<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended September 30, 1997
Commission File 0-20889
AVTEAM, Inc.
FLORIDA 65-0313187
------------------------------ -------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3230 EXECUTIVE WAY, MIRAMAR, FLORIDA 33025
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(954) 431-2359
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
COMMON STOCK, $.01 PAR VALUE-11,105,383 SHARES OUTSTANDING AS OF
DECEMBER 4, 1997
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 1997 and
December 31, 1996 1
Condensed Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 1997 and 1996 2
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1997 and 1996 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 7
PART II. - OTHER INFORMATION 11
SIGNATURES 14
</TABLE>
<PAGE> 3
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AVTEAM, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996*
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 234 $ --
Trade accounts receivable, net 5,173 5,030
Inventory 28,747 14,505
Prepaid expenses 767 219
Deposits 518 1,250
Due from affiliate -- 343
Deferred tax benefit 622 432
-------- --------
Total current assets 36,061 21,779
Revenue producing assets, at cost 4,946 --
Accumulated depreciation (90) --
-------- --------
4,856 --
Property and equipment, at cost 1,376 789
Accumulated depreciation (463) (287)
-------- --------
913 502
Deposits and other assets 496 136
-------- --------
$ 42,326 $ 22,417
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to bank $ 8,911 $ 404
Accounts payable 1,689 2,540
Accrued expenses 1,780 1,034
Customer deposit 110 510
Current portion of notes payable-lease financing 233 --
Current portion of capital lease obligations 91 69
Due to shareholders and affiliates 232 292
-------- --------
Total current liabilities 13,046 4,849
Capital lease obligations, net of current portion 100 62
Notes payable-lease financing 4,005 --
Notes payable-shareholders 489 2,513
Shareholders' equity:
Preferred stock, $.01 par value, 20,000,000
shares authorized, 1,974,642 shares of Class A
Preferred Stock and 439,644 shares of Class B
Preferred Stock issued and outstanding 24 17
Class A Common stock, $.01 par value, 77,000,000
shares authorized, 5,327,772 shares issued and
outstanding 53 50
Class B Common stock, $.01 par value, 3,000,000
shares authorized, no shares issued and outstanding -- --
Additional paid-in capital 21,895 14,611
Retained earnings 2,714 315
-------- --------
Total shareholders' equity 24,686 14,993
-------- --------
$ 42,326 $ 22,417
======== ========
</TABLE>
*As restated
See notes to condensed consolidated financial statements.
Page 1
<PAGE> 4
AVTEAM, Inc.
Condensed Consolidated Statements of Operations
(In thousands except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1997 1996 1997 1996
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 13,269 $ 6,835 $ 32,201 $ 19,809
Cost of sales 9,718 4,959 22,686 13,878
----------- ----------- ----------- -----------
Gross profit 3,551 1,876 9,515 5,931
Operating expenses:
Selling, general, and administrative 1,643 916 4,232 2,539
Officers' compensation 257 170 655 435
----------- ----------- ----------- -----------
1,900 1,086 4,887 2,974
----------- ----------- ----------- -----------
Income from operations 1,651 790 4,628 2,957
Offering expenses -- 1,154 -- 1,154
Interest expense, net 389 220 858 569
----------- ----------- ----------- -----------
Income (loss) before provision (credit) for income taxes 1,262 (584) 3,770 1,234
Provision (credit) for income taxes:
Current 427 -- 1,561 --
Deferred 32 -- (190) --
----------- ----------- ----------- -----------
459 -- 1,371 --
----------- ----------- ----------- -----------
Net income (loss) 803 (584) 2,399 1,234
Adjustments for pro forma provision (credit) for income taxes -- (210) -- 451
----------- ----------- ----------- -----------
Pro forma net income (loss) (historical for 1997) $ 803 $ (374) $ 2,399 $ 783
=========== =========== =========== ===========
Pro forma net income (loss) per common equivalent share
(historical for 1997) $ 0.10 $ (0.05) $ 0.31 $ 0.10
=========== =========== =========== ===========
Weighted average number of common equivalent
shares outstanding 7,742,058 7,742,058 7,742,058 7,742,058
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
Page 2
<PAGE> 5
AVTEAM, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1997 1996
-------- --------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,399 $ 1,234
