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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 September 30, 2008

OR



| ̈ | 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 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.



|                                                                       |  |                              |  |                     
|---------------------------------------------------------------------- |  | ---------------------------- |  | --------------------
|Large accelerated filer  x                                             |  |                              |  | Accelerated filer   ̈
|Non-accelerated filer   ̈ (Do not check if a smaller reporting
company) |  | Smaller reporting company   ̈

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 November 4, 2008
|Common Stock, $.01 par value |  | 74,859,316                  









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Bucyrus International, Inc.

INDEX



|         |  |                                                                                               |  |                                                                                                                        |  |         
|-------- |  | --------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | --------
|         |  |                                                                                               |  |                                                                                                                        |  | Page No.
|PART I.  |  | FINANCIAL INFORMATION:                                                                        |  |                                                                                                                       
|         |  |                                                                                              
|         |  | Item 1. Financial Statements (Unaudited)                                                      |  |                                                                                                                       
|         |  |                                                                                               | 
|         |  |                                                                                               |  | Consolidated Condensed Statements of Earnings  Quarters and nine months ended September 30, 2008 and 2007             |  | 3       
|         |  |                                                                                               | 
|         |  |                                                                                               |  | Consolidated Condensed Statements of Comprehensive Income  Quarters and nine months ended September 30, 2008 and 2007 |  | 4       
|         |  |                                                                                               | 
|         |  |                                                                                               |  | Consolidated Condensed Balance Sheets  September 30, 2008 and December 31, 2007                                       |  | 5       
|         |  |                                                                                               | 
|         |  |                                                                                               |  | Consolidated Condensed Statements of Cash Flows  Quarters and nine months ended September 30, 2008 and 2007           |  | 7       
|         |  |                                                                                               | 
|         |  |                                                                                               |  | Notes to Consolidated Condensed Financial Statements                                                                   |  | 9       
|         |  |                                                                                              
|         |  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 20                                                                                                                    
|         |  |                                                                                              
|         |  | Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |  | 35                                                                                                                    
|         |  |                                                                                              
|         |  | Item 4. Controls and Procedures                                                               |  | 36                                                                                                                    
|         |  |                                                                                              
|PART II. |  | OTHER INFORMATION:                                                                            |  |                                                                                                                       
|         |  |                                                                                              
|         |  | Item 1. Legal Proceedings                                                                     |  | 37                                                                                                                    
|         |  |                                                                                              
|         |  | Item 1A. Risk Factors                                                                         |  | 37                                                                                                                    
|         |  |                                                                                              
|         |  | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 37                                                                                                                    
|         |  |                                                                                              
|         |  | Item 3. Defaults Upon Senior Securities                                                       |  | 37                                                                                                                    
|         |  |                                                                                              
|         |  | Item 4. Submission of Matters to a Vote of Security Holders                                   |  | 37                                                                                                                    
|         |  |                                                                                              
|         |  | Item 5. Other Information                                                                     |  | 37                                                                                                                    
|         |  |                                                                                              
|         |  | Item 6. Exhibits                                                                              |  | 37                                                                                                                    
|         |  |                                                                                              
|         |  | Signatures                                                                                    |  | 38                                                                                                                    



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Bucyrus International, Inc.

Consolidated Condensed Statements of Earnings
(Unaudited)



|                                             |  |                                                  |            |                                |   |            |  |      |            |  |   |           
|-------------------------------------------- |  | ------------------------------------------------ | ---------- | ------------------------------ | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                             |  | Quarter EndedSeptember 30,                       |            | Nine Months EndedSeptember 30,
|                                             |  | 2008                                             |            | 2007                           |   | 2008       |  | 2007
|                                             |  | (Dollars in thousands, except per share amounts)
|Sales                                        |  | $                                                | 646,002    |                                | $ | 500,278    |  | $    | 1,783,991  |  | $ | 1,065,440 
|Costs of products sold                       |  |                                                  | 463,671    |                                |   | 376,650    |  |      | 1,285,979  |  |   | 793,437   
|                                             |  |                                                  |            |                                |   |            |  |      |            |  |   |           
|Gross profit                                 |  |                                                  | 182,331    |                                |   | 123,628    |  |      | 498,012    |  |   | 272,003   
|                                             |  |                                                  |            |                               
|Selling, general and administrative expenses |  |                                                  | 66,285     |                                |   | 55,802     |  |      | 185,149    |  |   | 118,607   
|Research and development expenses            |  |                                                  | 8,910      |                                |   | 5,172      |  |      | 27,420     |  |   | 12,334    
|Amortization of intangible assets            |  |                                                  | 4,183      |                                |   | 11,672     |  |      | 15,214     |  |   | 16,570    
|                                             |  |                                                  |            |                                |   |            |  |      |            |  |   |           
|Operating earnings                           |  |                                                  | 102,953    |                                |   | 50,982     |  |      | 270,229    |  |   | 124,492   
|                                             |  |                                                  |            |                               
|Interest expense  net                       |  |                                                  | 6,422      |                                |   | 8,178      |  |      | 18,919     |  |   | 15,632    
|Other expense                                |  |                                                  | 768        |                                |   | 763        |  |      | 2,304      |  |   | 1,628     
|                                             |  |                                                  |            |                                |   |            |  |      |            |  |   |           
|Earnings before income taxes                 |  |                                                  | 95,763     |                                |   | 42,041     |  |      | 249,006    |  |   | 107,232   
|Income tax expense                           |  |                                                  | 31,596     |                                |   | 13,439     |  |      | 81,441     |  |   | 33,005    
|                                             |  |                                                  |            |                                |   |            |  |      |            |  |   |           
|Net earnings                                 |  | $                                                | 64,167     |                                | $ | 28,602     |  | $    | 167,565    |  | $ | 74,227    
|                                             |  |                                                  |            |                                |   |            |  |      |            |  |   |           
|Net earnings per share data                  |  |                                                  |            |                                |   |            |  |      |            |  |   |           
|Basic:                                       |  |                                                  |            |                                |   |            |  |      |            |  |   |           
|Net earnings per share                       |  | $                                                | 0.86       |                                | $ | 0.39       |  | $    | 2.25       |  | $ | 1.08      
|Weighted average shares                      |  |                                                  | 74,339,888 |                                |   | 74,229,464 |  |      | 74,335,712 |  |   | 68,588,824
|                                             |  |                                                  |            |                               
|Diluted:                                     |  |                                                  |            |                                |   |            |  |      |            |  |   |           
|Net earnings per share                       |  | $                                                | 0.85       |                                | $ | 0.38       |  | $    | 2.23       |  | $ | 1.07      
|Weighted average shares                      |  |                                                  | 75,266,063 |                                |   | 74,971,382 |  |      | 75,248,961 |  |   | 69,241,144

See notes to consolidated condensed financial statements.



3



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Bucyrus International, Inc.

Consolidated Condensed Statements of

Comprehensive Income (Unaudited)



|                                                                                                                                             |  |                            |         |   |                                |   |        |      |  |   |         |   |  |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------------ | - | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                                                                                                                             |  | Quarter EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                                                                                             |  | 2008                       |         |   | 2007                           |   |        | 2008 |  |   | 2007    |  
|                                                                                                                                             |  | (Dollars in thousands)     |        
|Net earnings                                                                                                                                 |  | $                          | 64,167  |   |                                | $ | 28,602 |      |  | $ | 167,565 |   |  | $ | 74,227 |  
|Other comprehensive income:                                                                                                                  |  |                            |         |   |                                |   |        |      |  |   |         |   |  |   |        |  
|Foreign currency translation adjustments                                                                                                     |  |                            | (31,896 | ) |                                |   | 13,448 |      |  |   | (31,674 | ) |  |   | 15,341 |  
|Change in pension and postretirement unrecognized costs, net of income tax expense (benefit) of ($373), $55, ($1,430) and $406, respectively |  |                            | (844    | ) |                                |   | 93     |      |  |   | (3,198  | ) |  |   | 692    |  
|Derivative fair value changes, net of income tax expense (benefit) of ($4,289), ($4,031), ($7,456) and ($4,205), respectively                |  |                            | (5,831  | ) |                                |   | (7,709 | )    |  |   | (14,537 | ) |  |   | (7,043 | )
|                                                                                                                                             |  |                            |         |   |                                |   |        |      |  |   |         |   |  |   |        |  
|Comprehensive income                                                                                                                         |  | $                          | 25,596  |   |                                | $ | 34,434 |      |  | $ | 118,156 |   |  | $ | 83,217 |  
|                                                                                                                                             |  |                            |         |   |                                |   |        |      |  |   |         |   |  |   |        |  

See notes to consolidated condensed financial statements.



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Bucyrus International, Inc.

Consolidated Condensed Balance Sheets (Unaudited)



|                                    |  |                                                 |           |   |                  |   |           |  
|----------------------------------- |  | ----------------------------------------------- | --------- | - | ---------------- | - | --------- | -
|                                    |  | September 30,2008                               |           |   | December 31,2007 |  
|                                    |  | (Dollars in thousands, except pershare amounts) |          
|ASSETS                              |  |                                                 |           |   |                  |   |           |  
|CURRENT ASSETS:                     |  |                                                 |           |   |                  |   |           |  
|Cash and cash equivalents           |  | $                                               | 62,844    |   |                  | $ | 61,112    |  
|Receivables  net                   |  |                                                 | 554,029   |   |                  |   | 416,584   |  
|Inventories  net                   |  |                                                 | 622,180   |   |                  |   | 494,425   |  
|Deferred income taxes               |  |                                                 | 54,377    |   |                  |   | 33,630    |  
|Prepaid expenses and other          |  |                                                 | 34,366    |   |                  |   | 41,038    |  
|                                    |  |                                                 |           |   |                  |   |           |  
|Total Current Assets                |  |                                                 | 1,327,796 |   |                  |   | 1,046,789 |  
|                                    |  |                                                 |           |   |                  |   |           |  
|OTHER ASSETS:                       |  |                                                 |           |   |                  |   |           |  
|Goodwill                            |  |                                                 | 320,255   |   |                  |   | 317,238   |  
|Intangible assets  net             |  |                                                 | 230,619   |   |                  |   | 245,836   |  
|Other assets                        |  |                                                 | 39,374    |   |                  |   | 47,946    |  
|                                    |  |                                                 |           |   |                  |   |           |  
|Total Other Assets                  |  |                                                 | 590,248   |   |                  |   | 611,020   |  
|                                    |  |                                                 |           |   |                  |   |           |  
|PROPERTY, PLANT AND EQUIPMENT:      |  |                                                 |           |   |                  |   |           |  
|Cost                                |  |                                                 | 573,374   |   |                  |   | 521,819   |  
|Less accumulated depreciation       |  |                                                 | (127,286  | ) |                  |   | (111,416  | )
|                                    |  |                                                 |           |   |                  |   |           |  
|Total Property, Plant and Equipment |  |                                                 | 446,088   |   |                  |   | 410,403   |  
|                                    |  |                                                 |           |   |                  |   |           |  
|TOTAL ASSETS                        |  | $                                               | 2,364,132 |   |                  | $ | 2,068,212 |  
|                                    |  |                                                 |           |   |                  |   |           |  



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Bucyrus International, Inc.

