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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-Q



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(Mark One)

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

For the quarterly period ended September 30, 2007

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 000-50858



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BUCYRUS INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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 |  | 53172     
|(Address of Principal Executive Offices)                       |  | (Zip Code)

(414) 768-4000

(Registrants Telephone Number, Including Area Code)



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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, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated
filer  x    Accelerated filer ̈Non-accelerated filer ̈

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

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



|                                     |  |                             
|------------------------------------ |  | ----------------------------
|Class                                |  | Outstanding November 2, 2007
|Class A Common Stock, $.01 par value |  | 37,413,702                  



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##### Table of Contents

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX



|                               |  |                                                                                                |  |                                                                                                                       |  |         
|------------------------------ |  | ---------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------- |  | --------
|                               |  |                                                                                                |  |                                                                                                                       |  | Page No.
|PART I. FINANCIAL INFORMATION: |  |                                                                                               
|                               |  |                                                                                               
|                               |  | Item 1 - Financial Statements (Unaudited)                                                      |  |                                                                                                                      
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Consolidated Condensed Statements of Earnings  Quarter and nine months ended September 30, 2007 and 2006             |  | 3       
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Consolidated Condensed Statements of Comprehensive Income  Quarter and nine months ended September 30, 2007 and 2006 |  | 4       
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Consolidated Condensed Balance Sheets  September 30, 2007 and December 31, 2006                                      |  | 5       
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Consolidated Condensed Statements of Cash Flows  Nine months ended September 30, 2007 and 2006                       |  | 7       
|                               |  |                                                                                                | 
|                               |  |                                                                                                |  | Notes to Consolidated Condensed Financial Statements                                                                  |  | 9       
|                               |  |                                                                                               
|                               |  | Item 2 - Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 20                                                                                                                   
|                               |  |                                                                                               
|                               |  | Item 3 - Quantitative and Qualitative Disclosures About Market Risk                            |  | 37                                                                                                                   
|                               |  |                                                                                               
|                               |  | Item 4 - Controls and Procedures                                                               |  | 38                                                                                                                   
|                               | 
|PART II. OTHER INFORMATION:    |  |                                                                                               
|                               |  |                                                                                               
|                               |  | Item 1 - Legal Proceedings                                                                     |  | 39                                                                                                                   
|                               |  |                                                                                               
|                               |  | Item 1A - Risk Factors                                                                         |  | 39                                                                                                                   
|                               |  |                                                                                               
|                               |  | Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 39                                                                                                                   
|                               |  |                                                                                               
|                               |  | Item 3 - Defaults Upon Senior Securities                                                       |  | 39                                                                                                                   
|                               |  |                                                                                               
|                               |  | Item 4 - Submission of Matters to a Vote of Security Holders                                   |  | 39                                                                                                                   
|                               |  |                                                                                               
|                               |  | Item 5 - Other Information                                                                     |  | 39                                                                                                                   
|                               |  |                                                                                               
|                               |  | Item 6 - Exhibits                                                                              |  | 39                                                                                                                   
|                               |  |                                                                                               
|                               |  | Signature Page                                                                                 |  | 40                                                                                                                   



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##### Table of Contents

PART I

FINANCIAL INFORMATION

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 1FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



|                                             |  |                             |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|-------------------------------------------- |  | --------------------------- | ---------- | - | ------------------------------ | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                             |  | Quarter Ended September 30, |            |   | Nine Months EndedSeptember 30, |  
|                                             |  | 2007                        |            |   | 2006                           |   |            | 2007 |  |   | 2006       |  
|Sales                                        |  | $                           | 500,278    |   |                                | $ | 184,980    |      |  | $ | 1,065,440  |   |  | $ | 532,437    |  
|Costs of products sold                       |  |                             | 376,650    |   |                                |   | 137,086    |      |  |   | 793,437    |   |  |   | 396,736    |  
|                                             |  |                             |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Gross profit                                 |  |                             | 123,628    |   |                                |   | 47,894     |      |  |   | 272,003    |   |  |   | 135,701    |  
|                                             |  |                             |            |  
|Selling, general and administrative expenses |  |                             | 57,238     |   |                                |   | 18,728     |      |  |   | 121,369    |   |  |   | 52,266     |  
|Research and development expenses            |  |                             | 5,172      |   |                                |   | 2,182      |      |  |   | 12,334     |   |  |   | 7,155      |  
|Amortization of intangible assets            |  |                             | 11,672     |   |                                |   | 446        |      |  |   | 16,570     |   |  |   | 1,347      |  
|                                             |  |                             |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Operating earnings                           |  |                             | 49,546     |   |                                |   | 26,538     |      |  |   | 121,730    |   |  |   | 74,933     |  
|                                             |  |                             |            |  
|Interest expense                             |  |                             | 9,712      |   |                                |   | 804        |      |  |   | 18,137     |   |  |   | 2,050      |  
|Other income                                 |  |                             | (2,970     | ) |                                |   | (176       | )    |  |   | (5,267     | ) |  |   | (567       | )
|Other expense                                |  |                             | 763        |   |                                |   | 259        |      |  |   | 1,628      |   |  |   | 769        |  
|                                             |  |                             |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Earnings before income taxes                 |  |                             | 42,041     |   |                                |   | 25,651     |      |  |   | 107,232    |   |  |   | 72,681     |  
|Income tax expense                           |  |                             | 13,439     |   |                                |   | 8,931      |      |  |   | 33,005     |   |  |   | 19,881     |  
|                                             |  |                             |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Net earnings                                 |  | $                           | 28,602     |   |                                | $ | 16,720     |      |  | $ | 74,227     |   |  | $ | 52,800     |  
|                                             |  |                             |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Net earnings per share data                  |  |                             |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Basic:                                       |  |                             |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Net earnings per share                       |  | $                           | .77        |   |                                | $ | .53        |      |  | $ | 2.16       |   |  | $ | 1.69       |  
|Weighted average shares                      |  |                             | 37,114,732 |   |                                |   | 31,289,478 |      |  |   | 34,294,412 |   |  |   | 31,255,652 |  
|                                             |  |                             |            |  
|Diluted:                                     |  |                             |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Net earnings per share                       |  | $                           | .76        |   |                                | $ | .53        |      |  | $ | 2.14       |   |  | $ | 1.67       |  
|Weighted average shares                      |  |                             | 37,485,691 |   |                                |   | 31,498,745 |      |  |   | 34,620,572 |   |  |   | 31,547,086 |  

See notes to consolidated condensed financial statements.



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##### Table of Contents

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 1FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED STATEMENTS OF

COMPREHENSIVE INCOME (UNAUDITED)

(DOLLARS IN THOUSANDS)



|                                                                      |  |                            |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------- |  | -------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                      |  | Quarter EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                                      |  | 2007                       |        |   | 2006                           |   |        | 2007 |  |   | 2006   |  
|Net earnings                                                          |  | $                          | 28,602 |   |                                | $ | 16,720 |      |  | $ | 74,227 |   |  | $ | 52,800 |  
|Other comprehensive income -                                          |  |                            |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Foreign currency translation adjustments                              |  |                            | 13,448 |   |                                |   | (222   | )    |  |   | 15,341 |   |  |   | (1,155 | )
|Pension and postretirement liability adjustments, net of income taxes |  |                            | 93     |   |                                |   |       |      |  |   | 692    |   |  |   |       |  
|Derivative fair value adjustments, net of income taxes                |  |                            | (7,709 | ) |                                |   |       |      |  |   | (7,043 | ) |  |   |       |  
|                                                                      |  |                            |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Comprehensive income                                                  |  | $                          | 34,434 |   |                                | $ | 16,498 |      |  | $ | 83,217 |   |  | $ | 51,645 |  
|                                                                      |  |                            |        |   |                                |   |        |      |  |   |        |   |  |   |        |  

See notes to consolidated condensed financial statements.



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##### Table of Contents

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 1FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



|                                    |  |                    |           |   |                   |   |         |  
|----------------------------------- |  | ------------------ | --------- | - | ----------------- | - | ------- | -
|                                    |  | September 30, 2007 |           |   | December 31, 2006 |  
|ASSETS                              |  |                    |           |   |                   |   |         |  
|CURRENT ASSETS:                     |  |                    |           |   |                   |   |         |  
|Cash and cash equivalents           |  | $                  | 40,040    |   |                   | $ | 9,575   |  
|Receivables  net                   |  |                    | 464,026   |   |                   |   | 162,535 |  
|Inventories                         |  |                    | 503,596   |   |                   |   | 176,277 |  
|Deferred income taxes               |  |                    | 13,641    |   |                   |   | 11,725  |  
|Prepaid expenses and other          |  |                    | 52,563    |   |                   |   | 16,408  |  
|                                    |  |                    |           |   |                   |   |         |  
|Total Current Assets                |  |                    | 1,073,866 |   |                   |   | 376,520 |  
|                                    |  |                    |           |   |                   |   |         |  
|OTHER ASSETS:                       |  |                    |           |   |                   |   |         |  
|Goodwill                            |  |                    | 308,142   |   |                   |   | 47,306  |  
|Intangible assets  net             |  |                    | 257,664   |   |                   |   | 28,097  |  
|Deferred income taxes               |  |                    | 38,859    |   |                   |   | 16,117  |  
|Other assets                        |  |                    | 38,525    |   |                   |   | 7,523   |  
|                                    |  |                    |           |   |                   |   |         |  
|Total Other Assets                  |  |                    | 643,190   |   |                   |   | 99,043  |  
|                                    |  |                    |           |   |                   |   |         |  
|PROPERTY, PLANT AND EQUIPMENT:      |  |                    |           |   |                   |   |         |  
|Cost                                |  |                    | 491,379   |   |                   |   | 210,604 |  
|Less accumulated depreciation       |  |                    | (111,686  | ) |                   |   | (85,455 | )
|                                    |  |                    |           |   |                   |   |         |  
|Total Property, Plant and Equipment |  |                    | 379,693   |   |                   |   | 125,149 |  
|                                    |  |                    |           |   |                   |   |         |  
|TOTAL ASSETS                        |  | $                  | 2,096,749 |   |                   | $ | 600,712 |  
|                                    |  |                    |           |   |                   |   |         |  



