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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
BUTLER MANUFACTURING COMPANY
BMA TOWER, PENN VALLEY PARK
(P.O. BOX 419917)
KANSAS CITY, MISSOURI 64141-0917
TELEPHONE: (816) 968-3000
Incorporated in the State of Delaware
COMMISSION FILE NO. 0-603
IRS NO. 44-0188420
The Company has no securities registered pursuant to Section 12(b) of the
Act. The only class of stock outstanding consists of Common Stock having no par
value, 7,636,995 shares of which were outstanding at December 31, 1997. The
Common Stock is registered pursuant to Section 12(g) of the Act.
The aggregate market value of the Common Stock of the Company held by
non-affiliates, based upon the last sales price of such stock on February 23,
1998 was $257,549,050.
The Registrant 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 has been subject to such filing requirements for the past 90 days.
As indicated by the following check mark, disclosure of delinquent filers
pursuant to Rule 405 of Regulation S-K is not contained herein and will not be
contained to the best of Registrant's knowledge in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K:
[X]
The following documents are incorporated herein by reference:
(1) Butler Manufacturing Company 1997 Annual Report, pages 14 through 32 (the
"Annual Report" incorporated into Part II).
(2) Butler Manufacturing Company Notice of Annual Meeting of Stockholders and
Proxy Statement, dated March 9, 1998 (the "Proxy Statement" incorporated
into Parts I and III).
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BUTLER MANUFACTURING COMPANY
FORM 10-K
---------------
For the Fiscal Year Ended December 31, 1997
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CONTENTS
<TABLE>
<CAPTION>
PART I Page
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<S> <C> <C>
Item 1. Business .................................................. 3
Item 2. Properties ................................................ 6
Item 3. Legal Proceedings ......................................... 7
Item 4. Submission of Matters to a Vote of Security Holders ....... 7
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters ....................................... 7
Item 6. Selected Financial Data ................................... 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 8
Item 8. Financial Statements and Supplementary Data ............... 8
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure .................... 8
PART III
Item 10. Directors and Executive Officers of the Registrant ........ 8
Item 11. Executive Compensation .................................... 10
Item 12. Security Ownership of Certain Beneficial Owners
and Management ............................................ 10
Item 13. Certain Relationships and Related Transactions ............ 10
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K ............................................... 10
SIGNATURES ........................................................... 14
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS .................. 15
FINANCIAL STATEMENT SCHEDULES ........................................ S-1
</TABLE>
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PART I
Item 1. Business
(a) General Description of Business
The Company was founded as a partnership in 1901. It was incorporated in
Missouri in 1902 and reincorporated in Delaware in 1969. Its corporate
headquarters are located in Kansas City, Missouri, and principal plants and
offices are operated throughout the continental United States. Principal
international operations are conducted through Butler Building Systems, Ltd.,
a wholly owned United Kingdom subsidiary acquired in 1991, Butler Shanghai
Inc., a Chinese wholly owned subsidiary, Butler do Brasil Limitada, a South
American wholly owned subsidiary, Beker Kft, a majority owned Hungarian joint
venture and Saudi Building Systems Ltd. a Saudi Arabian joint venture.
The Company and its subsidiaries are primarily engaged in the marketing,
design, and production of systems and components for nonresidential structures.
Products and services fall into three principal business segments: (1)
Building Systems, consisting primarily of custom designed and pre-engineered
steel and wood frame building systems for commercial, community, industrial and
agricultural uses; (2) Construction and construction management services for
purchasers of large, complex or multiple site building projects; and (3)
Architectural Products, consisting primarily of curtain wall and storefront
systems, custom window systems, skylights and roof vents for low-rise,
medium-rise and high-rise nonresidential buildings.
The Company's products are sold primarily through numerous independent
dealers. Other Company products are sold through a variety of distribution
arrangements.
(b) Financial Information about Industry Segments
The information required by Item 1(b) is hereby incorporated by reference to
pages 25 through 26 of the Company's Annual Report furnished to the Commission
pursuant to Rule 14a-3(b) and attached as Exhibit 13.0 to this report (see also
items 6, 7, and 8 of this report).
(c) Narrative Description of Business
Building Systems
The Company's largest segment, Building Systems, includes the U.S.
steel and wood frame pre-engineered building systems; Butler European
operations consisting of wholly owned subsidiaries in the United Kingdom,
France, and Germany, and Beker Kft., a 90% owned joint venture in Hungary; two
new operations, Butler Shanghai Inc., a wholly owned Chinese subsidiary, and
Butler do Brasil Limitada, a wholly owned South American subsidiary; and a 30%
owned Saudi Arabian joint venture (Saudi Building Systems, Ltd.), all of which
manufacture and/or market pre-engineered steel frame building systems; an
export marketing organization for metal building systems; and Butler Real
Estate, Inc. a real estate developer. Pre-engineered building systems are
marketed to Japanese firms through a Japanese representative sales office.
Both the Chinese and Brasilian subsidiaries started in-country manufacturing
operations in 1997.
The Company's building systems segment consists primarily of custom designed
and pre-engineered one to five-story steel and one to two-story wood framed
buildings for commercial, community, industrial and agricultural uses such as
office buildings, manufacturing
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facilities, warehouses, schools, shopping centers, livestock and farm
buildings. Principal product components of the systems are structural members
and a variety of pre-engineered wall and roof components. These are fabricated
according to standard or customer specifications and shipped to building sites
for assembly by independent dealers. Building components are manufactured in
plants located at Galesburg and Charleston, Illinois; Laurinburg, North
Carolina; Birmingham, Alabama; Visalia, California; Annville, Pennsylvania; San
Marcos, Texas; Lester Prairie, Minnesota; Ottawa, Kansas; and Clear Brook,
Virginia.
In December 1997 the Company agreed to dissolve Advanced Buildings Systems,
a 50% owned joint venture with the McDonald's Corporation. In December 1997 the
Company formed a new entity Innovative Building Technology, Inc. to design,
engineer, market and erect panelized buildings for the smaller commercial
buildings segment. Product will be produced at existing facilities in Lester
Prairie, Minnesota and Ottawa, Kansas.
Butler Building Systems, Ltd. manufactures for the European market from
plants in Kirkcaldy, Scotland and Nyiregyhaza, Hungary. Saudi Building
Systems, Ltd. manufactures pre-engineered steel frame buildings for Middle
Eastern markets at manufacturing facilities located in Jeddah, Saudi Arabia.
The Company serves the Canadian market through a branch office in Burlington,
Ontario.
In late 1996 the Company acquired a 90% interest in Beker Kft, a building
systems fabricator located in Nyiregyhaza, Hungary.
The U.S. export operation is focused on Central American and Caribbean
markets. Shipments are sourced primarily from Butler's U.S. plants.
Building Systems' products are distributed throughout the world by
independent Butler dealers. The dealers provide construction services and in
many cases complete design and engineering capabilities.
Nonresidential pre-engineered buildings compete with ordinary forms of
building construction in the low-rise commercial, community, industrial and
agricultural markets. Competition is primarily based upon cost, time of
construction, appearance, thermal efficiency and other specific customer
requirements.
The Company also competes with numerous pre-engineered steel frame building
manufacturers doing business within the United States, Canada, Europe, South
America and China. The Company believes that its 1997 sales of steel frame
pre-engineered buildings within the United States exceeded those of any other
nonresidential steel frame pre-engineered buildings manufacturer, with its next
largest competitors being NCI Building Systems, Inc., Varco-Pruden Buildings, a
division of The LTV Corporation, American Buildings Company, and Ceco and
Star Buildings Systems combined, a division of Robertson - Ceco Corporation.
Competition among manufacturers of pre-engineered buildings is based primarily
upon price, service, product design and performance and marketing capabilities.
Lester Building Systems, the Company's wood frame buildings business, ranks
second in sales to the industry leader, Morton Buildings, Inc., a major
manufacturer which sells direct to the end user.
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Butler Real Estate, Inc., a wholly-owned subsidiary of the Company, provides
real estate development services in cooperation with Butler dealers. On the
basis of commitments to lease obtained from credit worthy customers, Butler
Real Estate, Inc. acquires building sites, arranges with Butler dealers for
construction of project improvements and then sells the completed projects to
investors.
BMC Real Estate, Inc., a wholly-owned subsidiary of the Company,
participates solely in land development ventures.
Construction Services
The Company's Construction Services segment consists of a wholly-owned
construction subsidiary, BUCON, Inc. which provides comprehensive design,
planning, execution and construction management services to major purchasers of
construction. Revenues of the segment are derived primarily from general
contracting. In addition, the Construction Services segment performs "furnish
and erect" and "materials only" subcontracts using products from several
Company divisions, predominantly the Company's Buildings Division. Competition
is primarily based upon price, time necessary to complete a project, design and
product performance. BUCON, Inc. competes with international, national,
regional and local general contracting firms, and whenever possible, performs
projects in conjunction with independent Butler dealers.
Architectural Products
This segment includes the operations of the Vistawall group which designs,
manufactures and sells aluminum curtain wall systems for mid and high-rise
office markets, entry doors, custom architectural window systems and other
standard storefront products for low-rise retail and commercial markets. In
early 1997 the Vistawall group acquired the assets of Rebco West, Inc., a west
coast manufacturer and distributor of entrance doors and storefront products.
In June 1997 the Vistawall group acquired the stock of Modu-Line Windows Inc.,
a Wisconsin based manufacturer of architectural window systems for the
nonresidential buildings market. Vistawall's products are distributed on a
material supply basis to either curtain wall erection subcontractors or general
contractors, and through distribution warehouses to glazing contractors for
storefront and entry door applications. Manufacturing and distribution
facilities are located in Warwick, Rhode Island; Atlanta, Georgia; Modesto,
Hayward and Rancho Cucamonga, California; Cincinnati and Cleveland, Ohio;
Terrell, Houston and Dallas, Texas; Tampa, Florida; Washington, D.C.; Chicago,
Illinois; St. Louis, Missouri; Seattle, Washington and Wausau, Wisconsin. In
1997 the Vistawall Division completed the expansion of its Terrell, Texas
facility with the addition of facilities to house a second extrusion press, and
the expansion of its painting line operation.
The Division operates in highly competitive markets with other national
manufacturers which operate multiple plants and distribution facilities, and
with regional manufacturers. Competition is primarily based on cost, delivery
capabilities, appearance and other specific customer requirements.
The Vistawall Division at its Terrell, Texas location also designs,
manufactures and installs Naturalite skylights of all types, from the more
standard designs used in commercial and industrial buildings, to highly complex
engineered solutions for monumental building projects. In addition, the
Division designs and manufactures roof accessories, such as smoke and heat
vents, for conventional and pre-engineered buildings, and the Skywall product
line of translucent roof and wall systems.
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The Division markets its Naturalite and Skywall products through its
existing independent representative organization. There are numerous
competitors in this industry with competition primarily based on price,
engineering and installation capabilities, delivery and other specific customer
requirements.
Prior to 1997 the Grain Systems Division was included in this business
segment which was previously designated as "Other Building Products". In June
1997 the Company sold its Grain Systems Division which manufactured and
marketed grain storage bins, and also distributes grain conditioning and
handling equipment. The business was sold to CTB, Inc.
Manufacturing and Materials
The Company's manufacturing operations include most conventional metal
fabricating operations, such as punching, shearing, welding, extruding and
forming of sheet and structural steel and aluminum. The Company also operates
painting and anodizing lines for structural steel and aluminum components,
respectively. Wood frame manufacturing operations include sawing and truss
fabrication. The principal materials used in the manufacture of Company
products include steel, aluminum, wood and purchased parts. Materials are
presently available in sufficient quantities to meet current Company needs.
Seasonal Business
Historically, the Company's sales and net earnings have been affected by
cycles in the general economy which influence nonresidential construction
markets (see in particular Item 7 of this report). The Company experienced peak
seasonal demand for products and services, and the sale of real estate projects
during the last three quarters of 1997. Sales for the first, second, third and
fourth quarters of 1997 were $188 million, $241 million, $241 million and $245
million, respectively.
Backlog
The Company's backlog of orders believed to be firm was $286 million at
December 31, 1997 and $253 million at December 31, 1996. The Construction
Services segment, where margins are significantly lower than those associated
with product sales, accounted for $41 million and $37 million of year-end
backlog for 1997 and 1996, respectively.
Employees
At December 31, 1997 the Company employed 5,177 persons, 4,147 of whom were
non-union employees, and 1,030 were hourly paid employees who were members of
three unions. At December 31, 1996 the Company employed 4,162 persons.
Item 2. Properties
The principal plants and physical properties of the Company consist of
the manufacturing facilities described under Item 1, and the Company's
executive offices in Kansas City. The 142,000 square foot Vistawall facility
located in Lincoln, Rhode Island which had light manufacturing and fabrication
operations was sold in 1997. Through a subsidiary, the Company also owns a
land development venture with property located on a 108 acre site in San
Marcos, Texas. The property is recorded in "Assets held for sale" and
described in the "Real Estate Subsidiaries" footnote on page 24 in the
Company's Annual Report. All other plants and offices described under Item 1
are utilized by the Company and are generally suitable and adequate for
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the business activity conducted therein. The Company's manufacturing
facilities described under Item 1, along with current outsourcing agreements
with various fabricators, have production capabilities sufficient to meet
current and foreseeable needs.
Except for leased facilities listed below, all of the Company's principal
plants and offices are owned:
(1) Leased space used for the Company's executive offices in Kansas City,
Missouri (120,000 sq. ft. lease expiring in the year 2001 with an option to
renew).
(2) Leased space used for the Vistawall Division plant in Terrell, Texas
(145,000 sq. ft. and 121,000 sq. ft. with leases expiring in 2000 and 2006,
respectively, both containing options to renew), and fabrication and
distribution facilities in Dallas and Houston, Texas; St. Louis, Missouri;
Chicago, Illinois; Washington, D.C.; Cincinnati and Cleveland, Ohio;
Atlanta, Georgia; Tampa, Florida; Seattle, Washington; and Modesto, and
Hayward, California (293,000 sq. ft. leased with various expiration dates).
(3) The Company also leases various small sales and national account offices
throughout the world.
Item 3. Legal Proceedings.
There are no material legal or environmental proceedings pending as of
March 9, 1998, nor does the Company have any known material environmental
contingencies as of this date. Proceedings which are pending consist of matters
normally incident to the business conducted by the Company and taken together
do not appear to be material.
Item 4. Submissions of Matters to a Vote of Security Holders.
No matters have been submitted to a vote of stockholders since the last
annual meeting of stockholders on April 15, 1997.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Incorporated by reference to the information under "Quarterly Financial
Information (Unaudited)", "Price Range of Common Stock (Unaudited)" and
"Historical Review 1997-1993" on pages 31 and 32 of the Annual Report.
In September, 1994 the Board of Directors approved the resumption of a
regular cash dividend, at an indicated annual rate of 40 cents per share. The
initial 10 cent quarterly payment was made in October 1994. In June, 1995 the
Board of Directors approved a 3-for-2 stock split and a 50% increase in the
quarterly cash dividend. The stock split was paid July 17, 1995 to
shareholders of record on June 30, 1995. In September 1997 the Company
increased its cash dividend from 10 cents to 12 cents per share to shareholders
of record as of September 26. The Company has limited restrictions on the
payment of dividends based on certain debt covenants of the Note Agreement
dated June 1, 1994, between the Company and four insurance companies
(incorporated by reference to the Form 10-Q for the quarter ended June 30,
1994, as indicated under Item 14). As of December 31, 1997 the Company had
approximately $14 million of retained earnings available for cash dividends.
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Item 6. Selected Financial Data.
Incorporated by reference to the information under "Historical Review
1997-1993" on page 32 of the Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Incorporated by reference to the information under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 14
through 17 of the Annual Report.
