<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended MARCH 31, 1995
---------------------------------------------
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-14951
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BUTLER INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
MARYLAND 06-1154321
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 Summit Avenue, Montvale, New Jersey 07645
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-8000
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No _____.
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As of May 1, 1995, 5,906,658 shares of the registrant's common stock, par
value $.001 per share, were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
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(A) Condensed Consolidated Balance Sheets - March 31, 1995 (Unaudited) and
December 31, 1994
(B) Condensed Consolidated Statements of Operations (Unaudited) - quarter ended
March 31, 1995 and quarter ended March 31, 1994
(C) Condensed Consolidated Statements of Cash Flows (Unaudited) - quarter ended
March 31, 1995 and quarter ended March 31, 1994
(D) Notes to Condensed Consolidated Financial Statements (Unaudited)
2
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BUTLER INTERNATIONAL, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(in thousands except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
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(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 1,350 $ 2,285
Accounts receivable, net 76,044 63,149
Other current assets 3,702 3,119
-------- --------
Total current assets 81,096 68,553
Property and equipment, net 13,859 13,237
Other assets and deferred charges 1,141 1,303
Excess cost over net assets of
business acquired, net 24,605 24,717
-------- --------
Total assets $120,701 $107,810
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 26,535 $ 17,535
Current portion of long-term debt 2,453 2,863
-------- --------
Total current liabilities 28,988 20,398
-------- --------
Long-term debt 49,828 45,746
-------- --------
Other long-term liabilities 4,220 4,268
-------- --------
Stockholders' equity:
Preferred stock, par value $.001 per share,
authorized 5,000,000: Series B Cumulative
Convertible, authorized 2,400,000; issued
2,288,878 at March 31, 1995 and at
December 31, 1994 (Aggregate liquidation
preference $2,288,878 at March 31, 1995
and at December 31, 1994) 2 2
Common stock, par value $.001 per share,
authorized 83,333,333; issued and outstanding
5,906,658 at March 31, 1995 and 5,903,658
at December 31, 1994 6 6
Additional paid-in capital 92,649 92,635
Accumulated deficit (54,239) (54,650)
Cumulative foreign currency translation
adjustment (753) (595)
-------- --------
Total stockholders' equity 37,665 37,398
-------- --------
Total liabilities and
stockholders' equity $120,701 $107,810
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
BUTLER INTERNATIONAL, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(in thousands except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Quarter
ended ended
March 31, March 31,
1995 1994
---- ----
<S> <C> <C>
Net sales $ 116,294 $ 85,296
Cost of sales 101,458 73,468
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Gross margin 14,836 11,828
Depreciation and amortization 638 595
Selling, general and administrative expenses 12,332 10,460
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Income before other income (expense)
and income taxes 1,866 773
Other income (expense):
Interest and other income 148 173
Interest expense (1,421) (829)
--------- ---------
Income before income taxes 593 117
Income taxes 142 30
--------- ---------
Net income $ 451 $ 87
========= =========
Primary income per share $ .07 $. 01
========= =========
Average number of common shares and
common stock equivalents outstanding 6,259,855 5,497,204
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
BUTLER INTERNATIONAL, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Quarter
ended ended
March 31, March 31,
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 451 $ 87
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and excess purchase
price amortization 638 594
Amortization of deferred financing
and employee stock purchase
plan loans 142 143
Foreign currency translation (158) (84)
(Increase) decrease in assets,
increase (decrease) in liabilities:
Accounts receivable (12,895) (4,955)
Other current assets (583) (311)
Other assets 23 (49)
Current liabilities 9,030 1,653
Other long-term liabilities (48) (78)
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Net cash used in operating activities (3,400) (3,000)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - net (1,015) (479)
Cost of business acquired (133) (32)
Expenses paid in conjunction with
discontinued operations (73) (535)
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Net cash used in investing activities (1,221) (1,046)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under financing
agreements 3,727 3,417
Net proceeds from the issuance of
common stock 14 465
Net payments in conjunction with
headquarters building purchase (55) (280)
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Net cash provided by financing activities 3,686 3,602
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Net decrease in cash and
cash equivalents (935) (444)
Cash and cash equivalents,
beginning of period 2,285 1,908
-------- -------
Cash and cash equivalents,
end of period $ 1,350 $ 1,464
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
BUTLER INTERNATIONAL, INC.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
NOTE 1 - PRESENTATION:
The consolidated financial statements include the accounts of Butler
International, Inc. ("the Company") and its wholly-owned subsidiaries.
Significant intercompany balances and transactions have been eliminated.
