-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OaHAM9eu0sY6HEGyU/YyI8zVmcCf+n0EOrPpPMbyL4IIU+o6ua+7mJiG5Tgkj9lQ +zKC8rBt1EoRR/VxpZqRzg== 0000950137-97-003653.txt : 19971114 0000950137-97-003653.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950137-97-003653 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUTLER MANUFACTURING CO CENTRAL INDEX KEY: 0000015840 STANDARD INDUSTRIAL CLASSIFICATION: PREFABRICATED METAL BUILDINGS & COMPONENTS [3448] IRS NUMBER: 440188420 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12335 FILM NUMBER: 97712309 BUSINESS ADDRESS: STREET 1: BMA TOWER PENN VALLEY PARK STREET 2: P O BOX 419917 CITY: KANSAS CITY STATE: MO ZIP: 64141 BUSINESS PHONE: 8169683000 MAIL ADDRESS: STREET 1: BMA TOWER PENN VALLEY MALL STREET 2: P O BOX 419917 CITY: KANSAS CITY STATE: MO ZIP: 64141 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. 001-12335 FOR THE QUARTER ENDED SEPTEMBER 30, 1997 BUTLER MANUFACTURING COMPANY Incorporated in State of Delaware BMA Tower - Penn Valley Park Post Office Box 419917 Kansas City, Missouri 64141-0917 Phone: (816) 968-3000 I.R.S. Employer Identification Number: 44-0188420 Shares of common stock outstanding at SEPTEMBER 30, 1997: 7,762,302 The name, address and fiscal year of the Registrant have not changed since the last report. 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, and (2) has been subject to such filing requirements for the past 90 days. 2 INDEX
PART I. - FINANCIAL INFORMATION Page Number ITEM 1. Financial Statements (1) Consolidated Financial Statements (unaudited): Consolidated Statements of Operations for the Three and Nine Month Periods Ended September 30, 1997 and 1996. 3 Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996. 4 Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 1997 and 1996. 5 (2) Notes to Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 PART II.- OTHER INFORMATION ITEM 5. Other Information 9 ITEM 6. Exhibits and Reports on Form 8-K 9
Page 2 3 BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the three and nine month periods ended September 30, 1997 and 1996 (unaudited) ($000's omitted except for per share data)
Three months ended Nine months ended September 30, September 30, ------------------------ ---------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Net sales $ 241,031 $ 229,019 $ 670,211 $ 598,157 Cost of sales 197,149 187,492 552,926 488,486 -------- -------- -------- -------- Gross profit 43,882 41,527 117,285 109,671 Selling, general and administrative expenses 30,513 26,350 88,166 76,410 -------- -------- -------- -------- Operating income 13,369 15,177 29,119 33,261 International joint venture income (loss), net --- 108 222 408 Other income (expense), net 68 1,269 75 860 Gain on sale of Grain Systems --- --- 22,000 --- -------- -------- -------- -------- Earnings before interest and taxes 13,437 16,554 51,416 34,529 Interest expense 950 1,059 3,860 3,224 -------- -------- -------- -------- Pretax earnings 12,487 15,495 47,556 31,305 Income tax expense 5,681 6,717 19,862 13,460 -------- -------- -------- -------- Net earnings $ 6,806 $ 8,778 $ 27,694 $ 17,845 ======== ======== ======== ======== Earnings per common share* $ .86 $ 1.14 $ 3.57 $ 2.32 ======== ======== ======== ========
*Earnings per common share are based on net earnings and the average number of common shares and common share equivalents outstanding during each period. The weighted average number of shares outstanding used in the computation of earnings per share are as follows: Three months ended September 30, 1997 7,871,803 Three months ended September 30, 1996 7,702,801 Nine months ended September 30, 1997 7,753,125 Nine months ended September 30, 1996 7,707,803 See Accompanying Notes to Consolidated Financial Statements. Page 3 4 BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1997 and December 31, 1996 (unaudited) ($000's omitted)
1997 1996 ----------- ------------ ASSETS Current assets: Cash and cash equivalents $ 1,412 $ 2,013 Receivables, net 118,402 110,136 Inventories: Raw materials 35,081 37,292 Work in process 9,054 6,460 Finished goods 41,234 27,590 Lifo reserve (10,870) (11,252) -------- -------- Total inventory 74,499 60,090 Real estate developments in progress 33,211 33,803 Deferred tax assets 8,878 8,878 Other current assets 10,922 7,141 -------- -------- Total current assets 247,324 222,061 Investments and other assets 35,180 24,701 Assets held for sale 9,423 13,260 Property, plant and equipment, at cost 230,778 228,051 Less accumulated depreciation (141,452) (150,653) -------- -------- Net property, plant and equipment 89,326 77,398 -------- -------- $ 381,253 $ 337,420 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 4,965 $ 9,237 Current maturities of long-term debt 5,862 5,464 Accounts payable 87,252 74,549 Dividends payable 1,087 907 Accrued liabilities 59,848 62,222 Taxes on income 11,602 8,500 -------- -------- Total current liabilities 170,616 160,879 Deferred tax liabilities 3,837 3,837 Other noncurrent liabilities 12,157 9,865 Long-term debt, less current maturities 39,211 38,397 Shareholders' equity: Common stock, no par value, authorized 20,000,000 shares, issued 9,088,200 shares, at stated value 12,623 12,623 Cumulative foreign currency translation adjustment (309) 551 Retained earnings 170,154 141,900 -------- -------- 182,468 155,074 Less cost of common stock in treasury, 1,325,898 shares in in 1997 and 1,526,735 shares in 1996 27,036 30,632 -------- -------- Total shareholders' equity 155,432 124,442 -------- -------- $ 381,253 $ 337,420 ======== ========
