<PAGE> 1
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 March 31, 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 No. 1-7134
MERCURY AIR GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 11-1800515
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5456 McConnell Avenue, Los Angeles, CA 90066
-------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(310) 827-2737
(Registrant's telephone number, including area code)
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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Number of Shares Outstanding
Title As of May 9, 2000
----- -------------------
Common Stock, $.01 Par Value 6,472,955
<PAGE> 2
MERCURY AIR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 1999
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,909,000 $ 4,797,000
Trade accounts receivable, net of allowance for doubtful accounts
of $3,034,000 at 3/31/00 and $1,953,000 at 6/30/99 54,063,000 50,134,000
Notes receivable - current portion 555,000 555,000
Inventories, principally aviation fuel 2,990,000 1,892,000
Prepaid expenses and other current assets 4,500,000 2,603,000
------------- -------------
Total current assets 64,017,000 59,981,000
CASH-RESTRICTED - 785,000
PROPERTY, EQUIPMENT AND LEASEHOLDS, net of accumulated depreciation
and amortization of $41,821,000 at 3/31/00 and $35,787,000 at 6/30/99 59,334,000 56,110,000
NOTES RECEIVABLE 310,000 454,000
OTHER ASSETS (Note 9) 10,842,000 9,972,000
------------- -------------
$ 134,503,000 $ 127,302,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 30,612,000 $ 21,312,000
Accrued expenses and other current liabilities 5,328,000 6,241,000
Current portion of long-term debt 6,368,000 6,806,000
------------- -------------
Total current liabilities 42,308,000 34,359,000
LONG-TERM DEBT 39,559,000 44,285,000
DEFERRED INCOME TAXES 236,000 223,000
SENIOR SUBORDINATED NOTE (Note 9) 24,000,000
CONVERTIBLE SUBORDINATED DEBENTURES (Note 9) 19,852,000
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY (Notes 4):
Preferred Stock - $.01 par value; authorized 3,000,000 shares;
no shares outstanding
Common Stock - $ .01 par value; authorized 18,000,000 shares;
outstanding 6,472,955 shares at 3/31/00;
outstanding 6,641,175 shares at 6/30/99 64,000 66,000
Additional paid-in capital 19,486,000 19,873,000
Retained earnings 9,696,000 9,543,000
Cumulative translation adjustment (238,000) (237,000)
Notes receivable from sale of stock (608,000) (662,000)
------------- -------------
Total stockholders' equity 28,400,000 28,583,000
------------- -------------
$ 134,503,000 $ 127,302,000
============= =============
</TABLE>
<PAGE> 3
MERCURY AIR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------------------------------------------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales and Revenues:
Sales $ 185,074,000 $ 104,019,000 $ 69,788,000 $ 34,513,000
Service revenues 63,034,000 58,889,000 20,147,000 19,130,000
------------- ------------- ------------- -------------
248,108,000 162,908,000 89,935,000 53,643,000
------------- ------------- ------------- -------------
Costs and Expenses:
Cost of sales 162,525,000 82,784,000 62,236,000 26,870,000
Operating expenses 60,417,000 57,176,000 20,422,000 19,398,000
------------- ------------- ------------- -------------
222,942,000 139,960,000 82,658,000 46,268,000
------------- ------------- ------------- -------------
Gross Margin (Excluding depreciation
and amortization) 25,166,000 22,948,000 7,277,000 7,375,000
------------- ------------- ------------- -------------
Expenses (Income):
Selling, general and administrative 5,383,000 5,212,000 1,711,000 1,856,000
Provision for bad debts (Note 3) 4,562,000 1,354,000 3,634,000 452,000
Depreciation and amortization 7,157,000 5,819,000 2,395,000 2,128,000
Interest expense 4,465,000 3,125,000 1,669,000 1,100,000
Interest income (139,000) (154,000) (33,000) (39,000)
------------- ------------- ------------- -------------
21,428,000 15,356,000 9,376,000 5,497,000
------------- ------------- ------------- -------------
Income (Loss) Before Provision
(Benefit) for Income Taxes 3,738,000 7,592,000 (2,099,000) 1,878,000
Provision (Benefit) for Income Taxes 1,459,000 2,962,000 (817,000) 734,000
------------- ------------- ------------- -------------
Net Income (Loss) Before Extraordinary Item 2,279,000 4,630,000 (1,282,000) 1,144,000
Extraordinary Item (Note 9) (Less applicable
income taxes of $625,000, $163,000, $0, $43,000) (979,000) (255,000) (68,000)
------------- ------------- ------------- -------------
Net Income (Loss) $ 1,300,000 $ 4,375,000 ($ 1,282,000) $ 1,076,000
------------- ------------- ------------- -------------
Net Income (Loss) Per Common Share (Note 5):
Basic:
Before extraordinary item $ 0.35 $ 0.70 ($ 0.20) $ 0.17
Extraordinary item (0.15) (0.04) (0.01)
------------- ------------- ------------- -------------
Net income (Loss) $ 0.20 $ 0.66 ($ 0.20) $ 0.16
------------- ------------- ------------- -------------
Diluted:
Before extraordinary item $ 0.32 $ 0.52 ($ 0.20) $ 0.14
Extraordinary item (0.13) (0.02) (0.01)
------------- ------------- ------------- -------------
Net income (Loss) $ 0.19 $ 0.50 ($ 0.20) $ 0.13
------------- ------------- ------------- -------------
</TABLE>
<PAGE> 4
MERCURY AIR GROUP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,300,000 $ 4,375,000
Non-cash component of extraordinary charge 824,000 275,000
Adjustments to derive cash flow from Operating activities:
Bad debt expense 4,562,000 1,354,000
Depreciation and amortization 7,157,000 5,819,000
Amortization of officers' loans 29,000 29,000
Changes in operating assets and liabilities:
Trade and other accounts receivable (8,491,000) (5,230,000)
Inventories (1,098,000) 62,000
Prepaid expenses and other current assets (1,897,000) (1,638,000)
Accounts payable 9,300,000 761,000
Income taxes payable (373,000)
Accrued expenses and other current liabilities (913,000) 760,000
------------ ------------
Net cash provided by operating activities 10,773,000 6,194,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Reduction in restricted cash-tax exempt bond 785,000 7,248,000
(Increase) Decrease in notes receivable 144,000 (55,000)
Addition to other assets (1,910,000) (80,000)
Acquisition of businesses (3,100,000) (4,200,000)
Additions to property, equipment and leaseholds (7,080,000) (13,110,000)
------------ ------------
Net cash used in investing activities (11,161,000) (10,197,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 5,264,000 26,000,000
Reduction of long-term debt (10,428,000) (16,676,000)
Reduction of note receivable from sale of stock 54,000
Reduction of convertible subordinated debentures (19,534,000) (4,682,000)
Repurchase of common stock (1,856,000) (5,555,000)
Proceeds from senior subordinated note 24,000,000
Proceeds from issuance of common stock 15,000
------------ ------------
Net cash used in financing activities (2,500,000) (898,000)
------------ ------------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (2,888,000) (4,901,000)
