U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number 0-10190-0
AERO SERVICES INTERNATIONAL, INC.
(Exact name of small business issuer as
specified in its charter)
LOUISIANA 72-0385274
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
660 Newtown-Yardley Road, Newtown, PA 18940
(Address of principal executive offices
(215) 860-5600
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of July 31, 1996: Common stock (without par value)
6,998,052 shares.
Transitional Small Business Disclosure Format (Check one): Yes No
<PAGE>
AERO SERVICES INTERNATIONAL, INC. & SUBSIDIARIES
INDEX
PART I - Financial Information Page Number
Item 1. Financial Statements
Condensed Consolidated Balance Sheet
June 30, 1996 (unaudited) and
September 30, 1995 (audited) 2
Consolidated Statement of Earnings
three months and nine months ended June 30, 1996
and 1995 (unaudited) 3
Condensed Consolidated Statement of Cash Flows
nine months ended June 30, 1996 and 1995
(unaudited) 4
Notes to Condensed Consolidated Financial Statements
(unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 9
PART II - Other Information
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 13
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED: DOLLAR AMOUNTS IN THOUSANDS)
As of As of
ASSETS June 30 September 30
1996 1995
CURRENT ASSETS
Cash $ 502 $ 455
Restricted cash 5
Customers receivables, less allowance for
doubtful accounts of $50 and
$37, respectively 299 229
Other receivables 458 1,045
Inventories 48 175
Prepaid expenses and other current assets 138 63
TOTAL CURRENT ASSETS 1,445 1,972
PROPERTY AND EQUIPMENT, NET 2,028 2,142
ASSETS HELD FOR SALE AT NET BOOK VALUE 25
OTHER ASSETS
Notes receivable 500
Goodwill, net of accumulated
amortization of $40 and $16, respectively 334 357
Other 14
TOTAL OTHER ASSETS 848 357
TOTAL ASSETS $ 4,321 $ 4,496
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable - affiliate $ 8,700 $
Current maturities of long-term debt - other 46 55
Accounts payable - trade 791 648
Accrued expenses
Property, payroll, and other taxes 2,947 3,037
Other 1,121 1,945
Affiliate 492 532
TOTAL CURRENT LIABILITIES 14,097 6,217
LONG-TERM DEBT, less current maturities
Affiliate 6,910 15,610
Other 3,521 3,554
TOTAL LONG-TERM DEBT 10,431 19,164
OTHER LONG TERM LIABILITIES 748 343
REDEEMABLE PREFERRED STOCK 5,920 5,692
STOCKHOLDERS' DEFICIT
Common stock 8,399 8,399
Additional paid-in capital 4,064 3,380
Accumulated deficit (39,101) (38,462)
(26,638) (26,683)
Less: Common stock in treasury 237 237
TOTAL STOCKHOLDERS' DEFICIT (26,875) (26,920)
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 4,321 $ 4,496
NOTE: The balance sheet at September 30, 1995 has been taken from the audited
financial statements at that date and condensed.
See Notes to Condensed Consolidated Financial Statements.
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF EARNINGS
(UNAUDITED: DOLLAR AMOUNTS IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED
June 30, June 30,
1996 1995 1996 1995
NET SALES $1,734 $2,122 $ 6,058 $ 8,123
COST AND EXPENSE
Cost of sales 734 1,057 2,736 4,141
Departmental costs 650 1,044 2,436 3,858
Administrative costs 193 327 659 887
Interest expense - other 51 54 152 168
Interest expense - affiliate 364 393 1,119 1,127
$ (258) $ (753) $(1,044) $(2,058)
Gain on sale of certain FBO
operations 295 295 292
Other income/(expense), net 53 (163) 110 26
NET INCOME/(LOSS) $ 90 $ (916) $ (639) $(1,740)
Earnings (loss) per common and
common equivalent share $ .00 $ (.14) $ (.12) $ (.28)
Fully diluted earnings
per common share $ .01 $ - $ - $ -
See Notes to Condensed Consolidated Financial Statements.
