SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the
X Securities Exchange Act of 1934
For the quarter ended July 31, 2001
Transition Report Pursuant to Section 13 or 15 (d) of the
Security Exchange Act of 1934
For the quarter ended July 31, 2001
Commission File Number 0-1678
BUTLER NATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 41-0834293
(State of incorporation) (I.R.S. Employer
Identification No.)
19920 West 161st Street, Olathe, Kansas 66062
(Address of Principal Executive Office)(Zip Code)
Registrant's telephone number, including area code: (913) 780-9595
Former name, former address and former fiscal year if changed since
last report:
Not Applicable
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 twelve months and (2) has
been subject to such filing requirements for the past ninety days:
Yes X No ______
The number of shares outstanding of the Registrant's Common
Stock, $0.01 par value, as of July 31, 2001, was 37,283,278 shares.
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION: Page
No.
Consolidated Balance Sheets - July 31, 2001
and April 30, 2001.............................. 3
Consolidated Statements of Income - Three
Months ended July 31, 2001 and 2000............... 4
Consolidated Statements of Cash Flows - Three
Months ended July 31, 2001 and .................. 5
Notes to Consolidated Financial Statements......... 6-7
Management's Discussion and Analysis
Financial Condition and Results of Operations... 8-9
PART II.
OTHER INFORMATION........................................... 10
SIGNATURES................................................. 11
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
7/31/01
(unaudited)
Current Assets:
Cash $ 92,381
Accounts receivable, net of allowance for 1,903,806
doubtful accounts of $11,703 at July 31,
and $25,600 at April 30, 2001
Note receivable from Indian Gaming Developments 647,285
Contracts in process -
Inventories
Raw materials 1,720,415
Work in process 143,473
Finished goods 36,447
Aircraft 295,281
_________
2,195,616
Prepaid expenses and other assets 3,872
_________
Total current assets 4,842,960
Property, Plant and Equipment:
Land & building 948,089
Machinery and equipment 1,168,961
Office furniture and fixtures 607,736
Leasehold improvements 4,249
_________
Total cost 2,729,035
Accumulated depreciation (1,631,159)
_________
Net Property, Plant and Equipment 1,097,876
Supplemental Type Certificates 1,348,892
Indian Gaming:
Note receivable from Indian Gaming Developments 1,106,178
Advances for Indian Gaming Developments 1,866,221
(net of reserves of $2,718,928 at July
31 and April 30, 2001) _________
Total Indian Gaming 2,972,399
Other Assets
Other assets 196,837
_________
Total Other Assets 196,837
Total Assets $10,458,964
=========
ASSETS
4/30/01
(audited)
Current Assets:
Cash $ 108,071
Accounts receivable, net of allowance for 642,564
doubtful accounts of $18,227 at July 31,
and $25,600 at April 30, 2001
Note receivable from Indian Gaming Developments 647,285
Due from affiliate -
Contracts in process -
Inventories
Raw materials 1,639,080
Work in process 208,036
Finished goods 70,920
Aircraft 1,467,771
_________
3,385,807
Prepaid expenses and other assets 9,730
_________
Total current assets 4,793,457
Property, Plant and Equipment:
Land & building 948,089
Machinery and equipment 1,161,220
Office furniture and fixtures 607,736
Leasehold improvements 4,249
_________
Total cost 2,721,294
Accumulated depreciation (1,590,048)
_________
Net Property, Plant and Equipment 1,131,246
Supplemental Type Certificates 1,338,372
Indian Gaming:
Note receivable from Indian Gaming Developments 1,285,326
Advances for Indian Gaming Developments 1,861,376
(net of reserves of $2,718,928 at July
31 and April 30, 2001)
Total Indian Gaming 3,146,702
Other Assets
Other assets 196,837