CASH AND CASH EQUIVALENTS, beginning of period 4,797,000 7,836,000
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 1,909,000 $ 2,935,000
============ ============
CASH PAID DURING THE PERIOD:
Interest $ 5,132,000 $ 3,746,000
Income taxes $ 2,309,000 $ 3,172,000
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Issuance of 124,224 shares of common stock for $ 1,000,000
acquisition of assets of Weather Data
Conversion of 318 debentures into 43,590 shares
of common stock $ 318,000
Issuance of note payable for the acquisition of
assets of Jackson FBO $ 2,800,000
</TABLE>
<PAGE> 5
MERCURY AIR GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION:
The accompanying unaudited financial statements reflect all adjustments
(consisting of normal, recurring accruals only) which are necessary to fairly
present the results for the interim periods. Such financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X and therefore do not include all the information or footnotes
necessary for a complete presentation. They should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended June 30, 1999 and
the notes thereto. The results of operations for the nine months ended March 31,
2000 are not necessarily indicative of results for the full year.
NOTE 2 - INCOME TAXES:
Income taxes have been computed based on the estimated annual effective
income tax rate for the respective years.
NOTE 3 - PROVISION FOR BAD DEBTS:
Charge to bad debt expense in the three months ended March 31, 2000 was
$3,634,000 and included the write off of $2,700,000 of accounts receivable from
Tower Air Inc., who filed chapter 11 Bankruptcy on February 29, 2000. The
additional provision of $934,000 is based on significantly higher fuel prices
during the current fiscal year which has increased the Company's risk of loss
from certain airline accounts. Bad debt provision in future periods may continue
to reflect higher risk of loss based on high fuel prices and potential
bankruptcies and will depend upon actual experience. On May 1, 2000 Kitty Hawk,
Inc. and related companies, fuel customers of the Company, filed for bankruptcy
under Chapter 11. The potential write off of this receivable has been considered
in evaluating the March 31, 2000 accounts receivable allowance.
NOTE 4 - STOCKHOLDINGS' EQUITY:
During the nine month period ended March 31, 2000, the Company
repurchased 234,375 shares of its common stock at a cost of approximately
$1,856,000, or an average price of $7.92 per share, which was charged to: Common
Stock $2,000; Additional Paid In Capital $705,000; and Retained Earnings
$1,149,000.
5
<PAGE> 6
NOTE 5- EARNINGS PER SHARE:
Basic income per common share is computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
income per share is computed by dividing net income by the weighted average
number of common shares and common stock equivalents. Common stock equivalents
include stock options, warrants and shares resulting from the assumed conversion
of subordinated debentures, when dilutive. For the three months ended March 31,
2000, weighted average common and common equivalent shares exclude shares
resulting from the assumed exercise of stock options and assumed conversion of
debentures since the impact was anti-dilutive.
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
March 31, 2000 March 31, 1999 March 31, 2000
------------------------------------------------------------ ------------------------------
Diluted Basic Diluted Basic Diluted Basic
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Weighted average number of common
shares outstanding during the
period 6,601,000 6,601,000 6,665,000 6,665,000 6,483,000 6,483,000
Common stock equivalents resulting
from the assumed exercise of stock
options and warrants 405,000 -- 373,000 -- -- --
Common shares resulting from the
assumed conversion of debentures 770,000 -- 3,536,000 -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Weighted average number of common
and common equivalent shares
outstanding during the period 7,776,000 6,601,000 10,574,000 6,665,000 6,483000 6,483,000
============ ============ ============ ============ ============ ============
Net income (Loss) before
Extraordinary item $ 2,279,000 $ 2,279,000 $ 4,630,000 $ 4,630,000 ($ 1,282,000) ($ 1,282.000)
Interest expense, net of tax, on
convertible debenture 183,000 -- 923,000 -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Adjusted income (Loss) before
extraordinary item $ 2,462,000 $ 2,279,000 $ 5,553,000 $ 4,630,000 ($ 1,282,000) ($ 1,282,000)
Extraordinary item (979,000) (979,000) (255,000) (255,000) -- --
------------ ------------ ------------ ------------ ------------ ------------
Adjusted income (Loss) $ 1,483,000 $ 1,300,000 $ 5,298,000 $ 4,375,000 ($ 1,282,000) ($ 1,282,000)
------------ ------------ ------------ ------------ ------------ ------------
Common and common share
equivalents 7,776,000 6,601,000 10,574,000 6,665,000 6,483,000 6,483,000
============ ============ ============ ============ ============ ============
Earnings (loss) per share:
Before extraordinary item $ .32 $ .35 $ .52 $ .70 ($ .20) ($ .20)
Extraordinary item (.13) (.15) (.02) (.04) -- --
------------ ------------ ------------ ------------ ------------ ------------
Net income (loss) $ .19 $ .20 $ .50 $ .66 ($ .20) ($ .20)
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
Three Months Ended
March 31, 1999
-----------------------------
Diluted Basic
------------ ------------
<S> <C> <C>
Weighted average number of common
shares outstanding during the
period 6,575,000 6,575,000
Common stock equivalents resulting
from the assumed exercise of stock
options and warrants 382,000 --
Common shares resulting from the
assumed conversion of debentures 3,331,000 --
------------ ------------
Weighted average number of common
and common equivalent shares
outstanding during the period 10,288,000 6,575,000
============ ============
Net income (Loss) before
Extraordinary item 1,144,000 1,144,000
Interest expense, net of tax, on
convertible debenture 290,000 --
------------ ------------
Adjusted income (Loss) before
extraordinary item $ 1,434,000 $ 1,144,000
Extraordinary item (68,000) (68,000)
------------ ------------
Adjusted income (Loss) $ 1,366,000 $ 1,076,000
------------ ------------
Common and common share
equivalents 10,288,000 6,575,000
============ ============
Earnings (loss) per share:
Before extraordinary item $ .14 $ .17
Extraordinary item (.01) (.01)
------------ ------------
Net income (loss) $ .13 $ .16
============ ============
</TABLE>
6
<PAGE> 7
NOTE 6 - COMPREHENSIVE INCOME:
In June of 1997, the Financial Accounting Standards Board issued
statement of Financial Accounting Standard No. 130 "Reporting Comprehensive
Income." This statement, which the Company adopted in fiscal 1999, establishes
standards for reporting and displaying comprehensive income and its components
in a full set of financial statements. For the periods presented, adjustments to
derive comprehensive income were insignificant .
