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 November 30, 1995 or
[ ] 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 0-18352
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
Delaware 59-2223025
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8095 NW 64th Street, Miami, FL 33166
(Address of principal executive offices) Zip Code)
Registrant's telephone number, including area code: (305) 593-2658
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 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 CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The number of shares of the Company's common stock outstanding as
of January 10, 1996 was 4,041,779.
<PAGE>
FORM 10-Q
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
November 30, 1995 and May 31, 1995 3
Condensed Consolidated Statements of Operations
Three Months and Six Months ended
November 30, 1995 and 1994 5
Condensed Consolidated Statements of Cash Flows
Six Months ended November 30, 1995 and 1994 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial Condition 10
Part II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 3. Defaults upon Senior Securities 14
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
FORM 10-Q
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
November 30, May 31,
1995 1995
(Unaudited) (Note)*
<S> <C> <C>
Current assets:
Cash $ 358,058 $ 848,331
Accounts receivable, net of allowance
for doubtful accounts of $348,000
at November 30, 1995 and $619,000
at May 31, 1995 2,647,375 2,592,463
Notes receivable - 313,490
Inventories 7,321,720 6,497,270
Other current assets 128,470 31,480
--------------- --------------
Total current assets 10,455,623 10,283,034
Property and equipment:
Land 330,457 330,457
Aircraft held for lease 3,841,893 3,289,613
Building and leasehold improvements 715,772 715,772
Machinery and Equipment 989,596 940,948
--------------- --------------
5,877,718 5,276,790
Less accumulated depreciation 2,266,696 1,980,927
--------------- --------------
3,611,022 3,295,863
--------------- --------------
Other assets:
Deferred debt costs, net 811,681 931,932
--------------- --------------
$ 14,878,326 $ 14,510,829
=============== ==============
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long term
obligations $ 5,848,336 $ 1,812,040
Long-term obligations in
default classified as current 14,041,667 18,083,334
Accounts payable and accrued expenses 3,542,386 3,876,978
--------------- ---------------
Total current liabilities 23,432,389 23,772,352
Long-term obligations, less current maturates 424,693 440,377
Commitments and contingencies - -
Stockholders' equity (deficit):
Common stock 4,042 4,042
Additional paid-in capital 2,654,332 2,654,332
Retained earnings (deficit) (11,637,130) (12,360,274)
--------------- ----------------
Total stockholders' equity (deficit) (8,978,756) (9,701,900)
--------------- ----------------
$ 14,878,326 $ 14,510,829
================ ==============
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE>
FORM 10-Q
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended Six Months ended
November 30, November 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues
Net sales $ 4,270,585 $ 7,213,618 $ 8,928,404 $14,867,268
Lease revenue 445,926 687,023 748,036 1,415,500
--------------- -------------- -------------- -------------
Total revenues 4,716,511 7,900,641 9,676,440 16,282,768
Cost of sales 2,763,075 6,222,803 5,392,072 12,865,963
Selling, general, and
administrative expenses 879,774 1,063,108 1,901,145 2,219,577
Financial restructuring costs 51,499 - 192,909 -
Interest expense 505,676 591,665 1,036,394 1,238,618
Depreciation and amortization 209,544 572,574 430,505 1,135,292
Interest and other income (1,605) (57,480) (3,979) (238,166)
Losses of service center
subsidiary - 528,266 - 986,869
--------------- -------------- -------------- --------------
4,407,963 8,920,936 8,949,046 18,208,153
--------------- -------------- -------------- --------------
Earnings (loss) before
income taxes 308,548 (1,020,295) 727,394 (1,925,385)
Provision for income taxes 4,250 - 4,250 -
--------------- -------------- -------------- --------------
Net earnings (loss) $ 304,298 $ (1,020,295) $ 723,144 $ (1,925,385)
=============== ============== ============== ==============
Per share date:
Weighted average shares 4,041,779 4,041,779 4,041,779 4,041,779
Net earnings (loss) per common
share and common equivalent
shares
Net earnings (loss) $ .08 $ (0.25) $ 0.18 $ (0.48)
================ ============== ============== =============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE>
