools will result
in material costs, no assurance to this effect can be provided.
owned Australian subsidiary is a defendant in a suit pending in the Supreme Court of Queensland in
Australia, brought on May 5, 2002, relating to a contractual claim. The plaintiff, pursuant
to a contract with the Companys subsidiary, agreed to erect a dragline sold by the Company
to a customer for use at its mine site. The plaintiff asserts various contractual claims related
to breach of contract damages and other remedies for approximately Aus $2.4 million related
to its claim that it is owed amounts for services rendered under the contract. The Companys
subsidiary has asserted counterclaims against the plaintiff in connection with certain aspects of
the work performed. This matter is anticipated to go to trial in late 2006 or early 2007. The Company
has established a reserve for its estimate of the resolution of this matter.
Companys 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
the Companys 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 required compliance
with more stringent laws or regulations, 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.
problems have not interfered in any material respect with the Companys manufacturing operations
to date. The Company believes that its compliance with statutory requirements respecting environmental
quality will not materially affect its capital expenditures, earnings or competitive position. The
Company has an ongoing program to address any potential environmental problems.
environmental laws, such as the Federal Comprehensive Environmental Response, Compensation and Liability
Act (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
currently 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.
Company is one of 53 entities named by the United States Environmental Protection Agency (EPA)
as potentially responsible parties (PRP) 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 a PRP under an administrative order issued in March 1992 as a
result of allegations that it disposed of foundry sand at the site in the 1970s. Both the United
States government and the Commonwealth of Pennsylvania initiated actions to recover cleanup costs.
The Company has settled both actions with respect to its liability for past costs. In addition, 37
PRPs, including the Company, 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
was one of eighteen parties responsible for a share of the cost of such work, and has shared such
cost per capita to date; however, such cost may be subject to reallocation. In 2002, final remedial
work in the form of installation of a municipal golf course as cover was completed and the cost thereof
was paid. The EPA has certified completion and its approval thereof. The former remediation contractor,
IT Corporation, commenced suit against the Millcreek Dumpsite Group, an unincorporated association
including the Company and other cooperating Millcreek PRPs (the Group) for breach of
contract claims in an amount in excess of $1 million. The Group is defending and negotiating
settlement of the claim. At December 31, 2005, the Company does not believe that its remaining
potential liability in connection with this site will have a material effect on its financial position,
results of operations or cash flows, although no assurance can be given to that effect.
Company has also been named as a PRP in three additional CERCLA matters. The EPA named the Company
as a PRP with respect to the cleanup of the Chemical Recovery Systems, Inc. (CRS)
site in Elyria, Ohio. On December 20, 2003, the EPA offered the Company a de minimis settlement in the amount of $6,800 to resolve its liabilities under CERCLA Sections 106, 107
and 113. The Company accepted the EPAs settlement offer and is awaiting notification from the
EPA that the settlement is effective. As of December 31, 2005, the Company does not believe
that its remaining potential liability in connection with this site will have a material effect on
its financial position, results of operations or cash flows, although no assurance can be given to
EPA also named the Company as a PRP in the Tremont City, Clark County, Ohio, landfill matter pursuant
to an administrative order issued in July 2001. The EPA identified the Company as a PRP based
upon past operations of The Marion Power Shovel Company, the assets of which the Company acquired
in 1997 pursuant to an asset purchase and sale agreement. The Company responded that it has not operated
The Marion Power Shovel Company, that the periods of operation of the Tremont City landfill expired
many years prior to 1997 and that, accordingly, it has none of the information requested by the EPA.
The Company gave notice of this matter and potential claim to Global Industrial Technologies, Inc.
(Global) under indemnification provisions of the Asset Purchase and Sale Agreement. In
2002, the Company received notice that Global had filed for bankruptcy under Chapter 11 under federal
bankruptcy laws. The Company has filed timely claims in that proceeding. Attorneys for Global have
participated in a group of potential responsible parties in connection with the EPAs investigation
of the Tremont City landfill. The Company has not had further contact from the EPA concerning this
matter. Although the Company has not regarded, and does not regard, this site as presenting a material
contingent liability, there can be no assurances to that effect
because the EPA has not responded to the Company nor has the EPA withdrawn its identification of the
Company as a PRP.