AERO SERVICES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED: DOLLAR AMOUNTS IN THOUSANDS)
NINE MONTHS ENDED
JUNE 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $(639) $(1,740)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 237 228
Provision for losses on accounts receivable 14 16
Amortization of discounted note payable - 182
(Gain) loss on sale of certain FBO operations (295) (292)
(Gain) loss on sale of fixed assets (75) (144)
Other assets included in sale of FBO operations - (528)
Debt forgiveness to paid-in-capital 311 -
Current period interest included in debt forgiveness 601 -
Other 72 95
Change in assets and liabilities:
(Increase) decrease in restricted cash 5 -
(Increase) decrease in accounts receivable (84) 859
(Increase) decrease in other receivables 587 (23)
(Increase) decrease in inventory 127 375
(Increase) decrease in other current assets (75) 38
(Increase) decrease in other assets (491) (365)
Increase (decrease) in accounts payable 143 (703)
Increase (decrease) in property,
payroll, and other taxes (90) 63
Increase (decrease) in other current liabilities (824) (365)
Increase (decrease) in other liabilities - affiliate (40) 658
Increase (decrease) in other long term liabilities 405 (81)
Total adjustments 528 13
Net cash provided by (used in) operating activities (111) (1,727)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (100) (151)
Proceeds from sale of fixed assets - 4
Proceeds from sale of FBOs 300 973
Net cash from (used in) investing activities 200 826
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payment of notes payable (12) (355)
Principal payments of long-term debt (30) (44)
Net cash provided by (used in) financing activities (42) (399)
Net increase (decrease) in cash & cash equivalents 47 (1,300)
Cash and cash equivalents at beginning of year 455 2,406
Cash and cash equivalents at end of second fiscal
quarter $ 502 $ 1,106
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 406 $ 465
Income taxes - 12
See Notes to Condensed Consolidated Financial Statements.
NOTE 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of June 30, 1996, consolidated
statement of earnings for the nine month and three month periods ended June
30, 1996 and 1995, and the condensed consolidated statement of cash flows for
the nine month period then ended were prepared by the Company, without audit.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations, and cash flows at June 30, 1996 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's September 30, 1995
annual report on Form 10-KSB. The results of operations for the periods
ended June 30, 1996 and 1995 are not necessarily indicative of the operating
results for the full year.
NOTE 2: CASH AND SHORT-TERM SECURITIES
The Company considers cash on hand and deposits in banks as cash and cash
equivalents. All items in this category have maturities of less than three
months.
NOTE 3: INVENTORIES
Inventories are classified as follows:
JUNE 30 SEPTEMBER 30
1996 1995
Aircraft parts and accessories, oil and
supplies less provisions for obsolete
and slow-moving, and excess quantity
of $46 and $49, respectively $28 $ 55
Fuel 20 47
Work-In-Process - 73
$ 48 $175
NOTE 4: OTHER RECEIVABLES
The balance at September 30 includes $756 of receivables due from insurance
companies for lawsuits against the Company. A liability of $816 was recorded
in Accrued Expense - Other, with the difference representing the Company's
deductible amount of insurance. In January 1996 payment was made on one of
these lawsuits in the amount of $330 as final settlement. Of this amount,
$320 was covered by insurance. In May 1996 payment of $461 was made on the
other lawsuit as final settlement. Of this amount, $436 was covered by
insurance.
The balance at June 30 includes a note receivable of $100 from Jason IV
Aviation, Inc. as partial payment of the selling price of the Company
facility at New Orleans. (See Note 10 for details.) Also included is an
escrow deposit of $118, the remainder of $150 that was required by the City
of Scottsdale to insure completion of the EPA cleanup at that facility before
the city would agree to the Company selling its leasehold interest at the
Scottsdale, Arizona airport in September 1994.
NOTE 5: NOTES RECEIVABLE
The balance at June 30 is the face amount of a note taken as partial payment
in the sale of the Company's facility at New Orleans to Jason IV. The note
carries an interest rate of 9% per annum, to be paid monthly, and is due and
payable on March 31, 1999. (See Note 10 for further details.).
NOTE 6: GOODWILL
Goodwill of $373 was recorded as the result of the acquisition of Mountain
State Flight Services Inc. on April 1, 1995, and is being amortized over 141
months from the date of acquisition.
NOTE 7: ACCRUED PROPERTY, PAYROLL, AND OTHER TAXES
Included in the balances both at June 30 and September 30 is an accrual of
$1,457 for a New York motor fuels tax assessment which is being appealed, and
respectively, $1,363 and $1,496 for property taxes.