Consolidated Condensed Balance Sheets (Unaudited) (Continued)



|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------ | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                      |  | September 30,2008                                |           |   | December 31,2007 |  
|                                                                                                                                      |  | (Dollars in thousands, except per share amounts) |          
|LIABILITIES AND COMMON STOCKHOLDERS INVESTMENT                                                                                       |  |                                                  |           |   |                  |   |           |  
|CURRENT LIABILITIES:                                                                                                                  |  |                                                  |           |   |                  |   |           |  
|Accounts payable                                                                                                                      |  | $                                                | 222,855   |   |                  | $ | 146,529   |  
|Accrued expenses                                                                                                                      |  |                                                  | 171,364   |   |                  |   | 149,443   |  
|Liabilities to customers on uncompleted contracts and warranties                                                                      |  |                                                  | 240,948   |   |                  |   | 158,390   |  
|Income taxes                                                                                                                          |  |                                                  | 67,696    |   |                  |   | 55,086    |  
|Current maturities of long-term debt and other short-term obligations                                                                 |  |                                                  | 9,607     |   |                  |   | 9,348     |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|Total Current Liabilities                                                                                                             |  |                                                  | 712,470   |   |                  |   | 518,796   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|LONG-TERM LIABILITIES:                                                                                                                |  |                                                  |           |   |                  |   |           |  
|Deferred income taxes                                                                                                                 |  |                                                  | 55,805    |   |                  |   | 50,920    |  
|Pension, postretirement benefits and other                                                                                            |  |                                                  | 160,142   |   |                  |   | 160,925   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|Total Long-Term Liabilities                                                                                                           |  |                                                  | 215,947   |   |                  |   | 211,845   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|LONG-TERM DEBT, less current maturities                                                                                               |  |                                                  | 507,205   |   |                  |   | 526,721   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|COMMON STOCKHOLDERS INVESTMENT:                                                                                                      |  |                                                  |           |   |                  |   |           |  
|Common stock  par value $0.01 per share, authorized 200,000,000 shares, issued 75,078,402 shares and 75,044,674 shares, respectively |  |                                                  | 751       |   |                  |   | 750       |  
|Additional paid-in capital                                                                                                            |  |                                                  | 676,132   |   |                  |   | 670,966   |  
|Treasury stock  217,200 shares                                                                                                       |  |                                                  | (851      | ) |                  |   | (851      | )
|Accumulated earnings                                                                                                                  |  |                                                  | 304,462   |   |                  |   | 142,560   |  
|Accumulated other comprehensive loss                                                                                                  |  |                                                  | (51,984   | ) |                  |   | (2,575    | )
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|Total Common Stockholders Investment                                                                                                 |  |                                                  | 928,510   |   |                  |   | 810,850   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|TOTAL LIABILITIES AND COMMON STOCKHOLDERS INVESTMENT                                                                                 |  | $                                                | 2,364,132 |   |                  | $ | 2,068,212 |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  

See notes to consolidated condensed financial statements.



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Bucyrus International, Inc.

Consolidated Condensed Statements of Cash Flows (Unaudited)



|                                                                 |  |                                 |         |   |      |   |          |  
|---------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | -------- | -
|                                                                 |  | Nine Months Ended September 30, |        
|                                                                 |  | 2008                            |         |   | 2007 |  
|                                                                 |  | (Dollars in thousands)          |        
|Net Cash Provided By Operating Activities                        |  | $                               | 84,062  |   |      | $ | 25,777   |  
|                                                                 |  |                                 |         |   |      |   |          |  
|Cash Flows From Investing Activities                             |  |                                 |         |   |      |   |          |  
|Purchases of property, plant and equipment                       |  |                                 | (62,223 | ) |      |   | (64,283  | )
|Proceeds from sale of property, plant and equipment              |  |                                 | 2,796   |   |      |   | 446      |  
|Purchases of investments                                         |  |                                 | (4,996  | ) |      |   |         |  
|Proceeds from sale of investments                                |  |                                 | 6,011   |   |      |   |         |  
|Acquisition of DBT GmbH                                          |  |                                 |        |   |      |   | (707,236 | )
|DBT GmbH acquisition cash settlement for liabilities not assumed |  |                                 |        |   |      |   | 26,549   |  
|Other  net                                                      |  |                                 | 115     |   |      |   |         |  
|                                                                 |  |                                 |         |   |      |   |          |  
|Net cash used in investing activities                            |  |                                 | (58,297 | ) |      |   | (744,524 | )
|                                                                 |  |                                 |         |   |      |   |          |  
|Cash Flows From Financing Activities                             |  |                                 |         |   |      |   |          |  
|Net (repayments of) revolving credit facilities                  |  |                                 | (15,130 | ) |      |   | (63,104  | )
|Proceeds from term loan facility                                 |  |                                 |        |   |      |   | 825,000  |  
|Payment of term loan facility                                    |  |                                 | (3,865  | ) |      |   | (325,000 | )
|Proceeds from other bank borrowings and long-term debt           |  |                                 | 7,203   |   |      |   | 5,719    |  
|Payments of other bank borrowings and long-term debt             |  |                                 | (3,649  | ) |      |   | (11,375  | )
|Payment of refinancing expenses for new credit facilities        |  |                                 |        |   |      |   | (15,672  | )
|Net proceeds from issuance of common stock                       |  |                                 |        |   |      |   | 336,052  |  
|Payments under capital lease agreements                          |  |                                 | (980    | ) |      |   |         |  
|Tax benefit related to share-based payment awards                |  |                                 | 1,566   |   |      |   | 167      |  
|Dividends paid                                                   |  |                                 | (5,576  | ) |      |   | (5,360   | )
|                                                                 |  |                                 |         |   |      |   |          |  
|Net cash provided by (used in) financing activities              |  |                                 | (20,431 | ) |      |   | 746,427  |  
|Effect of exchange rate changes on cash                          |  |                                 | (3,602  | ) |      |   | 2,785    |  
|                                                                 |  |                                 |         |   |      |   |          |  
|Net increase in cash and cash equivalents                        |  |                                 | 1,732   |   |      |   | 30,465   |  
|Cash and cash equivalents at beginning of period                 |  |                                 | 61,112  |   |      |   | 9,575    |  
|                                                                 |  |                                 |         |   |      |   |          |  
|Cash and cash equivalents at end of period                       |  | $                               | 62,844  |   |      | $ | 40,040   |  
|                                                                 |  |                                 |         |   |      |   |          |  



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Bucyrus International, Inc.

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



|                                                                                                                                                                            |  |                                 |        |      |   |           |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | ---- | - | --------- | -
|                                                                                                                                                                            |  | Nine Months Ended September 30, |       
|                                                                                                                                                                            |  | 2008                            |        | 2007 |  
|                                                                                                                                                                            |  | (Dollars in thousands)          |       
|Supplemental Disclosures of Cash Flow Information                                                                                                                           |  |                                 |        |      |   |           |  
|Cash paid during the period for:                                                                                                                                            |  |                                 |        |      |   |           |  
|Interest                                                                                                                                                                    |  | $                               | 21,434 |      | $ | 16,203    |  
|Income taxes  net of refunds                                                                                                                                               |  | $                               | 50,632 |      | $ | 35,420    |  
|                                                                                                                                                                            |  |                                
|Supplemental Disclosure of Noncash Investing Activity                                                                                                                       |  |                                 |        |      |   |           |  
|Capital expenditures related to expansion program included in accounts payable                                                                                              |  |                                 |       |      | $ | 321       |  
|                                                                                                                                                                            |  |                                
|Supplemental Schedule of Non-Cash Investing and Financing Activities                                                                                                        |  |                                 |        |      |   |           |  
|On May 4, 2007, the Company purchased certain assets and assumed certain liabilities of DBT GmbH. In conjunction with the acquisition,
liabilities were assumed as follows: |  |                                 |        |      |   |           |  
|Fair value of assets acquired                                                                                                                                               |  |                                 |        |      | $ | 1,291,638 |  
|Cash paid                                                                                                                                                                   |  |                                 |        |      |   | (694,822  | )
|Fair value of Company common stock issued                                                                                                                                   |  |                                 |        |      |   | (21,782   | )
|Acquisition expenses paid                                                                                                                                                   |  |                                 |        |      |   | (12,414   | )
|Accrued acquisition expenses                                                                                                                                                |  |                                 |        |      |   | (1,064    | )
|                                                                                                                                                                            |  |                                 |        |      |   |           |  
|Liabilities assumed                                                                                                                                                         |  |                                 |        |      | $ | 561,556   |  
|                                                                                                                                                                            |  |                                 |        |      |   |           |  

See notes to consolidated condensed financial statements.



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Bucyrus International, Inc.

Notes to Consolidated Condensed Financial Statements (Unaudited)



|1. | Bucyrus International, Inc. (the Company) is a leading designer, manufacturer and marketer of high productivity mining equipment for surface and underground mining. 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. The Company has more customers overall in its underground mining segment than in its surface mining segment. 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, Germany, Poland and the United States and service and sales centers in Australia, Brazil, Canada, Chile, China, England, India, Mexico, Peru, Russia, South Africa and the United States.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. | In the opinion of Company management, the consolidated condensed financial statements contain all adjustments necessary to present fairly in all material respects the financial
results for the interim periods. 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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2008.



|3. | On April 24, 2008, the Companys stockholders approved an amendment to the Companys Amended and Restated Certificate of Incorporation to eliminate all references to
Class B common stock and rename the Companys Class A common stock as common stock.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On April 30,
2008, the Companys stockholders approved an amendment to the Companys Amended and Restated Certificate of Incorporation increasing the number of authorized shares of common stock from 75 million to 200 million. Also on
April 30, 2008, the Company announced a two-for-one split of the Companys common stock in the form of a 100% stock dividend. The stock dividend was paid on May 27, 2008 to stockholders of record on May 13, 2008 and the
Companys common stock began trading on a split-adjusted basis on May 28, 2008. All previously reported net earnings per share and number of shares in the accompanying consolidated condensed financial statements and notes thereto have been
adjusted to reflect this stock split.



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|4. | Inventories consisted of the following:
|-- | ---------------------------------------



|                                                |  |                        |         |                  |   |        
|----------------------------------------------- |  | ---------------------- | ------- | ---------------- | - | -------
|                                                |  | September 30,2008      |         | December 31,2007
|                                                |  | (Dollars in thousands)
|Raw materials and parts                         |  | $                      | 88,443  |                  | $ | 113,244
|Work in process                                 |  |                        | 248,952 |                  |   | 132,998
|Finished products (primarily replacement parts) |  |                        | 284,785 |                  |   | 248,183
|                                                |  |                        |         |                  |   |        
|                                                |  | $                      | 622,180 |                  | $ | 494,425
|                                                |  |                        |         |                  |   |        



|5. | The Companys credit facilities include a secured revolving credit facility of $375.0 million, an unsecured German revolving credit facility of 65.0 million, each of
which mature on May 4, 2012, and a term loan facility of $400.0 million plus 75.0 million with a maturity date of May 4, 2014. The entire secured revolving credit facility may be used for letters of credit.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At September 30, 2008, the Company had no borrowings under the secured revolving credit facility or the unsecured German
credit facility. The amount potentially available for borrowings under the secured revolving credit facility at September 30, 2008 was $230.1 million, after taking into account $144.9 million of issued letters of credit. The amount potentially
available for borrowings under the unsecured German credit facility at September 30, 2008 was $45.0 million (31.9 million), after taking into account $46.5 million (33.1 million) of issued letters of credit. At September 30,
2008, the Company had borrowings under the term loan facility of $502.2 million ($396.0 million plus 74.3 million) at a weighted average annual interest rate of 4.91%.

