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 MARCH 31, 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 May 12, 1997 were:
Class A common stock, $0.01 par value (NASDAQ: GASIA) - 7,009,948 shares.
Class B common stock, $0.01 par value (NASDAQ: GASIB) - 9,761,450 shares.
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GREENWICH AIR SERVICES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I FINANCIAL INFORMATION:
Consolidated Balance Sheets as of March 31, 1997 (unaudited)
and September 30, 1996 .................................... 3
Consolidated Statements of Income for the three months
and six months ended March 31, 1997 and 1996 (unaudited).... 4
Consolidated Statements of Cash Flows for the three months
and six months ended March 31, 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............. 13
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PART I. FINANCIAL INFORMATION
GREENWICH AIR SERVICES, INC, AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND SEPTEMBER 30, 1996
MARCH 31,
1997 SEPTEMBER 30,
ASSETS (UNAUDITED) 1996
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Current Assets:
Cash $ 180 $ 334
Accounts receivable, less allowance of $4,875 in March 1997
and $5,033 in September 1996 165,825 139,401
Inventories 372,066 318,013
Prepaid expenses and other current assets 14,309 20,004
---------- ----------
Total current assets 552,380 477,752
---------- ----------
Property, plant and equipment 153,995 147,403
Less accumulated depreciation (17,721) (12,518)
---------- ----------
Property, plant and equipment, net 136,274 134,885
Deferred financing costs, net 7,621 8,416
Other assets 13,672 4,027
---------- ----------
TOTAL ASSETS $ 709,947 $ 625,080
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 117,039 $ 106,556
Accrued expenses and current portion of long term liabilities 63,540 68,215
Customer deposits and deferred revenue 25,094 21,912
Income taxes payable 8,521 7,474
---------- ----------
Total current liabilities 214,194 204,157
Deferred income taxes payable 21,228 23,000
Other liabilities 24,910 25,510
Long term debt 137,049 69,710
Long term debt - WAL 1,141
Senior notes 160,000 160,000
Convertible subordinated debentures 2,515
Stockholders' Equity:
Common stock 167 163
Capital in excess of par value 106,586 104,271
Retained earnings 46,367 35,658
Treasury stock, at cost (554) (1,045)
---------- ----------
Total stockholders' equity 152,566 139,047
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 709,947 $ 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 SIX MONTHS ENDED MARCH 31, 1997 AND 1996
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
------------------------------------ ----------------------------------
DOLLARS IN THOUSANDS 1997 1996 1997 1996
------------------ -------------- -------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 201,116 $ 60,030 $ 388,663 $ 118,625
Cost of sales 176,566 50,689 339,551 99,922
-------------- ----------- ------------ ------------
Gross profit 24,550 9,341 49,112 18,703
Selling, general and
administrative expense 8,099 3,919 16,663 7,742
-------------- ----------- ------------- ------------
Income from operations 16,451 5,422 32,449 10,961
-------------- ----------- ------------- ------------
Non-operating (income)
expense:
Interest expense 7,637 1,601 14,252 3,635
Other (income) expense (454) (16) (117) (1)
-------------- ----------- ------------- ------------
Total non-operating
expense 7,183 1,585 14,135 3,634
-------------- ------------ ------------- ------------
Income before provision for
income taxes 9,268 3,837 18,314 7,327
Provision for income taxes 3,661 1,512 7,234 2,909
-------------- ----------- ------------ ------------
Net Income $ 5,607 $ 2,325 $ 11,080 $ 4,418
============== =========== ============ ============
Earnings per share:
Primary $ 0.33 $ 0.19 $ 0.65 $ 0.36
Fully diluted $ 0.33 $ 0.18 $ 0.65 $ 0.35
Weighted average number of common shares
and common share equivalents:
Primary 17,011,838 12,341,304 16,934,676 12,105,468
Fully diluted 17,068,323 13,073,772 17,009,544 12,844,590
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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
SIX MONTHS ENDED MARCH 31, 1997 AND 1996
SIX MONTHS ENDED MARCH 31,
-----------------------------------
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $11,080 $4,418
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 5,839 1,192
Changes in assets and liabilities:
Accounts receivable (26,424) (12,080)
Inventories (54,053) 9,260
Prepaid expenses and other current assets 5,695 11
Other assets (9,645) (39)
Accounts payable 10,483 (1,682)
Accrued expenses, customer deposits and deferred revenue (5,171) (5,269)
Income taxes payable 1,047 (244)
Deferred income taxes (1,772) (535)
Other non-current liabilities (600) (1,450)
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NET CASH USED BY OPERATING ACTIVITIES (63,521) (6,418)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,592) (1,737)
--------- --------
NET CASH USED BY INVESTING ACTIVITIES (6,592) (1,737)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net changes in revolving credit facility 71,430 10,080
Repayments of long term debt (1,554) (1,810)
Purchase of treasury shares (140) (109)
Proceeds from sale of treasury shares 420 100
Options exercised 4 95
GCL merger 0 7
Cash dividends paid (201) (120)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 69,959 8,243
--------- ---------
NET INCREASE IN CASH (154) 88
Cash, beginning of periods 334 180
--------- ---------
Cash, end of periods $180 $268
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $12,778 $3,571
Taxes $6,896 $3,687
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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
MARCH 31, 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 six months
ended March 31, 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
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earnings per share will be determined. Adoption of this statement by the
Company will not have a material impact on earnings per share.
