<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
For Quarterly Period Ended NOVEMBER 30, 2000 Commission file number 1-6263
----------------- -----------------------------
AAR CORP.
--------------------------- ----------
(Exact name of registrant as specified in its charter)
DELAWARE 36-2334820
--------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
ONE AAR PLACE, 1100 N. WOOD DALE ROAD, WOOD DALE, ILLINOIS 60191
-------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (630) 227-2000
-----------------------
Former name, former address and former fiscal year,
if changed since last report.
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
------------ -----------
(APPLICABLE ONLY TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
$1.00 par value, 26,932,112 shares outstanding as of NOVEMBER 30, 2000
<PAGE>
AAR CORP. and Subsidiaries
Quarterly Report on Form 10-Q
November 30, 2000
Table of Contents
<TABLE>
<CAPTION>
PAGE
-------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Condensed Consolidated Statements of Comprehensive Income 6
Notes to Condensed Consolidated Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 -13
Item 3. Quantitative and Qualitative Disclosure About Market Risk 13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K
Exhibits 14
Reports on Form 8-K 14
Signature Page 15
</TABLE>
2
<PAGE>
PART I, ITEM 1 - FINANCIAL STATEMENTS
AAR CORP. and Subsidiaries
Condensed Consolidated Balance Sheets
As of November 30, 2000 and May 31, 2000
(000s omitted)
<TABLE>
<CAPTION> November 30, May 31,
2000 2000
----------- -------------
(Unaudited) (Derived from
audited financial
statements)
<S> <S> <S>
ASSETS
------
Current assets:
Cash and cash equivalents $ 3,069 $ 1,241
Accounts receivable, less allowances of $10,646
and $10,080 respectively 127,565 128,348
Inventories 264,026 275,817
Equipment on or available for short-term leases 80,752 60,201
Deferred tax assets, deposits and other 39,337 45,660
------- -------
Total current assets 514,749 511,267
------- -------
Property, plant and equipment, net 110,963 110,003
------- -------
Other assets:
Investments in leveraged leases 36,431 34,487
Cost in excess of underlying net assets of acquired companies, net 46,002 38,840
Equipment on long-term lease 8,350 -
Other 56,446 46,401
------- -------
147,229 119,728
------- -------
$772,941 $740,998
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Short-term debt $50,000 $25,885
Current maturities of long-term debt 437 429
Notes payable 13,242 -
Accounts and trade notes payable 95,899 107,879
Accrued liabilities 29,789 29,623
------- -------
Total current liabilities 189,367 163,816
Long-term debt, less current maturities 180,173 180,447
Deferred tax liabilities 60,937 56,020
Retirement benefit obligation 1,200 1,200
------- -------
242,310 237,667
------- -------
Stockholders' equity:
Preferred stock, $1.00 par value, authorized 250 shares, none issued - -
Common stock, $1.00 par value, authorized 100,000
shares; issued 29,253 and 29,168 shares, respectively 29,253 29,168
Capital surplus 147,392 146,557
Retained earnings 213,334 210,474
Treasury stock, 2,321 and 2,303 shares at cost, respectively (37,467) (37,236)
Accumulated other comprehensive income (loss)-
Cumulative translation adjustments (11,248) (9,448)
------- -------
341,264 339,515
------- -------
$772,941 $740,998
======== ========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial
Statements are an integral part of these statements
3
<PAGE>
AAR CORP. and Subsidiaries
Condensed Consolidated Statements of Income
For the Three and Six Months Ended November 30, 2000 and 1999
(Unaudited)
(000s omitted except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
------------------------- ---------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $207,637 $248,070 $432,525 $493,979
Pass through sales 3,698 12,170 20,580 32,944
-------- -------- -------- --------
Total sales 211,335 260,240 453,105 526,923
Costs and operating expenses:
Cost of sales 175,998 214,512 383,353 437,005
Selling, general and
administrative and other 23,879 24,469 48,423 48,152
-------- -------- -------- --------
199,877 238,981 431,776 485,157
Operating income 11,458 21,259 21,329 41,766
Interest expense (5,718) (5,961) (11,706) (11,770)
Interest income 245 282 751 970
-------- -------- -------- --------
Income before provision for income taxes 5,985 15,580 10,374 30,966
Provision for income taxes 1,707 4,674 2,937 9,229
-------- -------- -------- --------
Net income $ 4,278 $ 10,906 $ 7,437 $21,737
======== ======== ======= =======
Earnings per share - Basic $ .16 $ .40 $ .28 $ .80
Earnings per share - Diluted $ .16 $ .40 $ .28 $ .79
Weighted average common shares
outstanding - Basic 26,913 27,199 26,886 27,296
Weighted average common shares
outstanding - Diluted 26,972 27,489 26,959 27,662
Dividends paid and declared per share
of common stock $ .085 $ .085 $ .17 $ .17
</TABLE>
The accompanying Notes to Condensed Consolidated Financial
Statements are an integral part of these statements.
