<PAGE> 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. 0-603
FOR QUARTER ENDED SEPTEMBER 30, 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
SEPTEMBER 30, 1994: 4,851,055
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
<TABLE>
<S> <C>
PART I. - FINANCIAL INFORMATION Page Number
ITEM 1. Financial Statements
(1) Condensed Consolidated Financial Statements (unaudited):
Consolidated Statements of Operations for the Three and Nine Month
Periods Ended September 30, 1994 and 1993. 3
Consolidated Balance Sheets as of September 30, 1994 and
December 31, 1993. 4
Consolidated Statements of Cash Flows for the Nine Month
Periods Ended September 30, 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. 6-7
PART II. - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 8
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine month periods ended September 30, 1994 and 1993
(unaudited)
($000's omitted except for per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------- ---------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $189,645 $163,910 $482,134 $419,402
Cost of sales 154,658 134,652 397,797 347,588
-------- -------- -------- --------
Gross profit 34,987 29,258 84,337 71,814
Selling, general, and administrative expenses 21,766 20,997 61,337 58,961
-------- -------- -------- --------
Operating income 13,221 8,261 23,000 12,853
International joint venture income (loss), net 201 312 971 1,191
Other income (expense), net (428) (543) (1,498) (1,120)
-------- -------- --------- --------
Earnings before interest and taxes 12,994 8,030 22,473 12,924
Interest expense 1,032 1,161 2,793 3,733
-------- -------- -------- --------
Pretax earnings 11,962 6,869 19,680 9,191
Income tax expense 5,327 2,728 9,365 3,862
-------- -------- -------- --------
Net earnings $ 6,635 $ 4,141 $ 10,315 $ 5,329
======== ======== ======== ========
Earnings per common share* $ 1.33 $ .87 $ 2.12 $ 1.14
======== ======== ======== ========
</TABLE>
*Earnings per common share are based on net earnings and the average number of
common shares outstanding during each period. The weighted average number of
shares outstanding used in the computation of earnings per common share are as
follows:
Three months ended September 30, 1994 4,970,270
Three months ended September 30, 1993 4,775,774
Nine months ended September 30, 1994 4,863,910
Nine months ended September 30, 1993 4,669,293
Page 3
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1994 and December 31, 1993
(unaudited)
(000's omitted)
<TABLE>
<CAPTION>
1994 1993
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,747 $ 14,853
Receivables, net 94,010 61,602
Inventories:
Raw materials 35,008 25,309
Work in process 6,552 3,766
Finished goods 20,492 15,670
Lifo reserve (8,559) (7,319)
--------- ---------
Total inventory 53,493 37,426
Real estate developments in progress 12,268 2,987
Deferred tax assets 7,216 7,216
Other current assets 4,840 4,182
--------- ---------
Total current assets 175,574 128,266
Investments and other assets, at cost 19,797 22,106
Assets held for sale 13,587 13,587
Property, plant and equipment, at cost 178,681 171,284
Less accumulated depreciation (134,486) (129,756)
--------- ---------
Net property, plant and equipment 44,195 41,528
--------- ---------
$ 253,153 $ 205,487
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 870 1,556
Current maturities of long-term debt 2,653 11,368
Accounts payable 67,824 41,777
Dividends payable 485 ---
Accrued liabilities 44,272 33,575
Taxes on income 6,401 9,918
--------- ---------
Total current liabilities 122,505 98,194
Deferred taxes on income 4,601 4,601
Other noncurrent liabilities 12,057 10,638
Long-term debt, less current maturities 39,864 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 187 183
Retained earnings 95,139 86,332
--------- ---------
107,949 99,138
Less cost of common stock in treasury, 1,207,745 shares in 1994
and 1,336,484 shares in 1993 33,823 37,429
--------- ---------
Total shareholders' equity 74,126 61,709
--------- ---------
$ 253,153 $ 205,487
========= =========
</TABLE>
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine month periods ended September 30, 1994 and 1993
(unaudited)
(000's omitted)
<TABLE>
<CAPTION>
1994 1993
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 10,315 $ 5,329
Adjustments to reconcile net earnings to net cash (used in)
provided by operating activities:
Depreciation, amortization, other 5,867 7,292
Equity (earnings) loss of international joint ventures (469) (723)
Deferred taxes --- 397
Change in assets and liabilities:
Receivables (33,210) (23,228)