NOTE 8: LONG-TERM DEBT
The balance of $6,910 in Long-Term Debt-Affiliate at June 30 is the note due
Transtech Holding Company, Inc. (Transtech). $8,700 that was in this
category at September 30 is the total of a series of demand notes due
Transtech that were reclassified to short-term debt at March 31. As part of
an addendum to the Debt and Note Modification Agreement of May 20, 1994 (see
Note 9) the maturity date for each of these notes has been amended to the
earlier of (a) demand or (b) June 30, 1996. However, the agreement states
that Transtech will forbear collection of principal under these notes to the
extent that payments would exceed fifty percent (50%) of the Company's
available cash flow (as defined in the agreement). Included in Long-Term
Debt-Other at June 30 and September 30, respectively, are $3,520 and $3,550
due on industrial revenue bonds.
NOTE 9: RELATED PARTY TRANSACTIONS
In December 1995 the Board of Directors approved an addendum to the Debt and
Note Modification Agreement of May 20, 1994 between the Company and
Transtech. Pursuant to the terms of the Modification Agreement, Transtech
agreed to the forgiveness of certain interest and fee payments arising out
of the Triton notes and the Whitney notes which Transtech had acquired from
Triton Energy Corporation. Transtech waived and forgave collection of
interest on all notes for a period of 180 days, and agreed to forbear, under
certain circumstances, collection of principal and interest under the Triton
notes and the Whitney notes. The addendum modifies certain provisions of the
agreement to provide for the acceleration of certain interest payments under
the Triton notes in return for forgiveness by Transtech of additional
interest that has been accrued under the Whitney note, namely, the period
December 1, 1994 to June 30, 1996. Through June 30, 1996, $912 of interest
had been accrued under the Whitney note. As part of the forgiveness this
amount has been reclassified to Paid-in-Capital.
The Company is indebted to its major shareholder Transtech (holder of 42.2%
of common stock and 34.9% of preferred) in the amount of $15,610. Relative
to this debt, the Company had accrued interest of $492 and $832, respective-
ly, at June 30 and September 30. During the nine months ended June 30, 1996
the Company paid $249 of interest to Transtech.
The Company provides accounting services to Transtech for one fixed base
operation owned by it for a monthly fee of nine hundred dollars.
On November 8, 1995 the Company assigned its interest in the sublease and
purchase option agreement at Houston's Hobby Airport, together with fixed
assets situated at the facility, to TigerAir, Inc., a Texas corporation
formed by Wallace E. Congdon, the then President of the Company. In
consideration of the assignment, TigerAir paid $250 in the form of a non-
interest bearing promissory note. Effective as of the closing, Mr. Congdon
resigned as President and as a Director of the Company.
NOTE 10: CERTAIN FIXED BASED OPERATION (FBO) MATTERS
In consideration of the assignment of the Company's interest at Houston's
Hobby Airport (see Note 9) TigerAir paid $250 in the form of a non-interest
bearing promissory note due and payable on the first to occur of: (1)
TigerAir's subsequent sale of the Houston FBO; (2) a change in ownership of
TigerAir; or (3) the third anniversary date of the closing. Based on the
results of operations during 1995, the Company believed significant
uncertainties existed as to the ability of TigerAir to generate the required
cash necessary to repay the note. Therefore, the Company had elected to
defer recognition of a $236 gain generated by this sale. The gain is
recorded in the financial statements at June 30 as an offset to the $250 note
receivable and the net result of $14 is included in Other Assets. In April
1996, TigerAir ceased operations at Hobby Airport. The landlord has seized
the assets on the premises for back rent. These assets are pledged to the
Company as security for the note. The Company's attorneys are attempting to
protect its interests but at this time how much the Company may recover can
not be determined. TigerAir owes the Company a total of $351 at June 30.
Since the Company has deferred a gain on the sale of Houston of $236, if
there is no recovery of any amounts, the maximum effect on the financial
statements will be a charge of $115. There are no additional reserves
recorded in the financial statements at June 30.
