<PAGE>
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 JANUARY 31, 1999
[ ] 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
Newport News/Williamsburg International Airport, Newport News, VA 23602
(Address of principal executive offices)
(757) 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 /X/ No / /.
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 February 10, 1999, there
were 1,013,976 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/
<PAGE>
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The Flight International Group, Inc. (the "Company") files herewith
unaudited condensed consolidated balance sheets of the Company and its
subsidiaries as of January 31, 1999 (unaudited) and April 30, 1998 (the
Company's most recent fiscal year), unaudited condensed consolidated statements
of operations for the three and nine months ended January 31, 1999 and 1998, and
unaudited condensed consolidated statements of cash flows for the nine months
ended January 31, 1999 and 1998, 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 periods 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 fiscal year ended April 30, 1998.
<PAGE>
THE FLIGHT INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
January 31, 1999 April 30, 1998
(Unaudited)
------------------------- ---------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ - $ 104,008
Accounts Receivable, net 3,235,592 3,989,073
Inventories 2,559,965 2,087,700
Prepaid expenses and other 1,271,080 510,785
Deposits 661,799 983,774
----------- ------------
Total current assets 7,728,436 7,675,340
PROPERTY AND EQUIPMENT, NET 4,300,849 4,096,017
OTHER ASSETS 35,212 22,262
----------- -----------
$12,064,497 $11,793,619
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
THE FLIGHT INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
January 31, 1999 April 30, 1998
(Unaudited)
------------------------- ------------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,020,578 $ 450,403
Deferred revenue 1,122,870 950,802
Accrued expenses and other liabilities 2,243,094 2,362,442
Note payable 572,907 451,097
Long-term debt due currently 729,311 652,238
Income tax payable 11,848 20,000
----------- -----------
Total current liabilities 5,700,608 4,886,982
DEFERRED REVENUE 15,139 727,586
ACCRUED ENGINE RESERVES 409,220 744,647
LONG-TERM DEBT, LESS CURRENT MATURITIES 2,794,728 3,030,231
----------- -----------
Total liabilities 8,919,695 9,389,446
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 10,000,000 shares
authorized, 1,013,976 issued and outstanding 10,140 10,140
Additional paid in capital 1,007,617 1,007,617
Retained Earnings 2,127,045 1,386,416
----------- -----------
Total stockholders' equity 3,144,802 2,404,173
$12,064,497 $11,793,619
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
THE FLIGHT INTERNATIONAL GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
January 31, 1999 January 31, 1998 January 31, 1999 January 31, 1998
------------------------------------------ ----------------------------------------
<S> <C> <C> <C> <C>
REVENUES $5,858,976 $4,155,102 $18,333,806 $15,835,253
OPERATING COSTS AND EXPENSES
Costs of services 4,664,725 3,647,974 15,282,123 13,152,697
Gain on disposal of assets (18,167) (19,647) (54,502) (55,981)
Depreciation and amortization 153,260 137,584 444,358 416,005
General, corporate and administrative 523,516 537,584 1,661,158 1,628,279
------------------------------------------ ----------------------------------------
Total operating costs and expenses 5,323,334 4,303,495 17,333,137 15,141,000
INCOME (LOSS) BEFORE OTHER 535,642 (148,393) 1,000,669 694,253
EXPENSES
OTHER EXPENSES
Interest expense 92,317 95,210 250,340 271,526
------------------------------------------ ----------------------------------------
Total other expenses 92,317 95,210 250,340 271,526
INCOME BEFORE TAXES 443,325 (243,603) 750,329 422,727
Income tax expense 9,700 (1,879) 9,700 13,046
------------------------------------------ ----------------------------------------
NET INCOME (LOSS) $ 433,625 $ (241,724) $ 740,629 $ 409,681
========================================== ========================================
NET INCOME (LOSS) PER COMMON $ 0.43 $ (0.24) $ 0.73 $ 0.40
========================================== ==========================================
SHARE - BASIC
WEIGHTED AVERAGE NUMBER OF SHARES 1,013,976 1,013,976 1,013,976 1,013,976
