<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. 001-12335
FOR THE QUARTER ENDED MARCH 31, 1997
BUTLER MANUFACTURING COMPANY
Incorporated in State of Delaware
BMA Tower - Penn Valley Park
Post Office Box 419917
Kansas City, Missouri 64141-0917
Phone: (816) 968-3000
I.R.S. Employer Identification Number: 44-0188420
Shares of common stock outstanding at
MARCH 31, 1997: 7,579,478
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
PART I.-FINANCIAL INFORMATION Page Number
ITEM 1. Financial Statements
(1) Consolidated Financial Statements (unaudited):
Consolidated Statements of Operations for the Three Month
Periods Ended March 31, 1997 and 1996. 3
Consolidated Balance Sheets as of March 31, 1997 and
December 31, 1996. 4
Consolidated Statements of Cash Flows for the Three Month
Periods Ended March 31, 1997 and 1996. 5
(2) Notes to Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7-8
PART II.-OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 9
Page 2
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three month periods ended March 31, 1997 and 1996
(unaudited)
($000's omitted except for per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net sales $188,102 $175,692
Cost of sales 156,025 143,980
---------- ----------
Gross profit 32,077 31,712
Selling, general and administrative expenses 27,427 24,555
---------- ----------
Operating Income 4,650 7,157
International joint venture income (loss), net 156 199
Other income (expense), net (290) (633)
---------- ----------
Earnings before interest and taxes 4,516 6,723
Interest Expense 1,279 1,041
---------- ----------
Pretax earnings 3,237 5,682
Income tax expense 1,341 2,423
---------- ----------
Net earnings $ 1,896 $ 3,259
========== ==========
Earnings per common share* $ .25 $ .42
========== ==========
</TABLE>
*Earnings per common share are based on net earnings and the average number of
common shares and common share equivalents outstanding during each period. The
weighted average number of shares outstanding used in the computation of
earnings per share are as follows:
<TABLE>
<S> <C>
Three months ended March 31, 1997 7,671,458
Three months ended March 31, 1996 7,702,199
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
Page 3
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1997 and December 31, 1996
(unaudited)
($000's omitted)
<TABLE>
<S> <C> <C>
1997 1996
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 14 $ 2,013
Receivables, net 98,598 110,136
Inventories:
Raw materials 39,011 37,292
Work in process 6,372 6,460
Finished goods 33,950 27,590
Lifo reserve (11,402) (11,252)
------------- -------------
Total inventory 67,931 60,090
Real estate developments in progress 38,516 33,803
Deferred tax assets 8,878 8,878
Other current assets 7,800 7,141
------------- -------------
Total current assets 221,737 222,061
Investments and other assets 27,792 24,701
Assets held for sale 13,260 13,260
Property, plant and equipment, at cost 233,138 228,051
Less accumulated depreciation (152,315) (150,653)
------------- -------------
Net property, plant and equipment 80,823 77,398
------------- -------------
$ 343,612 $ 337,420
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 36,260 $ 9,237
Current maturities of long-term debt 5,712 5,464
Accounts payable 64,174 74,549
Dividends payable 910 907
Accrued liabilities 48,940 62,222
Taxes on income 9,175 8,500
------------- -------------
Total current liabilities 165,171 160,879
Deferred tax liabilities 3,837 3,837
Other noncurrent liabilities 9,813 9,865
Long-term debt, less current maturities 39,243 38,397
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 212 551
Retained earnings 142,983 141,900
------------- -------------
155,818 155,074
Less cost of common stock in treasury, 1,508,722 shares
in 1997 and 1,526,735 shares in 1996 30,270 30,632
------------- -------------
Total shareholders' equity 125,548 124,442
------------- -------------
$ 343,612 $ 337,420
============= =============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
Page 4
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three month periods ended March 31, 1997 and 1996
(unaudited)
($000's omitted)
<TABLE>
<S> <C> <C>
1997 1996
----------- -----------
Cash flows from operating activities:
Net earnings $ 1,896 $ 3,259
Adjustments to reconcile net earnings to net cash used
in operating activities:
Depreciation and amortization 2,921 2,300
Equity earnings (loss) on joint ventures (51) (29)
Deferred taxes --- (1)
