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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, 1999
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(g) of the
Act. The only class of stock outstanding consists of Common Stock having no par
value, 6,876,544 shares of which were outstanding at December 31, 1999. The
Common Stock and related Preferred Share Purchase Rights are registered pursuant
to Section 12(b) 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 22,
2000 was $154,034,954.
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 1999 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 8, 2000 (the "Proxy Statement" incorporated
into Parts I and III).
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BUTLER MANUFACTURING COMPANY
FORM 10-K
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
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CONTENTS
PART I Page
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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................................. 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 8
Item 7A. Quantitative and Qualitative Disclosure About Market
Risk ................................................... 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.................................. 9
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................................................................ 13
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS................................. 14
FINANCIAL STATEMENT SCHEDULES............................................. S-1
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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 Europe Kft. a majority
owned Hungarian subsidiary, Butler Shanghai Inc., a Chinese wholly owned
subsidiary, and Saudi Building Systems Ltd. a minority owned Saudi Arabian joint
venture.
The Company is primarily engaged in the marketing, design and production of
systems and components for nonresidential structures. Products and services fall
into four 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)
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; (3) Construction Services,
providing construction management services for purchasers of large, complex or
multiple site building projects; and (4) Real Estate, providing
build-to-suit-to-lease development services for corporations who prefer to lease
rather than own their facilities.
The Company's products are sold through independent dealers and strategic
alliances developed between the company and several major corporations.
(b) Financial Information about Industry Segments
The information required by Item 1(b) is incorporated by reference to pages
25 through 26 of the Company's Annual Report, of which pages 14 through 32 are
attached as Exhibit 13.1 to this report. See also items 6, 7, 7A, and 8 of this
report.
(c) Narrative Description of Business
Building Systems
The Company's largest segment, Building Systems, includes the North American
and International steel building systems businesses and the wood frame buildings
business. The International building systems business includes the U.S. export
operation; A majority owned European metal building systems subsidiary (Butler
Europe Kft.) with manufacturing operations in Hungary and marketing and
engineering subsidiaries in the United Kingdom, France, and Germany; Butler
Shanghai Inc., a wholly owned Chinese metal building systems subsidiary; and a
minority owned Saudi Arabian metal buildings joint venture (Saudi Building
Systems, Ltd.).
The Company's building systems segment activities consist primarily of the
design, engineering, and distribution of 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 facilities,
warehouses, schools, shopping centers, restaurants, convenience stores,
livestock and farm buildings. Principal product components of the systems are
structural members and
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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 for
North American and export sales 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.
Butler Shanghai Inc. markets, engineers and fabricates metal building
systems for the China Region from a plant in Shanghai, China. In 1999 the
Company announced a $5 million expansion of the Shanghai manufacturing facility
to increase its metal building production capacity. The expansion should be
completed by the middle of 2000.
The U.S. export operation markets and engineers metal building systems for
the Central American, Caribbean and select Latin American markets. Shipments are
sourced primarily from Butler's U.S. plants and local manufacturing alliances.
The Company also serves the Canadian market through a branch office in
Burlington, Ontario.
In December 1998 the Company announced the restructuring of its
International operations leading to the sale of its United Kingdom manufacturing
operation and closing of its Brazilian pre-engineered steel frame buildings
manufacturing plant. During 1999 Butler Europe shifted its operations to an
expanded facility located in Nyiregyhaza, Hungary. European requirements are
supplied by the Hungarian facility and a manufacturing alliance formed with a
European supplier.
Saudi Building Systems, Ltd. manufactures pre-engineered steel frame
buildings for Middle Eastern markets at manufacturing facilities located in
Jeddah, Saudi Arabia.
In December 1997 the Company formed Innovative Building Technology, Inc. to
design, engineer, market and erect panelized buildings for the smaller
commercial buildings segment. In 1999 the business was merged with the Lester
wood frame buildings business. Panelized building products are manufactured at
existing wood building facilities in Lester Prairie, Minnesota and Ottawa,
Kansas.
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 conventional 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 1999 sales of steel frame
pre-engineered building systems within the United States exceeded those of any
other nonresidential steel frame pre-engineered building systems manufacturer,
with its next largest competitors being NCI Building Systems, Inc., V.P.
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.
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Lester Building Systems, the Company's wood frame buildings business, ranks
second in sales to the industry leader, Morton Buildings, Inc., a manufacturer
who sells direct to the end user.
Architectural Products
This segment includes the operations of the Vistawall group which designs,
manufactures and sells aluminum extruded curtain wall systems for mid and
high-rise office markets, entry doors, custom architectural window systems,
translucent roof and wall systems, custom and standard skylights 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 Moduline Windows Inc., a
Wisconsin-based manufacturer of architectural window systems for the
nonresidential buildings market. The Vistawall group's products are distributed
on a material supply basis to either curtain wall erection subcontractors or
general contractors, and through its distribution warehouses to glazing
contractors for storefront and entry door applications. Manufacturing and
distribution facilities are located in Warwick, Rhode Island; Atlanta and
Newnan, Georgia; Modesto, Hayward and Rancho Cucamonga, California; Denver
Colorado; 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 Vistawall completed the
expansion of its Terrell, Texas operation with additional facilities to house a
second extrusion press and additional painting operations. Additional extruding
and finishing operations will be built in 2000 to increase Vistawall's
production capacity. The new facility to be located in the southeastern U.S.
will be fully operational in 2001.
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 price, engineering and
installation capabilities, delivery, appearance 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 distributed grain conditioning and handling
equipment. The business was sold to CTB, Inc.
Construction Services
The Company's Construction Services segment consists of Butler Construction,
a wholly-owned construction subsidiary also known as BUCON, Inc., which provides
comprehensive design, planning, execution and construction management services
to major purchasers of construction related services. Butler Heavy Structures is
an operating unit of Butler Construction serving markets requiring large complex
building designs using heavy fabricated mill steel in combination with Butler's
pre-engineered secondary structural and metal cladding systems. Revenues of the
Construction Services segment are derived primarily from general contracting. In
addition, the segment performs "furnish and erect" and "material only"
subcontracts using products from several Company businesses, predominantly the
Company's U.S. metal buildings businesses. Competition is primarily based upon
price, time necessary to complete a project, design and product performance.
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This business segment competes with international, national, regional and local
general contracting firms, and whenever possible, performs projects in
conjunction with independent Butler dealers.
Real Estate
This business segment consists solely of Butler Real Estate, Inc., a
wholly-owned subsidiary of the Company, which provides value-added real estate
development and leasing services to major corporations in cooperation with
Butler dealers. Butler Real Estate, Inc. functions as a development and
financing source during the lead procurement and construction process. 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 build-to-suit projects and sells the completed projects to
permanent investors when the facilities are occupied by lessees.
Manufacturing and Materials
The Company's manufacturing facilities 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 also experiences
seasonal demand for products and services. Sales for the first, second, third,
and fourth quarters of 1999 were $203 million, $249 million, $266 million and
$255 million, respectively.
Backlog
The Company's backlog of orders believed to be firm was $323 million at
December 31, 1999, up 3% from a year ago.
Employees
At December 31, 1999 the Company employed 4,912 persons, 3,976 of whom were
non-union employees, and 936 were hourly paid employees who were members of
three unions. At December 31, 1998 the Company employed 5,171 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. Through a subsidiary, the Company also owns a land
development venture with property located on approximately an 85 acre site in
San Marcos, Texas. The property is recorded as "Assets held for sale" and
described in a footnote on page 25 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 the business activity conducted therein. The
Company's manufacturing facilities described under Item 1, along with current
outsourcing agreements with various domestic and foreign fabricators, provide
production capabilities sufficient to meet current and foreseeable needs.
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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 (119,000 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 and Newnan, Georgia; Tampa, Florida; Seattle, Washington; Modesto,
Hayward, and Rancho Cucamonga, California; Warwick, Rhode Island; and
Denver, Colorado (493,000 sq. ft. leased with various expiration dates).
(3) Leased space used for Bucon, Inc. in Kansas City, Missouri. (74,000 sq. ft.
lease expiring in the year 2007).
(4) The Company also leases various sales offices throughout the world.
Item 3. Legal Proceedings.
There are no material legal or environmental proceedings pending as of March
22, 2000, 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 20, 1999
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 1999-1995" on pages 31 and 32 of the Annual Report.
In September 1999 the Company increased its quarterly cash dividend from 15
cents to 16 cents per share to shareholders of record as of October 1, 1999. The
Company has limited restrictions on the payment of dividends based on certain
debt covenants of Note Agreements dated June 1, 1994 between the Company and
four insurance companies and the Note Agreement dated March 1, 1998 with an
insurance company (incorporated by reference to the Forms 10-Q for the quarters
ended June 30, 1994 and March 31, 1998 as indicated under Item 14). The Company
had approximately $17 million of retained earnings available for cash dividends
and share repurchases at December 31, 1999.
Item 6. Selected Financial Data.
Incorporated by reference to the information under "Historical Review
1999-1995" on page 32 of the Annual Report.
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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 7A. Quantitative and Qualitative Disclosure About Market Risk.
Incorporated by reference to page 15 and 16 of the Annual Report to the
information under "Management's Discussion and Analysis of Financial Condition
and Results of Operations".
Item 8. Financial Statements and Supplementary Data.
