FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
- --------- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1999
--------------
- --------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934)
For the transition period from___________ to ____________
Commission File Number 0-21995
-------
First Aviation Services Inc.
(Exact name of registrant as
specified in its charter)
Delaware 06-1419064
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
15 Riverside Avenue, Westport,
------------------------------
Connecticut, 06880-4214
(Address of principal
executive offices)
(203) 291-3300
--------------
(Issuer's telephone number)
----------------------------------------------------
(Former name, former address and formal fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes __ No__
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the registrant's common stock as of June 1,
1999 is 9,004,824 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
First Aviation Services Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
<TABLE>
<CAPTION>
April 30, 1999 January 31,1999
----------------- --------------------
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 310 $ 149
Trade receivables, net of allowance for doubtful accounts of
$693 and $608, respectively 28,609 28,056
Inventories, net 50,575 51,757
Deferred income taxes 2,491 2,638
Prepaid expenses and other 1,947 1,851
----------------- --------------------
Total current assets 83,932 84,451
Plant and equipment, net 12,217 10,729
Goodwill, net 1,823 1,840
Other assets 59 69
----------------- --------------------
$ 98,031 $ 97,089
================= ====================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 17,270 $ 17,873
Accrued compensation and related expenses 3,053 2,667
Accrued litigation costs 2,461 2,840
Other accrued liabilities 2,725 3,045
Income taxes payable 1,949 2,083
Short term credit line 7,500 8,850
----------------- --------------------
Total current liabilities 34,958 37,358
Revolving line of credit 15,955 13,907
Minority interest 1,041 1,041
Obligations under capital leases 369 402
----------------- --------------------
Total liabilities 52,323 52,708
Stockholders' equity:
Common stock, $0.01 par value, 25,000,000 shares authorized,
9,001,896 and 9,001,896 shares issued and outstanding,
respectively 90 90
Additional paid-in capital 38,515 38,515
Retained earnings 7,103 5,776
----------------- --------------------
Total stockholders' equity 45,708 44,381
----------------- --------------------
$ 98,031 $ 97,089
================= ====================
</TABLE>
See accompanying notes.
2
<PAGE>
First Aviation Services Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Three months ended
April 30,
1999 1998
---------------- ----------------
<S> <C> <C>
Net sales $ 46,052 $ 34,624
Cost of sales 37,782 29,214
---------------- ----------------
Gross profit 8,270 5,410
Selling, general and administrative expenses 6,276 4,748
Non-recurring charges - 2,778
---------------- ----------------
Income/(loss) from operations 1,994 (2,116)
Interest expense 508 374
Minority interest in subsidiary 12 10
---------------- ----------------
Income/(loss) before provision/(benefit) for income taxes 1,474 (2,500)
Provision/(benefit) for income taxes 147 (750)
---------------- ----------------
Net income/(loss) available to common stockholders $ 1,327 $ (1,750)
================ ================
Basic net income/(loss) per common share:
Basic net income/(loss) per common share $ 0.15 $ (0.20)
================ ================
Shares used in the calculation of basic net income/(loss) per
common share 9,001,906 8,939,171
================ ================
Net income per common share - assuming dilution:
Net income per common share - assuming dilution $ 0.15 $ (0.20)
================ ================
Shares used in the calculation of net income per common share
- assuming dilution 9,111,626 8,939,171
================ ================
</TABLE>
See accompanying notes.
