<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, 1995
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, 1995: 7,527,430
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.
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PART I. - FINANCIAL INFORMATION Page Number
<S> <C>
ITEM 1. Financial Statements
(1) Condensed Consolidated Financial Statements (unaudited):
Consolidated Statements of Earnings for the Three and Nine Month
Periods Ended September 30, 1995 and 1994. 3
Consolidated Balance Sheets as of September 30, 1995 and
December 31, 1994. 4
Consolidated Statements of Cash Flows for the Nine Month
Periods Ended September 30, 1995 and 1994. 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>
Page 2
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the three and nine month periods ended September 30, 1995 and 1994
(unaudited)
($000's omitted except for per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------------- ---------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 206,634 $ 189,645 $ 608,257 $ 482,134
Cost of sales 165,002 154,658 496,458 397,797
---------- ---------- ---------- ----------
Gross profit 41,632 34,987 111,799 84,337
Selling, general, and administrative expenses 26,346 21,766 76,014 61,337
---------- ---------- ---------- ----------
Operating income 15,286 13,221 35,785 23,000
International joint venture income (loss), net (29) 201 515 971
Other income (expense), net (700) (428) (1,622) (1,498)
---------- ---------- ---------- ----------
Earnings before interest and taxes 14,557 12,994 34,678 22,473
Interest expense 893 1,032 3,110 2,793
---------- ---------- ---------- ----------
Pretax earnings 13,664 11,962 31,568 19,680
Income tax expense 5,995 5,327 14,104 9,365
---------- ---------- ---------- ----------
Net earnings $ 7,669 $ 6,635 $ 17,464 $ 10,315
========== ========== ========== ==========
Earnings per common share* $ 1.00 $ .89 $ 2.29 $ 1.41
========== ========== ========== ==========
</TABLE>
*Earnings per common share are based on net earnings and the average number of
common shares outstanding during each period. The earnings per share amounts
for 1995 and 1994 have been restated to reflect the effect of the 3 for 2 stock
split for stockholders of record on June 30, 1995. The weighted average number
of shares outstanding used in the computation of earnings per common share are
as follows:
<TABLE>
<S> <C>
Three months ended September 30, 1995 7,653,340
Three months ended September 30, 1994 7,455,405
Nine months ended September 30, 1995 7,614,625
Nine months ended September 30, 1994 7,295,865
</TABLE>
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<PAGE> 4
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1995 and December 31, 1994
(unaudited)
(000's omitted)
<TABLE>
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 5,113 $ 5,284
Receivables, net 94,520 95,277
Inventories:
Raw materials 37,703 34,732
Work in process 5,958 5,462
Finished goods 21,970 28,105
Lifo reserve (8,463) (9,393)
------------- ------------
Total inventory 57,168 58,906
Real estate developments in progress 17,942 15,985
Deferred tax assets 7,538 7,538
Other current assets 8,687 5,662
------------- ------------
Total current assets 190,968 188,652
Investments and other assets, at cost 20,482 20,371
Assets held for sale 13,260 13,587
Property, plant and equipment, at cost 198,498 184,576
Less accumulated depreciation (141,037) (136,050)
------------- ------------
Net property, plant and equipment 57,461 48,526
------------- ------------
$ 282,171 $ 271,136
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 2,232 70
Current maturities of long-term debt 512 2,474
Accounts payable 58,833 81,092
Dividends payable 753 487
Accrued liabilities 57,136 46,987
Taxes on income 5,065 4,970
------------- ------------
Total current liabilities 124,531 136,080
Deferred taxes on income 4,685 4,685
Other noncurrent liabilities 10,918 11,006
Long-term debt, less current maturities 46,008 40,263
Shareholders' equity:
Common stock, no par value, authorized 13,000,000 shares,
issued 9,088,200 shares, at stated value 12,623 12,623
Cumulative foreign currency translation adjustment 48 194
Retained earnings 113,840 99,579
------------- ------------
126,511 112,396
Less cost of common stock in treasury, 1,560,771 shares in
1995 and 1,783,328 shares in 1994 30,482 33,294
------------- ------------
Total shareholders' equity 96,029 79,102
------------- ------------
