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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 June 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 August 6, 2008
|Common Stock, $.01 par value |  | 74,866,402                









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Bucyrus International, Inc.

INDEX



|         |  |                                                                                                                   |  |         
|-------- |  | ----------------------------------------------------------------------------------------------------------------- |  | --------
|         |  |                                                                                                                   |  | Page No.
|PART I.  |  | FINANCIAL INFORMATION:                                                                                            |  |         
|         |  |                                                                                                                  
|         |  | Item 1. Financial Statements (Unaudited)                                                                          |  | 3       
|         |  |                                                                                                                  
|         |  | Consolidated Condensed Statements of Earnings  Quarters and six months ended June 30, 2008 and
2007              |  | 3       
|         |  |                                                                                                                  
|         |  | Consolidated Condensed Statements of Comprehensive Income  Quarters and six months ended June 
30, 2008 and 2007 |  | 4       
|         |  |                                                                                                                  
|         |  | Consolidated Condensed Balance Sheets  June 30, 2008 and December 31, 2007                                       |  | 5       
|         |  |                                                                                                                  
|         |  | Consolidated Condensed Statements of Cash Flows  Quarters and six months ended June 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                     |  | 19      
|         |  |                                                                                                                  
|         |  | Item 3. Quantitative and Qualitative Disclosures About Market Risk                                                |  | 34      
|         |  |                                                                                                                  
|         |  | Item 4. Controls and Procedures                                                                                   |  | 35      
|         |  |                                                                                                                  
|PART II. |  | OTHER INFORMATION:                                                                                                |  |         
|         |  |                                                                                                                  
|         |  | Item 1. Legal Proceedings                                                                                         |  | 36      
|         |  |                                                                                                                  
|         |  | Item 1A. Risk Factors                                                                                             |  | 36      
|         |  |                                                                                                                  
|         |  | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                               |  | 36      
|         |  |                                                                                                                  
|         |  | Item 3. Defaults Upon Senior Securities                                                                           |  | 36      
|         |  |                                                                                                                  
|         |  | Item 4. Submission of Matters to a Vote of Security Holders                                                       |  | 36      
|         |  |                                                                                                                  
|         |  | Item 5. Other Information                                                                                         |  | 37      
|         |  |                                                                                                                  
|         |  | Item 6. Exhibits                                                                                                  |  | 37      
|         |  |                                                                                                                  
|         |  | Signature Page                                                                                                    |  | 38      



2



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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Bucyrus International, Inc.

Consolidated Condensed Statements of Earnings
(Unaudited)



|                                             |  |                                                  |            |                          |   |            |  |      |            |  |   |           
|-------------------------------------------- |  | ------------------------------------------------ | ---------- | ------------------------ | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                             |  | Quarter EndedJune 30,                            |            | Six Months EndedJune 30,
|                                             |  | 2008                                             |            | 2007                     |   | 2008       |  | 2007
|                                             |  | (Dollars in thousands, except per share amounts)
|Sales                                        |  | $                                                | 621,008    |                          | $ | 374,801    |  | $    | 1,137,989  |  | $ | 565,162   
|Costs of products sold                       |  |                                                  | 446,912    |                          |   | 278,504    |  |      | 822,308    |  |   | 416,787   
|                                             |  |                                                  |            |                          |   |            |  |      |            |  |   |           
|Gross profit                                 |  |                                                  | 174,096    |                          |   | 96,297     |  |      | 315,681    |  |   | 148,375   
|                                             |  |                                                  |            |                         
|Selling, general and administrative expenses |  |                                                  | 59,383     |                          |   | 41,687     |  |      | 118,864    |  |   | 62,805    
|Research and development expenses            |  |                                                  | 10,359     |                          |   | 4,614      |  |      | 18,510     |  |   | 7,162     
|Amortization of intangible assets            |  |                                                  | 4,610      |                          |   | 4,452      |  |      | 11,031     |  |   | 4,898     
|                                             |  |                                                  |            |                          |   |            |  |      |            |  |   |           
|Operating earnings                           |  |                                                  | 99,744     |                          |   | 45,544     |  |      | 167,276    |  |   | 73,510    
|                                             |  |                                                  |            |                         
|Interest expense  net                       |  |                                                  | 6,583      |                          |   | 6,217      |  |      | 12,497     |  |   | 7,454     
|Other expense                                |  |                                                  | 769        |                          |   | 600        |  |      | 1,536      |  |   | 865       
|                                             |  |                                                  |            |                          |   |            |  |      |            |  |   |           
|Earnings before income taxes                 |  |                                                  | 92,392     |                          |   | 38,727     |  |      | 153,243    |  |   | 65,191    
|Income tax expense                           |  |                                                  | 30,075     |                          |   | 10,965     |  |      | 49,845     |  |   | 19,566    
|                                             |  |                                                  |            |                          |   |            |  |      |            |  |   |           
|Net earnings                                 |  | $                                                | 62,317     |                          | $ | 27,762     |  | $    | 103,398    |  | $ | 45,625    
|                                             |  |                                                  |            |                          |   |            |  |      |            |  |   |           
|Net earnings per share data                  |  |                                                  |            |                          |   |            |  |      |            |  |   |           
|Basic:                                       |  |                                                  |            |                          |   |            |  |      |            |  |   |           
|Net earnings per share                       |  | $                                                | 0.84       |                          | $ | 0.40       |  | $    | 1.39       |  | $ | 0.69      
|Weighted average shares                      |  |                                                  | 74,342,810 |                          |   | 68,749,332 |  |      | 74,333,624 |  |   | 65,721,758
|                                             |  |                                                  |            |                         
|Diluted:                                     |  |                                                  |            |                          |   |            |  |      |            |  |   |           
|Net earnings per share                       |  | $                                                | 0.83       |                          | $ | 0.40       |  | $    | 1.37       |  | $ | 0.69      
|Weighted average shares                      |  |                                                  | 75,272,435 |                          |   | 69,406,916 |  |      | 75,238,982 |  |   | 66,328,538

See notes to consolidated condensed financial statements.



3



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Bucyrus International, Inc.

Consolidated Condensed Statements of

Comprehensive Income (Unaudited)



|                                                                                                                                                |  |                        |        |   |                          |   |        |      |  |   |         |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | - | ------------------------ | - | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                                                                                                                                |  | Quarter EndedJune 30,  |        |   | Six Months EndedJune 30, |  
|                                                                                                                                                |  | 2008                   |        |   | 2007                     |   |        | 2008 |  |   | 2007    |  
|                                                                                                                                                |  | (Dollars in thousands) |       
|Net earnings                                                                                                                                    |  | $                      | 62,317 |   |                          | $ | 27,762 |      |  | $ | 103,398 |   |  | $ | 45,625 |  
|Other comprehensive income:                                                                                                                     |  |                        |        |   |                          |   |        |      |  |   |         |   |  |   |        |  
|Foreign currency translation adjustments                                                                                                        |  |                        | (9,123 | ) |                          |   | 1,389  |      |  |   | 222     |   |  |   | 1,893  |  
|Change in pension and postretirement unrecognized costs, net of income tax expense (benefit) of ($1,392), $351, ($1,057) and $351,
respectively |  |                        | (3,013 | ) |                          |   | 599    |      |  |   | (2,354  | ) |  |   | 599    |  
|Derivative fair value changes, net of income tax expense (benefit) of $1,401, ($174), ($3,167) and ($174), respectively                         |  |                        | 1,175  |   |                          |   | (192   | )    |  |   | (8,706  | ) |  |   | (192   | )
|                                                                                                                                                |  |                        |        |   |                          |   |        |      |  |   |         |   |  |   |        |  
|Comprehensive income                                                                                                                            |  | $                      | 51,356 |   |                          | $ | 29,558 |      |  | $ | 92,560  |   |  | $ | 47,925 |  
|                                                                                                                                                |  |                        |        |   |                          |   |        |      |  |   |         |   |  |   |        |  

See notes to consolidated condensed financial statements.



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Bucyrus International, Inc.

