UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

¨	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 001-00871

BUCYRUS INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE

39-0188050

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

P. O. BOX 500

1100 MILWAUKEE AVENUE

SOUTH MILWAUKEE, WISCONSIN

(Address of Principal Executive Offices)

53172

(Zip Code)

(414) 768-4000

(Registrant’s Telephone Number, Including Area Code)

Indicate 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding May 3, 2011
Common Stock, $.01 par value		81,454,916

Bucyrus International, Inc.

INDEX


			Page No.

PART I.	FINANCIAL INFORMATION:

	Item 1 -	Financial Statements (Unaudited)

		Consolidated Condensed Statements of Earnings – Quarters ended March 31, 2011 and 2010		3

		Consolidated Condensed Statements of Comprehensive Income – Quarters ended March 31, 2011 and 2010		4

		Consolidated Condensed Balance Sheets – March 31, 2011 and December 31, 2010		5

		Consolidated Condensed Statements of Cash Flows – Quarters ended March 31, 2011 and 2010		7

		Notes to Consolidated Condensed Financial Statements		9

	Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25

	Item 3 -	Quantitative and Qualitative Disclosures About Market Risk		40

	Item 4 -	Controls and Procedures		41

PART II.	OTHER INFORMATION:

	Item 1 -	Legal Proceedings		42

	Item 1A -	Risk Factors		42

	Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds		42

	Item 3 -	Defaults Upon Senior Securities		42

	Item 4 -	(Removed and Reserved)		42

	Item 5 -	Other Information		42

	Item 6 -	Exhibits		42

	Signature Page			43

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Bucyrus International, Inc.

Consolidated Condensed Statements of Earnings (Unaudited)


	Quarter Ended March 31,
	2011			2010
	(Dollars in thousands, except per share amounts)

Sales	$	909,671		$	607,525
Costs of products sold		650,018			432,243


Gross profit		259,653			175,282

Selling, general and administrative expenses		115,131			87,134
Research and development expenses		23,814			13,243
Amortization of intangible assets		11,550			8,990


Operating earnings		109,158			65,915
Interest income		(2,062	)		(1,349	)
Interest expense		19,743			11,059
Other expense		2,453			1,835


Earnings before income taxes		89,024			54,370
Income tax expense		32,690			19,356


Net earnings	$	56,334		$	35,014


Net earnings per share data
Basic:
Net earnings per share	$	0.70		$	0.45
Weighted average shares		80,923,776			77,299,009

Diluted:
Net earnings per share	$	0.69		$	0.45
Weighted average shares		82,125,915			78,661,173

See notes to consolidated condensed financial statements.

Bucyrus International, Inc.

Consolidated Condensed Statements of

Comprehensive Income (Unaudited)


	Quarter Ended March 31,
	2011		2010
	(Dollars in thousands)

Net earnings	$	56,334	$	35,014

Other comprehensive income (loss):
Currency translation adjustments		51,081		(21,706	)
Change in pension and postretirement benefit unrecognized costs, net of income tax expense (benefit) of $598 and ($221), respectively		1,271		(2,356	)
Derivative fair value changes, net of income tax expense (benefit) of $2,721 and ($3,828), respectively		5,301		(3,341	)

Other comprehensive income (loss)		57,653		(27,403	)

Comprehensive income	$	113,987	$	7,611

See notes to consolidated condensed financial statements.

Bucyrus International, Inc.

Consolidated Condensed Balance Sheets (Unaudited)


	March 31, 2011			December 31, 2010
	(Dollars in thousands, except per share amounts)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	484,371		$	473,741
Receivables – net		880,066			918,828
Inventories		1,334,235			1,129,484
Deferred income taxes		75,940			80,358
Prepaid expenses and other		78,000			61,856


Total Current Assets		2,852,612			2,664,267


OTHER ASSETS:
Goodwill		949,007			927,882
Intangible assets – net		666,419			679,131
Other assets		133,169			122,397


Total Other Assets		1,748,595			1,729,410


PROPERTY, PLANT AND EQUIPMENT:
Cost		852,867			818,139
Less accumulated depreciation		(207,533	)		(191,988	)


Total Property, Plant and Equipment		645,334			626,151


TOTAL ASSETS	$	5,246,541		$	5,019,828

Bucyrus International, Inc.

Consolidated Condensed Balance Sheets (Unaudited) (Continued)


	March 31, 2011			December 31, 2010
	(Dollars in thousands, except per share amounts)
LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT

CURRENT LIABILITIES:
Accounts payable	$	382,144		$	417,505
Accrued expenses		260,149			328,955
Liabilities to customers on uncompleted contracts and warranties		467,183			322,051
Income taxes		89,969			46,386
Current maturities of long-term debt and short-term obligations		37,553			28,113


Total Current Liabilities		1,236,998			1,143,010


LONG-TERM LIABILITIES:
Deferred income taxes		95,126			92,350
Pension and other		271,350			258,010


Total Long-Term Liabilities		366,476			350,360


LONG-TERM DEBT, less current maturities		1,490,038			1,487,344


COMMON STOCKHOLDERS’ INVESTMENT:
Common stock – par value $0.01 per share, authorized 200,000,000 shares, issued 81,667,154 shares and 81,303,881 shares, respectively		817			813
Additional paid-in capital		1,055,902			1,053,942
Treasury stock – 217,200 shares		(851	)		(851	)
Accumulated earnings		1,035,462			981,164
Accumulated other comprehensive income		61,699			4,046


Total Common Stockholders’ Investment		2,153,029			2,039,114


TOTAL LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT	$	5,246,541		$	5,019,828

See notes to consolidated condensed financial statements.

Bucyrus International, Inc.

Consolidated Condensed Statements of Cash Flows (Unaudited)


	Quarter Ended March 31,
	2011			2010
	(Dollars in thousands)

Net Cash Provided By Operating Activities	$	24,604		$	190,488


Cash Flows From Investing Activities
Purchases of property, plant and equipment		(23,682	)		(9,064	)
Proceeds from disposal of property, plant and equipment		41			2,631
Purchases of investments		(950	)		(743	)
Proceeds from sale of investments		518			2,536
Acquisitions, including acquisition of Terex Mining		—			(1,004,143	)
Other		(475	)		(1,593	)


Net cash used in investing activities		(24,548	)		(1,010,376	)


Cash Flows From Financing Activities
Borrowings from revolving credit facilities		—			205,900
Repayments of revolving credit facilities		—			(205,900	)
Proceeds from term loan facility		—			1,000,000
Repayments of term loan facility		(320	)		(1,269	)
Proceeds from other long-term debt and other bank borrowings		11,423			1,465
Repayments of other long-term debt and other bank borrowings		(2,459	)		(1,627	)
Dividends paid		(2,034	)		(2,026	)
Payment of financing costs		—			(35,226	)
Other		(8	)		(35	)


Net cash provided by financing activities		6,602			961,282


Effect of exchange rate changes on cash		3,972			(545	)


Net increase in cash and cash equivalents		10,630			140,849
Cash and cash equivalents at beginning of period		473,741			101,084


Cash and cash equivalents at end of period	$	484,371		$	241,933


Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	22,317		$	9,219
Income taxes – net of refunds	$	18,260		$	12,565

Supplemental Disclosure of Non-Cash Investing Activities
Capital expenditures included in accounts payable	$	10,338		$	390

Bucyrus International, Inc.

Consolidated Condensed Statements of Cash Flows (Unaudited) (Continued)

Supplemental Schedule of Non-Cash Investing and Financing Activities

On February 19, 2010, the Company completed its acquisition of Terex Corporation’s mining equipment business (“Terex Mining”). In conjunction with the acquisition, preliminary liabilities were assumed as follows:


	Quarter Ended March 31,
	2011		2010
	(Dollars in thousands)

Fair value of assets acquired	$	—	$	1,694,589
Cash consideration		—		(1,048,525	)
Consideration paid in the form of the Company’s common shares, based on the February 19, 2010 per share closing price of $62.64		—		(363,922	)


Liabilities assumed	$	—	$	282,142

Bucyrus International, Inc.