Adjustments to reconcile net income
to net cash (used in) operating activities:
Depreciation and amortization expense 269 105
Bad debt expense 99 8
Deferred tax provision (190) --
Changes in operating assets and liabilities:
Trade accounts receivable (242) 2,204
Inventory (14,242) (3,857)
Prepaid expenses and deposits 184 (3,343)
Due from affiliate 343 (243)
Other assets (360) 8
Accounts payable (851) (2,564)
Accrued expenses and customer deposits 346 1,634
Due to shareholders and affiliates (60) --
-------- --------
Net cash used in operating activities (12,305) (4,814)
INVESTING ACTIVITIES
Additions to revenue producing assets (672) --
Purchases of property and equipment (478) (264)
-------- --------
Net cash used in investing activities (1,150) (264)
FINANCING ACTIVITIES
Payments on capital leases (52) (35)
Payments on notes payable-lease financing (36) 5,113
Net proceeds from short-term line of credit 8,507 --
Net proceeds from sale of preferred stock 5,000 --
Net proceeds from sale of common stock 2,294 --
Repayment of shareholder loan (2,024) --
Advances from shareholders -- 750
Payments on shareholder advances -- (750)
-------- --------
Net cash provided by financing activities 13,689 5,078
-------- --------
Net increase in cash 234 --
Cash at beginning of period -- --
-------- --------
Cash at end of period $ 234 $ --
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $ 460 $ 569
======== ========
Equipment acquired under capital leases $ 112 $ 26
======== ========
Revenue producing assets acquired under
lease financing $ 4,274 $ --
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
Page 3
<PAGE> 6
AVTEAM, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 1997
1. GENERAL
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three- and nine-month periods ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the financial
statements and footnotes thereto included in the Company's Registration
Statement on Form S-1 (File No. 333-23829).
The Company has in the past and may in the future experience substantial
fluctuations in its results of operations as a result of seasonal effects.
The Company believes that demand for aircraft engines, engine parts and
airframe components ("Engines and Components") is seasonal, with increased
demand during the summer months. This seasonality exists because aircraft
engine performance is directly related to ambient temperature (as
temperatures rise it is more difficult for aircraft engines to perform
properly). As a result, certain aircraft engines are removed from service
during the summer months due to the failure of those particular aircraft
engines to comply with exhaust gas temperature limitations. Aircraft
engines of the same type and model can have different performance
capabilities. The summer months also include peak travel periods during
which aircraft utilization levels are high. In addition, the timing of
whole aircraft engine sales, at greater unit purchase prices than the
installed parts and components, may cause significant fluctuations in the
Company's quarterly results of operations.
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
is effective for fiscal years ending after December 15, 1997. This
statement specifies the computation, presentation and disclosure
requirements for earnings per share for entities with publicly held common
stock or potential common stock. This pronouncement is not expected to have
a material impact on the financial statements of the Company.
2. REVENUE RECOGNITION
In March and April 1997, the Company entered into agreements with a third
party to exchange four aircraft engines, with an inventory value of
approximately $3.4 million, and cash of $2.5 million for five aircraft
engines valued at $6.9 million. Revenue recognition was delayed until the
third quarter of 1997 when the Company completed certain required repairs.
Page 4
<PAGE> 7
3. REVENUE PRODUCING ASSETS
Revenue producing assets are engines leased to users on a short-term basis.
Such engines are carried at cost and are depreciated using the
straight-line method over periods between five and ten years. Such engines
are the subject of a sale/leaseback arrangement. The proceeds under the
arrangement are recorded as a financing obligation and will be reduced by
payments under the lease over its five year term. The lease agreement
provides the Company with an option to terminate the lease and to
repurchase the engines at any time after one year at varying rates based on
the original sales price.
