-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BKS72tdrGBTgArgL8Ub/IOFwnzr5dGWIgDiYGSZ4b2wBJ0hfN6UWJIObR15qCROZ 2KB5tuYBRi6OsDeJvMN3tA== 0000950130-96-001068.txt : 19960401 0000950130-96-001068.hdr.sgml : 19960401 ACCESSION NUMBER: 0000950130-96-001068 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUTLER INTERNATIONAL INC /MD/ CENTRAL INDEX KEY: 0000786765 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 061154321 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-14951 FILM NUMBER: 96541653 BUSINESS ADDRESS: STREET 1: 110 SUMMIT AVE CITY: MONTVALE STATE: NJ ZIP: 07645 BUSINESS PHONE: 2015738000 MAIL ADDRESS: STREET 2: 110 SUMMIT AVENUE CITY: MONTVALE STATE: NJ ZIP: 07645 FORMER COMPANY: FORMER CONFORMED NAME: NORTH AMERICAN VENTURES INC DATE OF NAME CHANGE: 19920703 10-K405 1 FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) {X} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the period ended DECEMBER 31, 1995 --------------------------------------- OR { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from to ------------------------- 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 -------------- Securities registered pursuant to Section 12(b) of the Act: None ---- Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.001 per share --------------------------------------- (Title of class) 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 . --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. {X}. The aggregate market value of the voting stock held by non-affiliates of the registrant is approximately $31,433,000. Such aggregate market value has been computed by reference to the $5.63 per share closing sale price of such stock as of March 25, 1996. As of March 26, 1996, 6,018,783 shares of the registrant's single class of common stock, par value $.001 per share, were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report to Stockholders for the year ended December 31, 1995 are incorporated by reference in Part II hereof. A definitive proxy statement pursuant to Regulation 14A will be filed with the Commission not later than April 29, 1996. Portions of the proxy statement for the 1996 Annual Meeting of Stockholders are incorporated by reference in Part III hereof. PART I ITEM 1. BUSINESS -------- Butler International, Inc. ("the Company"), through its subsidiaries, is a leading provider of technical services and solutions to companies throughout the world. The Company provides services on a contract basis to clients in a wide variety of industries, including telecommunications, aerospace, electronics, defense, energy and machinery & equipment. Contract services are utilized by the Company's clients for staff augmentation, project management, quality facilitation and strategic outsourcing of particular programs and functions. As of March 26, 1996, the Company had more than 7,200 employees, of which 6,700 billable employees provide these services, generally at client facilities, from a network of over 50 offices in the United States and abroad. Through its international operations, the Company currently provides similar services from offices in the United Kingdom, Indonesia, and South Africa. Based on 1995 net sales and the number of offices, as published in the NTSA Directory (which lists over 200 firms), the Company believes it is among the five largest companies in the domestic technical services industry. In 1995, the Company had net sales of $433.6 million from its domestic and foreign operations. A substantial amount of these sales were derived from companies included in the "Fortune 500" companies list. The Company was incorporated in Maryland on November 27, 1985. The principal executive offices of the Company are located at 110 Summit Avenue, Montvale, New Jersey 07645, and its telephone number is (201) 573-8000. 2 DESCRIPTION OF THE BUSINESS Contract services are utilized by the Company's clients for: (i) staff augmentation, (ii) project management and (iii) outsourcing services, as follows: STAFF AUGMENTATION services are provided to supplement a client's existing work force with technical professionals whose skills are tailored to the particular needs of that business. Staff augmentation is currently the largest part of the Company's revenues. Staff can be added or removed as needed, avoiding extra costs of specially-skilled people during slack times. Contract technical personnel reduce a client's personnel costs and administrative burdens. PROJECT MANAGEMENT services are provided through the Company assuming responsibility for specifically defined projects. Depending upon the nature of the assignment, the type of equipment required for the task and the particular needs of the client, project management services may be provided either on-site at the client's facilities or at a facility designed by the Company for this purpose. The Company frequently obtains the necessary equipment for the project (if not available from the client) on a lease basis for the expected term of the project. OUTSOURCING services are provided through the Company managing an entire on-going operation for or on behalf of a client, thereby reducing the cost and relieving the client of the burden of maintaining that operation. Outsourcing frequently involves performance of tasks which are ancillary to, and not a major part of, the client's normal business. Outsourcing services are provided by the Company at facilities established by the Company for that purpose. In some cases, however, where client facilities already exist for the performance of that operation, the Company will staff and manage that operation. Charges for the Company's services are billed to clients on the basis of an hourly rate per contract employee, or on the basis of an hourly rate plus equipment charges (and overhead charges, if applicable), or on a fixed price or fixed unit price basis. Fixed price arrangements are usually subject to bid. Staff augmentation is usually billed on an hourly rate per contract employee supplied, and upon termination of the assignment there is no further cost to the Company or to the client for the services of the contract employee. Outsourcing and project management services may be billed on an hourly, per unit, or fixed price basis, or a combination of these billing arrangements. Fixed price contracts do not currently represent a significant portion of the Company's continuing operations, but that proportion is expected to grow. BUSINESS AND INDUSTRIES SERVICED The Company's staff augmentation, project management and outsourcing services are provided through three principal operations: (i) CONTRACT TECHNICAL SERVICES, through which the Company provides experienced technical personnel to organizations for staff augmentation purposes; (ii) SPECIALTY OPERATIONS, through which the Company provides a wide variety of other services, including staff augmentation, project management and outsourcing, to many of the same clients; and (iii) TELECOMMUNICATIONS SERVICES, through which the Company provides skilled and technical personnel to all areas of the telecommunications industry for staff augmentation and project management. CONTRACT TECHNICAL SERVICES. Contract technical services is the Company's largest operation. Major clients utilizing the Company's contract technical services include University of California (Los Alamos Laboratories), Boeing, GE, Gulfstream, and Martin Marietta. Services are provided to a wide variety of industries including aerospace, aircraft, automotive, banking, brokerage, consumer products, electronics, energy, environment, financial services, food processing, marine, petrochemical, pharmaceutical, telecommunications and utilities. 3 SPECIALTY OPERATIONS. The Company's specialty operations offer personnel and services for staff augmentation, project management, and outsourcing. Some of these services are provided to the same clients as contract technical and telecommunication services. The specialty operations include the following: BUTLER PROJECT ENGINEERING SERVICES provides the services of skilled teams in Butler-operated facilities near or at the client's site, carrying out both long-term and short-term projects and engineering support services, including product and facilities design, drafting, computer programming, technical writing and illustration. Major clients for these services include Sikorsky, Caterpillar, Eastman Kodak, Delco Electronics, Allison Engines, and Monsanto. BUTLER TECHNOLOGY SOLUTIONS provides computer professionals and services for client/server, relational database and software engineering. This group serves all sectors of the software and data processing industries, from development through testing and final software quality assurance. Butler employees provide a broad range of software, hardware and data processing specialists with expertise in a wide variety of applications, operating systems and platforms. In the future, Butler Technology Solutions plans to emphasize providing system solutions to clients in project related tasks. Major clients for these services include AT&T, IBM, MCI, Xerox, EDS, and GTE. BUTLER FLEET SERVICES provides vehicle maintenance and management services to organizations with major ground vehicle fleets, including gas and electric utilities, telecommunications and courier service companies, government agencies and other organizations. Services include: preventative maintenance, mobile maintenance repair and service, scheduling servicing and inspections, computerized fleet tracking system (including inventory control), training, fueling, fluid level checks and total fleet management. Most of these services are provided by A.S.E. (Automotive Service Excellence) certified mechanics. Major clients for these services include NYNEX, U.S. West, Bell South, Pacific Bell and Airborne Express. BUTLER DESIGN SERVICES include computer drafting and computer-aided design (CAD) records conversion, fixed-price manual drafting, telecommunications and public utilities systems design and drafting, municipal planning and mapping engineering reproduction, printing and graphics. Clients are primarily in the telecommunications industry. Major clients for these services include AT&T, U.S. West and Pacific Bell. TELECOMMUNICATIONS SERVICES. The Company's telecommunications services provide skilled and technical personnel to the telecommunications industry, including wireless communications and fiber optic transmissions, for staff augmentation and project management. The Company's telecommunications services furnish a wide variety of services including engineers, technicians, craftspeople and project managers to approximately 300 active clients through a national network of branch offices. The Company's telecommunication services contract personnel provide applied engineering services, install, test and maintain central office and customer premise equipment for voice and data applications, with both standard coaxial cable and fiber optic capabilities. Such services are also provided for both campus and multi-story telecommunication management. In addition, the central service personnel and project services personnel design, install and maintain cable television and provide related support services, such as management, clerical, drafting, training, data processing and other specialized contract personnel services. Major telecommunications clients include GTE, Nortel, NYNEX, Ericsson, Bell South, Pac Bell, MCI and AT&T. 4 INTERNATIONAL OPERATIONS The Company's international operations ("International Operations") are directed from offices in the United Kingdom, Indonesia, and South Africa. Currently, approximately 7.2% of the Company's personnel are employed in its International Operations. International Operations accounted for approximately 9.8% of the Company's net sales in 1995, principally from the United Kingdom and Indonesia. In late 1995, the Company discontinued its marginal operations in Canada, and exited its Latin American operations due to economic uncertainties in Mexico and Venezuela. Historically, the Company's International Operations unit was primarily engaged in the aerospace and telecommunications industries. Its current strategy is to expand into other industries where the Company's U.S. operations have extensive experience in order to efficiently draw on existing U.S. resources. International Operations is also responsible for development of growth opportunities on the European continent and the Pacific Rim where upgrading and privatization of government-owned telecommunications companies is occurring, which management expects will provide significant market opportunities. Altogether, Butler provides services in over 25 countries. The Company has maintained an operation in the United Kingdom since 1983, currently located at Redhill, Surrey, England, which is also headquarters for the Company's International Operations outside North and South America. The Company's United Kingdom business mix is predominantly telecommunications, with customers in the aerospace, electronics and process control industries as well. The United Kingdom operation has received the British Standards Institute's equivalent of the ISO 9000 award for quality for its cable laying and jointing (splicing) work in its telecommunications unit, and also for its contract technical services unit. Major clients of the United Kingdom operation include British Telecom, IPTN (Indonesia), Honeywell and Jetstream. The United Kingdom operation currently maintains offices in Indonesia to service its principal customer IPTN, and in 1994 opened a new office in Johannesburg, South Africa. CURRENT MARKETS AND MARKETING PLANS In general, management continues to believe that the worldwide economic recession in the early 1990s and the continued focus on corporate reengineering and redesign has led to major structural changes in the way corporations, such as the Company's traditional client base, do business, including downsizing and particularly outsourcing. The drivers of these trends are global competition (hastened by improved telecommunications and computer networks) and relatively low inflation, which have made it difficult to afford the costs of excess layers of personnel. Cost control has become a competitive weapon and the principal way companies can show earnings growth when revenue growth is restrained by a variety of market forces. An additional incentive for eliminating some management positions has come from Total Quality Management (TQM), which empowers people at all levels to make informed decisions and thereby reduces the need for layers of supervisory personnel. As a consequence, management believes that these companies will have to build a different kind of workforce, one in which contract and outsourced workers supplement a "core" of permanent full-time employees. Management expects to participate in a meaningful manner as these changes continue to occur in its markets. As a result, management believes that the Company's recent marketing success (net sales have grown in excess of 78% since 1991) and the keys to its future success are: (i) its attention to client needs and devotion to achieving client satisfaction, (ii) its commitment to quality, (iii) its ability to quickly locate and assemble the right person/team through its computerized hiring system (described below, see "Employees"), and (iv) its ability to successfully bid on projects. In addition, management works very diligently with clients to define the job/project and to determine: the client's needs and expectations, skill sets required, education and background suited for the tasks or projects, proper work environment, location and duration of the project, special training needs, equipment and tool requirements, and proper scheduling of personnel and deployment of equipment and materials. This personalized approach to client needs enables the Company to respond to clients' expectations, as well as to the particular job requirements. 5 As leading corporations around the world move toward doing business with a reduced number of "preferred suppliers", they tend to form longer-term supplier partnerships with quality providers who are able to respond to a wide range of needs in the most efficient manner. To date, the Company's operations have received a total of nine (9) ISO 9000 certifications covering a number of different locations in the United States and the United Kingdom. The Company has received at least one ISO 9000 certification in each of its major businesses, and continues to seek additional ISO 9000 certifications for several other of its facilities. Management believes that its commitment to quality will enhance Butler's standing as a provider of quality technical services throughout the world. BUSINESS EXPANSION AND ACQUISITIONS Since 1991, the Company has made a number of acquisitions to complement its contract technical services and telecommunications businesses. Since 1993, the current strategy of the Company is to concentrate its resources and concentrate on acquisitions in its Technology Solutions business. In 1993, the Company acquired two companies in computer services industry that increased its overall marketing strength in Georgia and New Jersey. In the latter part of 1994, the Company acquired another company in Georgia and later added a company in the Washington, DC metropolitan area servicing computer clients. The Company believes that acquisitions in the computer services market will increase its overall margins and add to the Company's future growth in terms of sales and profits. CLIENTS The Company provides its services to over 1,600 clients. None of the Company's clients individually represented 10% or more of the Company's net sales in 1995. A substantial amount of the Company's 1995 net sales were derived from U.S. companies included in the "Fortune 500" companies list. EMPLOYEES The Company currently has over 7,200 employees in the United States and abroad, and believes that its relationship with its employees is good. Less than 2% of the Company's employees are covered by collective bargaining agreements. Historically, the Company has been able to attract and retain high caliber employees and utilize them effectively to service client needs quickly, efficiently and at competitive costs. The Company's services are provided by employees who are hired by the Company and assigned to work on a full time basis on a specific project of a client. The period of assignment depends upon the duration of the need for the skills possessed by an individual employee, and averages approximately five to eight months. At the end of an assignment, the employee's employment is terminated unless the Company is able to reassign the employee to a different client. A number of employees have worked for Butler intermittently over a period of years. Management believes that technical personnel are attracted to this type of employment by the opportunity to work frequently on "state-of-the-art" projects and by the geographic and industry diversity of the projects. The Company's employees are on the Company's payroll and are subject to its administrative control only during the period that the employee provides services to the client. The client typically retains technical and supervisory control over the performance of the employees. Management expects that changing technologies will continue to create demands for new skills faster than the permanent workforce can respond, resulting in a shortage of specialized technical skills. At the same time, early retirees and increased labor force mobility provide a sizable labor pool available to technical service companies like the Company. As a result, the Company expects that an adequate supply of qualified people will continue to be available to recruit and satisfy client needs. 