$ 282,171 $ 271,136
============= ============
</TABLE>
Page 4
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine month periods ended September 30, 1995 and 1994
(unaudited)
(000's omitted)
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 17,464 $ 10,315
Adjustments to reconcile net earnings to net cash (used in)
provided by operating activities:
Depreciation, amortization, other 6,482 5,867
Equity in (earnings) loss of international joint ventures (152) (469)
Change in assets and liabilities:
Receivables 757 (33,210)
Inventories 2,123 (16,067)
Real estate developments in progress (1,957) (9,281)
Other current assets (3,016) (658)
Current liabilities excluding short-term debt (12,015) 43,137
------------- -------------
Net cash used in operating activities 9,686 (366)
Cash flows from investing activities:
Capital expenditures (14,490) (7,611)
Sale of Walker --- (8,623)
Acquisition of new business (994) ---
Net changes in other noncurrent assets 442 855
Common stock dividend
from international joint venture 799 1,000
---------------- --------------
Net cash used in investing activities (14,243) (14,379)
Cash flows from financing activities:
Payment of dividends (1,728) ---
Proceeds from issuance of long-term debt 4,882 35,000
Repayment of long-term debt (224) (25,481)
Net change in short-term debt (40) (9,401)
Sale and issuance of treasury stock 7,885 4,050
Purchase of treasury stock (5,073) (444)
Net changes in other noncurrent liabilities (1,171) (89)
------------- -------------
Net cash provided by financing activities 4,531 3,635
Effect of exchange rate changes on cash (145) 4
------------- -------------
Net decrease in cash and cash equivalents (171) (11,106)
Cash and cash equivalents at beginning of year 5,284 14,853
--------------- -------------
Cash and cash equivalents at end of period $ 5,113 $ 3,747
=============== =============
</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.
Page 5
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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 $.2 million in the first nine months of 1995.
Cash was used to significantly reduce vendor payables and for capital
expenditures, primarily the expansion of the San Marcos, Texas metal buildings
plant. For the nine months ended September 30, 1995, domestic short-term
borrowings averaged $8.0 million for 124 days compared to $7.1 million for 59
days in 1994.
The Company currently has revolving credit facilities aggregating $50 million,
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,
1995, $9 million of the credit line was utilized to provide a bank letter of
credit to secure insurance obligations. The Company has $6.25 million of
Industrial Revenue Bond financing to fund expansion of its San Marcos, Texas
facility. The bonds mature in the year 2015 and pay a floating interest rate.
The bonds are also secured by a bank letter of credit issued by NationsBank of
Texas subject to a reimbursement agreement.
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. During the fourth quarter, the Company will
invest $1.0 million in its United Kingdom subsidiary to reduce bank debt.
Management believes a combination of funding from this bank line of credit and
additional investment from the Company, as required, will be sufficient to meet
liquidity requirements.
In September 1995, the Company announced it had received Chinese government
approval for the establishment of a wholly-owned subsidiary to manufacture
pre-engineered metal building systems and provide construction services in
China. The subsidiary will be based in Shanghai. The initial investment in
the Shanghai manufacturing facility will be about $12 million.
In September 1995, the Company, through its Lester Building Systems Division,
announced the establishment of Advanced Building Systems, in partnership with
McDonald's Corporation, to develop modular buildings and evaluate their
application as restaurants for McDonald's.
Capital expenditures were $14.5 million for the first nine months of 1995
compared to $7.6 million a year ago. The increase is due in large part to the
expansion of the San Marcos, Texas facility. Total capital expenditures are
expected to be approximately $22 million in 1995 compared to actual
expenditures of $13.7 million in 1994. The majority of 1995 capital
expenditures will be invested in the Building Systems Segment, due to the
expansion of the San Marcos, Texas facility and the Shanghai, China facility.
