<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 JUNE 30, 1996
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
JUNE 30, 1996: 7,619,206
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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<TABLE>
<CAPTION>
INDEX
<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 Six Month
Periods Ended June 30, 1996 and 1995. 3
Consolidated Balance Sheets as of June 30, 1996 and
December 31, 1995. 4
Consolidated Statements of Cash Flows for the Six Month
Periods Ended June 30, 1996 and 1995. 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
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Page 2
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six month periods ended June 30, 1996 and 1995
(unaudited)
($000's omitted except for per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------------------- ------------------
1996 1995 1996 1995
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $193,446 $206,771 $369,138 $401,623
Cost of sales 157,014 168,748 300,994 331,456
-------- -------- -------- --------
Gross profit 36,432 38,023 68,144 70,167
Selling, general, and administrative expenses 25,505 25,352 50,060 49,668
-------- -------- -------- --------
Operating income 10,927 12,671 18,084 20,499
International joint venture income (loss), net 101 151 300 544
Other income (expense), net 224 (378) (409) (922)
-------- -------- -------- --------
Earnings before interest and taxes 11,252 12,444 17,975 20,121
Interest expense 1,124 1,181 2,165 2,217
-------- -------- -------- --------
Pretax earnings 10,128 11,263 15,810 17,904
Income tax expense 4,320 5,080 6,743 8,109
-------- -------- -------- --------
Net earnings $ 5,808 $ 6,183 $ 9,067 $ 9,795
======== ======== ======== ========
Earnings per common share* $ .75 $ .81 $ 1.18 $ 1.29
======== ======== ======== ========
</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 June 30, 1996 7,718,410
Three months ended June 30, 1995 7,630,113
Six months ended June 30, 1996 7,710,305
Six months ended June 30, 1995 7,595,268
Page 3
<PAGE> 4
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and December 31, 1995
(unaudited)
(000's omitted)
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 97 $ 7,253
Receivables, net 96,675 91,157
Inventories:
Raw materials 28,325 31,735
Work in process 8,415 5,696
Finished goods 23,293 25,190
Lifo reserve (11,453) (11,453)
---------- ---------
Total inventory 48,580 51,168
Real estate developments in progress 30,669 20,123
Deferred tax assets 8,347 8,348
Other current assets 7,208 9,254
---------- ---------
Total current assets 191,576 187,303
Investments and other assets, at cost 20,706 18,899
Assets held for sale 13,260 13,260
Property, plant and equipment, at cost 216,837 206,421
Less accumulated depreciation (146,860) (143,014)
---------- ---------
Net property, plant and equipment 69,977 63,407
---------- ---------
$ 295,519 $ 282,869
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 12,558 $ 2,553
Current maturities of long-term debt 4,408 4,451
Accounts payable 55,155 53,047
Dividends payable 762 756
Accrued liabilities 49,888 59,162
Taxes on income 6,352 6,163
---------- ---------
Total current liabilities 129,123 126,132
Deferred taxes on income 2,581 $ 2,582
Other noncurrent liabilities 9,806 9,119
Long-term debt, less current maturities 43,073 42,613
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 186 154
Retained earnings 127,019 119,395
---------- ---------
139,828 132,172
Less cost of common stock in treasury, 1,468,994 shares in 1996
and 1,523,262 shares in 1995 28,892 29,749
---------- ---------
Total shareholders' equity 110,936 102,423
---------- ---------
$ 295,519 $ 282,869
========== =========
</TABLE>
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six month periods ended June 30, 1996 and 1995
(unaudited)
(000's omitted)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 9,067 $ 9,795
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation, amortization, other 4,704 4,056
Equity (earnings) loss of international joint ventures (58) (83)
Change in assets and liabilities:
Receivables (5,518) (242)
Inventories 2,588 957
Real estate developments in progress (10,546) 5,931
Other current assets 2,046 (3,246)
Current liabilities excluding short-term debt (6,977) (19,167)
-------- --------
Net cash used in operating activities (4,694) (1,999)
Cash flows from investing activities:
Capital expenditures (10,753) (9,211)
Acquisition of new business ---- (994)
Net changes in other noncurrent assets (2,270) 2,313
Common stock dividend
from international joint ventures ---- 799
-------- --------
Net cash used in investing activities (13,023) (7,093)
Cash flows from financing activities:
Payment of dividends (1,515) (978)
Net change in long-term debt 460 3,834
Net change in short-term debt 9,962 2,141
Sale and issuance of treasury stock 1,293 5,978
Purchase of treasury stock (436) (3,159)
Net changes in other noncurrent liabilities 765 (1,019)
-------- --------
Net cash provided by financing activities 10,529 6,797
Effect of exchange rate changes on cash 32 79
-------- --------
Net decrease in cash and cash equivalents (7,156) (2,216)
Cash and cash equivalents at beginning of year 7,253 5,284
-------- --------
Cash and cash equivalents at end of period $ 97 $ 3,068
======== ========
</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 $7.2 million in the first six months of 1996.