Item 8. Financial Statements and Supplementary Data.
Incorporated by reference to the consolidated financial statements and
related notes on pages 17 through 32 of the Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
On April 15, 1997, the Audit Committee of the Board of Directors of Butler
Manufacturing Company, chose to engage Arthur Andersen LLP as independent
accountants to audit the financial statements of the Company for the year
ending December 31, 1997, rather than reengage KPMG Peat Marwick, LLP.
The reports of KPMG Peat Marwick, LLP for the past two years ending December
31, 1996, contain no adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
Subsequent to December 31, 1996 there have been no disagreements between the
Butler Manufacturing Company and KPMG Peat Marwick.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information as to Directors is incorporated herein by reference to pages 2
through 5 of the Proxy Statement. The Executive Officers, their ages, their
positions and offices with the Company and their principal occupations during
the past five years are shown below:
Corporate Executive Officers
Robert H. West - age 59, Chairman of the Board and Chief Executive Officer;
Chairman of the Executive Committee and member of the Board Organization
Committee. He joined the Company in 1968, became President in 1978 and
Chairman of the Board in 1986. Mr. West is a director of Commerce Bancshares,
Inc., Burlington Northern Santa Fe Corporation, Kansas City Power & Light
Company, and St. Luke's Shawnee Mission Health System. He is a trustee of the
University of Missouri at Kansas City.
Donald H. Pratt - age 60, President; member of the Executive Committee. He
joined Butler in 1965, became Executive Vice President in 1980, and President
of the Company in 1986. Mr. Pratt is also Vice Chairman of American Century
Mutual Funds, a director of Atlas-Copco North America Inc. and is a trustee of
the Midwest Research Institute.
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Richard O. Ballentine - age 61, Vice President, General Counsel, and Secretary
since 1978. He joined Butler in 1975 as Vice President-Legal.
John T. Cole - age 47, Controller since 1990. He joined Butler in 1977 and
previously was Corporate Audit Manager.
Larry D. Hayes - age 59, President Innovative Building Technology since 1997.
He was named President, Lester Building Systems in 1991 and Vice President,
Corporate Development in 1996, and President, Lester Building Systems Division
since 1991. He joined Butler in 1975.
John J. Holland - age 47, Vice President-Finance since 1990. He joined Butler
in 1980 and became Vice President - Controller in 1986.
John W. Huey - age 50, Vice President-Administration since 1993 and Assistant
General Counsel and Assistant Secretary since 1987. He joined Butler in 1978.
Larry C. Miller - age 41, Treasurer since 1989. He joined Butler in 1980 and
became Assistant Treasurer in 1985.
Division Executive Officers
Moufid (Mike) Alossi - age 55, President, Butler Shanghai Inc., since 1997. He
joined Butler in 1968 and was previously President of Butler World Trade since
1996 and Vice President-International Sales and Marketing.
Hans G. Berger - age 50, Managing Director, Butler Europe since 1995. He
previously was Managing Director, Butler Bausysteme GmbH from 1993 to 1995 and
Vice President-Engineering, Butler Canada from 1986 to 1992.
Clyde E. Wills - age 52, President, International Division since 1997. He
first joined Butler in 1972 and was Senior Vice President of Operations -
Building Division from 1992 to 1997. He was previously Vice President of
Manufacturing - Buildings Division.
Marc S. Hafer - age 40, President, Lester Building Systems since 1996. From
1993 to 1996 he was President of Walker Systems, Inc., a subsidiary of
Wiremold, Inc. He was Vice President-Sales and Marketing of the Company's
Walker Division from 1991 to 1993. He first joined Butler in 1988.
Thomas J. Hall - age 52, President, Butler Real Estate, Inc. since 1991. He
joined Butler in 1969, and was named Vice President and General Manager of
Butler Real Estate, Inc. in 1987.
Charles E. Hatch - age 50, Managing Director, Butler do Brasil, Ltda since
1997. He first joined Butler in 1981.
Richard S. Jarman - age 51, President, Buildings Division since 1986. He
joined Butler in 1974.
William L. Johnsmeyer - age 50, President Butler Construction (Bucon, Inc.)
since 1990. He joined Butler in 1982 and became President, Walker Division in
1984.
Ronald F. Rutledge - age 56, President Vistawall Division since 1984 when he
joined Butler.
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Item 11. Executive Compensation.
Incorporated by reference to the information under "Report on Executive
Compensation", "Summary Compensation Table", "Option Grants During 1997",
"Aggregated Option Exercises and Fiscal Year-End Option Value Table", and
"Pension Plan Table" on pages 9 through 14 of the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Incorporated by reference to the information under "Beneficial Ownership
Table" on pages 7 through 8 of the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
Incorporated by reference to the information under "Election of Class C
Directors" on pages 2 through 10 and "Report on Executive Compensation" in the
Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
The following documents are filed as part of this report:
(a) Financial Statements:
- "Report of Independent Public Accountants" for the year end December
31, 1997 and "The Report of "Independent Public Accountants" for the
two-year period ended December 31, 1996.
- Consolidated Balance Sheets as of December 31, 1997 and 1996.
- Consolidated Statements of Earnings and Retained Earnings - Years
Ended December 31, 1997, 1996 and 1995.
- Consolidated Statements of Cash Flows - Years Ended December 31,
1997, 1996 and 1995.
- Notes to Consolidated Financial Statements.
The foregoing have been incorporated by reference to the Annual Report
as indicated under Item 8.
(b) Financial Statement Schedules:
Auditors' Reports on Financial Statement and Schedule IX, Valuation and
Qualifying Accounts.
All other schedules are omitted because they are not applicable or the
information is contained in the consolidated financial statements or
notes thereto.
(c) Exhibits:
3.1 Restated Certificate of Incorporation (incorporated by reference
to Exhibit 3.1 to Company's form 10-Q for the quarter ended, March
31, 1996).
3.2 Bylaws of Butler Manufacturing Company (incorporated by reference to
Exhibit 3.8 to Company's Form 10-Q for quarter ended September 30,
1990).
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4.1 Note Agreement between the Company and four Insurance Companies dated
as of June 1, 1994 (incorporated by reference to Exhibit 4 of the
Company's Form 10-Q for the quarter ended June 30, 1994).
10.1 Butler Manufacturing Company Executive Deferred Compensation Plan as
amended (incorporated by reference to Exhibit 10.2 to the Company's
Form 10-K for the year ended December 31, 1989).
10.2 Butler Manufacturing Company Stock Incentive Plan for 1987, as amended
(incorporated by reference to Exhibit 10.1 to the Company's Form 10-K
for the year ended December 31, 1990).
10.3 Butler Manufacturing Company Stock Incentive Plan of 1979, as amended
(incorporated by reference to Exhibit 10.2 to the Company's Form 10-K
for the year ended December 31, 1990).
10.4 Form of Change of Control Employment Agreements, as amended, between
the Company and each of six executive officers (incorporated by
reference to Exhibit 10.3 to the Company's Form 10-K for the year
ended December 31, 1990).
10.5 Copy of Butler Manufacturing Company Supplemental Benefit Plan as
amended and restated (incorporated by reference to Exhibit 10.5 to the
Company's Form 10-K for the year ended December 31, 1994).
10.6 Form of Butler Manufacturing Company Split Dollar Life Insurance
Agreement (Collateral Assignment Method; Bonus Arrangement) entered
into between the Company and certain executive officers (incorporated
by reference to Exhibit 10.6 to the Company's Form 10-K for the year
ended December 31, 1994).
10.7 Form of Butler Manufacturing Company Split Dollar Life Insurance
Agreement (Collateral Assignment Method; Roll Out Arrangement)
entered into between the Company and certain executive officers
(incorporated by reference to Exhibit 10.7 to the Company's Form 10-K
for the year ended December 31, 1994).
10.8 Butler Manufacturing Company Stock Incentive Plan of 1996
(incorporated by reference to Exhibit 4(a) to the Company's
Registration Statement Number 333-02557 on S-8 filed April 17, 1996).
10.9 Butler Manufacturing Company Director Stock Compensation Program.
10.10 Butler Manufacturing Company Restricted Stock Compensation Program of
1996.
10.11 Asset Purchase Agreement dated March 31, 1997 between Butler
Manufacturing Company and CTB, Inc. relating to the sale of the
Company's Grain Systems Division (incorporated by reference to
Exhibit (2) to the Company's Form 8-K dated June 23, 1997).
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13.1 Butler Manufacturing Company 1997 Annual Report Pages 14 through 32
only (the information expressly incorporated herein by reference).
13.2 KPMG Peat Marwick LLP's "Report of Independent Public Accountants"
for the two-year period ended December 31, 1996.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Butler Manufacturing Company:
We have audited the consolidated balance sheet of Butler Manufacturing
Company and subsidiaries as of December 31, 1996 and the related
consolidated statements of earnings and retained earnings and cash flows for
each of the years in the two-year-period ended December 31, 1996. These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Butler
Manufacturing Company and subsidiaries at December 31, 1996, and the results
of their operations and their cash flows for each of the years in the
two-year period ended December 31, 1996 in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG PEAT MARWICK LLP
Kansas City, Missouri
February 3, 1997
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22.0 Set forth below is a list as of March 9, 1998 of subsidiaries of the
Company and their respective jurisdictions of incorporation.
Subsidiaries not listed, when considered in the aggregate as a
single subsidiary, do not constitute a significant subsidiary.
<TABLE>
<CAPTION>
Jurisdiction of
Subsidiary Incorporation
---------- -------------
<S> <C>
Butler Argentina, S.A. Argentina
Butler do Brasil Limitada Brazil
Butler Export, Inc. Barbados
Butler Building Systems, Ltd. Scotland
Butler Europe GmbH Germany
Butler Systemes de Construction SARL France
BMC Real Estate, Inc. Delaware
BUCON, Inc. Delaware
Butler Pacific, Inc. Delaware
Butler Real Estate, Inc. Delaware
Butler, S.A. de C.V. Mexico
Butler (Shanghai) Inc. China
Butler Holdings, Inc. Delaware
Beker Kft Hungary
Comercial Butler Limitada Chile
Innovative Building Technology, Inc. Delaware
Lester's of Minnesota, Inc. Minnesota
Lester Holdings, Inc. Delaware
Modu-Line Windows, Inc. Wisconsin
</TABLE>
23.0 Consent of Independent Public Accountants (incorporated by
reference to page 14 of this report).
24.0 Power of Attorney to sign this Report by each director.
27.0 Financial Data Schedule.
No reports on Form 8-K were filed by the Company during the quarter ended
December 31, 1997.
The calculation of the aggregate market value the Company's Common Stock
held by non-affiliates shown on the front of the cover page assumes that
directors are affiliates. Such assumption does not reflect a belief by the
Company or any director that any director is an affiliate of the Company.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on this 20th day of
March, 1998.
BUTLER MANUFACTURING COMPANY
BY /s/ Robert H. West
-----------------------------------
Robert H. West
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated on the dates indicated.
/s/ Robert H. West Chairman of the Board March 20, 1998
- ----------------------------- (Principal Executive Officer)
Robert H. West
/s/ John J. Holland Vice President-Finance March 20, 1998
- ----------------------------- (Principal Financial Officer)
John J. Holland
/s/ John T. Cole Controller March 20, 1998
- ----------------------------- (Principal Accounting Officer)
John T. Cole
/s/ Harold G. Bernthal * Director March 20, 1998
- -----------------------------
Harold G. Bernthal
/s/ Robert E. Cook * Director March 20, 1998
- -----------------------------
Robert E. Cook
/s/ Alan M. Hallene * Director March 20, 1998
- -----------------------------
Alan M. Hallene
/s/ C.L. William Haw * Director March 20, 1998
- -----------------------------
C.L. William Haw
/s/ Robert J. Novello * Director March 20, 1998
- -----------------------------
Robert J. Novello
/s/ George E. Powell, Jr. * Director March 20, 1998
- -----------------------------
George E. Powell, Jr.
/s/ Donald H. Pratt Director March 20, 1998
- -----------------------------
Donald H. Pratt
/s/ Robert J. Reintjes, Sr. * Director March 20, 1998
- -----------------------------
Robert J. Reintjes, Sr.
/s/ Judith A. Rogala * Director March 20, 1998
- -----------------------------
Judith A. Rogala
/s/ Gary L. Tapella * Director March 20, 1998
- -----------------------------
Gary L. Tapella
Richard O. Ballentine, by signing his name hereto, does hereby sign this report
on Form 10-K on behalf of each of the directors of the Registrant pursuant to a
power of attorney executed by each of such directors.
* By /s/ Richard O. Ballentine, Attorney-in-fact March 20, 1998
---------------------------------------------------
Richard O. Ballentine, Attorney-in-fact
14
<PAGE> 16
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Butler Manufacturing Company
As independent public accountants, we hereby consent to the incorporation of
our report dated January 23, 1998, appearing in item 8 of Butler Manufacturing
Company's 1997 Annual Report on Form 10-K, into the Company's previously filed
Registration Statements on Form S-8 (Nos. 33-14464, 2-63830, 2-55753,
333-02285, 333-02557 and 2-36370). We also consent to the incorporation in
our report dated January 23, 1998, on the Financial Statement Schedule,
appearing in item 14 of form 10-K. It should be noted that we have not audited
any financial statements of Butler Manufacturing Company subsequent to December
31, 1997, nor performed any audit procedures subsequent to the date of our
report.
/s/ ARTHUR ANDERSEN LLP
---------------------------------
ARTHUR ANDERSEN LLP
Kansas City, Missouri,
March 26, 1998
15
<PAGE> 17
We consent to the incorporation by reference in Registration Statements Nos.
33-14464, 2-63830, 2-55753, 333-02285, 333-02557 and 2-36370 on Form S-8 and
the related Prospectus of June 11, 1987, with Appendix dated March 8, 1996, of
Butler Manufacturing Company of our report dated February 3, 1997 relating to
the consolidated balance sheet of Butler Manufacturing Company and subsidiaries
as of December 31, 1996, and the related consolidated statements of earnings
and retained earnings and cash flows and the related schedule for each of the
years in the two-year period ended December 31, 1996, which reports appear in
or are incorporated by reference in the Annual Report on Form 10-K of Butler
Manufacturing Company for the fiscal year ended December 31, 1996. We also
consent to the reference to our firm under the heading "Experts" in the
Prospectus to the Registration Statements.
/s/ KPMG PEAT MARWICK LLP
---------------------------------
KPMG PEAT MARWICK LLP
Kansas City, Missouri
March 26, 1998
16
<PAGE> 18
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Financial Statement Schedule
(Form 10-K)
December 31, 1997, 1996 and 1995
(With Auditors' Reports Thereon)
S-1
<PAGE> 19
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Butler Manufacturing Company:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements for 1997 described in item 8 of Butler
Manufacturing Company's 1997 Annual Report on Form 10-K, and have issued our
report thereon dated January 23, 1998. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The Financial
Statements Schedule listed in item 14 is presented for the purpose of complying
with the Securities and Exchange Commission's rules and is not part of the
basic financial statements and, in our opinion, fairly states in all material
aspects the financial data required to be set forth in relation to the basic
consolidated financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
---------------------------------
ARTHUR ANDERSEN LLP
Kansas City, Missouri,
January 23, 1998
S-2
<PAGE> 20
The Board of Directors
Butler Manufacturing Company:
Under date of February 3, 1997, we reported on the consolidated balance sheet
of Butler Manufacturing Company and subsidiaries as of December 31, 1996, and
the related consolidated statements of earnings and retained earnings and cash
flows for each of the years in the two-year period ended December 31, 1996, as
contained in the 1997 Annual Report. These consolidated financial statements
and our report thereon are incorporated by reference or included in the report
on form 10-K for the year 1997. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
consolidated financial statement schedule as of December 31, 1996 and 1995 and
for the years then ended as listed in item 14. This consolidated financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this consolidated financial
statement schedule based on our audits.
