☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Kansas
|
|
41-0834293
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(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company T
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Item 1
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Financial Statements
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PAGE NO.
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Condensed Consolidated Balance Sheets – January 31, 2015 and April 30, 2014
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3
|
|
Condensed Consolidated Statements of Operations - Three Months Ended January 31, 2015 and 2014
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4
|
|
Condensed Consolidated Statements of Operations - Nine Months Ended January 31, 2015 and 2014
|
5
|
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Condensed Consolidated Statements of Cash Flows - Nine Months Ended January 31, 2015 and 2014
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6
|
|
Notes to Condensed Consolidated Financial Statements
|
7
|
|
Item 2
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
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8
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Item 3
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Quantitative and Qualitative Disclosures about Market Risk
|
19
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Item 4
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Controls and Procedures
|
19
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Item 1
|
Legal Proceedings
|
19
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Item 1A
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Risk Factors
|
20
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Item 2
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Unregistered Sales of Equity Securities and Use of Proceeds
|
20
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Item 3
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Defaults Upon Senior Securities
|
20
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Item 4
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Mine Safety Disclosures
|
20
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Item 5
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Other Information
|
20
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Item 6
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Exhibits
|
20
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Signatures
|
21
|
|
Exhibit Index
|
22
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|
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January 31, 2015
|
|
April 30, 2014
|
||||
ASSETS
|
|
|
|
|
||||
CURRENT ASSETS:
|
|
|
|
|
||||
Cash
|
|
$
|
5,052
|
|
$
|
6,261
|
||
Accounts receivable
|
|
|
2,456
|
|
|
3,109
|
||
Inventories
|
|
|
|
|
|
|
||
Raw materials
|
|
|
5,330
|
|
|
5,102
|
||
Work in process
|
|
|
2,205
|
|
|
1,090
|
||
Finished goods
|
|
|
144
|
|
|
144
|
||
Total inventory
|
|
|
7,679
|
|
|
6,336
|
||
Prepaid expenses and other current assets
|
|
|
1,171
|
|
|
825
|
||
Total current assets
|
|
|
16,358
|
|
|
16,531
|
||
|
|
|
|
|
|
|
||
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
||
Land and building
|
|
|
4,071
|
|
|
4,044
|
||
Aircraft
|
|
|
7,300
|
|
|
6,723
|
||
Machinery and equipment
|
|
|
3,586
|
|
|
3,535
|
||
Office furniture and fixtures
|
|
|
6,648
|
|
|
6,447
|
||
Leasehold improvements
|
|
|
4,081
|
|
|
4,060
|
||
|
|
25,686
|
|
|
24,809
|
|||
Accumulated depreciation
|
|
|
(13,996)
|
|
|
(12,140)
|
||
Total property, plant and equipment
|
|
|
11,690
|
|
|
12,669
|
||
|
|
|
|
|
|
|
||
SUPPLEMENTAL TYPE CERTIFICATES (net of amortization of $2,953 at January 31, 2015 and $2,841 at April 30, 2014)
|
|
|
4,938
|
|
|
3,744
|
||
|
|
|
|
|
|
|||
OTHER ASSETS:
|
|
|
|
|
|
|
||
Deferred tax asset
|
|
|
1,335
|
|
|
1,335
|
||
Other assets (net of accumulated amortization of $3,596 at January 31, 2015 and $2,520 at April 30, 2014)
|
|
|
7,312
|
|
|
7,399
|
||
Total other assets
|
|
|
8,647
|
|
|
8,734
|
||
Total assets
|
|
$
|
41,633
|
|
$
|
41,678
|
||