Incorporated by reference to the consolidated financial statements and
related notes on pages 18 through 32 of the Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
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
Donald H. Pratt - age 62, Chairman of the Board and Chairman of the Executive
Committee; has been a director since 1979. He joined Butler in 1965, became
Executive Vice President in 1980, President of the Company in 1986, Vice
Chairman and Chairman in 1999. Mr. Pratt is also a director and Vice Chairman of
American Century Mutual Funds, a director of Atlas-Copco North America Inc. and
is a trustee of the Midwest Research Institute.
John J. Holland - age 49, President and Chief Executive Officer and member of
the Board Executive Committee. He joined Butler in 1980 and became Vice
President - Controller in 1986, Vice President-Finance in 1990, Executive Vice
President in 1998 and President and Chief Executive Officer in 1999. Mr. Holland
is a director of Commerce Fund, a mutual fund; an advisory director of Allendale
Insurance Company, and a director of Saint Luke's Hospital. He is a former
chairman of Heart of America Family Services.
Richard S. Jarman - age 53, Executive Vice President since 1999. He joined the
Company in 1974 and became President of the Buildings Division in 1986. Mr.
Jarman is a director and former chairman of the Metal Buildings Manufacturers
Association and a member if its Executive Committee, and a director of
Mid-America Coalition on Health Care. He is a past chairman of INROADS, Kansas
City.
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Barbara B. Bridger - age 41, Vice President- Human Resources since 1999. She
joined Butler in 1980 and previously was Vice President- Human Resources for the
Buildings Division.
John T. Cole - age 49, Controller since 1990. He joined Butler in 1977 and
previously was Corporate Audit Manager.
John W. Huey - age 52, Vice President, General Counsel, and Secretary since
1999. He joined Butler in 1978 and became Vice President-Administration in 1993
and Assistant General Counsel and Assistant Secretary in 1987.
Paul F. Liljegren - age 45, Treasurer since 1998. He joined Butler in 1979 and
previously was Vice President and Controller of Lester Building Systems.
Larry C. Miller - age 43, Vice President-Finance since 1998. He joined Butler in
1980 and became Assistant Treasurer in 1985 and Treasurer in 1989.
Division Executive Officers
Moufid (Mike) Alossi - age 57, President, Butler Shanghai Inc., since 1997. He
joined Butler in 1968 and was previously President of Butler World Trade and
Vice President-International Sales and Marketing.
Hans G. Berger - age 52, 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.
Marc S. Hafer - age 42, 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 54, 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.
William L. Johnsmeyer - age 52, President Butler Construction (Bucon, Inc.)
since 1990. He joined Butler in 1982 and became President, Walker Division in
1984.
Ronald E. Rutledge - age 58, President Vistawall Division since 1984 when he
joined Butler.
Clyde E. Wills, Jr. - age 54, President, Buildings Division since 1999. He first
joined Butler in 1972. He was previously Senior Vice President of Operations,
Building Division from 1992 to 1997 and was President of the International
Division.
Item 11. Executive Compensation.
Incorporated by reference to the information under "Report of the
Compensation and Benefits Committee on Executive Compensation," "Summary
Compensation Table," "Option Grants During 1999," "Aggregated Option Exercises
and Fiscal Year-End Option Value Table" and "Pension Plan Table" on pages 8
through 13 of the Proxy Statement.
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Item 12. Security Ownership of Certain Beneficial Owners and Management.
Incorporated by reference to the information under "Beneficial Ownership
Table" on pages 6 through 7 of the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
Incorporated by reference to the information under "Election of Class B
Directors" and "Report on Executive Compensation" in the Proxy Statement on
pages 2 through 10.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) The following documents are filed as part of this report:
(1) Financial Statements:
- "Report of Independent Public Accountants" for the three-year period
ended December 31, 1999.
- Consolidated Balance Sheets as of December 31, 1999 and 1998.
- Consolidated Statements of Earnings and Retained Earnings for years
Ended December 31, 1999, 1998 and 1997.
- Consolidated Statements of Comprehensive Income for years ended
December 31, 1999, 1998, and 1997
- Consolidated Statements of Cash Flows for years ended December 31,
1999, 1998 and 1997.
- Notes to Consolidated Financial Statements.
The foregoing have been incorporated by reference to the Annual Report
as indicated under Item 8.
(2) Financial Statement Schedules:
Auditors' Reports on Financial Statement and Schedule II, 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.
(3) 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 as amended effective
January 19, 1999 (incorporated by reference to Exhibit 3.2 to the
Company's form 10-K for the year ended December 31, 1998).
3.11 Certificate of Designation of SERIES A, CLASS, 1 PREFERRED STOCK
of BUTLER MANUFACTURING COMPANY (Pursuant to Section 151 of the
Delaware General Corporation Law), filed September 23, 1999,
pursuant to Rights Agreement appended as Exhibit 4.3.
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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).
4.2 Note Agreement between the Company and an Insurance Company dated
as of March 1, 1998 (incorporated by reference to Exhibit 4 of
the Company's Form 10-Q for the quarter ended March 31, 1998).
4.3 Rights Agreement dated September 16, 1998, between Butler
Manufacturing Company and UMB Bank, N.A. which includes the form
of Rights as Exhibit C (incorporated by reference to Exhibit 1.1
to the Company's For 8-A filed September 23, 1999.
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).
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10.9 Butler Manufacturing Company Director Stock Compensation Program
(incorporated by reference to Exhibit 10.9 to the Company's
December 31, 1997 Form 10-K).
10.10 Butler Manufacturing Company Restricted Stock Compensation
Program of 1996 (incorporated by reference to Exhibit 10.10 to
the Company's December 31, 1997 Form 10-K).
13.1 Butler Manufacturing Company 1999 Annual Report Pages 14 through
32 only (the information expressly incorporated herein by
reference).
22.0 Set forth below is a list as of February 22, 2000 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
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Butler Argentina, S.A. Argentina
Butler do Brasil Limitada Brazil
Butler Export, Inc. Barbados
Butler Europe GmbH Germany
Butler Europe Kft. Hungary
Butler Europe Ltd. Scotland
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
Comercial Butler Limitada Chile
Innovative Building Technology, Inc. Delaware
Lester's of Minnesota, Inc. Minnesota
Lester Holdings, Inc. Delaware
Liberty Building Systems, Inc. Delaware
Moduline Windows, Inc. Wisconsin
23.1 Consent of Arthur Andersen LLP (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.
(b) The Company has not filed any reports on Form 8-K for or during the quarter
ended December 31, 1999.
* * * * * *
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 9th day of
March, 2000.
BUTLER MANUFACTURING COMPANY
BY /S/ John J. Holland
------------------------
John J. Holland
President-CEO
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/ Donald H. Pratt Chairman of the Board March 9, 2000
- ---------------------------
Donald H. Pratt
/S/ John J. Holland President-CEO March 9, 2000
- --------------------------- (Principal Executive Officer)
John J. Holland
/S/ Richard S. Jarman Executive VP March 9, 2000
- ---------------------------
Richard S. Jarman
/S/ Larry C. Miller Vice President-Finance March 9, 2000
- --------------------------- (Principal Financial Officer)
Larry C. Miller
/S/ John T. Cole Controller March 9, 2000
- --------------------------- (Principal Accounting Officer)
John T. Cole
/S/ K. Dane Brooksher Director March 10, 2000
- ---------------------------
K. Dane Brooksher
/S/ Gary M. Christensen Director March 10, 2000
- ---------------------------
Gary M. Christensen
/S/ Alan M. Hallene Director March 9, 2000
- ---------------------------
Alan M. Hallene
/S/ C.L. William Haw Director March 9, 2000
- ---------------------------
C.L. William Haw
/S/ Robert J. Novello * Director March 17, 2000
- ---------------------------
Robert J. Novello
/S/ Robert J. Reintjes, Sr. Director March 9, 2000
- ---------------------------
Robert J. Reintjes, Sr.
/S/ Gary L. Tapella Director March 9, 2000
- ---------------------------
Gary L. Tapella
John W. Huey, 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/ John W. Huey Attorney-in-fact March 17, 2000
----------------------------------
John W. Huey, Attorney-in-fact
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports dated January 26, 2000, included in or incorporated by reference in this
Form 10-K, into the Company's previously filed Registration Statements on Form
S-8 (Nos. 33-14464, 2-63830, 2-55753,333-02285, and 333-02557).
/S/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Kansas City, Missouri,
March 22, 2000
14
<PAGE> 16
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Financial Statement Schedules
(Form 10-K)
December 31, 1999, 1998 and 1997
(With Auditors' Reports Thereon)
S-1
<PAGE> 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Butler Manufacturing Company:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Butler Manufacturing Company's
1999 Annual Report to Shareholders, which is incorporated by reference in this
Form 10-K, and have issued our report thereon dated January 26, 2000. Our audit
was made for the purpose of forming an opinion on those statements taken as a
whole. The Financial Statement Schedule listed in item 14 is the responsibility
of the Company's management and is presented for the purpose of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic consolidated financial statements,
and in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic consolidated financial
statements taken as a whole.
/S/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Kansas City, Missouri,
January 26, 2000
S-2
<PAGE> 18
SCHEDULE II
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
(Thousands of Dollars)
<TABLE>
<CAPTION>
Balance at Charged Balance
beginning to Less: at end
Description of year earnings Other Deductions of year
- ------------------------- ---------- -------- ----- ---------- --------
(A)
<S> <C> <C> <C> <C> <C>
Allowance for Losses
on Accounts Receivable:
1999 $3,791 $2,876 $ (191) $1,802 $4,674
1998 $2,473 $2,772 - $ 1,454 $3,791
1997 $2,918 $ 887 $ 198 $ 1,530(B) $2,473
Restructuring Reserve:
1999 $2,277 $1,514(C) $ (447) $2,459(D) $ 885
1998 - $2,409 - $ 132 $2,277
1997 - - - - -
</TABLE>
(A) Includes transfers and/or recoveries of reserve balances.
