<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 JUNE 30, 1995
------------------------------
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-14951
-------
BUTLER INTERNATIONAL, INC.
--------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 06-1154321
------------------------------ ------------------
(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
--------------
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 _____.
-----
As of August 3, 1995, 5,968,783 shares of the registrant's common stock, par
value $.001 per share, were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
(A) Consolidated Balance Sheets - June 30, 1995 (Unaudited) and December 31,
1994
(B) Consolidated Statements of Operations (Unaudited) - quarter ended June 30,
1995 and quarter ended June 30, 1994
(C) Consolidated Statements of Operations (Unaudited) - six months ended June
30, 1995 and six months ended June 30, 1994
(D) Consolidated Statements of Cash Flows (Unaudited) - six months ended June
30, 1995 and six months ended June 30, 1994
(E) Notes to Consolidated Financial Statements (Unaudited)
2
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(in thousands except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- -------------
(Unaudited)
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,347 $ 2,285
Accounts receivable, net 80,953 63,149
Other current assets 3,796 3,119
-------- --------
Total current assets 86,096 68,553
Property and equipment, net 14,855 13,237
Other assets and deferred charges 931 1,303
Excess cost over net assets of
business acquired, net 24,512 24,717
-------- --------
Total assets $126,394 $107,810
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 24,616 $ 17,535
Current portion of long-term debt 3,734 2,863
-------- --------
Total current liabilities 28,350 20,398
-------- --------
Long-term debt 55,290 45,746
-------- --------
Other long-term liabilities 3,885 4,268
-------- --------
Stockholders' equity:
Preferred stock, par value $.001 per share,
authorized 5,000,000: Series B Cumulative Convertible,
authorized 2,400,000; issued 2,368,329 at June 30, 1995
and 2,288,878 at December 31, 1994 (Aggregate
liquidations preference $2,368,329 at June 30, 1995
and $2,288,878 at December 31, 1994) 2 2
Common stock, par value $.001 per share, authorized
83,333,333; issued and outstanding 5,968,783 at
June 30, 1995 and 5,903,658 at December 31, 1994 6 6
Additional paid-in capital 92,695 92,635
Accumulated deficit (53,112) (54,650)
Cumulative foreign currency translation adjustment (722) (595)
-------- --------
Total stockholders' equity 38,869 37,398
-------- --------
Total liabilities and stockholders' equity $126,394 $107,810
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(in thousands except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Quarter
ended ended
June 30, June 30,
1995 1994
----------- ----------
<S> <C> <C>
Net sales $ 110,514 $ 96,125
Cost of sales 94,224 82,457
---------- ----------
Gross margin 16,290 13,668
Depreciation and amortization 684 651
Selling, general and administrative expenses 12,693 11,155
---------- ----------
Income before other income (expense)
and income taxes 2,913 1,862
Other income (expense):
Interest and other 126 (35)
Interest expense (1,576) (1,011)
---------- ----------
Income before income taxes 1,463 816
Income taxes 296 188
---------- ----------
Net income $ 1,167 $ 628
========== ==========
Net income per share:
Primary $.18 $.10
Assuming full-dilution $.17 $.10
---------- ----------
Average number of common shares and
common stock equivalents outstanding:
Primary 6,260,215 5,606,495
Assuming full-dilution 6,940,639 6,519,474
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(in thousands except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
ended ended
June 30, June 30,
1995 1994
----------- ----------
<S> <C> <C>
Net sales $ 226,808 $ 181,421
Cost of sales 195,682 155,925
---------- ----------
Gross margin 31,126 25,496
Depreciation and amortization 1,322 1,246
Selling, general and administrative expenses 25,025 21,615
---------- ----------
Income before other income (expense)
and income taxes 4,779 2,635
Other income (expense):
Interest and other 274 138
Interest expense (2,997) (1,840)
---------- ----------
Income before income taxes 2,056 933
Income taxes 438 218
---------- ----------
Net income $ 1,618 $ 715
========== ==========
Net income per share:
Primary $.25 $.11
Assuming full-dilution $.23 $.11
Average number of common shares and
common stock equivalents outstanding:
Primary 6,244,825 5,549,311
Assuming full-dilution 6,915,352 6,460,961
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
ended ended
June 30, June 30,
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,618 $ 715
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and excess purchase
price amortization 1,322 1,246
Amortization of deferred financing
and employee stock purchase
plan loans 292 133
Foreign currency translation (127) 19
(Increase) decrease in assets,
increase (decrease) in liabilities:
Accounts receivable (17,804) (9,337)
Other current assets (677) (553)
Other assets 86 (1,021)
Current liabilities 7,156 1,866
Other long-term liabilities (383) (499)
-------- -------
Net cash used in operating activities (8,517) (7,431)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - net (2,445) (1,044)
Cost of business acquired (290) (30)
Expenses paid in conjunction with
discontinued operations (81) (534)
-------- -------
Net cash used in investing activities (2,816) (1,608)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under financing
agreements 10,488 8,626
Net proceeds from the issuance of
common stock 106 789
Net payments in conjunction with
headquarters building purchase (73) (510)
Payment of dividends on preferred stock - (50)
Repurchase common stock (126) -
-------- -------
Net cash provided by financing activities 10,395 8,855
-------- -------
Net decrease in cash and
cash equivalents (938) (184)
Cash and cash equivalents,
beginning of period 2,285 1,908
-------- -------
Cash and cash equivalents,
end of period $ 1,347 $ 1,724
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
NOTES TO 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 June 30, 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 and six months ended
June 30, 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 $45.0 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 June 30,
1995 and the average rate since January 1, 1995 was 9.07%. The maximum line of
credit under the Credit Facility was increased by GECC at the Company's request
from $45.0 million to $55.0 million as of June 30, 1995. This increase will
provide additional borrowing capacity 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:
In the six months ended June 30, 1995, the Company issued 85,083 shares of
common stock upon the exercise of various stock options and repurchased and
retired 19,958 shares of common stock.