3
<PAGE>
First Aviation Services Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three months ended
April 30,
1999 1998
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income/(loss) $ 1,327 $ (1,750)
Adjustments to reconcile net income to net cash provided
by/(used in) operating activities:
Depreciation and amortization 425 211
Deferred tax provision 147 -
Changes in assets and liabilities:
Trade receivables (553) (894)
Inventories 1,182 (2,068)
Prepaid expenses and other assets (86) 153
Accounts payable (603) 1,149
Accrued compensation and related expenses, and other
accrued liabilities 66 1,284
Accrued litigation costs (379) -
Income taxes payable (134) (1,347)
----------------- ----------------
Net cash provided by/(used in) operating activities 1,392 (3,262)
Cash flows from investing activities:
Purchases of plant and equipment (1,896) (1,913)
----------------- ----------------
Net cash (used in) investing activities: (1,896) (1,913)
Cash flows from financing activities:
Net borrowings on revolving line of credit 2,048 3,580
Net borrowings/(repayments) on short term line of credit (1,350) 1,950
Principal payments on capital lease obligations (33) -
Other - 15
----------------- ----------------
Net cash provided by financing activities 665 5,545
Net increase in cash and cash equivalents 161 370
Cash and cash equivalents at beginning of period 149 237
----------------- ----------------
Cash and cash equivalents at end of period $ 310 $ 607
================= ================
Supplemental cash flow disclosures:
Interest paid $ 538 $ 362
================= ================
Income taxes paid $ 90 $ 600
================= ================
</TABLE>
See accompanying notes.
4
<PAGE>
First Aviation Services Inc.
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except share amounts)
April 30, 1999
1. Basis of Presentation
First Aviation Services Inc. ("First Aviation") and its subsidiaries, Aircraft
Parts International Combs, Inc. ("API") and National Airmotive Corporation
("NAC"), (collectively, the "Company"), are headquartered in Westport,
Connecticut. The Company is a worldwide leader in providing services to aircraft
operators of some of the most widely used military, commercial, and general
aviation aircraft engines in the world, including the Lockheed Martin C-130
Hercules and P3C Orion aircraft, and a large variety of aircraft and helicopters
powered by light turbine engines. The Company's operations include repair and
overhaul of gas turbine engines and accessories, remanufacturing of engine
components and accessories, and redistribution of new and remanufactured parts
and components. The Company has become one of the leading suppliers of aircraft
engine parts and other aircraft parts and components to the general aviation
industry worldwide, while at the same time extending its third party logistics
and inventory management services to the commercial airline market. Customers of
the Company include passenger and cargo airlines, foreign governments, U.S. and
foreign military services, fleet operators, fixed base operators, certified
repair facilities and industrial companies. The accompanying unaudited
consolidated financial statements of First Aviation and its subsidiaries have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q 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 material adjustments,
consisting only of the elimination of intercompany balances and transactions,
and normal recurring accruals considered necessary for a fair presentation, have
been included in the accompanying unaudited financial statements. Operating
results for the quarter ended April 30, 1999 are not necessarily indicative of
the results that may be expected for the full year ending January 31, 2000. For
further information, refer to the financial statements and footnotes thereto
included in the Company's Form 10-K/A for the year ended January 31, 1999.
2. Inventories
<TABLE>
<CAPTION>
Inventories consist of the following:
April 30, 1999 January 31, 1999
---------------- --------------------
<S> <C> <C>
Parts held for manufacturing or resale $ 35,001 $ 37,320
Work in-process 12,371 11,628
Finished goods 5,233 4,663
---------------- --------------------
52,605 53,611
Less: allowance for obsolete and slow moving inventory (2,030) (1,854)
---------------- --------------------
$ 50,575 $ 51,757
================ ====================
</TABLE>
3. Short Term Credit Line and Long Term Debt
On April 28, 1999 Fleet Bank extended the term of API's short term credit line
until July 23, 1999, and committed to extend further the credit line through
February 2000 under the prevailing terms and conditions.
NAC's long term credit agreement, which had an expiration date of May 15, 1999,
automatically renewed under its present terms and conditions on February 16,
1999 for an additional one year period.
5
<PAGE>
4. Segment Reporting
The following tables present information by operating segment (in thousands):
<TABLE>
<CAPTION>
Three months ended
April 30, 1999 April 30, 1998
--------------- -------------
<S> <C> <C>
Revenues
NAC $ 28,018 $ 21,079
API 18,034 13,545
------------ ------------
Total net sales $ 46,052 $ 34,624
============ ============
Gross profit
NAC $ 4,698 $ 2,820
API 3,572 2,590
------------ ------------
Total gross profit $ 8,270 $ 5,410
============ ============
</TABLE>
5. Non-recurring Charges
On April 6, 1998, the Company announced that it had initiated a plan to
streamline operations at NAC. In connection with this plan, the Company recorded
$2.8 million of pre-tax non-recurring charges. The non-recurring charges
included a reduction of facilities and severance and other employee termination
costs related to a reduction in NAC's workforce of 92 people. During the
quarters ended April 30, 1999 and 1998, approximately $- million and $0.9
million, respectively, was charged against the reserve for severance and other
employee costs. At April 30, 1999 the reserve had been fully utilized.