2. INVENTORIES
Inventories are comprised of the following: March 31, September 30,
Amounts in thousands 1997 1996
------ ------
Parts $160,237 $136,424
Engines 19,445 21,393
Work in process 180,824 144,116
Inventories substantially applicable to long-term
programs 11,560 16,080
-------- --------
TOTAL $372,066 $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 six months ended March 31,
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 six months ended March 31, 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.
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6. RELATED PARTY TRANSACTIONS
During the six months ended March 31, 1997, the Company purchased engine
parts totaling $7,000, from a company affiliated through common
ownership, and performed engine repair services totaling 1,213,904 for
this same affiliate. In addition, during the six months ended March 31,
1997, the Company also purchased engine parts totaling $41,470 from
another company affiliated through common ownership.
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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1996
Net sales for the second quarter of fiscal 1997 increased 235% to $201.1 million
from second quarter 1996 sales of $60.0 million. 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. on
June 10, 1996, as well as internal growth. Principally as a result of the Aviall
acquisition, revenues from both commercial aviation engine services and
government programs work were higher in the second quarter of fiscal 1997 than
in the second quarter of fiscal 1996. Revenues from aeroderivative engine
services, which includes power station installations, were also higher for the
second quarter of 1997 when compared to the second quarter of fiscal 1996,
although these revenues were not affected by the acquisition.
Gross profit for the second quarter of fiscal 1997 increased to $24.6 million,
or 12.2% of net sales, from $9.3 million, or 15.6% 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 second quarter of fiscal
1997 increased to $8.1 million, or 4.0% of net sales, from $3.9 million, or 6.5%
of net sales for the second 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 second quarter of fiscal 1997 increased to $7.6
million, or 4% of net sales, from $1.6 million, or 2.7% of net sales for the
second 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. Partially offsetting this increase in long
term debt was a $3.6 million decrease in the average outstanding balance of
Convertible Subordinated Debentures as compared to the second quarter of 1996.
Other non-operating expenses increased to $0.5 million, or 0.2% of net sales, 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 141.2% to $5.6 million,
or 2.8% of net sales for the second quarter of fiscal 1997, from $2.3 million,
or 3.9% of net sales for the second quarter of fiscal 1996. Second quarter
fiscal 1997 primary earnings per share increased to $0.33, as compared to $0.19
for the second quarter of fiscal 1996; and fully diluted earnings per share
increased to $0.33 per share versus $0.18 per share for the second quarter of
fiscal 1996. The number of primary and fully diluted shares outstanding in the
second quarter of fiscal 1997 increased by 38% and 31%, respectively, as
compared to the second quarter of fiscal 1996.
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SIX MONTHS ENDED MARCH 31, 1997 COMPARED WITH SIX MONTHS ENDED MARCH 31, 1996
For the first six months of fiscal year 1997, the Company again had record net
sales, net income and earnings per share levels of $388.7 million, $11.1 million
and $0.65 per share, respectively.
