UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
COMMISSION FILE NUMBER 0-22706
GREENWICH AIR SERVICES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 58-1758941
- ------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. BOX 522187, MIAMI, FLORIDA 33152
4590 NW 36TH STREET, MIAMI, FLORIDA 33122
- --------------------------------------- --------
(Address of principal executive offices) (Zip Code)
(305) 526-7000
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(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 [ ]
The number of shares outstanding of each class of the issuer's Common Stock as
of August 11, 1997 were:
Class A common stock, $0.01 par value (NASDAQ: GASIA) - 7,044,198 shares
Class B common stock, $0.01 par value (NASDAQ: GASIB) - 9,798,162 shares.
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GREENWICH AIR SERVICES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I FINANCIAL INFORMATION:
Consolidated Balance Sheets as of June 30, 1997 (unaudited)
and September 30, 1996 ............................................. 3
Consolidated Statements of Income for the three months
and nine months ended June 30, 1997 and 1996 (unaudited) ........... 4
Consolidated Statements of Cash Flows for the three months
and nine months ended June 30, 1997 and 1996 (unaudited)............ 5
Notes to Consolidated Financial Statements (unaudited) ............... 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations .......................................... 9
PART II OTHER INFORMATION:
Item 4 Submission of Matters to a Vote of Security Holders...... 12
Item 5 Other Information ....................................... 12
Item 6 Exhibits and Reports on Form 8-K ........................ 12
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PART I. FINANCIAL INFORMATION
GREENWICH AIR SERVICES, INC, AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND SEPTEMBER 30, 1996
JUNE 30,
1997 SEPTEMBER 30,
(UNAUDITED) 1996
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ASSETS
Current Assets:
Cash $ 195 $ 334
Accounts receivable, less allowance of $4,266 in June 1997
and $5,033 in September 1996 168,455 139,401
Inventories 371,813 318,013
Prepaid expenses and other current assets 14,555 20,004
---------- ----------
Total current assets 555,018 477,752
---------- ----------
Property, plant and equipment 155,854 147,403
Less accumulated depreciation (20,426) (12,518)
---------- ----------
Property, plant and equipment, net 135,428 134,885
Deferred financing costs, net 7,433 8,416
Other assets 18,863 4,027
---------- ----------
TOTAL ASSETS $ 716,742 $ 625,080
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 105,364 $ 106,556
Accrued expenses and current portion of long term liabilities 78,550 68,215
Customer deposits and deferred revenue 30,287 21,912
Income taxes payable 11,835 7,474
---------- ----------
Total current liabilities 226,036 204,157
Deferred income taxes payable 21,228 23,000
Other liabilities 6,300 25,510
Long term debt 144,766 69,710
Long term debt - WAL 0 1,141
Senior notes 160,000 160,000
Convertible subordinated debentures 0 2,515
Stockholders' Equity:
Common stock 168 163
Capital in excess of par value 106,679 104,271
Retained earnings 51,914 35,658
Treasury stock, at cost (349) (1,045)
---------- ----------
Total stockholders' equity 158,412 139,047
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 716,742 $ 625,080
========== ==========
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SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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GREENWICH AIR SERVICES, INC, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
THREE AND NINE MONTHS ENDED JUNE 30, 1997 AND 1996
THREE MONTHS ENDED JUNE 30, NINE MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
DOLLARS IN THOUSANDS 1997 1996 1997 1996
------------ ------------ ------------ ------------
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Net sales $ 220,375 $ 99,601 $ 609,038 $ 218,226
Cost of sales 194,100 86,923 533,650 186,844
------------ ------------ ------------ ------------
Gross profit 26,275 12,678 75,388 31,382
Selling, general and
administrative expense 9,663 5,414 26,326 13,156
------------ ------------ ------------ ------------
Income from operations 16,612 7,264 49,062 18,226
------------ ------------ ------------ ------------
Non-operating (income)
expense:
Interest expense 8,106 2,781 22,357 6,416
Other (income) expense (703) 25 (820) 24
------------ ------------ ------------ ------------
Total non-operating
expense 7,403 2,806 21,537 6,440
------------ ------------ ------------ ------------
Income before provision for
income taxes 9,209 4,458 27,525 11,786
Provision for income taxes 3,638 1,739 10,872 4,647
