-----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, V5w9aQS4ciLyDpLbdmlXi4eRBJUhWW/xI8Bbwo6XDO79gwvhsITVOtTgQluCXzIf KTjCaYsdXZIrFi4QInjeAw== 0000950130-96-004426.txt : 19961118 0000950130-96-004426.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950130-96-004426 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUTLER INTERNATIONAL INC /MD/ CENTRAL INDEX KEY: 0000786765 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 061154321 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14951 FILM NUMBER: 96664534 BUSINESS ADDRESS: STREET 1: 110 SUMMIT AVE CITY: MONTVALE STATE: NJ ZIP: 07645 BUSINESS PHONE: 2015738000 MAIL ADDRESS: STREET 2: 110 SUMMIT AVENUE CITY: MONTVALE STATE: NJ ZIP: 07645 FORMER COMPANY: FORMER CONFORMED NAME: NORTH AMERICAN VENTURES INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) {X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 1996 ----------------------------------- OR { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-14951 ------- BUTLER INTERNATIONAL, INC. -------------------------- Exact name of registrant as specified in its charter) MARYLAND 06-1154321 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 110 Summit Avenue, Montvale, New Jersey 07645 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (201) 573-8000 -------------- 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 . ----- ----- As of November 12, 1996, 6,174,997 shares of the registrant's common stock, par value $.001 per share, were outstanding. PART I - FINANCIAL INFORMATION Item 1. Financial Statements. -------------------- (A) Consolidated Balance Sheets - September 30, 1996 (Unaudited) and December 31, 1995 (B) Consolidated Statements of Operations (Unaudited) - quarter ended September 30, 1996 and quarter ended September 30, 1995 (C) Consolidated Statements of Operations (Unaudited) - nine months ended September 30, 1996 and nine months ended September 30, 1995 (D) Consolidated Statements of Cash Flows (Unaudited) - nine months ended September 30, 1996 and nine months ended September 30, 1995 (D) Notes to Consolidated Financial Statements (Unaudited) BUTLER INTERNATIONAL, INC. -------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- (in thousands except share data) --------------------------------
September 30, December 31, 1996 1995 -------------- ------------- (Unaudited) ASSETS - ------ Current assets: Cash and cash equivalents $ 1,277 $ 1,097 Accounts receivable, net 59,643 66,020 Other current assets 2,813 3,345 -------- -------- Total current assets 63,733 70,462 Property and equipment, net 13,491 15,168 Other assets and deferred charges 965 654 Excess cost over net assets of business acquired, net 23,878 24,288 -------- -------- Total assets $102,067 $110,572 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable and accrued liabilities $ 24,061 $ 27,012 Current portion of long-term debt 7,228 9,347 -------- -------- Total current liabilities 31,289 36,359 -------- -------- Long-term debt 32,976 40,480 -------- -------- Other long-term liabilities 3,724 3,677 -------- -------- Stockholders' equity: Preferred stock, par value $.001 per share, authorized 5,000,000: Series B Cumulative Convertible, authorized 3,500,000; issued 2,537,480 at September 30, 1996 and 2,451,898 at December 31, 1995 (Aggregate liquidation preference $2,537,480 at September 30, 1996 and $2,451,898 at December 31, 1995) 3 2 Common stock, par value $.001 per share, authorized 83,333,333; issued and outstanding 6,174,997 at September 30, 1996 and 5,993,783 at December 31, 1995 6 6 Additional paid-in capital 93,709 92,882 Accumulated deficit (59,551) (62,727) Cumulative foreign currency translation adjustment (89) (107) -------- -------- Total stockholders' equity 34,078 30,056 -------- -------- Total liabilities and stockholders' equity $102,067 $110,572 ======== ========
The accompanying notes are an integral part of these financial statements. BUTLER INTERNATIONAL, INC. -------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (in thousands except share and per share daata) (Unaudited)
Quarter Ended September 30, --------------------------- 1996 1995 ---------- ---------- Net sales $ 103,054 $ 108,222 Cost of sales 87,733 92,776 ---------- ---------- Gross margin 15,321 15,446 Depreciation and amortization 693 682 Selling, general and administrative expenses 11,991 12,868 Non recurring charges - 163 ---------- ---------- Income before other income (expense) and income taxes 2,637 1,733 Other income (expense): Interest and other 283 168 Interest expense (1,333) (1,835) ---------- ---------- Income before income taxes 1,587 66 Income taxes 108 (17) ---------- ---------- Net income $ 1,479 $ 83 ========== ========== Net income per share: Primary $.22 $.01 Assuming full-dilution $.20 $.01 Average number of common shares and dilutive common share equivalents outstanding: Primary 6,545,191 6,354,258 Assuming full-dilution 7,337,501 7,004,219