Net sales increased $270.1 million or 227.7% to $388.7 million in the period
from $118.6 million in the first six months of 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 six months of fiscal 1997 than in the first six months of
fiscal 1996. Revenues from aeroderivative engine services, which includes power
station installations, were also higher for the first six months of 1997 when
compared to the first six months of fiscal 1996, although these revenues were
not affected by the acquisition.
Gross profit for the first six months of fiscal 1997 increased to $49.1million,
or 12.6% of net sales, from $18.7 million or 15.8% of net sales for the first
six 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 six months of fiscal
1997 increased to $16.7 million, or 4.3% of net sales, from $7.7 million, or
6.5% of net sales for the first six 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 six months of fiscal 1997 increased to $14.3
million, or 3.7% of net sales, from $3.6 million or 3.1% of net sales for the
first six 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
six months of fiscal 1996.
As a result of the above factors, net income increased to a record $11.1
million, or 2.9% of net sales for the first six months of 1997, from $4.4
million, or 3.7% of net sales for the first six months of 1996. Fully diluted
earnings per share increased more than 85% to $0.65 per share for the first six
months of 1997 from $0.35 per share for the same period in 1996.
FINANCIAL POSITION
Total assets at March 31, 1997 were $709.9 million, an $84.9 million net
increase from the September 30, 1996 total of $625.1 million. The major
components of this net increase were (a) a $54.1 million increase in inventories
and (b) a $26.4 million increase in accounts receivable balances. The increase
in inventory levels was primarily due to (a) a $32.2 million increase in work in
process as a result of a greater number of JT8D and CF6 engines in work, and (b)
a $21.9 million increase in parts inventories, primarily related to provisioning
for the increase in JT8D and CF6 engine work, while the increase in accounts
receivable was
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primarily attributable to the higher level of sales in the quarter.
Total liabilities at March 31, 1997 were $557.4 million, a $71.4 million net
increase from the September 30, 1996 total of $486.0 million. The major
components of this net increase were (a) a $71.4 million increase in borrowings
under the Credit Facility and (b) a $10.4 million increase in accounts payable.
Partially offsetting these increases were (a) a $5.2 million decrease in accrued
expenses, customer deposits and deferred revenue; (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 March 31, 1997 was $152.6 million, a $13.6 million
increase from the September 30, 1996 total of $139.0 million. This increase was
primarily due to the conversion of $2.5 million of the Company's Debentures into
Class A common stock since September 30, 1996, along with net income for the six
months of $11.1 million.
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 $71.4 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 $338.2 million at March 31, 1997, as compared with $273.6 million at
September 30, 1996. As of March 31, 1997 there was approximately $135.0 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 six 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 merger with GE is completed as planned, the Company will have the added
benefit of having access to the financial resources of GE, one of the world's
most financially stable and liquid corporations. 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 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 March 21, 1997, the Company conducted its annual meeting of shareholders. As
of the record date of January 20, 1997, there were 6,968,825 shares of Class A
Common Stock eligible to vote. Of these shares, 6,769,145 (97.1%) were
represented either in person or by proxy at this meeting. Five matters were
submitted to a vote at the meeting with the following results:
(a) ELECTION OF DIRECTORS - All six incumbent members of the Board of
Directors (Eugene P. Conese, Eugene P. Conese, Jr., General Charles
Gabriel (USAF, retired), Allen J. Krowe, Charles J. Simons, and
Chesterfield Smith) were nominated for election to the Board for a
one-year term. All six directors were reelected by the identical vote
count of 6,651,364 votes, or 98.26% of the votes cast, "for"; and 117,781
votes "withheld".
(b) AMENDED EMPLOYEE STOCK PURCHASE PLAN - The Company's Amended Qualified
Employee Stock Purchase Plan was approved and adopted by a shareholder
vote of 5,810,428, or 85.84% of the votes cast, "for"; 137,690 "against";
and 10,069 "abstaining"; with the balance of 810,958 shares registered as
"non-votes".
(c) AMENDED EMPLOYEE STOCK OPTION PLAN - The Company's Amended Employee Stock
Option Plan was approved and adopted by a shareholder vote of 5,774,343,
or 85.30% of the votes cast, "for"; 168,641 "against"; and 15,203
"abstaining"; with the balance of 810,958 shares registered as
"non-votes".