------------ ------------ ------------ ------------
Net Income $ 5,571 $ 2,719 $ 16,653 $ 7,139
============ ============ ============ ============
Earnings per share:
Primary $ 0.33 $ 0.20 $ 0.98 $ 0.56
Fully diluted $ 0.33 $ 0.19 $ 0.98 $ 0.54
Weighted average number of common shares
and common share equivalents:
Primary 17,057,359 13,912,023 16,975,570 12,743,561
Fully diluted 17,066,286 14,431,775 17,027,810 13,330,165
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SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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GREENWICH AIR SERVICES, INC, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
NINE MONTHS ENDED JUNE 30, 1997 AND 1996
NINE MONTHS ENDED JUNE 30,
---------------------------
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 16,653 $ 7,138
Adjustments to reconcile net income to net cash used by
operating activities:
Depreciation and amortization 8,856 2,763
Changes in assets and liabilities:
Accounts receivable (29,054) (29,433)
Inventories (53,800) 13,749
Prepaid expenses and other current assets 5,449 (603)
Other assets (14,836) (302)
Accounts payable (1,192) (10,736)
Accrued expenses, customer deposits and deferred revenue 15,491 2,567
Income taxes payable 4,361 1,330
Deferred income taxes (1,772) (1,493)
Other non-current liabilities (19,210) (1,000)
---------- ----------
NET CASH USED BY OPERATING ACTIVITIES (69,054) (16,020)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (8,451) (2,472)
Acquisition of Net Assets (226,937)
---------- ----------
NET CASH USED BY INVESTING ACTIVITIES (8,451) (229,409)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net changes in revolving credit facility 79,479 28,037
Repayments of long term debt (2,346) (11,993)
Purchase of treasury shares (140) (703)
Proceeds from sale of treasury shares 616 452
Proceeds from issuance of common stock, net of expenses 80,701
Proceeds from sale of senior notes 160,000
Options exercised 83 432
GCL merger 7
Cash dividends paid (201) (120)
Financing Cost (125) (10,727)
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 77,366 246,086
---------- ----------
NET INCREASE (DECREASE) IN CASH (139) 657
Cash, beginning of periods 334 180
---------- ----------
Cash, end of periods $ 195 $ 837
---------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 24,173 $ 5,604
Taxes $ 7,219 $ 6,356
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SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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GREENWICH AIR SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
JUNE 30, 1997
1. STATEMENT OF INFORMATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes normally included in annual
financial statements and should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's latest Annual Report on Form 10-K for the year ended September
30, 1996. In the opinion of management, the unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the balance
sheets and statements of income and of cash flows for such interim periods
presented. The results of operations for the three and nine months ended
June 30, 1997 are not necessarily indicative of the results which may be
expected for the entire fiscal year. The preparation of the financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
ORGANIZATION
Greenwich Air Services, Inc. ("GASI") and its subsidiaries (collectively,
the "Company" or "Greenwich") overhauls, repairs, and refurbishes gas
turbine engines and components used in aviation, marine and industrial
applications. The Company also manages government and military service and
maintenance programs, and provides management services for the sale,
refurbishment and installation of complete gas turbine power plants.
On June 10, 1996, the Company, through its newly-formed, wholly-owned
subsidiary GASI Engine Services Corporation, purchased (a) substantially
all of the assets and business of the commercial engine services divisions
(the "CES Divisions") of Aviall, Inc. ("Aviall"), and (b) all of the
issued and outstanding shares of Aviall Limited, a subsidiary of Aviall
(collectively, the "Former Aviall Operations"). The CES Divisions included
(i) all of the engine repair and overhaul operations of Aviall located in
Dallas and Fort Worth, Texas and (ii) the components and parts repair
business of Aviall located in McAllen, Texas. Aviall Limited, which has
been renamed Greenwich Caledonian Limited ("Greenwich Caledonian")
operated an engine repair and overhaul facility in Prestwick, Scotland.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, ACCOUNTING
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
DISPOSED OF. SFAS No. 121 was adopted by to the Company as of October 1,
1996 without any impact.
