Butler National (BUKS) 10-Q 14 Sep 16 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Jul. 31, 2016	Sep. 09, 2016
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		64,066,873
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 31, 2016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands	Jul. 31, 2016	Apr. 30, 2016
CURRENT ASSETS:
Cash	$ 6,307	$ 7,381
Accounts receivable, net of allowance fo doubtful accounts	2,164	1,574
Inventories
Parts and Raw materials	6,365	6,339
Work in process	1,024	1,349
Finished goods	247	275
Total inventory	7,636	7,963
Prepaid expenses and other current assets	852	873
Total current assets	16,959	17,791
PROPERTY, PLANT AND EQUIPMENT:
Land and building	4,090	4,081
Aircraft	5,888	5,712
Machinery and equipment	3,680	3,630
Office furniture and fixtures	5,710	5,637
Leasehold improvements	4,032	4,032
Property, plant and equipment, gross	23,400	23,092
Accumulated depreciation	(13,595)	(13,218)
Total property, plant and equipment	9,805	9,874
SUPPLEMENTAL TYPE CERTIFICATES (net of amortization of $3,731 at July 31, 2016 and $3,549 at April 30, 2016)	6,414	6,481
OTHER ASSETS:
Deferred tax asset	978	1,104
Other assets (net of accumulated amortization of $5,902 at July 31, 2016 and $5,579 at April 30, 2016)	7,124	7,447
Total other assets	8,102	8,551
Total Assets	41,280	42,697
CURRENT LIABILITIES:
Promissory notes	4,033	3,988
Current maturities of long-term debt	2,306	2,464
Accounts payable	1,774	2,018
Customer deposits	30	258
Gaming facility mandated payment	804	1,206
Compensation and compensated absences	1,244	1,322
Other current liabilities	190	125
Total current liabilities	10,381	11,381
LONG-TERM DEBT, NET OF CURRENT MATURITIES:	4,713	5,218
Total liabilities	15,094	16,599
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01: authorized 100,000,000 shares issued and outstanding 64,066,873 shares at July 31, 2016 and 64,066,873 shares at April 30, 2016	640	640
Capital contributed in excess of par	13,716	13,716
Treasury stock at cost, 600,000 shares	(732)	(732)
Retained Earnings	8,409	8,185
Total stockholders' equity Butler National Corporation	22,033	21,809
Noncontrolling Interest in BHCMC, LLC	4,153	4,289
Total stockholders' equity	26,186	26,098
Total Liabilities and Stockholders' Equity	41,280	42,697
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	3 Months Ended	12 Months Ended
	Jul. 31, 2016	Apr. 30, 2016
ASSETS
SUPPLEMENTAL TYPE CERTIFICATES net of amortization	$ 3,731	$ 3,549
OTHER ASSETS
Other assets, accumulated amortization	$ 5,902	$ 5,579
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)	64,066,873	64,066,873
Common stock, shares outstanding (in shares)	64,066,873	64,066,873
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	9.80%	9.80%
Preferred stock, liquidation preference value	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	6.00%	6.00%
Preferred stock, liquidation preference value	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
	Jul. 31, 2016	Jul. 31, 2015
REVENUE:
Professional services	$ 7,483	$ 7,604
Aerospace products	3,906	4,092
Total revenue	11,389	11,696
COSTS AND EXPENSES:
Cost of professional services	4,520	4,503
Cost of aerospace products	2,871	3,121
Marketing and advertising	1,013	1,201
Employee benefits	475	485
Depreciation and amortization	507	610
General, administrative and other	1,292	1,415
Total costs and expenses	10,678	11,335
OPERATING INCOME	711	361
OTHER INCOME (EXPENSE):
Interest expense	(117)	(120)
Other income, net	(20)	1
Total other income (expense),	(137)	(119)
INCOME (LOSS) BEFORE INCOME TAXES	574	242
PROVISION FOR INCOME TAXES
Provision (benefit) for income taxes	0	11
Deferred income tax	126	0
NET INCOME (LOSS)	448	231
Net income attributable to noncontrolling interest in BHCMC, LLC	(224)	(212)
NET INCOME (LOSS) ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION	$ 224	$ 19
BASIC EARNINGS PER COMMON SHARE (in dollars per share)	$ 0	$ 0
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION (in shares)	63,466,873	62,260,098
DILUTED EARNINGS PER COMMON SHARE (in dollars per share)	$ 0	$ 0
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION (in shares)	63,466,873	62,260,098

