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 SEPTEMBER 30, 2001
BUTLER MANUFACTURING COMPANY
Incorporated in 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
SEPTEMBER 30, 2001: 6,289,783
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.
INDEX
Page Number
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PART I. - FINANCIAL INFORMATION
ITEM 1. Financial Statements
(1) Consolidated Financial Statements (unaudited):
Consolidated Statements of Operations for the Three
and Nine Months Ended September 30, 2001 and 2000. 3
Consolidated Statements of Comprehensive Income for
the Nine Months Ended September 30, 2001 and 2000. 4
Consolidated Balance Sheets as of September 30, 2001
and December 31, 2000. 5
Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 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 10
ITEM 3. Quantitative and Qualitative Disclosure About
Market Risk. 12
PART II. - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibits Index
Page 2
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2001 and 2000
(unaudited)
($000's omitted, except for per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net sales $249,676 $249,671 $658,207 $712,896
Cost of sales 208,770 202,440 558,878 588,794
-------- -------- -------- --------
Gross profit 40,906 47,231 99,329 124,102
Selling, general and
administrative expenses 30,302 30,974 85,620 90,953
Restructuring credit -- -- -- (441)
-------- -------- -------- --------
Operating income 10,604 16,257 13,709 33,590
Other income (expense) net 861 (491) 1,567 (862)
-------- -------- -------- --------
Earnings before interest
and taxes 11,465 15,766 15,276 32,728
Interest expense 1,949 1,406 5,022 4,078
-------- -------- -------- --------
Pretax earnings 9,516 14,360 10,254 28,650
Income tax expense 3,588 4,929 3,704 10,361
-------- --------
-------- --------
Net earnings $ 5,928 $ 9,431 $ 6,550 $ 18,289
======== ======== ======== ========
Basic earnings per common share $0.94 $1.47 $1.04 $2.78
======== ======== ======== ========
Diluted earnings per common share $0.94 $1.47 $1.04 $2.77
======== ======== ======== ========
Basic weighted average number
of shares 6,290,196 6,394,939 6,282,147 6,582,966
Diluted weighted average number
of shares 6,293,169 6,404,625 6,285,761 6,593,839
See Accompanying Notes to Consolidated Financial Statements.
Page 3
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Nine Months Ended September 30, 2001 and 2000
(unaudited)
($000's omitted)
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
2001 2000
------ -------
Net earnings $6,550 $18,289
Other comprehensive income (loss):
Foreign currency translation and
other comprehensive loss adjustments (532) (726)
------ -------
Comprehensive income $6,018 $17,563
====== =======
See Accompanying Notes to Consolidated Financial Statements.
Page 4
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2001 and December 31, 2000
(unaudited)
($000's omitted)
2001 2000
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 51,645 $ 16,855
Receivables, net 146,951 138,347
Inventories:
Raw materials 20,839 22,059
Work in process 13,941 10,685
Finished goods 33,628 38,686
Lifo reserve (10,163) (9,926)
--------- ---------
Total inventory 58,245 61,504
Real estate developments in progress 29,430 52,623
Net deferred tax assets 10,587 10,586
Other current assets 9,203 11,855
--------- ---------
Total current assets 306,061 291,770
Investments and other assets 41,733 35,000
Assets held for sale 3,684 3,832
Property, plant and equipment, at cost 288,702 274,432
Less accumulated depreciation (157,207) (157,036)
--------- ---------
Net property, plant and equipment 131,495 117,396
--------- ---------
$ 482,973 $ 447,998
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,889 $ 35,155
Current maturities of long-term debt 5,581 5,563
Accounts payable 83,284 86,232
Dividends payable 1,132 1,064
Accrued liabilities 92,557 77,434
Taxes on income 11,826 7,461
--------- ---------
Total current liabilities 196,269 212,909
Net deferred tax liabilities 1,409 1,409
Other noncurrent liabilities 12,854 14,666
Long-term debt, less current maturities 103,327 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
Cumulative foreign currency translation (2,009) (1,477)
and other comprehensive loss adjustments
Retained earnings 223,256 220,113
--------- ---------
233,870 231,259
Less cost of common stock in treasury,
2,798,417 shares in 2001 and 2,832,338
shares in 2000 64,756 65,543
--------- ---------
Total shareholders' equity 169,114 165,716
--------- ---------
$ 482,973 $ 447,998
========= =========
See Accompanying Notes to Consolidated Financial Statements
Page 5