In October 1995, the FASB issued SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION. The Company intends to adopt the pro forma disclosure
features of SFAS No. 123, which are effective for fiscal year 1997. The
adoption of these pro forma disclosure features will not have any impact
on the Company's present accounting for stock-based compensation.
In February 1997, the FASB issued SFAS No. 128, EARNINGS PER SHARE. The
statement is effective for financial statements for periods ending after
December 15, 1997, and changes the method by which earnings per share will
be determined. Adoption of this statement by the Company is not expected
to have a material impact on earnings per share.
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2. INVENTORIES
Inventories are comprised of the following: June 30, September 30,
Amounts in thousands 1997 1996
--------- -------------
Parts $157,083 $136,424
Engines 20,337 21,393
Work in process 176,007 144,116
Inventories substantially applicable
to long-term programs 18,386 16,080
--------- --------
TOTAL $371,813 $318,013
========= ========
3. EARNINGS PER SHARE
Primary earnings per share are based on the weighted average number of
common shares and common share equivalents outstanding. Common share
equivalents include dilutive stock options and stock warrants using the
treasury stock method.
Fully diluted earnings per share assumes, in addition to the above, (a)
that convertible debentures and debenture warrants were converted at the
beginning of each period with earnings being increased for interest
expense, net of taxes, that would not have been incurred had conversion
taken place and (b) the additional dilutive effect of stock options.
4. CAPITAL STOCK AND STOCKHOLDERS' EQUITY
The Company is authorized to issue 25,000,000 shares of Class A common
stock, $.01 par value; 25,000,000 shares of Class B non-voting common
stock, $.01 par value; and 2,500,000 shares of preferred stock, $.01 par
value.
On October 2, 1996, Greenwich's Board of Directors authorized the
redemption of all of the Company's outstanding 8% Convertible Subordinated
Debentures, due 2000 (the "Debentures"). The redemption date was November
25, 1996. The redemption price was 100% of the principal amount plus any
unpaid interest accrued to that date. The Debentures are convertible into
Class A Common Stock at a conversion price of $5.85 per share. Prior to
the redemption, during the nine months ended June 30, 1997, a total of
$2,515,000 of the Debentures were converted into 429,904 shares of Class A
common stock.
On November 25, 1996, Greenwich's Board of Directors elected to declare a
$.012 per share cash dividend to shareholders of record as of January 10,
1997. The cash dividend is payable on shares of both Class A and Class B
Common Stock and was paid on January 30, 1997.
5. OTHER STATEMENT OF CASH FLOWS INFORMATION
During the nine months ended June 30, 1997, $2,515,000 of the Company's 8%
Convertible Subordinated Debentures due 2000 were converted into 429,904
shares of Common Stock. Unamortized deferred issue costs applicable to the
Debentures converted of approximately $160,000 were charged to additional
paid in capital. The unamortized deferred issue costs are determined at
the date of conversion.
6. RELATED PARTY TRANSACTIONS
During the nine months ended June 30, 1997, the Company purchased engine
parts totaling $19,000, from a company affiliated through common
ownership, and performed engine repair services totaling 1,214,000 for
this same affiliate. In addition, during the nine months ended June 30,
1997, the Company also purchased engine parts totaling $41,000 from
another company affiliated through common ownership.
The terms of the above transactions are believed by the Company's
management to have been on a market basis
7
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not materially different from those which would have prevailed in a
transaction on an arms-length basis with an unrelated person.
A director of the Company is a senior partner in a law firm which has
received legal fees from the Company in connection with professional
services provided to the Company.
