UNITED STATES SECURITIES AND EXCHANGE COMMISSION | ||
FORM 10-K | ||
(Mark One) |
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For the fiscal year endedApril 30, 2009 | ||
[ ]Transition Report Pursuant to Section 13 or 15(d) of the Security Exchange Act of 1934 (No Fee Required) | ||
For the Transition Period from __________ to __________. | ||
Commission File Number0-1678 | ||
BUTLER NATIONAL CORPORATION | ||
Kansas | 41-0834293 | |
19920 West 161st Street, Olathe, Kansas 66062 | ||
Registrant's telephone number, including area code:(913) 780-9595 | ||
Securities registered pursuant to Section 12(b) of the Act:None | ||
Securities registered pursuant to Section 12(g) of the Act: | ||
Common Stock $.01 Par Value | ||
Indicate by check if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | ||
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. [ ] | ||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. | ||
Indicate by check mark whether the registrant is a shell company. Yes [ ] No [X] | ||
The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, as of July 2, 2009, was55,997,031 shares. | ||
DOCUMENTS INCORPORATED BY REFERENCE: NONE | ||
This Form 10-K consists of 73 pages (including exhibits). The index to exhibits is set forth on pages 38-40. |
PART I | |||||||||
Item 1. BUSINESS | |||||||||
Forward Looking Information | |||||||||
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. | |||||||||
General | |||||||||
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. | |||||||||
Current Activities.Our current product lines and services include: | |||||||||
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 near future. In the interim period the company has an agreement for transition services and continued support for the acquired JET product line. | |||||||||
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Industry Segment | Assets | Revenue | |||||||
Aircraft Modifications | 21.3% | 64.7% | |||||||
Aircraft | 19.0% | 0.0% | |||||||
Avionics | 16.1% | 12.5% | |||||||
Gaming | 17.0% | 7.1% | |||||||
Monitoring Services | 1.6% | 9.8% | |||||||
Corporate / Professional Services | 25.0% | 5.9% | |||||||
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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. | |||||||||
Financial Information about Industry Segments | |||||||||
Information with respect to our industry segments are found at Note 10 of Notes to Consolidated Financial Statements for the year ended April 30, 2009. | |||||||||
Narrative Description of Business | |||||||||
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. | |||||||||
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. Aircraft - Acquisition, Modification and Sales We actively purchase airplanes, through our subsidiary Butler National, Inc., principally Learjets. Avcon modifies these planes and then we sell them directly to customers or to brokers. Company owned aircraft are sometimes used to prove the design, testing, and compliance of the STC modifications during the FAA approval process.
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. Also, we have signed consulting engagement letters with two tribes to study and develop plans for Indian gaming. 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. We have expanded this segment to include aviation-related engineering consulting services and operate as the Butler National Aircraft Certification Center. | |||||||||
Backlog: Our backlog as of April 30, 2009, 2008, and 2007, was as follows: | |||||||||
Industry Segment | 2009 | 2008 | 2007 | ||||||
Aircraft Modifications | $ 6,018,620 | $ 3,629,343 | $ 6,340,304 | ||||||
Avionics | 4,067,592 | 3,504,013 | 5,197,103 | ||||||
Services - Monitoring Services | 967,671 | 1,205,191 | 2,443,065 | ||||||
Corporate / Professional Services | 143,444 | 211,351 | 262,361 | ||||||
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Total backlog | $11,197,327 | $8,549,898 | $14,242,833 | ||||||
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Item 2. PROPERTIES | ||||||||||
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. | ||||||||||
Item 3. LEGAL PROCEEDINGS | ||||||||||
A lawsuit was filed in the United States District Court for the District of Kansas by the State of Kansas against us, the United States, the Business Committee members of the Miami Tribe and others on October 14, 1999, challenging the determination by the NIGC and the United States District Court for the District of Kansas that the Miami Princess Maria Reserve No. 35 is Indian land for the purposes of gaming under the Indian Gaming Regulatory Act. The State of Kansas requested an order by the Court preventing further development of gaming on the Indian land.
Butler National filed a lawsuit in the United States District Court for the Eastern District of Texas against General Electric in May 2008 and others related to overhaul of two CJ-610 aircraft jet engines. We are aggressively prosecuting the case. We cannot reliably predict the outcome of this litigation at this time.