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Month Ended September 30, 2001 and 2000
(unaudited)
($000's omitted)
2001 2000
-------- --------
Cash flows from operating activities:
Net earnings $ 6,550 $ 18,289
Adjustments to reconcile net earnings
to net cash provided (used) in operating
activities:
Depreciation and amortization 12,775 11,277
Restructuring charge -- (441)
Equity earnings on joint ventures (360) (121)
Change in asset and liabilities
Receivables (8,604) (33,305)
Inventories 3,259 4,396
Real estate developments in progress 23,193 (27,198)
Other current assets 2,652 5,972
Current liabilities excluding short-term debt 16,539 10,542
Net change in other noncurrent assets (5,846) 1,587
Net change in other noncurrent liabilities (1,951) 2,225
-------- --------
Net cash provided (used) in operating activities 48,207 (6,777)
Cash flows from investing activities:
Capital expenditures (26,681) (24,560)
Software development costs for internal use (3,745) (1,466)
Proceeds from the sale of property,
plant, & equipment 3,025 525
Assets held for sale 148 (1,358)
-------- --------
Net cash (used) by investing activities (27,253) (26,859)
Cash flows from financing activities:
Payment of dividends (3,200) (3,191)
Proceeds from issuance of long-term debt 50,661 1,650
Repayment of long-term debt (632) (257)
Net increase (decrease) in short-term debt (33,248) 11,164
Sale and issuance of treasury stock 871 616
Purchase of treasury stock (84) (11,644)
-------- --------
Net cash provided (used) by financing activities 14,368 (1,662)
Effect of exchange rate and comprehensive income
changes on cash (532) (726)
-------- --------
Net increase (decrease) in cash and cash equivalents 34,790 (36,024)
Cash and cash equivalents at beginning of year 16,855 52,951
-------- --------
Cash and cash equivalents at September 30 $ 51,645 $ 16,927
======== ========
See Accompanying Notes to Consolidated Financial Statements.
Page 6
BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated 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 2000 Form 10-K. It is suggested that those consolidated statements be
read in conjunction with this report. The year-end financial statements
presented were derived from the company's audited financial statements. In the
opinion of management, the accompanying consolidated financial statements
reflect all adjustments necessary for a fair presentation of the financial
position of Butler Manufacturing Company and the results of its operations.
NOTE 2 - NEW ACCOUNTING PRONOUNCEMENT
In July 2001, the Financial Accounting Standards Board (SFAS), issued Statement
No. 141, "Business Combinations, and SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 requires all future acquisitions after June 30,
2001, to be accounted for under the purchase method of accounting. In addition,
it further clarifies the criteria for recognition of intangible assets
separately from goodwill. SFAS No. 142 provides guidance on the accounting and
reporting for goodwill and intangible assets. Goodwill will no longer be
amortized over its estimated useful life, but will be assessed annually for
impairment using a fair value based test.
The company will adopt these new standards on January 1, 2002. At the end of the
third quarter the company had goodwill of $6.0 million and approximately $.1
million of goodwill amortization on a quarterly basis which will no longer be
recorded at January 1, 2002. The company is evaluating the application of these
pronouncements and has not yet determined the impact of the adoption on the
financial statements.
NOTE 3 - BUSINESS SEGMENTS
The company groups its operations into five business segments: North American
Building Systems, International Building Systems, Architectural Products,
Construction Services, and Real Estate.
The North American Building Systems segment includes the North American metal
buildings and the wood buildings businesses. These business units supply steel
and wood frame pre-engineered building systems for a wide variety of commercial,
community, industrial, and agricultural applications.
The International Buildings Systems segment includes the company's Asian and
European metal buildings businesses. These businesses supply pre-engineered
metal buildings for commercial, community, industrial, and agricultural
applications primarily for the Chinese and European markets.
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 as included in the company's 2000
form 10-K. Butler Manufacturing Company's reportable segments are strategic
business units that offer products and services for different markets. 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.
