<PAGE> 1
U.S. Securities and Exchange Commission, Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to___________
Commission file number 2-87778A
THE FLIGHT INTERNATIONAL GROUP, INC.
(Exact name of small business issuer as specified in its charter)
GEORGIA 58-1476225
(State or other jurisdiction of (I.R.S. Employer of
incorporation or organization) Identification No.)
NEWPORT NEWS/WILLIAMSBURG INTERNATIONAL AIRPORT, NEWPORT NEWS, VA 23602
(Address of principal executive offices)
(804) 886-5500
Issuer's telephone number
________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has 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 X .
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes No X
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's class
of common equity, as of the latest practicable date:
As of November 20, 1995, there were 998,974 shares of the issuer's New Common
Stock, par value $.01 per share, issued and outstanding.
Transitional Small Business Disclosure Format [check one]: Yes No X
---- ----
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PART 1
FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
The Flight International Group, Inc. (the "Company") files herewith
condensed consolidated balance sheets of the Company and its subsidiaries as of
July 31, 1995 (unaudited) and April 30, 1995 (the Company's most recent fiscal
year), unaudited condensed consolidated statements of operations for the three
months ended July 31, 1995 and 1994, and unaudited condensed consolidated
statements of cash flows for the three months ended July 31, 1995 and 1994,
together with unaudited condensed notes thereto. In the opinion of management of
the Company, the financial statements reflect all adjustments, all of which are
normal recurring adjustments, necessary to fairly present the financial
condition of the Company for the interim period presented. Operating results for
any quarter are not necessarily indicative of results for any future period. The
financial statements included in this report on Form 10-QSB should be read in
conjunction with the audited financial statements of the Company and the notes
thereto included in the annual report of the Company on Form 10-KSB for the year
ended April 30, 1995.
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THE FLIGHT INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
July 31, 1995
(Unaudited) April 30, 1995
------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash $607,444 $601,744
Accounts Receivable, net 1,457,219 1,809,891
Inventories 1,365,811 1,376,818
Prepaid expenses, deposits and other 816,763 564,186
----------- -----------
Total current assets 4,247,237 4,352,639
PROPERTY AND EQUIPMENT, NET 7,645,933 7,821,152
OTHER ASSETS 38,475 29,208
$11,931,645 $12,202,999
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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THE FLIGHT INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
July 31,
1995 April 30,
(Unaudited) 1995
------------- --------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 57,935 $ 69,414
Deferred revenue 415,813 277,478
Accrued expenses and other liabilities 1,763,537 1,902,435
Long-term debt due currently 980,650 871,357
----------- -----------
Total current liabilities 3,217,935 3,120,684
OTHER NON-CURRENT LIABILITIES 1,282,844 1,361,680
LONG-TERM DEBT, LESS CURRENT MATURITIES 6,481,028 6,843,080
Total liabilities 10,981,807 11,325,444
STOCKHOLDERS' EQUITY
Common stock 9,990 9,990
Additional paid in capital 988,986 988,986
Treasury stock (1,769) (1,769)
Accumulated deficit (47,369) (119,652)
Total stockholders' equity 949,838 877,555
$11,931,645 $12,202,999
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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THE FLIGHT INTERNATIONAL GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Three
Months Ended Months Ended
July 31, 1995 July 31, 1994
------------- -------------
<S> <C> <C>
REVENUES $3,286,637 $3,072,461
OPERATING COSTS AND EXPENSES
Costs of services 2,350,866 2,172,862
Depreciation and amortization 205,460 203,490
General, corporate and administrative 495,321 772,465
---------- ----------
Total operating costs and expenses 3,051,647 3,148,817
INCOME (LOSS) BEFORE OTHER (INCOME) EXPENSES 234,990 (76,356)
OTHER (INCOME) EXPENSES
Interest expense 161,617 46,275
Income tax 1,090
---------- ----------
Total other expenses 162,707 46,275
NET INCOME (LOSS) $ 72,283 ($122,631)
========== ==========
NET INCOME (LOSS) PER COMMON
SHARE $ 0.07 ($0.01)
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES 998,976 9,899,713
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Three
Months Ended Months Ended
July 31, 1995 July 31, 1994
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 72,283 ($122,631)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities
Depreciation and amortization 205,460 203,490
Engine reserve (36,787) 110,718
Changes in operating assets and liabilities
Accounts receivable 352,672 44,438
Inventories 11,007 66,492
Prepaid expenses (252,577) (101,101)
Accounts payable (11,479) 54,423
Accrued expenses and other liabilities (102,111) (441,528)
Deferred revenue 59,499 8,483
--------- ---------
Net cash provided by (used in) operating activities 297,967 (177,216)
INVESTING ACTIVITIES
Sale (Purchase) of property and equipment (30,241) 269,924
Net (increase) decrease in other assets (9,267) 431,085
--------- ---------
Net cash provided by (used in) investing activities (39,508) 701,009
</TABLE>
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<TABLE>
<S> <C> <C>
FINANCING ACTIVITIES
Repayment of long-term debt (252,759) (134,018)
-------- --------
Net cash provided by (used in) financing activities (252,759) (134,018)
NET (DECREASE) INCREASE IN CASH AND $5,700 $389,775
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 601,744 147,071
CASH AND CASH EQUIVALENTS, END OF PERIOD $607,444 $536,846
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid $160,013 $ 45,000
Income taxes paid $ 1,090
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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THE FLIGHT INTERNATIONAL GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Flight International Group, Inc. (the "Company") is an aviation
services company that performs military training services using specially
modified commercial aircraft, principally under contracts with the United States
Department of Defense, other government agencies and foreign countries. In
addition, the Company has established a market for training and testing in the
aerospace industry. The Company also operates a fixed base operation ("FBO") at
the Newport News/Williamsburg International Airport.