4
<PAGE>
AAR CORP. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended November 30, 2000 and 1999
(Unaudited)
(000s omitted)
<TABLE>
<CAPTION>
Six Months Ended
November 30,
--------------------------
2000 1999
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,437 $ 21,737
Adjustments to reconcile net income to net cash
provided from (used in) operating activities:
Depreciation and amortization 9,210 9,010
Deferred taxes 4,767 734
Change in certain assets and liabilities:
Accounts receivable 5,751 (8,383)
Inventories 15,085 (10,793)
Equipment on or available for short-term leases (20,759) (6,168)
Accounts and trade notes payable (13,662) (4,776)
Accrued liabilities (3,051) (11,140)
Other assets 5,372 4,232
------- -------
Net cash provided from (used in) operating activities 10,150 (5,547)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment expenditures, net (6,493) (12,604)
Acquisitions, less cash acquired (3,200) -
Investment in equipment on long-term lease
and leveraged leases (10,620) (183)
Investment in joint ventures and other (7,544) (1,404)
------- -------
Net cash used in investing activities (27,857) (14,191)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank lines 24,115 23,600
Change in long-term debt (267) (311)
Cash dividends (4,577) (4,709)
Purchases of treasury stock - (4,446)
Other 306 (23)
------- -------
Net cash provided from financing activities 19,577 14,111
------- -------
Effect of exchange rate changes on cash (42) 198
------- -------
Increase (decrease) in cash and cash equivalents 1,828 (5,429)
Cash and cash equivalents, beginning of period 1,241 8,250
------- -------
Cash and cash equivalents, end of period $ 3,069 $ 2,821
======= =======
</TABLE>
The accompanying Notes to Condensed Consolidated Financial
Statements are an integral part of these statements.
5
<PAGE>
AAR CORP. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
For the Six Months Ended November 30, 2000 and 1999
(Unaudited)
(000s omitted)
<TABLE>
<CAPTION>
Six Months Ended
November 30,
------------------------------
2000 1999
------- -------
<S> <C> <C>
Net income $ 7,437 $21,737
Other comprehensive income (loss)-
Foreign currency translation (1,800) (915)
------- -------
Total comprehensive income $ 5,637 $20,822
======== =======
</TABLE>
The accompanying Notes to Condensed Consolidated Financial
Statements are an integral part of these statements.
6
<PAGE>
AAR CORP. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
November 30, 2000
(Unaudited)
(000s omitted)
NOTE A - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include the
accounts of AAR CORP. and its subsidiaries (the Company) after elimination of
intercompany accounts and transactions.
