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Bucyrus International, Inc. Announces Summary Financial Results For The Quarter And Year Ended December 31, 2010

SOUTH MILWAUKEE, Wis., Feb. 17, 2011 (GLOBE NEWSWIRE) -- Bucyrus International, Inc. (Nasdaq:BUCY), a leading designer, manufacturer and marketer of high productivity mining equipment for surface and underground mining, announced today its summary unaudited financial results for the quarter and year ended December 31, 2010. On January 20, 2011, the stockholders of Bucyrus approved the merger agreement providing for the acquisition of Bucyrus by Caterpillar Inc. Bucyrus anticipates that the merger will be completed in mid-2011.

Operating Results

On February 19, 2010, Bucyrus completed its previously announced acquisition of Terex Corporation's mining equipment business ("Terex Mining"). The financial results for the quarter and year ended December 31, 2010 include the net assets and results of operations of Terex Mining since the February 19, 2010 date of acquisition as well as the acquisition accounting adjustments and acquisition costs related to the Terex Mining acquisition. As a result, the financial results for the quarter and year ended December 31, 2010 are not necessarily comparative to the results for the quarter and year ended December 31, 2009 and may not be indicative of future results. Terex Mining has been integrated into the surface mining segment. For the fourth quarter and the year ended December 31, 2010, Bucyrus has disclosed certain financial information for Terex Mining. 

Consolidated Condensed Statements of Earnings (Unaudited)
     
   Quarter Ended December 31,   Year Ended December 31, 
   2010   2009   2010   2009 
  (Dollars in thousands, except per share amounts)
Sales $1,237,206 $645,822 $3,650,563 $2,651,769
Cost of products sold  868,276  439,513  2,601,209  1,846,170
Gross profit 368,930 206,309 1,049,354 805,599
Selling, general and administrative expenses   131,468   74,066   405,496   269,539
Research and development expenses   17,811   12,053   62,498   41,908
Amortization of intangible assets  11,896  4,701  46,596  18,899
Operating earnings 207,755 115,489 534,764 475,253
Interest income (1,416) (1,578) (5,110) (5,117)
Interest expense 20,639 6,689 71,620 27,017
Other expense  2,456  386  7,372  6,085
Earnings before income taxes 186,076 109,992 460,882 447,268
Income tax expense   56,123  28,537 145,132  134,565
Net earnings  $129,953   $81,455   $315,750  $312,703
         
Net earnings per share data        
 Basic:        
 Net earnings per share  $1.61  $1.09 $3.96 $4.20
 Weighted average shares 80,583,630 74,463,276 79,764,251 74,456,969
 Diluted:        
 Net earnings per share  $1.58  $1.07 $3.88 $4.12
 Weighted average shares 82,216,200 76,345,348 81,329,109 75,880,863
         
Other Financial Data        
EBITDA (1) $234,865 $132,697 $637,295 $532,995
Non-cash stock compensation expense (2) 2,336 4,291 8,756 11,889
(Gain) loss on disposal of fixed assets (3)   (148)    13    1,025   3,704
Terex Mining acquisition costs (4) 3,475 19,738
Costs associated with the pending merger with Caterpillar Inc. (5). 14,885 14,885
Inventory fair value adjustment charged to cost of products sold (6) 912 38,948
Adjusted EBITDA (7) $256,325 $137,001 $720,647 $548,588
         
(1) EBITDA is defined as net earnings before net interest expense, income tax expense (benefit), depreciation and amortization. EBITDA is presented because (i) management uses EBITDA to measure Bucyrus' liquidity and financial performance and (ii) management believes EBITDA is frequently used by securities analysts, investors and other interested parties in evaluating the performance and enterprise value of companies in general, and in evaluating the liquidity of companies with significant debt service obligations and their ability to service their indebtedness. The EBITDA calculation is not an alternative to net earnings under accounting principles generally accepted in the United States of America as an indicator of operating performance or of cash flows as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures of other companies. The following table reconciles net earnings to EBITDA and EBITDA to net cash provided by operating activities.
(2) Reflects non-cash stock compensation expense related to equity incentive plans.
(3) Reflects losses on the disposal of fixed assets in the ordinary course.
(4) Reflects costs related to the acquisition of Terex Mining.
(5) Reflects costs related to the pending merger with Caterpillar Inc.
(6) In connection with the acquisition of Terex Mining, inventories acquired were adjusted to estimated fair value. This adjustment is being charged to cost of products sold as the inventory is sold.
(7) Adjusted EBITDA is a material term in Bucyrus' credit agreement, which management believes is a material agreement, and is used in the calculation of the leverage ratio covenant thereunder.
 
