<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
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 33-56532
EVERGREEN INTERNATIONAL AVIATION, INC.
------------------------------------------------
(Exact name of registrant as specified in its charter)
Oregon 93-0729079
- -------------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3850 Three Mile Lane
McMinnville, Oregon 97128
------------------------------------
(Address of principal executive offices)
(503) 472-9361
----------------------
(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 Registrant's Common Stock at January 15,
1997 was 5,580,110.
<PAGE>
TABLE OF CONTENTS
Page(s)
-------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - At the last day of
February 1996 and the last day of November 1996 . . . . . . . . . 3-4
Consolidated Statements of Income (Loss)- For the three
months and the nine months ended November 30, 1995 and 1996 . . . 5
Consolidated Statements of Cash Flows - For the nine months
ended November 30, 1995 and 1996. . . . . . . . . . . . . . . . . 6-7
Notes to Consolidated Financial Statements. . . . . . . . . . . . 8-12
Item 2. Management's Discussion and Analysis Results of
Operations and of Financial Condition . . . . . . . . . . . . . 13-22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 3. Defaults upon Senior Securities
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 23-24
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVERGREEN INTERNATIONAL AVIATION, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
FEBRUARY NOVEMBER
ASSETS 29, 1996 30, 1996
------ ---------- ----------
(Unaudited)
CURRENT ASSETS:
Cash $ 7,559 $ 2,288
Accounts receivable, less allowance for doubtful
accounts of $3,754 and $1,781 at February 29
and November 30, 1996
Trade 35,687 30,002
Other 3,982 4,898
Inventories 3,306 4,887
Prepaid expenses and other assets 2,268 6,179
Receivables from affiliated companies 6,186 10,575
Deferred income tax asset 3,173 3,173
---------- ----------
Total current assets 62,161 62,002
---------- ----------
PROPERTY AND EQUIPMENT:
Flight equipment 661,738 663,351
Other property and equipment 94,232 98,259
---------- ----------
755,970 761,610
Less accumulated depreciation 243,799 258,913
---------- ----------
512,171 502,697
---------- ----------
OTHER ASSETS (Notes receivable from affiliated
companies of $1,036 and $1,424; Investment
in an affiliated company of $2,960 and $4,503)
43,155 37,288
---------- ----------
TOTAL ASSETS $ 617,487 $ 601,987
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
3
<PAGE>
EVERGREEN INTERNATIONAL AVIATION, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
(In thousands)
FEBRUARY 29, NOVEMBER
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 30, 1996
------------ ------------
(Unaudited)
CURRENT LIABILITIES:
Short-term notes payable (Short-term note payable
to an affiliated company of $43 at
November 30, 1996) $1,826 $ 624
Accounts payable (Accounts payable to affiliated
companies of $15,213, and $15,013) 48,789 52,860
Accrued liabilities 19,188 19,762
Accrued interest (Interest due to affiliated
companies of $23 at February 29, 1996) 54,864 68,435
Income tax payable 2,217 1,186
Current portion of long-term debt (Notes
payable to affiliated companies of
$542 and $59) 4,840 10,970
Long-term debt in default (Note 2) 231,390 167,632
Senior notes in default 125,000 125,000
------------ ------------
Total current liabilities 488,114 446,469
LONG-TERM DEBT, less current portion 6,664 35,386
Deferred rentals payable to affiliated companies and
deferred income 4,217 6,219
DEFERRED INCOME TAXES 35,862 31,961
------------ ------------
Total liabilities 534,857 520,035
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 2)
STOCKHOLDERS' EQUITY:
Common stock, no par value; 6,000,000 shares
authorized; 5,580,110 shares issued and
outstanding 21,004 21,004
Retained earnings 61,626 60,948
------------ ------------
Total stockholders' equity 82,630 81,952
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 617,487 $ 601,987
------------ ------------
------------ ------------
4
<PAGE>
See accompanying notes to consolidated financial statements.
EVERGREEN INTERNATIONAL AVIATION, INC.
AND SUBSIDIARIES
Consolidated Statement of Income (Loss)
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
------------------------- -------------------------
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
OPERATING REVENUE:
Flight $ 67,572 $ 65,117 $ 184,856 $ 185,899
Aircraft leases 5,387 1,739 19,036 8,895
Sales of aircraft, parts and other property and equipment 2,141 4,526 45,800 18,882
Support services (Includes revenues from affiliated
companies of $361, $99, $615 and $245 ) 12,533 19,078 42,893 47,759
---------- ---------- ---------- ----------
OPERATING REVENUE 87,633 90,460 292,585 261,435
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Flight costs 12,710 9,290 31,770 26,274
Fuel 8,815 13,793 28,565 34,193
Maintenance (Expenses from an affiliated company of
$871 and $1,516 during the three months and nine months ended
November 30, 1996) 17,392 12,962 50,165 38,079
Aircraft and equipment (Includes rentals to
affiliated companies of $6,409, $4,571 , $17,838 and $14,015) 15,457 12,888 44,989 39,237
Cost of sales of aircraft, parts and other
property and equipment 293 3,012 24,311 14,189
Selling, general and administrative 11,824 12,437 31,519 31,441
Other (Includes expenses to affiliated companies of
$243, $273, $729 and $779) 13,800 16,775 47,594 42,194
---------- ---------- ---------- ----------
OPERATING EXPENSES 80,291 81,157 258,913 225,607
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 7,342 9,303 33,672 35,828
NON OPERATING (INCOME) EXPENSES:
Interest expense (Includes interest income from an affiliate
of $100, $196, $303 and $497) 12,583 11,354 40,228 35,119
Foreign currency exchange loss (gain) (258) 12 97 129
Sale of route authority and other income (88) (43) (71,163) (79)
---------- ---------- ---------- ---------
INCOME (LOSS) BEFORE TAXES AND EXTRAORDINARY ITEM (4,895) (2,020) 64,510 659
INCOME TAX EXPENSE (BENEFIT) (1,817) (775) 24,472 212
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (3,078) (1,245) 40,038 447
EXTRAORDINARY ITEM:
Gain on extinguishment of debt (Net of applicable income
tax expense of $3,166 and $3,400) 5,166 - 5,547 -
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 2,088 $ (1,245) $ 45,585 $ 447
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
EVERGREEN INTERNATIONAL AVIATION, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
