Butler National Corporation Reports Record Earnings of $.04 for Quarter Ending July 31, 1997.

OLATHE, Kan.--(BUSINESS WIRE)--Sept. 19, 1997--

Management Reports Progress with Indian Gaming Projects

Butler National Corporation has filed its Quarterly Report on Form 10-Q pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. -0-

Selected Financial Data ($000's):

                            unaudited three months   audited year

                            7/31/97        7/31/96        4/30/97

        Net Sales          $  2,953       $  5,307       $ 21,540

        Operating Income        223            122            764

        Net Income              341             63            166

        Per Share Net Income    .04            .01            .02

        Total Assets         11,221          9,147         11,124

        Shareholders' Equity  4,388          4,405          4,872

Highlights of the 10-Q report include:

-- Net income for the first fiscal quarter was $341,207, $0.04 per share, up $0.03 per share from July 31, 1996. Operating income for the first fiscal quarter increased $101,332 (83%) compared to the prior year. Total sales for the first fiscal quarter decreased $2,354,167 (55.6%) compared to the prior year.

-- All of the major operating segments experienced increased sales for the quarter ended July 31, 1997, compared to the same quarter in the prior year, except Food Distribution (-63.4%). Avionics increased (162.3%), Aircraft Modifications increased (97.6%) and Monitoring Services increased (73.7%).

-- All operating segments including, Food Distribution, were profitable for the quarter.

Management Comments:

"We started our 38th year with a profitable quarter. We are pleased that all of the major segments are progressing as planned and we expect them to continue to contribute to earnings.

Our significant investments in Aircraft Modification products are showing positive results. The AVCON FINS have provided a base for improved Learjet performance, efficiency and utility. They are creating the opportunity to sell additional modification products like the AVCON R/X MOD including weight increases and tip tank extensions. As we progress in fiscal 1998, we expect additional business from the AVCON FINS and the Beechcraft King Air EXTENDED BAGGAGE DOOR.

RF, Inc., (Food Distribution) our newest business, is being refocused to take advantage of the Valu Foods(R) concept. This segment will continue to operate in the wholesale food market and plans are to sell under the Valu Foods(R) label at retail. Sales decreased in this business because the company released the previous manager from his agreement not to compete allowing him to compete for a share of the RFI wholesale market. The first Valu Foods(R) test store in an upper income market with a population in excess of 100,000 was opened in August. We have had a considerable interest from food manufacturers in this new store and the marketing concept. We expect the Valu Foods(R) concept to be a success for the shareholders.

Avionics and SCADA manufacturing were relocated from Arkansas to Arizona to be closer to the major Avionics customer and to provide more emphasis on SCADA products. The increased sales and profits for these products is demonstrating the fresh approach to the market and the benefits of this relocation. Sales were up 162% and 74% for these segments.

Indian gaming is progressing. Construction of the Stables Indian gaming enterprise continues. A November opening is planned. We are working to complete the financing of this enterprise. On August 11, 1997, the Miami tribe filed an action in Federal District Court to define the Princess Maria, located in Miami County, Kansas, as Indian land suitable for gaming. Results are expected within six months. Shawnee 206, located in Johnson County in the Kansas City market, continues to progress as the Shawnee and the Cherokee further define their desires to operate a gaming enterprise. We feel that this segment is showing positive results. However, we can't assume that all the above items will happen in a timely manner.

I am proud and pleased with the accomplishments of all of the Butler team during the past quarter and the past year. The team has made considerable progress in the face of management changes at Food Distribution and other disruptive events. We expect fiscal 1998 to be a good year," commented Clark D. Stewart, President of the company.

Forward-Looking Information:

The information set forth above may include "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 the company's Annual Report on Form 10-K, are incorporated herein by reference. 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.

Our Business:

Butler National Corporation operates in the aerospace and services business segments. The Services segment includes food distribution, electronic monitoring of water pumping stations, temporary employee services and plans to include management services for Indian gaming enterprises. Aerospace includes the manufacture of switching equipment for Boeing - McDonnell-Douglas aircraft and structural modification of business aircraft.

CONTACT: Butler National Corporation, Olathe

Edward J. Matukewicz, Investor Relations 

Ph 913/ 780-9595

Fax [phone]