<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13
or 15(d) of the
Securities Exchange Act of 1934
Commission File No. 001-12335
FOR THE QUARTER ENDED JUNE 30, 1999
BUTLER MANUFACTURING COMPANY
Incorporated in the State of Delaware
BMA Tower - Penn Valley Park
Post Office Box 419917
Kansas City, Missouri 64141-0917
Phone: (816) 968-3000
I.R.S. Employer Identification Number: 44-0188420
Shares of common stock outstanding at
JUNE 30, 1999: 7,028,572
The name, address and fiscal year of the Registrant have not changed
since the last report.
The Registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past 90 days.
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PART I. - FINANCIAL INFORMATION Page Number
ITEM 1. Financial Statements
<S> <C> <C>
(1) Consolidated Financial Statements (unaudited):
Consolidated Statements of Operations for the Three and Six Month
Periods Ended June 30, 1999 and 1998. 3
Consolidated Statements of Comprehensive Income for the Six Month
Periods Ended June 30, 1999 and 1998. 4
Consolidated Balance Sheets as of June 30, 1999 and
December 31, 1998. 5
Consolidated Statements of Cash Flows for the Six Month
Periods Ended June 30, 1999 and 1998. 6
(2) Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
PART II. - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 13
</TABLE>
Page 2
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six month periods ended June 30, 1999 and 1998
(unaudited)
($000's omitted except for per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------------------- -------------------------------------
1999 1998 1999 1998
---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net sales $ 248,713 $ 238,517 $ 452,109 $ 432,301
Cost of sales 204,234 197,455 373,727 359,312
---------------- ----------------- ---------------- ----------------
Gross profit 44,479 41,062 78,382 72,989
Selling, general and administrative expenses 32,227 31,326 62,513 59,604
Restructuring charge - Brazilian devaluation
loss - - 1,514 -
---------------- ----------------- ---------------- ----------------
Operating income 12,252 9,736 14,355 13,385
Other income (expense), net (96) 181 (233) 651
---------------- ----------------- ---------------- ----------------
Earnings before interest and taxes 12,156 9,917 14,122 14,036
Interest expense 1,366 1,483 2,875 2,868
---------------- ----------------- ---------------- ----------------
Pretax earnings 10,790 8,434 11,247 11,168
Income tax expense 4,459 3,516 4,652 5,091
---------------- ----------------- ---------------- -----------------
Net earnings $ 6,331 $ 4,918 $ 6,595 $ 6,077
================ ================= ================ ================
Basic earnings per common share $ 0.89 $ 0.64 $ 0.92 $ 0.79
================ ================= ================ ================
Diluted earnings per common share $ 0.89 $ 0.64 $ 0.91 $ 0.79
================ ================= ================ ================
Basic weighted average number of shares 7,084,119 7,663,184 7,159,160 7,658,208
Diluted weighted average number of shares 7,149,851 7,735,523 7,215,043 7,728,047
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
Page 3
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the six month periods ended June 30, 1999 and 1998
(unaudited)
($000's omitted, except for per share data)
<TABLE>
<CAPTION>
Six months ended
June 30,
1999 1998
---------------- ----------------
<S> <C> <C>
Net earnings $ 6,595 $6,077
Other comprehensive income:
Foreign currency translation adjustment (591) (460)
---------------- ----------------
Comprehensive income $ 6,004 $5,617
================ ================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
Page 4
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1999 and December 31, 1998
(unaudited)
($000's omitted)
<TABLE>
<CAPTION>
1999 1998
-------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 31,669 $ 10,260
Receivables, net 137,475 130,622
Inventories:
Raw materials 24,460 34,509
Work in process 8,902 8,503
Finished goods 34,711 37,417
Lifo reserve (10,328) (10,177)
-------------- ----------------
Total inventory 57,745 70,252
Real estate developments in progress 22,649 19,139
Deferred tax assets 10,944 10,944
Other current assets 10,078 12,283
-------------- ----------------
Total current assets 270,560 253,500
Investments and other assets 42,939 38,689
Assets held for sale 4,000 4,000
Property, plant and equipment, at cost 240,425 243,671
Less accumulated depreciation (146,348) (145,967)
-------------- ----------------
Net property, plant and equipment 94,077 97,704
-------------- ----------------
$ 411,576 $ 393,893
============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,354 $ 1,627
Current maturities of long-term debt 5,727 5,832
Accounts payable 90,554 83,710
Dividends payable 1,055 1,092
Accrued liabilities 71,857 62,444
Taxes on income 10,412 6,425
-------------- ----------------
Total current liabilities 180,959 161,130