6 Company recruiters are trained to be skilled at providing a proper match between the candidate and the client's requirements. Candidates are screened on the basis of their overall career experience and technical competency. In 1996, the current Personnel Data Query ("PDQ") system will be replaced with a state- of-the-art fulfillment system that allows for full text searches, on-line reporting, systematic management of requirements, and shared databases across all divisions. Identification of personnel to add to the Company's employee candidate base comes from multiple sources including national and international advertising, employee referrals and industry contacts, including early retirees. There are currently nearly 300,000 potential candidates in the Company's computerized network of resumes, with 100,000 resumes processed per year. This restructuring will also include the establishment of hubs tied to a number of satellite offices located in strategic sales markets. The Company's strategic direction for the sales and recruiting organization is (i) to significantly lower overhead costs by centralizing field operations and upgrading technology; achieving process standardization and cost management; and creating a platform for integration with future systems (payroll/billing, finance, etc.); and (ii) to have a customer driven strategy by creating mobile sales and recruiting organizations that can move in and out of markets. The new system is expected to produce both hard dollar savings and productivity gains in the entire sales and recruiting process. COMPETITION The contract technical services industry in the United States is highly fragmented and characterized by specialized regional and local firms serving specific geographic territories and industries. The Company is one of only a few international companies with the breadth of personnel and resources to respond quickly to the large scale and rapidly changing personnel requirements of major corporate clients worldwide. Based on this characteristic, management believes the Company is a preferred provider of contract technical services and solutions to major corporations because of its ability to service the broad range of client needs. Some national and international companies are larger than the Company or are associated with companies that have greater financial or other resources than the Company. Management believes, however, that the Company's ability to handle efficiently the broad spectrum of specialized client needs, its commitment to quality, the extensive network of the Company's offices, the wide array of technical skills available, and its unique computerized system of identifying qualified personnel for specialized tasks enable it to compete favorably with other providers in the industry. 7 ITEM 2. PROPERTIES ---------- In 1990, the Company relocated and consolidated its corporate offices with the executive offices of its principal operating subsidiary at 110 Summit Avenue, Montvale, New Jersey, 07645. The 82,000 square foot facility was leased until May 1993, when it was purchased by a subsidiary of the Company for approximately $9.4 million. See also "Management's Discussion and Analysis of Results of Operations and Financial Condition." At March 25, 1996, Butler maintained office space at the following locations for predominantly sales, recruiting and administrative functions: UNITED STATES Albuquerque, NM Euclid, OH Redmond, WA Anaheim, CA Fairfax, VA Riverside, CA Arlington Heights, IL Fairport, NY Rochester, NY Aurora, CO Fort Wayne, IN Rockville, MD Austin, TX Gaylord, MI Saginaw, MI Baltimore, MD Granger, IN St. Louis, MO Bayport, NY Indianapolis, IN San Jose, CA Beaverton, OR Irving, TX Shelton, CT Bellaire, TX King of Prussia, PA Springfield, MA Bingham Farms, MI Kokomo, IN Syracuse, NY Bronx, NY Lake St. Louis, MO Tempe, AZ Burlington, MA Lombard, IL Tucson, AZ Cave Creek, AZ Miami, FL Twinsburg, OH Center Line, MI Montvale, NJ West Bridgewater, MA Chillicothe, IL Norcross, GA Westerville, OH Cincinnati, OH Ontario, CA Woodside, NY Citrus Heights, CA Park Ridge, IL Dallas, TX Plainsboro, NJ Dublin, CA Pleasanton, CA Dyer, IN Pompano Beach, FL Encino, CA Raleigh, NC INTERNATIONAL Derbyshire, England Bandung, West Java, Indonesia Leeds, England Jakarta, Indonesia London, England Johannesburg, South Africa Redhill, Surrey, England Except for its corporate headquarters facility in Montvale, New Jersey, the Company does not own any real estate and generally leases office space. The Company makes modest investments in leasehold improvements, equipment and other tangible property, principally computer equipment, as required. ITEM 3. LEGAL PROCEEDINGS ----------------- The Company and its subsidiaries are parties to various legal proceedings and claims incidental to normal business operations for which material losses, beyond that which is recorded, is remote except for the following matter. In June, 1995, the Company filed a complaint against CIGNA Property and Casualty Insurance Company in 8 the Court of Common Pleas of Philadelphia County, Pennsylvania alleging negligence, breach of contract, breach of fiduciary duty, and negligent misrepresentation arising out of CIGNA's and other defendants' acts and omissions in the processing, handling and investigation of claims against the Company under general liability and workmen's compensation insurance contracts. On August 31, 1995, the defendants filed an answer, new matter and counterclaim denying the Company's allegations, asserting certain affirmative defenses, and alleging that the Company has failed to pay retrospective premiums amounting to approximately $7.0 million. In the opinion of management, based on the advice of counsel, all of the proceedings and claims in which the Company and its subsidiaries are involved with can ultimately be defended. The Company is defending itself vigorously against all such claims. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER ----------------------------------------------------------------- MATTERS ------- Information regarding the market for the Company's common stock and related stockholder matters is on page 27 of the Company's 1995 Annual Report, which information is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA ----------------------- Selected financial data is included on page 27 of the Company's 1995 Annual Report, which is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND ----------------------------------------------------------------- FINANCIAL CONDITION ------------------- Management's discussion and analysis of results of operations and financial condition is included on pages 8-10 of the Company's 1995 Annual Report, which discussion and analysis are incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ------------------------------------------- The following financial statements and supplementary data are herein incorporated by reference to the Company's 1995 Annual Report: Consolidated Balance Sheets at December 31, 1995 and December 31, 1994 PAGE 11 Consolidated Statements of Operations for the years ended December 31, 1995, December 31, 1994, and December 31, 1993 PAGE 12 Consolidated Statements of Cash Flows for the years ended December 31, 1995, December 31, 1994, and December 31, 1993 PAGE 13 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1995, December 31, 1994, and December 31, 1993 PAGE 14 Notes to Consolidated Financial Statements PAGES 15-25 Independent Auditors' Report PAGE 26 Other supporting schedules are submitted in a separate section of this report following Item 14. 9 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND --------------------------------------------------------------- FINANCIAL DISCLOSURE -------------------- Not Applicable. PART III A definitive proxy statement pursuant to Regulation 14A will be filed with the Commission not later than April 29, 1996, which is 120 days after the close of the Registrant's fiscal year. The proxy statement will be incorporated in Part III (Items 10 through 13) of Form 10-K. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K ---------------------------------------------------------------- (a)(1) The following consolidated financial statement schedules of Butler International, Inc. and subsidiaries are included following Item 14: Schedule I - Condensed financial information of Registrant Schedule II - Valuation and qualifying accounts All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. (a)(3) Exhibits: The exhibit listing and exhibits follow the schedules. (b) No reports on Form 8-K were filed by the Company during the fiscal quarter ended December 31, 1995. 10 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 29, 1996 BUTLER INTERNATIONAL, INC. (Registrant) By: /s/ Edward M. Kopko ------------------------- Edward M. Kopko, Chairman Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name Title Date - ---- ----- ---- /s/ Edward M. Kopko Chairman of the Board of March 29, 1996 - ------------------ Directors and CEO Edward M. Kopko (Principal Executive Officer) /s/ John F. Hegarty Director March 29, 1996 - ------------------ John F. Hegarty /s/ Frederick H. Kopko, Jr. Director March 29, 1996 - -------------------------- Frederick H. Kopko, Jr. /s/ Hugh G. McBreen Director March 29, 1996 - ------------------ Hugh G. McBreen /s/ Nikhil S. Nagaswami Director March 29, 1996 - ---------------------- Nikhil S. Nagaswami /s/ Michael C. Hellriegel Senior Vice President March 29, 1996 - ------------------------ and Treasurer Michael C. Hellriegel (Principal Financial Officer) /s/ Warren F. Brecht Senior Vice President March 29, 1996 - ------------------- and Secretary Warren F. Brecht 11 Schedule I - ---------- BUTLER INTERNATIONAL, INC. CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED BALANCE SHEETS (in thousands)
December 31, ----------------------- 1995 1994 -------- -------- ASSETS Current assets Cash and equivalents $ 2 $ 104 Other current assets 117 134 -------- -------- Total current assets 119 238 Investment in and receivable from subsidiaries 30,781 38,172 Other assets 77 141 -------- -------- Total assets $ 30,977 $ 38,551 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities $ 532 $ 203 Current portion of long-term debt 149 - -------- -------- Total current liabilities 681 203 -------- -------- Long-term liabilities 133 355 -------- -------- Stockholders' equity: Preferred stock 2 2 Common stock 6 6 Additional paid-in capital 92,882 92,635 Accumulated deficit (62,727) (54,650) -------- -------- Total stockholders' equity 30,163 37,993 -------- -------- Total liabilities and stockholders' equity $ 30,977 $ 38,551 ======== ========
The accompanying notes are an integral part ot these financial statements. Schedule I (continued) - ---------------------- BUTLER INTERNATIONAL, INC. CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF OPERATIONS (in thousands)
Year ended December 31, ------------------------------ 1995 1994 1993 -------- -------- -------- Revenues Interest income (includes intercompany interest of $2,349, $1,609, and $1,185) $ 2,363 $ 1,624 $ 1,346 -------- -------- -------- Expenses Compensation and benefits 16 (21) 287 Administrative and operating expenses 671 911 689 Interest expense 24 45 30 -------- -------- -------- 711 935 1,006 -------- -------- -------- Equity in (loss) income of subsidiaries * (9,677) 1,279 (2,485) -------- -------- -------- (Loss) income from operations before income taxes (8,025) 1,968 (2,145) Income taxes (benefit) (111) 309 55 -------- -------- -------- Net (loss) income $ (7,914) $ 1,659 $ (2,200) ======== ======== ========
* Includes losses from discontinued operations of $3,427 for the year ended December 31, 1993. The accompanying notes are an integral part ot these financial statements. Schedule I (continued) - ---------------------- BUTLER INTERNATIONAL, INC. CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF CASH FLOWS (in thousands)
1995 1994 1993 --------- -------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) Income $ (7,914) $ 1,659 $ (2,200) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 23 (12) 269 (Gains) losses of subsidiaries 9,534 (1,007) 2,540 (Increase) decrease in assets, increase (decrease) in liabilities: Other current assets 223 128 (98) Other assets - 4 300 Accounts payable and accrued liabilities 316 (459) 502 Long term liabilities - (75) (830) --------- -------- --------- Net cash provided by operating activities 2,182 238 483 --------- -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: (Expenses paid) proceeds received in in connection with discontinued operations, net - - (295) Increase in note receivable from Butler Service Group, Inc. (2,349) (1,442) (2,957) Capital expenditures - net - (27) - Other 53 (4) 90 --------- -------- --------- Net cash used in investing activities (2,296) (1,473) (3,162) --------- -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from the exercise of common stock options and warrants 84 1,566 1,973 Net payments of note payable (72) (289) - Payment of dividends - (99) (128) Net proceeds from the sale of preferred stock - - 970 --------- -------- --------- Net cash provided by financing activities 12 1,178 2,815 --------- -------- --------- Net (decrease) increase in cash and cash equivalents (102) (57) 136 Cash and cash equivalents, beginning of year 104 161 25 --------- -------- --------- Cash and cash equivalents, end of year $ 2 $ 104 $ 161 ========= ======== =========
The accompanying notes are an integral part ot these financial statements. Schedule I (continued) - ---------------------- BUTLER INTERNATIONAL, INC. NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT AT DECEMBER 31, 1995 NOTE 1 - ACCOUNTING POLICIES: The investments in the Company's subsidiaries are carried at the Company's equity of the subsidiary which represents amounts invested less the Company's equity in the net losses to date. Significant intercompany balances and activities have not been eliminated in this unconsolidated financial information. No cash dividends were received from subsidiaries during the past three years. Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted. Accordingly, these financial statements should be read in conjunction with the Company's consolidated financial statements in its 1995 Annual Report. NOTE 2 - CONTINGENT LIABILITIES: The Company has guaranteed the Butler Service Group, Inc. ("BSG") revolving credit loan. Under the terms of the agreement, transfer of funds to the Company by BSG is restricted (see Note 5 of the Company's consolidated financial statements in its 1995 Annual Report).
Schedule II - Valuation and qualifying accounts - -------------------------------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D COL. E Additions Balance at Charged to Charged to Balance at beginning of costs and other end of Description period expenses accounts Deductions period - -------------------------------------------------------------------------------------------------------- 1993 Allowance for uncollectible accounts receivable $550,000 $363,000 -- $262,000 $651,000 Reserve for discontinued operations (A) $2,339,000 $1,857,400 (B) -- $3,182,000 (C) $1,014,400 1994 Allowance for uncollectible accounts receivable $651,000 $447,000 -- $225,000 $873,000 Reserve for discontinued operations (A) $1,014,400 -- -- $642,400 (C) $372,000 1995 Allowance for uncollectible accounts receivable $873,000 $783,000 -- $82,000 $1,574,000 Reserve for discontinued operations (A) $372,000 -- -- $118,000 (C) $254,000
(A) Reserve for disposal of discontinued operations (B) Reserve established for the disposal of the Company's heavy equipment telephone construction and asset reclamation business units that were discontinued in 1993. (C) Amounts charged against the reserve. INDEPENDENT AUDITORS' REPORT ---------------------------- To the Board of Directors and Stockholders of Butler International, Inc. Montvale, New Jersey We have audited the consolidated financial statements of Butler International, Inc. as of December 31, 1995 and December 31, 1994, and for each of the three years in the period ended December 31, 1995, and have issued our report thereon dated March 26, 1996; such financial statements and report are included in your 1995 Annual Report for Stockholders and are incorporated herein by reference. Our audits also included the financial statement schedules of Butler International, Inc. listed in Item 14. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. /s/ Deloitte & Touche LLP Parsippany, New Jersey March 26, 1996 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 3.1 Articles of Incorporation of the Registrant, as amended, filed as Exhibit No. 3(a) to the Registrant's Registration Statement on Form S-4, Registration No. 33-10881 (the "S-4"), and hereby incorporated by reference. 3.2 By-laws of the Registrant, as amended, filed as Exhibit No. 3.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990 (the "1990 10-K"), and hereby incorporated by reference. 4.1 Specimen Stock Certificate for the Registrant's common stock, par value $.001 per share, filed as Exhibit No. 4.1 to the Registrant's Registration Statement on Form S-1, Registration No. 33-2479 (the "S-1"), and hereby incorporated by reference. 4.2 Articles Supplementary to the Articles of Incorporation of the Registrant's 7 1/2% Senior Cumulative Convertible Preferred Stock, filed as Exhibit No. 4.1 to Form 10-Q for the period ended September 27, 1992, and hereby incorporated by reference. 4.3 Specimen Stock Certificate representing the Registrant's Series B 7% Cumulative Convertible Preferred Stock, par value $.001 per share, filed as Exhibit No. 4.5 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992 (the "1992 10- K"), and hereby incorporated by reference. 10.1* Incentive Stock Option Plan of the Registrant, as amended, filed as Exhibit No. 10.1 to the 1990 10-K, and hereby incorporated by reference. 10.2* Stock Option Plan of the Registrant, as amended, filed as Exhibit No. 10.2 to the 1990 10-K, and hereby incorporated by reference. 10.3 Agreement dated May 26, 1993, by and among Butler International, Inc. ("Butler"), Butler of New Jersey Realty Corp., a New Jersey corporation ("BNJRC"), Frederick H. Kopko, Jr. and Hugh G. McBreen, filed as Exhibit No. 10.6 to the S-2, and hereby incorporated by reference. 10.4 Purchase and Sale Agreement, dated May 26, 1993, by and between 110 Summit Limited Partnership, a New Jersey limited partnership ("110 Summit") and BNJRC, filed as Exhibit 10.7 to the Registrant's Registration Statement on Form S-2, Registration No. 33-72550 (the "S-2), and hereby incorporated by reference. 10.5(a) Promissory Note, dated May 26, 1993, in the principal amount of $1,200,000 by BNJRC to 110 Summit, as lender, filed as Exhibit No. 10.8(a) to the S-2, and hereby incorporated by reference. 10.5(b) Amended and Restated Promissory Note, dated May 26, 1993, in the amount of $6,750,000 by BNJRC to Firemen's Insurance Company of Newark, New Jersey, as lender ("Firemen's"), filed as Exhibit No. 10.8(b) to the S-2, and hereby incorporated by reference. *Denotes compensatory plan, compensation arrangement, or management contract. E-1 Exhibit No. Description - ----------- ----------- 10.6 Amended and Restated Mortgage and Assignment of Leases and Rents and Security Agreement, dated May 26, 1993, from BNJRC, as mortgagor, to Firemen's as mortgagee, filed as Exhibit No. 10.9 to the S-2, and hereby incorporated by reference. 10.7 Guaranty Agreement, dated May 26, 1993, by Butler in favor of 110 Summit, filed as Exhibit 10.10 to the S-2, and hereby incorporated by reference. 10.8* 1989 Directors Stock Option Plan of the Registrant, dated November 1, 1988, as amended, filed as Exhibit 10.18 to the 1990 10-K, and hereby incorporated by reference. 10.9* Stock Purchase Agreement, dated September 19, 1990, between North American Ventures, Inc. and Edward M. Kopko, filed as Exhibit 10.31 to the 1990 10-K, and hereby incorporated by reference. 10.10* Plan Pledge Agreement, dated September 19, 1990, between North American Ventures, Inc. and Edward M. Kopko, filed as Exhibit No. 10.32 to the 1990 10-K, and hereby incorporated by reference. 10.11* Plan Promissory Note, dated January 16, 1991, executed by Edward M. Kopko, and made payable to the order of North American Ventures, Inc. in the amount of $445,000, filed as Exhibit No. 10.33 to the 1990 10-K, and hereby incorporated by reference. 10.12* Pledge Agreement, dated January 16, 1991, between North American Ventures, Inc. and Edward M. Kopko, filed as Exhibit No. 10.34 to the 1990 10-K, and hereby incorporated by reference. 10.13* Promissory Note, dated January 16, 1991, executed by Edward M. Kopko and made payable to the order of North American Ventures, Inc. in the amount of $154,999.40, filed as Exhibit No. 10.35 to the 1990 10-K, and hereby incorporated by reference. 