January 2005, the Company received notice from the EPA that the EPA filed a Consent Decree on January
6, 2005 with the U.S. District Court for the Western District of Pennsylvania regarding final settlement
of the Companys (and other responsible parties) environmental liability for remediation costs
associated with the Breslube Penn Superfund site in Pennsylvania. Following a 30 day public comment
period, the EPA determined that a Consent Decree should be entered by the Court. As a result of the
Consent Decree, the Company was notified that a settlement payment of approximately $15,500 was due
and that the Company will have no further liability for remediation costs as it regards the Breslube
Penn site. On October 5, 2005, the Company tendered the De Minimis Settlement payment of approximately
$15,500 to EPA pursuant to the Consent Decree.
March 24, 2003, the EPA sent a Request for Information pursuant to CERCLA Section 104 and
the Resource Conservation and Recovery Act (RCRA) Section 3007 to Minserco, Inc.
(Minserco), a wholly owned subsidiary of the Company, seeking information concerning
Minsercos involvement with the Sadler Drum site in Mulberry, Polk County, Florida. Minserco
responded that it had purchased drums from Sadler Drum, but did not send any drums to the site or
return to Sadler Drum any drums it purchased. EPA has not responded to Minsercos information.
The Company is aware that the EPA has spent approximately $.6 million for environmental cleanup at
the Sadler Drum site, but has not received any indication whether PRPs will be asked to investigate
December 1990, the Wisconsin Department of Natural Resources (DNR) conducted a pre-remedial
screening site inspection on property owned by the Company located 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. The
DNRs 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 be material, depending on the circumstances.
Company has previously been named as a potentially responsible party under CERCLA and analogous state
laws at other sites throughout the United States. The Company believes it has determined its cleanup
liabilities with respect to these sites discussed above and does not believe that any such remaining
liabilities, if any, either individually or in the aggregate, will have a material adverse effect
on its business, financial condition, results of operations or cash flows. The Company cannot assure,
however, that it will not incur additional liabilities with respect to these sites in the future,
the costs of which could be material, nor can it assure that it will not incur remediation liability
in the future with respect to sites formerly or currently owned or operated by the Company, or with
respect to off-site disposal locations, the costs of which could be material.
the past three years, expenditures for ongoing compliance, remediation, monitoring and clean-up have
been immaterial. While no assurance can be given, the Company believes that expenditures for compliance
and remediation will not have a material effect on its future capital expenditures, results of operations
or competitive position.
Companys customers are engaged in long-term, capital intensive extractive operations subject
to and affected by a variety of environmental, safety, land-use and other regulations. In the United
States, federal, state and local authorities regulate mining activities with respect to aspects such
as permitting and licensing, air quality, employee safety and health, water pollution, protection
of plants and wildlife and land reclamation and restoration. Mining operations may not commence or
continue absent federal, state and local government approvals. Approvals may be contingent upon production
of costly and time-consuming environmental impact assessments and mitigation measures. The Surface
Mining Control and Reclamation Act of 1977 (the Act), which is administered by the Office
of Surface Mining Reclamation and Enforcement (OSM), requires mine operators to obtain
permits from the OSM. Certain key surface mining states have achieved primary control over mine operators
within their jurisdiction from the OSM in accordance with the Act. Permitting under the Act can take
from six months to two years or more, and is subject to public comment. Permits are contingent upon
the posting of a bond or other security to assure compliance with land reclamation obligations. The
U.S. Clean Water Act of 1972 also imposes costs on extractive operations by imposing permitting requirements
contingent upon monitoring, reporting and performance standards related to activities that result
in discharges into bodies of water.
enterprises in foreign jurisdictions are subject to extensive local regulation. Most key mining jurisdictions
subject extractive enterprises to permitting and permit renewal requirements and to royalty assessments.
Several key nations place restrictions or assessments on foreign investment. Foreign mining operations
may also be subject to safety and environmental regulations that can delay extractive projects or
increase associated costs.
Companys customers operations may also be adversely affected by regulatory regimes concerning
surface mined commodities. In particular, regulations affecting fossil fuel emissions, most notably
coal emissions, have had a significant impact on the output of the domestic coal industry. Laws and
regulations affecting U.S. coal consumption include the Clean Air Act and Clean Air Act Amendments
of 1990, and regulatory initiatives under the Act, including the EPAs new source review initiative,
1997 National Ambient Air Quality Standards, 2003 Interstate Air Quality Rule and the nitrogen oxides
State Implementation Plan (NOx SIP) Call rules. These initiatives and further pending
initiatives related to mercury emissions and acid rain have had and could in the future have the
effect of reducing the relative desirability of coal as a fuel source for electrical generation facilities.