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
||
Promissory notes
|
|
$
|
1,502
|
|
$
|
1,757
|
||
Current maturities of long-term debts
|
|
|
3,627
|
|
|
3,908
|
||
Accounts payable
|
|
|
1,533
|
|
|
1,375
|
||
Customer deposits
|
|
|
2,192
|
|
|
982
|
||
Gaming facility mandated payment
|
|
|
930
|
|
|
1,267
|
||
Compensation and compensated absences
|
|
|
1,156
|
|
|
1,122
|
||
Other current liabilities
|
|
|
388
|
|
|
93
|
||
Total current liabilities
|
|
|
11,328
|
|
|
10,504
|
||
|
|
|
|
|
|
|
||
LONG-TERM DEBT, NET OF CURRENT MATURITIES:
|
|
|
5,211
|
|
|
6,820
|
||
Total liabilities
|
|
|
16,539
|
|
|
17,324
|
||
|
|
|
|
|
|
|
||
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
||||
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
||
Preferred stock, par value $5:
Authorized 50,000,000 shares, all classes Designated Classes A and B 200,000 shares $100 Class A, 9.8 %, cumulative if earned liquidation and redemption value $100, no shares issued and outstanding |
|
|
-
|
|
|
-
|
||
$1,000 Class B, 6 %, convertible cumulative, liquidation and redemption value $1,000, no shares issued and outstanding
|
|
|
-
|
|
|
-
|
||
Common stock, par value $.01: authorized 100,000,000 shares issued and outstanding 61,493,092 shares at January 31, 2015 and 61,493,092 shares at April 30, 2014
|
|
|
614
|
|
|
614
|
||
Capital contributed in excess of par
|
|
|
13,282
|
|
|
13,282
|
||
Treasury stock at cost, 600,000 shares
|
|
|
(732)
|
|
|
(732)
|
||
Retained earnings
|
|
|
8,483
|
|
|
8,134
|
||
Total stockholders' equity Butler National Corporation
|
|
|
21,647
|
|
|
21,298
|
||
Noncontrolling interest in BHCMC, LLC
|
|
|
3,447
|
|
|
3,056
|
||
Total stockholders' equity
|
|
|
25,094
|
|
|
24,354
|
||
Total liabilities and stockholders' equity
|
|
$
|
41,633
|
|
$
|
41,678
|
|
|
THREE MONTHS ENDED
January 31,
|
|
|||||
|
|
2015
|
|
2014
|
|
|||
REVENUE:
|
|
|
|
|
|
|||
Professional Services
|
|
$
|
7,757
|
|
$
|
6,984
|
||
Aerospace Products
|
|
|
3,326
|
|
|
3,860
|
||
Total revenue
|
|
|
11,083
|
|
|
10,844
|
||
|
|
|
|
|
|
|
||
COSTS AND EXPENSES:
|
|
|
|
|
|
|
||
Cost of Professional Services
|
|
|
4,715
|
|
|
4,498
|
||
Cost of Aerospace Products
|
|
|
2,477
|
|
|
2,843
|
||
Marketing and advertising
|
|
|
1,010
|
|
|
868
|
||
Employee benefits
|
|
|
487
|
|
|
571
|
||
Depreciation and amortization
|
|
|
693
|
|
|
870
|
||
General, administrative and other
|
|
|
1,166
|
|
|
1,176
|
||
Total costs and expenses
|
|
|
10,548
|
|
|
10,826
|
||
|
|
|
|
|
|
|
||
OPERATING INCOME
|
|
|
535
|
|
|
18
|
||
|
|
|
|
|
|
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
||
Interest expense
|
|
|
(251)
|
|
|
(348)
|
||
Other income, net
|
|
|
5
|
|
|
2
|
||
Total other income (expense)
|
|
|
(246)
|
|
|
(346)
|
||
|
|
|
|
|
|
|
||
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
289
|
|
|
(328)
|
||
|
|
|
|
|
|
|
||
PROVISION FOR INCOME TAXES
|
|
|||||||
PROVISION (BENEFIT) FOR INCOME TAXES
|
-
|
(101)
|
||||||
NET INCOME (LOSS)
|
|
|
289
|
|
|
(227)
|
||
Net income attributable to noncontrolling interest in BHCMC, LLC
|
|
|
(221)
|
|
|
8
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION
|
|
$
|
68
|
|
$
|
(219)
|
||
|
|
|
|
|
|
|
||
BASIC EARNINGS PER COMMON SHARE
|
|
$
|
0.00
|
|
$
|
0.00
|
||
|
|
|
|
|
|
|
||
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION
|
|
|
60,893,092
|
|
|
59,019,173
|
||
|
|
|
|
|
|
|
||
DILUTED EARNINGS PER COMMON SHARE
|
|
$
|
0.00
|
|
$
|
0.00
|
||
|
|
|
|
|
|
|
||
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION
|
|
|
60,893,092
|
|
|
59,019,173
|
|
|
NINE MONTHS ENDED
January 31,
|
|
|||||
|
|
2015
|
|
2014
|
|
|||
REVENUE:
|
|
|
|
|
|
|||
Professional Services
|
|
$
|
22,834
|
|
$
|
22,820
|
||
Aerospace Products
|
|
|
12,392
|
|
|
9,819
|
||
Total revenue
|
|
|
35,226
|
|
|
32,639
|
||
|
|
|
|
|
|
|
||
COSTS AND EXPENSES:
|
|
|
|
|
|
|
||
Cost of Professional Services
|
|
|
13,886
|
|
|
14,068
|
||
Cost of Aerospace Products
|
|
|
9,150
|
|
|
7,787
|
||
Marketing and advertising
|
|
|
3,311
|
|
|
3,185
|
||
Employee benefits
|
|
|
1,352
|
|
|
1,651
|
||
Depreciation and amortization
|
|
|
2,244
|
|
|
2,630
|
||
General, administrative and other
|
|
|
3,575