NOVEMBER 30,
--------------------------
1995 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 45,585 $ 447
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 21,974 21,312
Amortization 31,541 22,062
Provision for loss on accounts receivable 2,582 -
Increase (decrease) in deferred income taxes 17,519 (3,901)
Gain on sale of property, equipment and route
authority (88,989) (4,693)
Gain on extinguishment of debt (5,547) -
Deferred rentals payable to affiliates and other - 2,002
Changes in items affecting operations:
Accounts receivable (2,107) 4,769
Inventories, prepaid expenses, and
receivables from affiliated companies (2,477) (9,881)
Accounts payable and accrued liabilities 12,946 17,941
----------- -----------
Net cash provided by operating activities 33,027 50,058
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, equipment and overhauls (38,393) (37,094)
Proceeds from disposition of property, equipment and
route authority 105,902 10,671
Notes receivable, deposits and other assets (6,151) 2,185
----------- -----------
Net cash provided by (used in) investing
activities 61,358 (24,238)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 329 -
Proceeds from operating loans and short-term debt 325,690 230,049
Payments on long-term debt (71,809) (30,887)
Payments on operating loans and short-term debt (341,526) (230,253)
----------- -----------
Net cash used in financing activities (87,316) (31,091)
----------- -----------
Net increase (decrease) in cash 7,069 (5,271)
CASH, AT BEGINNING OF PERIOD 584 7,559
----------- -----------
CASH, AT END OF PERIOD $ 7,653 $ 2,288
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
EVERGREEN INTERNATIONAL AVIATION, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, (Continued)
(Unaudited)
(In thousands)
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Nine Months Ended November 30, 1996:
A Guarantor Subsidiary sold assets in exchange for $2,447 in payable offsets.
A Guarantor Subsidiary purchased $8,439 in overhauls and assets under vendor
financing arrangements which are included in accounts payable at
November 30, 1996.
A Guarantor Subsidiary sold an aircraft for $6,500 in exchange for credit
against accounts payable of $5,764 and a note receivable of $736.
A Guarantor Subsidiary capitalized $318 of accrued and unpaid interest into
long-term debt.
Nine Months Ended November 30, 1995:
A Guarantor Subsidiary sold $1,700 in assets in exchange for $400 in payable
offsets and $1,300 in future credit against component repairs and overhauls.
Two of the Guarantor Subsidiaries sold assets in exchange for $3,436 in
payable offsets.
A Guarantor Subsidiary purchased $2,641 in overhauls and assets under vendor
financing arrangements which are included in accounts payable at
November 30, 1995.
Two of the Guarantor Subsidiaries recognized $5,547 in gain from
extinguishment of debt related to the long-term financing of certain fixed
wing and rotor-wing aircraft.
See accompanying notes to consolidated financial statements.
7
<PAGE>
(1) CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The consolidated interim financial statements included in this report
have been prepared by the Company and are unaudited. In the opinion of the
Company, all adjustments necessary for a fair presentation are reflected in
the interim financial statements. Such adjustments are of a normal and
recurring nature. This financial data should be read in conjunction with
the audited financial statements and notes thereto included in the
Company's Form 10-K for the fiscal year ended February 29, 1996. Results
for the interim period presented are not necessarily indicative of results
for the entire year.
The Company's 13 1/2% senior notes due 1999 to 2002 (the "Senior
Notes") are jointly and severally guaranteed on a senior subordinated basis
by Evergreen International Airlines, Inc., Evergreen Helicopters, Inc. and
Evergreen Air Center, Inc. (the "Guarantor Subsidiaries"), each of which is
a wholly owned-subsidiary of the Company.
(2) LONG-TERM DEBT AND SENIOR NOTES
In February 1994, the Company withheld payments to certain creditors
of the Guarantor Subsidiaries and holders of the Company's Senior Notes and
commenced negotiations to restructure these agreements. Through November
30, 1996, the Company has restructured its obligations with certain B747
creditors by reducing current amounts due through the extension of maturity
dates and/or deferral or reduction of periodic payments. The Company is
continuing negotiations with the holders of the Senior Notes and certain
other lenders in an effort to complete the restructuring of such affected
obligations.
The Company is continuing its efforts to reach a consensual resolution
with all of the holders of the Senior Notes and in December 1996 proposed
to representatives of the holders the repurchase of all the Senior Notes at
110% of their principal amount. In January 1997 the Company revised its
proposal to provide for the purchase of the Senior Notes at 120% of their
principal amount. The Company has received a commitment from a major
financial institution to provide funds in the amount necessary to complete
the repurchase of the Senior Notes, subject to certain conditions.
8
<PAGE>
As a result of the failure to meet debt service payment requirements
on its Senior Notes, the Company continues to be in violation of covenants
and non-payment provisions of its Senior Notes, and is in violation of
cross default and financial and other covenant provisions of certain other
financing agreements, primarily of the Guarantor Subsidiaries. These
violations would permit affected creditors to, among other things,
accelerate the due date of their debt. In April 1996, a holder of the
Senior Notes filed suit against the Company for payment of principal and
interest. In August 1996, the trustee under the indenture governing the
Senior Notes intervened on behalf of all holders of the Senior Notes.
Partial summary judgment has been granted to the plaintiffs with respect to
a portion of the claims by and on behalf of all holders of the Senior Notes
and a U.S. Magistrate has issued a Findings and Recommendations which would
grant summary judgment on most of the remaining claim. The Company has
until January 20, 1997 to file its objections to the Findings and
Recommendations (see "Part II. Other Information: Item 1. Legal
Proceedings"). No other creditors have taken action to seek remedies under
their respective agreements.