See Accompanying Notes to Consolidated Financial Statements. Page 4 5 BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine month periods ended September 30, 1997 and 1996 (unaudited) ($000's omitted)
1997 1996 ------------ ------------ Cash flows from operating activities: Net earnings $ 27,694 $ 17,845 Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation and amortization 9,127 7,151 Gain on sale of Grain Systems (13,299) --- Equity (earnings) loss on joint ventures (207) 771 Change in asset and liabilities, net of businesses acquired and sold: Receivables (7,606) (18,489) Inventories (18,207) (3,964) Real estate developments in progress 592 (21,296) Other current assets (3,721) 2,481 Current liabilities excluding short-term debt 5,745 27,761 -------- -------- Net cash used in operating activities 118 12,260 Cash flows from investing activities: Capital expenditures (20,140) (16,073) Sale of Grain Systems 33,748 --- Acquisition of new businesses (7,697) --- Other, net (1,611) (4,457) -------- -------- Net cash provided (used) by investing activities 4,300 (20,530) Cash flows from financing activities: Payment of dividends (2,751) (2,277) Proceeds from issuance of long-term debt 790 771 Repayment of long-term debt (533) (342) Net change in short-term debt (4,031) 2,753 Sale and issuance of treasury stock 783 1,303 Purchase of treasury stock (1,035) (1,981) Other, net 2,618 857 -------- -------- Net cash provided by financing activities (4,159) 1,084 Effect of exchange rate changes on cash (860) 76 -------- -------- Net increase (decrease) in cash and cash equivalents (601) (7,110) Cash and cash equivalents at beginning of year 2,013 7,253 -------- -------- Cash and cash equivalents at September 30 $ 1,412 $ 143 ======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: The Company purchased all of the capital stock of Modu-Line, Inc. for 191,777 shares of the Company's common stock issued from the treasury, plus deferred cash payments and closing costs totaling $.5 million. The Company also retired Modu-Line's existing bank debt of $4.5 million. In conjunction with the acquisition, the value of treasury stock issued is shown below: Fair value of assets acquired $11,982 Cash paid 4,982 ------- Treasury stock issued for purchase of capital stock $7,000 ======= See Accompanying Notes to Consolidated Financial Statements. Page 5 6 BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the accounting policies described in the consolidated financial statements and related notes included in Butler Manufacturing Company's 1996 Form 10-K. It is suggested that those consolidated statements be read in conjunction with this report. The year-end financial statements presented were derived from the Company's audited financial statements. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments necessary for a fair presentation of the financial position of Butler Manufacturing Company and the results of its operations. NOTE 2 - NEW ACCOUNTING PRONOUNCEMENT In March 1997, the Financial Accounting Standards Board released FASB Statement No. 128, "Earnings Per Share" which revises the calculation and presentation provisions of Accounting Principles Board Opinion 15 and related interpretations. Statement No. 128 is effective for the Company's fiscal year ending December 31, 1997. Retroactive application will be required. The Company expects the effect of adopting the new standard to be immaterial. NOTE 3 - ACQUISITION AND DISPOSITION OF BUSINESS On June 11, 1997, the Company announced the acquisition of Modu-Line Windows, Inc. for 191,777 shares of Butler stock having a market value of approximately $7 million, plus deferred cash payments and closing costs totaling $.5 million. The Company also retired Modu-Line's existing bank debt of approximately $4.5 million. The fair value of assets acquired of $12 million consists primarily of receivables, inventory, and equipment valued at $6.2 million with the remaining amount allocated to goodwill which will be amortized over 40 years. On June 23, 1997, the Company sold the business and substantially all of the assets and liabilities used in the business of the Grain Systems Division, an unincorporated division of the Company, to CTB, Inc., a privately owned company in Indiana. The business was sold for an agreed upon price of approximately $34 million in cash. The sale of the Grain Systems division generated an after-tax gain of $13.3 million, or $1.72 per share. Net cash proceeds to the Company were approximately $23 million. Page 6 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Cash and equivalents decreased $1 million in the first nine months of 1997, primarily due to increased investments in domestic operations and in working capital. The increased working capital requirement was funded with short-term borrowings. For the nine months ended September 30, 1997, domestic short term borrowings averaged $25 million for 213 days compared to $8 million for 195 days in 1996. The Company currently has revolving domestic bank credit facilities aggregating $50 million and a separate line of credit for approximately $2.4 million for its United Kingdom