|
|
|
3,356
|
||
Total costs and expenses
|
|
|
33,518
|
|
|
32,677
|
||
|
|
|
|
|
|
|
||
OPERATING INCOME (LOSS)
|
|
|
1,708
|
|
|
(38)
|
||
|
|
|
|
|
|
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
||
Interest expense
|
|
|
(843)
|
|
|
(1,100)
|
||
Other income, net
|
|
|
12
|
|
|
42
|
||
Total other income (expense)
|
|
|
(831)
|
|
|
(1,058)
|
||
|
|
|
|
|
|
|
||
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
877
|
|
|
(1,096)
|
||
|
|
|
|
|
|
|
||
PROVISION (BENEFIT) FOR INCOME TAXES
|
|
|
136
|
|
|
(359)
|
||
|
|
|
|
|
|
|
||
NET INCOME (LOSS)
|
|
|
741
|
|
|
(737)
|
||
Net income attributable to noncontrolling interest in BHCMC, LLC
|
|
|
(391)
|
|
|
(116)
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION
|
|
$
|
350
|
|
$
|
(853)
|
||
|
|
|
|
|
|
|
||
BASIC EARNINGS PER COMMON SHARE
|
|
$
|
0.01
|
|
$
|
(0.01)
|
||
|
|
|
|
|
|
|
||
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION
|
|
|
60,893,092
|
|
|
59,019,173
|
||
|
|
|
|
|
|
|
||
DILUTED EARNINGS PER COMMON SHARE
|
|
$
|
0.01
|
|
$
|
(0.01)
|
||
|
|
|
|
|
|
|
||
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION
|
|
|
60,893,092
|
|
|
59,019,173
|
|
|
NINE MONTHS ENDED
January 31,
|
|
|||||
|
|
2015
|
|
2014
|
|
|||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
741
|
|
$
|
(737)
|
||
Adjustments to reconcile cash flows from operating activities
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
|
3,044
|
|
|
3,255
|
||
Stock issued for services
|
|
|
-
|
|
|
22
|
||
Gain and loss on disposal of other assets
|
-
|
(36)
|
||||||
|
|
|
|
|
|
|
||
Changes in assets and liabilities
|
|
|
|
|
|
|
||
Accounts receivable
|
|
|
653
|
|
|
974
|
||
Income tax receivable
|
-
|
1,185
|
||||||
Inventories
|
|
|
(1,343)
|
|
|
(1,116)
|
||
Prepaid expenses and other current assets
|
|
|
(346)
|
|
|
62
|
||
Accounts payable
|
|
|
157
|
|
|
(258)
|
||
Customer deposits
|
|
|
1,210
|
|
|
887
|
||
Accrued liabilities
|
|
|
34
|
|
|
(56)
|
||
Gaming facility mandated payment
|
|
|
(337)
|
|
|
(328)
|
||
Other liabilities
|
|
|
295
|
|
|
136
|
||
Deferred tax asset
|
-
|
(424)
|
||||||
Other assets
|
(231)
|
12
|
||||||
Cash flows from operating activities
|
|
|
3,877
|
|
|
3,578
|
||
|
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
||
Capital expenditures
|
|
|
(2,183)
|
|
|
(174)
|
||
Cash flows from investing activities
|
|
|
(2,183)
|
|
|
(174)
|
||
|
|
|
|
|
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
||
Borrowings of promissory notes, net
|
|
|
(255)
|
|
|
367
|
||
Borrowings of long-term debt
|
704
|
-
|
||||||
Repayment of long-term debt
|
|
|
(3,352)
|
|
|
(3,848)
|
||
Cash flows from financing activities
|
|
|
(2,903)
|
|
|
(3,481)
|
||
|
|
|
|
|
|
|
||
NET DECREASE IN CASH
|
|
|
(1,209)
|
|
|
(77)
|
||
|
|
|
|
|
|
|
||
CASH, beginning of period
|
|
|
6,261
|
|
|
5,148
|
||
|
|
|
|
|
|
|
||
CASH, end of period
|
|
$
|
5,052
|
|
$
|
5,071
|
||
|
|
|
|
|
|
|
||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
||
Interest paid
|
|
$
|
843
|
|
$
|
1,102
|
||
Income taxes paid
|
|
$
|
-
|
|
$
|
-
|
||
|
|
|
|
|
|
|
||
NON CASH OPERATING ACTIVITY
|
|
|
|
|
||||
Non cash stock for services
|
|
$
|
-
|
|
$
|
22
|
||
Intangible gaming equipment and notes
|
|
$
|
758
|
|
$
|
1,070
|
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
· | the impact of general economic trends on the Company's business; |
· | the deferral or termination of programs or contracts for convenience by customers; |
· | market acceptance of the Company's Aerospace Products and or other planned products or product enhancements; |
· | increased fuel and energy costs and the downward pressure on demand for our aircraft business; |
· | the ability to gain and maintain regulatory approval of existing products and services and receive regulatory approval of new businesses and products; |
· | the actions of regulatory, legislative, executive or judicial decisions of the federal, state or local level with regard to our business and the impact of any such actions; |
· | failure to retain/recruit key personnel; |
· | the availability of government funding; |
· | any delays in receiving components from third party suppliers; |
