UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 16, 1998
----------------
Date of Report (Date of earliest event reported)
FIELDS AIRCRAFT SPARES, INC.
----------------------------
(Exact name of Registrant as specified in its charter)
Utah 0-27100 95-4218263
--------------- ---------------------- ------------------
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
Incorporation)
2251-A Ward Avenue
Simi Valley, CA 93005
---------------------
(Address of principal executive offices)
(Zip Code)
(805) 583-0080
--------------
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On January 16, 1998, pursuant to a Stock Purchase Agreement dated as of
January 2, 1998 by and among Fields Aircraft Spares, Inc. (the "Company"), as
Buyer, and the stockholders (the "Sellers") of Flightways Manufacturing, Inc.
(Flightways"), the Company consummated the purchase of substantially all of the
outstanding common stock, no par value (the "Shares"), of Flightways.
Flightways was not affiliated with the Company. Flightways is based in
Van Nuys, California and manufactures and repairs high quality plastic
replacement components for commercial aircraft seats and interiors. Seating
components include foodtrays, latches, shrouds, panel armcaps, bumper strips and
escutcheons. Other components are used in aircraft lavatories, galleys,
cockpits, windows, overhead units and a variety of other subassemblies. Through
its repair station (FAA Repair Station No. UFWR486L), Flightways overhauls and
repairs seats, seating components, carts and modules.
The customers of Flightways include U.S. domestic airlines as well as
an increasing number of international carriers. The Company intends to initially
operate Flightways out of its Van Nuys, California office. The Company
eventually intends to consolidate its corporate headquarters, along with all of
the Flightways operations, into a larger facility. The Company will deliver the
products and services of Flightways through the Company's distribution system.
The Company purchased over 99% of the issued and outstanding shares of
Flightways for approximately $2.9 million in cash and, in addition, the Company
retired approximately $1.1 million in Flightways debt by refinancing such debt
through the Company's existing credit facility with NationsCredit Commercial
Funding. In determining the amount of consideration to be paid for Flightways,
the Company considered, among other factors, the historical level of sales and
profitability of Flightways, its past rate of growth, 1998 financial projections
for Flightways and the potential synergies that might be obtained by combining
the two businesses, and similar factors. The acquisition of Flightways will be
accounted for as a purchase.
The foregoing description is qualified in its entirety by reference to
the Stock Purchase Agreement, which is filed as an exhibit herewith.
Funds for the acquisition were provided by the Company's line of credit
with NationsCredit Commercial Funding.
Statements in this Current Report that relate to future plans,
financial results or projections, events or performance, including statements
with respect to future business potential, future sales and future earnings, and
the effects of the acquisition 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
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<PAGE>
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 the successful integration of
Flightways into the Company's current operations, the ability to successfully
combine the businesses, 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 the Company's expansion
plans, failure to maintain existing customer or vendor relationships, shifts in
market demand, general economic conditions and other risks and uncertainties.
Item 7. Financial Statements and Exhibits
(a) The following financial statements of Flightways Manufacturing,
Inc. are filed with this Amendment No. 1:
(1) Independent Auditor's Report
(2) Balance Sheet as of December 31, 1997
(3) Statement of Income for the year ended
December 31, 1997
(4) Statement of Shareholders' Deficit for the year
ended December 31, 1997
(5) Statement of Cash Flows for the year ended
December 31, 1997
(6) Notes to Financial Statements
(b) The following unaudited pro forma financial information
regarding the acquired company is filed with this Amendment No. 1:
(1) Unaudited Pro Forma Combined Balance Sheet as of
December 31, 1997
(2) Notes to the Unaudited Pro forma Combined
Balance Sheet
(3) Unaudited Pro forma Combined Statement of Operations
for the year ended December 31, 1997
(4) Notes to the Unaudited Pro forma Combined Statement
of Operations
(c) The following exhibits were filed with the original of this
report.
2.1 Stock Purchase Agreement by and among Fields Aircraft
Spares, Inc., as Buyer, and each of the individuals listed on Exhibit "A", as
Sellers, dated as of January 2, 1998.
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<PAGE>
Pursuant to Item 601(b)(2) of Regulation S-B, the Exhibits referred to in the
Agreement are omitted. The Company agrees to furnish supplementally a copy of
any such Exhibit to the Commission upon request.
10.1 Covenant Not to Compete, dated as of January 2, 1998,
by and among Fields Aircraft Spares, Inc., Flightways Manufacturing, Inc. and
Yung Ford.