Consolidated Condensed Balance Sheets (Unaudited)



|                                    |  |                                                  |           |   |                  |   |           |  
|----------------------------------- |  | ------------------------------------------------ | --------- | - | ---------------- | - | --------- | -
|                                    |  | June 30,2008                                     |           |   | December 31,2007 |  
|                                    |  | (Dollars in thousands, except per share amounts) |          
|ASSETS                              |  |                                                  |           |   |                  |   |           |  
|CURRENT ASSETS:                     |  |                                                  |           |   |                  |   |           |  
|Cash and cash equivalents           |  | $                                                | 140,483   |   |                  | $ | 61,112    |  
|Receivables  net                   |  |                                                  | 500,544   |   |                  |   | 416,584   |  
|Inventories  net                   |  |                                                  | 578,373   |   |                  |   | 494,425   |  
|Deferred income taxes               |  |                                                  | 39,054    |   |                  |   | 33,630    |  
|Prepaid expenses and other          |  |                                                  | 34,480    |   |                  |   | 41,038    |  
|                                    |  |                                                  |           |   |                  |   |           |  
|Total Current Assets                |  |                                                  | 1,292,934 |   |                  |   | 1,046,789 |  
|                                    |  |                                                  |           |   |                  |   |           |  
|                                    |  |                                                 
|OTHER ASSETS:                       |  |                                                  |           |   |                  |   |           |  
|Goodwill                            |  |                                                  | 320,255   |   |                  |   | 317,238   |  
|Intangible assets  net             |  |                                                  | 234,841   |   |                  |   | 245,836   |  
|Deferred income taxes               |  |                                                  | 3,425     |   |                  |   | 3,498     |  
|Other assets                        |  |                                                  | 40,809    |   |                  |   | 44,448    |  
|                                    |  |                                                  |           |   |                  |   |           |  
|Total Other Assets                  |  |                                                  | 599,330   |   |                  |   | 611,020   |  
|                                    |  |                                                  |           |   |                  |   |           |  
|                                    |  |                                                 
|PROPERTY, PLANT AND EQUIPMENT:      |  |                                                  |           |   |                  |   |           |  
|Cost                                |  |                                                  | 568,343   |   |                  |   | 521,819   |  
|Less accumulated depreciation       |  |                                                  | (123,700  | ) |                  |   | (111,416  | )
|                                    |  |                                                  |           |   |                  |   |           |  
|Total Property, Plant and Equipment |  |                                                  | 444,643   |   |                  |   | 410,403   |  
|                                    |  |                                                  |           |   |                  |   |           |  
|TOTAL ASSETS                        |  | $                                                | 2,336,907 |   |                  | $ | 2,068,212 |  
|                                    |  |                                                  |           |   |                  |   |           |  



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Bucyrus International, Inc.

Consolidated Condensed Balance Sheets (Unaudited) (Continued)



|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------ | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                      |  | June 30,2008                                     |           |   | December 31,2007 |  
|                                                                                                                                      |  | (Dollars in thousands, except per share amounts) |          
|LIABILITIES AND COMMON STOCKHOLDERS INVESTMENT                                                                                       |  |                                                  |           |   |                  |   |           |  
|CURRENT LIABILITIES:                                                                                                                  |  |                                                  |           |   |                  |   |           |  
|Accounts payable                                                                                                                      |  | $                                                | 188,283   |   |                  | $ | 146,529   |  
|Accrued expenses                                                                                                                      |  |                                                  | 167,769   |   |                  |   | 149,443   |  
|Liabilities to customers on uncompleted contracts and warranties                                                                      |  |                                                  | 282,504   |   |                  |   | 158,390   |  
|Income taxes                                                                                                                          |  |                                                  | 52,433    |   |                  |   | 55,086    |  
|Current maturities of long-term debt and other short-term obligations                                                                 |  |                                                  | 9,230     |   |                  |   | 9,348     |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|Total Current Liabilities                                                                                                             |  |                                                  | 700,219   |   |                  |   | 518,796   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|                                                                                                                                      |  |                                                 
|LONG-TERM LIABILITIES:                                                                                                                |  |                                                  |           |   |                  |   |           |  
|Postretirement benefits                                                                                                               |  |                                                  | 16,883    |   |                  |   | 16,007    |  
|Deferred income taxes                                                                                                                 |  |                                                  | 50,031    |   |                  |   | 50,920    |  
|Pension and other                                                                                                                     |  |                                                  | 152,016   |   |                  |   | 144,918   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|Total Long-Term Liabilities                                                                                                           |  |                                                  | 218,930   |   |                  |   | 211,845   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|LONG-TERM DEBT, less current maturities                                                                                               |  |                                                  | 513,533   |   |                  |   | 526,721   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|                                                                                                                                      |  |                                                 
|COMMON STOCKHOLDERS INVESTMENT:                                                                                                      |  |                                                  |           |   |                  |   |           |  
|Common stock  par value $0.01 per share, authorized 200,000,000 shares, issued 75,085,467 shares and 75,044,674 shares, respectively |  |                                                  | 751       |   |                  |   | 750       |  
|Additional paid-in capital                                                                                                            |  |                                                  | 675,569   |   |                  |   | 670,966   |  
|Treasury stock  217,200 shares                                                                                                       |  |                                                  | (851      | ) |                  |   | (851      | )
|Accumulated earnings                                                                                                                  |  |                                                  | 242,169   |   |                  |   | 142,560   |  
|Accumulated other comprehensive loss                                                                                                  |  |                                                  | (13,413   | ) |                  |   | (2,575    | )
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|Total Common Stockholders Investment                                                                                                 |  |                                                  | 904,225   |   |                  |   | 810,850   |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  
|TOTAL LIABILITIES AND COMMON STOCKHOLDERS INVESTMENT                                                                                 |  | $                                                | 2,336,907 |   |                  | $ | 2,068,212 |  
|                                                                                                                                      |  |                                                  |           |   |                  |   |           |  

See notes to consolidated condensed financial statements.



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Bucyrus International, Inc.

Consolidated Condensed Statements of Cash Flows (Unaudited)



|                                                                |  |                           |         |   |      |   |          |  
|--------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | -------- | -
|                                                                |  | Six Months Ended June 30, |        
|                                                                |  | 2008                      |         |   | 2007 |  
|                                                                |  | (Dollars in thousands)    |        
|Net Cash Provided By Operating Activities                       |  | $                         | 146,740 |   |      | $ | 12,851   |  
|                                                                |  |                           |         |   |      |   |          |  
|                                                                |  |                          
|Cash Flows From Investing Activities                            |  |                           |         |   |      |   |          |  
|Purchases of property, plant and equipment                      |  |                           | (44,326 | ) |      |   | (38,142  | )
|Proceeds from sale of property, plant and equipment             |  |                           | 2,620   |   |      |   | 272      |  
|Purchases of investments                                        |  |                           | (4,189  | ) |      |   |         |  
|Proceeds from sale of investments                               |  |                           | 423     |   |      |   |         |  
|Acquisition of DBT GmbH                                         |  |                           |        |   |      |   | (723,064 | )
|Othernet                                                       |  |                           | 96      |   |      |   | (59      | )
|                                                                |  |                           |         |   |      |   |          |  
|Net cash used in investing activities                           |  |                           | (45,376 | ) |      |   | (760,993 | )
|                                                                |  |                           |         |   |      |   |          |  
|                                                                |  |                          
|Cash Flows From Financing Activities                            |  |                           |         |   |      |   |          |  
|Net borrowings from (repayments of) revolving credit facilities |  |                           | (15,130 | ) |      |   | (51,039  | )
|Proceeds from term loan facility                                |  |                           |        |   |      |   | 825,000  |  
|Payment of term loan facility                                   |  |                           | (2,569  | ) |      |   | (325,000 | )
|Proceeds from other bank borrowings and long-term debt          |  |                           |        |   |      |   | 3,508    |  
|Payments of other bank borrowings and long-term debt            |  |                           | (3,353  | ) |      |   | (719     | )
|Payment of refinancing expenses for new credit facilities       |  |                           |        |   |      |   | (15,734  | )
|Net proceeds from issuance of common stock                      |  |                           |        |   |      |   | 336,325  |  
|Tax benefit related to share-based payment awards               |  |                           | 1,556   |   |      |   | 128      |  
|Dividends paid                                                  |  |                           | (3,717  | ) |      |   | (3,157   | )
|                                                                |  |                           |         |   |      |   |          |  
|Net cash provided by (used in) financing activities             |  |                           | (23,213 | ) |      |   | 769,312  |  
|Effect of exchange rate changes on cash                         |  |                           | 1,220   |   |      |   | 489      |  
|                                                                |  |                           |         |   |      |   |          |  
|Net increase in cash and cash equivalents                       |  |                           | 79,371  |   |      |   | 21,659   |  
|Cash and cash equivalents at beginning of period                |  |                           | 61,112  |   |      |   | 9,575    |  
|                                                                |  |                           |         |   |      |   |          |  
|Cash and cash equivalents at end of period                      |  | $                         | 140,483 |   |      | $ | 31,234   |  
|                                                                |  |                           |         |   |      |   |          |  



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Bucyrus International, Inc.

Consolidated Condensed Statements of Cash Flows (Unaudited)

(Continued)



|                                                                                                                                                                            |  |                           |        |      |   |           |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------ | ---- | - | --------- | -
|                                                                                                                                                                            |  | Six Months Ended June 30, |       
|                                                                                                                                                                            |  | 2008                      |        | 2007 |  
|                                                                                                                                                                            |  | (Dollars in thousands)    |       
|Supplemental Disclosures of Cash Flow Information                                                                                                                           |  |                           |        |      |   |           |  
|Cash paid during the period for:                                                                                                                                            |  |                           |        |      |   |           |  
|Interest                                                                                                                                                                    |  | $                         | 15,909 |      | $ | 6,521     |  
|Income taxes  net of refunds                                                                                                                                               |  | $                         | 38,283 |      | $ | 30,370    |  
|                                                                                                                                                                            |  |                          
|Supplemental Disclosure of Noncash Investing Activity                                                                                                                       |  |                           |        |      |   |           |  
|Capital expenditures related to expansion program included in accounts payable                                                                                              |  |                           |       |      | $ | 500       |  
|                                                                                                                                                                            |  |                          
|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                                                                                                                                               |  |                           |        |      | $ | 1,356,529 |  
|Cash paid                                                                                                                                                                   |  |                           |        |      |   | (723,064  | )
|Fair value of Company common stock issued                                                                                                                                   |  |                           |        |      |   | (21,782   | )
|Receivable for cash settlement adjustments                                                                                                                                  |  |                           |        |      |   | 15,583    |  
|                                                                                                                                                                            |  |                           |        |      |   |           |  
|Liabilities assumed                                                                                                                                                         |  |                           |        |      | $ | 627,266   |  
|                                                                                                                                                                            |  |                           |        |      |   |           |  

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 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. Also 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.