The accompanying notes are an integral part of these financial statements. BUTLER INTERNATIONAL, INC. -------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (in thousands except share and per share data) (Unaudited)
Nine Months Ended September 30, ------------------------------- 1996 1995 ----------- ----------- Net sales $ 309,104 $ 335,030 Cost of sales 264,541 288,458 ---------- ---------- Gross margin 44,563 46,572 Depreciation and amortization 2,325 2,004 Selling, general and administrative expenses 35,016 37,563 Non recurring charges - 493 ---------- ---------- Income before other income (expense) and income taxes 7,222 6,512 Other income (expense): Interest and other 633 442 Interest expense (4,168) (4,832) ---------- ---------- Income before income taxes 3,687 2,122 Income taxes 380 421 ---------- ---------- Net income $ 3,307 $ 1,701 ========== ========== Net income per share: Primary $.50 $.25 Assuming full-dilution $.46 $.24 Average number of common shares and dilutive common share equivalents outstanding: Primary 6,364,624 6,281,293 Assuming full-dilution 7,256,528 6,982,273
The accompanying notes are an integral part of these financial statements. BUTLER INTERNATIONAL, INC. -------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (in thousands) (Unaudited)
Nine Months Ended September 30, ------------------------------- 1996 1995 -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,307 $ 1,701 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and excess purchase price amortization 2,325 2,004 Amortization of deferred financing and employee stock purchase plan loans 605 453 Foreign currency translation 18 (173) (Increase) decrease in assets, increase (decrease) in liabilities: Accounts receivable 6,377 (18,043) Other current assets 532 (1,367) Other assets (917) 186 Current liabilities (2,916) 9,796 Other long-term liabilities 47 (401) ------ -------- Net cash provided by (used in) operating activities 9,378 (5,844) ------ -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures - net 145 (3,196) Cost of business acquired (382) (419) Expenses paid in conjunction with discontinued operations (80) (108) -------- ------- Net cash used in investing activities (317) (3,723) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings under financing agreements (9,601) 11,755 Net proceeds from the issuance of common stock 742 106 Net payments in conjunction with headquarters building purchase (22) (73) Repurchase common stock - (126) -------- ------- Net cash (used in) provided by financing activities (8,881) 11,662 -------- ------- Net increase in cash and cash equivalents 180 2,095 Cash and cash equivalents, beginning of period 1,097 2,285 -------- ------- Cash and cash equivalents, end of period $ 1,277 $ 4,380 ======== =======
The accompanying notes are an integral part of these financial statements. BUTLER INTERNATIONAL, INC. -------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (Unaudited) ----------- NOTE 1 - PRESENTATION: The consolidated financial statements include the accounts of Butler International, Inc. ("the Company") and its wholly-owned subsidiaries. Significant intercompany balances and transactions have been eliminated. Certain amounts from prior period consolidated financial statements have been reclassified in the accompanying consolidated financial statements to conform with current period presentation. The accompanying financial statements are unaudited, but, in the opinion of management, reflect all adjustments, which include normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows at September 30, 1996 and for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted. Accordingly, this report should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 1995. The results of operations for the three and nine months ended September 30, 1996 are not necessarily indicative of operating results for the full year. NOTE 2 - CREDIT FACILITY: Effective September 30, 1996, the Company extended its Credit Facility with General Electric Capital Corporation ("GECC") to July 1, 1998. The Credit Facility provides the Company with up to $50.0 million in loans, including $9.0 million for letters of credit. During the fourth quarter of 1996, the interest rate will be reduced by fifty basis points from the current rate of 300 basis points above the 30 day commercial paper rate. Beginning January 1, 1997, additional interest reductions are available based upon the Company achieving certain financial results. The Company has guaranteed all obligations incurred or created under the Credit Facility. The Company is required to comply with certain affirmative and financial covenants. The Company is in compliance with the aforementioned