UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
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FORM 10-K |
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( Mark One)[X] |
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For the fiscal year ended April 30, 2011 |
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[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from __________ to __________. |
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Commission File Number 0-1678 |
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BUTLER NATIONAL CORPORATION |
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Kansas |
41-0834293 |
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19920 West 161st Street, Olathe, Kansas 66062 |
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Registrant's telephone number, including area code: (913) 780-9595 |
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Securities registered pursuant to Section 12(b) of the Act: None |
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Securities registered pursuant to Section 12(g) of the Act: |
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Common Stock $.01 Par Value |
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Indicate by check if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. |
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] |
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. |
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Indicate by check mark whether the registrant is a shell company. Yes [ ] No [X] |
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The number of shares outstanding of the registrant's common stock, $0.01 par value, as of July 22, 2011, was 57,194,262 shares. |
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DOCUMENTS INCORPORATED BY REFERENCE: NONE |
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This Form 10-K consists of 72 pages (including exhibits). The index to exhibits is set forth on pages 37-39. |
PART I |
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Item 1. BUSINESS |
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Forward Looking Information |
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The information set forth below includes "forward-looking" information and is subject to the Risk Factors as outlined in the Private Securities Litigation Reform Act of 1995. The Risk Factors listed under Item 1A of this Form 10-K , and the Cautionary Statements, filed by us as Exhibit 99 to this Form 10-K, are incorporated herein by reference, and you are specifically referred to such Risk Factors and Cautionary Statements for a discussion of factors which could affect our operations and forward-looking statements contained herein. |
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General |
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Butler National Corporation (the "Company" or "BNC") is a Kansas corporation formed in 1960, with corporate headquarters at 19920 West 161st Street, Olathe, Kansas 66062. |
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Current Activities. Our current product lines and services include: |
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Avionics - principally includes the manufacture, sale, and service of airborne electronic switching units used in DC-9, DC-10, DC-9/80, MD-80, MD-90, and the KC-10 aircraft, Transient Suppression Devices (TSDs) for fuel tank protection on Boeing Classic 737 and 747 aircraft, and other Classic aircraft using a capacitance fuel quantity indicating system ("FQIS"), airborne electronics upgrades for classic weapon control systems used on military aircraft and vehicles, and consulting services with airlines and equipment manufacturers regarding fuel system safety requirements. We provide the products through our subsidiary, Butler National Corporation - Tempe, Arizona and the services through Butler National Corporation - Olathe, Kansas ("Avionics", "Classic Aviation Products", "Safety Products", or "Switching Units"). In September 2010 we expanded this division by the acquisition of Kings Avionics Inc. The acquisition of Kings Avionics allows us to transition into the new technology available in avionics. Kings Avionics sells, installs and repairs avionics equipment (airplane radio equipment and flight control systems). These systems are flight display systems which include intuitive touchscreen controls with large display to give users unprecedented access to high-resolution terrain mapping, graphical flight planning, geo-referenced charting, traffic display, satellite weather and much more. Kings is also recognized nationwide for its troubleshooting and repair work particularly on autopilots. Services - SCADA (Supervisory Control and Data Acquisition) Systems and Monitoring Services - principally includes monitoring and related repair services of water and wastewater remote pumping stations through electronic surveillance for municipalities and the private sector. We provide these services through our subsidiary, Butler National Services, Inc. ("Monitoring Services" or "BNS"). Corporate / Professional Services - principally includes providing as a management service licensed architectural services through our subsidiary, BCS Design, Inc. These services include commercial and industrial building design. We have expanded this segment to include aviation-related engineering consulting services and operate as the Butler National Aircraft Certification Center ("BNACC"). Gaming - principally includes business management services provided by our subsidiary, Butler National Service Corporation ("BNSC"). We provide management services to the Boot Hill Casino and Resort which commenced operations on December 15, 2009 through our subsidiary BHCMC, LLC, a Kansas limited liability company jointly owned by BNSC and BHC Investment Company, L.C. (BHCI). BHCI is not a related party. |
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Assets as of April 30, 2011 and Revenue for the year ended April 30, 2011 . |
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Industry Segment |
Assets |
Revenue |
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Aircraft Modifications |
20.34% |
29.9% |
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Avionics |
16.24% |
11.0% |
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Gaming |
26.74% |
53.7% |
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Monitoring Services |
2.16% |
3.4% |
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Corporate / Professional Services |
34.52% |
2.0% |
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Regulation Under Federal Aviation Administration : Our Avionics and Aircraft Modifications segments are subject to regulation by the Federal Aviation Administration ("FAA"). We manufacture products and parts under FAA Parts Manufacturing Authority (PMA) requiring qualification and traceability of all materials and vendors used by us. We make aircraft modifications pursuant to the authority granted by Supplemental Type Certificates issued by the FAA. We repair aircraft parts pursuant to the authority granted by our FAA Authorized Repair Station. Violation or changes to FAA regulations could be detrimental to our operation in these business segments.Licensing and Regulation under Federal Indian Law: Before commencing gaming operations (Class II or Class III) on Indian Land, we must obtain the approval of various regulatory entities. Gaming on Indian land is extensively regulated by Federal, State, and Tribal governments and authorities. Regulatory changes could limit or otherwise materially affect the types of gaming that may be conducted on Indian Land. All aspects of our proposed business operations on Indian Lands are subject to approval, regulation, and oversight by the Bureau of Indian Affairs ("BIA"), the Secretary of the United States Department of the Interior ("Secretary"), and the National Indian Gaming Commission ("NIGC"). Our management of Class III gaming operations is also subject to approval of a Class III Gaming Compact between the Indian Tribe and the respective state. Failure to comply with applicable laws or regulations, whether Federal, State or Tribal, could result in, among other things, the termination of any management agreements which would have a material adverse effect on us. Management agreement terms are also regulated by the Indian Gaming Regulatory Act ("IGRA"), which restricts initial terms to five years and management fees to 30% of the net profits of the casino, except in certain circumstances where the term may be extended to seven years and the management fee increased to 40%. Management agreements with Indian Tribes will not be approved by the NIGC unless, among other things, background checks of the directors and officers of the manager and its ten largest holders of capital stock have been satisfactorily completed. We will also be required to comply with background checks as specified in Tribal-State Compacts before we can manage gaming operations on Indian land. Background checks by the NIGC may take up to 180 days and may be extended to 270 days. There can be no assurance that we would continue to be successful in obtaining the necessary regulatory approvals for our management of proposed gaming operations on a timely basis, or at all. Licensing and Regulation under State Law: Our present and future stockholders are and will continue to be subject to review by regulatory agencies. Gaming licenses and/or background investigations ("License") may be required in connection with our management of a State of Kansas owned Lottery Gaming Facility (a casino) and/or a Class III Indian casino on Indian land within the territorial boundaries of the State of Kansas. Our management personnel, Butler National Corporation and/or the managing subsidiaries, the key personnel of all entities, and if applicable the appropriate Indian Tribe may be required to have gaming Licenses for Class III gaming and/or a Lottery Gaming Facility gaming in the respective location prior to conducting operations. The failure of the Company or the key personnel to obtain or retain Licenses could have a material adverse effect on the Company or on its ability to obtain or retain Licenses in other jurisdictions. A State Gaming Agency has broad discretion in granting, renewing and revoking Licenses. Obtaining such Licenses and approvals will be time consuming and cannot be assured. The State of Kansas approved state owned Lottery Gaming Facilities, pari-mutuel dog and/or horse racing for non-Indian organizations. The State of Kansas operates a state lottery, keno games, and operates state owned Lottery Gaming Facilities for the benefit of the State. The Lottery Gaming Facility management contract approval process requires that any entity or person owning one-half of one percent (0.5%) of the ownership interest of the management company must be found suitable to satisfactorily pass a background investigation by the State of Kansas. Our subsidiary, Butler National Service Corporation received approval from the Kansas Lottery Commission of its management proposal and contract for the Southwest Gaming Zone. The Lottery Commission directed the Executive Director of the Kansas Lottery, on behalf of the State of Kansas, to forward the Management Contract with Butler National Service Corporation to the Lottery Gaming Facility Review Board. As a condition to obtaining and maintaining our Oklahoma Class III license or any other Class III license, we must submit detailed financial and other reports to the Indian Tribe and the respective federal and state regulatory Agencies ("Agency"). Any person owning or acquiring 5% or more of our common stock must be found suitable by one or more of the agencies or the Indian Tribes ("Interest"). Any Agency has the authority to require a finding of suitability with respect to any stockholder regardless of the percentage of ownership. If found unsuitable by any Agency or the Indian Tribe, the stockholder must offer all of the Ownership Interest in Company stock held by such stockholder to the Company for cash at the current market bid price less a fifteen percent (15%) administrative charge and the Company must purchase such Interest within six months of the offer. The stockholder is required to pay all costs of investigation with respect to a determination of his/her suitability. In addition, regardless of ownership, each member of the board of directors and certain officers of the Company are subject to a finding of suitability by any Agency and the Indian Tribe. |
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Financial Information about Industry Segments |
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Information with respect to our industry segments are found at Note 10 of Notes to Consolidated Financial Statements for the three year period ended April 30, 2011. |
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Narrative Description of Business |
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Avcon modifies business-type aircraft in Newton, Kansas. The modifications include aircraft conversion from passenger to freighter configuration, addition of aerial photography capability, stability enhancing modifications for Learjets, and other special mission modifications. Avcon offers avionics, aerodynamic, and stability improvement products for selected business jet aircraft. Avcon makes these modifications to customer-owned aircraft and Company- owned aircraft for resale. |
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The Aircraft Modifications business derives its ability to modify aircraft from the authority granted to it by the Federal Aviation Administration ("FAA"). The FAA grants this authority by issuing a Supplemental Type Certificate ("STC") after a detailed review of the design, engineering, and functional documentation, and demonstrated flight evaluation of the modified aircraft. The STC authorizes Avcon to build the required parts and assemblies under FAA Parts Manufacturing Authority ("PMA"), and to make the installations on applicable aircraft. Avionics Classic Aviation Products: Our mission is to provide and support economical products for older aircraft, often referred to as "Classic" aircraft. As a result of more than 40 years in the aircraft switching unit business, we recognize the potential to support many aircraft in the last half of their expected service life. The business mission of the company promotes us as a designer and supplier of "Classic Aviation Products". A part of the Classic products are directed to supporting safety of flight for the older aircraft. Gaming BNSC is engaged in the business of providing management services to Indian tribes in connection with the Indian Gaming Regulatory Act of 1988. We have three management agreements; however, the performance of these agreements is contingent upon, and subject to approval by the Secretary of Interior, Bureau of Indian Affairs, National Indian Gaming Commission, and the appropriate state, if required. Services SCADA Systems and Monitoring Services: BNS is engaged in the sale of monitoring and control equipment and the sale of monitoring services for water and wastewater remote pumping stations through electronic surveillance by radio or telephone. BNS contracts with government and private owners of water and wastewater pumping stations to provide both monitoring and preventive maintenance services for our customers. A high percentage of BNS business comes from municipally owned pumping stations. BNS is currently soliciting business only in Florida. While we have exposure to competitive forces in the monitoring and preventive maintenance business, management believes the competition is limited in the Florida area. Corporate Corporate / Professional Services: We provide licensed architectural services through BCS Design, Inc. These services include commercial and industrial building design. This segment also includes administrative management services and aviation-related engineering consulting services and operates as the Butler National Aircraft Certification Center. |