· | the competitive environment; |
· | the bankruptcy or insolvency of one or more key customers; |
· | new product offerings from competitors; |
· | protection of intellectual property rights; |
· | the ability to service the international market; |
· | acts of terrorism and war and other uncontrollable events; |
· | joint ventures and other arrangements; |
· | low priced penny-stock regulations; |
· | general governance features; |
· | United States and other country defense spending cuts; |
· | our estimated effective income tax rates; estimated tax benefits; and merits of our tax position; |
· | potential future acquisitions; |
· | changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, third-party relations and approvals, and decisions, disciplines and fines of courts, regulators and governmental bodies; |
· | the ability to timely and cost-effectively integrate companies that we acquire into our operations; |
· | construction factors, including delays, increased costs of labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters and building permit issues; |
· | litigation outcomes and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions and fines and taxation; |
· | access to insurance on reasonable terms for our assets; |
· | cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations; |
· | as a supplier of military and other equipment to the U.S. Government, we are subject to unusual risks, such as the right of the U.S. Government contractor to terminate contracts for convenience and to conduct audits and investigations of our operations and performance; |
· | our reputation and ability to do business may be impacted by the improper conduct of employees, vendors, agents or business partners; |
· | changes in legislation or government regulations or policies can have a significant impact on our results of operations; and |
· | other factors disclosed from time to time in the Company's filings with the Securities and Exchange Commission. |
(dollars in thousands)
|
Nine
Months
Ended
Jan 31, 2015
|
Percent
of Total
Revenue
|
Nine
Months
Ended
Jan. 31, 2014
|
Percent
of Total
Revenue
|
Percent
Change
2014-2015
|
|||||||||||
Revenue:
|
||||||||||||||||
Professional Services
|
$
|
22,834
|
65
|
%
|
$
|
22,820
|
70
|
%
|
0
|
%
|
||||||
Aerospace Products
|
12,392
|
35
|
%
|
9,819
|
30
|
%
|
26
|
%
|
||||||||
Total revenue
|
35,226
|
100
|
%
|
32,639
|
100
|
%
|
8
|
%
|
||||||||
Costs and expenses:
|
||||||||||||||||
Costs of Professional Services
|
13,886
|
40
|
%
|
14,068
|
43
|
%
|
(1)
|
%
|
||||||||
Cost of Aerospace Products
|
9,150
|
26
|
%
|
7,787
|
24
|
%
|
18
|
%
|
||||||||
Marketing and advertising
|
3,311
|
9
|
%
|
3,185
|
10
|
%
|
4
|
%
|
||||||||
Employee benefits
|
1,352
|
4
|
%
|
1,651
|
5
|
%
|
(18)
|
%
|
||||||||
Depreciation and amortization
|
2,244
|
6
|
%
|
2,630
|
8
|
%
|
(15)
|
%
|
||||||||
General, administrative and other
|
3,575
|
10
|
%
|
3,356
|
10
|
%
|
7
|
%
|
||||||||
Total costs and expenses
|
33,518
|
95
|
%
|
32,677
|
100
|
%
|
3
|
%
|
||||||||
Operating income (loss)
|
$
|
1,708
|
5
|
%
|
$
|
(38)
|
0
|
%
|
· | Professional Services derives its revenue from (a) professional management services in the gaming industry through Butler National Service Corporation ("BNSC") and BHCMC, LLC ("BHCMC"), and (b) professional architectural, engineering and management support services through BCS Design ("BCS"). Revenue from Professional Services remained constant at $22.8 million in the nine months ended January 31, 2015 from $22.8 million in the nine months ended January 31, 2014. |
· | Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft. Aerospace Products revenue increased 26% for the nine months to $12.4 million at January 31, 2015 compared to $9.8 million at January 31, 2014. We anticipate future domestic military spending reductions and continued slow growth of the United States economy. |
(dollars in thousands)
|
Nine
Months
Ended
Jan 31, 2015
|
Percent
of Total
Revenue
|
Nine
Months
Ended
Jan. 31, 2014
|
Percent
of Total
Revenue
|
Percent
Change
2014-2015
|
|||||||||||||
Professional Services
|
||||||||||||||||||
Revenue
|
||||||||||||||||||
Boot Hill Casino