NOTE 7- LITIGATION:
In connection with the Chapter 7 bankruptcy filing for Western Pacific
Airlines, Inc. ("WPAI"), the Company received a letter dated August 25, 1999,
from the bankruptcy trustee's attorneys making a formal demand for recovery of
alleged preference payments of approximately $11.4 million. This amount
represents cash received for payment of fuel and sales during the 90 days prior
to WPAI's initial bankruptcy filing. The Company believes this claim is without
merit and the entire amount is defensible based on the transaction 1) having
been a substantially contemporaneous exchange for value, 2) being made in the
ordinary course of business, and 3) involving an exchange for new value.
Accordingly, the Company believes it will ultimately prevail and that no
provision is required.
In October, 1999, Mr. Rene Perez, formerly the president of RPA,
notified the Company of certain alleged violations of his employment contract
dated February 28, 1998 between the Company, RPA and Mr. Perez asserting among
other things constructive termination. The Company subsequently filed a suit
seeking declaratory relief regarding the employment contract in the United
States District Court for Northern California ( San Francisco) in November 1999.
The Company subsequently amended, on November 30, 1999, that suit as a result of
its investigation seeking damages against Mr. Perez. This case has been
transferred to the United States District court for the Southern District of New
York (New York City) in March 27, 2000. Mr. Perez filed a lawsuit, which was
filed in November 1999 and served in December 1999, in the Circuit Court of the
11th Judicial Circuit in Dade County, Florida seeking damages in excess of the
jurisdictional limit. At this time, the Company believes that no provision is
required.
NOTE 8- SUBSEQUENT EVENT:
On April 21, 2000, the Company acquired certain assets of an FBO located
in Fort Wayne, Indiana (FWAS) for a cash consideration of $3,900,000. The
Company borrowed from its acquisition line to fund the purchase. The purchase
price was allocated primarily to Property, Equipment and Leaseholds and a
portion to inventory.
7
<PAGE> 8
NOTE 9 - SENIOR SUBORDINATED NOTE / EXTRAORDINARY ITEM:
On September 10, 1999, the Company issued, in a private placement,
$24,000,000 Senior Subordinated 12% Notes ("the Notes") due 2006 with detachable
warrants to acquire 503,126 shares of the Company's common stock exercisable at
$6.50 per share for seven years. Proceeds of the Notes were used to redeem the
Company's 7 3/4% convertible subordinated debentures due February 1, 2006 at
104% of the principal amount plus accrued interest and pay expenses of the
transaction as follows:
<TABLE>
<CAPTION>
<S> <C>
Principal balance of debentures redeemed $19,509,000
Redemption premium of 4% 780,000
Accrued interest 164,000
Placement fees, legal fees and other
expenses of transaction capitalized as
other assets 1,750,000
Cash received 1,797,000
-----------
Proceeds $24,000,000
===========
</TABLE>
The $1,750,000 of fees incurred are being amortized over the term of the
Notes.
As a result of this transaction the Company recorded an extraordinary
charge of $979,000 net of a $625,000 tax benefit in the first quarter of fiscal
2000. The extraordinary charge includes the redemption premium of $780,000 plus
write off of related capitalized fees of $824,000.
NOTE 10 - ACQUISITIONS:
On October 22, 1999, the Company acquired certain assets of Air Tulsa,
Inc., an FBO located in Tulsa, Oklahoma. Assets acquired included refueling
equipment and tank farms utilized in the FBO business, customer contracts,
inventory, prepaid expenses and a sublease. Total consideration was $2.4 million
in cash which the Company funded under its acquisition line. The agreement
includes a second closing to occur within eighteen months to include the
purchase of hangars, buildings and the leasehold for an additional cash
consideration of $3.8 million. The Company's Senior lenders have agreed to fund
the amount under the acquisition line.
On October 5, 1999, the Company acquired certain FBO assets of Charleston
Equities, Inc. for $700,000 cash. The purchase consolidated the leasehold at
Charleston International Airport and includes the leasehold at John's Island
Executive Airport.
8
<PAGE> 9
NOTE 11 - SEGMENT REPORTING:
The Company operates and reports it's activities through four principal
units: 1) Fuel Sales and Services, which also includes RPA, 2) Fixed Based
Operations, 3) Cargo Operations, and 4) Government Contract Services.