Backlog : Our backlog as of April 30, 2011, 2010, and 2009, was as follows: |
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Industry Segment |
2011 |
2010 |
2009 |
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Aircraft Modifications |
$ 8,090,361 |
$ 4,189,653 |
$ 6,018,620 |
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Avionics |
1,454,925 |
2,039,510 |
4,067,592 |
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Services - Monitoring Services |
414,286 |
1,192,481 |
967,671 |
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Corporate / Professional Services |
9,145 |
50,000 |
143,444 |
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-------------- |
-------------- |
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Total backlog |
$9,968,717 |
$7,471,644 |
$11,197,327 |
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In addition, some provisions of our Articles of Incorporation and Bylaws could make it more difficult for a potential acquirer to acquire a majority of our outstanding voting stock. This includes, but is not limited to, provisions that: provide for a classified board of directors, prohibit stockholders from taking action by written consent, and restrict the ability of stockholders to call special meetings. We are also subject to provisions of Kansas law K.S.A. 17-12, 101 that prohibit us from engaging in any business combination with any interested stockholder for a period of three years from the date the person became an interested stockholder, unless certain conditions are met, which could have the effect of delaying or preventing a change of control. Regulation Under Federal Aviation Administration: Our Avionics and Aircraft Modifications segments are subject to regulation by the Federal Aviation Administration ("FAA"). We manufacture products and parts under FAA Parts Manufacturing Authority (PMA) requiring qualification and traceability of all materials and vendors used by us. We make aircraft modifications pursuant to the authority granted by Supplemental Type Certificates issued by the FAA. We repair aircraft parts pursuant to the authority granted by our FAA Authorized Repair Station. Violation or changes to FAA regulations could be detrimental to our operation in these business segments. Licensing and Regulation under Federal Indian Law: Before commencing gaming operations (Class II or Class III) on Indian Land, we must obtain the approval of various regulatory entities. Gaming on Indian land is extensively regulated by Federal, State, and Tribal governments and authorities. Regulatory changes could limit or otherwise materially affect the types of gaming that may be conducted on Indian Land. All aspects of our proposed business operations on Indian Lands are subject to approval, regulation, and oversight by the Bureau of Indian Affairs ("BIA"), the Secretary of the United States Department of the Interior ("Secretary"), and the National Indian Gaming Commission ("NIGC"). Our management of Class III gaming operations is also subject to approval of a Class III Gaming Compact between the Indian Tribe and the respective state. Failure to comply with applicable laws or regulations, whether Federal, State or Tribal, could result in, among other things, the termination of any management agreements which would have a material adverse effect on us. Management agreement terms are also regulated by the Indian Gaming Regulatory Act ("IGRA"), which restricts initial terms to five years and management fees to 30% of the net profits of the casino, except in certain circumstances where the term may be extended to seven years and the management fee increased to 40%. Management agreements with Indian Tribes will not be approved by the NIGC unless, among other things, background checks of the directors and officers of the manager and its ten largest holders of capital stock have been satisfactorily completed. We will also be required to comply with background checks as specified in Tribal-State Compacts before we can manage gaming operations on Indian land. Background checks by the NIGC may take up to 180 days and may be extended to 270 days. There can be no assurance that we would continue to be successful in obtaining the necessary regulatory approvals for our proposed gaming operations on a timely basis, or at all. Licensing and Regulation under State Law: Our present and future stockholders are and will continue to be subject to review by regulatory agencies. Gaming licenses and/or background investigations ("license") may be required in connection with our management of a State of Kansas owned Lottery Gaming Facility (a casino) and/or a Class III Indian casino on Indian land. Our management personnel, Butler National and/or the managing subsidiaries, the key personnel of all entities and if applicable the appropriate Indian Tribe may be required to have gaming licenses for Class III gaming and/or a Lottery Gaming Facility gaming licenses in the respective state prior to conducting operations. The failure of the Company or the key personnel to obtain or retain a license could have a material adverse effect on the Company or on its ability to obtain or retain Class III licenses in other jurisdictions. Each such State Gaming Agency has broad discretion in granting, renewing, and revoking licenses. Obtaining such licenses and approvals will be time consuming and cannot be assured. The State of Kansas has approved state-owned Lottery Gaming Facilities, pari-mutuel dog and/or horse racing for non-Indian organizations. The State of Kansas operates a state lottery, keno games, and plans to operate state-owned Lottery Gaming Facilities for the benefit of the State. The Lottery Gaming Facility management contract approval process requires that any entity or person owning one-half of one percent (0.5%) of the ownership interest of the management company must be found suitable to be an owner by the State of Kansas. The Kansas Supreme Court announced its ruling affirming the constitutionality of the Kansas Expanded Lottery Act (KELA) as the law was enacted. There can be no assurances that other constitutionality challenges will not occur. As a condition to obtaining and maintaining our various gaming approvals, we must submit reports to the Indian Tribe and the respective federal and state regulatory Agencies ("the Agency"). Any person owning or acquiring 5% or more of the Common Stock of the Company must be found suitable by one or more of the agencies or the Indian Tribes ("the Interest"). Any Agency has the authority to require a finding of suitability with respect to any stockholder regardless of the percentage of ownership. If found unsuitable by any Agency or the Indian Tribe, the stockholder must offer all of the Ownership Interest in Company stock held by such stockholder to the Company for cash at the current market bid price less a fifteen percent (15%) administrative charge and the Company must purchase such Interest within six months of the offer. The stockholder is required to pay all costs of investigation with respect to a determination of his/her suitability. In addition, regardless of ownership, each member of the board of directors and certain officers of the Company are subject to a finding of suitability by any Agency and the Indian Tribe. There is no assurance that a Tribal/State Compact between the Tribes and the State of Kansas can be completed. If the Compact is not approved, there could be a material adverse effect on our plans for management of Class III gaming on Indian lands within the territorial boundaries of Kansas. |
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Item 2. PROPERTIES |
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Corporate: Our corporate headquarters are located in a 9,000 square foot owned facility for office and storage space at 19920 West 161st Street, in Olathe, Kansas.Avionics: Butler National Corporation has its principal offices and manufacturing operations at 4654 South Ash Ave, Tempe, Arizona in a 16,110 square foot owned facility. Kings Avionics, Inc. has its principal facility at 280 Gardner Dr., Ste. 3, New Century, Kansas in a 19,500 square foot facility with annual rent of approximately $168,500. Modifications: Our Aircraft Modifications Division is located at 714 North Oliver Road, Newton, Kansas, in a 42,700 square foot leased facility of hangar and office space at the municipal airport in Newton, Kansas, at an annual rent of approximately $143,000. Butler National Aircraft Certification Center is located at One Aero Plaza, New Century, Kansas in a 1,000 square foot plus three hangar spaces with a month to month lease at the New Century Airport in New Century, Kansas. The expected annual rent is approximately $75,000. Services: Butler National Services, Inc. has its principal offices at 2772 NW 31st Ave, Ft. Lauderdale, Florida at an annual rent of approximately $43,000. Gaming: Butler National Services Corporation through its subsidiary, BHCMC, LLC rents real property, improvements and equipment at 4000 W. Comanche in Dodge City, Kansas of approximately 60,000 square feet related to the Boot Hill Casino and Resort facility at an annual rent of approximately $4,515,000 in fiscal year ended April 30, 2011 and an estimate of $4,924,000 in fiscal year ended April 30, 2012. Management believes our properties have been well maintained, are suitable and adequate for us to operate at present levels, and the current productive capacity. The utilization of these facilities are appropriate for our existing real estate requirements. However, significant increases in customer orders and/or future acquisitions may require expansion of our current properties or the addition of new properties. |
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Butler National Service Corporation and BHCMC, LLC filed a lawsuit on September 4, 2009 in the United States District Court for the District of Kansas against Larry J. Woolf and Navegante, Inc. a Las Vegas based consulting firm for damages for failing to perform and defective performance related to a written and executed consulting agreement. In October of 2009, Navegante filed a lawsuit with the District Court against Butler National Service Corporation, seeking damages for breach of an alleged oral agreement to provide management services. Navegante has alleged damages in excess of $75,000. Butler National Service Corporation denies the Navegante allegations and is vigorously defending the matter. Butler National Service Corporation is pursuing the recovery of its damages for breaches of contract. |
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Item 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS Butler National Corporation Annual Meeting of Shareholders was held on March 8, 2011 (the "Annual Meeting"). At the Annual Meeting, 38,981,118 shares of common stock, or approximately 69% of the 56,756,448 shares of common stock outstanding and entitled to vote at the Annual Meeting, were present in person or by proxies. |
PART II |
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Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
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COMMON STOCK (BUKS): |
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(a) Market Information: We were 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, we were listed on the NASDAQ Small Cap Market under the symbol "BUKS." Our common stock was delisted from the small cap category effective January 20, 1999 and was quoted in the over-the-counter (OTCBB) category. On March 2, 2011 we announced that our shares were now being exclusively quoted on OTC Markets Group's OTC Link™ platform. |
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Year Ended April 30, 2011 |
Year Ended April 30, 2010 |
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Low |
High |
Low |
High |
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First Quarter |
$ |
.310 |
$ |
.440 |
$ |
.190 |
$ |
.440 |
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Second Quarter |
$ |
.320 |
$ |
.480 |
$ |
.210 |
$ |
.380 |
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Third Quarter |
$ |
.330 |
$ |
.500 |
$ |
.260 |
$ |
.450 |
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Fourth Quarter |
$ |
.380 |
$ |
.620 |
$ |
.330 |
$ |
.480 |
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SECURITIES CONVERTIBLE TO COMMON STOCK: |
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As of July 22, 2011 there were no Convertible Preferred shares or Convertible Debenture notes outstanding. |
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Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants, and rights |
Weighted-average exercise price of outstanding options, warrants, and rights |
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a)) |
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(a) |
(b) |
(c) |
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Equity compensation plans approved by stockholders |
7,262,064 |
$ |
.49 |
0 |
(1) |
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Equity compensation plans not approved by stockholders |
0 |
0 |
0 |
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Total |
7,262,064 |
$ |
.49 |
0 |
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Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased under the Plans or Programs |
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(a) |
(b) |
(c) |
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May 1, 2010 through April 30, 2011 |
0 |
0 |
0 |
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Total |
0 |
$ |
0 |
0 |
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Item 6. SELECTED FINANCIAL DATA |
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Year Ended April 30 |
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2007 |