|
$
|
22,297
|
98
|
%
|
$
|
22,212
|
97
|
%
|
0
|
%
|
||||||||
Management/Professional Services
|
537
|
2
|
%
|
608
|
3
|
%
|
(12)
|
%
|
||||||||||
Revenue
|
22,834
|
100
|
%
|
22,820
|
100
|
%
|
0
|
%
|
||||||||||
Costs of Professional Services
|
13,886
|
61
|
%
|
14,068
|
62
|
%
|
(1)
|
%
|
||||||||||
Expenses
|
7,579
|
33
|
%
|
7,886
|
34
|
%
|
(4)
|
%
|
||||||||||
Total costs and expenses
|
21,465
|
94
|
%
|
21,954
|
96
|
%
|
(2)
|
%
|
||||||||||
Professional Services operating income before noncontrolling interest in BHCMC, LLC
|
$
|
1,369
|
6
|
%
|
$
|
866
|
4
|
%
|
58
|
%
|
(dollars in thousands)
|
Nine
Months
Ended
Jan 31, 2015
|
Percent
of Total
Revenue
|
Nine
Months
Ended
Jan. 31, 2014
|
Percent
of Total
Revenue
|
Percent
Change
2014-2015
|
|||||||||||
Aerospace Products
|
||||||||||||||||
Revenue
|
$
|
12,392
|
100
|
%
|
$
|
9,819
|
100
|
%
|
26
|
%
|
||||||
Costs of Aerospace Products
|
9,150
|
74
|
%
|
7,787
|
79
|
%
|
18
|
%
|
||||||||
Expenses
|
2,903
|
23
|
%
|
2,936
|
30
|
%
|
(1)
|
%
|
||||||||
Total costs and expenses
|
12,053
|
97
|
%
|
10,723
|
109
|
%
|
12
|
%
|
||||||||
Aerospace Products operating income (loss)
|
$
|
339
|
3
|
%
|
$
|
(904)
|
(9)
|
%
|
· | Revenue from Professional Services remained constant at $22.8 million for the nine months ended January 31, 2015, compared to $22.8 million for the nine months ended January 31, 2014. In the nine months ended January 31, 2015 Boot Hill Casino received gross receipts for the State of Kansas of $29.9 million compared to $29.9 million for the nine months ended January 31, 2014. Mandated fees, taxes and distributions reduced gross receipts by $9.9 million resulting in gaming revenue of $20.0 million for the nine months ended January 31, 2015, compared to a reduction to gross receipts of $9.9 million resulting in gaming revenue of $20.0 million for the nine months ended January 31, 2014. Non-gaming revenue at Boot Hill Casino increased 6% to $2.3 million for the nine months ended January 31, 2015, compared to $2.2 million for the nine months ended January 31, 2014. The remaining management and Professional Services revenue includes professional management services in the gaming industry, and licensed architectural services. Professional Services revenue excluding Boot Hill casino decreased 12% to $537 for the nine months ended January 31, 2015, compared to $608 for the nine months ended January 31, 2014. |
· | Costs of Professional Services decreased 1% in the nine months ended January 31, 2015 to $13.9 million compared to $14.1 million in the nine months ended January 31, 2014. Costs were 61% of segment total revenue in the nine months ended January 31, 2015, as compared to 62% of segment total revenue in the nine months ended January 31, 2014. |
· | Expenses decreased 4% in the nine months ended January 31, 2015 to $7.6 million compared to 7.9 million in the nine months ended January 31, 2014. Expenses were 33% of segment total revenue in the nine months ended January 31, 2015, as compared to 34% of segment total revenue in the nine months ended January 31, 2014. |
· | Revenue increased 26% to $12.4 million in the nine months ended January 31, 2015, compared to $9.8 million in the nine months ended January 31, 2014. This increase is attributable to increased revenue of $2.8 million in the modification business. We anticipate future domestic military spending reductions and continued slow growth of the United States economy. In an effort to offset decreased domestic military spending, we have invested in the development of several STCs. These STCs are state of the art avionics and we are aggressively marketing both domestically and internationally. |
· | Costs of Aerospace Products increased by 18% in the nine months ended January 31, 2015 to $9.2 million compared to $7.8 million for the nine months ended January 31, 2014. Costs were 74% of segment total revenue in the nine months ended January 31, 2015, as compared to 79% of segment total revenue in the nine months ended January 31, 2014. |