7. RECENT DEVELOPMENTS
THE UNC ACQUISITION
On February 13, 1997, Greenwich entered into an agreement and plan of
reorganization with UNC Incorporated ("UNC") whereby Greenwich would (a)
acquire all of the outstanding shares of UNC's common stock and common
stock equivalents for a purchase price of between $14.00 and $16.10 per
share to be paid in Greenwich Class B common stock and/or cash, and (b)
merge UNC with and into a wholly-owned subsidiary of Greenwich. This
proposed acquisition, which is subject to certain shareholder approvals
and regulatory clearances, was estimated to have a value of between $310
and $355 million, depending upon the trading price of Greenwich Class B
common stock immediately prior to the closing of the acquisition. On March
9, 1997, concurrently with the agreement described below, the UNC
acquisition agreement was restructured as an all-cash transaction at
$15.00 per share with a value of approximately $330 million.
THE GE MERGER
On March 9, 1997, Greenwich entered into an agreement and plan of merger
with General Electric Company ("GE") whereby GE would (a) acquire all of
the outstanding shares of Greenwich's common stock and common stock
equivalents for a purchase price of $31.00 per share to be paid in GE
common stock and/or cash, and (b) merge Greenwich with and into a
wholly-owned subsidiary of GE. This proposed merger, which is also subject
to certain shareholder approvals and regulatory clearances, is estimated
to have a value of approximately $530 million.
The Company announced on April 28, 1997 that the Antitrust Division of the
Department of Justice had requested additional information relating to (a)
the proposed acquisition of Greenwich by General Electric Company ("GE"),
and (b) the proposed acquisition of UNC Incorporated ("UNC") by Greenwich
(or by GE, if the GE acquisition of Greenwich has been completed). On July
1, 1997, the Company submitted its response to this request from the
Department of Justice. On August 11, 1997, the Federal Trade Commission
announced that the Department of Justice had approved the acquisition of
UNC by either Greenwich or GE.
In May, 1997, the Company was advised that Southwest Airlines Company had
signed a letter of intent to enter into a long-term agreement with General
Electric Engine Services, Inc. for the repair and overhaul of its CFM56
and JT8D engines, commencing in the second half of calendar 1997.
Greenwich had been servicing a portion of those engines under an agreement
with Southwest which expired at the end of 1996, and which had been
renewed on an interim basis pending the results of competitive bidding for
a new long-term agreement. In fiscal 1996, Southwest Airlines was one of
the Company's five largest customers, but accounted for less than 5% of
the Company's revenues. The Company does not believe that the loss of the
Southwest contracts will have a material adverse effect on the Company's
operations.
8
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 1997 AND 1996
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1996
Net sales for the third quarter of fiscal 1997 increased 121.2% to a record
$220.4 million from third quarter 1996 sales of $99.6 million. The increase in
net sales was primarily attributable to the inclusion of a full quarter of the
operations of the commercial engine services operations in Texas and Scotland
acquired from Aviall, Inc. on June 10, 1996, versus less than one month of
operations in the third quarter of fiscal 1996. Also as a result of the Aviall
acquisition, revenues from both commercial aviation engine services and
government programs work were higher in the third quarter of fiscal 1997 than in
the third quarter of fiscal 1996. Revenues from aeroderivative engine services,
which includes power station installations, were lower for the third quarter of
1997 when compared to the third quarter of fiscal 1996, however these revenues
were not affected by the acquisition.
Gross profit for the third quarter of fiscal 1997 increased to $26.3 million, or
11.9% of net sales, from $12.7 million, or 12.7% of net sales, for the same
period last year, primarily as a result of the increase in net sales for the
period. The decline in gross profit as a percentage of sales is primarily the
result of work performed under certain long-term contracts assumed from Aviall
that have not been generating margins as high as the Company's pre-acquisition
operations, as well as a shift in product mix. Gross profit margins for the
former Aviall operations in Texas and Scotland have been, and are expected to
continue improving as the Company completes its integration plan, which is
engineered to increase productivity, reduce turnaround times and eliminate
duplicative expenses.