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Net Revenue |
$ |
46,335 |
$ |
32,577 |
$ |
18,093 |
$ |
17,647 |
$ |
14,681 |
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Operating Income |
$ |
2,829 |
$ |
3,344 |
$ |
1,832 |
$ |
2,203 |
$ |
1,251 |
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Net Income |
$ |
1,260 |
$ |
2,890 |
$ |
829 |
$ |
1,274 |
$ |
606 |
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Basic Per Share |
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Net Income |
$ |
0.02 |
$ |
0.05 |
$ |
0.02 |
$ |
0.02 |
$ |
0.01 |
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Selected Balance Sheet Information |
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Total Assets |
$ |
32,158 |
$ |
29,566 |
$ |
25,798 |
$ |
27,104 |
$ |
20,445 |
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Long-term Obligations (excluding current maturities) |
$ |
4,940 |
$ |
4,305 |
$ |
6,345 |
$ |
6,416 |
$ |
2,521 |
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Cash dividends declared per common share |
None |
None |
None |
None |
None |
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Revenue and Operating Profit |
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Our revenue for fiscal 2011 was $46,335,328, an increase of 42.2% from fiscal 2010 revenue of $32,576,708. We experienced a 16% decrease in earnings before taxes from fiscal 2010 to fiscal 2011. Our operating profit for 2011 was $2,828,527 compared to $3,343,748 in 2010, a decrease of 15%. |
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Aircraft Modifications: Revenue from Aircraft Modifications segment for the fiscal year ending April 30, 2011, was $13,872,659, an increase of 3% from fiscal 2010 with revenue of $13,486,358, and an increase of 18.4% from fiscal 2009, with revenue of $11,713,497. The modifications segment operating profit for the fiscal year ending April 30, 2011, was $4,393,029, an increase of 105% from fiscal 2010 with an operating profit of $2,146,533, and an increase of 118% from fiscal 2009 with an operating profit of $2,012,085.During the past few years we have seen a significant increase in aircraft camera modification. The repetitive nature of our current aircraft modifications has significantly increased our operating profits. As the economy grows aircraft owners may elect to update, modify, and purchase business aircraft. A shift to business aircraft ownership positively impacts our aircraft modification revenues. Although we cannot anticipate the future we must always consider the negative impact of items such as the September 11, 2001 event, increases in fuel prices, and general economic downturns. |
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Avionics: Revenue from Avionics for the fiscal year ending April 30, 2011 was $5,072,298, a decrease of 8% from fiscal 2010 with revenue of $5,497,408, and an increase of 125% from fiscal 2009 with revenue of $2,255,776. The avionics segment had an operating profit of $339,881 in fiscal 2011, $2,169,643 for fiscal 2010, and $338,468 for fiscal 2009. Many economic and political uncertainties can impact the avionics product line. |
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Services - SCADA Systems and Monitoring Services: Revenue decreased 3% from $1,608,468 for fiscal 2010 to $1,562,294 for fiscal 2011. During fiscal 2011, we maintained a relatively level volume of long-term contracts with municipalities. We anticipate increases in revenue from additional lift station rehabilitations over the next three to four years. Revenue fluctuates due to the introduction of new products and services and the related installations of these types of products. Our contracts with our two largest customers have been renewed through fiscal 2012. An operating profit of $253,780 in Monitoring Services was recorded for fiscal 2011, compared to a profit of $297,301 for fiscal 2010, a decrease of 14.6%. We believe the service business has had revenue stability over the past few years and we expect this to continue. |
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Corporate / Professional Services: Services in this segment include the architectural services related to gaming and other real estate development, administrative management services, and engineering consulting services.Revenue consisting of architectural services and revenue related to completed construction projects were $849,100 for the fiscal year ended April 30, 2010 and $281,900 for the fiscal year ended April 30, 2011. Projects related to architectural services decreased $524,309 for the twelve months to revenue of $644,434 at April 30, 2011. An operating loss of $264,212 for the fiscal year ended April 30, 2011 was recorded compared to a profit of $59,631 for the fiscal year ended April 30, 2010. Revenue related to gaming and other real estate development, on site contract management of gaming establishments for the fiscal year ended April 30, 2011 was $2,223,337 compared to $1,691,860 for the fiscal year ended April 30, 2010, an increase of 31.4%. Operating profits from management services related to gaming increased $524,611 from $352,784 for the fiscal year ended April 30, 2010, to $877,395 for the fiscal year ended April 30, 2011. Boot Hill Casino and Resort opened for business on December 15, 2009. In the fiscal year ended April 30, 2011 the Gaming Facility received gross revenue including funds for the State of Kansas of $42,200,370 compared to $16,068,838 in fiscal year ended April 30, 2010. Mandated fees, taxes and distributions reduced gross revenue by $19,521,963 leaving net revenue to us, as the manager, of $22,678,406 compared to $8,314,043 in fiscal year ended April 30, 2010. Net income before taxes and minority interest were $397,147 in fiscal year ended April 30, 2010 compared to a loss of $577,353 in fiscal year ended April 30, 2011. |
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Selling General and Administrative
As we grow, we anticipate that overhead expenses may increase. We continue to monitor and evaluate our overhead expenses in order to efficiently manage our operations. Other Income (Expense)
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Contractual Obligations: |
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Tabular Disclosure of Contractual Obligations |
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Payments Due By Period |
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Less than 1 Year |
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More than 5 Years |
|||||||||||||||||||||||
Long-Term Debt/Capital Lease Obligations |
$ |
6,748 |
$ |
1,807 |
$ |
2,633 |
$ |
892 |
$ |
787 |
$ |
414 |
$ |
215 |
||||||||||||||||
Operating Lease Obligations |
$ |
1,774 |
$ |
350 |
$ |
350 |
$ |
350 |
$ |
245 |
$ |
176 |
$ |
303 |
||||||||||||||||
Facility Rent Obligations |
$ |
132,004 |
$ |
4,924 |
$ |
6,791 |
$ |
6,837 |
$ |
6,883 |
$ |
6,930 |
$ |
99,639 |
||||||||||||||||
Promissory Notes |
$ |
92 |
$ |
92 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
||||||||||||||||
--------- |
--------- |
--------- |
--------- |
--------- |
--------- |
--------- |
||||||||||||||||||||||||
TOTAL |
$ |
140,618 |
$ |
7,173 |
$ |
9,774 |
$ |
8,079 |
$ |
7,915 |
$ |
7,520 |
$ |
100,157 |
||||||||||||||||
===== |
===== |
===== |
===== |
===== |
===== |
===== |
||||||||||||||||||||||||
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
||||||||||||||||||||||||||||||
The table below provides information about our other financial instruments that are sensitive to changes in interest rates including debt obligations. |
||||||||||||||||||||||||||||||
Expected Maturity Date |
||||||||||||||||||||||||||||||
|
|
|
|
|
There-after |
|
Fair Value |
|||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||
Note receivable: |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
||||||||||||||
Variable rate |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Liabilities |
||||||||||||||||||||||||||||||
Promissory Notes |
$ |
92 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
92 |
$ |
92 |
||||||||||||||
Long-term debt: |
$ |
1,807 |
$ |
2,633 |
$ |
892 |
$ |
787 |
$ |
414 |
$ |
215 |
$ |
6,748 |
$ |
6,748 |
||||||||||||||
Variable rate |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Interest Payments |
||||||||||||||||||||||||||||||
Est. Interest Payments: |
$ |
133 |
$ |
197 |
$ |
71 |
$ |
63 |
$ |
35 |
$ |
18 |
$ |
517 |
||||||||||||||||
|
||||||||||||||||||||||||||||||
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
||||||||||||||||||||||||||||||
The Financial Statements of the Registrant are set forth on pages 42 through 61 of this report. |
||||||||||||||||||||||||||||||
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||
Item 9A. CONTROLS AND PROCEDURES |
||||||||||||||||||||||||||||||
We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms. Our principal executive and financial officers have evaluated our disclosure controls and procedures as of the end of the period covered by this report on Form 10-K and have determined that such disclosure controls and procedures are effective, based on criteria in Internal Control-Integrated Framework, issued by COSO. In connection with the preparation of this Form 10-K, our Chief Executive Officer and our Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2011. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of April 30, 2011. Internal Control Over Financial Reporting Management Report on Internal Control Over Financial Reporting: Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of April 30, 2011. Our internal control over financial reporting includes policies and procedures that (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Company assets that could have a material effect on the financial statements. This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report is not subject to attestation by the Company registered public accounting firm because Section 989G(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act exempts us, a company with a public float of less than $75 million from the requirement that our registered public accounting firm attest to our financial controls. Limitations on Controls Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Changes in Internal Control Over Financial Reporting: In our opinion there were no material changes in the Company internal controls over financial reporting during the three months ended April 30, 2010 that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting. Item 9B. Other Information We believe all material information is reported on Form 8-K reports. |
||||||||||||||||||||||||||||||
PART III |
||||||||||||||||||||||||||||||
Qualifications and Skills of Directors: The Company believes that its Board as a whole should encompass a range of talent, skill, diversity, and expertise enabling it to provide sound guidance with respect to the Company's operations and interests. In addition to considering a candidate's background and accomplishments, candidates are reviewed in the context of the current composition of the Board and the evolving needs of our businesses.The Board of Directors identifies candidates for election to the Board of Directors; reviews their skills, characteristics and experience. The Board of Directors seeks directors with strong reputations and experience in areas relevant to the strategy and operations of the Company's businesses, particularly industries and growth segments that the Company serves, such as avionics, aircraft modifications and gaming. Each of the Company's current Directors has experience in core management skills, such as strategic and financial planning, public company financial reporting, corporate governance, risk management, and leadership development. The Board of Directors also believes that each of the current Directors has other key attributes that are important to an effective board: integrity and demonstrated high ethical standards; sound judgment; analytical skills; the ability to engage management and each other in a constructive and collaborative fashion; diversity of origin, background, experience, and thought; and the commitment to devote significant time and energy to service on the Board and its Committees. Diversity as a Factor in Selection of Board Candidates: The board does not have a formal policy with respect to diversity. However, the Board believes that it is essential that the Board members represent diverse viewpoints, with a broad array of experiences, professions, skills and backgrounds that, when considered as a group, provide a sufficient mix of perspectives to allow the Board to best fulfill its responsibilities to the long-term interests of the Company's stockholders. Board's Role in Risk Oversight and Board Leadership Structure: The Board has determined that the positions of Chairman of the Board and Chief Executive Officer should be held by different persons. Under our corporate governance principles, the Chairman of the Board is responsible for coordinating the Board's activities, including scheduling of meetings of the full Board, scheduling executive sessions of the non-employee directors and setting relevant items on the agenda (in consultation with the Chief Executive Officer as necessary or appropriate). The Board believes this leadership structure enhances the Board's oversight of Company management, the ability of the Board to carry out its roles and responsibilities on behalf of our stockholders, and our overall corporate governance. The board as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant board committees. These committees then provide reports to the full board. The oversight responsibility of the board and its committees is enabled by management reporting processes that are designed to provide visibility to the board about the identification, assessment, and management of critical risks. These areas of focus include strategic, operational, financial and reporting, succession and compensation, compliance, and other risks. The board and its committees oversee risks associated with their respective areas of responsibility, as summarized above. |
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
|||||||
Name of |
Served |
|
|||||
Clark D. Stewart (71) |
1989 |
President of the Company from September 1, 1989 to present. |
|||||
R. Warren Wagoner (59) |
1986 |
Chairman of the Board of Directors of the Company since August 30, 1989. |
|||||
David B. Hayden (65) |
1996 |
Co-owner and President of Kings Avionics, Inc. since 1974 prior to its acquisition in 2010. Director since 1996. |
|||||
Michael J. Tamburelli (48) |
2010 |
General Manager of the Isle of Capri Kansas City, Missouri 2004-2008, General Manager Boot Hill Casino & Resort 2009-2010, General Manager of Cherokee National Casino, West Siloam Springs, Oklahoma since 2010. Director since May 1, 2010. |
|||||
Bradley K. Hoffman (37) |
2010 |
Regional Manager of ISG Technology, Inc. in Kansas City, Kansas since 2005. Director since June 9, 2010. |