========================================== ==========================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
THE FLIGHT INTERNATIONAL GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
January 31, 1999 January 31, 1998
-------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 740,629 $ 409,681
Adjustments to reconcile net income
to net cash provided (absorbed) by operating
activities
Depreciation and amortization 444,358 416,005
Engine reserve (335,427) 284,203
Gain on sale of assets (54,502) 0
Net cash provided (absorbed) by
Accounts receivable 753,481 230,836
Inventories (472,265) (311,765)
Prepaid expenses and other assets (438,320) (260,512)
Accounts payable 570,175 205,581
Accrued expenses and other liabilities (64,846) (258,286)
Deferred revenue (540,379) (129,883)
Income taxes payable (8,152) 0
-------------------------------------------------
Net cash provided by operating activities 594,752 585,860
INVESTING ACTIVITIES
Purchase of property and equipment (649,190) (376,383)
Net (increase) decrease in other assets (12,950) 3,545
-------------------------------------------------
Net cash absorbed by investing activities (662,140) (372,838)
FINANCING ACTIVITIES
Proceeds from credit line, net 121,810 0
Long term borrowing 0 1,338,750
Repayment of long-term debt (158,430) (1,435,585)
-------------------------------------------------
Net cash absorbed by financing activities (36,620) (96,835)
NET (DECREASE) INCREASE IN CASH AND (104,008) 116,187
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 104,008 231,111
CASH AND CASH EQUIVALENTS, END OF PERIOD $ - $ 347,298
=================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
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") and
licensed repair station 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. NOTES PAYABLE
During the year ended April 30, 1998, the Company entered into a
$2,000,000 asset based borrowing agreement with a bank in Newport News,
Virginia. Under the terms of the Agreement, the Company may obtain advances up
to 85% of amounts billed by the Company on government contracts. The Company
must pay interest at prime plus .50% on outstanding advances. Under the
Agreement, the Company must maintain certain net worth ratios. The Company was
in compliance with these ratios at January 31, 1999. As of January 31, 1999,
$572,907 was outstanding.
3. INCOME TAXES
The provision for income taxes differs from the amount determined by
applying federal statutory tax rates to pre-tax income as a result of the
utilization of net operating loss carry forwards. Income tax expense is
comprised of federal alternative minimum tax and state taxes.
As of April 30, 1998, the cumulative net operating loss available for
federal income tax purposes was $7,900,000, which will expire primarily in the
2006-2011 period, subject to certain limitations due to reorganization, if not
previously utilized.
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BACKGROUND AND GENERAL INFORMATION
The Flight International Group, Inc. (the "Company") was incorporated
in Georgia on May 7, 1982. The Company is an aviation services company that
performs military training services using specially modified commercial
aircraft, principally under contract with the United States Department of
Defense, other government agencies and foreign countries, operating through its
direct and indirect subsidiaries described in the next paragraph. In addition,
with the use of these aircraft, 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 ("NN/W Airport").
Flight International, Inc., a Georgia corporation ("FII"), Flight
International Aviation, Inc., a Georgia corporation ("FIA"), and Flight
International Sales and Leasing, Inc., a Delaware corporation, are wholly-owned
subsidiaries of the Company. Flight International of Florida, Inc., a Florida
corporation ("FIF") is a wholly-owned subsidiary of FII.
In its last three fiscal years, the Company has increased its revenue,
obtained, in August 1996, a major long-term contract (see "CAS-MOS Contract"
below) and has generated positive net income (after extraordinary item in 1996)
for the years ended April 30, 1998, 1997 and 1996.
Management believes that, in this three year period, it has
strengthened its balance sheet, developed contracts in its core areas and, as a
result, acquired more personnel and equipment, and enhanced the Company's
ability to compete more effectively in its marketplaces.