_________
Total Other Assets 196,837
__________
Total Assets $10,606,614
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
7/31/01
(unaudited)
Current Liabilities:
Bank overdraft payable $ 88,254
Promissory notes payable 621,471
Current maturities of long-term debt 879,054
Accounts Payable 695,698
Customer Deposits 31
Accrued liabilities -
Compensation and compensated absences 99,466
Other 152,480
_________
Total current liabilities 2,536,454
Long-Term Debt, net of current maturities 3,070,455
Convertible debentures -
_________
Total liabilities 5,606,908
Shareholders' equity:
Preferred stock, par value $5: -
Authorized, 200,000 shares, all classes
$1,000 Class B, 6%, convertible cumulative,
liquidation and redemption value $1,000,
issued and outstanding, zeero shares at
7/31/01 & zero shares at 4/30/01
Common stock, par value $.01: 378,833
Authorized, 40,000,000 shares
Issued and outstanding 37,883,278 July 31,
2001 & 27,181,828 at April 31, 2001,
Capital contributed in excess of par 9,958,476
Treasury stock, at cost (No preferred at (732,000)
7/31 & no preferred at 4/30
and common 600,000 at 7/31 & 600,000 at 4/30)
Retained deficit (4,753,254)
(deficit of $11,938,813 eliminated October 31,
1992)
Total shareholders' equity 4,852,055
_________
Total liabilities and shareholders' equity $10,458,964
=========
4/30/01
(audited)
Current Liabilities:
Bank overdraft payable $ 148,859
Promissory notes payable 348,590
Current maturities of long-term debt 1,321,030
Accounts Payable 807,114
Customer Deposits 167,530
Accrued liabilities -
Compensation and compensated absences 120,304
Other 118,837
_________
Total current liabilities 3,033,264
Long-Term Debt, net of current maturities 3,253,612
Convertible debentures 78,000
_________
Total liabilities 6,364,876
Shareholders' equity:
Preferred stock, par value $5: -
Authorized, 200,000 shares, all classes
$1,000 Class B, 6%, convertible cumulative,
liquidation and redemption value $1,000,
issued and outstanding, 283.5 shares at
7/31/01 & 283.5 shares at 4/30/01
Common stock, par value $.01: 369,041
Authorized, 40,000,000 shares
Issued and outstanding 27,806,828 July 31,
2001 & 27,181,828 at April 31, 2001,
Capital contributed in excess of par 9,890,268
Treasury stock, at cost (No preferred at (732,000)
7/31 & no preferred at 4/30
and common 600,000 at 7/31 & 600,000 at 4/30)
Retained deficit (5,285,571)
(deficit of $11,938,813 eliminated October 31,
1992)
Total shareholders' equity 4,241,738
_________
Total liabilities and shareholders' equity $10,606,614
==========
The accompanying notes are an integral part of these balance sheets.
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED
July 31,
2001 2000
(unaudited) (unaudited)
Net sales $ 3,254,990 $ 982,586
Cost of sales 2,192,562 837,423
________ _________
1,062,428 145,163
Selling, general and
administrative expenses 486,529 484,921
________ _________
Operating income (loss) $ 575,899 $ (339,758)
Other income (expense):
Interest expense (89,975) (83,545)
Interest revenue 42,958 36,360
Other 3,435 2,005
________ __________
Other expense $ (43,582) $ (45,180)
Income (loss)from
continuing operations
before taxes 532,317 (384,938)
Provision for income taxes
from continuing operations 5,000 -
Income (loss) from _________ __________
continuing operations $ 527,317 $ (384,938)
_________ __________
Net income (loss) $ 527,317 $ (384,938)
Basic earnings (loss) per
common share:
Continuing operations $ 0.02 $ (0.02)
________ _________
$ 0.02 $ (0.02)
Shares used in per share
calculation 31,337,597 21,438,725
Diluted earnings (loss) per
common share 0.02 (0.02)
________ _________
Continuing operations $ 0.02 $ (0.02)
Shares used in per share
calculation 31,337,597 21,438,725
The accompanying notes are an integral part of these statements.