|||||
|
|||||||
|
|
|
|||||
R. Warren Wagoner |
59 |
Chairman of the Board of Directors |
|||||
Clark D. Stewart |
71 |
President and Chief Executive Officer |
|||||
Christopher J. Reedy |
45 |
Vice President and Secretary |
|||||
Angela D. Shinabargar |
47 |
Chief Financial Officer |
|||||
R. Warren Wagoner was General Manager, Am-Tech Metal Fabrications, Inc. from 1982 to 1987. From 1987 to 1989, Mr. Wagoner was President of Stelco, Inc. Mr. Wagoner was Sales Manager for Yamazen Machine Tool, Inc. from March 1992 to March 1994. Mr. Wagoner was President of the Company from July 26, 1989, to September 1, 1989. He became Chairman of the Board of the Company on August 30, 1989. |
|||||||
Clark D. Stewart was President of Tradewind Industries, Inc., a manufacturing company, from 1979 to 1985. From 1986 to 1989, Mr. Stewart was Executive Vice President of RO Corporation. In 1980, Mr. Stewart became President of Tradewind Systems, Inc. He became President of the Company in September 1989. |
|||||||
Christopher J. Reedy worked for Colantuono & Associates, LLC from 1997 to 2000 in the area of aviation, general business and employment counseling, and from 1995 to 1997 with the Polsinelli, White firm. He was involved in aviation product development and sales with Bendix/King, a division of Allied Signal, Inc. from 1988 through 1993. Mr. Reedy joined the Company in November 2000 as Vice President of the, and became Secretary of the Company in 2005. |
|||||||
Angela D. Shinabargar was the controller of A&M products, a subsidiary of First Brands Corporation from 1995 to 1998. From 1998 to 2000 Ms. Shinabargar was a Senior Business Systems Analyst for Black & Veatch of Kansas, the largest privately held engineering firm in the United States. Ms. Shinabargar was the CFO of Peerless Products, Inc. a manufacturer of customized windows from 2000 to 2001. Ms. Shinabargar joined the Company as Chief Financial Officer in October 2001. |
|||||||
Directorships Held within the Past Five Years: |
|||||||
Current Directorships: |
|||||||
Name |
Company |
Date(s) of Directorship |
|||||
Clark D. Stewart |
Butler National Corporation |
Since 1989 |
|||||
R. Warren Wagoner |
Butler National Corporation |
Since 1986 |
|||||
David B. Hayden |
Butler National Corporation |
Since 1996 |
|||||
Michael J. Tamburelli |
Butler National Corporation |
Since June 9, 2010 |
|||||
Bradley K. Hoffman |
Butler National Corporation |
Since May 1, 2010 |
|||||
Past Directorships: |
|||||||
Clark D. Stewart |
None |
||||||
R. Warren Wagoner |
None |
||||||
David B. Hayden |
None |
||||||
Michael J. Tamburelli |
None |
||||||
Bradley K. Hoffman |
None |
||||||
Legal Proceedings Involving a Director or Executive Officer |
|||||||
During the past ten years no director or officer has been convicted in a criminal proceeding or is a named subject of a pending criminal proceeding, exclusive of traffic violations. |
|||||||
Section 16(a) Beneficial Ownership Reporting Compliance |
|||||||
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company pursuant to Rule 16(a)-3(e) during the most recent fiscal year and Form 5 and amendments thereto furnished to the Company with respect to the most recent fiscal year, the Company believes that no person who at any time during the fiscal year was a director, officer, beneficial owner of more than 10% of any class of equity securities registered pursuant to Section 12 of the Exchange Act failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years. |
|||||||
Audit Committee and Audit Committee Expert of the Company |
|||||||
The current members of the Audit Committee are Mr. David B. Hayden, Mr. Bradley K. Hoffman, and Mr. Tad McMahon. Mr. Hoffman is an independent member under the Nasdaq listing standards. The Audit Committee met five times during fiscal year 2011, excluding actions by unanimous written consent. |
|||||||
Item 11. EXECUTIVE COMPENSATION Our compensation programs are designed to support our business goals and promote both short-term and long-term growth. This section of the proxy statement explains how our compensation programs are designed and operate in practice with respect to our listed officers. Our listed officers are the CEO, CFO, Vice President, and Chairman of the Board. There are only four executive officers of Butler National Corporation. The "Executive Compensation" section presents compensation earned by the listed officers for fiscal years ending April 30, 2011, 2010 and 2009. The Compensation Committee of the Board of Directors determines the compensation for Butler National executive officers. Our executive officers have the broadest job responsibilities and policy-making authority in the company. The Committee reviews and determines all components of executive officer compensation, including making individual compensation decisions and reviewing and revising the executive officer compensation plans, programs, and guidelines as appropriate. The Committee also consults with management regarding non-executive employee compensation programs. Our Compensation Philosophy The core element of our overall compensation philosophy is the alignment of pay and performance. Total compensation varies with individual performance and Butler National's performance in achieving financial and non-financial objectives. Our equity plans are designed to ensure that executive compensation is aligned with the long-term interests of our stockholders. The Committee and our management believe that compensation should help to recruit, retain, and motivate the employees that the company will depend on for current and future success. The Committee and our management also believe that the proportion of "at risk" compensation (variable cash compensation and equity) should rise as an employee's level of responsibility increases. This philosophy is reflected in the following key design priorities that govern compensation decisions:
|
|||||||
|
|
||||||
Base Salary |
Described in detail in separate paragraph above titled Base Salary. |
||||||
Annual and Semiannual Incentive Cash Payments |
Paid as discretionary cash bonuses to individual employees for outstanding performance of a task. |
||||||
Equity Grants/Option Awards |
Option Awards are granted by the Compensation Committee to align management objective toward improved earnings and retention of the management team. |
||||||
Employee Stock Purchase Plan |
Any employee may purchase the Company stock at the fair market value at the date of purchase without broker or issue fees. The stock is restricted and not considered a stock reward. We have the 1981 Employee Stock Purchase plan. No shares have been purchased under this plan since 1988. |
||||||
Retirement Benefits |
We pay the required federal and state retirement contributions, the required unemployment contributions and match the employee's contribution to their account in the Butler National Corporation 401(k) plan according to the parameters set forth in the plan. |
||||||
Health and Welfare Benefits |
Employees electing to participate in the various insurance plans offered by the Company receive a payment for a share of the health, dental, vision and life insurance costs for the employee. |
Grant Date Fair Value of Stock Option Awards |
|||
The following table summarizes compensation paid to non-employee directors during fiscal year 2011. We paid $10,000 in cash compensation to Mr. David Hayden, Mr. Michael Tamburelli, and Mr. Bradley Hoffman, our non-employee directors in fiscal year 2011. |
|||
Name |
Stock Awards |
||
David B. Hayden |
0 / 125,000(a) |
||
Michael J. Tamburelli |
0 / 125,000(a) |
||
Bradley K. Hoffman |
0 / 125,000(a) |
||
The unexercised options at April 30, 2011 listed in the table above have an exercise price of $0.49 and will expire on December 31, 2020. The options were granted under and are expressly subject to all the terms and provisions of the Plans, and the terms of such Plans are incorporated herein by reference. The terms are included but not limited to the following restrictions: |
|||
Material Adverse Effect of Compensation Policies and Procedures |
|||
The Compensation Committee regularly reviews the Company's compensation policies and practices, including the risks created by the Company's compensation plans. In addition, the Company also conducted a review of its compensation plans and related risks to the Company. The Company reviewed its analysis with the Compensation Committee, and the Compensation Committee concluded that the compensation plans reflected the appropriate compensation goals and philosophies. Based on this review and analysis, the Company has concluded that any risks arising from its employee compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. |
|||
Performance Measures and Decision-Making Process for Fiscal Year 2011 The Committee set base salaries for executive officers for 2011 in April 2010, with payment beginning in April 2010. - The performance measures used by the Committee in determining executive compensation for fiscal year 2011 were: - the absolute one-year and multi-year company performance as measured by market share, revenue growth, profit from operations and total shareholder return; - one-year and multi-year performance on the same measures as compared with competitors in the comparator group; and - Company progress toward its strategic goals. To make its decisions on executive compensation, the Committee reviewed in detail each of the performance measures above and reviewed compensation market data. The Committee also reviewed the total compensation and benefits of the executive officers and considered the impact that their retirement, or termination under various other scenarios, would have on their compensation and benefits. The CEO provided the entire board of directors with an assessment of his own performance with respect to the performance measures listed above, which the board considered in its assessment of his performance for fiscal year 2011. The CEO reviewed the performance of the other executive officers (except the Chairman) with the Committee and made recommendations regarding the components of their compensation. Before making its compensation decisions, the Committee discussed levels of compensation for the Chairman, the CEO and the other executive officers with the full board of directors in an executive session. Determination of CEO Compensation In fiscal year 2011, Butler National Corporation reached projected levels of revenue, profit from operations, operating margin and operating cash flow. With regard to progress toward strategic goals, BNC improved its products and technology positions and strengthened its relationships with customers. Taking into account Company performance, both absolute and relative to competition and the executive officers contribution to that performance, the Committee set its targeted compensation levels so as to be commensurate with that relative performance. The Committee made the following determinations for fiscal year 2011 with respect to each component of compensation for the CEO and his existing contract and the other executive officers: Base Salary - In keeping with its strategy, the Committee base salary decisions for fiscal year 2011 were generally intended to provide salaries somewhat lower than the median level of salaries for similarly situated executives of the comparator companies. Performance Bonus - In general, the Committee granted no annual performance awards Long-Term Compensation - The Committee granted no equity compensation. Compensation of the Chairman Because Mr. Wagoner was among the four most highly compensated executive officers in the Company, SEC rules require disclosure of his compensation. In making the determinations, the Committee considered his role as Chairman, his contribution to the Company performance and strategic direction, and the compensation of employee-chairmen of comparator companies. Report of the Compensation Committee The Compensation Committee, which is composed of the Board of Directors, assists the Board in fulfilling its responsibilities with regard to compensation matters, and is responsible under its charter for determining the compensation of the Company's executive officers. The Compensation Committee has reviewed and discussed the "Compensation Discussion and Analysis" section of this Annual Report on Form 10-K with management, including our CEO, Clark D. Stewart and our CFO, Angela D. Shinabargar. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the "Compensation Discussion and Analysis" section be included in the Company's Annual Report on Form 10-K. Compensation Committee |
|||
Mr. David B. Hayden |
Mr. R. Warren Wagoner |
||
Mr. Clark D. Stewart |
Mr. Bradley K. Hoffman (effective June 9, 2010) |
||
Mr. Michael J. Tamburelli (effective May 1, 2010) |
Executive Compensation |
||||||||||||||||||||||||||
Summary Compensation Table |
||||||||||||||||||||||||||
|
||||||||||||||||||||||||||
Name |
YR |
Salary |
|
Stock Awards |
Option Awards and Stock Appreciation Rights |
Non-Equity Incentive Plan Compensation ($) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings($) |
All Other |
Total ($)(2) |
|||||||||||||||||
Clark D. Stewart, CEO |
11 10 |
443,554 |
8,904 |
--- |
174,796 |
--- |
--- |
39,469 |
666,723 |
|||||||||||||||||
R. Warren Wagoner |
11 |
255,066 |
4,468 |
--- |
36,740 |
--- |
--- |
25,988 |
322,422 |
|||||||||||||||||
Christopher J. Reedy |
11 |
203,827 |
--- |
--- |
36,740 |
--- |
--- |
24,530 |
265,097 |
|||||||||||||||||
Angela D. Shinabargar |
11 |
150,093 |
5,000 |
--- |
36,740 |
--- |
--- |
9,738 |
201,571 |
|||||||||||||||||
|
||||||||||||||||||||||||||
Name |
Year |
Airplane and Automobile Usage |
Health Benefits |
Memberships |
Matching Contributions to 401(k) (3) |
|||||||||||||||||||||
Clark D. Stewart |
2011 |
7,200 |
7,654 |
9,915 |
14,700 |
|||||||||||||||||||||
R. Warren Wagoner |
2011 |
--- |
11,288 |
--- |
14,700 |
|||||||||||||||||||||
Christopher J. Reedy |
2011 |
--- |
4,256 |
8,091 |
12,183 |
|||||||||||||||||||||
Angela D. Shinabargar |
2011 |
--- |
606 |
--- |
9,132 |
|||||||||||||||||||||
(1) All Other Compensation includes the amounts in the tables above. |
OPTION GRANTS, EXERCISES AND HOLDINGS |
||||
No options were granted to any named executive officer in the last fiscal year. |
||||
The following table provides information with respect to the named executive officers concerning options exercised and unexercised options held as of the end of the our last fiscal year: |
||||
Aggregated Option Exercises in Last Fiscal Year |
||||
|
Value of Unexercised |
|||
|
Number of Shares Acquired |
Value |
Exercisable/ |
Exercisable/ |
Clark D. Stewart, |
|
|
|
|
R. Warren Wagoner, |
|
|
|
|
Christopher J. Reedy, |
|
|
|
|
Angela D. Shinabargar, |
|
|
|
|
David B. Hayden, |
|
|
|
|
Michael J. Tamburelli, |
|
|
|
|
Bradley K. Hoffman, |
|
|
|
|