FORM 10-Q
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended
November 30,
1995 1994
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 723,144 $ (1,925,385)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 430,505 1,298,023
Changes in assets and liabilities (997,451) 4,354,566
---------------- --------------
Total adjustments (566,946) 5,652,589
Net cash provided by operating
activities 156,198 3,727,204
Cash flows from investing activities:
Capital expenditures (625,416) (473,647)
----------------- --------------
Net cash (used in) investing activities (625,416) (473,647)
Cash flows from financing activities:
Repayments of notes payable and debt
obligations (21,055) (3,342,501)
----------------- --------------
Net cash (used in) financing activities (21,055) (3,342,501)
Net (decrease) in cash (490,273) (88,944)
Cash at beginning of period 848,331 95,790
----------------- ---------------
Cash at end of period $ 358,058 $ 6,846
================= ===============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements
<PAGE>
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain adjustments (consisting only of normal
and recurring adjustments) necessary to present fairly International Airline
Support Group, Inc.'s condensed consolidated balance sheets as of November 30,
1995 and May 31, 1995, the condensed consolidated statements of operations for
the three and six month periods ended November 30, 1995 and 1994, and the
condensed consolidated statements of cash flows for the six month periods then
ended.
The accounting policies followed by the Company are described in the May
31, 1995 financial statements.
The results of operations for the six months ended November 30, 1995 are
not necessarily indicative of the results to be expected for the full year. For
interim reporting purposes, certain expenses are based on estimates rather than
expenses actually incurred.
2. Inventories consisted of the following:
November 30, 1995 May 31, 1995
Aircraft parts $ 5,120,988 $ 4,063,352
Aircraft available for sale 2,200,732 2,433,918
--------- ---------
$ 7,321,720 $ 6,497,270
========= =========
Inventories are stated at the lower of cost or market. The cost of
aircraft parts is determined on a specific identification basis for those parts
purchased individually or in lots where specific identification is practical.
For parts acquired through whole aircraft purchases, the costs are assigned to
pools which are then amortized as parts sales take place. The amortization is
then based upon the actual sales, except in any periods where sales are lower
than expected, the estimated sales per the initial sales projection are used
(which has a maximum life of 5 years). The amount of cost amortized is based
upon the gross profit percentage as calculated from the estimated sales value
of the parts. The sales value estimates are monitored by management, and
adjusted periodically as necessary.
At November 30, 1995, approximately 90% of the ending inventory
(including aircraft held for sale) was costed under the specific identification
method, and the remaining 10% was costed under the pooling method.
3. Primarily as a result of net losses experienced in fiscal 1995 and
1994, and the classification of most indebtedness as current, the Company has a
significant deficit in working capital and stockholders' equity. Currently, the
Company is in default in the payment of principal on the 12% Senior Secured
Notes ("Notes"), issued July 1992, and is in default in payment of interest on
the 8% Convertible Subordinated Debentures ("Debentures"), issued September
1993. The Notes are secured by substantially all of the assets of the Company.
The Debentures are unsecured and are subordinated in right of payment to the
Notes and to the claims of the Company's general unsecured creditors.
<PAGE>
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Excluding amounts scheduled to be repaid within the next 12 months under the
terms of the agreements, $14,041,667 is subject to accelerated maturity and, as
such, has been classified as a current liability in the Consolidated Balance
Sheets at November 30, 1995. After conducting preliminary meetings with cert-
ian holders of the Notes and Debentures, the Company formulated a restructuring
proposal that contemplates (among other things) a deferral of the time of
payment of a portion of the principal of the Notes and a conversion of all of
the outstanding Debentures into the Company's Common Stock. The restructuring
proposal was subsequently presented to certain major holders of the Debentures.