10.14* Form of Plan Pledge Agreement, dated September 19, 1990, between North American Ventures, Inc. and each of John F. Hegarty, Hugh G. McBreen, and Frederick H. Kopko, Jr. ("Outside Directors"), filed as Exhibit No. 10.36 to the 1990 10-K, and hereby incorporated by reference. 10.15* Form of Plan Promissory Note, dated September 19, 1990, each represented by an Outside Director and each made payable to the order of North American Ventures, Inc. in the amount of $185,000, filed as Exhibit No. 10.37 to the 1990 10-K, and hereby incorporated by reference. 10.16* Form of Stock Purchase Agreement, dated November 4, 1988, between North American Ventures, Inc. and each of the Outside Directors, filed as Exhibit No. 10.38 to the 1990 10-K, and hereby incorporated by reference. 10.17* Form of Pledge Agreement, dated January 16, 1991, between North American Ventures, Inc. and each of the Outside Directors, filed as Exhibit No. 10.39 to the 1990 10-K, and hereby incorporated by reference. *Denotes compensatory plan, compensation arrangement, or management contract. E-2 Exhibit No. Description - ----------- ----------- 10.18* Form of Promissory Note, dated January 16, 1991, executed by each of the Outside Directors and each payable to the order of North American Ventures, Inc., in the amount of $63,000, filed as Exhibit 10.40 to the 1990 10-K, and hereby incorporated by reference. 10.19* Form of Pledge Agreement, dated January 16, 1991, between North American Ventures, Inc. and each of the Outside Directors, filed as Exhibit No. 10.41 to the 1990 10-K, and hereby incorporated by reference. 10.20* Form of Promissory Note, dated January 16, 1991, executed by each of the Outside Directors and each made payable to the order of North American Ventures, Inc. in the amount of $54,000, filed as Exhibit No. 10.42 to the 1990 10-K, and hereby incorporated by reference. 10.21* Form of Promissory Note, dated January 16, 1991, executed by each of the Outside Directors and each payable to the order of North American Ventures, Inc., in the amount of $225,450, filed as Exhibit No. 10.43 to the 1990 10-K, and hereby incorporated by reference. 10.22* Form of Pledge Agreement, dated January 16, 1991, between North American Ventures, Inc. and each of the Outside Directors, filed as Exhibit No. 10.44 to the 1990 10-K, and hereby incorporated by reference. 10.23* Form of Security Agreement, dated January 16, 1991, between North American Ventures, Inc. and each of the Outside Directors, filed as Exhibit No. 10.45 to the 1990 10-K, and hereby incorporated by reference. 10.24* 1990 Employee Stock Purchase Plan of the Registrant, as amended, filed as Exhibit No. 10.46 to the 1990 10-K, and hereby incorporated by reference. 10.25* Employment Agreement, dated December 17, 1991, among North American Ventures, Inc., Butler Service Group, Inc., and Edward M. Kopko, filed as Exhibit 10.33 to the Registrant's Annual Report on Form 10-K for the year ended December 29, 1991 (the "1991 10-K"), and hereby incorporated by reference. 10.26* Stock Purchase Agreement, dated December 17, 1991, between North American Ventures, Inc. and Edward M. Kopko, filed as Exhibit No. 10.34 to the 1991 10-K, and hereby incorporated by reference. 10.27* Plan Pledge Agreement, dated December 17, 1991, between North American Ventures, Inc. and Edward M. Kopko, filed as Exhibit No. 10.35 to the 1991 10-K and hereby incorporated by reference. 10.28* Plan Promissory Note, dated December 17, 1991, executed by Edward M. Kopko, and made payable to the order of North American Ventures, Inc. in the amount of $84,000, filed as Exhibit No. 10.36 to the 1991 10-K, and hereby incorporated by reference. 10.29* Form of Stock Purchase Agreement, dated December 17, 1991, between North American Ventures, Inc. and each of the Outside Directors, filed as Exhibit 10.37 to the 1991 10-K, and hereby incorporated by reference. *Denotes compensatory plan, compensation arrangement, or management contract. E-3 Exhibit No. Description - ----------- ----------- 10.30* Form of Plan Pledge Agreement, dated December 17, 1991, between North American Ventures, Inc. and each of the Outside Directors, filed as Exhibit 10.38 to the 1991 10-K, and hereby incorporated by reference. 10.31* Form of Plan Promissory Note, dated December 17, 1991, each executed by an Outside Director, and each made payable to the order of North American Ventures, Inc., in the amount of $42,000, filed as Exhibit No. 10.39 to the 1991 10-K, and hereby incorporated by reference. 10.32* 1992 Stock Option Plan, filed as Exhibit 10.40 to the 1992 10-K, and hereby incorporated by reference. 10.33* 1992 Incentive Stock Option Plan, filed as Exhibit 10.41 to the 1992 10-K, and hereby incorporated by reference. 10.34* 1992 Stock Bonus Plan, filed as Exhibit No. 10.42 to the 1992 10-K, and hereby incorporated by reference. 10.35* 1992 Stock Option Plan for Non-Employee Directors, filed as Exhibit 10.43 to the 1992 10-K, and hereby incorporated by reference. 10.36* Butler Service Group, Inc. Employee Stock Ownership Plan and Trust Agreement, filed as Exhibit No. 19.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1987 (the "1987 10-K"), and hereby incorporated by reference. 10.37* Employment Agreement dated November 1, 1991 and Amended October 12, 1992, between Butler Service Group, Inc. and Raymond J. Lacroix, filed as Exhibit No. 10.47 to the 1992 10-K, and hereby incorporated by reference. 10.38 Credit Agreement dated as of May 31, 1994 between Butler Service Group, Inc. and General Electric Credit Corporation, filed as Exhibit 10.41 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 (the "1994 10-K"), and hereby incorporated by reference. 10.39(a) First Amendment Agreement, dated December 14, 1994 among Butler Service Group, Inc., the Company, Butler Service Group Canada, Ltd., and General Electric Capital Corporation, filed as Exhibit 10.42(a) to the 1994 10-K, and hereby incorporated by reference. 10.39(b) Second Amendment Agreement, dated March 21, 1995 and effective as of December 14, 1994, among Butler Service Group, Inc., the Company, Butler Service Group Canada, Ltd., and General Electric Capital Corporation, filed as Exhibit 10.42(b) to the 1994 10-K, and hereby incorporated by reference. 10.39(c) Third Amendment Agreement, dated May 15, 1995 and effective as of March 31, 1995, among Butler Service Group, Inc., the Company, Butler Service Group Canada, Ltd., and General Electric Capital Corporation, filed as Exhibit 10.42(c) to Form 10-Q for the period ended September 30, 1995, and hereby incorporated by reference. *Denotes compensatory plan, compensation arrangement, or management contract. E-4 Exhibit No. Description - ----------- ----------- 10.39(d) Fourth Amendment Agreement, dated August 3, 1995 and effective as of June 1, 1995, among Butler Service Group, Inc., the Company, Butler Service Group Canada, Ltd., and General Electric Capital Corporation, filed as Exhibit 10.42(d) to Form 10-Q for the period ended September 30, 1995, and hereby incorporated by reference. 10.39(e) Fifth Amendment Agreement, dated October 4, 1995 and effective as of September 30, 1995, among Butler Service Group, Inc., the Company, Butler Service Group Canada, Ltd., and General Electric Capital Corporation, filed as Exhibit 10.42(e) to Form 10-Q for the period ended September 30, 1995, and hereby incorporated by reference. 10.39(f) Sixth Amendment Agreement, dated November 3, 1995 and effective as of September 30, 1995, among Butler Service Group, Inc., the Company, Butler Service Group Canada, Ltd., and General Electric Capital Corporation, filed herewith as Exhibit 10.39(f). 10.39(g) Seventh Amendment Agreement, dated December 6, 1995 and effective as of November 30, 1995, among Butler Service Group, Inc., the Company, Butler Service Group Canada, Ltd., and General Electric Capital Corporation, filed herewith as Exhibit 10.39(g). 10.39(h) Eighth Amendment Agreement, dated March 26, 1996 and effective as of December 31, 1995, among Butler Service Group, Inc., the Company, Butler Service Group Canada, Ltd., and General Electric Capital Corporation, filed herewith as Exhibit 10.39(h). 10.40* Agreements related to the merger of Server Solutions Corporation into Butler Computer Services, Inc., filed as Exhibit No. 10.43 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (the "1993 10-K"), and hereby incorporated by reference. 10.41* Employment Agreement dated May 15, 1994 between Butler Fleet Services, a division of Butler Services, Inc., and James VonBampus, filed as Exhibit 10.44 to the 1994 10-K, and hereby incorporated by reference. 10.42* Employment Agreement dated April 18, 1995 between Butler International, Inc., and Harley R. Ferguson, filed herewith as Exhibit 10.42. 10.43* Form of Promissory Note dated May 3, 1995 in the original principal amount of $142,500 executed by Frederick H. Kopko, Jr. and Hugh G. McBreen, and made payable to the order of Butler International, Inc., filed herewith as Exhibit 10.43. 10.44* Form Pledge Agreement dated May 3, 1995 between Butler International, Inc. and each of Frederick H. Kopko, Jr. and Hugh G. McBreen, filed herewith as Exhibit 10.44. 13.1 1995 Annual Report to Stockholders, Financial Section (Pages 7-28), filed herewith as Exhibit 13.1. 22.1 List of Subsidiaries of the Registrant. 23.1 Consent of Deloitte & Touche LLP. *Denotes compensatory plan, compensation arrangement, or management contract. E-5 EX-10.39(F) 2 SIXTH AMENDMENT AGREEMENT EXHIBIT 10.39(f) SIXTH AMENDMENT AGREEMENT ------------------------- AGREEMENT, dated November 3, 1995, to be effective as of September 30, 1995, among BUTLER SERVICE GROUP, INC. a New Jersey corporation, BUTLER INTERNATIONAL, INC., a Maryland corporation, BUTLER SERVICE GROUP CANADA, LTD., a Canadian corporation, and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation. Background ---------- A. Capitalized terms not otherwise defined shall have the meanings ascribed to them in the Credit Agreement dated as of May 31, 1994, between Butler Service Group, Inc. and General Electric Capital Corporation (as amended, modified or supplemented from time to time, the "Credit Agreement". ----------------- B. The Borrower has requested that the Lender modify one of the financial covenants set forth in the Credit Agreement. C. The Lender has agreed to the Borrower's request subject to the terms and conditions of this Agreement. Agreement --------- In consideration of the Background, which is incorporated by reference, the parties, intending to be legally bound, agree as follows: 1. Modifications. All the terms and provisions of the Credit Agreement ------------- and the other Loan Documents shall remain in full force and effect except that the Leverage Ratio covenant of "5.0:1" for the period ended September 30, 1995, contained in subsection (d) of Schedule 6.02(u) to the Credit Agreement is deleted and the Leverage Ratio covenant of "6.5:1" is substituted therefor. 2. Conditions Precedent. The Lender's obligations under this Agreement -------------------- are contingent upon the Lender's receipt of the following, all in form, scope and content acceptable to the Lender in its sole discretion: (a) Amendment Agreement. This Agreement duly executed by the parties ------------------- hereto. (b) Other. Such other agreements and instructions as the Lender shall ----- require. 3. Reaffirmation By Borrower. The Borrower acknowledges and agrees, and ------------------------- reaffirms, that it is legally, validly and enforceably indebted to the Lender under the Revolving Note without defense, counterclaim or offset, and that it is legally, validly and enforceably liable to the Lender for all costs and expenses of collection and attorneys' fees related to or in any way arising out of this Agreement, the Credit Agreement, the Revolving Note and the other Loan Documents. The Borrower hereby restates and agrees to be bound by all covenants contained in the Credit Agreement and the other Loan Documents and hereby reaffirms that all of the representations and warranties contained in the Credit Agreement remain true and correct in all material respects except as disclosed in connection with the execution and delivery of the First Amendment Agreement dated December 14, 1994 (the "First Amendment Agreement"). The Borrower ------------------------- represents that except as set forth in the Credit Agreement and the First Amendment Agreement, ere are not pending or to the Borrower's knowledge threatened, legal proceedings to which the Borrower or either of the Guarantors is a party, or which materially or adversely affect the transactions contemplated by this Agreement or the ability of the Borrower or either of the Guarantors to conduct its business. The Borrower acknowledges and represents that the resolutions of the Borrower dated May 25, 1994, remain in full force and effect and have not been amended, modified, rescinded or otherwise abrogated. 4. Reaffirmation by Guarantors. Each of the Guarantors acknowledges that --------------------------- each is legally and validly indebted to the Lender under the Guaranty of each without defense, counterclaim or offset. Each of the Guarantors affirms that the Guaranty of each remains in full force and effect and acknowledges that the Guaranty of each encompasses, without limitation, the amount of the Maximum Revolving Loan, as modified herein. 5. Other Representations By Borrower and Guarantors. The Borrower and the ------------------------------------------------ Guarantors each represents and confirms that (a) no Default or Event of Default has occurred and is continuing and the Lender has not given its consent to or waived any Default or Event of Default and (b) the Credit Agreement and the other Loan Documents are in full force and effect and enforceable against the Borrower and Guarantors in accordance with the terms thereof. The Borrower and the Guarantors each represent and confirm that as of the date hereof, each has no claim or defense (and the Borrower and the Guarantors each hereby waive every claim and defense) against the Lender arising out of or relating to the Credit Agreement and the other Loan Documents or the making, administration or enforcement of the Revolving Loan and the remedies provided for under the Loan Documents. 6. No Waiver By Lender. The Borrower and the Guarantors each acknowledges ------------------- that (a) by the execution by each of this Agreement, the Lender is not waiving any Default, whether now existing or hereafter occurring, disclosed or undisclosed, by the Borrower under the Loan Documents and (b) the Lender reserves all rights and remedies available to it under the Loan Documents and otherwise. The parties have executed this Agreement on the date first written above to be effective as of September 30, 1995. BUTLER SERVICE GROUP, INC. By /s/ Michael C. Hellriegel ---------------------------------- Michael C. Hellriegel Its Vice President and Comptroller BUTLER INTERNATIONAL, INC. By /s/ Michael C. Hellriegel ---------------------------------- Michael C. Hellriegel Its Vice President and Comptroller BUTLER SERVICE GROUP CANADA, LTD. By /s/ Michael C. Hellriegel ---------------------------------- Michael C. Hellriegel Its Assistant Secretary GENERAL ELECTRIC CAPITAL CORPORATION By /s/ Martin S. Greenberg ---------------------------------- Martin S. Greenberg Its Duly Authorized Signatory EX-10.39(G) 3 SEVENTH AMENDMENT AGREEMENT EXHIBIT 10.39(g) SEVENTH AMENDMENT AGREEMENT --------------------------- AGREEMENT, dated December 6, 1995, to be effective as of November 30, 1995, among BUTLER SERVICE GROUP, INC. a New Jersey corporation, BUTLER INTERNATIONAL, INC., a Maryland corporation, BUTLER SERVICE GROUP CANADA, LTD., a Canadian corporation, and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation. Background ---------- A. Capitalized terms not otherwise defined shall have the meanings ascribed to them in the Credit Agreement dated as of May 31, 1994, between Butler Service Group, Inc. and General Electric Capital Corporation (as amended, modified or supplemented from time to time, the "Credit Agreement". ----------------- B. The Borrower has requested that the Lender further extend the date by which the Maximum Revolving Loan shall be reduced to $50,000,000. C. The Lender has agreed to the Borrower's request subject to the terms and conditions of this Agreement. Agreement --------- In consideration of the Background, which is incorporated by reference, the parties, intending to be legally bound, agree as follows: 1. Modifications. All the terms and provisions of the Credit Agreement ------------- and the other Loan Documents shall remain in full force and effect except as follows: (a) Section 2.01 of the Credit Agreement is deleted and the following is substituted therefor: Section 2.01 Revolving Loan. (a) Upon and subject to the terms and -------------- conditions set forth in this Agreement, and relying on the representations, warranties and covenants of the Borrower set forth in this Agreement, until the Commitment Termination Date, the Lender agrees to make the Advances to the Borrower against the Eligible Accounts, the Eligible Pending Accounts Receivable and the Fixed Contracts Account Receivable, for the Borrower's use and upon the request of the Borrower, from time to time in the aggregate principal amount which shall not exceed the lesser at such time of (X) the Maximum Revolving Loan less the aggregate outstanding amount of the Letters of Credit and (Y) the Borrowing Base less the sum of the aggregate outstanding amount of the Letters of Credit and the aggregate amount of the Reserves. Notwithstanding the foregoing, the Borrower agrees to take all steps to ensure that the Maximum Revolving Loan shall be reduced to amounts not greater than those set forth below for the dates specified: Date Maximum Revolving Loan ---- ---------------------- December 1, 1995 $55,000,000 December 11, 1995 $54,000,000 December 18, 1995 $53,000,000 December 26, 1995 $52,000,000 January 2, 1996 $51,000,000 January 8, 1996 $50,000,000 (b) In addition to the foregoing, the Borrower agrees to reduce the Maximum Revolving Loan to an amount not greater than $50,000,000 upon receipt by the Borrower or the Parent of proceeds from an offering of its equity securities or the placement of subordinated indebtedness on terms and conditions satisfactory to the Lender. (b) Section 3.17 of the Credit Agreement is deleted and the following is substituted therefor: 3.17 Overadvance Fee. The Borrower agrees to pay to the Lender the --------------- Overadvance Fee for each calendar day that there exists an Overadvance; notwithstanding the foregoing, the Borrower agrees that in no event shall Overadvances exceed the amounts set forth below for the dates specified: Date Maximum Revolving Loan ---- ---------------------- December 1, 1995 $2,000,000 December 11, 1995 $1,750,000 December 18, 1995 $1,500,000 December 26, 1995 $1,250,000 January 2, 1996 $1,000,000 January 8, 1996 $ 500,000 January 15, 1996 $ 0 (c) The definition of "Maximum Revolving Loan" contained in Schedule "1.01" to the Credit Agreement is deleted and the following is substituted therefor: "Maximum Revolving Loan" shall mean the agreement of the Lender to make ---------------------- advances to the Borrower up to the maximum aggregate amount outstanding of $55,000,000, subject to the terms and conditions of the Credit Agreement, including, without limitation, Section 2.01 thereof. (b) The definition of "Overadvance Fee" contained in Schedule "1.01" to the Credit Agreement is deleted and the following is substituted therefor: "Overadvance Fee" shall mean the amount of $3,000, which amount shall be --------------- due and payable for each Overadvance. 2. Fees. (a) In consideration of the Lender's extension of the date on ---- which the Maximum Revolving Loan is to be reduced to $50,000,000, the Borrower agrees to pay the following fees to the Lender: (I) $20,000 simultaneously with the execution and delivery of this Agreement; (ii) $5,000 on January 2, 1996, if the Maximum Revolving Loan has not been reduced to $50,000,000 (or less) on or before such date; and (iii) $5,000 on January 8, 1996, if the Maximum Revolving Loan has not been reduced to $50,000,000 (or less) on or before such date. (b) The Borrower agrees that the fees set forth under subsection (a) above shall be deemed "Fees" under the Credit Agreement. 