Similar regulatory regimes have been imposed or proposed in foreign countries or may be instituted
in the future. Existing emissions and air quality regulations in the United States and elsewhere
have shifted coal production to low-sulfur coal, a portion of which, in the United States, is surface
mined in the Powder River Basin. Further regulatory initiatives not related to air quality but targeting
carbon dioxide emissions, a byproduct of coal consumption, could potentially depress Western coal
consumption. The United States and over 160 other nations are signatories to the 1992 Framework Convention
on Climate Change, which is intended to limit emissions of greenhouse gases, such as carbon dioxide.
In December 1997, in Kyoto, Japan, the signatories to the convention established a binding set
of emission targets for developed nations which require
reductions in greenhouse gas production. Although the United States has not ratified the emission targets
and no comprehensive regulations limiting United States greenhouse gas emissions are in place, these
restrictions, whether through ratification of the emission targets or other efforts to stabilize
or reduce greenhouse gas emissions, could adversely impact the price of and demand for coal. Further
developments in connection with regulations or other limits on carbon dioxide emissions could reduce
demand for the Companys customers output and thus their demand for its products, which
would have a material adverse effect on its business.
The following table sets forth the names and ages, as of March 14, 2006, of the Companys executive
officers, as well as the positions and offices held by those persons. Officers serve at the discretion
of, and for the term set by, the board of directors.
Timothy W. Sullivan
President, Chief Executive Officer and Director
John F. Bosbous
Frank P. Bruno
Vice PresidentHuman Resources
Kenneth W. Krueger
Executive Vice President
Craig R. Mackus
Chief Financial Officer, Controller and Secretary
Marc L. Staff
Senior Vice President, Marketing and Sales
Mr. Sullivan became the Companys President and Chief Executive Officer on March 19, 2004 and was
previously President and Chief Operating Officer from August 14, 2000 to March 19, 2004.
Mr. Sullivan rejoined the Company on January 17, 2000 as Executive Vice President. From January 1999
through December 1999, Mr. Sullivan served as President and Chief Executive Officer of United
Container Machinery, Inc. From June 1998 through December 1998, Mr. Sullivan was the Companys
Executive Vice PresidentMarketing and from April 1995 through May 1998 was the Companys
Vice President Marketing and Sales. Mr. Sullivan is also a director of Foundations Bank, Pewaukee,
Wisconsin. Mr. Sullivan has been a director of the Company since August 2000.
Mr. Bosbous has served as Treasurer since March 1998. Mr. Bosbous was Assistant Treasurer from 1988
to 1998, and Assistant to the Treasurer from August 1984 to February 1988.
Mr. Bruno has served as Vice PresidentHuman Resources since December 1, 1997. Mr. Bruno was
a consultant from 1996 to 1997. From 1984 to 1995, Mr. Bruno held senior positions in Human Resources
with Eagle Industries, Inc. and from 1990 to 1995 was Vice President Administration.
Mr. Krueger joined the Company as Executive Vice President on December 12, 2005. Mr. Krueger held the position
of Senior Vice President and Chief Financial Officer with A.O. Smith Corporation from August 2000
to June 2005. Mr. Krueger held various senior management positions at Eaton Corporation from July
1999 to July 2000 and Rockwell Automation from October 1983 to June 1999. He is also a director of
Manitowoc Company, Inc.
Mr. Mackus became the Companys Chief Financial Officer on June 9, 2004 after serving as Vice
PresidentFinance from October 2002 through June 9, 2004, and has served as Secretary
since May 1996 and as Controller since February 1988. Mr. Mackus was Division Controller
and Assistant Corporate Controller from 1985 to 1988, Manager of Corporate Accounting from 1981 to
1982 and 1984 to 1985, and Assistant Corporate Controller of Western Gear Corporation from 1982 to
Mr. Staff became the Companys Senior Vice President, Marketing and Sales on February 16, 2006. Mr. Staff
was Vice President, Marketing and Sales from October 1, 2005 to February 16, 2006 and Director Strategic
Planning from April 18, 2005 to October 1, 2005. From June 2004 to March 2005, Mr. Staff was acting
Vice President of Sales and Marketing with McCloskey International, Ltd. of Canada. Mr. Staff was
President of North and Central America with Metso Minerals from January 1995 to September 2003 and
Vice President and General Manager with Terexs earthmoving equipment division from January
1988 to December 1995.