· | Expenses decreased 1% in the nine months ended January 31, 2015 at $2.9 million compared to $2.9 million in the nine months ended January 31, 2014. Expenses were 23% of segment total revenue in the nine months ended January 31, 2015, as compared to 30% of segment total revenue in the nine months ended January 31, 2014. |
(dollars in thousands)
|
Three
Months
Ended
Jan 31, 2015
|
Percent
of Total
Revenue
|
Three
Months
Ended
Jan. 31, 2014
|
Percent
of Total
Revenue
|
Percent
Change
2014-2015
|
|||||||||||
Revenue:
|
||||||||||||||||
Professional Services
|
$
|
7,757
|
70
|
%
|
$
|
6,984
|
64
|
%
|
11
|
%
|
||||||
Aerospace Products
|
3,326
|
30
|
%
|
3,860
|
36
|
%
|
(14)
|
%
|
||||||||
Total revenue
|
11,083
|
100
|
%
|
10,844
|
100
|
%
|
2
|
%
|
||||||||
Costs and expenses:
|
||||||||||||||||
Costs of Professional Services
|
4,715
|
43
|
%
|
4,498
|
42
|
%
|
5
|
%
|
||||||||
Cost of Aerospace Products
|
2,477
|
22
|
%
|
2,843
|
26
|
%
|
(13)
|
%
|
||||||||
Marketing and advertising
|
1,010
|
9
|
%
|
868
|
8
|
%
|
16
|
%
|
||||||||
Employee benefits
|
487
|
4
|
%
|
571
|
5
|
%
|
(15)
|
%
|
||||||||
Depreciation and amortization
|
693
|
6
|
%
|
870
|
8
|
%
|
(20)
|
%
|
||||||||
General, administrative and other
|
1,166
|
11
|
%
|
1,176
|
11
|
%
|
(1)
|
%
|
||||||||
Total costs and expenses
|
10,548
|
95
|
%
|
10,826
|
100
|
%
|
(3)
|
%
|
||||||||
Operating income (loss)
|
$
|
535
|
5
|
%
|
$
|
18
|
0
|
%
|
2,872
|
%
|
· | Professional Services derives its revenue from (a) professional management services in the gaming industry through Butler National Service Corporation ("BNSC") and BHCMC, LLC ("BHCMC"), and (b) professional architectural, engineering and management support services through BCS Design ("BCS"). Revenue from Professional Services increased 11% to $7.8 million in the three months ended January 31, 2015 from $7.0 million in the three months ended January 31, 2014. |
· | Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft. Aerospace Products revenue decreased 14% for the three months to $3.3 million at January 31, 2015 compared to $3.9 million at January 31, 2014. We anticipate future domestic military spending reductions and continued slow growth of the United States economy. |
(dollars in thousands)
|
Three
Months
Ended
Jan 31, 2015
|
Percent
of Total
Revenue
|
Three
Months
Ended
Jan. 31, 2014
|
Percent
of Total
Revenue
|
Percent
Change
2014-2015
|
|||||||||||||
Professional Services
|
||||||||||||||||||
Revenue
|
||||||||||||||||||
Boot Hill Casino
|
$
|
7,611
|
98
|
%
|
$
|
6,882
|
99
|
%
|
11
|
%
|
||||||||
Management/Professional Services
|
146
|
2
|
%
|
102
|
1
|
%
|
43
|
%
|
||||||||||
Revenue
|
7,757
|
100
|
%
|
6,984
|
100
|
%
|
11
|
%
|
||||||||||
Costs of Professional Services
|
4,715
|
61
|
%
|
4,498
|
64
|
%
|
5
|
%
|
||||||||||
Expenses
|
2,514
|
32
|
%
|
2,380
|
34
|
%
|
6
|
%
|
||||||||||
Total costs and expenses
|
7,229
|
93
|
%
|
6,878
|
98
|
%
|
5
|
%
|
||||||||||
Professional Services operating income before noncontrolling interest in BHCMC, LLC
|
$
|
528
|
7
|
%
|
$
|
106
|
2
|
%
|
398
|
%
|
(dollars in thousands)
|
Three
Months
Ended
Jan 31, 2015
|
Percent
of Total
Revenue
|
Three
Months
Ended
Jan. 31, 2014
|
Percent
of Total
Revenue
|
Percent
Change
2014-2015
|
|||||||||||
Aerospace Products
|
||||||||||||||||
Revenue
|
$
|
3,326
|
100
|
%
|
$
|
3,860
|
100
|
%
|
(14)
|
%
|
||||||
Costs of Aerospace Products
|
2,477
|
75
|
%
|
2,843
|
74
|
%
|
(13)
|
%
|
||||||||
Expenses
|
842
|
25
|
%
|
1,105
|
28
|
%
|
(24)
|
%
|
||||||||
Total costs and expenses
|
3,319
|
100
|
%
|
3,948
|
102
|
%
|
(16)
|
%
|
||||||||
Aerospace Products operating income (loss)
|
$
|
7
|
0
|
%
|
$
|
(88)
|
(2)
|
%
|
