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, 2000
--------------
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
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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
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(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 6,
2000 is 7,680,481 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
----------------------------
First Aviation Services Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
<TABLE>
<CAPTION>
April 30, January 31,
2000 2000
------------- -----------------
Assets (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 41,393 $ 50,104
Trade receivables, net of allowance for
doubtful accounts of $838 and $820, respectively 15,157 13,810
Inventory, net of allowance for obsolete and
slow moving inventory of $409 and $414, respectively 17,728 14,142
Prepaid expenses, deferred income taxes and other 2,830 2,582
------------- -----------------
Total current assets 77,108 80,638
Plant and equipment, net 5,384 3,980
Goodwill, net 1,758 1,774
------------- -----------------
$ 84,250 $ 86,392
============= =================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 14,873 $ 8,264
Accrued compensation and related expenses 2,774 3,156
Other accrued liabilities 4,367 4,752
Income taxes payable 1,606 6,858
Current portion of obligations under capital leases 257 163
------------- -----------------
Total current liabilities 23,877 23,193
Revolving line of credit 7,200 7,900
Minority interest 1,041 1,041
Obligations under capital leases 344 115
------------- -----------------
Total liabilities 32,462 32,249
Stockholders' equity:
Common stock, $0.01 par value, 25,000,000 shares
authorized, 7,680,481 and 8,133,997 shares outstanding, respectively 91 91
Additional paid-in capital 38,643 38,615
Retained earnings 21,190 21,306
------------- -----------------
59,924 60,012
------------- -----------------
Less: Treasury stock, at cost (8,136) (5,869)
------------- -----------------
Total stockholders' equity 51,788 54,143
------------- -----------------
$ 84,250 $ 86,392
============= =================
</TABLE>
See accompanying notes.
2
<PAGE>
First Aviation Services Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Three months ended
April 30,
2000 1999
------------- -----------------
<S> <C> <C>
Net sales $ 21,818 $ 18,034
Cost of sales 17,575 14,461
------------- -----------------
Gross profit 4,243 3,573
Selling, general and administrative expenses 4,014 3,250
E-commerce initiative 195 -
Corporate expenses 747 614
------------- -----------------
Loss from operations (713) (291)
Net interest income (expense) 530 (142)
Minority interest in subsidiary (10) (12)
------------- -----------------
Loss before benefit for income taxes (193) (445)
Benefit for income taxes 77 45
------------- -----------------
Net loss from continuing operations (116) (400)
Net income from discontinued operation, net of
provision for income taxes of $192 - 1,727
------------- -----------------
Net income (loss) $ (116) $ 1,327
============= =================
Basic net income per common share:
Basic net loss from continuing operations per common share $ (0.01) $ (0.04)
Basic net income from discontinued operation per common share - 0.19
------------- -----------------
Basic net income per common share $ (0.01) $ 0.15
============= =================
Shares used in the calculation of basic net
income per common share 7,987,897 9,001,906
============= =================
Net income per common share - assuming dilution:
Net loss from continuing operations per
common share - assuming dilution $ (0.01) $ (0.04)
Net income from discontinued operation per
common share - assuming dilution - 0.19
------------- -----------------
Net income per common share - assuming dilution $ (0.01) $ 0.15
============= =================
Shares used in the calculation of net income per
common share - assuming dilution 7,987,897 9,001,906
============= =================
</TABLE>
See accompanying notes.
3
<PAGE>
First Aviation Services Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three months ended
April 30,
2000 1999
------------- -----------------
<S> <C> <C>
Cash flows from operating activities
Net loss from continuing operations $ (116) $ (400)
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 256 199
Changes in assets and liabilities:
Trade receivables (1,347) (1,169)
Inventories (3,586) 363
Prepaid expenses, deferred income taxes and other assets (248) (105)
Accounts payable 6,609 2,715
Accrued compensation and related expenses, and other accrued liabilities (451) 254
Income taxes payable (77) (45)
------------- -----------------
Net cash provided by operating activities of continuing operations 1,040 1,812
Net cash used in operating activities of discontinued operation (5,491) (420)
------------- -----------------
Net cash provided by (used in) operating activities (4,451) 1,392
Cash flows from investing activities
Purchases of plant and equipment of continuing operations (1,329) (388)
Purchases of plant and equipment of discontinued operation - (1,508)
------------- -----------------
Net cash used in investing activities (1,329) (1,896)
Cash flows from financing activities
Net borrowings (repayments) on revolving lines of credit (700) 698
Repurchases of common stock for treasury (2,267) -
Incurrence of (principal payments on) capital lease obligations 8 (33)
Other 28 -
------------- -----------------
Net cash provided by (used in) financing activities
of continuing operations (2,931) 665
------------- -----------------
Net increase (decrease) in cash and cash equivalents (8,711) 161
Cash and cash equivalents at beginning of period 50,104 149
------------- -----------------
Cash and cash equivalents at end of period $ 41,393 $ 310
============= =================
Supplemental cash flow disclosures:
Interest paid $ 171 $ 191
============= =================
Income taxes paid (discontinued operation) $ 5,175 $ 90
============= =================
Acquisition of equipment through capital lease obligation $ 315 $ -
============= =================
</TABLE>
See accompanying notes.