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Item 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS | ||||||||||
(a) On February 24, 2009 Butler National Corporation held its Annual Meeting of Shareholders. (c) The proposal for the ratification of the appointment of Weaver & Martin, LLC as Independent Auditors for the fiscal year ending April 30, 2009 was voted on and approved at the meeting by the following vote: For: 43,294,139 Against: 1,318,396 Abstain: 40,644. | ||||||||||
PART II | ||||||||||
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. | ||||||||||
COMMON STOCK (BUKS): | ||||||||||
(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 is now quoted in the over-the-counter (OTCBB) category. Approximately eighteen (18) market makers offer and trade the stock. | ||||||||||
Year Ended | Year Ended | |||||||||
Low | High | Low | High | |||||||
First Quarter | $ | .350 | $ | .580 | $ | .350 | $ | .490 | ||
Second Quarter | $ | .210 | $ | .550 | $ | .220 | $ | .430 | ||
Third Quarter | $ | .180 | $ | .330 | $ | .260 | $ | .390 | ||
Fourth Quarter | $ | .130 | $ | .240 | $ | .250 | $ | .390 |
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SECURITIES CONVERTIBLE TO COMMON STOCK: | |||||
As of July 2, 2009 there were no Convertible Preferred shares or Convertible Debenture notes outstanding. | |||||
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 | 1,071,834 | $ | .9000 | 6,017,229 | (1) |
Equity compensation plans not approved by stockholders | 0 | 0 | 0 | ||
Total | 1,244,834 | $ | .7900 | 6,017,229 | |
(1) See Note 5 to the audited consolidated financial statements for a description of the equity compensation plan for securities remaining available for future issuance. Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities | |||||
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, 2008 through April 30, 2009 | 0 | 0 | 6,017,229 shares | (1) | |
Total | 0 | $ | 0 | 6,017,229 shares | |
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Expected Maturity Date
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Assets | ||||||||||||||||
Note receivable: | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
Variable rate |
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Liabilities | ||||||||||||||||
Promissory Notes | $ | 685 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 685 | $ | 685 |
Long-term debt: | $ | 2,775 | $ | 1,255 | $ | 1,298 | $ | 3,239 | $ | 461 | $ | 92 | $ | 9,120 | $ | 9,120 |
Variable rate |
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Interest Payments | ||||||||||||||||
Est. Interest Payments: | $ | 167 | $ | 79 | $ | 91 | $ | 95 | $ | 37 | $ | 8 | $ | 477 |
Scheduled interest payments are calculated on a fixed rate basis, if known, and the remaining interest will be calculated on the average current rate. | ||||
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | ||||
The Financial Statements of the Registrant are set forth on pages 43 through 62 of this report. | ||||
Item 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | ||||
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Item 9(A). 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. This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management report was not subject to attestation by the Company registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report. Limitations on Controls 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, 2009 that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting. | ||||
PART III | ||||
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT | ||||
Name of Nominee andDirector, Age and Term | Served |
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Clark D. Stewart | 1989 | President of the Company from September 1, 1989 to present. | ||
R. Warren Wagoner | 1986 | Chairman of the Board of Directors of the Company since August 30, 1989. | ||
David B. Hayden | 1996 | Co-owner and President of Kings Avionics, Inc. since 1974. | ||
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R. Warren Wagoner | 57 | Chairman of the Board of Directors | ||
Clark D. Stewart | 69 | President and Chief Executive Officer | ||
Christopher J. Reedy | 43 | Vice President and Secretary | ||
Angela D. Shinabargar | 45 | 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. | ||||
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 in October 2001. | ||||