The aggregate principal outstanding of long-term debt and Senior Notes
in default and classified as a current liability because of such defaults
in the accompanying consolidated balance sheets at November 30, 1996 was
$292,632. At November 30, 1996, accrued and unpaid interest related to the
Senior Notes was $68,373. The aggregate outstanding principal amount of
Guarantor Subsidiaries' debt in default classified as a current liability
in their condensed and combined consolidated balance sheet at November 30,
1996 was $131,676 (see Note 5).
(3) ASSETS PURCHASED FROM AN AFFILIATE
During the first nine months of fiscal 1997, a Guarantor Subsidiary
purchased aircraft related assets from an affiliate. The difference
between the price paid and the carrying value at the affiliate of the
assets purchased was $1,125 and is recorded as a reduction to retained
earnings at November 30, 1996.
(4) EXTRAORDINARY ITEM
During the first nine months of fiscal 1996, two of the Guarantor
Subsidiaries recognized $5,547 in gain from the extinguishment of certain
long-term debt obligations, net of applicable income taxes of $3,400.
9
<PAGE>
(5) FINANCIAL INFORMATION OF GUARANTOR SUBSIDIARIES
The Senior Notes are guaranteed by Evergreen International Airlines,
Inc., Evergreen Helicopters, Inc. and Evergreen Air Center, Inc. (the
Guarantor Subsidiaries), each of which is a wholly-owned subsidiary of the
Company.
The following presents comparative combined and condensed financial
information for the Guarantor Subsidiaries at February 29, 1996 and
November 30, 1996 and for the three and nine month periods ended November
30, 1995 and 1996:
FEBRUARY NOVEMBER
29, 1996 30, 1996
------------ ------------
Current assets $46,294 $33,501
Property and equipment 475,420 465,744
Other assets 35,415 29,710
------------ ------------
Total assets $557,129 $528,955
------------ ------------
------------ ------------
Current liabilities:
Notes payable $1,826 $1,677
Accounts payable and accrued liabilities 64,056 68,074
Current portion of long-term debt 2,970 8,053
Long-term debt in default 192,673 131,676
------------ ------------
Total current liabilities 261,525 209,480
------------ ------------
Noncurrent liabilities 45,612 73,060
Intercompany payables 215,018 215,625
------------ ------------
Total noncurrent liabilities 260,630 288,685
------------ ------------
Stockholder's equity 34,974 30,790
------------ ------------
Total liabilities and stockholder's equity $557,129 $528,955
------------ ------------
------------ ------------
10
<PAGE>
(5) FINANCIAL INFORMATION OF GUARANTOR SUBSIDIARIES (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED NOVEMBER 30, ENDED NOVEMBER 30,
------------------------- -------------------------
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues:
Flight $67,572 $ 65,117 $ 184,856 $ 185,899
Aircraft leasing 5,387 1,739 19,036 8,895
Sales of aircraft, parts and other
property and equipment 2,011 4,147 45,467 18,119
Support services 3,632 7,715 17,490 17,458
---------- ---------- ---------- ----------
Total operating revenues 78,602 78,718 266,849 230,371
---------- ---------- ---------- ----------
Operating expenses:
Flight costs 12,710 9,290 31,770 26,274
Fuel 8,600 13,435 27,947 33,053
Maintenance 17,049 12,584 49,312 37,074
Aircraft and equipment 15,457 12,888 44,989 39,237
Cost of sales and write-downs of aircraft,
parts and other property and equipment 222 2,845 24,128 13,765
Selling, general and administrative 10,103 9,222 25,284 22,539
Other 9,448 11,994 36,193 28,675
---------- ---------- ---------- ----------
Total operating expenses 73,589 72,258 239,623 200,617
---------- ---------- ---------- ----------
Income from operations 5,013 6,460 27,226 29,754
Non-operating (income) expenses:
Interest expense 12,146 11,309 38,738 34,827
Sale of route authority and other (346) (31) (71,066) 50
---------- ---------- ---------- ----------
Income (loss) before taxes and extraordinary item (6,787) (4,818) 59,554 (5,123)
Income tax expense (benefit) (2,536) (1,832) 22,589 (1,947)
---------- ---------- ---------- ----------
Income (loss) before extraordinary item (4,251) (2,986) 36,965 (3,176)
Extraordinary gain, net 5,166 - 5,547 -
---------- ---------- ---------- ----------
Net income (loss) $915 ($2,986) $42,512 ($3,176)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
11
<PAGE>
(5) FINANCIAL INFORMATION OF GUARANTOR SUBSIDIARIES (CONTINUED)
NINE MONTHS ENDED
NOVEMBER 30,
------------------------
1995 (1) 1996
---------- ----------
Net cash provided by operating activities $40,100 $62,618
---------- ----------
Cash flows from investing activities:
Purchases of property, equipment and overhauls (36,500) (33,573)
Proceeds from disposition of property, equipment and
route authority 105,569 9,908
Other (5,270) 2,313
---------- ----------
Net cash provided by (used in) investing activities 63,799 (21,352)
---------- ----------
Cash flows from financing activities:
Proceeds from operating loans and debt 10,401 1,350
Payments on operating loans and debt (108,523) (47,792)
---------- ----------
Net cash used in financing activities (98,122) (46,442)
---------- ----------
Net increase (decrease) in cash 5,777 (5,176)
Cash, at beginning of period (33) 6,616
---------- ----------
Cash, at end of period $5,744 $1,440
---------- ----------
---------- ----------
(1) Fiscal 1995 amounts have been reclassified to reflect the presentation of
Senior Note interest consistent with fiscal 1996.
12
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Management's Discussion and Analysis of Results of Operations and Financial
Condition, presented below, relates to the operations of the Company as
reflected in its consolidated financial statements. Emphasis in this discussion
is placed upon contract flight operations, and sales of aircraft, components and
parts, as such activities generate the major portion of the Company's total
consolidated revenues. Support services primarily includes ground handling and
maintenance services provided by the Company's other operating subsidiaries.