Notes to Consolidated Condensed Financial Statements (Unaudited)

1. Nature of Operations

Bucyrus International, Inc. (the “Company”) is a leading designer, manufacturer and marketer of high productivity mining equipment. The Company operates in two business segments: surface mining and underground mining. Major markets for the surface mining industry are copper, coal, oil sands and iron ore. The major market for the underground mining industry is coal. Most of the Company’s surface mining customers are large multinational corporations with operations in the various major surface mining markets throughout the world. Most of the Company’s underground mining customers are multinational coal mining corporations, but tend to be smaller in size than the Company’s surface mining customers. In addition to the manufacture of original equipment, an important part of the Company’s business consists of aftermarket sales, such as supplying parts, maintenance and repair services and technical advice, as well as refurbishing and relocating older, installed original equipment. The Company has manufacturing facilities in Australia, China, the Czech Republic, Germany, Mexico, the United Kingdom and the United States and service and sales centers in Australia, Brazil, Canada, Chile, China, India, Indonesia, Peru, Russia, South Africa and the United States.

2. Basis of Presentation

In the opinion of Company management, the consolidated condensed financial statements contain all adjustments necessary to present fairly the financial results for all periods presented. Certain items are included in these statements based on estimates for the entire year. Actual results in future periods may differ from the estimates.

Certain notes and other information have been condensed or omitted from these interim consolidated condensed financial statements. Therefore, these statements should be read in conjunction with the Company’s 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2011.

3. Derivative Financial Instruments

The Company enters into certain derivative financial instruments to mitigate foreign exchange rate risk of specific foreign currency denominated transactions and manage and preserve the economic value of cash flows in non-functional currencies. The Company also enters into certain derivative financial instruments to mitigate interest rate risk. The Company has designated several of these contracts as cash flow hedges. The Company does not use derivative financial instruments for trading or other speculative purposes.

The contractual amounts of the Company’s outstanding foreign currency forward contracts not designated as cash flow hedges, by currency, were as follows:


	March 31, 2011				December 31, 2010
	Buy		Sell		Buy		Sell
	(Dollars in thousands)

United States dollar	$	1,915	$	17,296	$	2,703	$	17,422
Australian dollar		11,954		157,961		1,838		136,003
Brazilian real		—		7,835		—		7,787
British pounds sterling		2,204		190		1,759		636
Canadian dollar		7,376		56,678		—		46,143
Chilean peso		—		—		2,014		—
Czech koruna		163		—		195		—
Euro		15,919		15,202		48,296		48,204
Indian rupee		—		2,461		—		2,128
Mexican peso		2,345		—		2,252		—
Peruvian sol		—		—		1,001		3,737
Russian ruble		—		7,654		—		6,248


	$	41,876	$	265,277	$	60,058	$	268,308

The contractual amounts of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges, by currency, were as follows:


	March 31, 2011				December 31, 2010
	Buy		Sell		Buy		Sell
	(Dollars in thousands)

United States dollar	$	14,765	$	56,768	$	10,477	$	65,335
Australian dollar		26,294		2,999		28,775		1,119
British pounds sterling		15,569		2,352		14,927		58
Canadian dollar		—		15,899		—		42,218
Czech koruna		—		—		1,508		—
Euro		25,206		383		27,764		307
Russian ruble		—		4,145		—		7,796


	$	81,834	$	82,546	$	83,451	$	116,833

Based upon March 31, 2011 exchange rates, all of the Company’s outstanding contracts were recorded at fair value.

The Company conducts its business on a multinational basis in a wide variety of foreign currencies and hedges foreign currency exposures arising from various receivables, liabilities and expected inventory purchases. Derivative instruments that are utilized to hedge the foreign currency risk associated with anticipated inventory purchases and cash collection of accounts receivable in foreign currencies are designated as cash flow hedges. Gains and losses on these instruments, to the extent that they have been effective, are deferred in accumulated other comprehensive income (loss) and recognized in earnings when the related inventory is sold or the accounts receivable is recorded. The ineffectiveness related to these hedge instruments that

was recognized in the Consolidated Condensed Statements of Earnings consisted of losses of $0.1 million and $0.5 million for the quarters ended March 31, 2011 and 2010, respectively. The maturity of these instruments generally does not exceed 24 months. Accumulated other comprehensive income, net of tax, related to foreign currency forward contracts was $1.0 million at March 31, 2011, compared to a net loss of $0.8 million at December 31, 2010. The Company estimates that $1.2 million of income included in the $1.0 million of net accumulated other comprehensive income will be reclassified into earnings over the next 12 months.

To manage a portion of its exposure to changes in LIBOR-based interest rates on its variable rate debt, the Company has entered into interest rate swap agreements to effectively fix the interest payments on $749.1 million ($650.0 million plus €70.0 million) of its term loan. All of the swaps in place at March 31, 2011 have been designated as cash flow hedges of LIBOR-based interest payments. The effective portion of the change in fair value of the derivatives is recorded in accumulated other comprehensive income (loss), while any ineffective portion is recorded as an adjustment to interest expense. The differential paid or received on the interest rate swap is recognized as an adjustment to interest expense. Interest rate swaps in place at March 31, 2011 were as follows:


Amount		Interest Rate (1)			Maturity Date
(Dollars in thousands)

	$50,000		2.175	%	January 30, 2012
	50,000		2.40	%	January 28, 2013
	25,000		2.22	%	February 19, 2013
	25,000		2.25	%	February 19, 2013
	25,000		2.29	%	May 20, 2013
	25,000		2.41	%	August 19, 2013
	25,000		2.45	%	November 19, 2013
	50,000		2.5975	%	January 28, 2014
	25,000		2.58	%	February 19, 2014
	25,000		2.21	%	April 1, 2014
	50,000		2.99	%	May 4, 2014
	100,000		2.99	%	May 4, 2014
	50,000		2.99	%	May 6, 2014
	25,000		2.63	%	May 19, 2014
	25,000		2.7425	%	August 19, 2014
	25,000		2.82	%	November 19, 2014
	25,000		2.845	%	February 19, 2015
	25,000		2.97	%	May 19, 2015
	21,234		1.96	%	March 30, 2012 (2)
	14,156		2.28	%	March 28, 2013 (2)
	35,389		2.518	%	March 31, 2014 (2)
	21,234		2.49	%	March 31, 2014 (2)
	7,078		2.49	%	April 1, 2014 (2)

	$749,091

(1)	Excludes applicable spread of 1.50% to 3.00%.

(2)	This interest rate swap is denominated in euros.

The Company recognized interest expense of $3.4 million and $0.5 million for the quarters ended March 31, 2011 and 2010, respectively, related to the effective portion of its interest rate swaps. This interest expense combined with the interest paid to the Company’s lender based on the terms of its credit facility results in effective interest rates equal to the swap rates presented in the table above. Accumulated other comprehensive loss, net of tax, related to interest rate swaps was $11.6 million and $15.1 million at March 31, 2011 and December 31, 2010, respectively. The Company estimates that $7.8 million of the $11.6 million accumulated other comprehensive loss, net of tax, will be reclassified into earnings over the next 12 months.

The pre-tax fair value of the Company’s cash flow hedges related to foreign currency forward contracts and interest rate swaps and the accounts in the Consolidated Condensed Balance Sheets in which the amounts are included were as follows:


	March 31, 2011
	Prepaid Expenses and Other		Other Assets		Accrued Expenses		Pension and Other
	(Dollars in thousands)

Interest rate swaps	$	—	$	—	$	12,373	$	6,364
Foreign currency forward contracts		6,727		99		2,676		5


Total designated	$	6,727	$	99	$	15,049	$	6,369


	December 31, 2010
	Prepaid Expenses and Other		Other Assets		Accrued Expenses		Pension and Other
	(Dollars in thousands)

Interest rate swaps	$	—	$	—	$	12,799	$	11,166
Foreign currency forward contracts		7,953		146		2,948		307


Total designated	$	7,953	$	146	$	15,747	$	11,473

The pre-tax derivative gains and losses included in the Consolidated Condensed Statements of Comprehensive Income and the Consolidated Condensed Statements of Earnings related to cash flow hedges were as follows:

Gain (loss) recognized in other comprehensive income (loss):


	Quarter Ended March 31,
	2011		2010
	(Dollars in thousands)

Interest rate swaps	$	5,228	($	5,312	)
Foreign currency forward contracts		2,794		(1,857	)


Total	$	8,022	($	7,169	)

Gain (loss) reclassified from other comprehensive income to earnings:


	Quarter Ended March 31,						Consolidated Condensed Statement of Earnings Line Item
	2011			2010			Consolidated Condensed Statement of Earnings Line Item
	(Dollars in thousands)

Interest rate swaps	($	3,376	)	($	530	)	Interest expense
Foreign currency forward contracts		(694	)		422		Sales
Foreign currency forward contracts		2,991			(962	)	Cost of products sold
Foreign currency forward contracts		—			(17	)	Selling, general and administrative expenses


Total	($	1,079	)	($	1,087	)