Selling, general and administrative expenses for the third quarter of fiscal
1997 increased to $9.7 million, or 4.4% of net sales, from $5.4 million, or 5.4%
of net sales for the third quarter of fiscal 1996. The reduction in selling,
general, and administrative expense as a percentage of net sales is primarily
attributed to savings realized from the elimination of duplicative expenses as a
result of the integration plan.
Interest expense for the third quarter of fiscal 1997 increased to $8.1 million,
or 3.7% of net sales, from $2.8 million, or 2.8% of net sales for the third
quarter of fiscal 1996, primarily due to the increase in outstanding borrowings
under the Company's revolving credit facility (the "Credit Facility") and the
issuance of the Senior Notes.
Other non-operating expenses for the third quarter decreased to ($0.7) million
as a result of foreign currency translation adjustments related to the Company's
holdings in Scotland.
As a result of the above factors, net income increased 104.9% to $5.6 million,
or 2.5% of net sales for the third quarter of fiscal 1997, from $2.7 million, or
2.7% of net sales for the third quarter of fiscal 1996. Third quarter fiscal
1997 primary earnings per share increased to $0.33, as compared to $0.20 for the
third quarter of fiscal 1996; and fully diluted earnings per share increased to
$0.33 per share versus $0.19 per share for the third quarter of fiscal 1996. The
number of primary and fully diluted shares outstanding in the third quarter of
fiscal 1997 increased by 22.6% and 18.3%, respectively, as compared to the third
quarter of fiscal 1996.
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NINE MONTHS ENDED JUNE 30, 1997 COMPARED WITH NINE MONTHS ENDED JUNE 30, 1996
Net sales increased $390.8 million or 179.1% to a record $609.0 million in the
first nine months of fiscal 1997 from $218.2 million in the first nine months of
fiscal 1996. The increase in net sales was primarily attributable to the
inclusion of the operations of the commercial engine services operations in
Texas and Scotland acquired from Aviall, Inc., as well as internal growth.
Principally as a result of that acquisition, revenues from both commercial
aviation engine services and government programs work were higher in the first
nine months of fiscal 1997 than in the first nine months of fiscal 1996.
Revenues from aeroderivative engine services, which includes power station
installations, were also higher for the first nine months of 1997 when compared
to the first nine months of fiscal 1996, although these revenues were not
affected by the acquisition.
Gross profit for the first nine months of fiscal 1997 increased to $75.4
million, or 12.4% of net sales, from $31.4 million or 14.4% of net sales for the
first nine months of fiscal 1996, primarily as a result of the increase in net
sales for the period. The decline in gross profit as a percentage of sales is
primarily the result of work performed under certain long-term contracts assumed
from Aviall that have not been generating margins as high as the Company's
pre-acquisition operations, as well as a shift in product mix. Gross profit
margins for the former Aviall operations in Texas and Scotland have been, and
are expected to continue improving as the Company completes its integration
plan, which is engineered to increase productivity, reduce turnaround times and
eliminate duplicative expenses.
Selling, general and administrative expenses for the first nine months of fiscal
1997 increased to $26.3 million, or 4.3% of net sales, from $13.2 million, or
6.0% of net sales for the first nine months of fiscal 1996. The reduction in
selling, general, and administrative expense as a percentage of net sales is
primarily attributed to savings realized from the elimination of duplicative
expenses as a result of the integration plan.
Interest expense for the first nine months of fiscal 1997 increased to $22.4
million, or 3.7% of net sales, from $6.4 million or 2.9% of net sales for the
first nine months of fiscal 1996, primarily due to the increase in outstanding
borrowings under the Credit Facility and the issuance of the Senior Notes.
Partially offsetting this increase in long term debt was the conversion into
stock of all of the Convertible Subordinated Debentures outstanding in the first
nine months of fiscal 1996.
As a result of the above factors, net income increased to a record $16.7
million, or 2.7% of net sales for the first nine months of 1997, from $7.1
million, or 3.3% of net sales for the first nine months of 1996. Fully diluted
earnings per share increased more than 81.5% to $0.98 per share for the first
nine months of 1997 from $0.54 per share for the same period in 1996.