3. Conditions Precedent. The Lender's obligations under this Agreement -------------------- are contingent upon the Lender's receipt of the following, all in form, scope and content acceptable to the Lender in its sole discretion: (a) Amendment Agreement. This Agreement duly executed by the parties ------------------- hereto. (b) Other. Such other agreements and instruments as the Lender shall ----- require. 4 Reaffirmation By Borrower. The Borrower acknowledges and agrees, and ------------------------- reaffirms, that it is legally, validly and enforceably indebted to the Lender under the Revolving Note without defense, counterclaim or offset, and that it is legally, validly and enforceably liable to the Lender for all costs and expenses of collection and attorneys' fees related to or in any way arising out of this Agreement, the Credit Agreement, the Revolving Note and the other Loan Documents. The Borrower hereby restates and agrees to be bound by all covenants contained in the Credit Agreement and the other Loan Documents and hereby reaffirms that all of the representations and warranties contained in the Credit Agreement remain true and correct in all material respects except as disclosed in connection with the execution and delivery of the First Amendment Agreement dated December 14, 1994 (the "First Amendment Agreement"). The ------------------------- Borrower represents that except as set forth in the Credit Agreement and the First Amendment Agreement, ere are not pending or to the Borrower's knowledge threatened, legal proceedings to which the Borrower or either of the Guarantors is a party, or which materially or adversely affect the transactions contemplated by this Agreement or the ability of the Borrower or either of the Guarantors to conduct its business. The Borrower acknowledges and represents that the resolutions of the Borrower dated May 25, 1994, remain in full force and effect and have not been amended, modified, rescinded or otherwise abrogated. 5 Reaffirmation by Guarantors. Each of the Guarantors acknowledges that --------------------------- each is legally and validly indebted to the Lender under the Guaranty of each without defense, counterclaim or offset. Each of the Guarantors affirms that the Guaranty of each remains in full force and effect and acknowledges that the Guaranty of each encompasses, without limitation, the amount of the Maximum Revolving Loan, as modified herein. 6 Other Representations By Borrower and Guarantors. The Borrower and ------------------------------------------------ the Guarantors each represents and confirms that (a) no Default or Event of Default has occurred and is continuing and the Lender has not given its consent to or waived any Default or Event of Default and (b) the Credit Agreement and the other Loan Documents are in full force and effect and enforceable against the Borrower and Guarantors in accordance with the terms thereof. The Borrower and the Guarantors each represent and confirm that as of the date hereof, each has no claim or defense (and the Borrower and the Guarantors each hereby waive every claim and defense) against the Lender arising out of or relating to the Credit Agreement and the other Loan Documents or the making, administration or enforcement of the Revolving Loan and the remedies provided for under the Loan Documents. 7 No Waiver By Lender. The Borrower and the Guarantors each ------------------- acknowledges that (a) by the execution by each of this Agreement, the Lender is not waiving any Default, whether now existing or hereafter occurring, disclosed or undisclosed, by the Borrower under the Loan Documents and (b) the Lender reserves all rights and remedies available to it under the Loan Documents and otherwise. The parties have executed this Agreement on the date first written above to be effective as of November 30, 1995. BUTLER SERVICE GROUP, INC. By /s/ Michael C. Hellriegel ---------------------------------- Michael C. Hellriegel Its Vice President and Comptroller BUTLER INTERNATIONAL, INC. By /s/ Michael C. Hellriegel ---------------------------------- Michael C. Hellriegel Its Vice President and Comptroller BUTLER SERVICE GROUP CANADA, LTD. By /s/ Michael C. Hellriegel ---------------------------------- Michael C. Hellriegel Its Assistant Secretary GENERAL ELECTRIC CAPITAL CORPORATION By /s/ Martin S. Greenberg ---------------------------------- Martin S. Greenberg Its Duly Authorized Signatory EX-10.39(H) 4 EIGHTH AMENDMENT AGREEMENT EXHIBIT 10.39(h) EIGHT AMENDMENT AGREEMENT AGREEMENT, dated as of March 26, 1996, to be effective as of December 31, 1995, among BUTLER SERVICE GROUP, INC., a New Jersey corporation, BUTLER INTERNATIONAL, INC., a Maryland corporation, BUTLER SERVICE GROUP CANADA. LTD., a Canadian corporation, and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation. Background ---------- A. Capitalized terms not otherwise defined shall have the meanings ascribed to them in the Credit Agreement dated as of May 31, 1994, between Butler Service Group, Inc. and General Electric Capital Corporation (as amended, modified or supplemented from time to time, the ("Credit Agreement). B. The Borrower has requested that the Lender modify certain of the financial covenants contained in the Credit Agreement. C. The Lender has agreed to the Borrower's request subject to the terms and conditions of this Agreement. Agreement --------- In consideration of the Background, which is incorporated by reference, the parties, intending to be legally bound, agree as follows: 1. Modifications. All the terms and provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect except as follows: (a) The definition of "Commitment Termination Date" contained in Section " 1 .01 " to the Credit Agreement is deleted and the following is substituted therefor: "Commitment -Termination Date" means the earliest to occur of ------------------------------ (i) May 31, 1997, (ii) thirty (30) days prior to the maturity date of the indebtedness currently secured by the Montvale Mortgage (or any extension, renewal or refinancing of such indebtedness), and (iii) the date on which the Lender's obligation to make, and the Borrower's right to receive, advances under this Agreement shall terminate under Section 7.01 hereof. (b) Schedule "6-02(u)" to the Credit Agreement is deleted and the ----------------- Schedule "6.02(u)" attached hereto is substituted therefor. 2. Modification Fee ---------------- (a) In consideration of the Lender's execution, delivery and performance of this Agreement, the Borrower agrees to pay the Lender the amount of $10,000 simultaneously within the execution and delivery of the Agreement. (b) The Borrower agrees that the fee set forth under subsection (a) above shall be deemed one of the "Fees" under the Credit Agreement. 3. Conditions Precedent. The Lender's obligations under this Agreement -------------------- are contingent upon the Lender's receipt of the following, all in form, scope and content acceptable to the Lender in its sole discretion: (a) Amendment Agreement. This Agreement duly executed by the ------------------- parties hereto. (b) Other- Such other agreements and instruments as the Lender shall require. 4. Reaffirmation-By Borrower. The Borrower acknowledges and agrees, and ------------------------- reaffirms, that it is legally, validly and enforceably indebted to the Lender under the Revolving Note without defense, counterclaim or offset, and that it is legally, validly and enforceably liable to the Lender for all costs and expenses of collection and attorneys' fees related to or in any way arising out of this Agreement, the Credit Agreement, the Revolving Note and the other Loan Documents. The Borrower hereby restates and agrees to be bound by all covenants contained in the Credit Agreement and the other Loan Documents and hereby reaffirms that all of the representations and warranties contained in the Credit Agreement remain true and correct in all material respects except as disclosed in connection with the execution and delivery of the First Amendment Agreement dated December 14, 1994 (the "First Amendment Agreement"), The Borrower represents that except as set forth in the Credit Agreement and the First Amendment Agreement, there are not pending or to the Borrower's knowledge threatened, legal proceedings to which the Borrower or either of the Guarantors is a party, or which materially or adversely affect the transactions contemplated by this Agreement or the ability of the Borrower or either of the Guarantors to conduct its business. The Borrower acknowledges and represents that the resolutions of the Borrower dated May 25, 1994, remain in full force and effect and have not been amended, modified, rescinded or otherwise abrogated. 5. Reaffirmation by Guarantors. Each of the Guarantors acknowledges that --------------------------- each is legally and validly indebted to the Lender under the Guaranty of each without defense, counterclaim or offset. Each of the Guarantors affirms that the Guaranty of each remains in full force and effect and acknowledges that the Guaranty of each encompasses, without limitation, the amount of the Maximum Revolving Loan, as modified herein. 6. Other Representations By Borrower and Guarantors. The Borrower and ------------------------------------------------ the Guarantors each represents and confirms that (a) no Default or Event of Default has occurred and is continuing and the Lender has not given its consent to or waived any Default or Event of Default and (b) the Credit Agreement and the other Loan Documents are in full force and effect and enforceable against the Borrower and Guarantors in accordance with the terms thereof. The Borrower and the Guarantors each represent and confirm that as of the date hereof, each has no claim or defense (and the Borrower and the Guarantors each hereby waive every claim and defense) against the Lender arising out of or relating to the Credit Agreement and the other Loan Documents or the making, administration or enforcement of the Revolving Loan and the remedies provided for under the Loan Documents. 7. No Waiver By Lender. The Borrower and the Guarantors each ------------------- acknowledges that (a) by the execution by each of this Agreement, the Lender is not waiving any Default, whether now existing or hereafter occurring, disclosed or undisclosed, by the Borrower under the Loan Documents and (b) the Lender reserves all rights and remedies available to it under the Loan Documents and otherwise. The parties have executed this Agreement as of the date first written above to be effective as of December 31, 1995. BUTLER SERVICE GROUP. INC. By /s/ Michael C. Hellriegel ------------------------------ Michael C. Hellriegel Vice President and Comptroller BUTLER INTERNATIONAL, INC. By /s/ Michael C. Hellriegel ------------------------------ Michael C. Hellriegel Vice President and Comptroller BUTLER SERVICE GROUP. CANADA, LTD. By /s/ Michael C. Hellriegel ------------------------------ Michael C. Hellriegel Assistant Secretary GENERAL ELECTRIC CAPITAL CORPORATION By /s/ Martin S. Greenberg ------------------------------ Martin S. Greenberg Duly Authorized Signatory FINANCIAL COVENANTS ------------------- There shall be no breach or failure to comply with any of the following financial covenants, each of which shall be calculated in accordance with GAAP, consistently applied. (a) Maximum Capital Expenditures. The Parent and its Subsidiaries ----------------------------- (except Butler UK), on a consolidated basis, shall not make Capital Expenditures that exceed in the aggregate the amounts set forth below for each Fiscal Year set forth below, which amount shall be noncumulative from year to year: Maximum Capital Maximum Capital Fiscal Year Expenditures ----------- --------------- 1994 $2,400,000 1995 2,600,000 1996 2,600,000 1997 2,700,000 (b) Tangible Net-Worth. The Parent and its Subsidiaries, on a ------------------ consolidated basis, shall not permit Tangible Net Worth measured as at each of the dates set forth below for the period of the Fiscal Year to such date (and shall at all times during the period from and including such date through but excluding the last day of the Fiscal Quarter immediately succeeding such date not permit Tangible Net Worth), to be less than the amount set forth opposite such date: Date Tangible Net Worth ---- ------------------ June 30, 1994 $10,000,000 September 30, 1994 10,250,000 December 31, 1994 11,000,000 March 31, 1995 11,000,000 June 30, 1995 11,250,000 September 30, 1995 11,500,000 December 31, 1995 5,200,000 March 31, 1996 4,700,000 June 30, 1996 6,100,000 September 30, 1996 7,800,000 December 31, 1996 9,500,000 March 31, 1997 9,500,000 (c) Fixed Charge Coverage Ratio. The parent and its Subsidiaries (except --------------------------- Butler UK), on a consolidated basis, shall not permit the Fixed Charge Coverage Ratio measured on the last day of each Fiscal Quarter for that portion of the current Fiscal Year to date, to be less than 1.0:1 (except that such Ratio shall not be less than 0.6:1 for the period of four consecutive Fiscal Quarters ending on December 31, 1995). Schedule "6.02(u)" to Credit Agreement (d) Leverage Ratio. The Parent and its Subsidiaries, on a consolidated -------------- basis, shall not permit the Leverage Ratio measured as at each of the dates set forth below for the period of the Fiscal Year to such date (and shall at all times during the period from and including such date through but excluding the last day of the Fiscal Quarter immediately succeeding such date not permit the Leverage Ratio) to be greater than the amount set forth opposite such date: Fiscal Quarter Leverage Ratio -------------- -------------- June 30, 1994 5.7:1 September 30, 1994 5.0:1 December 31, 1994 5.0:1 March 31, 1995 5.0:1 June 30, 1995 5.0:1 September 30, 1995 5.0:1 December 31, 1995 16.0:1 March 31, 1996 18.0:1 June 30, 1996 14.0:1 September 30, 1996 11.0:1 December 31, 1996 8.5:1 March 31, 1997 8.5:1 (e) Interest Coverage Ratio. The Parent and its Subsidiaries (except ----------------------- Butler UK), on a consolidated basis, shall not permit the Interest Coverage Ratio measured as at each of the dates set forth below for the period of the Fiscal Year to such date (and shall at all times during the period from and including such date through but including the last day of the Fiscal Quarter immediately succeeding such date not permit the Interest Coverage Ratio) to be less than the amount set forth opposite such date: Fiscal Quarter Interest Coverage Ratio -------------- ----------------------- June 30, 1994 1.0:1 September 30, 1994 1.2:1 December 31, 1994 1.3:1 March 31, 1995 1.1:1 June 30, 1995 1.2:1 September 30, 1995 1.2:1 December 31, 1995 0.4:1 March 31, 1996 1.0:1 June 30, 1996 1.2:1 September 30, 1996 1.3:1 December 31, 1996 1.3:1 March 31, 1997 1.2:1 EX-10.42 5 EMPLOYMENT AGREEMENT EXHIBIT 10.42 EMPLOYMENT AGREEMENT -------------------- AGREEMENT made this 18th day of April, 1995, by and between BUTLER INTERNATIONAL, INC., a Maryland corporation, with offices at 110 Summit Avenue, Montvale, New Jersey 07645 (hereinafter referred to as "Employer") and HARLEY R. FERGUSON residing at 3063 Glengrove Drive, Rochester Mills, Michigan 48309 (hereinafter referred to as "Employee"). WHEREAS, the Employer and Employee are desirous of setting forth the terms and conditions of their employment relationship in writing, it is in consideration of the mutual promises and covenants hereinafter set forth, agreed as follows: 1. The Employee is hereby engaged to work in the capacity of Senior Vice President and Chief Information Officer of Butler International, Inc., and/or any other capacity so designated. If and so long as Employee is elected and appointed to serve as an officer, director, or employee of the Employer or any of its, parent, affiliate or subsidiary corporations, Employee shall do so at no additional compensation. 2. The effective date of this Agreement and the commencement of work hereunder shall be the 10th day of April, 1995, and the employment shall continue until terminated as hereinafter provided. 3. The Employer agrees as follows: (A) To pay the Employee a salary at the rate of One Hundred Fifty Eight Thousand ($158,000.00) Dollars per year, payable in accordance with the Employer's regularly scheduled pay periods ("Base Salary"). (B) That Employee shall receive such other incidental benefits of employment, such as insurance, pension plan participation, and vacation, as are provided generally to Employer's other salaried employees on the same terms as are applicable to such other employees. These incidental benefits are subject to change at the discretion of the Employer. (C) To reimburse the Employee for business expenses incurred in the execution of his duties, it being expressly understood that all such expenses are subject to the approval of the Employer. Submission of business expenses for reimbursement will be in accordance with the Employer's regularly established procedures and must conform to the Internal Revenue Code. (D) To pay the Employee a car allowance as more specifically set forth in Paragraph Eight (8) below. (E) To pay the Employee a one time signing bonus of Twelve Thousand Five Hundred ($12,500.00) Dollars, payable within days of Employee's commencement of employment hereunder. (F) Employee is eligible for participation in Butler's Stock Option Plan under which options to purchase shares of common stock of Butler International, Inc., at the last price traded on NASDAQ on April 10, 1995, will be granted as follows: (i) on January 2, 1996, option to purchase 6,250 Butler International, Inc., shares shall vest; (ii) on January 2, 1997, option to purchase 6,250 Butler International, Inc., shares shall vest; (iii) on January 2, 1998, option to purchase 6,250 Butler International, Inc., shares shall vest; and (iv) on January 2, 1999, option to purchase 6,250 of Butler International, Inc., shares shall vest. Options will be granted and will vest only if, on the vesting date referenced above Employee has been continuously employed by Employer since April 10, 1995. Employee will have ten (10) years from vesting to exercise the options. This Paragraph is expressly subject to Butler's Stock Option Plan. (F) Employer agrees to pay Employee a Management Objective Bonus (prorated for the calendar year 1995 and any other year in which Employee is employed by Employer for less than one (1) full year in accordance with Addendum A attached hereto. 4. The Employee agrees as follows: (A) To devote his entire skill, labor, and attention to said employment during the term of his employment and that he will promptly and faithfully do and perform all services pertaining to said position that are or may hereafter be required of him by the Employer during said term. (B) That any inventions, discoveries, improvements, or works which are conceived, first reduced to practice, made, developed, suggested by, or created in anticipation of, in the course of, or as a result of work done under this Agreement by the Employee shall become the absolute property of the Employer; and the Employee further agrees that all such inventions, discoveries, improvements, creations, or works, and all letters, patents, or copyrights that may be obtained therefore, shall be property of the Employer; and the Employee agrees to do every act and thing requisite to vest said patents or copyrights in the Employer without any other or additional compensation or consideration to the Employee than herein expressed. (C) That Employer may set-off against any wages, benefits, securities, or other compensation due the Employee, any amounts owed to the Employer because of salary, bonus, or incentive advances, excess payments, damage to, or loss of the Employer's property. 5. The payment of salary, bonus, commission, or incentive hereunder shall be paid only in the event that the Employee actually works for the Employer so that the Employer will not be obligated to pay the Employee during periods of disability or sickness (except as per the required relevant law and corporate policy), leave of absence, suspension, or similar circumstances. It is not the intention of this provision to cease payments during the Notification Period. 