Butler National (BUKS) 10-Q 15 Dec 15 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended	6 Months Ended
	Oct. 31, 2015shares	Oct. 31, 2015shares
Document and Entity Information [Abstract]
Entity Registrant Name		BUTLER NATIONAL CORP
Entity Central Index Key		15,847
Current Fiscal Year End Date		--04-30
Entity Well-known Seasoned Issuer		No
Entity Voluntary Filers		No
Entity Current Reporting Status		Yes
Entity Filer Category		Smaller Reporting Company
Entity Common Stock, Shares Outstanding	0	0
Document Fiscal Year Focus		2,016
Document Fiscal Period Focus	Q2
Document Type		10-Q
Amendment Flag		false
Document Period End Date		Oct. 31, 2015

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands	Oct. 31, 2015	Apr. 30, 2015
CURRENT ASSETS:
Cash	$ 5,622	$ 6,195
Accounts receivable	1,985	1,724
Inventories
Raw materials	5,910	5,277
Work in process	1,795	1,364
Finished goods	280	396
Total inventory	7,985	7,037
Prepaid expenses and other current assets	946	862
Total current assets	16,538	15,818
PROPERTY, PLANT AND EQUIPMENT:
Land and building	4,071	4,071
Aircraft	7,493	7,493
Machinery and equipment	3,612	3,612
Office furniture and fixtures	5,515	5,396
Leasehold improvements	4,081	4,081
Property, plant and equipment, gross	24,772	24,653
Accumulated depreciation	(14,391)	(13,473)
Total property, plant and equipment	10,381	11,180
SUPPLEMENTAL TYPE CERTIFICATES (net of amortization of $3,257 at October 31, 2015 and $2,975 at April 30, 2015)	6,064	5,863
OTHER ASSETS:
Deferred tax asset	1,455	1,197
Other assets (net of accumulated amortization of $4,877 at October 31, 2015 and $4,050 at April 30, 2015)	6,660	7,540
Total other assets	8,115	8,737
Total Assets	41,098	41,598
CURRENT LIABILITIES:
Promissory notes	2,728	1,510
Current maturities of long-term debt	2,599	2,412
Accounts payable	1,686	1,874
Customer deposits	1,119	837
Gaming facility mandated payment	1,387	1,299
Compensation and compensated absences	999	1,294
Other current liabilities	249	100
Total current liabilities	10,767	9,326
LONG-TERM DEBT, NET OF CURRENT MATURITIES:	5,497	6,870
Total liabilities	$ 16,264	$ 16,196
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.01: authorized 100,000,000 shares issued and outstanding 62,860,098 shares at October 31, 2015 and 62,860,098 shares at April 30, 2015	$ 628	$ 628
Capital contributed in excess of par	13,487	13,487
Treasury stock at cost, 600,000 shares	(732)	(732)
Retained Earnings	7,701	8,161
Total stockholders' equity Butler National Corporation	21,084	21,544
Noncontrolling Interest in BHCMC, LLC	3,750	3,858
Total stockholders' equity	24,834	25,402
Total Liabilities and Stockholders' Equity	41,098	41,598
Preferred Class A [Member]
STOCKHOLDERS' EQUITY:
Preferred stock	0	0
Preferred Class B [Member]
STOCKHOLDERS' EQUITY:
Preferred stock	$ 0	$ 0