Change in asset and liabilities, net of purchases of new businesses:
Receivables 12,423 5,239
Inventories (6,616) (3,161)
Real estate developments in progress (4,713) (6,342)
Prepaid income taxes --- 1
Other current assets (659) 2,193
Current liabilities excluding short-term debt (22,988) (9,786)
----------- -----------
Net cash used in operating activities (17,787) (6,327)
Cash flows from investing activities:
Capital expenditures (5,619) (3,998)
Acquisition of new business (2,715) ---
Other, net (2,456) (1,686)
----------- -----------
Net cash used in investing activities (10,790) (5,684)
Cash flows from financing activities:
Payment of dividends (907) (756)
Proceeds from issuance of long-term debt 346 313
Repayment of long-term debt (55) (24)
Net change in short-term debt 27,131 4,394
Sale and issuance of treasury stock 362 606
Purchase of treasury stock --- (125)
Other, net 40 507
----------- -----------
Net cash provided by financing activities 26,917 4,915
Effect of exchange rate changes on cash (339) (80)
----------- -----------
Net increase (decrease) in cash and cash equivalents (1,999) (7,176)
Cash and cash equivalents at beginning of year 2,013 7,253
----------- -----------
Cash and cash equivalents at March 31 $ 14 $ 77
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
Page 5
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the accounting policies described in the
consolidated financial statements and related notes included in Butler
Manufacturing Company's 1996 Form 10-K. It is suggested that those
consolidated statements be read in conjunction with this report. The year-end
financial statements presented were derived from the Company's audited
financial statements. In the opinion of management, the accompanying
consolidated financial statements reflect all adjustments necessary for a fair
presentation of the financial position of Butler Manufacturing Company and the
results of its operations.
NOTE 2 - NEW ACCOUNTING PRONOUNCEMENT
In March, 1997, the Financial Accounting Standards Board released FASB
Statement No. 128, "Earnings Per Share" which revises the calculation and
presentation provisions of Accounting Principles Board Opinion 15 and related
interpretations. Statement No. 128 is effective for the Company's fiscal year
ending December 31, 1997. Retroactive application will be required. The
Company expects the effect of adopting the new standard to be immaterial.
NOTE 3 - SHORT-TERM BORROWINGS
During the first quarter of 1997, the Company temporarily increased its line of
credit by $23 million in anticipation of increased need for short-term working
capital. This additional line of credit went into effect March 25, 1997 and
expires on June 18, 1997.
NOTE 4 - SUBSEQUENT EVENTS
On April 28, 1997, the Company announced that it had entered into a preliminary
agreement to sell its Grain Systems division to CTB, Inc. The business will be
sold for a cash price of approximately $33 million. Closing is expected to
occur within thirty days. CTB, Inc. is a privately owned company that owns
several agricultural equipment entities, including Brock Manufacturing Company,
a grain storage business based in Indiana. If the transaction occurs as
planned, Butler will realize an after-tax gain of about $15 million, or $2.00
per share. Net cash proceeds to Butler will be approximately $23 million.
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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 three months of 1997,
primarily due to increased investments in domestic operations and in working
capital. This working capital requirement was funded with an increase in
short-term borrowings. For the three months ended March 31, 1997, domestic
short term borrowings averaged $23.8 million for 90 days compared to $3.1
million for 44 days in 1996.
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 March 31, 1997, $9 million of the credit line
was utilized to provide a bank letter of credit to secure insurance
obligations. In anticipation of increased need for short-term working capital
financing, the Company entered into a short-term credit agreement with a bank
to provide for an additional $23 million line of credit beyond the $50 million
revolving facilities mentioned above. This agreement expires June 18, 1997.
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 $2.5
million at current exchange rates. Management believes that this separate bank
line of credit is sufficient to meet future liquidity requirements.