Certain statements in this Form 10-Q contain "forward looking" information
(as defined in Section 27A of the Securities Act of 1933, as amended) that
involves risks and uncertainties, including, but not limited to, the Company's
ability to restructure certain of its long-term debt, including the Senior
Notes, markets for air freight services, operating losses, competition from
other carriers, dependence upon material contracts, volatility of aircraft
values, dependence on subsidiaries, compliance with Federal Aviation
Administration ("FAA") requirements, risks of international business, the
effects of economic conditions, and other risks detailed in the Company's
Securities and Exchange Commission filings. Any forward looking statements
should be considered in light of these factors.
GENERAL
The Company's largest operating subsidiary, Evergreen International
Airlines, Inc. ("EIA"), is a contract air carrier that primarily charges
customers based on a block hour basis rather than a per seat or per pound basis
as do scheduled passenger carriers or overnight express carriers. A "block
hour" is defined as the elapsed time computed from the moment the aircraft moves
to the time it comes to rest at its destination. Fluctuations in flight
revenues are not necessarily indicative of a true change in operating activities
because of shifts in the mix between "all-in" services and wet leases or "ACMI"
services from year-to-year. For all-in charters, EIA is responsible for the
full range of operating expenses, including fuel, and receives a correspondingly
higher price per block hour flown. However, for wet leases and contract
charters, EIA typically provides only aircraft, crew, maintenance and insurance
("ACMI"), where the customer is responsible for all other operating expenses,
such as fuel, ground handling and crew accommodations. As a result, wet lease
and other ACMI contract charters typically have lower block hour revenue rates.
For this reason, it is important to analyze the type of block hours flown in
connection with changes in actual revenues earned. EIA, as a matter of policy,
includes fuel cost adjustment mechanisms in certain all-in charters, including
U.S. military charters, thus minimizing the risk of fuel price volatility to
EIA. In addition, the Company also provides common carriage services and "dry"
leases certain of its aircraft.
13
<PAGE>
COMPARISON OF THE THREE MONTHS ENDED NOVEMBER 30, 1996 TO THE THREE MONTHS ENDED
NOVEMBER 30, 1995
OPERATING REVENUES. Total operating revenue during the three months ended
November 30, 1996 increased by $2.8 million, or a 3.2% improvement, when
compared to the three month fiscal period ended November 30, 1995.
Flight revenues during the quarter declined by $2.5 million when compared
to the three months ended November 30, 1995. The decline is primarily due to
discontinued DC8 activity and B747 capacity limitations brought about by the
removal from service of three GATX/Airlog converted B747-100F aircraft in
January 1996 in accordance with an FAA airworthiness directive (see "Liquidity
and Capital Resources"). The reduction of B747 capacity restricted EIA's
ability to provide expanded cargo lift to its existing AustralAsia and South
American customers. Partially offsetting these declines was the return to
contract service in fiscal 1997 of one previously dry leased B747 which enabled
EIA to perform expanded United States Air Force Air Mobility Command ("AMC")
activity when comparing the third quarter of fiscal 1996 and 1997.
Block hour totals during the third quarter of fiscal 1997 declined by 278
hours when compared to the corresponding period of fiscal 1996. The following
table details block hour totals by aircraft type for the fiscal quarters ended
November 30, 1995 and 1996:
---------------------------------------------------------------
THREE MONTHS ENDED NOVEMBER 30,
BLOCK HOURS: ---------------------------------
AIRCRAFT TYPE 1995 1996 NET CHANGE
---------------------------------------------------------------
B747 7,468 7,342 (126)
DC8 149 0 (149)
DC9 1,792 1,789 (3)
---------------------------------------------------------------
Totals 9,409 9,131 (278)
---------------------------------------------------------------
The composition of flight revenue during the third quarter of fiscal 1997,
when compared to the corresponding prior year period, indicates an increase in
all-in block hours relative to ACMI hours. The increase in all-in hours is
primarily attributable to AMC expansion during the third quarter of fiscal 1997.
All-in B747 activity increased by 742 hours, while ACMI B747 activity declined
by 868 hours, when compared with those recorded during the third quarter of
fiscal 1996. In aggregate, the Company operated 5,423 all-in hours (59.4%) and
3,708 ACMI hours (40.6%) during the three months ended November 30, 1996,
compared to 4,773 all-in hours (50.7%) and 4,636 ACMI hours (49.3%) operated
during the same period of the prior fiscal year.
Aircraft leasing revenue declined by $3.6 million during the third quarter
of fiscal 1997, primarily due to a reduction of B747 aircraft on dry lease from
three aircraft during the third quarter of fiscal 1996 to one aircraft during
the third quarter of fiscal 1997. One B747 remained on dry lease at the end of
the quarter and was returned to the Company in December 1996. Aircraft leasing
revenues include maintenance reserves for scheduled engine and airframe
overhauls and inspections.
Revenues from the sale of aircraft, parts and other property and equipment
increased by $2.4 million when comparing the three month period ending November
30, 1996 and 1995. The increase is primarily attributable to the disposition of
rotor-wing aircraft during the third quarter of fiscal 1997.
14
<PAGE>
Support services revenue, which is composed of non-flight activities such
as Evergreen Aviation Ground Logistics Enterprises, Inc. ("EAGLE") and Evergreen
Air Center, Inc. ("EAC') ground handling and maintenance services, increased by
$6.5 million during the three months ended November 30, 1996 when compared to
the three months ended November 30, 1995, primarily due to increased EAC third
party maintenance service revenue and expanded EAGLE United States Postal
Service ("USPS") and domestic station activities. In August 1996, EAGLE began
support of the daytime USPS Hub and Spoke Program ("HASP") in conjunction with
the its existing T-Net contract at Indianapolis, Indiana.
OPERATING EXPENSES. Categories of operating expense include flight
costs, fuel, maintenance, aircraft and equipment, cost of sales of aircraft,
parts and other property and equipment, selling, general and administrative,
and other. Total operating expenses increased by $.9 million when comparing
the third quarter of fiscal 1997 to the corresponding prior year period.
Flight costs declined by $3.4 million primarily due to subservicing of a
passenger aircraft to perform AMC passenger missions during the third quarter
of fiscal 1996 which was not necessary during the current year period. Fuel
costs increased by $5.0 million during the third quarter of fiscal 1997 when
compared to the same period of the prior year primarily due to the change in
the mix of services provided, and an overall increase in average fuel prices.