· | Revenue from Professional Services increased 11% to $7.8 million for the three months ended January 31, 2015, compared to $7.0 million for the three months ended January 31, 2014. The increase in Professional Services revenue was driven primarily by increased revenue in gaming activities. In the three months ended January 31, 2015 Boot Hill Casino received gross receipts for the State of Kansas of $10.2 million compared to $9.4 million for the three months ended January 31, 2014. Mandated fees, taxes and distributions reduced gross receipts by $3.4 million resulting in gaming revenue of $6.8 million for the three months ended January 31, 2015, compared to a reduction to gross receipts of $3.2 million resulting in gaming revenue of $6.2 million for the three months ended January 31, 2014. Non-gaming revenue at Boot Hill Casino was $800 for the three months ended January 31, 2015 and $690 for the three months ended January 31, 2014. The remaining management and Professional Services revenue includes professional management services in the gaming industry, and professional architectural, engineering and management support services. Professional Services revenue excluding Boot Hill casino increased 43% to $146 in the three months ended January 31, 2015. |
· | Costs of Professional Services increased 5% in the three months ended January 31, 2015 to $4.7 million compared to $4.5 million in the three months ended January 31, 2014. Costs were 61% of segment total revenue in the three months ended January 31, 2015, as compared to 64% of segment total revenue in the three months ended January 31, 2014. |
· | Expenses increased 6% in the three months ended January 31, 2015 to $2.5 million compared to $2.4 million in the three months ended January 31, 2014. Expenses were 32% of segment total revenue in the three months ended January 31, 2015, as compared to 34% of segment total revenue in the three months ended January 31, 2014. |
· | Revenue decreased 14% to $3.3 million in the three months ended January 31, 2015, compared to $3.9 million in the three months ended January 31, 2014. This decrease is attributable to decreased revenue of $579 in the modification business. We anticipate future domestic military spending reductions and continued slow growth of the United States economy. In an effort to offset decreased domestic military spending, we have invested in the development of several STCs. These STCs are state of the art avionics and we are aggressively marketing both domestically and internationally. |
· | Costs of Aerospace Products decreased by 13% in the three months ended January 31, 2015 to $2.5 million compared to $2.8 million for the three months ended January 31, 2014. Costs were 75% of segment total revenue in the three months ended January 31, 2015, as compared to 74% of segment total revenue in the three months ended January 31, 2014. |
· | Expenses decreased 24% in the three months ended January 31, 2015 at $842 compared to $1,105 in the three months ended January 31, 2014. Expenses were 25% of segment total revenue in the three months ended January 31, 2015, as compared to 28% of segment total revenue in the three months ended January 31, 2014. |
Membership Interest
|
Members of
Board of Managers
|
Equity Ownership
|
Income
(Loss) Sharing
|
|||||||||
Class A
|
3
|
20%
|
40%
|
|||||||||
Class B
|
4
|
80%
|
60%
|
Item 1. | LEGAL PROCEEDINGS. |
Item 1A. | RISK FACTORS. |
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
Item 3. | DEFAULTS UPON SENIOR SECURITIES. |
Item 4. | MINE SAFETY DISCLOSURES. |
Item 5. | OTHER INFORMATION. |
Item 6. | EXHIBITS. |
3.1
|
Articles of Incorporation, as amended and restated are incorporated by reference to Exhibit 3.1 of our Form DEF 14A filed on December 26, 2001.
|
|
3.2
|
Bylaws, as amended, are approved by the Board of Directors on March 12, 2013.
|
|
31.1
|
Certificate of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).
|
|
31.2
|
Certificate of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).
|
|
32.1
|
Certifications of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certifications of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995, are incorporated by reference to Exhibit 99 of the Form 10-K for the fiscal year ended April 30, 2014.
|
||
101
|
The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended January 31, 2015, formatted in XBRL (Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of January 31, 2015 and April 30, 2014, (ii) Condensed Consolidated Statements of Operations for the three months ended January 31, 2015 and 2014 and nine months ended January 31, 2015 and 2014, (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2015 and 2014, and (iv) the Notes to Consolidated Financial Statements, with detail tagging.