FINANCIAL POSITION
Total assets at June 30, 1997 were $716.7 million, a $91.7 million net increase
from the September 30, 1996 total of $625.1 million. The major components of
this net increase were (a) a $53.8 million increase in inventories and (b) a
$29.1 million increase in accounts receivable balances. The increase in
inventory levels was primarily due to a $34.2 million increase in work in
process and a $19.6 million increase in parts inventory as a result of a greater
number of JT8D and CF6 engines in work. The increase in accounts receivable was
primarily attributable to the higher level of sales in the quarter.
Total liabilities at June 30, 1997 were $558.3 million, a $72.3 million net
increase from the September 30, 1996 total of $486.0 million. The major
components of this net increase were (a) a $78 million increase in
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borrowings under the Credit Facility and (b) an $8.4 million increase in
customer deposits and deferred revenue. Partially offsetting these increases
were (a) a net $8.9 million reduction in combined accrued expenses and other
long-term liabilities; (b) a $2.5 million reduction in the outstanding balance
of the Company's Debentures, resulting from the conversion of these debentures
into approximately 430,000 shares of the Company's Class A common stock; and (c)
a $1.8 million reduction in deferred income taxes.
Total stockholders' equity at June 30, 1997 was $158.4 million, a $19.4 million
increase from the September 30, 1996 total of $139.0 million. This increase was
primarily due to net income for the nine months of $16.7 million, along with the
conversion of $2.5 million of the Company's Debentures into Class A common stock
since September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Since the consummation of the Aviall Acquisition, the Company's primary sources
of liquidity have been cash flow from operations and borrowings under the Credit
Facility. In addition, other sources of liquidity have been advance payments for
power station installations and other customer progress payments. Since
September 30, 1996, the Company has borrowed approximately $78.0 million
additional under the Credit Facility in order to support work in process
inventories, purchase additional parts inventory and aircraft engines required
to service certain customers under new and existing contracts, and to fund
expenditures related to the growth in the Company's business. Working capital
was $329.0 million at June 30, 1997, as compared with $273.6 million at
September 30, 1996. As of June 30, 1997 there was approximately $137.2 million
outstanding under the Credit Facility, and the Company may be required to borrow
additional amounts under the Credit Facility in the near future in order to fund
current asset increases in support of business growth, fund further integration
expenses, and satisfy interest payment and debt service obligations under the
Senior Notes and other long term debt agreements.
Based upon current levels of operations, the Company believes that its cash flow
from operations, combined with borrowings available under the Credit Facility,
will be sufficient to enable the Company to meet its normal cash operating
requirements, including scheduled interest and principal payments. However, if
the Company's operations continue to expand in the future as they have in the
first nine months of fiscal 1997, an increase in the maximum borrowing capacity
under the Credit Facility will be required for capital expenditures and working
capital requirements.
If the proposed merger with GE is not completed, the Company intends to proceed
with the proposed acquisition of UNC under the terms and conditions of the
original merger agreement with UNC. The Company will seek to finance the UNC
acquisition through the issuance of shares of Class B common stock in exchange
for UNC shares and through public offerings of additional stock and/or debt, as
well as senior bank financing. There can be no assurance that such financings or
the UNC acquisition will be consummated on terms attractive to the Company, if
at all.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 11, 1997, the Company conducted a special meeting of shareholders. As
of the record date of June 16, 1997, there were 7,012,448 shares of Class A
Common Stock eligible to vote. Of these shares, 5,589,787 (79.71%) were
represented either in person or by proxy at this meeting. One matter was
submitted to a vote at the meeting with the following result:
(a) ADOPTION OF AGREEMENT AND PLAN OF MERGER - The Agreement and Plan of
Merger dated March 9, 1997, among the Company, General Electric Company
and GB Merger Corp., a wholly owned subsidiary of GE, was approved and
adopted by an affirmative shareholder vote of 5,575,620 shares, or 79.51%
of all eligible shares. In addition, 12,924 shares (0.18%) were voted
"against" approval; 1,243 shares (0.02%) "abstained"; 0 shares (0.00%)
were represented as "non-votes"; and 1,422,661 shares (20.29%) were not
represented at the meeting.