This was primarily due to increased investment in real estate development
projects and the new metal buildings plant near Shanghai, China. Short-term
borrowings from bank credit lines were utilized to finance the temporary
working capital increase. For the six months ended June 30, 1996, domestic
short-term borrowings averaged $6 million for 134 days compared to $8 million
for 124 days in 1995.
The Company currently has revolving bank credit facilities aggregating $50
million to meet the needs of both the Company and the Company's subsidiary,
Butler Real Estate, Inc. As of June 30, 1996, $9 million of the credit line
was utilized to provide a bank letter of credit to secure insurance
obligations. The Company also has issued Industrial Revenue Bonds secured by
an additional $6.5 million bank letter of credit. Management believes the
Company's operating cash flow, along with the bank credit lines, are sufficient
to meet future liquidity requirements.
Butler Building Systems, Ltd., the Company's United Kingdom subsidiary,
maintains a separate line of credit with its local bank for approximately $2.3
million at current exchange rates. Management believes that this separate bank
line of credit is sufficient to meet future liquidity requirements.
The Company recently announced the establishment of a wholly-owned subsidiary
to market, design, and manufacture metal building systems and provide
construction services in South America. Approximately $4 million will be
invested in facilities and equipment to be located near Belo Horizonte, Brazil.
Manufacturing operations will be conducted through a strategic alliance with
Usiminas Mechanica S.A., a steel fabricating subsidiary of a large Brazilian
integrated steel producer.
Capital expenditures were $10.8 million for the first six months of 1996
compared to $9.2 million a year ago. Last year's capital expenditures were due
in large part to the expansion of the San Marcos, Texas facility and this year
in large part to the investment in a new metal buildings plant near Shanghai,
China. Total capital expenditures are expected to be approximately $26 million
in 1996 compared to actual expenditures of $22.7 million in 1995.
RESULTS OF OPERATIONS
Net sales of $193.4 million for the quarter ended June 30, 1996 were 6% lower
than a year ago. The Building Systems and Construction Services segments
contributed to the majority of the decrease. Volume was down in the wood frame
buildings business due to severe winter and early spring weather in their
predominate market areas. Butler Real Estate volume was also down due to the
timing, completion and sales of various real estate projects. The decrease in
the Construction Services Segment was due primarily to project timing
differences. For the six months ended June 30, 1996, net sales were $369.1
million, or an 8% decrease from a year ago. The Building Systems Segment
contributed to the majority of the decrease. More specifically, the wood frame
buildings business and Butler Real Estate's sales were both lower than during
the same period last year.
The second quarter 1996 consolidated gross profit was $36.4 million
compared to $38 million a year ago. The decrease was primarily due to lower
volume in the Building Systems and Construction Services segments. For the six
months ended June 30, 1996, consolidated gross profit was $68.1 million, or a 3%
decrease over a year ago. Gross profit decreased in total dollar amount, but
increased as a percentage of net sales.
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Net earnings for the quarter ended June 30, 1996 were $5.8 million or $.75 per
common share compared to $6.2 million or $.81 per common share a year ago.
Unanticipated costs on two construction projects where subcontractors failed to
meet their commitments were the primary factor that resulted in 1996
second-quarter earnings being lower than a year ago. The net earnings for the
six months ended June 30, 1996 were $9.1 million or $1.18 per common share,
compared to $9.8 million or $1.29 per common share a year ago. The Other
Building Products group had somewhat lower earnings in the first half compared
to their exceptional profitability in the first six months of 1995. The
European metal building systems business reduced its first half loss 50%
compared to a year ago due to improved operating efficiencies and expense
control. Butler Real Estate had lower first half earnings this year, but, as
evidenced by an increase in real estate development projects, their activity is
at record levels.
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) July 15, 1996 letter to shareholders.
(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 June 30, 1996.
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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
August 6, 1996 /s/ John J. Holland
- --------------- -------------------------------
Date John J. Holland
Vice President - Finance
and Chief Financial Officer
August 12, 1996 /s/ Richard O. Ballentine
- --------------- -------------------------------
Date Richard O. Ballentine
Vice President, General Counsel
and Secretary
Page 9
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Exhibit 99
EXHIBIT INDEX
Exhibit
Number Description
- ------- ---------------------------------------------------------
15 Letter from independent public accountants pursuant to
paragraph (d) of Rule 10-01 of Regulation S-X and related
letter.
19 July 15, 1996 letter to shareholders.
27 Financial Data Schedule
Page 10
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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 June 30, 1996 and the related
condensed consolidated statements of operations and cash flows for the
three-month and six-month periods ended June 30, 1996 and 1995. 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, 1995 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 2, 1996, 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, 1995 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
July 12, 1996
<PAGE> 2
Exhibit 15
The Board of Directors
Butler Manufacturing Company:
RE: Registration Statement Nos. 2-55753, 2-63830, 33-14464, 333-02285,
and 333-02557
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated July 12, 1996 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
July 12, 1996
<PAGE> 1
Exhibit 19
Butler
Manufacturing
Company
SECOND
QUARTER
REPORT 1996
Six Months Ended
June 30, 1996
BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64108
To Our Shareholders:
Second quarter profitability for most Butler businesses was about as we
anticipated. However, one-time costs to address problems on two jobs in our
construction services subsidiary were the primary factor that resulted in 1996
second quarter earnings being lower than a year ago.
