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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. 0-603
FOR QUARTER ENDED MARCH 31, 1994
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
MARCH 31, 1994: 4,757,905
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.
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INDEX
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PART I. - FINANCIAL INFORMATION Page Number
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ITEM 1. Financial Statements
(1) Condensed Consolidated Financial Statements (unaudited):
Consolidated Statements of Operations for the Three Month
Periods Ended March 31, 1994 and 1993. 3
Consolidated Balance Sheets as of March 31, 1994 and
December 31, 1993. 4
Consolidated Statements of Cash Flows for the Three Month
Periods Ended March 31, 1994 and 1993. 5
(2) Statement as to Review and Presentation. 5
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 6
PART II. - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 7
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three month periods ended March 31, 1994 and 1993
(unaudited)
($000's omitted except for per share data)
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Three months ended
March 31,
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1994 1993
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Net sales $ 117,067 $ 110,708
Cost of sales 99,203 93,455
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Gross profit 17,864 17,253
Selling, general, and administrative expenses 18,958 18,383
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Operating income (loss) (1,094) (1,130)
International joint venture income (loss), net 550 687
Other income (expense), net (602) (144)
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Earnings (loss) before interest and taxes (1,146) (587)
Interest expense 731 1,235
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Pretax earnings (loss) (1,877) (1,822)
Income tax expense (benefit) (476) (610)
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Net earnings (loss) $ (1,401) $ (1,212)
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Earnings (loss) per common share* $ (.29) $ (.27)
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*Earnings (loss) per common share are based on net earnings (loss) and the
average number of common shares outstanding during each period. The weighted
average number of shares outstanding used in the computation of earnings (loss)
per common share are as follows:
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Three months ended March 31, 1994 4,751,792
Three months ended March 31, 1993 4,570,761
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1994 and December 31, 1993
(unaudited)
(000's omitted)
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1994 1993
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ASSETS
Current assets:
Cash $ 1,042 $ 14,853
Receivables, net 67,570 61,602
Inventories:
Raw materials 37,974 25,309
Work in process 4,093 3,766
Finished goods 17,873 15,670
Lifo reserve (7,394) (7,319)
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Total inventory 52,546 37,426
Real estate developments in progress 4,057 2,987
Deferred tax assets 7,216 7,216
Other current assets 5,018 4,182
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Total current assets 137,449 128,266
Investments and other assets, at cost 18,789 22,106
Assets held for sale 13,587 13,587
Property, plant and equipment, at cost 172,256 171,284
Less accumulated depreciation (131,199) (129,756)
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Net property, plant and equipment 41,057 41,528
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$ 210,882 $ 205,487
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 6,975 1,556
Current maturities of long-term debt 13,135 11,368
Accounts payable 51,242 41,777
Accrued liabilities 31,827 33,575
Taxes on income 3,204 9,918
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Total current liabilities 106,383 98,194
Deferred taxes on income 4,601 4,601
Other noncurrent liabilities 10,970 10,638
Long-term debt, less current maturities 28,218 30,345
Shareholders' equity:
Common stock, no par value, authorized 13,000,000 shares,
issued 6,058,800 shares, at stated value 12,623 12,623
Cumulative foreign currency translation adjustment (77) 183
Retained earnings 84,592 86,332
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97,138 99,138
Less cost of common stock in treasury, 1,300,895 shares in 1994
and 1,336,484 shares in 1993 36,428 37,429
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Total shareholders' equity 60,710 61,709
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$ 210,882 $ 205,487
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three month periods ended March 31, 1994 and 1993
(unaudited)
(000's omitted)
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1994 1993
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Cash flows from operating activities:
Net earnings (loss) $ (1,401) $ (1,212)
Adjustments to reconcile net earnings (loss) to net cash provided
by operating activities:
Depreciation, amortization, other 1,895 2,350
Equity (earnings) loss of international joint ventures (196) (287)
Deferred taxes --- 397
Change in assets and liabilities:
Receivables (6,770) (1,916)
Inventories (15,120) (8,186)
Real estate developments in progress (1,070) (30)
Other current assets (836) (779)
Current liabilities excluding short-term debt 9,148 1,741
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Net cash used in operating activities (14,350) (7,922)
Cash flows from investing activities:
Capital expenditures (1,229) (1,294)
Sale of Walker (7,343) ---
Net changes in other noncurrent assets 2,318 (413)
Common stock dividend
from international joint ventures 1,000 1,440
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Net cash used in investing activities (5,254) (267)
Cash flows from financing activities:
Net change in long-term debt (2,127) (1,277)
Net change in short-term debt 7,186 4,270
Sale and issuance of treasury stock 1,054 333
Purchase of treasury stock (53) ---
Net changes in other noncurrent liabilities (7) (94)
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Net cash provided by financing activities 6,053 3,232
Effect of exchange rate changes on cash (260) (71)
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Net decrease in cash and cash equivalents (13,811) (5,028)
Cash and cash equivalents at beginning of year 14,853 7,699
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Cash and cash equivalents at end of period $ 1,042 $ 2,671
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REVIEW AND PRESENTATION
The information included in the foregoing consolidated financial statements has
been reviewed by KPMG Peat Marwick, independent public accountants, in
accordance with established standards and procedures for a limited review of
interim financial statements. The statements include all adjustments which
were, in the opinion of management, necessary to present a fair statement of
the results for the period, and include all adjustments and additional
disclosures proposed by independent public accountants.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and equivalents decreased $13.8 million in the first three months of 1994.