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##### Table of Contents

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 1FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



|                                                                                                                                             |  |                    |           |   |                   |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | - | ----------------- | - | ------- | -
|                                                                                                                                             |  | September 30, 2007 |           |   | December 31, 2006 |  
|LIABILITIES AND COMMON STOCKHOLDERS INVESTMENT                                                                                              |  |                    |           |   |                   |   |         |  
|CURRENT LIABILITIES:                                                                                                                         |  |                    |           |   |                   |   |         |  
|Accounts payable                                                                                                                             |  | $                  | 132,477   |   |                   | $ | 83,603  |  
|Accrued expenses                                                                                                                             |  |                    | 139,176   |   |                   |   | 44,121  |  
|Liabilities to customers on uncompleted contracts and warranties                                                                             |  |                    | 164,917   |   |                   |   | 32,233  |  
|Income taxes                                                                                                                                 |  |                    | 58,124    |   |                   |   | 9,978   |  
|Current maturities of long-term debt and other short-term obligations                                                                        |  |                    | 8,503     |   |                   |   | 331     |  
|                                                                                                                                             |  |                    |           |   |                   |   |         |  
|Total Current Liabilities                                                                                                                    |  |                    | 503,197   |   |                   |   | 170,266 |  
|                                                                                                                                             |  |                    |           |   |                   |   |         |  
|LONG-TERM LIABILITIES:                                                                                                                       |  |                    |           |   |                   |   |         |  
|Liabilities to customers on uncompleted contracts and warranties                                                                             |  |                    | 24,602    |   |                   |   | 940     |  
|Postretirement benefits                                                                                                                      |  |                    | 18,351    |   |                   |   | 17,313  |  
|Pension and other                                                                                                                            |  |                    | 159,929   |   |                   |   | 33,530  |  
|Deferred income taxes                                                                                                                        |  |                    | 107,921   |   |                   |   | 401     |  
|                                                                                                                                             |  |                    |           |   |                   |   |         |  
|Total Long-Term Liabilities                                                                                                                  |  |                    | 310,803   |   |                   |   | 52,184  |  
|                                                                                                                                             |  |                    |           |   |                   |   |         |  
|LONG-TERM DEBT, less current maturities                                                                                                      |  |                    | 546,187   |   |                   |   | 82,266  |  
|COMMON STOCKHOLDERS INVESTMENT:                                                                                                             |  |                    |           |   |                   |   |         |  
|Class A common stock  par value $0.01 per share, authorized 75,000,000 shares, issued 37,522,302 shares and 31,685,767 shares,
respectively |  |                    | 375       |   |                   |   | 317     |  
|Additional paid-in capital                                                                                                                   |  |                    | 669,428   |   |                   |   | 306,981 |  
|Treasury stock  108,600 shares, at cost                                                                                                     |  |                    | (851      | ) |                   |   | (851    | )
|Accumulated earnings                                                                                                                         |  |                    | 82,522    |   |                   |   | 13,451  |  
|Accumulated other comprehensive loss                                                                                                         |  |                    | (14,912   | ) |                   |   | (23,902 | )
|                                                                                                                                             |  |                    |           |   |                   |   |         |  
|Total Common Stockholders Investment                                                                                                        |  |                    | 736,562   |   |                   |   | 295,996 |  
|                                                                                                                                             |  |                    |           |   |                   |   |         |  
|TOTAL LIABILITIES AND COMMON STOCKHOLDERS INVESTMENT                                                                                        |  | $                  | 2,096,749 |   |                   | $ | 600,712 |  
|                                                                                                                                             |  |                    |           |   |                   |   |         |  

See notes to consolidated condensed financial statements.



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##### Table of Contents

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 1 - FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(DOLLARS IN THOUSANDS)



|                                                                     |  |                                 |          |   |      |   |         |  
|-------------------------------------------------------------------- |  | ------------------------------- | -------- | - | ---- | - | ------- | -
|                                                                     |  | Nine Months Ended September 30, |         
|                                                                     |  | 2007                            |          |   | 2006 |  
|Net Cash Provided By Operating Activities                            |  | $                               | 25,777   |   |      | $ | 18,655  |  
|                                                                     |  |                                 |          |   |      |   |         |  
|Cash Flows From Investing Activities                                 |  |                                 |          |   |      |   |         |  
|Purchases of property, plant and equipment                           |  |                                 | (64,283  | ) |      |   | (47,458 | )
|Proceeds from sale of property, plant and equipment                  |  |                                 | 446      |   |      |   | 613     |  
|Acquisition of DBT GmbH                                              |  |                                 | (707,236 | ) |      |   |        |  
|Other                                                                |  |                                 |         |   |      |   | (93     | )
|DBT GmbH acquisition closing adjustments for liabilities not assumed |  |                                 | 26,549   |   |      |   |        |  
|                                                                     |  |                                 |          |   |      |   |         |  
|Net cash used in investing activities                                |  |                                 | (744,524 | ) |      |   | (46,938 | )
|                                                                     |  |                                 |          |   |      |   |         |  
|Cash Flows From Financing Activities                                 |  |                                 |          |   |      |   |         |  
|Net borrowings (repayments) of revolving credit facilities           |  |                                 | (63,104  | ) |      |   | 25,518  |  
|Proceeds from term loan facility                                     |  |                                 | 825,000  |   |      |   |        |  
|Payment of term loan facility                                        |  |                                 | (325,000 | ) |      |   |        |  
|Proceeds from other bank borrowings and long-term debt               |  |                                 | 5,719    |   |      |   | 900     |  
|Payments of other bank borrowings and long-term debt                 |  |                                 | (11,375  | ) |      |   | (291    | )
|Receipt of government grants for facilities expansion                |  |                                 |         |   |      |   | 2,000   |  
|Payment of financing expenses                                        |  |                                 | (15,672  | ) |      |   | (240    | )
|Net proceeds from issuance of common stock                           |  |                                 | 336,052  |   |      |   | 756     |  
|Tax benefit related to share-based payment awards                    |  |                                 | 167      |   |      |   | 4,353   |  
|Dividends paid                                                       |  |                                 | (5,360   | ) |      |   | (4,327  | )
|                                                                     |  |                                 |          |   |      |   |         |  
|Net cash provided by financing activities                            |  |                                 | 746,427  |   |      |   | 28,669  |  
|                                                                     |  |                                 |          |   |      |   |         |  
|Effect of exchange rate changes on cash                              |  |                                 | 2,785    |   |      |   | (50     | )
|                                                                     |  |                                 |          |   |      |   |         |  
|Net increase in cash and cash equivalents                            |  |                                 | 30,465   |   |      |   | 336     |  
|Cash and cash equivalents at beginning of period                     |  |                                 | 9,575    |   |      |   | 12,451  |  
|                                                                     |  |                                 |          |   |      |   |         |  
|Cash and cash equivalents at end of period                           |  | $                               | 40,040   |   |      | $ | 12,787  |  
|                                                                     |  |                                 |          |   |      |   |         |  



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##### Table of Contents

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 1 - FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(CONTINUED)

(DOLLARS IN THOUSANDS)



|                                                                               |  |                                 |        |      |   |       
|------------------------------------------------------------------------------ |  | ------------------------------- | ------ | ---- | - | ------
|                                                                               |  | Nine Months Ended September 30,
|                                                                               |  | 2007                            |        | 2006
|Supplemental Disclosures of Cash Flow Information                              |  |                                 |        |      |   |       
|Cash paid during the period for:                                               |  |                                 |        |      |   |       
|Interest                                                                       |  | $                               | 16,203 |      | $ | 2,468 
|Income taxes  net of refunds                                                  |  |                                 | 35,420 |      |   | 18,789
|Supplemental Disclosure of Noncash Investing Activity                          |  |                                 |        |      |   |       
|Capital expenditures related to expansion program included in accounts payable |  | $                               | 321    |      | $ | 351   

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:



|                                          |  |      |           |  
|----------------------------------------- |  | ---- | --------- | -
|                                          |  | 2007 |          
|Fair value of assets acquired             |  | $    | 1,291,638 |  
|Cash paid                                 |  |      | (694,822  | )
|Fair value of Company common stock issued |  |      | (21,782   | )
|Acquisition expenses paid                 |  |      | (12,414   | )
|Accrued acquisition expenses              |  |      | (1,064    | )
|                                          |  |      |           |  
|Liabilities assumed                       |  | $    | 561,556   |  
|                                          |  |      |           |  

See notes to consolidated condensed financial statements.



8



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##### Table of Contents

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 1FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)



|1. | Bucyrus International, Inc. (the Company) is a leading designer, manufacturer and marketer of large-scale excavation equipment used in surface mining and, as a result of
its acquisition of DBT GmbH (DBT) on May 4, 2007, is also a leading designer, manufacturer and marketer of high technology system solutions for underground coal mining. The Company operates in two business segments: surface mining
and underground mining. 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 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 2006 Annual Report to Stockholders and Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2007 and the Companys prospectus supplement
filed with the Securities and Exchange Commission on May 9, 2007 in connection with the recent public offering of its Class A common stock (see Note 6).



|3. | On May 4, 2007, the Company completed its acquisition of DBT from RAG Coal International AG (RAG Coal). DBT is based in Lünen, Germany. Through the
Companys acquisition subsidiary, DBT Holdings GmbH, the Company acquired DBT for $694.8 million in cash and 471,476 shares of the Companys common stock with an initial market value of $21.8 million. Expenses related to the acquisition
totaled $13.5 million. The net assets acquired and results of operations since the date of acquisition are included in the Companys consolidated financial statements.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The acquisition of DBT enabled the Company to expand its product portfolio to include underground mining equipment and aftermarket support for that
equipment, which enhances its capability to serve a larger segment of the global mining equipment market. The acquisition also increases the Companys strategic presence in markets that it expects will experience substantial mining growth over
the next several years. These factors contributed to a purchase price resulting in the recognition of goodwill.



9



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The acquisition of DBT was accounted for under the purchase method of accounting. Under purchase
accounting, the total purchase price was allocated to the tangible and intangible assets and liabilities assumed based on their respective fair values as of the date of the DBT acquisition. The principles of purchase accounting require extensive use
of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. Accordingly, the purchase price allocation is preliminary
and will be adjusted upon completion of the final valuation of the acquired assets. Such adjustments could be significant. The final valuation is expected to be completed as soon as practicable but no later than 12 months after the date of the DBT
acquisition.



|                                                                                 |  |   |          
|-------------------------------------------------------------------------------- |  | - | ---------
|The preliminary purchase price was determined as follows (dollars in thousands): |  |   |          
|                                                                                 | 
|Cash                                                                             |  | $ | 694,822  
|Issuance of common shares                                                        |  |   | 21,782   
|Liabilities assumed                                                              |  |   | 450,302  
|Deferred tax impact of purchase accounting                                       |  |   | 111,254  
|Acquisition expenses                                                             |  |   | 13,478   
|                                                                                 |  |   |          
|Total preliminary purchase price                                                 |  | $ | 1,291,638
|                                                                                 |  |   |          

Major categories of liabilities assumed included liabilities to customers on uncompleted contracts
of $92.3 million, pension liabilities of $117.2 million, warranty liabilities of $74.9 million and trade accounts payable of $55.9 million.





|                                                                                        |  |   |          
|--------------------------------------------------------------------------------------- |  | - | ---------
|The preliminary allocation of the purchase price was as follows (dollars in thousands): |  |   |          
|                                                                                        | 
|Current assets                                                                          |  | $ | 546,343  
|Property, plant and equipment                                                           |  |   | 209,000  
|Intangible assets (including goodwill of $260,836)                                      |  |   | 507,835  
|Other long-term assets                                                                  |  |   | 28,460   
|                                                                                        |  |   |          
|Total preliminary purchase price allocation                                             |  | $ | 1,291,638
|                                                                                        |  |   |          

Pro Forma Results of Operations

The following unaudited pro forma results of operations assumes that the Company acquired DBT on January 1, 2006 and 2007 and includes the effects of the
Companys debt refinancing (see Note 5) and equity offering (see Note 6). The pro forma results include adjustments to reflect additional interest expense, depreciation expense and amortization of intangibles, as well as the effects of
adjustments made to the carrying value of certain assets.