<TABLE>
<CAPTION>
Government
Fuel Sales Fixed Base Cargo Contract
(Dollars in Thousands) and Services Operations Operations Services Total
<S> <C> <C> <C> <C> <C>
QUARTER ENDED MARCH 31, 2000
Revenues $ 56,794 $ 19,611 $ 7,633 $ 5,897 $ 89,935
Gross Margin 1,291 2,835 2,070 1,081 7,277
Depreciation and Amortization 310 1,157 772 156 2,395
Capital Expenditures 63 2,412 159 28 2,662
Segment Assets 55,849 27,450 32,807 18,397 134,503
QUARTER ENDED MARCH 31, 1999
Revenues $ 26,923 $ 13,393 $ 7,051 $ 6,276 $ 53,643
Gross Margin 2,096 3,129 951 1,199 7,375
Depreciation and Amortization 408 743 793 184 2,128
Capital Expenditures 1,067 2,899 79 (39) 4,006
Segment Assets 56,737 21,814 24,617 16,999 120,167
NINE MONTHS ENDED MARCH 31, 2000
Revenues $151,815 $ 52,485 $ 24,983 $ 18,825 $248,108
Gross Margin 4,764 8,283 8,380 3,739 25,166
Depreciation and Amortization 801 3,267 2,497 592 7,157
Capital Expenditures 126 6,209 669 76 7,080
Segment Assets 55,849 27,450 32,807 18,397 134,503
NINE MONTHS ENDED MARCH 31, 1999
Revenues $ 84,025 $ 39,990 $ 20,474 $ 18,419 $162,908
Gross Margin 6,402 9,190 3,576 3,780 22,948
Depreciation and Amortization 1,031 1,893 2,310 585 5,819
Capital Expenditures 2,310 9,503 933 364 13,110
Segment Assets 56,737 21,814 24,617 16,999 120,167
</TABLE>
Gross margin is used as the measure of profit and loss for segment
reporting purposes as it is viewed by key decision makers as the principal
operating indicator in measuring segment profitability
9
<PAGE> 10
ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS- COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2000 AND
MARCH 31,1999 AND COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 2000 AND MARCH
31, 1999.
The following tables set forth, for the periods indicated, the revenues and
gross margin for each of the Company's four operating units, as well as selected
other financial statement date.
<TABLE>
<CAPTION>
Nine Months Ended March 31, Three Months Ended March 31,
($ in millions)
2000 1999 2000 1999
Amount % of Total Amount % of Total Amount % of Total Amount % of Total
Revenues Revenues Revenues Revenues
Revenues:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fuel sales and services $151.8 61.2% $ 84.0 51.6% $ 56.8 63.1% $ 26.9 50.2%
FBOs 52.5 21.1% 40.0 24.5% 19.6 21.8% 13.4 25.0%
Cargo operations 25.0 10.1% 20.5 12.6% 7.6 8.5% 7.1 13.1%
Government contract services 18.8 7.6% 18.4 11.3% 5.9 6.6% 6.3 11.7%
------ ------ ------ ------ ------ ------ ------ ------
Total Revenue $248.1 100.0% $162.9 100.0% $ 89.9 100.0% $ 53.6 100.0%
====== ====== ====== ====== ====== ====== ====== ======
Amount % of Unit Amount % of Unit Amount % of Unit Amount % of Unit
Revenues Revenues Revenues Revenues
Gross Margin (1):
Fuel sales and services $ 4.8 3.1% $ 6.4 7.6% $ 1.3 2.3% $ 2.1 7.8%
FBOs 8.3 15.8% 9.2 23.0% 2.8 14.5% 3.1 23.4%
Cargo operations 8.4 33.5% 3.6 17.5% 2.1 27.1% 1.0 13.5%
Government contract services 3.7 19.9% 3.8 20.5% 1.1 18.3% 1.2 19.1%
------ ------ ------ ------ ------ ------ ------ ------
Total Gross Margin $ 25.2 10.1% $ 22.9 14.1% $ 7.3 8.1% $ 7.4 13.7%
====== ====== ====== ====== ====== ====== ====== ======
Amount % of Total Amount % of Total Amount % of Total Amount % of Total
Revenues Revenues Revenues Revenues
Selling, general and administrative $ 5.4 2.2% $ 5.2 3.2% $ 1.7 1.9% $ 1.9 3.5%
Provision for bad debts 4.6 1.8% 1.4 0.8% 3.6 4.0% 0.5 0.8%
Depreciation and amortization 7.2 2.9% 5.8 3.6% 2.4 2.7% 2.1 4.0%
Interest expense and other 4.3 1.7% 3.0 1.8% 1.6 1.8% 1.1 2.0%
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes 3.7 1.5% 7.6 4.7% (2.1) (2.3)% 1.9 3.5%
Provision (benefit) for income taxes 1.5 0.6% 3.0 1.8% (0.8) (0.9)% 0.7 1.4%
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss) before
extraordinary item $ 2.3 0.9% $ 4.6 2.8% $ (1.3) (1.4)% $ 1.1 2.1%
Extraordinary item (1.0) (0.4)% (0.2) (0.2)% - - (0.1) (0.1)%
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss) $ 1.3 0.5% $ 4.4 2.7% $ (1.3) (1.4)% $ 1.1 2.0%
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
(1) Gross margin as used here and throughout Management's Discussion excludes
depreciation and amortization and selling, general and administrative expense.
10
<PAGE> 11
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO MARCH 31, 1999.
Revenue increased by 67.7% to $89.9 million in the current period from $53.6
million a year ago primarily due to an increase in the price of fuel and
partially due to an increase in the volume of fuel sold. Gross margin decreased
1.3% to $7.3 million in the current period from $7.4 million a year ago.
Revenues from fuel sales and services represented 63.1% of total revenues in the
current period compared to 50.2% of total revenues a year ago. Revenues from
fuel sales and services increased 110.0% to $56.8 million from $26.9 million
last year. The increase in revenues from fuel sales and services was due to an
increase of 16.3% in the volume of fuel sold and an increase of 84.6% in the
price of fuel . Gross margin from fuel sales and services decreased by 38.4% to
$1.3 million in the current period from $2.1 million last year partly due to
lower margins from fuel sales caused by rising prices and partly due to a loss
of $427,000 from RPA in the current period compared with gross margin of $3,000
a year ago. Revenues and gross margin from fuel sales and services include the
activities of Mercury's contract fueling business as well as revenues from RPA,
its airline information software company. Revenue from RPA was $1,012,000 in the
current period compared with $982,000 a year ago. In January 2000, the Company
appointed a new Chief Executive Officer of RPA.