In March, the Company purchased the assets of Rebco West, a leading west coast
manufacturer and distributor of quality entrance doors and storefront products
for $2.7 million in cash. Rebco West is based in Rancho Cucamonga, California
and also has a service center in Las Vegas, Nevada. The business is being
integrated with the Vistawall Division, within the Other Building Products
Segment.
In April, the Company announced that it had entered into a preliminary
agreement to sell its Grain Systems division to CTB, Inc. The business will be
sold for a cash price of approximately $33 million. Closing is expected to
occur within thirty days. CTB, Inc. is a privately owned company that owns
several agricultural equipment entities, including Brock Manufacturing Company,
a grain storage business based in Indiana.
Capital expenditures were $5.6 million for the first three months of 1997
compared to $4 million in 1996. Total capital expenditures are expected to be
approximately $27 million in 1997 compared to $22.7 million in 1996. This
year's anticipated capital expenditures are due in large part to investments in
domestic operations. The previous year's expenditures included costs for
investments in new metal buildings plants near Shanghai, China and Belo
Horizonte, Brazil.
RESULTS OF OPERATIONS
Net sales of $188 million were up 7% from last year's first quarter. Our new
plant in China began shipping products in January of this year. The core U.S.
metal buildings business had increased sales as did the Other Building Products
Segment. These increased sales were offset slightly by a decrease in revenues
of the Construction Services Segment which started the new year with a lower
backlog.
Net earnings for the quarter ended March 31, 1997 were $1.9 million or $.25 per
common share compared to $3.3 million or $.42 per common share in 1996. The
core U.S. metal buildings business operated at a slightly lower level of
earnings in the first quarter of 1997 due to the mix of business from this year
to last year. Also within the Building Systems Segment, results were affected
by start up costs associated with the new metal buildings plants in China and
Brazil. The Construction Services Segment also experienced lower earnings than
a year ago due to decreased volume.
Page 7
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Total backlog of $271 million is 11% above the March 31, 1996 level.
For additional comments, refer to the April 15, 1997 letter to shareholders,
which is attached as exhibit 19.
Page 8
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PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(19) April 15, 1997 letter to shareholders
(27) Financial Data Schedule
(b) Reports on Form 8-K.
Butler Manufacturing Company filed a Current Report on Form 8-K dated
April 22, 1997 in which the Company confirmed their engagement of
Arthur Andersen LLP as independent accountants to audit the financial
statements of the Company for the year ending December 31, 1997,
rather than the reengagement of KPMG Peat Marwick, LLP.
In addition to historical information included herein, this Report contains
forward-looking statements and information that are based on management's
beliefs as well as on assumptions made by and information currently available
to management. These forward-looking statements and information are within the
meaning of the Private Securities Litigation Reform Act of 1995. When used in
this Report, the words "anticipate," "intend," "plan," "believe," "estimate,"
and similar expressions are intended to identify forward-looking statements.
Such statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions which could cause the Company's future
results and stockholder values to differ materially from those expressed in
such forward-looking statements.
Page 9
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUTLER MANUFACTURING COMPANY
May 8, 1997 /s/ John J. Holland
- ------------------ ----------------------------------
Date John J. Holland
Vice President - Finance
and Chief Financial Officer
May 8, 1997 /s/ Richard O. Ballentine
- ------------------ ----------------------------------
Date Richard O. Ballentine
Vice President, General Counsel
and Secretary
Page 10
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EXHIBIT INDEX
Exhibit
Number Description
- --------- ---------------------------------------------
19 April 15, 1997 letter to shareholders
27 Financial Data Schedule
Page 11
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Exhibit 19
Butler
Manufacturing
Company
FIRST
QUARTER
REPORT 1997
Three Months Ended
March 31, 1997
BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64108
To Our Shareholders:
Butler's first quarter earnings, as predicted previously, were lower than last
year, primarily because of start-up costs associated with our wholly-owned
metal buildings subsidiary in China. Our South American metal buildings
business, headquartered in Brazil, also commenced operations during the first
quarter, and incurred an additional small loss.
Corporate quarterly sales of $188 million were up 7 percent from a year ago.
Net earnings were $1.9 million, or $.25 per share, compared with $3.3 million,
or $.42 per share in the first quarter a year ago.
