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Third quarter fiscal 2003 compared to third quarter fiscal 2002
The Company's sales for the nine months ended January 31, 2003 were $4,579,549 compared to $7,373,985 for the nine months ended January 31, 2002, a decrease of (38%).
Discussion of the specific changes by operation at each business segment follows:
Aircraft Modifications: Sales from the Aircraft Modifications business segment increased $53,204 (1.7%) from $1,705,606 in the nine months of the prior fiscal year to $1,758,810 in the first nine months of fiscal 2003. Modified Aircraft sales were $1,425,000 in the first quarter of fiscal 2002. Third quarter operating income was $167,179 in fiscal 2003 compared to a loss of $61,980 in fiscal 2002. The 2002 loss was attributed to the depressed economic conditions resulting from the September 11, 2001 events. Modifications is developing STC's for RVSM (Reduced Vertical Separation Minimums) compliance for the Learjet Series 20 aircraft. RVSM will be required for all flights at the high altitudes by 2004.
Avionics: Sales from the Avionics business segment were $968,085 for the nine months ended January 31, 2003 compared to $2,675,372 in the comparable period of the preceding year, a decrease of (64%). The decrease resulted from decreased sales of aviation safety products. Operating income for the nine months ended January 31, 2003, was $137,367 compared to a profit of $1,577,729 for the nine months ended January 31, 2002. Defense and Military related Classic Avionics products are being designed, manufactured and sold to military aircraft manufacturers. Sales to date are slightly over $300,000. Management expects this business segment to continue to increase in future years due to the additional new Classic Aviation Products.
SCADA Systems and Monitoring Services: Sales from the Scada Systems and Monitoring Services business segment for the nine months ended January 31, 2003 were $836,945 compared to sales of $902,330 for the comparable period of the prior year a decrease of (7.2%). Operating profit for the nine months was $359,118 compared to $381,945 for the nine months ended October 31, 2002. The Company believes the service business of this segment will continue to grow at a moderate rate.
Temporary Services: BTS provides managed temporary personnel to corporate clients to cover personnel shortages on a short and/or long term basis. This service is being marketed in Kansas and Missouri. Currently, this Company is inactive. BTS plans to provide contract staffing for the Princess Maria.
Management Services: Management consulting and professional services sales for the nine months ended January 31, 2003 were $228,169 compared to $341,887 in the comparable period of the preceding year, a decrease of (33%).
Selling, General and Administrative (SG&A): Expenses in the nine months ended January 31, 2003, were $1,812,196 or (40%) of sales compared to $1,740,974 or (41%) of sales for the nine months ended January 31, 2002, an increase of $71,222 or 4%.
Other Income (Expense): Other income (expense) is expense of $577 in the quarter ended January 31, 2003, versus of $4 in the quarter ended January 31, 2002.
Interest expense for the nine months ended January 31, 2003, decreased $128,298 from $262,180 in the first nine months of the prior year to $133,882. The Company continues to use its line of credit to maintain operations.
Indian Gaming Management (a division of Butler National Corporation): This segment received $5,724 in net interest income and incurred minimal expenses during the current quarter.
The Company employed 55 at January 31, 2003, and 57 at January 31, 2002.
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EARNINGS
The Company recorded income of $46,385 in the nine months ended January 31, 2003. This is comparable to a profit of $1,116,255 in the nine months ended January 31, 2002. Income (Loss) per share is $0.00 and $0.03 for the nine months ending January 31, 2003, and January 31, 2002, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Borrowed funds have been used primarily for working capital. Bank (Industrial State Bank) debt related to the Company's operating line was $366,887 at January 31, 2003, and was $414,957 at January 31, 2002.
The Company's unused line of credit was approximately $133,113 as of January 31, 2003 and approximately $85,043 as of January 31, 2002. The interest rate on the Company's line of credit is prime plus two, as of March 13, 2003, the interest rate is 7.0%.
The Company plans to continue using the promissory notes payable to fund working capital. The promissory notes range from one hundred eight to three hundred sixty five days. The Company believes the extensions will continue and does not anticipate the repayment of these notes in fiscal 2003. If the Bank were to demand repayment of the notes payable the Company currently does not have enough cash to pay off the notes without materially adversely affecting the financial condition of the Company.
The Company does not, as of January 31, 2003 have any material commitments for other capital expenditures other than the terms of the Indian gaming Management Agreements. Depending upon the development schedules, the Company will need additional funds to complete its currently planned Indian gaming opportunities. The Company will use current cash available as well as additional funds, for the start up and construction of gaming facilities. The Company anticipates initially obtaining these funds from internally generated working capital and borrowings. After a few gaming facilities become operational, gaming operations will generate additional working capital for the start up and construction of other gaming facilities. The Company expects that its start up and construction financing of gaming facilities will be replaced by other financial lenders, long term financing through debt issue, or equity issues.
The Company was 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, it was listed on the NASDAQ small cap market under the symbol "BUKS". The Company's common stock was delisted from the small cap category effective January 1, 1999, and is now listed in the over-the-counter (OTCBB) category. Approximately fifteen (15) market makers offer and trade the stock. NASDAQ is considering a change from the over-the-counter listing system to the Bulletin Board Exchange (BBX) system. The new system may cause a change in our symbol.
FORWARD LOOKING INFORMATION
The information set forth below includes "forward-looking" information as outlined in the Private Securities Litigation Reform Act of 1995. The Cautionary Statements, filed by the Company as Exhibit 99 to its Form 10-K, are incorporated herein by reference and you are specifically referred to such Cautionary Statements for a discussion of factors which could affect the Company's operations and forward-looking statements contained herein.
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