6. From April 10, 1995 to April 9, 1996, this Agreement may be terminated by either party for any reason whatsoever by giving the other party twelve (12) months prior notice. At anytime thereafter this Agreement may be terminated by either party for any reason whatsoever by giving the other party six (6) months prior notice. Notwithstanding the above, Employer may terminate Employee and this Agreement at any time upon notice to Employee for just cause. For purposes of this Agreement, "just cause" shall be defined to mean the Employee's: (i), breach of fiduciary duty owed to the Employer; (ii), breach of any representation, warranty, or covenant in the Employment Agreement; (iii), any dishonest, or illegal conduct of Employee; or (iv), if the Employee performs, participates in, or knowingly permits any act of moral turpitude. In the event of termination by either party; salary, commissions, bonuses, Incentive Performance Bonus, stock option plans, benefits or rights thereto, and any other compensation cease as of the date of the termination date except as required by Paragraphs 18, 19, 20, or 21 herein. 7. The Employee represents and warrants that at the time of the signing of this Agreement, there is no written or oral contract or of any legal or other impediment which would inhibit or prohibit the employment herein provided for. The Employee will not knowingly utilize any trade secret, company confidential information, or other intellectual property right of another party in the performance of the Employee's duties hereunder. 8. The Employer will pay the Employee an allowance for the Employee to provide a car for use on company business. Such allowance shall be Five Hundred Fifty ($550.00) Dollars per month, and shall cover all costs (except those noted below) of such car, including but not limited to, purchase, rental, repairs, insurance, and depreciation. Payments shall be pro-rated in the event of Employee's termination. Payments are subject to withholding for income tax and associated payroll deductions pursuant to the current Internal Revenue Code and regulations promulgated thereunder. The sole additional allowance to be paid by the Employer with respect to the use of said car on company business shall be reimbursement for such actual fuel costs incurred on company business at a rate to be determined in accordance with company policy. 9. The Employer and Employee recognize and agree that the methods employed in the Employer's business are such as would place the Employee in close business and personal relationship with the Employer's customers and clients. It is therefore agreed that in the event of a termination of this Agreement for any reason whatsoever, the Employee will not for a period of one (1) year from the date of the termination of this Agreement, either directly or indirectly, on his account, or as agent, stockholder, owner, employer, employee (or otherwise) of another, solicit any business from the then customers of the Employer or from customers of Employer's affiliate or subsidiary corporations that Employee or any of Employer's employees supervised, directly or indirectly, by Employee may have contacted at any time during his period of employment. For purposes of this Clause nine (9), the term "Client" and the term "Customer" includes any and all affiliates, customers and clients of Employer's client. 10. The Employer and Employee recognize and agree that due to the nature of the Employer's business, there is generally a lengthy development period between the time a potential customer or client is actually contacted and the time when such potential customer or client becomes an actual customer or client. During this developmental period, Employer generally invests money and resources and, through its employees, makes numerous contacts, personal and otherwise, with the potential customers and clients. In light of the foregoing relationship nurtured during the developmental period and the good will of the Employer generated during this period, the Employee further agrees that in the event of a termination of this Agreement for any reason whatsoever, the Employee will not for a period of one (1) year from the date of termination of this Agreement, either directly or indirectly, on his own account or as agent, stockholder, owner, employer, employee (or otherwise) of another, solicit any business from any potential customers of the Employer or from any potential customers of Employer's affiliate or subsidiary corporations that the Employee has contacted or been responsible for, directly or indirectly, at any time during his period of employment. For purposes of this Clause ten (10), the term "Client" and the term "Customer" includes any and all affiliates, customers and clients of Employer's client. 11. The Employee agrees that he will not for a period of one (1) year from the date of termination of this Agreement engage in a business similar to that of Employer in the United States of America. Inasmuch as the Employee is employed for the wide-ranging responsibility of being the Senior Vice President and Chief Information Officer of the Employer, the activities proscribed in this Paragraph Eleven (11) are those services which the Employee provides to the Employer during the term of this Agreement, services which encompass executive, management, sales, and marketing functions. The geographical territories applicable to this Paragraph Eleven (11) are the states and regions where the Employee or other employees of the Employer who Employee has direct or indirect responsibility, render the services contemplated by this Agreement. The boundaries of this Region are as defined by the Employer and are subject to change from time to time. For purposes of this Clause eleven (11), Employer's business is defined as ___________________________. 12. Employee agrees that he shall not for the period of one (1) year after termination of this Agreement, contact or approach, directly or indirectly, for his own individual purpose or those of another, any employee of Employer or any employee of Employer's parent, affiliate, or subsidiary corporations with whom the Employee has personally worked or has knowledge by virtue of his employment without regard to his/her location, for the purpose of attempting to or actually soliciting or hiring that employee on his own account or for the account of another. 13. The Employee acknowledges that all information of the type hereinafter described, directly or indirectly, disclosed or made available to the Employee as a result of this employment is valuable property and a trade or business secret and under the exclusive ownership of the Employer and its affiliate, or subsidiary corporations, and Employee agrees not to divulge such information to any individual or business entity. Such valuable proprietary business and trade secrets are defined for the purposes of this Agreement as Employer and Employer's affiliate, or subsidiary corporations' methodologies, data, data bases, procedures, software and software application, source and object codes, and other programs and designs, marketing information, plans and surveys, customer or client lists, sales leads, contracts, customer feedback, employee qualifications, benefits and remuneration, pricing and bid information, profitability, production techniques, financial and profit plans, and methodologies, and performance tests. 14. In the event this Agreement shall be terminated for any reason whatsoever, Employee shall upon such termination deliver immediately to the Employer's representative all correspondence, letters, copies thereof, software, code, system information, formulas, designs, techniques, call reports, price lists, manuals, mailing lists, customer lists, marketing information and plans, contractor lists, advertising materials, ledgers, supplies, equipment, checks, petty cash, credit cards, any physical embodiments of a trade or business secret, as referenced in Paragraph Thirteen (13) above, and all other material, property and records of any kind that may be in Employee's possession or control. 15. Employee further agrees not to utilize or make available any such knowledge or information, either directly or indirectly, in connection with the establishment of an enterprise similar to that of the Employer or that which will compete with Employer, or in connection with the solicitation, acceptance, or conduct of employment with any other employer. 16. Notwithstanding the above, the Employee will not be prohibited from utilizing the knowledge and information gained from his general experience obtained prior to or during his employment with Employer. 17. Employee agrees that should either party seek to enforce or determine its rights through legal or judicial proceedings because of an act of Employee which the Employer believes to be in contravention of Paragraphs 9, 10, 11, 12, 13, 14, and/or 15, the covenant period shall be extended for a time period equal to the period necessary to obtain Judicial enforcement of the Employer's rights hereunder. In the event of Employee's breach of said Paragraphs, the Employer may be entitled to a preliminary restraining order and injunction restraining the Employee from violating the provisions. In addition to the above, Employer may pursue all other remedies available to Employer for such breach or threatened breach, including seeking damages and other monetary relief 18. In the event of termination by the Employer, in recognition of Paragraphs 9, 10, 11, and 12, the Employer will pay Employee fifty (50%) percent of his weekly Base Salary at the rate as delineated in Paragraph 3 (A) for a period of one (1) year from the date of termination, payable in equal weekly installments. 19. In the event of termination by the Employee, in recognition of Paragraphs 9, 10, 11, and 12, the Employer will pay Employee twenty five (25%) percent of his weekly salary, at the rate delineated in Paragraph 3 (A) for a period of one (1) year from date of termination, payable in equal weekly installments. 20. In the event of termination due to retirement as contemplated under Employer's retirement policy, in recognition of Paragraphs 9, 10, 11, and 12, the Employer will pay Employee twenty-five (25%) percent of his weekly salary at the rate delineated in Paragraph 3 (A) for a period of one (1) year from date of termination, payable in equal weekly installments. 21. The provisions of Paragraphs 18, 19, and 20 above, are expressly conditioned upon compliance of said Paragraphs 9, 10, 11, and 12, provided however, that Employer, at its sole option and discretion, may waive, in whole or in part, the requirement that the Employee comply with Paragraphs 9, 10, 11, and 12. In the event that Employer so exercises its option to waive enforcement of all of said Paragraphs, the payments required pursuant to Paragraphs 18, 19, and 20 shall be canceled and said Paragraphs shall be rendered void and of no further force and effect. 22. Should a court of competent jurisdiction determine that any of the covenants contained in this Paragraph are overbroad or unenforceable because it determines that the restrictions are unreasonable for reasons including but not limited to overbroad restrictions as to geographic scope, time, or activity, the parties agree that the covenants should be enforced to the maximum extent deemed reasonable by any such court. 23. This Agreement supersedes all prior agreements between the parties and constitutes and expresses the whole agreement of the parties hereto in reference to any employment of the Employee by the Employer and in reference to any of the matters or things herein provided for or hereinafter discussed or mentioned in reference to such employment, all promises, representations, and understandings relative thereto being herein merged. 24. No oral arrangements have been made between the parties hereto and this Agreement may be amended only in writing and signed by both parties. 25. This Agreement shall be construed in accordance with the laws of the state of New Jersey and any action brought to enforce this Agreement or by reason of an alleged breach thereof shall be brought on in the state of New Jersey. 26. The rights and obligations of the Employee and the Employer under this Agreement shall inure to the benefit of and shall be binding upon their successors and assigns. The Employee may not assign his obligations under this Agreement. 27. Those paragraphs which by their nature are intended to survive termination of this Agreement, including without limitation Paragraphs 4 (B) and (C), 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, and 22 shall survive termination of this Agreement. IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day and year first above written. EMPLOYEE BUTLER INTERNATIONAL, INC. /s/ Harley R. Ferguson /s/ Edward M. Kopko - ------------------------ ------------------------------- HARLEY R. FERGUSON EDWARD M. KOPKO as its President and Chief Executive Officer - ------------------------- WITNESS EX-10.43 6 PROMISSORY NOTE EXHIBIT 10.43 PROMISSORY NOTE --------------- $142,500 Date: May 3, 1995 FOR VALUE RECEIVED, the undersigned, for himself/herself, his/her heirs, representatives, successors and assigns (the "Maker"), hereby promises to pay to the order of BUTLER INTERNATIONAL, INC. ("Butler" or the "Company") the principal sum specified above (the "Principal Sum"), without interest, (except as set forth below), on May 3, 2002. All payments under this Note shall be made in lawful money of the United States of America and shall be made to the holder hereof at 110 Summit Avenue, Montvale, New Jersey, or at such other place as the holder hereof may otherwise designate in writing from time to time. This Note is made pursuant to the exercise of three stock options issued under the 1992 Directors Stock Option Plan and is secured by and in the manner provided in that certain Pledge Agreement dated of even date herewith between the Maker and Butler. The Maker shall have the right to prepay the whole or any part of this Note at any time and from time to time. All prepayments shall be applied first to accrued interest, and the remainder shall be applied against the outstanding balance of the Principal Sum hereof. In the event of the failure of the Maker to make any payment when and as due and payable hereunder, the amount of such payment shall accrue and bear interest at the rate of 12% per annum. The Maker hereby authorizes the Company to offset any and all amounts due and payable under this Note against any amounts owed to the Maker from the Company, including any and all wages, compensation and reimbursement. Notwithstanding the exercise by the Company of the foregoing right of offset, Butler shall remain entitled to pursue every other right and remedy available to it under all applicable law. If the Company initiates litigation to collect this Note and a judicial determination is made in favor of the Maker, the Company shall pay all of Maker's costs and expenses in defending the litigation. No failure or delay by the holder hereof to insist upon the strict performance of any provision of this Note, or to exercise any right, power or remedy consequent upon a breach thereof, shall constitute a waiver of any such provision or of any such breach, or preclude the holder hereof from exercising any such right, power or remedy at any later time or times. By accepting payment after the due date of any amount payable under this Note, the holder hereof shall not be deemed to have waived the right either to require prompt payment when due of all other amounts due under this Note. All notices and other communications hereunder shall be in writing, and shall be duly given and received if personally delivered, sent by telefax or telegram or overnight courier or posted by United States registered or certified mail, return receipt requested, postage prepaid, and addressed to the Maker at his address on file with the Company, and to Butler at its address set forth above. The Maker and the holder hereof may change their respective addresses by notice of such change in the manner set forth herein. Notice shall be deemed given on the day after the day such notice is posted or sent by courier in the manner described above, and if sent by telefax or telegram, on the date such notice is sent, and if delivered in person, on the date so delivered. Notwithstanding anything herein to the contrary, in no event shall the Maker be personally liable to pay any amount due hereunder; the sole remedy of the holder hereof shall be against the securities pledged hereunder and pursuant to the Pledge Agreement, of even date herewith. IN WITNESS WHEREOF, this Note has been executed as of the date first written above. MAKER: ______________________________ EX-10.44 7 PLEDGE AGREEMENT EXHIBIT 10.44 PLEDGE AGREEMENT ---------------- This Pledge Agreement ("Agreement") is made as of this 3rd day of May, 1995, between _____________________ ("Pledgor") and Butler International, Inc., a Maryland corporation ("Pledgee"). Background. Pledgee is loaning funds to Pledgor in order for Pledgor ---------- to purchase stock in Pledgee (the "Stock") pursuant to the exercise of the following options issued under the 1992 Directors Stock Option Plan: (i) exercise of the option to acquire 10,000 shares issued on March 1, 1993; (ii) exercise of the option to acquire 10,000 shares issued on June 11, 1993; and (iii) exercise of the option to acquire 10,000 shares issued on June 3, 1994 ("Stock Options"). As a condition to making the loan, Pledgee is requiring that Pledgor execute a Promissory Note (the "Promissory Note") and pledge the Stock and certain other securities which may be derived therefrom (the "Pledged Stock", as defined below) to Pledgee or to such other person or entity as Pledgee may designate in writing. NOW THEREFORE, in consideration of the premises, the parties hereby agree as follows: 1. Definitions. Capitalized terms in this Agreement that are defined ----------- in the Promissory Note and not otherwise defined in this Agreement shall have the meanings and be construed as provided in the Promissory Note. 2. Pledge. To secure the prompt payment in full of all funds borrowed ------ pursuant to the Promissory Note, the Pledgor hereby: a. pledges, and grants a continuing first security interest, to Pledgee in the Stock, and all cash dividends, stock dividends, stock splits, redemption premiums and all substitutions, replacements and proceeds (collectively, the "Pledged Stock"); and b. delivers to the Pledgee the stock certificates representing all of the Pledged Stock, together with duly executed and undated stock powers, executed in blank, which stock certificates and stock powers shall be held by the Pledgee in accordance with this Agreement. 3. Release of Pledge. All of the Stock pledged hereunder shall be ----------------- released and returned to the Pledgor at such time or times as 100% of the Principal Sum of the Promissory Note is forgiven and discharged pursuant to the terms thereof, or at such time or times as the Promissory Note is paid in full pursuant to the terms thereof. In addition, the Pledgor may sell any stock pledged hereunder, and such stock shall be released and returned to the Pledgor, provided that the proceeds of the sale of such Stock are applied toward payment of the Promissory Note, as set forth in Section 6(d) hereof. 4. Pledgor's Representations. Pledgor represents and warrants that ------------------------- Pledgor is the sole legal and beneficial owner of the Pledged Stock; that the Pledged Stock is not encumbered nor subject to restrictions on transfer or resale or other disposition in any manner; and that the Pledgor has the unqualified right and power to grant a security interest in the Pledged Stock without the consent of any other party. 5. Cash Dividends, Voting, Shareholder Rights. So long as no Event of ------------------------------------------ Default has occurred: a. The Pledged Stock shall remain registered on the books of the Pledgee in the name of the Pledgor and the Pledgor shall have the right to vote the Pledged Stock, except that the Pledgor shall not vote the Pledged Stock in favor of any action that may be inconsistent with this Agreement; and b. notwithstanding Section 2(a) hereof, Pledgor shall have the right to receive all cash dividends distributed with respect to the Pledged Stock. 