The Company understands that, after the presentation of the restructuring
proposal, the largest holder of the Debentures sold all of the Debentures then
held by it, for a cash price equal to $150 per $1,000 principal amount of the
Debentures, to one or more substantial holders of Debentures that have also
been participating in the restructuring discussions. In November 1995, these
Debenture holders presented to the Company a preliminary counterproposal to the
Company's restructuring proposal, but the counterproposal was subsequently
retracted. Although the Company intends to continue these restructuring
discussions, there can be no assurance that the Company will be able to
consummate a restructuring of its indebtedness. If the lenders were to
accelerate the maturity of the Notes or Debentures, or both, the Company would
not have sufficient funds to repay the debt obligations.
As a result of these factors, there exists substantial doubt about the
Company's ability to continue in existence.
During the six months ended November 30, 1995, the Company incurred
approximately $193,000 of legal, accounting and other consulting fees in
connection with its debt restructuring activities.
4. During the fiscal year ending May 31, 1995, the Company accepted lease
payments from a foreign customer in the customer's local currency because
conversion restrictions precluded the customer from obtaining and paying U.S.
dollars. Due to uncertainties regarding when and at what rate the local
currency could be converted to U.S. dollars, the Company valued the local
currency at an estimated value of $200,000 as of May 31, 1995 (included in
cash), such amount being less than the then current U.S. equivalent amount at
the official exchange rate. The Company subsequently was able to convert the
funds to U.S. dollars in the amount of $339,000, resulting in a gain of
$139,000, which is included in lease revenues during the three and six months
ended November 30, 1995.
5. The Company recorded a gain during the six months ended November 30,
1995 relating to the settlement of certain disputes with a customer. Pursuant
to the settlement, the customer paid the Company $660,000 and the Company
canceled a note receivable from the customer. The Company also released all
claims it had against the customer, which included among other things, claims
for the purchase price of parts purchased by the customer on open account or
pursuant to a consignment arrangement. The customer released certain claims it
had against the Company as part of the settlement. The transaction resulted in
a net gain
<PAGE>
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
to the Company of approximately $345,000, consisting of the excess of cash
received over the net carrying value of the note receivable and cost of the
inventory. The Company recorded as net sales the cost of the inventory plus
the amount of the net gain.
6. Earnings per share is computed by dividing the net earnings (loss) by
the weighted average number of common shares outstanding and common stock
equivalents. Stock options and warrants are considered common stock equivalents
unless their inclusion would be anti-dilutive. In all periods presented, stock
options and warrants are anti-dilutive because their exercise price exceeded the
market price. The Company's convertible subordinated debentures are not
considered common stock equivalents as the effective yield on the securities
exceeded 66-2/3% of the average Aa corporate bond rate at the time of issuance.
7. Supplemental cash flow disclosures:
Cash payments for interest were $626,000 and $1,345,600 for the six
months ended November 30, 1995 and 1994, respectively.
<PAGE>
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATION AND FINANCIAL CONDITION
The following is management's discussion and analysis of certain
significant factors which have affected the Company's operating results and
financial position during the periods included in the accompanying condensed
consolidated financial statements.
