UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the three months ended
MARCH 31, 1995
Commission File Number: 1-6222
FLIGHTSAFETY INTERNATIONAL, INC.
(Exact name of registrant as specified in charter)
New York 11-1671001
(State or other jurisdiction of (I.R.S. employer identification No.)
incorporation or organization)
Marine Air Terminal, LaGuardia Airport
Flushing, New York 11371
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: 718-565-4100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock (par value $.10 per share) New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Company (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 Company
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of May 1, 1995 , the Company had 31,335,751
shares of its common stock outstanding.
FLIGHTSAFETY INTERNATIONAL, INC.
INDEX
PART I - FINANCIAL INFORMATION Page
Item 1 - Financial Statements
Consolidated Balance Sheets at March 31, 1995
and December 31, 1994 3 - 4
Consolidated Statements of Income,
Three Months Ended March 31, 1995 and 1994 5
Consolidated Statements of Cash Flows,
Three Months Ended March 31, 1995 and 1994 6
Notes to Consolidated Financial Statements
as of March 31, 1995 7 - 8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 10
Item 6 - Exhibits and Reports on Form 8-K 10
SIGNATURES 11
Page 2 of 11
<TABLE>
<CAPTION>
FLIGHTSAFETY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
March 31, December 31,
1995 1994
Current assets:
<C> <C>
Cash $ 932,000 $ 2,062,000
Short-term investments stated
at cost which approximates
market value 215,059,000 194,930,000
Accounts receivable, less
allowance for doubtful
accounts of $1,538,000
($1,433,000 in 1994) 65,062,000 59,718,000
Inventory 12,640,000 14,330,000
Prepaid expenses and other
current assets 8,875,000 10,336,000
Total current assets 302,568,000 281,376,000
Equipment and facilities, at cost 823,597,000 806,651,000
Less - accumulated depreciation
and amortization (348,691,000) (336,590,000)
474,906,000 470,061,000
Intangible and other assets 41,225,000 41,492,000
Total assets $818,699,000 $792,929,000
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3 of 11
<TABLE>
<CAPTION>
FLIGHTSAFETY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES and SHAREHOLDERS' EQUITY
(UNAUDITED)
March 31, December 31,
1995 1994
<C> <C>
Current liabilities:
Current portion of long-term debt $ 1,759,000 $ 1,759,000
Accounts payable and accrued expenses 36,568,000 36,648,000
Income taxes payable 13,166,000 8,230,000
Unearned income for contract training 38,046,000 32,566,000
Total current liabilities 89,539,000 79,203,000
Long-term debt 38,638,000 39,813,000
Deferred income taxes 108,597,000 108,308,000
Other liabilities 4,878,000 5,201,000
Total liabilities 241,652,000 232,525,000
Shareholders' equity:
Common stock - par value $.10
Authorized - 100,000,000 shares
Issued and outstanding -
31,328,662 shares (31,315,429 in 1994) 3,133,000 3,132,000
Capital in excess of par value 33,407,000 33,217,000
Retained earnings 542,066,000 525,661,000
578,606,000 562,010,000
Less - restricted stock compensation (1,559,000) (1,606,000)
Total shareholders' equity 577,047,000 560,404,000
Total liabilities and
shareholders' equity $818,699,000 $792,929,000
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4 of 11
<TABLE>
<CAPTION>
FLIGHTSAFETY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31,
1995 1994*
<C> <C>
Revenues:
Training revenues $71,344,000 $64,845,000
Product sales 6,487,000 8,401,000
77,831,000 73,246,000
Costs and expenses:
Salaries and wages 18,786,000 18,783,000
Depreciation and amortization 11,961,000 11,393,000
General and administrative 7,823,000 6,766,000
Operating expenses 6,840,000 5,140,000
Cost of product sales 5,326,000 7,392,000
50,736,000 49,474,000
Income from operations 27,095,000 23,772,000
Other income (expense):
Interest and other income 3,114,000 2,442,000
Interest expense (724,000) (690,000)
Income before income taxes 29,485,000 25,524,000
Income taxes 9,321,000 9,325,000
Net income for the period $20,164,000 $16,199,000
Net income per share $ .64 $ .51
Average shares outstanding 31,321,355 31,953,637
</TABLE>
*Reclassified to conform to 1995 presentation.