6. Remedies. At such time as the Promissory Note becomes due and -------- payable, the Pledgee may do any of the following in any order and at any time simultaneously or not simultaneously: a. present the stock certificates representing the Pledged Stock for registration in the name of Pledgee or its designee and, upon presentation, the stock certificates shall be registered in such name and returned to the Pledgee or its designee; b. exercise any and all of the rights and remedies of a secured party under the Uniform Commercial Code, as then adopted in the State of New Jersey or any other state whose laws are applicable; c. sell any of the Pledged Stock for cash or other value in any number of lots at a public or private sale and without advertisement, provided that the Pledgee shall give the Pledgor ten day's prior written notice of the time and place of any such sale, which notice the Pledgor and Pledgee hereby agree to be reasonable; d. apply the proceeds of any sales of the Pledged Stock, or any part thereof, and any other monies the application of which is not otherwise herein provided for, as follows: (i) first, to pay all costs and expenses of every kind for care, safekeeping, collection, sale, foreclosure, delivery, or otherwise respecting the Pledged Stock (including taxes, assessments, expenses or other charges incurred in the protection of the Pledgee's title to or lien upon or right in any kind of the Pledged Stock, insurance, commission for sale, and guaranty); and (ii) second, to the payment of any other amounts due under the Promissory Note ("Obligations"), whether or not such Obligations are due or accrued. 7. Pledgee as Authorized Representative of Pledgor. Pledgor hereby ----------------------------------------------- appoints Pledgee its attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which Pledgee may deem necessary or advisable, which appointment is irrevocable and coupled with an interest. Without limitation, Pledgee shall have the right and power, after an Event of Default, to receive, endorse and collect all checks and other orders for the payment of money made payable to Pledgor representing any dividend, or other distribution payable or distributable in respect of the Pledged Stock, or any part thereof and to give full discharge for the same. 8. Miscellaneous. ------------- a. Promissory Note. This Agreement is subject to the terms and --------------- conditions of the Promissory Note, which is hereby incorporated by reference. To the extent of any inconsistency between any terms and conditions of the Promissory Note and this Agreement, the terms and conditions of the Promissory Note shall prevail. b. Notice. Any notice or communication required or permitted ------ hereunder shall be given in the manner set forth in the Promissory Note. c. Construction. This Agreement shall be governed by and construed in ------------ accordance with the laws of the State of New Jersey. d. Partial Invalidity. If any of the provisions of this Agreement ------------------ shall contravene or be held invalid under the laws of New Jersey, this Agreement shall be construed as if not containing such provisions and the rights and obligations of the parties shall be construed and enforced accordingly. e. Binding Effect. This Agreement shall be binding upon and shall -------------- inure to the benefit of the Pledgor and the Pledgee and their respective successors and assigns. Without limiting the foregoing, the rights and obligations of the Pledgee hereof shall inure to the benefit of and be binding upon any assignees of the Pledgee. f. Further Assurances. The Pledgor will from time to time at the ------------------ Pledgee's request make, execute, acknowledge, deliver and file all such instruments and take all such action as the Pledgee may reasonably request for assuring and confirming to the Pledgee, the Pledgee's security interest in the Pledged Stock. IN WITNESS WHEREOF, the undersigned have executed this Pledge Agreement on the date first written above. BUTLER INTERNATIONAL, INC. a Maryland Corporation By:___________________________ ______________________________ EX-13.1 8 EXCERPT FROM ANNUAL REPORT EXHIBIT 13.1 FINANCIAL INDEX --------------- -8- Management's Discussion and Analysis of Results of Operations and Financial Condition -11- Consolidated Balance Sheets -12- Consolidated Statements of Operations -13- Consolidated Statements of Cash Flows -14- Consolidated Statements of Stockholders' Equity -15- Notes to Consolidated Financial Statements -27- Selected Consolidated Financial Information MANAGEMENT'S DISCUSSION & ANALYSIS of Results of Operations and Financial Condition RESULTS OF OPERATIONS Net sales were $433.6 million for the year ended December 31,1995, an increase of $40.3 million or 10% compared with net sales of $393.3 million for the year ended December 31,1994. A net loss of $7.9 million, or $1.36 per share was recorded for 1995, compared with net income of $1.7 million, or $.25 per share for the year ended December 31,1994, and a net loss of $2.2 million, or $.50 per share for the year ended December 31,1993. The loss in 1995 was the result of charges and management actions with respect to restructuring, cost reduction, and the United Kingdom ("UK") operation, as announced in the fourth quarter. The effects of these actions have all been recorded and completed in 1995. As a result, the Company expects to be profitable throughout 1996, including the first quarter ending March 31, which is typically the weakest quarter of the year. Record sales were achieved as the combined operating groups, excluding the Contract Technical Services division ("CTS"), increased sales 18% in 1995. CTS's strategic focus of increasing margins and shedding lower margin business resulted in a 5% sales growth as planned. The Company expects continued sales growth in all domestic divisions in 1996, except for Project Engineering Services due to the completion of a major contract which registered annual sales of approximately $12 million, and CTS which is expected to be lower than 1995 as the group continues to improve its business mix and pricing, resulting in increased margins. Net sales for 1994 increased $85.6 million or 28% compared with net sales of $307.7 million for the year ended December 31, 1993. The 1994 increase was attributed to a comparable percentage increase in the number of billable employees. Gross margins decreased by 0.5 % to 13.1 % in 1995 as a result of international operations, and remained level at 13.6% for both 1994 and 1993. Gross margins for domestic operations improved to 13.8% in 1995, compared with 13.0% in 1994, reflecting the Company's strategy to shed low margin business and focus on increasing margins. The Company expects consolidated margins to increase in 1996 over 1995 as a direct result of improved business mix, improved pricing and lower cost of sales. The UK operation, which began the year with profits, ended the year by recording an operating loss of $5.4 million in the fourth quarter and $4.5 million loss for the full year. In November 1995, the Company undertook a strategic review of its entire UK operation. As a result, the Company has exited the Utility business, written down accounts receivable and work in process mainly related to Telecom and Utility work, made personnel changes including a new Telecom management team, further reduced both overhead and cost of sales, and strengthened financial controls and accounting procedures. From these actions, the UK is expected to be profitable in 1996, after an expected modest first quarter loss. The Company exited its Latin American operations due to economic uncertainties in Mexico and Venezuela. As a result, in the fourth quarter, the Company recorded a $1.5 million non recurring charge, which consists primarily of non-cash charges for foreign currency translation differences. The 1995 operating losses from these operations were approximately $700,000 in 1995 as compared to a profit of $100,000 in 1994. Selling, General and Administrative ("SG&A") expenses were 12.2% of sales in 1995 compared with 11.5% in 1994 and 11.8% in 1993. The increase was spread across the operating groups except for the CTS group which was flat year to year. The UK and corporate accounted for the largest SG&A increases. In November, the Company eliminated approximately $6.0 million of on-going annual costs. This included 8 eliminating 95 staff positions worldwide, or 16% of the staff workforce. These reductions were made throughout all of the Company's operations and functions, affecting management, administrative and clerical positions. Senior management was consolidated and marginal offices were eliminated through consolidation or closure. In addition, marginal business units were discontinued, including Butler Quality Services, Butler Airport Services, and Butler Canada. The operating losses from these operations were $100,000 in 1995 and 1994. Non- recurring charges of $500,000 were recorded for severance costs related to management personnel eliminated in 1995. For the year ended December 31, 1995, interest expense was $6.5 million, compared to $4.3 million and $2.5 million for the years ended December 31, 1994 and December 31, 1993, respectively. The increase of $2.2 million in 1995 was primarily due to the increased use of the Company's credit facility. The relocation of the Company's billing, collection and certain other accounting functions from Montvale, NJ to Lake St. Louis, MO in early 1995 negatively impacted the billing and collection processes, resulting in significantly higher accounts receivable balances and contributing heavily to the $2.2 million increase in interest expense. The Company took significant actions to rectify the billing and collection processing inefficiencies resulting from the transition to Lake St. Louis. As a result, receivables have significantly improved, as reflected in a $9.2 million reduction in the Company's credit facility during the fourth quarter. From these actions and continuous improvement initiatives, the Company anticipates interest expense to decrease substantially in 1996. Sufficient reserves have been established for issues related to the relocation, including non-recurring charges of $650,000 pertaining to the move. At December 31, 1995, the Company had approximately $8.0 million of net future tax deductions (temporary differences) for which a tax benefit has not been recognized in the financial statements. The Company does not anticipate paying significant federal income taxes in 1996 and 1997, as a result of tax loss carryforwards and the reversal of temporary differences. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of funds are generated from operations and borrowings under its Credit Facility. (See "Financing Activities"). Availability under the Credit Facility is based upon the amount of eligible receivables. As of December 31, 1995, $40.5 million was outstanding under the Credit Facility, and an additional $5.0 million was used to collateralize letters of credit. Proceeds from the Credit Facility were used by the Company to finance its internal business growth, working capital and capital expenditures. The credit facility excludes the U.K. operation, which has its own $1.5 million facility. Cash and cash equivalents decreased by $1.2 million during the year ended December 31, 1995. Cash inflows amounted to $7.7 million and were made up of a decrease in working capital requirements of $6.4 million and borrowings under the Credit Facility of $1.3 million. Cash outflows amounted to $8.9 million and were used to fund the net loss before depreciation and amortization of $4.3 million, capital expenditures of $4.0 million, and other expenditures of $0.6 million. During the year ended December 31, 1995, the Company realized $0.2 million of net proceeds from the exercise of outstanding Common Stock Purchase Warrants and Options. As a result, 110,083 common shares were issued by the Company during the year. Annual dividends paid, for the year ended December 31, 1995 on the Company's Series B Preferred Stock amounted to $0.2 million, and were paid in the form of additional shares of such preferred stock at the option of the holders. From the middle of 1995 to the end of 1995, General Electric Capital Corporation ("GECC") provided the Company with a $2 million overdraft facility which it used from time to time. The Company has been operating since the end of December within the current facility level. The Company anticipates that the 9 current facility will be adequate to finance its operations in 1996 as anticipated profits and improved receivable management processes provide the additional availability to cover expected borrowing requirements. The UK operation at December 31, 1995 had a $0.5 million deficit in working capital, and will not be able to fund its overextended liabilities in 1996 with its current facility and its expected level of operating cashflow. The Company is in the process of establishing a new credit facility in the UK, which will provide for the majority of its financing needs to meet its 1996 operating plan. At December 31, 1995, the Company's total recorded investment in the UK (made up of a combination of equity and loans) was approximately $1.3 million. In May 1993, Butler of New Jersey Realty Corp., a subsidiary of the Company, acquired the Company's corporate office complex in Montvale, New Jersey for approximately $9.4 million. This transaction was financed principally through the assumption of an existing mortgage of $6.7 million, bearing interest at 10 7/8%, the issuance of a non-interest bearing note in the aggregate principal amount of $1.2 million (which was fully paid in 1994), and the issuance of a second note in the aggregate principal amount of $510,000 (the balance of which was $149,000 at December 31, 1995). Each of these obligations has been guaranteed by the Company. The existing mortgage note becomes due on October 31, 1996. The Company is currently in the process of refinancing the mortgage long-term and expects to complete the refinancing by September 30, 1996. The debt is reflected in current portion of long-term debt. Financing Activities In May, 1994, certain of the Company's U.S. and Canadian operating subsidiaries entered into a three year Credit Facility with GECC. This Credit Facility provides the Company with up to $50.0 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 lesser of (i) $50.0 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 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 at December 31, 1995 was 8.8% and the average interest rate during 1995 was 9.0%. The Company and Butler Service Group-Canada, Ltd. have each guaranteed all obligations incurred or created under the Credit Facility. The Company is required to comply with certain affirmative and financial covenants. The Company is in compliance with the aforementioned covenants, as amended. The termination date of the Credit Facility is the earlier of (i) May 31, 1997, or (ii) thirty days prior to the maturity date of the above mentioned mortgage note (or any extension, renewal or refinancing of such indebtedness). As of December 31, 1995, the outstanding balance under the Credit Facility was $45.5 million including $5.0 million in outstanding letters of credit Recent Accounting Pronouncements The Company adopted SFAS No. 109, "Accounting for Income Taxes" in 1993. The Company has substantial amounts of temporary book/tax differences, net operating loss carryforwards and tax credit carryforwards that will allow net future tax deductions and credits, resulting in a significant deferred tax asset. However, SFAS No. 109 also requires that a valuation allowance be created and offset against such an asset if, based on existing facts and circumstances, it is more likely than not that some portion or all of the deferred tax asset will not be realized. To date, the Company has provided a 100% valuation allowance. In 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation," which encourages, but does not require, employers to adopt a fair value method of accounting for employee stock-based compensation, and which requires increased stock-based compensation disclosures if expense recognition is not adopted. The Company has not yet decided how they will elect to adopt SFAS 123. 10 BALANCE SHEETS: Consolidated Statements (in thousands except share data)
December 3l, -------------------- 1995 1994 -------- -------- ASSETS Current assets: Cash and cash equivalents $ 1,097 $ 2,285 Accounts receivable, net of allowance for uncollectible accounts of $1,574 and $873 66,020 63,149 Other current assets 3,345 3,119 -------- -------- Total current assets 70,462 68,553 Property and equipment, net 15,168 13,237 Other assets 654 1,303 Excess cost over net assets of business acquired, net of accumulated amortization of $6,786 and $5,788 24,288 24,717 -------- -------- Total assets $110,572 $107,810 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 27,012 $ 17,535 Current portion of long-term debt 9,347 2,863 -------- -------- Total current liabilities 36,359 20,398 -------- -------- Long-term debt 40,480 45,746 -------- -------- Other long-term liabilities 3,677 4,268 -------- -------- Commitments and contingencies Stockholders' equity: Preferred stock, par value $.001 per share, authorized 5,000,000: Series B 7% Cumulative Convertible Preferred Shares, authorized 3,500,000; issued 2,451,898 at December 31, 1995 and 2,288,878 at December 31, 1994 (Aggregate liquidation preference $2,451,898 at December 31, 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 5,993,783 at December 31, 1995, and 5,903,658 at December 31, 1994 6 6 Additional paid-in capital 92,882 92,635 Accumulated deficit (62,727) (54,650) Cumulative foreign currency translation adjustment (107) (595) -------- -------- Total stockholders' equity 30,056 37,398 -------- -------- Total liabilities and stockholders' equity $110,572 $107,810 ======== ========
The accompanying notes are an integral part of these financial statements. 11 OPERATIONS: Consolidated Statements (in thousands except share and per share data)
Year Ended December 3l, ------------------------------------ 1995 1994 1993 Net sales $ 433,564 $ 393,250 $ 307,715 Cost of sales 377,069 339,633 265,971 ---------- ---------- ---------- Gross margin 56,495 53,617 41,744 Depreciation and amortization 3,040 2,547 2,160 Selling, general and administrative expenses 52,911 45,251 36,353 Non recurring charges (note 19) 2,680 - - ---------- ---------- ---------- (Loss) income from continuing operations before other income (expense) and income taxes (2,136) 5,819 3,231 Other income (expense): Interest and other income 628 405 531 Interest expense (6,517) (4,256) (2,480) ---------- ---------- ---------- (Loss) income from continuing operations before income taxes (8,025) 1,968 1,282 Income tax (benefit) expense (111) 309 55 ---------- ---------- ---------- (Loss) income from continuing operations (7,914) 1,659 1,227 Discontinued operations: Loss from operations - - (1,370) Provision for loss on disposal - - (2,057) ---------- ---------- ---------- Loss from discontinued operations - - (3,427) ---------- ---------- ---------- Net (loss) income $ (7,914) $ 1,659 $ (2,200) ========== ========== ========== Primary (loss) income per share: Continuing operations $(1.36) $ 0.25 $0.20 Discontinued operations - - $(0.70) ---------- ---------- ---------- Total $(1.36) $ 0.25 $(0.50) ========== ========== ========== Average number of common shares and dilutive common share equivalents outstanding 5,957,916 5,937,554 4,927,734 ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 12 CASH FLOWS: Consolidated Statements (in thousands)