CAS-MOS CONTRACT
In August 1996, the Company was awarded a major contract. The
Commercial Air Services-Military Operations Support (CAS-MOS) Contract is a
derivative of the original government contract won by the Company in 1980 and
operated until September 1993. The new contract began on October 1, 1996 and has
completed its base year and first option year, with three additional years
remaining. Annual revenues from this contract have been $13.9 million and $7.3
million for the fiscal year ended April 30, 1998 and the seven months ended
April 30, 1997, respectively. This contract currently constitutes a substantial
portion of the Company's revenues.
<PAGE>
RESULTS OF OPERATIONS
Revenues
Total revenues for the three months ended January 31, 1999 and 1998
were $5,858,976 and $4,155,102, respectively. The 41% increase in revenue is
primarily due to a 37% increase in flight operations from the CAS-MOS contract.
Maintenance and FBO revenues also increased by 100% and 13%, respectively. The
increase in maintenance services was a result of several large commercial and
government projects completed during the quarter.
Revenue increased 16% for the nine months ended January 31, 1999, due
principally to increases in flight operations from the CAS-MOS contract and
increased contract work at the US Army's base at Yuma, Arizona. Maintenance
operations, which accounted for 9% of total Company revenues, are up 23% from
the prior year. FBO revenue, which accounted for 8% of total revenue, increased
by 12% for the nine month period.
Cost of Services
Cost of services for the three months ended January 31, 1999 and 1998
were $4,664,725 and $3,647,974 respectively. For the nine months ended January
31, 1999 and 1998, the cost of services was $15,282,123 and $13,152,697,
respectively. The 28% increase for the three months and the 16% increase for the
nine months are in line with the increased revenue as mentioned above. Gross
margin has remained constant at 17% of sales for the nine months ended January
31, 1999 and 1998.
General Corporate and Administrative
General corporate and administrative expenses for the three months
ended January 31, 1999 and 1998 were $523,516 and $537,584, respectively. For
the nine months ended January 31, 1999 and 1998, general corporate and
administrative expenses were $1,661,158 and $1,628,279, respectively. The 3%
decrease in the three month period is due to a reduction in bad debt expenses.
The 2% increase in the nine month period is due to minor adjustments in
personnel needed to handle the increased revenues.
Interest
Interest expense for the three months ended January 31, 1999 and 1998
was $92,317 and $95,210, respectively. For the nine months ended January 31,
1999 and 1998, interest expense was $250,340 and $271,526, respectively. The 3%
and 8% decreases in interest
<PAGE>
expense for the three month and nine month periods ended January 31, 1999 over
the comparable prior year periods is principally due to the scheduled pay off of
long term debt.
Net Income
As a result of the foregoing, the Company's income for the three months
ended January 31, 1999, was $433,625, or $.43 per share of the Company's common
stock, compared with a net loss of $241,724, or $(.24) per share for the three
months ended January 31, 1998. For the nine months ended January 31, 1999, the
Company's net income was $740,629 or $.73 per share, compared to $409,681 or
$.40 per share for the nine months ended January 31, 1998. The weighted average
number of shares used in computing per share earnings for all periods was
1,013,976.
Liquidity and Capital Resources
The Company has funded its operations primarily through cash flow from
operations and bank indebtedness. The Company's operating activities provided
cash of $594,752 for the nine months ended January 31, 1999, while providing
$585,860 in the comparable prior year period.
On February 25, 1998, the Company entered into a line of credit with
Crestar Bank ("Crestar") for all short term financing needs. The Agreement
provides for up to $2,000,000 in credit. The loan is represented by a demand
note which may be payable at any time upon the demand of Crestar. The Company
will be obligated to pay Crestar interest at prime rate plus one-half percent of
the average balance outstanding. The line is secured by the Company's accounts
receivable and an assignment of the CAS-MOS Contract.
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.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. The Company is not a party to any legal
proceeding or litigation.