subsidiary. As of September 30, 1997, $9 million of the credit line was utilized to provide a bank letter of credit to secure insurance obligations. Management believes the Company's operating cash flow, along with the bank credit lines, is sufficient to meet future liquidity requirements. On September 16, 1997, the Company announced a 17% increase in its cash dividend to a new annual rate of $.56 per share. The quarterly dividend of $.14 per share is an increase from the $.12 per share previously paid, and was paid on October 10, 1997 to shareholders of record as of the close of business on September 26, 1997. Capital expenditures were $20.1 million for the first nine months of 1997 compared to $16.1 million for the same period a year ago. Total capital expenditures are projected to be approximately $33 million in 1997 compared to actual expenditures of $22.7 million in 1996. Projected capital expenditures for 1997 are primarily for investments in Butler's domestic operations, while last year's expenditures included significant investments in new metal buildings plants in China and Brazil. RESULTS OF OPERATIONS Net sales of $241 million for the quarter ended September 30, 1997 were up 5% compared to the previous year. A very strong third quarter was achieved by most of the U.S. operating units, particularly in the metal buildings systems business. Third quarter 1996 results include $15 million in sales from the Grain Systems business, which was sold in June of 1997. For the nine months ended September 30, 1997, net sales were $670 million, or a 12% increase from a year ago. The Building Systems Segment had increased volume as did the Other Building Products Segment. The third quarter 1997 consolidated gross profit was $43.9 million compared to $41.5 million a year ago. The increase was primarily due to increased volume in the Building Systems segment. For the nine months ended September 30, 1997, consolidated gross profit was $117.3 million compared to $109.7 million in 1996. The 7% increase was attributable to the Building Systems and Other Building Products segments. Other income in 1997 declined compared to a year ago. Third quarter 1996 included a gain on the sale of a plant facility Butler continued to own after the business was divested in 1993. Net earnings from operations for the quarter ended September 30, 1997 were $6.8 million or $.86 per share compared to $8.8 million or $1.14 per common share in 1996. The Lester wood frame buildings business continued to operate at lower profitability, due to backlog not being adequately priced to reflect the current cost of lumber. In addition, the strength of the British pound against the German mark severely depressed margins and reduced sales in Europe for products fabricated in the Company's plant in Scotland and shipped to the Continent. The Construction Services group had increased earnings, despite lower sales in the third quarter, as a result of actions taken to reduce costs and improve project execution. The net earnings from operations for the nine months ended September 30, 1997 were $14.4 million (excluding the gain on the sale of the Grain Systems business) or $1.85 per common share, compared to $17.8 million or $2.32 per common share a year ago. Page 7 8 In addition, earnings were affected by start-up costs of the new metal buildings plants in China and Brazil. Total net earnings for the nine months of $27.7 million or $3.57 per common share, includes the sale of our Grain Systems business. Total backlog of $318 million is down 3% from the September 30, 1996 level. FORWARD LOOKING INFORMATION In addition to historical information included herein, this Report contains forward-looking statements and information that are based on management's beliefs as well as on assumptions made by and information currently available to management. These forward-looking statements and information are within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Report, the words "anticipate," "intend," "plan," "believe," "estimate," "project," and similar expressions are intended to identify forward-looking statements. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which could cause the Company's future results and stockholder values to differ materially from those expressed in such forward-looking statements. Such risks, uncertainties, and assumptions include, but are not limited to, industry cyclicality, fluctuations in customer demand and order pattern, seasonality related to weather, changes in pricing and competitor action. For additional comments, refer to the October 14, 1997 letter to shareholders, which is attached as exhibit 19. Page 8 9 PART II. - OTHER INFORMATION Item 5 Other Information Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits (19) October 14, 1997 letter to shareholders (27) Financial Data Schedule (b) Reports on Form 8-K. Page 9 10 SIGNATURES Pursuant to the requirement 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. BUTLER MANUFACTURING COMPANY November 6, 1997 /s/ John J. Holland - --------------------- ------------------------------- Date John J. Holland Vice President - Finance and Chief Financial Officer November 7, 1997 /s/ Richard O. Ballentine - --------------------- ------------------------------- Date Richard O. Ballentine Vice President, General Counsel and Secretary Page 10 11 EXHIBIT INDEX Exhibit