Maintenance costs declined by $4.4 million during the third quarter of fiscal
1997 when compared to the corresponding period of the previous year, due
primarily to reduced overhaul amortization expense and line maintenance
expense resulting from a reduction in overall flight activity due to the
removal from service of the three GATX/Airlog converted B747-100F aircraft in
January 1996. Aircraft and equipment costs, which represent primarily
aircraft rentals and depreciation, declined by $2.6 million during the three
months ended November 30, 1996 when compared to the corresponding period of
fiscal 1996 primarily due to renegotiated lease arrangements with affiliated
companies for rotor-wing, B747 and DC9 aircraft. Cost of sales of aircraft,
parts and other property and equipment increased by $2.7 million during the
third quarter of fiscal 1997 when compared to fiscal 1996 third quarter
totals, primarily due to the increased level of sales of aircraft, parts and
other property and equipment and a $.2 million prior year inventory
adjustment at EAC. Selling, general and administrative costs increased by
$.6 million, primarily due to higher legal and professional expenses, while
other operating expenses increased by $3.0 million during the third quarter
of fiscal year 1997 when compared to the corresponding period of fiscal 1996,
resulting from the expansion of support service business performed by EAC and
EAGLE during the current year period and a $.5 million adjustment relating to
prior periods at EAC.
NON-OPERATING (INCOME) EXPENSES. During the third quarter of fiscal 1997,
non-operating expenses totaled $11.3 million compared to non-operating expenses
of $12.2 million recognized during the corresponding period of fiscal 1996.
Interest expense declined by approximately $1.2 million due to a reduction in
interest bearing liabilities, primarily long-term debt.
EXTRAORDINARY ITEM. During the third quarter of fiscal 1996, the Company
finalized an agreement to retire an existing debt obligation and finance on a
long-term basis one B747 aircraft. As a consequence of the transaction the
Company recognized a before tax gain of $8.3 million related to extinguishment
of debt, which is presented net of applicable income taxes of $3.2 million in
the accompanying statement of income (loss).
15
<PAGE>
NET INCOME (LOSS). During the third quarter ended November 30, 1996, net
loss totaled $1.2 million, compared to $2.1 million in net income generated
during the third quarter of fiscal 1996. The primary reason for the decline in
income is an extraordinary gain of $5.2 million (net of applicable taxes of $3.2
million) recognized during the third quarter of fiscal 1996 resulting from the
agreements to retire and refinance a B747 long-term debt obligation. Operating
performance improved despite the removal from service of the three GATX/Airlog
converted B747-100F aircraft in January 1996, primarily due to improved
utilization by EIA of its remaining fleet.
16
<PAGE>
COMPARISON OF THE NINE MONTHS ENDED NOVEMBER 30, 1996 TO THE NINE MONTHS ENDED
NOVEMBER 30, 1995
OPERATING REVENUES. Total operating revenue during the nine months ended
November 30, 1996 declined by $31.2 million, or 10.6%, when compared to the nine
months ended November 30, 1995.
Flight revenues increased by $1.0 million when compared to the
corresponding period of the prior year. The increase is primarily attributed to
heli-logging and aerial firefighting activities by EHI during the first nine
months of fiscal 1997. In aggregate, EHI flight revenue increased by
approximately $6.0 million compared to the first nine months of fiscal 1996.
These increases were partially offset by depressed EIA flight revenue due to the
removal from service of the three GATX/Airlog converted B747-100F aircraft in
January 1996.
During the first nine months of fiscal 1997, block hours operated by EIA
decreased by 1,864 hours when compared to block hour totals recorded during the
first nine months of the prior year. The block hour decline is due primarily to
the removal from service of one DC8 aircraft and the removal from service of the
three GATX/Airlog converted B747-100F aircraft in fiscal 1996. The following
table details block hour totals by aircraft type for the nine months ended
November 30, 1995 and 1996:
---------------------------------------------------------------
NINE MONTHS ENDED NOVEMBER 30,
BLOCK HOURS: ------------------------------
AIRCRAFT TYPE 1995 1996 NET CHANGE
---------------------------------------------------------------
B747 20,190 19,616 (574)
DC8 1,077 0 (1,077)
DC9 5,725 5,512 (213)
---------------------------------------------------------------
Totals 26,992 25,128 (1,864)
---------------------------------------------------------------
The composition of flight revenue during the nine months ended November 30,
1996, when compared to the corresponding prior year period, indicates an
increase in all-in block hours and a decline in ACMI hours. The primary reason
for the change in block hour composition is the discontinuance of ACMI contracts
operating between China and the United States and Europe and the United States
which were replaced with all-in and AMC expansion activity. All-in block hour
activity increased by 348 hours while ACMI hours declined by 2,212 hours, when
comparing nine month fiscal 1997 block hour totals with those recorded during
the corresponding period of the prior year. In aggregate, the Company operated
16,243 all-in hours (64.6%) and 8,885 ACMI hours (35.4%) during the nine months
ended November 30, 1996, compared to 15,895 all-in hours (58.9%) and 11,097 ACMI
hours (41.1%) operated during the same period of fiscal 1996.
Aircraft leasing revenue declined by $10.1 million during the first nine
months of fiscal 1997 when compared to the corresponding period of the prior
year, primarily due to the return of two B747 aircraft from lease in June 1995
and March 1996. During the first nine months of fiscal 1997 the Company
employed an average of two B747 aircraft under dry leases compared to an average
of four B747 aircraft during the first nine months of fiscal 1996. The
remaining aircraft was returned to the Company in December 1996. Aircraft
leasing revenues include maintenance reserves for scheduled engine and airframe
overhauls and inspections.
17
<PAGE>
Revenues from the sale of aircraft, parts and other property and equipment
declined by $26.9 million during the first nine months of fiscal 1997 when
compared to the corresponding period of fiscal 1996. The decline is primarily
attributable to the sale of two DC8 aircraft in March 1995 for a total of $38.0
million. Sales of aircraft during the nine months ended November 30, 1996
reflect the sale of a DC8-62 aircraft, rotor-wing aircraft and the results of
the Company's continued component sales activity.