Deferred tax liabilities 3,441 3,441
Other noncurrent liabilities 17,280 16,233
Long-term debt, less current maturities 62,293 62,901
Shareholders' equity:
Common stock, no par value, authorized 20,000,000
shares, issued 9,088,200 shares, at stated value 12,623 12,623
Cumulative foreign currency translation adjustment (643) (52)
Retained earnings 183,016 178,536
-------------- ----------------
194,996 191,107
Less cost of common stock in treasury, 2,059,628 shares
in 1999 and 1,806,202 shares in 1998 47,393 40,919
Total shareholders' equity 147,603 150,188
-------------- ----------------
$ 411,576 $ 393,893
============== ================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
Page 5
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six month periods ended June 30, 1999 and 1998
(unaudited)
($000's omitted)
<TABLE>
<CAPTION>
1999 1998
--------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 6,595 $ 6,077
Adjustments to reconcile net earnings to net cash used
in operating activities:
Depreciation and amortization 7,751 7,346
Restructuring Charge 1,514 ---
Equity earnings on joint ventures (40) (156)
Change in asset and liabilities, net of businesses acquired and sold:
Receivables (6,853) (11,798)
Inventories 12,507 (7,789)
Real estate developments in progress (3,510) 4,404
Other current assets 2,205 441
Current liabilities excluding short-term debt 20,244 20,869
--------------- -------------
Net cash provided in operating activities 40,413 19,394
Cash flows from investing activities:
Capital expenditures (4,557) (7,744)
Other, net (3,765) (3,793)
--------------- -------------
Net cash (used) by investing activities (8,322) (11,537)
Cash flows from financing activities:
Payment of dividends (2,164) (2,141)
Proceeds from issuance of long-term debt --- 35,000
Repayment of long-term debt (615) (620)
Net increase (decrease) in short-term debt (378) (20,265)
Sale and issuance of treasury stock 299 622
Purchase of treasury stock (6,773) ---
Other, net (460) (199)
--------------- -------------
Net cash (used) provided by financing activities (10,091) 12,397
Effect of exchange rate changes on cash (591) (460)
--------------- -------------
Net increase in cash and cash equivalents 21,409 19,794
Cash and cash equivalents at beginning of year 10,260 5,515
--------------- -------------
Cash and cash equivalents at June 30 $ 31,669 $ 25,309
=============== =============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
Page 6
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the accounting policies described in the
consolidated financial statements and related notes included in Butler
Manufacturing Company's 1998 Form 10-K. It is suggested that those consolidated
statements be read in conjunction with this report. The year-end financial
statements presented were derived from the company's audited financial
statements. In the opinion of management, the accompanying consolidated
financial statements reflect all adjustments necessary for a fair presentation
of the financial position of Butler Manufacturing Company and the results of its
operations.
NOTE 2 - NEW ACCOUNTING PRONOUNCEMENT
Derivative Instruments and Hedging Activities
In 1998 the Financial Accounting Standards Board (FASB) issued Statement Nos.
133 and 137, "Accounting for Derivative Instruments and Hedging Activities"
effective for fiscal years beginning after June 15, 2000. These new statements
replace existing pronouncements and practices with an integrated accounting and
reporting standard for derivatives and hedging activities. They require every
derivative instrument be recorded in the balance sheet as either an asset or
liability at its fair value, and changes in a derivative's fair value be
recognized in current earnings or other comprehensive income. The company is
required to adopt these statements beginning January 1, 2001, and does not
expect adoption to have a material impact on the company's financial statements.
NOTE 3 - BUSINESS SEGMENTS
The company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information", which changed the way the company reports information
about its operating segments.
The company groups its operations into four business segments, Building Systems,
Architectural Products, Construction Services, and Real Estate. The Building
Systems segment includes the U.S. and foreign building systems businesses and
the company's international joint venture operations. These business units
supply steel and wood frame pre-engineered building systems for a wide variety
of commercial, community, industrial, and agricultural applications.
The Architectural Products segment includes the operations of the Vistawall
Group. The group's 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 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 Real Estate segment provides real estate build-to-suit-to-lease development
services in cooperation with Butler dealers.