On January 30, 1996 the Company entered into an agreement with Jason IV
Aviation, Inc. (Jason IV) to participate in the ownership of a combination
of the Company's current facility and one owned by Jason IV at Lakefront
Airport in New Orleans. The business combination agreed to in January was
subsequently found to be unworkable. A new agreement was reached whereby
Jason IV would purchase Aero's leasehold interest at New Orleans, together
with all furniture, fixtures, and equipment used at the facility and all of
the fuel and oil inventory on hand at February 1, 1996 for the purchase price
of $900, plus the invoice cost of the fuel and oil inventory, plus 35% of
cash flow (as defined in the agreement) from the consolidated operations for
the months of February and March 1996. Payment is to be made as follows:
(a) $300 plus the invoice cost of all inventory, plus Aero's portion of the
cash flow for February 1996 to be paid at closing; (b) $100 paid in the form
of a promissory note bearing interest at the rate of 8% per annum from April
1, 1996 until paid, and due and payable on April 30, 1997; (c) $500 paid in
the form of a promissory note bearing interest at the rate of 9% per annum
from April 1, 1996 until paid and due and payable on March 31, 1999.
Interest on both notes is to be paid monthly. Settlement was held on May 10,
1996 and the Company received funds totalling $305.
The sale of New Orleans will generate a total gain of $886. However, the
gain is being recognized on the installment method. The financial statements
at June 30 include a gain of $295, with $591 recorded as deferred gain. No
further gain will be recognized until the $100 note is paid.
NOTE 11: CONTINGENT LIABILITIES
A. Environmental Matters
The Company's business involves the storage, handling and sale of aviation
fuel; and the provision of mechanical maintenance and refurbishing services
which involve the use of hazardous chemicals. Accordingly, the Company is
required to comply with federal, state and local regulations which have been
enacted to control the discharge of material into the environment or
otherwise relate to the protection of the environment. As a normal course
of business, the Company from time to time discusses environmental compliance
with the appropriate environmental agency.
At September 30, 1995, the Company had accrued $490 for expenses related to
environmental protection, assessment and remediation matters at certain
locations. At June 30, 1996, the financial statements of the Company
included accruals for resolution of environmental matters in the amount of
$469 based upon identified situations and cost estimates provided by firms
and individuals knowledgeable of such matters. These estimates are subject
to change dependent upon additional information and revisions to governing
regulations.
The expenditures and accruals for environmental matters are specific in
nature to identified situations at Company locations. The Company is
presently responsible for remediation projects at two locations previously
sold. Due to uncertainties related to estimating both elapsed correction
time and the effectiveness of environmental remediation techniques utilized
to correct non-compliance situations, the Company may incur additional costs
in future periods related to these same situations.
B. Litigation
Please refer to Part II, Item 1 on page 12 for a discussion of current
litigation matters.
NOTE 12: SERIES A PREFERRED STOCK
The Series A preferred stock is subject to mandatory redemption at the rate
of 7 1/2% of the issue in each of the years 1996 through 2005, with the
remainder to be redeemed on August 1, 2006. The first redemption was due on
August 1, 1996, but no redemption was made. The Louisiana Business
Corporation Law provides that a corporation may redeem shares of its capital
stock subject to redemption out of surplus or stated capital so long as any
such redemption would not reduce stated capital below the aggregate allocated
value of issued shares remaining after the redemption and so long as
sufficient net assets remain to satisfy amounts payable upon liquidation with
respect to any remaining issued shares having a preferential right to
participate in assets upon liquidation. Also, the terms of the issue state
that the Company may not redeem any shares unless full accrued dividends have
been paid on all outstanding shares, and also, if such redemption would
reduce working capital below $9,000 or cash below $1,500. At June 30, 1996
the Company had accrued and unpaid dividends totalling $2,455, a working
capital deficit of ($12,652), and a cash balance of $502. The Company's
obligation to redeem shall be cumulative.
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
(DOLLAR AMOUNTS IN THOUSANDS)
Results of Operations:
The following table presents as a percentage of total sales certain selected
financial data for the Company for the periods indicated.