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
Y2K - Year 2000 Computer Issue
What is commonly known as the "Year 2000 Issue" arises because
many computer hardware and software systems use only two digits
to represent the year. As a result, these systems and programs
may not calculate dates beyond 1999 which may cause errors in
information or system failures.
With respect to its internal systems, the Company is taking
appropriate steps to remedy the Year 2000 issues and does not
expect the costs of these efforts to be material. However, the
Year 2000 readiness of the Company's suppliers may vary. While
the Company does not believe the Year 2000 matters disclosed
above will have a material impact on its business, financial
condition or results of its operations, it is uncertain whether
or to what extent the Company may be affected by such matters.
Item 6. (a) Exhibits
Exhibit Number and Description
10.1 Amended Pages to CAS-MOS Contract (as listed in
Exhibit 10(l) to the Company's Annual Report on
Form 10-KSB for the year ended April 30, 1997.
Certain information on these pages was excluded
from previous filings because of its acceptance by
the Securities and Exchange Commission for
confidential treatment.)
27.1 Financial Data Schedule
(b) Reports on Form 8-K. None
<PAGE>
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: March 12, 1999 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
<PAGE>
EXHIBIT INDEX
10.1 Amended Pages to CAS-MOS Contract (as listed in Exhibit 10(l) to the
Company's Annual Report on Form 10-KSB for the year ended April 30,
1997. Certain information on these pages was excluded from previous
filings because of its acceptance by the Securities and Exchange
Commission for confidential treatment.)
27.1 Financial Data Schedule
<PAGE>
EXHIBIT 10.1
REVISED SCHEDULE B
PART I - THE SCHEDULE
SECTION 8 - SUPPLIES OR SERVICES AND PRICES/COSTS
OPTION YEAR II - FY-99 (REVISED BY P00015)
PART A - INDEFINITE DELIVERY/INDEFINITE QUANTITY - EAST COAST
N00019-96-D-2047
<TABLE>
<CAPTION>
CLIN SUPPLIES/SERVICES QTY UNIT UNIT PRICE AMOUNT
<S> <C> <C> <C> <C> <C> <C>
0201 PROP AIC, ASAC, TRACK, FERRY UTILITY MISSIONS
0201AA Guaranteed Flight Hours 450 FH $1,009.52 $454,329.00
0201AB Level I Excess Flight Hours EST 100 FH $398.62 $39,862.00
0201AC Level II Excess Flight ,-Hours EST 100 FH $398.62 $39,862.00
0202 JET AIC, TRACK, FERRY, UTILITY MISSIONS
0202AA Guaranteed Flight Hours 2,400 FH $1,271.52 $3,051,388.00
0202AB Level I Excess Flight Hours EST 600 FH $701.62 $420,972.00
0202AC Level II Excess Flight Hours EST 200 FH $701.52 $140,324.00