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.
Net income/loss per common share is computed by dividing the
income/loss by the weighted average number of shares of common stock outstanding
during the year.
2. REORGANIZATION AND EMERGENCE FROM CHAPTER 11
On February 4, 1994, the Company and three of its affiliates, Flight
International, Inc. ("FII"), Flight International of Florida, Inc. ("FIF"), and
Flight International Aviation, Inc. ("FIA") filed voluntary petitions in the
United States Bankruptcy Court in the Eastern District of Virginia (the
"Bankruptcy Court") for reorganization under Chapter 11 of the United States
Bankruptcy Code. On December 8, 1994, the Bankruptcy Court entered an order
confirming the Company's joint plan of reorganization (the "Plan"), and the Plan
became effective on December 28, 1994 (the "Effective Date"). For accounting
purposes, the effective date is deemed to be December 31, 1994.
Pursuant to the plan, a total of 1,000,000 shares of new common stock
were authorized and 998,976 shares were issued. The 9,899,713 shares of common
stock previously outstanding were cancelled. The shares of new common stock were
distributed as follows:
(i) 510,000 shares were issued to holders of allowed general
unsecured claims;
(ii) 290,000 shares were issued to Flight's management group, as
identified in the Disclosure Statement, in exchange for an equity
investment of $290,000 in the reorganized company;
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(iii) 100,000 shares were issued to the Flight management, as
identified in the Disclosure Statement; and
(iv) 98,976 were issued to shareholders of record on December 20, 1994.
Of the 510,000 shares to be issued to holders of allowed general
unsecured claims, approximately 63,000 shares are being held by the
Company to satisfy the remaining disputed claims of unsecured
creditors. Once these claims are settled the 63,000 shares will be
redistributed based on the final valuation of all general unsecured
claims.
3. FRESH START ACCOUNTING
The Company has accounted for the reorganization by using the
principles of fresh start accounting, as required by SOP 90-7. The Company was
required to adopt fresh start reporting because holders of the existing voting
shares immediately prior to filing and confirmation of the Plan received less
than 50% of the voting shares of the emerging entity, and its reorganization
value was less than the total of its post-petition liabilities and allowed
claims. Under the principles of fresh start accounting, the Company's total
assets were recorded at their assumed reorganization value, with the
reorganization value allocated to identifiable tangible assets on the basis of
their estimated fair value.
The Company's net reorganization value was determined to be
approximately $1,000,000. The net reorganization value was based principally on
cash infusions received for the issuance of new common stock and was approved by
the Bankruptcy Court.
As a result of the implementation of fresh start accounting, the
financial statements of the Company after consummation of the plan are not
comparable to the Company's financial statements of prior periods.
4. INCOME TAXES
No provision for federal income taxes has been made by the Company, as
it has substantial Net Operating Loss carry forwards available to offset against
current income.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BACKGROUND AND GENERAL INFORMATION
On February 4, 1994 (the "Petition Date"), the Company and certain of
its subsidiaries (the "Chapter 11 Entities") filed a petition for relief under
Chapter 11 of the Federal Bankruptcy Code (the "Code") in the United States
Bankruptcy Court for the Eastern District of Virginia, Newport News Division
(the "Bankruptcy Court").
On December 28, 1994, a Joint Plan of Reorganization dated August 31,
1994, as amended, confirmed and decreed by order of the Bankruptcy Court (the
"Plan"), became effective pursuant to an order of the Bankruptcy Court. The Plan
restructured and satisfied the claims of the creditors of the Chapter 11
Entities and the interests of shareholders of the Company.
The Company accounted for the reorganization effected by the Plan
through the principles of "fresh start" accounting, as required by Statement of
Position ("SOP") 90-7, "Financial Reporting by Entities in Reorganization Under
the Bankruptcy Code", issued by the American Institute of Certified Public
Accountants. As a result, the financial statements of the Company for the post
bankruptcy period are not comparable in all respects to the Company's financial
statements of prior periods.