4. STOCK ISSUES
On August 21, 1997, the Company issued and sold to The Clipper Group in a
private placement transaction an aggregate of 494,642 shares of Class A
Preferred Stock and 219,644 shares of Class B Preferred Stock for an
aggregate purchase price of $5,000,002. Pursuant to the Company's Second
Amended Articles of Incorporation, all of such shares of Class A Preferred
Stock automatically converted into an aggregate of 494,642 shares of Class
A Common Stock and all of such shares of Class B Preferred Stock
automatically converted into an aggregate of 219,644 shares of Class B
Common Stock upon the consummation of the Company's initial public offering
(October 30, 1997). The Clipper Group has transferable registration rights
for their shares of Common Stock.
Also, on August 21, 1997, the Company issued 327,772 shares of Class A
Common Stock valued at $2,294,404 to the Chairman of the Board of Directors
of the Company as payment for a $1,322,479 non-interest bearing note and a
$701,278 interest bearing note and as payment for the purchase of
inventory, valued at $270,647.
5. PRO FORMA DISCLOSURES
PRO FORMA STATEMENTS OF INCOME INFORMATION
In conjunction with the closing of the private offering of its preferred
stock on December 6, 1996, the Company terminated its status as an S
corporation. Pro forma net income reflects adjustments for income taxes
which would have been recorded if the Company had not been an S corporation
for the three and nine month periods ended September 30, 1996.
PRO FORMA NET INCOME (LOSS) PER COMMON EQUIVALENT SHARE
Pro forma net income (loss) per common equivalent share is calculated using
the weighted average number of common shares and common equivalent shares
outstanding during the periods presented. Pursuant to the requirements of
the Securities and Exchange Commission, common equivalent shares issued at
prices below the estimated public offering price during the 12 months
immediately preceding the date of the initial filing of the registration
statement have been included in the calculation of common shares, as if
they were outstanding for all periods presented.
Page 5
<PAGE> 8
6. SUBSEQUENT EVENTS
On October 30, 1997 the Company, through an initial public offering, sold
3.033 million shares of Class A Common Stock. The net proceeds before
deduction of expenses amounted to $23,960,700. A portion of the proceeds
was used to repay the outstanding balance owed under the Company's existing
Credit Facility, to repay loans to shareholders and to pay officers'
accrued compensation.
Also on October 30 1997, the Company granted to employees a total of
250,000 options to purchase Class A Common Stock at $8.50 per share under
the Company's 1996 Stock Option Plan. The options vest over a three year
period and are exercisable over a period of ten years. 350,000 shares of
Class A Common Stock remain reserved for issuance under future option
grants.
On November 28, 1997 the Company issued 330,325 additional shares of Class
A Common Stock pursuant to the exercise of the over-allotment option
granted to the underwriters. Net proceeds before deduction of expenses
amounted to approximately $2.6 million.
Page 6
<PAGE> 9
Part 1. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
AVTEAM, Inc. is a global supplier of aftermarket aircraft engines, engine parts
and airframe material. The Company supplies its products to other aftermarket
suppliers, independent repair facilities, aircraft operators and original
equipment manufacturers. Beginning in April, 1997 the Company, through its
wholly-owned subsidiary, AVTEAM Aviation Field Services, Inc., began providing
certain on-wing maintenance and repair and borescope services.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain items contained
in the Company's condensed consolidated statements of operations expressed as a
percentage of net sales:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100% 100% 100% 100%
Cost of sales 73 73 70 70
---- ---- ---- ----
Gross profit 27 27 30 30
Operating expenses:
Selling, general, and administrative 12 13 13 13
Officers' compensation 2 2 2 2
---- ---- ---- ----
Total operating expenses 14 15 15 15
---- ---- ---- ----
Income from operations 13 12 15 15
Offering expenses(1) (17) (6)
Interest expense, net (3) (3) (3) (3)
---- ---- ---- ----
Income (loss) before provision for income taxes 10 (8) 12 6
Provision for income taxes(2) 4 -- 4 --
---- ---- ---- ----
Net income (loss)(2) 6 (8) 8 6
Adjustments for pro forma provision for income taxes -- (3) -- 2
---- ---- ---- ----
Pro forma net income (loss) (historical
for 1997)(3) 6% (5%) 8% 4%
==== ==== ==== ====
</TABLE>
(1) Represents a one-time charge against earnings in the approximate amount of
$1.2 million for the write-off of the costs associated with a public
offering which was withdrawn in August 1996 due to market conditions.