covenants as amended. NOTE 3 - COMMON STOCK: In the nine months ended September 30, 1996, the Company issued 181,214 shares of common stock upon the exercise of common stock options and warrants. NOTE 4 - PREFERRED STOCK: On June 30, 1996, $85,582 of dividends in kind were paid to holders of Series B Preferred Stock. NOTE 5 - EARNINGS PER SHARE: Primary earnings per share are determined by dividing net earnings (after deducting preferred stock dividends) by the weighted average number of common shares outstanding and dilutive common stock equivalents. On a fully-diluted basis, both earnings and shares outstanding are adjusted to assume the conversion of convertible preferred stock. NOTE 6 - CONTINGENCIES: The Company and its subsidiaries are parties to various legal proceedings and claims incidental to its normal business operations for which material losses, beyond that which is recorded, is remote except for the following matter. In 1995, the Company filed a complaint against CIGNA Property and Casualty Insurance Company alleging negligence, breach of contract, breach of fiduciary duty, and negligent misrepresentation arising out of CIGNA's and other defendants' acts and omissions in the processing, handling and investigation of claims against the Company under general liability and workmen's compensation insurance contracts. The defendants filed an answer, new matter and counterclaim denying the Company's allegations, asserting certain affirmative defenses, and alleging that the Company has failed to pay retrospective premiums amounting to approximately $7.0 million. In the opinion of management, based on the advice of counsel, all of the proceedings and claims in which the Company and its subsidiaries are involved with can ultimately be defended. The Company is defending itself vigorously against all such claims. NOTE 7 - UNITED KINGDOM DISPOSALS: As previously announced during the third quarter of 1996, the Company completed the sale and disposal of the Telecommunications, Pacific and South African operations of its United Kingdom ("UK") unit. There was no significant impact on reported earnings. NOTE 8 - MORTGAGE NOTE: Effective November 7, 1996, the Company entered into an agreement to extend the $6.75 million mortgage note on its corporate headquarters facility through April 30, 1998. The new terms include an interest rate of 10%, down from 10 7/8%, and an amortization schedule of 15 years. The Company will pursue long-term refinancing of the mortgage in 1997. Item 2. Management's Discussion and Analysis of Results of Operations and ----------------------------------------------------------------- Financial Condition - ------------------- RESULTS OF OPERATIONS - --------------------- The third quarter of 1996 net income increased to $1.5 million, or $.22 per share, from the $83,000, or $.01 per share, reported in the third quarter of 1995. On a year-to-date basis, net income improved 94% to $3.3 million, or $.50 per share, from $1.7 million, or $.25 per share reported last year. The results for the quarter continue to reflect the strength of the Company's Telecommunications Services, Technology Solutions and Fleet Services operations, as they continue to drive the Company's improved performance. Additionally, the margins in the Contract Technical Services ("CTS") division were again higher than that of the prior quarter and the same quarter last year. Gross margins increased to 14.9% in the third quarter from 14.6% reported in the second quarter and 13.8% reported in the first quarter, reflecting the success of the Company's strategy of pursuing an improved business mix. This increase occurred despite lower than average margins in the United Kingdom ("UK") business. The year-to-date gross margin for 1996 was 14.4%, compared with 13.9% for the same period in 1995. Selling, general and administrative expenses were sharply lower than that of the prior year, the direct result of the strategic management actions announced in late 1995. The Company also benefited from reduced interest expense, resulting from the significantly improved controls on, and management of, its receivable investment which decreased by $22 million on a year-to-year basis, allowing the Company to reduce its revolving line of credit to $33 million at September 30, 1996. The results of the UK Telecommunications group did not meet expectations and the Company entered into an agreement to sell this operation. The Company finalized the transaction to dispose its UK Telecommunications, as well as its Pacific and South African operations during the third quarter of 1996. Proceeds from the sale of the Telecommunications and Pacific operations were sufficient to extinguish related liabilities and cover the cost basis of assets sold. The company will continue to support its international