<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, 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
SEPTEMBER 30, 1996: 7,564,115
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> <C>
ITEM 1. Financial Statements
(1) Condensed Consolidated Financial Statements (unaudited):
Consolidated Statements of Operations for the Three and Nine Month
Periods Ended September 30, 1996 and 1995. 3
Consolidated Balance Sheets as of September 30, 1996 and
December 31, 1995. 4
Consolidated Statements of Cash Flows for the Nine Month
Periods Ended September 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
</TABLE>
Page 2
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine month periods ended September 30, 1996 and 1995
(unaudited)
($000's omitted except for per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $229,019 $206,634 $598,157 $608,257
Cost of sales 187,492 165,002 488,486 496,458
-------- -------- -------- --------
Gross profit 41,527 41,632 109,671 111,799
Selling, general and administrative expenses 26,350 26,346 76,410 76,014
-------- -------- -------- --------
Operating income 15,177 15,286 33,261 35,785
International joint venture income (loss), net 108 (29) 408 515
Other income (expense), net 1,269 (700) 860 (1,622)
-------- -------- -------- --------
Earnings before interest and taxes 16,554 14,557 34,529 34,678
Interest expense 1,059 893 3,224 3,110
-------- -------- -------- --------
Pretax earnings 15,495 13,664 31,305 31,568
Income tax expense 6,717 5,995 13,460 14,104
-------- -------- -------- --------
Net earnings $ 8,778 $ 7,669 $ 17,845 $ 17,464
======== ======== ======== ========
Earnings per common share* $ 1.14 $ 1.00 $ 2.32 $ 2.29
======== ======== ======== ========
</TABLE>
*Earnings per common share are based on net earnings and the weighted average
equivalent 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, 1996 7,702,801
Three months ended September 30, 1995 7,653,340
Nine months ended September 30, 1996 7,707,803
Nine months ended September 30, 1995 7,614,625
Page 3
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and December 31, 1995
(unaudited)
(000's omitted)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 143 $ 7,253
Receivables, net 109,646 91,157
Inventories:
Raw materials 31,315 31,735
Work in process 8,517 5,696
Finished goods 27,453 25,190
Lifo reserve (12,153) (11,453)
--------- ---------
Total inventory 55,132 51,168
Real estate developments in progress 41,419 20,123
Deferred tax assets 8,347 8,348
Other current assets 6,773 9,254
--------- ---------
Total current assets 221,460 187,303
Investments and other assets 23,248 18,899
Assets held for sale 13,260 13,260
Property, plant and equipment, at cost 220,636 206,421
Less accumulated depreciation (148,970) (143,014)
--------- ---------
Net property, plant and equipment 71,666 63,407
--------- ---------
$ 329,634 $ 282,869
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 5,437 $ 2,553
Current maturities of long-term debt 4,320 4,451
Accounts payable 78,946 53,047
Dividends payable 909 756
Accrued liabilities 59,434 59,162
Taxes on income 7,753 6,163
--------- ---------
Total current liabilities 156,799 126,132
Deferred taxes on income 2,581 2,582
Other noncurrent liabilities 9,897 9,119
Long-term debt, less current maturities 43,046 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 230 154
Retained earnings 134,885 119,395
--------- ---------
147,738 132,172
Less cost of common stock in treasury, 1,524,085 shares in
1996 and 1,523,262 shares in 1995 30,427 29,749
--------- ---------
Total shareholders' equity 117,311 102,423
--------- ---------
$ 329,634 $ 282,869
========= =========
</TABLE>
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine month periods ended September 30, 1996 and 1995
(unaudited)
(000's omitted)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 17,845 $ 17,464
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation, amortization, other 7,151 6,482
Equity (earnings) loss of joint ventures 771 (152)
Change in assets and liabilities:
Receivables (18,489) 757
Inventories (3,964) 2,123
Real estate developments in progress (21,296) (1,957)
Other current assets 2,481 (3,016)
Current liabilities excluding short-term debt 27,761 (12,015)
-------- --------
Net cash used in operating activities 12,260 9,686
Cash flows from investing activities:
Capital expenditures (16,073) (14,490)
Acquisition of new business -- (994)
Net changes in other noncurrent assets (4,457) 442
Common stock dividend
from international joint ventures -- 799
-------- --------
Net cash used in investing activities (20,530) (14,243)
Cash flows from financing activities:
Payment of dividends (2,277) (1,728)
Net change in long-term debt 429 4,658
Net change in short-term debt 2,753 (40)
Sale and issuance of treasury stock 1,303 7,885
Purchase of treasury stock (1,981) (5,073)
Net changes in other noncurrent liabilities 857 (1,171)
-------- --------
Net cash provided by financing activities 1,084 4,531
Effect of exchange rate changes on cash 76 (145)
-------- --------
Net decrease in cash and cash equivalents (7,110) (171)
Cash and cash equivalents at beginning of year 7,253 5,284
-------- --------
Cash and cash equivalents at end of period $ 143 $ 5,113
======== ========
</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 $7.1 million in the first nine months of 1996.