Inventories (16,067) (5,700)
Real estate developments in progress (9,281) (2,249)
Other current assets (658) (787)
Current liabilities excluding short-term debt 43,137 24,529
----------- ----------
Net cash (used in) provided by operating activities (366) 4,860
Cash flows from investing activities:
Capital expenditures (7,611) (5,125)
Sale of Walker (8,623) ---
Net changes in other noncurrent assets 855 (5,397)
Common stock dividend
from international joint venture 1,000 1,440
----------- ----------
Net cash used in investing activities (14,379) (9,082)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 35,000 906
Repayment of long-term debt (25,481) (7,376)
Net change in short-term debt (9,401) 5,427
Sale and issuance of treasury stock 4,050 2,480
Purchase of treasury stock (444) (50)
Net changes in other noncurrent liabilities (89) (930)
----------- ----------
Net cash provided by financing activities 3,635 457
Effect of exchange rate changes on cash 4 (304)
----------- ----------
Net decrease in cash and cash equivalents (11,106) (4,069)
Cash and cash equivalents at beginning of year 14,853 7,699
---------- ----------
Cash and cash equivalents at end of period $ 3,747 $ 3,630
========== ==========
</TABLE>
REVIEW AND PRESENTATION
The information included in the foregoing consolidated financial statements has
been reviewed by KPMG Peat Marwick LLP, 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 $11.1 million in the first nine months of 1994
primarily due to an increase in the working capital required to support the
significant increase in sales, and the payment of taxes on the gain related to
the sale of the Company's Walker Division in 1993. For the nine months ended
September 30, 1994, domestic short-term borrowings averaged $7.1 million for 59
days compared to $6.1 million for 154 days in 1993. There were no domestic
borrowings in the third quarter.
The Company currently has a $50 million revolving credit facility, provided by
four banking institutions, to meet the needs of both the Company and the
Company's subsidiary, Butler Real Estate, Inc. As of September 30, 1994, $9.0
million of the credit line was utilized to provide a bank letter of credit to
secure insurance obligations. Management believes operating cash flow, along
with the bank credit facility, are sufficient to meet the Company's liquidity
requirements.
Butler Building Systems, Ltd., the Company's United Kingdom subsidiary,
maintains a separate line of credit with its local bank for approximately $2.4
million at current exchange rates. In the third quarter, the Company invested
$1.6 million in its United Kingdom subsidiary to reduce bank debt. Management
believes a combination of funding from the bank line of credit and additional
investment from the Company, as required, will be sufficient to meet liquidity
requirements.
At its meeting in September, the Board of Directors approved the resumption of
a regular cash dividend for Butler shareholders. The indicated annual rate is
40 cents a share, and the initial quarterly dividend of 10 cents per share was
paid October 15, 1994, to shareholders of record September 30.
Capital expenditures were $7.6 million for the first nine months of 1994
compared to $5.1 million a year ago. Total capital expenditures are expected
to be approximately $16.1 million in 1994 compared to actual expenditures of
$6.5 million in 1993. In anticipation of continuing growth in pre-engineered
metal building systems sales, the Company completed a multi-million dollar
expansion of its Annville, Pennsylvania plant during the third quarter.
Subsequent to quarter end, the Lester Division invested $.9 million to acquire
an existing plant in Ottawa, Kansas. In the fourth quarter, the Lester
Division plans to invest an additional $.5 million to equip the plant to
produce wood frame buildings for the central and southwest regions of the
country.
RESULTS OF OPERATIONS
Net sales of $189.6 million for the quarter ended September 30, 1994 were 16%
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 third quarter sales) were 24% higher than a year ago. The increase in
sales was the result of marketing and sales initiatives in various divisions
along with an improved non-residential construction market. For the nine
months ended September 30, 1994, net sales were $482.1 million, or a 15%
increase over a year ago. Net of the Walker Division, net sales increased
$94.0 million, or 24%, due in large part to increases in volume in the Building
Systems Segment and the Construction Services Segment which benefited from
relationships with several major customers.