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|                        |  |                                                 |         |                                |   |         |  |      |           |  |   |          
|----------------------- |  | ----------------------------------------------- | ------- | ------------------------------ | - | ------- |  | ---- | --------- |  | - | ---------
|                        |  | Three Months EndedSeptember 30,                 |         | Nine Months endedSeptember 30,
|                        |  | 2007                                            |         | 2006                           |   | 2007    |  | 2006
|                        |  | (Dollar in thousands, except per share amounts)
|Sales                   |  | $                                               | 500,278 |                                | $ | 404,722 |  | $    | 1,425,953 |  | $ | 1,444,079
|                        |  |                                                 |         |                               
|Net earnings            |  | $                                               | 36,817  |                                | $ | 21,108  |  | $    | 86,766    |  | $ | 86,693   
|                        |  |                                                 |         |                               
|Net earnings per share: |  |                                                 |         |                                |   |         |  |      |           |  |   |          
|Basic                   |  | $                                               | .99     |                                | $ | .57     |  | $    | 2.34      |  | $ | 2.35     
|Diluted                 |  | $                                               | .98     |                                | $ | .57     |  | $    | 2.32      |  | $ | 2.33     

Finished parts and work in process inventories have been adjusted to their estimated fair market value as required
by Statement of Financial Accounting Standards No. 141, Business Combinations. Finished parts were valued at their selling price, less cost to sell, less a selling profit, and work in process was valued at its selling price, less
cost to sell, less a selling profit, less manufacturing profit not yet earned. As this inventory adjustment was directly attributed to the transaction and will not have a continuing impact, it is not reflected in the pro forma results of operations
presented above. However, this inventory adjustment is resulting in a charge to cost of products sold in the period subsequent to the consummation of the acquisition of DBT during which the related inventories are sold. The actual charge, net of
tax, for the quarter and nine months ended September 30, 2007 was $6.1 million and $9.5 million, respectively. The remaining estimated charge, net of tax, is approximately $13.8 million and is expected to be fully amortized as a charge to cost
of sales by the second quarter of 2008.

The pro forma financial information presented above is not necessarily indicative of either the results of
operations that would have occurred had the acquisition of DBT been effective on January 1, 2006 and 2007 or of the Companys future operations. Also, the pro formal financial information does not reflect the costs which the Company may
incur to integrate DBT, and these costs may be material.



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



|                                                |  |                        |         |                   |   |        
|----------------------------------------------- |  | ---------------------- | ------- | ----------------- | - | -------
|                                                |  | September 30, 2007     |         | December 31, 2006
|                                                |  | (Dollars in thousands)
|Raw materials and parts                         |  | $                      | 105,709 |                   | $ | 45,392 
|Work in process                                 |  |                        | 158,170 |                   |   | 30,794 
|Finished products (primarily replacement parts) |  |                        | 239,717 |                   |   | 100,091
|                                                |  |                        |         |                   |   |        
|                                                |  | $                      | 503,596 |                   | $ | 176,277
|                                                |  |                        |         |                   |   |        



|5. | The Company entered into new credit facilities, as amended and restated on May 25, 2007, to finance the acquisition of DBT and refinance certain existing
indebtedness. The new credit facilities include a secured revolving credit facility of $375.0 million, an
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



11



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| | 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. The credit facilities replaced the Companys previous $200.0 million revolving credit
facility.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 the Companys 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 the Companys total leverage ratio) for U.S. dollar denominated base rate loans and (3) EURIBOR plus between 1.25% and 1.75% (based on the Companys total leverage ratio) for
Euro denominated loans. The interest rates under the secured revolving credit facility are subject to change based on the Companys total leverage ratio. Under each revolving credit facility, the Company has agreed to pay a commitment fee based
on the unused portion of such facilities, payable quarterly, at rates ranging from 0.25% to 0.50% depending on the total leverage ratio, and when applicable, customary letter of credit fees. Borrowings under the term loan facility bear interest,
payable no less frequently than quarterly, at (a) LIBOR plus 1.50% for U.S. dollar denominated LIBOR loans, (2) the base rate plus 0.50% for U.S. dollar denominated base rate loans and (3) EURIBOR plus 1.75% for Euro denominated
loans.

At September 30, 2007, the Company had no borrowings under the secured revolving credit facility. The amount available for
borrowings under the secured revolving credit facility was $201.5 million (taking into account $173.5 million of issued letters of credit). At September 30, 2007, the Company also had borrowings under the term loan facility of $506.9 ($400.0
million plus 75 million) million at a weighted average rate of 6.8% and had borrowings under the German revolving credit facility of $15.7 million (11.0 million) at a weighted average rate of 6.0%.

The Companys obligations under the 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.

The credit facilities contain operating and financial covenants that, among other things, could limit the Companys ability to obtain additional
sources of capital. The financial covenants require the Company to maintain a total leverage ratio, calculated on a trailing four-quarters 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 September 30, 2007, the Company was in compliance with all covenants and other requirements under its credit facilities.



12



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|6. | On May 15, 2007, the Company sold 5,306,100 shares of its Class A common stock in an underwritten public offering at a price to the public of $66.35 per share, from which
it received net proceeds of $336.1 million. The Company used the net proceeds from this equity offering to repay a portion of its new term loan facility used to initially finance the acquisition of DBT.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|7. | The following is a reconciliation of the numerators and the denominators of the basic and diluted net income per share of common stock calculations for the quarters and nine months
ended September 30, 2007 and 2006.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|---------------------------------------------------------------------------------------------------- |  | ----------------------------------------------- | ---------- | ------------------------------ | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                                                                                     |  | Quarter Ended September 30,                     |            | Nine Months EndedSeptember 30,
|                                                                                                     |  | 2007                                            |            | 2006                           |   | 2007       |  | 2006
|                                                                                                     |  | (Dollar in thousands, except per share amounts)
|Net earnings                                                                                         |  | $                                               | 28,602     |                                | $ | 16,720     |  | $    | 74,227     |  | $ | 52,800    
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Weighted average shares outstanding                                                                  |  |                                                 | 37,114,732 |                                |   | 31,289,478 |  |      | 34,294,412 |  |   | 31,255,652
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Basic net earnings per share:                                                                        |  | $                                               | .77        |                                | $ | .53        |  | $    | 2.16       |  | $ | 1.69      
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Weighted average shares outstanding                                                                  |  |                                                 | 37,114,732 |                                |   | 31,289,478 |  |      | 34,294,412 |  |   | 31,255,652
|Effect of dilutive stock options, nonvested shares, stock appreciation rights and performance shares |  |                                                 | 370,959    |                                |   | 209,267    |  |      | 326,160    |  |   | 291,434   
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Weighted average shares outstanding  diluted                                                        |  |                                                 | 37,485,691 |                                |   | 31,498,745 |  |      | 34,620,572 |  |   | 31,547,086
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           
|Diluted net earnings per share                                                                       |  | $                                               | .76        |                                | $ | .53        |  | $    | 2.14       |  | $ | 1.67      
|                                                                                                     |  |                                                 |            |                                |   |            |  |      |            |  |   |           



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|8. | Intangible assets (other than goodwill) consisted of the following:
|-- | -------------------------------------------------------------------



|                                                       |  |                        |         |                          |                   |         |                       |  |                          |        |  |   |         |  
|------------------------------------------------------ |  | ---------------------- | ------- | ------------------------ | ----------------- | ------- | --------------------- |  | ------------------------ | ------ |  | - | ------- | -
|                                                       |  | September 30, 2007     |         |                          | December 31, 2006 |        
|                                                       |  | Gross Carrying Amount  |         | Accumulated Amortization |                   |         | Gross Carrying Amount |  | Accumulated Amortization |       
|                                                       |  | (Dollars in thousands) |        
|Amortized intangible assets:                           |  |                        |         |                          |                   |         |                       |  |                          |        |  |   |         |  
|Engineering drawings                                   |  | $                      | 25,500  |                          | $                 | (12,775 | )                     |  | $                        | 25,500 |  | $ | (11,818 | )
|Technology                                             |  |                        | 115,000 |                          |                   | (3,993  | )                     |  |                          |       |  |   |        |  
|Customer relationships                                 |  |                        | 112,000 |                          |                   | (2,333  | )                     |  |                          |       |  |   |        |  
|Backlog                                                |  |                        | 8,000   |                          |                   | (3,333  | )                     |  |                          |       |  |   |        |  
|Trademarks                                             |  |                        | 12,000  |                          |                   | (5,523  | )                     |  |                          |       |  |   |        |  
|Other                                                  |  |                        | 4,937   |                          |                   | (4,252  | )                     |  |                          | 5,844  |  |   | (3,865  | )
|                                                       |  |                        |         |                          |                   |         |                       |  |                          |        |  |   |         |  
|                                                       |  | $                      | 277,437 |                          | $                 | (32,209 | )                     |  | $                        | 31,344 |  | $ | (15,683 | )
|                                                       |  |                        |         |                          |                   |         |                       |  |                          |        |  |   |         |  
|Unamortized intangible assets  Trademarks/Trade names |  | $                      | 12,436  |                          |                   |         |                       |  | $                        | 12,436 |  |   |         |  
|                                                       |  |                        |         |                          |                   |         |                       |  |                          |        |  |   |         |  

The estimated future amortization expense of intangible assets as of September 30, 2007 was as
follows (dollars in thousands):



|                              |  |   |        
|----------------------------- |  | - | -------
|2007 (remaining three months) |  | $ | 9,722  
|2008                          |  |   | 20,281 
|2009                          |  |   | 17,404 
|2010                          |  |   | 16,937 
|2011                          |  |   | 16,601 
|2012                          |  |   | 16,601 
|Future                        |  |   | 147,682
|                              |  |   |        
|                              |  | $ | 245,228
|                              |  |   |        

Additional preliminary goodwill of $260.8 million was recorded in 2007 as part of the acquisition
of DBT and was recorded as part of the underground mining segment.



14



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|9. | As described in Note 1, as a result of the acquisition of DBT on May 4, 2007, the Company has two reportable segments: surface mining and underground mining. Prior to the
acquisition of DBT, all of the Companys operations were in surface mining and were classified as one operating segment. The new underground mining segment refers to the operations of DBT. As a result, disclosures of segment information for the
prior quarter and on a year-to-date basis are not presented since the Companys underground mining segment did not exist prior to the acquisition of DBT on May 4, 2007.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These two business segments are strategic business units that offer distinctive products and services. They are managed separately because of their unique
technology, marketing and distribution requirements.

The operating income (loss) of segments does not include interest expense, other
income and expense and a provision for income taxes. There are no significant intersegment sales. Identifiable assets are those used in the operations in each segment.