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



|                                                |  |                        |         |                  |   |        
|----------------------------------------------- |  | ---------------------- | ------- | ---------------- | - | -------
|                                                |  | June 30,2008           |         | December 31,2007
|                                                |  | (Dollars in thousands)
|Raw materials and parts                         |  | $                      | 83,778  |                  | $ | 113,244
|Work in process                                 |  |                        | 232,395 |                  |   | 132,998
|Finished products (primarily replacement parts) |  |                        | 262,200 |                  |   | 248,183
|                                                |  |                        |         |                  |   |        
|                                                |  | $                      | 578,373 |                  | $ | 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 June 30, 2008, the Company had no borrowings under the secured revolving credit facility or the unsecured German
credit facility. The amount available for borrowings under the secured revolving credit facility at June 30, 2008 was $221.5 million, after taking into account $153.5 million of issued letters of credit. The amount available for borrowings
under the unsecured German credit facility at June 30, 2008 was $63.0 million (40.0 million), after taking into account $39.4 million (25.0 million) of issued letters of credit. At June 30, 2008, the Company had borrowings
under the term loan facility of $514.2 million ($397.0 million plus 74.4 million) at a weighted average annual interest rate of 4.71%.

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 six months
ended June 30, 2008 and 2007.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                                     |  |                                                 |            |                          |   |            |  |      |            |  |   |           
|---------------------------------------------------------------------------------------------------- |  | ----------------------------------------------- | ---------- | ------------------------ | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                                                                                     |  | Quarter EndedJune 30,                           |            | Six Months EndedJune 30,
|                                                                                                     |  | 2008                                            |            | 2007                     |   | 2008       |  | 2007
|                                                                                                     |  | (Dollar in thousands, except per share amounts)
|Net earnings                                                                                         |  | $                                               | 62,317     |                          | $ | 27,762     |  | $    | 103,398    |  | $ | 45,625    
|                                                                                                     |  |                                                 |            |                          |   |            |  |      |            |  |   |           
|Weighted average shares outstanding                                                                  |  |                                                 | 74,342,810 |                          |   | 68,749,332 |  |      | 74,333,624 |  |   | 65,721,758
|                                                                                                     |  |                                                 |            |                          |   |            |  |      |            |  |   |           
|Basic net earnings per share:                                                                        |  | $                                               | 0.84       |                          | $ | 0.40       |  | $    | 1.39       |  | $ | 0.69      
|                                                                                                     |  |                                                 |            |                          |   |            |  |      |            |  |   |           
|Weighted average shares outstanding                                                                  |  |                                                 | 74,342,810 |                          |   | 68,749,332 |  |      | 74,333,624 |  |   | 65,721,758
|Effect of dilutive stock options, nonvested shares, stock appreciation rights and performance shares |  |                                                 | 929,625    |                          |   | 657,584    |  |      | 905,358    |  |   | 606,780   
|                                                                                                     |  |                                                 |            |                          |   |            |  |      |            |  |   |           
|Weighted average shares outstanding  diluted                                                        |  |                                                 | 75,272,435 |                          |   | 69,406,916 |  |      | 75,238,982 |  |   | 66,328,538
|                                                                                                     |  |                                                 |            |                          |   |            |  |      |            |  |   |           
|Diluted net earnings per share                                                                       |  | $                                               | 0.83       |                          | $ | 0.40       |  | $    | 1.37       |  | $ | 0.69      
|                                                                                                     |  |                                                 |            |                          |   |            |  |      |            |  |   |           



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|7. | During the first six months of 2008, the Company issued 54,700 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 six months ended June 30, 2008 was as follows:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                               |  |                 |   |  |                                      |      
|------------------------------ |  | --------------- | - |  | ------------------------------------ | -----
|                               |  | Number ofShares |   |  | Weighted-AverageGrant DateFair Value
|Outstanding at January 1, 2008 |  | 391,262         |   |  | $                                    | 21.46
|Granted                        |  | 54,700          |   |  |                                      | 51.77
|Forfeited                      |  | (10,800         | ) |  |                                      | 28.15
|Vested                         |  | (9,600          | ) |  |                                      | 10.00
|                               |  |                 |   |  |                                      |      
|Outstanding at June 30, 2008   |  | 425,562         |   |  | $                                    | 25.44
|                               |  |                 |   |  |                                      |      

At June 30, 2008, there was $6.5 million of unrecognized compensation expense related to
nonvested share grants. This cost is expected to be recognized over a weighted-average period of approximately 2.3 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
June 30, 2008, the Company expected approximately 404,000 shares to vest and these shares had an aggregate intrinsic value of $29.5 million and a weighted-average remaining contractual term of approximately 1.75 years. The total fair value of
shares vested during the six months ended June 30, 2008 was $0.5 million.

During the first six 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 six months ended June 30, 2008 was as follows:



|                                        |  |                 |   |  |                                      |      
|--------------------------------------- |  | --------------- | - |  | ------------------------------------ | -----
|                                        |  | Number ofShares |   |  | Weighted-AverageGrant DateFair Value
|Outstanding at January 1, 2008          |  | 1,004,950       |   |  | $                                    | 11.59
|Granted                                 |  | 263,000         |   |  |                                      | 24.05
|Forfeited                               |  | (36,680         | ) |  |                                      | 14.19
|Exercised                               |  | (31,720         | ) |  |                                      | 12.36
|                                        |  |                 |   |  |                                      |      
|Outstanding at June 30, 2008            |  | 1,199,550       |   |  |                                      | 14.22
|                                        |  |                 |   |  |                                      |      
|Vested and exercisable at June 30, 2008 |  | 169,116         |   |  | $                                    | 10.85
|                                        |  |                 |   |  |                                      |      



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At June 30, 2008, there was $10.2 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 2.6 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.



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



|                          |  |                         |       |   |                           |   |        |      |  |   |        |   |  |   |        |  
|------------------------- |  | ----------------------- | ----- | - | ------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                          |  | Pension Benefits        |      
|                          |  | Quarter Ended June 30,  |       |   | Six Months Ended June 30, |  
|                          |  | 2008                    |       |   | 2007                      |   |        | 2008 |  |   | 2007   |  
|                          |  | (Dollars in thousands)  |      
|Service cost              |  | $                       | 549   |   |                           | $ | 702    |      |  | $ | 1,094  |   |  | $ | 1,302  |  
|Interest cost             |  |                         | 2,268 |   |                           |   | 2,180  |      |  |   | 4,489  |   |  |   | 3,530  |  
|Expected return on assets |  |                         | (800  | ) |                           |   | (1,425 | )    |  |   | (1,600 | ) |  |   | (2,850 | )
|Amortization of:          |  |                         |       |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Prior service cost        |  |                         | (25   | ) |                           |   | 100    |      |  |   | (50    | ) |  |   | 200    |  
|Actuarial loss            |  |                         | 150   |   |                           |   | 400    |      |  |   | 300    |   |  |   | 800    |  
|                          |  |                         |       |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Net periodic benefit cost |  | $                       | 2,142 |   |                           | $ | 1,957  |      |  | $ | 4,233  |   |  | $ | 2,982  |  
|                          |  |                         |       |   |                           |   |        |      |  |   |        |   |  |   |        |  
|                          | 
|                          |  | Postretirement Benefits |      
|                          |  | Quarter Ended June 30,  |       |   | Six Months Ended June 30, |  
|                          |  | 2008                    |       |   | 2007                      |   |        | 2008 |  |   | 2007   |  
|                          |  | (Dollars in thousands)  |      
|Service cost              |  | $                       | 200   |   |                           | $ | 250    |      |  | $ | 400    |   |  | $ | 500    |  
|Interest cost             |  |                         | 725   |   |                           |   | 250    |      |  |   | 1,450  |   |  |   | 500    |  
|Expected return on assets |  |                         | (875  | ) |                           |   |       |      |  |   | (1,750 | ) |  |   |       |  
|Amortization of:          |  |                         |       |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Prior service cost        |  |                         | 125   |   |                           |   | (50    | )    |  |   | 250    |   |  |   | (100   | )
|Actuarial loss            |  |                         | 150   |   |                           |   | 25     |      |  |   | 300    |   |  |   | 50     |  
|                          |  |                         |       |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Net periodic benefit cost |  | $                       | 325   |   |                           | $ | 475    |      |  | $ | 650    |   |  | $ | 950    |  
|                          |  |                         |       |   |                           |   |        |      |  |   |        |   |  |   |        |  