Certain amounts from prior period condensed consolidated financial statements
have been reclassified in the accompanying consolidated financial statements to
conform with current period presentation.
The accompanying financial statements are unaudited, but, in the opinion of
management, reflect all adjustments, which include normal recurring accruals,
necessary to present fairly the financial position, results of operations and
cash flow at March 31, 1995 and for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in conformity with generally accepted accounting principles
have been condensed or omitted. Accordingly, this report should be read in
conjunction with the Company's Annual Report on Form 10-K for the period ended
December 31, 1994. The results of operations for the three months ended March
31, 1995 are not necessarily indicative of operating results for the full year.
NOTE 2 - CREDIT FACILITY:
In May, 1994, certain of the Company's U.S. and Canadian operating subsidiaries
entered into a three year Credit Facility with General Electric Capital
Corporation ("GECC"). This Credit Facility replaced the previous $30.0 million
credit facility and provides the Company with up to $45 million in loans
including $6.0 million for letters of credit. The sum of the aggregate amount
of loans outstanding under the Credit Facility plus the aggregate amount
available for letters of credit may not exceed the lessor of (i) $45.0 million
or (ii) an amount equal to 85% of eligible receivables plus 75% of eligible
pending receivables (which percentages are subject to adjustment from time to
time by the Company's principal lender - GECC). The interest rate chargeable to
the Company is fixed at the beginning of each month based upon the 30 day
commercial paper rate in effect at the close of the last business day of each
month, plus three hundred basis points. The interest rate in effect on March
31, 1995 was 9.05% and the average interest rate since January 1, 1995 was
9.06%. The maximum line of credit under the Credit Facility was increased by
GECC at the Company's request to $50.0 million in December, 1994. This increase
will provide additional borrowing capacity, if needed, for working capital,
capital expenditures and related purposes. The Company and Butler Service Group
- - Canada, Ltd. have each guaranteed all obligations incurred or created under
the Credit Facility. The Company is also required to comply with certain
affirmative and financial covenants as amended. The Company is in compliance
with the aforementioned covenants.
NOTE 3 - COMMON STOCK:
During the quarter ended March 31, 1995, the Company received proceeds of
$13,500 for the exercise of 3,000 common stock purchase warrants.
NOTE 4 - EARNINGS PER SHARE:
Primary earnings per share are determined by dividing net earnings (after
deducting preferred stock dividends) by the weighted average number of common
shares outstanding and common stock equivalents. On a fully-diluted basis, both
earnings and shares outstanding are adjusted to assume the conversion of
convertible preferred stock at the beginning of the period presented. Fully-
diluted earnings per share for the quarter ended March 31, 1995 and March 31,
1994 are not shown since the effect of the conversion of preferred stock was
either not material or anti-dilutive.
6
<PAGE>
NOTE 5 - CONTINGENCIES:
The Company and its subsidiaries are parties to various legal proceedings and
claims incidental to its normal business operations. In the opinion of
management, based on the advice of counsel, all of these proceedings and claims
in which the Company and its subsidiaries are defendants, can ultimately be
defended and resolved without a material adverse effect on the financial
position of the Company.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
-----------------------------------------------------------------
Financial Condition
-------------------
RESULTS OF OPERATIONS
- ---------------------
Net sales for the quarter ended March 31, 1995 were $116.3 million as compared
to $85.3 million which resulted in an increase of $31.0 million or 36.3% over
the same period last year. Net income was $0.5 million, or $.07 per share as
compared to last year's $0.1 million or $.01 per share. Operating cash flow was
$1.2 million or $.20 per share as compared to last year's $0.8 million of $.15
per share. Operating results for the first quarter of 1995 included 14 weeks as
compared to 13 weeks last year. Common stock and common stock equivalents
outstanding for the first quarter 1995 were 6,259,855 as compared to last year's
total of 5,497,204.
For the quarter the Company's sales increase was primarily attributed to a 24%
increase in billable employees over last year. Gross margins were down from
last year's 13.9% to 12.8% as Contract Technical Services ("CTS") margins were
lower. For the quarter, however, CTS sales and profits were still ahead of last
year. The Company continues to gradually shift its product mix from its CTS
business to its more profitable Specialty Operations and other businesses.
All of the Company's major businesses reported improved operating results over
last year with the exception of Butler Telecom's operation in Mexico. The
continued erosion of the Mexican Peso and other operating difficulties in Mexico
caused this operation to sustain a $0.3 million loss for the quarter as compared
to a profit of $0.2 million for the same period last year. Cost reduction
programs implemented during the quarter should result in breakeven operations in
Mexico from now on until the overall situation improves. Specialty Operations
(including Fleet Services), Butler Telecom and the Company's operation in the
United Kingdom all reported significant increases over last year in both sales
and profits for this period.