10.2 Covenant Not to Compete, dated as of January 2, 1998,
by and among Fields Aircraft Spares, Inc., Flightways Manufacturing, Inc. and
Frank Scalise.
10.3 Covenant Not to Compete, dated as of January 2, 1998,
by and among Fields Aircraft Spares, Inc., Flightways Manufacturing, Inc. and
Christian J. Luhnow.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIELDS AIRCRAFT SPARES, INC.
Date: March 30, 1998 By: /s/ Alan M. Fields
----------------------------
Alan M. Fields, President
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<PAGE>
FLIGHTWAYS MANUFACTURING, INC.
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 1997
<PAGE>
FLIGHTWAYS MANUFACTURING, INC.
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 1997
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Balance Sheet as of December 31, 1997 Exhibit A 2
Statement of Income for the year ended
December 31, 1997 Exhibit B 3
Statement of Shareholders' Deficit for the
year ended December 31, 1997 Exhibit C 4
Statement of Cash Flows for the year ended
December 31, 1997 Exhibit D 5
Notes to the Financial Statements 6 - 11
<PAGE>
[Letterhead]
MOORE STEPHENS FRAZER AND TORBET, LLP
CERTIFIED PUBLIC ACCOUNTANTS
OFFICE: 1199 South Fairway Drive, Walnut, California 91789
MAIL: Post Office Box 3949, City of Industry, California 91744
Telephone: (909) 595-4624 Facsimile: (909) 594-2357
e-mail: 75444,[email protected]
________________________________________________________________________________
The Board of Directors
Flightways Manufacturing, Inc.
Van Nuys, California
Independent Auditors' Report
We have audited the accompanying balance sheet of Flightways
Manufacturing, Inc. as of December 31, 1997, and the related statements of
income, shareholders' deficit and cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Flightways
Manufacturing, Inc. as of December 31, 1997, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Moore Stephens Frazer and Torbet, LLP
Certified Public Accountants
March 23, 1998
MS An independently owned and operated member of Moore Stephens North America,
Inc. - members in principal cities throughout North America Moore Stephens North
America, Inc. is a member of Moore Stephens International Limited - members in
principal cities throughout the world.
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<PAGE>
<TABLE>
<CAPTION>
FLIGHTWAYS MANUFACTURING, INC. EXHIBIT A
BALANCE SHEET
AS OF DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
<S> <C>
Cash $ 35,521
Accounts receivable, net of allowance for
doubtful accounts of $60,000 984,084
Inventories 787,684
Prepaid expenses 23,597
-----------------
Total current assets $ 1,830,886
-----------------
PROPERT, MACHINERY AND EQUIPMENT $ 818,828
Less accumulated depreciation 391,280
-----------------
Property, machinery and equipment, net $ 427,548
-----------------
OTHER ASSETS:
Deposits $ 27,772
-----------------
Total assets $ 2,286,206
=================
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 640,559
Accrued expenses 469,046
Income taxes payable 2,200
Product warranty reserve 47,000
Current portion of obligations under capital leases 42,452
----------------
Total current assets $ 1,201,257
----------------
LONG-TERM DEBT:
Obligations under capital leases, net of current portion $ 93,114
Notes payable to shareholders 1,120,321
----------------
Long-term debt, net $ 1,213,435
----------------
SHAREHOLDERS' DEFICIT:
Common stock, no par value, 50,000,000 shares
authorized, 41,394,751 issued and outstanding $ 32,903
Additional paid-in capital 1,215,700
Retained deficit (1,377,089)
----------------
Total shareholders' deficit $ (128,486)
----------------
Total liabilities and shareholders' deficit $ 2,286,206
================
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE>
FLIGHTWAYS MANUFACTURING, INC. EXHIBIT B
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
NET SALES $ 4,259,670
COST OF SALES 2,993,812
-------------
GROSS PROFIT $ 1,265,858
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 825,566
-------------
INCOME FROM OPERATIONS $ 440,292
-------------
OTHER EXPENSE (INCOME):
Interest expense $ 98,137
Interest income (372)
-------------
Total other expense $ 97,765
-------------
INCOME BEFORE PROVISION FOR INCOME TAXES 342,527
PROVISION FOR INCOME TAXES 3,000
-------------
NET INCOME $ 339,527
=============
NET INCOME PER SHARE $ .01
=============
The accompanying notes are an integral part of this statement.