6. Earnings/(Loss) per Common Share
The following sets forth the computation of basic earnings per share and
earnings per share - assuming dilution:
<TABLE>
<CAPTION>
Three months ended
April 30, 1999 April 30, 1998
---------------- ----------------
<S> <C> <C>
Numerator:
Numerator for earnings/(loss) per share - net income/(loss)
available to common shareholders $ 1,327 $ (1,750)
================ ================
Denominator:
Denominator for basic earnings/(loss) per share - weighted
average shares 9,001,906 8,939,171
Effect of dilutive warrants and employee stock options 109,720 -
---------------- ----------------
Denominator for earnings per share - assuming dilution adjusted
weighted average shares and assumed conversions 9,111,626 8,939,171
================ ================
</TABLE>
For the three months ended April 30, 1998 loss per share - assuming dilution was
the same as basic loss per share because the effect of warrants and options
would have been antidilutive.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
-----------------------------------------------------------------------
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995.
- -------------------------------------------------------------
Statements which are not historical facts in this report constitute forward
looking statements, within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements, including those concerning
the Company's expectations, all involve risk and uncertainties, which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievement expressed or
implied by such forward looking statements. Such factors include, among others,
the Company's ability to obtain parts from its principal suppliers on a timely
basis, the ability to consummate suitable acquisitions, and other items that are
beyond the Company's control and may cause actual results to differ from
management's expectations.
General
On April 29, 1999, the Company announced that it would explore ways of enhancing
shareholder value, including the potential sale of NAC.
The Company's net sales consist of revenues derived from the overhaul and repair
of aircraft engines, engine components and industrial turbines, sales of parts
and components and provision of third party logistics and inventory management
services. Net sales generally are recorded when repaired or overhauled engines
and components are completed, tested and shipped. Net sales of spare parts and
components are recorded when parts are shipped.
On April 6, 1998, the Company announced that it had initiated a plan to
streamline and improve operations at NAC. In accordance with this plan, the
Company recorded pre-tax non-recurring charges of approximately $2.8 million in
the quarter ended April 30, 1998.
The plan included the elimination of 92 positions at the Oakland facility. The
reduction in force at Oakland was the result of softness in the Large Flight
Engine business unit as well as the consolidation of the Light Turbine
operations. The Large Flight Engine business unit's Allison T-56 repair and
overhaul business had slowed due to the deteriorating financial situation in
Asia and a postponement of inputs from customers located primarily in Middle
Eastern countries. The improvement in market conditions in the quarter ended
April 30, 1999 has enabled the Company to rehire a number of the skilled
individuals previously released.
Results of Operations
Net Sales
Net sales for the quarter ended April 30, 1999 increased $11.5 million, or
33.2%, to $46.1 million from $34.6 million in the quarter ended April 30, 1998.
Sales at API increased 32.2% to $18.0 million as compared to the $13.6 million
in the quarter ended April 30, 1998. API has been growing at double-digit rates
since its acquisition in fiscal year 1997, as a result of improved service
levels, increased market share and growth in the logistics and inventory
management services business. Sales at NAC increased 32.9% to $28.0 million as
compared to the $21.1 million reported in the quarter ended April 30, 1998. The
increase in sales at NAC was due to increased revenues from repair and overhaul
activities in all three business units.
7
<PAGE>
Cost of Sales
Cost of sales for the quarter ended April 30, 1999 increased $8.6 million, or
29.5%, to $37.8 million from $29.2 million in the quarter ended April 30, 1998.
As a percentage of net sales, cost of sales decreased 2.4% to 82.0% from 84.4%
in the quarter ended April 30, 1998. The decrease in cost of sales was due
principally to increased efficiency at NAC in the production of repair and
overhauls, and reductions in the cost of materials utilized.