(2) The Company was an S Corporation for federal and state income tax purposes
for the taxable periods from inception through December 6, 1996. As a
result, the net income of the Company was taxed, for federal and state
income tax purposes, directly to the Company's shareholders rather than to
the Company.
(3) Assumes that the Company was subject to federal and state income taxes
during the periods presented (at an effective tax rate of approximately
38%).
Page 7
<PAGE> 10
NET SALES. Net sales increased 94.1% to $13.3 million during the third
quarter of 1997 from $6.8 million during the third quarter of 1996. For the
first nine months of 1997 net sales increased 65.6% to $32.2 million from $19.8
million for the first nine months of 1996. The increases are primarily due to
increased whole engine sales and higher levels of airframe component inventory
available for sale resulting from purchases of whole aircraft which were
disassembled.
GROSS PROFIT. Gross profit increased 89.3% to $3.6 million during the third
quarter of 1997 from $1.9 million during the third quarter of 1996. For the
first nine months of 1997 gross profit increased 60.4% to $9.5 million from $5.9
million during the first nine months of 1996. Gross margins for the third
quarter and for three quarters of 1997 compared to the same periods of 1996
remained constant.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased 79.4% to $1.6 million during the third quarter
of 1997 from $916,000 during the third quarter of 1996. During the first nine
months of 1997, selling, general and administrative expense increased 66.7% to
$4.2 million from $2.5 million during the first nine months of 1996. As a
percentage of net sales, such expense decreased to 12.4% during the third
quarter of 1997 from 13.4% during the third quarter of 1996. During the first
nine months of 1997, the percentage of selling, general and administrative
expense to net sales remained approximately the same as the percentage of such
expense to net sales during the first nine months of 1996. The expense increases
are primarily attributed to increased personnel expense resulting from
additional staffing in the Florida headquarters office, increased insurance
expense as a result of higher inventory levels and volume of shipments and
start-up costs related to the Company's new Texas-based field services
operation.
OFFICERS' COMPENSATION. Officers' compensation increased 51% to $257,000
during the third quarter of 1997 from $170,000 during the third quarter of 1996.
During the first nine months of 1997 officers' compensation increased 51% to
$665,000 from $435,000 during the first nine months of 1996. As a percentage of
net sales, such expense remained constant at approximately 2% for the third
quarter and the three quarters of 1997 and for the same periods for 1996. These
increases reflect the effect of an amendment to the employment agreements of the
two senior executives of the Company, the hiring of a Chief Financial Officer in
April 1996, the appointment of an executive officer in the fourth quarter of
1996 and the hiring of a vice president at the end of the first quarter of 1997.
NET INTEREST EXPENSE. Net interest expense increased 76.8% to $389,000
during the third quarter of 1997 from $220,000 during the third quarter of 1996.
During the first nine months of 1997 net interest expense increased 50.8% to
$858,000 from $569,000 during the nine months of 1996. Such expense, as a
percentage of net sales remained at approximately 3% for all periods. The
increased interest expense is a result of higher borrowing levels in order to
support the higher level of inventory available for sale.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary sources of liquidity have been from
financing activities and cash flow generated by operations. Net cash provided by
financing activities, derived primarily from bank lines of credit and advances
from stockholders, was $13.7 million during the nine months
Page 8
<PAGE> 11
ended September 30, 1997. In May 1997, the Company launched a program in
conjunction with third-party financing sources under which the Company leases
aircraft engines to its customers, which increased the Company's liquidity and
provided working capital for the purchase of additional aircraft engines.
The Company's existing Credit Facility matures in May 1998. At September
30, 1997, the Company had outstanding borrowings under the Credit Facility of
approximately $8.9 million. On November 5, 1997, upon receipt of the net
proceeds of its initial public offering, the Company repaid its outstanding
obligations under the Credit Facility of $12.0 million.