The accounting policies for the segments are the same as those described in the
summary of significant accounting policies as included in the company's 1998
form 10-K. Butler Manufacturing Company's reportable segments are strategic
business units that offer different products and services. They are managed
separately because each business requires different technology and expertise.
Other represents unallocated corporate expenses and unallocated assets,
including corporate offices, deferred taxes, pension accounts, and intersegment
eliminations. Included also in Other is a $1.5 million charge due to Brazilian
currency devaluation recorded in the first quarter.
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<TABLE>
<CAPTION>
Three Months Six Months
NET SALES Ended June 30, Ended June 30,
(Thousands of dollars) 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Building Systems $160,420 $155,380 $288,447 $284,180
Architectural Products 50,424 42,379 98,629 84,857
Construction Services 42,773 37,035 65,699 57,778
Real Estate 3,360 13,135 12,630 18,155
Other (8,264) (9,452) (13,296) (12,669)
----------------- --------------- ---------------- ----------------
$248,713 $238,517 $452,109 $432,301
================= =============== ================ ================
</TABLE>
Net sales represent revenues from sales to affiliated and unaffiliated customers
before elimination of intersegment sales which is included in other.
Intersegment eliminations are primarily sales from the Building Systems and
Architectural Products segments to Construction Services.
<TABLE>
<CAPTION>
Three Months Six Months
PRETAX EARNINGS (LOSSES) Ended June 30 Ended June 30
(Thousands of dollars) 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Building Systems $8,837 $8,691 $8,314 $10,297
Architectural Products 5,459 2,230 9,536 5,010
Construction Services 1,023 1,134 1,126 961
Real Estate 533 1,530 1,857 1,935
Other (5,062) (5,151) (9,586) (7,035)
----------------- --------------- ---------------- ----------------
$10,790 $8,434 $11,247 $11,168
================= =============== ================ ================
</TABLE>
<TABLE>
<CAPTION>
TOTAL ASSETS June 30, December 31,
(Thousands of dollars) 1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Building Systems $221,644 $227,474
Architectural Products 78,629 80,799
Construction Services 37,808 26,596
Real Estate 26,910 26,303
Other 46,585 32,721
----------------- -----------------
$411,576 $393,893
================= =================
</TABLE>
Assets represent both tangible and intangible assets used by the segments. Other
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 8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales of $249 million were up 4% from the second quarter at 1998 primarily
due to increased sales in the Architectural Products, Construction Services, and
Building Systems segments. The Real Estate segment's sales declined from a year
ago, due to lower project sales. For the six months ended June 30, 1999 net
sales were $452 million compared with $432 million in 1998, an increase of 5%.
The Architectural Products and Constructions Services segments' sales increased
significantly while sales in the Building Systems segment were comparable with
the prior six month period.
The Architectural Products segment, which consists of the Vistawall group,
reported a 16% increase in sales for the first half of 1999 compared with same
period a year ago due to a good commercial construction market and excellent
customer service, while the Construction Services segment sales increased 14%
over the same period. Building Systems segment sales for the six months of 1999
were comparable with same period a year ago. While sales of domestic metal
building systems declined 2% from a year ago, internationally-based revenues
more than offset this decline.
Pretax earnings for the quarter ended June 30, 1999 was $10.8 million compared
with $8.4 million for the same period a year ago due to the strong performance
of the Architectural Products segment. Pretax earnings for the six month period
ending June 30, 1999 were $11.2 million, flat with the previous year. Increases
in the Architectural Products segment were affected by the results of the U.S.
metal buildings business and a $1.5 million restructuring charge for Brazilian
currency devaluation recorded in the first quarter of 1999.
LIQUIDITY AND CAPITAL RESOURCES
Cash and equivalents increased $21.4 million in the first six months of 1999 due
to a decrease in working capital driven primarily by lower inventory levels.
Principal uses of cash were to fund operations, capital expenditures, the
repurchase of company shares for the treasury, and the payment of dividends. For
the six months ended June 30, 1999, domestic short-term borrowings averaged $6
million for 101 days compared to $20 million for 118 days in 1998.
In March, 1998 the company completed a $35 million private placement of senior
unsecured notes due March 20, 2013. The notes carry a fixed interest rate of
6.57%, and are payable in equal annual installments of $3.5 million beginning in
2004. Proceeds from the private placement were used to pay down the company's
short-term line of credit and to fund future investment opportunities. The
company continues to maintain domestic bank credit facilities aggregating $40
million to meet the needs of the company. As of June 30, 1999, $1.8 million of
the credit line was utilized to provide a bank letter of credit to secure
insurance obligations. Management believes the company's operating cash flow,
along with the bank credit lines, are sufficient to meet future liquidity
requirements.