Three Months Ended Nine Months Ended
June 30, June 30,
1996 1995 1996 1995
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 42.3 49.8 45.2 51.0
Departmental costs 37.5 49.2 40.2 47.5
Administrative costs 11.1 15.4 10.9 10.9
Interest expense (Net) 23.9 21.1 21.0 15.9
Other income/(expense) 20.0 (7.7) 6.8 3.9
Net income (loss) 5.2 (43.2) (10.5) (21.4)
Revenues for the three months and nine months ended June 30, 1996 declined
18% and 25%, respectively as compared to the same period for the previous
year to $1,734 and $6,058, respectively. These declines are the result of
certain FBO sales in fiscal 1995 and 1996. In order to compare the results
of continuing operations, a comparative statement of earnings for the three
month and nine month periods are presented below, including one FBO which was
in operation during all of both periods, plus Mountain State Flight Services,
Inc., which was acquired on April 1, 1995.
CONTINUING OPERATIONS
THREE MONTHS ENDED JUNE 30,
1996 % 1995 %
Net Sales $1,717 100.0 $1,376 100.0
COST AND EXPENSE
Cost of Sales 735 42.8 630 45.8
Departmental costs 640 37.3 655 47.6
Administrative costs 198 11.5 414 30.1
Interest expense 413 24.1 448 32.5
(269) (15.7) (771) (56.0)
Other income, Net 53 3.1 45 3.2
NET (LOSS) $ (216) (12.6) $ (726) (52.8)
As shown above, revenues at continuing operations increased 25% during the
quarter ended June 30, 1996 compared to the previous year. The volume of
fuel sold increased 8% and the resulting revenue increased 4%. $155 of the
sales increase is due to an airline fueling contract which began October
1995. The contract is for services only. No fuel is sold to the airline.
The sales of maintenance services decreased 39% from last year.
Cost of sales decreased 3% as a percentage of sales in the current quarter.
Departmental costs during the current quarter decreased $15 from last year,
and also decreased as a percentage of sales by 10 percentage points to 37.3%.
Administrative costs have been reduced by $216 to 11.5% of sales, down from
30.1% last year because an increase in the New York tax assessment of $220
was recorded in June 1995.
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
(DOLLAR AMOUNTS IN THOUSANDS)
Results of Operations (continued):
CONTINUING OPERATIONS
NINE MONTHS ENDED JUNE 30,
1996 % 1995 %
Net Sales $5,063 100.0 $ 3,528 100.0
COST AND EXPENSE
Cost of Sales 2,169 42.8 1,562 44.3
Departmental costs 2,100 41.5 1,813 51.4
Administrative costs 625 12.3 807 22.9
Interest expense 1,270 25.1 1,290 36.5
(1,101) (21.7) (1,944) (55.1)
Other income, Net 110 2.1 114 3.2
NET (LOSS) $ (991) (19.6) $(1,830) (51.9)
As shown above, revenues at continuing operations increased 44%. Fuel volume
increased 32% and contributed $791 of the increased revenue. The airline
fueling contract has contributed $528 of the increased revenue. The sale of
maintenance services decreased 16% in the current year.
Cost of sales decreased 1.5% as a percentage of sales in the current year.
Departmental costs increased $287 during the current year. Salaries and
benefits increased $217 as a result of the additional personnel required to
service the airline fueling contract.
Administrative costs decreased $182 in the current year, but 1995 figures
include the $220 increase in the New York tax assessment.
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
(DOLLAR AMOUNTS IN THOUSANDS)
LIQUIDITY AND CAPITAL RESOURCES
Working capital deficiency at June 30, 1996 increased by $8,407 to ($12,652)
primarily as a result of the reclassification of $8,700 of demand notes due
Transtech from long term to short term (see Note 8).
Operations during the nine months ended June 30, 1996 used $111 of cash with
an additional $100 used for the purchase of fixed assets, and $42 applied to
debt reduction. The sale of New Orleans provided $300, for a total increase
in cash of $47 for the nine month period.
Management is continuing with its plan to sell and/or to restructure
financing of the Company's assets in order to pay current liabilities.
Management is also working with several bankers trying to arrange financing
for two major acquisitions. In addition, the Company has been requested by
the airport authority of a major Pennsylvania airport to propose the
implementation of a fixed base operation, and management is currently in the
process of responding to that request. However, should management be
successful in completing any portion, or even all, of the plans described
above, there can be no guarantee that the Company can be returned to
profitability or maintained as a going concern.