Gain (loss) recognized in earnings due to ineffectiveness and amounts excluded from effectiveness testing:


	Quarter Ended March 31,						Consolidated Condensed Statement of Earnings Line Item
	2011			2010			Consolidated Condensed Statement of Earnings Line Item
	(Dollars in thousands)

Foreign currency forward contracts	$	1		($	85	)	Sales
Foreign currency forward contracts		(479	)		(194	)	Cost of products sold
Foreign currency forward contracts		389			(222	)	Selling, general and administrative expenses


Total	($	89	)	($	501	)

The pre-tax gains (losses) from derivatives not designated as hedging instruments included in the Consolidated Condensed Statements of Earnings were as follows:


	Quarter Ended March 31,						Consolidated Condensed Statement of Earnings Line Item
	2011			2010			Consolidated Condensed Statement of Earnings Line Item
	(Dollars in thousands)

Foreign currency forward contracts	$	2,083		$	939		Cost of products sold
Foreign currency forward contracts		(238	)		(5,897	)	Selling, general and administrative expenses


Total	$	1,845		($	4,958	)

Derivative instruments are subject to significant concentrations of credit risk to the banking industry. The Company manages counterparty credit risk by only entering into derivative contracts with large commercial financial institutions. The maximum amount of pre-tax loss, not considering netting arrangements, if any, which the Company would have incurred if counterparties to its derivative instruments failed to meet their obligations was $9.7 million at March 31, 2011 compared to $8.8 million at December 31, 2010. At March 31, 2011, the Company had no knowledge of any of counterparty default.

The Company also has cross-currency foreign currency-denominated debt obligations that are designated as hedges of the foreign currency exposure associated with its net investments in non-United States operations. The currency effects of the debt obligations are reflected in other comprehensive income (loss) where they offset translation gains and losses recorded on the Company’s net investments in Germany. The Company recognized a pre-tax loss of $5.5 million and a pre-tax gain of $6.7 million in other comprehensive income (loss) related to net investment hedges for the quarters ended March 31, 2011 and 2010, respectively.

The Company also uses natural hedges to mitigate risks associated with foreign currency exposures. For example, the Company often has non-functional currency denominated receivables from customers for which the exposure is partially mitigated by a corresponding non-functional currency payable to a vendor.

4. Comprehensive Income (Loss)

The Company reports comprehensive income (loss) in addition to net earnings (loss). Comprehensive income (loss) is a more inclusive financial reporting method that includes disclosure of financial information that historically has not been recognized in the calculation of net earnings (loss). The Company reports comprehensive income (loss) and accumulated other comprehensive income (loss) in the Consolidated Statements of Common Stockholders’ Investment. Accumulated other comprehensive income, net of income taxes, was as follows:


	March 31, 2011			December 31, 2010
	(Dollars in thousands)

Currency translation adjustments	$	105,969		$	54,888
Pension and postretirement benefit unrecognized costs		(33,623	)		(34,894	)
Derivative fair value adjustments		(10,647	)		(15,948	)


Accumulated other comprehensive income	$	61,699		$	4,046

5. Inventories

Inventories consisted of the following:


	March 31, 2011		December 31, 2010
	(Dollars in thousands)

Raw materials and parts	$	113,302	$	117,919
Work in process		474,091		366,733
Finished products (primarily replacement parts)		746,842		644,832


	$	1,334,235	$	1,129,484

6. Goodwill and Intangible Assets

Intangible assets consisted of the following:


	March 31, 2011					December 31, 2010
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
	(Dollars in thousands)

Amortized intangible assets:
Technology	$	426,863	($	60,449	)	$	421,396	($	48,394	)
Customer relationships		272,040		(32,106	)		269,043		(28,213	)
Trademarks and trade names		45,879		(17,854	)		50,340		(16,322	)
Engineering drawings		25,500		(17,237	)		25,500		(16,919	)
Other		12,952		(6,044	)		11,663		(5,809	)

	$	783,234	($	133,690	)	$	777,942	($	115,657	)

Unamortized intangible assets: Trademarks/Trade names	$	16,875				$	16,846

Changes in the carrying amount of goodwill were as follows:


	Surface Mining		Underground Mining
	(Dollars in thousands)

Balance at January 1, 2011	$	636,215	$	291,667
Currency translation		11,624		9,501


Balance at March 31, 2011	$	647,839	$	301,168

The estimated future amortization expense of intangible assets as of March 31, 2011 was as follows (dollars in thousands):


2011 (remaining nine months)	$	34,105
2012		45,955
2013		45,955
2014		45,633
2015		45,409
2016		45,409
Future		387,078


	$	649,544

7. Long-Term Debt and Financing Arrangements

Long-term debt consisted of the following:


	March 31, 2011			December 31, 2010
	(Dollars in thousands)

Term loan facility	$	1,498,712		$	1,495,715
Other		28,879			19,742


		1,527,591			1,515,457
Less current maturities of long-term debt and short-term obligations		(37,553	)		(28,113	)


	$	1,490,038		$	1,487,344

The Company’s credit facilities include a secured revolving credit facility of $525.0 million ($35.0 million has a maturity date of May 4, 2012 and $490.0 million has a maturity date of May 4, 2014), an unsecured German revolving credit facility of €65.0 million ($92.0 million at March 31, 2011) which matures on May 4, 2014 and a secured term loan facility. The secured term loan facility balance at March 31, 2011 was $1,498.7 million, consisting of (i) $1,269.4 million ($386.0 million matures on May 4, 2014 and $883.4 million matures on February 19, 2016); (ii) A$122.8 million ($126.8 million) with a maturity date of February 19, 2016; and (iii) €72.4 million ($102.5 million) with a maturity date of May 4, 2014. The entire secured revolving credit facility is eligible to be used for letters of credit.

Borrowings under the secured revolving credit facility that mature on May 4, 2012 and May 4, 2014 bear interest, payable no less frequently than quarterly, at (i) LIBOR or EURIBOR, plus the applicable spread; or (ii) a base rate determined by reference to the United States prime lending rate, the federal funds rate, or one month LIBOR plus 1.00%, plus the applicable spread. The unsecured German revolving credit facility bears interest, payable no less frequently than quarterly, at EURIBOR, plus the applicable spread.

Under each revolving credit facility, the Company pays a commitment fee based on the unused portion of such facilities, payable quarterly, at rates ranging from 0.25% to 0.50% depending on the total leverage ratio for revolving credit facilities that mature on May 4, 2012, and 0.50% for revolving credit facilities that mature on May 4, 2014, and when applicable, customary letter of credit fees.

Borrowings under the term loan facility that mature on May 4, 2014 bear interest, payable no less frequently than quarterly, at (i) LIBOR, plus the applicable spread, for United States dollar denominated loans; and (ii) EURIBOR, plus the applicable spread, for Euro denominated loans.

Borrowings under the term loan facility that mature on February 19, 2016 bear interest, payable no less frequently than quarterly, at (i) LIBOR (subject to a 1.50% floor), plus the applicable spread (based on the Company’s total leverage ratio), for United States dollar denominated base rate loans; and (ii) an offered rate of interest based on deposits of Australian dollars, plus (a) the difference between three-month LIBOR and 1.50% (if greater), and (b) between 2.75% and 3.00% (based on the Company’s total leverage ratio), for Australian dollar denominated base rate loans.

The credit facilities contain operating and financial covenants that, among other things, could limit the Company’s ability to obtain additional sources of capital. The Company’s financial covenants require that it maintain, on a trailing four-quarter basis as of the end of each fiscal quarter, a total leverage ratio of not more than 3.50 to 1.00 and a consolidated interest coverage ratio of at least 3.0 to 1.0. At March 31, 2011, the Company’s total leverage ratio was 1.40 to 1.00 and its interest coverage ratio was 9.3 to 1.00. The Company was also in compliance with all operating covenants at March 31, 2011.

The credit facilities require the Company to prepay outstanding loans with 100% of the net proceeds of the incurrence of certain debt and certain asset sales and 50% (subject to reductions based on the Company’s total leverage ratio) of the Company’s annual excess cash flow, as defined in its credit facilities.

At March 31, 2011, the amount potentially available for borrowings under the secured revolving credit facility was $304.5 million, after taking into account $220.5 million of issued letters of credit. The amount potentially available for borrowings under the unsecured German credit facility at March 31, 2011 was $19.5 million (€13.8 million), after taking into account $72.5 million (€51.2 million) of issued letters of credit. To manage a portion of its exposure to changes in LIBOR-based and EURIBOR-based interest rates, the Company has entered into interest rate swap agreements that effectively fix the interest payments on $749.1 million ($650.0 million plus €70.0 million) of outstanding borrowings under its term loan facility at a weighted average interest rate of 2.6%, plus the applicable spread. The remaining $749.6 million of outstanding term loan borrowings at March 31, 2011 were at a weighted average interest rate of 4.8%, including the applicable spread.