On July 25, 1997, the Company entered into an agreement with NationsBanc
Leasing Corporation ("NBLC") whereby the Company sold three Pratt & Whitney JT8D
engines to NBLC for approximately $4.3 million and subsequently leased-back such
engines for a period of five years at fixed monthly payments. The Company, at
its option, may repurchase any of these engines at a predetermined percentage of
the original leased amount beginning in July 1998. As of September 30, 1997, the
engines subject to this agreement were on short-term leases to third parties.
Payments under such leases provide sufficient cash flow to exceed the Company's
payments to NBLC. The proceeds from the sale of these engines were used by the
Company to reduce the outstanding balance of its credit facility.
On August 21, 1997, the Company issued and sold Class A Preferred Stock and
Class B Preferred Stock to The Clipper Group for an aggregate purchase price of
approximately $5.0 million, with the proceeds being used to reduce the
outstanding balance of its credit facility.
Also, on August 21, 1997, the Company issued and sold 327,772 shares of
Class A Common Stock to Leon Sragowicz, Chairman of the Board of Directors, as
payment for loans made by Mr. Sragowicz to the Company in the amount of
approximately $2.0 million and payment for the remaining inventory of Pratt &
Whitney engine parts valued at approximately $300,000.
On October 30, 1997, the Company, through an initial public offering, sold
3.033 million shares of Class A Common Stock. The net proceeds before deduction
of expenses amounted to $23,960,700. A portion of the proceeds was used to repay
the outstanding balance owed under the Company's existing credit facility, to
repay shareholder loans and to pay officer's accrued compensation. On November
28, 1997, the Company sold 330,325 shares of Class A Common Stock pursuant to
the exercise of the over-allotment option granted the underwriters. After
expenses, it is expected that the Company will have approximately $14 million
available for working capital and general corporate purposes.
The Company believes that current levels of working capital and amounts
available under the Credit Facility will enable it to meet its liquidity
requirements for the next twelve months.
SEASONALITY
The Company believes that demand for Engines and Components is seasonal,
with increased demand during the summer months. This seasonality exists because
aircraft engine performance is directly related to ambient temperature (as
temperatures rise it is more difficult for aircraft engines to perform
properly). As a result, certain aircraft engines are removed from service during
the
Page 9
<PAGE> 12
summer months due to the failure of those particular aircraft engines to comply
with exhaust gas temperature limitations. Aircraft engines of the same type and
model can have different performance capabilities. The summer months also
include peak travel periods during which aircraft utilization levels are high.
In addition, the timing of whole aircraft engine sales, at greater unit purchase
prices than the installed parts and components, may cause significant
fluctuations in the Company's quarterly results. The Company has in the past and
may in the future experience substantial quarterly fluctuations in its results
of operations due to these seasonal effects.
Page 10
<PAGE> 13
PART II. - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On January 1, 1995, pursuant to the terms of certain stock options granted
by the Company, certain executive officers of the Company acquired an aggregate
of 71.35 shares of the then outstanding Class A Common Stock, par value $1.00
per share, as evidenced by certain promissory notes each in the amount of
$239,097. Such securities were issued pursuant to exemptions set forth in
Section 4(2) of the Securities Act. The recipients of the shares of Class A
Common Stock represented their intentions to acquire the securities for
investment only and not with a view to sell the securities in connection with
any distribution thereof and appropriate restrictive legends were affixed to the
share certificates.
On December 31, 1995, pursuant to the terms of certain stock options
granted by the Company, certain executive officers of the Company acquired an
aggregate of 178.65 shares of the then outstanding Class A Common Stock, par
value $1.00 per share, as evidenced by certain promissory notes in the aggregate
amount of $1,120,245. Such securities were issued pursuant to exemptions set
forth in Section 4(2) of the Securities Act. The recipients of the shares of
Class A Common Stock represented their intentions to acquire the securities for
investment only and not with a view to sell the securities in connection with
any distribution thereof and appropriate restrictive legends were affixed to the
share certificates.