RESULTS OF OPERATIONS
Revenues
Total revenues for the three months ended July 31, 1995 and 1994 were
$3,286,637 and $3,072,461, respectively. The 7% increase in revenue is a result
of (i) a 22% increase in contract revenues due to the contract with the U.S.
Navy/Naval Weapons Center in China Lake, California (the "China Lake contract")
to provide Metro III aircraft necessary to accomplish naval transportation,
which was awarded in October, 1994, and subcontract revenue from the Continental
United States Commercial Services Contract (the "CAS Conus contract") and (ii) a
13.6% increase in fixed base operations, partially offset by (iii) a 100%
decrease in flight school revenues caused by the lease of the Company's flight
school operations to an unaffiliated party and (iv) a 21% decline in repair
facility revenues.
Cost of Services
Cost of services for the three months ended July 31, 1995 and 1994 were
$2,350,866 and $2,172,862, respectively. The 8.2% increase in cost of services
is a result of increased operating costs due to new business (primarily the CAS
Conus and China Lake contracts), partially offset by a reduction in cost of
services caused by the lease of the flight school operations.
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Depreciation and Amortization
Depreciation and amortization for the three months ended July 31, 1995
and 1994 were $205,460 and $203,490, respectively. The 1% increase reflects a
relatively stable level of aircraft and facilities over the last year.
General Corporate and Administrative
General corporate and administrative expenses for the three months
ended July 31, 1995 and 1994 were $495,321 and $772,465, respectively. The 35%
decline is primarily the result of reduced legal and other bankruptcy related
costs, which were substantial in the prior year, partially offset by increased
marketing costs due to the Company's allocation of increased personnel and
greater resources towards the pursuit of new business initiatives.
Interest
Interest expense for the three months ended July 31, 1995 and 1994 was
$161,617 and $46,275, respectively. The 249% increase is due to the fact that
most of the Company's debt in the prior year did not accrue interest because of
the bankruptcy proceedings.
Net Income (Loss)
As a result of the foregoing, the Company's net income for the three
months ended July 31, 1995 was $72,283, or $.07 per share of the Company's
common stock, compared to a loss of ($122,631), or ($.01) per share for the
three months ended July 31, 1994. The weighted average number of shares used in
computing per share earnings decreased from 9.9 million shares for the three
months ended July 31, 1994 to 1.0 million shares for the three months ended July
31, 1995 as a result of the confirmation of the Plan.
Liquidity and Capital Resources
The Company operates in a capital intensive industry. Typically major
expenses are incurred in connection with the initiation of a new contract. These
costs can be reduced through leasing arrangements and advance payments from
customers, if these are obtainable. The Company believes that it will be able to
arrange through available means the financing of these initial contract costs
when necessary, although no assurance can be given.
The Plan included a favorable restructuring of all of the Company's
indebtedness, and the Company's aircraft and parts inventory currently is
financed over periods averaging six years with interest rates fixed at 7-8%. The
mortgage on the leasehold improvements at the fixed base operations, including
the headquarters building and adjoining hangars, will need to be refinanced or
paid in February 1997, and there can be no assurance that the Company will be
able to complete such refinancing or payment. The facilities are in excess of
current Company needs and management has attempted, without success, to sell or
sublease a portion of its office or hangar space. Management intends to
continue to seek the sale or sublease of this space unless business conditions
shall justify otherwise.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated: December 5, 1995 THE FLIGHT INTERNATIONAL GROUP,
INC.
By: /s/ David E. Sandlin
---------------------------------
David E. Sandlin
Principal Executive Officer
By: /s/ Wayne M. Richmon
---------------------------------
Wayne M. Richmon
Principal Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description Page
- ------- ----------- ----
27 Financial Data Schedule
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Flight
International Group, Inc.'s unaudited condensed consolidated financial
statements for the quarterly period ended July 31, 1995 and is qualified in its
entirety by reference to succh unaudited condensed consolidated financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 607,444
<SECURITIES> 0
<RECEIVABLES> 1,457,219
<ALLOWANCES> 0
<INVENTORY> 1,365,811
<CURRENT-ASSETS> 4,247,237
<PP&E> 7,645,933
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,931,645
<CURRENT-LIABILITIES> 3,217,935
<BONDS> 6,481,028
<COMMON> 9,990
0
0
<OTHER-SE> 939,848
<TOTAL-LIABILITY-AND-EQUITY> 11,931,645
<SALES> 0
<TOTAL-REVENUES> 3,286,637
<CGS> 0
<TOTAL-COSTS> 2,350,866
<OTHER-EXPENSES> 700,781
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 161,617
<INCOME-PRETAX> 73,373
<INCOME-TAX> 1,090
<INCOME-CONTINUING> 72,283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,283
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