8. Common Stockholders’ Investment

At March 31, 2011, the Company’s issued and outstanding shares consisted only of common stock. Holders of common stock are entitled to one vote per share on all matters to be voted on by the Company’s common stockholders.

9. Stock-Based Compensation

The Company recognizes compensation expense for nonvested shares and stock appreciation rights (“SARs”) over the requisite service period for vesting of the award. Total stock-based compensation expense included in the Company’s Consolidated Condensed Statements of Earnings was $2.0 million and $1.9 million for the quarters ended March 31, 2011 and 2010, respectively.

Nonvested Shares. The Company has granted nonvested shares to certain employees pursuant to the Bucyrus International, Inc. Omnibus Incentive Plan 2007 (the “Omnibus Plan”). These shares cliff vest in their entirety at the end of the fourth calendar year from the grant date (inclusive of the year of grant) provided the employee remains employed by the Company until such date or has a qualifying retirement prior to such date. Compensation expense related to nonvested shares was $0.6 million for each of the quarters ended March 31, 2011 and 2010, respectively. Nonvested share activity during the quarter ended March 31, 2011 was as follows:


	Number of Shares		Weighted Average Grant Date Fair Value

Outstanding at January 1, 2011		383,050	$	27.44
Granted		142,400	$	91.04
Forfeited		—		—
Vested		—		—


Outstanding at March 31, 2011		525,450	$	44.68

At March 31, 2011, there was $17.5 million of unrecognized compensation expense related to nonvested share grants. This cost is expected to be recognized over a weighted average period of 3.4 years. The grant date fair value was based on the fair market value of the Company’s common stock on the date of grant. At March 31, 2011, the Company expected approximately 494,000 shares to vest and these shares had an aggregate intrinsic value of $45.2 million and a weighted-average remaining contractual term of 2.4 years.

SARs. The Company has granted SARs to certain employees pursuant to the Omnibus Plan. The SARs vest incrementally and can be settled in shares only. Compensation expense related to SARs was $1.4 million and $1.3 million for the quarters ended March 31, 2011 and 2010, respectively. SAR activity during the quarter ended March 31, 2011 was as follows:


	Number of Shares			Weighted Average Grant Date Fair Value

Outstanding at January 1, 2011		1,471,347		$	15.03
Granted		—			—
Forfeited		—			—
Exercised		(6,601	)	$	14.52


Outstanding at March 31, 2011		1,464,746		$	15.03


Vested and exercisable at March 31, 2011		287,311		$	14.58

The 287,311 vested and exercisable shares at March 31, 2011 had a weighted average exercise price of $28.36 per share, an aggregate intrinsic value of $18.1 million and a weighted average remaining contractual term of 6.5 years.

At March 31, 2011, approximately 1,313,000 of the outstanding SARs were vested or were expected to vest and these SARs had a weighted average exercise price of $27.11 per share, an intrinsic value of $84.5 million and a weighted average remaining contractual life of 7.7 years.

At March 31, 2011, there was $10.2 million of unrecognized compensation expense related to SARs that were vested or were expected to vest. This cost is expected to be recognized over a weighted average period of 2.2 years.

10. Pension Benefits

Net pension periodic benefit cost consisted of the following:


	Quarter Ended March 31,
	2011			2010
	(Dollars in thousands)

Service cost	$	1,748		$	1,388
Interest cost		2,940			2,931
Expected return on assets		(1,542	)		(1,378	)
Amortization of:
Prior service cost		111			114
Actuarial loss		540			683


Net pension periodic benefit cost	$	3,797		$	3,738

11. Net Earnings Per Share

The reconciliation of the numerators and the denominators of the basic and diluted net earnings per share of common stock calculations were as follows:


	Quarter Ended March 31,
	2011		2010
	(Dollar in thousands, except per share amounts)

Net earnings	$	56,334	$	35,014

Weighted average shares outstanding		80,923,776		77,299,009


Basic net earnings per share	$	0.70	$	0.45


Weighted average shares outstanding		80,923,776		77,299,009
Effect of dilutive nonvested shares, stock appreciation rights and performance shares		1,202,139		1,362,164

Weighted average shares outstanding – diluted (1)		82,125,915		78,661,173


Diluted net earnings per share	$	0.69	$	0.45

(1)

Grants of nonvested shares and SARs representing approximately an additional 5,000 shares were outstanding for the quarter ended March 31, 2010, but were not included in the computation of diluted net earnings per share because their effect would have been antidilutive. There were no grants of nonvested shares or SARs that were antidilutive for the quarter ended March 31, 2011.

12. Segment Information

The Company has two reportable segments, surface mining and underground mining, which are based on the internal organization used by management for making operating decisions, measuring and evaluating financial performance, and allocating resources, as well as based on the similarity of customers served, distinctive products and services, common use of facilities and economic results attained.

The accounting policies of the Company’s segments are the same as those described in Note A to the Company’s 2010 consolidated financial statements. Operating earnings for each segment do not include interest income, interest expense, other income, other expense and a provision for income taxes. Corporate expenses consist primarily of costs related to employees who provide services across both of the Company’s segments. Most costs incurred to acquire businesses are also classified as corporate expenses. There are no significant intersegment sales. Identifiable assets are those used in the operations of each segment.

Segment information was as follows:


	Quarter Ended March 31, 2011
	Sales		Operating Earnings			Depreciation and Amortization		Capital Expenditures		Total Assets
	(Dollars in thousands)

Surface mining	$	640,027	$	101,398		$	14,746	$	10,631	$	3,549,865
Underground mining		269,644		22,123			8,483		5,929		1,665,015


Total operations		909,671		123,521			23,229		16,560		5,214,880
Corporate		—		(14,363	)		—		12,837		31,661


Consolidated total	$	909,671		109,158			23,229	$	29,397	$	5,246,541


Interest income				(2,062	)		—
Interest expense				19,743			—
Other expense				2,453			2,453


Earnings before income taxes			$	89,024		$	25,682


	Quarter Ended March 31, 2010
	Sales		Operating Earnings			Depreciation and Amortization		Capital Expenditures		Total Assets
	(Dollars in thousands)

Surface mining (1)	$	397,571	$	66,588		$	13,393	$	4,175	$	2,878,288
Underground mining		209,954		21,268			8,558		2,549		1,470,987


Total operations		607,525		87,856			21,951		6,724		4,349,275
Corporate		—		(21,941	)		—		—		—


Consolidated total	$	607,525		65,915			21,951	$	6,724	$	4,349,275


Interest income				(1,349	)		—
Interest expense				11,059			—
Other expense				1,835			1,836


Earnings before income taxes			$	54,370		$	23,787

(1)	Operating earnings include inventory fair value adjustments charged to cost of products sold of $7.0 million. This amount is not included in the depreciation and amortization column.

13. Contingencies

Environmental, product warranty and liability and legal matters as of March 31, 2011 were as follows:

Environmental

The Company’s operations and properties are subject to a broad range of federal, state, local and foreign laws and regulations relating to environmental matters, including laws and regulations governing discharges into the air and water, the handling and disposal of solid and hazardous substances and wastes, and the remediation of contamination associated with releases of hazardous substances at the Company’s 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.

Environmental problems have not interfered in any material respect with the Company’s manufacturing operations to date. The Company believes that its compliance with statutory requirements respecting environmental quality will not have a material adverse effect on its financial position, results of operations or cash flows, although no assurance to that effect can be given. The Company has an ongoing program to proactively address potential environmental problems.

Over the past three years, expenditures for ongoing compliance, remediation, monitoring and cleanup have been immaterial. The Company believes that expenditures for compliance and remediation will not have a material adverse effect on its financial position, results of operations or cash flows, although no assurance to that effect can be given.