The third quarter 1994 consolidated gross profit was $35.0 million compared to
$29.3 million a year ago. Net of the Walker Division, consolidated gross
profit increased $10.3 million or 42%. The major contributor to the
improvement was the Building Systems Segment through increased volume and
improved margins. For the nine months ended September 30, 1994, consolidated
gross profit was $84.3 million, or a 17% increase over a year ago. Net of the
Walker Division, year-to-date gross profit increased $24.5 million, or 41%, due
to improved results in the Building Systems Segment and the Other Building
Products Segment.
Net earnings for the quarter ended September 30, 1994 were $6.6 million or
$1.33 per common share, compared to net earnings of $4.1 million or $.87 per
common share a year ago. In the third quarter of 1993, net earnings from
Walker, adjusted for estimated interest expense savings due to the cash
proceeds from the Walker sale, were $.9 million or $.19 per common share. The
improvement in net earnings was due to the increase in sales and improved
margins of the Building Systems Segment and the Other Building Products
Segment. The net earnings for the nine months ended September 30, 1994 were
$10.3 million or $2.12 per common share, compared to $5.3 million or $1.14 per
common share a
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year ago. For the nine months ended September 30, 1993, the Walker Division
had net earnings of $1.8 million or $.38 per common share (net of estimated
interest expense savings). The improvement was due to the increase in volume
of business and lower operating expenses, as a percent of sales, in all
segments, with the Buildings Systems Segment the most significant contributor.
The Company's European buildings business reported a loss for the nine months
ended September 30, 1994, primarily attributable to increased marketing
expenses in France and Germany and depressed conditions in the European
construction market.
Order backlog at September 30, 1994 was $260 million compared to $164 million a
year ago, an increase of 59%, net of Walker. Building Systems Segment backlog
was up 70% from last year due to the U.S. and International pre-engineered
metal building systems businesses. The Other Building Products Segment backlog
was also particularly strong with a 42% increase over 1993, net of Walker.
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) October 14, 1994 letter to shareholders (without financial
statements).
(27) Financial Data Schedule
(b) Reports on Form 8-K.
The Company has not filed any reports on Form 8-K during the
quarter ended September 30, 1994.
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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
Date 11/8/94 /s/ JOHN J. HOLLAND
John J. Holland
Vice President - Finance
and Chief Financial Officer
Date 11/8/94 /s/ RICHARD O. BALLENTINE
Richard O. Ballentine
Vice President, General Counsel
and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- - - ------ -----------
<S> <C>
15 Letter from independent public accountants pursuant to
paragraph (d) of Rule 10-01 of Regulation S-X and related
letter.
19 October 14, 1994 letter to shareholders (without financial statements).
27 Financial Data Schedule
</TABLE>
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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 September 30, 1994 and the related
condensed consolidated statements of operations and cash flows for the
three-month and nine month periods ended September 30, 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 LLP
October 13, 1994
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Exhibit 15
The Board of Directors
Butler Manufacturing Company:
RE: Registration Statement No. 2-55753, 2-36370 and 2-63830
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated October 13, 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 meaning of
Sections 7 and 11 of the Act.
/s/ KPMG Peat Marwick LLP
Kansas City, Missouri
October 13, 1994
<PAGE> 1
Exhibit 19
Butler
Manufacturing
Company
THIRD
QUARTER
REPORT 1994
Nine Months Ended
September 30, 1994
BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64108
To Our Shareholders:
Butler's third quarter results reflect the improvement in the U.S.
nonresidential construction market and our success in serving it well.
Quarterly sales of $190 million were up 16% from a year ago, and net earnings
of $6.6 million, or $1.33 per share, were 53% higher than the $4.1 million, or
$.87 per share profit for the third quarter last year.
For the nine months of 1994, sales were $482 million, an increase of 15% over
1993. Year-to-date earnings of $10.3 million, or $2.12 per share, were an 86%
increase over the $5.3 million, or $1.14 per share profit for the same period
last year.
The 1993 third quarter and nine month results include sales of $11.5 million
and $31.3 million, respectively, from the Walker Division which was sold in
late 1993 and net earnings of $.9 million (or $.19 per share) and $1.8 million
($.38 per share), respectively, net of estimated interest expense savings.
The value of U.S. nonresidential building awards through August, as reported by
the F. W. Dodge Division of McGraw-Hill, Inc., was 7% higher than a year ago.