This was due to an increase in inventory investment in anticipation of a strong
second quarter and to take advantage of purchasing opportunities. Another
factor was the payment of taxes on the gain related to the sale of Walker. The
increase in working capital was partially offset by an increase in short-term
borrowings. For the three months ended March 31, 1994, domestic short-term
borrowings averaged $4.0 million for 3 days compared to $6.0 million for 43
days in 1993.
The Company has $20 million in short-term credit facilities available and
obtained an additional $5 million temporary credit line through June 30, 1994
to meet domestic seasonal working capital requirements. As of March 31, 1994,
$9 million of the credit line was utilized to provide a bank letter of credit
arrangement to secure insurance obligations. Management believes the Company's
operating cash flow, along with the bank credit lines, are sufficient to meet
future liquidity requirements. The Company is in the process of refinancing
both its short-term and long-term debt facilities, as well as its revolving
credit facility. The purpose of the refinancing is to lengthen the maturity of
the remaining term debt, and to reduce costs associated with the revolving line
of credit.
Butler Real Estate, Inc. has a separate $27 million line of credit with a bank
for its credit based leasing activities which management believes is adequate.
Butler Building Systems, Ltd., the Company's United Kingdom subsidiary,
maintains a separate line of credit with its local bank for approximately $2.2
million at current exchange rates. In April, 1994, the Company infused $.75
million in additional funds into the United Kingdom subsidiary. Management
believes that these additional funds, along with its separate bank line of
credit are sufficient to cover future liquidity requirements.
Capital expenditures were $1.2 million for the first three months of 1994
compared to $1.3 million a year ago. Total capital expenditures are expected to
be approximately $11.0 million in 1994 compared to actual expenditures of $6.5
million in 1993. During 1994, in anticipation of continuing growth in metal
building systems sales, the Company announced a multi-million dollar expansion
of its Annville, Pennsylvania plant, expected to be operational in the third
quarter of this year.
RESULTS OF OPERATIONS
Net sales of $117.1 million for the quarter ended March 31, 1994 were 6% higher
than a year ago, despite the absence of the sales of the Walker Division that
was sold in late 1993. Sales of continuing businesses (excluding Walker's 1993
first quarter sales) were 16% higher than a year ago. The majority of the
increase is attributable to an overall improvement in the U.S. economy
generally and in the nonresidential construction market specifically.
The net loss for the quarter ended March 31, 1994 was $1.4 million or $.29 per
common share compared to a net loss of $1.2 million or $.27 per common share a
year ago. In the first quarter of 1993, Walker had earnings of $.3 million or
$.06 per common share. Adjusting for the sale of Walker, the 1994 first
quarter loss was lower than a year ago. The improvement was due to the strong
increase in quarterly sales of the U.S. pre-engineered metal buildings
division and Vistawall. The Company's European buildings business had a larger
loss in 1994 primarily attributable to increased marketing expenses in France
and Germany.
At March 31,1994, order backlog was $203 million compared to $159 million a
year ago, an increase of 28%. Building Systems Segment backlog was up 41% from
last year due to the metal and wood building systems businesses. The
Construction Services Segment backlog was also particularly strong with a 25%
increase over 1993.
For additional information, see the letter to shareholders at Exhibit 19.
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PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(15) Letter from independent public accountants pursuant to
paragraph (d) of Rule 10-01 of Regulation S-X and related
letter.
(19) April 15, 1994 letter to shareholders.
(b) Reports of Form 8-K.
The Company has not filed any reports of Form 8-K during the
quarter ended March 31, 1994.
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.