4
<PAGE>
First Aviation Services Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(in thousands, except share amounts)
April 30, 2000
1. Basis of Presentation
First Aviation Services Inc. ("First Aviation") and its subsidiaries, Aerospace
Products International Inc. ("API"), Aircraft Products International Ltd. and
AeroV Inc. ("AeroV") (collectively, the "Company"), are headquartered in
Westport, Connecticut. The Company, through API, is one of the leading suppliers
of aircraft parts and components to the aviation industry worldwide, and is a
provider of third party logistics and inventory management services to the
aerospace industry. Customers of the Company include passenger and cargo
airlines, fleet operators, fixed base operators, certified repair facilities and
military services. AeroV is the Company's E-commerce business-to-business
initiative that is under development. The accompanying unaudited condensed
consolidated financial statements of the Company 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, including
the elimination of intercompany balances and transactions, and normal recurring
accruals considered necessary for a fair presentation, have been included in the
accompanying unaudited condensed consolidated financial statements. Operating
results for the three months ended April 30, 2000 are not necessarily indicative
of the results that may be expected for the full year ending January 31, 2001.
For further information, refer to the financial statements and footnotes thereto
included in the Company's Form 10-K for the year ended January 31, 2000. As
described in Note 5, on November 1, 1999 the Company consummated the sale of the
stock of its former wholly owned subsidiary, National Airmotive Corporation
("NAC"). Accordingly, NAC has been accounted for as a discontinued operation and
the prior year results of its operations and cash flows have been reported
separately in the accompanying condensed consolidated financial statements.
2. Earnings (Loss) per Common Share and Treasury Stock
For the three months ended April 30, 2000 and 1999, respectively, the
denominator used in the calculation of net loss per common share from continuing
operations - assuming dilution was the same as basic loss per share because the
effect of warrants and options would have been antidilutive.
During the three months ended April 30, 2000 The Company purchased a 458,818
share block of its common stock for $2,267.
3. Revolving Line of Credit
On March 30, 2000, API entered into a new $20 million commercial revolving loan
and security agreement. Borrowings under this credit facility bear interest
equal to the LIBOR rate plus 1.5% and are limited to specified percentages of
eligible trade receivables and inventories of API. The credit agreement contains
a number of covenants on API, including restrictions on mergers, consolidations
and acquisitions, the incurrence of indebtedness, transactions with affiliates,
the creation of liens and limitations on capital expenditures. The credit
agreement also requires API to maintain minimum levels of net worth and
specified interest expense coverage ratios, and restricts the payment of
dividends on API's common stock. Substantially all of API's domestic assets are
pledged as collateral under this credit facility. Borrowings under the facility
are guaranteed by First Aviation. The agreement expires May 1, 2001. As a result
of the new long-term agreement, borrowings under API's previous line of credit
were reclassified to long term as of January 31, 2000. In accordance with the
terms and conditions of an existing advisory agreement the Company paid a fee to
First Equity Development Inc., a related party, of $90 for services provided in
connection with the completion of the new financing. The amount of the fee was
expensed in the quarter.
5
<PAGE>
4. Software Development
The Company accounts for software development costs in accordance with Statement
of Position ("SOP") 98-1, "Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use". During the three months ended April 30,
2000 the Company capitalized approximately $500 of software development costs
incurred in connection with the Company's E-commerce initiative. These costs
have been included in plant and equipment in the accompanying condensed
consolidated balance sheets. The Company will begin amortizing these costs over
an expected three year period beginning later in the year ended January 31, 2000
in accordance with the SOP.