The following tables present segment information for the quarter and nine months ended September 30, 2007:



|                                                   |  |                                  |         |                    |   |        |                               |  |                      |        |              |   |        |  |   |          
|-------------------------------------------------- |  | -------------------------------- | ------- | ------------------ | - | ------ | ----------------------------- |  | -------------------- | ------ | ------------ | - | ------ |  | - | ---------
|                                                   |  | Quarter Ended September 30, 2007
|                                                   |  | Sales                            |         | Operating Earnings |   |        | Depreciation and Amortization |  | Capital Expenditures |        | Total Assets
|                                                   |  | (Dollars in thousands)          
|Surface mining                                     |  | $                                | 237,104 |                    | $ | 41,436 |                               |  | $                    | 5,254  |              | $ | 18,804 |  | $ | 739,165  
|Underground mining                                 |  |                                  | 263,174 |                    |   | 12,283 |                               |  |                      | 15,088 |              |   | 7,158  |  |   | 1,357,584
|                                                   |  |                                  |         |                    |   |        |                               |  |                      |        |              |   |        |  |   |          
|Total operations                                   |  |                                  | 500,278 |                    |   | 53,719 |                               |  |                      | 20,342 |              |   | 25,962 |  |   | 2,096,749
|Corporate                                          |  |                                  |        |                    |   | (4,173 | )                             |  |                      |       |              |   |       |  |   |         
|                                                   |  |                                  |         |                    |   |        |                               |  |                      |        |              |   |        |  |   |          
|Consolidated total                                 |  | $                                | 500,278 |                    |   | 49,546 |                               |  | $                    | 20,342 |              | $ | 25,962 |  | $ | 2,096,749
|                                                   |  |                                  |         |                    |   |        |                               |  |                      |        |              |   |        |  |   |          
|Interest expense                                   |  |                                  |         |                    |   | (9,712 | )                             |  |                      |        |              |   |        |  |   |          
|Other income (including interest income of $1,534) |  |                                  |         |                    |   | 2,970  |                               |  |                      |        |              |   |        |  |   |          
|Other expense                                      |  |                                  |         |                    |   | (763   | )                             |  |                      |        |              |   |        |  |   |          
|                                                   |  |                                  |         |                    |   |        |                               |  |                      |        |              |   |        |  |   |          
|Earnings before income taxes                       |  |                                  |         |                    | $ | 42,041 |                               |  |                      |        |              |   |        |  |   |          
|                                                   |  |                                  |         |                    |   |        |                               |  |                      |        |              |   |        |  |   |          



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|                                                   |  |                                      |           |                    |   |         |                               |  |                      |        |              |   |        |  |   |          
|-------------------------------------------------- |  | ------------------------------------ | --------- | ------------------ | - | ------- | ----------------------------- |  | -------------------- | ------ | ------------ | - | ------ |  | - | ---------
|                                                   |  | Nine Months Ended September 30, 2007
|                                                   |  | Sales                                |           | Operating Earnings |   |         | Depreciation and Amortization |  | Capital Expenditures |        | Total Assets
|                                                   |  | (Dollars in thousands)              
|Surface mining                                     |  | $                                    | 641,060   |                    | $ | 104,202 |                               |  | $                    | 14,834 |              | $ | 51,191 |  | $ | 739,165  
|Underground mining                                 |  |                                      | 424,380   |                    |   | 23,749  |                               |  |                      | 22,707 |              |   | 10,366 |  |   | 1,357,584
|                                                   |  |                                      |           |                    |   |         |                               |  |                      |        |              |   |        |  |   |          
|Total operations                                   |  |                                      | 1,065,440 |                    |   | 127,951 |                               |  |                      | 37,541 |              |   | 61,557 |  |   | 2,096,749
|Corporate                                          |  |                                      |           |                    |   | (6,221  | )                             |  |                      |       |              |   |       |  |   |         
|                                                   |  |                                      |           |                    |   |         |                               |  |                      |        |              |   |        |  |   |          
|Consolidated total                                 |  | $                                    | 1,065,440 |                    |   | 121,730 |                               |  | $                    | 37,541 |              | $ | 61,557 |  | $ | 2,096,749
|                                                   |  |                                      |           |                    |   |         |                               |  |                      |        |              |   |        |  |   |          
|Interest expense                                   |  |                                      |           |                    |   | (18,137 | )                             |  |                      |        |              |   |        |  |   |          
|Other income (including interest income of $2,505) |  |                                      |           |                    |   | 5,267   |                               |  |                      |        |              |   |        |  |   |          
|Other expense                                      |  |                                      |           |                    |   | (1,628  | )                             |  |                      |        |              |   |        |  |   |          
|                                                   |  |                                      |           |                    |   |         |                               |  |                      |        |              |   |        |  |   |          
|Earnings before income taxes                       |  |                                      |           |                    | $ | 107,232 |                               |  |                      |        |              |   |        |  |   |          
|                                                   |  |                                      |           |                    |   |         |                               |  |                      |        |              |   |        |  |   |          



|10. | 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
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 SFAS 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, 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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 under SFAS
No. 133.



|11. | Environmental, Product Warranty and Legal Matters
|--- | -------------------------------------------------

Environmental

The Company is subject to increasingly stringent environmental and occupational health and safety laws and
regulations in the countries in which it operates, including laws and regulations governing emissions to air, discharges to water and the generation, handling, storage, transportation, treatment and disposal of, or exposure to, hazardous materials.
The Company cannot assure that it has always on a historical basis complied, or will continue to comply, with these requirements. If the Company is not in compliance with these laws and regulations, it may incur remediation obligations or other
costs in excess



16



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##### Table of Contents

of amounts reserved, or fines, penalties or suspension of production. The Company may be adversely impacted by costs, liabilities or claims with respect to
existing or subsequently acquired operations, under either present laws and regulations or those that may be adopted or imposed in the future.

The Companys operations are also subject to laws requiring the cleanup of contaminated property. If a release of hazardous substances occurs, or has occurred, at or from any of our current or former properties or at a landfill or
another location where the Company has disposed of hazardous materials, the Company may be held liable for the contamination, and the amount of such liability could be material.

The Company may incur environmental liabilities relating to DBTs current properties or properties that had been formerly owned or operated by DBT
that may not be covered by indemnification under the DBT purchase agreement, or with respect to which indemnification may be limited by the DBT purchase agreement, and there can be no assurance that RAG Coal would be able to satisfy such
indemnification obligation at the time the Company makes a claim or at all.

In addition, increased environmental regulation of the mining
industry in North America and overseas could increase costs to the Company or to its customers and adversely affect the sales of its products and future operating results. These requirements may change in the future in a manner that could require
the Company to make capital and other expenditures, which could have a material adverse effect on its business, results of operations and financial condition.

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 following is a reconciliation of the changes in accrued warranty costs for the nine months ended September 30, 2007 and 2006:



|                                |  |                                 |        |   |      |   |        |  
|------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------ | -
|                                |  | Nine Months Ended September 30, |       
|                                |  | 2007                            |        |   | 2006 |  
|                                |  | (Dollars in thousands)          |       
|Balance at January 1            |  | $                               | 5,788  |   |      | $ | 5,977  |  
|Effect of DBT acquisition       |  |                                 | 74,924 |   |      |   |       |  
|Provision                       |  |                                 | 8,865  |   |      |   | 2,939  |  
|Charges                         |  |                                 | (9,529 | ) |      |   | (3,061 | )
|Effect of exchange rate changes |  |                                 | 3,181  |   |      |   |       |  
|                                |  |                                 |        |   |      |   |        |  
|Balance at September 30         |  | $                               | 83,229 |   |      | $ | 5,855  |  
|                                |  |                                 |        |   |      |   |        |  



17



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Product and Asbestos Liability

The selling and servicing of complex, large scale equipment used in a variety of locations and climates, and integrating a variety of manufactured and
purchased components, entails an inherent risk of lawsuits and liability relating to the operation and performance of the equipment and the health and safety of the workers who operate and come into contact with the equipment. For example, the
Company has been named as a co-defendant in personal injury liability cases alleging damages caused by exposure to asbestos and other substances, and the particular circumstances of many of these cases are difficult to assess because the claims
allege exposure to a variety of substances from various sources over varying historical periods and assert the culpability of multiple defendants.

DBT is also subject to various product liability and personal injury claim including those relating to alleged asbestos and silicosis exposure. These types of claims, as well as product liability claims in general, can be expensive to
defend and can divert the attention of management and other personnel for long periods of time, regardless of the ultimate outcome. While the Company maintains product liability and other insurance to cover varying levels of claims of this nature,
including varying levels of coverage for the historical periods during which the pending claims of which the Company is aware allege asbestos exposure, those policies are subject to deductibles and recovery limitations, and there are limitations on
events covered by these policies. It is the view of management that the final resolution of these claims and other similar claims which are likely to arise in the future will not individually or in the aggregate have a material effect on the
Companys financial position, results of operations or cash flows, although no assurance to that effect can be given.

Other
Litigation

One of the Companys wholly owned subsidiaries is a defendant in a suit pending in the United States District Court for
the Western District of Pennsylvania, brought on June 15, 2002, relating to an incident in which a dragline operated by an employee of one of the Companys subsidiaries tipped over. The owner of the dragline has sued an unaffiliated third
party on a negligence theory for property damages and business interruption losses in a range of approximately $25.0 million to $27.0 million. The unrelated third party has brought a third party action against the Companys subsidiary. The
Companys insurance carriers are defending the claim, but have not conceded that the relevant policies cover the claim. As of September 30, 2007, discovery was ongoing and it is not possible to evaluate the outcome of the claim nor the
range of potential loss, if any. Therefore, the Company has not recorded any liability with respect to this litigation.



|12. | Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, requires the reporting of comprehensive income in addition to net earnings from
operations. Comprehensive income is a more inclusive financial reporting method that includes disclosure of financial information that historically has not been recognized in the calculation of net earnings. The Company reports comprehensive income
and accumulated other comprehensive income, which includes net earnings, foreign currency translation adjustments, pension liability adjustments and derivative fair value adjustments. Information on accumulated other comprehensive loss is as
follows:
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|                                               |  |                                   |        |   |                               |   |         |                                   |  |   |                                      |   |  |   |         |  
|---------------------------------------------- |  | --------------------------------- | ------ | - | ----------------------------- | - | ------- | --------------------------------- |  | - | ------------------------------------ | - |  | - | ------- | -
|                                               |  | Cumulative Translation Adjustment |        |   | Pension Liability Adjustments |   |         | Derivative Fair Value Adjustments |  |   | Accumulated Other Comprehensive Loss |  
|                                               |  | (Dollars in thousands)            |       
|Balance at December 31, 2006                   |  | $                                 | (4,681 | ) |                               | $ | (19,221 | )                                 |  | $ |                                     |   |  | $ | (23,902 | )
|Changes  Nine months ended September 30, 2007 |  |                                   | 15,341 |   |                               |   | 692     |                                   |  |   | (7,043                               | ) |  |   | 8,990   |  
|                                               |  |                                   |        |   |                               |   |         |                                   |  |   |                                      |   |  |   |         |  
|Balance at September 30, 2007                  |  | $                                 | 10,660 |   |                               | $ | (18,529 | )                                 |  | $ | (7,043                               | ) |  | $ | (14,912 | )
|                                               |  |                                   |        |   |                               |   |         |                                   |  |   |                                      |   |  |   |         |  



|13. | The Company adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN No. 48), on
January 1, 2007. As a result of the implementation of FIN No. 48, the Company recognized a net decrease to retained earnings of $0.1 million. At the adoption date of January 1, 2007, the Company had $0.6 million of unrecognized tax
benefits, all of which would affect its effective tax rate if recognized. At September 30, 2007, the Company had $1.4 million of unrecognized tax benefits, an increase of $0.1 million from June 30, 2007. The Company does not presently
expect any reasonably possible material changes to the estimated amount of liability associated with its uncertain tax positions during the next 12 months.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Periods subject to examination for the Companys federal tax return include the 1990 through
1994, 1999, 2001 and 2004 through 2006 tax years. In addition, open tax years related to state and foreign jurisdictions remain subject to examination but are not considered material.