Revenues from FBOs increased by 46.4% in the current period to $19.6 million
from $13.4 million a year ago due to the addition of Tulsa, Charleston and
John's Island locations and higher fuel prices in the period. Gross margin
decreased 9.4% in the current period to $2.8 million from $3.1 million last
year. The decrease was attributable to an increase in the price of fuel, some of
which was not passed on to customers, resulting in lower per gallon fuel
margins.
Revenues from cargo operations in the current period increased 8.3% to $7.6
million from $7.1 million a year ago. This increase was due to an increase in
space brokerage and cargo handling revenues at LAX. Gross margin from cargo
operations in the current period increased 117.7% to $2.1 million from $1.0
million in the year ago period primarily due to increased space brokerage,
higher cargo handling revenues and elimination of losses at the Miami cargo
location, which was sold in fiscal 1999.
Revenues from government contract services decreased 6.0% in the current period
to $5.9 million from $6.3 million in the year ago period. The decrease in
revenues from government contract services was due primarily to a reduction in
the number of Weather Data contracts. Gross margin from government contract
services decreased approximately 9.8% in the current period to $1.1 million from
$1.2 million a year ago due to lower revenue.
Selling, general and administrative expenses in the current period decreased
7.8% to $1.7 million from $1.9 million in last year's third quarter due
primarily to lower compensation expense.
Provision for bad debts increased by $3,182,000 in the current period to
$3,634,000 from $452,000 in the year ago period due to a $2.7 million write off
of Tower Air Inc's receivable, higher sales in the current period and greater
exposure due to significantly higher fuel prices during the current fiscal year
which has created a greater risk of loss due to potential bad debts related to
certain airline accounts. Future periods may continue to be impacted by higher
reserve requirements related to potential bankruptcies. On May 1, 2000 Kitty
Hawk, Inc. and its related companies, fuel customers of the Company, filed for
bankruptcy under Chapter 11. The potential write off of this receivable has been
considered in evaluating the March 31, 2000 accounts receivable allowance.
Depreciation and amortization expense increased 12.5% in the current period to
$2.4 million from $ 2.1 million a year ago primarily due to the acquisition of
the Tulsa FBO in October 1999 and various capital expenditures.
Interest expense (net) increased 54.2% in the current period to $1.6 million
from $1.1 million a year ago due to higher interest rates and higher average
outstanding borrowings.
Income tax (benefit) expense approximated 39.0% of pre-tax (loss) income in each
period reflecting the expected effective annual income tax rate.
11
<PAGE> 12
In last year's three month period, extraordinary item of $68,000 consists of a
charge of $111,000 related to the cost of repurchasing convertible subordinated
debentures in excess of par value and related bond issuance costs, net of a tax
benefit of $43,000.
NINE MONTHS ENDED MARCH 31, 2000 COMPARED TO MARCH 31, 1999.
Revenues increased 52.3% to $248.1 million in the current period from $162.9
million a year ago primarily due to an increase in the price of fuel and volume
of fuel sold. Gross margin increased 9.7% to $ 25.2 million in the current
period from $22.9 million a year ago due to an increase in gross margin from
cargo operations, which was partially offset by lower gross margins from fuel
sales and services and FBO's.
Revenues from fuel sales and services represented 61.2% of total revenues in the
current period compared to 51.6% of total revenues a year ago. Revenues from
fuel sales and services increased 80.7% to $151.8 million from $84.0 million
last year. The increase in revenues from fuel sales and services was due to an
increase of 50% in the price of fuel and an increase of 25.1% in the volume of
fuel sold. Gross margin from fuel sales and services decreased 25.6% in the
current period to $4.8 million from $6.4 million a year ago. The decrease in
gross margin from fuel sales and services was due to a loss from RPA of $1.3
million in the current period compared to gross margin of $0.6 million last year
caused by lower revenues in the current period. Revenue from RPA was $3.0
million in the current nine month period compared to $4.7 million last year.
Revenues from FBOs increased 31.2% in the current period to $52.5 million from
$40.0 million a year ago due to higher fuel prices and the addition of Jackson
and Charleston in fiscal 1999 and Tulsa in October 1999. Gross margin decreased
9.9% to $8.3 million from $9.2 million in the year ago period due primarily to
an increase in the price of fuel, some of which was not passed on to customers,
resulting in lower per gallon margins.
Revenues from cargo operations in the current period increased 22.0% to $25.0
million from $20.5 million a year ago. The increase was primarily due to an
increase in space brokerage and cargo handling revenues at LAX. Gross margin
from cargo operations in the current period increased 134.3% to $8.4 million
from $3.6 million in the year ago period primarily due to increased space
brokerage, higher cargo handling revenues and elimination of losses in its Miami
cargo handling operation which was sold in fiscal 1999.
Revenues from government contract services in the current period increased 2.2%
to $18.8 million from $18.4 million in the year ago period. The increase in
revenues from government contract services in the current period compared to
last year was primarily due to higher contract revenue from Yokota offset
partially by lower revenue from a lower number of Weather Data contracts. Gross
margin from government contract services in the current period decreased 1.1% to
$3.7 million from $3.8 million last year due to a different contract mix.
Selling, general and administrative expenses in the current period increased
3.3% to $5.4 million from $5.2 million in the year ago period. The increase was
primarily due to higher professional fees.
Provision for bad debts increased by $3,208,000 in the current period to
$4,562,000 from $1,354,000 in the year ago period due to a $2.7 million write
off of Tower Air Inc.'s receivable and a bad debt provision of $1,862,000 due to
significantly higher fuel prices during the current fiscal year which has
created a greater risk of loss due to potential bad debts related to certain
airline accounts. Future periods may continue to be impacted by higher reserve
requirements related to potential bankruptcies. On May 1, 2000 Kitty Hawk, Inc.
and its related companies, fuel customers of the Company, filed for bankruptcy
under Chapter 11. The potential write off of this receivable has been considered
in evaluating the March 31, 2000 accounts receivable allowance.
