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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13
or 15(d) of the
Securities Exchange Act of 1934
Commission File No. 001-12335
FOR THE QUARTER ENDED MARCH 31, 2001
BUTLER MANUFACTURING COMPANY
Incorporated in the State of Delaware
BMA Tower - Penn Valley Park
Post Office Box 419917
Kansas City, Missouri 64141-0917
Phone: (816) 968-3000
I.R.S. Employer Identification Number: 44-0188420
Shares of common stock outstanding at
MARCH 31, 2001: 6,281,298
The name, address and fiscal year of the Registrant have not changed
since the last report.
The Registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past 90 days.
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INDEX
PART I. - FINANCIAL INFORMATION Page Number
ITEM 1. Financial Statements
(1) Consolidated Financial Statements (unaudited):
Consolidated Statements of Operations for the Three Month
Periods Ended March 31, 2001 and 2000. 3
Consolidated Statements of Comprehensive Income (Loss)
for the Three Month Periods Ended March 31, 2001 and 2000. 4
Consolidated Balance Sheets as of March 31, 2001 and
December 31, 2000. 5
Consolidated Statements of Cash Flows for the Three Month
Periods Ended March 31, 2001 and 2000. 6
(2) Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk. 11
PART II. - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibits Index 14
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three month periods ended March 31, 2001 and 2000
(unaudited)
($000's omitted except for per share data)
2001 2000
----------- -----------
Net sales $ 194,859 $ 219,189
Cost of sales 170,094 184,475
----------- -----------
Gross profit 24,765 34,714
Selling, general and administrative expenses 28,187 29,497
----------- -----------
Operating earnings (loss) (3,422) 5,217
Other income (expense), net 486 (239)
----------- -----------
Earnings (loss) before interest and taxes (2,936) 4,978
Interest expense 1,479 1,267
----------- -----------
Pretax earnings (loss) (4,415) 3,711
Income tax expense (benefit) (1,612) 1,496
----------- -----------
Net earnings (loss) $ (2,803) $ 2,215
=========== ===========
Basic earnings (loss) per common share $ (0.45) $ 0.33
=========== ===========
Diluted earnings (loss) per common share $ (0.45) $ 0.33
=========== ===========
Basic weighted average number of shares 6,273,626 6,755,037
Diluted weighted average number of shares 6,273,626 6,767,519
See Accompanying Notes to Consolidated Financial Statements.
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the three month periods ended March 31, 2001 and 2000
(unaudited)
($000's omitted)
2001 2000
------- -------
Net earnings (loss) $(2,803) $ 2,215
Other comprehensive loss:
Foreign currency and other comprehensive loss adjustments (707) (261)
------- -------
Comprehensive income (loss) $(3,510) $ 1,954
======= =======
See Accompanying Notes to Consolidated Financial Statements.
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2001 and December 31, 2000
($000's omitted)
2001 2000
--------- ---------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 17,784 $ 16,855
Receivables, net 114,293 138,347
Inventories:
Raw materials 22,246 22,059
Work in process 12,309 10,685
Finished goods 35,844 38,686
Lifo reserve (10,061) (9,926)
--------- ---------
Total inventory 60,338 61,504
Real estate developments in progress 42,059 52,623
Deferred tax assets 10,587 10,586
Other current assets 12,665 11,855
--------- ---------
Total current assets 257,726 291,770
Investments and other assets 35,697 35,000
Assets held for sale 3,832 3,832
Property, plant and equipment, at cost 272,445 274,432
Less accumulated depreciation (153,694) (157,036)
--------- ---------
Net property, plant and equipment 118,751 117,396
--------- ---------
$ 416,006 $ 447,998
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 39,467 $ 35,155
Current maturities of long-term debt 5,567 5,563
Accounts payable 64,851 86,232
Dividends payable 1,068 1,064
Accrued liabilities 69,132 77,434
Taxes on income 4,573 7,461
--------- ---------
Total current liabilities 184,658 212,909
Deferred tax liabilities 1,409 1,409
Other noncurrent liabilities 15,115 14,666
Long-term debt, less current maturities 52,987 53,298
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 and other comprehensive loss adjustments (2,184) (1,477)
Retained earnings 216,355 220,113
--------- ---------
226,794 231,259
Less cost of common stock in treasury, 2,806,902 shares
in 2001 and 2,832,338 shares in 2000 64,957 65,543
--------- ---------
Total shareholders' equity 161,837 165,716
--------- ---------
$ 416,006 $ 447,998
========= =========
See Accompanying Notes to Consolidated Financial Statements.