RESULTS OF OPERATIONS:
Revenues
Total revenues for the three and six months ended November 30, 1995
decreased 41% and 40%, respectively, to $4.3 million and $8.9 million, from $7.2
million and $14.9 million, respectively, for the same periods in the prior
fiscal year. Aircraft sales were $0 and $325,000 during the three and six
months ended November 30, 1995, compared to $4.1 million and $8.1 million,
respectively, during the same periods in the prior fiscal year. Aircraft sales
are unpredictable transactions and may fluctuate significantly from year to
year, dependent, in part, upon the Company's ability to purchase an aircraft and
resell it within a relatively brief period of time. Included in aircraft sales
during the six months ended November 30, 1994 are the sale of three DC-9
aircraft sold to a leasing company for $5.6 million pursuant to a contract
entered into during the fiscal year ended 1994. Parts sales for the three and
six months ended November 30, 1995 were $4.1 million and $7.8 million,
respectively, compared to $2.8 million and $6.2 million, respectively, during
the same periods in the prior fiscal year. During the six months ended November
30, 1995, the Company has continued to increase its domestic customer base and
decrease its number of foreign customers in order to lessen the Company's credit
risks. Lease revenue for the three and six months ended November 30, 1995
decreased to $446,000 and $748,000, respectively, compared to $687,000 and $1.4
million, respectively, during the same periods in the prior fiscal year, as
certain leases that were in existence during the prior year have terminated.
During the fiscal year ending May 31, 1995, the Company accepted lease
payments from a foreign customer in the customer's local currency because
conversion restrictions precluded the customer from obtaining and paying U.S.
dollars. Due to uncertainties regarding when and at what rate the local
currency could be converted to U.S. dollars, the Company valued the local
currency at an estimated value of $200,000 as of May 31, 1995 (included in
cash), such amount being less than the then current U.S. equivalent amount at
the official exchange rate. The Company subsequently was able to convert the
funds to U.S. dollars in the amount of $339,000, resulting in a gain of
$139,000, which is included in lease revenues during the three and six months
ended November 30, 1995.
The Company recorded a gain during the six months ended November 30,
1995 relating to the settlement of certain disputes with a customer. Pursuant
to the settlement, the customer paid the Company $660,000 and the Company
canceled a note receivable from the customer. The Company also released all
claims it had against the customer, which included among other things, claims
for the purchase price of parts purchased by the customer on open account or
pursuant to a consignment arrangement. The customer released certain claims it
had against the Company as part of the settlement. The transaction resulted in
a net gain to the Company of approximately $345,000, consisting of the excess of
cash
<PAGE>
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
received over the net carrying value of the note receivable and cost of the
inventory. The Company recorded as net sales the cost of the inventory plus the
amount of the net gain.
Cost of Sales
Cost of sales as a percentage of total revenues for the three and six
months ended November 30, 1995 was 59% and 56%, respectively, compared to 79%
and 79%, respectively, during the same periods in the prior fiscal year. The
higher cost of sales as a percentage of total revenues in the three and six
months ended November 30, 1994 was the result of lower margins realized on
aircraft sales. Excluding aircraft sales and cost of aircraft sales, cost of
sales as a percentage of total revenues during the three and six months ended
November 30, 1995 was 59% and 56%, respectively, compared to 56% and 59% during
the same periods in the prior fiscal year.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses for the three and
six months ended November 30, 1995 were $880,000 and $1.9 million, respectively,
compared to $1.1 million and $2.2 million, respectively, during the same periods
in the prior fiscal year. The decrease in SG&A expenses is a result of
continuing efforts to reduce costs.
Financial Restructuring Costs
During the three and six months ended November 30, 1995 the Company
incurred approximately $52,000 and $193,000, respectively, of legal, accounting
and other consulting fees in connection with its debt restructuring activities.
Interest Expense
Interest expense for the three and six months ended November 30, 1995
was $506,000 and $1.0 million, respectively, compared to $592,000 and $1.2
million during the same periods in the prior fiscal year.
Depreciation and Amortization
Depreciation and amortization for the three and six months ended
November 30, 1995 was $210,000 and $431,000, respectively, compared to $573,000
and $1.1 million, respectively, during the same periods in the prior fiscal
year. The decrease in depreciation and amortization was due primarily to a
reduction in depreciable aircraft held for lease, such aircraft held for lease
amounting to a gross value of $3.8 million at November 30, 1995 compared to $7.7
million at November 30, 1994. The reduction in aircraft held for lease is due
to the Company selling during fiscal 1995 certain aircraft previously leased or
transferring certain aircraft to inventory held for sale.