In our opinion, such schedule, when considered in relation to the basic 1996
and 1995 consolidated financial statements taken as a whole, presents fairly,
in all material aspects, the information set forth therein.
/s/ KPMG PEAT MARWICK LLP
---------------------------------
KPMG PEAT MARWICK LLP
Kansas City, Missouri
February 3, 1997
S-3
<PAGE> 21
SCHEDULE IX
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
(Thousands of Dollars)
<TABLE>
<CAPTION>
Additions Deductions
---------------- -----------------------
Balance at Charged Charged off Balance
beginning to net of at close
Description of year earnings Other recoveries of year
- ------------------------------- ---------- -------- ----- ---------- -------
(A) (B)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
For possible losses on accounts
receivable $ 2,918 $ 887 $ 198 $ 1,530 $ 2,473
======= ====== ===== ======= =======
Year ended December 31, 1996:
For possible losses on accounts
receivable $ 2,348 $1,344 $ 470 $ 1,244 $ 2,918
======= ====== ===== ======= =======
Year ended December 31, 1995:
For possible losses on accounts
receivable $ 1,364 $1,154 $ 326 $ 496 $ 2,348
======= ====== ===== ======= =======
</TABLE>
(A) Includes transfers from other reserve accounts.
(B) Includes write-off of $293.0 thousand in 1997 for the sale of the Grain
Systems Division.
S-4
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- -------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation (incorporated by reference
to Exhibit 3.1 to Company's Form 10-Q for the quarter ended,
March 31, 1996).
3.2 Bylaws of Butler Manufacturing Company (incorporated by
reference to Exhibit 3.8 to Company's Form 10-Q for quarter
ended September 30, 1990).
4.1 Note Agreement between the Company and four Insurance Companies
dated as of June 1, 1994 (incorporated by reference to Exhibit 4
of the Company's Form 10-Q for the quarter ended June 30, 1994).
10.1 Butler Manufacturing Company Executive Deferred Compensation
Plan as amended (incorporated by reference to Exhibit 10.2 to
the Company's Form 10-K for the year ended December 31, 1989).
10.2 Butler Manufacturing Company Stock Incentive Plan for 1987, as
amended (incorporated by reference to Exhibit 10.1 to the
Company's Form 10-K for the year ended December 31, 1990).
10.3 Butler Manufacturing Company Stock Incentive Plan of 1979, as
amended (incorporated by reference to Exhibit 10.2 to the
Company's Form 10-K for the year ended December 31, 1990).
10.4 Form of Change of Control Employment Agreements, as amended,
between the Company and each of six executive officers
(incorporated by reference to Exhibit 10.3 to the Company's Form
10-K for the year ended December 31, 1990).
10.5 Copy of Butler Manufacturing Company Supplemental Benefit Plan
as amended and restated (incorporated by reference to Exhibit
10.5 to the Company's Form 10-K for the year ended December 31,
1994).
10.6 Form of Butler Manufacturing Company Split Dollar Life Insurance
Agreement (Collateral Assignment Method; Bonus Arrangement)
entered into between the Company and certain executive officers
(incorporated by reference to Exhibit 10.6 to the Company's Form
10-K for the year ended December 31, 1994).
10.7 Form of Butler Manufacturing Company Split Dollar Life Insurance
Agreement (Collateral Assignment Method; Roll Out Arrangement)
entered into between the Company and certain executive officers
(incorporated by reference to Exhibit 10.7 to the Company's Form
10-K for the year ended December 31, 1994).
10.8 Butler Manufacturing Company Stock Incentive Plan of 1996
(incorporated by reference to Exhibit 4(a) to the Company's
Registration Statement Number 333-02557 on S-8 filed April 17,
1996).
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
10.9 Butler Manufacturing Company Director Stock Compensation Program.
10.10 Butler Manufacturing Company Restricted Stock Compensation
Program of 1996.
13.1 Butler Manufacturing Company 1997 Annual Report Pages 14 through
32 only (the information expressly incorporated herein by
reference).
13.2 Report of Independent Public Accountants for the two-year period
ended December 31, 1996.
22.0 Set forth below is a list as of March 10, 1998 of subsidiaries
of the Company and their respective jurisdictions of
incorporation. Subsidiaries not listed, when considered in the
aggregate as a single subsidiary, do not constitute a significant
subsidiary.
Jurisdiction of
Subsidiary Incorporation
---------- -------------
Butler Argentina, S.A. Argentina
Butler do Brasil Limitada Brazil
Butler Export, Inc. Barbados
Butler Building Systems, Ltd. Scotland
Butler Europe GmbH Germany
Butler Systemes de Construction SARL France
BMC Real Estate, Inc. Delaware
BUCON, Inc. Delaware
Butler Pacific, Inc. Delaware
Butler Real Estate, Inc. Delaware
Butler, S.A. de C.V. Mexico
Butler (Shanghai) Inc. China
Butler Holdings, Inc. Delaware
Beker Kft Hungary
Comercial Butler Limitada Chile
Innovative Building Technology, Inc. Delaware
Lester's of Minnesota, Inc. Minnesota
Lester Holdings, Inc. Delaware
Modu-Line Windows, Inc. Wisconsin
23.0 Consents of Independent Certified Public Accountants
(incorporated by reference to page 14 of this report).
24.0 Power of Attorney to sign this Report by each director.
27.0 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 10.9
BUTLER MANUFACTURING COMPANY
DIRECTOR STOCK COMPENSATION PROGRAM
AS AMENDED ON JANUARY 21, 1997
1. PURPOSE. The purpose of this Director Stock Compensation Program
("Program") is to enable members of the Board of Directors (the "Board") of
Butler Manufacturing Company (the "Company") who are not employees of the
Company ("Outside Directors") to increase their proprietary interest in the
success and progress of the Company through their ownership of additional
shares of the Common Stock, no par value, of the Company (the "Common Stock").
2. PARTICIPATION. Each person becoming an Outside Director of the Company
shall participate in the Program commencing on the later of the date of
adoption of this Program by the stockholders or the date the person becomes an
Outside Director and shall continue to participate until the resignation,
non-reelection, death or disability of any such Outside Director
("Participant").
3. PAYMENT OF ANNUAL CASH RETAINER IN STOCK.
(a) PAYMENT OF RETAINER. The dollar amount of the annual retainer
payable to Outside Directors as established by the Board from time to time
shall be credited in Common Stock to accounts for each Participant ("Stock
Account") maintained by the Board Organization Committee of the Board of
Directors ("the Committee"). The amount of the credit for each calendar
quarter for each Participant shall be such number of shares of Common Stock of
the Company as is equal to one fourth of the dollar amount of the annual
retainer payable to each Participant divided by the Fair Market Value of one
share of Common Stock on the date the credit is made. The credit shall be made
on the fifth (5th) Business Day of each calendar quarter.
(b) DIVIDENDS, ETC. An amount equal to any cash dividends payable on
shares of Common Stock shall also be credited to a Participant's Stock Account
in shares of Common Stock on the payment date for such dividend on all shares
of Common Stock. The amount of such credit to each Participant's Stock Account
for cash dividends shall be such number of shares of Common Stock as is equal
to the amount of the cash dividend payable on shares of Common Stock credited
to the Participant's Stock Account divided by the Fair Market Value of one
share of Common Stock on the date the credit is made. The number of shares
credited to Participant Stock Accounts shall be adjusted to reflect any stock
split, stock dividend, the issuance of stock purchase rights or similar
transactions effected prior to the issuance of stock certificates.
(c) FAIR MARKET VALUE. The Fair Market Value of a share of Common Stock
shall mean the last sale price for the Company's Common Stock on the New York
Stock Exchange, or if the Company's Common Stock is not traded on that day, on
the next preceding day on which the Common Stock was so traded.
4. ISSUE OF STOCK CERTIFICATES. The Company shall issue from the Treasury or
from authorized but unissued shares a certificate to each Participant in the
amount of whole shares of Common Stock credited to the Participant's Stock
Account (a) upon written request of the Participant, (b) annually on the 10th
Business Day of the last calendar quarter of each year, (c) upon termination
of participation or (d) upon termination of the Program. Until the issuance of
the stock certificate, no right to vote or receive dividends or other rights as
a stockholder shall exist as to the shares of Common Stock credited to a
Participant's Stock Account, except to the extent specified in Section 3. Upon
any termination of Participation, termination of the Program or any other
distribution of a Participant's Stock Account in whole, any fraction of a share
of Common Stock shall be distributed in cash equal to the Fair Market Value of
the fractional share. Any other property credited to the Participant's Stock
Account other than shares of Common Stock shall be distributed in kind or in
cash equal to the fair market value thereof as determined by the Committee.
5. AMOUNT OF ANNUAL RETAINER. The amount of the Annual Retainer shall be
determined by the full Board of Directors from time to time, but not more
frequently than annually.
<PAGE> 2
6. ADMINISTRATION. The Program shall be administered by the Committee, which
shall have full power and authority to construe and administer the Program.
Any action taken under the provisions of the Program by the Committee arising
out of or in connection with the administration, construction, or effect of the
Program or any rules adopted thereunder shall, in each case, lie within the
discretion of the Committee and shall be conclusive and binding upon the
Company and upon all Participants, and all persons claiming under or through
any of them.
7. BENEFICIARY DESIGNATION. A Participant shall designate a beneficiary or
beneficiaries who, upon the Participant's death, shall receive the Shares and
any other items credited to a Participant's Stock Accounts that otherwise would
have been delivered to the Participant. All designations shall be in writing
and signed by the Participant. The designation shall be effective only if an
when delivered to the Company during the lifetime of the Participant. The
Participant also may change beneficiaries by a signed, written instrument
delivered to the Company. The delivery of Shares shall be in accordance with
the last unrevoked written designation of beneficiary that has been signed and
delivered to the Secretary of the Company. In the event the Participant does
not designate a beneficiary, in the event that all of the beneficiaries named
pursuant to this section predecease the Participant, or if for any reason such
designation is ineffective in whole or in part, the Shares and other items
credited to the Participant's account that otherwise would have been delivered
to the Participant shall be delivered to the Participant's estate, and in such
event, the term "beneficiary" shall include such estate.
8. TRANSFERABILITY. The rights and privileges conferred under this Program
shall not be subject to execution, attachment or similar process and may not
be transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than by will or the laws of descent and
distribution or a "qualified domestic relations order" as defined in the
Internal Revenue Code, as amended from time to time.
9. APPROVAL; EFFECTIVE DATE. This Program shall become effective when approved
by the holders of a majority of the Common Stock present or represented and
entitled to vote at a meeting of stockholders.
10. AMENDMENT AND TERMINATION. Subject to the provisions of Section 5, this
Program may be amended by the Board of Directors of the Company from time to
time, and may be terminated by the Board of Directors or Stockholders, except
that any such action shall not adversely affect any Participant's rights under
the Program that had accrued prior to such amendment or termination.
11. EXPENSES OF THE PROGRAM. All costs and expenses of the Program shall be
borne by the Company and none of such expense shall be charged to any
Participant.
12. COMPLIANCE WITH RULE 16B-3. It is the intention of the Company that the
operation of the Program comply in all respects with Rule 16b-3 under Section
16(b) of the Securities Exchange Act of 1934, as amended, and that all
Participants remain Disinterested Persons as defined by such Rule.
Accordingly, if any Program provision is later found to cause any crediting of
Common Stock to fail to qualify under Rule 16b-3 for an exemption from the
operation of Section 16(b) or if any Program provision would disqualify
Participants from remaining Disinterested Directors under Rule 16b-3, that
provision shall be deemed null and void, and in all events the Program shall be
construed in favor of its meeting the requirements of Rule 16b-3.
<PAGE> 3
CERTIFICATION
The undersigned Secretary of Butler Manufacturing Company, hereby
certifies that the foregoing Program was duly adopted by the Board of Directors
at a regular meeting of the Board duly called, noticed, convened and held on
December 12, 1995, in accordance with the Certificate of Incorporation, Bylaws
and applicable laws of the State of Delaware.
________________________________
Richard O. Ballentine
Vice President, Secretary and
General Counsel
The undersigned Secretary of Butler Manufacturing Company, hereby
certifies that the foregoing Program was duly approved by the holders of a
majority of the Common Stock present or represented and entitled to vote at the
Annual Meeting of Stockholders duly called, noticed, convened and held on April
16, 1996, in accordance with the Certificate of Incorporation, Bylaws and
applicable laws of the State of Delaware.
________________________________
Richard O. Ballentine
Vice President, Secretary and
General Counsel
The undersigned Secretary of Butler Manufacturing Company, hereby
certifies that the foregoing Program incorporates the amendments duly adopted
by the Board of Directors at a regular meeting of the Board duly called,
noticed and convened and held on January 21, 1997, in accordance with the
Certificate of Incorporation, Bylaws and applicable laws of the State of
Delaware.
________________________________
Richard O. Ballentine
Vice President, Secretary and
General Counsel
<PAGE> 1
EXHIBIT 10.10
BUTLER MANUFACTURING COMPANY
RESTRICTED STOCK BONUS PROGRAM
OF 1996
Effective as of
December 17, 1996
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
This Program Document is Dated December 17, 1996
<PAGE> 2
BUTLER MANUFACTURING COMPANY
RESTRICTED STOCK BONUS PROGRAM
OF 1996
Pursuant to the Stock Incentive Plan of 1996
1. GENERAL. The Butler Manufacturing Company Restricted Stock Bonus Program of
1996 ("Program") is hereby adopted. The Program is being implemented per the
Stock Awards Feature of the Butler Manufacturing Company Stock Incentive Plan
of 1996 (the "Plan") by the Compensation and Benefits Committee of the Board of
Directors of Butler Manufacturing Company (the "Committee"). Its purpose is to
encourage eligible Senior Executives of the Company to acquire and retain
equity ownership in the Company.
For definitions of capitalized terms see Section 16.
2. ELIGIBILITY. Only a Senior Executive of the Company, who is a salaried
employee and who is deemed by the Committee to be a person who will contribute
significantly to the growth and successful operations of the Company will be
eligible to participate in the Program. Each person that the Committee
designates for Participation shall be deemed to be a Senior Executive for
purposes of this Program.
3. DESIGNATION OF PARTICIPATION. From time to the time the Committee, in its
discretion, shall designate Senior Executives of the Company to be eligible to
participate in this Program with respect to the Annual Bonus awarded to each
such Participant for the year covered by the designation ("Designation"). The
Designation shall amount to the grant by the Committee of a Stock Purchase
Right. On or after the Designation Date, the Chairman of the Company or his
designee shall furnish to each Participant a form of Stock Bonus Agreement
which shall offer participation in the Program with respect to the dollar
amount of the Participant's Annual Bonus for the year (the "Announcement
Date"). The form of Stock Bonus Agreement shall be in substantially the form
appended to this Program as Exhibit A.
4. STOCK BONUS ELECTION. A Participant who receives a Designation and who
desires to receive up to 50% of his Annual Bonus as a Stock Bonus shall:
(a) specify in the Stock Bonus Agreement the amount of the Annual Bonus to
be so applied, but not to exceed 50%,
(b) complete the balance of the Stock Bonus Agreement,
(c) sign the Stock Bonus Agreement and
(d) deliver the properly completed and executed Stock Bonus Agreement to
the Secretary of the Company on or before midnight on the Expiration
Date.
The Expiration Date shall be the tenth Business Day following the
Announcement Date. All rights under the Designation shall expire at midnight
Kansas City, Missouri time on the Expiration Date.