Page 7
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
NET SALES -------------------- --------------------
($000's omitted) 2001 2000 2001 2000
---------------- -------- -------- -------- --------
North American Building Systems $123,461 $145,245 $325,237 $394,887
International Building Systems 21,748 27,797 56,879 61,329
Architectural Products 61,443 56,969 177,442 166,663
Construction Services 35,300 31,825 86,688 108,359
Real Estate 15,888 316 31,841 7,682
Other (8,164) (12,481) (19,880) (26,024)
-------- -------- -------- --------
$249,676 $249,671 $658,207 $712,896
======== ======== ======== ========
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 between North American Building
Systems and Architectural Products segments to the International Building
Systems and Construction Services segments.
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
PRETAX EARNINGS (LOSSES) ------------------- ---------------------
($000's omitted) 2001 2000 2001 2000
------------------------ -------- ------- -------- --------
North American Building Systems $ 6,001 $11,217 $ 5,247 $ 22,745
International Building Systems 506 2,232 102 2,579
Architectural Products 4,481 4,600 11,926 13,186
Construction Services 758 598 1,490 1,888
Real Estate 2,881 714 5,436 1,904
Other (5,111) (5,001) (13,947) (13,652)
------- ------- -------- --------
$ 9,516 $14,360 $ 10,254 $ 28,650
======= ======= ======== ========
TOTAL ASSETS SEPTEMBER 30, DECEMBER 31,
($000's omitted) 2001 2000
---------------- ------------- ------------
North American Building Systems $142,337 $156,002
International Building Systems 72,184 62,563
Architectural Products 125,790 108,688
Construction Services 30,596 31,231
Real Estate 33,304 55,331
Other 78,762 34,183
-------- --------
$482,973 $447,998
======== ========
Total assets represent assets used by each business segment. 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.
In prior periods the North American Building Systems and International Building
Systems segments were reported as a single segment. Because of reorganization
and management changes, two segments were formed.
NOTE 4 - RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
In December 1998, the company's board of directors approved a restructuring of
the South American and European metal buildings businesses. As a result, the
company recorded a $7.1 million pretax charge in connection with the
restructuring. In addition, the company recorded a $6.5 million pretax charge
for the impairment of certain assets. The actions leading to the restructuring
charge were the closing of manufacturing operations in Brazil and repositioning
of European operations. Estimates of realizable asset sales values were obtained
from outside appraisals and the company's experience in selling redundant
assets.
During the first quarter of 1999, the company recorded an additional $1.5
million restructuring charge for currency translation losses on its remaining
Brazilian net asset exposure.
Page 8
At the end of the first quarter 2000, $.9 million of the restructuring accrual
remained. Final activities related to restructuring were completed in the second
quarter 2000, resulting in a $.4 million reversal of the remaining accrual.
NOTE 5 - CHANGE IN ACCOUNTING FOR PENSION COSTS
Effective January 2001, the company changed its method for the recognition of
asset gains and losses considered in the calculation of the annual net pension
expense for its base retirement pension plan under SFAS 87, "Employers'
Accounting for Pensions. " The company has changed from the market-value method
of asset valuation to a market-related value method. Under the previous
accounting method all gains and losses, subject to a 10 percent corridor, were
recognized and amortized in determining the net periodic pension costs. The new
method recognizes and amortizes 20 percent of the cumulative asset gains or
losses in determining net periodic pension costs. The new method is commonly
used by the manufacturing sector and is preferable because it more accurately
matches expense to accounting periods for which benefits are earned. The new
method also improves year-to-year comparability of net periodic pension costs.
Adoption of this change reduced income from operations and net income for the
three months and nine months ending September 30, 2000 by $.2 million and $.5
million, respectively. The earnings per share impact for the three months and
nine months ended September 30, 2001 was $.03 and $.08 per share, respectively.
The company also changed, effective April 1, 2001, the period used to amortize
prior service costs associated with retroactive amendments of benefits for its
hourly pension plans. Previously, the effect of these amendments was amortized
over the average future working lifetime of those expected to receive benefits.