Gross Profit
Gross profit for the quarter ended April 30, 1999 increased $2.9 million, or
53.7%, to $8.3 million from $5.4 million in the quarter ended April 30, 1998.
Gross profit as a percentage of net sales increased to 18.0% from 15.6% as a
result of improved performance at NAC and API, as well as an increase in the
proportion of the Company's net sales of parts and components relative to net
sales from repair and overhaul activities.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the quarter ended April 30,
1999 increased $1.6 million, or 34.0%, to $6.3 million from $4.7 million in the
quarter ended April 30, 1998. The increase is attributable to the growth in net
sales at API and additional marketing and personnel costs incurred at NAC. In
addition, API is a distribution and logistics business and, as is typical in
such businesses, incurs less direct labor costs and greater selling, general and
administrative costs than a company such as NAC.
Net Interest Expense and Other
Net interest expense and other for the quarter ended April 30, 1999 increased
$0.1 million, or 25.0%, to $0.5 million from $0.4 million in the quarter ended
April 30, 1998. The increase was attributable to an increase in the average
borrowings under the Company's credit facilities to support the Company's
capital improvements.
Provision/(Benefit) for Income Taxes
Management estimates that the Company's effective income tax rate for the
quarter ended April 30, 1999 is 10%. The effective income tax rate for the
quarter ended April 30, 1998 was 30%. The Company's effective tax rate is less
than statutory rates due to benefits that the Company expects to derive from the
implementation of certain tax saving strategies. During the year, the Company
expects to realize the tax benefit of certain financial statement accruals not
previously deducted for income tax purposes. The Company previously had
established a valuation reserve of over $3 million (the "Valuation Allowance").
The Company expects that the Valuation Allowance will be reduced by
approximately 50 percent in the current fiscal year.
Net Income/(Loss)
For the quarter ended April 30, 1999 the Company had net income of approximately
$1.3 million. This compares to a net loss of approximately $1.75 million after
non-recurring charges for the comparable period of the prior fiscal year. The
net loss in the prior fiscal year resulted from the non-recurring charges that
totaled $2.8 million pre-tax.
8
<PAGE>
Liquidity and Capital Resources
The Company's liquidity requirements arise primarily from its working capital
needs, principally inventory and trade receivables.
The Company's cash provided by operations for the three months ended April 30,
1999 was $1.4 million, compared to cash used in operations of $3.3 million for
the three months ended April 30, 1998. Cash used for investing activities during
these same periods was $1.9 million and $1.9 million, respectively. Cash
provided by financing activities during the three months ended April 30, 1999
was $0.7 million, compared to $5.5 million for the three months ended April 30,
1998.
The Company has not declared or paid any cash dividends or distributions on its
common stock since its inception. The Company anticipates that, for the
foreseeable future, all earnings will be retained for use in the Company's
business and no cash dividends will be paid on its Common Stock. Any payment of
cash dividends in the future on the Common Stock will be dependent upon the
Company's financial condition, results of operations, current and anticipated
cash requirements, plans for expansion, the ability of its subsidiaries to pay
dividends or otherwise make cash payments or advances to it and restrictions, if
any, under any future debt obligations, as well as other factors that the Board
of Directors deems relevant. Further, the Company's current credit facilities
prohibit the payment of cash dividends from either subsidiary to First Aviation,
except with the lender's consent, and contain other covenants and restrictions.
Borrowings under NAC's $40.0 million credit facility totaled approximately $16.0
million at April 30, 1999. During the quarter ended April 30, 1998, API entered
into a $10.0 million revolving credit facility. At April 30, 1999, borrowings
under this facility approximated $7.5 million.
On April 28, 1999 Fleet Bank extended the term of API's short term credit line
until July 23, 1999, and committed to extend further the credit line through
February 2000 under the prevailing terms and conditions. NAC's long term credit
agreement, which had an expiration date of May 15, 1999, automatically renewed
under its present terms and conditions on February 16, 1999 for an additional
one year period.