(B) Includes write-off of $293.0 thousand in 1997 for the sale of the Grain
Systems Division.
(C) Represents $1.5 million Brazilian foreign currency devaluation reserve
established and utilized in the first quarter of 1999.
(D) Includes charges against the reserve in 1999 of $1.1 million, plus $1.5
million write-down of Brazilian assets due to currency devaluation, net $.2
million 1999 recoveries shown in the Other column.
S-3
<PAGE> 19
EXHIBIT INDEX
EXHIBITS DESCRIPTION
- -------- -----------
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 as amended effective
January 19, 1999 (incorporated by reference to Exhibit 3.2 to the
Company's form 10-K for the year ended December 31, 1998).
3.11 Certificate of Designation of SERIES A, CLASS, 1 PREFERRED STOCK
of BUTLER MANUFACTURING COMPANY (Pursuant to Section 151 of the
Delaware General Corporation Law), filed September 23, 1999,
pursuant to Rights Agreement appended as Exhibit 4.3.
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).
4.2 Note Agreement between the Company and an Insurance Company dated
as of March 1, 1998 (incorporated by reference to Exhibit 4 of
the Company's Form 10-Q for the quarter ended March 31, 1998).
4.3 Rights Agreement dated September 16, 1998, between Butler
Manufacturing Company and UMB Bank, N.A. which includes the form
of Rights as Exhibit C (incorporated by reference to Exhibit 1.1
to the Company's For 8-A filed September 23, 1999.
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).
<PAGE> 20
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
(incorporated by reference to Exhibit 10.9 to the Company's
December 31, 1997 Form 10-K).
10.10 Butler Manufacturing Company Restricted Stock Compensation
Program of 1996(incorporated by reference to Exhibit 10.10 to the
Company's December 31, 1997 Form 10-K).
13.1 Butler Manufacturing Company 1999 Annual Report Pages 14 through
32 only (the information expressly incorporated herein by
reference).
22.0 Set forth below is a list as of February 22, 2000 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 Europe GmbH Germany
Butler Europe Kft. Hungary
Butler Europe Ltd. Scotland
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
Comercial Butler Limitada Chile
Innovative Building Technology, Inc. Delaware
Lester's of Minnesota, Inc. Minnesota
Lester Holdings, Inc. Delaware
Liberty Building Systems, Inc. Delaware
Moduline Windows, Inc. Wisconsin
<PAGE> 21
23.1 Consent of Arthur Andersen LLP (incorporated by reference to page
16 of this report).
24.0 Power of Attorney to sign this Report by each director.
27.0 Financial Data Schedule.
<PAGE> 1
Financial Review
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Company sales for 1999 were $973 million, an increase of 1% over 1998 sales of
$962 million. The Architectural Products and Construction Services segments
increased 11% and 13%, respectively. The Building Systems segment sales
declined 2% and the Real Estate segment reported a 17% decline in sales in
1999.
Sales in the Architectural Products segment were $202 million in 1999 and $182
million in 1998. Continued strong demand for both storefront and curtain wall
product lines contributed to the increase in sales, along with improved
Moduline window sales and exceptional service provided to customers.
The Construction Services segment sales were $152 million in 1999 compared
with $135 million in 1998. Construction Services continued to benefit from
strategic alliance customer relationships with large domestic companies by
meeting their construction needs for multiple projects.
The Building Systems segment sales were $625 million in 1999 compared with
$638 million in 1998. Domestic steel building sales declined 4% in 1999
reflecting the reduced market opportunity in the industrial market. The Lester
wood frame buildings business reported 12% lower sales for the year due to
weak demand in agricultural markets. Lower steel building sales in Europe and
Brazil resulted from the repositioning and closing of manufacturing facilities
and weaker economic activity in Europe and South America. Sales in the China
region doubled.
The Real Estate segment, which develops build-to-suit-to-lease facilities and
sells them to investors, reported sales of $27 million in 1999 compared with
$33 million in 1998, reflecting fewer project sales.
The company's consolidated sales in 1998 were $962 million compared with $925
million in 1997, an increase of 4%. Building Systems segment revenues
increased slightly over 1997, with both domestic and international steel
buildings contributing to the increase. Architectural Products segment sales
increased 20% due to increased demand for curtain wall and storefront systems,
plus a full year of sales in 1998 for Moduline and Rebco West, both acquired
in 1997.
Gross profit in 1999 was $172 million or 17.7% of sales compared to $162
million or 16.8% of sales in 1998. Gross profit in the Building Systems
segment declined due to lower sales. The Architectural Products segment gross
profit dollars increased 33% in 1999, on higher sales and improved operational
efficiency. Gross profit dollars in the Construction Services increased by 16%
due to higher sales while the Real Estate segments gross profit was comparable
to the prior year.
Gross profit was $162 million or 16.8% of sales in 1998 compared with $164
million or 17.7% of sales in 1997. The gross profit dollars decreased due
primarily to project losses sustained by the Brazilian operation in 1998.
Selling, general, and administrative expenses were $134 million in 1999
compared to $125 million in 1998 or 13.7% and 13% of sales, respectively. In
1997 selling, general, and administrative expenses were $122 million or 13.2%
of sales. The increase in 1999 resulted from sales increases and costs
associated with the write-down of a software project in the U.S. metal
building systems business to net realizable value.
In 1999 the company recorded a restructuring charge, net of recoveries, of
$1.1 million due to the restructuring of the company's Brazilian and European
operations. In 1998, the company recorded a $7.1 million restructuring charge
and a $6.5 million asset impairment charge. See further discussion on page 16.
In 1999 the company recorded other income of $.2 million compared with $.4
million in 1998 and $1.2 million in 1997. The amount of rental income received
on real estate development projects accounts for most of the differences in
each year.
In June 1997 the company recorded a pretax gain of $22 million from the sale
of the Grain Systems division.
Interest expense in 1999 of $5.6 million was comparable to the $5.7 million
recorded in 1998. Domestic borrowings declined in the latter half of 1999 due
to better working capital management, offset by greater foreign borrowings.
The 1998 increase over the $5.1 million recorded in 1997 was due to $35
million of private placement notes funded in March 1998 and higher short-term
borrowings to support working capital needs early in 1998.
The company's effective tax rates were 17.1% in 1999, 60.5% in 1998, and 42.5%
in 1997. The lower effective rate in 1999 resulted
(PIE CHARTS)
SEGMENT CONTRIBUTION
SALES
Building Systems.........61%
Architectural Products...21%
Construction Services....15%
Real Estate...............3%
EARNINGS
Building Systems.........47%
Architectural Products...40%
Construction Services.....5%
Real Estate...............8%
Page 14
<PAGE>
from a $5.8 million tax benefit from the sale of the company's Scottish
subsidiary, Butler Building Systems, Ltd. The higher rate in 1998 was due to a
larger foreign loss component of the company's pretax earnings.
Liquidity and Capital Resources
The company's cash balance increased $42.7 million in 1999 compared to
increases of $4.7 million in 1998 and $3.5 million in 1997. Principal sources
of cash in 1999 were $82.8 million from operations including better earnings
and greatly improved working capital management. Principal uses of cash in
1999 were capital expenditures of $13.6 million, share repurchases of $13.1
million, $5.9 million in repayments of long-term debt, and $4.3 million for
dividends.
In 1998 principal sources of cash were $32.2 million from operations and $35
million from the issuance of private placement notes. Principal uses of cash
were capital expenditures of $14.8 million, a $19.7 million reduction in
short-term borrowings, and share repurchases of $10.3 million. In 1997
principal sources of cash were earnings adjusted for depreciation and
amortization, along with proceeds from the sale of the Grain Systems division.
Principal uses of cash were capital expenditures and increases to working
capital.
Cash flow from operations was $82.8 million in 1999 compared with $32.2
million in 1998 and $5.2 million in 1997. Inventory levels decreased $10.3
million due to improved purchasing practices. Reductions in receivables of $15
million resulted from improved collection efforts in all business segments. In
1998 and 1997, working capital increased due to the timing of sales during
each year.
In March 1998 the company completed a $35 million private placement financing.
The notes mature in March 2013, carry a fixed interest rate of 6.57%, and are
payable in equal annual installments of $3.5 million beginning in 2004.
Proceeds were used to pay down the company's short-term borrowings and other
corporate purposes. The company's total debt to total capital ratio was 28% at
December 31, 1999 compared with 31% and 20% at December 31, 1998 and 1997,
respectively.
The company maintains short-term credit facilities aggregating $46.5 million
to meet the needs of the company and its subsidiaries. Borrowings outstanding
at December 31, 1999 were $3.3 million. Management believes the company's
operating cash flow and its bank credit lines are sufficient to meet future
liquidity requirements.
Capital expenditures were $13.6 million in 1999, $14.8 million in 1998, and
$30.2 million in 1997. The higher expenditures in 1997 were used to expand
domestic and international production capacity in the Building Systems and
Architectural Products segments.
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.
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 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. During
1999, steel prices remained relatively stable.
Aluminum hedge contracts of less than one year 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 time from project quote to
manufacture. Gains or losses recorded on hedge contracts are offset against
the actual aluminum costs incurred. At December 31, 1999 outstanding hedge
contracts represent less than 10% of annual aluminum purchases. The fair value
of aluminum contracts and their associated risk were immaterial at that date.
