<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 JUNE 30, 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
JUNE 30, 1997: 7,781,198
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>
<CAPTION>
PART I. - FINANCIAL INFORMATION Page Number
<S> <C> <C>
ITEM 1. Financial Statements
(1) Consolidated Financial Statements (unaudited):
Consolidated Statements of Operations for the
Three and Six Month Periods Ended June 30, 1997
and 1996. 3
Consolidated Balance Sheets as of June 30, 1997 and
December 31, 1996. 4
Consolidated Statements of Cash Flows for the Six Month
Periods Ended June 30, 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 5. Other Information 9
ITEM 6. Exhibits and Reports on Form 8-K 9
</TABLE>
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six month periods ended June 30, 1997 and 1996
(unaudited)
($000's omitted except for per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
----------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $241,078 $193,446 $429,180 $369,138
Cost of sales 199,752 157,014 355,777 300,994
-------- -------- -------- --------
Gross profit 41,326 36,432 73,403 68,144
Selling, general and administrative expenses 30,226 25,505 57,653 50,060
-------- -------- -------- --------
Operating income 11,100 10,927 15,750 18,084
International joint venture income (loss), net --- 101 156 300
Other income (expense), net 363 224 73 (409)
Gain on sale of Grain Systems 22,000 --- 22,000 ---
-------- -------- -------- --------
Earnings before interest and taxes 33,463 11,252 37,979 17,975
Interest expense 1,631 1,124 2,910 2,165
-------- -------- -------- --------
Pretax earnings 31,832 10,128 35,069 15,810
Income tax expense 12,840 4,320 14,181 6,743
-------- -------- -------- --------
Net earnings $ 18,992 $ 5,808 $ 20,888 $ 9,067
======== ======== ======== ========
Earnings per common share* $ 2.46 $ .75 $ 2.71 $ 1.18
======== ======== ======== ========
</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:
Three months ended June 30, 1997 7,716,113
Three months ended June 30, 1996 7,718,410
Six months ended June 30, 1997 7,693,786
Six months ended June 30, 1996 7,710,305
See Accompanying Notes to Consolidated Financial Statements.
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and December 31, 1996
(unaudited)
($000's omitted)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
ASSERTS
Current assets:
Cash and cash equivalents $ 15 $ 2,013
Receivables, net 126,888 110,136
Inventories:
Raw materials 35,680 37,292
Work in process 6,926 6,460
Finished goods 43,177 27,590
Lifo reserve (10,770) (11,252)
-------- --------
Total inventory 75,013 60,090
Real estate developments in progress 27,365 33,803
Deferred tax assets 8,878 8,878
Other current assets 12,294 7,141
-------- --------
Total current assets 250,453 222,061
Investments and other assets 36,387 24,701
Assets held for sale 9,942 13,260
Property, plant and equipment, at cost 224,307 228,051
Less accumulated depreciation (142,034) (150,653)
-------- --------
Net property, plant and equipment 82,273 77,398
-------- --------
$379,055 $337,420
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 13,236 $ 9,237
Current maturities of long-term debt 5,860 5,464
Accounts payable 76,917 74,549
Dividends payable 934 907
Accrued liabilities 60,354 62,222
Taxes on income 17,258 8,500
-------- --------
Total current liabilities 174,559 160,879
Deferred tax liabilities 3,837 3,837
Other noncurrent liabilities 10,604 9,865
Long-term debt, less current maturities 39,287 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 (31) 551
Retained earnings 164,399 141,900
-------- --------
176,991 155,074
Less cost of common stock in treasury, 1,307,002 shares
in 1997 and 1,526,735 shares in 1996 26,223 30,632
-------- --------
Total shareholders' equity 150,768 124,442
-------- --------
$379,055 $337,420
======== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six month periods ended June 30, 1997 and 1996
(unaudited)
($000's omitted)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $20,888 $ 9,067
Adjustments to reconcile net earnings to net cash used
in operating activities:
Depreciation and amortization 5,965 4,704
Gain on sale of Grain Systems (13,299) ---
Equity (earnings) loss on joint ventures (87) (58)
Change in asset and liabilities, net of businesses acquired and sold:
Receivables (16,092) (5,518)
Inventories (18,721) 2,588