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Jul. 31, 2016	Jul. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS)	$ 448	$ 231
Adjustments to reconcile cash flows from operating activities
Depreciation and amortization	882	1,059
Increase (Decrease) in Deferred Income Taxes	126	0
Changes in operating assets and liabilities
Accounts receivable	(590)	(210)
Inventories	327	(30)
Prepaid expenses and other assets	21	26
Accounts payable	(244)	(373)
Increase (Decrease) in Deferred Income Taxes	126	0
Customer deposits	(228)	(278)
Accrued liabilities	(78)	(183)
Gaming facility mandated payment	(402)	(264)
Other liabilities	65	97
Cash flows from operating activities	327	75
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(423)	(321)
Cash flows from investing activities	(423)	(321)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings of promissory notes, net	45	531
Borrowings on long-term debt	0	70
Distribution to noncontrolling member	(360)	(360)
Repayments of long-term debt	(663)	(606)
Net cash provided by (used in ) financing activities	(978)	(365)
NET DECREASE IN CASH	(1,074)	(611)
CASH, beginning of period	7,381	6,195
CASH, end of period	6,307	5,584
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	117	120
Income taxes paid	$ 0	$ 0

Organization, Consolidated and

Organization, Consolidated and Presentation of Financial Statements	3 Months Ended
	Jul. 31, 2016
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, 2016. In our opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three months ended July 31, 2016 are not indicative of the results of operations that may be expected for the fiscal year ended April 30, 2017. Certain reclassifications within the condensed financial statement captions have been made to maintain consistency in presentation between years. These reclassifications have no impact on the reported results of operations. Financial amounts are in thousands of dollars except per share amounts.

Net Income (Loss) Per Share

Net Income (Loss) Per Share	3 Months Ended
	Jul. 31, 2016
Net Income (Loss) Per Share [Abstract]
Net Income (Loss) Per Share	2. Net Income (Loss) Per Share: Butler National Corporation ("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 July 31, 2016 is 63,466,873.

Research and Development

Research and Development	3 Months Ended
	Jul. 31, 2016
Research and Development [Abstract]
Research and Development	3. Research and Development: We invested in research and development activities. The amount invested in the three months ended July 31, 2016 and 2015 pectively.

Borrowings

Borrowings	3 Months Ended
	Jul. 31, 2016
Borrowings [Abstract]
Borrowings	4. Debt: A At July 31, 2016, there were several notes collateralized by aircraft security agreements totaling $700. 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 $785 for real estate located in Olathe, Kansas and Tempe, Arizona. The due date for the notes is March 2019. One note totaling $287 remains for real estate purchased in Dodge City, Kansas and matures in June 2019. BHCMC arranged to acquire for ownership by the Kansas Lottery additional gaming machines. The balance of these financed payables is $901. One note collateralized by all of the BNSC assets and compensation due under the State Management contract totals $4,346 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 July 31, 2016. 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 2017 and beyond.

Other Assets

Other Assets	3 Months Ended
	Jul. 31, 2016
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, $4,576 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 $1,533. 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	3 Months Ended
	Jul. 31, 2016
Stock Options [Abstract]
Stock Options	6. Stock Options: At July 31, 2016 we had no outstanding stock options. There were 7,262,064 outstanding stock options that were issued on December 31, 2010 all of which expired on December 31, 2015.

Subsequent Events

Subsequent Events	3 Months Ended
	Jul. 31, 2016
Subsequent Events [Abstract]
Subsequent Events	7. Subsequent Events: The Company evaluated its July 31, 2016 financial statements for subsequent events through the fili ng date of this report. The Company i s not aware of any subsequent events that would require recognition or disclosure in the financial statements.

Net Income (Loss) Per Share (De

Net Income (Loss) Per Share (Details)	3 Months Ended
	Jul. 31, 2016shares
Net Income (Loss) Per Share [Abstract]
Potential common shares excluded from earnings per share calculation (in shares)	63,466,873

Research and Development (Detai

Research and Development (Details) - USD ($) $ in Thousands	3 Months Ended
	Jul. 31, 2016	Jul. 31, 2015
Research and Development [Abstract]
Research and development	$ 299	$ 555

Borrowings (Details)

Borrowings (Details) $ in Thousands	Jul. 31, 2016USD ($)Note
Bank Line of Credit due August 2015 [Member]
Debt Instrument [Line Items]
Number of lines of credit | Note	1
Unused line	$ 967,000
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	700
Notes Payable to Bank [Member]
Debt Instrument [Line Items]
Notes payable	$ 785
Number of notes | Note	3
Notes for Real Estate [Member]
Debt Instrument [Line Items]
Notes payable	$ 287
Number of notes | Note	1
BHCMC Lottery Gaming Machines [Member]
Debt Instrument [Line Items]
Notes payable	$ 901
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	$ 4,346

Other Assets (Details)

Other Assets (Details) $ in Thousands	3 Months Ended
	Jul. 31, 2016USD ($)
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 1,533
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	4,576
JET Autopilot Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 1,417
Useful life	15 years

Stock Options (Details)

Stock Options (Details) - $ / shares	1 Months Ended
	Dec. 31, 2010	Jul. 31, 2016
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