Product Warranty

The Company recognizes the cost associated with its warranty policies on its products as revenue is recognized. The amount recognized is based on historical experience. The changes in accrued warranty costs for the quarters ended March 31, 2011 and 2010 were as follows:


	2011			2010
	(Dollars in thousands)

Balance at January 1	$	166,867		$	49,442
Acquired balance		—			39,099
Provisions		12,892			7,667
Settlements		(13,792	)		(6,801	)
Changes in liability for pre-existing warranties, net		176			(2,743	)
Foreign currency translation		4,505			(1,831	)


Balance at March 31	$	170,648		$	84,833

Product Liability

The Company is 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 Company’s products are operated by its employees and its 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. The Company has insurance covering most of these claims and has various limits of liability depending on the insurance policy year in question. At the time a liability associated with a claim becomes probable and can be reasonably estimated, the Company accrues for the liability by a charge to earnings. For all other cases, an estimate of the costs associated with the matters cannot be made due to the inherent uncertainties in the litigation process; however, the Company believes 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 its financial position, results of operations or cash flows, although no assurance to that effect can be given.

Asbestos Liability

The Company has been named as a co-defendant in numerous personal injury liability cases alleging damages due to exposure to asbestos and other substances. The Company has insurance covering most of these cases and has various limits of liability depending on the insurance policy year in question. At the time a liability associated with a case becomes probable and can be reasonably estimated, the Company accrues for the liability by a charge to earnings. For all other cases, an estimate of the costs associated with the matters cannot be made due to the inherent uncertainties in the litigation process; however, the Company does not believe that these costs will have a material effect on its financial position, results of operations or cash flows, although no assurance to that effect can be given.

Other Litigation

In August 2010, the Company received letters from the U.S. Department of Justice and from the U.S. Securities and Exchange Commission (“SEC”) requesting certain documents and information and notifying the Company that the SEC is conducting a non-public, fact-finding inquiry of the Company. The Company is cooperating fully with this inquiry.

The Company is involved in various other litigation arising in the normal course of business. The Company does not believe that its recovery or liability, if any, under any such pending litigation will have a material effect on the its financial position, results of operations or cash flows, although no assurance to that effect can be given.

14. Fair Value Measurements

Accounting guidance regarding fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This guidance classifies the inputs used to measure the fair value into the following hierarchy:


Level 1		Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2		Unadjusted quoted prices in active markets for similar assets or liabilities, or Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or Inputs other than quoted prices that are observable for the assets or liabilities

Level 3		Unobservable inputs for the assets or liabilities

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

The Company has determined that its financial assets and liabilities are level 2 in the fair value hierarchy. The Company’s financial assets and liabilities that were accounted for at fair value were as follows:


	March 31, 2011		December 31, 2010
	(Dollars in thousands)
Assets:
Foreign currency forward contracts (1)	$	9,690	$	8,802


Liabilities:
Foreign currency forward contracts (1)	$	5,940	$	14,609
Interest rate swaps (2)		18,737		23,965


Total liabilities at fair value	$	24,677	$	38,574

(1)	Based on observable market transactions of forward currency prices.

(2)	Based on observable market transactions of forward LIBOR or EURIBOR rates.

15. Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board issued new accounting guidance regarding the accounting for revenue in arrangements with multiple deliverables. This guidance addresses how the unit of accounting for arrangements involving multiple deliverables and how arrangement consideration should be allocated to the separate units of accounting, when applicable. This guidance became effective on a prospective basis for fiscal years beginning on or after June 15, 2010. The Company adopted the guidance effective January 1, 2011 and it did not have a material effect on its financial position or results of operations.

Item 2. Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Forward-Looking Statements

The following discussion and analysis and information contained elsewhere in this report contain 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 cause our actual results to differ materially from those anticipated in such forward-looking statements and could adversely affect our actual results of operations and financial condition include, without limitation:

•

events, regulatory factors or other circumstances related to the merger agreement with Caterpillar Inc.;

•

the cyclical nature of the sale of original equipment due to fluctuations in market prices for coal, copper, oil, iron ore and other minerals, changes in general economic conditions, changes in interest rates, changes in customers’ replacement or repair cycles, consolidation in the mining industry and competitive pressures;

•

changes in global financial markets and global economic conditions;

•

our customers deferring, delaying or canceling capital investments due to volatility and tightening of credit markets, unprecedented financial market conditions and a global recession;

•

disruption of our plant operations due to equipment failures, natural disasters or other reasons;

•

our dependence on the commodity price of coal and other conditions in the coal market;

•

the highly competitive nature of the mining industry;

•

our reliance on significant customers;

•

the loss of key customers or key members of management;

•

the risks and uncertainties of doing business in foreign countries, including emerging markets, and foreign currency risks;

•

costs and risks associated with regulatory compliance and changing regulations affecting the mining industry and/or electric utilities;

•

our ability to attract and retain skilled labor;

•

our ability to continue to offer products containing innovative technology that meets the needs of our customers;

•

work stoppages at our company, our customers, our suppliers or providers of transportation;

•

our ability to protect intellectual property;

•

the availability of operating cash to service our indebtedness, including the substantial indebtedness incurred to acquire Terex Mining;

•

our customers’ inability to obtain loan guarantees or other credit enhancements or financing;

•

our reliance on local partners in foreign countries;

•

liabilities relating to Terex Mining which are unknown to us;

•

dependence on Terex Mining internal control systems for compliance with Section 404 of the Sarbanes-Oxley Act of 2002;

•

our entering into a new line of business and new geographic markets in which certain of our competitors have substantially more experience than we do as a result of our acquisition of Terex Mining;

•

our ability to successfully implement a new enterprise resource planning (“ERP”) system in our surface segment;

•

our ability to satisfy underfunded pension and postretirement obligations;

•

our production capacity;

•

product liability, environmental and other potential litigation; and

•

our ability to purchase component parts or raw materials from key suppliers at acceptable prices and/or on the required time schedule.

The foregoing factors do not constitute an exhaustive list of factors that could cause actual results to differ materially from those anticipated in forward-looking statements, and should be read in conjunction with the other cautionary statements and risk factors included in our 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2011 and our subsequently filed Quarterly Reports on Form 10-Q, including this Quarterly Report on Form 10-Q. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Preamble

All references to “us,” “we” and “our” in the following discussion and analysis means, unless the context indicates otherwise, Bucyrus International, Inc. together with its consolidated subsidiaries.

Pending Merger with Caterpillar Inc.

The previously announced transaction with Caterpillar Inc. is expected to close in mid-2011, subject to the completion of certain competition agency reviews and the satisfaction of other customary conditions to closing.

Business

We are a leading designer and manufacturer of safe and highly productive mining equipment for the extraction of coal, copper, oil sands, iron ore and other minerals in major mining centers throughout the world. In addition to the manufacture of original equipment, we also provide the aftermarket replacement parts and service for this equipment. We operate in two business segments: surface mining and underground mining. Substantially all of our products and services are marketed under the Bucyrus name. We have manufacturing facilities in Australia, China, the Czech Republic, Germany, Mexico, the United Kingdom and the United States, and service and sales centers in Australia, Brazil, Canada, Chile, China, India, Indonesia, Peru, Russia, South Africa and the United States. The largest markets for our surface mining original equipment and aftermarket parts and service have historically been in Australia, Canada, China, India, South Africa, South America and the United States. We expect these markets to continue to be our largest surface mining equipment markets and we expect growth in the Russian and Asian markets. The largest markets for our underground mining original equipment and aftermarket parts and service have historically been in the United States, Australia and China. We expect these markets to continue to be our largest underground mining equipment markets, and we expect potential growth in the Russian, Eastern European and Indian markets in the next three to five years.

A substantial portion of our sales and operating earnings is attributable to our operations located outside the United States. We generally sell our surface mining original equipment, including that sold directly to foreign customers, and most of our aftermarket parts in either United States dollars or euros. Our underground mining original equipment is generally sold in either United States dollars or euros. A portion of our aftermarket parts sales is denominated in the currency of the country in which our products are sold. Aftermarket services are paid for primarily in local currency, which is naturally hedged by our payment of local labor in local currency.

The market for our original equipment is closely correlated with customer expectations of sustained strength in prices of mined commodities. Copper and gold prices are at historically high levels, thermal and especially metallurgical coal prices have experienced significant price increases in recent periods, oil and iron ore prices have increased, and all other commodity prices are holding to positive long-term trend lines. As a result, demand for virtually all of our original equipment products is strong. All markets for our original equipment products currently are strong, particularly Australia (coal and iron ore), Canada (oil, copper and iron ore), China (coal), Eastern Europe (coal), India (coal), South Africa (coal), South America (copper and iron ore) and the United States iron ore market.

The size of our installed base of surface mining and underground mining original equipment (approximately $34 billion and $10 billion, respectively) provides the foundation for our aftermarket activities. In our surface mining segment, Australia and Canada remain strong markets for our aftermarket parts and services. Strong demand for iron ore and coal in Australia

has resulted in increased spending by our customers for our aftermarket parts and services. In Canada, customers are increasing spending on maintenance and major overhauls that were postponed in 2009 and 2010. Sales growth is expected in the United States market as electric mining shovels are coming into the life cycle stage where orders for aftermarket parts and service are expected to increase.