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
July 31,
2001 2000
(unaudited) (unaudited)
Cash flows from operating
activities:
Net income (loss) $ 527,317 $ (384,938)
Income (loss) from
discontinued operations - -
Income from continuing
operations 527,317 (384,938)
Adjustments to reconcile net
income (loss) to net cash (used
in) operations:
Depreciation 41,111 51,037
Amortization - 16,808
Other noncash expenses 5,000 -
Changes in assets and liabilities:
Accounts receivable (1,261,242) 126,627
Contracts in process - 326,250
Inventories 1,190,191 (122,109)
Prepaid expenses and other
current assets 5,858 648
Other assets and other - 3,018
Accounts payable (173,021) 37,195
Customer deposits (167,500) (81,228)
Accrued liabilities 12,806 (19,239)
_________ _________
Cash provided by (used
in) operations $ 180,520 $ (45,931)
_________ _________
Cash flows from investing
activities:
Capital expenditures, net (7,741) -
Indian Gaming Developments 174,303 42,099
Supplemental Type Certificates (10,520) -
_________ ________
Cash used in investing activities 156,042 $ 42,099
Cash flows from financing
activities:
Net borrowings under promissory note 272,881 23,727
Repayments of long-term
debt and lease obligations (625,133) (84,676)
_________ ________
Cash provided by
financing activities $ (352,252) $ (60,949)
_________ ________
Net increase (decrease) in cash (15,690) (64,781)
Cash, beginning of period 108,071 160,090
_________ ________
Cash, end of period $ 92,381 $ 95,309
Supplemental disclosures of cash
flow information:
Interest paid 486,104 83,545
Income taxes paid - -
The accompanying notes are an integral part of these statements.
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited Consolidated Financial Statements
have been prepared in accordance with the instructions to Form 10-Q of
Regulation S-X and do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of the management of the
Company, all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation have been included. Operating results
for the three months ended July 31, 2001 are not indicative of the
results of operations that may be expected for the year ending
April 30, 2002.
Certain reclassifications within the financial statement captions have
been made to maintain consistency in presentation between years.
2. Indian Gaming: The Company is advancing funds for the
establishment of Indian gaming. These funds have been capitalized in
accordance with Statements of Financial Accounting Standards (SFAS)
67 "Accounting for Costs and Initial Rental Operations of Real Estate
Projects." Such standard requires costs associated with the acquisition,
development, and construction of real estate and real estate-related
projects to be capitalized as part of that project. The realization of these
advances is predicated on the ability of the Company and their Indian
gaming clients to successfully open and operate the proposed casinos.
There is no assurance that the Company will be successful. The
inability of the Company to recover these advances could have a
material adverse effect on the Company's financial position and results
of operations.
Advances to the tribes and for gaming developments are capitalized and
recorded as receivables from the tribes. These receivables, shown as
Advances for Indian Gaming Development on the balance sheet,
represent costs to be reimbursed to the Company pending approval of
Indian gaming in several locations. The Company has agreements in
place which require payments to be made to the Company for the
respective projects upon opening of Indian gaming facilities. Once
gaming facilities have gained proper approvals, the Company will enter
into note receivable arrangements with the tribe to secure
reimbursement of advanced funds to the Company for the particular
project. The Company currently has one note receivable shown as Note
Receivable From Indian Gaming Development on the balance sheet.
Reserves are recorded for Indian Gaming Development costs that cannot
be determined whether reimbursement from the Tribes will occur. We
have agreements with the Tribes to be reimbursed for all costs incurred
by us to develop gaming when the facilities are constructed and opened.
Because the Stables represents the only operations opened, there is
uncertainty as to whether reimbursement on all remaining costs that
have been reserved will occur. It is our policy therefore, to reduce the
respective reserves as reimbursement from the Tribes is collected.
The Company has capitalized approximately $1,866,322 and $1,861,376
at July 31, 2001 and April 30, 2001 respectively, related to the
development of Indian gaming facilities. These amounts are net of
reserves of $2,718,928 in fiscal year 2001 and 2000, which were
established to reserve for potentially unreimburseable costs. In the
opinion of management, the net advances will be recoverable through
the gaming activities. Current economic projections for the gaming
activities indicate adequate future cash flows to recover the advances.
In the event the Company and its Indian clients are unsuccessful in
establishing such operations, these net recorded advances will be
recovered through the liquidation of the associated assets. The
Company has title to land purchased for Indian gaming. These tracts,
currently owned by the Company, could be sold to recover costs in the
projects.
As a part of a Management Contract approved by the National Indian
Gaming Commission (NIGC) on January 14, 1997, between the
Company's (then) wholly owned subsidiary, Butler National Service
Corporation, and the Miami Tribe of Oklahoma and the Modoc Tribe of
Oklahoma (the Tribes), the Company agreed to convert their current
unsecured receivable from the Tribes to a secured note receivable with
the Tribes of $3,500,000 at 2 percent over prime, to be repaid over five
years, for the construction of the Stables gaming establishment and
reimbursement for previously advanced funds. Security under the
contract includes the Tribes' profits from all tribal gaming enterprises
and all assets of the Stables except the land and building. In conjunction
with the dividend of Butler National Services Corporation (BNSC)
shares to Company shareholders in May, 1999 $1,607,642 of the note
was an asset of BNSC and $1,770,351 was an asset of the Company.