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three month periods ended March 31, 2001 and 2000
(unaudited)
($000's omitted)
2001 2000
-------- --------
Cash flows from operating activities:
Net earnings (loss) $ (2,803) $ 2,215
Adjustments to reconcile net earnings (loss) to net cash used
in operating activities:
Depreciation and amortization 4,094 3,909
Equity earnings of joint ventures (12) (35)
Change in asset and liabilities:
Receivables 24,054 (20,790)
Inventories 1,166 (2,797)
Real estate developments in progress 10,564 (7,620)
Other current assets and current liabilities (33,382) (3,706)
-------- --------
Net cash provided (used) by operating activities 3,681 (28,824)
Cash flows from investing activities:
Capital expenditures (6,456) (5,721)
Net change in other noncurrent assets 331 (849)
-------- --------
Net cash used by investing activities (6,125) (6,570)
Cash flows from financing activities:
Payment of dividends (1,064) (1,100)
Proceeds from issuance of long-term debt 145 58
Repayment of long-term debt (456) (140)
Net increase in short-term debt 4,316 9,009
Issuance of treasury stock 605 503
Purchase of treasury stock (19) (6,329)
Net change in other noncurrent liabilities 553 379
-------- --------
Net cash provided by financing activities 4,080 2,380
Effect of exchange rate changes (707) (261)
-------- --------
Net increase (decrease) in cash and cash equivalents 929 (33,275)
Cash and cash equivalents at beginning of year 16,855 52,951
-------- --------
Cash and cash equivalents at March 31 $ 17,784 $ 19,676
======== ========
See Accompanying Notes to Consolidated Financial Statements.
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BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the accounting policies described in the
consolidated financial statements and related notes included in Butler
Manufacturing Company's Form 10-K for the year ended December 31, 2000. It is
suggested that those consolidated statements be read in conjunction with this
report. The year-end financial statements presented were derived from the
company's audited financial statements. In the opinion of management, the
accompanying consolidated financial statements reflect all adjustments necessary
for a fair presentation of the financial position of Butler Manufacturing
Company and the results of its operations.
NOTE 2 - NEW ACCOUNTING PRONOUNCEMENT
Derivative Instruments and Hedging Activities
January 1, 2001, the company adopted Financial Accounting Standards Board (FASB)
Statement Nos. 133 and 137, "Accounting for Derivative Instruments and Hedging
Activities" requiring 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. Changes in fair value for
hedge contracts are recorded in comprehensive income while they remain open.
Gains or losses on contracts are recognized in income at their contract
settlement date. The changes in fair value of currency exchange and metal hedge
contracts recorded in the first quarter of 2001 were immaterial.
NOTE 3 - 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.
The Architectural Products segment includes the operations of the Vistawall
group which designs, manufactures, and markets 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 as included in the company's Form
10-K for the year ended December 31, 2000. Butler Manufacturing Company's
reportable segments are strategic business units that offer different products
and services. They are managed separately because each business requires
different technology and expertise.
The Other classification represents unallocated corporate expenses and
unallocated assets, including corporate offices, deferred taxes, pension
accounts, interest expense, and intersegment eliminations.
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Three Months
NET SALES Ended March 31,
(Thousands of dollars) 2001 2000
--------------------------------------------------------------------------------
Building Systems $ 106,074 $ 136,310
Architectural Products 58,271 53,950
Construction Services 18,233 32,228
Real Estate 15,953 214
Other (3,672) (3,513)
------------------------------
$ 194,859 $ 219,189
==============================
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.