The Companys obligations under its credit facilities are guaranteed, on a joint and several basis, by certain of its domestic subsidiaries. In
addition, the Companys obligations under the secured revolving credit facility and the term loan facility are secured by a security interest in substantially all of its consolidated tangible and intangible domestic assets (subject to certain
exceptions), as well as 100% of the outstanding capital stock of its domestic subsidiaries and 65% of the voting stock and 100% of the non-voting stock of certain of its first-tier foreign subsidiaries.



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|6. | The following is a reconciliation of the numerators and the denominators of the basic and diluted net earnings per share of common stock calculations for the quarters and nine
months ended September 30, 2008 and 2007.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|---------------------------------------------------------------------------------------------------- |  | ----------------------------------------------- | ---------- | ------------------------------ | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                                                                                     |  | Quarter EndedSeptember 30,                      |            | Nine Months EndedSeptember 30,
|                                                                                                     |  | 2008                                            |            | 2007                           |   | 2008       |  | 2007
|                                                                                                     |  | (Dollar in thousands, except per share amounts)
|Net earnings                                                                                         |  | $                                               | 64,167     |                                | $ | 28,602     |  | $    | 167,565    |  | $ | 74,227    
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Weighted average shares outstanding                                                                  |  |                                                 | 74,339,888 |                                |   | 74,229,464 |  |      | 74,335,712 |  |   | 68,588,824
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Basic net earnings per share:                                                                        |  | $                                               | 0.86       |                                | $ | 0.39       |  | $    | 2.25       |  | $ | 1.08      
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Weighted average shares outstanding                                                                  |  |                                                 | 74,339,888 |                                |   | 74,229,464 |  |      | 74,335,712 |  |   | 68,588,824
|Effect of dilutive stock options, nonvested shares, stock appreciation rights and performance shares |  |                                                 | 926,175    |                                |   | 741,918    |  |      | 913,249    |  |   | 652,320   
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Weighted average shares outstanding  diluted                                                        |  |                                                 | 75,266,063 |                                |   | 74,971,382 |  |      | 75,248,961 |  |   | 69,241,144
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Diluted net earnings per share                                                                       |  | $                                               | 0.85       |                                | $ | 0.38       |  | $    | 2.23       |  | $ | 1.07      
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           



|7. | During the first nine months of 2008, the Company issued 55,350 nonvested shares to certain employees pursuant to the Bucyrus International, Inc. Omnibus Incentive Plan 2007 (the
Omnibus Plan). These shares fully cliff vest on December 31, 2011. Nonvested share activity during the nine months ended September 30, 2008 was as follows:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                  |  |                 |   |  |                                      |      
|--------------------------------- |  | --------------- | - |  | ------------------------------------ | -----
|                                  |  | Number ofShares |   |  | Weighted-AverageGrant DateFair
Value
|Outstanding at January 1, 2008    |  | 391,262         |   |  | $                                    | 21.46
|Granted                           |  | 55,350          |   |  | $                                    | 51.99
|Forfeited                         |  | (12,100         | ) |  | $                                    | 29.25
|Vested                            |  | (140,088        | ) |  | $                                    | 17.86
|                                  |  |                 |   |  |                                      |      
|Outstanding at September 30, 2008 |  | 294,424         |   |  | $                                    | 28.59
|                                  |  |                 |   |  |                                      |      



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At September 30, 2008, there was $5.4 million of unrecognized compensation expense related to
nonvested share grants. This cost is expected to be recognized over a weighted-average period of approximately 2.2 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
September 30, 2008, the Company expected approximately 275,000 shares to vest and these shares had an aggregate intrinsic value of $12.3 million and a weighted-average remaining contractual term of approximately 1.6 years. The total fair value
of shares vested during the nine months ended September 30, 2008 was $6.8 million.

During the first nine months of 2008, the Company
also granted stock appreciation rights (SARs) to certain employees pursuant to the Omnibus Plan. The SARs vest incrementally and can be settled in shares only. SAR activity during the nine months ended September 30, 2008 was as
follows:



|                                             |  |                 |   |  |                                      |      
|-------------------------------------------- |  | --------------- | - |  | ------------------------------------ | -----
|                                             |  | Number ofShares |   |  | Weighted-AverageGrant DateFair
Value
|Outstanding at January 1, 2008               |  | 1,004,950       |   |  | $                                    | 11.59
|Granted                                      |  | 263,950         |   |  | $                                    | 24.14
|Forfeited                                    |  | (40,680         | ) |  | $                                    | 14.64
|Exercised                                    |  | (33,880         | ) |  | $                                    | 12.35
|                                             |  |                 |   |  |                                      |      
|Outstanding at September 30, 2008            |  | 1,194,340       |   |  | $                                    | 14.24
|                                             |  |                 |   |  |                                      |      
|Vested and exercisable at September 30, 2008 |  | 166,736         |   |  | $                                    | 10.82
|                                             |  |                 |   |  |                                      |      

At September 30, 2008, there was $8.7 million of unrecognized compensation expense related to
SARs that are vested or expected to vest. This expense is expected to be recognized over a weighted-average period of approximately 2.5 years. The grant date fair value of the SARs was calculated using the Black-Scholes pricing model. The
assumptions used in this model were as follows:



|                                |  |           |  
|------------------------------- |  | --------- | -
|Risk-free interest rate         |  | 3.49      | %
|Expected stock price volatility |  | 42        | %
|Expected life                   |  | 6.5 years |  
|Dividend yield                  |  | 0.19      | %

The risk-free interest rate was based on the U.S. Government Treasury strips rate on the date of
grant and with a maturity equal to the expected life of the SARs. The expected stock price volatility was based on the historical activity of the Companys common stock. The expected life was calculated using the simplified method for
plain-vanilla issuances. The expected dividend yield was based on the annual dividends which have been paid on the Companys common stock.



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|8. | Pension and postretirement expenses consisted of the following:
|-- | ---------------------------------------------------------------



|                                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|------------------------------------------------------ |  | --------------------------- | ------- | - | ------------------------------- | - | ------- | ------------------- |  | - | ----------------------- | - |  | - | ------- | -
|                                                       |  | Pension Benefits            |        
|                                                       |  | Quarter Ended September 30, |         |   | Nine Months Ended September 30, |  
|                                                       |  | 2008                        |         |   | 2007                            |   |         | 2008                |  |   | 2007                    |  
|                                                       |  | (Dollars in thousands)      |        
|Service cost                                           |  | $                           | 2,993   |   |                                 | $ | 766     |                     |  | $ | 4,086                   |   |  | $ | 2,068   |  
|Interest cost                                          |  |                             | 4,542   |   |                                 |   | 2,574   |                     |  |   | 9,031                   |   |  |   | 6,105   |  
|Expected return on assets                              |  |                             | (3,565  | ) |                                 |   | (1,735  | )                   |  |   | (5,165                  | ) |  |   | (4,585  | )
|Amortization of:                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|Prior service cost                                     |  |                             | 398     |   |                                 |   | 139     |                     |  |   | 348                     |   |  |   | 339     |  
|Actuarial loss                                         |  |                             | 556     |   |                                 |   | 138     |                     |  |   | 857                     |   |  |   | 938     |  
|                                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|Net periodic benefit cost                              |  | $                           | 4,924   |   |                                 | $ | 1,882   |                     |  | $ | 9,157                   |   |  | $ | 4,865   |  
|                                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|                                                       | 
|                                                       |  | Postretirement Benefits     |        
|                                                       |  | Quarter Ended September 30, |         |   | Nine Months Ended September 30, |  
|                                                       |  | 2008                        |         |   | 2007                            |   |         | 2008                |  |   | 2007                    |  
|                                                       |  | (Dollars in thousands)      |        
|Service cost                                           |  | $                           | 187     |   |                                 | $ | 287     |                     |  | $ | 587                     |   |  | $ | 787     |  
|Interest cost                                          |  |                             | (716    | ) |                                 |   | 224     |                     |  |   | 734                     |   |  |   | 724     |  
|Expected return on assets                              |  |                             | 1,750   |   |                                 |   |        |                     |  |   |                        |   |  |   |        |  
|Amortization of:                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|Prior service cost                                     |  |                             | (437    | ) |                                 |   | (87     | )                   |  |   | (187                    | ) |  |   | (187    | )
|Actuarial loss                                         |  |                             | (300    | ) |                                 |   | (41     | )                   |  |   |                        |   |  |   | 9       |  
|                                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|Net periodic benefit cost                              |  | $                           | 484     |   |                                 | $ | 383     |                     |  | $ | 1,134                   |   |  | $ | 1,333   |  
|                                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|                                                      
|9.      Intangible assets consisted of the following:  | 
|                                                       |  |                            
|                                                       |  | September 30, 2008          |         |   | December 31, 2007               |  
|                                                       |  | GrossCarryingAmount         |         |   | AccumulatedAmortization         |   |         | GrossCarryingAmount |  |   | AccumulatedAmortization |  
|                                                       |  | (Dollars in thousands)      |        
|Amortized intangible assets:                           |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|Engineering drawings                                   |  | $                           | 25,500  |   |                                 | $ | (14,050 | )                   |  | $ | 25,500                  |   |  | $ | (13,094 | )
|Technology                                             |  |                             | 115,000 |   |                                 |   | (13,576 | )                   |  |   | 115,000                 |   |  |   | (6,389  | )
|Customer relationships                                 |  |                             | 112,000 |   |                                 |   | (7,933  | )                   |  |   | 112,000                 |   |  |   | (3,733  | )
|Backlog                                                |  |                             | 8,000   |   |                                 |   | (8,000  | )                   |  |   | 8,000                   |   |  |   | (5,333  | )
|Trademarks                                             |  |                             | 12,000  |   |                                 |   | (12,000 | )                   |  |   | 12,000                  |   |  |   | (12,000 | )
|Other                                                  |  |                             | 5,855   |   |                                 |   | (4,613  | )                   |  |   | 5,855                   |   |  |   | (4,406  | )
|                                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|                                                       |  | $                           | 278,355 |   |                                 | $ | (60,172 | )                   |  | $ | 278,355                 |   |  | $ | (44,955 | )
|                                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  
|Unamortized intangible assets  Trademarks/Trade names |  | $                           | 12,436  |   |                                 |   |         |                     |  | $ | 12,436                  |   |  |   |         |  
|                                                       |  |                             |         |   |                                 |   |         |                     |  |   |                         |   |  |   |         |  



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Changes in the carrying amount of goodwill for the nine months ended September 30, 2008 were as
follows:



|                              |  |               |        |                   |   |        
|----------------------------- |  | ------------- | ------ | ----------------- | - | -------
|                              |  | SurfaceMining |        | UndergroundMining
|Balance at January 1, 2008    |  | $             | 47,306 |                   | $ | 269,932
|Purchase price adjustments    |  |               |       |                   |   | 3,017  
|                              |  |               |        |                   |   |        
|Balance at September 30, 2008 |  | $             | 47,306 |                   | $ | 272,949
|                              |  |               |        |                   |   |        

The estimated future amortization expense of intangible assets at September 30, 2008 was as
follows (dollars in thousands):



|                              |  |   |        
|----------------------------- |  | - | -------
|2008 (remaining three months) |  | $ | 4,180  
|2009                          |  |   | 16,601 
|2010                          |  |   | 16,601 
|2011                          |  |   | 16,601 
|2012                          |  |   | 16,601 
|2013                          |  |   | 16,601 
|Future                        |  |   | 130,998
|                              |  |   |        
|                              |  | $ | 218,183
|                              |  |   |        



|10. | 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, allocating resources, and based on the similarity of customers served, distinctive products and services, common use of facilities and economic results attained. Prior to the acquisition of DBT in May
2007, all of the Companys operations were in surface mining and were classified as one operating segment.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
accounting policies of the segments are the same as those described in Note A to the Companys 2007 consolidated financial statements. Operating earnings for each segment do not include interest expense, 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. Capital expenditures include amounts recorded in accounts payable. There are no significant
inter-segment sales. Identifiable assets are those used in the operations in each segment.