These statements have been prepared by the Company without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission ("SEC"). The
condensed consolidated balance sheet as of May 31, 2000 has been derived from
audited financial statements. To prepare the financial statements in conformity
with generally accepted accounting principles, management has made a number of
estimates and assumptions relating to the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities. Actual results
could differ from those estimates. Certain information and footnote disclosures,
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States, have been condensed or
omitted pursuant to such rules and regulations of the SEC. These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
latest annual report on Form 10-K.
In the opinion of management of the Company, the condensed consolidated
financial statements reflect all adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the condensed consolidated
financial position of AAR CORP. and its subsidiaries as of November 30, 2000 and
the condensed consolidated results of operations for the three and six-month
periods ended November 30, 2000, and 1999, and the condensed consolidated cash
flows and comprehensive income for the six month periods ended November 30, 2000
and 1999. The results of operations for such interim periods are not necessarily
indicative of the results for the full year.
NOTE B - REVENUE RECOGNITION
Sales and related cost of sales are recognized primarily upon shipment of
products and performance of services. Lease revenue is recognized as earned.
In connection with certain long-term inventory management programs, the
Company purchases factory new products on behalf of customers from original
equipment manufacturers. These products are purchased from the manufacturer,
included in the Company's inventory, and "passed through" to the customer at
the Company's cost. During the Company's third quarter of fiscal 2000, the
SEC issued Staff Accounting Bulletin (SAB) No. 101 summarizing the SEC's
views in applying generally accepted accounting principles to revenue
recognition. As a result of SAB No. 101, the Company believes that pass
through sales should be included in sales and began reporting pass through
sales on the consolidated income statement beginning with the third quarter
of fiscal 2000 Form 10-Q. Prior to issuance of SAB No. 101, the Company
believed that excluding pass through sales from sales was appropriate given
the limited nature of the services provided for these transactions.
7
<PAGE>
AAR CORP. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
November 30, 2000 (Continued)
(000s omitted)
NOTE C - INVENTORY
The summary of inventories is as follows:
<TABLE>
<CAPTION>
November 30, May 31,
2000 2000
-------- --------
<S> <C> <C>
Raw materials and parts $44,403 $50,452
Work-in-process 22,760 19,849
Purchased aircraft, parts, engines and components held for sale 196,863 205,516
-------- --------
$264,026 $275,817
======== ========
</TABLE>
NOTE D - SUPPLEMENTAL CASH FLOWS INFORMATION
Supplemental information on cash flows:
<TABLE>
<CAPTION>
Six Months Ended
November 30,
-----------------------
2000 1999
-------- -------
<S> <C> <C>
Interest paid $11,758 $11,393
Income taxes paid 1,871 8,998
Income tax refunds received 6,773 311
</TABLE>
On September 29, 2000, the Company acquired substantially all of the assets
and assumed certain liabilities of Hermetic Aircraft International Corp.
(Hermetic), a wholly owned subsidiary of Honeywell International Inc.
Hermetic provides aircraft component repair and distribution services to the
North American aviation aftermarket on behalf of European aircraft component
manufacturers. The Company acquired Hermetic for $16,442 which was paid for
with a combination of cash and seller provided financing. The seller provided
financing is included in Notes Payable on the November 30, 2000 unaudited
condensed consolidated balance sheet. The acquisition was recorded under the
purchase method of accounting.