A Stock Bonus Election shall entitle the Participant to receive Bonus Shares
for the amount of the Annual Bonus applied to the Election and Matching Shares
equal to 50% of the Bonus Shares.
<PAGE> 3
The Election shall become effective as of the close of business on the
Expiration Date if the Participant has delivered an unrevoked properly
completed Stock Bonus Agreement to the Secretary or the designee of the
Secretary on or before the Expiration Date. Any Stock Bonus Agreement so
delivered shall be revocable by the Participant by delivering written notice of
revocation to the Secretary at any time prior to midnight Kansas City, Missouri
time on the Expiration Date.
5. TRANSFER RESTRICTIONS AND FORFEITURE PROVISIONS. The Bonus Shares and
Matching Shares issued under the Program shall be subject to the Transfer
Restrictions and Forfeiture Provisions set forth in the Stock Bonus Agreement.
6. SHARES COVERED BY THE PROGRAM. A total of 50,000 shares out of the 600,000
shares reserved under the Plan are reserved for issuance under this Program,
subject to the adjustment provisions of the Plan. Pursuant to the provisions
of Section 4(a) of the Plan, only Matching Shares which become fully vested
shall be counted against that limitation.
7. TERM. This Program shall expire at such time as the Committee shall
discontinue the same or the sooner expiration of the Plan.
8. ISSUE OF STOCK CERTIFICATES. The Company shall issue from its Treasury or
from authorized but unissued shares certificates to Participants in the amount
of whole shares of Common Stock for Bonus Shares and Matching Shares.
Certificates covering Matching Shares shall bear the following legend until the
occurrence of the Vesting Date for such shares:
The Shares evidenced by this Certificate have been
issued pursuant to the BUTLER MANUFACTURING COMPANY
RESTRICTED STOCK BONUS PROGRAM of 1996 and a related
agreement ("Agreement") between the Company and the
Registered Holder which restricts the transfer of the
Shares and subjects them to forfeiture to the Company upon
the occurrence of any Forfeiture Event described in the
Agreement. This legend may be removed upon occurrence of the
Vesting Date under the Agreement.
9. ADMINISTRATION. The Program shall be administered by the Committee, which
shall have full power and authority to construe and administer the Program.
Any action taken under the provisions of the Program by the Committee arising
out of or in connection with the administration, construction, or effect of the
Program or any rules adopted thereunder shall, in each case, lie within the
discretion of the Committee and shall be conclusive and binding upon the
Company and upon all Participants, and all persons claiming under or through
any of them.
The members of the Committee, as of the date of the mailing of the Proxy
Statement for the latest annual meeting of stockholders of the Company are
listed in that Proxy Statement under "COMPENSATION AND BENEFITS COMMITTEE."
The Proxy Statement is incorporated into this Prospectus and Program Document
by reference. All members of the Committee are directors of the Company and
each has an address at BMA Tower, P. 0. Box 419917, Penn Valley Park, Kansas
City, Missouri 64141-0917.
<PAGE> 4
10. EXPENSES OF THE PROGRAM. All costs and expenses of the Program shall be
borne by the Company and none of such expense shall be charged to any
Participant.
11. PROSPECTUS. This Program document also constitutes a part of a prospectus
under the Securities Act of 1933. The securities being offered by the
prospectus consist of shares of Common Stock of the Company which may be issued
to Participants under the Program.
12. ERISA. The Program is not subject to any provisions of the Employee
Retirement Income Security Act of 1974.
13. AVAILABLE DOCUMENTS AND INFORMATION
The following documents are incorporated by reference herein:
* The Plan. The descriptions in this document of various provision of the
Plan do not purport to be complete and are qualified in their entirety
by reference to the provisions of the Plan.
* The Company's Annual Report on Form 10-K for the year ended December 31,
1995;
* All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Securities and Exchange Act of 1934 since December 31, 1995;
* The description of the Company's Common Stock and Preferred Share
Purchase Rights contained in its Registration Statements on Form 8-A
dated October 8, 1996; and
* All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents.
The above-listed documents are available to Participants without charge,
upon written or oral request, as are the following documents:
* Periodic updates of this Prospectus and the other documents, if
any, which from time to time constitute the prospectus meeting the
requirements of Section 10(a) of the Securities Act of 1933.
* All reports, proxy statements and other communications distributed
by Butler Manufacturing Company generally to its stockholders.
* Copies of the Registration Statement on Form S-8 filed with the
Securities and Exchange Commission which registers the offering of
securities described in this Prospectus, as well as any amendments
thereto.
Requests for any of the above-listed documents should be directed to the
Secretary of the
<PAGE> 5
Company at BMA Tower, Penn Valley Park, P.O. Box 419917, Kansas City, Missouri
64141-0917, telephone (816) 968-3000. Copies of documents publicly filed
with the Securities and Exchange Commission may also be obtained from the
Internet at http://www.sec.gov./cgi-bin/srch-edgar.
14. APPROVAL; EFFECTIVE DATE. This Program shall become effective when
approved by the Committee as of December 17, 1996.
15. AMENDMENT AND TERMINATION. Subject to the provisions of the Plan, this
Program may be amended by the Committee from time to time, and may be
terminated by the Board of Directors or Stockholders, except that any such
action shall not adversely affect any Participant's rights under the Program
that had accrued prior to such amendment or termination. Subject to the
provisions of the Plan, Agreements issued pursuant to this Program may be
amended by or at the direction of the Committee with the consent of the
Participant to such Agreement.
16. DEFINITIONS AND TERMS: Unless otherwise required by the context, the
following terms and the terms set forth in Section 2 of the Plan, when used
in this Program, shall have the meanings set forth in this Section 16 and in
Section 2 of the Plan:
ANNOUNCEMENT DATE: The date the Chairman of the Company or his designee
shall furnish to each Participant a form of Stock Bonus Agreement which shall
offer participation in the Program with respect to the dollar amount of the
Participant's Annual Bonus for the year.
BONUS SHARES: A whole number of shares of the Company's Common Stock which
a Participant elects to purchase, subject to Transfer Restrictions, with up to
50% of the Participant's Annual Bonus, the number of which shall be the cash
amount of the Annual Bonus to be applied toward the purchase of Bonus Shares
divided by the Fair Market Value of the Common Stock as of close of business on
the Election Date.
ANNUAL BONUS: The bonus awarded to a Participant under the Company's
Executive Bonus Program.
COMMITTEE: The Committee which administers the Plan.
DESIGNATION. A designation of eligibility to participate in the Program as
contemplated by Section 3.
DESIGNATION DATE. Date the Committee makes a Designation or such
subsequent date as the Committee specifies in the Designation as the effective
date of the Designation.
ELECTION DATE. The effective date of an election to participate, which
shall be the Expiration Date with respect to an unrevoked and properly
delivered, completed and signed Stock Bonus Agreement.
EXPIRATION DATE. Date of expiration of rights granted under a
Designation.
<PAGE> 6
FORFEITURE EVENT. An event, the occurrence of which will cause a
forfeiture of Matching Shares under a Stock Bonus Agreement.
FORFEITURE PROVISION. Provision contained in a Stock Bonus Agreement
which directs the forfeiture of Matching Shares upon the occurrence of a
Forfeiture Event.
MATCHING SHARES: A whole number of shares of the Company's Common Stock
which a Participant shall receive, subject to Transfer Restrictions and
Forfeiture Provisions, under a Stock Bonus Agreement, in an amount equal to one
half of the Bonus Shares purchased under the Stock Bonus Agreement.
PARTICIPANT: A Senior Executive selected by the Committee in accordance
with the terms of the Plan to participate in the Program.
PLAN: The Stock Incentive Plan of 1996.
PROGRAM: The Butler Manufacturing Company Restricted Stock Bonus Program
of 1996 as herein set forth.
PROGRAM DOCUMENT: This document, each Stock Bonus Agreement and the Plan.
SECTION 83(B) ELECTION. The election of a Participant to include in the
Participant's gross income under the Code for the taxable year in which a Stock
Bonus Election is made the fair market value (as defined under the Code) of the
Matching Shares as of the Election Date without regard to any Transfer
Restriction or Forfeiture Provision, made in writing in accordance with IRS
regulations not later than 30 days after the Election Date.
STOCK BONUS: The grant by the Company to a Participant of a Stock Bonus
consisting of Bonus Shares and Matching Shares pursuant to the terms of a
Stock Bonus Agreement.
STOCK BONUS AGREEMENT: The Award Agreement between the Company and a
Participant with respect to the Participant's acquisition of Bonus Shares and
Matching Shares under the Program as evidenced by a properly executed and
delivered Stock Bonus Election and the Terms of the Program and the Plan.
STOCK BONUS ELECTION: The written election of a Participant to apply up to
50% of the Participant's Annual Bonus for the purchase of Bonus Shares
delivered to the Secretary of the Company in the form specified by the
Committee.
STOCK PURCHASE RIGHT: A Stock Purchase Right as contemplated by the Plan
and granted under the Program which entitles a Participant to purchase Bonus
Shares and acquire Matching Shares pursuant to a Stock Bonus Election.
TRANSFER RESTRICTION: A provision of a Stock Bonus Agreement pursuant to
which the Participant agrees not to voluntarily transfer Bonus Shares until the
Vesting Date.
VESTING DATE: Date Matching Shares become fully vested prior to a
Forfeiture Event.
<PAGE> 7
CERTIFICATION
The undersigned Secretary of Butler Manufacturing Company, hereby
certifies that as of this 17th day of December, 1996, the foregoing is a true
copy of the Butler Manufacturing Company Restricted Stock Bonus Program of
1996, as amended (the "Program"), that the Program is in effect, and that the
same has been duly adopted by the Committee in accordance with the terms of the
Butler Manufacturing Company Stock Incentive Plan of 1966, as amended, the
Certificate of Incorporation and Bylaws of the Company and the applicable laws
of the State of Delaware.
_____________________
Richard O. Ballentine
Vice President, Secretary and
General Counsel
<PAGE> 8
EXHIBIT A
STOCK BONUS AGREEMENT
(and Part of a Prospectus)
TO:
FROM: Bob West
DATE: January 21, 1997 (THE "ANNOUNCEMENT DATE")
RE: BUTLER MANUFACTURING COMPANY RESTRICTED STOCK BONUS PROGRAM OF 1996,
copy of which is being delivered with this Agreement (the "Program").
I am pleased to advise you that the Compensation and Benefits Committee of
the Board of Directors has selected you to participate in the Program on the
terms of this Agreement, the Program and the Butler Manufacturing Company Stock
Incentive Plan of 1996 (the "Plan"). Under this Agreement you may make a Stock
Bonus Election to convert up to 50% of your Annual Bonus (as shown below) to a
Stock Bonus. Under a Stock Bonus you may receive a portion of your Annual
Bonus for 1996 in Bonus Shares and Matching Shares.
Announcement Date: Date shown above.
Your Annual Bonus: $_______.
Expiration Date: tenth Business Day following the
Announcement Date (February 4, 1997).
YOU MAY MAKE A STOCK BONUS ELECTION ONLY BY PROPERLY COMPLETING, SIGNING
AND RETURNING THIS AGREEMENT TO THE SECRETARY ON OR BEFORE MIDNIGHT, KANSAS
CITY, MISSOURI TIME, ON THE EXPIRATION DATE SPECIFIED ABOVE. Your Stock Bonus
Election will become effective as of the close of Business on the Expiration
Date if you have delivered this Agreement properly signed and completed to the
office of the Secretary, and have not revoked the election, on or before the
Expiration Date (the "Election Date"). You may revoke a prior delivered
Election only by delivering a written notice of revocation to the Secretary on
or before Midnight on the Election Date.
For definitions of capitalized terms in this Agreement see Section 16 of
the Program.
<PAGE> 9
1. BONUS SHARES YOU WILL RECEIVE. The number of Bonus Shares that you will
receive under your Stock Bonus Election shall be a whole number equal to (a)
the dollar amount of the Annual Bonus you choose to apply to the Stock Bonus
Election as shown immediately above your signature on this Agreement (not to
exceed 50% of the Annual Bonus) divided by (b) the closing sales price of a
share of Common Stock as reported by the NYSE on the Expiration Date. Any
fraction will be paid in cash as a part of your Annual Bonus.
2. NUMBER OF MATCHING SHARES. The number of Matching Shares you will
receive shall be a whole number (rounded up) equal to one half of the number
of Bonus Shares.
3. ISSUE OF SHARE CERTIFICATES. The Matching Shares and the Bonus Shares
will be issued in your name as soon as may be practicable following the
Election Date. Certificates for the Bonus Shares will be delivered to you
subject to a Transfer Restriction only. A certificate covering the Matching
Shares will be delivered to the Secretary of the Company subject to a Transfer
Restriction and a Forfeiture Provision and containing a legend referring to
those Restrictions and Provisions (the "Legend"). You will deliver with this
Agreement a properly completed stock power in blank that will authorize the
Secretary to transfer to the Company the Matching Shares covered by the
Certificate for the Matching Shares upon the occurrence of a Forfeiture Event.
Upon the lapse of the Transfer Restrictions and Forfeiture Provisions on the
Matching Shares, the Secretary shall deliver to you the Certificate covering
the Matching Shares together with written instructions to the Transfer Agent
for the Common Stock to remove the legend.
4. VESTING AND FORFEITURE: Matching Shares will become fully vested on the
earlier of (a) the third anniversary of the Election Date or (b) the date of a
Change-in-Control (the "Vesting Date"); provided, however all Matching Shares
subject to this Agreement shall be forfeited to the Company in the event that
prior to the Vesting Date (i) your employment with the Company terminates for
any reason other than retirement, permanent and total disability, or death or
(ii) any of the Bonus Shares subject to this Agreement are transferred by you
in violation of the Transfer Restriction ("Forfeiture Event").
5. TRANSFER RESTRICTIONS. You agree that prior to the Vesting Date you
will not voluntarily sell, assign, pledge, hypothecate or otherwise transfer
any of the Bonus or Matching Shares, except by operation of law and except to a
trust for your benefit with respect to which you have during your life the sole
voting and dispositive power over, and sole beneficial interest in the economic
incidents of ownership of, the Shares contributed to such Trust.
The Company believes that your Stock Purchase Election will be exempt from
the short swing profits provisions of Section 16 of the Exchange Act. However
you will be required to report the acquisition of the Matching and Bonus Shares
on your next Form 5.
So long as you are an affiliate of the Company and for a period of three
months thereafter you will also be required to effect any public sales of the
Shares that are not otherwise restricted by the Transfer Restrictions and
Forfeiture Provisions in accordance with the provisions of SEC Rule 144.
6. VOTING, DIVIDENDS AND OTHER STOCK RIGHTS. Upon issuance of Bonus and
Matching shares in your name, you will enjoy all rights of a stockholder,
including voting, dividend and other stock rights, subject only to the Transfer
Restriction and Forfeiture Provisions.
7. TAX CONSEQUENCES. Set forth below is a brief description of certain
significant United States Federal income tax consequences of a Stock Bonus
Election, under existing law as of the most recent April 1. It applies
primarily if you are a citizen or resident alien of the United States whose tax
home or abode is in the United States. The discussion is based on the Internal
Revenue Code of 1986, as amended (the "Code") and applicable regulations
thereunder in effect on the Designation Date. Any subsequent changes in the
Code or those regulations may affect the accuracy of this discussion. In
addition, this discussion does not consider any state, local or foreign tax
consequences or any circumstances that are unique to you that may affect the
accuracy or applicability of this discussion.
The BONUS SHARES you receive under a Stock Bonus Election will subject you
to tax at ordinary income rates on the fair market value of the Bonus Shares at
the Election Date. HOWEVER, the MATCHING SHARES that you receive under a Stock
Bonus Election will subject you to tax at ordinary income rates on the fair
market value of the Matching Shares AT the time the stock is either
transferable or is no longer subject to forfeiture, which will ordinarily be
THE VESTING DATE. The Company will receive a tax
<PAGE> 10
deduction with respect to the amount of income recognized by you on the Bonus
Shares and the Matching Shares.