The unexercised options at April 30, 2011 listed in the table above have an exercise price of $0.49 and will expire on December 31, 2020. The options were granted under and are expressly subject to all the terms and provisions of the Plans, and the terms of such Plans are incorporated herein by reference. The terms are included but not limited to the following restrictions: |
||||
COMPENSATION OF DIRECTORS |
||||
Each non-officer director is entitled to a director's fee for meetings of the Board of Directors which he attends. Officer-directors are not entitled to receive fees for attendance at meetings. |
||||
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL |
||||
On April 30, 2001, the Company extended the Employment Agreement through August 31, 2006 with Clark D. Stewart under the terms of which Mr. Stewart was employed as the President and Chief Executive Officer of the Company. On February 24, 2009 the Company extended the Employment Agreement with Mr. Stewart with the terms as currently provided including annual increases of 5% through December 31, 2021. In the event Mr. Stewart is terminated from employment with the Company other than "for cause," Mr. Stewart shall receive as severance pay an amount equal to the unpaid salary for the remainder of the term of the Employment Agreement. Mr. Stewart is also granted an automobile allowance of $600 per month which is reported by us as Salary Expense and to Mr. Stewart as Wages. Under the terms of the Employment Agreement with Mr. Stewart, the Company is obligated to pay company related expenses and salary. Included in accrued liabilities are $11,542 and $33,148 as of April 30, 2011, and 2010 respectively for amounts owed to our CEO for accrued compensation. |
||||
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
||||
The Compensation Committee of the Board of Directors is comprised of Mr. Wagoner, Chairman of the Board, Mr. Stewart, CEO, President and Board member, and Mr. Hayden, Board member, Mr. Tamburelli, Board member and Mr. Hoffman, Board member . The company does not employ the use of any compensation consultants in determining or recommending the amount or form of executive and director compensation. |
||||
In the normal course of business, we purchased modifications services and avionics of approximately $1,144, $88,142, and $74,442 from a company partially owned by David Hayden, a director for the Company during fiscal 2011, 2010, and 2009 respectively. |
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|||||||
The following table sets forth, with respect to the Company common stock (the only class of voting securities), the only persons known to be beneficial owners of more than five percent (5%) of any class of the Company voting securities as of July 22, 2011. |
|||||||
Name and Address of Beneficial Owner |
Amount and Nature of |
Percent |
|||||
Clark D. Stewart |
5,016,627(2) |
8.8% |
|||||
(1) Unless otherwise indicated by footnote, nature of beneficial ownership of securities is direct, and beneficial ownership as shown in the table arises from sole voting power and sole investment power. The beneficial ownership includes the shares held in the Butler National 401(k) Profit Sharing Plan for the benefit of the individual. |
|||||||
The following table sets forth as of April 30, 2011, with respect to the Company common stock (the only class of voting securities), (i) shares beneficially owned by all directors and named executive officers of the Company, and (ii) total shares beneficially owned by directors and officers as a group, as of April 30, 2011. |
|||||||
|
Amount and Nature of |
Percent of Class |
|||||
David B. Hayden |
1,732,225 |
3.0% |
|||||
Christopher J. Reedy |
1,108,593 |
1.9% |
|||||
Clark D. Stewart |
5,016,627 |
(2) |
8.8% |
||||
R. Warren Wagoner |
4,290,586 |
(3) |
7.5% |
||||
Angela D. Shinabargar |
723,558 |
1.3% |
|||||
Bradley K. Hoffman |
375,000 |
0.7% |
|||||
Michael J. Tamburelli |
375,000 |
0.7% |
|||||
All Directors and Executive Officers as a Group (7 persons) |
13,621,589 |
(4) |
23.8% |
||||
(1) Unless otherwise indicated by footnote, nature of beneficial ownership of securities is direct and beneficial ownership as shown in the table arises from sole voting power and sole investment power. |
Equity Compensation Plan Information |
|||||||||
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a)) |
||||||
(a) |
(b) |
(c) |
|||||||
Equity compensation plans approved by stockholders |
7,262,064 |
$ |
.49 |
0 |
(1) |
||||
Equity compensation plans not approved by stockholders |
0 |
0 |
0 |
||||||
Total |
7,262,064 |
$ |
.49 |
0 |
|||||
|
|||||||||
Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased under the Plans or Programs |
||||||
(a) |
(b) |
(c) |
|||||||
May 1, 2010 through April 30, 2011 |
0 |
0 |
0 |
||||||
Total |
0 |
$ |
0 |
0 |
|||||
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE In September 2010 we acquired Kings Avionics, Inc. in support of our "Classic" commercial and military product lines. As part of the acquisition Mr. Hayden received $90,000 in fiscal 2011. In the normal course of business we purchased business system components $158,528 in fiscal 2011 and $6,653 in fiscal 2010 from ISG, the employer of Bradley Hoffman, a director of Butler National Corporation during fiscal 2011. Included in accrued liabilities are $44,649 and $56,646 as of April 30, 2011, and 2010 respectively for amounts owed to our CEO for accrued compensation. In fiscal 2011, there were three related-person transactions under the relevant standards: Butler National employed the brother (Wayne Stewart), son (Craig Stewart) and son-in-law (Jeff Shinkle) of Clark D. Stewart, an executive officer, as an engineer, a sales representative and public relations person, and an architect. Compensation for these related-persons was calculated in the same manner as the Summary Compensation table resulting in compensation of $186,800, $220,200 and $155,487, respectively, for fiscal 2011, $180,886, $215,653 and $133,483, respectively, for fiscal 2010 and $166,699, $205,070, and $118,805, respectively for fiscal 2009. The policies and procedures for payment of goods and services for related transactions follow our normal course of business standards and require the necessary review and approval process as outlined in our Policies and Procedures manual and as set forth by our Compensation Committee. |
|||||||||
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|||||||||
|
|
|
|||||||
Audit fees (a) |
$91,256 |
$86,450 |
|||||||
(a) Includes fees billed for professional services rendered in connection with the audit of the annual financial statements and for the review of the quarterly financial statements. |
PART IV |
||
(a) Documents Filed As Part of Form 10-K Report. |
||
(1) Financial Statements: |
||
Description |
Page No. |
|
Report of Independent Registered Public Accounting Firm |
41 |
|
Consolidated Balance Sheets as of April 30, 2011 and 2010 |
42 |
|
Consolidated Statement of Operations for the years ended April 30, 2011, 2010, and 2009 |
43 |
|
Consolidated Statements of Stockholders' Equity for the years ended April 30, 2011, 2010, and 2009 |
44 |
|
Consolidated Statements of Cash Flows for the years ended April 30, 2011, 2010, and 2009 |
45 |
|
Notes to Consolidated Financial Statements |
46-61 |
|
(2) Financial Statement Schedules |
|
Schedule |
Description |
Page No. |
|
II. |
Valuation and Qualifying Accounts and Reserves for the years ended April 30, 2011, 2010, and 2009 |
61 |
|
All other financial statements and schedules not listed have been omitted because the required information is inapplicable or the information is presented in the financial statements or related notes. |
|||
(3) Exhibits Index: |
|||
No. |
Description |
Page No. |
|
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 our Form DEF 14A filed on December 15, 2003. |
* |
|
4.1 |
Certificate of Rights and Preferences of $100 Class A Preferred Shares of the Company, are incorporated by reference to Exhibit 4.1 of our Form 10-K/A, as amended, for the year ended April 30, 1994. |
* |
|
4.2 |
Certificate to Set Forth Designations, Preferences and Rights of Series C Participating Preferred Stock of the Company, are incorporated by reference to Exhibit 1 of our Form 8-A (12G) filed on December 7, 1998. |
* |
|
10.1 |
1989 Nonqualified Stock Option Plan is incorporated by reference to our Form 8-K filed on September 1, 1989 and as amended on Exhibit 4(a) of our Form S-8 filed on February 20, 1998. |
* |
|
10.2 |
Nonqualified Stock Option Agreement dated September 8, 1989 between the Company and Clark D. Stewart is incorporated by reference to our Form 8-K filed on September 1, 1989. |
* |
|
10.3 |
Agreement dated March 10, 1989 between the Company and Woodson Electronics, Inc. is incorporated by reference to our Form 10-K for the fiscal year ended April 30, 1989. |
* |
|
10.4 |
Agreement of Stockholder to Sell Stock dated January 1, 1992, is incorporated by reference to our Form 8-K filed on January 15, 1992. |
* |
|
10.5 |
Private Placement of Common Stock pursuant to Regulation D, dated December 15, 1993, is incorporated by reference to our Form 8-K filed on January 24, 1994. |
* |
|
10.6 |
Stock Acquisition Agreement of RFI dated April 21, 1994, is incorporated by reference to our Form 8-K filed on July 21, 1994. |
* |
|
10.7 |
Employment Agreement between the Company and Brenda Lee Shadwick dated July 6, 1994, are incorporated by reference to Exhibit 10.7 of our Form 10-K/A, as amended, for the year ended April 30, 1994.* |
* |
|
10.8 |
Employment Agreement between the Company and Clark D. Stewart dated March 17, 1994, are incorporated by reference to Exhibit 10.8 of our Form 10-K/A, as amended, for the year ended April 30, 1994.* |
* |
|
10.9 |
Employment Agreement among the Company, R.F., Inc. and Marvin J. Eisenbath dated April 22, 1994, are incorporated by reference to Exhibit 10.9 of our Form 10-K/A, as amended, for the year ended April 30, 1994.* |
* |
|
10.10 |
Real Estate Contract for Deed and Escrow Agreement between Wade Farms, Inc. and the Company, are incorporated by reference to Exhibit 10.10 of our Form 10-K/A, as amended, for the year ended April 30, 1994. |
* |
|
10.11 |
1993 Nonqualified Stock Option Plan, are incorporated by reference to Exhibit 10.11 of our Form 10-K/A, as amended, for the year ended April 30, 1994 and as amended on Exhibit 4(a) of our Form S-8 filed on February 20, 1998. |
* |
|
10.12 |
1993 Nonqualified Stock Option Plan II, are incorporated by reference to Exhibit 10.12 of our Form 10-K/A, as amended, for the year ended April 30, 1994 and as amended on Exhibit 4(a) of our Form S-8 filed on February 20, 1998. |
* |
|
10.13 |
Industrial State Bank principal amount of $500,000 revolving credit line, as amended, are incorporated by reference to Exhibit 10.13 of our Form 10-K/A, as amended, for the year ended April 30, 1994. |
* |
|
10.14 |
Bank IV guaranty for $250,000 dated October 14, 1994, are incorporated by reference to Exhibit 10.14 of our Form 10-K/A, as amended, for the year ended April 30, 1994. |
* |
|
10.15 |
Bank IV loan in principal amount of $300,000 dated December 30, 1993, are incorporated by Reference to Exhibit 10.15 of our Form 10-K/A, as amended, for the year ended April 30, 1994. |
* |
|
10.16 |
Letter of Intent to acquire certain assets of Woodson Electronics, Inc., is incorporated by reference to Exhibit 10.16 of our Form 10-K, as amended for the year ended April 30, 1995. |
* |
|
10.17 |
Asset Purchase Agreement between the Company and Woodson Electronics, Inc. dated May 1, 1996, is incorporated by reference to Exhibit 10.17 of our Form 10-K, as amended for the year ended April 30, 1996. |
* |
|
10.18 |
Non-Exclusive Consulting, Non-Disclosure and Non-Compete agreement with Thomas E. Woodson dated May 1, 1996, is incorporated by reference to Exhibit 10.18 of our Form 10-K, as amended for the year ended April 30, 1996. |
* |
|
10.19 |
1995 Nonqualified Stock Option Plan dated December 1, 1995, is incorporated by reference to Exhibit 10.19 of our Form 10-K, as amended for the year ended April 30, 1996 and as amended on Exhibit 4(a) of our Form S-8 filed on February 20, 1998. |
* |
|
10.20 |
Settlement Agreement and Release - Marvin J. Eisenbath and the Company dated April 30, 1997, is incorporated by reference to Exhibit 10.20 of our Form 10-K, as amended for the year ended April 30, 1997. |
* |
|
10.21 |
Settlement Agreement and Release - Brenda Shadwick and the Company dated May 1, 1997, is incorporated by reference to Exhibit 10.21 of our Form 10-K, as amended for the year ended April 30, 1997. |
* |
|
10.22 |
Preferred Stock Purchase Rights and Rights Agreement dated October 26, 1998 between the Company and Norwest Bank Minnesota are incorporated by reference to Exhibit 4(a) of our Form 8-A filed on December 7, 1998. |
* |
|
10.23 |
Stock Purchase Agreement with Gary Morris and David Hayden for the acquisition of Kings Avionics, incorporated by reference to Exhibit 10.1 of the Company's current report on Form 8-K dated September 27, 2010 |
* |
|
14 |
Standards of Business Conduct and Ethics, incorporated by reference to Exhibit 14 of the Company's Form 10-K for the year ended April 30, 2008. |
* |
|
21 |
List of Subsidiaries. |
62 |
|
23.1 |
Consent of Independent Public Accountants. |
63 |
|
99 |
Cautionary Statement for Purpose of the "Safe Harbor" Provisions of the Private Securities Reform Act of 1995. |
64-68 |
|
31.1 |
Certificate pursuant to 18 U.S.C 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
69 |
|
31.2 |
Certificate pursuant to 18 U.S.C 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
70 |
|
32.1 |
Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
71 |
|
32.2 |
Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
72 |
|
* Relates to executive officer employment compensation. |
SIGNATURES |
||
Pursuant to the requirements of Section 13 or 15(d) 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. |
||
July 28, 2011 |
||
BUTLER NATIONAL CORPORATION |
||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated: |
||
Signature |
Title |
Date |
/s/ Clark D. Stewart |
President, Chief Executive Officer and Director (Principal Executive Officer) |
July 28, 2011 |
/s/ R. Warren Wagoner |
Chairman of the Board and Director |
July 28, 2011 |
/s/ David B. Hayden |
Director |
July 28, 2011 |
/s/ Michael J. Tamburelli |
Director |
July 28, 2011 |
/s/ Bradley K. Hoffman |
Director |
July 28, 2011 |
/s/ Angela D. Shinabargar |
Chief Financial Officer |
July 28, 2011 |
Report of Independent Registered Public Accounting Firm Stockholders and Directors Butler National Corporation Olathe, Kansas We have audited the accompanying consolidated balance sheets of Butler National Corporation as of April 30, 2011 and 2010 and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended April 30, 2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Butler National Corporation as of April 30, 2011 and 2010 and the consolidated results of its operations, stockholders' equity, and cash flows for each of the three years in the period ended April 30, 2011 in conformity with U.S. generally accepted accounting principles.
