Management Comments:
"Our sales for the fiscal quarter-ended October 31, 2006, decreased 13% to $4.4 million as compared to $5.1 million for the same period in 2005. Net income over the same periods increased 149% from $107,000 to $266,000. As stated last quarter, we are striving to get more of the revenue to the bottom-line and we feel this shows a significant step in that direction. We continue with our commitment to the "Classic Aviation" products while improving profitability. In an effort to further develop and grow our "Classic Aviation" product line, we expensed 12% of sales on product development and showed increasing profit during a tough but improving year in the aerospace industry. We continue to work on new products and potential acquisitions to stabilize our long-term revenues. Sales from Aircraft Modifications including modified aircraft increased $95,000 (4.7%) from $2.0 million in the second quarter of fiscal year 2006 to $2.1 million in the current three months of fiscal 2007. RVSM revenues increased by 36.7% in the second quarter of fiscal 2007, compared to the second quarter of fiscal 2006. We have received RVSM group approval for the Learjet 35/36 model aircraft and are beginning to see sales of this RVSM solution as well as continued sales of the Lear 20 model aircraft RVSM solution. We are projecting sales of 50 to 100 Learjet 20 series and Learjet 30 series RVSM installations in the next two to five years. Sales from the Avionics division increased 78.5%, from $656,000 in second quarter of fiscal 2006, to $1.2 million in the current three months of fiscal 2007. We expect this business segment to significantly increase in future years due to the addition of new fuel system protection devices like the TSD, GFI and other classic aviation defense products. During the second quarter of fiscal 2007 we continued to focus our efforts on the build up of product for several customers. Monitoring sales increased from $355,000 for the three months ended October 31, 2005 to $661,000 for the three months ended October 31, 2006, an increase of 86%. During the three months ended October 31, 2006, we maintained a relatively level volume of long-term contracts with municipalities. Revenue fluctuates due to the introduction of new products and services and the related installations of these products. Our contract with one of our larger customers has been renewed through fiscal 2008. We had an operating profit of $56,000 in Monitoring Services for the three months ended October 31, 2006, compared to $30,000 for the three months ended October 31, 2005. Revenues from Management Services related to gaming increased 26% for the six months ending October 31, 2006 compared to the same period last year. We are continuing to see positive effects of the Class III gaming. As of October 31, 2006, our backlog is in excess of $15 million. This backlog reflects our product development efforts and the related potential results. Our challenge is to ship the backlog and further take advantage of these new products. However, because of our major investment in product development required to continue these new products, we may not always maintain smooth and continuous quarterly profits. Butler National demonstrated tangible progress in these past two quarters. We want to build on these results and focus on sustainable bottom line performance and increasing shareholder value. We look forward to a successful balance of fiscal 2007. We feel the opportunities in front of us are more significant than what we have seen in the past," commented Clark D. Stewart, President of the Company. Our Business:
Butler National Corporation operates in the Aerospace and Services business segments. The Aerospace segment focuses on the manufacturing of support systems for "Classic" business, commercial, and military aircraft including the Butler National TSD for the Boeing 737 and 747 Classic aircraft, switching equipment for Boeing/Douglas Aircraft, weapon control systems for Boeing Helicopter and performance enhancement structural modifications for Learjet, Cessna, Dassault and Raytheon business aircraft. Services include electronic monitoring of water pumping stations, temporary employee services, Indian gaming services and administrative management services.
Forward-Looking Information:
The information set forth above may include "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 the Company's Annual Report on Form 10-K, are incorporated herein by reference and investors 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. These Risk Factors are also listed in Part I Item 1A of the company's Annual Report on Form 10-K.
FOR MORE INFORMATION CONTACT:
Craig D. Stewart, Investor Relations
Butler National Corporation
19920 W. 161st Street
Olathe, KS 66062
Direct Investor Relations (214) 663-5833
Phone office (913) 780-9595
Fax office (913) 780-5088
Jim Drewitz, Public Relations
jdrewitz@comcast.net Public Relations Phone (972) 355-6070
jdrewitz@comcast.net For more information, please visit the Company web site: www.butlernational.com
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