Losses of Service Center Subsidiary
In fiscal 1994 the Company began operations of International Airline
Service Center, Inc. (IASC), an FAA-certified repair facility. During the
fiscal year ended May 31, 1995, IASC ceased operations and the majority of its
assets were sold. As a result, there were no operating results of IASC during
<PAGE>
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
the three and six months ended November 30, 1995. The results of IASC during
the three and six months ended November 30, 1994, amounting to approximately
$528,000 and $987,000, respectively, are shown as losses of service center
subsidiary.
Income Taxes
The Company recorded an income tax provision (resulting from alternative
minimum tax rules) of $4,250 during the three and six months ended November 30,
1995, respectively. No income tax provision was recorded during the three and
six months ended November 30, 1994. The Company has net operating loss
carryforwards sufficient to offset income.
Liquidity and Capital Resources
At November 30, 1995 the Company's total long-term debt amounted to
$20.3 million, consisting primarily of $9.9 million principal amount of the
Notes, $10 million principal amount of the Debentures and $400,000 principal
amount of a mortgage loan secured by its corporate headquarters. The entire
principal amount of the Notes and the Debentures is classified as current at
November 30, 1995, because of the existence of defaults under the governing
documents. The Notes, which were issued during fiscal 1993, bear interest at
the fixed rate of 12% per annum, payable quarterly. The Notes mature in 1997.
The Debentures, which were issued during fiscal 1994, bear interest at the fixed
rate of 8% per annum, payable quarterly and are convertible into shares of the
Company's Common Stock at $4.00 per share. The Debentures mature in 2003.
On May 26, 1995, the Company received a notice of payment blockage from
the holder (the "Majority Noteholder") of a majority of the outstanding princi-
pal amount of the Notes. Citing a continuing Event of Default under the agree-
ment governing the Notes as a result of the Company's noncompliance with certain
financial covenants, the Majority Noteholder demanded that the scheduled
interest payment which would otherwise have been payable on May 31, 1995 to
holders of the Debentures not be paid. As a result of the Company's receipt of
the notice of payment blockage, the Company did not make its scheduled May 31,
1995 nor its August 31, 1995 interest payments, totaling $400,000, to the
holders of the Debentures. Further, the Company did not make its scheduled July
17, 1995 principal payment, in the approximate amount of $1.8 million, to the
holders of the Notes. Pursuant to terms of the Notes, the Company was
prohibited from making any other payments with respect to the Debentures prior
to the expiration of the payment blockage period on November 22, 1995.
Notwithstanding the expiration of the payment blockage period, the Company did
not pay interest in the amount of $200,000 on the Debentures that became due on
November 30, 1995. The Company does not intend to resume making payments of
interest on the Debentures. The Company made a principal payment of $1,450,000
on the Notes on December 12, 1995.
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
The failure to make the May 31, 1995, August 31, 1995, and November 30,
1995 interest payments to the holders of the Debentures and the July 17, 1995
principal payment to the holders of the Notes constitutes an Event of Default
under the agreements governing the Notes and Debentures. If the Company remains
in default under the terms of the Notes and Debentures, the holders of such
instruments could accelerate the debt, resulting in principal of approximately
$18.4 million becoming immediately due and payable. The Company would have no
ability to repay such indebtedness if it were to be accelerated. The foregoing
circumstances could require the Company to cease operations or to seek
protection from its creditors through judicial reorganization proceedings.