During the latter half of 1999 aluminum prices experienced an increase over
1998 levels.
The company's wood frame building business enters into forward purchase
arrangements for commercial grade lumber for
(BAR CHART)
CASH INCREASED $42.7 MILLION DURING 1999
(Tabular data in millions)
SOURCES
Earnings adjusted for non-cash items....$46.6
Working capital reductions..............$36.2
USES
Capital expenditures....................$13.6
Share repurchases $13.1
Reduction of long-term debt.............$ 5.9
Dividends...............................$ 4.3
All other-net...........................$ 3.2
Page 15
<PAGE>
periods of less than one year duration. Lumber costs are generally more
volatile than steel costs. To offset increases in lumber costs the company
adjusts product prices accordingly. During 1999 lumber costs fluctuated within
a typical range of historical volatility.
Interest Rates: Approximately 90% of the company's total debt carries a fixed
interest rate, therefore the company's interest expense is relatively stable
and not influenced by changes in market interest rates. Principal payments
over the next five years on the fixed-rate debt are $24.5 million with a
weighted-average interest rate of approximately 6.9%. At the end of five
years, the outstanding fixed-rate debt of $31.7 million carries a weighted-
average interest rate of 6.6%.
Foreign Currency Fluctuation: The majority of the company's business is
transacted in U.S. dollars which limits 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.
The company's net asset investment in foreign operations at December 31, 1999
was approximately $16 million. 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
less than one year duration are purchased to cover the exposure. At December
31, 1999 the fair value of such contracts was 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 operations. 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 repositioning of European
operations. The charge includes amounts for the write-down to realizable sale
value of redundant assets ($2.8 million) and the write-off of worthless assets
($1.9 million). Estimates of realizable sales values were obtained from
outside appraisal and the company's experience in selling redundant assets.
The remaining $2.4 million pertains to severance and termination costs for
approximately one hundred employees ($1.3 million) and legal, claims, and
other incremental shut-down costs ($1.1 million) associated with the
restructuring.
In the first quarter of 1999 the Brazilian government decided to float its
currency, the real. This lead to a significant devaluation of the Brazilian
real against the U.S. dollar. As a result the company recognized an additional
currency translation loss as a restructuring charge in 1999. The additional
charge during 1999, net of recoveries from the original charge in 1998, was
$1.1 million.
Year 2000 Update
In 1999 the company successfully completed its Year 2000 ("Y2K") remediation
efforts for all its principal business, manufacturing, and engineering systems
at a total incurred cost of $3 million. The costs were expensed as they were
incurred.
To date there have been no significant reportable events related to the
company's key computer information and manufacturing control systems, nor to
the failure of any suppliers to meet their commitments. The company plans to
continue to monitor and report incidents, if any, through the first quarter of
2000. Although contingency plans are in place to address areas of Y2K
exposure, the company does not anticipate incurring any material future costs
or disruptions associated with Y2K.
Board of Directors
In 1999 the board of directors elected K. Dane Brooksher as director. Mr.
Brooksher is Chairman and CEO of ProLogis Trust, a leading real estate
investment trust specializing in the acquisition, development, marketing,
operation, and ownership of distribution facilities and services worldwide.
Alan M. Hallene will retire from the board of directors in April 2000 after 20
years of service. Judith A. Rogala retired from the board of directors in 1999
after 10 years of service.
Outlook
Domestic economic indicators suggest a slower rate of growth and somewhat
higher interest rates for the U.S. economy in 2000. Internationally, the
operational and marketing progress made in China during 1999 together with a
$5 million facility expansion to be operational in 2000 will greatly improve
the company's ability to serve this large market. The repositioning of the
European operations during 1999 should assist in lowering operating costs in
this business and make it more competitive in both the western and eastern
European markets. The company plans to expand its Architectural Products
business by constructing a new $24 million extrusion and
Page 16
<PAGE>
finishing facility to be operational in the first quarter of 2001. A domestic
metal building systems plant will be established in the southern U.S. during
2000 to make small buildings, to better penetrate this building market.
Continued growth of worldwide strategic alliances with major corporations is a
factor that may lessen the effect of a slower economy. Also, growth
opportunities continue for the company's systems approach to providing
construction solutions, as pre-engineered metal buildings currently command
only one-half of all targeted nonresidential construction markets in the U.S.
Order backlog at year-end was $323 million, 3% greater than a year ago, with
higher margin product backlog up 13% and construction backlog 27% lower.
Dividends
In September 1999 the company increased its quarterly dividend to $.16 per
common share, the fifth consecutive year of dividend increases.
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 future operations, 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 sheets of Butler
Manufacturing Company (a Delaware corporation) and subsidiaries as of December
31, 1999 and 1998, and the related consolidated statements of earnings and
retained earnings, comprehensive income and cash flows for each of the three
years in the period ended December 31, 1999. 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 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 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 audits provide a 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, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Kansas City, Missouri
January 26, 2000
Page 17
<PAGE>
<TABLE>
Consolidated Balance Sheets
<CAPTION>
$ in thousands
At December 31, 1999 1998
-------- --------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 52,951 $ 10,260
Receivables:
Trade 111,699 122,345
Other 8,563 12,068
-------- --------
120,262 134,413
Less allowance for possible losses 4,674 3,791
-------- --------
Net receivables 115,588 130,622
Inventories 59,987 70,252
Real estate developments in progress 18,725 19,139
Deferred tax assets 9,238 10,944
Other current assets 14,499 12,283
-------- --------
Total current assets 270,988 253,500
-------- --------
Investments and other assets 36,818 38,689
Assets held for sale 4,000 4,000
Property, plant, and equipment, at cost:
Land 4,895 5,017
Buildings 59,823 60,166
Machinery, tools, and equipment 135,313 137,290
Office furniture and fixtures 37,972 39,573
Transportation equipment 1,504 1,625
-------- --------
239,507 243,671
Less accumulated depreciation 145,456 145,967
-------- --------
Net property, plant, and equipment 94,051 97,704
-------- --------
$405,857 $393,893
======== ========
See Accompanying Notes to Consolidated Financial Statements.
Page 18
<PAGE>
<CAPTION>
$ in thousands
At December 31, 1999 1998
-------- --------
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable to banks $ 3,311 $ 1,627
Current maturities of long-term debt 5,676 5,832
Accounts payable 90,422 83,710
Dividends payable 1,100 1,092
Accrued taxes and other expenses 50,443 40,728
Accrued payroll and pension expense 14,632 17,180
Billings in excess of costs and estimated earnings 4,787 4,536
Taxes on income 4,603 6,425
-------- --------
Total current liabilities 174,974 161,130
-------- --------
Deferred tax liabilities 1,642 3,441
Other noncurrent liabilities 12,670 16,233
Long-term debt, less current maturities 57,021 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
Foreign currency translation adjustment (1,102) (52)
Retained earnings 199,229 178,536
-------- --------
210,750 191,107
Less cost of common stock in treasury, 2,211,646
shares in 1999 and 1,806,202 shares in 1998 51,200 40,919
-------- --------
Total shareholders' equity 159,550 150,188
Commitments and contingencies
-------- --------
$405,857 $393,893
======== ========
</TABLE>
Page 19
<PAGE>
<TABLE>
Consolidated Statements of Earnings and Retained Earnings
<CAPTION>
$ in thousands, except per share amounts
Years ended December 31, 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales $973,153 $962,163 $924,646
Cost of sales 801,144 800,307 760,721
-------- -------- --------
Gross profit 172,009 161,856 163,925
Selling, general, and administrative expenses 134,442 125,291 122,214
Restructuring charge 1,067 7,117 -
Asset impairment charge - 6,499 -
-------- -------- --------
Operating income 36,500 22,949 41,711
Other income (expense), net 246 393 1,180
Gain on sale of business - - 22,000
-------- -------- --------
246 393 23,180
-------- -------- --------
Operating and other income 36,746 23,342 64,891
Interest expense 5,572 5,667 5,069
-------- -------- --------
Pretax earnings 31,174 17,675 59,822
Income taxes 5,340 10,696 25,438
Net earnings 25,834 6,979 34,384
Retained earnings at beginning of year 178,536 175,373 141,900
-------- -------- --------
204,370 182,352 176,284
Dividends declared:
Common stock, $.62, $.58, and
$.52 per share (4,352) (4,356) (3,999)
Net change in retained earnings from
treasury stock transactions (789) 540 3,088
-------- -------- --------
Retained earnings at end of year $199,229 $178,536 $175,373
======== ======== ========
Basic earnings per share $ 3.66 $ 0.92 $ 4.48
======== ======== ========
Diluted earnings per share $ 3.63 $ 0.92 $ 4.43
======== ======== ========
</TABLE>
<TABLE>
Consolidated Statements of Comprehensive Income
<CAPTION>
$ in thousands
Years ended December 31, 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net earnings: $ 25,834 $ 6,979 $ 34,384
Other comprehensive income:
Foreign currency translation adjustment (1,050) (78) (525)
-------- -------- --------
Comprehensive income $ 24,784 $ 6,901 $ 33,859
======== ======== ========
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
Page 20
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
$ in thousands
Years ended December 31, 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 25,834 $ 6,979 $ 34,384
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 19,972 14,923 12,474
Restructuring charge 1,067 7,117 -
Asset impairment charge - 6,499 -
After tax gain on sale of business - - (13,299)
Equity in (earnings) loss of joint ventures (241) 222 (576)
Change in assets and liabilities, net of
sale or purchase of new businesses:
Receivables 15,034 (23,740) 3,914
Inventories 10,405 6,871 (21,999)
Real estate developments in progress 414 3,262 11,402
Deferred taxes (93) (3,252) 790
Other current assets and
current liabilities 10,387 13,316 (21,885)
-------- -------- --------
Net cash provided by
operating activities 82,779 32,197 5,205
-------- -------- --------
Cash flows from investing activities:
Capital expenditures (13,634) (14,800) (30,249)
Cash received on sale of business - - 33,748
Acquisition of new businesses - - (7,697)
Net change in other noncurrent assets (641) (7,356) (2,429)
-------- -------- --------
Net cash used by
investing activities (14,275) (22,156) (6,627)
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt - 35,000 790
Repayment of long-term debt (5,880) (6,017) (5,826)
Net change in short-term borrowings 1,528 (19,683) 12,284
Dividends paid (4,344) (4,333) (3,837)
Issuance of treasury stock 2,812 797 1,507
Purchase of treasury stock (13,093) (10,260) (6,179)
Net change in other noncurrent liabilities (5,786) (722) 6,710
-------- -------- --------
Net cash provided (used) by
financing activities (24,763) (5,218) 5,449
Effect of exchange rate changes (1,050) (78) (525)
-------- -------- --------
Net change in cash and
cash equivalents 42,691 4,745 3,502
Cash and cash equivalents at beginning of year 10,260 5,515 2,013
-------- -------- --------
Cash and cash equivalents
at end of year $ 52,951 $ 10,260 $ 5,515
======== ======== ========
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
Page 21
<PAGE>
Notes to Consolidated Financial Statements
Significant Accounting Policies
Reclassifications. Certain reclassifications have been made to prior years
information to conform to the 1999 presentation.