0203 JET AIC, TRACK FERRY, UTILITY,MISSIONS (LEAR 35 or 36)
0203AA Guaranteed Flight Hours 190 FH $2,427.52 $461,247.80
0203AB Level I Excess Flight Hours EST 400 FH $694.62 $277,848.00
0203AC Level II Excess Flight Hours EST 450 FH $694.62 $312,579.00
0203AD Level III Excess Flight Hours EST 450 FH $694.52 $312,579.00
0204 TOW MISSIONS BASIC (LEAR 35 or 36)
0204AA Guaranteed Flight Hours 500 FH $3,167.52 $1,583,810.00
0204AB Level I Excess Flight Hours EST 200 FH $962.52 $192,524.00
0204AC Level II Excess Flight Hours EST 100 FH $801.62 $80,162.00
0205 TOW MISSIONS BASIC - GFE TARGET/BANNERS (LR 35 or 36)
0205AA Guaranteed Flight Hours 100 FH $2,132.52 $213,262.00
0205AB Level I Excess Flight Hours EST 100 FH $867.62 $86,762.00
0205AC Level II Excess Flight Hours EST 50 FH $867.62 $43,381.00
0206 TOW MISSIONS SPECIAL (LEAR 35 or 36)
0206AA Estimated Flight Hours EST 40 FH $2,634.52 $105,384.80
</TABLE>
<PAGE>
REVISED SCHEDULE B
<TABLE>
<CAPTION>
CLIN SUPPLIES/SERVICES QTY UNIT UNIT PRICE AMOUNT
<S> <C> <C> <C> <C> <C> <C>
0207 EW MISSIONS (LEAR 35 OR 36)
0207AA Guaranteed Flight Hours 700 FH $1,825.62 $1,277,934.00
0207AB Level I Excess Flight Hours EST 450 FH $518.62 $233,379.00
0207AC Level II Excess Flight Hours EST 450 FH $468.62 $210,879.00
0207AD Level III Excess Flight Hours EST 450 FH $367.62 $165,429.00
0208 SPECIAL EW SYSTEMS MISSIONS-GFE INTERNAL EW
EQUIPMENT AND/OR EXTERNAL PODS (LEAR 35 OR 36)
0208AA Guaranteed Flight Hours 120 FH $2,828.62 $339,434.40
0208AB Level I Excess Flight Hours EST 300 FH $2,219.62 $665,886.00
0208AC Level II Excess Flight Hours EST 450 FH $716.62 $322,479.00
PART B - REQUIREMENTS - EAST COAST
0209 JET AIC, TRACK, FERRY, UTILITY MISSIONS 175 FH $1,509.62 $264,183.50
0210 JET AIC, TRACK, FERRY UTILITY MISSIONS
JACKSONVILLE, FL 500 FH $1,003.62 $501,810.00
0211 JET AIC, TRACK. FERRY, UTILITY MISSIONS
ROOSEVELT ROADS P R (LEAR 35 or 36) 250 FH $1,724.62 $431,155.00
0212 RESERVED
0213 JET FERRY UTILITY -WITH EXTERNALLY MOUNTED
EQUIPMENT (LEAR 35 or 36) 200 FH $1,065.62 $213,124.00
0214 TOW MISSIONS BASIC - ROOSEVELT ROADS, PR
(LEAR 35 or 36) 130 FH $2,140.62 $278,230.50
0215 TOW MISSIONS BASIC - GFE TARGETS/BANNERS
ROOSEVELT ROADS PR (LEAR 35 or 36) 50 FH $1,920.62 $96,031.00
0216 RESERVED
0217 EW MISSIONS - ROOSEVELT ROADS. PR (LEAR 35 or 36) 250 FH $1,751.62 $437,905.00
0218 SPECIAL EW SYSTEMS MISSIONS - LEAR 36 TEST
BED/EW PLATFORM 475 FH $2,219.52 $1,054,319.50
PART C - COST REIMBURSABLE ITEMS - EAST COAST
0219 SPECIAL FERRY OF LEAR 36 TO HONOLULU HI
FROM EAST COAST 1 Lot $XXXXXXX $XXXXXXX