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Oct. 31, 2015	Apr. 30, 2015
ASSETS
SUPPLEMENTAL TYPE CERTIFICATES net of amortization	$ 3,257	$ 2,975
OTHER ASSETS
Other assets, accumulated amortization	$ 4,877	$ 4,050
STOCKHOLDERS' EQUITY:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	62,860,098	62,860,098
Common stock, shares outstanding (in shares)	62,860,098	62,860,098
Common stock, shares owed but not issued (in shares)	0	0
Treasury stock (in shares)	600,000	600,000
Class A [Member]
STOCKHOLDERS' EQUITY:
Preferred stock, par value (in dollars per share)	$ 5	$ 5
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Preferred stock, stated value (in dollars per share)	$ 100	$ 100
Preferred stock, dividend rate (in hundredths)	9.80%	9.80%
Preferred stock, liquidation preference value (in hundredths)	9.80%	9.80%
Preferred stock, redemption value	$ 100	$ 100
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Class B [Member]
STOCKHOLDERS' EQUITY:
Preferred stock, par value (in dollars per share)	$ 5	$ 5
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Preferred stock, stated value (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, dividend rate (in hundredths)	6.00%	6.00%
Preferred stock, liquidation preference value (in hundredths)	6.00%	6.00%
Preferred stock, redemption value	$ 1,000	$ 1,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Class A and B [Member]
STOCKHOLDERS' EQUITY:
Preferred stock, designated classes (in shares)	200,000	200,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 31, 2015	Oct. 31, 2014	Oct. 31, 2015	Oct. 31, 2014
REVENUE:
Professional Services	$ 7,334	$ 7,453	$ 14,938	$ 15,077
Aerospace Products	2,772	4,299	6,864	9,066
Total revenue	10,106	11,752	21,802	24,143
COSTS AND EXPENSES:
Cost of Professional Services	4,539	4,611	9,042	9,171
Cost of Aerospace Products	2,449	3,175	5,570	6,674
Marketing and advertising	1,258	1,162	2,454	2,300
Employee benefits	429	403	914	865
Depreciation and amortization	566	691	1,365	1,552
General, administrative and other	1,464	1,343	2,696	2,408
Total costs and expenses	10,705	11,385	22,041	22,970
OPERATING INCOME	(599)	367	(239)	1,173
OTHER INCOME (EXPENSE):
Interest expense	(117)	(303)	(236)	(592)
Other income, net	9	3	10	7
Total other income (expense),	(108)	(300)	(226)	(585)
INCOME (LOSS) BEFORE INCOME TAXES	(707)	67	(465)	588
Net income (loss)	(438)	67	(207)	452
Net income attributable to noncontrolling interest in BHCMC, LLC	(40)	(38)	(252)	(170)
NET INCOME (LOSS) ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION	(478)	29	(459)	282
PROVISION FOR INCOME TAXES
Provision (benefit) for income taxes	$ (269)	$ 0	$ (258)	$ 136
BASIC EARNINGS PER COMMON SHARE (in dollars per share)	$ (0.01)	$ 0	$ (0.01)	$ 0
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION (in shares)	62,260,098	60,893,092	62,260,098	60,893,092
DILUTED EARNINGS PER COMMON SHARE (in dollars per share)	$ (0.01)	$ 0	$ (0.01)	$ 0
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION (in shares)	62,260,098	60,893,092	62,260,098	60,893,092

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Oct. 31, 2015	Oct. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (207)	$ 452
Adjustments to reconcile cash flows from operating activities
Depreciation and amortization	2,027	1,979
Increase (Decrease) in Deferred Income Taxes	(258)	0
Changes in assets and liabilities
Accounts receivable	(261)	609
Inventories	(948)	(1,020)
Prepaid expenses and other current assets	(31)	(223)
Accounts payable	(189)	(168)
Increase (Decrease) in Deferred Income Taxes	(258)	0
Customer deposits	282	601
Accrued liabilities	(295)	(211)
Gaming facility mandated payment	88	(23)
Other liabilities	149	281
Cash flows from operating activities	357	2,277
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(602)	(847)
Cash flows from investing activities	(602)	(847)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings of promissory notes, net	1,218	(210)
Borrowings on long-term debt	70	0
Distribution to noncontrolling member	(360)	0
Repayments of long-term debt	(1,256)	(2,384)
Cash flows from financing activities	(328)	(2,594)
NET DECREASE IN CASH	(573)	(1,164)
CASH, beginning of period	6,195	6,261
CASH, end of period	5,622	5,097
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	237	593
Income taxes paid	$ 0	$ 0

Organization, Consolidated and

Organization, Consolidated and Presentation of Financial Statements	6 Months Ended
	Oct. 31, 2015
Organization, Consolidated and Presentation of Financial Statements [Abstract]
Organization, Consolidated and Presentation of Financial Statements	1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the annual report on Form 10-K for the fiscal year ended April 30, 2015. In our opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three and six months ended October 31, 2015 are not indicative of the results of operations that may be expected for the fiscal year ended April 30, 2016. Certain reclassifications within the condensed financial statement captions have been made to maintain consistency in presentation between years. Financial amounts are in thousands of dollars except per share amounts.