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 2009, excluding actions by unanimous written consent. The rest of this page intentionally left blank. | ||||
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, 2009, 2008 and 2007. 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:
Each element of compensation reflects one or more of these design priorities. In most cases, our employees, including executive officers, are employed at will, without employment agreements, severance payment arrangements (except as required by local law), or payment arrangements that would be triggered by a "change in control" of Butler National. Retirement plan programs are broad-based; Butler National does not provide special retirement plans or benefits solely for executive officers. Total compensation for the majority of our employees including executive officers, includes two or more of the following components:
The Compensation Committee and management continue to believe that a similar method of compensating all employees with cash, equity and retirement benefits supports a culture of fairness, collaboration, and egalitarianism. | |
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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 | Since 2003 we have elected not to award equity grants. |
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. |
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. |
Performance Measures and Decision-Making Process for Fiscal Year 2009 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 2008. 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 2008, 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 2009 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 2009 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. The Compensation Committee, which is composed solely of independent members 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. Clark D. Stewart Mr. R. Warren Wagoner Executive Compensation SUMMARY | |
The following table below sets forth certain compensation information concerning the Chief Executive Officer, Chief Financial Officer, and our two additional most highly compensated executive officers for the fiscal | |
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 (Contract back pay) | 09 | 367,633 | --- | --- | --- | --- | --- | 34,582 | 402,215 | ||||||||||||||||||||||||
R. Warren Wagoner | 09 | 228,984 161,010 | --- | --- | --- | --- | --- | 20,702 | 249,686 | ||||||||||||||||||||||||
Christopher J. Reedy | 09 | 178,418 | --- | --- | --- | --- | --- | 21,205 | 199,623 | ||||||||||||||||||||||||
Angela D. Shinabargar | 09 | 123,583 | 20,000 | --- | --- | --- | --- | 10,386 | 153,969 | ||||||||||||||||||||||||
Name | Year | Airplane and Automobile Usage | Health Benefits | Memberships | Matching Contributions to 401(k) (3) | ||||||||||||||||||||||||||||
Clark D. Stewart | 2009 | 7,200 | 4,381 | 9,201 | 13,800 | ||||||||||||||||||||||||||||
R. Warren Wagoner | 2009 | --- | 7,087 | --- | 13,615 | ||||||||||||||||||||||||||||
Christopher J. Reedy | 2009 | --- | 2,824 | 7,516 | 10,865 | ||||||||||||||||||||||||||||
Angela D. Shinabargar | 2009 | --- | 1,660 | --- | 8,726 | ||||||||||||||||||||||||||||
(1) All Other Compensation includes the amounts in the tables above. (3) Includes catch-up contribution made by the employee and matched by the Company. | |||||||||||||||||||||||||||||||||
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, |
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R. Warren Wagoner, |
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Christopher J. Reedy, |
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Angela D. Shinabargar, |
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David B. Hayden, |
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The unexercised options at April 30, 2009 listed in the table above have an exercise price of $0.90 and will expire on December 31, 2010. | |||||||||||||||||||||||||||||||||
COMPENSATION OF DIRECTORS | |||||||||||||||||||||||||||||||||
Each non-officer director is entitled to a director's fee of $100 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, 2020. 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 $99,057 and $73,758 as of April 30, 2009, and 2008 respec tively 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. | |||||||||||||||||||||||||||||||||