5. Sale of NAC
On November 1, 1999, the Company consummated the sale of the stock of NAC to
Rolls-Royce North America, Inc. for $73 million, pursuant to a Stock Purchase
Agreement between First Aviation Services Inc. and Rolls-Royce North America,
Inc. dated as of September 9, 1999 (the "Agreement"). NAC's operations included
the repair and overhaul of gas turbine engines and accessories, and the
remanufacturing of engine components and accessories.
Pursuant to the Agreement, Rolls-Royce North America, Inc. acquired
substantially all of the assets and assumed certain liabilities of NAC,
excluding income tax liabilities, debt, amounts due to parent (First Aviation)
and any contingent liabilities resulting from the Company's liquidation of its
former defined benefit plan. The sales price may be increased or decreased by an
amount not to exceed $3 million based upon the change in net assets, as defined
in the Agreement, from a target amount to October 31, 1999, the day immediately
preceding the closing date. The amount of the adjustment, currently estimated to
be approximately $2.1 million, will be finalized during the year ended January
31, 2001. It has been included in other accrued liabilities in the accompanying
condensed consolidated balance sheets.
Summarized results of operations information for NAC is as follows.
<TABLE>
<CAPTION>
For the three
months ended
April 30, 1999
--------------------
<S> <C>
Net sales $ 28,019
====================
Earnings before interest & taxes 2,286
Net interest expense 367
--------------------
Earnings before income taxes 1,919
Net income $ 1,727
====================
</TABLE>
Pursuant to the terms and conditions of the Agreement, the Company is subject to
certain indemnification provisions resulting from the sale. The Company believes
that none of the indemnification provisions will lead to a claim that would have
a material adverse impact upon the Company. However, depending on the amount and
timing, unfavorable resolution of any of these potential claims could have a
material effect on the Company's consolidated financial position, results of
operations or cash flows in a particular period.
During the year ended January 31, 2000 the Company accrued for certain costs
related to the sale of NAC. During the three months ended April 30, 2000, $316
was charged against the accruals, for compensation and other expenses. In
addition, income tax liabilities that arose as a result of the sale were paid.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition,
Results of Operations and Liquidity and Capital Resources
---------------------------------------------------------------------
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995.
---------------------------------------------------------------------------
Information included in this Quarterly Report on Form 10-Q may contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are not statements of
historical facts, but rather reflect the Company's current expectations
concerning future events and results. Such forward-looking statements, including
those concerning the Company's expectations, involve known and unknown risks,
uncertainties and other factors, some of which are beyond the Company's control,
that may cause the Company's actual results, performance or achievements, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. In evaluating such statements as well as the future prospects of the
Company, specific consideration should be given to various factors, including
the Company's ability to obtain parts from its principal suppliers on a timely
basis, market conditions, 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. In addition, specific consideration
should be given to the various factors discussed in this Quarterly Report on
Form 10-Q.
General
The Company is a worldwide leader in supplying aircraft parts and components to
the aviation industry worldwide, as well as providing the aerospace industry
third party logistics and inventory management services. The Company is the
fastest growing distributor and third party logistics provider in the aerospace
industry.
The Company's executive offices are located at 15 Riverside Avenue in Westport,
Connecticut, 06880. Further information about the Company can be found on the
worldwide web at www.firstaviation.com. The Company can be reached via e-mail at
[email protected].
In addition to the start up of Aero V, during the three months ended April 30,
2000 the Company also established API Asia Pacific Inc., a new sales and
distribution center at the former Clark Air Force Base in the Philippines. Costs
relating to the establishment and start up of this facility have been included
in selling, general and administrative expenses in the accompanying condensed
consolidated statements of operations. Net sales from this facility were not
significant during the three months ended April 30, 2000.
On November 1, 1999, the Company consummated the sale of the stock of NAC to
Rolls-Royce North America, Inc. for $73 million, pursuant to the Agreement. As a
result, NAC has been accounted for as a discontinued operation. All prior year
amounts reported herein have been restated to reflect NAC as a discontinued
operation.
Results of Operations
Net Sales
The Company's net sales consist of sales of parts and components, component
overhaul services and provision of third party logistics and inventory
management services. Net sales are recorded when spare parts and components are
shipped or when logistics and management services have been provided.
Net sales for the three months ended April 30, 2000, increased $3.8 million, or
21.0%, to $21.8 million from $18.0 million for the three months ended April 30,
1999.