Net Income (Loss) Per Share

Net Income (Loss) Per Share	6 Months Ended
	Oct. 31, 2015
Net Income (Loss) Per Share [Abstract]
Net Income (Loss) Per Share	2. Net Income (Loss) Per Share: The Company follows ASC 260 that requires the reporting of both basic and diluted earnings per share. Basic earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC 260, any anti-dilutive effects on net earnings (loss) per share are excluded. The number of potential common shares as of October 31, 2015 is 69,522,162.

Research and Development

Research and Development	6 Months Ended
	Oct. 31, 2015
Research and Development [Abstract]
Research and Development	3. Research and Development: We invested in research and development activities. The amount invested in the six months ended October 31, 2015 and 2014 pectively.

Borrowings

Borrowings	6 Months Ended
	Oct. 31, 2015
Borrowings [Abstract]
Borrowings	4. Debt: A At October 31, 2015, there were several notes collateralized by aircraft security agreements totaling $1,060. 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 $1.0 million for real estate located in Olathe, Kansas and Tempe, Arizona. The due date for the notes are March 2019 and August 2019. One note totaling $299 remains for real estate purchased in Dodge City, Kansas and matures in June 2016. One note collateralized by equipment totals an additional $23 and matures in June 2016. BHCMC arranged to acquire for ownership by the Kansas Lottery additional gaming machines. The balance of these financed payables is $610. One note collateralized by all of BNSC's assets and compensation due under the State Management contract totals $5,104 and matures in May 2020. The proceeds were used primarily to retire obligations with BHCI (a non-controlling owner of BHCMC, LLC). We are not in default of any of our notes as of October 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.

Other Assets

Other Assets	6 Months Ended
	Oct. 31, 2015
Other Assets [Abstract]
Other Assets	5. Other Assets: Our other asset account includes assets of $5,500 related to the Kansas Expanded Lottery Act Management Contract privilege fee, $3,705 of gaming equipment we were required to pay for ownership by the State of Kansas Lottery, and JET autopilot intellectual property of $1,417 and miscellaneous other assets of $915. BHCMC expects the $5,500 privilege fee to have a value over the remaining life of the Management Contract with the State of Kansas which will end in December 2024. There is no assurance of the Management Contract renewal. The Managers Certificate asset for use of gaming equipment is being amortized over a period of three years based on the estimated useful life of gaming equipment. The JET intellectual property is being amortized over a period of 15 years.

Stock Options

Stock Options	6 Months Ended
	Oct. 31, 2015
Stock Options [Abstract]
Stock Options	6. Stock Options: At October 31, 2015 we had 7,262,064 outstanding stock options that were issued on December 31, 2010 all of which expire on December 31, 2015. The exercise price for the incentive stock options is $0.49. The Board of Directors approved the issuance of incentive stock options on December 31, 2010 with the goals of increasing shareholder value, expanding the number of managers participating in the program, and increasing the percentage of compensation tied to share price performance. The incentive stock options are allocated in three groups with two conditions for vesting. The first condition is stock price and the second condition is time. There are 2,420,688 options at $0.49 that may be exercised if and when the share price reaches $0.92, and 2,420,688 options at $0.49 that may be exercised if and when the share price reaches $1.41, and 2,420,688 options at $0.49 that may be exercised on or after December 31, 2013 if and when the share price reaches $1.90.

Subsequent Events

Subsequent Events	6 Months Ended
	Oct. 31, 2015
Subsequent Events [Abstract]
Subsequent Events [Text Block]	7. Subsequent Events: The Company evaluated its October 31, 2015 financial statements for subsequent events through ng date of this report. The Company i subsequent events that would require recognition or disclosure in the financial statements.