Support services revenue during the nine months ended November 30, 1996
increased by approximately $4.9 million when compared to the prior year
corresponding period, primarily due to increased EAC third party maintenance
service revenue and expanded EAGLE USPS and domestic station activities.
OPERATING EXPENSES. Operating expenses, exclusive of cost of sales of
aircraft, parts and other property and equipment declined by $23.2 million.
Total operating expenses, inclusive of cost of sales of aircraft, parts and
other property and equipment declined by $33.3 million when comparing the nine
months ended November 30, 1996 to the corresponding period of the prior year.
Flight costs declined by $5.5 million during the nine months ended November 30,
1996 when compared to prior year nine month totals, primarily due to
subservicing of a passenger aircraft to perform AMC passenger missions during
the third quarter of fiscal 1996 which was not necessary during the current year
period, a reduction in flight and cabin crew costs and passenger catering
resulting from the removal from service of the three GATX/Airlog converted
B747-100F aircraft in January 1996 and the conversion of the Company's remaining
passenger aircraft to freighter configuration in August 1995. Fuel costs
increased by $5.6 million when comparing the first nine months of fiscal 1997
and 1996, primarily due to an overall increase in average fuel prices, an
increase in all-in activity, specifically B747, performed by EIA, and EHI
heli-logging and aerial firefighting activity during the second quarter of
fiscal 1997. Maintenance costs declined by $12.1 million during the nine months
ended November 30, 1996 when compared to the corresponding period of the
previous year, due primarily to reduced overhaul amortization expense and line
maintenance expense due to fewer hours operated resulting from the removal from
service of the three GATX/Airlog converted B747-100F aircraft in January 1996.
Aircraft and equipment costs, which represent primarily aircraft rentals and
depreciation, declined by $5.8 million during the nine months ended November 30,
1996 when compared to the corresponding period of fiscal 1996, primarily due to
renegotiated lease arrangements with affiliated companies for B747 and DC9
aircraft. Cost of sales of aircraft, parts and other property and equipment
declined by $10.1 million during the nine month fiscal 1997 period when compared
to fiscal 1996 nine month totals, primarily reflecting the book value of two DC8
aircraft sold in March 1995 and a $.2 million prior period adjustment during the
current year at EAC. Selling, general and administrative costs remained
relatively constant while other expenses declined by $5.4 million during the
nine months ended November 30, 1996, primarily due to a reduction in aircraft
and cargo ground handling resulting from a higher level of AMC activity. AMC
activity, which represented a majority of EIA's all-in activity during the
current year, does not require ground and airport handling at military
locations. These declines in other costs were partially offset by increased
operating costs at EAGLE and a $.5 million adjustment relating to a prior period
at EAC.
18
<PAGE>
NON-OPERATING (INCOME) EXPENSES. During the first nine months of fiscal
1997, non-operating expenses totaled $35.2 million compared to non-operating
income of $30.8 million recognized during the corresponding period of fiscal
1996. This change is primarily attributable to the sale of EIA's China route
authority in August 1995 which generated $67.5 million in before-tax income
along with $3.5 million in income related to the final settlement of an
administrative claim against bankrupt Pan American Airways. Despite an increase
in penalty interest of approximately $1.7 million, interest expense declined by
$5.1 million due to a reduction in interest bearing liabilities.
EXTRAORDINARY ITEM. During the nine months ended November 30, 1995, the
Company finalized agreements to retire existing debt obligations and finance on
a long-term basis certain rotor-wing and B747 aircraft. As a consequence of the
agreements the Company recognized before tax gains of $8.9 million related to
extinguishment of debt, net of applicable income taxes of $3.4 million.
NET INCOME. During the nine months ended November 30, 1996, net income
totaled $.5 million, compared to $45.6 million in net income generated during
the first nine months of fiscal 1996. The primary reason for the decline in net
income when comparing the two fiscal periods, is the sale of EIA's China route
authority in August 1995, the sale of two DC8 aircraft in March 1995, and
extraordinary income recognized from the retirement and refinancing of a B747
long-term debt obligation. These transactions generated before-tax income
during fiscal 1996 of $67.5 million, $3.5 million, and $8.9 million,
respectively. Also contributing to the decline was the removal from service of
the three GATX/Airlog converted B747-100F aircraft in January 1996 which
adversely impacted earnings. These revenue declines were partially offset by
reductions in amortization and line maintenance expense, and a reduction in
interest expense during the first nine months of fiscal 1997.
19
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal internal sources of liquidity are cash flow from
operating activities and proceeds from the sales of assets. During the nine
months ended November 30, 1996 cash flow generated from operating activities
totaled $50.1 million. The Company continued its efforts to partially satisfy
obligations through barter and trade arrangements and negotiate favorable credit
terms with certain of its trade and overhaul vendors, which reduced operating
and maintenance cash requirements during the period by approximately $16.7
million.
Historically, the Company has been successful in supplementing cash from
operations by generating additional liquidity through refinancing of aircraft
and aircraft related assets. Unlike many air carriers, the Company owns most of
its operating equipment, and has relied upon the use of term debt, rather than
leasing, to finance its equipment acquisitions. However, due to the current
status of the Company's debt defaults and restructuring efforts, no assurance
can be given that the Company will be able to obtain new financing on
commercially reasonable terms.
Operating capital is supplemented by a lending facility which commenced in
January 1992 wherein EIA, EHI, and EAGLE borrow jointly under an operating loan
agreement which expires on February 20, 1997, subject to an automatic extension
until April 1997, unless the Company is notified to the contrary prior to the
expiration date. There can be no assurance that the lender will continue to
extend the expiration date. This operating loan facility is collateralized by
substantially all of the Company's assets with the exception of aircraft,
engines and real property. The maximum credit under the agreement is $45.0
million, subject to inventory and accounts receivable levels, advance rate
formulas, and other requirements. Actual availability at November 30, 1996 was
$36.3 million, of which $33.9 million was outstanding. The loans under the
facility bear interest at prime plus 2.25% per annum.