|
BUTLER NATIONAL CORPORATION
|
|
(Registrant)
|
|
March 17, 2015
|
/s/ Clark D. Stewart
|
Date
|
Clark D. Stewart
|
(President and Chief Executive Officer)
|
|
March 17, 2015
|
/s/ Craig D. Stewart
|
Date
|
Craig D. Stewart
|
(Chief Financial Officer)
|
Exhibit
Number
|
Description of Exhibit
|
3.1
|
Articles of Incorporation, as amended and restated are incorporated by reference to Exhibit 3.1 of our Form DEF 14A filed on December 26, 2001.
|
3.2
|
Bylaws, as amended, are incorporated by reference to Exhibit A of this Form 10Q filed on
March 12, 2013.
|
31.1
|
Certificate of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).
|
31.2
|
Certificate of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).
|
32.1
|
Certifications of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certifications of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
99
|
Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995, are incorporated by reference to Exhibit 99 of the Form 10-K for the fiscal year ended April 30, 2014.
|
101
|
The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended January 31, 2015, formatted in XBRL (Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of January 31, 2015 and April 30, 2014, (ii) Condensed Consolidated Statements of Operations for the three months ended January 31, 2015 and 2014 and nine months ended January 31, 2015 and 2014, (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2015 and 2014, and (iv) the Notes to Consolidated Financial Statements, with detail tagging.
|
1. | I have reviewed this quarterly report on Form 10-Q ended January 31, 2015 of Butler National Corporation. |
2. | Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. |
Date: March 17, 2015
|
/s/Clark D. Stewart
|
|
|
Clark D. Stewart
|
|
|
President and Chief Executive Officer
|
1. | I have reviewed this quarterly report on Form 10-Q ended January 31, 2015 of Butler National Corporation. |
2. | Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. |
Date: March 17, 2015
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/s/ Craig D. Stewart
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Craig D. Stewart
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Chief Financial Officer
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1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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/s/Clark D. Stewart
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Clark D. Stewart
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President and Chief Executive Officer
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Butler National Corporation
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March 17, 2015
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1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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/s/ Craig D. Stewart
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Craig D. Stewart
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Chief Financial Officer
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Butler National Corporation
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March 17, 2015
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Borrowings
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9 Months Ended |
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Jan. 31, 2015
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Borrowings [Abstract] | |
Borrowings | 4. Debt: At January 31, 2015, the Company was utilizing three lines of credit totaling $4.0 million. The unused line at January 31, 2015 was $2.5 million. These funds were primarily used for the purchase of inventory and aircraft modification Supplemental Type Certificate ("STC") development costs for modifications and avionics. Our $1.0 million line of credit has been extended to August 2015. Our $2.5 million line of credit matures April 2015. Our $0.5 million line of credit matures June 2015. The lines of credit are collateralized by the first and second positions on all assets of the Company. At January 31, 2015, there were several notes collateralized by aircraft security agreements totaling $1,560. These notes were used for the purchase and modifications of these collateralized aircraft and Butler Avionics, Inc. There are three notes at a bank totaling $1,213 for real estate located in Olathe, Kansas and Tempe, Arizona. The due date for these notes is March 2019 and August 2019. One note totaling $309 remains for real estate purchased in Dodge City, Kansas and matures in June 2016. One note collateralized by automobiles and equipment totals an additional $53 and matures in June 2016. The Kansas Lottery acquired additional gaming machines. BHCMC, as manager under the management contract with the State of Kansas, was required to remit payment for the gaming equipment. The balance of these financed payables are $635. BHCMC, LLC ("BHCMC") entered into an agreement dated May 1, 2011, and amended via an addendum dated January 1, 2012, with BHC Investment Company, L.C. ("BHCI") for a total obligation of $7,423. BHCI provided funds to BHCMC for the purchase of certain intangible items and gaming items related to the Boot Hill Casino. Commencing on January 1, 2012, BHCMC is obligated to make a minimum payment to BHCI of $177 per month until September 30, 2017. The remaining balance on the obligation is $3,511. On August 24, 2012 BHCMC and BHCI entered into a second agreement of $2,500 for tenant improvements related to expansion of the Boot Hill Casino. Commencing on November 1, 2012. BHCMC is obligated to make a minimum payment to BHCI of approximately $55 per month until November 30, 2017. The remaining obligation is $1,557. We are not in default of any of our notes as of January 31, 2015. We believe that our current banks will provide the necessary capital for our business operations. However, we continue to maintain contact with other banks that have an interest in funding our working capital needs to continue our growth in operations in 2015 and beyond. |