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|9. | Intangible assets consisted of the following:
|-- | ---------------------------------------------



|                                                       |  |                        |         |                         |                   |         |                     |  |                         |         |  |   |         |  
|------------------------------------------------------ |  | ---------------------- | ------- | ----------------------- | ----------------- | ------- | ------------------- |  | ----------------------- | ------- |  | - | ------- | -
|                                                       |  | June 30, 2008          |         |                         | December 31, 2007 |        
|                                                       |  | GrossCarryingAmount    |         | AccumulatedAmortization |                   |         | GrossCarryingAmount |  | AccumulatedAmortization |        
|                                                       |  | (Dollars in thousands) |        
|Amortized intangible assets:                           |  |                        |         |                         |                   |         |                     |  |                         |         |  |   |         |  
|Engineering drawings                                   |  | $                      | 25,500  |                         | $                 | (13,731 | )                   |  | $                       | 25,500  |  | $ | (13,094 | )
|Technology                                             |  |                        | 115,000 |                         |                   | (11,181 | )                   |  |                         | 115,000 |  |   | (6,389  | )
|Customer relationships                                 |  |                        | 112,000 |                         |                   | (6,533  | )                   |  |                         | 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   |                         |                   | (4,505  | )                   |  |                         | 5,855   |  |   | (4,406  | )
|                                                       |  |                        |         |                         |                   |         |                     |  |                         |         |  |   |         |  
|                                                       |  | $                      | 278,355 |                         | $                 | (55,950 | )                   |  | $                       | 278,355 |  | $ | (44,955 | )
|                                                       |  |                        |         |                         |                   |         |                     |  |                         |         |  |   |         |  
|Unamortized intangible assets  Trademarks/Trade names |  | $                      | 12,436  |                         |                   |         |                     |  | $                       | 12,436  |  |   |         |  
|                                                       |  |                        |         |                         |                   |         |                     |  |                         |         |  |   |         |  

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



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

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



|                            |  |   |        
|--------------------------- |  | - | -------
|2008 (remaining six months) |  | $ | 8,363  
|2009                        |  |   | 16,601 
|2010                        |  |   | 16,601 
|2011                        |  |   | 16,601 
|2012                        |  |   | 16,601 
|2013                        |  |   | 16,601 
|Future                      |  |   | 131,036
|                            |  |   |        
|                            |  | $ | 222,404
|                            |  |   |        



|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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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. There are no significant inter-segment sales. Identifiable assets are those used in the operations in each segment.

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



|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|---------------------------- |  | --------------------------- | ------- | ----------------- | - | ------- | --------------------------- |  | ------------------- | ------ | ----------- | - | ------ |  | - | ---------
|                             |  | Quarter Ended June 30, 2008
|                             |  | Sales                       |         | OperatingEarnings |   |         | DepreciationandAmortization |  | CapitalExpenditures |        | TotalAssets
|                             |  | (Dollars in thousands)     
|Surface mining               |  | $                           | 301,779 |                   | $ | 64,259  |                             |  | $                   | 5,488  |             | $ | 18,654 |  | $ | 978,881  
|Underground mining           |  |                             | 319,229 |                   |   | 44,298  |                             |  |                     | 8,790  |             |   | 4,488  |  |   | 1,358,026
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Total operations             |  |                             | 621,008 |                   |   | 108,557 |                             |  |                     | 14,278 |             |   | 23,142 |  |   | 2,336,907
|Corporate                    |  |                             | N/A     |                   |   | (8,813  | )                           |  |                     | N/A    |             |   | N/A    |  |   | N/A      
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Consolidated total           |  | $                           | 621,008 |                   |   | 99,744  |                             |  |                     | 14,278 |             | $ | 23,142 |  | $ | 2,336,907
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Interest expense  net       |  |                             |         |                   |   | 6,583   |                             |  |                     |        |             |   |        |  |   |          
|Other expense                |  |                             |         |                   |   | 769     |                             |  |                     | 769    |             |   |        |  |   |          
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Earnings before income taxes |  |                             |         |                   | $ | 92,392  |                             |  | $                   | 15,047 |             |   |        |  |   |          
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|                             | 
|                             |  | Quarter Ended June 30, 2007
|                             |  | Sales                       |         | OperatingEarnings |   |         | DepreciationandAmortization |  | CapitalExpenditures |        | TotalAssets
|                             |  | (Dollars in thousands)     
|Surface mining               |  | $                           | 213,595 |                   | $ | 36,126  |                             |  | $                   | 4,521  |             | $ | 17,564 |  | $ | 726,697  
|Underground mining           |  |                             | 161,206 |                   |   | 11,466  |                             |  |                     | 7,619  |             |   | 3,208  |  |   | 1,418,526
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Total operations             |  |                             | 374,801 |                   |   | 47,592  |                             |  |                     | 12,140 |             |   | 20,772 |  |   | 2,145,223
|Corporate                    |  |                             | N/A     |                   |   | (2,048  | )                           |  |                     | N/A    |             |   | N/A    |  |   | N/A      
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Consolidated total           |  | $                           | 374,801 |                   |   | 45,544  |                             |  |                     | 12,140 |             | $ | 20,772 |  | $ | 2,145,223
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Interest expense  net       |  |                             |         |                   |   | 6,217   |                             |  |                     |        |             |   |        |  |   |          
|Other expense                |  |                             |         |                   |   | 600     |                             |  |                     | 600    |             |   |        |  |   |          
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Earnings before income taxes |  |                             |         |                   | $ | 38,727  |                             |  | $                   | 12,740 |             |   |        |  |   |          
|                             |  |                             |         |                   |   |         |                             |  |                     |        |             |   |        |  |   |          



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|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|---------------------------- |  | ------------------------------ | --------- | ----------------- | - | ------- | --------------------------- |  | ------------------- | ------ | ----------- | - | ------ |  | - | ---------
|                             |  | Six Months Ended June 30, 2008
|                             |  | Sales                          |           | OperatingEarnings |   |         | DepreciationandAmortization |  | CapitalExpenditures |        | TotalAssets
|                             |  | (Dollars in thousands)        
|Surface mining               |  | $                              | 585,837   |                   | $ | 118,603 |                             |  | $                   | 10,080 |             | $ | 34,243 |  | $ | 978,881  
|Underground mining           |  |                                | 552,152   |                   |   | 63,547  |                             |  |                     | 19,604 |             |   | 10,084 |  |   | 1,358,026
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Total operations             |  |                                | 1,137,989 |                   |   | 182,150 |                             |  |                     | 29,684 |             |   | 44,327 |  |   | 2,336,907
|Corporate                    |  |                                | N/A       |                   |   | (14,874 | )                           |  |                     | N/A    |             |   | N/A    |  |   | N/A      
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Consolidated total           |  | $                              | 1,137,989 |                   |   | 167,276 |                             |  |                     | 29,684 |             | $ | 44,327 |  | $ | 2,336,907
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Interest expense  net       |  |                                |           |                   |   | 12,497  |                             |  |                     |        |             |   |        |  |   |          
|Other expense                |  |                                |           |                   |   | 1,536   |                             |  |                     | 1,536  |             |   |        |  |   |          
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Earnings before income taxes |  |                                |           |                   | $ | 153,243 |                             |  | $                   | 31,220 |             |   |        |  |   |          
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|                             | 
|                             |  | Six Months Ended June 30, 2007
|                             |  | Sales                          |           | OperatingEarnings |   |         | DepreciationandAmortization |  | CapitalExpenditures |        | TotalAssets
|                             |  | (Dollars in thousands)        
|Surface mining               |  | $                              | 403,956   |                   | $ | 64,092  |                             |  | $                   | 8,715  |             | $ | 32,387 |  | $ | 726,697  
|Underground mining           |  |                                | 161,206   |                   |   | 11,466  |                             |  |                     | 7,619  |             |   | 3,208  |  |   | 1,418,526
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Total operations             |  |                                | 565,162   |                   |   | 75,558  |                             |  |                     | 16,334 |             |   | 35,595 |  |   | 2,145,223
|Corporate                    |  |                                | N/A       |                   |   | (2,048  | )                           |  |                     | N/A    |             |   | N/A    |  |   | N/A      
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Consolidated total           |  | $                              | 565,162   |                   |   | 73,510  |                             |  |                     | 16,334 |             | $ | 35,595 |  | $ | 2,145,223
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Interest expense  net       |  |                                |           |                   |   | 7,454   |                             |  |                     |        |             |   |        |  |   |          
|Other expense                |  |                                |           |                   |   | 865     |                             |  |                     | 865    |             |   |        |  |   |          
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          
|Earnings before income taxes |  |                                |           |                   | $ | 65,191  |                             |  | $                   | 17,199 |             |   |        |  |   |          
|                             |  |                                |           |                   |   |         |                             |  |                     |        |             |   |        |  |   |          



|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. The first swap matures on May 4, 2010 and currently fixes the variable portion of the interest rate on term loan
facility borrowings in the notional amount of $150.0 million at 4.88%, plus the applicable spread based on terms of the credit facility. The second swap also matures on May 4, 2010 and currently fixes the interest rate at 5.094%, plus the
applicable spread in the notional amount of $50.0 million. The swaps have been designated as cash flow hedges 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 derivatives is recorded in accumulated other comprehensive income (loss), while any ineffective portion is
recorded as an adjustment to interest expense. The differential paid or received on the interest rate swaps will be recognized as an adjustment to interest expense.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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. | Environmental, product warranty and liability and legal matters at June 30, 2008 were as follows:
|--- | -------------------------------------------------------------------------------------------------

Environmental

The Companys
operations and properties are subject to a broad range of federal, state, local and foreign laws and regulations relating to environmental matters, including laws and regulations governing discharges into the air and water, the handling and disposal
of solid and hazardous substances and wastes, and the remediation of contamination associated with releases of hazardous substances at the Companys facilities and at off-site disposal locations. These laws are complex, change frequently and
have tended to become more stringent over time. Future events, such as required compliance with more stringent laws or regulations, more vigorous enforcement policies of regulatory agencies or stricter or different interpretations of existing laws,
could require additional expenditures by the Company, which may be material.