8
<PAGE>
AAR CORP. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
November 30, 2000 (Continued)
(000s omitted)
NOTE E - COMMON STOCK AND EARNINGS PER SHARE OF COMMON STOCK
The computation of basic earnings per share is based on the weighted average
number of common shares outstanding during the period. The computation of
diluted earnings per share is based on the weighted average number of common
shares outstanding during the period plus, when their effect is dilutive,
incremental shares consisting of shares subject to stock options. The following
table provides a reconciliation of the computations of basic and diluted
earnings per share information for the three and six-month periods ended
November 30, 2000 and 1999.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30 November 30
--------------------- -----------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
BASIC EPS
Net income $ 4,278 $10,906 $ 7,437 $21,737
Weighted average common shares
outstanding 26,913 27,199 26,886 27,296
------- ------- ------- -------
Earnings per share - Basic $ .16 $ .40 $ .28 $ .80
======= ======= ======= =======
DILUTED EPS
Net income $4,278 $10,906 $ 7,437 $21,737
Weighted average common shares
outstanding 26,913 27,199 26,886 27,296
Additional shares due to hypothetical
exercise of stock options 59 290 73 366
------- ------- ------- -------
26, 972 27,489 26, 959 27,662
------- ------- ------- -------
Earnings per share - Diluted $ .16 $ .40 $ .28 $ .79
======= ======= ======= =======
</TABLE>
NOTE F - NOTES PAYABLE
On November 1, 2001, the Company's $65,000 notes with interest of 9.5% become
due. The Company intends to refinance these notes utilizing existing credit
arrangements, which include the Company's revolving credit agreements,
the Company's universal shelf registration statement, or other available
sources of long-term financing.
NOTE G - SUBSEQUENT EVENT
On December 15, 2000, the Company and General Electric (GE) entered into a
series of agreements whereby the Company ended its exclusive engine parts
support agreements with three GE engine repair facilities, sold to GE its
interest in the Aviation Inventory Management Co. L.L.C. (AIMCO) joint venture,
dissolved the Turbine Engine Asset Management L.L.C. (TEAM) joint venture, and
was named a GE preferred supplier. AIMCO provided lease financing to customers
of rotable aircraft parts and TEAM was engaged in the distribution of GE engine
parts.
9
<PAGE>
PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
AAR CORP. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(000s omitted except percent data)
THREE AND SIX-MONTH PERIODS ENDED NOVEMBER 30, 2000
(as compared with the same period of the prior year)
The Company reports its activities in one business segment: Aviation Services.
The table below sets forth consolidated sales for the Company's classes of
similar products and services within this segment for the three and six month
periods ended November 30, 2000 and 1999.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
--------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales:
Airframe and Accessories $107,170 $ 96,586 $211,379 $192,753
Aircraft and Engines 77,012 121,217 174,685 241,069
Manufacturing 23,455 30,267 46,461 60,157
-------- -------- -------- --------
207,637 248,070 432,525 493,979
Pass Through Sales 3,698 12,170 20,580 32,944
-------- -------- -------- --------
$211,335 $260,240 $453,105 $526,923
======== ======== ======== ========
</TABLE>
THREE-MONTH PERIOD ENDED NOVEMBER 30, 2000
(as compared with the same period of the prior year)
Beginning with the fourth quarter of Fiscal 2000, the Company's results have
been adversely impacted by industry factors including higher fuel prices,
higher interest rates, bankruptcies at certain airlines and financial
pressures experienced by certain customers.
Consolidated sales for the second quarter of the Company's fiscal year ending
May 31, 2001, excluding pass through sales, decreased $40,433 or 16.3% over
the same period in the prior year. Sales in Airframe and Accessories
increased $10,584 or 11.0% during the second quarter of fiscal 2001
reflecting higher demand for the Company's aircraft component overhaul
services and higher airframe parts sales. Sales in Aircraft and Engines
decreased $44,205 or 36.5% primarily as a result of lower revenue in the
Company's aircraft sales business and lower engine parts sales. The decline
in engine parts sales is primarily the result of reduced demand by a major
customer for certain engine parts due principally to fewer engine shop visits
to this customer for the engine types the Company supports. The reduction in
pass through sales of $8,472 was also caused by the reduced demand for engine
parts from this major customer. On December 15, 2000, the Company's exclusive
engine parts support arrangement with this major customer was converted to
preferred supplier status. Sales in Manufacturing decreased $6,812 or 22.5%
reflecting lower sales of the Company's cargo handling systems and products
supporting the U.S. Government's rapid deployment program.
Consolidated gross profit decreased $10,391 or 22.7% over the prior period
due to lower sales and a reduction in the consolidated gross profit margin.