The company's European operations maintain separate lines of credit with local
banks of approximately $6 million at current exchange rates. Management believes
that the bank lines along with parent company loans, if any, are sufficient to
meet future liquidity requirements.
Capital expenditures were $4.6 million for the first six months of 1999 compared
to $7.7 million in 1998. Total capital expenditures are expected to be
approximately $15 million in 1999 compared with $15 million in 1998, and will be
used to increase capacity in the domestic and international metal buildings
businesses, as well as the architectural products business.
Through the second quarter of 1999 the company also used cash to repurchase
approximately 267,000 shares of company common stock for the treasury for $6.8
million and to pay dividends of $2.1 million. Total backlog of $338 million
increased 3% from comparable backlog of a year ago.
MARKET PRICE RISK
The company's principal exposure to market risk is from changes in commodity
prices, interest rates, and currency exchange rates. To limit exposure and to
manage volatility related to these risks, the company enters into select
commodity and currency hedging transactions, as well as forward purchasing
arrangements. The company does not use financial instruments for trading
purposes.
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Commodity Price Exposure: The company's primary commodities are steel, aluminum,
and wood. Steel is the company's largest purchased commodity. The company enters
into forward steel purchase arrangements in its metal buildings business for
periods of less than one year's duration to protect against potential price
increases. To the extent there are increases in the company's steel costs, they
are generally recaptured in the company's product sales prices. Aluminum hedge
contracts of less than one year's duration are purchased to hedge the engineered
products backlog of the Vistawall group against potential losses caused by
increases in aluminum costs. This product line is sensitive to material cost
movements due to the longer lead times from project quoting to manufacture.
Gains or losses recorded on hedge contracts are offset against the actual
aluminum costs incurred. The fair value of aluminum contracts and their
associated risk are immaterial. The company's wood frame building business
enters into forward purchase arrangements for commercial grade lumber for
periods of less than one year's duration. Lumber costs are generally more
volatile than steel costs. To offset increases in lumber costs, the company
adjusts product prices accordingly.
Interest Rates: The majority of the company's long-term debt carries a fixed
interest rate, therefore the company's interest expense is relatively stable and
not influenced by changes in market interest rates.
Foreign Currency Fluctuation: The majority of the company's business is
transacted in U.S. dollars, therefore limiting the company's exposure to foreign
currency fluctuations. Where the company has foreign-based operations, the local
currency has been adopted as the functional currency. As such, the company has
both transaction and translation foreign exchange exposure in those operations.
Due to relative cost and limited availability, the company does not hedge its
foreign net asset exposure. The company does hedge short-term foreign currency
transaction exposures related to sales activity in Canada. Forward Canadian
dollar sale contracts of up to four months' duration are purchased to cover the
exposure. The fair value of such contracts are immaterial.
RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
In December 1998 the company's Board of Directors approved a restructuring of
the South American and European metal buildings businesses. As a result, the
company recorded a $7.1 million pretax charge in connection with the
restructuring. In addition, the company recorded a $6.5 million pretax charge
for the impairment of certain assets. The actions leading to the restructuring
charge were the closing of manufacturing operations in Brazil and the move of
European manufacturing operations to Hungary from Scotland. Estimates of
realizable sales values were obtained from outside appraisal and the company's
experience in selling redundant assets.
The remaining $1.6 million restructuring accrual at the end of the second
quarter pertains to severance and termination costs ($.6 million), and legal,
claims, and other incremental shut-down costs ($1 million) associated with
restructuring the Brazilian and European metal buildings operation. The company
utilized $.7 million of the restructuring accrual through the second quarter of
1999 with $.09 million utilized in the first quarter and $.61 million in the
second quarter of 1999 as shown in the schedule below.
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<TABLE>
<CAPTION>
Details of the Restructuring Accrual
12/31/1998 6/30/1999
Accrual Utilization Accrual
----------------- ------------------- -------------------
<S> <C> <C> <C>
Severance and termination costs $1,185 $590 $595
Legal, claims, and other costs 1,092 110 982
----------------- ------------------- -------------------
$2,277 $700 $1,577
----------------- ------------------- -------------------
</TABLE>
During the first quarter 1999 the company recorded an additional $1.5 million
restructuring charge for currency translation losses on its remaining Brazilian
net asset exposure due to the devaluation of the Brazilian currency caused by
the Brazilian government's decision to let its currency, the real, to fluctuate
in value compared to the U.S. dollar.