ITEM 5. OTHER INFORMATION
The Company announced on April 28, 1997 that the Antitrust Division of the
Department of Justice had requested additional information relating to (a) the
proposed acquisition of Greenwich by General Electric Company ("GE"), and (b)
the proposed acquisition of UNC Incorporated ("UNC") by Greenwich (or GE, if the
GE acquisition of Greenwich has been completed). On July 1, 1997, the Company
submitted its response to this request from the Department of Justice. On August
11, 1997, the Federal Trade Commission announced that the Department of Justice
had approved the acquisition of UNC by either Greenwich or GE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 - Computation of Earnings per Share.
(b) Exhibit 27 - Financial Data Schedule.
12
<PAGE>
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.
GREENWICH AIR SERVICES, INC.
----------------------------
(Registrant)
AUGUST 14, 1997 /s/ ROBERT J. VANARIA
- --------------- ---------------------
(Date) Robert J. Vanaria
Senior Vice President
of Administration and
Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
- ------- ----
11 Computation of Earnings per Share.
27 Financial Data Schedule (for Electronic Filing only).
EXHIBIT 11
<TABLE>
<CAPTION>
GREENWICH AIR SERVICES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS ENDED JUNE 30,
1997 1996
--------------------------- ---------------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 16,776,279 16,776,279 13,609,692 13,609,692
Additional shares assuming conversion of:
Options and warrants 281,080 290,007 302,331 383,451
Subordinated debentures 0 0 0 438,632
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding, as adjusted 17,057,359 17,066,286 13,912,023 14,431,775
=========== =========== =========== ===========
Net income applicable to common stock $ 5,571,305 $ 5,571,305 $ 2,719,322 $ 2,719,322
After-tax interest savings from conversion
of subordinated debentures 0 0 0 30,792
----------- ----------- ----------- -----------
Net income, as adjusted $ 5,571,305 $ 5,571,305 $ 2,719,322 $ 2,750,114
Earnings per common share $ 0.33 $ 0.33 $ 0.20 $ 0.19
=========== =========== =========== ===========
NINE MONTHS ENDED JUNE 30,
1997 1996
------------------------- ------------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 16,713,167 16,713,167 12,475,740 12,475,740
Additional shares assuming conversion of:
Options and warrants 262,403 314,643 267,821 415,793
Subordinated debentures 0 0 0 438,632
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding, as adjusted 16,975,570 17,027,810 12,743,561 13,330,165
=========== =========== =========== ===========
Net income applicable to common stock $16,651,259 $16,651,259 $ 7,137,666 $ 7,137,666
After-tax interest savings from conversion
of subordinated debentures 0 0 0 92,376
----------- ----------- ----------- -----------
Net income, as adjusted $16,651,259 $16,651,259 $ 7,137,666 $ 7,230,042
Earnings per common share $ 0.98 $ 0.98 $ 0.56 $ 0.54
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000891461
<NAME> GREENWICH AIR SERVICES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 195
<SECURITIES> 0
<RECEIVABLES> 172,721
<ALLOWANCES> (4,266)
<INVENTORY> 371,813
<CURRENT-ASSETS> 555,018
<PP&E> 155,854
<DEPRECIATION> (20,426)
<TOTAL-ASSETS> 716,742
<CURRENT-LIABILITIES> 226,036
<BONDS> 160,000
0
0
<COMMON> 168
<OTHER-SE> 158,244
<TOTAL-LIABILITY-AND-EQUITY> 716,742
<SALES> 609,038
<TOTAL-REVENUES> 609,038
<CGS> 533,650
<TOTAL-COSTS> 559,976
<OTHER-EXPENSES> (820)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,357
<INCOME-PRETAX> 27,525
<INCOME-TAX> 10,872
<INCOME-CONTINUING> 16,653
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,653
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0.98
</TABLE>