14



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##### Table of Contents

Segment information for the quarter and nine months ended September 30, 2008 and 2007 was as
follows:



|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|---------------------------- |  | -------------------------------- | ------- | ----------------- | - | ------- | --------------------------- |  | ------------------- | ------ | ----------- | - | ------ |  | - | ---------
|                             |  | Quarter Ended September 30, 2008
|                             |  | Sales                            |         | OperatingEarnings |   |         | DepreciationandAmortization |  | CapitalExpenditures |        | TotalAssets
|                             |  | (Dollars in thousands)          
|Surface mining               |  | $                                | 337,148 |                   | $ | 72,269  |                             |  | $                   | 4,733  |             | $ | 12,346 |  | $ | 1,010,100
|Underground mining           |  |                                  | 308,854 |                   |   | 39,874  |                             |  |                     | 8,092  |             |   | 5,551  |  |   | 1,354,032
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Total operations             |  |                                  | 646,002 |                   |   | 112,143 |                             |  |                     | 12,825 |             |   | 17,897 |  |   | 2,364,132
|Corporate                    |  |                                  | N/A     |                   |   | (9,190  | )                           |  |                     | N/A    |             |   | N/A    |  |   | N/A      
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Consolidated total           |  | $                                | 646,002 |                   |   | 102,953 |                             |  |                     | 12,825 |             | $ | 17,897 |  | $ | 2,364,132
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Interest expense  net       |  |                                  |         |                   |   | (6,422  | )                           |  |                     |        |             |   |        |  |   |          
|Other expense                |  |                                  |         |                   |   | (768    | )                           |  |                     | 768    |             |   |        |  |   |          
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Earnings before income taxes |  |                                  |         |                   | $ | 95,763  |                             |  | $                   | 13,593 |             |   |        |  |   |          
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|                             | 
|                             |  | Quarter Ended September 30, 2007
|                             |  | Sales                            |         | OperatingEarnings |   |         | DepreciationandAmortization |  | CapitalExpenditures |        | TotalAssets
|                             |  | (Dollars in thousands)          
|Surface mining               |  | $                                | 237,104 |                   | $ | 42,872  |                             |  | $                   | 4,491  |             | $ | 18,804 |  | $ | 739,165  
|Underground mining           |  |                                  | 263,174 |                   |   | 12,283  |                             |  |                     | 15,088 |             |   | 7,158  |  |   | 1,357,584
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Total operations             |  |                                  | 500,278 |                   |   | 55,155  |                             |  |                     | 19,579 |             |   | 25,962 |  |   | 2,096,749
|Corporate                    |  |                                  | N/A     |                   |   | (4,173  | )                           |  |                     | N/A    |             |   | N/A    |  |   | N/A      
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Consolidated total           |  | $                                | 500,278 |                   |   | 50,982  |                             |  |                     | 19,579 |             | $ | 25,962 |  | $ | 2,096,749
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Interest expense  net       |  |                                  |         |                   |   | (8,178  | )                           |  |                     |        |             |   |        |  |   |          
|Other expense                |  |                                  |         |                   |   | (763    | )                           |  |                     | 763    |             |   |        |  |   |          
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Earnings before income taxes |  |                                  |         |                   | $ | 42,041  |                             |  | $                   | 20,342 |             |   |        |  |   |          
|                             |  |                                  |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          



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|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|---------------------------- |  | ------------------------------------ | --------- | ----------------- | - | ------- | --------------------------- |  | ------------------- | ------ | ----------- | - | ------ |  | - | ---------
|                             |  | Nine Months Ended September 30, 2008
|                             |  | Sales                                |           | OperatingEarnings |   |         | DepreciationandAmortization |  | CapitalExpenditures |        | TotalAssets
|                             |  | (Dollars in thousands)              
|Surface mining               |  | $                                    | 922,985   |                   | $ | 190,872 |                             |  | $                   | 14,813 |             | $ | 46,589 |  | $ | 1,010,100
|Underground mining           |  |                                      | 861,006   |                   |   | 103,421 |                             |  |                     | 27,696 |             |   | 15,634 |  |   | 1,354,032
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Total operations             |  |                                      | 1,783,991 |                   |   | 294,293 |                             |  |                     | 42,509 |             |   | 62,223 |  |   | 2,364,132
|Corporate                    |  |                                      | N/A       |                   |   | (24,064 | )                           |  |                     | N/A    |             |   | N/A    |  |   | N/A      
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Consolidated total           |  | $                                    | 1,783,991 |                   |   | 270,229 |                             |  |                     | 42,509 |             | $ | 62,223 |  | $ | 2,364,132
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Interest expense  net       |  |                                      |           |                   |   | (18,919 | )                           |  |                     |        |             |   |        |  |   |          
|Other expense                |  |                                      |           |                   |   | (2,304  | )                           |  |                     | 2,304  |             |   |        |  |   |          
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Earnings before income taxes |  |                                      |           |                   | $ | 249,006 |                             |  | $                   | 44,813 |             |   |        |  |   |          
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|                             | 
|                             |  | Nine Months Ended September 30, 2007
|                             |  | Sales                                |           | OperatingEarnings |   |         | DepreciationandAmortization |  | CapitalExpenditures |        | TotalAssets
|                             |  | (Dollars in thousands)              
|Surface mining               |  | $                                    | 641,060   |                   | $ | 106,964 |                             |  | $                   | 13,206 |             | $ | 51,191 |  | $ | 739,165  
|Underground mining           |  |                                      | 424,380   |                   |   | 23,749  |                             |  |                     | 22,707 |             |   | 10,366 |  |   | 1,357,584
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Total operations             |  |                                      | 1,065,440 |                   |   | 130,713 |                             |  |                     | 35,913 |             |   | 61,557 |  |   | 2,096,749
|Corporate                    |  |                                      | N/A       |                   |   | (6,221  | )                           |  |                     | N/A    |             |   | N/A    |  |   | N/A      
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Consolidated total           |  | $                                    | 1,065,440 |                   |   | 124,492 |                             |  |                     | 35,913 |             | $ | 61,557 |  | $ | 2,096,749
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Interest expense  net       |  |                                      |           |                   |   | (15,632 | )                           |  |                     |        |             |   |        |  |   |          
|Other expense                |  |                                      |           |                   |   | (1,628  | )                           |  |                     | 1,628  |             |   |        |  |   |          
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Earnings before income taxes |  |                                      |           |                   | $ | 107,232 |                             |  | $                   | 37,541 |             |   |        |  |   |          
|                             |  |                                      |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          



|11. | To manage a portion of the Companys exposure to changes in LIBOR-based interest rates on its variable rate debt, the Company entered into two interest rate
swap agreements in 2007 that effectively fix the interest payments on $200.0 million of its outstanding borrowings under its term loan facility. One swap matures on May 4, 2010 and currently fixes the interest on $50.0 million of the term loan
borrowings at 5.094% plus the applicable spread. This swap has been designated as a cash flow hedge of LIBOR-based interest payments. In accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (SFAS No. 133), the effective portion of the change in fair value of the derivative 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 will be recognized as an adjustment to interest expense. The other swap matures on May 4, 2010 and currently fixes the interest rate on $150.0
million of the term loan borrowings at 4.88% plus the applicable spread. At inception, this swap was also designated as a cash flow hedge of LIBOR-based interest payments. This swap is with Lehman Brothers Special Financing, Inc., which filed for
protection under
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16



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| | Chapter 11 of the United States Bankruptcy Code, as amended, in October 2008. As a result, this interest rate swap is no longer designated as a cash flow
hedge. The impact of this change was not material to the Companys financial statements. See note 14 for additional information related to this swap.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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-U.S. operations. The currency effects of the debt obligations are reflected in accumulated other comprehensive income (loss) where they offset translation gains and losses recorded on the Companys net
investments in Germany.

The Company also uses forward foreign exchange contracts to reduce the exchange rate risk of specific foreign
currency denominated transactions. The Company has designated these hedges as either cash flow hedges or fair value hedges in accordance with SFAS No. 133.

The Company also uses natural hedges to mitigate risks associated with foreign currency exposures. For example, oftentimes the Company 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.



|12. | Product warranty, product liability and legal matters at September 30, 2008 were as follows:
|--- | --------------------------------------------------------------------------------------------

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 nine months ended September 30, 2008 and
2007 were as follows:



|                          |  |                        |         |   |      |   |        |  
|------------------------- |  | ---------------------- | ------- | - | ---- | - | ------ | -
|                          |  | 2008                   |         |   | 2007 |  
|                          |  | (Dollars in thousands) |        
|Balance at January 1,     |  | $                      | 70,909  |   |      | $ | 5,788  |  
|Effect of DBT acquisition |  |                        |        |   |      |   | 74,924 |  
|Provision                 |  |                        | 10,837  |   |      |   | 8,865  |  
|Charges                   |  |                        | (12,774 | ) |      |   | (9,529 | )
|Currency translation      |  |                        | (2,302  | ) |      |   | 3,181  |  
|                          |  |                        |         |   |      |   |        |  
|Balance at September 30,  |  | $                      | 66,670  |   |      | $ | 83,229 |  
|                          |  |                        |         |   |      |   |        |  

Product Liability

The Company is normally subject to numerous product liability claims, many of which relate to products no longer manufactured by the Company or its
subsidiaries, and other claims arising in the ordinary course of business in federal and state courts. Such claims are generally related to property damage and to personal injury. The 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



17



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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 approximately 300 personal injury liability cases alleging damages due to exposure to asbestos and other substances, involving approximately 600 plaintiffs. 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