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.
Use of Estimates. 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 highly liquid investments with original maturities of 90 days or
less.
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 (FIFO) method had been used
for all locations, inventories would have been $9.3 million and $10.2 million
higher than those reported at December 31, 1999 and 1998, respectively.
The use of the LIFO method increased net earnings by $.5 million ($.08 per
share) and $.4 million ($.05 per share) in 1999 and 1998 respectively. Net
earnings in 1997 were decreased by $.3 million ($.04 per share) due to the use
of the LIFO method.
<TABLE>
Inventories by Component
<CAPTION>
(Thousands of dollars) 1999 1998
-------- --------
<S> <C> <C>
Raw materials $ 20,620 $ 34,509
Work in process 13,787 8,503
Finished goods 34,924 37,417
-------- --------
FIFO inventory 69,331 80,429
LIFO reserve (9,344) (10,177)
-------- --------
LIFO inventory $ 59,987 $ 70,252
======== ========
</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 1999, 1998 and 1997.
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
software applications expected to reduce costs in future periods have been
capitalized in accordance with the Accounting Standards Executive Committee's
Statement of Position 98-1, are included in "Investments and other assets" in
the consolidated balance sheets ($13.5 million and $14 million at December 31,
1999 and 1998, respectively), and are being amortized on a straight-line basis
over periods not exceeding seven years ($3 million in 1999, $2.1 million in
1998, and $1.2 million in 1997). During 1999 and 1998, the unamortized cost of
software applications was reduced by $4.9 million and $1.1 million
respectively, to reflect current value.
Derivative Instruments and Hedging Activities. 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 enters into forward currency exchange contracts and hedge
contracts for certain commodities used in its trade or business. Currently,
gains or losses on open contracts are not reflected in the company's financial
statements, but are recorded only at their contract settlement date. The
effect of implementing FASB No. 133 is still under evaluation but is not
believed to have a material effect on the company's financial statements.
Page 22
<PAGE>
Earnings Per Share. The company reports basic and diluted earnings per share
in accordance with Financial Accounting Standard No. 128, "Earnings Per
Share." 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 (EPS) Computations
<CAPTION>
1999
-------------------------
(In thousands except Per Share
per share amounts) Net Earnings Shares Amount
------- ----- -----
<S> <C> <C> <C>
Basic EPS available to common shareholders $25,834 7,064 $3.66
Assumed conversion of stock options 47
------- ----- -----
Diluted EPS available to common shareholders
plus assumed conversions $25,834 7,111 $3.63
======= ===== =====
<CAPTION>
1998
-------------------------
(In thousands except Per Share
per share amounts) Net Earnings Shares Amount
------- ----- -----
<S> <C> <C> <C>
Basic EPS available to common shareholders $ 6,979 7,553 $ .92
Assumed conversion of stock options 59
------- ----- -----
Diluted EPS available to common shareholders
plus assumed conversions $ 6,979 7,612 $ .92
======= ===== =====
<CAPTION>
1997
-------------------------
(In thousands except Per Share
per share amounts) Net Earnings Shares Amount
------- ----- -----
<S> <C> <C> <C>
Basic EPS available to common shareholders $34,384 7,668 $4.48
Assumed conversion of stock options 86
------- ----- -----
Diluted EPS available to common shareholders
plus assumed conversions $34,384 7,754 $4.43
======= ===== =====
</TABLE>
The following exercisable options were excluded from the computations of
annual diluted EPS presented above. Exercisable options are not considered to
be common equivalent shares during quarters when the options' exercise price
exceeded the average market price of the common shares.
<TABLE>
Options Excluded from Diluted EPS
<CAPTION>
Year
excluded Number of Range of exercise Year(s) the
from EPS option shares prices for excluded excluded options
calculation excluded option shares expire
---- ------- --------------- ------------
<S> <C> <C> <C>
1999 368,500 $23.00 - $38.50 2001 to 2006
1998 169,500 $23.00 - $38.50 2001 to 2006
1997 105,750 $35.88 - $38.50 2002
</TABLE>
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. In 1999, a $1.5 million
foreign currency devaluation loss was recognized on the income statement as
part of the restructuring charge for the company's Brazilian net asset
exposure. Foreign currency exchange transaction gains or losses for 1998 and
1997 were immaterial to consolidated results.
Comprehensive Income. The only component of comprehensive income is a foreign
currency translation adjustment, which has not been tax effected.
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, 1999 and 1998 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
hedge contracts of less than one year duration are utilized to hedge
architectural aluminum product backlog against losses caused by changes in
aluminum costs. Foreign currency forward contracts of less than one year
duration are used to hedge certain of the company's foreign currency exposure.
Gains or losses related to qualifying hedges are recognized in income when the
hedged transaction settles. The fair values of open aluminum hedge contracts
and foreign currency hedges at December 31, 1999 and 1998 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 were $6.3 million and $1.5 million at December 31, 1999 and 1998,
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 $16.7 million and $24.7 million
at December 31, 1999 and 1998, respectively. Included in the contract
receivables were $5 million and $4 million at December 31, 1999 and 1998,
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 Moduline 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 Moduline'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. Moduline is a leading manufacturer of high
quality architectural windows for the nonresidential buildings market.
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.
These acquisitions were 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
periods not exceeding forty years.
Sale and Dissolution of Businesses. In September 1999, the company sold the
shares of its United Kingdom metal buildings business, Butler Building
Systems, Ltd., to Aerpac Investment Holding UK Ltd. The company recorded a
one-time tax benefit of $5.8 million as a carryback of its capital loss.
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 year 1997
was $19.5 million and $3.5 million, respectively.
In December 1997, the company agreed to dissolve its 50%-owned partnership,
Advanced Building Systems. The financial impact of dissolution on the
company's financial results was 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 operations. 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 repositioning of European
operations. Estimates of realizable asset sale values were obtained from
outside appraisal and the company's experience in selling redundant assets.
The remaining $.9 million restructuring accrual at the end of 1999 pertains to
severance and termination costs ($.3 million), and legal, claims, and other
incremental shut-down costs ($.6 million). The company utilized $1.1 million
of the 1998 restructuring accrual during 1999 with $.1 million utilized in the
first quarter, $.6 million in the second quarter, $.3 million in the third
quarter, and $.1 million in the fourth quarter.
<TABLE>
Restructuring charge and accrual activity during 1999
<CAPTION>
12/31/1998 12/31/99
(Thousands of dollars) Accrual Utilization Recoveries Accrual
------ ------- ------ ----
<S> <C> <C> <C> <C>
Severance and
termination costs $1,185 $ (929) $ - $256
Legal, claims, and
other costs 1,092 (168) (295) 629
------ ------- ------ ----
$2,277 $(1,097) (295) $885
====== ======= ====== ====
Redundant and worthless assets recoveries (152)
------
Total recoveries from 1998 charge (447)
1999 restructuring charge:
Foreign currency devaluation-Brazil 1,514
------
Net restructuring charge for 1999 $1,067
======
</TABLE>
During the first quarter of 1999 the company recorded an additional $1.5
million restructuring charge for currency translation losses on its Brazilian
net asset exposure. In the third quarter $.4 million of the 1998 restructuring
charge was taken to income, due to reduced legal, claims, and other costs, and
better than expected recovery on redundant and worthless assets. Restructuring
charges, net of recoveries, totaled $1.1 million during 1999.
Page 24
<PAGE>
Assets Held for Sale. BMC Real Estate, Inc., a wholly-owned subsidiary, owns
land for development which is included in "Assets held for sale" in the
consolidated balance sheets with a net carrying value of $4 million at
December 31, 1999 and 1998. During 1998, the carrying value of this land
development was reduced to its current market value based upon an appraisal.
Business 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. Also included in the Building Systems segment are the 1999 and
1998 restructuring and asset impairment charges previously included in Other.