After conducting preliminary meetings with certain holders of the Notes
and Debentures, the Company formulated a restructuring proposal that contem-
plates (among other things) a deferral of the time of payment of a portion of
the principal of the Notes and a conversion of all of the outstanding Debentures
into the Company's Common Stock. The restructuring proposal was subsequently
presented to certain major holders of the Debentures. The Company understands
that, after the presentation of the restructuring proposal, the largest holder
of the Debentures sold all of the Debentures then held by it, for a cash price
equal to $150 per $1,000 principal amount of the Debentures, to one or more
substantial holders of Debentures that have also been participating in the
restructuring discussions. In November 1995, these Debenture holders presented
to the Company a preliminary counterproposal to the Company's restructuring
proposal, but the counterproposal was subsequently retracted. The Debenture
holders have engaged an aviation consulting firm and an investment banking firm
to review the Company's restructuring proposal. These experts completed their
review and issued a report dated December 12, 1995. Although the Company
intends to continue discussing a restructuring with its creditors, there can be
no assurances that the Company will be able to consummate a successful
restructuring.
At November 30, 1995, the Company had a working capital deficit of $13.0
million and a current ratio of .45 to 1.0, compared to a working capital deficit
of $13.5 million and a current ratio of .43 to 1.0 at May 31, 1995. The
decrease in working capital deficit was principally the result of the Company's
net income recorded during the six months ended November 30, 1995.
The Company does not have any bank lines of credit or other sources of
liquidity beyond cash flows from operating activities due to profitable
operations, if any, or further asset sales. However, the Company does not
currently have any significant commitments for capital outlays.
Impact of Inflation
Current financial statements are prepared in accordance with generally
accepted accounting principles and report operating results in terms of
historical costs. They provide a reasonable, objective, quantifiable statement
of financial results, but do not evaluate the impact of inflation.
Management believes that impact of inflation would not materially affect
operating results because, competitive conditions permitting, the Company
modifies its selling prices to recognize cost changes as incurred.
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In July 1993, Viglass Aviation ("Viglass") filed a complaint against the
Company in the Circuit Court of the 11th Judicial Circuit in and for Dade
County, Florida (Case No. 93-14256CA20), claiming that Viglass was entitled to
payment of $681,750 under a commission agreement with the Company relating to
the sale of certain aircraft to one of the Company's significant customers.
During December 1995, after the date of this report, the Company reached an
agreement to settle the claims of the plaintiffs in this litigation. In the
opinion of management, the amount paid in settlement of this claim will not have
a material adverse effect on the Company's financial position or results of
operations.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Currently, the Company is in default in the payment of principal on the
Notes and in default in the payment of interest on the Debentures. As of the
date of this report, the Company was in default in the payment of approximately
$1.8 million of principal on the Notes. On December 12, 1995, after the date of
this report, the Company paid $1.45 million of such defaulted principal. As of
the date of this report, the Company was in default in the payment of $600,000
of interest on the Debentures. The Notes are secured by substantially all of
the assets of the Company and the Debentures are unsecured and are subordinated
in right of payment to the Notes and to the claims of the Company's general
unsecured creditors.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES
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.
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
- -----------------------------------------
(Registrant)
/s/ Robert K. Norris January 11 , 1996
- ------------------------------- ------------------
ROBERT K. NORRIS Date
Vice President - Finance
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> NOV-30-1995
<CASH> 358,058
<SECURITIES> 0
<RECEIVABLES> 2,995,375
<ALLOWANCES> 348,000
<INVENTORY> 7,321,720
<CURRENT-ASSETS> 10,455,623
<PP&E> 5,877,718
<DEPRECIATION> 2,266,696
<TOTAL-ASSETS> 14,878,326
<CURRENT-LIABILITIES> 23,432,389
<BONDS> 424,693
<COMMON> 4,042
0
0
<OTHER-SE> (8,982,798)
<TOTAL-LIABILITY-AND-EQUITY> 14,878,326
<SALES> 8,928,404
<TOTAL-REVENUES> 9,676,440
<CGS> 5,392,072
<TOTAL-COSTS> 5,392,072
<OTHER-EXPENSES> 430,505
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,036,394
<INCOME-PRETAX> 727,394
<INCOME-TAX> 4,250
<INCOME-CONTINUING> 723,144
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 723,144
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