Interest expenses amounted to $1.4 million and was up $0.6 million, when
compared to last year's first quarter interest expenses of $0.8 million, because
of higher interest rates and borrowings.
Income taxes consist of federal, state and foreign income taxes.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's primary sources of funds are generated from operations and
borrowings under its Credit Facility. As of March 31, 1995, $42.9 million was
outstanding under the Credit Facility, and an additional $4.3 million was used
to collateralize letters of credit. Proceeds from the Credit Facility were used
by the Company to finance working capital, capital expenditures and other
business related expenses.
In May, 1994, certain of the Company's U.S. and Canadian operating subsidiaries
entered into a three year Credit Facility with General Electric Capital
Corporation ("GECC"). This Credit Facility replaced the previous $30.0 million
credit facility and provides the Company with up to $45 million in loans
including $6.0 million for letters of credit. The sum of the aggregate amount
of loans outstanding under the Credit Facility plus the aggregate amount
available for letters of credit may not exceed the lessor of (i) $45.0 million
or (ii) an amount equal to 85% of eligible receivables plus 75% of eligible
pending receivables (which percentages are subject to adjustment from time to
time by the Company's principal lender - GECC). The interest rate chargeable to
the Company is fixed at the beginning of each month based upon the 30 day
commercial paper rate in effect at the close of the last business day of each
month, plus three hundred basis points. The interest rate in effect on March
31, 1995 was 9.05% and the average interest rate since January 1, 1995 was
9.06%. The maximum line of credit under the Credit Facility was increased by
GECC at the Company's request to $50.0 million in December, 1994. The Company
has recently borrowed the maximum amount available under its existing Credit
Facility and will have to increase the credit line or secure other financing
alternatives in order to continue its planned growth. Discussions are currently
underway with GECC and other potential lenders to address the Company's
financial needs for the short and medium term. The Company and Butler Service
Group - Canada, Ltd. have each guaranteed all obligations incurred or created
under the Credit Facility. The Company is also required to comply with certain
affirmative and financial covenants as amended. The Company is in compliance
with the aforementioned covenants.
8
<PAGE>
Cash and cash equivalents decreased by $0.9 million during the quarter ended
March 31, 1995. Principal sources of cash inflows amounted to $5.1 million and
were made up of: borrowings under the Credit Facility of $3.9 million and net
income before depreciation and amortization of $1.2 million. Cash outflows
amounted to $6.0 million and were needed for: increased working capital
requirements of $4.6 million, capital expenditures of $1.0 million and other
expenditures of $0.4 million.
During the quarter ended March 31, 1995, the Company received $13,500 of net
proceeds from warrant holders for the exercise of 3,000 common stock purchase
warrants.
9
<PAGE>
PART II - OTHER INFORMATION
Item
1. Legal Proceedings - None
2. Changes in Securities - None
3. Defaults Upon Senior Securities - None
4. Submission of Matters to a Vote of Security Holders - None
5. Other Information - None
6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - None
10
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUTLER INTERNATIONAL, INC.
--------------------------
(Registrant)
May 15, 1995 By: /s/ Edward M. Kopko
-------------------------
Edward M. Kopko
Chairman and Chief Executive
Officer
May 15, 1995 By: /s/ Warren F. Brecht
-------------------------
Warren F. Brecht
Vice President, Secretary,
and Treasurer
May 15, 1995 By: /s/ Raymond J. Lacroix
-------------------------
Raymond J. Lacroix
Senior Vice President and
Chief Financial Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,350
<SECURITIES> 0
<RECEIVABLES> 76,968
<ALLOWANCES> (924)
<INVENTORY> 0
<CURRENT-ASSETS> 81,096
<PP&E> 26,038
<DEPRECIATION> (12,179)
<TOTAL-ASSETS> 120,701
<CURRENT-LIABILITIES> 28,988
<BONDS> 0
<COMMON> 6
0
2
<OTHER-SE> 37,657
<TOTAL-LIABILITY-AND-EQUITY> 120,701
<SALES> 116,294
<TOTAL-REVENUES> 116,294
<CGS> 101,458
<TOTAL-COSTS> 101,458
<OTHER-EXPENSES> 12,744
<LOSS-PROVISION> 78
<INTEREST-EXPENSE> 1,421
<INCOME-PRETAX> 593
<INCOME-TAX> 142
<INCOME-CONTINUING> 451
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 451
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