Year Ended December 31, ----------------------------- 1995 1994 1993 ------- -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $(7,914) $ 1,659 $(2,200) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and excess purchase price amortization 3,040 2,547 2,308 Amortization of deferred financing and employee stock purchase plan loans 622 418 444 Allocation of ESOP shares - - 84 Foreign translation 488 (442) (5) (Increase) decrease in assets, increase (decrease) in liabilities: Accounts receivable (2,871) (20,561) (4,441) Other current assets (226) 750 (2,053) Other assets 39 (860) (39) Current liabilities 9,583 5,320 2,200 Other long term liabilities (591) (660) 253 ------- -------- ------- Net cash provided by (used in) operating activities 2,170 (11,829) (3,449) ------- -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures - net (3,973) (3,013) (2,132) Cost of business acquired (569) (1,354) (625) Expenses paid in conjunction with discontinued operations (118) (642) (2,049) Other - - 94 ------- -------- ------- Net cash used in investing activities (4,660) (5,009) (4,712) ------- -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under financing agreements 1,291 16,746 6,513 Net proceeds from the exercise of common stock warrants 209 1,566 - Net payments in conjunction with headquarters building purchase (73) (998) (490) Payment of dividends on preferred stock - (99) (128) Net proceeds from the sale of common stock - 1,973 Net proceeds from the sale of preferred stock - 970 Repurchase common stock (125) - - ------- -------- ------- Net cash provided by financing activities 1,302 17,215 8,838 ------- -------- ------- Net (decrease) increase in cash and cash equivalents (1,188) 377 677 Cash and cash equivalents, beginning of period 2,285 1,908 1,231 ------- -------- ------- Cash and cash equivalents, end of period $ 1,097 $2,285 $ 1,908 ======= ======== =======
The accompanying notes are an integral part of these financial statements. 13 STOCKHOLDERS' EQUITY: Consolidated Statements (in thousands except share data)
CUMULATIVE SERIES B 7 1/2% SENIOR ADDITIONAL FOREIGN COMMON STOCK PREFERRED STOCK PREFERRED STOCK TREASURY STOCK PAID-IN EXCHANGE SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL ADJUSTMENT Balance at December 31, 1992 4,507,060 $5 915,043 $1 1,500 - (18,731) $(674) $87,927 $(148) Allocation of treasury shares - - - - - - 18,731 674 (590) - Forgive employee loans - - - - - - - - 369 - Issue Series B Preferred Stock - - 1,102,771 1 - - - - 969 - Issuances of Common Stock 622,753 - - - - - - - 2,080 - Issue Common Stock Bonus Award 5,000 - - - - - - - 20 - Dividends Paid - - 115,619 - - - - - 115 - Current Year Foreign Currency Adjustments - - - - - - - - - (5) Net loss - - - - - - - - - - --------- --- --------- --- ------- ---- ------- ----- ------- ----- Balance at December 31, 1993 5,134,813 5 2,133,433 2 1,500 - - - 90,890 (153) Forgive employee loans - - - - - - - - 25 - Issuances of Common Stock 393,845 1 - - - - - - 1,565 - Convert Preferred Stock to Common 375,000 - - - (1,500) - - - (1) - Dividends Paid - - 155,445 - - - - - 156 - Current Year Foreign Currency Adjustments - - - - - - - - - (442) Net income - - - - - - - - - - --------- --- --------- --- ------- ---- ------- ----- ------- ----- Balance at December 31, 1994 5,903,658 6 2,288,878 2 - - - - 92,635 (595) Issuances of Common Stock 110,083 - - - - - - - 494 - Loans issued for exercise of options - - - - - - - - (285) - Repurchase and retire shares (19,958) - - - - - - - (125) - Dividends Paid - - 163,020 - - - - - 163 - Current Year Foreign Currency Adjustments - - - - - - - - - 488 Net loss - - - - - - - - - - --------- --- --------- --- ------- ---- ------- ----- ------- ----- Balance at December 31, 1995 5,993,783 $6 2,451,898 $2 - - - - $92,882 $(107) ========= === ========= === ======= ==== ======= ===== ======= =====
TOTAL ACCUMULATED STOCKHOLDERS' DEFICIT EQUITY Balance at December 31, 1992 $(53,611) $33,500 Allocation of treasury shares - 84 Forgive employee loans - 369 Issue Series B Preferred Stock - 970 Issuances of Common Stock - 2,080 Issue Common Stock Bonus Award - 20 Dividends Paid (243) (128) Current Year Foreign Currency Adjustments - (5) Net loss (2,200) (2,200) --------- --------- Balance at December 31, 1993 (56,054) 34,690 Forgive employee loans - 25 Issuances of Common Stock - 1,566 Convert Preferred Stock to Common - (1) Dividends Paid (255) (99) Current Year Foreign Currency Adjustments - (442) Net income 1,659 1,659 --------- --------- Balance at December 31, 1994 (54,650) 37,398 Issuances of Common Stock - 494 Loans issued for exercise of options - (285) Repurchase and retire shares - (125) Dividends Paid (163) - Current Year Foreign Currency Adjustments - 488 Net loss (7,914) (7,914) --------- --------- Balance at December 31, 1995 $(62,727) $30,056 ========= =========
The accompanying notes are an integral part of these statements. 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE I - SIGNIFICANT ACCOUNTING POLICIES: Consolidation and Presentation The consolidated financial statements include the accounts of Butler International, Inc. ("the Company") and all its wholly-owned subsidiaries. Significant intercompany balances and transactions have been eliminated. Certain amounts from prior years' consolidated financial statements have been reclassified in the accompanying consolidated financial statements to conform with current year presentation. Business The Company operates in one business segment which is principally engaged in the location, recruitment and hiring of a wide variety of skilled engineers, computer and other technical personnel to provide services on a temporary basis to industrial and service corporations as well as other organizations. Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Property and Equipment Property and equipment are recorded at cost, which, for assets acquired through the Company's corporate acquisitions, represents the fair value at date of acquisition. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, which generally range between one and ten years except for the Corporate Headquarters building which has a thirty year life. Excess Cost Over Net Assets of Business Acquired Excess cost over net assets acquired is being amortized using the straight- line method generally over 40 years from the date of acquisition. Management routinely evaluates the recovery of goodwill with reference to estimates of future profitability and operating cash flow. Such estimates, on an undiscounted basis, are applied to the unamortized balance of goodwill. Should the results of this analysis indicate that impairment is likely, the Company will recognize a charge to operations at that time. Revenue Recognition The Company's net sales relate to net service revenues of its wholly-owned subsidiaries. Service revenues are recognized upon performance of such services at amounts expected to be ultimately realized. Income Taxes The Company and its subsidiaries file on a consolidated basis for federal income tax reporting purposes and both separately and combined for state income tax reporting. The Company provides deferred taxes on income for differences between income reported for financial reporting purposes and taxable income, in accordance with Financial Accounting Standards ("SFAS") No. 109. The significant components of deferred tax assets and liabilities are principally related to depreciation, allowance for doubtful accounts, deferred compensation, and accrued expenses not currently deductible. 15 Earnings Per Common Share Primary earnings (loss) per common share are determined by dividing net earnings (loss) (after deducting deferred stock dividends) by the weighted average number of common shares outstanding and dilutive 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 year ended December 31, 1994 are not shown since the effect of the conversion of preferred stock was not material. For the years ended December 31, 1995 and 1993 fully-diluted earnings per share are not shown since the effect of the conversion of preferred stock was antidilutive. Foreign Currency Translation For foreign operations, the assets and liabilities are translated at the current exchange rates, while income and expenses are translated at the average exchange rates for the period. Resulting translation gains and losses are reported as a component of shareholders' equity. Cash and Cash Equivalents In 1995, cash and cash equivalents include cash only; 1994 included cash and a certificate of deposit. NOTE 2 - PROPERTY AND EQUIPMENT: Property and equipment is summarized as follows (in thousands):
1995 1994 -------- -------- Land $ 5,662 $ 5,662 Buildings 4,168 4,168 Machinery, motor vehicles, and office equipment 17,022 14,428 Leasehold improvements 1,615 683 -------- -------- 28,467 24,941 Less accumulated depreciation (13,299) (11,704) -------- -------- Property and equipment, net $ 15,168 $ 13,237 ======== ========
Depreciation expense for the years ended December 31, 1995, December 31, 1994 and December 31, 1993 was $2,042, $1,661, and $1,321, respectively. NOTE 3 - CURRENT LIABILITIES: Accounts payable and accrued liabilities are summarized as follows (in thousands):
1995 1994 ------- ------- Accounts payable $ 7,523 $ 5,986 Accrued compensation 6,264 4,007 Taxes other than income taxes 4,963 3,315 Accrued lease obligations 1,229 837 Deferred compensation 637 713 Accrued pension and 401(k) contributions 1,198 649 Insurance related payables 270 149 Other 4,928 1,879 ------- ------- Accounts payable and accrued liabilities $27,012 $17,535 ======= =======
16 NOTE 4 - OTHER LONG-TERM LIABILITIES: Other long-term liabilities are summarized as follows (in thousands): 1995 1994 ------- ------- Long-term insurance-related liabilities $ 3,289 $ 3,289 Long-term litigation liability - 300 Reserve for discontinued operations - 300 Other 388 379 ------- ------- Other long-term liabilities $ 3,677 $ 4,268 ======= ======= NOTE 5 - LONG-TERM DEBT: Long-term debt is summarized as follows (in thousands): 1995 1994 ------- ------- Credit Facility, due May, 1997 $40,480 $38,996 UK Credit Facility, due March, 1996 2,295 2,641 Note payable, due August, 1996 153 - Notes payable related to headquarters facility purchase: Note payable, due October, 1996 149 222 Note payable, due October, 1996 6,750 6,750 ------- ------- 49,827 48,609 Less current portion (9,347) (2,863) ------- ------- Long-term debt $40,480 $45,746 ======= ======= 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 provides the Company with up to $50.0 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 lesser of (i) $50.0 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 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 at December 31, 1995 was 8.8% and the average interest rate for 1995 was 9.0%. The Company and Butler Service Group Canada, Ltd. have each guaranteed all obligations incurred or created under the Credit Facility. The termination date of the Credit Facility is the earlier of (i) May 31, 1997, or (ii) thirty days prior to the maturity date of the mortgage note mentioned below (or any extension, renewal or refinancing of such indebtedness). The Company is required to comply with certain affirmative and financial covenants. The Company is in compliance with the aforementioned covenants, as amended. In the case of one or more Events of Default, GECC may take either or both of the following actions: (a) terminate the Credit Facility, and (b) declare the Credit Facility then outstanding and the Term Note to be due and payable. Although there are a limited number of lenders which management feels could provide such a loan on comparable terms, a change in lenders could adversely affect the Company's operating results. Facility Purchase In May 1993, the Company, through its wholly-owned subsidiary Butler of New Jersey Realty Corp. ("BNJRC"), acquired its corporate office complex in Montvale, New Jersey for approximately $9.4 million. BNJRC financed this transaction principally through the assumption of an existing mortgage as well as issuing short and long-term notes. The Company issued an unsecured promissory note in the amount of $510,000 payable to North American Investment Realty of New Jersey, Inc. with an interest rate of 9 7/8% per annum. Principal payments were made in 1994 and 1995 bringing the balance down to $149,000. In 1995, the Company exercised its option to extend the term of the note to October 30, 1996. 17 Pursuant to the mortgage agreement, a note for $6.75 million was issued to Firemen's Insurance Company of Newark, New Jersey. The note bears interest at a fixed rate per annum of 10 7/8%. The principal balance of the note shall be due and payable in its entirety on October 31, 1996. The note is secured by the corporate office complex and is guaranteed by the Company. The Company is currently in the process of getting the mortgage refinanced and anticipates that this process will be completed before September 30, 1996. In 1995, the Company issued a promissory note in the amount of $250,000 payable to the Mercantile Bank of St. Louis National Association bearing interest at the rate of 6.83% per annum in connection with its relocation of certain accounting functions from Montvale, NJ to Lake St. Louis, MO. This note is secured by the equipment purchased to establish the office in Lake St. Louis. The note is due in August, 1996. The outstanding balance at December 31, 1995 was $153,000. Maturities of long-term debt of $40.5 million are due in 1997. NOTE 6 - COMMON STOCK: In 1993, the Company received net proceeds of approximately $2.0 million from the sale of 291,814 units, at a price of $7.00 per unit, (consisting of 583,628 shares of common stock and 291,814 common stock purchase warrants, at a price of $4.50 per share). In addition to commissions, the placement agent received, as additional compensation, warrants to purchase 44,620 shares of common stock, at a price of $4.20 per share. In 1994 and 1995, the Company received proceeds of $1.2 million and $13,000, respectively from the exercise of 264,720 and 3,000 common stock purchase warrants issued in 1993. In 1994, 125,000 common stock purchase warrants were exercised at a price of $3.00 per share. On January 19, 1994, January 19, 1995 and July 19, 1995, the sole shareholder of a computer service business which was acquired by the Company, received warrants to purchase 38,336 shares of the Company's unregistered common stock at a purchase price of $3.625 per share. In 1995, the Company received proceeds of $103,100 for the exercise of 25,000 common stock purchase warrants, previously granted in 1993 at an exercise price of $4.125 per share. At December 31, 1995, the Company had 443,722 common stock purchase warrants outstanding with exercise prices ranging from $3.62 to $6.00 per share and expiration dates from April, 1996 to July, 2003. In 1994, options to purchase 4,125 shares of the Company's common stock, granted under the 1992 Incentive Stock Options Plan, were exercised. In 1995, 82,083 options granted under various stock options plans were exercised. Also in 1995, the Company repurchased and retired 19,958 shares of its common stock. NOTE 7 - CUMULATIVE CONVERTIBLE PREFERRED STOCK: The Company's Series B Cumulative Convertible Preferred Stock ("Series B Preferred Shares") accrue dividends at the rate of 7% per annum, based upon a liquidation value of $1.00 per share, payable in cash or kind at the option of the holder. In 1993, a total of $121,114 was paid in dividends, $5,495 in cash and $115,619 in kind. In 1994 and 1995, dividends in kind amounting to $155,445 and $163,020, respectively, were paid to the holders of Series B Preferred Shares. Series B Preferred Shares are convertible at a ratio of one Series B Preferred Share to .285 Common Shares. The Company's 7 1/2% Senior Cumulative Convertible Preferred Stock ("Senior Preferred Shares") accrued dividends at the rate of 7 1/2% per annum based upon a liquidation value of $1,000 per share, payable semi-annually on the last day of June and December of each year in cash. In 1993 and 1994, respectively, dividends in the amounts of $122,738 and $99,247 were paid to the holders of Senior Preferred Shares. In 1994, all holders of Senior Preferred Shares exercised their option and converted the 1,500 Senior Preferred Shares into 375,000 shares of common stock. NOTE 8 - STOCK OPTIONS: The Company has in effect a number of stock-based incentive and benefit programs designed to attract and retain qualified directors, executives and management personnel. To accomplish these objectives, the Company has adopted a 1985 Incentive Stock Option Plan (the "ISOP"), a 1985 non-qualified Stock Option Plan (the "Non-qualified Plan"), a 1989 Directors Stock Option Plan ("Directors Plan"), a 1992 Stock Option Plan ("1992 Non-qualified Plan"), 18 a 1992 Incentive Stock Option Plan ("1992 ISOP"), a 1992 Stock Bonus Plan ("1992 Bonus Plan"), and a 1992 Stock Option Plan for Non-employee Directors ("1992 Directors Plan"). In addition, the Company has encouraged its directors to subscribe for shares of common stock from time to time at a price equal to the market price of the common stock at the time of their subscription. At December 31, 1995, 742,166 options were available for grant from the above mentioned plans. In 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation," which encourages, but does not require, employers to adopt a fair value method of accounting for employee stock-based compensation, and which requires increased stock-based compensation disclosures if expense recognition is not adopted. The Company has not yet decided how it will elect to adopt SFAS 123. Changes in stock options outstanding are as follows: Number of Option Price Shares Per Share --------- ------------ Qualified Stock Options: Outstanding at December 31, 1992 158,751 $ 3.38-$4.59 (108,750 exercisable, option price $3.38-$4.59) Granted during 1993 182,833 $ 3.13-$4.40 Exercised during 1993 (4,125) $ 3.13 Canceled during 1993 (13,333) $ 4.40 --------- Outstanding at December 31, 1993 324,126 $ 3.13-$4.59 (148,375 exercisable, option price $3.13-$4.59) Granted during 1994 25,000 $ 5.00 Exercised during 1994 (4,125) $ 3.13 --------- Outstanding at December 31, 1994 345,001 $ 3.13-$5.00 (241,667 exercisable, option price $3.13-$5.00) Granted during 1995 132,000 $ 4.38-$7.00 Exercised during 1995 (22,083) $ 3.13-$4.40 Canceled during 1995 (24,750) $ 3.13 --------- Outstanding at December 31, 1995 430,168 $ 3.13-$7.00 (267,416 exercisable, ========= option price $3.13-$7.00) Non-Qualified Stock Options: Outstanding at December 31, 1992 90,000 $3.78-$10.02 (90,000 exercisable) Granted during 1993 30,000 $ 3.75 Canceled during 1993 (4,167) $ 10.02 --------- Outstanding at December 31, 1993 115,833 $3.75-$10.02 (115,833 exercisable) Granted during 1994 50,000 $ 4.88 --------- Outstanding at December 31, 1994 165,833 $3.75-$10.02 (165,833 exercisable) Granted during 1995 40,000 $ 6.44 Exercised during 1995 (60,000) $ 3.75-$5.63 --------- Outstanding at December 31, 1995 145,833 $3.75-$10.02 (145,833 exercisable) ========= 19 NOTE 9 - EMPLOYEE STOCK PURCHASE PLAN: The Company has the Butler International, Inc. 1990 Employee Stock Purchase Plan (the "Plan") which made available $2.5 million for loans to officers, directors, and other key employees to purchase Company stock. Except for the loans to outside directors, the Company, subject to the Plan provisions, may reduce the amount due with respect to each loan by twenty-five percent of the original principal balance on successive anniversary dates of the loan, provided that the employee remains employed by the Company or one of its subsidiaries on such anniversary dates, or has not terminated his employment for other than a reason permitted by the Plan. The shares acquired by the outside directors pursuant to the Plan were subject to forfeiture ratably under certain conditions. In November, 1993, the Company reduced the loan amounts due from the participating employees in the plan by 25% or $257,199. Plan loans totaling $112,435, previously granted to employees who were terminated in 1992 were forgiven in 1993. A loan totaling $24,985, previously granted to an employee since deceased, was forgiven. NOTE 10 - EMPLOYEE BENEFIT PLANS: Defined Benefit Plan The Company has a defined benefit pension plan covering substantially all of its full-time staff employees. Benefits under the plan are determined based on earnings and period of service. The Company funds the pension plan in accordance with the minimum funding requirements of the Employees Retirement Income Security Act of 1974. Benefits payable under the plan are reduced by a participant's Employee Stock Option Plan ("ESOP") credits. Pension expense consisted of the following (in thousands):