Three Months
PRETAX EARNINGS (LOSSES) Ended March 31,
(Thousands of dollars) 2001 2000
--------------------------------------------------------------------------------
Building Systems $(5,293) $ 3,473
Architectural Products 3,581 4,091
Construction Services 396 552
Real Estate 1,492 377
Other (4,591) (4,782)
--------------------------
$(4,415) $ 3,711
==========================
TOTAL ASSETS March 31, December 31,
(Thousands of dollars) 2001 2000
--------------------------------------------------------------------------------
Building Systems $200,388 $218,565
Architectural Products 115,879 108,688
Construction Services 21,069 31,231
Real Estate 44,112 55,331
Other 34,558 34,183
---------------------------
$416,006 $447,998
===========================
Assets represent both tangible and intangible assets used by each business
segments. Other represents cash and cash equivalents, assets held for sale,
corporate equipment, and miscellaneous other assets which are not related to a
specific business segment.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the first quarter were $195 million, a decrease of 11% compared
with a year ago. Although the Real Estate and Architectural Products segments
reported greater sales in the first quarter compared with the prior year, lower
sales in the Buildings Systems and Construction Services segments more than
offset the increase. A combination of severe winter weather and the slowing
economy were the primary factors for the lower sales for the quarter.
Building Systems segment sales declined 22% compared with the prior year as all
of the businesses comprising this segment had lower sales, except the China
pre-engineered metal buildings business. First quarter sales in the domestic
metal buildings and wood buildings businesses were unfavorably impacted by
severe weather and the slowing economy mentioned earlier, causing building
buyers to delay scheduled construction projects. China metal building sales were
slightly higher during the first quarter than the previous year.
The Architectural Products segment, which consists of the Vistawall group,
reported an 8% increase in sales for the quarter compared with same period a
year ago. Increased production capacity at Vistawall's new Tennessee plant
allowed this business segment to take advantage of the continued strong demand
for storefront and curtainwall product. This group has continued to purchase
components to meet the service and growth needs of the business. These outside
purchases are more costly than products manufactured by Vistawall, thus reducing
their operating earnings
Construction Services segment sales for first quarter 2001 decreased 43%
compared with the prior year due to poor job site conditions, again caused by
weather. This segment also implemented a shift in its strategic focus to
material erect opportunities versus larger general contracting opportunities
causing lower sales comparisons between years.
First quarter Real Estate segment sales of $16 million increased significantly
compared with the prior year due to the sale of two development projects.
Selling general and administrative expenses were $28.2 million in the first
quarter 2001, slightly lower than the same period a year ago. Other income was
$.5 million compared with expense of $.2 million in the prior year due to rental
income from completed real estate development projects held in inventory.
Pretax loss for the quarter ended March 31, 2001 was $4.4 million compared with
pretax earnings of $3.7 million for the same period a year ago. Net loss for the
first quarter 2001 was $2.8 million, or $.45 per share, compared with net
earnings of $2.2 million, or $.33 per share, during the prior year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and equivalents increased $.9 million for the first three months of 2001.
Cash was used primarily to fund capital expenditures, operating losses, and the
payment of dividends. The primary sources of cash were short-term borrowings and
operating activities, including a reduction in working capital due to the sale
of real estate development projects and receivable collections. For the three
months ended March 31, 2000, domestic short-term borrowings averaged $35 million
for the entire first quarter 2001 compared to $8.5 million for 17 days in 2000.
The company has available committed and uncommitted domestic bank credit
facilities aggregating $70 million. As of March 31, 2001, domestic borrowings of
$37 million were outstanding. The company's foreign operations maintain separate
lines of credit with local banks of approximately $7 million, with $2.5 million
utilized at current exchange rates at March 31, 2001. The company is in the
process of renegotiating its existing bank credit agreement and expects the new
agreement will be in place prior to the expiration of the existing facility.