The Company is continuing its practice of recognizing interest and/or penalties related to income tax matters as a component of income tax expense. At the
date of adoption of FIN No. 48, the Company had accrued $0.3 million of interest and penalties. An additional $0.1 million of interest and penalties has subsequently been accrued, resulting in a balance of $0.4 million as of September 30,
2007.

The Company is currently in the process of evaluating the acquired FIN No. 48 liability in connection with the acquisition of
DBT and its impact upon the overall purchase price allocation. DBT files income tax returns in the United States, Germany and other foreign jurisdictions.



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##### Table of Contents

BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 2MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion and analysis and information contained elsewhere
in this report contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of predictive, future
tense or forward-looking terminology, such as believes, anticipates, expects, estimates, intends, may, will or similar terms. You are cautioned that any such
forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those contained in the forward-looking statements as a result of various factors,
some of which are unknown. The factors that could cause our actual results to differ materially from those anticipated in such forward-looking statements and could adversely affect our actual results of operations and financial condition include,
without limitation:



| |  |  | 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 new machines 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 our industry;
| | - |  | ----------------------------------------------



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



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



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



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



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



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



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



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



| |  |  | the final allocation of the DBT purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair
values.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 2006 Annual Report to Stockholders and Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 1, 2007, our prospectus supplement filed with the Securities and Exchange Commission on May 9, 2007 and other cautionary statements described in our subsequent reports filed with the Securities
and Exchange Commission. 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, including DBT GmbH (DBT). All references to Bucyrus in the following discussion and analysis are to our surface mining
business and all references to DBT are to our underground mining business.

Impact of DBT Acquisition

On May 4, 2007, we consummated the acquisition of DBT. The total purchase price included $708.3 million in cash (including $13.5 million of
acquisition expenses) and the issuance of 471,476 shares of our common stock with an initial market value of $21.8 million. The DBT acquisition has more than doubled the size of our company based on sales and earnings before interest income,
interest expense, income taxes, depreciation and amortization (EBITDA). On a pro forma combined basis, as if the DBT acquisition had been consummated



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on January 1, 2006, our 2006 sales would have been $1.9 billion, compared to Bucyrus 2006 sales of $738.0 million. Similarly, our 2006 pro forma
combined EBITDA would have been $252.9 million, compared to Bucyrus 2006 EBITDA of $116.0 million. Our pro forma combined EBITDA includes adjustments necessary to conform DBTs financial statements, which are prepared in accordance
with International Financial Reporting Standards (IFRS), to United States generally accepted accounting principles (U.S. GAAP), and to Bucyrus accounting policies. Our pro forma combined backlog as of December 31,
2006 would have been approximately $1.4 billion, compared to Bucyrus $894.7 million as of such date.

The strategic benefits to us
from consummating the DBT acquisition include:



| |  |  | The expansion of our product portfolio to include underground mining equipment and aftermarket support for that equipment, which enhances our capability to serve a
larger segment of the global mining equipment market.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An increase in our pro forma combined worldwide installed original equipment base as of December 31, 2006 to an approximate replacement value of $22.0 billion
from Bucyrus approximate replacement value of $12.6 billion as of such date. We believe that this increased installed base provides us with significantly greater opportunities to market our aftermarket parts and services. Parts typically earn
a higher gross margin than our original equipment sales. Additionally, DBTs aftermarket service business has lower market share than that of Bucyrus, which we believe presents an opportunity for growth.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An increased strategic presence in markets that we expect will experience substantial mining growth over the next several years, such as China and Russia.
Additionally, we anticipate building upon Bucyrus presence in India, another market that we believe has high growth potential, to increase DBTs share of the underground mining market in that country.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | DBTs advanced engineering and technology.
| | - |  | ------------------------------------------

While we believe that there are opportunities to consolidate some of DBTs international sales offices with Bucyrus sales offices and to realize increased operating efficiencies at DBT by reducing its
levels of selling, general and administrative expenses and research and development expenses, these potential cost saving and synergistic opportunities may take at least several quarters to begin to implement, and any potential benefits from these
actions may not be realized for at least several quarters following implementation. We are in the process of analyzing DBTs internal organizational and operating structure and, where possible, identifying appropriate opportunities for further
integration and synergies over the longer term. For example, in the third quarter, we made the decision to integrate the regional operations of our surface and underground segments.

We expect the DBT acquisition to impact our future results of operation and financial condition in a number of ways, including the following:



| |  |  | Our reliance on coal as the principal commodity mined by the customers purchasing our equipment will increase from 53% of Bucyrus historical 2006 sales to
approximately 79% on a pro forma 2006 combined basis. Approximately 96% of DBTs 2006 sales were derived from sales to coal mining customers.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | This means that our future results of operations will be more dependent on coal commodity price levels and conditions in, and other factors affecting, the
coal markets. Accordingly, our future results of operations may be subject to more pronounced cyclicality than prior to the DBT acquisition.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As a result of the DBT acquisition, growth in our future results of operations will likely become more dependent upon increasing our sales to emerging markets such
as China, Russia and India. This means we will increase our exposure to the uncertainties and risks associated with the developing governmental, legal and economic systems in those countries, as well as nationalism initiatives, tariffs and the other
risks of competing in foreign markets. Additionally, to be in a position to compete more cost effectively in the underground mining market in China, we are expanding our manufacturing capacity in China. This expansion process will likely take at
least 12 to 18 months to complete, and we expect that it likely will take at least several quarters after completion until we can begin realizing its anticipated potential benefits.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | DBTs revenue mix is weighted more towards original equipment sales than to aftermarket parts and services sales compared to Bucyrus revenue mix. In
2006, 73% of DBTs revenue was from sales of original equipment and 27% from aftermarket sales. Bucyrus 2006 revenue mix was 35% from original equipment sales and 65% from aftermarket sales. On a pro forma combined basis for 2006, our
revenue mix would have been 58% from original equipment sales and 42% from aftermarket sales. Since aftermarket parts sales generally have higher gross margins than original equipment sales, this means that we will likely report lower gross margins
in the future than we have in the past. However, we believe that this circumstance affords us an opportunity over time to increase the relative percentage of DBTs aftermarket sales through DBTs incorporation of the successful strategies
and techniques that we have previously implemented at Bucyrus to substantially increase Bucyrus level of aftermarket sales. We have begun the process of evaluating these strategies and techniques as they relate to DBTs current
operations. In addition, DBTs increased level of original equipment sales in 2005 and 2006 is expected to result in increased aftermarket sales in future years.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As a percent of 2006 sales, and taking into account certain pro forma reclassification adjustments, DBTs selling, general and administrative expenses were
15.2%, compared to 9.9% in 2006 for Bucyrus. This means that we will likely report higher selling, general and administrative expenses, as a percent of sales, in the future than we have in the past. However, we have begun the process of identifying
opportunities to reduce the relative level of DBTs selling, general and administrative expenses to further enhance our combined profitability over the longer term.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We will be subject to higher foreign currency exchange risk because DBT transacts a substantial percentage of its business in Euros, while we sell most of our
products in United States dollars, and we will be reporting our combined consolidated results in United States dollars. This means that our future results of operations may be subject to increased volatility based on relative changes in foreign
currency exchange rates, particularly the Euro/dollar exchange rate.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | We substantially increased our debt levels and debt service obligations to finance the DBT acquisition. Our total long-term debt as of September 30, 2007 was
$546.2 million compared to $82.3 million as of December 31, 2006.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Business

We are a leading designer and manufacturer 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 DBT acquisition, we operate in two
business segments: surface mining (Bucyrus) and underground mining (DBT). We now 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, Brazil, Canada, China and India will be increasingly important markets for our surface mining equipment and that the United States and the emerging markets of China,
Russia and India will be increasingly important markets for our underground mining equipment.

The market for our original equipment is
closely correlated with customer expectations of sustained strength in prices of mined commodities. Growth in demand for these commodities is a function of, among other things, economic activity, population increases and continuing improvements in
standards of living in many areas of the world. Market prices for coal, copper, iron ore and oil generally continue to be strong in 2007. Factors that could support sustained demand for these key commodities during the remainder of 2007 include
continued expected economic growth in China, India and the developing world, as well as renewed economic strength in industrialized countries. As of September 30, 2007, inquiries for our surface mining equipment in all product lines remained at
a high level despite the recent moderation in commodity prices. Interest in our surface mining equipment continued to be strong in the oil sands region of Western Canada, and inquiries related to coal, copper and iron ore mines in other areas of the
world have also remained strong. Although inquiries for our underground mining equipment have returned to pre-2006 normalized levels, inquiries in the third quarter of 2007 increased when compared to levels earlier in the year.

Our aftermarket parts and service sales tend to be more consistent than our equipment sales. Our original equipment is typically kept in continuous
operation from eight to 40 years by our customers, requiring regular maintenance and repair throughout their productive lives. The size of our installed base of surface mining equipment as of December 31, 2006 was approximately $12.6 billion
based on estimated replacement value. On a pro forma basis giving effect to the acquisition of DBT, our combined installed base of both surface mining and underground mining equipment as of December 31, 2006 was estimated to be approximately
$22.0 billion based on estimated replacement value. Our ability to provide on-time delivery of reliable parts and prompt service are important drivers of our aftermarket sales. As of September 30, 2007, surface mining aftermarket orders and
inquiries continued to remain at high levels as the existing installed fleet of our surface mining original equipment was operating at



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very high utilization levels due to the current demand and increased prices for related mined commodities. Underground mining aftermarket orders and
inquiries have increased in the third quarter of 2007 when compared to levels earlier in the year.

A substantial portion of our sales and
operating earnings is attributable to our operations located outside the United States. We generally sell our surface mining original equipment, including that sold directly to foreign customers, and most of our aftermarket parts in United States
dollars. DBTs underground mining original equipment is generally sold in either United States dollars or Euros. A portion of our aftermarket parts sales are also denominated in the local currencies of Australia, Brazil, Canada, Chile, 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 our surface mining business, as of September 30, 2007, we anticipate continued increased sales activity for both aftermarket parts sales and original equipment sales for the remainder of 2007 relative to 2006.
We expect surface mining original equipment sales to increase in 2007 compared to 2006, driven by customer expectations of sustained strength in the coal, copper, oil sands and iron ore markets, ongoing and rapid industrialization in China and other
parts of the developing world, demand for minerals in the developed world and the rising cost of non-coal energy sources. While we expect that the current commodity demand will continue for the near term, surface mining original equipment sales may
lag behind such increases in commodity prices because of the time needed to acquire the appropriate mining permits and establish the relevant infrastructure. We also expect our surface mining aftermarket sales to increase in 2007 compared to 2006 as
customers continue the trend of utilizing our parts and services in a broader range of applications on their installed base of surface mining equipment. Strong sales volume and demand as of September 30, 2007 has caused us to hire new
employees, and additional hiring is expected during the remainder of 2007.