This was primarily due to increased investment in real estate development
projects and expenditures for capital assets. For the nine months ended
September 30, 1996, domestic short-term borrowings averaged $7.7 million for
195 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 September 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 that it has signed a Letter of Intent to acquire
a 90% interest in Beker Kft, a building systems fabricator located in
Nyiregyhaza, Hungary. The transaction is expected to close in December, 1996.
Capital expenditures were $16.1 million for the first nine months of 1996
compared to $14.5 million a year ago. This year's capital expenditure level
was due in large part to the investment in a new metal buildings plant near
Shanghai, China, and last year in large part to the expansion of the Company's
San Marcos, Texas facility. Total capital expenditures are expected to be
approximately $27 million in 1996 compared to actual expenditures of $22.7
million in 1995.
On October 18, 1996, the Company announced that it has applied for listing of
its common stock on the New York Stock Exchange. The Company expects that its
securities will be listed and begin trading on the Big Board under the new
stock symbol BBR in early November, 1996.
RESULTS OF OPERATIONS
Third quarter sales of $229 million were up 11% from last year's third quarter.
All segments had strong results. The timing of project billings in the
Construction Services Segment contributed the majority of the increase. For
the nine months ended September 30, 1996, net sales were $598 million, a 2%
decrease from a year ago. The U.S. metal buildings business had slightly lower
sales, due to the slower order activity earlier in the year. The business is
now operating at record levels of production and higher backlogs. Butler Real
Estate volume was also down due to the timing, completion and sales of various
real estate projects.
The third quarter 1996 consolidated gross profit was $41.5 million, comparable
to $41.6 million a year ago. While volume was higher in 1996 by 11%,
competitive price discounting affected margins in the Building Systems Segment.
Within the Other Building Products Segment, the mix of sales and competitive
pricing caused somewhat lower margins in the Vistawall Division. The Company's
Construction Services Segment operated at lower than normal levels of margin in
the third quarter. For the nine months ended September 30, 1996, consolidated
gross profit was $109.7 million, a 2% decrease over a year ago. Gross profit
decreased in total dollar amount, but was comparable as a percentage of net
sales.
Page 6
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Net earnings for the quarter ended September 30, 1996 were $8.8 million or
$1.14 per common share compared to $7.7 million or $1.00 per common share a
year ago. Other income benefited from the sale of a plant facility that Butler
continued to own after the operating business using it was divested in 1993.
The net earnings for the nine months ended September 30, 1996 were $17.8
million or $2.32 per common share, compared to $17.5 million or $2.29 per
common share, a year ago. The European metal building systems business
reported losses through the third quarter that were 70% less than a year ago,
due to improved operating efficiencies and expense control. Butler Real Estate
had lower earnings this year, but as evidenced by an increase in real estate
development projects, their activity is at record levels.
Backlog for the quarter ended September 30, 1996 was $329 million, up 17% from
a year ago. Higher margin product backlog accounted for the increase, as
construction backlog was essentially even with the level of the previous 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 16, 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 September 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
October 30, 1996 /s/ John J. Holland
- ---------------- -------------------------------
Date John J. Holland
Vice President - Finance
and Chief Financial Officer
October 30, 1996 /s/ Richard O. Ballentine
- ---------------- -------------------------------
Date Richard O. Ballentine
Vice President, General Counsel
and Secretary
Page 9
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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 October 16, 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 September 30, 1996 and the related
condensed consolidated statements of operations and cash flows for the
three-month and nine-month periods ended September 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
October 11, 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 October 11, 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
October 11, 1996
<PAGE> 1
Exhibit 19
Butler
Manufacturing
Company
THIRD
QUARTER
REPORT 1996
Nine Months Ended
September 30, 1996
BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64108
To Our Shareholders:
Third quarter sales of $229 million were up 11% from last year's third quarter,
and net earnings of $8.8 million, or $1.14 per share, were a 14% increase over
the comparable period of 1995.