Number Description - ------- --------------------------------------- 19 October 14, 1997 letter to shareholders 27 Financial Data Schedule Page 11 EX-19 2 LETTER TO SHAREHOLDERS 1 Exhibit 19 Butler Manufacturing Company THIRD QUARTER REPORT 1997 Nine Months Ended September 30, 1997 BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64108 To Our Shareholders: Butler's third quarter sales of $241 million were up 5% compared to the previous year. Quarterly net earnings of $6.8 million, or $.86 per share, were 22% lower than third quarter earnings a year ago. Third quarter 1996 results include $15 million in sales and $.18 in earnings per share from the Grain Systems business, which was sold in June of 1997. For the nine months, sales were 12% higher than for the same period last year, and net earnings from operations were 19% lower. 1997 year-to-date reported earnings include a gain of $13.3 million, or $1.72 per share, from the sale of Grain Systems. Very strong third quarter performance was achieved by most of Butler's U.S. operating units. Gaining particular momentum was our metal building systems business, which recorded a 17% increase in sales and 24% increase in earnings compared to very positive results in the third quarter of 1996. The Lester wood frame buildings business continued to operate at lower profitability, primarily because of backlog not adequately priced to reflect the current cost of lumber. Price increases have been implemented to address this situation. Butler Real Estate has made significant profit contributions both this year and last. Our metal buildings business in Europe is suffering because of the strength of the British pound against the German mark. While that relationship has improved somewhat recently, it has had the effect for most of the year of severely depressing margins and reducing sales for products fabricated in our plant in Scotland and shipped to the continent. We are pleased with the operational progress being made in our new businesses in China and Brazil, but start-up losses are greater than anticipated because of competitive conditions in both of those markets. We are encouraged by the recent financial improvements at Butler Shanghai, Inc., which achieved modest profitability for the third quarter. Butler's Construction Services group had lower sales but increased earnings in the third quarter and for the year-to-date, compared to their results in 1996. Actions to reduce costs and improve project execution are having a positive effect on their overall performance. The Architectural Products group is having an outstanding year. Nine month sales, including Modu-Line Windows, Inc. acquired in June, were up 27% from a year ago, and earnings rose 25%. All product lines in the group are doing well, benefiting from good activity in the commercial and community segments of the construction market. Butler's balance sheet reflects considerable strength and flexibility. Shareholders' equity of over $155 million is 32% higher than a year ago, and long and short term debt is modest. Based on our good operating results, strong financial condition, and favorable prospects for the future, the board of directors approved a 17% increase in the cash dividend to a new annual rate of $.56 per share. The $.14 per share quarterly dividend paid October 10 to shareholders of record September 26 reflected that increase. 2 We announced in a mid-September press release that Butler's combined annual losses for our three international subsidiaries will total about $.70 per share for 1997. We are addressing all three situations aggressively--reducing expenses selectively and repositioning product costs and intensifying marketing efforts in all three businesses. As a result of these actions, we look for substantial improvement in their 1998 financial results. In that same recent press release, we indicated that for all of 1997, we expect Butler's operating earnings per share to be about 20% below the level of last year. Part of that decline is attributable to our international difficulties and part to the absence of the Grain Systems business sold earlier this year. Market conditions in the U.S. remain positive for Butler's business. Backlog on September 30 was $318 million compared to $329 million a year ago. Product backlog was up 11% and construction backlog was down 41%, the latter primarily due to delays in project closings and greater project selectivity. With a favorable economic outlook and major improvements anticipated in our non-U.S. operations, we are optimistic about the outlook for the foreseeable future. Cordially yours, Robert H. West Chairman and Chief Executive Officer October 14, 1997 Butler Manufacturing Company EX-27 3 FINANCIAL DATA SCHEDULE
5 0000015840 BUTLER MANUFACTURING CO. 1000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1,412 0 118,402 0 74,499 247,324 230,778 141,452 381,253 170,616 39,211 0 0 12,623 182,468 381,253 670,211 670,279 552,926 552,926 88,166 0 3,860 25,556 11,161 14,395 0 13,299 0 27,694 3.57 3.57 Reflects long-term debt, less current maturities Reflects other stockholders' equity before deduction of $26 million cost of treasury stock Reflects net sales plus net international joint venture income less net other expense Consists of selling, general and administrative expense
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