Net sales during the three months ended April 30, 2000 increased as compared to
the prior year as a result of Canadian expansion, increased domestic market
share and growth in the logistics services business. The Company's rate of
growth continues as management has expected. Growth is continuing despite
softness in the airline markets
7
<PAGE>
and aggressive pricing by competitors seeking to regain market share. The
Company continues to expand, and invest in new product offerings as well as the
logistics and inventory management businesses.
Cost of Sales
Cost of sales for the three months ended April 30, 2000 increased $3.1 million,
or 21.5%, to $17.6 million from $14.5 million for the three months ended April
30, 1999. As a percentage of net sales, cost of sales increased to 80.6%
compared to 80.2% for the three months ended April 30, 1999.
Gross Profit
Gross profit for the three months ended April 30, 2000 increased $0.7 million,
or 18.8%, to $4.2 million from $3.6 million for the three months ended April 30,
1999. Gross profit as a percentage of net sales decreased to 19.4% from 19.8% as
a result of changes in the mix of products sold.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended April
30, 2000 increased $0.8 million, or 23.5%, to $4.0 million from $3.3 million for
the three months ended April 30, 1999. The increase is attributable to the
growth in net sales and gross profit, and expenses incurred in connection with
the start up of the Company's Asia Pacific and planned European operations.
E-Commerce Initiative
The E-commerce initiative expenses for the three months ended April 30, 2000
were $0.2 million, and related to the start up of AeroV.
Corporate Expenses
Corporate expenses incurred during the three months ended April 30, 2000
increased $0.1 million to $0.7 million compared to $0.6 million for the three
months ended April 30, 1999. The increase is proportional to the growth of the
Company.
Net Interest Income (Expense) and Minority Interest in Subsidiary
Net interest income (expense) and other expenses for the three months ended
April 30, 2000 increased $0.7 million, to net income of $0.5 million from a net
expense of $0.2 million for the three months ended April 30, 1999. The increase
was attributable to interest earned on cash balances during the three months
ended April 30, 2000. No interest income was earned during the three months
ended April 30, 1999.
Benefit for Income Taxes
The effective tax rate on continuing operations for the three months ended April
30, 2000 was 40%. Management estimates that the Company's effective income tax
rate on continuing operations for the fiscal year ended January 31, 2001 will
approximate 40%. The Company's effective income tax rate on continuing
operations for the three months ended April 30, 1999 was approximately 10%. The
Company's effective tax rate for the prior fiscal year was less than statutory
rates due to benefits that the Company derived from the implementation of
certain tax planning strategies.
Net Loss from Continuing Operations
For the three months ended April 30, 2000, the Company incurred a net loss from
continuing operations of approximately $0.1 million. This compares to a net loss
from continuing operations of $0.4 million for the comparable period of the
prior year. The decrease in the net loss is due principally to interest income
earned, offset by start up expenses incurred in connection with the Company's
international expansions and e-commerce initiative.
8
<PAGE>
Income from Discontinued Operation
Net income for the three months ended April 30, 1999 from the discontinued
operation was $1.7 million. No income was earned during the three months ended
April 30, 2000 due to the sale of NAC in the last quarter of the prior fiscal
year.
Net Income
The Company incurred a loss of $0.1 million for the three months ended April 30,
2000, as compared to net income of $1.3 million for the three months ended April
30, 1999. The decrease was due to the reasons described above.
Liquidity and Capital Resources
The Company's liquidity requirements arise principally from its working capital
needs, which have increased due to growth and expansion. In addition, the
Company has liquidity requirements to fund capital expenditures. The Company's
growth in working capital is funded principally through the expansion of trade
payables. The Company also funds its requirements with a combination of cash on
hand, cash flows from operations and from borrowings.
The Company's cash provided by operating activities of continuing operations for
the three months ended April 30, 2000 was $1.0 million, compared to cash
provided of $1.8 million for the three months ended April 30, 1999. The decrease
in cash provided by operating activities during the three months ended April 30,
2000 compared to the comparable period of the prior year was due principally to
an inventory build up as a result of new product lines and international
expansions. Cash used in investing activities of continuing operations during
these same periods was $1.3 million and $0.3 million, respectively. Cash used in
financing activities during the three months ended April 30, 2000 was $2.9
million, compared to cash provided of $0.7 million for the three months ended
April 30, 1999. Cash used in financing activities during the three months ended
April 30, 2000 included approximately $2.3 million used to repurchase shares of
the Company's common stock.