This is consistent with the Federal Reserve Bank's report in August that U.S.
manufacturing was operating at 84.7% of capacity, the highest level since
August 1989. While total nonresidential contract awards in our industry are
still considerably below the levels achieved in 1989 during the peak of the
last cycle, Butler is benefiting from the numerous initiatives undertaken in
recent years which have contributed to the strong results we are experiencing
currently.
Butler's Building Systems group continued to be the leading contributor to the
company's improved financial results. The U.S. pre-engineered metal building
business has been particularly strong, benefiting from the success of our
extensive and professionally competent dealer distribution network. Lester
wood frame building sales were up 37% for the first nine months, with
significantly increased earnings as well. Export sales also continued to
expand and were 41% higher than at this same time in 1993. The European
buildings business recorded a loss for the quarter. We still expect that they
will lose about $2 million for the full year, as their construction markets
remain depressed.
The Construction Services Segment's sales were up for the first nine months and
profitability was equal to the level of last year, reflecting the mix of sales.
In the Other Building Products Segment, Vistawall sales increased 21% and
profits rebounded dramatically. Grain Systems' sales for the first three
quarters were slightly higher, but the mix of sales and certain non-recurring
expenses resulted in somewhat lower earnings.
At its meeting in September, your Board of Directors approved three major
capital investment projects for the company that will provide the capacity for
future growth in several areas of Butler's operations. $5.1 million has been
authorized to expand the pre-engineered metal buildings plant in San Marcos,
Texas. The structural fabrication and roll forming lines to be added there
will double the capacity of that facility. Butler's construction subsidiary
will spend $1.7 million to enlarge and equip its Kansas City office to
accommodate its growing volume of business in the U.S. and internationally.
The Lester Division will invest $1.4 million to acquire an existing plant in
Ottawa, Kansas, and equip it to produce wood frame buildings for the central
and southwest regions of the country. These commitments are indicative of the
potential we see for continued growth in all of these markets.
Also at the September board meeting as previously announced, the directors
approved the resumption of a regular cash dividend for Butler Shareholders.
The indicated annual rate is 40 cents a share, and the initial quarterly
dividend of 10 cents per share was paid today to shareholders of record
September 30. We are pleased that our encouraging operating outlook and
greatly improved financial condition made
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possible the restoration of a cash dividend at this time.
The rate of incoming orders has remained strong even as shipments during our
peak seasonal months have been at record levels. As a result, backlog on
September 30 was $260 million, an increase of 59% over the same time a year ago
(net of Walker). Assuming a favorable economic environment, we believe our
positive momentum will continue into 1995.
Cordially yours,
/s/ Robert H. West
Robert H. West
Chairman and
Chief Executive Officer
October 14, 1994
Butler Manufacturing Company
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Butler
Manufacturing Company Consolidated Statements of Operations for the nine months
ended September 30, 1994 and Consolidated Balance Sheet as of September 30, 1994
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 3,747
<SECURITIES> 0
<RECEIVABLES> 94,010
<ALLOWANCES> 0
<INVENTORY> 53,493
<CURRENT-ASSETS> 175,574
<PP&E> 178,681
<DEPRECIATION> 134,486
<TOTAL-ASSETS> 253,153
<CURRENT-LIABILITIES> 122,505
<BONDS> 39,864 <F1>
<COMMON> 12,623
0
0
<OTHER-SE> 95,139 <F2>
<TOTAL-LIABILITY-AND-EQUITY> 253,153
<SALES> 482,134
<TOTAL-REVENUES> 481,607 <F3>
<CGS> 397,797
<TOTAL-COSTS> 397,797
<OTHER-EXPENSES> 61,337 <F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,793
<INCOME-PRETAX> 19,680
<INCOME-TAX> 9,365
<INCOME-CONTINUING> 10,315
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,315
<EPS-PRIMARY> 2.12
<EPS-DILUTED> 2.12
<FN>
<F1>
Reflects long-term debt, less current maturities.
<F2>
Reflects other stockholders' equity before deduction of $33.2 million cost
of treasury stock.
<F3>
Reflects net sales plus net international joint venture income less net
other expense.
<F4>
Consists of selling, general, and administrative expenses.
</FN>
</TABLE>