Management believes the company's operating cash flow along with the
renegotiated bank lines (which the company believes could be increased, if
necessary) will be sufficient to meet future liquidity requirements. In
addition, the company is considering other longer term financing which if
effected would be used to reduce short-term borrowings and for other corporate
purposes.
Capital expenditures were $6.5 million for the first three months of 2001
compared to $5.7 million for the same period in 2000. Total capital expenditures
for 2001 are expected to be $57 million. Approximately $26 million represents
the estimated costs of the company's new headquarters building. Other
expenditures include costs to complete the installation of process lines in the
new Vistawall extrusion plant in Tennessee and expansion of the Shanghai, China
office facility.
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Cash paid for taxes and interest totaled $1.3 million and $1.7 million in the
first quarter 2001, compared with $.9 million and $1.2 million for the same
period a year ago.
During the first quarter of 2001, treasury stock purchases were minimal compared
with the prior year, and dividends paid totaled $1.1 million. Total backlog of
$295 million declined 7% from comparable backlog of a year ago. Higher margin
product backlog was down 2% and construction backlog was 28% lower.
MARKET 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.
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 times from project quoting to
manufacture. Gains or losses recorded on hedge contracts are offset against the
actual aluminum costs incurred. The fair value of aluminum contracts and their
associated risk are immaterial.
The company's wood frame building business enters into forward purchase
arrangements for commercial grade lumber for periods of less than one year
duration. Lumber costs are generally more volatile than steel costs. To offset
increases in lumber costs, the company adjusts product prices accordingly.
Interest Rates: The majority of the company's long-term debt carries a fixed
interest rate; therefore the company's interest expense is relatively stable and
not influenced by changes in market interest rates.
Foreign Currency Fluctuation: The majority of the company's business is
transacted in U.S. dollars, therefore limiting the company's exposure to foreign
currency fluctuations. Where the company has foreign-based operations, the local
currency has been adopted as the functional currency. As such, the company has
both transaction and translation foreign exchange exposure in those operations.
Due to relative cost and limited availability, the company does not hedge its
foreign net asset exposure. The company does hedge short-term foreign currency
transaction exposures related to sales activity in Canada. Forward Canadian
dollar sale contracts of less than one year duration are purchased to cover the
exposure. The fair value of such contracts is immaterial.
FORWARD LOOKING INFORMATION
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, which may include statements
concerning projection of revenues, income or loss, capital expenditures, capital
structure, or other financial items, statements regarding the plans and
objectives of management for future operations, statements of future economic
performance, statements of the assumptions underlying or relating to any of the
forgoing statements, and other statements which are other than statements of
historical fact. These statements appear in a number of places in this report
and include statements regarding the intent, belief, or current expectations of
the company and its management with respect to (i) the cost and timing of the
completion of new or expanded facilities, (ii) the company's competitive
position, (iii) the supply and price of materials used by the company, (iv) the
demand and price for the company's products and services, or (v) other trends
affecting the company's financial condition or results of operations including
changes in manufacturing capacity utilization and corporate cash flow in both
domestic and international markets. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially as a
result of these various factors.
For additional comments, refer to the April 16, 2001 letter to shareholders,
which is attached as exhibit 19.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There are no material changes to the disclosure made in the Annual Report on
Form 10-K for the year ended December 31, 2000 regarding this matter. See
discussion about market risk under Item 2. Management Discussion and Analysis on
page 10 of this document.
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PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(19) April 16, 2001 letter to shareholders
(b) Reports on Form 8-K.
The company has not filed any reports on Form 8-K during the quarter
ended March 31, 2001.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUTLER MANUFACTURING COMPANY
May 10, 2001 /s/ Larry C. Miller
-------------- ----------------------------
Date Larry C. Miller
Vice President - Finance,
and Chief Financial Officer
May 10, 2001 /s/ John W. Huey
-------------- ----------------------------
Date John W. Huey
Vice President, General Counsel
and Secretary
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EXHIBIT INDEX
Exhibit
Number Description
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19 April 16, 2001 Letter to Shareholders
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