Real estate developments in progress 6,438 (10,546)
Other current assets (5,093) 2,046
Current liabilities excluding short-term debt 1,572 (6,977)
------- -------
Net cash used in operating activities (18,429) (4,694)
Cash flows from investing activities:
Capital expenditures (13,191) (10,753)
Sale of Grain Systems 33,748 ---
Acquisition of new businesses (7,697) ---
Other, net (191) (2,270)
------- -------
Net cash provided (used) by investing activities 12,669 (13,023)
Cash flows from financing activities:
Payment of dividends (1,817) (1,515)
Proceeds from issuance of long-term debt 767 771
Repayment of long-term debt (442) (311)
Net change in short-term debt 4,238 9,962
Sale and issuance of treasury stock 561 1,293
Purchase of treasury stock --- (436)
Other, net 1,037 765
------- -------
Net cash provided by financing activities 4,344 10,529
Effect of exchange rate changes on cash (582) 32
------- -------
Net increase (decrease) in cash and cash equivalents (1,998) (7,156)
Cash and cash equivalents at beginning of year 2,013 7,253
------- -------
Cash and cash equivalents at June 30 $ 15 $ 97
======= =======
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
The Company purchased all of the capital stock of Modu-Line, Inc. for
191,777 shares of the Company's common stock issued from the treasury, plus
deferred cash payments and closing costs totaling $.5 million. The Company
also retired Modu-Line's existing bank debt of $4.5 million. In conjunction
with the acquisition, the value of treasury stock issued is shown below:
<TABLE>
<S> <C>
Fair value of assets acquired $11,982
Cash paid 4,982
-------
Treasury stock issued for purchase of capital stock $7,000
=======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
NOTES TO 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 - ACQUISITION AND DISPOSITION OF BUSINESS
On June 11, 1997, the Company announced the acquisition of Modu-Line Windows,
Inc. for 191,777 shares of Butler stock having a market value of approximately
$7 million, plus deferred cash payments and closing costs totaling $.5 million.
The Company also retired Modu-Line's existing bank debt of approximately $4.5
million. The fair value of assets acquired of $12 million consists primarily
of receivables, inventory, and equipment valued at $6.2 million with the
remaining amount allocated to goodwill which will be amortized over 40 years.
On June 23, 1997, the Company sold the business and substantially all of the
assets and liabilities used in the business of the Grain Systems Division, an
unincorporated division of the Company, to CTB, Inc., a privately owned company
in Indiana. The business was sold for an agreed upon price of approximately
$34 million in cash. The sale of the Grain Systems division generated an
after-tax gain of $13.3 million, or $1.72 per share. Net cash proceeds to the
Company were 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 six months of 1997,
primarily due to increased investments in domestic operations and in working
capital. The increased working capital requirement was funded with short-term
borrowings. For the six months ended June 30, 1997, domestic short term
borrowings averaged $29 million for 181 days compared to $6 million for 134
days in 1996.
The Company currently has revolving domestic bank credit facilities aggregating
$50 million and a separate line of credit for approximately $2.5 million for
its United Kingdom subsidiary. As of June 30, 1997, $9 million of the credit
line was utilized to provide a bank letter of credit to secure insurance
obligations. Management believes the Company's operating cash flow, along with
the bank credit lines, is sufficient to meet future liquidity requirements.
In June, the Company completed the sale of its Grain Systems division to CTB,
Inc., for approximately $34 million in cash. The net cash proceeds from the
sale of approximately $23 million will be used to fund investments in Butler's
core building products businesses and repurchase shares of the Company's common
stock. CTB, Inc. is a privately owned company that owns several agricultural
equipment entities, including Brock Manufacturing Company, a grain storage
business based in Indiana.
In June, the Company's Board of Directors authorized the repurchase of up to
800,000 shares of the Company's common stock. This share repurchase
authorization replaces a prior 500,000 share authorization granted in
September, 1995.