02 20 SPECIAL FERRY OF LEAR 36 TO ATSUKI, JAPAN
FROM EAST COAST 1 Lot $XXXXXXX $XXXXXXX
</TABLE>
<PAGE>
REVISED SCHEDULE B
N0001 9-96-D-2047
PART D - INDEFINITE DELIVERY/INDEFINITE QUANTITY - WEST COAST
<TABLE>
<CAPTION>
CLIN SUPPLIES/SERVICES QTY UNIT UNIT PRICE AMOUNT
<S> <C> <C> <C> <C> <C> <C>
0221 JE T AIC, TRACK, FERRY, UTILITY MISSIONS
0221AA Guaranteed Flight Hours 2,400 FH $1,271.62 $3,051,888.00
0221AB Level I Excess Flight Hours EST 450 FH $729.62 $328,329.00
0221AC Level II Excess Flight Hours EST 150 FH $729.62 $109,443.00
0222 TOW MISSIONS BASIC (LEAR 35 or 36)
0222AA Guaranteed Flight Hours 300 FH $3,121.62 $936,486.00
0222AB Level I Excess Flight Hours EST 200 FH $922.62 $184,524.00
0222AC Level II Excess Flight Hours EST 150 FH $922.62 $107,793.00
0223 EW MISSIONS (LEAR 35 or 36)
0223AA Guaranteed Flight Hours 550 FH $1,837.62 $1,194,453.00
0223AB Level I Excess Flight Hours EST 450 FH $518.62 $233,379.00
0223AC Level II Excess Flight Hours EST 450 FH $468.62 $210,879.00
PART E - COST REIMBURSABLE ITEMS - WEST COAST
0224 PROP ASAC, TRACK, UTILITY MISSIONS 1 Lot $XXXXXXXXX
0225 JET AIC TRACK, FERRY, UTILITY MISSIONS
WHIDBEY ISLAND WA 1 Lot $XXXXXXXXX
0226 JET AIC TRACK, FERRY, UTILITY MISSIONS
(LEAR 35 or 36) 1 Lot $XXXXXXXXX
0227 JET FERRY, UTILITY - WITH EXTERNAL EQUIPMENT
(LEAR 35 or 36) 1 Lot $XXXXXXXXX
0228 TOW MISSIONS - BASIC GFE BANNER (LEAR 35 or 36) 1 Lot $XXXXXXXXX
0229 TOW MISSIONS SPECIAL - TLX (LEAR 35 or 36) 1 Lot $XXXXXXXXX
0230 EW MISSIONS - GFE/CFE PODS (LEAR 35 or 36) 1 Lot $XXXXXXXXX
0231 SPECIAL EW SYSTEMS MISSIONS - GFE INTERNAL
EQUIPMENT AND/OR EXTERNAL PODS (LEAR 35 or 36) 1 Lot $XXXXXXXXX
0232 SPECIAL EW SYSTEMS MISSIONS - LEAR 36 TEST BED/
EW PLATFORM 1 Lot $XXXXXXXXX
0233 SPECIAL FERRY OF LEAR 26 TO HONOLULU HI
FROM WEST COAST 1 Lot $XXXXXXXXX
0234 SPECIAL FERRY OF LEAR 36 TO ATSUKI JAPAN
FROM WEST COAST 1 Lot $XXXXXXXXX
</TABLE>
<PAGE>
REVISED SCHEDULE 3
PART F - COST REIMBURSABLE MIDPAC/WESTPAC
N0001 9-96-D-2047
<TABLE>
<CAPTION>
CLIN SUPPLIES/SERVICES QTY UNIT UNIT PRICE AMOUNT
<S> <C> <C> <C> <C> <C> <C>
M DPAC
0235 JET AIC, TRACK, FERRY, UTILITY, TOW MISSIONS,
BASIC GFE CFE, EW MISSIONS (LEAR 36) 1 LOT $1,038,336.00 $XXXXXXX
0236 SPECIAL FERRY OF LEAR 36 TO ATSUKI, JAPAN
FROM HONOLULU, HI 1 LOT $101,237.76 $XXXXXXX
WESTPAC
0237 ._ JET AIC, TRACK, FERRY UTILITY TOW MISSIONS,
BASIC GFE/CFE EW MISSIONS (LEAR 36) 1 LOT $1,168,128.00 $XXXXXX
PART G - REQUIREMENTS
0238 SPECIAL. MISS,_N EQUIPMENT (SME)/EW OPERATOR 2,000 MH $62.00 $124,000,00
0239 SPECIAL REQUIREMENTS PILOTS, OTHER THAN FLYING 600 MH $62.00 $49,600.00