The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
PART II - OTHER INFORMATION
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
(DOLLAR AMOUNTS IN THOUSANDS)
ITEM 1. - LEGAL PROCEEDINGS
The Company is subject to several complaints filed over the last several
years in different courts or administrative agencies by different individual
former employees challenging the termination of their employment by the
Company on a variety of grounds. These claims are encountered in the
ordinary course of business, and in the opinion of management, the resolution
of these matters, either individually or in the aggregate, will not have a
material adverse effect on the Company's financial position in excess of what
has already been recorded. Management believes that it has established
adequate reserves for all of these claims. Management also believes it has
strong defenses and intends to vigorously defend its position.
The Company is also exposed to a number of asserted and unasserted potential
claims encountered in the normal course of business. In the opinion of
management, the resolution of these matters, as well as those discussed above
or referenced elsewhere in this report, will not have a material adverse
effect on the Company's financial position in excess of what has already been
recorded. Management believes that it has established adequate reserves for
all of these claims.
PART II - OTHER INFORMATION
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
(DOLLAR AMOUNTS IN THOUSANDS)
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11.1 Computation of per Share Loss.
27.0 Financial Data Schedule
(b) Reports on Form 8-K: None.
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
EXHIBIT 11.1 - COMPUTATION OF PER SHARE LOSS
(UNAUDITED: DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended
June 30, 1996
PRIMARY FULLY DILUTED
Average Common Shares outstanding 6,998,052 6,998,052
Assumed exercise of Common Stock Options - 1,290,000
Assumed conversion of Series A Cumulative
Convertible Preferred Stock - 1,076,740
Total 6,998,052 9,364,792
Net Income $ 90 $ 90
Less:
Dividends on Series A Cumulative
Convertible Preferred Stock 65 -
Accretion of Series A Cumulative
Convertible Preferred Stock 11 -
$ 14 $ 90
Net loss per Common Equivalent Share $ 0.00 $ 0.01
Note (1)
The Series A cumulative convertible preferred stock are not considered common
stock equivalents in the computation of primary loss per share because, at
the time of issuance, the effective yield was greater than two thirds of the
then current average A corporate bond yield.
Note (2)
The effect of the assumed exercise of the common stock options is anti-
dilutive.
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
EXHIBIT 11.1 - COMPUTATION OF PER SHARE LOSS
(UNAUDITED: DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended
June 30, 1995
PRIMARY FULLY DILUTED
Average Common Shares outstanding 6,998,052 N/A
Assumed exercise of Common Stock Options -
Assumed conversion of Series A Cumulative
Convertible Preferred Stock -
Total 6,998,052
Net Loss $ (916) N/A
Less:
Dividends on Series A Cumulative
Convertible Preferred Stock 65
Accretion of Series A Cumulative
Convertible Preferred Stock 11
$ (992)
Net loss per Common Equivalent Share $ (0.14) N/A
Note (1)
The Series A cumulative convertible preferred stock are not considered common
stock equivalents in the computation of primary loss per share because, at
the time of issuance, the effective yield was greater than two thirds of the
then current average A corporate bond yield.
Note (2)
The effect of the assumed exercise of the common stock options is anti-
dilutive.
Fully diluted loss per share is antidilutive and therefore not presented.
AERO SERVICES INTERNATIONAL, INC. AND SUBSIDIARIES
EXHIBIT 11.1 - COMPUTATION OF PER SHARE LOSS
(UNAUDITED: DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Nine Months Ended
June 30,
1996 1995
Primary loss per common and common
equivalent share
Average common shares outstanding 6,998,052 6,998,052
Net Loss $ (639) $ (1,740)
Less:
Dividends on Series A Cumulative
Convertible Preferred Stock 194 194
Accretion of Series A Cumulative
Convertible Preferred Stock 35 34
$ (868) $ (1,968)
Net loss per Common and Common
Equivalent Share $ (0.12) $ (0.28)
Note (1)
The Series A cumulative convertible preferred stock are not considered common
stock equivalents in the computation of primary loss per share because, at
the time of issuance, the effective yield was greater than two thirds of the
then current average A corporate bond yield.
Note (2)
The effect of the assumed exercise of the common stock options is anti-
dilutive.
Fully diluted loss per share is antidilutive and therefore not presented.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AERO SERVICES INTERNATIONAL, INC.
(Registrant)
____________________________________
(Signature)
Paul R. Slack
Chief Accounting Officer
and Controller
_____________________________________
(Signature)
R. Ted Brant
Chairman of the Board
Date: August 12, 1996
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