Capital expenditures were $13.1 million for the first six months of 1997
compared to $10.8 million a year ago. Total capital expenditures are projected
to be approximately $31 million in 1997 compared to actual expenditures of
$22.7 million in 1996. This year's anticipated capital expenditures are
primarily for investments in Butler's domestic operations. Last year's
expenditures included significant investments in new metal buildings plants in
China and Brazil.
RESULTS OF OPERATIONS
Net sales of $241 million for the quarter ended June 30, 1997 were 25% higher
than the same quarter last year. Each business unit, with the exception of
Grain Systems, experienced higher quarterly sales. In addition, Butler Real
Estate recorded two major project sales during the quarter as compared to none
in the same period in 1996. For the six months ended June 30, 1997, net sales
were $429 million, or a 16% increase from a year ago. The Building Systems
Segment had increased volume as did the Other Building Products Segment.
The second quarter 1997 consolidated gross profit was $41.3 million compared to
$36.4 million a year ago. The increase was primarily due to increased volume
in the Building Systems and Other Building Products segments. For the six
months ended June 30, 1997, consolidated gross profit was $73.4 million
compared to $68.1 million in 1996. The 8% increase was attributable to the
Building Systems and Other Building Products segments.
Net earnings from operations for the quarter ended June 30, 1997 were $5.7
million or $.74 per common share compared to $5.8 million or $.75 per common
share in 1996. The decrease was primarily due to changes in the mix of
business and slightly higher levels of price discounting in response to
competition in our U.S. metal buildings business. Total second quarter net
earnings of $19 million, or $2.46 per common share, includes $13.3 million, or
$1.72 per common share, from the June 23 sale of our Grain Systems business.
The net earnings from operations for the six months
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ended June 30, 1997 were $7.6 million or $.99 per common share, compared to
$9.1 million or $1.18 per common share a year ago. Total net earnings for the
six months of $20.9 million or $2.71 per common share, includes the sale of our
Grain Systems business. Earnings were affected by start-up costs of 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.
Total backlog of $301 million is up 6% above the June 30, 1996 level.
FORWARD LOOKING INFORMATION
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,"
"project," 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.
For additional comments, refer to the July 16, 1997 letter to shareholders,
which is attached as exhibit 19.
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PART II. - OTHER INFORMATION
Item 5 Other Information
Butler Manufacturing Company filed a Registration Statement on Form S-3
dated June 20, 1997, for 191,777 shares of the Company's common stock
acquired by former shareholders of Modu-Line Windows, Inc. in
connection with the Company's acquisition of Modu-Line.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(19) July 16, 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
June 23, 1997, in which the Company confirmed the sale of its Grain
Systems division to CTB, Inc., for approximately $34 million in cash.
CTB, Inc. is a privately-owned company whose primary business focus is
on related agricultural products and markets.
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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
8/6/97 /s/ John J. Holland
- ------ -------------------------------
Date John J. Holland
Vice President - Finance
and Chief Financial Officer
8/6/97 /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 July 16, 1997 letter to shareholders
27 Financial Data Schedule
Page 11
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Exhibit 19
Butler
Manufacturing
Company
SECOND
QUARTER
REPORT 1997
Six Months Ended
June 30, 1997
BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64108
To Our Shareholders:
Butler's second quarter sales of $241 million were 25% higher than a year ago.
Net earnings from operations were $5.7 million, compared with $5.8 million for
the second quarter of 1996. Our total reported second quarter earnings of $19
million, or $2.46 per share, includes $13.3 million, or $1.72 per share, from
the sale of our Grain Systems business on June 23.
Every business unit in the company except Grain Systems had increased quarterly
sales, but operating income, as expected, was essentially flat.
For the first six months of this year, sales of $429 million were 16% higher
than 1996. Year-to-date net operating earnings of $7.6 million, or $.99 per
share, compared with net operating earnings of $9.1 million, or $1.18 per
share, for the first half of last year.