Environmental problems have not interfered in any material
respect with the Companys manufacturing operations to date. The Company believes that its compliance with statutory requirements respecting environmental quality will not materially affect its capital expenditures, earnings or competitive
position. The Company has an ongoing program to address any potential environmental problems.

Certain environmental laws, such as the
Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), provide for strict, joint and several liability for investigation and remediation of spills and other releases of hazardous substances. Such laws may
apply to conditions at properties currently or formerly owned or operated by an entity or its predecessors, as well as to conditions at properties at which wastes or other contamination attributable to an entity or its predecessors come to be
located.

The Company has previously been named as a potentially responsible party under CERCLA and analogous state laws at other sites
throughout the United States. The Company believes it has determined its remediation liabilities with respect to the sites discussed above and does not believe that any such remaining liabilities, if any, either



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individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or cash flows. The Company
cannot, however, assure that it will not incur additional liabilities with respect to these sites in the future, the costs of which could be material, nor can it assure that it will not incur remediation liability in the future with respect to sites
formerly or currently owned or operated by the Company or with respect to off-site disposal locations, the costs of which could be material.

Over the past three years, expenditures for ongoing compliance, remediation, monitoring and cleanup have been immaterial. While no assurance can be given, the Company believes that expenditures for compliance and remediation will not have a
material effect on its future capital expenditures, results of operations or competitive position.

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 six months ended June 30, 2008 and 2007 were as follows:



|                          |  |                        |        |   |      |   |        |  
|------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | -
|                          |  | 2008                   |        |   | 2007 |  
|                          |  | (Dollars in thousands) |       
|Balance at January 1,     |  | $                      | 70,909 |   |      | $ | 5,788  |  
|Effect of DBT acquisition |  |                        |       |   |      |   | 75,037 |  
|Provision                 |  |                        | 4,114  |   |      |   | 6,545  |  
|Charges                   |  |                        | (5,874 | ) |      |   | (8,091 | )
|Currency translation      |  |                        | 4,139  |   |      |   |       |  
|                          |  |                        |        |   |      |   |        |  
|Balance at June 30,       |  | $                      | 73,288 |   |      | $ | 79,279 |  
|                          |  |                        |        |   |      |   |        |  

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
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.



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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 580 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.



|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:
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                      |  |                        |         |   |                  |   |        |  
|----------------------------------------------------- |  | ---------------------- | ------- | - | ---------------- | - | ------ | -
|                                                      |  | June 30,2008           |         |   | December 31,2007 |  
|                                                      |  | (Dollars in thousands) |        
|Foreign currency translation adjustments              |  | $                      | 12,352  |   |                  | $ | 12,130 |  
|Pension and postretirement benefit unrecognized costs |  |                        | (9,541  | ) |                  |   | (7,187 | )
|Derivative fair value adjustment                      |  |                        | (16,224 | ) |                  |   | (7,518 | )
|                                                      |  |                        |         |   |                  |   |        |  
|Accumulated other comprehensive loss                  |  | $                      | (13,413 | ) |                  | $ | (2,575 | )
|                                                      |  |                        |         |   |                  |   |        |  



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Forward-Looking Statements

The following discussion and analysis and information contained elsewhere
in this report contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of predictive, future
tense or forward-looking terminology, such as



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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;
| | - |  | -----------------------------------------------------------------------------------------------------------------



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



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



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



| |  |  | 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 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



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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 million for additional renovations at our South Milwaukee facility, which we expect will be completed in 2008. This expenditure is part of our expected total 2008 capital expenditures of $90 million to $100 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, which we expect to be completed in the second half of 2008. We also plan on establishing a new service facility
in Eastern Europe to support our underground mining business in this region and plan on expanding our surface mining service center in Gillette, Wyoming. The establishment of the service facility in Eastern Europe is expected to be completed in the
second half of 2008 and the expansion of our service center in Gillette is expected to be completed in 2009. The expenditures for the expansion of our facilities in Texas and Russia and the new service facility in Eastern Europe are included in our
expected total capital expenditures of $90.0 million to $100.0 million in 2008.

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
predictive level of expected 2008 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. Our backlog at June 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:



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|                    |                        |              |           |                  |   |           |  |      |  
|------------------- | ---------------------- | ------------ | --------- | ---------------- | - | --------- |  | ---- | -
|                    |                        | June 30,2008 |           | December 31,2007 |   | % Change  | 
|                    | (Dollars in thousands) |             
|Surface Mining:     |                        |              |           |                  |   |           |  |      |  
|Total               |                        | $            | 1,293,913 |                  | $ | 804,781   |  | 60.8 | %
|Next 12 months      |                        | $            | 842,397   |                  | $ | 579,448   |  | 45.4 | %
|Underground Mining: |                        |              |           |                  |   |           |  |      |  
|Total               |                        | $            | 878,891   |                  | $ | 636,473   |  | 38.1 | %
|Next 12 months      |                        | $            | 785,120   |                  | $ | 551,923   |  | 42.3 | %
|Total:              |                        |              |           |                  |   |           |  |      |  
|Total               |                        | $            | 2,172,804 |                  | $ | 1,441,254 |  | 50.8 | %
|Next 12 months      |                        | $            | 1,627,517 |                  | $ | 1,131,371 |  | 43.9 | %

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

New orders were as follows:



|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|----------------------------- | ---------------------- | ---------------------- | ------- |  | ------------------------- | ------- |  | ----- | - | ---- | - | --------- |  | - | ------- |  | ----- | -
|                              |                        | Quarter Ended June 30, |         |  | Six Months Ended June 30, |        
|                              | 2008                   |                        | 2007    |  | % Change                  |         |  | 2008  |   | 2007 |   | % Change  | 
|                              | (Dollars in thousands) |                       
|Surface Mining:               |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Original equipment            |                        | $                      | 194,390 |  | $                         | 158,222 |  | 22.9  | % |      | $ | 455,180   |  | $ | 298,512 |  | 52.5  | %
|Aftermarket parts and service |                        |                        | 265,080 |  |                           | 112,389 |  | 135.9 | % |      |   | 619,789   |  |   | 205,323 |  | 201.9 | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|                              |                        |                        | 459,470 |  |                           | 270,611 |  | 69.8  | % |      |   | 1,074,969 |  |   | 503,835 |  | 113.4 | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Underground Mining:           |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Original equipment            |                        |                        | 144,007 |  |                           | 127,264 |  | 13.2  | % |      |   | 497,115   |  |   | 127,264 |  | 290.6 | %
|Aftermarket parts and service |                        |                        | 173,071 |  |                           | 62,263  |  | 178.0 | % |      |   | 297,455   |  |   | 62,263  |  | 377.7 | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|                              |                        |                        | 317,078 |  |                           | 189,527 |  | 67.3  | % |      |   | 794,570   |  |   | 189,527 |  | 319.2 | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Total:                        |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Original equipment            |                        |                        | 338,397 |  |                           | 285,486 |  | 18.5  | % |      |   | 952,295   |  |   | 425,776 |  | 123.7 | %
|Aftermarket parts and service |                        |                        | 438,151 |  |                           | 174,652 |  | 150.9 | % |      |   | 917,244   |  |   | 267,586 |  | 242.8 | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|                              |                        | $                      | 776,548 |  | $                         | 460,138 |  | 68.8  | % |      | $ | 1,869,539 |  | $ | 693,362 |  | 169.6 | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  

Included in our surface mining aftermarket parts and service new orders for the quarter and six
months ended June 30, 2008 was $70.0 million and $278.7 million, respectively, of orders related to multi-year contracts that will generate revenue in future years. Underground original equipment new orders for the six months ended
June 30, 2008 included an order in the Czech Republic for five longwall systems.



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##### Table of Contents

Results of Operations

Quarter and Six Months Ended June 30, 2008 Compared to Quarter and Six Months Ended June 30, 2007



|                                             |                        |                           |            |      |      |        |          |            |         |  |      |   |  |       |  
|-------------------------------------------- | ---------------------- | ------------------------- | ---------- | ---- | ---- | ------ | -------- | ---------- | ------- |  | ---- | - |  | ----- | -
|                                             |                        | Quarter Ended June 30,    |           
|                                             | 2008                   |                           |            | 2007 |      |        | % Change |           
|                                             | Amount                 |                           | % of Sales |      |      | Amount |          | % of Sales |         | 
|                                             | (Dollars in thousands) |                          
|Sales                                        |                        | $                         | 621,008    |      |     |        |          | $          | 374,801 |  |     |   |  | 65.7  | %
|Gross profit                                 |                        | $                         | 174,096    |      | 28.0 | %      |          | $          | 96,297  |  | 25.7 | % |  | 80.8  | %
|Selling, general and administrative expenses |                        | $                         | 59,383     |      | 9.6  | %      |          | $          | 41,687  |  | 11.1 | % |  | 42.4  | %
|Operating earnings                           |                        | $                         | 99,744     |      | 16.1 | %      |          | $          | 45,544  |  | 12.2 | % |  | 119.0 | %
|Net earnings                                 |                        | $                         | 62,317     |      | 10.0 | %      |          | $          | 27,762  |  | 7.4  | % |  | 124.5 | %
|                                             |                       
|                                             |                        | Six Months Ended June 30, |           
|                                             | 2008                   |                           |            | 2007 |      |        | % Change |           
|                                             | Amount                 |                           | % of Sales |      |      | Amount |          | % of Sales |         | 
|                                             | (Dollars in thousands) |                          
|Sales                                        |                        | $                         | 1,137,989  |      |     |        |          | $          | 565,162 |  |     |   |  | 101.4 | %
|Gross profit                                 |                        | $                         | 315,681    |      | 27.7 | %      |          | $          | 148,375 |  | 26.3 | % |  | 112.8 | %
|Selling, general and administrative expenses |                        | $                         | 118,864    |      | 10.4 | %      |          | $          | 62,805  |  | 11.1 | % |  | 89.3  | %
|Operating earnings                           |                        | $                         | 167,276    |      | 14.7 | %      |          | $          | 73,510  |  | 13.0 | % |  | 127.6 | %
|Net earnings                                 |                        | $                         | 103,398    |      | 9.1  | %      |          | $          | 45,625  |  | 8.1  | % |  | 126.6 | %