The new period used for amortization of prior service costs attributed to the
amendments is the number of years in which the benefit is earned. The effect of
this change was to increase net periodic pension costs and decrease operating
income by $.2 million for the three months ended September 30, 2001 and $.4
million for the nine months ended September 30, 2001
NOTE 6 - INDEBTEDNESS
The company entered into a new $50 million bank credit facility and issued $50
million of senior unsecured notes pursuant to a note agreement at the end of
June, allowing domestic bank borrowings to be reduced to zero.
The new credit agreement was entered into with the Bank of America, N.A. as
administrative lender and certain other lenders. Interest on advances under the
new credit facility are based on either (a) the higher of the federal funds rate
plus .50% or the Administrative Lender's prime rate, which is payable quarterly,
or (b) LIBOR, which is payable at the end of periods ranging from one to six
months. The new credit agreement provides for a commitment fee on unused
advances ranging from .20% to .30%. Commitments under the new credit facility
expire on June 30, 2004, at which time any outstanding advances are payable. The
agreement contains certain operating covenants, including restrictions on liens,
investments, acquisitions, asset sales and mergers. The agreement also requires
the company to maintain a capitalization ratio, as defined, of .5 to 1, a fixed
charge coverage ratio, as defined, of 1.7 to 1, and a leverage ratio, as defined
of 3.25 to 1 through June 30, 2002 and 3.0 to 1 thereafter.
The senior notes bear interest, payable semi-annually on June 30 and December
30, at the rate of 7.91% per annum. Principal of the Senior Notes is payable in
annual installments of $4.55 million on December 30th of each year, commencing
December 30, 2006, with the final installment due on December 30, 2016. The Note
Agreement contains certain operating covenants, including restrictions on liens,
additional indebtedness and asset sales, and requires the company to maintain
adjusted consolidated net worth, as defined, of $125 million plus the cumulative
sum of 50% of consolidated net income for each fiscal quarter after March 31,
2001 and a fixed charge coverage ratio, as defined, of 1.5 to 1.0.
Page 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales were $250 million for the third quarter 2001 and for the same period a
year ago. Lower North American and International Building Systems segment sales
were offset by increased sales in the Architectural Products, Construction
Services and Real Estate segments. Sales in the North American Building Systems
segment declined 15%, due to lower non-residential building sale caused by a
slowing U.S. economy and greater uncertainty brought on by the September 11
terrorist attacks. The International Building Systems segment reported lower
activity in both Europe and China during the third quarter. Sales for this
segment declined 22% compared with the third quarter 2000. The Architectural
Products and Construction Services segment sales increased 8% and 11%
respectively for the third quarter, while the Real Estate segment, whose project
development sales are less predictable, reported a $16 million increase in third
quarter sales compared with the prior year.
For the Nine months ended September 30, 2001 net sales were $658 million
compared with $713 million a year ago, a decrease of 8%. Declining sales in the
North American and International Building Systems and Construction Services
segments were the primary contributors to the decline in sales, offset somewhat
by improved sales in the Architectural Products, Real Estate and International
Building Systems segments. Both domestic and international nonresidential
construction market opportunities declined in the third quarter as the global
economy began to slow.
Selling, general, and administrative expenses of $ 30 million for the third
quarter 2001 were slightly lower than a year ago. For the nine months ending
September 30, 2001 selling, general, and administrative expenses declined 6%
compared with the prior year as expenses are brought more in line with lower
sales levels.
Pretax earnings for the quarter ended September 30, 2001 were $9.5 million
compared with $14.4 million, a year ago. For the nine months ended September 30,
2001, pretax earnings were $10.2 million versus $28.7 million in 2000. The
sluggish U.S. economy, and slowing China and European markets, has resulted in
fewer nonresidential construction opportunities, and more competitive pricing.
LIQUIDITY AND CAPITAL RESOURCES
Since December 2000, cash and cash equivalents increased $34.8 million due to
improved cash flow provided from operating and financing activities offset by
the use of cash from investing activities. The sale of real estate development
projects and the increase in long term debt related to the $50 million bank
credit facility were major sources of cash, while higher receivables was a major
use of cash. Increased Architectural Products segment sales, and slower
receivable collections due to a slow-down in the domestic and foreign
nonresidential construction markets contributed to the increase in receivables.