12
<PAGE> 13
Depreciation and amortization expense in the current period increased 23.0% to
$7.2 million from $5.8 million a year ago. The increase in the current period is
primarily related to the Burbank FBO expansion during fiscal 1999, acquisitions
of Jackson and Charleston FBO's in fiscal 1999, acquisition of Tulsa FBO in
October 1999 and various capital expenditures.
Interest expense (net) increased 45.6% in the current nine months to $4.3
million from $3.0 million a year ago due to higher interest rates and higher
average outstanding borrowings.
Income tax expense approximated 39.0% of pretax income in both periods
reflecting the expected effective annual tax rate.
Extraordinary item of $979,000 in the current nine months consisted of charges
associated with the redemption of the Company's 7 3/4% convertible subordinated
debentures in September 1999. The charge includes a $780,000 redemption premium
plus write off of capitalized fees of $824,000, less a tax benefit of $625,000.
In last years nine month period, extraordinary item of $255,000 consists of a
charge of $418,000 related to the cost of repurchasing convertible subordinated
debentures in excess of par value and related bond issuance costs, net of a tax
benefit of $163,000.
LIQUIDITY AND CAPITAL RESOURCES:
Mercury has historically financed its operations primarily through operating
cash flow, bank debt and various public and private placements of bonds and
subordinated debt. Mercury's cash balance at March 31, 2000 was $1,909,000.
Net cash provided by operating activities was $10,773,000 during the nine month
period ended March 31, 2000. During this period, the primary sources of net cash
provided by operating activities were net income and depreciation and
amortization of $8,457,000, an increase in accounts payable of $9,300,000 and
bad debt expense of $4,562,000. The primary uses of cash from operating
activities was an increase in accounts receivable of $8,491,000. Accounts
receivable at March 31, 2000 increased to $54,063,000 from $50,134,000 at June
30, 1999 due to significantly higher sales in the current nine month period.
Days sales outstanding were approximately 57 at March 31, 2000 versus
approximately 74 at June 30, 1999.
Net cash used in investing activities was $11,161,000 during the current nine
month period. The primary uses of cash from investing activities included
additions to property, equipment and leaseholds of $7,080,000, acquisition of
the Tulsa FBO and assets of the Charleston FBO for $3,100,000 and addition to
other assets of $1,910,000.
Net cash used in financing activities was $2,500,000 during the current nine
month period. The primary uses of cash from financing activities in the current
nine month period was the early extinguishment of the Convertible Subordinated
Debentures of $19,534,000, reduction of long term debt of $10,428,000 and
repurchase of common stock of $1,856,000. The primary sources of cash from
financing activities was proceeds from the Notes of $24,000,000 and proceeds
from the acquisition line of $5,264,000.
The Company's senior secured bank credit facility consists of a $40,000,000
revolver, a term loan with an outstanding balance of $21,000,000 at March 31,
2000 and a $15,000,000 acquisition facility with an outstanding balance of
$5,264,000 at March 31, 2000. At March 31, 2000, there were no borrowings
outstanding under the revolver, however, the line was used to secure $19.0
million in letters of credit. Principal installments are due quarterly on the
term loan over a five year period maturing in March 2004. Balances owed under
the revolver and acquisition facility are due in March 2004. As a result of the
net loss during the current quarter, the Company obtained a waiver from its
lender to cure the violation of its minimum profitability covenant.
13
<PAGE> 14
On September 10, 1999, the Company redeemed $19,509,000 principal balance of
Convertible Subordinated Debentures plus a redemption premium of 4% totalling
$780,000. Financing of the redemption was accomplished by issuing the
$24,000,000 Notes. The Note pays interest quarterly at the per annum rate of
12%. In connection with the issuance of the Note, the Company issued warrants to
purchase 503,126 shares of common stock exerciseable at $6.50 per share.
Absent a major prolonged surge in oil prices or a capital intensive acquisition,
the Company believes its operating cash flows, revolver, vendor credit and cash
balance will provide it with sufficient liquidity during the next twelve months.
In the event that fuel prices increase significantly for an extended period of
time, the Company's liquidity could be adversely affected unless the Company is
able to increase vendor credit or increase lending limits under its revolving
credit facility. The Company believes, however, its revolver and vendor credit
should provide it with sufficient liquidity in the event of a major temporary
surge in oil prices. From June 1999 to March 31, 2000, fuel prices rose
approximately 61%. Significantly higher fuel prices for an extended period of
time have a negative impact on the aviation industry as it increases the
airlines operating expenses. Smaller, less well capitalized airlines may be more
seriously impacted. The current three month period includes a bad debt expense
of $3.6 million, including $2.7 million resulting from the bankruptcy of Tower
Air, Inc., and a bad debt provision of $900,000, due to higher fuel prices
affecting the aviation industry. The bad debt provision in the third quarter of
fiscal 1999 was $452,000. The increase in the general bad debt reserve resulted
from significantly higher fuel prices during the current fiscal year which have
created a greater risk of loss due to potential bad debts related to certain
airline accounts. Future periods may continue to be impacted by higher reserve
requirements related to potential bankruptcies. On May 1, 2000 Kitty Hawk, Inc.
and related companies, fuel customers of the Company, filed for bankruptcy under
Chapter 11. The potential write off of this receivable has been considered in
evaluating the March 31, 2000 accounts receivable allowance. The Company has a
note receivable of approximately $824,000 from a former fuel customer, Saeta, an
Ecuadorian Airline. Due to political and financial crisis in Ecuador, Saeta has
defaulted on its monthly payment obligation of approximately $48,000 since
January 2000, with the exception of one $10,000 payment received in February
2000. The Company has initiated legal action and has obtained a default
judgement against individual guarantors in the U.S. and is proceeding against
Saeta in Ecuador. While no assurance can be given, the Company believes some
portion of the note will ultimately be collected. Bad debt reserves will include
a continuing assessment of the collectability of the Saeta note.