The Architectural Products segment includes the operations of the Vistawall
Group. The group's businesses design, manufacture, and market architectural
aluminum systems for nonresidential construction, including 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. The 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.
The Other classification in the following tables represent unallocated
corporate expenses and assets, including corporate offices, deferred taxes,
pension accounts, interest expense, and intersegment eliminations. Also
included are the operating results of the company's Grain Systems division
until its sale in June 1997 as well as the gain on the sale of the division.
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>
Net Sales
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Building Systems $624,518 $637,591 $633,441
Architectural Products 202,332 181,541 152,035
Construction Services 151,937 134,532 120,905
Real Estate 27,309 32,809 37,577
Other (32,943) (24,310) (19,312)
-------- -------- --------
$973,153 $962,163 $924,646
======== ======== ========
</TABLE>
<TABLE>
Interest Expense
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Building Systems $ 717 $ 425 $ 492
Architectural Products - - -
Construction Services - - -
Real Estate 92 278 891
Other 4,763 4,964 3,686
-------- -------- --------
$ 5,572 $ 5,667 $ 5,069
======== ======== ========
</TABLE>
<TABLE>
Pretax Earnings (Loss)
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Building Systems $ 22,476 $ 15,315 $ 31,562
Architectural Products 19,263 11,590 9,161
Construction Services 2,248 2,147 1,519
Real Estate 4,094 4,221 5,032
Other (16,907) (15,598) 12,548
-------- -------- --------
$ 31,174 $ 17,675 $ 59,822
======== ======== ========
</TABLE>
Assets represent both tangible and intangible assets used by each business
segment. Other represents corporate cash and cash equivalents, assets held for
sale, corporate equipment, and various other assets which are not related to a
specific business segment.
<TABLE>
Assets
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Building Systems $212,652 $227,474 $226,681
Architectural Products 83,315 80,799 69,299
Construction Services 27,369 26,596 19,921
Real Estate 22,731 26,303 24,415
Other 59,790 32,721 34,656
-------- -------- --------
$405,857 $393,893 $374,972
======== ======== ========
</TABLE>
Page 25
<PAGE>
<TABLE>
Capital Expenditures
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Building Systems $ 10,934 $ 8,549 $ 16,689
Architectural Products 2,188 5,677 7,473
Construction Services 299 381 4,634
Real Estate - 39 3
Other 213 154 1,450
-------- -------- --------
$ 13,634 $ 14,800 $ 30,249
======== ======== ========
Capital expenditures exclude property, plant, and equipment acquired through
acquisition of new businesses.
</TABLE>
<TABLE>
Depreciation and Amortization
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Building Systems $ 15,796 $ 11,006 $ 9,693
Architectural Products 2,879 2,488 1,839
Construction Services 714 721 389
Real Estate 9 2 3
Other 574 706 550
-------- -------- --------
$ 19,972 $ 14,923 $ 12,474
======== ======== ========
</TABLE>
Geographic Information by Country
The following table presents revenues by country based on the location of the
use of the product or service. The U.S. is the only country in which net sales
exceeded 10% of the company's consolidated net sales.
<TABLE>
Net Sales
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
United States of America $829,187 $821,127 $775,747
All other countries 143,966 141,036 148,899
-------- -------- --------
$973,153 $962,163 $924,646
======== ======== ========
</TABLE>
The following table presents all noncurrent assets by country based on the
location of the asset. The U.S. is the only country in which long-lived assets
exceeded 10% of the company's total long-lived assets.
<TABLE>
Long-Lived Assets
<CAPTION>
(Thousands of dollars) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
United States of America $118,710 $120,568 $118,556
All other countries 16,159 19,825 23,093
-------- -------- --------
$134,869 $140,393 $141,649
======== ======== ========
Debt, Leases, Commitments, and Contingencies
</TABLE>
<TABLE>
Total Debt, Less Current Maturities
<CAPTION>
(Thousands of dollars) 1999 1998
-------- --------
<S> <C> <C>
1998 private placement notes $ 35,000 $ 35,000
1994 private placement notes 20,000 25,000
Industrial revenue bonds 6,250 6,250
Other debt 1,447 2,483
-------- --------
Total debt 62,697 68,733
Less current maturities (5,676) (5,832)
-------- --------
Long-term debt $ 57,021 $ 62,901
======== ========
</TABLE>
Long-Term Debt. The 1998 private placement notes carry a fixed interest rate
of 6.57%, and are payable in equal annual installments of $3.5 million
beginning in 2004. The notes mature March 20, 2013.
The 1994 private placement notes carry a fixed interest rate of 8.02%, and are
payable in equal annual installments of $5 million. The notes mature December
30, 2003.
Industrial Revenue Bonds mature in 2015, are guaranteed by the company, and
are secured by a bank letter of credit. The weighted-average interest rate on
the bond issue was 3.9% for 1999, 4% for 1998, and 4.3% for 1997.
Total principal payments due on all debt in each of the five years subsequent
to December 31, 1999 are $5.7 million in 2000, $5.3 million in 2001, $5.2
million in 2002, $5 million in 2003, $3.5 million in 2004, and $38 million
thereafter. Cash payments for interest on long-term debt were $4.6 million
each during 1999 and 1998, and $3.2 million during 1997.
Short-Term Borrowings. During 1999 and 1998 the company borrowed to meet
working capital needs and other requirements. At December 31, 1999 the company
had a domestic bank credit facility of $40 million to meet the needs of the
company. The company's foreign operations had separate lines of credit with
local banks of $6.5 million at current exchange rates. Borrowings outstanding
at December 31, 1999 were $3.3 million with a weighted-average interest rate
of 9.9%. At December 31, 1999 the company had approximately $43.2 million of
available borrowing capacity.
Debt and Borrowing Covenants. 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, 1999 the company was in
compliance with all covenants, and at that date approximately $17 million was
available for additional cash dividends and share repurchases.
Page 26
<PAGE>
Leases. Rental expense under operating leases was $11 million, $10.2 million,
and $9.9 million in 1999, 1998, and 1997, respectively. Minimum rental
commitments under noncancelable operating leases are $7.2 million in 2000,
$5.6 million in 2001, $2.7 million in 2002, $1.5 million in 2003, and $.8
million in 2004.
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. Such performance bonds exceeded the related
letters of credit by $.9 million at December 31, 1999.
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 below. The
provisions for income taxes were $5.3 million, $10.7 million, and $25.4
million for 1999, 1998, and 1997, respectively. In 1999 the company sold all
shares of its United Kingdom metal building business and recorded a tax
benefit of $5.8 million. The sale of shares resulted in a capital loss which
was used to offset the capital gain related to the sale of Grain Systems in
1997. Cash payments for income taxes were $15.8 million, $14.4 million, and
$25.2 million in 1999, 1998, and 1997, respectively. The foreign components of
pretax earnings were net profits of $4.4 million in 1999, and net losses of
$7.4 million and $3.6 million in 1998 and 1997, respectively.
<TABLE>
Components of Income Taxes
<CAPTION>
(Thousands of dollars) 1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Current:
Federal $ 3,665 $11,556 $19,917
Foreign 13 878 189
State and local 1,755 1,515 4,541
------- ------- -------
5,433 13,949 24,647
------- ------- -------
Deferred:
Federal (86) (2,996) 729
State and local (7) (257) 62
------- ------- -------
(93) (3,253) 791
------- ------- -------
Total income tax expense $ 5,340 $10,696 $25,438
======= ======= =======
</TABLE>
A reconciliation of the statutory federal income tax and the income tax
expense is shown below.
<TABLE>
Reconciliation of Income Tax Expense
<CAPTION>
(Thousands of dollars) 1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Expected income tax expense $ 5,100 $ 6,186 $20,938
State and local income
tax, net of federal benefits 1,141 985 2,952
Nondeductible losses (nontaxable
profits) of foreign subsidiaries (1,533) 2,580 1,437
Foreign sales corporation
tax benefit (350) (371) (695)
Loss of U.K. tax credits - 540 -
Other 982 776 806
------- ------- -------
Actual income tax expense $ 5,340 $10,696 $25,438
======= ======= =======
</TABLE>
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 below.
<TABLE>
Deferred Tax Assets and Liabilities
<CAPTION>
(Thousands of dollars) 1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Current deferred tax assets:
Operating expenses $ 8,156 $ 8,834 $ 6,929
Inventory 821 1,071 670
Restructuring charge - 825 -
Other 261 214 213
Net current deferred
tax assets $ 9,238 $10,944 $ 7,812
Page 27
<PAGE>
Deferred Tax Assets and Liabilities
<CAPTION>
(Thousands of dollars) 1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Noncurrent deferred tax assets (liabilities):
Depreciation $(8,664) $(8,835) $(7,370)
Operating expenses 5,845 3,994 4,451
Minority investments (428) (428) (90)
Foreign net operating
loss carryforward 1,347 6,825 4,517
Asset impairment 2,905 2,905 -
Deferred income (655) (655) (655)
Other (645) (422) 103
------- ------- -------
Net noncurrent charge
tax assets (295) 3,384 956
Valuation allowance (1,347) (6,825) (4,517)
------- ------- -------
Net noncurrent
deferred tax liabilities $(1,642) $(3,441) $(3,561)
======= ======= =======
</TABLE>
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), 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
integrated as to retirement benefits, with benefits based on compensation and
years of service. Bargaining unit employees are covered by defined benefit
retirement plans with benefits based on years of service.