In the normal course of business, we purchased modifications services and avionics of approximately $74,442, $89,398, and $127,661 from a company partially owned by David Hayden, a director for the Company during fiscal 2009, 2008, and 2007 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 2, 2009. | |||||||||||||||||||||||||||||||||
Name and Address of | Amount and Nature of | Percent | |||||||||||||||||||||||||||||||
Clark D. Stewart | 3,101,819(2) | 5.6% | |||||||||||||||||||||||||||||||
(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 following table sets forth, 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, 2009. | |||||||||||||||||||||||||||||||||
| Amount and Nature of |
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David B. Hayden | 1,357,225 | 2.4% | |||||||||||||||||||||||||||||||
Christopher J. Reedy | 260,747 | 0.5% | |||||||||||||||||||||||||||||||
Clark D. Stewart | 3,101,819(2) | 5.6% | |||||||||||||||||||||||||||||||
R. Warren Wagoner | 3,655,074(3) | 6.6% | |||||||||||||||||||||||||||||||
Angela D. Shinabargar | 131,092 | 0.2% | |||||||||||||||||||||||||||||||
All Directors and Executive Officers as a Group (5 persons) | 8,505,957(4) | 15.3% | |||||||||||||||||||||||||||||||
(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 | 1,071,834 | $ | .9000 | 6,017,229 | (1) | ||||
Equity compensation plans not approved by stockholders | 0 | 0 | 0 | ||||||
Total | 1,244,834 | $ | .7900 | 6,017,229 | |||||
| |||||||||
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, 2008 through April 30, 2009 | 0 | 0 | 6,017,229 shares | (1) | |||||
Total | 0 | $ | 0 | 6,017,229 shares | |||||
| |||||||||
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | |||||||||
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES | |||||||||
|
|
| |||||||
Audit fees (a) | $82,850 | $93,185 | |||||||
(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. | |||||||||
|
Schedule | Description | Page No. | |
II. | Valuation and Qualifying Accounts and Reserves for the years ended April 30, 2009, 2008, and 2007 | 62 | |
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. | * |
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. | 63 |
23.1 | Consent of Independent Public Accountants. | 64 |
99 | Cautionary Statement for Purpose of the "Safe Harbor" Provisions of the Private Securities Reform Act of 1995. | 65-69 |
31.1 | Certificate pursuant to 18 U.S.C 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | 70 |
31.2 | Certificate pursuant to 18 U.S.C 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | 71 |
32.1 | Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | 72 |
32.2 | Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | 73 |
* 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 17, 2009 | ||
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 17, 2009 |
/s/ R. Warren Wagoner | Chairman of the Board and Director | July 17, 2009 |
/s/ David B. Hayden | Director | July 17, 2009 |
/s/ Angela D. Shinabargar | Chief Financial Officer | July 17, 2009 |
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, 2009 and 2008 and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended April 30, 2009, and the financial statement schedule listed at Schedule II on page 62. 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 accoun ting 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, 2009 and 2008 and the consolidated results of its operations, shareholders' equity, and cash flows for each of the three years in the period ended April 30, 2009 in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedule of Valuation and Qualifying Accounts and Reserves (Schedule II) on page 62 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Weaver & Martin, LLC Kansas City Missouri July 17, 2009 |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
FOR THE YEARS ENDED APRIL 30, 2009, 2008 AND 2007 | |||||||||||||
2009 | 2008 | 2007 | |||||||||||
REVENUE | |||||||||||||
Aircraft / Modifications | $ | 11,713,497 | $ | 8,646,562 | $ | 6,696,737 | |||||||
Avionics / Defense | 2,255,776 | 5,024,781 | 3,538,422 | ||||||||||
Management / Professional Services | 4,123,815 | 3,975,222 | 4,445,883 | ||||||||||
------------------- | ------------------- | ------------------- | |||||||||||
Net Revenue | 18,093,088 | 17,646,565 | 14,681,042 | ||||||||||
COST OF SALES | |||||||||||||
Aircraft / Modifications | 8,444,622 | 6,084,283 | 5,927,713 | ||||||||||