In our underground segment, demand for aftermarket parts and services is expected to moderately increase from 2010 levels. Growth in room and pillar aftermarket in the United States is expected as rebuild activity remains steady. Demand for longwall aftermarket parts and services in Russia and China is strong and these markets are expected to grow in 2011 as the demand for coal remains at a high level.

Backlog

Our backlog level, which represents unfilled orders for our products and services, allows us to more accurately forecast our upcoming sales and plan our production accordingly. Our backlog also provides us with a relatively predictive level of expected sales and cash flows for the next 12 months. Due to the high cost of some of our original equipment, our backlog is subject to volatility, particularly over relatively short periods. A portion of our backlog is related to multi-year contracts that will generate revenue in future years. Our backlog at March 31, 2011 and December 31, 2010, as well as the portion of our backlog which is expected to be recognized within 12 months of these dates, was as follows:


	March 31, 2011		December 31, 2010		% Change
	(Dollars in thousands)
Surface Mining:
Total	$	2,161,537	$	1,708,877		26.5	%
Next 12 months	$	1,404,961	$	1,134,105		23.9	%
Underground Mining:
Total	$	1,104,062	$	997,388		10.7	%
Next 12 months	$	841,118	$	752,424		11.8	%
Total:
Total	$	3,265,599	$	2,706,265		20.7	%
Next 12 months	$	2,246,079	$	1,886,529		19.1	%

The increase in surface mining total backlog from December 31, 2010 was primarily due to the receipt of a large order for multiple off-highway haul trucks, electric mining shovels, draglines and aftermarket parts and services in the Indian market. The increase in the underground mining total backlog was primarily in aftermarket parts and services in the United States market.

New Orders

New orders were as follows:


	Quarter Ended March 31,
	2011		2010		% Change
	(Dollars in thousands)
Surface Mining:
Original equipment	$	721,905	$	168,213		329.2	%
Aftermarket parts and service		387,782		171,197		126.5	%

		1,109,687		339,410		226.9	%

Underground Mining:
Original equipment		145,335		153,214		(5.1	%)
Aftermarket parts and service		213,983		147,014		45.6	%

		359,318		300,228		19.7	%

Total:
Original equipment		867,240		321,427		169.8	%
Aftermarket parts and service		601,765		318,211		89.1	%

	$	1,469,005	$	639,638		129.7	%

The increase in surface mining original equipment new orders for the first quarter of 2011 compared to the first quarter of 2010 was primarily due to increased off-highway haul trucks, hydraulic excavators and dragline new orders. A large order for multiple off-highway haul trucks, electric mining shovels and draglines in the Indian market was received in the first quarter of 2011. Other new orders for off-highway haul trucks were received in the Mongolian and Australian markets. The increase in hydraulic excavator new orders was primarily in the Australian market.

The increase in surface mining aftermarket parts and service new orders for the first quarter of 2011 compared to the first quarter of 2010 was primarily due to Terex Mining being included for a partial quarter in 2010 as well as increased new orders in the Canadian, Indian and Chilean markets. The increase in Canada was primarily due to dragline rebuild projects in the Alberta region and large electric mining shovel parts orders. The increase in India was primarily due to aftermarket orders received along with new original equipment orders, and the increase in Chile was primarily due to the receipt of a multi-year maintenance and repair contract in the first quarter of 2011. A multi-year maintenance and repair contract in the United States market was canceled in the first quarter of 2010, which reduced new orders for that period by $29 million.

Total surface mining new orders for the first quarter of 2011 were positively impacted by approximately $22 million due to the effect of the weaker U.S. dollar on orders and beginning of period backlog denominated in foreign currencies.

The decrease in underground mining original equipment new orders for the first quarter of 2011 compared to the first quarter of 2010 was primarily in the room and pillar product line and reflects the timing of new orders. This decrease was partially offset by an increase in the belt systems product line as a result of large projects in China.

The increase in underground mining aftermarket parts and service new orders for the first quarter of 2011 compared to the first quarter of 2010 was primarily in the United States market due to a large longwall rebuild order in the Central Appalachia region.

Total underground mining new orders for the first quarter of 2011 were positively impacted by approximately $31 million due to the effect of the weaker U.S. dollar on orders and beginning of period backlog denominated in foreign currencies.

Results of Operations

Quarter Ended March 31, 2011 Compared to Quarter Ended March 31, 2010


	Quarter Ended March 31,
	2011					2010
	Amount		% of Sales			Amount		% of Sales
	(Dollars in thousands, except per share amounts)

Sales	$	909,671		—		$	607,525		—
Gross profit	$	259,653		28.5	%	$	175,282		28.9	%
Selling, general and administrative expenses	$	115,131		12.7	%	$	87,134		14.3	%
Operating earnings	$	109,158		12.0	%	$	65,915		10.8	%
Net earnings	$	56,334		6.2	%	$	35,014		5.8	%
Fully diluted net earnings per share	$	0.69		N/A		$	0.45		N/A

Sales

Sales consisted of the following:


	Quarter Ended March 31,
	2011		2010		% Change
	(Dollars in thousands)
Surface Mining:
Original equipment	$	324,545	$	170,169		90.7	%
Aftermarket parts and service		315,482		227,402		38.7	%

		640,027		397,571		61.0	%

Underground Mining:
Original equipment		134,733		97,826		37.7	%
Aftermarket parts and service		134,911		112,128		20.3	%

		269,644		209,954		28.4	%

Total:
Original equipment		459,278		267,995		71.4	%
Aftermarket parts and service		450,393		339,530		32.7	%

	$	909,671	$	607,525		49.7	%

Total sales for the first quarter of 2011 and 2010 were negatively impacted by the seasonality of aftermarket shipments in the mining industry in comparison to other quarters throughout the year. Typically, the first quarter is the slowest quarter in terms of aftermarket sales. In addition, the flooding in Australia negatively impacted first quarter 2011 sales.

Capacity utilization at Bucyrus’ manufacturing facilities was high during the first quarter of 2011 resulting in a build-up of work-in-progress inventory which is expected to be shipped in future periods.

The increase in surface mining original equipment sales for the first quarter of 2011 compared to the first quarter of 2010 was primarily due to increased hydraulic excavator, off-highway haul truck and electric mining shovel sales. The increase in hydraulic excavator sales was in the Australian, Mongolian and North African markets as a result of the continued strength of coal, iron ore and gold prices. The increase in off-highway haul truck sales was in the Australian, Chinese and Brazilian markets as a result of higher demand for coal and iron ore in these markets. The increase in electric mining shovel sales was in the Indian, Canadian and Brazilian markets and was driven by continued strong commodity prices, customers returning to more sustainable levels of capital expenditures and new shovel technology.

The increase in surface mining aftermarket parts and service sales for the first quarter of 2011 compared to the first quarter of 2010 was primarily due to the inclusion of Terex Mining sales for a partial quarter in 2010. The increase was also due to higher electric mining shovel part sales in the oil sands region of the Canadian market.

The increase in underground mining original equipment sales for the first quarter of 2011 compared to the first quarter of 2010 was primarily in the longwall product line. This increase was due to increased sales in the Chinese, United States and Australian markets due to improving coal prices and growing steel production.

The increase in underground mining aftermarket parts and service sales for the first quarter of 2011 compared to the first quarter of 2010 was primarily in the United States market. The increase in longwall aftermarket parts and service sales was primarily due to increased demand as a result of numerous new systems put into production within the past two years. The increase in room and pillar aftermarket parts and service sales was primarily due to an increase in rebuilds and increased demand for transportation equipment.