RESULTS OF OPERATIONS
Net sales of $206.6 million for the quarter ended September 30, 1995 were 9%
higher than a year ago. The increase is due entirely to increases in volume
within the Building Systems Segment and the Other Building Products Segment,
both of which benefited from a strong nonresidential construction market. For
the nine months ended September 30, 1995, net sales were $608.3 million, a 26%
increase over a year ago. The Building Systems Segment and Other Building
Products Segment contributed to the majority of the increase. More
specifically, the Buildings Division's U.S. metal buildings sales were sharply
higher than during the same period last year due to increased market share and
an overall strong nonresidential construction market. The Vistawall Division
is also acheiving record results. The Company's construction subsidiary had
lower sales.
The third quarter 1995 consolidated gross profit was $41.6 million compared to
$35.0 million a year ago. The major contributor to the improvement was the
Buildings Systems Segment through increased volume and improved margins. For
the nine months ended September 30, 1995, consolidated gross profit was $111.8
million, a 33% increase over a year ago. The increase was due to improved
results in the Building Systems Segment and Other Building Products Segment.
Net earnings for the quarter ended September 30, 1995 were $7.7 million or
$1.00 per common share, compared to net earnings of $6.6 million or $.89 per
common share a year ago. The improvement in net earnings was due to the
increase in sales and improved margins of the Building Systems Segment and
increased sales of the Other Building Products Segment.
Page 6
<PAGE> 7
The net earnings for the nine months ended September 30, 1995 were $17.5
million or $2.29 per common share, compared to $10.3 million or $1.41 per
common share a year ago. The improvement was primarily due to the increase in
volume of business and improved margins in the Building Systems Segment. The
Other Building Products Segment's sales also increased dramatically with margin
as a percent of sales remaining relatively constant. The Company's European
buildings business reported a loss for the nine months ended September 30, 1995
approximately equal to that of a year ago. The Company's construction
subsidiary had lower earnings for the first nine months of this year.
For additional information, see the letter to shareholders at Exhibit 19.
Page 7
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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 13, 1995 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, 1995.
Agreements relating to the Industrial Revenue Bond issue referred to in the
Management Discussion and Analysis section are not being filed as exhibits
pursuant to Rule 601(b) (4) (iii) (A) of Regulation S-K. The agreements will
be furnished to the Commission upon request.
Page 8
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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
11/03/95 /s/ John J. Holland
- ---------- ------------------------------------------------------------------
Date John J. Holland
Vice President - Finance
and Chief Financial Officer
11/03/95 /s/ Richard O. Ballentine
- ---------- ------------------------------------------------------------------
Date Richard O. Ballentine
Vice President, General Counsel
and Secretary
Page 9
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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 13, 1995 letter to shareholders (without financial statements).
27 Financial Data Schedule
</TABLE>
Page 10
<PAGE> 1
Exhibit 15
[KPMG Peat Marwick LLP Letterhead]
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, 1995 and the related
condensed consolidated statements of earnings and cash flows for the
three-month and nine-month periods ended September 30, 1995 and 1994. These
financial statements are the responsibility of the 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, 1994 and the
related consolidated statements of earnings and retained earnings and cash
flows for the year then ended (not included herein); and in our report dated
February 3, 1995, 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, 1994 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, 1995
<PAGE> 2
Exhibit 15
[KPMG Peat Marwick LLP Letterhead]
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, 1995 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 LLP
Kansas City, Missouri
October 13, 1995
<PAGE> 1
Exhibit 19
Butler
Manufacturing
Company
THIRD
QUARTER
REPORT 1995
Nine Months Ended
September 30, 1995
BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64108
October 13, 1995
To Our Shareholders:
Third quarter sales of $207 million were up 9% from last year's third quarter,
and net earnings of $7.7 million were a 16% increase over the comparable period
of 1994. Earnings per share of $1.00 this year were 12% higher and reflect the
effect of the 3-for-2 stock split on July 17.