Through the first five months of 1997, contract awards for new nonresidential
building projects in the United States (as reported by F. W. Dodge) were up 3%
based on square footage, and up 1% in dollar value, compared to 1996. Against
this backdrop, our U.S. metal buildings business had a similarly modest
increase in orders and achieved about 5% higher first half sales. Earnings,
however, were lower, primarily because of changes in the mix of sales and
slightly higher levels of price discounting in response to competitive
conditions. Butler Real Estate successfully completed two major project sales
in June which contributed significantly to quarterly and year-to-date earnings.
Our European metal building systems business continues to make excellent
progress in dealer development and manufacturing and engineering productivity
improvement. The business recorded a larger loss in the first half of 1997
than in the comparable 1996 period, due almost entirely to the strength of the
British pound against the German mark. We are investing over $1 million to
produce structural frames at our new facility in Hungary, which will lower
fabrication and transportation costs and address currency translation concerns.
Production is scheduled to commence late this year.
Sales activity at our new subsidiaries in China and Brazil is good, and backlog
at both business units is on plan. We expect both operations to become
profitable during the second half of the year.
The Vistawall Architectural Products business is having another excellent year.
Six month sales were up 23% from a year ago, and profitability was also
higher. In June we announced the acquisition of Modu-Line Windows, Inc. for
about 192,000 shares of Butler stock having a market value of approximately $7
million, and paid approximately $4.5 million cash, which was used to retire
Modu-Line's existing bank debt. This company is a long-established leading
manufacturer of high quality architectural windows for the nonresidential
building market.
<PAGE> 2
Modu-Line currently has annual sales of about $16 million, is highly
synergistic with Vistawall's other products and distribution, and is expected
to be accretive to Butler's earnings per share in 1997.
The sale in June of Butler's grain storage business was a corporate milestone,
since this was one of the company's earliest and most recognized product lines.
The business's many strengths and attractive profit economics made it
appealing to the purchaser, CTB, Inc., whose primary business focus is on
related agricultural products and markets. On the cash sale price of about $34
million, Butler recorded an after tax gain of $13.3 million, and realized net
cash proceeds of about $23 million. This transaction further increases our
ability to invest in our core building product businesses. The Board of
Directors also authorized the repurchase of up to 800,000 shares of Butler
stock (about 10% of the outstanding shares), replacing an earlier repurchase
authorization of 500,000 shares.
Our total backlog on June 30, 1997 was $301 million, up 6% from a year ago.
Product backlog was up 12% and construction backlog was down 15%. We expect a
strong third quarter and second half for all of our businesses. However,
because of larger than anticipated first half losses in Europe and the absence
of Grain Systems in the second half, Butler's full year operating earnings will
likely be slightly lower than the $3.35 per share we earned a year ago.
Cordially yours,
/s/ Robert H. West
Robert H. West
Chairman and
Chief Executive Officer
July 16, 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 June 30, 1997, and Consolidated Balance Sheet as of June 30, 1997, 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 15
<SECURITIES> 0
<RECEIVABLES> 126,888
<ALLOWANCES> 0
<INVENTORY> 75,013
<CURRENT-ASSETS> 250,453
<PP&E> 224,307
<DEPRECIATION> 142,034
<TOTAL-ASSETS> 379,055
<CURRENT-LIABILITIES> 174,559
<BONDS> 39,287<F1>
0
0
<COMMON> 12,623
<OTHER-SE> 164,399<F2>
<TOTAL-LIABILITY-AND-EQUITY> 379,055
<SALES> 429,180
<TOTAL-REVENUES> 429,409<F3>
<CGS> 355,777
<TOTAL-COSTS> 355,777
<OTHER-EXPENSES> 57,653<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,910
<INCOME-PRETAX> 35,069
<INCOME-TAX> 14,181
<INCOME-CONTINUING> 7,589
<DISCONTINUED> 0
<EXTRAORDINARY> 13,299
<CHANGES> 0
<NET-INCOME> 20,888
<EPS-PRIMARY> 2.71
<EPS-DILUTED> 2.71
<FN>
<F1>Reflects long-term debt, less current maturities
<F2>Reflects other stockholders' equity before deduction of $26.2 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 expense
</FN>
</TABLE>