Gross Profit

Gross profit and gross margin were as follows:


	Quarter Ended March 31,
	2011			2010			% Change
	(Dollars in thousands)

Gross profit	$	259,653		$	175,282			48.1	%
Gross margin		28.5	%		28.9	%		N/A

Gross profit and gross margin were affected by amortization of acquisition accounting adjustments related to the acquisition of Terex Mining as follows:


	Quarter Ended March 31,
	2011		2010
	(Dollars in thousands)

Gross profit increase (reduction)	$	178	($	6,832	)

Gross margin reduction (percentage points)		—		1.1

Gross margin was 28.5% and 30.0% for the first quarter of 2011 and 2010, respectively, after adjusting for amortization of Terex Mining acquisition accounting adjustments. Gross margin for the first quarter of 2011 decreased from the first quarter of 2010 primarily due to the mix of products sold. Raw material cost increases had a minimal impact on gross margin for the first quarter of 2011.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were as follows:


	Quarter Ended March 31,						% Change
	2011			2010			% Change
	(Dollars in thousands)

Selling, general and administrative expenses	$	115,131		$	87,134			32.1	%
Percent of sales		12.7	%		14.3	%		N/A

The increase in selling, general and administrative expenses for the first quarter of 2011 compared to the first quarter of 2010 was primarily due to the inclusion of Terex Mining for a partial quarter in 2010 and a full quarter in 2011. Selling, general and administrative expense for the first quarter of 2011 included $1.1 million of acquisition costs compared to $14.6 million of acquisition costs for the first quarter of 2010. The acquisition costs for 2011 were primarily related to the pending merger with Caterpillar Inc. and the acquisition costs for 2010 were primarily related to the acquisition of Terex Mining. Selling, general and administrative expenses for the first quarter of 2010 included a loss on the disposal of fixed assets $1.9 million.

Research and Development Expenses

Research and development expenses were as follows:


	Quarter Ended March 31,
	2011			2010			% Change
	(Dollars in thousands)

Research and development expenses	$	23,814		$	13,243			79.8	%
Percent of sales		2.6	%		2.2	%		N/A

The increase in research and development expenses for the first quarter of 2011 was primarily due to further development of our original equipment products and the inclusion of Terex Mining for a partial quarter in 2010 and a full quarter in 2011.

Amortization of Intangible Assets

Amortization of intangible assets acquired in the Terex Mining acquisition was $7.3 million for the first quarter of 2011 compared to $4.5 million for the first quarter of 2010. The amortization of Terex Mining intangible assets is expected to be approximately $7 million per quarter through December 2019.

Operating Earnings

Operating earnings were as follows:


	Quarter Ended March 31,
	2011			2010			% Change
	(Dollars in thousands)

Surface mining	$	101,398		$	66,588			52.3	%
Underground mining		22,123			21,268			4.0	%

Total operations		123,521			87,856			40.6	%
Corporate		(14,363	)		(21,941	)		34.5	%

Consolidated total	$	109,158		$	65,915			65.6	%

The increase in operating earnings for the first quarter of 2011 compared to the first quarter of 2010 was primarily due to the inclusion of Terex Mining for a partial quarter in 2010 and a full quarter in 2011 and reduced acquisition expense. Included in the first quarter of 2011 was $1.1 million of acquisition expense compared to $14.6 million for the first quarter of 2010. Operating earnings for the first quarter of 2011 and the first quarter of 2010 were reduced by $7.0 million and $11.2 million, respectively, as a result of amortization of acquisition accounting adjustments related to the acquisition of Terex Mining.

Interest Expense

Interest expense was $19.7 million for the first quarter of 2011 compared to $11.1 million for the first quarter of 2010. The increase in interest expense in 2011 was primarily due to the $1.0 billion secured term loan used to acquire Terex Mining being outstanding for a partial quarter in 2010 and a full quarter in 2011. Interest expense is expected to be approximately $59 million for the remaining nine months of 2011.

Income Tax Expense

The effective income tax rate for the first quarter of 2011 was 36.7% compared to 35.6% for the first quarter of 2010. The higher rate in 2011 was primarily due to non-deductible costs related to the pending merger with Caterpillar Inc. and the rate in 2010 was unfavorably impacted by non-deductible costs related to the acquisition of Terex Mining.

Net Earnings

Net earnings were as follows:


	Quarter Ended March 31,
	2011		2010		% Change
	(Dollars in thousands, except per share amounts)

Net earnings	$	56,334	$	35,014		60.9	%
Fully diluted net earnings per share	$	0.69	$	0.45		53.3	%

Net earnings were reduced (increased) by amortizations of preliminary acquisition accounting adjustments related to the acquisition of Terex Mining as follows:


	Quarter Ended March 31,
	2011			2010
	(Dollars in thousands)

Inventory fair value adjustment charged to cost of products sold	$	—		$	7,019
Amortization of intangible assets		7,276			4,462
Depreciation of fixed assets		(261	)		(234	)

Operating earnings		7,015			11,247
Income tax benefit		(2,445	)		(3,618	)

Total	$	4,570		$	7,629

Foreign Currency Fluctuations

The following table summarizes the approximate effect of changes in foreign currency exchange rates on our sales, gross profit and operating earnings, in each case compared to the prior year:


	Quarter Ended March 31,
	2011		2010
	(Dollars in thousands)

Increase in sales	$	20,535	$	34,636
Increase in gross profit	$	4,047	$	8,764
Increase in operating earnings	$	2,268	$	4,757

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA were as follows:


	Quarter Ended March 31,
	2011			2010
	(Dollars in thousands)

EBITDA	$	132,387		$	87,867
Percent increase (decrease) from prior year		50.7	%		(16.5	%)
EBITDA as a percent of sales		14.6	%		14.5	%

Adjusted EBITDA	$	135,502		$	112,767
Percent increase from prior year		20.2	%		4.8	%
Adjusted EBITDA as a percent of sales		14.9	%		18.6	%

EBITDA is defined as net earnings before interest income, interest expense, income tax expense, depreciation and amortization. EBITDA includes the impact of non-cash stock compensation expense, loss on disposals of fixed assets and the inventory fair value acquisition accounting adjustment charged to cost of products sold as set forth below. EBITDA is a measurement not recognized in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should not be viewed as an alternative to GAAP measures of performance. EBITDA is presented because (i) we use EBITDA to measure our liquidity and financial performance, and (ii) we believe 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 following table reconciles net earnings as reported in our Consolidated Condensed Statements of Earnings to EBITDA and reconciles EBITDA to Net Cash Provided By Operating Activities as reported in our Consolidated Condensed Statements of Cash Flows:


	Quarter Ended March 31,
	2011			2010
	(Dollars in thousands)

Net earnings	$	56,334		$	35,014
Interest income		(2,062	)		(1,349	)
Interest expense		19,743			11,059
Income tax expense		32,690			19,356
Depreciation		11,680			12,960
Amortization (1)		14,002			10,827


EBITDA		132,387			87,867
Changes in assets and liabilities		(59,386	)		127,874
Non-cash stock compensation expense (2)		1,964			1,948
Loss on disposal of fixed assets (3)		10			1,865
Interest income		2,062			1,349
Interest expense		(19,743	)		(11,059	)
Income tax expense		(32,690	)		(19,356	)


Net cash provided by operating activities	$	24,604		$	190,488


Net cash used in investing activities	($	24,548	)	($	1,010,376	)


Net cash provided by financing activities	$	6,602		$	961,282

(1)	Includes amortization of intangible assets and debt issuance costs. The $7.0 million of inventory fair value adjustments charged to cost of products sold for the quarter ended March 31, 2010 are not included.

(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.

Adjusted EBITDA is a material term in our current credit agreement, which we believe is a material agreement, and is used in the calculation of our leverage ratio covenant. Also, our management uses Adjusted EBITDA when preparing our annual operating budget and financial projections. The following table reconciles EBITDA to Adjusted EBITDA:


	Quarter Ended March 31,
	2011		2010
	(Dollars in thousands)

EBITDA	$	132,387	$	87,867
Non-cash stock compensation expense		1,964		1,948
Loss on disposal of fixed assets (1)		10		1,865
Terex Mining acquisition costs (2)		—		14,068
Costs associated with the pending merger with Caterpillar Inc. (3)		1,141		—
Inventory fair value adjustment charged to cost of products sold (4)		—		7,019


Adjusted EBITDA	$	135,502	$	112,767

(1)	Reflects losses on the disposal of fixed assets in the ordinary course.

(2)	Reflects costs incurred to acquire Terex Mining.

(3)	Reflects costs related to the pending merger with Caterpillar Inc.

(4)	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.

Liquidity and Capital Resources

Description of Current Credit Facility

Our credit facilities include a secured revolving credit facility of $525.0 million, an unsecured German revolving credit facility of €65.0 million ($92.0 million at March 31, 2011) and a secured term loan facility. Our secured term loan facility balance at March 31, 2011 was $1,498.7 million, consisting of (i) $1,269.4 million; (ii) A$122.8 million ($126.8 million); and (iii) €72.4 million ($102.5 million). We had no secured revolving credit facility or unsecured German revolving credit facility borrowings during the first quarter of 2011. Our credit facilities contain operating and financial covenants that, among other things, could limit our ability to obtain additional sources of capital. At March 31, 2011, we were in compliance with these covenants. Refer to Note 7 of the Notes to Consolidated Condensed Financial Statements for a more detailed discussion of our current credit facilities and associated financial covenants.