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



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|13. | Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, requires the reporting of comprehensive income (loss) in addition to net income
(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 income (loss). The Company reports comprehensive
income (loss) and accumulated other comprehensive loss in the Consolidated Statements of Common Stockholders Investment. Accumulated other comprehensive loss, net of income taxes, was as follows:
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                      |  |                        |         |   |                  |   |        |  
|----------------------------------------------------- |  | ---------------------- | ------- | - | ---------------- | - | ------ | -
|                                                      |  | September 30,2008      |         |   | December 31,2007 |  
|                                                      |  | (Dollars in thousands) |        
|Foreign currency translation adjustments              |  | $                      | (19,544 | ) |                  | $ | 12,130 |  
|Pension and postretirement benefit unrecognized costs |  |                        | (10,385 | ) |                  |   | (7,187 | )
|Derivative fair value changes                         |  |                        | (22,055 | ) |                  |   | (7,518 | )
|                                                      |  |                        |         |   |                  |   |        |  
|Accumulated other comprehensive loss                  |  | $                      | (51,984 | ) |                  | $ | (2,575 | )
|                                                      |  |                        |         |   |                  |   |        |  



|14. | On November 4, 2008, the Company terminated the $150.0 million interest rate swap with Lehman Brothers Special Financing, Inc., and replaced it with a $150.0 million interest
rate swap with a new creditworthy entity. Together with the costs associated with the terminated swap, the replacement swap effectively fixes the interest rate on $150.0 million of the term loan borrowings at 4.88% plus the applicable spread. This
swap will be designated as a cash flow hedge of LIBOR-based interest payments and will be accounted for in accordance with SFAS No. 133.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|15. | In December 2007, the Financial Accounting Standards Board (FASB) issued Statement No. 141 (R), Business Combinations (SFAS No. 141
(R)), which replaces SFAS No. 141 and provides greater consistency in the accounting and financial reporting of business combinations. SFAS No. 141 (R) requires the acquiring entity in a business combination to recognize all
assets acquired and liabilities assumed in the transaction and any non-controlling interest in the acquiree at the acquisition date and be measured at the fair value as of that date. SFAS No. 141 (R) will be effective for the Company as of
January 1, 2009. The Company is currently evaluating the impact that the adoption of SFAS No. 141 (R) will have on its financial statements
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In March 2008, the FASB issued Statement No. 161 (SFAS No. 161), Disclosures about Derivative Instruments and Hedging Activities  an amendment of FASB Statement No.133. SFAS
No. 161 enhances disclosures regarding derivatives and hedging activities, including how an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133 and how derivative
instruments and related hedged items affect an entitys financial position, financial performance and cash flows. SFAS No. 161 is effective for the Company as of January 1, 2009. The Company is currently evaluating the impact that the
adoption of SFAS No. 161 will have on its financial statements.



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##### Table of Contents

Item 2. Managements Discussion and Analysis of Financial

Condition and Results of Operations

Online Availability of Bucyrus Releases and Filings

All of our financial news releases and filings with the Securities and
Exchange Commission are posted to our website. These releases and filings are available at www.investors.bucyrus.com. Automatic email alerts for these postings are also available from this site. Corporate and general releases, as well as product
information, are available at www.bucyrus.com

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:



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



| |  |  | our ability to attract and retain skilled labor;
| | - |  | ------------------------------------------------



| |  |  | our production capacity;
| | - |  | ------------------------



| |  |  | our ability to purchase component parts or raw materials from key suppliers at acceptable prices and/or the required time schedule;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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, interest rates, customers replacement or repair cycles, consolidation in the mining industry and competitive pressures;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | the highly competitive nature of the mining industry;
| | - |  | -----------------------------------------------------



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



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##### Table of Contents

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



| |  |  | product liability, environmental and other potential litigation;
| | - |  | ----------------------------------------------------------------



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



| |  |  | our ability to satisfy underfunded pension obligations;
| | - |  | -------------------------------------------------------



| |  |  | our ability to effectively and efficiently integrate the operations of DBT and realize expected levels of sales and profit from this acquisition;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | potential risks, material weaknesses in financial reporting and liabilities of DBT unknown to us;
| | - |  | -------------------------------------------------------------------------------------------------



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



| |  |  | our reliance on significant customers;
| | - |  | --------------------------------------



| |  |  | volatility and tightening of credit markets and unprecedented financial market conditions that could lead to our customers deferring capital investments;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our experience in the underground mining business, which is less than some of our competitors; and
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | our increased levels of debt and debt service obligations relating to our acquisition of DBT.
| | - |  | ---------------------------------------------------------------------------------------------

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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2008. 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 the Company, us, we and our in the following discussion and analysis means, unless the context indicates otherwise, Bucyrus International, Inc.
together with its consolidated subsidiaries.

Business

We are a leading designer, manufacturer and marketer of high productivity 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



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also provide the aftermarket replacement parts and service for this equipment. As a result of our acquisition of DBT GmbH (DBT) in May 2007, we
operate in two business segments: surface mining and underground mining. As of January 1, 2008, all of our products and services are marketed under a single name: Bucyrus. We have manufacturing facilities in Australia, China,
Germany, Poland and the United States and service and sales centers in Australia, Brazil, Canada, Chile, China, England, India, Mexico, Peru, Russia, South Africa and the United States. The largest markets for our original equipment and aftermarket
parts and service have historically been in Australia, Canada, China, Germany, India, South Africa, South America and the United States. In the future, we expect that the United States, Australia, Brazil, Canada, China and India will be increasingly
important markets for our surface mining equipment and that the United States and the markets of China, Russia, Eastern Europe and India will be increasingly important markets for our underground mining equipment. In addition, we have recently
received large orders to supply longwall systems to a customer in the Czech Republic.

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 equipment sold directly to foreign customers, and most of our aftermarket parts in United States
dollars. Our underground mining original equipment is generally sold in either United States dollars or Euros. A portion of our aftermarket parts sales are also denominated in the local currencies of Australia, Brazil, Canada, South Africa and the
United Kingdom. Aftermarket services are paid for primarily in local currency, which is naturally hedged by our payment of local labor in local currency.

In response to sustained order strength for surface mining equipment, we have substantially completed a multi-phase capacity expansion of our surface mining manufacturing facilities in South Milwaukee, Wisconsin. The
aggregate cost of phase one and two of our expansion program was $56.6 million and the cost of phase three is expected to be approximately $74 million. Assuming that we are able to attract and retain the necessary skilled labor, our expanded
facilities are expected to enable us to increase our annual shovel production capacity to at least 24 machines from a capacity of 10 machines in 2006 and 16 machines in 2007, as well as approximately double our manufactured parts capacity from 2006
levels. This expansion also will help provide us with added flexibility to increase dragline production should demand for shovels decline or demand for draglines increase. In addition, we expect that this expansion will provide for improved
efficiency and workflow. In the first quarter of 2008, our board of directors approved an additional $45.0 million for additional renovations of our South Milwaukee facility, which we expect will be completed in 2009. Approximately $21.0 million of
this expenditure is part of our expected total 2008 capital expenditures of $100.0 million to $110.0 million, and will be financed by cash flows from operating activities and, to the extent necessary, borrowings under our credit facilities.

We have completed the expansion of our Kilgore, Texas surface mining service center and are in the process of expanding our underground
mining service facility in Russia and surface mining service center in Gillette, Wyoming. The expansion in Russia will be completed by the end of 2008 and the expansion in Wyoming will be completed in 2009. We are also evaluating the establishment
of a new service facility in Eastern Europe to support our underground mining business in this region. The expenditures for the expansion of our facilities in Texas, Russia, and a portion of the cost of the expansion in Wyoming are included in our
expected total capital expenditures of $100.0 million to $110.0 million in 2008.



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Backlog and New Orders

Our backlog level 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 future sales and cash flows.
Due to the high cost of some original equipment, our backlog is subject to volatility, particularly over relatively short periods. Many of our customers are large multinational corporations who finance their equipment purchases with internal cash or
through governments.

Our backlog at September 30, 2008 and December 31, 2007, as well as the portion of our backlog which is
expected to be recognized within 12 months of these dates, was as follows:



|                    |  |                        |           |                   |   |           |  |      |  
|------------------- |  | ---------------------- | --------- | ----------------- | - | --------- |  | ---- | -
|                    |  | September 30, 2008     |           | December 31, 2007 |   | % Change  | 
|                    |  | (Dollars in thousands) |          
|Surface Mining:     |  |                        |           |                   |   |           |  |      |  
|Total               |  | $                      | 1,318,297 |                   | $ | 804,781   |  | 63.8 | %
|Next 12 months      |  | $                      | 781,404   |                   | $ | 579,448   |  | 34.9 | %
|Underground Mining: |  |                        |           |                   |   |           |  |      |  
|Total               |  | $                      | 1,188,215 |                   | $ | 636,473   |  | 86.7 | %
|Next 12 months      |  | $                      | 908,957   |                   | $ | 551,923   |  | 64.7 | %
|Total:              |  |                        |           |                   |   |           |  |      |  
|Total               |  | $                      | 2,506,512 |                   | $ | 1,441,254 |  | 73.9 | %
|Next 12 months      |  | $                      | 1,690,361 |                   | $ | 1,131,371 |  | 49.4 | %

A portion of our surface mining backlog at September 30, 2008 and December 31, 2007 was
related to multi-year contracts that we anticipate will generate revenue in future years.

New orders were as follows:



|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  
|----------------------------- |  | --------------------------- | ------- | ---- | ------------------------------- | -------- |  | ----- | ---- |  | ---- | --------- | -------- | - | --------- |  | ----- | -
|                              |  | Quarter Ended September 30, |         |      | Nine Months Ended September 30, |         
|                              |  | 2008                        |         | 2007 |                                 | % Change |  |       | 2008 |  | 2007 |           | % Change |  
|                              |  | (Dollars in thousands)      |        
|Surface Mining:               |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  
|Original equipment            |  | $                           | 202,341 |      | $                               | 47,117   |  | 329.4 | %    |  | $    | 657,521   |          | $ | 345,629   |  | 90.2  | %
|Aftermarket parts and service |  |                             | 159,191 |      |                                 | 95,116   |  | 67.4  | %    |  |      | 778,980   |          |   | 300,439   |  | 159.3 | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  
|                              |  |                             | 361,532 |      |                                 | 142,233  |  | 154.2 | %    |  |      | 1,436,501 |          |   | 646,068   |  | 122.3 | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  
|Underground Mining:           |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  
|Original equipment            |  |                             | 467,092 |      |                                 | 100,392  |  | 365.3 | %    |  |      | 964,207   |          |   | 227,656   |  | 323.5 | %
|Aftermarket parts and service |  |                             | 151,086 |      |                                 | 89,518   |  | 68.8  | %    |  |      | 448,541   |          |   | 151,781   |  | 195.5 | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  
|                              |  |                             | 618,178 |      |                                 | 189,910  |  | 225.5 | %    |  |      | 1,412,748 |          |   | 379,437   |  | 272.3 | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  
|Total:                        |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  
|Original equipment            |  |                             | 669,433 |      |                                 | 147,509  |  | 353.8 | %    |  |      | 1,621,728 |          |   | 573,285   |  | 182.9 | %
|Aftermarket parts and service |  |                             | 310,277 |      |                                 | 184,634  |  | 68.0  | %    |  |      | 1,227,521 |          |   | 452,220   |  | 171.4 | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  
|                              |  | $                           | 979,710 |      | $                               | 332,143  |  | 195.0 | %    |  | $    | 2,849,249 |          | $ | 1,025,505 |  | 177.8 | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |           |  |       |  

Included in surface mining aftermarket parts and service new orders for the nine months ended
September 30, 2008 was $278.3 million related to multi-year contracts that we anticipate



23



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##### Table of Contents

will generate revenue in future years. Underground original equipment new orders for the nine months ended September 30, 2008 included an order in the
Czech Republic for five longwall systems.