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<PAGE>
<TABLE>
<CAPTION>
FLIGHTWAYS MANUFACTURING, INC. EXHIBIT C
STATEMENT OF SHAREHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1997
COMMON STOCK
NUMBER ADDITIONAL
OF SHARES PAID-IN RETAINED
OUTSTANDING AMOUNT CAPITAL DEFICIT TOTAL
----------- ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
BALANCES, December 31, 1996 13,637,761 $ 5,734 $1,215,700 $(1,716,616) $ (495,182)
Issuance of common stock 27,856,990 27,169 27,169
Net income 339,527 339,527
---------- -------- ---------- ----------- ------------
BALANCES, December 31, 1997 41,394,751 $ 32,903 $1,215,700 $(1,377,089) $ (128,486)
========== ======== ========== =========== ============
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE>
FLIGHTWAYS MANUFACTURING, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 339,527
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 112,380
Increase in accounts receivable (177,973)
Increase in inventories (473,267)
Increase in deposits (2,323)
Increase in prepaid expenses (23,597)
Increase in accounts payable 211,899
Increase in accrued expenses 117,505
Increase in income taxes payable 2,200
Increase in product warranty reserve 30,000
-----------
Net cash provided by operating activities $ 136,351
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, machinery and equipment $ (206,328)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt $ 43,628
Proceeds from issuance of common stock 27,169
-----------
Net cash provided by financing activities $ 70,797
-----------
NET INCREASE IN CASH $ 820
CASH, beginning of year 34,701
-----------
CASH, end of year $ 35,521
===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
INFORMATION:
Income taxes paid $ 800
==========
Interest paid $ 66,879
==========
The accompanying notes are an integral part of this statement.
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<PAGE>
FLIGHTWAYS MANUFACTURING, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of significant accounting policies
a. Business operations
Flightways Manufacturing, Inc. (The Company) is located in Van
Nuys, California and is a manufacturer of plastic replacement components for
commercial aircraft seats and interiors. The Company conducts business
throughout the United States and abroad.
b. Concentration of cash
The Company maintains cash balances at financial institutions
that, at times, may exceed Federal Deposit Insurance Corporation insured limits.
The Company has not experienced any losses in such accounts and believes it is
not exposed to any significant risks on its cash in bank deposit accounts.
c. Concentration of credit risk
Substantially all of the Company's accounts receivables are
due from companies in the aviation industry. At December 31, 1997 one of the
Company's customers accounted for approximately 62% of the total accounts
receivable.
d. Concentration of sales
For the year ended December 31, 1997, the Company had sales to
four customers of approximately $850,500, $476,300, $553,900 and $514,500. Those
sales amounted to approximately 19%, 11%, 12% and 12% of total sales,
respectively.
e. Inventory
Inventory is valued at the lower of cost or market value using
the first-in, first out method and consisted of the following as of December 31,
1997:
Raw materials $ 420,324
Work in process 301,976
Finished goods 65,384
-----------
Total inventories $ 787,684
==========
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FLIGHTWAYS MANUFACTURING, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of significant accounting policies, (continued)
f. Property, machinery and equipment
Property, machinery and equipment are stated at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the individual assets. Estimated useful lives range from 3 to 7
years.
The cost and related accumulated depreciation of assets sold
or otherwise retired are eliminated from the accounts and any gain or loss is
included in the statement of income. The cost of maintenance and repairs is
charged to income as incurred, whereas significant renewals and betterments are
capitalized.
Long-term assets of the Company are reviewed annually as to
whether their carrying value has income impaired, pursuant to the guidelines
established in Statement of Financial Accounting Standards ('SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of". Management considers assets to be impaired if the carrying value
exceeds the future projected cash flows from related operations. Management also
re-evaluates the periods of amortization to determine whether subsequent events
and circumstances warrant revised estimates of useful lives. As of December 31,
1997, management expects these assets to be fully recoverable.
Property, machinery and equipment consisted of the following
at December 31, 1997:
Machinery and equipment $ 507,329
Leasehold improvements 13,838
Computer equipment 86,032
Assets under capital leases 185,248
Furniture and fixtures 26,381
------------------
Total $ 818,828
Less accumulated depreciation
and amortization (391,280)
------------------
Property, machinery and
equipment, net $ 427,548
=================
Depreciation and amortization expense for the year ended
December 31, 1997 amounted to $112,380.
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FLIGHTWAYS MANUFACTURING, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of significant accounting policies, (continued)
g. Revenue recognition
The Company recognizes revenue from all types of sales under
the accrual method of accounting when title transfers. Title transfers at the
Company's facility.
h. Income taxes
Income taxes are provided for all items included in the
statement of income regardless of the period such items are reported for income
tax purposes. The deferred income taxes in the accompanying financial statements
reflect the temporary differences in reporting results of operations for income
tax and financial accounting purposes. These differences relate primarily to
certain accrued expenses, bad debts and net operating loss carryforwards.
The Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes". SFAS 109 requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between tax basis and financial reporting
basis of assets and liabilities. The income tax effect of the temporary
differences as of December 31, 1997 consisted of the following:
Deferred tax asset resulting from deductible
temporary differences for allowance for
doubtful accounts $ 14,000
Deferred tax asset resulting from deductible
temporary differences for product warranty
costs 3,000
Deferred tax asset resulting from deductible
temporary differences for accrued vacation 2,000
Deferred tax asset resulting from deductible
temporary differences for utilization of net
operating loss carryforwards for income tax
purposes 75,000
Deferred tax liability resulting from taxable
temporary differences for accounting for
depreciation (19,000)
Valuation allowance resulting from the potential
nonutilization of net operating loss
carryforwards for income tax purposes (75,000)
--------------
Total deferred income taxes $ -
==============
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FLIGHTWAYS MANUFACTURING, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of significant accounting policies, (continued)
i. Earnings per share
Earnings per share is based on the weighted average number of
common shares outstanding in the period, which amounted to 39,131,276 shares.
j. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Management believes that the estimates utilized in preparing
its financial statements are reasonable and prudent. Actual results could differ
from those estimates.
2. Notes payable to shareholders
The Company has notes payable to its shareholders. At December
31, 1997, total principal balance outstanding amounted to $898,112 plus accrued
interest of $222,209. The notes bear interest at 10% and are due February 15,
2001. Interest expense on the notes payable to shareholders amounted to $88,131
for the year ended December 31, 1997.
The total principal and interest balance of $1,120,321 was
subsequently paid off in January 1998 as part of the acquisition of the Company
by Fields Aircraft Spares, Inc., as further described in note 5.
3. Provision for income taxes
The provision for income taxes for the years ended December 31
consisted of the following:
CURRENT:
Federal $
State 3,000
--------
Total provision
for income taxes $ 3,000
==========
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FLIGHTWAYS MANUFACTURING, INC.
NOTES TO THE FINANCIAL STATEMENTS
3. Provision for income taxes, (continued)
Total income taxes paid in 1997 amounted to $800. The Company
has net operating loss carryforwards available to offset future taxable income.
The amount and expiration date of the carryforwards are as follows:
YEAR ENDING
DECEMBER 31, FEDERAL
------------ --------
2011 $75,600
4. Commitments
The Company leases machinery and equipment under capital
leases which expire over the next five years. The amount of capital leases
included in these financial statements consisted of the following as of December
31, 1997:
Machinery $ 150,248
Computer equipment 35,000
----------------
Total $ 185,248
Less accumulated amortization 21,155
----------------
Total $ 164,093
================
The Company leases a building under a non-cancelable operating
lease which will expire in July 1999. The Company also leases a smaller facility
on a month to month basis.
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<PAGE>
FLIGHTWAYS MANUFACTURING, INC.
NOTES TO THE FINANCIAL STATEMENTS
4. Commitments, (continued)
Future minimum lease commitments as of December 31, 1997 are
as follows:
YEAR ENDING OPERATING LEASES CAPITAL
DECEMBER 31, BUILDING LEASES
------------ ------------------ ------------
1998 $ 94,000 $ 42,452
1999 54,900 39,963
2000 - 39,963
2001 - 32,904
2002 - 14,707
Thereafter - -
-------------- -------------
Net minimum lease payments $ 169,989
Less amounts representing interest 34,423
-------------
Present value of net minimum
lease payments $ 135,566
Less current portion 42,452
-------------
Long-term portion of obligations
under capital leases $ 93,114
=============
Rental expense for the year ended December 31, 1997 amounted
to $106,887.
5. Subsequent event
In January 1998, substantially all of the stock of the Company
was acquired by Fields Aircraft Spares, Inc. (Fields). Fields distributes new
aircraft parts and equipment for use on international and domestic commercial
aircraft and purchases and sells parts on a brokerage bases.
Each share of the Company was exchanged for cash, under the
terms of the acquisition. The total cash received was approximately $2,866,000.
In addition, Fields paid-off notes payable to shareholders totaling
approximately $1,120,000.
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<PAGE>
FIELDS AIRCRAFT SPARES, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The unaudited pro forma combined balance sheet at December 31, 1997 and
statement of operations for the year ended December 31, 1997 are included in
order to illustrate the effect on the Company's financial statements of the
transactions described below.