Weaver & Martin, LLC Kansas City Missouri July 28, 2011 |
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
FOR THE YEARS ENDED APRIL 30, 2011, 2010 AND 2009 |
|||||||||||||||
2011 |
2010 |
2009 |
|||||||||||||
REVENUE |
|||||||||||||||
Aircraft / Modifications |
$ |
13,872,659 |
$ |
13,486,358 |
$ |
11,713,497 |
|||||||||
Avionics / Defense |
5,072,298 |
5,497,407 |
2,255,776 |
||||||||||||
Management / Professional Services |
4,711,965 |
5,278,900 |
4,123,815 |
||||||||||||
Gaming facility |
22,678,406 |
8,314,043 |
- |
||||||||||||
------------------- |
------------------- |
------------------- |
|||||||||||||
Net Revenue |
46,335,328 |
32,576,708 |
18,093,088 |
||||||||||||
COST OF SALES |
|||||||||||||||
Aircraft / Modifications |
8,195,500 |
9,046,653 |
8,444,622 |
||||||||||||
Avionics / Defense |
3,576,376 |
2,447,289 |
1,135,310 |
||||||||||||
Management / Professional Services |
1,587,800 |
2,380,572 |
1,921,804 |
||||||||||||
Gaming facility |
7,040,351 |
2,320,007 |
- |
||||||||||||
------------------- |
------------------- |
------------------- |
|||||||||||||
Total Cost of Sales |
20,400,027 |
16,194,521 |
11,501,736 |
||||||||||||
------------------- |
-------------------- |
--------------------- |
|||||||||||||
GROSS PROFIT |
25,935,301 |
16,382,187 |
6,591,352 |
||||||||||||
OPERATING EXPENSES MARKETING, GENERAL & ADMINISTRATIVE |
23,106,774 |
11,222,100 |
4,759,470 |
||||||||||||
IMPAIRMENT OF INDIAN ADVANCES |
- |
1,259,091 |
- |
||||||||||||
LOSS ON RETIREMENT OF AIRCRAFT |
- |
1,053,681 |
- |
||||||||||||
GAIN ON SALE OF LAND |
- |
(496,433) |
- |
||||||||||||
------------------- |
------------------- |
------------------- |
|||||||||||||
OPERATING INCOME |
2,828,527 |
3,343,748 |
1,831,882 |
||||||||||||
OTHER INCOME (EXPENSE) |
|||||||||||||||
Interest Expense |
(364,159) |
(455,827) |
(504,829) |
||||||||||||
Other |
(34,916) |
12,372 |
7,407 |
||||||||||||
------------------- |
----------------- |
------------------- |
|||||||||||||
|
Other Income (Expense) |
|
|
|
(399,075) |
(443,455) |
(497,422) |
||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES |
2,429,452 |
2,900,293 |
1,334,460 |
||||||||||||
PROVISION FOR INCOME TAXES |
|||||||||||||||
Deferred Income Tax Benefit |
- |
(1,226,000) |
- |
||||||||||||
Income Tax Expense |
1,171,063 |
1,235,293 |
505,146 |
||||||||||||
------------------- |
----------------- |
----------------- |
|||||||||||||
Total Income Tax Expense |
1,171,063 |
9,293 |
505,146 |
||||||||||||
------------------- |
----------------- |
----------------- |
|||||||||||||
NET INCOME BEFORE MINORITY INTEREST |
1,258,389 |
2,891,000 |
829,314 |
||||||||||||
MINORITY INTEREST |
1,270 |
(874) |
- |
||||||||||||
------------------- |
----------------- |
----------------- |
|||||||||||||
NET INCOME |
$ |
1,259,659 |
$ |
2,890,126 |
$ |
829,314 |
|||||||||
=========== |
========== |
========== |
|||||||||||||
BASIC EARNINGS PER COMMON SHARE |
$ |
0.02 |
$ |
0.05 |
$ |
0.02 |
|||||||||
========== |
========== |
========== |
|||||||||||||
Shares used in per share calculation |
56,108,812 |
55,398,581 |
54,864,138 |
||||||||||||
========== |
========== |
========== |
|||||||||||||
DILUTED EARNINGS PER COMMON SHARE |
$ |
0.02 |
$ |
0.05 |
$ |
0.02 |
|||||||||
========== |
========== |
========== |
|||||||||||||
Shares used in per share calculation |
56,108,812 |
55,502,899 |
54,934,092 |
||||||||||||
========== |
========== |
========== |
|||||||||||||
The accompanying notes are an integral part of these financial statements |
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||||
Common Stock |
Common Stock Owed but |
Capital Contributed in Excess of Par |
|
|
|
|
|||||||||||||||||
BALANCE, April 30, 2008 |
$ |
550,911 |
$ |
2,786 |
$ |
11,076,238 |
$ |
(732,000) |
$ |
- |
$ |
1,292,193 |
$ |
12,190,128 |
|||||||||
Issuance of stock owed from prior period |
|||||||||||||||||||||||
Issuance of stock Benefit Plan |
9,059 |
- |
190,244 |
- |
- |
- |
199,303 |
||||||||||||||||
Net income |
- |
- |
- |
- |
- |
829,314 |
829,314 |
||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
|||||||||||||||||
BALANCE, April 30, 2009 |
559,970 |
2,786 |
11,266,482 |
(732,000) |
- |
2,121,507 |
13,218,745 |
||||||||||||||||
Issuance of stock owed from prior period |
|||||||||||||||||||||||
Issuance of stock Benefit Plan |
5,657 |
- |
192,327 |
- |
- |
- |
197,984 |
||||||||||||||||
Net income |
- |
- |
- |
- |
874 |
2,890,126 |
2,891,000 |
||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
|||||||||||||||||
BALANCE, April 30, 2010 |
565,627 |
2,786 |
11,458,809 |
(732,000) |
874 |
5,011,633 |
16,307,729 |
||||||||||||||||
Issuance of stock for Services |
1,938 |
- |
75,562 |
- |
- |
- |
77,500 |
||||||||||||||||
Stock Options issued to employees |
- |
- |
167,316 |
- |
- |
- |
167,316 |
||||||||||||||||
Issuance of stock Benefit Plan |
4,378 |
- |
210,151 |
- |
- |
- |
214,529 |
||||||||||||||||
Net income |
- |
- |
- |
- |
(1,270) |
1,259,659 |
1,258,389 |
||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
|||||||||||||||||
BALANCE, April 30, 2011 |
$ |
571,943 |
$ |
2,786 |
$ |
11,911,838 |
$ |
(732,000) |
$ |
(396) |
$ |
6,271,292 |
$ |
18,025,463 |
|||||||||
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
|||||||||||||||||
The accompanying notes are an integral part of these financial statements. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||||||||||||||||||
FOR THE YEARS ENDED APRIL 30, 2011, 2010, AND 2009 |
||||||||||||||||||||||||||||
2011 |
2010 |
2009 |
||||||||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||||||||||||||||||
Net income |
$ |
1,258,389 |
$ |
2,891,000 |
$ |
829,314 |
||||||||||||||||||||||
Adjustments to reconcile cash flows from operating activities |
||||||||||||||||||||||||||||
Depreciation and amortization |
1,401,284 |
942,192 |
391,826 |
|||||||||||||||||||||||||
Amortization (Supplemental Type Certificates) |
114,855 |
98,064 |
184,898 |
|||||||||||||||||||||||||
Provision for obsolete inventories and fixed assets |
589,154 |
130,209 |
717,723 |
|||||||||||||||||||||||||
Stock issued for services |
77,500 |
- |
- |
|||||||||||||||||||||||||
Stock options issued to employees and directors |
167,316 |
- |
- |
|||||||||||||||||||||||||
Stock issued for benefit plan |
214,529 |
197,984 |
199,303 |
|||||||||||||||||||||||||
Impairment of Indian advances |
- |
1,259,091 |
- |
|||||||||||||||||||||||||
Loss on retirement of aircraft |
- |
1,053,681 |
- |
|||||||||||||||||||||||||
Deferred income tax asset |
- |
(1,226,000) |
|
- |
||||||||||||||||||||||||
Disposal of fixed assets |
43,450 |
(496,433) |
(500) |
|||||||||||||||||||||||||
Changes in assets and liabilities - |
||||||||||||||||||||||||||||
Accounts receivable |
11,970 |
(1,595,810) |
745,872 |
|||||||||||||||||||||||||
Inventories |
(718,515) |
1,327,898 |
(1,472,780) |
|||||||||||||||||||||||||
Prepaid expenses and other current assets |
(511,509) |
(25,688) |
(54,607) |
|||||||||||||||||||||||||
Accounts payable |
1,123,497 |
352,250 |
|
(83,864) |
||||||||||||||||||||||||
Customer deposits |
264,599 |
(293,514) |
(297,546) |
|||||||||||||||||||||||||
Deposits other |
(1,700,000) |
1,700,000 |
- |
|||||||||||||||||||||||||
Accrued liabilities |
(160,822) |
1,169,845 |
12,631 |
|||||||||||||||||||||||||
Gaming facility mandated payment |
368,332 |
1,659,683 |
- |
|||||||||||||||||||||||||
Other liabilities |
1,860 |
32,691 |
- |
|||||||||||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
||||||||||||||||||||||||||
Cash flows from operating activities |
2,545,889 |
9,177,143 |
1,172,270 |
|||||||||||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
||||||||||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||||||||||||||||||
Capital expenditures |
(3,792,459) |
(506,485) |
(198,407) |
|||||||||||||||||||||||||
Proceeds from sale of land/other assets |
39,000 |
2,000,000 |
- |
|||||||||||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
||||||||||||||||||||||||||
Cash flows from investing activities |
(3,753,459) |
1,493,515 |
(198,407) |
|||||||||||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
||||||||||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||||||||||||||||||
Borrowings line of credit, net |
21,999 |
(614,808) |
(26,473) |
|||||||||||||||||||||||||
Borrowings of promissory notes, long-term debt and capital lease obligations |
2,881,909 |
375,000 |
5,701,562 |
|||||||||||||||||||||||||
Repayments of promissory notes, long-term debt and capital lease obligations |
(1,927,359) |
(3,702,342) |
(7,640,629) |
|||||||||||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
||||||||||||||||||||||||||
Cash flows from financing activities |
976,549 |
(3,942,150) |
(1,965,540) |
|||||||||||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
||||||||||||||||||||||||||
NET INCREASE (DECREASE) IN CASH |
(231,021) |
6,728,508 |
(991,677) |
|||||||||||||||||||||||||
CASH, beginning of year |
8,706,546 |
1,978,038 |
2,969,715 |
|||||||||||||||||||||||||
-------------------- |
-------------------- |
-------------------- |
||||||||||||||||||||||||||
CASH, end of year |
$ |
8,475,525 |
$ |
8,706,546 |
$ |
1,978,038 |
||||||||||||||||||||||
============ |
============ |
============ |
||||||||||||||||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
||||||||||||||||||||||||||||
Interest paid |
$ |
363,618 |
$ |
462,687 |
$ |
510,633 |
||||||||||||||||||||||
============ |
============ |
============ |
||||||||||||||||||||||||||
Income taxes paid |
$ |
1,796,859 |
$ |
|
662,874 |
$ |
|
554,789 |
||||||||||||||||||||
============ |
============ |
============ |
||||||||||||||||||||||||||
NON CASH OPERATING ACTIVITY |
||||||||||||||||||||||||||||
Stock issued for services |
$ |
77,500 |
$ |
|
- |
$ |
|
- |
||||||||||||||||||||
============ |
============ |
============ |
||||||||||||||||||||||||||
Stock options issued to employees and directors |
$ |
167,316 |
$ |
|
- |
$ |
|
- |
||||||||||||||||||||
============ |
============ |
============ |
||||||||||||||||||||||||||
Stock issued for benefit plan |
$ |
214,529 |
$ |
|
197,984 |
$ |
|
199,303 |
||||||||||||||||||||
============ |
============ |
============ |
||||||||||||||||||||||||||
|
2. DEBT: |
|||||||||||
Promissory Notes |
2011 |
2010 |
|||||||||
Bank Line of Credit, available LOC $1,000,000 |
|||||||||||
interest at prime plus 2% (7.0% at April 30, 2011 - with a |
$ |
91,799 |
$ |
69,800 |
|||||||
floor of 7%) due August 2011, collateralized by a |
|||||||||||
first or second position on all assets of the Company. |
|||||||||||
-------------- |
-------------- |
||||||||||
$ |
91,799 |
$ |
69,800 |
||||||||
========= |
========= |
||||||||||
Long-Term Debt and Capital Lease Obligations |
|||||||||||
Note payable, interest at 6% due February 2016 collateralized |
1,622,390 |
- |
|||||||||
by Aircraft Security Agreements |
|||||||||||
Note payable, interest at prime plus 1%, (4.25% at April |
- |
269,841 |
|||||||||
30, 2011) due June 2011 collateralized by Aircraft |
|||||||||||
and Engine Security Agreements |
|||||||||||