The IRAA assets include the company's common stock, other equities, bonds, and
government securities. At December 31, 1999 and 1998, the IRAA had net assets
of $52.7 million and $50.3 million, respectively, and held 831,312 shares and
887,943 shares of company stock at December 31, 1999 and 1998, respectively.
The company expensed $.7 million for IRAA contributions in 1999, $.6 million
in 1998, and $.5 million in 1997.
A reconciliation of benefit obligations and plan assets, the funded status,
and the prepaid pension cost for the defined benefit plans are presented
below. While the market value of IRAA assets is not shown, the effect of the
IRAA offset against the defined benefit has been recognized in the benefit
obligations presented. The assets of the defined benefit plans are primarily
equities, bonds, and government securities.
<TABLE>
Reconciliations of Benefit Obligation and Plan Assets,
Funded Status and Prepaid Benefit Cost
<CAPTION>
(Thousands of dollars) 1999 1998
-------- --------
<S> <C> <C>
Reconciliation of projected benefit obligation
(Actuarial present value of future benefits
including future increases in compensation levels)
Projected benefit obligation at January 1 $ 87,176 $ 70,416
Service cost-benefits earned
during the period 4,562 3,420
Interest cost on projected
benefit obligation 6,172 5,288
Amendments to plans - 49
Actuarial (gain) loss (7,620) 10,665
Benefits paid (2,877) (2,662)
-------- --------
Projected benefit obligation
at December 31 $ 87,413 $ 87,176
======== ========
Reconciliation of fair value of plan assets
Fair value of plan assets at January 1 $ 67,195 $ 57,190
Actual return on plan assets 9,607 6,877
Employer contribution 5,400 5,790
Benefits paid (2,877) (2,662)
-------- --------
Fair value of plan assets at December 31 $ 79,325 $ 67,195
======== ========
Vested and accumulated benefit obligations
(For service and compensation through December 31)
Vested benefit obligation $ 57,977 $ 56,134
======== ========
Accumulated benefit obligation $ 59,610 $ 58,024
======== ========
Funded status and prepaid benefit cost at December 31
Projected benefit obligation greater
than plan assets $( 8,088) $(19,981)
Unrecognized net transition obligation cost 274 472
Unrecognized prior service cost 2,150 1,716
Unrecognized net actuarial loss 10,144 23,736
-------- --------
Prepaid benefit cost $ 4,480 $ 5,943
======== ========
</TABLE>
Page 28
<PAGE>
The components of net pension cost of the defined benefit plans are presented
below.
<TABLE>
Components of Net Pension Cost
<CAPTION>
(Thousands of dollars) 1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Service cost - benefits
earned during the year $ 4,562 $ 3,420 $ 2,669
Interest cost on the projected
benefit obligation 6,172 5,288 4,472
Expected return on plan assets (5,609) (5,366) (4,047)
Amortization of
transition obligation 197 197 197
Amortization of prior service cost 259 202 202
Amortization of net actuarial loss 1,282 816 749
------- ------- -------
Net pension cost $ 6,863 $ 4,557 $ 4,242
======= ======= =======
Assumptions used to determine net
pension cost and benefit obligations:
Discount rate of future
benefit obligation 7.75% 7.25% 7.50%
Long-term expected return
on plan assets 8.50% 9.50% 8.50%
Long-term rate of increase
in compensation levels 5.50% 5.50% 5.50%
</TABLE>
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
1999, 1998, and 1997 the company reached the defined profitability goals and
accordingly expensed $1.6 million, $1.5 million, and $1.5 million,
respectively, as a matching contribution to the plan. In addition, the company
sponsors 401(k) savings plans for its bargaining unit employees.
The company sponsors a supplemental retirement plan for certain executives.
Life insurance arrangements have been purchased to meet the liabilities of the
plan. The company expensed $1 million, $.8 million, and $.7 million in 1999,
1998, and 1997, 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. Company contributions toward these benefits have been projected as
fixed amounts per participant not to exceed 175% of its 1993 per capita
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.
A reconciliation of benefit obligations and the funded status and the accrued
benefit liability is presented below.
<TABLE>
Reconciliation of Benefit Obligation, and the Funded Status and Accrued
Benefit Liability
<CAPTION>
(Thousands of dollars) 1999 1998
------- -------
<S> <C> <C>
Reconciliation of projected benefit obligation
(Actuarial present value of future benefits)
Projected benefit obligation at January 1 $13,040 $13,386
Service cost-benefits earned
during the period 384 360
Interest cost on projected benefit obligation 912 965
Actuarial (gain) loss 1,874 (228)
Benefits paid (2,710) (2,296)
Participant contributions 801 853
------- -------
Projected benefit obligation
at December 31 $14,301 $13,040
======= =======
Funded status and accrued benefit liability at December 31
Projected benefit obligation, unfunded $14,301 $13,040
Unrecognized net transition
obligation cost (6,211) (6,689)
Unrecognized net actuarial loss (5,012) (2,738)
------- -------
Accrued benefit liability $ 3,078 $ 3,613
======= =======
</TABLE>
The components of the annual net benefit cost are presented below.
<TABLE>
Components of Net Benefit Cost
<CAPTION>
(Thousands of dollars) 1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Service cost - benefits
earned during the year $ 384 $ 360 $ 339
Interest cost on the projected
benefit obligation 912 965 912
Amortization of
transition obligation 478 478 504
Amortization of net actuarial loss 86 101 37
------ ------ ------
Net benefit cost $1,860 $1,904 $1,792
====== ====== ======
</TABLE>
For measurement purposes, annual rates of future increases in the per capita
cost of covered health care benefits were assumed to be 8% for 2000, 7% for
2001, 6% for 2002, and 5% for 2003 through 2006. During 2006, it is projected
that the plan will reach the company's contribution cap - 175% of its 1993 per
capita contribution.
Page 29
<PAGE>
The discount rate assumption was 7.75%, 7.25%, and 7.5% at December 31, 1999,
1998, and 1997, respectively. The rate of future compensation increases has no
impact on the plan. The return on plan assets is not applicable since the plan
is unfunded and benefits are paid as claims are submitted.
Assumed health care trend rates can have a significant effect on the amounts
reported for the health care plans. However, since the plan has capped the
company's cost at 175% of its 1993 per capita cost, the effect on the company
is not material. A 1% change in assumed health care cost trend rates would
have the following effects:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1% Increase 1% Decrease
----------- -----------
<S> <C> <C>
Effect on total of service and interest cost
components of net annual benefit cost $ 28 $ (28)
Effect on the health care component
of the projected benefit obligation $ 526 $(503)
</TABLE>
Stock Incentive Plans
Stock options are presently outstanding under the Stock Incentive Plans of
1996 and 1987. The 1996 Plan covering 600,000 shares was approved in April,
1996. The 1987 plan was terminated upon the approval of the 1996 plan except
for outstanding stock options and stock appreciation rights.
At December 31, 1999, 1998, and 1997, 265,249, 267,521, and 176,302 shares,
respectively, under option were exercisable and 119,979, 388,393, and 486,342
shares, respectively, were available for grant. Below is a summary of stock
option activity for the three years ended December 31, 1999. All options have
a fixed exercise price.
<TABLE>
Summary of Stock Option Activity
<CAPTION>
1999 1998 1997
----------------- ---------------- ----------------
Weighted- Weighted- Weighted-
average average average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
-------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Outstanding
at beginning
of year 378,516 $25.72 306,126 $22.86 262,764 $13.98
Granted 278,000 $26.00 103,000 $32.19 113,000 $38.37
Exercised (108,267) $11.11 (22,775) $13.44 (62,472) $12.03
Forfeited (6,000) $33.44 (7,835) $34.71 (7,166) $36.26
-------- ------- -------
Outstanding
at end of year 542,249 $28.70 378,516 $25.72 306,126 $22.86
======== ======= =======
</TABLE>
Nonqualified stock options were granted by the company in 1999, 1998, and 1997
to key employees under the 1996 and 1987 stock option plans. Options are
granted at fair market value and expire five years from the date of grant.
Options granted in 1999, 1998, and 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
1999, 1998, and 1997 was $8, $10, and $14, respectively, on the date of grant
using the Black Scholes option pricing model with the following weighted
average assumptions: 1999 - expected dividend yield of 2.3%, risk-free
interest rate of 6.6%, expected volatility factor of 34%, and an expected life
of five years; 1998 - expected dividend yield of 1.9%, risk-free interest rate
of 4.6%, expected volatility factor of 36%, and an expected life of five
years; 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.
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 $1.3 million and
$.18 per share in 1999, $.6 million and $.08 per share in 1998, and $.9
million and $.11 per share in 1997.
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>
Stock Options Outstanding and Exercisable
<CAPTION>
Options Outstanding Options Exercisable
- --------------------------------------------------- -------------------
Weighted- Weighted- Weighted-
Range of Number Average Average Number Average
Exercise Outstanding Remaining Exercise Exercisable Exercise
Prices at 12/31/99 Life in Years Price at 12/31/99 Price
- --------------- ------- --- ------ ------- ------
<S> <C> <C> <C> <C> <C>
$ 8.00 - 23.00 40,249 2.9 $12.82 40,249 $12.82
$26.00 277,000 4.1 $26.00 - -
$26.00 - 35.875 139,000 3.2 $32.44 139,000 $32.44
$38.75 86,000 2.1 $38.75 86,000 $38.75
542,249 3.4 $28.70 265,249 $31.51
</TABLE>
Page 30
<PAGE>
<TABLE>
Treasury Stock Activity
<CAPTION>
(Thousands of dollars) 1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Balance, January 1 $40,919 $31,456 $30,632
Purchases 13,093 10,260 6,179
Issues (2,812) (797) (5,355)
------- ------- -------
Balance, December 31 $51,200 $40,919 $31,456
======= ======= =======
</TABLE>
As a result of options exercised and the issuance of treasury stock, the
company recognized a tax benefit of $.5 million, $.2 million, and $.6 million
in 1999, 1998, and 1997, respectively, which was credited directly to retained
earnings.