Net Income (Loss) Per Share (De

Net Income (Loss) Per Share (Details)	6 Months Ended
	Oct. 31, 2015shares
Net Income (Loss) Per Share [Abstract]
Potential common shares excluded from earnings per share calculation (in shares)	69,522,162

Research and Development (Detai

Research and Development (Details) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2015	Oct. 31, 2014
Research and Development [Abstract]
Research and development	$ 937	$ 759

Borrowings (Details)

Borrowings (Details) $ in Thousands	Oct. 31, 2015USD ($)Note
Line of Credit [Member]
Debt Instrument [Line Items]
Number of lines of credit | Note	1
Unused line	$ 2,272,000
Line of Credit Facility, Maximum Borrowing Capacity	5,000
Line of credit facility borrowing capacity	$ 5,000
Line of Credit 1 [Member]
Debt Instrument [Line Items]
Number of lines of credit | Note	1
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,000
Line of credit facility borrowing capacity	$ 1,000
Line of Credit 2 [Member]
Debt Instrument [Line Items]
Number of lines of credit | Note	1
Line of Credit Facility, Maximum Borrowing Capacity	$ 2,500
Line of credit facility borrowing capacity	$ 2,500
Line of Credit 3 [Member]
Debt Instrument [Line Items]
Number of lines of credit | Note	1
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,000
Line of credit facility borrowing capacity	1,000
Notes Collateralized by Aircraft Security Agreements [Member]
Debt Instrument [Line Items]
Notes payable	1,060
Notes Payable to Bank [Member]
Debt Instrument [Line Items]
Notes payable	$ 1,000
Number of notes | Note	3
Notes for Real Estate [Member]
Debt Instrument [Line Items]
Notes payable	$ 299
Number of notes | Note	1
Notes Collateralized by Automobiles and Equipment [Member]
Debt Instrument [Line Items]
Notes payable	$ 23
BHCMC Lottery Gaming Machines [Member]
Debt Instrument [Line Items]
Notes payable	$ 610
Number of notes | Note	1
Second Obligation With BHCI [Member]
Debt Instrument [Line Items]
Notes payable	$ 1,557
Number of notes | Note	1
Face value of note entered	$ 2,500
Second BHCI Obligation Payment	$ 55
Obligation With BHCI [Member]
Debt Instrument [Line Items]
Number of notes | Note	1
First Obligation With BHCI [Member]
Debt Instrument [Line Items]
Face value of note entered
First BHCI Obligation Payment
Note collateralized by BNSC's assets and compensation due under State Mgmt Contract [Member]
Debt Instrument [Line Items]
Notes payable	$ 5,104

Other Assets (Details)

Other Assets (Details) $ in Thousands	6 Months Ended
	Oct. 31, 2015USD ($)
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 915
Kansas Expanded Lottery Act Contract Privilege [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	5,500
Intangible Gaming Support Items [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	3,705
JET Autopilot Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 1,417
Useful life	15 years

Stockholders' Equity (Details)

Stockholders' Equity (Details) - shares	Oct. 31, 2015	Apr. 30, 2015
Stockholders' Equity [Abstract]
Common stock, shares issued (in shares)	62,860,098	62,860,098

Stock Options (Details)

Stock Options (Details) - $ / shares	1 Months Ended
	Dec. 31, 2010	Oct. 31, 2015
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued (in shares)	7,200,000
Expiration date	Dec. 31, 2015
Stock exercise price (in dollars per share)		$ 1.42
Incentive stock options condition for vesting [Abstract]
Shares outstanding (in shares)		7,262,064
Incentive Stock Option [Member] | Year 1 Target [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock exercise price (in dollars per share)		$ 0.49
Incentive stock options condition for vesting [Abstract]
Number of options than can be exercised (in shares)		2,420,688
Target price of share (in dollars per share)		$ 0.92
Incentive Stock Option [Member] | Year 2 Target [Member]
Incentive stock options condition for vesting [Abstract]
Number of options than can be exercised (in shares)		2,420,688
Target price of share (in dollars per share)		$ 1.41
Incentive Stock Option [Member] | Year 3 Target [Member]
Incentive stock options condition for vesting [Abstract]
Number of options than can be exercised (in shares)		2,420,688
Target price of share (in dollars per share)		$ 1.90

Subsequent Events (Details)

Subsequent Events (Details) - USD ($) $ in Thousands	Feb. 02, 2015	Mar. 07, 2014
Subsequent Event [Line Items]
Damages Awarded to Plaintiff		$ 1,424
Damages Received from Defendant	$ 1,324