At November 30, 1996, the Company had consolidated long-term debt of $339.0
million, including the $125.0 million in Senior Notes and $33.9 million
outstanding under its operating loan. In addition, accrued and unpaid interest
on the Senior Notes at November 30, 1996 was $68.4 million, including $12.8
million in penalty interest. Long-term debt in default at November 30, 1996
totaled $292.6 million, which includes $125.0 million in Senior Notes, $34.3
million in B747 debt being restructured, and $133.3 million in long-term debt
carried as a current liability due solely to technical debt covenant violations
(e.g. cross defaults). The Company will be able to normalize the presentation
of its long-term debt as restructurings of the various agreements are completed.
The Senior Notes are primary obligations of the Company and are jointly and
severally guaranteed on a senior subordinated basis by the Guarantor
Subsidiaries. The rights of the holders of the Senior Notes under the
subsidiary guarantees are severally subordinated to all existing and future
Senior Indebtedness, as defined in the indenture under which the Senior Notes
were issued (the "Indenture"), of the Guarantor Subsidiaries. Such Senior
Indebtedness of EIA, EHI and EAC was $166.9 million, $3.2 million and $.1
million, respectively, as of November 30, 1996, substantially all of which is
collateralized by the assets of such Guarantor Subsidiaries. Total indebtedness
of the Company and Guarantor Subsidiaries with rights senior to the holders of
the Senior Notes, as of November 30, 1996 totaled $205.2 million.
20
<PAGE>
Certain debt instruments to which EIA, EHI and EAC (the Guarantor
Subsidiaries) are parties include limitations concerning the ability of the
Guarantor Subsidiaries to pay dividends, make loans and advances or make other
distributions. In each case, however, these restrictions are subject to the
terms of the Indenture which, subject to certain exceptions, prohibits the
Company and any of its subsidiaries from permitting to exist any consensual
encumbrance, restriction or limitation on the ability of any Company subsidiary
to pay dividends, or make other distributions or loans and advances to the
Company. These provisions in the Indenture do not permit the existence of any
restriction on the ability of Company subsidiaries to pay dividends or make
loans or advances in an amount sufficient to make payments of principal and
interest and other mandatory payments on the Senior Notes other than at such
time as such subsidiary is prohibited from making payments in respect of its
guarantee of the Senior Notes.
In February 1994, the Company withheld principal and interest payments on
certain of its long-term debt obligations and Senior Notes. The long-term debt
effected was primarily collateralized by B747 aircraft. In addition, the
Company withheld payments due to affiliated companies for leased aircraft and
equipment. None of the affected B747 collateralized creditors have exercised the
remedies available to them under their respective agreements. No principal or
interest payments have been made to the holders of the Senior Notes since August
1993. In April 1996, a holder of the Senior Notes notified the Company it had
accelerated the principal and accrued and unpaid interest on the Senior Notes.
On April 25, 1996, the holder filed suit against the Company in the United
States District Court for the District of Oregon for payment of principal and
interest. On May 28, 1996, the holder moved for partial summary judgment on the
interest portion of its claim of approximately $12.1 million. In August 1996,
the trustee under the Indenture intervened on behalf of all holders of the
Senior Notes. On December 6, 1996, the District Court granted the Trustee's
motion for partial summary judgment on the interest portion of the Trustee's
claim. In January 1997, a Findings and Recommendation was issued which granted
the Trustee its motion for summary judgment filed in October 1996 seeking
payment of all outstanding principal and other amounts due on the Senior Notes.
The Company has until January 20, 1997 to file its objections to the Findings
and Recommendation. (see "Part II: Item 1. Legal Proceedings") No assurances
can be given that the Company will be able to successfully renegotiate the
remainder of its long-term debt or the Senior Notes.
The Company is continuing its efforts to reach a consensual resolution with
all of the holders of the Senior Notes and in December 1996 proposed to
representatives of the holders the repurchase of all the Senior Notes at 110% of
their principal amount. In January 1997, the Company revised its proposal to
provide for purchase of the Senior Notes at 120% of their principal amount. The
Company has received a commitment from a major financial institution to provide
funds in the amount necessary to complete the repurchase of the Senior Notes,
subject to certain conditions.
If the Company is unable to successfully restructure the balance of its
secured debt and Senior Note agreements, the holder of any obligation remaining
in default could exercise remedies available to such holder, including, in many
cases, acceleration of the entire principal amount of the obligation. As
discussed above, the Trustee for the Senior Note Indenture is in the process of
exercising its remedies. Under such circumstances, the Company would be
unlikely to have the liquidity to pay the associated obligation, and could face
the loss of use of any asset collateralizing the obligation or of other assets
attached to satisfy a judgment. Under such circumstances, or other
circumstances, including the non-extension of the maturity date of its operating
loan facility, where actions by its creditors could impair the Company's
continuing ability to operate and serve its customers, the Company may have to
consider various alternatives including such things as the sale of part or all
of certain operating subsidiaries and
21
<PAGE>
equipment or other assets, further collateralization, or the Company may choose
to seek protection from its creditors under applicable laws.
EIA is required to perform certain maintenance inspections and structural
upgrades and modifications to designated B747 and DC9 aircraft. All of EIA's
B747 aircraft are subject to Section 41 modification(1): five aircraft have
completed the modification; during fiscal 1997 one aircraft is scheduled for
completion, and the remaining aircraft will be scheduled thereafter, as
required. The Company anticipates the cost to be approximately $1.1 million per
aircraft. In addition, the FAA will require all aircraft flown in the United
States to comply with Stage III noise regulations on a phased-in basis through
1999. The Company has five McDonnell Douglas DC9 aircraft remaining to phase-in
through 1999 and anticipates that compliance will cost approximately $1.6
million per aircraft. EIA's B747 aircraft can currently be operated under Stage
III guidelines; however, certain aircraft must be operated at reduced operating
weights in order to comply with Stage III requirements. Modifications are
available for EIA's four B747-200 aircraft to eliminate any reduction in
operating weights at an estimated cost of $.8 million to $1.5 million per
aircraft. The Company will continue to evaluate and determine the most
advantageous alternative for Stage III compliance for the remainder of its
fleet.