In the nine months ending September 30, 1996, sales were down 2%, net earnings
were up 2%, and earnings per share were up 1%.
Within our Building Systems group, our U.S. metal buildings business had
slightly lower nine month sales and earnings than a year ago. Order activity
was slower in the early part of the year, and competitive price discounting
affected margins. The business is now operating at record levels of
production, and higher backlog assures a strong finish for the year. Lester
wood frame buildings is similarly gaining momentum, and their backlog currently
is at a record level. Butler Real Estate is achieving another excellent year.
Our plant start-ups in China and Brazil are progressing well, and both will be
in production by the end of the year. Butler Europe earned a small profit in
the third quarter as contrasted with recording a sizable loss last year. For
all of 1996, European operations will show a much smaller loss than the $2.8
million experienced in 1995.
Butler's construction subsidiary continued to operate at lower than normal
levels of earnings in the third quarter. Actions are being taken to restore
profitability to more acceptable levels.
The Other Building Products group had excellent third quarter and nine month
results. The mix of sales and competitive price pressures caused somewhat
lower earnings in the Vistawall Division. Prospects for a big grain harvest
are supporting strong performance in the Grain Systems Division.
Third quarter other income benefited from the sale of a plant facility that
Butler continued to own after the operating business using it was divested in
1993.
<PAGE> 2
On September 20, we announced the signing of a letter of intent to acquire 90%
of Beker Kft, a small building systems fabricator in Hungary. While the size
of the investment is relatively modest, Beker's capabilities will significantly
enhance our ability to serve customers in the growing markets of Central and
Eastern Europe. The transaction is scheduled to close in December.
At its September meeting, Butler's Board of Directors voted a 20% increase in
the cash dividend, to a quarterly rate of $.12 per share from the previous $.10
per share quarterly rate. This increased dividend was reflected in the payment
made on October 11 to shareholders of record as of September 27.
In recent weeks we have repurchased about 73,000 shares of Butler stock at an
average price per share of approximately $27.50. We intend to continue to use
financial strategies that, along with our operating strategies, will increase
Butler shareholder value.
At the end of the third quarter, Butler's total backlog of $329 million was up
17% from a year ago. Higher margin product backlog accounted for the increase,
as construction backlog was essentially even with the level of the previous
year.
Prospects are good for a strong final quarter for 1996, and we believe we are
well positioned looking ahead to the early months of 1997.
Cordially yours,
/s/ Robert H. West
Robert H. West
Chairman and
Chief Executive Officer
October 16, 1996
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 quarter
ended September 30, 1996, and Consolidated Balance Sheet as of September 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 143
<SECURITIES> 0
<RECEIVABLES> 109,646
<ALLOWANCES> 0
<INVENTORY> 55,132
<CURRENT-ASSETS> 221,460
<PP&E> 220,636
<DEPRECIATION> 148,970
<TOTAL-ASSETS> 329,634
<CURRENT-LIABILITIES> 156,799
<BONDS> 43,046<F1>
<COMMON> 12,623
0
0
<OTHER-SE> 134,885<F2>
<TOTAL-LIABILITY-AND-EQUITY> 329,634
<SALES> 598,157
<TOTAL-REVENUES> 599,425<F3>
<CGS> 488,486
<TOTAL-COSTS> 488,486
<OTHER-EXPENSES> 76,410<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,224
<INCOME-PRETAX> 31,305
<INCOME-TAX> 13,460
<INCOME-CONTINUING> 17,845
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,845
<EPS-PRIMARY> 2.32
<EPS-DILUTED> 2.32
<FN>
<F1>Reflects long-term debt, less current maturities
<F2>Reflects other stockholders' equity before deduction of $30.4 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>