Avionics / Defense | 1,135,310 | 2,362,073 | 2,061,196 | ||||||||||
Management / Professional Services | 1,921,804 | 1,653,894 | 1,645,031 | ||||||||||
------------------- | ------------------- | -------------------- | |||||||||||
Total Cost of Sales | 11,501,736 | 10,100,250 | 9,633,940 | ||||||||||
------------------- | -------------------- | --------------------- | |||||||||||
GROSS PROFIT | 6,591,352 | 7,546,315 | 5,047,102 | ||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | (4,759,470) | (5,343,755) | (3,795,772) | ||||||||||
------------------- | ------------------- | ------------------- | |||||||||||
OPERATING INCOME | 1,831,882 | 2,202,560 | 1,251,330 | ||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||
Interest expense | (504,829) | (639,732) | (568,712) | ||||||||||
Other | 7,407 | 72,172 | 34,607 | ||||||||||
------------------- | ----------------- | ------------------- | |||||||||||
|
Other expense |
|
|
|
|
(497,422) | (567,560) | (534,105) | |||||
------------------- | ----------------- | ------------------ | |||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 1,334,460 | 1,635,000 | 717,225 | ||||||||||
PROVISION FOR INCOME TAXES | 505,146 | 360,522 | 111,680 | ||||||||||
------------------- | ----------------- | ----------------- | |||||||||||
NET INCOME | $ | 829,314 | $ | 1,274,478 | $ | 605,545 | |||||||
========== | ========== | ========== | |||||||||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.02 | $ | 0.02 | $ | 0.01 | |||||||
========== | ========== | ========== | |||||||||||
Shares used in per share calculation | 54,864,138 | 53,815,092 | 53,055,224 | ||||||||||
========== | ========== | ========== | |||||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.02 | $ | 0.02 | $ | 0.01 | |||||||
========== | ========== | ========== | |||||||||||
Shares used in per share calculation | 54,934,092 | 53,928,434 | 53,179,990 | ||||||||||
========== | ========== | ========== | |||||||||||
The accompanying notes are an integral part of these financial statements |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||
FOR THE YEARS ENDED APRIL 30, 2009, 2008, AND 2007 | |||||||||||||||||||||||
2009 | 2008 | 2007 | |||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||||||||
Net income | $ | 829,314 | $ | 1,274,478 | $ | 605,545 | |||||||||||||||||
Adjustments to reconcile net income (loss) to net cash | |||||||||||||||||||||||
provided by (used in) operations - | |||||||||||||||||||||||
Depreciation and amortization | 391,826 | 160,933 | 158,084 | ||||||||||||||||||||
Impairment of fixed assets | 111,963 | 302,537 | - | ||||||||||||||||||||
Amortization (STC) | 184,898 | 258,156 | 232,504 | ||||||||||||||||||||
Provision for obsolete inventories | 605,760 | 20,130 | 21,166 | ||||||||||||||||||||
Stock issued for Benefit Plan | 199,303 | 268,019 | 212,977 | ||||||||||||||||||||
(Gain) Loss on disposal of fixed asset | (500) | 70,224 | - | ||||||||||||||||||||
Changes in assets and liabilities - | |||||||||||||||||||||||
Accounts receivable | 745,872 | (328,394) | (282,418) | ||||||||||||||||||||
Inventories | (1,472,780) | (811,991) | (941,398) | ||||||||||||||||||||
Prepaid expenses and other current assets | (54,607) | (1,669,910) | (44,769) | ||||||||||||||||||||
Accounts payable | (83,864) | 27,912 | (218,816) | ||||||||||||||||||||
Customer deposits | (297,546) | 859,483 | 538,020 | ||||||||||||||||||||
Accrued liabilities | 12,631 | 179,162 | 61,885 | ||||||||||||||||||||
-------------------- | -------------------- | -------------------- | |||||||||||||||||||||
Cash provided by (used in) operating activities | 1,172,270 | 610,739 | 342,780 | ||||||||||||||||||||
-------------------- | -------------------- | -------------------- | |||||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||||||
Capital expenditures | (198,407) | (2,659,520) | (80,682) | ||||||||||||||||||||
Supplemental Type Certificates (STC) | - | (820,000) | (506,244) | ||||||||||||||||||||
-------------------- | -------------------- | -------------------- | |||||||||||||||||||||
Cash provided by (used in) investing activities | (198,407) | (3,479,520) | (586,926) | ||||||||||||||||||||
-------------------- | -------------------- | -------------------- | |||||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||||||
Borrowings under promissory notes, net | (26,473) | (38,703) | (1,643,823) | ||||||||||||||||||||