Cash from operations also improved due to an increase in current liabilities and
accruals, including warranty claims and project backcharge accruals in China
Steel buildings business. Cash decreased in 2001 compared with 2000 due to the
collection of a $5.8 million noncurrent tax loss carryback for the 1999 sale of
its United Kingdom metal buildings business. Increased spending for capital
expenditures and software development projects, the payment of dividends were
major uses of cash for the nine month period ending September 30, 2001.
The company entered into a new $50 million bank credit facility and signed a new
$50 million private placement agreement at the end of June allowing domestic
bank borrowings to be reduced to zero. The company's foreign operations maintain
separate lines of credit with local banks of approximately $7 million, with $2
million utilized at current exchange rates at September 30, 2001. For the nine
months ended September 30, 2001, domestic short-term borrowings averaged $27
million for 272 days compared to $12 million for 199 days in 2000. Management
believes the company's operating cash flow, along with the bank credit lines,
are sufficient to meet future liquidity requirements.
Capital expenditures were $27 million for the first nine months of 2001 compared
to $24 million for the same period in 2000. Total capital expenditures for 2001
are expected to be $48 million. It is estimated approximately $26 million will
be used to construct 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 and
warehouse facilities.
Cash paid for taxes were minimal in the third quarter 2001 due to tax refunds
received for settlement of prior years, while interest payments totaled $1.2
million for the same period. This compared with tax and interest payments of
$4.0 million and $1.4 million for the same period a year ago. Year to date net
tax refunds as of September 30, 2001
Page 10
totaled $1.3 million and interest paid totaled $4.2 million. This compares with
net tax refunds of $.5 million and interest paid of $3.7 million the same nine
month period a year ago.
During the third quarter of 2001, treasury stock purchases were minimal compared
with the prior year, and dividends paid totaled $1 million. Total backlog at
September 30, 2001 of $333 million was equal with the backlog of a year ago.
Higher margin product backlog was approximately 5% lower, while construction
backlog increased 20% as compared to the same period a year ago.
In September the company's Board of Directors voted to increase its quarterly
dividend by 5.9% to $.18 per share. The dividend was payable on October 12, 2001
to shareholders of record on September 28, 2001.
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. Although steel
prices are relatively stable the company enters into forward steel purchase
arrangements in its metal buildings business for periods of less than one years
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 periods of falling prices the company
reserves the right to purchase steel from other competitive suppliers.
The company's wood frame building business enters into forward purchase
arrangements for commercial grade lumber for periods of less than one year's
duration. Lumber costs are generally more volatile than steel costs. To offset
increases in lumber costs, the company adjusts product prices accordingly.
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 charged to cost of sales when contracts are settled. For
both the three months and nines ending September 30, 2001 the company recognized
net losses of $.2 million. The unrealized loss resulting from a change in fair
value of aluminum contracts are recorded in comprehensive income and totaled $.2
million at September 30, 2001. As of September 30, 2001, the potential change in
fair value of open aluminum hedge contracts, assuming a 10% change in the
underlying commodity price was, $.4 million.
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. However, interest rate
changes impacts the fair market value of such debt. As of September 30, 2001,
the company had $103 million in fixed rate debt outstanding. Holding other
variables constant, including levels of indebtness, a one percentage point
increase in interest rates would decrease the fair market value of the fixed
rate debt by $1.5 million.
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. Gains and losses recorded on Canadian currency hedge contracts are
recorded against Canadian receivable balances. The unrealized gain recorded in
comprehensive income for Canadian currency hedges totaled $.1 million at
September 30, 2001. As of September 30, 2001, the potential change in fair value
of open Canadian currency hedge contracts, assuming a 10% change in the
underlying commodity price, was $.3 million.
Page 11
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 October 15, 2001 letter to shareholders,
which is attached as exhibit 19.
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 11 above.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
(19) October 15, 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 September 30, 2001.
Page 12
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
November 14, 2001 /s/ Larry C. Miller
----------------- -------------------------------
Date Larry C. Miller
Vice President - Finance,
and Chief Financial Officer
November 14, 2001 /s/ John W. Huey
----------------- -------------------------------
Date John W. Huey
Vice President, General Counsel
and Secretary
Page 13
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
19 October 15, 2001 Letter to Shareholders
Page 14