The Company is currently receiving payments on the note on the Stables'
operation. Amounts to be received on the notes are 2002 - $468,137;
2003 - $647,285 and 2004 - $638,041.
3. Quasi Reorganization: After completing a three-year program of
restructuring the Company's operation, on October 31, 1992, the
Company adjusted the accumulated deficit (earned surplus benefit) to a
zero balance thereby affording the Company a "fresh start." No assets
or liabilities required adjustment in this process as they had been
recorded at fair value. The amount of accumulated deficit eliminated as
of October 31, 1992, was $11,938,813. Upon consummation of the
reorganization, all deficits in the surplus accounts were eliminated
against paid-in capital.
4. New Accounting Standards: The American Institute of Certified
Public Accountants has issued SOP 98-5, "Reporting on the costs of
start-up activities." This standard provides a change in the capitalization
policy for start up costs. The standard is required for the Company's
fiscal year-end 1999. The Company has evaluated this standard and
concluded its adoption will have no material effect to the financial
statements.
5. Earnings Per Share: Earnings per common share is based on the
weighted average number of common shares outstanding during the
year. Stock options, convertible preferred, and convertible debentures
have been considered in the dilutive earnings per share calculation, but
not used in 2001 and 2000 because they are anti-dilutive.
7. Research and Development: The Company charges to operations
research and development costs. The amount charged in the quarter
ended July 31, 2001 was approximately $208,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First quarter fiscal 2002 compared to first quarter fiscal
2001
Overview: Consolidated sales were $3,254,990 for the three months
ended July 31, 2001, compared to $982,586 for the three months ended
July 31, 2000, an increase of (231%). Sales increased in the Avionics
segment (374%), increased in the Aircraft Modifications segment (36.4%),
and increased in the Monitoring Services segment (11.5%).
The Company recorded a net profit from continuing operations of
$527,317 in the current quarter compared to a $384,937 net loss in the
comparable period of fiscal 2001.
Selling, General and Administrative expenses were $486,529 for the
current quarter, an increase of $1,608 from the prior year.
Discussion of the specific changes by operation at each business
segment follows:
Aircraft Modifications: Sales from the Aircraft Modifications business
segment increased $206,088 (36.4%) from $565,479 in the first quarter of
the prior fiscal year to $771,567 in the current first quarter of fiscal
2002. Modified aircraft sales were $1,425,000 for the current fiscal
current fiscal quarter. First quarter operating profit was $255,021
in fiscal 2002 and $(195,915) in fiscal 2001. Additional emphasis is
being placed on the purchase, modify and resale product line to increase
market share of all modification products.
Avionics: Avionics unit sales were $588,718 for the three months
ended July 31, 2001 compared to $124,301 in the comparable period of
the preceding year, an increase of (374%). The increase resulted from
increased sales of aviation safety products. Operating profits for the three
months ended July 31, 2001, were $134,017 compared to $(8,480) for
the three months ended July 31, 2000. The Company believes the sales
volume will remain relatively stable with growth from new projects for
the next few years.
SCADA Systems and Monitoring Services: Sales for the three months
ended July 31, 2001 were $296,893 compared to sales of $266,237 for
the comparable period of the prior year an increase of 11.5%. Operating
profit for the three months was $27,870 compared to $45,567 for the
three months ended July 31, 2000. Fluctuations above the basic service
business revenues are expected from quarter to quarter and year to year.
Temporary Services: This segment did not recognize any revenue in
the first quarter of fiscal 2002 and fiscal 2001.
Management Services:
-General-
Indian Gaming Management (a division of Butler National
Corporation): This segment received $45,851 in interest income and
incurred no expenses during the current quarter.
COSTS AND EXPENSES
Operating expenses (selling, general and administrative): Expenses in
the three months ended July 31, 2001, were $486,529 or 15% of sales
compared to $484,921 or 49% of sales for the three months ended July
31, 2000, an increase of $1,608 or 0.3%.