In connection with the acquisition of the API Business, AMR Combs purchased
10,407 shares of API Series A Cumulative Convertible Preferred Stock, $0.001 par
value, with dividends payable quarterly at $4.00 per share (the "Preferred
Stock"). In addition, First Aviation, API and AMR Combs entered into a
Stockholders Agreement. Pursuant to this agreement, AMR Combs agreed that it
would not sell its shares of the Preferred Stock or the shares of API common
stock into which the Preferred Stock is convertible (collectively the "API
Acquisition Shares") for a minimum period of three years. API has the right to
redeem the API Acquisition Shares at any time. After March 5, 2000, AMR Combs
has the right to cause API to repurchase the API Acquisition Shares. The Company
has, under certain circumstances, the ability to defer AMR Combs' ability to
cause API to repurchase the API Acquistion Shares. The redemption price is equal
to the fair market value of the API Acquisition Shares as determined by an
independent appraisal. The Stockholders Agreement also contains certain other
rights, including: (i) a right of first refusal on the part of First Aviation
with respect to any proposed sale of the API Acquisition Shares, (ii) the right
of First Aviation to require AMR Combs to participate, on a pro rata basis, with
it in the sale of the capital stock of API to a third party, (iii) the right of
AMR Combs to elect to participate, on a pro rata basis, in the sale of the
capital stock of API to a third party, and (iv) piggyback and demand
registration rights granted to AMR Combs with respect to the API Acquisition
Shares. The demand registration rights are not exercisable until three years
after the closing of the acquisition of the API Business, and, if API has not
previously closed an underwritten public offering of its common stock at the
time AMR Combs elects to exercise its demand registration rights, API may elect
to treat the demand as an exercise by AMR Combs of its put option with respect
to the API Acquisition Shares. First Aviation has no plans to cause API to
conduct a public offering of its securities.
Based upon current and anticipated levels of operations, the Company believes
that its cash flow from operations, combined with borrowings available under the
existing lines of credit, will be sufficient to meet its current and anticipated
cash operating requirements for the foreseeable future, including scheduled
interest and principal payments, capital expenditures, preferred dividend
requirements and working capital needs.
Year 2000
The Company continues to work on resolving the potential impact of the Year 2000
on the processing of date-sensitive information by the Company's computerized
information systems. The Year 2000 problem is the result of computer programs
being written using two digits (rather than four) to define the applicable year.
Any of the Company's programs and systems that have time-sensitive software may
be unable to interpret dates beyond the year 1999. This could result in
miscalculations and/or system failures, causing disruptions of operations
controlled by such systems or devices.
9
<PAGE>
The Company and each of its operating subsidiaries have conducted comprehensive
reviews of their systems and have developed plans to address any possible issues
related to the impact of the Year 2000 problem on both information technology
("IT") and non-IT systems (e.g., embedded technology). These plans address the
Year 2000 issue in multiple phases, including (i) determining an initial
inventory of the Company's systems, equipment, vendors, customers and third
party administrators that may be vulnerable to system failures or processing
errors as a result of Year 2000 issues, (ii) assessing and prioritizing of
inventoried items to determine risks associated with their failure to be Year
2000 compliant, (iii) testing of systems and equipment to determine Year 2000
compliance, and (iv) remediating and implementing systems and equipment. For
those systems which the Company determines are not currently Year 2000
compliant, implementation of the required changes is expected to be completed
during this fiscal year.
As of April 30, 1999, all critical hardware and software systems utilized by the
Company had been tested and/or verified as either Year 2000 compliant or
appropriate remediation was taken or will be taken to effect compliance. Certain
non-critical software systems were determined not to be Year 2000 compliant and
had been or will be modified or converted to compliant systems. Conversion of
additional non-critical systems is in process. Testing systems utilized to
verify compliance include the posting to the systems of a date on or after
January 1, 2000 as though the date were effective. The Company has tested nearly
all of its critical IT and non-IT systems. Any necessary additional
modifications or replacements are scheduled to be completed during the second
and third quarters of fiscal year 2000.
