Annual Report - Buhler Industries Inc.

Management Discussion & Financial Analysisbegun to supply FRP components to other farm equipmentmanufacturers in North America.Research and Development:R&D expenses were $3.7 million this year. We continuedour commitment to keep all our products current and viable,as our future depends on our products’ competitiveness inthe market place. Future R&D expenses are expected toremain similar to this year’s amount and is sufficient toachieve our goal of improving the value of our products.Management Team, left to right: Jim Friesen, Grant Adolph,Min Lee, Andrey Gornik, Helen Bergen, Eric Allison,Jean-Guy Fillion, Rick Kneeshaw, Larry Schroeder,line farm equipment. This allows the dealers to becompetitive and react to retail sales, regardless of when theretail sale develops. Although this has resulted in increasedoperating debt and interest expense for the company, it isseen as a “necessary evil”, and more importantly, this is themost competitive way of penetrating and competing in themarket place.Acquisitions:During 2003 we “Buhlerized” the acquisitions of 2002,ensuring they are following our business practices.Fargo Subsidiary:Our Fargo, ND factory continues to play an increasing rolein our production plans. Select short line products havebeen relocated to this factory in order to take advantage oftheir unique process and capacity.Next Year:Fiscal 2004 will be a year where we will continue to proveourselves. It is our goal to continue to service ourcustomers with a high level of product value and timelyprofessional service. Our products “speak for themselves”,and so our aim is to sell more product into the NorthAmerican marketplace so that it can speak to our credit.The management team and I are pleased with the results of2003. We are focused and committed to growing ourCompany.I am also confident that acquisition opportunities willcontinue to present themselves. When and whereappropriate, we will be eager to expand our Companythrough these acquisitions.Craig EngelPresident and Chief Operating OfficerSept 30, 2003Buhler Machine Works Division:Considerable investments were made in our BuhlerMachine Works (BMW) division. We have added CNCturning centers and integrated a series of horizontal millingmachines creating a flexible manufacturing system. Thisprovides us with the latest in technology and machiningefficiencies available in today’s market, and this permits usto continue in-sourcing more production of components aswe continue to vertically integrate.BrekMar FRP Division:Our BrekMar division continues to supply our tractorfactory, as well as our other factories, with Fibre ReinforcedPlastic (FRP) components. In addition, this division has4bühlerSales and Growth240160800RevenueM illions $99 00 01 02 03Revenue of $181 millionfor 2003 was down by 22%from last year. Revenueshould increase next year,but will not reach the highof 2002. If commodityprices and the farmeconomy continue toimprove, we could seebetter than forecastrevenue.