The Company has the following significant contracts or commitments for the
purchase of equipment or installation of facilities. On October 22, 1999, the
Company acquired certain assets of an FBO in Tulsa, Oklahoma for $2.4 million
cash funded from its acquisition line. In a second step to this transaction, the
Company will acquire the leasehold and buildings for $3.8 million within
eighteen months of the first closing. The Company expects to fund this from its
acquisition line. The Company began construction of a 30,000 square foot hangar
at its Bedford Massachusetts FBO in this fiscal period at an estimated cost of
$3.8 million. Approximately $1.9 million has been spent to date and is being
funded under the Company's acquisition line.
FORWARD-LOOKING STATEMENTS
Statements contained in this Quarterly Report on Form 10-Q which are not
historical facts are forward-looking statements. In addition, Mercury, from
time-to-time, makes forward-looking statements concerning its expected future
operations and performance and other developments. Such forward-looking
statements are necessarily estimates reflecting Mercury's best judgment based
upon current information and involve a number of risks and uncertainties, and
there can be no assurance that other factors will not affect the accuracy of
such forward-looking statements. While it is impossible to identify all such
factors, factors which could cause actual results to differ materially from
those estimated by Mercury include, but are not limited to, risks associated
with acquisitions, the financial condition of customers, non-renewal of
contracts, government regulation, as well as operating risks, general conditions
in the economy and capital markets, and other factors which may be identified
from time-to-time in Mercury's Securities and Exchange Commission filings and
other public announcements.
14
<PAGE> 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Reference should be made to the Forms 10-Q filed for the quarters ended
September 30, 1999 and December 31, 1999.
Item 2. Change in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Other Information
(a) Exhibit list and exhibits attached
(b) Reports on form 8-K (none)
15
<PAGE> 16
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.
Mercury Air Group, Inc.
Registrant
/s/ JOSEPH CZYZYK
-------------------------------------------
Joseph Czyzyk
Chief Executive Officer
/s/ RANDY AJER
-------------------------------------------
Randy Ajer
Principal Financial and Accounting Officer
May 09, 2000
16
<PAGE> 17
Item 6. (a) Exhibits and Exhibit List
(b) Reports on Form 8-K
6 (a)
Exhibit
No. Description
- --- -----------
1.1 Underwriting Agreement for the Company's $25,000,000 7-3/4% Convertible
Subordinated Debentures due February 1, 2006. (11)
3.1 Restated Certificate of Incorporation (4)
3.2 Form of Amendment to Restated Certificate of Incorporation creating the
Series A 8% Convertible Cumulative Redeemable Preferred Stock (4)
3.3 Form of Amendment to Restated Certificate of Incorporation declaring the
Separation Date for the Series A 8% Convertible Redeemable Preferred
Stock (5)
3.4 Bylaws of the Company (4)
3.5 Amendment to Bylaws of the Company (10)
3.6 Amendment to Bylaws of the Company adopted on December 3, 1998 (19)
4.1 Form of Indenture between Mercury Air Group, Inc. and IBJ Schroder Bank
& Trust Company. (11)
4.2 Negotiable Promissory Note, dated as of June 21, 1996, from Mercury Air
Group, Inc. to Raytheon Aircraft Services, Inc. (13)
4.3 Legend Agreement, dated as of August 29, 1996 between Mercury Air Group,
Inc. and Raytheon Aircraft Services, Inc. (13)
10.1 Employment Agreement dated December 10, 1993 between the Company and
Seymour Kahn (8)
10.2 Stock Purchase Agreement between the Company, SK Acquisition, Inc.,
Randolph E. Ajer, Kevin J. Walsh, Grant Murray and Joseph Czyzyk (2)
10.3 Company's 1990 Long-Term Incentive Plan (6)
10.4 Company's 1990 Directors Stock Option Plan (1)
10.5 Lease for 6851 West Imperial Highway, Los Angeles, California (4)
10.6 Memorandum Dated September 15, 1997 regarding Summary of Officer Life
Insurance Policies with Benefits Payable to Officers or Their Designated
Beneficiaries (15)
10.7 Memorandum dated September 15, 1995 regarding Summary of Bonus Plans for
Seymour Kahn, Joseph Czyzyk and Randolph E. Ajer (10)
10.8 Memorandum dated September 15, 1995 regarding Summary of Bonus Plans for
Kevin Walsh and William Silva (10)
10.9 The Company's 401(k) Plan consisting of LCI Actuaries, Inc. Regional
Prototype Defined Contribution Plan and Trust and Adoption Agreement (7)
10.10 Non-Qualified Stock Option Agreement by and between the Company and
Seymour Kahn dated January 21, 1993 (7)
10.11 Stock Purchase Agreement among the Company, SK Acquisition, Inc. and
William L. Silva dated as of August 9, 1993 (8)
10.12 Stock Exchange Agreement dated as of November 15, 1994 between Joseph
Czyzyk and the Company (9)
10.13 Employment Agreement dated November 15, 1994 between the Company and
Joseph Czyzyk (16)
10.14 Non-Qualified Stock Option Agreement dated August 24, 1995, by and
between S.K. Acquisition and Mercury Air Group, Inc. (12)
10.15 Non-Qualified Stock Option Agreement dated March 21, 1996, by and
between Frederick H. Kopko and Mercury Air Group, Inc. (12)
<PAGE> 18
10.16 Credit Agreement by and among Sanwa Bank California, Mellon Bank, N.A.,
The First National Bank of Boston and Mercury Air Group, Inc. dated
March 14, 1997. (14)
10.17 First Amendment to Credit Agreement and Related Loan Documents dated as
of November 1997, by and among Sanwa Bank California, Mellon Bank, N.A.,
BankBoston, N.A. and Mercury Air Group, Inc. (16)
10.18 First Amendment of 1998 to Credit Agreement and Other Loan Documents
dated as of April 1, 1998, by and among Sanwa Bank California, Mellon
Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (3)
10.19 Second Amendment of 1998 to Credit Agreement and Other Loan Documents
dated as of April 1998, by and between Sanwa Bank California, Mellon
Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (16)
10.20 Third Amendment of 1998 to Credit Agreement and Other Loan Documents
dated as of August 31, 1998, by and between Sanwa Bank California,
Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (16)
10.21 Loan Agreement between California Economic Development Financing
Authority and Mercury Air Group, Inc. relating to $19,000,000 California
Economic Development Financing Authority Variable Rate Demand Airport
Facilities Revenue Bonds, Series 1998 (Mercury Air Group, Inc. Project)
dated as of April 1, 1998. (3)
10.22 Reimbursement Agreement dated as of April 1, 1998, by and among Sanwa
Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air
Group, Inc. (3)
10.23 First Amendment to Reimbursement Agreement and Other L/C Documents as of
August 31, 1998, by and between Sanwa Bank California, Mellon Bank,
N.A., BankBoston, N.A. and Mercury Air Group, Inc. (16)
10.24 Fourth Amendment of 1998 to Credit Agreement and Other Loan Documents by
and between Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A.