See accompanying notes to consolidated financial statements.
Page 5 of 11
<TABLE>
<CAPTION>
FLIGHTSAFETY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
1995 1994
<C> <C>
Increase (decrease) in cash
Cash flows from operating activities:
Net income $20,164,000 $16,199,000
Items in net income not using cash:
Depreciation and amortization 11,961,000 11,393,000
Provision for losses on accounts receivable 161,000 75,000
Deferred income taxes 711,000 1,120,000
Increase in cash surrender value
of corporate-owned lifeinsurance (380,000) (356,000)
Other, net 153,000 301,000
Changes in working capital other than cash:
(Increase) in accounts receivable (5,505,000) (5,551,000)
Decrease in inventory 1,690,000 551,000
Decrease in prepaid expenses and other
current assets 1,461,000 2,127,000
(Decrease) increase in accounts payable
and accrued expenses (80,000) 1,752,000
Increase in income taxes payable 4,936,000 5,207,000
Increase in unearned income 5,480,000 3,528,000
Net cash provided by operating activities 40,752,000 36,346,000
Cash flows from investing activities:
Capital expenditures (17,018,000) (11,515,000)
(Increase) in short-term investments (20,129,000) (12,214,000)
Other, net 430,000 (9,000)
Net cash (used in) provided by investing
activities (36,717,000) (23,738,000)
Cash flows from financing activities:
Repayment of short-term borrowings
and long-term debt (1,175,000) (1,192,000)
Repurchase of common stock (6,859,000)
Cash dividends (3,759,000) (3,179,000)
Other, net (231,000) 1,056,000
Net cash used in financing activities (5,165,000) (10,174,000)
Net (decrease) increase in cash (1,130,000) 2,434,000
Cash at beginning of period 2,062,000 2,100,000
Cash at end of period $ 932,000 $ 4,534,000
</TABLE>
Page 6 of 11
FLIGHTSAFETY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
(UNAUDITED)
1) These financial statements, which should be read in conjunction with the
financial statements included in FlightSafety International, Inc.'s Annual
Report to Shareholders for 1994, are unaudited but include all adjustments of
a normal recurring nature that the Company considers necessary for a fair
presentation of the results for such interim period. Results for interim
periods are not necessarily indicative of results for a full year.
2) Debt consists of:
March 31, December 31,
1995 1994
Industrial development obligations
and other debt due 1995-2012 $40,397,000 $41,572,000
Less - current portion (1,759,000) (1,759,000)
$38,638,000 $39,813,000
The Company's industrial development obligations have variable rates
between 2.9 and 5.9 percent.
The interest capitalized on major equipment acquisitions for the three
months ended March 31, 1995 was $614,000 ($277,000 in 1994).
3) The changes in the Company's shareholders' equity account balances
in the current period were as follows:
Common Capital in Excess Retained
Stock of Par Value Earnings
Balance at December 31, 1994 $3,132,000 $33,217,000 $525,661,000
Net income for the period 20,164,000
Exercise of options pursuant
to employee stock
option plans 1,000 190,000
Dividends declared ($.12
per share) (3,759,000)
Balance at March 31, 1995 $3,133,000 $33,407,000 $542,066,000
Page 7 of 11
On February 19, 1993, the Company's Board of Directors authorized the
repurchase of up to 3,000,000 shares of the Company's outstanding common
stock. On December 3, 1993, the Board of Directors increased its authori-
zation to 4,000,000 shares. There were no shares repurchased under the
program in the first quarter of 1995. As of March 31, 1995, 3,291,700
shares had been repurchased and subsequently retired. At its March meeting,
the Company's Board of Directors declared a regular quarterly cash dividend
1995.
Page 8 of 11
FLIGHTSAFETY INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
In the first three months of 1995, cash provided by operations was $40.8
million. Cash was principally used for the purchase of short-term invest-
ments ($20.1 million), purchase additional equipment and facilities ($17.0
million), and payment of dividends ($3.8 million).