Note payable, interest at prime plus 3%, with a floor of |
587,555 |
- |
|||||||||
6.25% due September 2017 collateralized by Aircraft Security |
|||||||||||
Agreements |
|||||||||||
Note payable, interest at bank prime (3.25% at April |
456,122 |
498,579 |
|||||||||
30, 2011) due March 2013, collateralized by real estate. |
|||||||||||
Note payable, interest at bank prime (3.25% at April |
1,171,981 |
1,281,072 |
|||||||||
30, 2011) due March 2013, collateralized by real estate. |
|||||||||||
Note payable, interest at 6.0% due February 28, |
86,660 |
91,023 |
|||||||||
2024 collateralized by real estate. |
|||||||||||
Note payable, interest at 5.0% at April 30, 2010, |
- |
20,671 |
|||||||||
renewed and due October 2011, collateralized by real estate. |
|||||||||||
Note payable, interest at 5.0% at April 30, 2011, |
- |
121,765 |
|||||||||
renewed and due August 2011, collateralized by real estate. |
|||||||||||
Note payable, interest at 7.5% at April 30, 2011, |
168,781 |
346,611 |
|||||||||
due November 2012, collateralized by real estate. |
|||||||||||
Note payable, interest at 6.25% at April 30, 2011, |
355,923 |
366,596 |
|||||||||
due June 14, 2014, collateralized by real estate. |
|||||||||||
Note payable, interest at prime plus 2% (7.0% at April |
688,749 |
907,698 |
|||||||||
30, 2011 - with a floor of 7.0%), due January 2014, |
|||||||||||
collateralized by a first or second position on all assets. |
|||||||||||
Notes payable, interest Libor rate plus 9.715%, (10.8% at April |
649,534 |
825,441 |
|||||||||
30, 2011) renewed May 2009, due May 2014, collateralized |
|||||||||||
by Aircraft and Engine Security Agreements. |
|||||||||||
Note payable, with quarterly payments of $125,000 through |
473,339 |
908,874 |
|||||||||
2012. Imputed interest calculated at 7.0% |
|||||||||||
Other Notes Payable and Capital Lease Obligations |
486,858 |
155,171 0 |
|||||||||
Due May 2011 to May 2013 with interest rates between |
|||||||||||
3.9% and 8.5%. |
-------------- |
-------------- |
|||||||||
$ |
6,747,892 |
$ |
5,793,342 |
||||||||
Less: Current maturities |
1,807,490 |
1,488,343 |
|||||||||
-------------- |
-------------- |
||||||||||
$ |
4,940,402 |
$ |
4,304,999 |
||||||||
========= |
========= |
||||||||||
|
|||||||||||
|
|
||||||||||
-------------- |
-------------- |
||||||||||
2012 |
$ |
1,807,490 |
|||||||||
2013 |
2,632,678 |
||||||||||
2014 |
891,611 |
||||||||||
2015 |
786,811 |
||||||||||
2016 |
414,156 |
||||||||||
Thereafter |
215,146 |
||||||||||
-------------- |
|||||||||||
$ |
6,747,892 |
||||||||||
======== |
3. INCOME TAXES: |
|||||||
Deferred taxes are determined based on the estimated future tax effects of differences between the financial statements and tax basis of assets and liabilities given the provision of the enacted tax laws. Significant components of the Company's deferred tax liabilities and assets as of April 30, 2011 and 2010 are as follows: |
|||||||
April 30, 2011 |
April 30, 2010 |
||||||
Deferred tax liabilities: |
|||||||
Depreciation |
$ |
(248,000) |
$ |
(160,000) |
|||
---------------------- |
---------------------- |
||||||
Deferred tax assets: |
|||||||
Accounts receivable reserve |
56,000 |
89,000 |
|||||
Inventory and other reserves |
1,338,000 |
1,225,000 |
|||||
Vacation accruals |
80,000 |
72,000 |
|||||
---------------------- |
---------------------- |
||||||
Total gross deferred tax assets |
1,474,000 |
1,386,000 |
|||||
Less valuation allowance |
- |
- |
|||||
---------------------- |
---------------------- |
||||||
Net deferred tax assets |
$ |
1,226,000 |
$ |
1,226,000 |
|||
============= |
============= |
||||||
The reconciliation of the federal statutory income tax rate to the effective tax rate is as follows: |
|||||||
April 30, 2011 |
April 30, 2010 |
||||||
Statutory federal income tax rate |
34.00% |
34.00% |
|||||
State income tax |
9.70% |
- |
|||||
Permanent tax |
2.70% |
3.00% |
|||||
Change in valuation reserve |
- |
15.00% |
|||||
Other |
1.80% |
(11.00%) |
|||||
---------------------- |
---------------------- |
||||||
48.20% |
41.00% |
||||||
============= |
============= |
||||||
Income tax expense: |
|||||||
Deferred income tax benefit |
$ |
- |
$ |
(1,226,000) |
|||
Current income tax |
1,171,063 |
1,235,293 |
|||||
---------------------- |
---------------------- |
||||||
Total income tax expense |
$ |
1,171,063 |
$ |
9,293 |
|||
============= |
============= |
||||||
Current income tax expense of $1,171,063 and $1,235,293 are comprised of $925000 and $1,100,000 in federal income tax and $246,063 and $135,293 in state income tax for the years ended April 30, 2011 and 2010, respectively. |
4. STOCKHOLDERS' EQUITY: |
Common Stock Transactions |
During the year ended April 30, 2011, we issued 437,814 shares valued at $214,529 as the match to the Company 401(k) plan. |
5. STOCK OPTIONS AND INCENTIVE PLANS The following represents the outstanding and exercisable number of shares, weighted average exercise price and weighted average remaining contractual life of options outstanding and exercisable. We issued 7,262,064 stock options on December 31, 2010 expiring on December 31, 2015. The exercise price for the incentive stock options is $0.49 (closing price as of December 31, 2010). 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: Year 1: Target $0.92 Year 2: Target $1.41 Year 3: Target $1.90 We used the Black-Scholes model to value the options and used assumptions of ultimately how many option shares would vest based on our experience. The value of the option shares is $684,131 and this will be expensed over the vesting term using the active employment to determine monthly expense. For the fiscal year ended April 30, 2011 we expensed $167,316. The remaining amount will be expensed through fiscal 2014. The fair value of the option shares used the following weighted average assumptions: Strike Price $1.36; Stock Price $0.49; Volatility 125%; Term 3.1 years; Dividend yield 0% and Interest Rate 1.01%. |
A summary of stock options and warrants is as follows: |
|||||||||||
2011 |
2010 |
2009 |
|||||||||
Options exercisable at April 30 |
0 |
1,224,834 |
1,244,834 |
||||||||
Weighted average fair value per share Options granted per year |
.49 |
.80 |
.79 |
||||||||
Range of Exercise Prices |
Number Outstanding and Exercisable |
Weighted Average Remaining Contract Life |
Weighted Average Exercise and Outstanding Price |
||||||||
$0.49 |
0 |
3.1 years |
.49 |
||||||||
Options |
Average Price |
||||||||||
Outstanding Beginning 04/30/2008 |
1,493,763 |
$ |
0.81 |
||||||||
Granted |
- |
- |
|||||||||
Expired |
248,929 |
0.90 |
|||||||||
Exercised |
- |
- |
|||||||||
Outstanding Ending 04/30/2009 |
1,244,834 |
0.79 |
|||||||||
Outstanding Beginning 04/30/2009 |
1,244,834 |
0.79 |
|||||||||
Granted |
- |
- |
|||||||||
Expired |
20,000 |
.0625 |
|||||||||
Exercised |
- |
- |
|||||||||
Outstanding Ending 04/30/2010 |
1,224,834 |
0.80 |
|||||||||
Outstanding Beginning 04/30/2010 |
1,224,834 |
0.80 |
|||||||||
Granted |
7,262,064 |
0.49 |
|||||||||
Expired |
1,224,834 |
0.79 |
|||||||||
Exercised |
- |
- |
|||||||||
Outstanding Ending 04/30/2011 |
7,262,064 |
$ |
0.49 |
||||||||
6. COMMITMENTS :Lease and Rent Commitments We lease and rent space with initial terms of three (3) years, (5) years and ten (10) years. Total rental expense incurred for the years ended April 30, 2011, 2010, and 2009, was $1,774,429, $1,672,603, and $243,133, respectively. Minimum lease and rent agreement commitments under noncancellable operating leases and rental agreements for the next five (5) years are as follows: |
|||||||||||
Year Ending April 30 |
Amount |
||||||||||
2012 |
$ |
4,924,312 |
|||||||||
2013 |
6,790,723 |
||||||||||
2014 |
6,836,780 |
||||||||||
2015 |
6,883,298 |
||||||||||
2016 |
6,930,281 |
||||||||||
$ |
32,365,394 |
7. CONTINGENCIES: |
We are involved in various lawsuits incidental to our business. Management believes the ultimate liability, if any, will not have an adverse effect on the Company financial position or results of operations. |
8. RELATED-PARTY TRANSACTIONS: |
In the normal course of business, we purchased modifications services and avionics of approximately $1,143, $88,142, and $74,442 from a company partially owned by David Hayden, a director for Butler National Corporation during fiscal 2011, 2010, and 2009 respectively. |
9. 401(k) SAVINGS PLAN |
We have a defined contribution plan authorized under Section 401(k) of the Internal Revenue Code. All benefits-eligible employees with at least thirty days of service are eligible to participate in the plan; however there are only two entry dates per calendar year. Employees may contribute up to twelve percent of their pre-tax covered compensation through salary deductions. The Plan may match subject to the annual approval of the Board of Directors, 100 percent of every pre-tax dollar an employee contributes up to 6% of the employee's salary. Employees are 100 percent vested in the employer's contributions immediately. Our matching share contribution, at the then current market value, in 2011, 2010, and 2009 was approximately $214,529, $197,984, and $199,303 respectively. If approved by the Board of Directors, the Company match is paid in common stock of the Company. |
Industry Segmentation |
Company operations are classified into six segments in Fiscal Years 2011, 2010, and 2009. |
Aircraft Modifications - principally includes the modification of customer and company owned business-size aircraft from passenger to freighter configuration, addition of aerial photography capability, and stability enhancing modifications for Learjet, Beechcraft, Cessna, and Dassault Falcon aircraft along with other specialized modifications. We provide these services through our subsidiary, Avcon Industries, Inc. ("Aircraft Modifications" or "Avcon"). In March 2008, Butler National Corporation, through its subsidiary Avcon Industries, Inc. acquired the JET autopilot product line for the Classic Learjets. The Company plans a transition of the acquisition to continue the service and support of all customers operating the JET autopilot and related equipment. In the interim period the Company has extended an agreement for transition services.Avionics - principally includes the manufacture, sale, and service of airborne electronic switching units used in DC-9, DC-10, DC-9/80, MD-80, MD-90, and the KC-10 aircraft, Transient Suppression Devices (TSDs) for fuel tank protection on Boeing Classic 737 and 747 aircraft, and other Classic aircraft using a capacitance fuel quantity indicating system ("FQIS"), airborne electronics upgrades for classic weapon control systems used on military aircraft and vehicles, and consulting services with airlines and equipment manufacturers regarding fuel system safety requirements. We provide the products through our subsidiary, Butler National Corporation - Tempe, Arizona and the services through Butler National Corporation - Olathe, Kansas ("Avionics", "Classic Aviation Products", "Safety Products", or "Switching Units"). In September 2010 we expanded this division by