BUTLER MANUFACTURING COMPANY
May 10, 1994 /s/ John J. Holland
Date John J. Holland
Vice President - Finance
and Chief Financial Officer
May 10, 1994 /s/ Richard O. Ballentine
Date Richard O. Ballentine
Vice President, General Counsel
and Secretary
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EXHIBIT INDEX
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Exhibit
Number Description
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15 Letter from independent public accountants pursuant to
paragraph (d) of Rule 10-01 of Regulation S-X and related
letter.
19 April 15, 1994 letter to shareholders.
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Exhibit 15
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Directors
Butler Manufacturing Company:
We have reviewed the condensed consolidated balance sheet of Butler
Manufacturing Company and subsidiaries as of March 31, 1994 and the related
condensed consolidated statements of operations and cash flows for the
three-month periods ended March 31, 1994 and 1993. These financial statements
are the responsibility of Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1993 and the
related consolidated statements of operations and retained earnings and cash
flows for the year then ended (not included herein); and in our report dated
February 4, 1994, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 1993 is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
/s/ KPMG Peat Marwick
April 15, 1994
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Exhibit 15
The Board of Directors
Butler Manufacturing Company:
RE: Registration Statement No. 2-55723, 2-36370 and 2-63830
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated April 15, 1994 related to our
review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.
/s/ KPMG Peat Marwick
Kansas City, Missouri
April 15, 1994
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Exhibit 19
Butler
Manufacturing
Company
FIRST
QUARTER
REPORT 1994
Three Months Ended
March 31, 1994
BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64141
To Our Shareholders:
Butler's first quarter 1994 results compare favorably with 1993, despite
unusually severe winter weather this year in many parts of the country, and
despite the absence of the sales and earnings contribution from the Walker
Division that was sold in late 1993.
1994 sales of $117.1 million were up 6 percent. Sales of continuing businesses
(excluding Walker's 1993 first quarter sales) were 16 percent higher. The net
loss of $1.4 million, or $.29 per share, compared with a first quarter loss of
$1.2 million, or $.27 per share, last year. The quarterly effect on Butler's
profitability from the sale of Walker was $.06 per share for the first quarter,
so after adjusting for that transaction, Butler's 1994 first quarter loss was
somewhat lower than a year ago.
To some extent Butler's results for the latest quarter are reflective of an
overall improvement in the U.S. economy generally and in the nonresidential
construction market specifically. Corporate profitability, particularly in the
industrial sector, is trending positively, and manufacturing capacity
utilization, one of the relevant indicators for our markets, has risen above 83
percent. The F.W. Dodge Division of McGraw-Hill reports that for the first two
months of 1994 the value of new contract awards for nonresidential buildings
was up 10 percent compared to a year ago.
In the Building Systems Segment of Butler's business, our U.S. pre-engineered
metal buildings division achieved a significant improvement in profitability on
a strong increase in quarterly sales. In anticipation of continuing growth in
metal building systems sales, we recently announced a multi-million dollar
expansion of our plant in Annville, Pennsylvania. That additional production
capacity will be operational during the third quarter of this year. Our
European buildings subsidiary had a larger loss, primarily attributable to
increased marketing expenses in France and Germany. The contribution from
export sales was down for the first quarter because of delayed shipment dates
and lower margins in the mix of sales. The seasonal loss of the Lester wood
frame buildings business was comparable to a year ago, even though their
shipments to customers were the most significantly affected by winter weather
conditions.
The Construction Services Segment had earnings about equal to last year. Early
this year they responded very aggressively to an immediate need by the Texas
Department of Criminal Justice for prison dormitory buildings on twenty-four
different sites. Butler's pre-engineered building systems and our construction
subsidiary's ability to mobilize rapidly at multiple locations provide a unique
construction capability that is valuable to a variety of clients.
Our Other Building Products Segment now consists of the Vistawall architectural
products division and the Grain Systems Division. Vistawall achieved a
remarkable turnaround in first quarter profitability on a 21 percent increase
in sales. Grain Systems' earnings, while lower than last year, were
considerably ahead of their plan for 1994.
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Exhibit 19
We are encouraged by the recent level of prospect activity and order entry
rate. Backlog on March 31, 1994 was $203 million compared to $159 million a
year ago. However at this time last year, Walker's backlog was $5 million.
This means that backlog from existing business units was up 32 percent from the
first quarter of 1993. Metal and wood building systems and construction
services backlogs were particularly strong. We intend to continue our dual
emphasis on sales growth and operational effectiveness to realize improved
results for Butler shareholders.
Cordially yours,
/s/ Robert H. West
Robert H. West
Chairman and
Chief Executive Officer
April 15, 1994
Butler Manufacturing Company