In our underground mining business, as of September 30,
2007, we anticipate increased sales activity in 2007 for DBTs aftermarket parts sales as we enhance our selling efforts for these parts and as our customers continue to use our parts and services on our large installed base of underground
mining original equipment. We anticipate decreased sales activity for our underground mining original equipment for the remainder of 2007 relative to 2006 levels because 2006 sales benefited greatly from an influx of original equipment orders from
customers that had previously deferred original equipment purchases during the prior period of weaker coal commodity prices.

In response
to sustained order strength for surface mining equipment, we are in the process of completing a multi-phase capacity expansion of our surface mining manufacturing facilities in South Milwaukee. The first phase of our expansion provided 110,000
square feet of new space for welding and machining of large electric mining shovel components north of Rawson Avenue and was substantially complete at the end of the third quarter of 2006. The second phase of our expansion program further expanded
our new facility north of Rawson Avenue from 110,000 square feet to over 350,000 square feet of welding, machining and outdoor hard-goods storage space. Construction was completed in April 2007. The aggregate cost of phase one and two of our
expansion program was approximately $54 million, which was financed by borrowings under our then existing revolving credit facility. The third phase of this expansion program, which we announced in July 2006, is intended to help us meet the
continued growth of demand for our surface mining equipment and their components. The third phase includes the renovation and expansion of manufacturing buildings and offices at our existing



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facilities south of Rawson Avenue. Our focus is on modernizing our facilities and improving manufacturing and administrative efficiencies. The steps for
accomplishing phase three are scheduled to maximize manufacturing throughput during both the renovation and construction processes. We expect that phase three construction will cost approximately $58 million. The third phase is being financed by
borrowings under our current credit facilities. Assuming that we are able to attract and retain the necessary skilled labor, the expansion, when completed, is expected to enable us to increase our annual shovel production capacity from 10 machines
in 2006 to 16 machines in 2007 and ultimately to 24 machines in 2008, as well as approximately double our manufactured parts capacity. 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 improved workflow. We expect this capacity expansion to be substantially completed by the end of the first quarter
of 2008.

In addition, we are expanding our underground mining equipment manufacturing capacity in China. This expansion will allow for
increased production of several types of mobile equipment for underground mining. The expansion process will likely take at least 12 to 18 months to complete and we expect that it likely will take at least several quarters after completion until we
can begin realizing its anticipated potential benefits.

Over the past three years, we have increased our surface mining gross profit by
reducing manufacturing overhead variances, achieving productivity gains, improving equipment margins and increasing higher margin aftermarket parts and services business. We have begun the process of evaluating our underground mining manufacturing
operations in an effort to improve gross profit.

Installed Base

Our pro forma combined installed original equipment base of approximately $22.0 billion (calculated by estimated replacement value) as of December 31, 2006, provides the foundation for our future aftermarket
sales. Over the life of certain machines, customer purchases of aftermarket parts can exceed the original purchase price of the machine. Additionally, we generally realize higher gross margins on sales of our aftermarket parts than on sales of our
original equipment. Moreover, because these machines tend to operate continuously in all market conditions, with expected lives ranging from eight to 40 years, and have predictable parts and maintenance needs, our aftermarket business has
historically been more stable and predictable than the market for our original equipment, which is closely correlated with expectations of sustained strength in commodity markets.

Backlog and New Orders

Our relative 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 2007 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. A portion of our backlog is related to multi-year contracts that will generate revenue in future years. The following table shows our backlog as of September 30, 2007 and December 31, 2006, as well as the portion
of our backlog which is or was expected to be recognized within 12 months of these dates:



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##### Table of Contents

|                    |  |                        |           |                  |   |        
|------------------- |  | ---------------------- | --------- | ---------------- | - | -------
|                    |  | September 30,2007      |           | December 31,2006
|                    |  | (Dollars in thousands)
|Surface Mining:     |  |                        |           |                  |   |        
|Total               |  | $                      | 899,757   |                  | $ | 894,749
|Next 12 months      |  | $                      | 629,539   |                  | $ | 593,828
|Underground Mining: |  |                        |           |                  |   |        
|Total               |  | $                      | 395,793   |                  |   |       
|Next 12 months      |  | $                      | 355,830   |                  |   |       
|Total               |  |                        |           |                  |   |        
|Total               |  | $                      | 1,295,550 |                  | $ | 894,749
|Next 12 months      |  | $                      | 985,369   |                  | $ | 593,828

New orders related to surface mining operations for the third quarter of 2007 were $47.1 million
and $95.1 million for original equipment and aftermarket parts and service sales, respectively. New orders related to surface mining operations for the first nine months of 2007 were $345.6 million and $300.5 million for original equipment and
aftermarket parts and service sales, respectively. New orders related to underground mining operations for the third quarter of 2007 were $100.4 million and $89.5 million for original equipment and aftermarket parts and service sales, respectively.
New orders related to underground mining operations for the period May 4, 2007 through September 30, 2007 were $227.6 million and $151.8 million for original equipment and aftermarket parts and service sales, respectively.

Pro forma new orders related to underground mining operations for the nine months ended September 30, 2007 were $386.3 million and $257.3 million
for original equipment and aftermarket parts and service sales, respectively. Pro forma new orders related to underground mining operations for the nine months ended September 30, 2006 were $532.5 million and $225.3 million for original
equipment and aftermarket parts and service sales, respectively.

DBTs total backlog as of December 31, 2006 was $514.3 million,
and the Bucyrus/DBT pro forma combined total backlog as of December 31, 2006 was $1.4 billion.

Results of Operations

Quarter and Nine Months Ended September 30, 2007 Compared to Quarter and Nine Months Ended September 30, 2006

The results of operations of DBT since the date of acquisition are included in the financial information presented below which, as a result of the
shortened reporting period, may not be indicative of future results.



|                                             |  |                             |         |            |                                 |   |        |      |            |  |      |        |  |            |           |  |        |   |            |   |         |  |      |  
|-------------------------------------------- |  | --------------------------- | ------- | ---------- | ------------------------------- | - | ------ | ---- | ---------- |  | ---- | ------ |  | ---------- | --------- |  | ------ | - | ---------- | - | ------- |  | ---- | -
|                                             |  | Quarter Ended September 30, |         |            | Nine Months Ended September 30, |  
|                                             |  | 2007                        |         |            | 2006                            |   |        | 2007 |            |  | 2006 |       
|                                             |  | Amount                      |         | % of Sales |                                 |   | Amount |      | % of Sales |  |      | Amount |  | % of Sales |           |  | Amount |   | % of Sales |  
|                                             |  | (Dollars in thousands)      |         |            | (Dollars in thousands)          |  
|Sales                                        |  | $                           | 500,278 |            |                                |   |        | $    | 184,980    |  |     |        |  | $          | 1,065,440 |  |       |   |            | $ | 532,437 |  |     |  
|Gross profit                                 |  |                             | 123,628 |            | 24.7                            | % |        |      | 47,894     |  | 25.9 | %      |  |            | 272,003   |  | 25.5   | % |            |   | 135,701 |  | 25.5 | %
|Selling, general and administrative expenses |  |                             | 57,238  |            | 11.4                            |   |        |      | 18,728     |  | 10.1 |        |  |            | 121,369   |  | 11.4   |   |            |   | 52,266  |  | 9.8  |  
|Operating earnings                           |  |                             | 49,546  |            | 9.9                             |   |        |      | 26,538     |  | 14.3 |        |  |            | 121,730   |  | 11.4   |   |            |   | 74,933  |  | 14.1 |  
|Net earnings                                 |  |                             | 28,602  |            | 5.7                             |   |        |      | 16,720     |  | 9.0  |        |  |            | 74,227    |  | 7.0    |   |            |   | 52,800  |  | 9.9  |  



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Sales

Sales consisted of the following:



|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  
|----------------------------- |  | --------------------------- | ------- | ---- | ------------------------------- | -------- |  | ----- | ---- |  | ---- | --------- | -------- | - | ------- |  | ----- | -
|                              |  | Quarter Ended September 30, |         |      | Nine Months Ended September 30, |         
|                              |  | 2007                        |         | 2006 |                                 | % Change |  |       | 2007 |  | 2006 |           | % Change |  
|                              |  | (Dollars in thousands)      |        
|Surface:                      |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  
|Original equipment            |  | $                           | 113,119 |      | $                               | 74,493   |  | 51.9  | %    |  | $    | 277,223   |          | $ | 181,701 |  | 52.6  | %
|Aftermarket parts and service |  |                             | 123,985 |      |                                 | 110,487  |  | 12.2  | %    |  |      | 363,837   |          |   | 350,736 |  | 3.7   | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  
|                              |  |                             | 237,104 |      |                                 | 184,980  |  | 28.2  | %    |  |      | 641,060   |          |   | 532,437 |  | 20.4  | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  
|Underground:                  |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  
|Original equipment            |  |                             | 174,140 |      |                                 | N/A      |  | N/A   |      |  |      | 277,422   |          |   | N/A     |  | N/A   |  
|Aftermarket parts and service |  |                             | 89,034  |      |                                 | N/A      |  | N/A   |      |  |      | 146,958   |          |   | N/A     |  | N/A   |  
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  
|                              |  |                             | 263,174 |      |                                 | N/A      |  | N/A   |      |  |      | 424,380   |          |   | N/A     |  | N/A   |  
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  
|Total:                        |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  
|Original equipment            |  |                             | 287,259 |      |                                 | 74,493   |  | 285.6 | %    |  |      | 554,645   |          |   | 181,701 |  | 205.3 | %
|Aftermarket parts and service |  |                             | 213,019 |      |                                 | 110,487  |  | 92.8  | %    |  |      | 510,795   |          |   | 350,736 |  | 45.6  | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  
|                              |  | $                           | 500,278 |      | $                               | 184,980  |  | 170.4 | %    |  | $    | 1,065,440 |          | $ | 532,437 |  | 100.1 | %
|                              |  |                             |         |      |                                 |          |  |       |      |  |      |           |          |   |         |  |       |  

The overall increase in surface mining sales highlights the ongoing global demand for
Bucyrus products and services, which continues to be driven by the sustained strength in markets for commodities mined by Bucyrus machines. Capacity constraints continue to have an impact on surface mining sales, and the ongoing expansion of
Bucyrus South Milwaukee facilities is expected to be completed by the first quarter of 2008. Underground mining sales continue to be consistent with Bucyrus expectation for DBT sales in 2007 at the time of the DBT acquisition.