YEAR 2000 UPDATE
Many computer systems used by companies, governments, and individuals around the
world use only the last two digits to refer to a year ("99" for 1999). Therefore
these computer programs and systems may not properly distinguish between a year
that begins with "20" versus one beginning with "19". If not corrected, many
computer applications could fail or create erroneous results. This has come to
be known as the year "2000" (Y2K) problem.
The company believes it has identified or has processes in place to identify,
and will be able to address all of its critical Information Technology, Other
Technology, and Business Issues Y2K problems in a timely manner. The company is
in the remediation stage of its Y2K plan and as of the end of the first quarter
1999, has incurred approximately $1.5 million in Y2K compliance costs. It is
anticipated that total costs to attain full Y2K compliance will approximate $2.2
million.
In 1997 the company reviewed its principal business, manufacturing, and
engineering computer systems and applications to determine the impact of the Y2K
problem on these systems, and to establish a compliance plan to address critical
issues. In early 1998 the company engaged a consultant to assess the company's
plan and its progress toward effecting the plan in a timely manner. The
consultant reviewed three areas: Information Technology ("IT"), such as the
company's business, telecommunications, manufacturing, and engineering systems;
Other Technology ("Non-IT") such as manufacturing equipment which may contain
embedded micro-controllers; and Business Issues related to service providers,
vendors, and customers. The consultant advised the company that nothing was
identified that, in and of itself, would indicate the company would not be
successful with its Y2K compliance efforts. In mid-1998 the company established
a Y2K project office and chairperson responsible for the oversight and
coordination of the Y2K Plan, including assessment, remediation, and reporting
efforts. This office reports to the president and chief executive officer of the
company and its Board of Directors. A management representative at each of the
company's business units has been assigned responsibility for the coordination
and reporting of all three compliance area efforts, including any contingency
plans, if needed. Status reports are reviewed, evaluated, and summarized monthly
by the Y2K project office.
INFORMATION TECHNOLOGY: The assessment phase of the IT process was completed in
1997. The company is currently in the remediation and compliance phases. company
business units are at various stages of compliance. It is estimated that
collectively the company has achieved 91% compliance with its IT plan. It is
estimated that 100% compliance with all phases of the IT plan will be achieved
during the third quarter of 1999.
OTHER TECHNOLOGY: The assessment phase of the Non-IT process began in 1998 with
an inventory taken of all computer controlled and networked manufacturing
equipment to determine if date functions existed in their controllers and
whether they were compliant. This phase of the Non-IT process is complete and
remediation is in progress of equipment controls which are non-compliant. To
date the company is approximately 99% complete with its total Non-IT plan and
anticipates 100% compliance during the third quarter of 1999.
BUSINESS ISSUES: The assessment phase of the Business Issues compliance plan
began in 1998. To date each business unit has solicited their key service
providers, vendors, and customers to assess their Y2K readiness. The company is
approximately 89% complete with its Business Issues plan and anticipates 100%
compliance with all phases of the plan during the third quarter of 1999.
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CONTINGENCY PLANS: The company has identified its most critical Y2K risk to be
associated with its internally developed order management and manufacturing
control systems. The company anticipates being 100% compliant with all aspects
of its plan during the third quarter of 1999. Successful completion of the
company's plan is dependent upon timely Y2K compliance by key suppliers and
service providers. The company has received notification from many of its key
suppliers providing assurances that significant progress is being made towards
their attaining Y2K compliance. If they are incapable of achieving compliance
there could be a material adverse effect on the company's business, results of
operations, and financial condition. The company has and continues to develop
contingency plans to mitigate potential disruption which may occur due to Y2K
problems. Contingency plans and associated cost estimates will be continually
refined as additional information and communications are received.
MANAGEMENT TRANSITION
In June, 1999 Mr. Donald H. Pratt was elected chairman of Butler Manufacturing
Company. Mr. Pratt succeeds retired chairman Robert H. West.
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.
For additional comments, refer to the July 19, 1999 letter to shareholders,
which is attached as exhibit 19.