Borrowings under long-term debt and capital lease obligations | 5,701,562 | 7,838,718 | 3,570,587 | ||||||||||||||||||||
Repayments of long-term debt and capital lease obligations | (7,640,629) | (3,750,688) | (819,026) | ||||||||||||||||||||
-------------------- | -------------------- | -------------------- | |||||||||||||||||||||
Cash provided by (used in) financing activities | (1,965,540) | 4,049,327 | 1,107,738 | ||||||||||||||||||||
-------------------- | -------------------- | -------------------- | |||||||||||||||||||||
NET INCREASE (DECREASE) IN CASH | (991,677) | 1,180,546 | 863,592 | ||||||||||||||||||||
CASH, beginning of year | 2,969,715 | 1,789,169 | 925,577 | ||||||||||||||||||||
-------------------- | -------------------- | -------------------- | |||||||||||||||||||||
CASH, end of year | $ | 1,978,038 | $ | 2,969,715 | $ | 1,789,169 | |||||||||||||||||
============ | ============ | ============ | |||||||||||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||||||||||||||||||
Interest paid | $ | 510,633 | $ | 615,649 | $ | 555,492 | |||||||||||||||||
Income taxes paid | 554,789 | 95,879 | 51,680 | ||||||||||||||||||||
NON CASH FINANCING ACTIVITIES | |||||||||||||||||||||||
Stock Issued for benefit plan | $ | 199,303 | $ | 268,019 | $ | 212,977 | |||||||||||||||||
The accompanying notes are an integral part of these financial statements. |
3. INCOME TAXES: | |||||||||||
The deferred taxes are comprised of the following components: | |||||||||||
April 30, 2009 | April 30, 2008 | ||||||||||
Deferred tax assets | |||||||||||
Accounts receivable reserve | $ | 43,000 | $ | 29,000 | |||||||
Inventory and other reserves | 883,000 | 739,000 | |||||||||
Vacation accruals | 63,000 | 63,000 | |||||||||
----------------- | ----------------- | ||||||||||
Total gross deferred tax assets | 989,000 | 831,000 | |||||||||
Valuation allowance | (749,000) | (784,000) | |||||||||
----------------- | ----------------- | ||||||||||
Total deferred tax assets | $ | 240,000 | $ | 47,000 | |||||||
========= | ========= | ||||||||||
Deferred tax liabilities: | |||||||||||
Depreciation and amortization | $ | 240,000 | $ | 47,000 | |||||||
----------------- | ----------------- | ||||||||||
Total deferred tax liabilities | $ | 240,000 | $ | 47,000 | |||||||
========= | ========= | ||||||||||
Net deferred tax assets at April 30, 2009 and 2008 have been fully offset by a valuation allowance as management feels it is more likely than not that the Company will not ultimately realize any benefits. | |||||||||||
A reconciliation of the provision for income taxes to the statutory federal rate for continuing operations is as follows:
| 2009 | 2008 | 2007 | ||||||
Statutory federal income tax rate | 34.0% |
| 34.0% |
| 34.0% | ||||
Change in valuation allowance | (113.1%) |
| (46.9%) | (72.9%) | |||||
Nondeductible expenses | 106.1% |
| 34.9% |
| 40.1% | ||||
Effective tax rate | 27.0% | 22.0% | 1.2% |
Tax expenses of $505,146 are comprised of $561,830 in federal income tax and $56,684 in state income refunds for the year ended April 30, 2009.
As of April 30, 2009, the Company has accrued income taxes due to the federal and state government of $275,000.
4. STOCKHOLDERS' EQUITY: |
Common Stock Transactions |
During the year ended April 30, 2009, we did not issue any shares of common stock that were owed as of April 30, 2008. As of April 30, 2009, we had 278,573 shares of common stock owed but not issued. During the year ended April 30, 2007, we issued 3,683,066 shares of common stock that were owed as of April 30, 2006. As of April 30, 2007, we had 587,768 shares of common stock owed but not issued. |
The rest of this page intentionally left blank. |
5. STOCK OPTIONS AND INCENTIVE PLANS | ||||||||||
We have nonqualified stock option plans which provide key employees and consultants an opportunity to acquire ownership in the Company. Options are granted under these plans at exercise prices equal to fair market value at the date of the grant, generally exercisable immediately, and expire in 10 years. We account for these plans under Statement of Financial Accounting Standards No. 123(R). The Company did not grant options for the fiscal years ending 2009, 2008, and 2007; therefore, there are no expenses relating to option grants for those periods. As of April 30, 2009 there are 6,017,229 approved option shares available to grant under these plans. The approved plan expiration date is December 31, 2010. | ||||||||||