(d) COMPENSATION ARRANGEMENT WITH EUGENE P. CONESE AND EUGENE P. CONESE, JR.
- The Company's Incentive Compensation Arrangement with Eugene P. Conese
and Eugene P. Conese, Jr. was approved adopted by a shareholder vote of
6,562,998, or 96.95% of the votes cast, "for"; 55,459 "against"; and
59,005 "abstaining"; with the balance of 91,683 shares registered as
"non-votes".
(e) INDEPENDENT AUDITORS - The appointment of the accounting firm of Deloitte
& Touche LLP as the Company's independent auditors was ratified by a
shareholder vote of 6,755,198, or 99.79% of the votes cast, "for"; 4,153
"against"; and 9,794 "abstaining".
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, and (b) the
proposed acquisition of UNC Incorporated by Greenwich.
The Company has been advised that Southwest Airlines Company has 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 this calendar year. The Company has been
servicing a portion of these 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.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 - Computation of Earnings per Share.
(b) Exhibit 27 - Financial Data Schedule.
(c) On February 21, 1997, the Company filed with the Commission a Current
Report on Form 8-K with respect to the proposed acquisition of UNC
Incorporated.
On March 17, 1997, the Company filed with the Commission a Current Report
on Form 8-K with respect to the proposed acquisition of the Company by
General Electric Company.
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)
MAY 14, 1997 S/B ROBERT J. VANARIA
- ----------- ---------------------
(Date) Robert J. Vanaria
Senior Vice President of
Administration and Chief
Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
11 Computation of Earnings per Share.
27 Financial Data Schedule.
EXHIBIT 11
GREENWICH AIR SERVICES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
------------------------- -------------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 16,742,000 16,742,000 12,057,462 12,057,462
Additional shares assuming conversion of:
Options and warrants 269,838 326,323 283,842 407,592
Subordinated debentures 0 0 0 608,718
Weighted average number of common
shares outstanding, as adjusted 17,011,832 17,068,323 12,341,304 13,073,772
=========== =========== =========== ===========
Net income applicable to common stock $ 5,606,945 $ 5,606,945 $ 2,324,716 $ 2,324,716
After-tax interest savings from conversion
of subordinated debentures 0 0 0 42,732
----------- ----------- ----------- -----------
Net income, as adjusted $ 5,606,945 $ 5,606,945 $ 2,324,716 $ 2,367,448
Earnings per common share $ 0.33 $ 0.33 $ 0.19 $ 0.18
=========== =========== =========== ===========
<CAPTION>
SIX MONTHS ENDED MARCH 31,
1997 1996
------------------------- -------------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 16,681,611 16,681,611 11,843,133 11,843,133
Additional shares assuming conversion of:
Options and warrants 253,065 327,933 262,335 392,739
Subordinated debentures 0 0 0 608,718
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding, as adjusted 16,934,676 17,009,544 12,105,468 12,844,590
=========== =========== =========== ===========
Net income applicable to common stock $11,079,954 $11,079,954 $ 4,418,344 $ 4,418,344
After-tax interest savings from conversion
of subordinated debentures 0 0 0 85,464
----------- ----------- ----------- -----------
Net income, as adjusted $11,079,954 $11,079,954 $ 4,418,344 $ 4,503,808
Earnings per common share $ 0.65 $ 0.65 $ 0.36 $ 0.35
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 180
<SECURITIES> 0
<RECEIVABLES> 170,700
<ALLOWANCES> (4,875)
<INVENTORY> 372,066
<CURRENT-ASSETS> 552,380
<PP&E> 153,995
<DEPRECIATION> (17,721)
<TOTAL-ASSETS> 709,947
<CURRENT-LIABILITIES> 214,194
<BONDS> 160,000
0
0
<COMMON> 167
<OTHER-SE> 152,299
<TOTAL-LIABILITY-AND-EQUITY> 709,947
<SALES> 388,663
<TOTAL-REVENUES> 388,663
<CGS> 339,551
<TOTAL-COSTS> 356,214
<OTHER-EXPENSES> (117)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,252
<INCOME-PRETAX> 18,314
<INCOME-TAX> 7,234
<INCOME-CONTINUING> 11,080
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,080
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
</TABLE>