NOTE 4 - PREFERRED STOCK:
On June 30, 1995, approximately $80,000 of dividends in kind were paid to
holders of Series B Preferred Stock.
NOTE 5 - 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.
7
<PAGE>
NOTE 6 - 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 or results of operations of the Company.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
-----------------------------------------------------------------
Financial Condition
-------------------
RESULTS OF OPERATIONS
---------------------
Net sales for the quarter ended June 30, 1995 were $110.5 million compared to
$96.1 million, representing a 15.0% increase over the second quarter of 1994.
Net income was approximately $1.2 million, or $.18 per share, and was up 86% as
compared to $0.6 million, or $.10 per share for the same period in 1994. For
the six months ended June 30, 1995, net sales of $226.8 million were 25% above
the $181.4 million recorded in the first half of 1994. Net income for the first
six months of 1995 was $1.6 million, or $.25 per share compared to $0.7 million,
or $.11 per share for the same period in 1994. Operating cash flow was $3.2
million for the six months ended June 30, 1995 as compared to $2.1 million for
the same period in 1994. Average common stock and common stock equivalents
outstanding for the first half of 1995 increased to 6.2 million in 1995 from 5.5
million in 1994.
For the quarter, the Company's net sales increase was primarily attributed to an
8% increase in billable employees over the second quarter of 1994, coupled with
improved gross margins of 14.7% for the quarter ended June 30, 1995, compared to
14.2% for the same period in 1994. The Company continues to gradually shift its
product mix from its Contract Technical Services business (which historically
accounted for more than half of the Company's net sales) to its more profitable
Specialty Operations and other businesses. All of the Company's major
businesses reported increased net sales and profits over last year. Specialty
Operations, Butler Telecom (domestic), and operations in the United Kingdom, all
reported significant increases in net sales and operating profits over last
year, for the quarter and for the first six months.
Interest expense was $1.6 million and $3.0 million for the three and six months
ended June 30, 1995 compared with $1.0 million and $1.8 million for the same
period in 1994. This increase is due to higher interest rates and outstanding
debt balances.
Income taxes consist of federal, state and foreign income taxes. The effective
tax rates for the three and six months ended June 30, 1995 were 20.2% and 21.3%,
respectively compared to 23.0% and 23.4% for the comparable periods in 1994.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's primary sources of funds are generated from operations and
borrowings under its Credit Facility. As of June 30, 1995, $48.4 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 $45.0 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 June 30,
1995 and the average rate since January 1, 1995 was 9.07%. The maximum line of
credit under the Credit Facility was increased by GECC at the Company's request
from $45.0 million to $55.0 million as of June 30, 1995. This increase will
provide additional borrowing capacity 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.
Discussions are currently underway with GECC and other potential lenders to
address the Company's financial needs for the short and medium term.
9
<PAGE>
Cash and cash equivalents decreased by $0.9 million in the first half of 1995.
Principal sources of cash inflows consisted of: borrowings under the Credit
Facility of $9.4 million, borrowings under short-term financing agreements of
$1.1 million and net income before depreciation and amortization of $3.2
million. Cash outflows consisted of: increased working capital requirements of
$11.7 million, capital expenditures of $2.4 million and other expenditures of
$0.5 million.
10
<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 - At the Annual
Meeting of Stockholders held on May 23, 1995, a quorum, consisting of
approximately 91% of the Company's common and preferred stock
outstanding and entitled to vote at the meeting, was present in person
or by proxy. At the meeting, the following proposals were approved by
the stockholders: Proposal #1 - Hugh G. McBreen was re-elected as First
Class Director. Edward M. Kopko, Frederick H. Kopko, John F. Hegarty
and Nikhil S. Nagaswami continue to serve as directors. Proposal #2 -To
amend the 1992 Stock Option Plan, 1992 Incentive Stock Option Plan and
the 1992 Stock Bonus Plan, and Proposal #3 - To amend the 1992 Stock
Option Plan for Non-Employee Directors.