Quarterly net income of $5.8 million was down slightly from the $6.2 million
earned in the second quarter of 1995. Earnings per share of $.75 this year
compared with $.81 per share in the second quarter last year. Second quarter
1996 sales of $193 million were down 6% from a year ago.
For the first six months of this year, sales of $369 million were 8% below last
year. Year-to-date earnings of $9.1 million, or $1.18 per share, compared with
earnings of $9.8 million, or $1.29 per share, for the first half of 1995.
Our construction services business continues to perform well, and the
unanticipated costs that impacted the second quarter were incurred to assure
customer satisfaction on projects where subcontractors failed to meet their
commitments. Sufficient reserves have been established to fully provide for
completion of these two contracts.
In our Building Systems group, the U.S. metal buildings business achieved six
month sales and earnings very close to the robust level of a year ago. Their
second quarter orders were particularly strong, and their backlog is up about
5% from last year. Lester wood frame buildings had a loss for the first half
because of severe winter and early spring weather in their predominate market
areas. Recent acceleration of their order rate has been encouraging. Butler
Real Estate had lower first half earnings this year, but, as evidenced by "Real
estate developments in progress" on the June 30 balance sheet, their activity
is at record levels, and they project excellent results in the second half as
completed projects are sold to investors. Export activity remained strong in
the first half, with higher earnings, and backlog about equal to last year.
The metal buildings plant under construction in Shanghai, China has been
delayed somewhat because of our extremely wet job site, and production start-up
is now scheduled for late this year. Butler Europe experienced a first half
loss 50% lower than a year ago. Good progress is being made despite the weak
European economy, and their backlog is up 28% from last year.
The Other Building Products group had somewhat lower earnings in the
first half compared to their exceptional profitability in the first six months
of 1995. Grain Systems' earnings were significantly higher this year. Vistawall
Architectural Products' earnings, while satisfactory, were down from the record
level of 1995. Both businesses currently have backlogs more than 30% higher
than a year ago.
<PAGE> 2
First half progress of Advanced Building Systems, our modular restaurant joint
venture with McDonald's, was somewhat slower than scheduled. It is now moving
rapidly toward achieving its full capacity objective, which should be attained
during the third quarter.
We recently announced that Butler has established a wholly-owned subsidiary to
market, design, and manufacture metal building systems and provide construction
services in South America. We will be investing about $4 million in facilities
and equipment to be located near Belo Horizonte, Brazil. Manufacturing
operations will be conducted through a strategic alliance with Usiminas
Mechanica S.A., a steel fabricating subsidiary of a large Brazilian integrated
steel producer. Butler has previously established a solid customer base in
South America. By investing in that market we will greatly enhance our cost
and service performance compared to what we could accomplish by importing.
We also recently announced the addition to Butler's Board of Directors of
Robert J. Novello. Mr. Novello is Chairman and Chief Executive Officer of
Copeland Corporation, a world leader in the manufacture of compressors for air
conditioning and refrigeration equipment. Copeland is a wholly-owned
subsidiary of Emerson Electric Co., and Mr. Novello is also Executive Vice
President of Emerson. We value the broad business experience, including
directing extensive international operations, that he brings to our Board.
At the end of the quarter, Butler's total backlog of $285 million was up 6%
from a year ago. Most all of the increase was in higher margin products rather
than construction services.
Based on our results for the first half of the year, and our momentum moving
into the seasonally strongest months, we believe 1996 will be another good year
for your company. Equally as important, it will be a year of major investments
in the United States and internationally to sustain our success in the future.
Cordially yours,
/s/ Robert H. West
Robert H. West
Chairman and
Chief Executive Officer
July 15, 1996
Butler Manufacturing Company
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Butler
Manufacturing Company Consolidated Statements of Operations for the quarter
ended June 30, 1996, and Consolidated Balance Sheet as of June 30, 1996, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000015840
<NAME> BUTLER MANUFACTURING COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> JUN-30-1996
<CASH> 97
<SECURITIES> 0
<RECEIVABLES> 96,675
<ALLOWANCES> 0
<INVENTORY> 48,580
<CURRENT-ASSETS> 191,576
<PP&E> 216,837
<DEPRECIATION> 146,860
<TOTAL-ASSETS> 295,519
<CURRENT-LIABILITIES> 129,123
<BONDS> 43,073<F1>
<COMMON> 12,623
0
0
<OTHER-SE> 127,019<F2>
<TOTAL-LIABILITY-AND-EQUITY> 295,519
<SALES> 369,138
<TOTAL-REVENUES> 369,029<F3>
<CGS> 300,994
<TOTAL-COSTS> 300,994
<OTHER-EXPENSES> 50,060<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,165
<INCOME-PRETAX> 15,810
<INCOME-TAX> 6,743
<INCOME-CONTINUING> 9,067
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,067
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
<FN>
<F1>Reflects long-term debt, less current maturities
<F2>Reflects other stockholders' equity before deduction of $28.9 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 expense
</FN>
</TABLE>