Results of Operations

Quarter and Nine Months Ended September 30, 2008 Compared to Quarter and Nine Months Ended September 30, 2007



|                                             |  |                                 |           |            |      |   |        |         |            |  |      |   |  |       |  
|-------------------------------------------- |  | ------------------------------- | --------- | ---------- | ---- | - | ------ | ------- | ---------- |  | ---- | - |  | ----- | -
|                                             |  | Quarter Ended September 30,     |          
|                                             |  | 2008                            |           |            | 2007 |   |        | %Change |           
|                                             |  | Amount                          |           | % of Sales |      |   | Amount |         | % of Sales |  |     
|                                             |  | (Dollars in thousands)          |          
|Sales                                        |  | $                               | 646,002   |            |     |   |        | $       | 500,278    |  |     |   |  | 29.1  | %
|Gross profit                                 |  | $                               | 182,331   |            | 28.2 | % |        | $       | 123,628    |  | 24.7 | % |  | 47.5  | %
|Selling, general and administrative expenses |  | $                               | 66,285    |            | 10.3 | % |        | $       | 55,802     |  | 11.2 | % |  | 18.8  | %
|Operating earnings                           |  | $                               | 102,953   |            | 15.9 | % |        | $       | 50,982     |  | 10.2 | % |  | 101.9 | %
|Net earnings                                 |  | $                               | 64,167    |            | 9.9  | % |        | $       | 28,602     |  | 5.7  | % |  | 124.3 | %
|                                             | 
|                                             |  | Nine Months Ended September 30, |          
|                                             |  | 2008                            |           |            | 2007 |   |        | %Change |           
|                                             |  | Amount                          |           | % of Sales |      |   | Amount |         | % of Sales |  |     
|                                             |  | (Dollars in thousands)          |          
|Sales                                        |  | $                               | 1,783,991 |            |     |   |        | $       | 1,065,440  |  |     |   |  | 67.4  | %
|Gross profit                                 |  | $                               | 498,012   |            | 27.9 | % |        | $       | 272,003    |  | 25.5 | % |  | 83.1  | %
|Selling, general and administrative expenses |  | $                               | 185,149   |            | 10.4 | % |        | $       | 118,607    |  | 11.1 | % |  | 56.1  | %
|Operating earnings                           |  | $                               | 270,229   |            | 15.1 | % |        | $       | 124,492    |  | 11.7 | % |  | 117.1 | %
|Net earnings                                 |  | $                               | 167,565   |            | 9.4  | % |        | $       | 74,227     |  | 7.0  | % |  | 125.7 | %



24



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##### Table of Contents

Sales

Sales consisted of the following:



|                              |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  
|----------------------------- |  | --------------------------- | ------- | ---- | ------------------------------- | -------- |  | ---- | ---- |  | ---- | --------- | -------- | - | --------- |  | ----- | -
|                              |  | Quarter Ended September 30, |         |      | Nine Months Ended September 30, |         
|                              |  | 2008                        |         | 2007 |                                 | % Change |  |      | 2008 |  | 2007 |           | % Change |  
|                              |  | (Dollars in thousands)      |        
|Surface Mining:               |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  
|Original equipment            |  | $                           | 155,554 |      | $                               | 113,119  |  | 37.5 | %    |  | $    | 437,631   |          | $ | 277,223   |  | 57.9  | %
|Aftermarket parts and service |  |                             | 181,594 |      |                                 | 123,985  |  | 46.5 | %    |  |      | 485,354   |          |   | 363,837   |  | 33.4  | %
|                              |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  
|                              |  |                             | 337,148 |      |                                 | 237,104  |  | 42.2 | %    |  |      | 922,985   |          |   | 641,060   |  | 44.0  | %
|                              |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  
|Underground Mining:           |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  
|Original equipment            |  |                             | 186,037 |      |                                 | 174,140  |  | 6.8  | %    |  |      | 512,653   |          |   | 277,422   |  | 84.8  | %
|Aftermarket parts and service |  |                             | 122,817 |      |                                 | 89,034   |  | 37.9 | %    |  |      | 348,353   |          |   | 146,958   |  | 137.0 | %
|                              |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  
|                              |  |                             | 308,854 |      |                                 | 263,174  |  | 17.4 | %    |  |      | 861,006   |          |   | 424,380   |  | 102.9 | %
|                              |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  
|Total:                        |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  
|Original equipment            |  |                             | 341,591 |      |                                 | 287,259  |  | 18.9 | %    |  |      | 950,284   |          |   | 554,645   |  | 71.3  | %
|Aftermarket parts and service |  |                             | 304,411 |      |                                 | 213,019  |  | 42.9 | %    |  |      | 833,707   |          |   | 510,795   |  | 63.2  | %
|                              |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  
|                              |  | $                           | 646,002 |      | $                               | 500,278  |  | 29.1 | %    |  | $    | 1,783,991 |          | $ | 1,065,440 |  | 67.4  | %
|                              |  |                             |         |      |                                 |          |  |      |      |  |      |           |          |   |           |  |       |  

The increase in surface mining sales was in both original equipment and aftermarket parts and
service and was the result of the continued strong demand for our products and services throughout the world and the positive impact of recently completed capacity improvements at our principal surface mining manufacturing facility in South
Milwaukee, Wisconsin. The high demand for our surface mining products and services continued to be driven by high global commodity prices and strong global markets for commodities mined by our machines during the first nine months of 2008. The
increase in surface mining original equipment sales for the third quarter of 2008 was in all three product lines, electric mining shovels, draglines, and blasthole drills, and for the nine months ended September 30, 2008 was in electric mining
shovels and draglines. Surface mining aftermarket parts and service sales for the quarter and nine months ended September 30, 2008 increased in nearly all global markets compared to the same periods last year. The expansion of our South
Milwaukee, Wisconsin facilities is substantially complete, which will allow for annual shovel production capacity of at least 24 machines and almost doubled manufactured parts capacity from 2006 levels.

The increase in underground mining sales for the third quarter of 2008 compared to the third quarter last year was in both original equipment and
aftermarket parts and service and reflects strong global coal prices and demand. The increase in underground mining original equipment sales was primarily due to strong original equipment new orders since the fourth quarter of 2007. Market
conditions continued to be strong in Eastern Europe and the United States.

Giving effect to our acquisition of DBT as if it would have
occurred on January 1, 2007 instead of May 4, 2007, pro forma sales for the nine months ended September 30, 2007 would have been $1,426.0 million.



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Gross Profit

Gross profit for the third quarter of 2008 was $182.3 million, or 28.2% of sales, compared to $123.6 million, or 24.7% of sales, for the third quarter of 2007. Gross profit for the nine months ended September 30,
2008 was $498.0 million, or 27.9% of sales, compared to $272.0 million, or 25.5% of sales, for the nine months ended September 30, 2007. Gross profit was reduced by purchase accounting adjustments (primarily to inventory) as a result of the
acquisition of DBT in 2007 as follows:



|                                                           |  |                            |      |   |                                |   |       |      |  |   |        |   |  |   |       
|---------------------------------------------------------- |  | -------------------------- | ---- | - | ------------------------------ | - | ----- | ---- |  | - | ------ | - |  | - | ------
|                                                           |  | Quarter EndedSeptember 30, |      |   | Nine Months EndedSeptember 30,
|                                                           |  | 2008                       |      |   | 2007                           |   |       | 2008 |  |   | 2007  
|                                                           |  | (Dollars in thousands)    
|(Increase) decrease due to purchase accounting adjustments |  | $                          | (629 | ) |                                | $ | 8,978 |      |  | $ | 11,262 |   |  | $ | 15,144
|Gross margin increase (reduction) (percentage points)      |  |                            | 0.1  |   |                                |   | (1.8  | )    |  |   | (0.6   | ) |  |   | 1.4   

The increase in gross profit for the third quarter of 2008 compared to the third quarter of 2007
was due to increased sales in both segments. The increase in gross profit for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007 was primarily due to the acquisition of DBT and increased surface
mining sales. Surface mining original equipment sales, which have lower gross margins than aftermarket parts and services sales, were 46% of total surface mining sales for the third quarter of 2008 compared to 48% for the third quarter last year,
and were 47% of total surface mining sales for the nine months ended September 30, 2008 compared to 43% for the nine months ended September 30, 2007.

Underground mining original equipment sales, which have lower gross margins than aftermarket parts and services sales, were 60% of total underground mining sales for the third quarter of 2008 compared to 66% for the
third quarter last year.

The availability of raw materials and raw material cost increases have not had a significant effect on gross
margin or operating performance. We expect gross margin in both our surface mining and underground mining segments to continue to improve as we finalize the integration of DBT and complete the renovation of our facilities in South Milwaukee,
Wisconsin.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the third quarter of 2008 were $66.3 million, or 10.3% of sales, compared to $55.8 million, or 11.2% of
sales, for the third quarter of 2007. The dollar increase in 2008 was the result of increased headcount, higher employee incentive compensation, and foreign currency losses. These expenses for the nine months ended September 30, 2008 were
$185.1 million, or 10.4% of sales, compared to $118.6 million, or 11.1% of sales, for the nine months ended September 30, 2007. The dollar increase in 2008 was primarily due to the acquisition of DBT.



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##### Table of Contents

Research and Development Expenses

Research and development expenses for the third quarter of 2008 were $8.9 million, or 1.4% of sales, compared to $5.2 million, or 1.0% of sales, for
the third quarter of 2007. These expenses for the nine months ended September 30, 2008 were $27.4 million, or 1.5% of sales, compared to $12.3 million, or 1.2% of sales, for the nine months ended September 30, 2007. The increases were due
to the acquisition of DBT, as well as the continuing development of our surface and underground mining products.

Amortization of
Intangible Assets

Amortization of intangible assets acquired in the DBT acquisition was $3.8 million for the third quarter of 2008,
compared to $11.2 million for the third quarter of 2007, and were $14.1 million for the nine months ended September 30, 2008, compared to $15.2 million for the nine months ended September 30, 2007. Amortization of intangible assets
acquired in the DBT acquisition is expected to be approximately $3.8 million per quarter through April 2019.