ITEM 5. MARKET FOR THE COMPANYS COMMON
EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECUTITIES
Companys common stock is traded on the NASDAQ stock market under the symbol BUCY.
As of March 9, 2006, there were 161 shareholders of record. The following table sets forth the high
and low sales prices and dividend payments for the Companys stock for the periods indicated.
The Companys common stock began trading on July 23, 2004
Company made no purchases of its common stock in the fourth quarter of 2005.
information required by Item 5 regarding securities authorized for issuance under the Companys
equity compensation plans as of December 31, 2005 is incorporated herein by reference from the SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS section of the Companys Proxy Statement.
In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act),
the Companys management evaluated, with the participation of the Companys Chief Executive
Officer and Chief Financial Officer, Controller and Secretary, the effectiveness of the design and
operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e)
under the Exchange Act) as of December 31, 2005. Based upon their evaluation of these disclosure
controls and procedures, the Chief Executive Officer and Chief Financial Officer, Controller and
Secretary concluded that the disclosure controls and procedures were effective as of December 31,
2005 to ensure that information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time period
specified in the Securities and Exchange Commission rules and forms, and to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act
is accumulated and communicated to the Companys management, including its principal executive
and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
were no changes in the Companys internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter
ended December 31, 2005 that have materially affected, or are reasonably likely to materially affect,
the Companys internal control over financial reporting.
Report on Internal Control over Financial Reporting and the attestation report of Deloitte &
Touche LLP with respect thereto as required by Item 9A are incorporated herein by reference from
the Companys 2005 Annual Report to Shareholders.
The information required by Item 10 is incorporated herein by reference from the ELECTION OF DIRECTORS,
BOARD OF DIRECTORS, and SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE sections of the Companys
information regarding executive officers is included in Part I of this Form 10-K as permitted by
General Instruction G(3) and information regarding the Companys Code of Ethics for the Principal
Executive Officer and Senior Financial Officers is included in Part I of this Form 10-K.
information required by Item 11 is incorporated herein by reference from the BOARD OF DIRECTORS,
EXECUTIVE COMPENSATION, COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION, PERFORMANCE INFORMATION
and CERTAIN RELATIONSHIPS sections of the Companys Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 is incorporated herein by reference from the SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT section of the Companys Proxy Statement. The tabular
information regarding the Companys equity compensation plans is contained in Item 5 of this
Report and is incorporated herein by reference.
To the Board of Directors and Shareholders
of Bucyrus International, Inc.:
We have audited the consolidated financial statements of Bucyrus International, Inc. and subsidiaries
(the Company) as of December 31, 2005 and 2004, and for each of the three years in the
period ended December 31, 2005, managements assessment of the effectiveness of the Companys
internal control over financial reporting as of December 31, 2005, and the effectiveness of the Companys
internal control over financial reporting as of December 31, 2005, and have issued our reports thereon
dated March 10, 2006; such consolidated financial statements and reports are included in your 2005
Annual Report to Shareholders and are incorporated herein by reference. Our audits also included
the consolidated financial statement schedule of the Company listed in Item 15. This consolidated
financial statement schedule is the responsibility of the Companys management. Our responsibility
is to express an opinion based on our audits. In our opinion, such consolidated financial statement
schedule, when considered in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
/s/ Deloitte & Touche LLP
March 10, 2006
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
End of Period
(Dollars in Thousands)
Allowances for possible losses on notes and
Year ended December 31, 2005
Year ended December 31, 2004
Year ended December 31, 2003
Includes effect of changes in foreign currency exchange rates.
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
T. W. Sullivan and C. R. Mackus, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this report, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature and Title
/s/Ronald A. Crutcher
March 15, 2006
Ronald A. Crutcher, Director
/s/Gene E. Little
March 13, 2006
Gene E. Little, Director
/s/Robert W. Korthals
March 15, 2006
Robert W. Korthals, Director
/s/Edward G. Nelson
March 14, 2006
Edward G. Nelson, Director
/s/Robert L. Purdum
March 14, 2006
Robert L. Purdum, Director
/s/T. C. Rogers
March 14, 2006
Theodore C. Rogers, Director and Chairman
/s/Robert C. Scharp
March 15, 2006
Robert C. Scharp, Director
/s/T. W. Sullivan
March 14, 2006
Timothy W. Sullivan, Director and Chief Executive Officer
/s/C. R. Mackus
March 14, 2006
Craig R. Mackus, Chief Financial Officer, Controller and Secretary
(Principal Accounting and Financial Officer)
BUCYRUS INTERNATIONAL, INC. EXHIBIT INDEX TO 2005 ANNUAL REPORT ON FORM 10-K
Corrected Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit
4.2 to the Companys Registration Statement on Form S-8 (Commission File No. 333-119273), filed
September 24, 2004).