Butler's Building Systems segment, in total, also had lower first quarter
earnings this year because of slightly reduced profitability in our core U.S.
metal buildings business. This decline was, we believe, the result of changes
in the mix of business from last year to this year, rather than being
indicative of a change in the directional trend of market opportunity for this
business unit. The Lester wood frame buildings division had a smaller seasonal
loss than last year and is experiencing considerably stronger business activity
than a year ago. Butler Real Estate had a major project that was expected to
close in March move into the second quarter, but was still profitable for the
first three months of 1997. Butler Europe continued to make good operational
progress and was close to breakeven for the quarter.
Our new business in China began shipping products from its plant in Shanghai in
January. Most organizational positions are staffed, but training requirements
are substantial, and engineering and manufacturing productivity will improve as
our associates gain experience and as computer-based operating systems become
fully available to them. Incoming orders in China were on plan for the first
quarter, despite competitive selling conditions that are not dissimilar from
the U.S. and other more fully developed markets.
First quarter order receipts in South America were also at anticipated levels.
We are somewhat behind schedule in the start-up of structural frame production
in our Brazilian plant because of delays in the importation and installation of
key pieces of fabrication equipment.
Butler's Construction Services business had significantly lower first quarter
sales and earnings than a year ago. They entered the year with reduced backlog,
but recent success in procuring projects resulted in backlog at the end of the
first quarter being 19 percent higher than a year ago.
The Other Building Products group had a particularly good first quarter, with
both sales and earnings up from last year. Grain Systems had the larger
improvement, as demand for their grain storage products was favorable in the
farm, commercial, and export markets. In March, Butler purchased Rebco West, a
leading west coast manufacturer and distributor of quality entrance doors and
storefront products. Rebco West is based in Rancho Cucamonga, California and
also
<PAGE> 2
has a service center in Las Vegas, Nevada. The business is being integrated
with Vistawall and will add several million dollars to that division's annual
volume in the active southern California and southwest markets.
Butler's balance sheet at the end of the quarter reflected a $62 million
increase in total assets compared to a year ago. Working capital is higher
related to increased volume, new businesses acquired, and inventory required
for the plants in China and Brazil. Investments in manufacturing plant and
equipment and in engineering and operating computer software systems have also
increased, as has the magnitude of Butler Real Estate's development activity.
Short term bank credit facilities and retained earnings have been fully
adequate to fund these requirements, and the company continues to have ample
flexibility to meet whatever needs or opportunities arise.
As we approach the more active seasons for Butler's business, we sense a
continuing strong level of demand in most all of the markets we serve. The
outlook for our U.S. businesses is positive. Recent foreign investments are
performing about as expected and will continue to cause lower corporate
earnings comparisons in the second quarter. As mentioned above, construction
backlog is higher than a year ago, and product backlog is also up over 8
percent. Total backlog of $271 million is 11% above the level of 1996.
Cordially yours,
/s/ Robert H. West
Robert H. West
Chairman and
Chief Executive Officer
April 15, 1997
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 March 31, 1997, and Consolidated Balance Sheet as of March 31, 1997,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 98,598
<ALLOWANCES> 0
<INVENTORY> 67,931
<CURRENT-ASSETS> 221,737
<PP&E> 223,138
<DEPRECIATION> 152,315
<TOTAL-ASSETS> 343,612
<CURRENT-LIABILITIES> 165,171
<BONDS> 39,243<F1>
0
0
<COMMON> 12,623
<OTHER-SE> 142,983<F2>
<TOTAL-LIABILITY-AND-EQUITY> 343,612
<SALES> 188,102
<TOTAL-REVENUES> 187,968<F3>
<CGS> 156,025
<TOTAL-COSTS> 156,025
<OTHER-EXPENSES> 27,427<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,279
<INCOME-PRETAX> 3,237
<INCOME-TAX> 1,341
<INCOME-CONTINUING> 1,896
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,896
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
<FN>
<F1>Reflects long-term debt, less current maturities
<F2>Reflects other stockholders' equity before deduction of $30.3 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>