Cash Requirements

Our cash balance increased to $484.4 million at March 31, 2011 from $473.7 million at December 31, 2010.

A significant portion of our cash flows is generated outside of the United States. At March 31, 2011, $240.8 million of our $484.4 million cash and cash equivalents balance was located outside of the United States. We manage our global cash requirements considering available funds among the subsidiaries through which we conduct our business and the cost effectiveness through which those funds can be accessed. We continue to seek opportunities to

access cash balances in excess of local operating requirements to meet global liquidity needs in a cost effective manner. We have and will continue to transfer cash from international subsidiaries to the United States and other international subsidiaries when it is cost effective to do so.

Our customers generally are contractually obligated to make progress payments under purchase contracts for machine orders and certain large parts orders. As a result, we do not anticipate significant outside financing requirements to fund production of our original equipment and do not believe that original equipment sales will have a material adverse effect on our liquidity, although the issuance of letters of credit reduces the amount available for borrowings under our revolving credit facilities. If additional borrowings are necessary during the remainder of 2011, we believe we have sufficient capacity under our existing revolving credit facilities.

Inventory increased to $1.3 billion at March 31, 2011 from $1.1 billion at December 31, 2010. The increase was primarily due to the build up of work-in-process inventory which is expected to be shipped in future periods. Inventory turns were 2.4 at March 31, 2011 compared to 2.4 at December 31, 2010. We expect improvement in inventory turns throughout the remainder of 2011 based on the initiatives we implemented in 2010 to increase inventory turns and anticipated increased sales levels.

Ordinary course capital expenditures for the first quarter of 2011 were $29.4 million compared to $6.7 million for the first quarter of 2010. Included in capital expenditures was approximately $7 million related to facility expansions and renovations and approximately $5 million for the implementation of a global SAP enterprise resource planning system. Capital expenditures for 2011 are expected to approximate $100 million. We are closely monitoring our capital spending in relation to current economic conditions and business levels. We believe cash flows from operating activities and funds available under our revolving credit facilities will be sufficient to fund our expected ordinary course capital expenditures during 2011.

At March 31, 2011, there were approximately $350.3 million of standby letters of credit outstanding under all of our bank facilities.

In addition to the obligations noted above, we currently anticipate estimated cash funding requirements for interest and dividends of approximately $55 million and $6 million, respectively, and income taxes of between $130 million and $140 million during the remainder of 2011.

During the remainder of 2011, we anticipate continued positive cash flows from operations and expect our cash balances to increase throughout the remainder of the year. We believe that cash flows from operations and our existing revolving credit facilities will be sufficient to fund our ordinary course cash requirements for the remainder of 2011. We also believe that cash flows from operations will be sufficient to repay any borrowings under our revolving credit facilities, as necessary, and all scheduled term loan payments.

Receivables

We recognize revenues on most original equipment orders using the percentage-of-completion method. Accordingly, accounts receivable are generated when revenue is recognized, which can be before the funds are collected or, in some cases, before the customer is billed. At March 31, 2011, we had $880.1 million of accounts receivable compared to $918.8 million of

accounts receivable at December 31, 2010. Receivables at March 31, 2011 and December 31, 2010 included $427.8 million and $381.8 million, respectively, of revenues from long-term contracts which were not billable at these dates. Billed receivables at March 31, 2011 decreased from December 31, 2010 primarily due to large collections of original equipment billed receivables.

Liabilities to Customers on Uncompleted Contracts and Warranties

Customers generally make down payments at the time of the order for a new machine as well as progress payments throughout the manufacturing process. These payments are recorded as liabilities to customers on uncompleted contracts and warranties in the Consolidated Condensed Balance Sheets.

Critical Accounting Policies and Estimates

See Critical Accounting Policies and Estimates in the Management’s Discussion and Analysis section of our 2010 Annual Report to Stockholders. There have been no material changes to these policies.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Our market risk is impacted by changes in interest rates and foreign currency exchange rates.

Interest Rates

Our interest rate exposure relates primarily to floating rate debt obligations in the United States. We manage borrowings under our credit agreement through the selection of LIBOR based borrowings, EURIBOR based borrowings, or prime-rate based borrowings. To manage a portion of our exposure to changes in LIBOR-based interest rates on our variable rate debt, we have entered into interest rate swap agreements that effectively fix the interest payments on $749.1 million ($650.0 million plus €70.0 million) of our outstanding borrowings under our term loan facility. A sensitivity analysis was performed for our floating rate debt obligations as of March 31, 2011. Based on this analysis, we have determined that a 10% change in the weighted average interest rate as of March 31, 2011 would have the effect of changing our interest expense on an annual basis by approximately $4 million.

Foreign Currency

We sell most of our surface mining original equipment, including those sold directly to foreign customers, in United States dollars and we sell most of our underground mining original equipment in either United States dollars or euros. We sell most of our surface mining aftermarket parts in United States dollars, with limited aftermarket parts sales denominated in the local currencies of various foreign markets. We sell most of our underground mining aftermarket parts in either United States dollars or euros, also with limited aftermarket parts sales denominated in the local currencies of various foreign markets. Both surface mining and underground mining aftermarket services are paid primarily in local currency, with a natural partial currency hedge through payment for local labor in local currency. The value, in United States dollars, of our investments in our foreign subsidiaries and of dividends paid to us by those subsidiaries will be affected by changes in exchange rates. We enter into currency hedges to help mitigate currency exchange risks.

Currency controls, devaluations, trade restrictions and other disruptions in the currency convertibility and in the market for currency exchange could limit our ability to timely convert sales earned abroad into United States dollars. This could adversely affect our ability to service our United States dollar indebtedness, fund our United States dollar costs and finance capital expenditures and pay dividends on our common stock.

Based on our derivative instruments outstanding at March 31, 2011, a 10% change in foreign currency exchange rates would not have a material effect on our financial position, results of operations or cash flows.

Item 4.

Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer and Secretary, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2011. Based upon their evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer and Secretary concluded that the disclosure controls and procedures were effective as of March 31, 2011 to ensure that information required to be disclosed by us in the reports we file or submit 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 us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management has excluded the Terex Mining business from its assessment of internal control over financial reporting as of March 31, 2011 because we acquired Terex Mining during 2010. The total assets and total revenues of the Terex Mining business represented approximately 41% and 30%, respectively, of our consolidated condensed financial statement amounts as of and for the quarter ended March 31, 2011. Terex Mining will be included in the assessment of internal control over financial reporting as of December 31, 2011.

There were no changes in our 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 March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.

Not applicable.

Item 1A.

Risk Factors.

There are no material changes to the disclosures regarding risk factors made in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2010.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3.

Defaults Upon Senior Securities.

Not applicable.

Item 4.

(Removed and Reserved)

Not applicable.

Item 5.

Other Information.

Not applicable.

Item 6.

Exhibits.

See Exhibit Index on last page of this report.

SIGNATURES

Pursuant to the requirements 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.


		BUCYRUS INTERNATIONAL, INC. (Registrant)

		/s/ Mark J. Knapp
		Mark J. Knapp
		Corporate Controller
Date:	May 10, 2011	Principal Accounting Officer

		/s/ Craig R. Mackus
		Craig R. Mackus
Date:	May 10, 2011	Chief Financial Officer and Secretary Principal Financial Officer

		/s/ Timothy W. Sullivan
		Timothy W. Sullivan
Date:	May 10, 2011	President and Chief Executive Officer

EXHIBIT INDEX


Exhibit Number		Description

10		Bucyrus International, Inc. Supplemental Executive Retirement Plan, amended and restated effective April 1, 2011.

31.1		Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act and Rules 13a-14(a)/15d-14(a).

31.2		Certification of Chief Financial Officer and Secretary pursuant to Section 302 of the Sarbanes-Oxley Act and Rules 13a-14(a)/15d-14(a).

32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

Furnished as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Condensed Statements of Earnings for the quarters ended March 31, 2011 and 2010; (ii) the Consolidated Condensed Statements of Comprehensive Income for the quarters ended March 31, 2011 and 2010; (iii) the Consolidated Condensed Balance Sheets as of March 31, 2011 and December 31, 2010; (iv) the Consolidated Condensed Statements of Cash Flows for the quarters ended March 31, 2011 and 2010; and (v) Notes to Consolidated Condensed Financial Statements.

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BUCYRUS INTERNATIONAL INC 10-Q