clientele in its staff business, both in the UK and its other international markets. Sales for the quarter were $103.1 million, reflecting a 5% decrease from the $108.2 million recorded in the third quarter last year. For the nine months, sales were $309.2 million, down 8% from $335.0 million in the comparable period of the prior year. The reduction in sales related to businesses that the Company has exited, totaled $8 million and $17 million in the three and nine month periods, respectively. CTS sales, in accordance with the Company's strategic plans, were managed lower by $9 million and $32 million respectively, as the Company continues its strategy of shedding low margin business. Noteworthy increases were registered by the Fleet Services, Technology Solutions and Telecommunications Services divisions. Revenues in these units exceeded the prior year by 59% and 51% in the three and nine month periods, respectively. These operations, which generate higher than average returns, have been targeted for expansion, at the expense of lower margin work in the CTS business and other exited businesses. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's primary sources of funds are generated from operations and borrowings under its Credit Facility. As of September 30, 1996, $33.0 million was outstanding under the Credit Facility, and an additional $6.5 million was used to collateralize letters of credit. Proceeds from the Credit Facility were used by the Company to finance working capital, capital expenditures and other business related expenses. Improved controls over the Company's investment in its accounts receivable continue to yield results as reflected in the decrease in the borrowings under its Credit Facility to $33.0 million at September 30, 1996 from $40.5 million at December 31, 1995. Effective September 30, 1996, the Company extended its Credit Facility with General Electric Capital Corporation ("GECC") to July 1, 1998. The Credit Facility provides the Company with up to $50.0 million in loans, including $9.0 million for letters of credit. Effective during the fourth quarter of 1996, the interest rate will be reduced by fifty basis points from the current rate of 300 basis points above the 30 day commercial paper rate. The interest rate for November 1996 is 7.9%, which compares favorably to the prime rate of 8.25%. The average rate on the Credit Facility since January 1, 1996, was 8.45%. The Company has guaranteed all obligations incurred or created under the Credit Facility. The Company is also required to comply with certain affirmative and financial covenants. The Company is in compliance with the aforementioned covenants, as amended. In 1993, Butler of New Jersey Realty Corp., a subsidiary of the Company, acquired the Company's corporate office complex in Montvale, NJ for approximately $9.4 million. This transaction was financed principally through the assumption of an existing mortgage of $6.75 million, bearing interest at 10%, the issuance of a non-interest bearing note in the amount of $1.2 million (which was fully paid in 1994), and the issuance of a second note in the amount of $510,000 (the balance of which was $127,000 at September 30, 1996.) On November 7, 1996, the lender approved an extension of the existing mortgage note through April 30, 1998. The new terms include an interest rate of 10%, down from 10 7/8%, and amortization schedule of 15 years and a 1% extension fee. The Company will be pursuing long term refinancing of the mortgage in 1997. The mortgage balance is reflected in the current portion of long-term debt. PART II - OTHER INFORMATION Item 1. Legal Proceedings - None 2. Changes in Securities - None 3. Defaults Upon Senior Securities - None 4. Submission of Matters to a Vote of Security Holders - None 5. Other Information - None 6. Exhibits and Reports on Form 8-K (a) Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K - None 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 INTERNATIONAL, INC. -------------------------- (Registrant) November 13, 1996 By: /s/ Edward M. Kopko -------------------------------- Edward M. Kopko, Chairman and Chief Executive Officer November 13, 1996 By: /s/ Michael C. Hellriegel -------------------------------- Michael C. Hellriegel Senior Vice President and Chief Financial Officer November 13, 1996 By: /s/ Warren F. Brecht -------------------------------- Warren F. Brecht Senior Vice President and Secretary EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BUTLER INTERNATIONAL, INC. FROM 10-Q FOR PERIOD ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1995 SEP-30-1996 1,277 0 60,850 1,207 307 63,733 25,989 12,498 102,067 31,289 0 0 3 6 34,069 102,067 309,104 309,104 264,541 264,541 36,455 253 4,168 3,687 380 3,307 0 0 0 3,307 .50 .46
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