<TABLE>
<CAPTION>
(Number of shares) 1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Balance, January 1 1,806,202 1,451,205 1,526,735
Purchases 527,321 391,513 189,369
Issues (121,877) (36,516) (264,899)
--------- --------- ---------
Balance, December 31 2,211,646 1,806,202 1,451,205
========= ========= =========
Ending average cost
at December 31 $ 23.15 $ 22.65 $ 21.68
</TABLE>
<TABLE>
Quarterly Financial Information (Unaudited)
<CAPTION>
(Thousands of dollars except per share amounts)
Quarter Ended
-----------------------------------------
1999 March 31 June 30 Sept. 30 Dec. 31 Annual
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $203,396 $248,713 $266,382 $254,662 $973,153
Gross profit 33,903 44,479 46,678 46,949 172,009
Net earnings 264 6,331 14,370 4,869 25,834
Basic earnings
per share $ .04 $ .89 $ 2.04 $ .70 $ 3.66
Diluted earnings
per share $ .04 $ .89 $ 2.03 $ .70 $ 3.63
Dividends
per share $ .15 $ .15 $ .16 $ .16 $ .62
</TABLE>
Quarter ended March 31 net earnings and earnings per share amounts include a
currency transaction loss in Brazil of $1.0 million or $.13 per share. Quarter
ended September 30 net earnings include a one-time tax benefit of $5.8 million
or $.81 per share from the share sale of the company's United Kingdom
subsidiary, Butler Building Systems, Ltd. Net earnings for quarter ended
December 31 include a $2.5 million or $.35 per share write-down to net
realizable value of a software project that was terminated in the U.S. metal
building systems business. The cumulative annual effect of these one-time
items increased net earnings by $2.3 million or $.33 per share. Excluding
these items, 1999 net earnings from operations were $23.5 million or $3.30 per
share.
Annual earnings per share for 1999 do not equal the sum of the quarterly
earnings per share because of the timing of net earnings and the company's
purchase of common shares during the year.
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------
1998 March 31 June 30 Sept. 30 Dec. 31 Annual
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $193,784 $238,517 $268,054 $261,808 $962,163
Gross profit 31,927 41,062 45,245 43,622 161,856
Net earnings
(loss) 1,159 4,918 6,733 (5,831) 6,979
Basic earnings
(loss) per share $ .15 $ .64 $ .89 $ (.80) $ .92
Diluted earnings
(loss) per share $ .15 $ .64 $ .88 $ (.79) $ .92
Dividends
per share $ .14 $ .14 $ .15 $ .15 $ .58
</TABLE>
Quarter ended December 31 and annual net earnings and earnings per share
amounts include a restructuring and asset impairment charge of $10.7 million
or $1.41 per share. Excluding this item, 1998 net earnings from operations
were $17.7 million or $2.33 per share.
Annual earnings per share for 1998 do not equal the sum of the quarterly
earnings per share because of the timing of net earnings and the company's
purchase of common shares during the year.
<TABLE>
Price Range of Common Stock (Unaudited)
The company's common stock is traded on the New York Stock Exchange. The table
below summarizes the high and low trading prices as reported on the exchange.
<CAPTION>
1999 1998
------------------- -------------------
High Low High Low
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Quarter:
First $26 1/2 $22 1/8 $36 $31 3/16
Second $29 15/16 $23 7/16 $37 11/16 $33 3/8
Third $28 9/16 $26 $35 1/16 $23 1/8
Fourth $26 3/8 $21 $24 7/16 $20
Annual $29 15/16 $21 $37 11/16 $20
</TABLE>
Page 31
<PAGE>
<TABLE>
Historical Review (1999-1995)
<CAPTION>
$ in thousands, except per share amounts
Years ended December 31, 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income Statement Data
Net sales $973,153 $962,163 $924,646 $870,162 $826,538
Net earnings 25,834 6,979 34,384 25,763 23,432
As a percent of sales 2.7% 0.7% 3.7% 3.0% 2.8%
As a percent of average
shareholders' equity 16.7% 4.6% 24.5% 22.7% 25.8%
Per share of common stock:
Basic earnings $ 3.66 $ 0.92 $ 4.48 $ 3.39 $ 3.14
Diluted earnings 3.63 0.92 4.43 3.35 3.07
Cash dividends declared $ 0.62 0.58 .52 .44 .37
Cash dividends paid $ 0.61 0.57 .50 .42 .33
======== ======== ======== ======== ========
Financial Position At Year-End
Assets
Current assets $270,988 $253,500 $233,323 $222,061 $187,303
Property, plant,
and equipment, net 94,051 97,704 96,339 77,398 63,407
Total assets 405,857 393,893 374,972 337,420 282,869
Working capital
Net working capital $ 96,014 $ 92,370 $ 68,819 $ 61,182 $ 61,171
Ratio of current
assets to current
liabilities 1.5 1.6 1.4 1.4 1.5
Financial structure
Long-term debt, less
current maturities $ 57,021 $ 62,901 $ 33,918 $ 38,397 $ 42,613
Total debt 62,697 68,733 39,780 43,861 47,064
Shareholders' equity 159,550 150,188 156,566 124,442 102,423
Per common share,
year end 23.20 20.62 20.50 16.46 13.54
Total debt as a
percent of total
capital 28% 31% 20% 26% 32%
======== ======== ======== ======== ========
General Statistics
Depreciation and
amortization $ 19,972 $ 14,923 $ 12,474 $ 9,737 $ 8,861
Capital expenditures $ 13,634 $ 14,800 $ 30,249 $ 22,670 $ 22,663
Basic shares
outstanding, average 7,064 7,553 7,668 7,590 7,458
Diluted shares
outstanding, average 7,111 7,612 7,754 7,693 7,630
Common shares
outstanding, year end 6,877 7,282 7,637 7,561 7,565
Common shareholders,
year end 2,599 2,210 2,310 2,345 2,411
Number of employees,
year end 4,912 5,171 5,117 4,162 3,966
======== ======== ======== ======== ========
<FN>
1. In thousands except per share amounts for common stock and the number of
shareholders and employees.
2. The 1999 net earnings include a tax benefit from the sale of Butler
Building Systems, Ltd. of $5.8 million or $0.81 per share.
3. The 1998 net earnings include a restructuring and asset impairment charge
of $10.7 million or $1.41 per share.
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 John W. 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: January 17, 2000 /S/ K. DANE BROOKSHER
-----------------------------
K.DANE BROOKSHER
DATED: January 13, 2000 /S/ GARY M. CHRISTENSEN
-----------------------------
GARY M. CHRISTENSEN
DATED: March 3, 2000 /S/ ALAN M. HALLENE
-----------------------------
ALAN M. HALLENE
DATED: January 18, 2000 /S/ C.L. WILLIAM HAW
-----------------------------
C.L. WILLIAM HAW
DATED: January 12, 2000 /S/ JOHH J. HOLLAND
-----------------------------
JOHN J. HOLLAND
DATED: January 13, 2000 /S/ ROBERT J. NOVELLO
-----------------------------
ROBERT J. NOVELLO
DATED: January 14, 2000 /S/ DONALD H. PRATT
-----------------------------
DONALD H. PRATT
DATED: January 17, 2000 /S/ ROBERT J. REINTJES, SR.
-----------------------------
ROBERT J. REINTJES, SR.
DATED: January 12, 2000 /S/ GARY L. TAPELLA
-----------------------------
GARY L. TAPELLA
<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, 1999, and Consolidated Balance Sheet as of December 31, 1999, and
is qualified in its entirety by reference to such financial statement.
</LEGEND>
<CIK> 0000015840
<NAME> BUTLER MANUFACTURING COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 52,951
<SECURITIES> 0
<RECEIVABLES> 120,262
<ALLOWANCES> 4,674
<INVENTORY> 59,987
<CURRENT-ASSETS> 270,988
<PP&E> 239,507
<DEPRECIATION> 145,456
<TOTAL-ASSETS> 405,857
<CURRENT-LIABILITIES> 174,974
<BONDS> 57,021<F1>
0
0
<COMMON> 12,623
<OTHER-SE> 199,229<F2>
<TOTAL-LIABILITY-AND-EQUITY> 405,857
<SALES> 973,153
<TOTAL-REVENUES> 973,153<F3>
<CGS> 801,144
<TOTAL-COSTS> 801,144
<OTHER-EXPENSES> 134,442<F4>
<LOSS-PROVISION> 1,514<F5>
<INTEREST-EXPENSE> 5,572
<INCOME-PRETAX> 31,174
<INCOME-TAX> 5,340
<INCOME-CONTINUING> 25,834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,834
<EPS-BASIC> 3.66
<EPS-DILUTED> 3.63
<FN>
<F1>Reflects long-term debt, less current maturities.
<F2>Reflects other stockholders' equity before deduction of $52.3 million treasury
stock and foreign currency translation adjustments.
<F3>Reflects net sales plus net international joint venture income less.
<F4>Consists of selling, general, and administrative expense.
<F5>Includes additional restructuring charge of $1.5 million recorded in the first
quarter of 1999.
</FN>
</TABLE>