and Mercury Air Group, Inc. dated September 15, 1998. (17)
10.25 Second Amendment to Reimbursement Agreement and Other L/C Documents by
and between Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A.
and Mercury Air Group, Inc. dated September 15, 1998. (17)
10.26 Company's 1998 Long-Term Incentive Plan (18)
10.27 Company's 1998 Directors Stock Option Plan (18)
10.28 Amendment to Employment Agreement by and between Mercury Air Group, Inc.
and Joseph A. Czyzyk dated October 15, 1998. (19)
10.29 Amendment No. 2 to Employment Agreement by and between Mercury Air
Group, Inc. and Joseph A. Czyzyk dated April 12, 1999. (19)
10.30 First Amendment of 1999 to Credit Agreement and Other Loan Documents
dated as of December 31, 1998 by and between Sanwa Bank California,
Mellon Bank, N.A. and BankBoston, N.A. and Mercury Air Group, Inc. (19)
10.31 Third Amendment to Reimbursement Agreement and Other L/C Documents dated
as of December 31, 1998 by and between Sanwa Bank California, Mellon
Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (19)
10.32 Revolving Credit and Term Loan Agreement dated as of March 2, 1999 by
and among Mercury Air Group, Inc., The Banks listed on Schedule 1
thereto, and BankBoston, N.A., as Agent. (19)
10.33 Securities Purchase Agreement dated September 10, 1999 by and among
Mercury Air Group, Inc. and J.H. Whitney Mezzanine Fund, L.P. (20)
- --------------------------------
(1) Such document was previously filed as Appendix A to the Company's Proxy
Statement for the December 10, 1993 Annual Meeting of Shareholders and
is incorporated herein by reference.
<PAGE> 19
(2) Such document was previously filed as an Exhibit to the Company's
Current Report on Form 8-K dated December 6, 1989 and is incorporated
herein by reference.
(3) All such documents were previously filed as Exhibits to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and
are incorporated herein by reference.
(4) All such documents were previously filed as Exhibits to the Company's
Registration Statement No. 33-39044 on Form S-2 and are incorporated
herein by reference.
(5) Such document was previously filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and
is incorporated herein by reference.
(6) Such document was previously filed as Appendix A to the Company's Proxy
Statement for the December 2, 1992 Annual Meeting of Shareholders.
(7) All such documents were previously filed as Exhibits to the Company's
Annual Report on Form 10-K for the year ended June 30, 1993 and are
incorporated herein by reference.
(8) All such documents were previously filed as Exhibits to the Company's
Annual Report on Form 10-K for the year ended June 30, 1994 and are
incorporated herein by reference.
(9) Such document was previously filed as an Exhibit to the Company's
Current Report on Form 8-K dated November 15, 1994 and is incorporated
herein by reference.
(10) All such documents were previously filed as Exhibits to the Company's
Annual Report on Form 10-K for the year ended June 30, 1995 and are
incorporated herein by reference.
(11) All such documents were previously filed as Exhibits to the Company's
Registration Statement No. 33-65085 on Form S-1 and are incorporated
herein by reference.
(12) All such documents were previously filed as Exhibits to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and
are incorporated herein by reference.
(13) All such documents were previously filed as Exhibits to the Company's
Report on Form 8-K filed September 13, 1996 and are incorporated herein
by reference
(14) Such document was previously filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and
is incorporated herein by reference.
(15) Such document was previously filed as an Exhibit to the Company's Annual
Report on Form 10-K for the year ended June 30, 1997 and is incorporated
herein by reference.
(16) All such documents were previously filed as an Exhibit to the Company's
Annual Report on Form 10-K for the year ended June 30, 1998 and is
incorporated herein by reference.
(17) Such document was previously filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended December 31, 1998
and is incorporated herein by reference.
<PAGE> 20
(18) Such document was previously filed as Appendix A to the Company's Proxy
Statement for the December 3, 1998 Annual Meeting of Shareholders and is
incorporated herein by reference.
(19) All such documents were previously filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 and
incorporated herein by reference.
(20) All such documents were previously filed as an Exhibit to the Company's
Annual Report on Form 10-K for the year ended June 30, 1999 and is
incorporated herein by reference.
(b) Reports on Form 8-K: None
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 AND THE CONSOLIDATED STATEMENTS
OF INCOME FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS CONTAINED IN FORM 10-Q FOR
THE PERIOD ENDED MARCH 31, 2000.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-1-1999
<PERIOD-END> MAR-31-2000
<CASH> 1,909
<SECURITIES> 0
<RECEIVABLES> 57,652
<ALLOWANCES> 3,034
<INVENTORY> 2,990
<CURRENT-ASSETS> 64,017
<PP&E> 101,155
<DEPRECIATION> 41,821
<TOTAL-ASSETS> 134,503
<CURRENT-LIABILITIES> 42,308
<BONDS> 63,559
0
0
<COMMON> 64
<OTHER-SE> 28,336
<TOTAL-LIABILITY-AND-EQUITY> 134,503
<SALES> 185,074
<TOTAL-REVENUES> 248,108
<CGS> 162,525
<TOTAL-COSTS> 222,942
<OTHER-EXPENSES> 21,428
<LOSS-PROVISION> 4,562
<INTEREST-EXPENSE> 4,465
<INCOME-PRETAX> 3,738
<INCOME-TAX> 1,459
<INCOME-CONTINUING> 2,279
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<EXTRAORDINARY> 979
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<NET-INCOME> 1,300
<EPS-BASIC> .20
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