For the nine months ending September 30, 1995, sales were up 26% from 1994, net
earnings increased 69%, and earnings per share were 62% higher.
The non-residential construction market in the United States remains strong,
with total square footage of contract awards up almost 11% through August.
Butler's U.S. metal building systems business, through the first nine months,
has achieved a nearly 30% increase in sales and almost doubled their profit
contribution. The manufacturing sector of the U.S. economy is active and
continues to create a need for additional industrial capacity. Declining
vacancy rates in the commercial markets have led to improvement in those end
uses as well. The U.S. metal building manufacturers are increasing their share
of the total market, and Butler, as the leading member of the Metal Building
Manufacturers Association, is experiencing greater growth than most direct
industry competitors.
Export sales of building systems continue to be important to Butler.
Year-to-date export sales are about level with last year, as the decline in
Mexico has largely been offset by increased activity in other markets. Butler
recently announced the formation of a wholly-owned metal building systems
subsidiary in China, headquartered in Shanghai. We are investing approximately
$12 million in this new venture, which will enable us to improve our service
and reduce our costs in a market where we previously have enjoyed great success
importing buildings, mostly from our U.S. facilities. We anticipate start-up
production in China early in 1996. Staffing and training of operating
personnel are in process.
The other entities in Butler's Building Systems group are having mixed results.
Our build-to-suit-to-lease real estate subsidiary is having a record year.
Butler Europe will show a loss about equal to last year despite sharply higher
sales. Rapid material cost increases have had a severe effect on this
operation. Lester wood frame building systems will have lower sales and
earnings than 1994, mostly as a result of softening in the hog building
<PAGE> 2
market. We recently announced that Lester had established a partnership with
McDonald's Corporation to develop modular buildings and evaluate their
application as restaurants for McDonald's. Butler continues to identify
promising new segments of the buildings market, and we are pleased to be
working with McDonald's in pursuing the modular building market.
Butler's construction subsidiary had lower sales and earnings for the first
nine months of this year, but recent order activity has provided an excellent
outlook for the coming several months. Their new international construction
management capabilities are gaining wide interest among many U.S. multinational
corporations.
In our Other Building Products group, the Vistawall division is achieving
record results with strong year-to-date increases in both sales and earnings.
Grain Systems is performing well in serving the farm and commercial storage
markets in North America, as well as aggressively pursuing export
opportunities.
Butler's total backlog on September 30, 1995 was $282 million, up 8% from the
same time last year. Construction Services' backlog was up substantially, and
the U.S. metal buildings backlog was up modestly. Total product backlog was
down about 6%. We are assured of an excellent year for 1995 and are
maintaining our intensity of focus on customers, markets, and the quality of
our own operations to sustain our momentum into 1996.
Cordially yours,
/s/ Robert H. West
Robert H. West
Chairman and
Chief Executive Officer
October 13, 1995
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, 1995 and Consolidated Balance Sheet as of September 30,
1995, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,113
<SECURITIES> 0
<RECEIVABLES> 94,520
<ALLOWANCES> 0
<INVENTORY> 57,168
<CURRENT-ASSETS> 190,968
<PP&E> 198,498
<DEPRECIATION> 141,037
<TOTAL-ASSETS> 282,171
<CURRENT-LIABILITIES> 124,531
<BONDS> 46,008<F1>
<COMMON> 12,623
0
0
<OTHER-SE> 113,840<F2>
<TOTAL-LIABILITY-AND-EQUITY> 282,171
<SALES> 608,257
<TOTAL-REVENUES> 607,150<F3>
<CGS> 496,458
<TOTAL-COSTS> 496,458
<OTHER-EXPENSES> 76,014<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,110
<INCOME-PRETAX> 31,568
<INCOME-TAX> 14,104
<INCOME-CONTINUING> 17,464
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,464
<EPS-PRIMARY> 2.29
<EPS-DILUTED> 2.29
<FN>
<F1>Reflects long-term debt, less current maturities.
<F2>Reflects other stockholders' equity before deduction of $30.5 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>