Operating Earnings

Operating earnings were as follows:



|                   |  |                             |         |   |                                 |   |        |          |  |       |      |  |   |         |   |  |          |         |   |  |       |  
|------------------ |  | --------------------------- | ------- | - | ------------------------------- | - | ------ | -------- |  | ----- | ---- |  | - | ------- | - |  | -------- | ------- | - |  | ----- | -
|                   |  | Quarter Ended September 30, |         |   | Nine Months Ended September 30, |  
|                   |  | 2008                        |         |   | 2007                            |   |        | % Change |  |       | 2008 |  |   | 2007    |   |  | % Change |        
|                   |  | (Dollars in thousands)      |        
|Surface mining     |  | $                           | 72,269  |   |                                 | $ | 42,872 |          |  | 68.6  | %    |  | $ | 190,872 |   |  | $        | 106,964 |   |  | 78.4  | %
|Underground mining |  |                             | 39,874  |   |                                 |   | 12,283 |          |  | 224.6 | %    |  |   | 103,421 |   |  |          | 23,749  |   |  | 335.5 | %
|                   |  |                             |         |   |                                 |   |        |          |  |       |      |  |   |         |   |  |          |         |   |  |       |  
|Total operations   |  |                             | 112,143 |   |                                 |   | 55,155 |          |  | 103.3 | %    |  |   | 294,293 |   |  |          | 130,713 |   |  | 125.1 | %
|Corporate          |  |                             | (9,190  | ) |                                 |   | (4,173 | )        |  | 120.2 | %    |  |   | (24,064 | ) |  |          | (6,221  | ) |  | 286.8 | %
|                   |  |                             |         |   |                                 |   |        |          |  |       |      |  |   |         |   |  |          |         |   |  |       |  
|Consolidated total |  | $                           | 102,953 |   |                                 | $ | 50,982 |          |  | 101.9 | %    |  | $ | 270,229 |   |  | $        | 124,492 |   |  | 117.1 | %
|                   |  |                             |         |   |                                 |   |        |          |  |       |      |  |   |         |   |  |          |         |   |  |       |  

The increase in operating earnings for the third quarter of 2008 was primarily due to increased
gross profit as a result of increased sales in both segments and for the nine months ended September 30, 2008 was primarily due to the acquisition of DBT and increased gross profit resulting from increased surface mining sales volume. Operating
earnings for our underground mining business were reduced by purchase accounting adjustments related to the acquisition of DBT of $3.1 million and $24.8 million for the quarter and nine months ended September 30, 2008, respectively, compared to
$20.2 million and $30.7 million for the quarter and nine months ended September 30, 2007. Amortization of intangible assets acquired in the DBT acquisition is expected to be approximately $3.8 million per quarter through April 2019. The
purchase accounting adjustment related to inventory has been fully amortized as of June 30, 2008.

Interest Expense  Net

Net interest expense was $6.4 million for the third quarter of 2008 compared to $8.2 million for the third quarter of 2007 and was $18.9
million for the nine months ended September 30, 2008 compared to $15.6 million for the nine months ended September 30, 2007. The increase in net interest expense for the first nine months of 2008 was due to increased debt levels related to
the financing of the acquisition of DBT.



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##### Table of Contents

Net Earnings

Net earnings for the third quarter of 2008 were $64.2 million, or $0.86 per share, compared to $28.6 million, or $0.39 per share, for the third quarter of 2007. Net earnings for the nine months ended
September 30, 2008 were $167.6 million, or $2.25 per share, compared to $74.2 million, or $1.08 per share, for the nine months ended September 30, 2007. Net earnings were reduced (increased) by amortization of purchase accounting
adjustments related to the acquisition of DBT as follows:



|                                                                |  |                            |       |                                |      |   |        |  |   |        |   |  |   |       
|--------------------------------------------------------------- |  | -------------------------- | ----- | ------------------------------ | ---- | - | ------ |  | - | ------ | - |  | - | ------
|                                                                |  | Quarter EndedSeptember 30, |       | Nine Months EndedSeptember 30,
|                                                                |  | 2008                       |       |                                | 2007 |   | 2008   |  |   | 2007  
|                                                                |  | (Dollars in thousands)    
|Inventory fair value adjustment charged to cost of product sold |  | $                          |      |                                |      | $ | 8,859  |  | $ | 12,088 |   |  | $ | 14,490
|Amortization of intangible assets                               |  |                            | 3,796 |                                |      |   | 11,195 |  |   | 14,054 |   |  |   | 15,183
|Depreciation of fixed assets                                    |  |                            | (655  | )                              |      |   | 188    |  |   | (1,337 | ) |  |   | 1,038 
|                                                                |  |                            |       |                                |      |   |        |  |   |        |   |  |   |       
|Operating earnings                                              |  |                            | 3,141 |                                |      |   | 20,242 |  |   | 24,805 |   |  |   | 30,711
|Income tax expense                                              |  |                            | 1,042 |                                |      |   | 6,216  |  |   | 8,117  |   |  |   | 10,282
|                                                                |  |                            |       |                                |      |   |        |  |   |        |   |  |   |       
|Total                                                           |  | $                          | 2,099 |                                |      | $ | 14,026 |  | $ | 16,688 |   |  | $ | 20,429
|                                                                |  |                            |       |                                |      |   |        |  |   |        |   |  |   |       

Giving effect to our acquisition of DBT as if it would have occurred on January 1, 2007
instead of on May 4, 2007, pro forma net earnings and net earnings per share would have been $36.8 million and $0.50, respectively, for the third quarter of 2007. For the nine months ended September 30, 2008, pro forma net earnings and net
earnings per share were $175.7 million and $2.36, respectively, compared to $86.8 million and $1.17, respectively, for the nine months ended September 30, 2007. Pro forma net earnings excludes the adjustment of inventory to estimated fair value
as this adjustment was directly attributed to the DBT transaction and will not have a continuing impact. The actual after tax charge to net earnings for this adjustment was zero and $8.0 million for the quarter and nine months ended
September 30, 2008, respectively, compared to $6.1 million and $9.5 million for the quarter and nine months ended September 30, 2007.



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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 for
the quarter and nine months ended September 30, 2008 and 2007, in each case compared to the same period in the prior year:



|                               |  |                            |        |                                |   |       |  |      |        |  |   |      
|------------------------------ |  | -------------------------- | ------ | ------------------------------ | - | ----- |  | ---- | ------ |  | - | -----
|                               |  | Quarter EndedSeptember 30, |        | Nine Months EndedSeptember 30,
|                               |  | 2008                       |        | 2007                           |   | 2008  |  | 2007
|                               |  | (Dollars in thousands)    
|Increase in sales              |  | $                          | 26,103 |                                | $ | 4,424 |  | $    | 49,329 |  | $ | 7,633
|Increase in gross profit       |  | $                          | 6,667  |                                | $ | 784   |  | $    | 10,619 |  | $ | 1,212
|Increase in operating earnings |  | $                          | 4,214  |                                | $ | 108   |  | $    | 5,351  |  | $ | 503  

EBITDA

EBITDA was as follows:



|                             |  |                             |         |   |                                 |   |        |          |  |      |      |  |   |         |   |  |          |         |   |  |      |  
|---------------------------- |  | --------------------------- | ------- | - | ------------------------------- | - | ------ | -------- |  | ---- | ---- |  | - | ------- | - |  | -------- | ------- | - |  | ---- | -
|                             |  | Quarter Ended September 30, |         |   | Nine Months Ended September 30, |  
|                             |  | 2008                        |         |   | 2007                            |   |        | % Change |  |      | 2008 |  |   | 2007    |   |  | % Change |        
|                             |  | (Dollars in thousands)      |        
|EBITDA                       |  | $                           | 115,778 |   |                                 | $ | 70,561 |          |  | 64.1 | %    |  | $ | 312,738 |   |  | $        | 160,405 |   |  | 95.0 | %
|                             |  |                             |         |   |                                 |  
|EBITDA as a percent of sales |  |                             | 17.9    | % |                                 |   | 14.1   | %        |  |      |      |  |   | 17.5    | % |  |          | 15.1    | % |  |      |  

EBITDA is defined as net earnings before interest income, interest expense, income taxes,
depreciation and amortization. EBITDA includes the impact of non-cash stock compensation expense, severance expenses, loss on sales of fixed assets and the inventory fair value purchase accounting adjustment charged to cost of products sold. 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:



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|                                                    |  |                            |          |   |                                |   |         |      |  |   |          |   |  |   |          |  
|--------------------------------------------------- |  | -------------------------- | -------- | - | ------------------------------ | - | ------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                    |  | Quarter EndedSeptember 30, |          |   | Nine Months EndedSeptember 30, |  
|                                                    |  | 2008                       |          |   | 2007                           |   |         | 2008 |  |   | 2007     |  
|                                                    |  | (Dollars in thousands)     |         
|Net earnings                                        |  | $                          | 64,167   |   |                                | $ | 28,602  |      |  | $ | 167,565  |   |  | $ | 74,227   |  
|Interest expense  net                              |  |                            | 6,422    |   |                                |   | 8,178   |      |  |   | 18,919   |   |  |   | 15,632   |  
|Income tax expense                                  |  |                            | 31,596   |   |                                |   | 13,439  |      |  |   | 81,441   |   |  |   | 33,005   |  
|Depreciation                                        |  |                            | 8,642    |   |                                |   | 7,906   |      |  |   | 27,295   |   |  |   | 19,342   |  
|Amortization (1)                                    |  |                            | 4,951    |   |                                |   | 12,436  |      |  |   | 17,518   |   |  |   | 18,199   |  
|                                                    |  |                            |          |   |                                |   |         |      |  |   |          |   |  |   |          |  
|EBITDA (2)                                          |  |                            | 115,778  |   |                                |   | 70,561  |      |  |   | 312,738  |   |  |   | 160,405  |  
|                                                    |  |                            |          |  
|Changes in assets and liabilities                   |  |                            | (141,714 | ) |                                |   | (37,612 | )    |  |   | (134,136 | ) |  |   | (90,942  | )
|Non-cash stock compensation expense                 |  |                            | 1,082    |   |                                |   | 1,536   |      |  |   | 5,061    |   |  |   | 4,593    |  
|Loss on sale of fixed assets                        |  |                            | 194      |   |                                |   | 58      |      |  |   | 759      |   |  |   | 358      |  
|Interest expense  net                              |  |                            | (6,422   | ) |                                |   | (8,178  | )    |  |   | (18,919  | ) |  |   | (15,632  | )
|Income tax expense                                  |  |                            | (31,596  | ) |                                |   | (13,439 | )    |  |   | (81,441  | ) |  |   | (33,005  | )
|                                                    |  |                            |          |   |                                |   |         |      |  |   |          |   |  |   |          |  
|Net cash provided by (used in) operating activities |  | $                          | (62,678  | ) |                                | $ | 12,926  |      |  | $ | 84,062   |   |  | $ | 25,777   |  
|                                                    |  |                            |          |   |                                |   |         |      |  |   |          |   |  |   |          |  
|Net cash provided by (used in) investing activities |  | $                          | (12,921  | ) |                                | $ | 16,469  |      |  | $ | (58,297  | ) |  | $ | (744,524 | )
|                                                    |  |                            |          |   |                                |   |         |      |  |   |          |   |  |   |          |  
|Net cash provided by (used in) financing activities |  | $                          | 2,782    |   |                                | $ | (22,885 | )    |  | $ | (20,431  | ) |  | $ | 746,427  |  
|                                                    |  |                            |          |   |                                |   |         |      |  |   |          |   |  |   |          |  



|(1) | Includes amortization of intangible assets and debt issuance costs.
|--- | -------------------------------------------------------------------