Amended and Restated Bylaws, Effective July 27, 2004 (incorporated herein by reference to Exhibit 3.1
to the Registrants Form 8-K filed February 17, 2006).
Employment Agreement between Registrant and Craig R. Mackus, dated as of May 21, 1997 (incorporated
by reference herein to Exhibit 10.17 to Registrants Form 10-Q, filed August 14, 1997).
Bucyrus International, Inc. 1998 Management Stock Option Plan (incorporated by reference herein to
Exhibit 10.17 to Registrants Form 10-K for year ended December 31, 1997).
Employment Agreement between Registrant and Frank P. Bruno, dated as of December 1, 1997 (incorporated
by reference herein to Exhibit 10.18 to Registrants Form 10-K for the year ended December 31,
Agreement to Purchase and Sell Industrial Property between Registrant and InSite Real Estate Development,
L.L.C., dated October 25, 2001 (incorporated by reference herein to Exhibit 10.18 to Registrants
Form 10-K for year ended December 31, 2001).
Industrial Lease Agreement between Registrant and InSite South Milwaukee, L.L.C., dated January 4,
2002 (incorporated by reference herein to Exhibit 10.19 to Registrants Form 10-K for year ended
December 31, 2001).
Termination Benefits Agreement between Registrant and John F. Bosbous dated March 5, 2002 (incorporated
by reference herein to Exhibit 10.20 to Registrants Form 10-K for year ended December 31, 2001).
Termination Benefits Agreement between Registrant and Thomas B. Phillips dated March 5, 2002 (incorporated
by reference herein to Exhibit 10.21 to Registrants Form 10-K for year ended December 31, 2001).
Board of Directors Resolution, dated December 16, 1998, amending the 1998 Management Stock Option Plan
(incorporated by reference herein to Exhibit 10.17 to Registrants Form 10-K for year ended
December 31, 2002).
Form of Registration Rights Agreement (incorporated by reference herein to Exhibit 10.20 to the
Companys Registration Statement on Form S-1A (Commission File No. 333-119273), filed July
Loan and Security Agreement by and among Registrant, Minserco, Inc., Boonville Mining Services, Inc.,
the guarantor named therein, the lenders party thereto, and GMAC Commercial Finance LLC and Goldman
Sachs Credit Partners L.P. as sole lead arranger, book runner and syndication agent with respect
to the revolving facility and the term loans, respectively, dated July 28, 2004 (incorporated by
reference herein to Exhibit 99.2 to the Registrants Form 8-K, filed July 29, 2004).
Bucyrus International, Inc. 2004 Equity Incentive Plan (incorporated herein by reference to Exhibit
10.22 to the Companys Registration Statement on Form S-1/A (Commission File No. 333-119273),
filed July 16, 2004).
Bucyrus International, Inc. 2004 Executive Officer Incentive Plan (incorporated herein by reference
to Exhibit 10.23 to the Companys Registration Statement on Form S-1/A (Commission File
No. 333-119273), filed July 16, 2004).
Amended and Restated Loan and Security Agreement by and among Registrant, Minserco, Inc., Boonville Mining Services, Inc., the guarantor named therein, the lenders party thereto, GMAC Commercial Finance
LLC as sole lead arranger, JP Morgan Chase Bank as documentation agent, and LaSalle Bank National
Association as syndication agent, dated May 27, 2005 (incorporated by reference herein to Exhibit
10.1 to the Registrants Form 8-K filed June 1, 2005).
Bucyrus International, Inc. Non-Employee Directors Deferred Compensation Plan (incorporated herein
by reference to Exhibit 10.24 to the Companys Registration Statement on Form S-1/A (Commission
File No. 333-119273), filed July 16, 2004).
Amended and Restated Letter Agreement between Registrant and Timothy W. Sullivan dated July 27, 2004
(incorporated herein by reference to Exhibit 10.21 to Registrants Form 10-Q filed August 16,
of the 2005 Annual Report to Shareholders.
Bucyrus International, Inc. Business Ethics and Conduct Policy (incorporated herein by reference to
Exhibit 14 to Registrants Form 10-K for year ended December 31, 2003).
Subsidiaries of Registrant
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.