Gross Profit

Gross
profit for the third quarter of 2007 was $123.6 million, or 24.7% of sales, compared with $47.9 million, or 25.9% of sales, for the third quarter of 2006. Gross profit for the nine months ended September 30, 2007 was $272.0 million, or 25.5% of
sales, compared with $135.7 million, or 25.5% of sales, for the nine months ended September 30, 2006. Gross profit for the third quarter and first nine months of 2007 was reduced by $8.9 million and $15.1 million, respectively, of amortization
of purchase accounting adjustments (primarily to inventory) as a result of the acquisition of DBT, which had the effect of reducing the gross profit percentage for the third quarter and first nine months of 2007 by 1.8% and 1.5%, respectively. As of
September 30, 2007, there is approximately $20.9 million of inventory adjustment relating to the DBT acquisition yet to be expensed fairly evenly over approximately the next 2.5 quarters. The increases in gross profit were primarily due to the
acquisition of DBT and increased surface mining original equipment sales, as well as improved gross margins on both surface mining original equipment and aftermarket parts and services. New surface mining machine sales, which have lower gross profit
percentages, were 48% of total surface mining sales for the third quarter compared with 40% for the third quarter last year, and were 43% of total surface mining



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sales for the first nine months of 2007 compared with 34% for the first nine months of 2006. The cost of training new employees in South Milwaukee and the
related effects continue to negatively impact gross profit.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the third quarter of 2007 were $57.2 million, or 11.4% of sales, compared with $18.7 million, or 10.1% of
sales, for the third quarter of 2006. Selling, general and administrative expenses for the nine months ended September 30, 2007 were $121.4 million, or 11.4% of sales, compared with $52.3 million, or 9.8% of sales, for the nine months ended
September 30, 2006. The increase in selling, general and administrative expenses was primarily due to the acquisition of DBT.

Research and Development Expenses

Research and development expenses for the third quarter of 2007 were $5.2 million, or
1.0% of sales, compared with $2.2 million, or 1.2% of sales, for the third quarter of 2006, respectively. Research and development expenses for the nine months ended September 30, 2007 were $12.3 million, or 1.2% of sales, compared with
$7.2 million, or 1.3% of sales, for the nine months ended September 30, 2006. The increases were due to the acquisition of DBT, as well as the continuing development of our surface mining electrical and machine upgrade systems.

Amortization of Intangible Assets

In
the third quarter of 2007, we finalized our decision to operate under one brand name (Bucyrus) for both our surface and underground mining operations as of January 1, 2008. As a result, amortization of intangible assets for the third quarter of
2007 included $5.5 million of amortization as a result of purchase accounting adjustments related to DBT trademarks. The remaining trademark amortization will be recorded in the fourth quarter 2007 and will approximate $6.5 million. Excluding
trademarks, amortization of DBT purchase accounting adjustments related to intangible assets is expected to be $5.8 million per quarter for the next 2.5 quarters and then approximately $3.8 million per quarter for subsequent quarters.



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Operating Earnings

Operating earnings were as follows:



|                   |  |                             |        |   |                                 |   |          |  |       |      |  |   |         |   |          |   |        |  |      |  
|------------------ |  | --------------------------- | ------ | - | ------------------------------- | - | -------- |  | ----- | ---- |  | - | ------- | - | -------- | - | ------ |  | ---- | -
|                   |  | Quarter Ended September 30, |        |   | Nine Months Ended September 30, |  
|                   |  | 2007                        |        |   | 2006                            |   | % Change |  |       | 2007 |  |   | 2006    |   | % Change |  
|                   |  | (Dollars in thousands)      |       
|Surface mining     |  | $                           | 41,436 |   |                                 | $ | 26,538   |  | 56.1  | %    |  | $ | 104,202 |   |          | $ | 74,933 |  | 39.1 | %
|Underground mining |  |                             | 12,283 |   |                                 |   | N/A      |  | N/A   |      |  |   | 23,749  |   |          |   | N/A    |  | N/A  |  
|                   |  |                             |        |   |                                 |   |          |  |       |      |  |   |         |   |          |   |        |  |      |  
|Total operations   |  |                             | 53,719 |   |                                 |   | 26,538   |  | 102.4 | %    |  |   | 127,951 |   |          |   | 74,933 |  | 70.8 | %
|                   |  |                             |        |   |                                 |  
|Corporate          |  |                             | (4,173 | ) |                                 |   | N/A      |  | N/A   |      |  |   | (6,221  | ) |          |   | N/A    |  | N/A  |  
|                   |  |                             |        |   |                                 |   |          |  |       |      |  |   |         |   |          |   |        |  |      |  
|Consolidated total |  | $                           | 49,546 |   |                                 | $ | 26,538   |  | 86.7  | %    |  | $ | 121,730 |   |          | $ | 74,933 |  | 62.5 | %
|                   |  |                             |        |   |                                 |   |          |  |       |      |  |   |         |   |          |   |        |  |      |  

Operating earnings for underground mining operations were reduced by purchase accounting adjustments of $20.2
million and $30.7 million for the third quarter and first nine months of 2007, respectively. The purchase accounting adjustments included amortization of intangible assets of $11.2 and $15.2 for the third quarter and first nine months of 2007,
respectively. The increase in consolidated operating earnings for the quarter and nine months ended September 30, 2007 was primarily due to the acquisition of DBT and increased gross profit resulting from increased sales volume related to
surface mining operations. The purchase accounting adjustments related to inventory in the fourth quarter of 2007 are expected to remain at approximately the same level as the third quarter of 2007, and the amortization of intangible assets in the
fourth quarter of 2007 is expected to be approximately $12.3 million, including approximately $6.5 million related to DBT trademarks.

Interest Expense

Interest expense was $9.7 million for the third quarter of 2007 compared with $0.8 million for the third
quarter of 2006. Interest expense for the nine months ended September 30, 2007 was $18.1 million compared with $2.1 million for the nine months ended September 30, 2006. The increase in interest expense in 2007 was due to increased debt
levels related to the financing of the acquisition of DBT. See Description of New Credit Facilities below.

Income Taxes

Income tax expense for the third quarter of 2007 was $13.4 million, or 32.0% of pre-tax earnings, compared with $8.9 million, or 34.8%
of pre-tax earnings, for the third quarter of 2006. Income tax expense for the nine months ended September 30, 2007 was $33.0 million, or 30.8% of pre-tax earnings, compared with $19.9 million, or 27.4% of pre-tax earnings, for the nine months
ended September 30, 2006. The effective rate for the quarter and nine months ended September 30, 2007 resulted from a combination of increased earnings in lower-taxed jurisdictions and foreign tax credit benefits.



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Net Earnings

Net earnings for the third quarter of 2007 were $28.6 million, or $.77 per share, compared with $16.7 million, or $0.53 per share, for the third quarter of 2006. Net earnings for the nine months ended
September 30, 2007 were $74.2 million, or $2.16 per share, compared with $52.8 million, or $1.69 per share, for the nine months ended September 30, 2006. Amortization of intangible assets for the third quarter of 2007 included $5.5 million
($3.8 million net of tax) of amortization as a result of purchase accounting adjustments made in the third quarter related to DBT trademarks. The remaining trademark amortization will be recorded in the fourth quarter of 2007 and will approximate
$6.5 million ($4.4 million net of tax). Net earnings for the third quarter of 2007 were reduced by $14.0 million, net of tax, of amortizations of purchase accounting adjustments related to the acquisition of DBT. This amount included $8.9 million
for inventory, $11.2 million for intangible assets, $0.1 million for fixed assets and $6.2 million of income tax benefits. Net earnings for the nine months ended September 30, 2007 were reduced by $20.4 million, net of tax, of amortizations of
purchase accounting adjustments related to the acquisition of DBT. This amount included $14.5 million for inventory, $15.2 million for intangible assets, $1.0 million for fixed assets and $10.3 million of income tax benefits. Depreciation and
amortization of DBT purchase accounting adjustments to fixed assets and other intangible assets (excluding trademarks) is expected to be approximately $6.4 million ($4.3 million net of tax) per quarter for the next 2.5 quarters and then
approximately $4.4 million ($2.9 million net of tax) per quarter for subsequent quarters.

Foreign Currency Fluctuations

The following table summarizes the approximate effect of changes in foreign currency exchange rates on our sales, gross profit and operating earnings
for the quarter and nine months ended September 30, 2007 and 2006, in each case compared to the same period in the prior year:



|                                          |  |                            |       |      |                                |      |      |  |      |       |  |   |    
|----------------------------------------- |  | -------------------------- | ----- | ---- | ------------------------------ | ---- | ---- |  | ---- | ----- |  | - | ---
|                                          |  | Quarter EndedSeptember 30, |       |      | Nine Months EndedSeptember 30,
|                                          |  | 2007                       |       | 2006 |                                |      | 2007 |  | 2006
|                                          |  | (Dollars in thousands)    
|Increase (decrease) in sales              |  | $                          | 4,424 |      | $                              | (948 | )    |  | $    | 7,633 |  | $ | 89 
|Increase (decrease) in gross profit       |  | $                          | 784   |      | $                              | (73  | )    |  | $    | 1,212 |  | $ | 250
|Increase (decrease) in operating earnings |  | $                          | 108   |      | $                              | 163  |      |  | $    | 503   |  | $ | 299

EBITDA

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter were $70.6 million, an increase of 134.0% from $30.2 million for the third quarter of 2006. As a percent of
sales, EBITDA for the third quarter of 2007 was 14.1%, compared with 16.3% for the third quarter of 2006. EBITDA for the nine months ended September 30, 2007 was $160.4 million, an increase of 86.9% from $85.8 million for the nine months ended
September 30, 2006. As a percent of sales, EBITDA for the nine months ended September 30, 2007 was 15.1% compared with 16.1% for the nine months ended September 30, 2006. Included in third quarter and first nine months EBITDA for 2007
was $28.6 million and $48.9 million, respectively, related to underground mining operations. EBITDA includes the impact of non-cash



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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 presented (i) because we use EBITDA to measure our liquidity and financial performance and (ii) because 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 EBITDA calculation is not an
alternative to operating earnings under U.S. GAAP as an indicator of operating performance or of cash flows as a measure of liquidity. The following table reconciles Net Earnings as shown in the Consolidated Condensed Statements of Earnings to
EBITDA and reconciles EBITDA to Net Cash Provided by Operating Activities as shown in the Consolidated Condensed Statements of Cash Flows:



|                                                    |  |                            |         |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|--------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------------- | - | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                                    |  | Quarter EndedSeptember 30, |         |   | Nine Months Ended September 30, |  
|                                                    |  | 2007                       |         |   | 2006                            |   |         | 2007 |  |   | 2006     |  
|                                                    |  | (Dollars in thousands)     |        
|Net earnings                                        |  | $                          | 28,602  |   |                                 | $ | 16,720  |      |  | $ | 74,227   |   |  | $ | 52,800  |  
|Interest income                                     |  |                            | (1,534  | ) |                                 |   | (174    | )    |  |   | (2,505   | ) |  |   | (415    | )
|Interest expense                                    |  |                            | 9,712   |   |                                 |   | 804     |      |  |   | 18,137   |   |  |   | 2,050   |  
|Income tax expense                                  |  |                            | 13,439  |   |                                 |   | 8,931   |      |  |   | 33,005   |   |  |   | 19,881  |  
|Depreciation                                        |  |                            | 7,906   |   |                                 |   | 3,166   |      |  |   | 19,342   |   |  |   | 9,406   |  
|Amortization (1)                                    |  |                            | 12,436  |   |                                 |   | 704     |      |  |   | 18,199   |   |  |   | 2,115   |  
|                                                    |  |                            |         |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|EBITDA (2)                                          |  |                            | 70,561  |   |                                 |   | 30,151  |      |  |   | 160,405  |   |  |   | 85,837  |  
|                                                    |  |                            |         |  
|Changes in assets and liabilities                   |  |                            | (37,612 | ) |                                 |   | (34,275 | )    |  |   | (90,942  | ) |  |   | (48,509 | )
|Non-cash stock compensation expense                 |  |                            | 1,536   |   |                                 |   | 1,063   |      |  |   | 4,593    |   |  |   | 2,807   |  
|Loss on sale of fixed assets                        |  |                            | 58      |   |                                 |   | (19     | )    |  |   | 358      |   |  |   | 36      |  
|Interest income                                     |  |                            | 1,534   |   |                                 |   | 174     |      |  |   | 2,505    |   |  |   | 415     |  
|Interest expense                                    |  |                            | (9,712  | ) |                                 |   | (804    | )    |  |   | (18,137  | ) |  |   | (2,050  | )
|Income tax expense                                  |  |                            | (13,439 | ) |                                 |   | (8,931  | )    |  |   | (33,005  | ) |  |   | (19,881 | )
|                                                    |  |                            |         |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Net cash provided by (used in) operating activities |  | $                          | 12,926  |   |                                 | $ | (12,641 | )    |  | $ | 25,777   |   |  | $ | 18,655  |  
|                                                    |  |                            |         |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Net cash provided by (used in) investing activities |  | $                          | 16,469  |   |                                 | $ | (20,749 | )    |  | $ | (744,524 | ) |  | $ | (46,938 | )
|                                                    |  |                            |         |   |                                 |   |         |      |  |   |          |   |  |   |         |  
|Net cash provided by (used in) financing activities |  | $                          | (22,885 | ) |                                 | $ | 35,992  |      |  | $ | 746,427  |   |  | $ | 28,669  |  
|                                                    |  |                            |         |   |                                 |   |         |      |  |   |          |   |  |   |         |  

---

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



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|(2) | The following table shows certain charges that were deducted in calculating EBITDA for each of the periods presented. These items include (a) non-cash stock compensation
expense related to Bucyrus 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 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                 |  |                            |        |      |                                 |       |      |  |      |        |  |   |      
|---------------------------------------------------------------- |  | -------------------------- | ------ | ---- | ------------------------------- | ----- | ---- |  | ---- | ------ |  | - | -----
|                                                                 |  | Quarter EndedSeptember 30, |        |      | Nine Months Ended September 30,
|                                                                 |  | 2007                       |        | 2006 |                                 |       | 2007 |  | 2006
|                                                                 |  | (Dollars in thousands)    
|Non-cash stock compensation expense                              |  | $                          | 1,536  |      | $                               | 1,063 |      |  | $    | 4,593  |  | $ | 2,807
|Severance expenses                                               |  |                            | 181    |      |                                 | 571   |      |  |      | 1,411  |  |   | 1,312
|Loss on sales of fixed assets                                    |  |                            | 58     |      |                                 | (19   | )    |  |      | 358    |  |   | 36   
|Inventory fair value adjustment charged to cost of products sold |  |                            | 8,859  |      |                                 |      |      |  |      | 14,490 |  |   |     
|                                                                 |  |                            |        |      |                                 |       |      |  |      |        |  |   |      
|                                                                 |  | $                          | 10,634 |      | $                               | 1,615 |      |  | $    | 20,852 |  | $ | 4,155
|                                                                 |  |                            |        |      |                                 |       |      |  |      |        |  |   |      

Description of Liquidity and Capital Resources

Description of New Credit Facilities

We entered into new credit facilities, as amended and restated on May 25, 2007, to finance the DBT acquisition and refinance certain existing indebtedness. The new 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. The credit facilities replaced our previous $200.0 million revolving credit facility.

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,



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customary letter of credit fees. Borrowings under the term loan facility bear interest, payable no less frequently than quarterly, at (a) LIBOR plus
1.50% for U.S. dollar denominated LIBOR loans, (2) the base rate plus 0.50% for U.S. dollar denominated base rate loans and (3) EURIBOR plus 1.75% for Euro denominated loans.

At September 30, 2007, we had no borrowings under the secured revolving credit facility. The amount available for borrowings under the secured
revolving credit facility was $201.5 million (taking into account $173.5 million of issued letters of credit). At September 30, 2007, we had borrowings under the term loan facility of $506.9 million ($400.0 million plus 75.0 million) at a
weighted average rate of 6.8% and had borrowings under the German revolving credit facility of $15.7 million (11.0 million) at a weighted average rate of 6.0%. 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 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 September 30, 2007, we were in compliance with all covenants and other requirements in our credit facilities.

Equity Offering

On May 15, 2007, we sold 5,306,100 shares of our Class A common stock in a
firmly underwritten public offering at a price to the public of $66.35 per share, from which we received net proceeds of $336.1 million. We used the net proceeds from this equity offering to repay a portion of our new term loan facility used to
initially finance the acquisition of DBT.

Cash Requirements

During the remainder of 2007, we anticipate strong cash flows from operations due to continued strength in both surface mining and underground mining
aftermarket parts sales, as well as continued high demand for our surface mining original equipment. 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 2007, we believe we have sufficient capacity under our revolving credit
facility.



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Capital expenditures for the nine months ended September 30, 2007 were $61.6 million compared with
$47.8 million for the nine months ended September 30, 2006. Included in capital expenditures was $10.4 million related to the underground mining operations. Also included in capital expenditures for the nine months ended September 30, 2007
and 2006 were $27.8 million and $34.0 million, respectively, related to Bucyrus expansion program. The remaining expenditures consisted primarily of production machinery at the South Milwaukee manufacturing facility. Including the requirements
of DBT subsequent to the May 4, 2007 closing date of the DBT acquisition, we expect combined Bucyrus/DBT capital expenditures in 2007 to be between $85.0 million and $95.0 million, which includes Bucyrus continued expansion in South
Milwaukee and the upgrade and replacement of its manufacturing equipment to support our increased surface mining sales activity. 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 the remainder of 2007.

As of September 30, 2007, we had contractual
obligations of approximately $18.5 million with respect to our surface mining expansion program. As of September 30, 2007, there have been no other material changes to the contractual obligations as presented in our Form 10-Q for the quarterly
period ended June 30, 2007.

As of September 30, 2007, there were approximately $173.5 million of standby letters of credit
outstanding under our new revolving credit facilities.

We believe that cash flows from operations and our revolving credit facilities will
be sufficient to fund our cash requirements for the next 12 months. We also believe that cash flows from operations will be sufficient to repay any borrowings under our revolving credit facility as necessary.

Receivables

We recognize revenues on
most original equipment orders using the percentage-of-completion method. Accordingly, accounts receivable are generated when revenue is recognized, which can be before the funds are collected or in some cases, before the customer is billed. As of
September 30, 2007, we had $464.0 million of accounts receivable compared to $162.5 million of accounts receivable as of December 31, 2006. Receivables as of September 30, 2007 and December 31, 2006 included $220.6 million and
$77.0 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 AICPA 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.



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Critical Accounting Policies and Estimates

See Critical Accounting Policies and Estimates in the Managements Discussion and Analysis section of our 2006 Annual Report to Stockholders. There
have been no material changes to these policies.



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BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

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 or prime-rate based borrowings. In addition interest rate swaps are
used to adjust interest rate exposures. At September 30, 2007, a sensitivity analysis was performed for our floating rate debt obligations. Based on this sensitivity analysis, we have determined that a 10% change in the weighted average
interest rate as of September 30, 2007 would have the effect of changing our interest expense on an annual basis by approximately $2.2 million.

Foreign Currency

As a result of the DBT acquisition, we are subject to substantially higher foreign
currency exchange risk because DBT sells a significant amount of its products in Euros, while Bucyrus sells most of its products in United States dollars, and we report our combined consolidated results in United States dollars. As a result, an
increase in the value of the United States dollar or the Euro, relative to other nations currencies, will decrease the United States dollar or Euro equivalent of DBTs sales earned without decreasing the United States dollar or Euro value
of the expenses associated with its sales.

Additionally, most of our aftermarket parts sales in Australia, South Africa, Brazil and the
United Kingdom are denominated in the currencies of those nations, and the majority of our service sales are denominated in these and other local currencies. Although a portion of the expenses of providing overseas services are denominated in local
currencies, the cost of goods associated with overseas sales are generally incurred in United States dollars and Euros. As a result, an increase in the value of the United States dollar or the Euro relative to these nations currencies will
decrease the United States dollar or Euro equivalent of aftermarket sales earned abroad without decreasing the United States dollar or Euro value of a portion of the expenses associated with overseas sales.

Currency controls, devaluations, trade restrictions and other disruptions in currency convertibility and in the market for currency exchange could limit
our ability to convert revenues earned abroad into United States dollars or Euros in a timely way. This could adversely affect our ability to service our United States dollar or Euro indebtedness, fund our United States dollar or Euro costs, finance
capital expenditures and pay dividends on our common stock. Therefore, our future results of operations may be subject to increased volatility.

Based on the derivative instruments outstanding at September 30, 2007, a 10% change in foreign currency exchange rates would not have a material effect on our consolidated financial condition, results of operations or cash flows.



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BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES

ITEM 4CONTROLS AND PROCEDURES

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act), our management evaluated, with the participation
of our Chief Executive Officer and Chief Financial Officer and Secretary, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2007.
Based upon their evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer and Secretary concluded that the disclosure controls and procedures were effective as of September 30, 2007 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 quarter ended September 30, 2007 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting. As a result of the acquisition of DBT on May 4, 2007, there were changes in our internal control over financial reporting and, as part of our ongoing integration activities, we are continuing to incorporate our
controls and procedures into this recently acquired business and to augment our existing controls to reflect the risks inherent in an acquisition of this magnitude and complexity.

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



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

Not applicable.



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

Not applicable.



|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)                         
|                      | 
|Date November 8, 2007 |  | /s/ Mark J. Knapp                    
|                      |  | Mark J. Knapp                        
|                      |  | Corporate Controller                 
|                      |  | Principal Accounting Officer         
|                      | 
|Date November 8, 2007 |  | /s/ Craig R. Mackus                  
|                      |  | Craig R. Mackus                      
|                      |  | Chief Financial Officer and Secretary
|                      |  | Principal Financial Officer          
|                      | 
|Date November 8, 2007 |  | /s/ Timothy W. Sullivan              
|                      |  | Timothy W. Sullivan                  
|                      |  | President and Chief Executive Officer



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BUCYRUS INTERNATIONAL, INC.

EXHIBIT INDEX

TO

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2007



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.1            |  | First Amendment dated August 7, 2007 to Amended and Restated Credit Agreement, dated as of May 25, 2007, by and among Bucyrus International Inc. as Borrower, certain subsidiaries of Borrower, as
foreign borrowers, the several lenders from time to time parties thereto, Lehman Brothers, Inc. as Sole Lead Arranger and Sole Bookrunner, JPMorgan Chase Bank, N.A. and La Salle Bank National Association as syndication Agents, National City Bank and
M&I Marshall & Ilsley Bank as documentation agents, Lehman Brothers Bankhaus AG as German agent and Lehman Commercial Paper Inc. as Administrative Agent.
|               | 
|10.1           |  | Omnibus Incentive Plan 2007, as amended August 2, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|               | 
|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.