In March 1996, the Company amended and restated its Articles of
Incorporation, pursuant to which each share of the then outstanding class of
Class A Common Stock, par value $1.00 per share, was converted into 4,000 shares
of the currently outstanding class of Class A Common Stock, par value $.01 per
share. The Company issued and aggregate of 5,000,000 shares of Class A Common
Stock for no additional consideration in connection with such share conversion.
On December 6, 1996, the Company issued and sold 1,489,000 shares of Class
A Preferred Stock and 220,000 shares of Class B Preferred Stock to The Clipper
Group for an aggregate purchase price of $11.9 million in reliance upon
Regulation D and Section 4(2) of the Securites Act. On August 21, 1997, the
Company issued and sold 494,642 shares of Class A Preferred Stock and 219,644
shares of Class B Preferred Stock to the Clipper Group for an aggregate purchase
price of $5,000,002 in reliance upon Regulation D and Section 4(2) of the
Securities Act. The Cipper Group represented their intentions to acquire the
securities for investment only and not with a view to sell the securities in
connection with any distribution thereof and appropriate restrictive legends
were affixed to the share certificates. The Clipper Group had adequate access to
information about the Registrant. The Registrant believes that the Clipper Group
were accredited investors as defined in Rule 501 promulgated under the
Securities Act.
On August 21, 1997, the Company issued and sold 327,772 shares of Class A
Common Stock to Leon Sragowicz, the Chairman of the Board of Directors and
majority shareholder of the Company for an aggregate purchase price of
$2,294,404 in reliance upon Regulation D and Section 4(2) of the Securites Act.
Mr Sragowicz represented his intentions to acquire the securities for investment
only and not with a view to sell the securities in connection with any
distribution thereof and an appropriate restrictive legend was affixed to the
share certificate. Mr. Sragowicz had access
Page 11
<PAGE> 14
to adequate information about the Registrant. The Registrant believes that Mr.
Sragowicz was an accredited investor as defined in Rule 501 promulgated under
the Securities Act.
No underwriting discounts or commissions were paid in connection with any
of the foregoing transactions.
Page 12
<PAGE> 15
PART II. - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
(27) Financial Data Schedule.
(b) Reports on Form 8-K
None
Page 13
<PAGE> 16
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 thereunto duly authorized.
AVTEAM, Inc.
----------------------------------
(Registrant)
Date: November ___, 1997 /s/ DONALD A. GRAW
-------------------------------------
Donald A. Graw
President and Chief Executive Officer
Date: November ___, 1997 /s/ MARK S. KOONDEL
-------------------------------------
Mark S. Koondel
Chief Financial Officer and Treasurer
<PAGE> 1
Exhibit 11.1
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
1996 1997 1996 1997
------- ----- ----- ------
(In thousands)
<S> <C> <C> <C> <C>
Average shares outstanding 5,000 5,000 5,000 5,000
Assumed conversion of convertible preferred
shares issued on December 6, 1996 1,700 1,700 1,700 1,700
Assumed conversion of convertible preferred
shares issued on August 21, 1997 714 714 714 714
Common shares issued on August 21, 1997 328 328 328 328
----- ----- ----- -----
Total 7,742 7,742 7,742 7,742
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 234
<SECURITIES> 0
<RECEIVABLES> 5,173
<ALLOWANCES> 558
<INVENTORY> 28,747
<CURRENT-ASSETS> 36,061
<PP&E> 1,376
<DEPRECIATION> 463
<TOTAL-ASSETS> 42,326
<CURRENT-LIABILITIES> 13,046
<BONDS> 0
0
24
<COMMON> 53
<OTHER-SE> 24,609
<TOTAL-LIABILITY-AND-EQUITY> 42,326
<SALES> 32,201
<TOTAL-REVENUES> 32,201
<CGS> 22,686
<TOTAL-COSTS> 22,686
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 99
<INTEREST-EXPENSE> 858
<INCOME-PRETAX> 3,770
<INCOME-TAX> 1,371
<INCOME-CONTINUING> 2,399
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,399
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