Excluding the impact from pass through sales, the gross profit margin was
17.0% in the current quarter, compared to 18.4% in the prior quarter.
Selling, general and administrative expenses declined $590 or 2.4% primarily
as a result of lower personnel costs. Operating income decreased $9,801 or
46.1% and net income decreased $6,628 or 60.8% over the prior year due
primarily to the factors discussed above.
10
<PAGE>
PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
AAR CORP. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(000s omitted except ratios)
SIX-MONTH PERIOD ENDED NOVEMBER 30, 2000
(as compared with the same period of the prior year)
Consolidated sales for the first half of fiscal 2001, excluding pass through
sales, decreased $61,454 or 12.4% over the prior year six month period. Sales
in Airframe and Accessories increased $18,626 or 9.7% principally due to
higher sales of airframe parts and higher demand for the Company's aircraft
component overhaul services. Sales in Aircraft and Engines decreased $66,384
or 27.5% primarily as a result of lower revenue in the Company's aircraft
sales business and lower engine parts sales. The decline in engine parts
sales is primarily the result of reduced demand by a major customer for
certain engine parts due principally to fewer engine shop visits to this
customer for the engine types the Company supports. The reduction in pass
through sales of $12,364 was also caused by the reduced demand for engine
parts from this major customer. On December 15, 2000, the Company's exclusive
engine parts support arrangement with this major customer was converted to
preferred supplier status. Sales in Manufacturing decreased $13,696 or 22.8%
reflecting lower sales of the Company's cargo handling systems and products
supporting the U.S. Government's rapid deployment program.
Consolidated gross profit decreased $20,166 or 22.4% over the prior period
due to lower sales and a reduction in the gross profit margin. Excluding the
impact of pass through sales, the gross profit margin was 16.1% compared to
18.2% in the prior period. The reduction in the gross profit margin was
principally at the Company's engine parts, general aviation parts
distribution, and landing gear repair businesses. This decline was primarily
attributable to pricing pressure on older technology engine parts, reduced
demand from a major inventory management program customer, deferred landing
gear removals due to unusually heavy utilization during the peak summer
months and lower demand for general aviation parts. Operating income
decreased $20,437 or 48.9% and net income decreased $14,300 or 65.8% over the
prior year period due primarily to the factors discussed above.
11
<PAGE>
PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
AAR CORP. AND SUBSIDIARIES
FINANCIAL CONDITION
(000s omitted except ratios)
AT NOVEMBER 30, 2000
At November 30, 2000, the Company's liquidity and capital resources included
cash of $3,069 and working capital of $325,382. At November 30, 2000, the
Company's ratio of long-term debt to capitalization was 34.6%, down from
34.7% at May 31, 2000. The Company continues to maintain its external sources
of financing including $128,255 of unused bank lines, a universal shelf
registration on file with the Securities and Exchange Commission under which
up to $200 million of common stock, preferred stock or medium - or long-term
debt securities may be issued or sold subject to market conditions, and an
accounts receivable securitization program where the Company may sell an
interest in a defined pool of accounts receivable. As of November 30, 2000,
accounts receivable sold under this arrangement were $22,084, a decrease of
$7,275 from May 31, 2000.
During the six month period ended November 30, 2000, the Company generated
$10,150 of cash from operations compared to using $5,547 of cash from
operations during the six month period ended November 30, 1999. The
improvement in cash generated from operations was due principally to improved
working capital management during the six month period ended November 30,
2000 compared to the prior year.
During the six month period ended November 30, 2000, the Company's investing
activities used $27,857 of cash, reflecting the investment in equipment on
long-term lease of $8,350, property, plant and equipment expenditures of $6,493,
and the cash payment for the Hermetic acquisition of $3,200.
During the six month period ended November 30, 2000, the Company's financing
activities generated $19,577 reflecting proceeds from bank lines of $24,115,
offset in part by the payment of cash dividends of $4,577.