Under the Code you are entitled to make a Section 83(b) Election and be
currently taxed on the fair market value of the Matching Shares in the taxable
year in which the Election Date occurs. If you choose to make that Election
and the Matching Shares are forfeited due to the occurrence of a Forfeiture
Event, then current provisions of the Code do not entitle you to a
corresponding deduction or capital loss with respect to the amount of taxes
paid with respect to the Matching Shares and the Company will have no liability
with respect thereto even though it may have enjoyed a tax deduction in the
amount covered by your Section 83(b) Election. If you choose to make a Section
83(b) Election, make a check mark in the appropriate blank space indicated below
for that choice and the Company will provide you with the necessary form. THIS
IS A MATTER THAT YOU SHOULD DISCUSS WITH YOUR TAX ADVISOR.
The holding period to determine whether you will have long-term or
short-term capital gain or loss upon sale of Shares begins on the Election Date
for Bonus Shares and on the Vesting Date for Matching Shares [or upon the
Election Date for the Matching Shares, if you make a Section 83(b) Election].
Under Section 162(m) of the Code, certain compensation payments in excess
of $1 million are subject to a limitation on deductibility for the Company.
This limitation on deductibility applies with respect to that portion of a
compensation payment for a taxable year in excess of $1 million to either the
chief executive officer of the Company or any one of the other four highest
paid executive officers who are employed by the Company on the last day of the
taxable year.
Under certain circumstances, accelerated vesting of Matching Shares in
connection with a "change in control" of the Company might be deemed an "excess
parachute payment" for purposes of the golden parachute tax provisions of
Section 280G of the Code. To the extent it is so considered, you may be
subject to a 20% excise tax and the Company may be denied a tax deduction.
8. WITHHOLDING TAXES. The Company will withhold, as of the date of your
Stock Bonus Election, all federal, state and local income taxes generated by
such Election in the taxable year in which the Election is made and which the
Company is required to withhold. If a Section 83(b) Election is made, the
amount of income you will be required to include in your gross income for
Federal Income Tax purposes will be the full amount of your Annual Bonus plus
the fair market value of the Matching Shares on the Election Date. If a Section
83(b) Election is not made, the amount of income you will be required to
include in your gross income for Federal Income Tax purposes will be the full
amount of your Annual Bonus. No withholding may be satisfied by the
withholding of Bonus Shares or Matching Shares or the delivery of pre-owned
shares, except that, if you do not make a Section 83(b) Election, then you may
satisfy withholding taxes on the Matching Shares for the taxable year in which
the Vesting Date occurs by delivering to the Company pre-owned shares to
satisfy the withholding taxes.
9. CONSULT YOUR TAX ADVISOR. The discussion in this Agreement and Program
Document of the effects of Federal income taxation is merely a general
discussion. It is not intended to be relied upon by you in determining the
income tax consequences of making a Stock Bonus Election or Section 83(b)
Election or of disposing of the stock so acquired. State and local income
tax rules which may apply are not discussed. Because the applicability of the
tax laws will depend upon a number of factors personal to you and because of the
complexity of the income tax laws and regulations relating to this subject, it
is suggested that you consult with your tax advisor prior to (a) the making of a
Stock Bonus Election, (b) the making of a Section 83(b) Election or (c) making a
subsequent disposition of Matching or Bonus shares acquired.
10. PROSPECTUS. This Agreement also constitutes a part of a prospectus
under the Securities Act of 1933. The securities being offered by the
prospectus consist of shares of Common Stock of the Company which may be issued
to Participants under the Program. See Section 13 of the Program with respect
to documents available under the Registration Statement for the shares of
Common Stock covered by the Prospectus.
<PAGE> 11
11. RECEIPT OF DOCUMENTS. It is agreed that you have received copies of
the Plan, the Program, and the Company's most current Annual Report to
Stockholders. You also agree that copies of those documents and additional
documents and information referred to in this Agreement and in the Program are
available from the Corporate Secretary at the principal offices of the Company,
BMA Tower (P.O. Box 419917), Penn Valley Park, Kansas City, Missouri
64141-0917, and at the office of the Securities and Exchange Commission. See
"Available Information" in the Program.
12. MISCELLANEOUS. This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns and upon you and your
heirs, executors, administrators, successors, assigns and legal
representatives. All elections, notices, requests and other communications
shall be in writing and shall be deemed to have been duly given when delivered
by hand, by telecopy or mailed by First Class, Certified Mail, Return Receipt
Requested, with postage prepaid and addressed (a) if to you, at your office
with the Company or at such other address as you may specify in writing to the
Company and (b) if to the Company, to the office of the Secretary of the
Company. If any provision of this Agreement shall, for any reason, be adjudged
by any court of competent jurisdiction to be invalid or unenforceable, such
judgment shall not affect, impair or invalidate the remainder of this
Agreement, but shall be confined in its operation to the provision of this
Agreement determined invalid or unenforceable. This Agreement shall be
governed, interpreted, and enforced in accordance with the laws of the State of
Missouri and the corporate laws of the State of Delaware, including the
provisions of the Delaware General Corporation Code. The rights, covenants,
and obligations made in this Agreement are assignable by the Company but may
not be assigned by you, except by operation of law, and except as otherwise
provided herein, without the signed, written consent of both parties.
If the above terms are satisfactory to you and you wish to make a Stock
Bonus Election for up to 50% of your Annual Bonus, then please complete the
items shown below, sign where indicated and return the same to Dick Ballentine
on or before the Expiration Date.
_________________
Robert H. West
Chairman
<PAGE> 12
I agree with the above and hereby make a Stock Bonus Election as to
$_________ of my Annual Bonus for 1996. I understand that I may revoke this
election by delivering a written notice of revocation to Dick Ballentine,
Corporate Secretary on or before midnight of the Election Date.
I do ___ do not ___ wish to make a Section 83(b) Election.
I acknowledge receipt of a copy of all the Program Documents and a copy of
the latest Annual Report of the Company to its Stockholders.
Signature of Participant:
__________________________
Name: ___________________
Title: ___________________
Date: ___________________
The undersigned Secretary of Butler Manufacturing Company hereby
acknowledges receipt of the foregoing Stock Bonus Election on this ____ day of
__________, 19__.
______________________
Richard O. Ballentine,
<PAGE> 1
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Company sales for 1997 were $925 million compared with $870 million in 1996, an
increase of 6.3%. Revenues of the Building Systems and Architectural Products
segments increased 15.1% and 4.9%, respectively in 1997, while Construction
Services segment revenues decreased 27.6%.
Sales in the Building Systems segment were $671 million in 1997 compared with
$583 million in 1996. The majority of the sales increase was achieved in the
company's metal building businesses aided by a strong domestic economy and the
first full year of operations of the China and Brazil subsidiaries. The Lester
wood frame buildings business and Butler Real Estate also had increased sales
over the previous year. Export building sales declined due to a shift to in-
country fabrication at the new foreign-based businesses. The company's European
buildings business recorded a slight decrease in sales from a year ago.
Sales in the Architectural Products segment were $172 million in 1997 and $164
million in 1996, an increase of 4.9%. Greater demand for curtainwall and
storefront systems, plus the acquisitions during 1997 of Rebco West, Inc. and
Modu-Line Windows, Inc., more than offset the loss of revenues resulting from
the sale of the Grain Systems division at mid-year.
The Construction Services segment reported a decrease in sales from a year ago
due to greater selectivity of construction projects. Sales were $121 million in
1997 compared to $167 million in 1996, the latter due to exceptionally strong
sales to multinational strategic alliance customers.
The company's consolidated sales in 1996 were $870 million compared to $827
million in 1995, an increase of 5.2%. Building Systems segment sales decreased
slightly compared with the prior year. Sales in the domestic metal buildings
business were about even with the previous year, while wood frame building
sales were lower due to severe winter weather which slowed construction. The
Construction Services segment achieved higher sales on increased alliance
account activity. Architectural Products' sales increased due to greater demand
for engineered curtainwall products and the addition of the new Skywall product
line, along with strong demand for grain systems.
Gross profit in 1997 was $164 million or 17.7% of sales compared to $156
million or 17.9% of sales in 1996. The dollar increase was due primarily to
greater sales volume in the Building Systems segment. The decline in the gross
profit percentage was due to rising lumber costs in the company's wood frame
buildings business, lower start-up year sales volumes in the new subsidiaries
in China and Brazil, and lower margins on sales to Continental Europe due to
the appreciation of the British pound to the German mark.
Gross profit was $151 million or 18.3% of sales in 1995. Gross profit decreased
as a percent of sales in 1996 due to lower margins in the Construction Services
segment, resulting from cost overruns incurred on specific projects.
Selling, general, and administrative expenses were $122 million in 1997 and
$107 million in 1996, or 13.2% and 12.3% of sales, respectively. Approximately
one-half of the dollar increase was due to sales increases in both the Building
Systems and Architectural Products segments. The remaining dollar increase, and
the increase in selling, general, and administrative expenses as a percent of
sales, was due to start-up costs for the company's new international metal
buildings businesses, and nonrecurring costs associated with acquisitions and
growth initiatives in both the Building Systems and Architectural Products
segments.
In 1995 selling, general, and administrative expenses were $103 million or
12.5% of sales. Selling, general, and administrative expenses as a percent of
sales in 1996 was comparable to 1995. Construction Services' selling, general,
and administrative expenses increased in 1996 to support strategic alliance and
international business development, while Architectural Products' increased to
support sales volume and new product marketing.
In June, 1997 the company recorded a pretax gain of $22 million from the sale
of its Grain Systems business. The remaining $1.2 million of net other income
is comparable to the 1996 amount of $.9 million. The 1996 amount includes the
write-off of Butler Japan, Inc.
Page 14
<PAGE>
In 1995 the company recorded net other expense of $1.4 million. The favorable
variance in the 1996 amount was due to rental income earned on several real
estate development projects and the sale of surplus real estate.
Interest expense in 1997 increased to $5.1 million from $4.3 million in 1996
due to greater domestic short-term borrowings to support working capital needs.
Interest expense increased $.2 million from 1995 to 1996, also to support
working capital needs.
The company's effective tax rates were 42.5% in 1997, 44% in 1996, and 44.6% in
1995. The effective tax rate is higher than the statutory rates in all three
years due to nondeductible operating losses incurred by the European metal
building subsidiary and other international start-up operations.
Liquidity and Capital Resources
The company's cash balance increased $3.5 million in 1997 compared to a
decrease of $5.2 million in 1996 and an increase of $2 million in 1995.
Principal sources of cash in 1997 were earnings adjusted for depreciation and
proceeds from the sale of the Grain Systems business, which generated a
combined $80.6 million. Principal uses of funds in 1997 were capital
expenditures of $30.2 million, increased working capital net of short-term debt
of $27.8 million, and share repurchases of $6.2 million. The company also
acquired the assets of Rebco West, Inc. in March, 1997 for $2.7 million cash
and a deferred payment of $.7 million, and the stock of Modu-Line Windows, Inc.
in June, 1997 for 191,777 shares of company stock and a deferred cash payment
of $.4 million. The company also retired Modu-Line's bank debt of $4.5 million.
In 1995 the company acquired the translucent panel systems assets of Skywall,
Inc. for $1 million in cash and a $1.2 million note.
Cash flow from operations was $5.2 million in 1997 compared with $24.4 million
in 1996 and $19.1 million in 1995. In 1997, 1996, and 1995 working capital
increased to accommodate higher sales levels. The company's total debt to total
capital ratio was 20.3% in 1997, compared with 26.1% in 1996 and 31.5% in 1995.
The company maintains $50 million in committed credit lines from three banking
institutions to meet the needs of both the company and the company's
subsidiaries. As of December 31, 1997 $1.8 million of the credit line was
utilized to provide a bank letter of credit arrangement to secure insurance
obligations.
Butler Building Systems Limited (BBSL), a European subsidiary, maintains a
separate bank line of credit of approximately $2.5 million at current exchange
rates. In 1997, 1996, and 1995 the company invested cash of $3.2 million, $.8
million, and $4.3 million, respectively, in its European subsidiaries.
In April, 1995 the company obtained $6.3 million of Industrial Revenue Bond
financing to fund the expansion of its San Marcos, Texas facility. The bonds
are secured by a bank letter of credit.
Capital expenditures were $30.2 million in 1997 and $22.7 million in both 1996
and 1995. The majority of expenditures in 1997, 1996, and 1995 were used to
increase capacity in both the domestic and international metal building systems
businesses. The Architectural Products business also expended monies to expand
their extrusion capacity in 1997. Investments in the company's Chinese
subsidiary, Butler (Shanghai) Inc., were $4.3 million, $6.9 million, and $4.1
million in 1997, 1996, and 1995, respectively. Investments in Butler do Brasil
Limitada, the company's South American subsidiary, totaled $5.7 million in 1997
and $3.7 million in 1996.
In June, 1997 the board of directors approved an 800,000 share common stock
repurchase authorization, replacing the previous 500,000 share authorization
granted in 1995. The company repurchased 189,369 of its common shares in 1997,
87,822 of its common shares in 1996, and 194,301 of its common shares in 1995.
Shares repurchased were deposited in the company's treasury and used for stock
options and to purchase Modu-Line. The company issued 73,122, 84,349, and
454,366 treasury shares in connection with stock option exercises and
compensation plans in 1997, 1996, and 1995, respectively.
Page 15
<PAGE>
In September, 1997 the company announced a 17% increase in its cash dividend to
a new annual rate of $.56 per share. In June, 1995 the board of directors
approved a 3-for-2 stock split and a 50% increase in the quarterly cash
dividend. The stock split was paid July 17, 1995 to shareholders of record on
June 30, 1995.
The company believes that working capital needs and capital requirements for
the foreseeable future can be met by funds from operations and current credit
arrangements.
Other
The U.S. inflation rate grew at a moderate pace in 1997. The company accounts
for inventory at LIFO cost, which in general allows for current earnings to
approximate the earnings which would be reported if measured in terms of
current value dollars.
In January, 1998 an additional director, Gary L. Tapella, President and Chief
Executive Officer of Rheem Manufacturing Company, was elected to the board of
directors.
Accounting Standards
In 1997 the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share." The Statement replaces Accounting Principles Board
Statement No. 15 and requires a more simplified dual presentation of basic and
diluted earnings per share. The company adopted this statement for the period
ending December 31, 1997, and all prior periods presented have been restated.
Impact of Year 2000
In 1997 the company reviewed all computer systems and applications to determine
the impact of the "Year 2000 date change." Problems arise if date sensitive
applications use only a two digit date field versus a four digit field to
identify the year. A number of existing systems projects are underway that will
incorporate year 2000 modifications. The company believes that the incremental
cost of implementing year 2000 modifications is immaterial.
Outlook
A number of economic indicators remain positive for 1998. The company is well
positioned in the markets it serves. Growth may slow due to the maturity of the
business cycle, however expansion into the metal buildings business
internationally, primarily in Asia and Latin America, and a growth in strategic
alliances with major corporations are factors that may lessen the effect of an
economic slowdown on the company. Order backlog at year-end was $286 million,
13.1% greater than a year ago.