24



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##### Table of Contents

Sales

Sales consisted of the following:



|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|----------------------------- | ---------------------- | ---------------------- | ------- |  | ------------------------- | ------- |  | ----- | - | ---- | - | --------- |  | - | ------- |  | ----- | -
|                              |                        | Quarter Ended June 30, |         |  | Six Months Ended June 30, |        
|                              | 2008                   |                        | 2007    |  | % Change                  |         |  | 2008  |   | 2007 |   | % Change  | 
|                              | (Dollars in thousands) |                       
|Surface Mining:               |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Original equipment            |                        | $                      | 139,069 |  | $                         | 85,734  |  | 62.2  | % |      | $ | 282,077   |  | $ | 164,104 |  | 71.9  | %
|Aftermarket parts and service |                        |                        | 162,710 |  |                           | 127,861 |  | 27.3  | % |      |   | 303,760   |  |   | 239,852 |  | 26.6  | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|                              |                        |                        | 301,779 |  |                           | 213,595 |  | 41.3  | % |      |   | 585,837   |  |   | 403,956 |  | 45.0  | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Underground Mining:           |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Original equipment            |                        |                        | 185,500 |  |                           | 103,282 |  | 79.6  | % |      |   | 326,616   |  |   | 103,282 |  | 216.2 | %
|Aftermarket parts and service |                        |                        | 133,729 |  |                           | 57,924  |  | 130.9 | % |      |   | 225,536   |  |   | 57,924  |  | 289.4 | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|                              |                        |                        | 319,229 |  |                           | 161,206 |  | 98.0  | % |      |   | 552,152   |  |   | 161,206 |  | 242.5 | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Total:                        |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|Original equipment            |                        |                        | 324,569 |  |                           | 189,016 |  | 71.7  | % |      |   | 608,693   |  |   | 267,386 |  | 127.6 | %
|Aftermarket parts and service |                        |                        | 296,439 |  |                           | 185,785 |  | 59.6  | % |      |   | 529,296   |  |   | 297,776 |  | 77.7  | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  
|                              |                        | $                      | 621,008 |  | $                         | 374,801 |  | 65.7  | % |      | $ | 1,137,989 |  | $ | 565,162 |  | 101.4 | %
|                              |                        |                        |         |  |                           |         |  |       |   |      |   |           |  |   |         |  |       |  

The overall increase in surface mining sales was attributable to the high 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 products and services continues to be
driven by high international commodity prices and strong markets for commodities mined by our machines. The increase in surface mining original equipment sales for the six months ended June 30, 2008 was in both electric mining shovels and
draglines. Surface mining aftermarket parts and service sales for the second quarter and six months ended June 30, 2008 increased in nearly all worldwide markets compared to the same periods last year. The expansion of our South Milwaukee,
Wisconsin surface mining 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.

Underground mining sales for the second quarter of 2008 increased from recent quarters primarily due to strong original equipment new orders in the
fourth quarter of 2007 and first quarter of 2008. The lack of steel availability in the first quarter on these new orders has been resolved through changes in ordering policies. Market conditions remained strong in Eastern Europe and India, which
more than offset reductions occurring in China due to local sourcing.

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 quarter and six months ended June 30, 2007 were $468.2 million and $925.7 million, respectively.

Gross Profit

Gross profit for the
second quarter of 2008 was $174.1 million, or 28.0% of sales, compared to $96.3 million, or 25.7% of sales, for the second quarter of 2007. Gross profit for



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the six months ended June 30, 2008 was $315.7 million, or 27.7% of sales, compared to $148.4 million, or 26.3% of sales, for the six months ended
June 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:



|                                           |                        |                        |       |                          |      |       |      |   |        |  |   |      
|------------------------------------------ | ---------------------- | ---------------------- | ----- | ------------------------ | ---- | ----- | ---- | - | ------ |  | - | -----
|                                           |                        | Quarters EndedJune 30, |       | Six Months EndedJune 30,
|                                           | 2008                   |                        | 2007  |                          | 2008 |       | 2007
|                                           | (Dollars in thousands)
|Purchase accounting adjustments            |                        | $                      | 3,144 |                          | $    | 6,166 |      | $ | 11,891 |  | $ | 6,166
|Gross margin reduction (percentage points) |                        |                        | 0.5   |                          |      | 1.6   |      |   | 1.1    |  |   | 1.0  

The increase in gross profit in 2008 was primarily due to the acquisition of DBT and increased
surface mining sales. For the second quarter and six months ended June 30 2008, gross margins on surface mining original equipment and aftermarket parts and services were improved from the comparable periods in 2007. Original equipment sales,
which have lower gross margins than aftermarket parts and services sales, were 46% of total surface mining sales for the second quarter of 2008 compared to 40% for the second quarter last year, and were 48% of total surface mining sales for the six
months ended June 30, 2008 compared to 41% for the six months ended June 30, 2007. The cost of training new employees in South Milwaukee and the related effects also continued to negatively impact gross margin. The availability of raw
materials has not had a significant impact on the gross profit or our surface mining manufacturing schedule and recent raw material cost increases have not had a significant impact on gross profit.

Gross margin on underground mining equipment for the second quarter of 2008 declined from the first quarter of 2008 due to the mix of original equipment
sales, although underground mining equipment gross margin for the six months ended June 30, 2008 continued to exceed 2007 gross margins. Original equipment sales, which have lower gross margins than aftermarket parts and services sales, were
58% of total underground mining sales for the second quarter of 2008 compared to 61% for the first quarter of 2008, 65% for the fourth quarter of 2007 and 66% for the third quarter of 2007. Manufacturing absorption losses at our underground mining
manufacturing facilities for the second quarter of 2008 declined from the first quarter of 2008 due to increased activity levels.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the second quarter of 2008
were $59.4 million, or 9.6% of sales, compared to $41.7 million, or 11.1% of sales, for the second quarter of 2007 and $59.5 million, or 11.5% of sales, for the first quarter of 2008. These expenses for the six months ended June 30, 2008 were
$118.9 million, or 10.4% of sales, compared to $62.8 million, or 11.1% of sales, for the six months ended June 30, 2007. These dollar increases were primarily due to the acquisition of DBT.



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Research and Development Expenses

Research and development expenses for the second quarter of 2008 were $10.4 million, or 1.7% of sales, compared to $4.6 million, or 1.2% of sales,
for the second quarter of 2007. These expenses for the six months ended June 30, 2008 were $18.5 million, or 1.6% of sales, compared to $7.2 million, or 1.3% of sales, for the six months ended June 30, 2007. The increases were due to the
acquisition of DBT, as well as the continuing development of our surface and underground mining products. As a percent of surface mining sales, surface mining research and development expenses for the second quarter of 2008 were consistent with the
second quarter of 2007.

Amortization of Intangible Assets

Amortization of intangible assets acquired in the DBT acquisition was $4.5 million for the second quarter of 2008, compared to $4.0 for the second quarter
of 2007, and were $10.3 million for the six months ended June 30, 2008, compared to $4.0 for the six months ended June 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 June 30, |         |      | Six Months Ended June 30, |  
|                   | 2008                   |                        |         | 2007 |                           |   | % Change |   |  | 2008  |   |  | 2007 |         |   | % Change |  
|                   | (Dollars in thousands) |                       
|Surface mining     |                        | $                      | 64,259  |      |                           | $ | 36,126   |   |  | 77.9  | % |  | $    | 118,603 |   |          | $ | 64,092 |   |  | 85.1  | %
|Underground mining |                        |                        | 44,298  |      |                           |   | 11,466   |   |  | 286.3 | % |  |      | 63,547  |   |          |   | 11,466 |   |  | 454.2 | %
|                   |                        |                        |         |      |                           |   |          |   |  |       |   |  |      |         |   |          |   |        |   |  |       |  
|Total operations   |                        |                        | 108,557 |      |                           |   | 47,592   |   |  | 128.1 | % |  |      | 182,150 |   |          |   | 75,558 |   |  | 141.1 | %
|Corporate          |                        |                        | (8,813  | )    |                           |   | (2,048   | ) |  | 330.3 | % |  |      | (14,874 | ) |          |   | (2,048 | ) |  | 626.3 | %
|                   |                        |                        |         |      |                           |   |          |   |  |       |   |  |      |         |   |          |   |        |   |  |       |  
|Consolidated total |                        | $                      | 99,744  |      |                           | $ | 45,544   |   |  | 119.0 | % |  | $    | 167,276 |   |          | $ | 73,510 |   |  | 127.6 | %
|                   |                        |                        |         |      |                           |   |          |   |  |       |   |  |      |         |   |          |   |        |   |  |       |  

The increase in operating earnings for the second quarter and six months ended June 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 $7.4 million and $21.7 million for the quarter and six months ended June 30, 2008, respectively, compared to $10.5 million for the quarter and six months ended June 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 $6.6 million for the second quarter of 2008 compared to $6.2 million for the second quarter of 2007 and was $12.5 million for the six months ended June 30, 2008 compared to $7.5 million for the six months ended June 30, 2007.
The increase in interest expense in 2008 was due to increased debt levels related to the financing of the acquisition of DBT.