2009 | 2008 | 2007 | ||||||||
Options exercisable at April 30 | 1,244,834 | 1,493,763 | 1,493,763 | |||||||
Weighted average fair value per share Options granted per year | .79 | .81 | .81 | |||||||
|
| Weighted Average Remaining Contract Life |
| |||||||
$0.9000 | 1,071,834 | 1.7 years | .9000 | |||||||
$0.1400 | 153,000 | 3.7 years | .1400 | |||||||
$0.0625 | 20,000 | .7 years | .0625 | |||||||
Options | Average Price | ||||||
Outstanding Beginning 04/30/2006 | 1,493,763 | $ | 0.81 | ||||
Granted | - | - | |||||
Expired | - | - | |||||
Exercised | - | - | |||||
Outstanding Ending 04/30/2007 | 1,493,763 | $ | 0.81 | ||||
Outstanding Beginning 04/30/2007 | 1,493,763 | $ | 0.81 | ||||
Granted | - | - | |||||
Expired | - | - | |||||
Exercised | - | - | |||||
Outstanding Ending 04/30/2008 | 1,493,763 | $ | 0.81 | ||||
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 |
6. COMMITMENTS: | ||
Year Ending April 30 | Amount | |
2010 | $ | 187,123 |
2011 | 181,715 | |
2012 | 142,489 | |
2013 | 142,489 | |
2014 | 142,489 | |
Thereafter | 223,936 | |
$ | 1,020,241 |
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 $74,442, $89,398, and $127,661 from a company partially owned by David Hayden, a director for the Company during fiscal 2009, 2008, and 2007 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 2009, 2008, and 2007 was approximately $199,303, $268,020, and $212,977 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 2009, 2008, and 2007. |
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"). |
Year ended April 30, 2009 | ||||||||||||||
Gaming | Avionics | Modifications | Services | Aircraft | Corporate | Consolidated | ||||||||
Net Revenue | $ | 1,298,284 | $ | 2,255,776 | $ | 11,713,497 | $ | 1,771,755 | $ | 0 | $ | 1,058,776 | $ | 18,093,088 |
Depreciation/Amortization | 0 | 82,444 | 172,040 | 18,598 | 0 | 303,642 | 576,724 | |||||||
Operating profit (loss) (a) | 655,581 | (87,532) | 967,085 | 24,316 | 0 | 272,432 | 1,831,882 | |||||||
Capital Expenditures, net | (96,879) | 24,375 | 223,488 | 21,021 | 0 | 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 | 4,903,140 | 6,418,038 | 25,798,157 | |||||||
Year ended April 30, 2008 | ||||||||||||||
Gaming | Avionics | Modifications | Services | Aircraft | Corporate | Consolidated | ||||||||
Net Revenue | $ | 1,507,049 | $ | 5,024,781 | $ | 8,646,562 | $ | 1,557,792 | $ | 0 | $ | 910,381 | $ | 17,646,565 |
Depreciation/Amortization | 0 | 85,679 | 26,476 | 18,154 | 0 | 30,624 | 160,933 | |||||||
Operating profit (loss) (a) | 380,979 | 842,553 | 814,599 | 138,133 | 0 | 26,296 | 2,202,560 | |||||||
Capital Expenditures, net | 2,015,899 | 11,019 | 14,047 | 0 | 0 | 618,555 | 2,659,520 | |||||||
Interest Expense | (639,732) | |||||||||||||
Other income | 72,172 | |||||||||||||
Income before tax | 1,635,000 | |||||||||||||
Income taxes | 360,522 | |||||||||||||
Net Income |
|
|
|
|
|
| 1,274,478 | |||||||
Identifiable assets | 4,302,662 | 5,927,915 | 4,924,442 | 364,198 | 4,856,167 | 6,728,474 | 27,103,858 | |||||||
| ||||||||||||||
Gaming | Avionics | Modifications | Services | Aircraft | Corporate | Consolidated | ||||||||
Net Revenue | $ | 1,668,227 | $ | 3,538,422 | $ | 6,696,737 | $ | 2,403,065 | $ | 0 | $ | 374,591 | $ | 14,681,042 |
Depreciation/Amortization | 0 | 69,421 | 32,130 | 26,291 | 0 | 30,242 | 158,084 | |||||||
Operating profit (loss) (a) | 890,465 | 286,995 | (227,368) | 185,736 | 0 | 115,502 | 1,251,330 | |||||||
Capital Expenditures | 0 | 63,629 | 0 | 17,053 | 0 | 0 | 80,682 | |||||||
Interest Expense | (568,712) | |||||||||||||
Other income | 34,607 | |||||||||||||
Income before tax | 717,225 | |||||||||||||
Income taxes | 111,680 | |||||||||||||
Net Income |
|
|
|
|
|
| 605,545 | |||||||
Identifiable assets | 1,989,676 | 4,719,138 | 5,598,200 | 377,595 | 5,132,518 | 2,628,349 | 20,445,477 | |||||||
(a) Operating expenses not specifically identifiable are allocated based upon revenue, costs of sales, square footage or other factors as considered appropriate. |
Major Customers: Revenue from major customers (10 percent or more of consolidated revenue) were as follows: | ||||
2009 | 2008 | 2007 | ||
Modifications | 10.9% | N/A* | N/A* | |
Avionics | N/A* | 15.8% | 14.3% | |
Indian Management Services | N/A* | N/A* | 10.7% | |
Environmental Services (City Contract) | N/A* | N/A* | 12.2% | |
*Revenue represented less than 10% of consolidated revenue.