|(2) | Certain charges that were deducted in calculating EBITDA for each of the periods presented is presented in the following table. These items include (a) non-cash stock
compensation expense related to our equity incentive plans, (b) severance expenses for personnel changes, (c) loss on sales of fixed assets, and (d) the inventory fair value purchase accounting adjustment related to the acquisition of
DBT charged to cost of products sold. We believe this table, when reviewed in connection with our presentation of EBITDA, provides additional information that is useful to our management and investors for measuring comparative operating performance
between time periods and among companies. In addition to EBITDA, our management assesses the charges presented in this table when preparing our annual operating budget and financial projections. Specifically, we believe that this table allows our
management and investors to assess our operating performance during the periods these charges were incurred, on a consistent basis with the periods during which these charges were not incurred.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|                                                                 |  |                            |       |                                |      |   |        |  |      |        |  |   |       
|---------------------------------------------------------------- |  | -------------------------- | ----- | ------------------------------ | ---- | - | ------ |  | ---- | ------ |  | - | ------
|                                                                 |  | Quarter EndedSeptember 30, |       | Nine Months EndedSeptember 30,
|                                                                 |  | 2008                       |       |                                | 2007 |   | 2008   |  | 2007
|                                                                 |  | (Dollars in thousands)    
|Non-cash stock compensation expense                              |  | $                          | 1,082 |                                |      | $ | 1,536  |  | $    | 5,061  |  | $ | 4,593 
|Severance expenses                                               |  |                            | (306  | )                              |      |   | 181    |  |      | 884    |  |   | 1,411 
|Loss on sales of fixed assets                                    |  |                            | 194   |                                |      |   | 58     |  |      | 759    |  |   | 358   
|Inventory fair value adjustment charged to cost of products sold |  |                            |      |                                |      |   | 8,859  |  |      | 12,088 |  |   | 14,490
|                                                                 |  |                            |       |                                |      |   |        |  |      |        |  |   |       
|                                                                 |  | $                          | 970   |                                |      | $ | 10,634 |  | $    | 18,792 |  | $ | 20,852
|                                                                 |  |                            |       |                                |      |   |        |  |      |        |  |   |       

Liquidity and Capital Resources

Description of Credit Facilities

Our
credit facilities include a secured revolving credit facility of $375.0 million, an unsecured German revolving credit facility of 65.0 million, each of which mature on May 4, 2012, and a term loan facility of $400.0 million plus
75.0 million with a maturity date of May 4, 2014. The entire secured revolving credit facility may be used for letters of credit.

Borrowings under the secured revolving credit facility bear interest, payable no less frequently than quarterly, at (1) LIBOR plus between 1.25% and 1.75% (based on our total leverage ratio) for U.S. dollar denominated LIBOR loans,
(2) a base rate determined by reference to the greater of the U.S. prime lending rate and the federal funds rate plus between 0.25% and 0.75% (based on our total leverage ratio) for U.S. dollar denominated base rate loans and (3) EURIBOR
plus between 1.25% and 1.75% (based on our total leverage ratio) for Euro denominated loans. The interest rates under the secured revolving credit facility are subject to change based on the total leverage ratio. Under each revolving credit
facility, we have agreed to pay 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, and when applicable, customary letter of credit fees.
Borrowings under the term loan facility bear interest, payable no less frequently than quarterly, at (a) LIBOR plus 1.50% for U.S. dollar denominated LIBOR loans, (2) the base rate plus 0.50% for U.S. dollar denominated base rate loans and
(3) EURIBOR plus 1.75% for Euro denominated loans.

At September 30, 2008, we had no borrowings under the secured revolving
credit facility or the unsecured German credit facility. The amount potentially available for borrowings under the secured revolving credit facility at September 30, 2008 was $230.1 million, after taking into account $144.9 million of issued
letters of credit. The amount potentially available for borrowings under the unsecured German credit facility at September 30, 2008 was $45.0 million (31.9 million), after taking into account $46.5 million (33.1 million) of issued
letters of credit. At September 30, 2008, we had borrowings under the term loan facility of $502.2 million ($396.0 million plus 74.3 million) at a weighted average annual interest rate of 4.91%. To manage a portion of our exposure to
changes in LIBOR-based interest rates, we have entered into two interest rate swap agreements that effectively fix the interest payments on $200.0 million of our outstanding borrowings under our term loan facility.



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Our obligations under the credit facilities are guaranteed, on a joint and several basis, by certain of
our domestic subsidiaries. In addition, our obligations under the secured revolving credit facility and the term loan facility are secured by a security interest in substantially all of our consolidated tangible and intangible domestic assets
(subject to certain exceptions), as well as 100% of the outstanding capital stock of our domestic subsidiaries and 65% of the voting stock and 100% of the non-voting stock of certain of our first-tier foreign subsidiaries.

The credit facilities contain operating and financial covenants that, among other things, could limit our ability to obtain additional sources of
capital. Our financial covenants require that we maintain a total leverage ratio, calculated on a trailing four-quarter basis, of not more than 4.00 to 1.00 through the end of the quarter ending December 31, 2008 and not more than 3.50 to 1.00
for each measurement period thereafter. The total leverage ratio is calculated as the ratio of consolidated indebtedness (which is net of cash) to consolidated operating profit (which excludes, among other things, certain non-cash charges, as
discussed more fully in the credit facilities). At September 30, 2008, we were in compliance with all covenants and other requirements in our credit facilities.

The current worldwide credit environment has had a minimal impact on our debt instruments. Our credit rating has been raised by Standard & Poors Rating Services to BB from BB- and Moodys increased
our rating to Ba2 from Ba3.

Cash and Cash Requirements

Our cash balance decreased to $62.8 million at September 30, 2008 from $140.5 million at June 30, 2008. The decrease was primarily the result of
the usage of previously received large progress payments on original equipment orders and increased receivables due to the timing of cash collections on sold original equipment orders.

During the remainder of 2008, we anticipate strong cash flows from operations due to expected continued strong demand for our surface mining and
underground mining original equipment and aftermarket parts and service sales. In expanding markets, customers 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 negative effect on our liquidity, although the issuance of
letters of credit reduces the amount available for borrowings under our revolving credit facility. If additional borrowings are necessary during the remainder of 2008, we believe we have sufficient capacity under our revolving credit facility.

Capital expenditures for the nine months ended September 30, 2008 were $62.2 million compared to $61.6 million for the nine months
ended September 30, 2007. Included in capital expenditures for the nine months ended September 30, 2008 and 2007 were $33.1 million and $27.8 million, respectively, related to our surface mining expansion program and the additional
renovation of our South Milwaukee, Wisconsin facilities. We expect our capital expenditures in 2008 to be between $100.0 million and $110.0 million, which includes the expansion of our facilities in Russia and Texas, a portion of the expansion of
our facility in Wyoming and approximately $21.0 million for the additional renovations of our South Milwaukee, Wisconsin facility. The expansion of our facilities in Wyoming and the additional renovations of our South Milwaukee, WI facility will be
completed in 2009. We believe cash flows from operating activities and funds available under our revolving credit facility will be sufficient to fund our expected capital expenditures during 2008.



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At September 30, 2008, we had contractual obligations of approximately $19.9 million with respect to
our surface mining expansion and renovation programs. At September 30, 2008, there have been no other material changes to the contractual obligations as presented in our Form 10-K for the year ended December 31, 2007.

At September 30, 2008, there were approximately $206.9 million of standby letters of credit outstanding under all of our bank facilities.

We believe that cash flows from operations and our revolving credit facilities will be sufficient to fund our cash requirements for the
remainder of 2008. We also believe that cash flows from operations will be sufficient to repay any borrowings under our revolving credit facility as necessary.

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 September 30, 2008, we had $554.0
million of accounts receivable compared to $416.6 million of accounts receivable at December 31, 2007. Receivables at September 30, 2008 and December 31, 2007 included $285.0 million and $161.6 million, respectively, of revenues from
long-term contracts which were not billable at these dates. We expect that the collection of receivables will increase over the next two quarters based on scheduled payments from customers.

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. In accordance with American Institute of Certified Public
Accountants Statement of Position No. 81-1 Accounting for Performance of ConstructionType and Certain Production-Type Contracts, these payments are recorded as Liabilities to Customers on Uncompleted Contracts and Warranties.

Critical Accounting Policies and Estimates

See Critical Accounting Policies and Estimates in the Managements Discussion and Analysis section of our 2007 Annual Report to Stockholders. There have been no material changes to these policies.

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement No. 141 (R), Business Combinations
(SFAS No. 141 (R)), which replaces SFAS No. 141 and provides greater consistency in the accounting and financial reporting of business combinations. SFAS No. 141 (R) requires the acquiring entity in a business
combination to recognize all assets acquired and liabilities assumed in the transaction and any non-controlling interest in the acquiree at the acquisition date and be measured at the fair value as of that date. SFAS No. 141 (R) will be
effective for us as of January 1, 2009. We are currently evaluating the impact that the adoption of SFAS No. 141 (R) will have on our financial statements.



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In March 2008, the FASB issued Statement No. 161 (SFAS No. 161), Disclosures
about Derivative Instruments and Hedging Activities  an amendment of FASB Statement No.133. SFAS No. 161 enhances disclosures regarding derivatives and hedging activities, including how an entity uses derivative instruments, how
derivative instruments and related hedged items are accounted for under SFAS No. 133 and how derivative instruments and related hedged items affect an entitys financial position, financial performance and cash flows. SFAS No. 161 is
effective for us as of January 1, 2009. We are currently evaluating the impact that the adoption of SFAS No. 161 will have on our financial statements.



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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 its variable rate debt, we entered into two interest rate swap agreements that effectively fix the interest payments on $200.0 million of our outstanding borrowings under our term
loan facility. A sensitivity analysis was performed for our floating rate debt obligations at September 30, 2008. Based on this analysis, we have determined that a 10% change in the weighted average interest rate as of September 30, 2008
would have the effect of changing our interest expense on an annual basis by approximately $1.5 million.

Foreign Currency

We sell most of our surface mining original equipment, including equipment 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 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. We sell most of our surface mining aftermarket parts in United States dollars, with limited aftermarket parts sales denominated in the local currencies of Australia, Brazil,
Canada, South Africa and the United Kingdom. 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, which 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 September 30, 2008, a 10%
change in foreign currency exchange rates would not have a material effect on our financial position, results of operations or cash flows.



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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 September 30, 2008.
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 September 30, 2008 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.

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 three months ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.



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PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Not applicable.



|Item 1A. | Risk Factors
|-------- | ------------

Not applicable.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

Not applicable.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not applicable.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

Not applicable.



|Item 5. | Other Information
|------- | -----------------

Not applicable.



|Item 6. | Exhibits
|------- | --------

See Exhibit Index on last page of this
report.



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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: November 7, 2008 |  | Principal Accounting Officer         
|                       | 
|                       |  | /s/ Craig R. Mackus                  
|                       |  | Craig R. Mackus                      
|                       |  | Chief Financial Officer and Secretary
|Date: November 7, 2008 |  | Principal Financial Officer          
|                       | 
|                       |  | /s/ Timothy W. Sullivan              
|                       |  | Timothy W. Sullivan                  
|Date: November 7, 2008 |  | President and Chief Executive Officer



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EXHIBIT INDEX



|              |  |                                                                                                                                        
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                            
|31.1          |  | Certification of President and Chief Executive Officer pursuant to Section 302 of 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.