<TABLE>
<CAPTION>
FOR WITHHELD
--------- --------
<S> <C> <C>
Proposal #1 7,140,886 278,365
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--------- -------- ------- -------
<S> <C> <C> <C> <C>
Proposal #2 6,665,138 606,152 35,635 112,326
Proposal #3 6,670,214 597,674 39,037 112,326
</TABLE>
5. Other Information - None
6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.1 - Amendment, dated June 29, 1995, to the Credit
Agreement between the Company and General Electric Capital
Corporation
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - None
11
<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)
August 7, 1995 By: /s/ Edward M. Kopko
-------------------------
Edward M. Kopko,
Chairman and Chief Executive
Officer
August 7, 1995 By: /s/ Warren F. Brecht
-------------------------
Vice President, Secretary,
and treasurer
August 7, 1995 By: /s/ Raymond J. Lacroix
-------------------------
Raymond J. Lacroix
Senior Vice President and
Chief Financial Officer
12
<PAGE>
EXHIBIT 10.1
General Electric Capital Corporation
Commercial Finance
501 Merritt Seven, Third Floor
Norwalk, CT 06851
203-840-4500
June 29, 1995
Butler Service Group, Inc.
110 Summit Avenue
Montvale, NJ 07645
Gentlemen:
We have been involved in discussions with you over the past few weeks
concerning your request to increase, from $50,000,000 to $55,000,000 (the "Loan
Increase"), the revolving credit facility extended by General Electric Capital
Corporation to Butler Service Group, Inc. pursuant to the Credit Agreement dated
as of May 31, 1994 (as amended or supplemented from time to time, the "Credit
Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement.
We are in the process of preparing the necessary modification agreements to
evidence the Loan Increase. However, you have informed us that you need to take
advantage of the Loan Increase on or about this date. GECC is prepared to agree
to your request subject to the following terms and conditions (notwithstanding
that agreements evidencing the Loan Increase have not yet been executed):
1. The Maximum Revolving Loan shall be $55,000,000.
2. On and after June 1, 1995, the interest rate on all Indebtedness under
the Revolving Loan for all outstanding Indebtedness thereunder in excess of
$50,000,000 shall bear interest at the annual rate of five hundred basis points
(5.00%) in excess of the Index Rate in accordance with the terms of the Credit
Agreement. All outstanding Indebtedness under the Revolving Loan in the amount
of $50,000,000 or less shall continue to bear interest as set forth in the
Credit Agreement.
3. For each calendar day on and after June 1, 1995, that the outstanding
indebtedness under the Revolving Loan exceeded or exceeds the Borrowing Base,
you shall pay to GECC the amount of $2,000, which amount shall be deemed one of
the Fees.
<PAGE>
4. The terms and conditions set forth in Paragraphs 1, 2 and 3 above shall
expire on July 5, 1995, unless you shall have entered into agreements requested
by GECC in its sole discretion to evidence the Loan Increase on or before such
date.
5. Except as set forth above, all the terms and conditions of the Credit
Agreement and the other Loan Documents shall remain in full force and effect.
GENERAL ELECTRIC CAPITAL
CORPORATION
By__________________________
Martin S. Greenberg
Its Duly Authorized Signatory
Agreed to and accepted.
BUTLER SERVICE GROUP, INC.
By__________________________
Raymond J. Lacroix
Its Senior Vice President and
Chief Financial Officer
BUTLER INTERNATIONAL, INC.
By__________________________
Raymond J. Lacroix
Its Senior Vice President and
Chief Financial Officer
BUTLER SERVICE GROUP, CANADA, LTD.
By__________________________
Raymond J. Lacroix
Its Senior Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BUTLER
INTERNATIONAL, INC. FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,347
<SECURITIES> 0
<RECEIVABLES> 81,948
<ALLOWANCES> 995
<INVENTORY> 0
<CURRENT-ASSETS> 86,096
<PP&E> 27,489
<DEPRECIATION> 12,634
<TOTAL-ASSETS> 126,394
<CURRENT-LIABILITIES> 28,350
<BONDS> 0
<COMMON> 6
0
2
<OTHER-SE> 38,861
<TOTAL-LIABILITY-AND-EQUITY> 126,394
<SALES> 226,808
<TOTAL-REVENUES> 226,808
<CGS> 195,682
<TOTAL-COSTS> 195,682
<OTHER-EXPENSES> 25,951
<LOSS-PROVISION> 122
<INTEREST-EXPENSE> 2,997
<INCOME-PRETAX> 2,056
<INCOME-TAX> 438
<INCOME-CONTINUING> 1,618
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,618
<EPS-PRIMARY> .18
<EPS-DILUTED> .17
</TABLE>