the acquisition of Kings Avionics Inc. The acquisition of Kings Avionics allows us to transition into the new technology available in avionics. Kings Avionics sells, installs and repairs avionics equipment (airplane radio equipment and flight control systems). These systems are flight display systems which include intuitive touchscreen controls with large display to give users unprecedented access to high-resolution terrain mapping, graphical flight planning, geo-referenced charting, traffic display, satellite weather and much more. Kings is also recognized nationwide for its troubleshooting and repair work particularly on autopilots. Services - SCADA (Supervisory Control and Data Acquisition) Systems and Monitoring Services - principally includes monitoring and related repair services of water and wastewater remote pumping stations through electronic surveillance for municipalities and the private sector. We provide these services through our subsidiary, Butler National Services, Inc. ("Monitoring Services" or "BNS"). Corporate / Professional Services - principally includes providing as a management service licensed architectural services through our subsidiary, BCS Design, Inc. These services include commercial and industrial building design. We have expanded this segment to include aviation-related engineering consulting services and operate as the Butler National Aircraft Certification Center ("BNACC"). Gaming - principally includes business management services provided by our subsidiary, Butler National Service Corporation ("BNSC"). We provide management services to the Boot Hill Casino and Resort which commenced operations on December 15, 2009 through our subsidiary BHCMC, LLC, a Kansas limited liability company jointly owned by BNSC and BHC Investment Company, L.C. (BHCI). BHCI is not a related party. |
Year ended April 30, 2011 |
|||||||||||||||
Gaming |
Avionics |
Modifications |
Services |
Corporate |
Consolidated |
||||||||||
Net Revenue |
$ |
24,901,743 |
$ |
5,072,298 |
$ |
13,872,659 |
$ |
1,562,294 |
$ |
926,334 |
$ |
46,335,328 |
|||
Depreciation/Amortization |
18,917 |
175,675 |
1,062,779 |
17,526 |
241,242 |
1,516,139 |
|||||||||
Operating income |
(217,958) |
(183,359) |
2,153,029 |
13,780 |
1,063,035 |
2,828,527 |
|||||||||
Capital Expenditures, net |
224,982 |
999,466 |
2,486,601 |
18,233 |
26,177 |
3,755,459 |
|||||||||
Interest Expense |
(364,159) |
||||||||||||||
Other income |
(34,914) |
||||||||||||||
Income before tax |
2,429,452 |
||||||||||||||
Income tax expense |
1,171,063 |
||||||||||||||
Net Income |
|
|
|
|
|
1,259,659 |
|||||||||
Identifiable assets |
8,597,798 |
5,220,991 |
6,540,463 |
694,553 |
11,103,889 |
32,157,694 |
|||||||||
Year ended April 30, 2010 |
|||||||||||||||
Gaming |
Avionics |
Modifications |
Services |
Corporate |
Consolidated |
||||||||||
Net Revenue |
$ |
10,005,903 |
$ |
5,497,408 |
$ |
13,486,358 |
$ |
1,608,468 |
$ |
1,978,571 |
$ |
32,576,708 |
|||
Depreciation/Amortization |
- |
69,191 |
812,045 |
18,313 |
140,705 |
1,040,254 |
|||||||||
Operating income |
53,215 |
1,293,643 |
806,533 |
2,301 |
1,188,056 |
3,343,748 |
|||||||||
Capital Expenditures, net |
(1,062,298) |
- |
60,000 |
- |
5,215 |
(997,083) |
|||||||||
Interest Expense |
(455,827) |
||||||||||||||
Other income |
12,372 |
||||||||||||||
Income before tax |
2,900,293 |
||||||||||||||
Income tax expense |
9,293 |
||||||||||||||
Net Income |
|
|
|
|
|
2,890,126 |
|||||||||
Identifiable assets |
7,897,464 |
4,262,775 |
6,009,939 |
958,821 |
10,436,948 |
29,565,947 |
|||||||||
Year ended April 30, 2009 |
|||||||||||||||
Gaming |
Avionics |
Modifications |
Services |
Corporate |
Consolidated |
||||||||||
Net Revenue |
$ |
1,293,284 |
$ |
2,255,776 |
$ |
11,713,497 |
$ |
1,771,755 |
$ |
1,058,776 |
$ |
18,093,088 |
|||
Depreciation/Amortization |
- |
82,444 |
172,040 |
18,598 |
303,642 |
576,724 |
|||||||||
Operating income |
655,581 |
(87,532) |
967,085 |
24,316 |
272,432 |
1,831,882 |
|||||||||
Capital Expenditures, net |
(96,879) |
24,375 |
223,488 |
21,021 |
26,902 |
198,907 |
|||||||||
Interest Expense |
(504,829) |
||||||||||||||
Other income |
7,407 |
||||||||||||||
Income before tax |
1,334,460 |
||||||||||||||
Income taxes |
505,146 |
||||||||||||||
Net Income |
|
|
|
|
|
829,314 |
|||||||||
Identifiable assets |
4,388,715 |
4,159,006 |
5,504,679 |
424,579 |
11,321,178 |
25,798,157 |
Major Customers: Revenue from major customers (10 percent or more of consolidated revenue) were as follows: |
|||||||||||||||||||
2011 |
2010 |
2009 |
|||||||||||||||||
Modifications |
11.2% |
N/A* |
10.9% |
||||||||||||||||
Avionics |
N/A* |
N/A* |
N/A* |
||||||||||||||||
Management Services |
N/A* |
N/A* |
N/A* |
||||||||||||||||
Environmental Services |
N/A* |
N/A* |
N/A* |
||||||||||||||||
*Revenue represented less than 10% of consolidated revenue. |
|||||||||||||||||||
12. FAIR VALUE MEASURMENTS The Company adopted ASC Topic 820-10 at the beginning of 2009 to measure the fair value of certain of its financial assets required to be measured on a recurring basis. The adoption of ASC Topic 820-10 did not impact the Company's financial condition or results of operations. ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below: Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. Level 2 - Valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. Level 3 - Valuations based on inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability. |
|||||||||||||||||||
|
|||||||||||||||||||
The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of April 30, 2011: |
|||||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Fair Value |
||||||||||||||||
Line of credit |
$ |
- |
$ |
91,799 |
$ |
- |
$ |
91,799 |
|||||||||||
Long term debt and capital lease obligations |
- |
6,747,892 |
- |
6,747,892 |
|||||||||||||||
--------------- |
--------------- |
--------------- |
--------------- |
||||||||||||||||
$ |
- |
$ |
6,839,691 |
$ |
- |
$ |
6,839,691 |
||||||||||||
The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of April 30, 2010: |
|||||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Fair Value |
||||||||||||||||
Line of credit |
$ |
- |
$ |
69,800 |
$ |
- |
$ |
69,800 |
|||||||||||
Long term debt and capital lease obligations |
- |
5,793,342 |
- |
5,793,342 |
|||||||||||||||
--------------- |
--------------- |
--------------- |
--------------- |
||||||||||||||||
$ |
- |
$ |
5,863,142 |
$ |
- |
$ |
5,863,142 |
||||||||||||
13. ACQUISITIONS On September 1, 2010, we acquired Kings Avionics Inc. for $540,000. The acquisition of Kings Avionics allows us to transition into the new technology available in avionics today. In February 2011, we purchased a Learjet 60 aircraft for approximately $1,820,000. This acquisition was made for the STC development of Lear 60 products. |
|||||||||||||||||||
14. DODGE CITY LAND ACQUISITION In June 2009 we sold 104 acres of land to BHC Development as a part of the build-to-suit agreement for $2,000,000. The cost associated with this sale was $1,503,567. On June 15, 2009, our subsidiary, Kansas International DDC, LLC exercised our option to purchase approximately 49 acres east of Highway 50 Bypass across from the future location of the Boot Hill Casino and Resort in Dodge City, Kansas. After option fee payments and additional deposits we borrowed approximately $375,000 to make this purchase. In May 2010 we purchased approximately 20 acres of land in Dodge City, Kansas, known as Glenridge Estates for approximately $85,000. This land was purchased in support of future developments in Dodge City, Kansas. |
|||||||||||||||||||
15. SUBSEQUENT EVENTS On May 6, 2011 BHCMC, LLC and BHC Investments entered into a lease agreement beginning March 1, 2012 and ending September 30, 2017 in the monthly amount of $182,081, for additional items provided to the Tenant by the landlord. On May 1, 2011 BHC Investment Company exercised the option to acquire 100% of the Class A Preferred Interest in BHCMC, LLC. The ownership structure of BHCMC, LLC is now: |
|||||||||||||||||||
Membership Interest |
Members of BOM |
Equity Ownership |
Income (Loss) Sharing |
||||||||||||||||
Class A |
3 |
20% |
40% |
||||||||||||||||
Class B |
4 |
80% |
60% |
16. SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED) |
||||||||||
2011 |
First |
Second |
Third |
Fourth |
Total |
|||||
Revenue |
$ |
9,546 |
$ |
11,016 |
$ |
12,860 |
$ |
12,913 |
$ |
46,335 |
Operating Income (Loss) |
(64) |
780 |
1,514 |
598 |
2,828 |
|||||
Nonoperating Income (Expense) |
(130) |
(89) |
(84) |
(96) |
(399) |
|||||
Net Income (Loss) |
(112) |
473 |
867 |
32 |
1,260 |
|||||
Basic Earnings (Loss) per Share* |
.00 |
.01 |
.01 |
.00 |
.02 |
|||||
Diluted Earnings (Loss) per Share* |
N/A |
.01 |
.01 |
.00 |
.02 |
|||||
*Rounded to nearest tenth |
||||||||||
2010 |
First |
Second |
Third |
Fourth |
Total |
|||||
Revenue |
$ |
6,069 |
$ |
4,411 |
$ |
8,924 |
$ |
13,173 |
$ |
32,577 |
Operating Income (Loss) |
1,198 |
113 |
977 |
1,056 |
3,344 |
|||||
Nonoperating Income (Expense) |
(480) |
(94) |
(334) |
455 |
(453) |
|||||
Net Income (Loss) |
718 |
19 |
643 |
1,510 |
2,890 |
|||||
Basic Earnings (Loss) per Share* |
.01 |
.00 |
.01 |
.03 |
.05 |
|||||
Diluted Earnings (Loss) per Share* |
.01 |
.00 |
.01 |
.03 |
.05 |
|||||
*Rounded to nearest tenth |
||||||||||
2009 |
First |
Second |
Third |
Fourth |
Total |
|||||
Revenue |
$ |
5,204 |
$ |
4,056 |
$ |
4,545 |
$ |
4,288 |
$ |
18,093 |
Operating Income (Loss) |
656 |
(5) |
503 |
678 |
1,832 |
|||||
Nonoperating Income (Expense) |
(338) |
(41) |
(225) |
(398) |
(1,002) |
|||||
Net Income (Loss) |
318 |
(46) |
278 |
279 |
829 |
|||||
Basic Earnings (Loss) per Share* |
.01 |
.01 |
.01 |
.01 |
.02 |
|||||
Diluted Earnings (Loss) per Share* |
.01 |
.01 |
.01 |
.01 |
.02 |
|||||
*Rounded to nearest tenth |
||||||||||
The individual quarter and fiscal year earnings per share are presented as shown in our quarterly and annual filings with the Securities and Exchange Commission. These numbers are rounded up to the nearest tenth. |
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES |
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES |
|||||||||||
FOR THE YEARS ENDED APRIL 30, 2011, 2010 AND 2009 |
|||||||||||
|
Additions Charged to Costs and Expenses |
|
|
||||||||
Description |
|||||||||||
Year ended April 30, 2011 |
|||||||||||
Allowance for doubtful accounts |
$ |
229,969 |
$ |
- |
$ |
83,467 |
$ |
146,502 |
|||
Reserve for inventory obsolescence |
1,244,216 |
548,466 |
- |
1,792,681 |
|||||||
Year ended April 30, 2010 |
|||||||||||
Allowance for doubtful accounts |
$ |
111,840 |
$ |
118,129 |
$ |
- |
$ |
229,969 |
|||
Reserve for inventory obsolescence |
1,114,007 |
165,384 |
- |
1,244,216 |
|||||||
Income tax valuation allowance |
749,000 |
- |
749,000 |
- |
|||||||
Year ended April 30, 2009 |
|||||||||||
Allowance for doubtful accounts |
$ |
75,040 |
$ |
36,800 |
$ |
- |
$ |
111,840 |
|||
Reserve for inventory obsolescence |
477,254 |
636,753 |
- |
1,114,007 |
|||||||
Income tax valuation allowance |
784,000 |
- |
35,000 |
749,000 |
|||||||