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Net Earnings

Net earnings for the second quarter of 2008 were $62.3 million, or $0.84 per share, compared to $27.8 million, or $0.40 per share, for the second quarter of 2007. Net earnings for the six months ended June 30,
2008 were $103.4 million, or $1.39 per share, compared to $45.6 million, or $0.69 per share, for the six months ended June 30, 2007. Net earnings were reduced (increased) by amortization of purchase accounting adjustments related to the
acquisition of DBT as follows:



|                                                                |                        |                       |       |                          |  |      |        |  |      |        |   |  |   |       
|--------------------------------------------------------------- | ---------------------- | --------------------- | ----- | ------------------------ |  | ---- | ------ |  | ---- | ------ | - |  | - | ------
|                                                                |                        | Quarter EndedJune 30, |       | Six Months EndedJune 30,
|                                                                | 2008                   |                       |       | 2007                     |  | 2008 |        |  | 2007
|                                                                | (Dollars in thousands)
|Inventory fair value adjustment charged to cost of product sold |                        | $                     | 3,229 |                          |  | $    | 5,631  |  | $    | 12,088 |   |  | $ | 5,631 
|Amortization of intangible assets                               |                        |                       | 4,462 |                          |  |      | 3,988  |  |      | 10,258 |   |  |   | 3,988 
|Depreciation of fixed assets                                    |                        |                       | (327  | )                        |  |      | 850    |  |      | (682   | ) |  |   | 850   
|                                                                |                        |                       |       |                          |  |      |        |  |      |        |   |  |   |       
|Operating earnings                                              |                        |                       | 7,364 |                          |  |      | 10,469 |  |      | 21,664 |   |  |   | 10,469
|Income tax expense                                              |                        |                       | 2,293 |                          |  |      | 4,066  |  |      | 7,075  |   |  |   | 4,066 
|                                                                |                        |                       |       |                          |  |      |        |  |      |        |   |  |   |       
|Total                                                           |                        | $                     | 5,071 |                          |  | $    | 6,403  |  | $    | 14,589 |   |  | $ | 6,403 
|                                                                |                        |                       |       |                          |  |      |        |  |      |        |   |  |   |       

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 were $64.5 million and $0.87, respectively, for the second quarter of 2008 compared to $28.7 million and $0.39, respectively, for the second quarter of 2007. For the
six months ended June 30, 2008, pro forma net earnings and net earnings per share were $111.6 million and $1.50, respectively, compared to $47.8 million and $0.64, respectively, for the six months ended June 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 $2.2
million and $8.0 million for the quarter and six months ended June 30, 2008, respectively, compared to $3.4 million for the quarter and six months ended June 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 six months ended June 30, 2008 and 2007, in each case compared to the same period in the prior year:



|                               |                        |                       |        |                          |      |       |      |   |        |  |   |      
|------------------------------ | ---------------------- | --------------------- | ------ | ------------------------ | ---- | ----- | ---- | - | ------ |  | - | -----
|                               |                        | Quarter EndedJune 30, |        | Six Months EndedJune 30,
|                               | 2008                   |                       | 2007   |                          | 2008 |       | 2007
|                               | (Dollars in thousands)
|Increase in sales              |                        | $                     | 17,201 |                          | $    | 1,896 |      | $ | 23,226 |  | $ | 3,209
|Increase in gross profit       |                        | $                     | 3,067  |                          | $    | 563   |      | $ | 3,952  |  | $ | 428  
|Increase in operating earnings |                        | $                     | 825    |                          | $    | 469   |      | $ | 1,137  |  | $ | 395  

EBITDA

EBITDA was as follows:



|                             |                        |                        |         |      |                           |   |          |   |  |      |   |  |      |         |   |          |   |        |   |  |       |  
|---------------------------- | ---------------------- | ---------------------- | ------- | ---- | ------------------------- | - | -------- | - |  | ---- | - |  | ---- | ------- | - | -------- | - | ------ | - |  | ----- | -
|                             |                        | Quarter Ended June 30, |         |      | Six Months Ended June 30, |  
|                             | 2008                   |                        |         | 2007 |                           |   | % Change |   |  | 2008 |   |  | 2007 |         |   | % Change |  
|                             | (Dollars in thousands) |                       
|EBITDA                       |                        | $                      | 114,022 |      |                           | $ | 57,684   |   |  | 97.7 | % |  | $    | 196,960 |   |          | $ | 89,844 |   |  | 119.2 | %
|EBITDA as a percent of sales |                        |                        | 18.4    | %    |                           |   | 15.4     | % |  | 19.5 | % |  |      | 17.3    | % |          |   | 15.9   | % |  | 8.8   | %

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 Ended June 30, |         |      | Six Months Ended June 30, |   
|                                                    | 2008                   |                        |         | 2007 |                           |    | 2008    |   |  | 2007 |        
|                                                    | (Dollars in thousands) |                       
|Net earnings                                        |                        | $                      | 62,317  |      |                           | $  | 27,762  |   |  | $    | 103,398 |   |  | $  | 45,625  |  
|Interest expense  net                              |                        |                        | 6,583   |      |                           |    | 6,217   |   |  |      | 12,497  |   |  |    | 7,454   |  
|Income tax expense                                  |                        |                        | 30,075  |      |                           |    | 10,965  |   |  |      | 49,845  |   |  |    | 19,566  |  
|Depreciation                                        |                        |                        | 9,983   |      |                           |    | 7,688   |   |  |      | 18,653  |   |  |    | 11,436  |  
|Amortization (1)                                    |                        |                        | 5,064   |      |                           |    | 5,052   |   |  |      | 12,567  |   |  |    | 5,763   |  
|                                                    |                        |                        |         |      |                           |    |         |   |  |      |         |   |  |    |         |  
|EBITDA (2)                                          |                        |                        | 114,022 |      |                           |    | 57,684  |   |  |      | 196,960 |   |  |    | 89,844  |  
|Changes in assets and liabilities                   |                        |                        | (85,811 | )    |                           |    | (38,273 | ) |  |      | 7,578   |   |  |    | (53,330 | )
|Non-cash stock compensation expense                 |                        |                        | 2,157   |      |                           |    | 1,365   |   |  |      | 3,979   |   |  |    | 3,057   |  
|Loss on sale of fixed assets                        |                        |                        | 5       |      |                           |    | 205     |   |  |      | 565     |   |  |    | 300     |  
|Interest expense  net                              |                        |                        | (6,583  | )    |                           |    | (6,217  | ) |  |      | (12,497 | ) |  |    | (7,454  | )
|Income tax expense                                  |                        |                        | (30,075 | )    |                           |    | (10,965 | ) |  |      | (49,845 | ) |  |    | (19,566 | )
|                                                    |                        |                        |         |      |                           |    |         |   |  |      |         |   |  |    |         |  
|Net cash provided by (used in) operating activities |                        | ($                     | 6,285   | )    |                           | $  | 3,799   |   |  | $    | 146,740 |   |  | $  | 12,851  |  
|                                                    |                        |                        |         |      |                           |    |         |   |  |      |         |   |  |    |         |  
|Net cash provided by (used in) investing activities |                        | ($                     | 23,748  | )    |                           | ($ | 745,276 | ) |  | ($   | 45,376  | ) |  | ($ | 760,993 | )
|                                                    |                        |                        |         |      |                           |    |         |   |  |      |         |   |  |    |         |  
|Net cash provided by (used in) financing activities |                        | ($                     | 3,240   | )    |                           | $  | 759,170 |   |  | ($   | 23,213  | ) |  | $  | 769,312 |  
|                                                    |                        |                        |         |      |                           |    |         |   |  |      |         |   |  |    |         |  



|(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 in the ordinary course, (c) loss on sales of fixed assets in the ordinary course, 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 EndedJune 30, |       | Six Months EndedJune 30,
|                                                                 | 2008                   |                       | 2007  |                          | 2008 |       | 2007
|                                                                 | (Dollars in thousands)
|Non-cash stock compensation expense                              |                        | $                     | 2,157 |                          | $    | 1,365 |      | $ | 3,979  |  | $ | 3,057 
|Severance expenses                                               |                        |                       | 910   |                          |      | 757   |      |   | 1,190  |  |   | 1,230 
|Loss on sales of fixed assets                                    |                        |                       | 5     |                          |      | 205   |      |   | 565    |  |   | 300   
|Inventory fair value adjustment charged to cost of products sold |                        |                       | 3,229 |                          |      | 5,631 |      |   | 12,088 |  |   | 5,631 
|                                                                 |                        |                       |       |                          |      |       |      |   |        |  |   |       
|                                                                 |                        | $                     | 6,301 |                          | $    | 7,958 |      | $ | 17,822 |  | $ | 10,218
|                                                                 |                        |                       |       |                          |      |       |      |   |        |  |   |       

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 June 30, 2008, we had no borrowings under the secured revolving credit
facility or the unsecured German credit facility. The amount available for borrowings under the secured revolving credit facility at June 30, 2008 was $221.5 million, after taking into account $153.5 million of issued letters of credit. The
amount available for borrowings under the unsecured German credit facility at June 30, 2008 was $63.0 million (40.0 million), after taking into account $39.4 million (25.0 million) of issued letters of credit. At June 30, 2008,
we had borrowings under the term loan facility of $514.2 million ($397.0 million plus 74.4 million) at a weighted average rate of 4.71%. 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.