|
12. SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | ||||||||||
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 | ||||||||||
2008 | First | Second | Third | Fourth | Total | |||||
Revenue | $ | 4,707 | $ | 4,234 | $ | 4,259 | $ | 4,446 | $ | 17,646 |
Operating Income (Loss) | 410 | 335 | 442 | 1,015 | 2,202 | |||||
Nonoperating Income (Expense) | (178) | (148) | (249) | (353) | (928) | |||||
Net Income (Loss) | 232 | 187 | 193 | 662 | 1,274 | |||||
Basic Earnings (Loss) per Share* | .00 | .01 | .01 | .01 | .02 | |||||
Diluted Earnings (Loss) per Share* | .00 | .01 | .01 | .01 | .02 | |||||
*Rounded to nearest tenth | ||||||||||
2007 | First | Second | Third | Fourth | Total | |||||
Revenue | $ | 3,076 | $ | 4,355 | $ | 3,344 | $ | 3,906 | $ | 14,681 |
Operating Income (Loss) | 164 | 432 | 28 | 627 | 1,251 | |||||
Nonoperating Income (Expense) | (120) | (167) | (147) | (212) | (646) | |||||
Net Income (Loss) | 44 | 265 | (119) | 415 | 605 | |||||
Basic Earnings (Loss) per Share* | .01 | .01 | .01 | .01 | .01 | |||||
Diluted Earnings (Loss) per Share* | .01 | .01 | .01 | .01 | .01 | |||||
*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. | ||||||||||
13. PRODUCT LINE ACQUISITION | ||||||||||
14. DODGE CITY LAND ACQUISITION | ||||||||||
15. SUBSEQUENT EVENTS The terms of the agreement between the Kansas Lottery and BNSC/BHCMC require the completion of an addition to the Boot Hill Casino and Resort to open in late 2013. Funding for this expansion is expected to come from operations and additional debt secured by the Boot Hill Casino and Resort. |
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES | |||||||||||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | |||||||||||
FOR THE YEARS ENDED APRIL 30, 2009, 2008 AND 2007 | |||||||||||
| Additions Charged to Costs andExpenses |
|
| ||||||||
Description | |||||||||||
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 | |||||||
Reserve for Indian gaming development | 3,346,623 | - | - | 3,346,623 | |||||||
Income tax valuation allowance | 784,000 | - | 35,000 | 749,000 | |||||||
Year ended April 30, 2008 | |||||||||||
Allowance for doubtful accounts | $ | 154,233 | $ | - | $ | 79,193 | $ | 75,040 | |||
Reserve for inventory obsolescence | 452,942 | 24,312 | - | 477,254 | |||||||
Reserve for Indian gaming development | 2,912,440 | 434,183 | - | 3,346,623 | |||||||
Deferred interest (1) | 15,446 | - | 15,446 | - | |||||||
Income tax valuation allowance | 1,551,000 | - | 767,000 | 784,000 | |||||||
Year ended April 30, 2007 | |||||||||||
Allowance for doubtful accounts | $ | 149,577 | $ | 4,656 | $ | - | $ | 154,233 | |||
Reserve for inventory obsolescence | 431,776 | 21,166 | - | 452,942 | |||||||
Reserve for gaming development | 2,912,440 | - | - | 2,912,440 | |||||||
Deferred interest (1) | 31,620 | - | 16,174 | 15,446 | |||||||
Income tax valuation allowance | 1,839,000 | - | 288,000 | 1,551,000 | |||||||
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