Page 16
<PAGE>
Forward Looking Information
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, which may include statements
concerning projection of revenues, income or loss, capital expenditures,
capital structure, or other financial items, statements regarding the plans and
objectives of management for future operations, statements of future economic
performance, statements of the assumptions underlying or relating to any of the
forgoing statements, and other statements which are other than statements of
historical fact. These statements appear in a number of places in this report
and include statements regarding the intent, belief, or current expectations of
the company and its management with respect to (i) the cost and timing of the
completion of new or expanded facilities, (ii) the company's competitive
position, (iii) the supply and price of materials used by the company, (iv) the
demand and price for the company's products and services, or (v) other trends
affecting the company's financial condition or results of operations including
changes in manufacturing capacity utilization and corporate cash flow in both
domestic and international markets. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially as a
result of these various factors.
Report of Independent
Public Accountants
To the Shareholders of
Butler Manufacturing Company
We have audited the accompanying consolidated balance sheet of Butler
Manufacturing Company and subsidiaries at December 31, 1997 and the related
consolidated statements of earnings and retained earnings and cash flows for
the year then ended. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The consolidated financial statements
of Butler Manufacturing Company for 1996 and 1995 were audited by other
auditors whose report, dated February 3, 1997, expressed an unqualified opinion
on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Butler
Manufacturing Company and subsidiaries at December 31, 1997, and the
consolidated results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Kansas City, Missouri
January 23, 1998
Page 17
<PAGE>
<TABLE>
Consolidated Balance Sheets
<CAPTION>
(Thousands of dollars)
At December 31 1997 1996
-------- --------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 5,515 $ 2,013
Receivables:
Trade 102,591 107,480
Other 6,764 5,574
-------- --------
109,355 113,054
Less allowance for possible losses 2,473 2,918
-------- --------
Net receivables 106,882 110,136
Inventories 78,291 60,090
Real estate developments in progress 22,401 33,803
Deferred tax assets 7,812 8,878
Other current assets 12,422 7,141
-------- --------
Total current assets 233,323 222,061
-------- --------
Investments and other assets 35,887 24,701
Assets held for sale 9,423 13,260
Property, plant, and equipment, at cost:
Land 5,005 4,971
Buildings 59,732 56,749
Machinery, tools, and equipment 130,598 126,259
Office furniture and fixtures 42,607 38,095
Transportation equipment 1,805 1,977
-------- --------
239,747 228,051
Less accumulated depreciation 143,408 150,653
-------- --------
Net property, plant, and equipment 96,339 77,398
-------- --------
$374,972 $337,420
======== ========
See Accompanying Notes to Consolidated Financial Statements.
Page 18
<PAGE>
At December 31 1997 1996
-------- --------
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable to banks $ 21,280 $ 9,237
Current maturities of long-term debt 5,862 5,464
Accounts payable 72,266 74,549
Dividends payable 1,069 907
Accrued taxes and other expenses 37,842 36,051
Accrued payroll and pension expense 14,304 15,456
Billings in excess of costs and estimated earnings 3,700 10,715
Taxes on income 8,181 8,500
-------- --------
Total current liabilities 164,504 160,879
-------- --------
Deferred tax liabilities 3,561 3,837
Other noncurrent liabilities 16,423 9,865
Long-term debt, less current maturities 33,918 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
Foreign currency translation adjustment 26 551
Retained earnings 175,373 141,900
-------- --------
188,022 155,074
Less cost of common stock in treasury, 1,451,205
shares in 1997 and 1,526,735 shares in 1996 31,456 30,632
-------- --------
Total shareholders' equity 156,566 124,442
Commitments and contingencies
-------- --------
$374,972 $337,420
======== ========
</TABLE>
Page 19
<PAGE>
<TABLE>
Consolidated Statements of Earnings and retained earnings
<CAPTION>
(Thousands of dollars, except per share amounts)
Years ended December 31 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net sales $924,646 $870,162 $826,538
Cost of sales 760,721 714,116 675,671
-------- -------- --------
Gross profit 163,925 156,046 150,867
Selling, general, and administrative expenses 122,214 106,548 103,093
-------- -------- --------
Operating income 41,711 49,498 47,774
Other income (expense):
International joint venture income (loss) 238 (137) 563
Interest and finance charges earned 421 440 437
Sundry, net 521 547 (2,365)
Gain on sale of Grain Systems division 22,000 - -
-------- -------- --------
23,180 850 (1,365)
-------- -------- --------
Operating and other income 64,891 50,348 46,409
Interest expense 5,069 4,344 4,100
-------- -------- --------
Pretax earnings 59,822 46,004 42,309
Income taxes 25,438 20,241 18,877
-------- -------- --------
Net earnings 34,384 25,763 23,432
Retained earnings at beginning of year 141,900 119,395 99,579
-------- -------- --------
176,284 145,158 123,011
Dividends declared:
Common stock, $.52, $.44, and $.37 per share (3,999) (3,335) (2,750)
Net change in retained earnings due to
treasury stock transactions 3,088 77 (866)
-------- -------- --------
Retained earnings at end of year $175,373 $141,900 $119,395
======== ======== ========
Basic earnings per share $ 4.48 $ 3.39 $ 3.14
======== ======== ========
Diluted earnings per share $ 4.43 $ 3.35 $ 3.07
======== ======== ========
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
Page 20
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
(Thousands of dollars)
Years ended December 31 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 34,384 $ 25,763 $ 23,432
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 12,474 9,737 8,861
Gain on sale of business (13,299) - -
Equity in (earnings) loss of joint ventures (576) 720 (91)
Change in assets and liabilities, net of sale
or purchase of new businesses:
Receivables 3,914 (18,979) 4,120
Inventories (21,999) (8,922) 8,123
Real estate developments in progress 11,402 (13,680) (4,138)
Deferred taxes 790 725 (2,913)
Other current assets (5,221) 2,113 (3,583)
Current liabilities excluding
short-term debt (16,664) 26,899 (14,677)
-------- -------- --------
Net cash provided by operating activities 5,205 24,376 19,134
-------- -------- --------
Cash flows from investing activities:
Capital expenditures (30,249) (22,670) (22,663)
Cash received on sale of business 33,748 - -
Acquisition of new businesses (7,697) (805) (994)
Net change in other noncurrent assets (2,429) (6,275) 1,811
Distributions from international joint ventures - - 800
-------- -------- --------
Net cash used by investing activities (6,627) (29,750) (21,046)
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 790 771 5,516
Repayment of long-term debt (5,826) (5,384) (4,248)
Net change in short-term debt 12,284 7,597 4,220
Dividends paid (3,837) (3,184) (2,481)
Sale and issuance of treasury stock 1,507 1,660 8,616
Purchase of treasury stock (6,179) (2,543) (5,071)
Net change in other noncurrent liabilities 6,710 820 (2,631)
-------- -------- --------
Net cash provided (used)
by financing activities 5,449 (263) 3,921
Effect of exchange rate changes (525) 397 (40)
-------- -------- --------
Net change in cash and cash equivalents 3,502 (5,240) 1,969
Cash and cash equivalents at beginning of year 2,013 7,253 5,284
-------- -------- --------
Cash and cash equivalents at end of year $ 5,515 $ 2,013 $ 7,253
======== ======== ========
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
Page 21
<PAGE>
Notes to Consolidated Financial Statements
Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements include all
subsidiaries which are more than 50% owned. Corporations in which the company
has stock ownership up to but not over 50% are accounted for using the equity
method. All significant intercompany profits, account balances, and
transactions are eliminated in consolidation.
Management of the company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
Cash and Cash Equivalents. Cash and cash equivalents are defined as all demand
deposits and overnight investments.
Inventories. Inventories are valued at the lower of cost or market. The last-
in, first-out (LIFO) method of determining cost is used for substantially all
domestic inventories. If the first-in, first-out method had been used for all
locations, inventories would have been $10.9 million, $11.3 million, and $11.5
million higher than those reported at December 31, 1997, 1996, and 1995,
respectively.
In 1997 and 1995, the use of the LIFO method decreased net earnings by $.3
million ($.04 per share) and $1.1 million ($.15 per share), respectively, and
increased net earnings by $.1 million ($.01 per share) in 1996.
<TABLE>
Inventories by Component
<CAPTION>
(Thousands of dollars) 1997 1996
-------- --------
<S> <C> <C>
Raw materials $ 38,622 $ 37,292
Work in process 7,304 6,460
Finished goods 43,223 27,590
-------- --------
89,149 71,342
LIFO reserve (10,858) (11,252)
-------- --------
$ 78,291 $ 60,090
======== ========
</TABLE>
Property, Plant, and Equipment. Depreciation is calculated using the straight-
line method over the estimated useful lives of the assets. Expenditures for
maintenance and repairs are charged to expense as incurred. Upon sale or
retirement of assets, the cost and the accumulated depreciation amounts are
removed from the accounts.
Research and Development Costs. Costs incurred in the creation and start-up of
new products or changes of existing products are charged to expense as
incurred. The company expended $2.9 million of research and development costs
in 1997, $2.7 million in 1996, and
$2.5 million in 1995.
Stock Option Plans. The company records stock compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25). Under APB 25 no charges are made to earnings in accounting
for stock options granted because all options are granted at fair market value.
If the amounts received when options are exercised are different than the
carrying value of treasury stock issued, the difference is recorded in retained
earnings. See the "Stock Incentive Plans" footnote for more information on the
company's stock option plans.
Deferred Charges. Incremental costs related to the development of major
computer programs expected to reduce costs in future periods have been
capitalized, are included in "Investments and other assets" in the consolidated
balance sheets ($11.5 million, $7.1 million, and $4.6 million at December 31,
1997, 1996, and 1995, respectively), and are being amortized on a straight-line
basis over periods not exceeding seven years.
Page 22
<PAGE>
Earnings Per Share. In February, 1997 the Financial Accounting Standards Board
issued Statement of Financial Accounting Standard No. 128, "Earnings Per Share"
(SFAS 128), effective for periods ending after December 15, 1997, requiring
presentation of basic and diluted earnings per share. SFAS 128 supersedes
Accounting Principles Board Opinion No. 15 and related pronouncements and
replaces the computations of primary and fully diluted earnings per share (EPS)
with basic and diluted earnings per share, respectively. Basic earnings per
share is based upon the weighted average common shares outstanding during each
year. Dilutive earnings per share is based upon the weighted average common and
common equivalent shares outstanding during each year. Employee stock options
are the company's only common stock equivalents; there are no other potentially
dilutive securities.
<TABLE>
Basic and Diluted Earnings Per Share Computations
<CAPTION>
1997
----------------------------
Per-Share
(In thousands except per share amounts) Income Shares Amount
------- ------ ------
<S> <C> <C> <C>
Net earnings $34,384
------- ------ ------
Basic EPS income available to common shareholders 34,384 7,668 $4.48
------- ------ ------
Stock options 86
------- ------ ------
Diluted EPS income available to common
shareholders plus assumed conversions $34,384 7,754 $4.43
======= ====== ======
<CAPTION>
1996
----------------------------
Per-Share
(In thousands except per share amounts) Income Shares Amount
------- ------ ------
<S> <C> <C> <C>
Net earnings $25,763
------- ------ ------
Basic EPS income available to common shareholders 25,763 7,590 $3.39
------- ------ ------
Stock options 103
------- ------ ------
Diluted EPS income available to common
shareholders plus assumed conversions $25,763 7,693 $3.35
======= ====== ======
<CAPTION>
1995
----------------------------
Per-Share
(In thousands except per share amounts) Income Shares Amount
------- ------ ------
<S> <C> <C> <C>
Net earnings $23,432
------- ------ ------
Basic EPS income available to common shareholders 23,432 7,458 $3.14
------- ------ ------
Stock options 172
------- ------ ------
Diluted EPS income available to common
shareholders plus assumed conversions $23,432 7,630 $3.07
======= ====== ======
</TABLE>
Options to purchase 93,000 and 15,000 shares of common stock at $38.50 and
$35.88 per share, respectively, were outstanding during 1997 but were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the common shares.
These options, which expire in 2002, were still outstanding at the end of 1997.
Foreign Currency Translation. The value of the U.S. dollar fluctuates on
foreign currency exchanges which creates exchange gains or losses on the
company's international investments.
These investments and the related equity earnings and losses are translated
into U.S. dollars at year-end and average exchange rates, respectively. The
gains or losses that result from translation are shown in the shareholders'
equity section of the consolidated balance sheets. Foreign currency exchange
transaction gains or losses for 1997, 1996, and 1995 were immaterial to
consolidated results.
Financial Instruments. The fair value of long-term debt is determined by
comparing interest rates for debt with similar terms and maturities. At
December 31, 1997 and 1996 the fair value of the company's long-term debt was
not materially different than its carrying value. Other financial instruments,
consisting of cash and cash equivalents, net receivables, notes payable, and
accounts payable are carried at cost, which approximates fair value, as a
result of the short-term nature of these instruments.
The company has entered into derivative transactions for purposes other than
trading as a means of managing risk of loss of underlying assets. Aluminum
metal hedge contracts of less than one year's duration are utilized to hedge
architectural aluminum product backlog against losses caused by changes in
aluminum costs. Certain foreign currency forward contracts (principally
Canadian dollars) of less than one year's duration are used to hedge the
company's foreign currency exposure. Gains or losses related to qualifying
hedges are recognized in income when the hedged transaction occurs. The fair
values of open aluminum metal hedge contracts and foreign currency hedges at
December 31, 1997 and 1996 were immaterial.
The company has no significant off-balance sheet risks or concentrations of
credit.
Page 23
<PAGE>
Construction Contracts. The company recognizes earnings on construction
contracts using the percentage of completion method based upon its estimate of
the completion of each project. Costs and estimated earnings in excess of
billings at December 31, 1997 and 1996 were $1.5 million and $1.7 million,
respectively, and are reflected in the consolidated balance sheets under the
caption "Inventories." Total receivables due under construction contracts,
which are included as trade receivables, were $11.6 million and $27.2 million
at December 31, 1997 and 1996, respectively. Included in the contract
receivables were $2.1 million and $5 million at December 31, 1997 and 1996,
respectively, for amounts billed but not collected pursuant to retainage
provisions. These amounts are due upon completion of the contracts.
Acquisition of New Businesses. In March, 1997 the company acquired certain
assets of Rebco West, Inc., a leading west coast manufacturer and distributor
of quality entrance doors and storefront products. The consideration paid was
$2.7 million cash and a $.7 million deferred payment.
In June, 1997 the company acquired Modu-Line Windows, Inc. for 191,777 shares
of Butler common stock having a market value of approximately $7 million, plus
deferred cash payments and closing costs of $.5 million. The company also
retired Modu-Line's existing bank debt of approximately $4.5 million. The fair
value of the assets acquired of $12 million consisted primarily of receivables,
inventory, and equipment valued at $6.2 million. The remaining amount was
allocated to goodwill. Modu-Line is a leading manufacturer of high quality
architectural windows for the nonresidential buildings market.
In December, 1996 the company purchased a 90% interest in Beker Kft for cash
and a deferred payment. The consideration paid was immaterial to the financial
statements. Beker Kft is a small building systems manufacturer in Hungary.
In June, 1995 the company purchased certain assets of Skywall, Inc. for $1
million cash and $1.2 million in notes, payable in five annual installments
through 2000. Skywall is a manufacturer of translucent fiberglass panel
systems.
The results of the businesses acquired have been included in the consolidated
results of the company since the acquisition dates with an immaterial impact on
net sales and net earnings.
All acquisitions to date have been accounted for as purchases. The excess of
cost over net assets of businesses acquired, which is classified as
"Investments and other assets" in the consolidated balance sheets, is being
amortized over forty years or less.
Sale and Dissolution of Businesses. In June, 1997 the company sold the business
and substantially all of the assets and liabilities of the Grain Systems
division to CTB, Inc. for $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.
Net sales and pretax earnings for the Grain Systems division for the years
1997, 1996, and 1995 were $19.5 million and $3.5 million, $41.7 million and
$6.1 million, and $30.6 million and $3.6 million, respectively.