In addition, an FAA directive, which went into effect January 30, 1996,
requires structural enhancements to three of EIA's B747-100 aircraft. If the
directive is not complied with, the aircraft will be subject to substantial
weight limitations. The Company anticipates that the cost of these enhancements
will be borne by the original holder of the supplemental type certificate
("STC") under which the aircraft were originally modified to freighter
configuration. The required structural enhancements for two of these aircraft
have been partially completed and the Company is waiting for design by the STC
holder and approval from the FAA regarding engineering conformity for final
completion. It is anticipated that two of these aircraft will remain out of
service until the first or second quarters of fiscal year 1998, while the third
aircraft is expected back in service during the Company's fourth quarter of
fiscal year 1997.
In fiscal 1996, the Company entered into an agreement to purchase five Bell
407 helicopters at a rate of one per year until fiscal 2000. The agreement
included deposits on line positions totaling $.2 million. The Company estimates
the cost per aircraft to be $1.4 million. The Company chose not to take
delivery of the first aircraft and was refunded the line position deposit.
Under the terms of the agreement the Company may elect to trade assets to
satisfy a portion of the purchase price.
The Company believes that its expertise in asset management and its
knowledge of the aviation industry will permit it to continue to supplement
operations with its barter, trade, sale and lease activities. The Company also
may selectively sell a part or all of certain operating subsidiaries and other
equipment and assets to assist in providing the liquidity necessary to meet its
current obligations. The Company is currently pursuing the sale or
recapitalization of its various subsidiaries. No assurances can be given that
any such efforts, or the Company's ability to restructure certain of its
long-term and Senior Note instruments, will enable the Company to generate
adequate cash flows to meet its debt service and capital requirements and fund
continuing operations.
- ----------------------------
(1)Mandated by the FAA in 1990, this modification consists of frame replacement
within Section 41 of the aircraft fuselage and must be completed prior to 20,000
total aircraft cycles.
22
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 25, 1996, Cargill Financial Services Corporation ("Cargill") filed
an action in the United States District Court for the District of Oregon
against the Company and certain of its subsidiaries. Cargill sought
amounts claimed to be due and owing to Cargill as a then-holder of
approximately $55 million in principal amount of the Company's Senior
Notes. On May 28, 1996, Cargill moved for partial summary judgment on the
portion of its claims that sought recovery of unpaid interest and interest
on that unpaid interest as provided in the Senior Notes. On July 22, 1996,
Magistrate Judge John Jelderks issued a Findings and Recommendations that
Cargill be granted partial summary judgment on such claims. On September
6, 1996, U.S. District Judge Ancer Haggerty adopted Judge Jelderks'
Findings and Recommendations. On August 16, 1996, the District Court
allowed the Trustee under the Indenture to intervene in the action to
assert claims for unpaid principal and interest on all the Senior Notes. On
August 22, 1996, the Trustee filed a motion for partial summary judgment on
the portion of its claims seeking recovery of interest on the Senior Notes
and interest on that interest. On October 7, 1996, Magistrate Judge
Jelderks issued a Findings and Recommendations that the Trustee's motion
for partial summary judgment be granted. On December 6, 1996 the District
Court adopted the Findings and Recommendations of the Magistrate Judge and
granted the Trustee's motion for partial summary judgment. The Trustee's
Amended Complaint, filed October 9, 1996, seeks payment of all outstanding
principal and accrued and unpaid interest on the Senior Notes (other than
unaccelerated interest payments payable to Cargill), together with default
interest thereon. On January 3, 1997 Magistrate Judge Jelderks issued a
Findings and Recommendations which granted the Trustee's motion for summary
judgment filed in October 1996, but feeling that the effective date of
acceleration of the Senior Notes should be August 15, 1996, rather than
April 15, 1996, and that the judgment concerning the Trustee's recovery of
costs and fees should not include compensation for services not related to
its prosecution of the present action. The Company has until January 20,
1997 to file its objections to the Findings and Recommendations.
23
<PAGE>
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
Since February 1994, the Company has failed to make semi-annual
interest payments on the Company's $125 million 13 1/2% Senior Notes due
August 15, 2002 (totaling approximately $68.4 million at November 30, 1996)
and is therefore in default with respect to its payment obligations as well
as certain financial and other covenants under the Senior Notes. In August
1996, all outstanding principal and accrued interest on the Senior Notes
was accelerated by the Trustee. At November 30, 1996, $125 million and
$68.4 million in interest (including $12.8 million in penalty interest)
were outstanding under the Senior Notes.
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits filed with this Form 10-Q
3.1* Articles of Incorporation of Evergreen International
Aviation, Inc., as amended to date
3.2* Bylaws of Evergreen International Aviation, Inc., as amended
to date
3.3* Articles of Incorporation of Evergreen International
Airlines, Inc., as amended to date
3.4* Restated Bylaws of Evergreen International Airlines, Inc.,
as amended to date
3.5* Articles of Incorporation of Evergreen Helicopters, Inc. as
amended to date
3.6* Bylaws of Evergreen Helicopters, Inc., as amended to date
3.7* Articles of Incorporation of Evergreen Air Center, Inc., as
amended to date
3.8* Bylaws of Evergreen Air Center, Inc., as amended to date
27 Financial Data Schdule
*-Incorporated by reference from exhibit filing to the Company's
Registration Statement on Form S-4 (file no. 33-56532), filed
with the Commission on April 28, 1993.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on September 5, 1996
concerning intervention of the Trustee in a lawsuit on behalf of all
holders of the Company's Senior Notes.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
EVERGREEN INTERNATIONAL AVIATION, INC.
Date: January 15, 1997 /s/ Timothy G. Wahlberg
----------------------- -------------------------------
Timothy G. Wahlberg
President
Date: January 15, 1997 /s/ D. Michael Clark
----------------------- -------------------------------
D. Michael Clark
Chief Financial Officer
25
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> NOV-30-1996
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0
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