In a series of authorizations, the Company's Board of Directors established a
stock repurchase program of up to 1,660,000 shares of the Company's common
stock. Repurchases may be made from time-to-time in open market transactions,
block purchases, privately negotiated transactions or otherwise at prevailing
prices. No time limit has been given for the completion of the program. Through
January 31, 2000 the Company had repurchased a total of 1,000,000 shares of its
common stock at an aggregate cost of approximately $5.9 million, or $5.87 per
share. On March 24, 2000, the Company purchased an additional 458,818 share
block of its common stock for approximately $2.3 million, or $4.94 per share.
After this transaction, repurchases under the program totaled 1,458,818 shares
at an aggregate cost of approximately $8.1 million, or approximately $5.58 per
share. Approximately 200,000 shares still may be repurchased under this program.
The Board of Directors of the Company has authorized an investment of up to $2.0
million in AeroV, the Company's E-commerce initiative. This authorization is in
addition to the technology enhancements being undertaken at API. The Company
expects that the investment will be completed during the year ended
January 31, 2001
The Company invests its cash and cash equivalents in certificates of deposit and
commercial paper with maturities when purchased of three months or less.
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. The Company's
current credit facility prohibits the payment of cash dividends to First
Aviation, except with the lender's consent, and contain other covenants and
restrictions. 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.
9
<PAGE>
On March 30, 2000, API entered into a new $20 million commercial revolving loan
and security agreement. Borrowings under this credit facility bear interest
equal to the LIBOR rate plus 1.5% and are limited to specified percentages of
eligible trade receivables and inventories of API. The credit agreement contains
a number of covenants on API, including restrictions on mergers, consolidations
and acquisitions, the incurrence of indebtedness, transactions with affiliates,
the creation of liens and limitations on capital expenditures. The credit
agreement also requires API to maintain minimum levels of net worth and
specified interest expense coverage ratios, and restricts the payment of
dividends on API's common stock. Substantially all of API's domestic assets are
pledged as collateral under this credit facility. Borrowings under the facility
are guaranteed by First Aviation. The agreement expires May 1, 2001. Borrowings
under this facility totaled approximately $7.2 million at April 30, 2000.
On March 5, 1997, the Company completed the acquisition of API from AMR Combs,
Inc. ("AMR Combs"). In conjunction with the Company's acquisition of API, 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 Acquisition 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
API, 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.
On March 5, 1999, AMR Combs was acquired by Signature Flight Support, an
affiliate of BBA Group Plc.
Based upon current and anticipated levels of operations, the Company believes
that its cash flow from operations, combined with cash on hand and borrowings
available under the existing line 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,
minority interest requirements and working capital needs. In addition, the
Company may use its cash on hand to pursue potential acquisitions.
Year 2000
In prior years the Company discussed the nature and progress of its plans to
become Year 2000 ready. In 1999 the Company completed its remediation and
testing of its systems. As a result of those planning and implementation
efforts, the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems, and believes
those systems successfully responded to the Year 2000 date change. Costs in
connection with remediation of its systems were not significant. The Company is
not aware of any material problems resulting from Year 2000 issues, either with
its internal systems or services of third parties. The company will continue to
monitor its mission critical computer applications and those of its suppliers
and vendors throughout the year 2000 to ensure that any latent Year 2000 matters
that may arise are addressed promptly.
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
-----------------------------------------------------------
At the Company's Annual Meeting of Shareholders held on June 6, 2000, the
following proposals were adopted by the margins indicated.
(1) To elect two directors for a three-year term to expire at the
Annual Meeting of Shareholders in the year 2003.
<TABLE>
<CAPTION>
Votes For Votes Withheld
--------- --------------
<S> <C> <C>
Joshua S. Friedman 6,219,377 1,039
Aaron P. Hollander 6,219,377 1,039
</TABLE>
Michael C. Culver, Robert L. Kirk, John A. Marsalisi and
Charles B. Ryan continued to serve as directors of the Company
after the annual meeting of shareholders.
(2) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ended January 31, 2001.
<TABLE>
<CAPTION>
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
<S> <C> <C> <C>
6,220,316 100 -0-
</TABLE>
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
27.2 Restated Financial Data Schedule
(b) Reports on Form 8-K.
NONE.
[Signature page follows]
11
<PAGE>
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 14, 2000 /s/ Michael C. Culver
------------------------
Michael C. Culver,
President, Chief Executive Officer and
Director (Principal Executive Officer)
Date: June 14, 2000 /s/ John A. Marsalisi
------------------------
John A. Marsalisi,
Vice President, Secretary, Director and
Chief Financial Officer (Principal
Financial and Accounting Officer)
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