Capital expenditures, which are primarily revenue generating assets such as
simulators, are expected to exceed $60 million in 1995. The Board of
Directors increased the shares authorized for the stock repurchase program
from 3,000,000 shares to 4,000,000 shares on December 3, 1993. There were
no shares repurchased under the program in the first quarter of 1995. The
Company had repurchased and retired 3,291,700 shares as of March 31, 1995.
The Company expects to fund its capital expenditures and stock
repurchase programs(if appropriate market conditions exist) from cash
provided by operations, existing cash and short-term investments.
Accounts receivable increased by $5.3 million, or nine percent, primarily
due to an increase in amounts billed in the first quarter of 1995 as
compared to the 1994 first quarter.
Results of Operations
Training revenues for the three month period ending March 31, 1995 increased
by $6.5 million, or 10 percent, as compared to 1994. Revenue increases were
experienced in all areas of the Company's training operations. Training
revenues for 1994 include approximately $1.9 million related to an equivalent
amount of retroactive salary and benefit expenses from October 1, 1992 paid to
employees in accordance with the United States Government Services Contract
Act on one of the Company's contracts. Excluding this recurring item, revenue
increased by $8.4 million, or 13 percent in 1995 versus 1994.
Product sales decreased $1.9 million, or 23 percent, for the three month
period ending March 31, 1995 versus 1994. The decline in product sales is
primarily attributable to a decrease in market demand and customer orders
for equipment being produced by the Company's Simulation Systems Division.
There appeared to be no increase in salary expense in 1995, however, salary
expense actually increased by $1.7 million, or ten percent, due to personnel
additions and annual salary increases. The nominal change in salary expense
was a result of an equivalent amount of retroactive salary increases from
October 1, 1992 paid in accordance with the United States Services Contract
Act, as previously stated, that were included in salary expense for 1994.
Depreciation and amortization increased $0.6 million due to the addition of new
simulators since the first three months of 1994. Operating expenses increased by
$1.7 million primarily due to increases in simulator maintenance, training
supplies and subcontractor fees. General and administrative increased by
$1.1 million primarily due to increases in professional fees and overall
increases in general and administrative costs. These increases were offset
by a decrease in cost of product sales primarily related to the decrease in
product sales.
Income taxes were relatively unchanged for the three months ending March 31,
1995 versus 1994. Income taxes as a percentage of pre-tax income decreased
to 31.6 percent in 1995 as compared to 36.5 percent in 1994. The lower
effective income tax rate is due principally to income tax refunds related
to prior years and an increase in tax advantaged income as a percentage of
pre-tax income.
Page 9 of 11
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 6. Exhibits and Reports on Form 8-K.
None.
Page 10 of 11
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.
FLIGHTSAFETY INTERNATIONAL, INC.
Date: May 9, 1995 /s/ A. L. UELTSCHI
President
Date: May 9, 1995 /s/ KENNETH W. MOTSCHWILLER
Vice President-Treasurer
Page 11 of 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Filing of the Article 5 EX-27 Financial Data Schedule is only a
summarization of some of the information provided in the actual 10-Q
itself. It is meant as a supplement to the 10-Q filed electronically in
order to satisfy the requirements for EDGAR filers only and is not meant
to be a substitute for the 10-Q filing as required by the S.E.C.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 932,000
<SECURITIES> 215,059,000
<RECEIVABLES> 66,600,000
<ALLOWANCES> 1,538,000
<INVENTORY> 12,640,000
<CURRENT-ASSETS> 302,568,000
<PP&E> 823,597,000
<DEPRECIATION> (348,691,000)
<TOTAL-ASSETS> 818,699,000
<CURRENT-LIABILITIES> 89,539,000
<BONDS> 0
<COMMON> 3,133,000
0
0
<OTHER-SE> 573,914,000
<TOTAL-LIABILITY-AND-EQUITY> 818,699,000
<SALES> 77,831,000
<TOTAL-REVENUES> 80,945,000
<CGS> 5,326,000
<TOTAL-COSTS> 50,736,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 724,000
<INCOME-PRETAX> 29,485,000
<INCOME-TAX> 9,321,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,164,000
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
</TABLE>