EBITDA Reconciliation (Unaudited)
     
   Quarter Ended December 31,   Year Ended December 31, 
   2010    2009   2010   2009 
  (Dollars in thousands)
Net earnings $129,953 $81,455 $315,750 $312,703
Interest income (1,416) (1,578) (5,110) (5,117)
Interest expense 20,639 6,689 71,620 27,017
Income tax expense 56,123 28,537 145,132 134,565
Depreciation 15,213 12,110 54,051 41,544
Amortization  14,353  5,484  55,852  22,283
EBITDA 234,865 132,697 637,295 532,995
         
Changes in assets and liabilities (22,709) (98,747) 44,449 (253,574)
Non-cash stock compensation expense   2,336   4,291   8,756   11,889
(Gain) loss on disposal of fixed assets (148) 13 1,025 3,704
Interest income 1,416 1,578 5,110 5,117
Interest expense (20,639) (6,689) (71,620) (27,017)
Income tax expense   (56,123)   (28,537)  (145,132)  (134,565)
Net cash provided by operating activities   $138,998   $4,606   $479,883   $138,549
 
Consolidated Condensed Balance Sheets (Unaudited)
     
    December 31,  2010  December 31,  2009 
  (Dollars in thousands)
Assets    
Cash and cash equivalents  $473,741  $101,084
Receivables - net  918,828 741,815
Inventories  1,129,484 627,289
Deferred income taxes   80,358 45,024
Prepaid expenses and other    61,856  40,861
Total current assets  2,664,267  1,556,073
     
Goodwill 927,882 351,333
Intangible assets - net 679,131 220,780
Other assets  122,397  61,505
Total other assets  1,729,410  633,618
     
Property, plant and equipment - net  626,151  514,421
Total assets   $5,019,828 $2,704,112
     
Liabilities and Common Stockholders' Investment    
Accounts payable and accrued expenses $746,460 $328,722
Liabilities to customers on uncompleted contracts and warranties 322,051 183,097
Income taxes 46,386 45,811
Current maturities of long-term debt and short-term obligations  28,113    7,566
Total current liabilities 1,143,010    565,196
     
Deferred income taxes 92,350 82,260
Pension, postretirement benefits and other  258,010  198,000
Total long-term liabilities   350,360  280,260
     
Long-term debt, less current maturities  1,487,344  499,666
     
Common stockholders' investment   2,039,114   1,358,990
Total liabilities and common stockholders' investment   $5,019,828   $2,704,112
 
Segment Information (Unaudited)
   
  Quarter Ended December 31, 2010 
       Sales    Operating  Earnings  Depreciation and Amortization   Capital Expenditures   Total  Assets 
  (Dollars in thousands)
Surface mining (1) $831,095 $160,947 $19,357  $2,285 $3,408,266
Underground mining   406,111   80,296  7,753     9,163  1,596,125
 Total operations 1,237,206 241,243 27,110  11,448 5,004,391
Corporate (1)      —   (33,488)     —     15,473      15,437
 Consolidated total $1,237,206 207,755  27,110 $26,921 $5,019,828
Interest income   (1,416)  —    
Interest expense   20,639    
Other expense    2,456   2,456    
Earnings before income taxes   $186,076 $29,566    
           
(1) Certain capital expenditures previously reported as surface mining were reclassified to corporate in the fourth quarter.