On January 16, 1998, Fields Aircraft Spares, Inc. purchased
substantially all the common stock of Flightways Manufacturing, Inc. The
purchase of the stock was effective as of January 2, 1998. The purchase price
for the stock was $2,866,000 in cash. In addition, the debt of Flightways
Manufacturing, Inc. totaling approximately $1,120,000 was paid off to the
noteholders, generally consisting of the former shareholders of Flightways. The
unaudited pro forma statement of operations is presented as if the transactions
had occurred at the beginning of the period for the consideration specified.
The pro forma combined financial statements should be read in
conjunction with the Company's consolidated financial statements and notes
thereto, and the financial statements and notes thereto of Flightways
Manufacturing, Inc. The unaudited pro forma combined financial statements are
not necessarily indicative of the results that would have been reported had such
events actually occurred on the date specified, nor are they indicative of the
Company's future results.
<PAGE>
<TABLE>
<CAPTION>
FIELDS AIRCRAFT SPARES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,1997
Historical Pro Forma
Fields Adjustments
Aircraft Flightways for
Spares, Inc. Manufacturing, Inc. Acquisition Combined
------------ ------------------- ----------- --------
<S> <C> <C> <C> <C>
Assets:
Cash & cash equivalents 6,071,000 35,521 (2,914,798)(1)
(1,120,321)(2) 2,071,402
Accounts receivable 1,955,000 984,084 (13,378)(3) 2,925,706
Inventory 11,058,000 787,684 (70,000)(4) 11,775,684
Other current assets 191,000 51,369 242,369
Property, plant and
equipment, net 1,010,000 427,548 1,437,548
Intangible and other
assets 1,896,000 3,029,186 (1) 4,925,186
--------- --------- --------- ---------
Total assets 22,181,000 2,286,206 (1,089,311) 23,377,895
========== ========= ========== ==========
Liabilities and
Stockholders' Equity:
Accounts payable 1,239,000 640,559 (13,378)(3) 1,866,181
Accrued expenses 241,000 469,046 710,046
Other current liabilities 55,000 91,652 146,652
Notes payable 15,047,000 1,120,321 (1,120,321)(2) 15,047,000
Other long term debt 93,114 93,114
Common stock 351,000 32,903 (32,903)(1) 351,000
Additional paid-in capital 6,959,000 1,215,700 (1,215,700)(1) 6,959,000
Retained deficit (1,711,000) (1,377,089) 1,362,991 (1)
(70,000)(4) (1,795,098)
Total liabilities and
stockholders' ---------- --------- ---------- ----------
equity 22,181,000 2,286,206 (1,089,311) 23,377,895
========== ========= ========== ==========
</TABLE>
<PAGE>
FIELDS AIRCRAFT SPARES, INC.
NOTES TO THE UNAUDITED PRO FORMA COMBINED BALANCE SHEET
1) Reflects preliminary allocation of the approximate $2,915,000 total
consideration for the acquisition of Flightways Manufacturing, Inc. by
Fields Aircraft Spares, Inc.
2) Reflects payment to Flightways Manufacturing, Inc.'s shareholders as
required in the purchase agreement.
3) Reflects the elimination of accounts receivable from Fields Aircraft
Spares, Inc. to Flightways.
4) Reflects the elimination of inter-company profit included in the
ending inventory.
<PAGE>
<TABLE>
<CAPTION>
FIELDS AIRCRAFT SPARES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,1997
Historical Pro Forma
Fields Adjustments
Aircraft Flightways for
Spares, Inc. Manufacturing, Inc. Acquisition Combined
------------ ------------------- ----------- --------
<S> <C> <C> <C> <C>
Net sales 12,101,000 4,259,670 (270,000) (1) 16,090,670
Cost of sales 7,214,000 2,993,812 (270,000) (1)
70,000 (2) 10,007,812
---------- --------- -------- ----------
Gross profit 4,887,000 1,265,858 (70,000) 6,082,858
Operating expenses 3,349,000 825,566 4,174,566
---------- --------- -------- ----------
Income from operations 1,538,000 440,292 (70,000) 1,908,292
Other expense 1,676,000 97,765 1,773,765
---------- --------- -------- ----------
Loss (income) before provision
for income taxes (138,000) 342,527 (70,000) 134,527
Provision for income taxes 9,000 3,000 12,000
---------- --------- -------- ----------
Net (loss) income (147,000) 339,527 (70,000) 122,527
========== ========= ======== ==========
</TABLE>
<PAGE>
FIELDS AIRCRAFT SPARES, INC.
NOTES TO THE UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
1) Reflects elimination of inter-company sales.
2) Reflects elimination of inter-company profit included in the ending
inventory.