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PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(19) July 19, 1999 letter to shareholders
(27) Financial Data Schedule
(b) Reports on Form 8-K
The company has not filed any reports on Form 8-K during the
quarter ended June 30, 1999.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUTLER MANUFACTURING COMPANY
August 12, 1999 /s/ Larry C. Miller
- --------------- ---------------------------------
Date Larry C. Miller
Vice President - Finance,
and Chief Financial Officer
August 12, 1999 /s/ John W. Huey
- --------------- ---------------------------------
Date John W. Huey
Vice President, General Counsel
and Secretary
Page 14
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Exhibit 99
EXHIBIT INDEX
Exhibit
Number Description
- --------- -------------------------------------------
19 July 19, 1999 Letter to Shareholders
27 Financial Data Schedule
<PAGE> 1
Exhibit 19
Butler
Manufacturing
Company
SECOND
QUARTER
REPORT 1999
Six Months Ended
June 30, 1999
BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64108
To Our Shareholders:
The second-quarter results continue the positive trend from the first quarter.
Sales for the quarter were $249 million compared with $239 million a year ago.
Net income was $6.3 million, or $.89 per share, 39% higher than the $.64 per
share recorded in the second quarter last year.
For the first six months, sales were $452 million compared with $432 million a
year ago, and net income was $6.6 million, or $.91 per share, an 15% improvement
over the $.79 per share amount last year.
In our individual businesses, the Vistawall group doubled operating earnings
during the second quarter, on 19% higher sales. Our China metal building
business contributed excellent operating earnings compared with a loss last year
and our Brazil metal building business had a modest loss for the quarter, a
substantial improvement over the same period a year ago. The U. S. Building
Systems group and Europe both posted lower comparative operating results for the
quarter.
For the six months, the U. S. metal building business sales were down about 2%
and earnings, while good, were well below the strong results of a year ago. The
industrial end-use market, which is important to our metal building business, is
running 33% lower than 1998. Encouragingly, backlog in this business is slightly
ahead of last year and orders are about equal to a year ago. The Lester wood
frame building sales were comparable to last year and this business recorded a
modest operating loss for the six months as opposed to break-even results last
year. Over half of Lester sales are to the general agriculture and livestock
confinement markets, and both markets show little sign of improvement. Our
start-up panelized building business operated at a larger loss during the first
six months compared with last year. We continue to refine our costs and
marketing approach to improve the operating results of this business.
Our China metal building business performed exceptionally well during the first
six months of 1999. Sales and operating earnings increased significantly and
business momentum continues to build, with backlog 29% higher than last year. In
Europe, we completed the move of manufacturing operations from the United
Kingdom to our metal building plant in Hungary on schedule. Sales in Europe for
the six months were well below last year with a higher operating loss, as
anticipated. We expect to see improvement in this business beginning in the
third quarter. Our Brazilian business has substantially completed its remaining
projects at a modest operating loss compared with a significant loss a year ago.
The Vistawall group, our architectural aluminum business, performed very well
in the first half of 1999. Sales were $99 million, 16% higher than last year,
and operating earnings increased 91%. Excellent service and the combination of
curtain wall, skylight and window products as a single-source offering has
proven to be a competitive advantage. Backlog remains good in this business and
slightly ahead of last year.
<PAGE> 2
Butler Real Estate six month earnings were even with a year ago. Prospects for
the year remain good. Butler Construction sales were $66 million in the first
half of the year, 14% higher than last year and operating earnings grew in line
with revenues. Construction backlog was $68 million at the end of June compared
with $53 million at the same time a year ago.
We are pleased with the improvement in the second quarter results. The
industrial and agricultural markets do not show signs of improvement, each an
important source of sales for Butler. Nonetheless, the growing diversity of the
markets we serve, both domestic and international, provide reason to remain
optimistic about the outlook for the year. We enter the busy third quarter with
a backlog of $338 million, ahead of the comparable backlog of $329 million last
year, which excludes Brazil. We expect to deliver substantial 1999 earnings
improvement over 1998.
Cordially yours,
/s/John Holland
John Holland
President and Chief Executive Officer
July 19, 1999
Butler Manufacturing Company
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Butler
Manufacturing Company Consolidated Statements of Operations for the quarter
ended June 30, 1999, and Consolidated Balance Sheet as of June 30, 1999, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
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<NAME> BUTLER MANUFACTURING COMPANY
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
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<RECEIVABLES> 137,475
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<INVENTORY> 57,745
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<PP&E> 240,425
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0
0
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<F1>Reflects long-term debt, less current maturities
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<F4>Consists of selling, general and administrative expense
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