Terex Mining results included in the table above were as follows: 

  Quarter Ended December 31, 2010
    Sales Operating Earnings Depreciation and Amortization Capital Expenditures Total Assets
  (Dollars in thousands)
           
Surface mining (1) $416,194 $69,392 $10,803 $1,070 $1,964,693
Interest income   (144)    
Interest expense    20   —    
Earnings before income taxes   $69,516 $10,803    
           
(1) Operating earnings include inventory fair value adjustments charged to cost of products sold of $0.9 million. This amount is not included in the depreciation and amortization column.
  Quarter Ended December 31, 2009
       Sales    Operating  Earnings  Depreciation and Amortization   Capital Expenditures   Total  Assets 
  (Dollars in thousands)
Surface mining $305,058 $68,337 $7,222 $11,955 $1,106,154
Underground mining  340,764    56,503    9,588    8,084  1,597,958
 Total operations 645,822 124,840 16,810 20,039 2,704,112
Corporate     —   (9,351)     —        —        — 
 Consolidated total $645,822 115,489  16,810 $20,039 $2,704,112
Interest income   (1,578)  —    
Interest expense   6,689    
Other expense     386  784    
Earnings before income taxes   $109,992 $17,594    
   
  Year Ended December 31, 2010
         Sales   Operating  Earnings Depreciation and Amortization Capital Expenditures   Total  Assets
  (Dollars in thousands)
Surface mining (1) $2,385,461 $403,465 $67,866 $28,668 $3,408,266
Underground mining   1,265,102  206,062 32,781    27,185  1,596,125
 Total operations 3,650,563  609,527 100,647 55,853 5,004,391
Corporate (1)       —  (74,763)     —   15,473     15,437
 Consolidated total $3,650,563  534,764  100,647 $71,326 $5,019,828
Interest income    (5,110)  —        
Interest expense       71,620        
Other expense       7,372  9,256        
Earnings before income taxes     $460,882 $109,903        
                     
(1) Certain capital expenditures previously reported as surface mining were reclassified to corporate in the fourth quarter.  

Terex Mining results included in the table above were as follows: 

  Year Ended December 31, 2010
      Sales Operating Earnings Depreciation and Amortization Capital Expenditures Total Assets
  (Dollars in thousands)  
Surface mining (1) $1,032,079 $98,147 $36,876 $3,878 $1,964,693
Interest income     (327)        
Interest expense      39      
Earnings before income taxes       $98,435 $36,876        
                       
(1) Operating earnings include inventory fair value adjustments charged to cost of products sold of $38.9 million. This amount is not included in the depreciation and amortization column.  
  Year Ended December 31, 2009
         Sales   Operating  Earnings Depreciation and Amortization   Capital Expenditures   Total  Assets
  (Dollars in thousands)
Surface mining $1,284,996 $292,754 $24,536 $37,581 $1,106,154
Underground mining   1,366,773  221,616  35,907   17,001  1,597,958
 Total operations 2,651,769  514,370 60,443 54,582 2,704,112
Corporate       —  (39,117)     —     —       —
 Consolidated total $2,651,769  475,253  60,443 $54,582 $2,704,112
Interest income      (5,117)  —        
Interest expense       27,017        
Other expense       6,085  3,384        
Earnings before income taxes     $447,268 $63,827        

Sales consisted of the following:

   Quarter Ended December 31,  Year Ended December 31,
     2010 2009 % Change  2010  2009 % Change
  (Dollars in thousands)
Surface mining:                  
Original equipment $486,126 $117,360 314.2% $1,202,566 $534,463 125.0%
Aftermarket parts and  service    344,968    187,698    83.8%   1,182,894      750,533  57.6%
    831,094  305,058 172.4% 2,385,460  1,284,996  85.6%
Underground mining:                        
Original equipment 220,451 207,671  6.2% 680,479 821,019 (17.1%)
Aftermarket parts and service    185,661    133,093  39.5%    584,624    545,754  7.1%
   406,112  340,764  19.2% 1,265,103  1,366,773  (7.4%)
Total:                      
Original equipment 706,577 325,031 117.4% 1,883,045 1,355,482  38.9%
Aftermarket parts and service    530,629    320,791    65.4%     1,767,518     1,296,287  36.4%
  $1,237,206 $645,822  91.6% $3,650,563 $2,651,769  37.7%

The increase in surface mining original equipment sales for the quarter and year ended December 31, 2010 compared to the same periods of 2009 was primarily due to the inclusion of $256.6 million and $540.6 million of Terex Mining sales in 2010, respectively. Excluding the impact of Terex Mining, surface mining original equipment sales increased by approximately 96% and 24% for the quarter and year ended December 31, 2010, respectively, compared to the same periods of 2009. The increases were primarily due to increased electric mining shovel sales.  

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