In December, 1997 the company agreed to dissolve its 50%-owned joint venture,
Advanced Building Systems. The financial impact of dissolution on the company's
financial results was immaterial.
In December, 1996 the company recorded a $.6 million pretax loss resulting from
Butler Japan, Inc. discontinuing its business. The company also recognized a
$.2 million tax benefit relating to the discontinuance of this business.
Real Estate Subsidiaries. Butler Real Estate, Inc. (BRE) is a wholly-owned
subsidiary providing real estate development services in cooperation with
Butler dealers. In 1997, 1996, and 1995 BRE generated net earnings of $3.1
million, $2.2 million, and $1.6 million, respectively, from project related
activities.
In a separate activity, BMC Real Estate, Inc. (BMCRE) participates in land
development joint ventures which are accounted for using the equity method.
BMCRE also owns land for development which is included in "Assets held for
sale" in the consolidated balance sheets with a net carrying value of $9.4
million and $9.9 million at December 31, 1997 and 1996, respectively.
Management believes the recovery of its investment in this property may take
several years and that the ultimate realizable value approximates the carrying
value.
Page 24
<PAGE>
International Joint Venture Operations. The company has a 30% interest in one
international joint venture, Saudi Building Systems. This entity is involved in
the design, manufacture, and marketing of pre-engineered metal buildings for
nonresidential use in its respective market. In 1996 and 1995, the company also
had a 45% interest in Butler Japan, Inc., a marketing joint venture.
The financial results of the joint ventures are reported using the equity
method of accounting. Total net sales of the joint ventures in 1997, 1996, and
1995 were $29.7 million, $29.3 million, and $32 million, respectively. The
joint ventures' operating earnings in 1997, 1996, and 1995 were $.5 million,
$.4 million, and $.5 million, respectively. In 1997 and 1996 total assets were
$19.1 million and $19.8 million, respectively. Total liabilities for 1997 and
1996 were $6.3 million and $7.5 million, respectively.
The company received distributions from the international joint ventures in
1995 of $.8 million.
Business Segments
The company groups its operations into three business segments, Building
Systems, Construction Services, and Architectural Products.
The Building Systems segment includes the U.S. and foreign building systems
businesses, the company's joint venture operations, and real estate
subsidiaries. These business units supply steel and wood frame pre-engineered
building systems and development services for a wide variety of commercial,
community, industrial, and agricultural applications.
The Construction Services segment provides comprehensive design and
construction planning, execution, and management services for major purchasers
of construction. Projects are usually executed in conjunction with the dealer
representatives of other Butler divisions.
The Architectural Products segment includes the operations of the Vistawall
Group. These businesses design, manufacture, and market architecturally
oriented component systems for nonresidential construction, including aluminum
curtain wall, storefront systems, windows, doors, skylights, and roof
accessories. The results of the former Grain Systems division are included in
the segment table amounts until its sale in June, 1997.
<TABLE>
Net Sales
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Building Systems $671,018 $582,756 $586,377
Construction Services 120,905 167,069 120,501
Architectural Products 171,501 164,457 146,656
Intersegment eliminations (38,778) (44,120) (26,996)
-------- -------- --------
$924,646 $870,162 $826,538
======== ======== ========
</TABLE>
Net sales represent revenues from sales to affiliated and unaffiliated
customers before elimination of intersegment sales which are separately
disclosed. Intersegment eliminations are primarily sales from the Building
Systems and Architectural Products segments to Construction Services.
<TABLE>
Export Sales by Domestic Operations
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
North & South America $ 61,232 $ 58,645 $ 57,799
Far East 24,126 32,514 31,579
Other 16,281 14,576 13,875
-------- -------- --------
$101,639 $105,735 $103,253
======== ======== ========
</TABLE>
<TABLE>
Pretax Earnings (Loss)
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Building Systems $ 37,951 $ 41,882 $ 40,354
Construction Services 1,519 735 1,318
Architectural Products 12,670 15,712 14,146
Corporate (9,249) (7,981) (9,409)
Interest expense (5,069) (4,344) (4,100)
-------- -------- --------
$ 37,822 $ 46,004 $ 42,309
======== ======== ========
</TABLE>
Pretax earnings in 1997 excludes the $22 million gain on sale of the Grain
Systems division.
<TABLE>
Assets
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Building Systems $251,375 $224,258 $174,446
Construction Services 19,921 27,333 25,998
Architectural Products 69,299 53,244 43,919
Corporate 34,377 32,585 38,506
-------- -------- --------
$374,972 $337,420 $282,869
======== ======== ========
</TABLE>
Assets represent both tangible and intangible assets used by the segments.
Corporate assets represent cash and cash equivalents, assets held for sale,
corporate equipment, and miscellaneous other assets which are not related to a
specific business segment.
Page 25
<PAGE>
<TABLE>
Capital Expenditures
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Building Systems $ 16,692 $ 19,106 $ 19,253
Construction Services 4,634 639 676
Architectural Products 7,746 2,621 2,479
Corporate 1,177 304 255
-------- -------- --------
$ 30,249 $ 22,670 $ 22,663
======== ======== ========
</TABLE>
Capital expenditures exclude property, plant, and equipment acquired through
acquisition of new businesses.
<TABLE>
Depreciation
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Building Systems $ 8,160 $ 6,447 $ 5,958
Construction Services 389 399 343
Architectural Products 1,754 1,490 1,402
Corporate 248 144 99
-------- -------- --------
$ 10,551 $ 8,480 $ 7,802
======== ======== ========
</TABLE>
Operations by Geographic Area
Information about the company's operations in different geographic areas for
the years ended December 31, 1997, 1996, and 1995 is listed below. The foreign
component consists of Europe, the Pacific Rim, and Latin America.
<TABLE>
Net Sales
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
North America $868,675 $834,931 $802,706
Foreign 55,971 35,231 23,832
======== ======== ========
$924,646 $870,162 $826,538
======== ======== ========
</TABLE>
Intersegmental sales or transfers between geographic areas were immaterial.
<TABLE>
Pretax Earnings (Loss) Excluding Corporate and Interest Expense
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
North America $ 56,995 $ 59,756 $ 58,282
Foreign (4,855) (1,427) (2,464)
======== ======== ========
$ 52,140 $ 58,329 $ 55,818
======== ======== ========
</TABLE>
<TABLE>
Assets Excluding Corporate Assets
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
North America $290,477 $274,545 $225,116
Foreign 50,118 30,290 19,247
======== ======== ========
$340,595 $304,835 $244,363
======== ======== ========
</TABLE>
Debt, Leases, Commitments, and Contingencies
<TABLE>
Long-Term Debt Net of Current Maturities
(Thousands of dollars) 1997 1996
-------- --------
<S> <C> <C>
Private Placement Notes $ 25,000 $ 30,000
Industrial Revenue Bonds 6,250 6,250
Other debt 2,668 2,147
-------- --------
$ 33,918 $ 38,397
======== ========
</TABLE>
The Private Placement Notes carry a fixed interest rate of 8.02%. Annual
principal payments of $5 million are required beginning in December, 1997 and
continuing through 2003.
In April, 1995 the Development Authority of San Marcos, Texas issued $6.3
million of Industrial Revenue Bonds. Proceeds from the issue were used to
finance the expansion of the existing San Marcos plant. The bonds mature in
2015 and are guaranteed by the company. The weighted average interest rates on
the bond issue were 4.3% for 1997 and 3.8% for 1996. The bonds are secured by a
bank letter of credit.
Total principal payments due on all debt in each of the five years subsequent
to December 31, 1997 are $5.9 million in 1998, $5.9 million in 1999, $5.7
million in 2000, $5.3 million in 2001, $5.2 million in 2002, and $11.8 million
thereafter. Cash payments for interest on long-term debt were $3.2 million,
$3.6 million, and $3.7 million in 1997, 1996, and 1995, respectively.
Short-Term Borrowings. During 1997 and 1996 the company borrowed to meet
working capital needs and other requirements. At December 31, 1997 the company
and its subsidiaries, including Butler Building Systems Limited, had short-term
credit facilities at several banks totaling $52.5 million. Borrowings
outstanding at December 31, 1997 were $21.3 million at a weighted average
interest rate of 8.5%. The company has committed $1.8 million of its credit
facilities under a letter of credit for insurance obligations. At December 31,
1997 the company had approximately $29.4 million of available borrowing
capacity.
The company's credit agreements contain certain limitations on additional
borrowings, the payment of cash dividends, and the purchase of company stock,
as well as covenants related to the maintenance of certain financial ratios. As
of December 31, 1997 the company was in compliance with all covenants, and at
that date approximately $14 million of retained earnings was available for cash
dividends and share repurchases.
PAGE 26
<PAGE>
Leases. Rental expense under operating leases was $9.9 million, $8.5 million,
and $7.7 million in 1997, 1996, and 1995, respectively. Minimum rental
commitments under noncancelable operating leases are $5.2 million in 1998, $5.2
million in 1999, $4.4 million in 2000, $3.1 million in 2001, and $2.4 million
in 2002.
Commitments and Contingencies. As a service to its independent dealers, the
company assists in obtaining performance bonds on certain construction
contracts in the ordinary course of business. An irrevocable letter of credit
is generally required for a portion of the contract amount to reduce the
possible liability of the company. At December 31, 1997 such performance bonds
exceeded the related letters of credit by $.6 million. The contracts are in
various stages of completion and management believes that there will be no
liability to the company.
The company is subject to various legal proceedings, claims, and environmental
actions which arise in the ordinary course of business operations. Although the
ultimate outcome of these matters is presently not determinable, management,
after consultation with legal counsel, believes the resolution of these matters
will not have a material adverse effect upon the company's financial position
or results of operations.
Taxes on Income
The components of the provision for income taxes are shown in Table A. Cash
payments for income taxes were $25.2 million, $15.9 million, and $17.8 million
in 1997, 1996, and 1995, respectively. The foreign components of pretax
earnings were net losses of $3.6 million, $2.4 million, and $2.8 million in
1997, 1996, and 1995, respectively. A reconciliation of the statutory federal
income tax and the income tax expense is shown in Table B.
Deferred income tax expense or benefit arises from differences between
financial reporting and tax reporting of assets and liabilities, which most
often result from the differences in timing of income and expense recognition.
Differences between financial reporting and tax bases also arise due to
business acquisition activity as tax laws can result in significant differences
in values assigned to assets and liabilities. Previously recorded deferred tax
assets and liabilities are adjusted for any changes in enacted tax rates.
Detail of deferred tax assets and liabilities is shown in Table C.
<TABLE>
Table A: Components of Income Taxes
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal $ 19,917 $ 15,881 $ 18,539
Foreign 189 168 -
State and local 4,541 3,467 3,251
-------- -------- --------
24,647 19,516 21,790
-------- -------- --------
Deferred:
Federal 729 668 (2,683)
State and local 62 57 (230)
-------- -------- --------
791 725 (2,913)
-------- -------- --------
Total income tax expense $ 25,438 $ 20,241 $ 18,877
======== ======== ========
</TABLE>
<TABLE>
Table B: Reconciliation of Income Tax Expense
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Expected income tax expense $ 20,938 $ 16,101 $ 14,808
State and local income tax,
net of federal benefits 2,952 2,253 2,113
Nondeductible operating losses
of foreign subsidiaries 1,437 823 964
Other 111 1,064 992
-------- -------- --------
Actual income tax expense $ 25,438 $ 20,241 $ 18,877
======== ======== ========
</TABLE>
<TABLE>
Table C: Deferred Tax Assets and Liabilities
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Current deferred tax assets:
Operating expenses $ 7,039 $ 7,213 $ 5,901
Inventory 670 893 808
Restructuring reserves (110) 648 1,354
Other 213 124 285
-------- -------- --------
Net current deferred tax assets $ 7,812 $ 8,878 $ 8,348
======== ======== ========
Noncurrent deferred tax assets (liabilities):
Depreciation $ (7,370) $ (7,769) $ (5,735)
Operating expenses 4,451 4,057 3,890
Minority investments (90) (72) (242)
Foreign net operating loss carryforward 4,517 4,338 3,515
Other (552) (53) (495)
-------- -------- --------
Net noncurrent deferred tax assets 956 501 933
Valuation allowance (4,517) (4,338) (3,515)
-------- -------- --------
Net noncurrent deferred tax liabilities $ (3,561) $ (3,837) $ (2,582)
======== ======== ========
</TABLE>
PAGE 27
<PAGE>
The valuation allowance offsets the deferred tax asset relating to the foreign
net operating loss carryforwards. Depending on future profitability, the
carryforwards may be realized in later years. The company has sufficient
taxable income in the three year carryback period to support the recognition of
its other deferred tax assets.
The company and its domestic subsidiaries file a consolidated federal income
tax return. The company's consolidated federal income tax returns have been
examined by the Internal Revenue Service and settled through 1990. Although
1991 was not examined by the Internal Revenue Service, the statute period has
expired.
Employee Benefit Plans
Retirement Plans. The company provides retirement benefits for substantially
all employees, either through a defined benefit plan, the defined contribution
Individual Retirement Asset Account Plan (IRAA) - formerly the ESOP, or a
combination of both types of plans. Pension contributions are based on funding
standards established by the Employee Retirement Income Security Act of 1974.
The majority of the company's salaried and nonunion hourly employees are
covered by both a defined benefit plan and the IRAA. These plans are linked as
to retirement benefits, and benefits are based on the employees' highest five
consecutive years' compensation. Bargaining unit employees are covered by
defined benefit retirement plans. Benefits are based upon the number of years
of service.
The funded status and accrued pension cost at December 31, 1997 and 1996 for
the defined benefit plans are presented in Table D. While the market value of
the IRAA assets is not included in the amounts in Table D, the effect of the
IRAA offset has been recognized in the accumulated and projected benefit
obligations. Assets held by the defined benefit plans are primarily equities,
bonds, and government securities. The net pension cost of these plans in 1997,
1996, and 1995 is presented in Table E.
<TABLE>
Table D: Funded Status and Accrued Pension Cost
<CAPTION>
(Thousands of dollars) 1997 1996
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $ 47,536 $ 41,323
======== ========
Accumulated benefit obligation $ 49,305 $ 42,151
======== ========
Plan assets at fair value $ 57,190 $ 48,431
Projected benefit obligation 70,416 61,625
-------- --------
Projected benefit obligation
(greater than) less than plan assets (13,226) (13,194)
Unrecognized net (gain) loss 16,924 15,556
Unrecognized net transition (asset) liability 669 866
-------- --------
Prepaid (accrued) pension cost $ 4,367 $ 3,228
======== ========
</TABLE>
<TABLE>
Table E: Components of Net Pension Cost
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits
earned during the period $ 2,669 $ 2,268 $ 1,622
Interest cost on the projected
benefit obligation 4,472 4,096 3,715
Actual return on assets - (gain) loss (7,152) (4,997) (9,497)
Net amortization and deferral 4,253 2,771 8,143
-------- -------- --------
Net pension cost $ 4,242 $ 4,138 $ 3,983
======== ======== ========
Assumptions used in determining net pension
cost and all benefit obligations were:
Expected long-term rate of return on assets 8.5% 8.5% 8.5%
Discount rate 7.5% 7.5% 7.5%
Long-term rate of increase in
compensation levels 5.5% 5.5% 5.5%
</TABLE>
The IRAA assets include the company's common stock, other equities, bonds, and
government securities. At December 31, 1997 and 1996, the IRAA had net assets
of $57.4 million and $67 million, respectively, and held 949,345 shares and
1,017,443 shares of company stock at December 31, 1997 and 1996, respectively.
The company expensed $.5 million for IRAA contributions in 1997 and 1996, and
$.4 million in 1995, respectively.
