[Letterhead]
FIELDS
Aircraft Spares, Inc.
341 "A" Street, Fillmore, California 93015-1931
Telephone (805) 583-0080 Fax (805) 583-0825 SITA LAXFBXD
July 1, 1997
Dear Shareholder,
We are pleased to enclose a proxy for our Shareholders Meeting set for August 7,
1997, together with your Company's Annual Report on form 10-KSB for the year
ended December 31, 1996. At this meeting you will be asked to vote on the
matters described on the attached Notice of Annual Meeting of Shareholders and
Proxy Statement that management believes will affect your Company in a positive
manner. Whether or not you plan to attend the meeting, please take the time to
complete and return the enclosed proxy form to ensure that your shares are
represented and voted in accordance with your wishes.
There have been additional positive developments with your Company since our
letter to you of April 17, 1997. We completed the refinancing of our revolving
credit line in April with a new $ 10 million secured credit agreement with
NationsCredit Commercial Funding ("NationsCredit"). The new secured facility
replaces your Company's prior agreement with another lender.
The agreement with NationsCredit provides for up to $ 10 million in borrowing
availability, up almost 59% from approximately $6.3 million under the prior
credit line. In addition the new credit facility has a substantially lower
interest rate and lower facility fees. The NationsCredit facility has an initial
term of 3 years and replaces a credit facility that was payable on demand.
This new credit facility is expected to reduce your Company's interest costs
while at the same time provide the financing needed to continue the growth in
both distributorship and brokerage sales. Your Company's ability to grow is
directly related to the inventory levels that your Company is able to maintain.
This new secured credit facility is allowing your Company to continue to
increase those inventory levels.
With the completion of the NASDAQ listing in March and the refinancing of your
Company's bank loan in April, management has been able to turn its full
attention towards the growth of the business. The growth generated by having the
necessary capital and management's full attention has been staggering.
This growth is evidenced by preliminary Second-Quarter sales having reached
record levels of $2.9 million an increase of 142% over Second-Quarter 1996 sales
of $1.2 million.
Preliminary sales for the first six months of the year have reached $5.0
million, the largest six month sales level in your Company's corporate history,
up 92% over first six months 1996 sales of $2.6 million and is even more
impressive when compared to $5.7 million in sales for the entire year of 1996.
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In the April 17, 1997 shareholder letter, we had projected that your Company
would return to profitability in the third quarter. We are now extremely pleased
to be able to report that the return to profitability has been accelerated, and
that although the first six months of 1996 will stiff show a loss, your Company
was profitable in the second quarter.
With additional distributorship agreements pending and with sales discussions
ongoing with a number of major airlines, we are optimistic that the growth rate
your Company is experiencing will continue through the balance of 1997.
The Nasdaq listing, refinancing, conversion of McDonnell Douglas Corporation's
preferred shares into common shares, the rapid sales growth and return to
profitability represent years of negotiation and work that have culminated in
this beginning of a new era for your Company. In recognition, Management asks
you to support the proposals as described in the enclosed Notice of Annual
Meeting of Shareholders and Proxy Statement.
We look forward to meeting with those who will be able to attend the
Shareholders meeting. However, whether or not you plan to attend the meeting,
please carefully review the enclosed Notice of Annual Meeting of Shareholders
and Proxy Statement and complete and return the Proxy so that your vote will
count.
Sincerely,
PETER FROHLICH
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Chairman
ALAN M. FIELDS
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President
LAWRENCE TROYNA
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Chief Financial Officer
Statements in this shareholder letter that relate to future plans, financial
results or projections, events or performance are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. such statements
are subject to risks and uncertainties that could cause actual results to differ
materially. Actual results may differ from such forward-looking statements as a
result of a number of factors, including but not limited to competitive factors
and pricing pressures, ability to obtain necessary capital or financing, the
price and availability of aircraft parts and other materials, successful
execution of your Company's expansion plans, failure to maintain existing
customer or vendor relationships, shifts in market demand, general economic
conditions and other risks and uncertainties discussed in periodic reports filed
by your Company with the Securities and Exchange Commission and which your
Company urges investors to consider. Copies of filed reports may be requested
from your Company or obtained from your Company's web site:
http://www.fieldsair.com
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