The Company believes that its cash and cash equivalents and available sources
of financing will continue to provide the Company with the ability to meet
its ongoing working capital requirements, make anticipated capital
expenditures, meet contractual commitments and pay dividends.*
A summary of key indicators of financial condition and lines of credit follow:
<TABLE>
<CAPTION>
November 30, May 31,
Description 2000 2000
---------------- --------- --------
<S> <C> <C>
Working capital $325,382 $347,451
Current ratio 2.7:1 3.1:1
Bank credit lines:
Short-term debt $ 50,000 $ 25,885
Unused lines 128,255 153,326
-------- --------
Total credit lines $178,255 $179,211
======== ========
Long-term debt, less current maturities $180,173 $180,447
Ratio of long-term debt to capitalization 34.6% 34.7%
Ratio of total debt to capitalization 40.3% 37.8%
--------------------------------
* See "Forward Looking Statements" section of this item.
</TABLE>
12
<PAGE>
PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
AAR CORP. AND SUBSIDIARIES
FINANCIAL CONDITION (CONTINUED)
(000s omitted except ratios)
AT NOVEMBER 30, 2000 (CONTINUED)
FORWARD-LOOKING STATEMENTS
Part I, Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations, contains certain statements relating to future results,
which are forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995 and are identified by an asterisk(*).
These forward-looking statements are based on beliefs of Company management as
well as assumptions and estimates based on information currently available to
the Company, and are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or those
anticipated, depending on a variety of factors, including: ability to acquire
inventory at favorable prices, impact of the change in the GE relationship,
integration of acquisitions, marketplace competition, economic and
aviation/aerospace market stability and Company profitability. Should one or
more of these risks or uncertainties materialize adversely, or should underlying
assumptions or estimates prove incorrect, actual results may vary materially
from those described.
PART I, ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's exposure to market risk is limited to fluctuating interest rates
under its unsecured bank credit agreements, and foreign exchange rates. During
the first half of fiscal 2001 and 2000, respectively, the Company did not
utilize derivative financial instruments to offset these risks. A hypothetical
10 percent increase to the average interest rate under the Company's bank credit
agreements and a hypothetical 10 percent devaluation of foreign currencies
against the U.S. dollar would not have had a material impact on the results of
operations for the Company during the first half of fiscal 2001 and 2000,
respectively.
13
<PAGE>
PART II - OTHER INFORMATION
AAR CORP. and Subsidiaries
November 30, 2000
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Company was held on
October 11, 2000. The following item was acted upon at the
meeting:
1) Election of two Class I directors to serve until the 2003
Annual Meeting of Stockholders. Two directors were
nominated for election.
Directors Nominated and Elected at the Meeting
----------------------------------------------
<TABLE>
<CAPTION>
Votes
For
------------------
<S> <C>
Joel D. Spungin 23,679,563
David P. Storch 20,236,491
</TABLE>
Continuing Directors
--------------------
A. Robert Abboud
Howard B. Bernick
Ira A. Eichner
Edgar D. Jannotta
Lee B. Stern
Richard D. Tabery
No other matters were presented to the Company's shareholders for
action at the Annual Meeting of Stockholders.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K FOR QUARTER ENDED NOVEMBER 30, 2000
The Company filed no reports on Form 8-K during the three months ended
November 30, 2000.
14
<PAGE>
SIGNATURE
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.
AAR CORP.
------------------------------------------
(Registrant)
Date: January 12, 2001 /s/ Timothy J. Romenesko
----------------- ------------------------------------------
Timothy J. Romenesko
Vice President and Chief Financial
Officer (Principal Financial Officer and
officer duly authorized to sign on
behalf of registrant)
/s/ Michael J. Sharp
-------------------------------------------
Michael J. Sharp
Vice President - Controller
(Principal Accounting Officer)
15