Interest expense for the three months ended July 31, 2001, increased
$6,430 from $83,545 in the first quarter of the prior year to $83,545.
The Company continues to use its line of credit to maintain operations.
Other income(expense) is income of $3,435 in the quarter ended July
31, 2001, versus income of $2,005 in the quarter ended July 31, 2000.
The Company employed 48 at July 31, 2001, and 69 at July 31, 2000.
EARNINGS
The Company recorded a profit of $527,317 in the three months ended
July 31, 2001. This is comparable to a loss of $384,937 (see note 2) in
the three months ended July 31, 2000. Income per share is $0.02 and
income per share is $(.02) for the three months ending July 31, 2001,
and July 31, 2000, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Borrowed funds have been used primarily for working capital. Bank
(Industrial State Bank) debt related to the Company's operating line was
$421,471 at July 31, 2001, and was $438,902 at July 31, 2000.
The Company's unused line of credit was approximately $78,529 as of
July 31, 2001 and approximately $61,098 as of July 31, 2000. The
interest rate on the Company's line of credit is prime plus two, as of
September 15, 2001, the interest rate is 9.0%.
The Company plans to continue using the promissory notes payable to
fund working capital. The Company believes the extensions will
continue and does not anticipate the repayment of these notes in fiscal
2002. The extensions of the promissory notes payable is consistent with
prior years. If the Bank were to demand repayment of the notes payable
the Company currently does not have enough cash to pay off the notes
without materially adversely affecting the financial condition of the
Company.
The Company does not, as of July 31, 2001 have any material
commitments for other capital expenditures other than the Management
Services segment's requirements under the terms of the Indian gaming
Management Agreements. These requirements are further described in
this section.
Depending upon the development schedules, the Company, through
Management Services, will need additional funds to complete its
currently planned Indian gaming opportunities. The Company will use
current cash available, and additional funds, for the start up and
construction of gaming facilities. The Company anticipates initially
obtaining these funds from: internally generated working capital and
borrowings. After a few gaming facilities become operational, gaming
operations will generate additional working capital for the start up
and construction of other gaming facilities. The Company expects
that its start up and construction financing of gaming facilities will
be replaced by other financial lenders, long term financing through debt
issue, or equity issues.
The Company was initially listed in the National Over-the-Counter
market in 1969, under the symbol "BUTL". Effective June 8, 1992, the
symbol was changed to "BLNL". On February 24, 1994, it was listed on
the small cap market under the symbol "BUKS". The Company's common
stock was delisted from the small cap category effective January 1,
1999, and is now listed in the over-the-counter (OTCBB) category.
FORWARD LOOKING INFORMATION
The information set forth below includes "forward-looking" information
as outlined in the Private Securities Litigation Reform Act of 1995. The
Cautionary Statements, filed by the Company as Exhibit 99 to this Form
10-K, are incorporated herein by reference and you are specifically
referred to such Cautionary Statements for a discussion of factors
which could affect the Company's operations and forward-looking statements
contained herein.
PART II.
OTHER INFORMATION
Responses to items 1, 3, and 5 are omitted since these items are either
inapplicable or the response thereto would be negative.
Item 2. Changes in Securities
The Company issued 979,167 shares of common stock
related to the convertible debenture.
Item 4 . Submission of Matters to Vote of Security Holders
None
Item 6. Exhibits and reports on Form 8-K.
(A) Exhibits.
3.1 Articles of Incorporation, as amended are incorporated
by reference to Exhibit 3.1 of the Company's Form 10-K
for the year ended April 30, 1988
3.2 Bylaws, as amended, are incorporated by reference
to Exhibit 3.2 of the Company's Form 10-K
for the Statement dated August 16, 1996.
99 Exhibit Number 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, 1998.
27.1 Financial Data Schedule (EDGAR version only).
Filed herewith.
The Company agrees to file with the Commission any
agreement or instrument not filed as an exhibit upon the
request of the Commission.
(B) Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUTLER NATIONAL CORPORATION
(Registrant)
September 28, 2001 /S/ Clark D. Stewart
Date Clark D. Stewart
(President and Chief
Executive Officer)
September 28, 2001 /S/ Stanley Nolind
Date Stanley Nolind
(Chief Financial Officer)