0240 GFE EQUIPMENT INSTALLERS/GFE MAINTENANCE
PERSONNEL 5,000 MH $49.00 $245,000.00
PART H. COST REIMBURSABLE ITEMS
0241 TRAVEL/PER DIEM 1 LOT $324,480.00 $356,928.00
0242 MATERIAL 1 LOT $865,280.00 $951,808.00
0243 SITE ACTIVATION/DEACTIVATION-EAST/WEST COAST 1 LOT $7,571.00 $XXXXXXX
0244 SITE RELOCATION - EAST/WEST COAST
O244AA SITE RELOCATION - EAST COAST 1 LOT XXXX $85,503.00
0245 SITE ACTIVATION - MIDPAC/WESTPAC 1 LOT $7,571.00 $XXXXXXX
O246 SITE RELOCATION - MIDPAC/WESTPAC 1 LOT $4,326.00 $XXXXXXX
0247 ADMINISTRATIVE/TECHNICAL DATA IN ACCORDANCE
WITH DD FORM 1423 -EXHIBIT A 1 LOT NSP NSP
0248 ADDITIONAL SUPPORT AIRCRAFT
0248AA EAST COAST 1 LOT $432,640.00 $XXXXXXX
0248AB WEST COAST 1 LOT $432,640.00 $XXXXXXX
</TABLE>
<PAGE>
PART I -REQUIREMENTS - AIRCRAFT MODIFICATIONS
<TABLE>
<CAPTION>
CLIN SUPPLIES/SERVICES QTY UNIT UNIT PRICE AMOUNT
<S> <C> <C> <C> <C> <C> <C>
0249 AIRCRAFT MODIFICATIONS (SPECIAL EQUIPMENT)
0249AA BELLY RADOME 1 EACH $0.00 $0.00
0249AB ANTI-COLLISION LIGHT (SB 35/36 33-9) 1 EACH $0.00 $0.00
0249AC WING HARDPOINTS 1 EACH $0.00 $0.00
0249AD EJECTOR RELEASE 1 EACH $0.00 $0.00
0249AE INVERTORS 1 EACH $0.00 $0.00
0249AF NOSE RADOME 1 EACH $0.00 $0.00
0249AG TAIL RADOME 1 EACH $0.00 $0.00
0249AH AN/APX-72 OR APX-100 PROVISIONS INCLUDING 2 GFE
ANTENNAS (JET AIRCRAFT) 1 EACH $3,450.00 $3,450.00
0249AJ AN/APX-72 OR APX-100 PROVISIONS INCLUDING 2 GFE
ANTENNAS (LEAR 30 SERIES AIRCRAFT) 1 EACH $3,450.00 $3,450.00
0249AK STORMSCOPE 1 EACH $13,800.00 $13,800.00
0249AL UPGRADE AIR CONDITIONING 1 EACH $0.00 $0.00
0249AM ADDITIONAL UHF TRANSCEIVER (225-400 MHZ) WITH GFE CRYPTO
CAPABILITY (JET AIRCRAFT) 1 EACH $5,750.00 $5,750.00
0249AN ADDITIONAL UHF TRANSCEIVER (225-400 MHZ) WITH GFE CRYPTO
CAPABILITY (LEAR 30 SERIES AIRCRAFT) 1 EACH $8,625.00 $8,625.00
TOTAL AMOUNT FOR ALL CLINS....................................................... $22,514,093.60
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,469,008
<ALLOWANCES> 233,416
<INVENTORY> 2,559,965
<CURRENT-ASSETS> 7,728,436
<PP&E> 6,530,977
<DEPRECIATION> 2,230,128
<TOTAL-ASSETS> 12,064,497
<CURRENT-LIABILITIES> 5,700,608
<BONDS> 0
0
0
<COMMON> 10,140
<OTHER-SE> 3,134,662
<TOTAL-LIABILITY-AND-EQUITY> 12,064,497
<SALES> 18,333,806
<TOTAL-REVENUES> 18,333,806
<CGS> 15,282,123
<TOTAL-COSTS> 17,333,137
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 250,340
<INCOME-PRETAX> 750,329
<INCOME-TAX> 9,700
<INCOME-CONTINUING> 740,629
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 740,629
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.73
</TABLE>