1995 1994 1993 ------- ------ ------ Service cost-benefits earned during the period $ 543 $ 480 $ 191 Interest cost on projected benefit obligations 213 178 93 Actual return on assets (159) (46) (65) Net amortization and deferral 99 (26) (41) ------- ------ ------ Net pension expense $ 696 $ 586 $ 178 ======= ====== ====== Assumptions used in determining net pension expense were: 1995 1994 1993 ------- ------ ------ Discount rate 7.25% 8.5% 7.5% Rates of increase in compensation levels 4% 4% 5% Expected long-term rate of return on assets 9% 10% 10%
The following table sets forth the funded status and amount recognized in the balance sheets (in thousands):
1995 1994 ------- ------ Actuarial present value of benefit obligations: Vested benefit obligation $ 1,996 $1,205 ======= ====== Accumulated benefit obligation $ 2,231 $1,353 ======= ====== Plan assets at fair value $ 2,059 $1,641 Less projected benefit obligation 3,691 2,450 ------- ------ Projected benefit obligation (in excess of less than plan assets (1,632) (809) Unrecognized net (gain) or loss (238) (736) Prior service cost not yet recognized in net periodic pension cost 1,282 1,381 ------- ------ Accrued liability recognized in the financial statements $ (588) $ (164) ======= ======
20 At December 31, 1994 and 1995, approximately 69% of plan assets were held in fixed income investments and 31% in equity investments. Postemployment and Postretirement Benefits The Company currently does not provide postemployment and postretirement benefits other than pensions. Employee Stock Ownership Plan The Company sponsors the qualified Butler Service Group, Inc. Employee Stock Ownership Plan ("ESOP"). The ESOP has approximately 125,000 shares of the Company's common stock. The shares of stock were allocated to employees over seven years beginning in 1987. The final shares of stock were allocated to employees in 1993. For the year ended December 31, 1993, pension expense relating to the ESOP's was approximately $84,000, which represents the market value of 18,731 shares of the Company's common stock allocated to plan participants as of December 31, 1993. The difference between cost and market value at the date of allocation for the shares allocated of approximately $590,000 was charged to paid-in capital. 401(K) Plan The Company provides a non-contributory 401(K) savings plan. At its option, the Company may contribute to the plan. The Company did not make any contributions to the plan in 1995, 1994 and 1993. NOTE 11 - INCOME TAXES: Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes". The cumulative effect of implementing SFAS No. 109 was not material. The income tax expense (benefit) included in the Consolidated Statements of Operations consists of the following (in thousands):
1995 1994 1993 Current taxes: Federal $ 32 $ 38 $ - State 73 137 29 Foreign (216) 134 26 ----- ----- ----- Income tax (benefit) expense $(111) $ 309 $ 55 ===== ===== =====
SFAS No. 109 requires that a valuation allowance be created and offset against the deferred tax assets if, based on existing facts and circumstances, it is more likely than not that some portion or all of the deferred asset will not be realized. To date, the Company has provided a 100% valuation allowance. Consequently, the Company's net deferred tax assets remain unchanged from December 31, 1994. However, individual components (temporary differences and carryforwards) giving rise to this asset have changed. The principal changes have been an increase in temporary differences (deferred tax assets) and utilization/expiration of U.S. net operating loss carryforwards. As a result, at December 31, 1995 and December 31, 1994, the Company had approximately $8.0 million and $6.0 million, respectively, of net future tax deductions (temporary differences) for which a tax benefit has not been recognized in the financial statements. The tax effected temporary differences and carryforwards which 21 give rise to deferred tax assets and valuation allowances are as follows (in thousands): 1995 1994 --------- -------- Allowance for doubtful accounts $ 428 $ 338 Deferred compensation 258 285 Depreciation and amortization 325 291 Accruals for exiting and discontinued operations 102 149 Accrual for termination and exiting operations 541 - Accruals for workers compensation 714 888 Other items 852 419 Capital loss carryforwards 1,876 1,876 Tax loss carryforwards: U.S. regular operating losses 4,280 4,925 U.S. SRLY operating losses 5,160 5,207 U.K. regular operating losses 1,320 - Tax credit carryforwards 607 568 Valuation allowance (16,463) (14,946) -------- -------- Net deferred tax asset (liability) $ 0 $ 0 ======== ======== A reconciliation between the income tax expense (benefit) compared by applying the federal statutory rate to income (loss) from continuing operations before income taxes to the actual expense (benefit) is as follows: 1995 1994 1993 ------ ------ ------ Income tax (benefit) expense at statutory rate (34.0)% 34.0% 34.0% Amortization of excess of cost over net assets acquired 2.7 11.4 17.9 Limitation on utilization (utilization) of net operating loss and credit carryforwards 24.2 (40.6) (55.4) State income tax expense net of federal tax benefit .9 6.8 2.3 Other, including foreign rate differential 4.8 4.1 5.5 ------- ------ ------ Effective tax rate (1.4)% 15.7% 4.3% ======= ====== ====== U.S. net operating loss carryforwards from 1993, 1992, 1991 and from separate return limitation years (SRLY) are available to reduce future taxable income, subject to applicable Internal Revenue Service carryforward rules and limitations. A U.K. net operating loss from 1995 is available to reduce future U.K. taxable income. U.K. tax law provides an unlimited life for net operating loss carryforwards. The benefit of these net operating losses have not been recognized for financial reporting purposes. These carryforwards expire as follows (in thousands): U.S.-SRLY U.S.-Regular U.K Year of Net Operating Net Operating Net Operating Expiration Loss Loss Loss ------------ -------------- ------------- ------------- 1996 $ 300 $ - $ - 1997 1,100 - - 1998 2,600 - - 1999 5,200 - - 2000 3,700 - - 2006 - 2,800 - 2007 - 4,700 - 2008 - 3,200 - Indefinite - - 4,000 -------- -------- -------- $12,900 $10,700 $4,000 ======== ======== ======== 22 The Company has capital loss carryforwards for financial reporting and tax reporting purposes of approximately $4.7 million expiring in 1996 and 1997 which are available to offset future capital gains, if any. The Company has tax credit carryforwards for financial reporting and/or tax reporting purposes of approximately $607,000 expiring from 2000 onward. NOTE 12 - COMMITMENTS AND CONTINGENCIES: The Company has operating leases for office space and various computer equipment. Estimated minimum future rental commitments under non-cancelable leases at December 31, 1995 are as follows (in thousands): 1996 $2,660 1997 2,092 1998 1,573 1999 865 2000 241 Thereafter 177 ------ Total $7,608 ====== Substantially all of the leases provide for increases based upon use of utilities and lessors' operating expenses. Total rent expense for the years ended December 31, 1995, December 31, 1994 and December 31, 1993 was approximately $4.0 million, $4.1 million and $4.0 million, respectively. The Company and its subsidiaries are parties to various legal proceedings and claims incidental to its normal business operations for which material losses, beyond that which is recorded, is remote except for the following matter. In June, 1995, the Company filed a complaint against CIGNA Property and Casualty Insurance Company in the Court of Common Pleas of Philadelphia County, Pennsylvania alleging negligence, breach of contract, breach of fiduciary duty, and negligent misrepresentation arising out of CIGNA's and other defendants' acts and omissions in the processing, handling and investigation of claims against the Company under general liability and workmen's compensation insurance contracts. On August 31, 1995, the defendants filed an answer, new matter and counterclaim denying the Company's allegations, asserting certain affirmative defenses, and alleging that the Company has failed to pay retrospective premiums amounting to approximately $7.0 million. In the opinion of management, based on the advice of counsel, all of the proceedings and claims in which the Company and its subsidiaries are involved with can ultimately be defended. The Company is defending itself vigorously against all such claims. NOTE 13 -RELATED PARTY TRANSACTIONS: Three non-employee directors have non-interest bearing notes payable to the Company, totaling $952,200 in connection with common stock purchased pursuant to various stock option plans. In 1990, the Chairman issued a $155,000 non- interest bearing note due in 1998 to purchase 35,880 shares of the Company's common stock. Notes of $84,000 by the Chairman and $42,000 by each of three outside directors were issued to purchase stock pursuant to the 1990 Employee Stock Purchase Plan ("ESPP"). In 1993, 1992 and 1991 loans to the Chairman of $132,250, $132,250 and $111,250 were forgiven under the ESPP. As of December 31, 1995 and 1994, a balance under a note from a non-employee director was $100,312 and $94,527, respectively, relating to the purchase of common stock. During 1995, 1994 and 1993, the Company paid or accrued $346,000, $654,000 and $673,000, respectively, in fees and expenses to McBreen, McBreen & Kopko, its outside counsel. In 1993, Frederick H. Kopko Jr. and Hugh G. McBreen, provided collateral and guaranteed a letter of credit issued as collateral for a promissory note to a lender to the Company in connection with the purchase of the headquarters building presently occupied by the Company. The note was fully paid in 1994 and the letter of credit was returned to the Company in 1995. As consideration, warrants to purchase 90,000 and 60,000 shares of the Company's common stock, at the then market price of $3.62 per share, were granted to an assignee of Mr. Kopko and to Mr. McBreen, respectively. In May, 1995, two non-employee directors, executed notes of $142,500 each, in connection with their purchase of 60,000 shares of the Company's common stock pursuant to the 1992 Directors Stock Option Plan. 23 NOTE 14 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: During 1995, 1994 and 1993, the Company received $18,000, $77,000 and $217,000, respectively, in federal, state and foreign income tax refunds. Cash paid for interest and federal, state and foreign income taxes for the years ended December 31, 1995, 1994 and 1993 is as follows (in thousands): 1995 1994 1993 ------ ------ ------ Interest $5,711 $3,649 $2,241 Income taxes $304 $242 $152 NOTE 15 - SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES: In 1993, the Company reduced the amount due from the participants in the ESPP by 25%, or $257,199. In 1994, a loan totaling $24,985, previously granted to an employee since deceased was forgiven. In lieu of cash dividends, several holders of Series B Preferred Shares opted for dividends in kind equivalent to $115,619 in 1993, $155,445 in 1994 and $163,020 in 1995. In May 1993, the Company, through its wholly-owned subsidiary BNJRC, acquired its corporate office complex in Montvale, New Jersey for approximately $9.4 million. BNJRC financed this transaction principally through the assumption of an existing mortgage for $6.75 million as well as issuing promissory notes for $1.2 million and $510,000. (See Note 5). NOTE 16 - ACQUISITIONS: The Company's wholly-owned subsidiary, Butler Technology Solutions, Inc., concluded the purchase of certain operating assets of two private computer service companies during 1994. These acquisitions were not material to the financial results of the Company. NOTE 17 - DISCONTINUED OPERATIONS: In April, 1993, the Company discontinued certain business units involving heavy equipment telephone construction ("Fixed Price Construction") and asset reclamation ("Asset Recovery") that had been unprofitable due to negative market conditions. The operating results of the Fixed Price Construction and Asset Recovery divisions were reclassified and reported in the Consolidated Statements of Operations under discontinued operations. Net sales of the discontinued operations were $5.2 million for the year ended December 31, 1993. The operating loss from discontinued operations for the year ended December 31, 1993 was $1.4 million. In addition to the loss from operations, an $857,000 reserve was established in the second quarter of 1993 for the disposal of these divisions and increased by approximately $1.2 million in the fourth quarter. No further provisions were required and this program was completed in 1994. NOTE 18 - INFORMATION ABOUT THE COMPANY'S FOREIGN OPERATIONS: (in thousands): 1995 1994 1993 ------- ------- ------- Net Sales $42,354 $39,657 $24,407 Operating Income (loss) (5,013) 1,608 480 Idenfifiable Assets 9,226 12,453 7,176 Operating income (loss) consists of earnings from continuing operations before interest expense, corporate expenses 24 and income taxes. Identifiable assets consist of total assets excluding any intercompany receivables or payables employed by the Company's foreign operations. Foreign operations consist principally of the United Kingdom and Indonesia. NOTE 19 - NON RECURRING CHARGES: In 1995, the Company recorded non recurring charges totaling $2.7 million consisting of $1.5 million of expenses and reserves in connection with the sale and exiting of certain of the Company's foreign and non strategic operations, one-time costs of approximately $650,000 related to the relocation of payroll, billing, accounts payable, collections and other accounting functions from Montvale, NJ to Lake St. Louis, MO, and $535,000 of costs related to the ter- mination of certain management level personnel. The foreign and non strategic operations that were ceased in the fourth quarter of 1995 include Butler Telecom's operations in Mexico and Venezuela, Butler Quality Services, Butler Airport Services and the Butler Canadian operations. The operating results for these operations, excluding the loss on disposal, are shown below (in thousands):
1995 1994 1993 -------- ------- -------- Net sales $ 4,577 $ 9,458 $ 7,314 Gross margin 839 2,284 1,769 Depreciation and amortization 23 42 29 Selling, general and administrative expense 1,615 2,066 1,375 Other (income) expense (45) 148 168 Income (loss) before interest and taxes $ (754) $ 28 $ 197 NOTE 20 - INTERIM FINANCIAL INFORMATION: (in thousands, except per share data) (unaudited) 1995 QUARTERS FIRST SECOND THIRD FOURTH - ------------- --------- --------- -------- ---------- Operations: - -------------- Net sales $116,294 $110,514 $108,222 $ 98,534 Gross margin 14,836 16,290 15,446 9,923 Non recurring charges (125) (205) (163) (2,187) Net income (loss) 451 1,167 83 (9,615) ========= ======== ========= ========= Per share data: - -------------- Primary earnings (loss) per share $0.07 $0.18 $0.01 $ (1.61) ========= ======== ========= ========= 1994 QUARTERS FIRST SECOND THIRD FOURTH - ------------- --------- --------- -------- ---------- Operations: - -------------- Net sales $ 85,296 $ 96,125 $100,234 $111,595 Gross margin 11,828 13,668 13,847 14,274 Net income 87 628 772 172 ======== ======== ======== ======== Per share data: - -------------- Primary earnings per share $0.01 $0.10 $0.13 $ 0.02 ======== ======== ======== =========
25 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Butler International, Inc. Montvale, New Jersey We have audited the accompanying consolidated balance sheets of Butler International, Inc. as of December 31, 1995 and December 31, 1994, and the related consolidated statements of operations, stockholders'equity, and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Butler International, Inc. as of December 31, 1995 and December 31, 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. As discussed in Note 11 to the financial statements, the Company changed its method of accounting for income taxes effective January 1, 1993 to conform with Statement of Financial Accounting Standards No. 109. /s/ Deloitte & Touche LLP Parsippany, New Jersey March 26, 1996 26 SELECTED CONSOLIDATED: Financial Information - -------------------------------------------------------------------------------- (in thousands except share and per share data)
1995 1994 1993 1992 1991 --------- --------- --------- --------- --------- Operations Data: Net sales $ 433,564 $ 393,250 $ 307,715 $ 267,581 $ 243,931 Gross margin $ 56,495 $ 53,617 $ 41,744 $ 34,116 $ 34,251 Income (loss) from continuing operations $ (7,914)(a) $ 1,659 $ 1,227 $ (4,561) $ (4,390) Income (loss) from discontinued operations - - $ (3,427) $ (182) $ (157) --------- --------- --------- --------- --------- Net income (loss) $ (7,914)(a) $ 1,659 (2,200) (4,743) (4,547) ========= ========= ========= ========= ========= Per Share Data: Income (loss) per share: Continuing operations $ (1.36) $ 0.25 $ 0.20 $ (1.03) $ (0.99) Discontinued operations - - $ (0.70) $ (0.04) $ (0.04) --------- --------- --------- --------- --------- Net income (loss) per share $ (1.36) $ 0.25 $ (0.50) $ (1.07) $ (1.03) ========= ========= ========= ========= ========= Book value per common share outstanding at year end $ 4.61 $ 5.95 $ 6.05 $ 6.93 $ 8.11 Weighted average number of shares outstanding 5,957,916 5,937,554 4,927,734 4,477,487 4,413,039 Balance Sheet Data: Working capital $ 34,103 $ 48,155 $ 34,753 $ 28,841 $ 25,855 Total assets $ 110,572 $ 107,810 $ 85,381 $ 69,406 $ 69,495 Long-term debt $ 40,480 $ 45,746 $ 32,151 $ 18,378 $ 13,000 Total liabilities $ 80,516 $ 70,412 $ 50,691 $ 35,906 $ 33,016 Stockholders' equity $ 30,056 $ 37,398 $ 34,690 $ 33,500 $ 36,479
(a) 1995 includes $2,680 of non recurring charges (See Note 19). MARKET INFORMATION ON BUTLER'S COMMON STOCK The Common Stock is quoted under the symbol "BUTL" and is listed on the NASDAQ National Market System. As of March 18, 1995, there were approximately 4,376 holders of record of Common Stock. Not reflected in the number of record holders are persons who beneficially own shares or the Common Stock held in nominee or street name. HIGH LOW 1994 First Quarter $6.19 $4.38 Second Quarter 6.00 4.44 Third Quarter 6.38 4.63 Fourth Quarter 7.13 5.50 1995 First Quarter $7.75 $5.38 Second Quarter 7.13 5.88 Third Quarter 8.50 6.50 Fourth Quarter 8.06 4.00 1996 First Quarter (Through March 21, 1996) $6.00 $4.63 No cash dividends were declared on the Company's Common Stock during the years ended December 31, 1995 and 1994. The Company has no present intention of paying cash dividends during the year ending December 31, 1996. 27 EX-22.1 9 SUBSIDIARIES OF REGISTRANT EXHIBIT 22.1 SUBSIDIARIES OF REGISTRANT -------------------------- PERCENTAGE OF VOTING STATE OR SECURITIES JURISDICTION OF CORPORATION OWNED BY OWNED INCORPORATION - ----------- -------- ---------- --------------- Butler Service Group, Inc. Registrant 100 New Jersey AAC Corp. Registrant 100 Delaware Sylvan Insurance Co. Ltd. Registrant 100 Bermuda Butler Airport Services, Corp. Registrant 100 Maryland Butler of New Jersey Realty Corp. Registrant 100 New Jersey BUTLER SERVICE GROUP, INC. ("BSG") SUBSIDIARIES ----------------------------------------------- Butler Service Group-Canada Inc. BSG 100 Canada (Federal) Butler Service Group-UK, Ltd. BSG 100 United Kingdom Butler Airport Services, Ltd. BSG 100 United Kingdom Butler Services International Inc. BSG 100 Delaware Butler Telecom, Inc. BSG 100 Delaware Butler Management Resources, Inc. BSG 100 New Jersey Butler Service Inc. BSG 100 Delaware Butler Technology Solutions, Inc. BSG 100 Oklahoma Butler Utility Services, Inc. BSG 100 Delaware Butler de Mexico, S.A. de C.V. BSG 100 Mexico Telecommunicaciones Butler, S.A. BSG 100 Venezuela Butler Airport Services, Inc. BSG 100 Cayman Islands EX-23.1 10 INDEPENDENT AUDITORS' CONSENT EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT - ----------------------------- We consent to the incorporation by reference in Registration Statements No. 33- 58481 and No. 33-87012 on Form S-8, Registration Statement No. 33-59427 on Form S-3 and Post-Effective Amendment No. 4 to Registration Statement No. 33-58278 on Form S-2 of our reports dated March 26, 1996, appearing in and incorporated by reference in this Annual Report on Form 10-K of Butler International, Inc. for the year ended December 31, 1995. /s/ Deloitte & Touche LLP Parsippany, New Jersey March 26, 1996 -----END PRIVACY-ENHANCED MESSAGE-----