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



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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). As of June 30, 2008, we were in compliance with all covenants and other requirements in our credit facilities.

Cash Requirements

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 six months ended June 30, 2008 were $44.3
million compared to $35.6 million for the six months ended June 30, 2007. Included in capital expenditures for the six months ended June 30, 2008 and 2007 were $16.0 million and $16.8 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 $90.0 million and $100.0 million, which includes the expansion of our facilities in Russia and
Texas, the establishment of a new service facility in Eastern Europe and $45.0 million for the additional renovations at our South Milwaukee, Wisconsin facility. 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.

At June 30, 2008, we had contractual
obligations of approximately $7.3 million with respect to our surface mining expansion program. At June 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 June 30, 2008, there were approximately $214.1 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.



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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 June 30, 2008, we had $500.5 million of accounts receivable compared to $416.6 million of accounts receivable at December 31, 2007. Receivables at June 30, 2008 and
December 31, 2007 included $223.6 million and $161.6 million, respectively, of revenues from long-term contracts which were not billable at these dates.

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.



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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 June 30, 2008. Based on this analysis, we have determined that a 10% change in the weighted average interest rate as of June 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 June 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 June 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 June 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 June 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.



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##### Table of Contents

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.
|------- | ----------------------------------------------------

The share amounts disclosed in this Item 4 do not reflect the two-for-one split of our common stock that was paid on May 27, 2008 to stockholders of record on May 13, 2008. Our 2008 annual meeting of stockholders was held on
April 24, 2008 (the Annual Meeting), with a portion of such meeting adjourned to April 30, 2008. At our Annual Meeting, the following matters were voted on in person or by proxy and approved by our stockholders:



| |  |  | The election of Gene E. Little to our Board of Directors for a three year term to expire at our 2011 annual meeting of stockholders and until his successor is duly
elected and qualified. The directors remaining in office until 2009 are Paul W. Jones, Robert L. Purdum and Timothy W. Sullivan, and the directors remaining in office until 2010 are Edward G. Nelson, Theodore C. Rogers and Robert C. Scharp.
Subsequent to our Annual Meeting, our Board of Directors elected Robert K. (Kelly) Ortberg as a new director for a term that will expire at our 2011 annual meeting of stockholders.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The amendment to our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of our common stock.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The amendments to our Amended and Restated Certificate of Incorporation to eliminate references to our Class B common stock and rename our Class A common
stock.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The ratification of the appointment of Deloitte & Touche to serve as our independent registered public accounting firm.
| | - |  | -----------------------------------------------------------------------------------------------------------------------

As of the February 25, 2008 record date for the determination of the stockholders entitled to notice of, and to vote at, our Annual Meeting,
37,432,848 shares of our common stock were outstanding and eligible to vote. A total of 33,707,559 shares voted in person or by proxy. The following are the final votes on the matters presented for stockholder approval at our Annual Meeting:



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##### Table of Contents

Election of Director



|               |       |            |               |       |          |       |            |               |       |  
|-------------- | ----- | ---------- | ------------- | ----- | -------- | ----- | ---------- | ------------- | ----- | -
|Name           |       | For        |               |       | Withheld |      
|               | Votes |            | Percentage(1) |       |          | Votes |            | Percentage(1) |      
|Gene E. Little |       | 18,596,993 |               | 55.17 | %        |       | 15,110,566 |               | 44.83 | %

Amendment and Restatement of Certificate of Incorporation Increasing Number of Authorized Shares of Common
Stock



|           |  |               |  |            |  |                 |  |        |  |               |  |       |  |              
|---------- |  | ------------- |  | ---------- |  | --------------- |  | ------ |  | ------------- |  | ----- |  | -------------
|For        |  | Against       |  | Abstain    |  | Broker Non-Vote
|Votes      |  | Percentage(1) |  | Votes      |  | Percentage(1)   |  | Votes  |  | Percentage(1) |  | Votes |  | Percentage(1)
|19,251,013 |  | 57.11%        |  | 14,443,422 |  | 42.85%          |  | 13,124 |  | .04%          |  | 0     |  | 0%           

Amendment and Restatement of Certificate of Incorporation Eliminating References to Class B Common Stock and
Renaming Class A Common Stock



|           |  |               |  |         |  |                 |  |       |  |               |  |           |  |              
|---------- |  | ------------- |  | ------- |  | --------------- |  | ----- |  | ------------- |  | --------- |  | -------------
|For        |  | Against       |  | Abstain |  | Broker Non-Vote
|Votes      |  | Percentage(1) |  | Votes   |  | Percentage(1)   |  | Votes |  | Percentage(1) |  | Votes     |  | Percentage(1)
|31,349,551 |  | 93.00%        |  | 25,395  |  | .08%            |  | 9,351 |  | .03%          |  | 2,323,262 |  | 6.89%        

Ratification of Deloitte & Touche LLP



|           |  |               |  |           |  |               |  |       |  |              
|---------- |  | ------------- |  | --------- |  | ------------- |  | ----- |  | -------------
|For        |  | Against       |  | Abstain  
|Votes      |  | Percentage(1) |  | Votes     |  | Percentage(1) |  | Votes |  | Percentage(1)
|31,123,024 |  | 92.33%        |  | 2,574,715 |  | 7.64%         |  | 9,820 |  | .03%         



|(1) | Based on a total of all shares actually voted in person or by proxy at our Annual Meeting.
|--- | ------------------------------------------------------------------------------------------



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

Our Board of Directors and
Compensation Committee have approved certain technical amendments to the definition of Change in Control to each form of existing Key Executive Employment and Severance Agreement (the KEESA) that we previously entered into
with Timothy W. Sullivan, Craig R. Mackus, Kenneth W. Krueger and John F. Bosbous, and to the Bucyrus International, Inc. Omnibus Incentive Plan 2007 (the 2007 Plan). These amendments are effective on August 11, 2008. The KEESAs and
the 2007 Plan, each as amended, are filed as exhibits to this Quarterly Report on Form 10-Q and are incorporated by reference herein.

Additionally, our Board of Directors and Compensation Committee have approved a KEESA for Luis de Leon, with an effective date of August 11, 2008. The new KEESA is filed as an exhibit to this quarterly Report on Form 10-Q and is
incorporated by reference herein.



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

See Exhibit Index on
last page of this report.



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##### Table of Contents

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                                                    
|Date: August 8, 2008 |  | Corporate Controller Principal Accounting Officer                
|                     | 
|                     |  | /s/ Craig R. Mackus                                              
|                     |  | Craig R. Mackus                                                  
|Date: August 8, 2008 |  | Chief Financial Officer and Secretary Principal
Financial Officer
|                     | 
|                     |  | /s/ Timothy W. Sullivan                                          
|                     |  | Timothy W. Sullivan                                              
|Date: August 8, 2008 |  | President and Chief Executive Officer                            



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EXHIBIT INDEX



|              |  |                                                                                                                                        
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                            
|10.1          |  | Key Executive Employment and Severance Agreement, effective August 11, 2008, by and between the Company and Timothy W. Sullivan.       
|              | 
|10.2          |  | Key Executive Employment and Severance Agreement, effective August 11, 2008, by and between the Company and Craig R. Mackus.           
|              | 
|10.3          |  | Key Executive Employment and Severance Agreement, effective August 11, 2008, by and between the Company and Kenneth W. Krueger.        
|              | 
|10.4          |  | Key Executive Employment and Severance Agreement, effective August 11, 2008, by and between the Company and John F. Bosbous.           
|              | 
|10.5          |  | Key Executive Employment and Severance Agreement, effective August 11, 2008, by and between the Company and Luis de Leon.              
|              | 
|10.6          |  | Bucyrus International, Inc. Omnibus Incentive Plan 2007, as amended, effective August 11, 2008.                                        
|              | 
|10.7          |  | Bucyrus International, Inc. 1998 Management Stock Option Plan, as adjusted to reflect the May 2008 stock split.                        
|              | 
|10.8          |  | Bucyrus International, Inc. Amended and Restated Non-Employee Directors Deferred Compensation Plan.                                    
|              | 
|31.1          |  | Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act and Rules 13a-14(a)/15d-14(a).
|              | 
|31.2          |  | Certification of Chief Financial Officer and Secretary pursuant to Section 302 of the Sarbanes-Oxley Act and Rules 13a-14(a)/15d-14(a).
|              | 
|32            |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.