PAGE 28
<PAGE>
Other Benefit Plans. The company sponsors the Butler Employees Savings Trust, a
savings plan under section 401(k) of the Internal Revenue Code. All salaried
and nonunion hourly employees are eligible to participate in this plan. Under
its terms the company will match 30% of the first 6% of employees'
contributions to the plan if certain profitability levels are attained. In
1997, 1996, and 1995 the company reached the defined profitability goals and
accordingly expensed $1.5 million, $1.1 million, and $.9 million, respectively,
as a matching contribution to the plan.
The company sponsors a supplemental retirement plan for certain executives.
Life insurance arrangements have been purchased which name the company as
beneficiary to meet the liabilities of the plan. The company expensed
$.7 million, $.3 million, and $.5 million in 1997, 1996, and 1995,
respectively, related to this plan.
Postretirement Benefits. The company currently provides certain health care and
life insurance benefits for retired employees and their dependents.
Substantially all employees become eligible for these benefits if they reach
retirement age while still working for the company and have at least ten years
of service. Contributions toward these benefits have been set to fixed amounts
per participant not to exceed 175% of 1993 costs. Election of health care and
life insurance benefit coverage for retirees and dependents is optional, and
requires contributions by the retiree towards the cost of these coverages. The
company reserves the right to change or terminate all employee benefits,
including postretirement benefits.
The company accrues estimated future postretirement benefit costs during the
years that employees perform services and earn benefits. The company amortizes
the resulting transition obligation over a 20 year period. The transition
obligation was $7.2 million, $8.1 million, and $8.6 million at December 31,
1997, 1996, and 1995, respectively.
<TABLE>
Table F: Accumulated Postretirement Benefit Obligation
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Retirees $ 6,776 $ 6,562 $ 7,582
Active participants fully eligible to retire 2,540 1,912 2,237
Other active participants 4,070 4,199 3,457
-------- -------- --------
13,386 12,673 13,276
Unrecognized net loss for
changes in assumptions (3,067) (1,895) (2,906)
Remaining accumulated post retirement benefit
obligation (7,167) (8,064) (8,567)
-------- -------- --------
Accrued postretirement
benefit liability $ 3,152 $ 2,714 $ 1,803
======== ======== ========
</TABLE>
Net postretirement benefit costs in 1997, 1996, and 1995 is presented in
Table G.
<TABLE>
Table G: Net Postretirement Benefit Costs
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Service cost, benefits attributed to
employee service during the year $ 339 $ 295 $ 182
Interest cost on accumulated postretirement
benefit obligation 912 956 879
Amortization of accumulated postretirement
benefit obligation 504 504 504
Deferred loss 37 100 -
-------- -------- --------
Net postretirement
benefit costs $ 1,792 $ 1,855 $ 1,565
======== ======== ========
</TABLE>
The discount rate assumption was 7.5% in 1997, 1996, and 1995. The health care
cost trend rate used in the actuarial computation was a blend of rates between
5% and 8% through 1999. The effect of a 1% increase in the health care cost
trend rate on the accumulated postretirement benefit obligation would be $.2
million, with an immaterial effect on net postretirement benefit costs.
Page 29
<PAGE>
Stock Incentive Plans
Stock options are presently outstanding under the Stock Incentive Plans of
1996, 1987, and 1979. The 1996 Plan covering 600,000 shares was approved in
April, 1996. Both the 1987 and 1979 plans were terminated upon the approval of
the respective successor plan except for outstanding qualified and nonstatutory
stock options and stock appreciation rights.
Options are granted at a price equal to the fair market value of company stock
at the date of grant for terms of up to ten years. At December 31, 1997, 1996,
and 1995, 176,302, 222,281, and 290,780 shares, respectively, under option were
exercisable and 485,342, 592,978, and 94,877 shares, respectively, were
available for grant. Table H presents a summary of stock option activity for
the three years ended December 31, 1997.
<TABLE>
Table H: Summary of Stock Option Activity
<CAPTION>
1997 1996 1995
Weighted- Weighted- Weighted-
average average average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Fixed Options
Outstanding at
beginning of year 262,764 $13.98 320,113 $11.64 760,974 $11.24
Granted 113,000 $38.37 28,000 $31.59 16,500 $23.00
Exercised (62,472) $12.03 (84,349) $10.84 (454,366) $11.39
Forfeited (7,166) $36.26 (1,000) $23.00 (2,995) $11.53
------- ------- -------
Outstanding at
end of year 306,126 $22.86 262,764 $13.98 320,113 $11.64
======= ======= =======
</TABLE>
Incentive stock options were granted by the company in 1997, 1996, and 1995 to
key employees under the 1996 and 1987 stock option plans. Options are granted
at fair market value and expire between five and ten years from the date of
grant. Prior to 1997 options vested in three equal annual installments
commencing one year from the date of grant. Options granted in 1997 vest one
year after date of grant and are fully exercisable thereafter.
The per share weighted-average fair value of stock options granted during 1997,
1996, and 1995 was $38, $32, and $23 respectively, on the date of grant using
the Black Scholes option pricing model with the following weighted average
assumptions: 1997 - expected dividend yield of 1.6%, risk-free interest rate of
5.7%, expected volatility factor of 39%, and an expected life of five years;
1996 - expected dividend yield of 1.7%, risk-free interest rate of 6.4%,
expected volatility factor of 43%, and an expected life of five years; 1995 -
expected dividend yield of 1.4%, risk-free interest rate of 6.2%, expected
volatility factor of 43%, and an expected life of five years.
Since the company applies APB 25 in accounting for its plans, no compensation
cost has been recognized for stock options in net income. Stock-based
compensation cost if recorded under Statement of Financial Accounting Standard
No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), would have
decreased the company's net income and earnings per share by $.9 million and
$.11 per share in 1997, $.2 million and $.02 per share in 1996, and $.1 million
and $.01 per share in 1995.
The full impact of calculating compensation costs for stock options under SFAS
123 is not reflected in the pro forma net income amounts presented above, as
compensation cost is reflected over the option's vesting period.
<TABLE>
Table I: Stock Options Outstanding
<CAPTION>
Options Outstanding Options Exercisable
Weighted-
Average Weighted- Weighted-
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 12/31/97 Life in Years Price at 12/31/97 Price
- ------------ ------- --- ------ ------- ------
<S> <C> <C> <C> <C> <C>
$ 8.00-12.00 153,876 2.1 $10.79 153,876 $10.79
$12.00-18.00 7,750 6.0 $17.50 7,750 $17.50
$18.00-27.00 10,500 7.1 $23.00 6,000 $23.00
$27.00-38.75 134,000 4.6 $37.02 8,676 $31.50
------- -------
306,126 3.4 $22.86 176,302 $12.52
======= =======
</TABLE>
Page 30
<PAGE>
<TABLE>
Treasury Stock Activity
<CAPTION>
(Thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Common stock held in treasury:
Balance January 1 $ 30,632 $ 29,749 $ 33,294
Purchases 6,179 2,543 5,071
Sales or issues (5,355) (1,660) (8,616)
-------- -------- --------
Balance, December 31 $ 31,456 $ 30,632 $ 29,749
======== ======== ========
</TABLE>
Purchases of treasury stock were made in 1997, 1996, and 1995 of 189,369,
87,822, and 194,301 common shares, respectively. Sales or issues of treasury
stock were 264,899, 84,349, and 454,366 common shares in 1997, 1996, and 1995,
respectively. The company recognized a tax benefit of $.6 million, $.8 million,
and $2.7 million in 1997, 1996, and 1995, respectively, which was credited
directly to retained earnings in the treasury stock transactions.
<TABLE>
Quarterly Financial Information (Unaudited)
<CAPTION>
(Thousands of dollars except per share amounts)
1997 Quarter Ended March 31 June 30 Sept. 30 Dec. 31 Total
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $188,102 $241,078 $241,031 $254,435 $924,646
Gross profit 32,077 41,326 43,882 46,640 163,925
Net earnings 1,896 18,992 6,806 6,690 34,384
Basic earnings per share .25 2.49 .87 .87 4.48
Diluted earnings
per share .25 2.46 .86 .86 4.43
Dividends per share .12 .12 .14 .14 .52
Second quarter and annual net earnings and earnings per share amounts include
the gain on the sale of the Grain Systems division of $13.3 million or $1.72
per share.
1996 Quarter Ended March 31 June 30 Sept. 30 Dec. 31 Total
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $175,692 $193,446 $229,019 $272,005 $870,162
Gross profit 31,712 36,432 41,527 46,375 156,046
Net earnings 3,259 5,808 8,778 7,918 25,763
Basic earnings
per share .43 .76 1.15 1.05 3.39
Diluted earnings
per share .42 .75 1.14 1.04 3.35
Dividends per share .10 .10 .12 .12 .44
</TABLE>
<TABLE>
Price Range of Common Stock (Unaudited)
The company's common stock is traded on the New York Stock Exchange following
its listing on the Exchange on November 12, 1996. Prior to that date, the
company's shares were traded in the NASDAQ Over-the-Counter Market. The table
below summarizes the high and low closing prices as reported on the respective
exchanges.
<CAPTION>
1997 1996
Quarter High Low High Low
------- ------- ------- -------
<S> <C> <C> <C> <C>
First $41 1/2 $35 1/2 $39 1/2 $30 1/8
Second 36 1/2 31 1/2 37 3/4 33 1/4
Third 37 1/8 33 3/16 35 25 1/4
Fourth 34 1/2 31 11/16 41 27 1/2
</TABLE>
Page 31
<PAGE>
<TABLE>
Historical Review 1997-1993
<CAPTION>
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income Statement Data
Net sales $924,646 $870,162 $826,538 $692,190 $575,847
Net earnings 34,384 25,763 23,432 15,355 18,098
As a percent of sales 3.7% 3.0% 2.8% 2.2% 3.1%
As a percent of average
shareholders' equity 24.5% 22.7% 25.8% 21.8% 35.4%
Per share of common stock:
Basic earnings $ 4.48 $ 3.39 $ 3.14 $ 2.13 $ 2.62
Diluted earnings 4.43 3.35 3.07 2.07 2.56
Cash dividends declared,
per common share .52 .44 .37 .13 -
Cash dividends paid,
per common share .50 .42 .33 .07 -
================================================
Financial Position
At Year-End
Assets
Current assets $233,323 $222,061 $187,303 $188,652 $128,266
Property, plant,
and equipment, net 96,339 77,398 63,407 48,526 41,528
Total assets 374,972 337,420 282,869 271,136 205,487
Working capital
Net working capital 68,819 61,182 61,171 52,572 30,072
Ratio of current assets
to current liabilities 1.4 1.4 1.5 1.4 1.3
Financial structure
Long-term debt,
less current maturities $ 33,918 $ 38,397 $ 42,613 $ 40,263 $ 30,345
Total debt 39,780 43,861 47,064 42,737 41,713
Shareholders' equity 156,566 124,442 102,423 79,102 61,709
Per common share,
year-end 20.50 16.46 13.54 10.83 8.71
Total debt as a percent
of total capital 20.3% 26.1% 31.5% 35.1% 40.3%
================================================
General Statistics
Depreciation $ 10,551 $ 8,480 $ 7,802 $ 6,681 $ 7,675
Capital expenditures $ 30,249 $ 22,670 $ 22,663 $ 13,663 $ 6,460
Basic shares
outstanding, average 7,668 7,590 7,458 7,201 6,918
Diluted shares
outstanding, average 7,754 7,693 7,630 7,407 7,095
Common shares
outstanding, year-end 7,637 7,561 7,565 7,305 7,083
Common shareholders, year-end 2,310 2,345 2,411 2,473 2,562
Number of employees, year-end 5,117 4,162 3,966 3,564 3,064
================================================
<FN>
1. In thousands except per share amounts for common stock and the number of
shareholders and employees.
2. The 1993 net earnings include an after-tax gain on the sale of the Walker
division of $10.7 million or $1.51 per share.
3. All per share and common equivalent share amounts have been restated to
reflect the effect of the June, 1995 3-for-2 stock split.
4. The 1997 net earnings include an after-tax gain on the sale of the Grain
Systems division of $13.3 million or $1.72 per share.
5. Earnings per share have been restated to reflect the provisions of Statement
of Financial Accounting Standard No. 128 - Earnings Per Share.
</TABLE>
Page 32
<PAGE> 1
EXHIBIT 24.0
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned hereby
constitutes and appoints Richard O. Ballentine and John Huey, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and revocation in each, for him/her and in his/her name, place and
stead, to sign any or all reports (including reports on Form 10-K, Form 3, Form
4, Form 5, Schedule 13-D, Schedule 13-G, and Form 144), and any amendments
thereto, required or permitted to be filed by him under the Securities and
Exchange Act of 1934, or the Securities Act of 1933, with respect to beneficial
ownership of, and transactions in, equity securities of BUTLER MANUFACTURING
COMPANY, a Delaware corporation (the "Company"), and with respect to other
matters relating to the Company, and to file the same, with all documents
required or permitted to be filed in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises as fully to
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
DATED: March 20, 1998 /s/ HAROLD G. BERNTHAL
---------------------------------------
HAROLD G. BERNTHAL
DATED: March 20, 1998 /s/ ROBERT E. COOK
---------------------------------------
ROBERT E. COOK
DATED: March 20, 1998 /s/ ALAN M. HALLENE
---------------------------------------
ALAN M. HALLENE
DATED: March 20, 1998 /s/ C.L. WILLIAM HAW
---------------------------------------
C.L. WILLIAM HAW
DATED: March 20, 1998 /s/ ROBERT J. NOVELLO
---------------------------------------
ROBERT J. NOVELLO
DATED: March 20, 1998 /s/ GEORGE E. POWELL, JR.
---------------------------------------
GEORGE E. POWELL, JR.
DATED: March 20, 1998 /s/ DONALD H. PRATT.
---------------------------------------
DONALD H. PRATT
DATED: March 20, 1998 /s/ ROBERT J. REINTJES, SR.
---------------------------------------
ROBERT J. REINTJES, SR.
DATED: March 20, 1998 /s/ JUDITH A. ROGALA
---------------------------------------
JUDITH A. ROGALA
DATED: March 20, 1998 /s/ Gary L. Tapella
---------------------------------------
Gary L. Tapella
DATED: March 20, 1998 /s/ ROBERT H. WEST
---------------------------------------
ROBERT H. WEST
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Butler
Manufacturing Company Consolidated Statements of Operations for the year ended
December 31, 1997, and Consolidated Balance Sheet as of December 31, 1997, and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 5,515
<SECURITIES> 0
<RECEIVABLES> 109,355
<ALLOWANCES> 2,473
<INVENTORY> 78,291
<CURRENT-ASSETS> 233,323
<PP&E> 239,747
<DEPRECIATION> 143,408
<TOTAL-ASSETS> 374,972
<CURRENT-LIABILITIES> 164,504
<BONDS> 33,918<F1>
0
0
<COMMON> 12,623
<OTHER-SE> 175,373<F2>
<TOTAL-LIABILITY-AND-EQUITY> 374,972
<SALES> 924,646
<TOTAL-REVENUES> 925,826<F3>
<CGS> 760,721
<TOTAL-COSTS> 760,721
<OTHER-EXPENSES> 122,214<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,069
<INCOME-PRETAX> 59,822
<INCOME-TAX> 25,438
<INCOME-CONTINUING> 34,384<F5>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,384
<EPS-PRIMARY> 4.48
<EPS-DILUTED> 4.43
<FN>
<F1>Reflects long-term debt, less current maturities.
<F2>Reflects other stockholders' equity before deduction of $31.5 million cost of
treasury stock and foreign currency translation adjustments.
<F3>Reflects net sales plus net international joint venture income less net other
expense.
<F4>Consists of selling, general, and administrative expense.
<F5>Includes $22.0 million one time gain on the sale of Grain Systems division.
</FN>
</TABLE>