The Company is in the process of contacting its customers, major suppliers and
vendors to assess their status relating to Year 2000 readiness and/or
compliance, and the potential impact on operations if such third parties are not
successful in ensuring that their systems are Year 2000 compliant in a timely
manner. The Company could suffer potential business interruptions and/or incur
costs, damages or losses related thereto if other third parties, such as
governmental agencies (e.g., Federal Aviation Administration), are not Year 2000
compliant. The Company is unable to determine at this time whether it will be
materially affected by the failure of any of its customers, suppliers, vendors
or other third parties to be Year 2000 compliant.
A failure by the Company, its customers, major suppliers or vendors, or any
third party with which the Company interacts, to resolve a material Year 2000
issue could result in the interruption in, or failure of, certain normal
business activities or operations and could materially and adversely affect the
Company's financial condition, results of operations and cash flows. The Company
is currently assessing those scenarios in which unexpected failures could have a
material adverse effect on the Company and anticipates that it will develop
contingency plans, as deemed appropriate, designed to deal with such scenarios.
Based on current plans and assumptions, the Company does not expect that the
Year 2000 issue will have a material adverse impact on the Company as a whole.
Due to the general uncertainty inherent in the Year 2000 issue, however, there
can be no assurance that all Year 2000 issues will be foreseen and corrected on
a timely basis, or that no material disruption to the Company's business
operations will occur. Further, the Company's expectations are based on the
assumption that there will be no general failure of external local, national or
international systems (including power, communications, postal, transportation,
or financial systems) necessary for the ordinary conduct of business.
Costs associated with the Company's Year 2000 compliance effort, including
consulting costs and costs associated with internal resources used to modify
existing systems in order to achieve Year 2000 compliance, are charged to
expense as incurred. Management estimates that the expenditures relating to the
Company's Year 2000 compliance effort will total approximately $400,000. Through
April 30, 1999, management estimates that approximately $200,000 has been spent
addressing this issue. The remainder is expected to be spent over the next two
to three quarters. The Company does not separately track internal costs of the
Year 2000 compliance effort. The anticipated costs of the project and the dates
on which the Company believes it will complete the Year 2000 modifications and
assessments are based on management's best estimates, which were derived
utilizing numerous assumptions of future events, including the continued
availability of certain resources. There can be no guarantee that these
estimates will be achieved and actual results could differ materially from those
anticipated. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area and the ability to locate and correct all relevant systems.
Management does not expect the financial impact of making the required system
changes to be material to the Company's overall consolidated financial position.
10
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- -------------------------
NONE
Item 2. Changes in Securities
- -----------------------------
NONE
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
NONE
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
NONE
Item 5. Other Information
- -------------------------
NONE
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits.
Exhibit
Number Description of Exhibit
- ------- ----------------------
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
First Aviation Services Inc.
----------------------------
(Registrant)
Date: June 7, 1999 /s/ Michael C. Culver
-----------------------------------
Michael C. Culver,
President, Chief Executive Officer and
Director (Principal Executive Officer)
Date: June 7, 1999 /s/ John A. Marsalisi
-----------------------------------
John A. Marsalisi,
Vice President, Secretary, Director and
Chief Financial Officer (Principal Financial
and Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial information contained in the body of the accompanying 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<PERIOD-START> Feb-01-1999
<FISCAL-YEAR-END> Jan-31-2000
<PERIOD-END> Apr-30-1999
<CASH> 310
<SECURITIES> 0
<RECEIVABLES> 29,302
<ALLOWANCES> 693
<INVENTORY> 50,575
<CURRENT-ASSETS> 83,932
<PP&E> 15,610
<DEPRECIATION> 3,393
<TOTAL-ASSETS> 98,031
<CURRENT-LIABILITIES> 34,958
<BONDS> 0
0
0
<COMMON> 90
<OTHER-SE> 45,618
<TOTAL-LIABILITY-AND-EQUITY> 98,031
<SALES> 46,052
<TOTAL-REVENUES> 46,052
<CGS> 37,782
<TOTAL-COSTS> 37,782
<OTHER-EXPENSES> 6,288
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 508
<INCOME-PRETAX> 1,474
<INCOME-TAX> 147
<INCOME-CONTINUING> 1,327
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,327
<EPS-BASIC> 0.15
<EPS-DILUTED> 0.15
</TABLE>
