<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[_] For the quarterly period ended March 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-21540
COMMANDER AIRCRAFT COMPANY
(Exact name of registrant as specified in its charter)
Virginia 62-1363505
(State of Incorporation) (IRS Employer
Identification No.)
7200 NW 63rd Street
Hangar 8, Wiley Post Airport
Bethany, Oklahoma 73008
(Address of principal executive offices) (Zip Code)
(405) 495-8080
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
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 requirement for the past 90 days.
Yes__X___ No_____
There were 6,720,548 Shares of Common Stock Outstanding
as of March 31, 1996.
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
COMMANDER AIRCRAFT COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 156,496 $ 138,591
Accounts receivable 37,475 267,232
Notes receivable from related party 3,415,741 4,223,743
Notes receivable 327,538 363,195
Inventories 7,488,146 7,430,844
Prepaid expenses and other assets 87,007 166,548
------------- -------------
Total current assets 11,512,403 12,590,153
------------- -------------
Notes receivable - non current 523,914 986,471
Property and equipment:
Office equipment and furniture 277,011 277,011
Vehicles and aircraft 422,099 435,198
Manufacturing equipment 354,837 354,837
Tooling 488,709 478,771
Leasehold improvements 232,073 232,073
------------- -------------
1,774,729 1,777,890
Less: Accumulated depreciation (680,900) (639,391)
------------- -------------
Net property and equipment 1,093,829 1,138,499
------------- -------------
$ 13,130,146 $ 14,715,123
============= =============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable $ 583,973 $ 1,357,660
Accrued expenses 628,364 839,042
Refundable deposits 24,637 27,800
Notes payable 247,000 -
Notes payable - related parties 2,600,000 2,450,000
------------- -------------
Total current liabilities 4,083,974 4,674,502
------------- -------------
Non-current liabilities:
Subordinated debt - -
------------- -------------
Total non-current liabilities - -
------------- -------------
Total liabilities 4,083,974 4,674,502
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Shareholders' investment (deficit):
Preferred stock, $100 par value, 20,000
shares authorized; no shares outstanding - -
Common stock, $.50 par value, 10,000,000
shares authorized; 6,720,548
shares issued and outstanding
at March 31, 1996 and Dec. 31, 1995 3,360,274 3,360,274
Additional paid-in capital 31,770,862 31,770,862
Retained earnings (deficit) (26,084,964) (25,090,515)
------------- -------------
Total shareholders' investment 9,046,172 10,040,621
------------- -------------
$ 13,130,146 $ 14,715,123
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
COMMANDER AIRCRAFT COMPANY
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
--------------- ---------------
<S> <C> <C>
Net sales - aircraft $1,277,987 $2,995,005
Net sales - service 184,943 327,966
--------------- ---------------
Total net sales 1,462,930 3,322,971
--------------- ---------------
Cost of sales - aircraft 1,304,952 2,493,067
Cost of sales - service 220,550 202,489
--------------- ---------------
Total cost of sales 1,525,502 2,695,556
--------------- ---------------
Gross margin (deficit) (62,572) 627,415
--------------- ---------------
Other operating expenses:
Product development and engineering costs 86,708 129,578
Selling, general and administrative expenses 890,810 874,593
--------------- ---------------
Total other operating expenses 977,518 1,004,171
--------------- ---------------
Operating income (loss) (1,040,090) (376,756)
--------------- ---------------
Other income (expenses):
Other income 121,635 88,499
Interest expense (66,181) (106,764)
Other expense (9,813) (1,054)
--------------- ---------------
Total other income (expenses) 45,641 (19,319)
--------------- ---------------
Net loss ($994,449) ($396,075)
=============== ===============
Net loss per share:
Weighted average common shares outstanding 6,720,548 6,185,275
--------------- ---------------
Loss per share ($0.15) ($0.06)
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
COMMANDER AIRCRAFT COMPANY
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($994,449) ($396,075)
Adjustments to reconcile net loss to
net cash used in operating activities---
Depreciation and amortization 43,069 49,578
Loss on disposal of property and equipment 3,540 -
Changes in operating assets and liabilities,
excluding cash:
Accounts receivable 229,757 (591,543)
Notes receivable - related parties 808,002 (569,167)
Notes receivable 498,214 (407,929)
Inventories (57,302) 872,850
Prepaid expense and other assets 79,541 (241,116)
Accounts payable (773,687) 207,643
Accrued expenses (210,678) 119,514
Refundable deposits (3,163) (3,550)
------------ ------------
Net cash used in operating activities (377,156) (959,795)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (9,939) (3,677)
Proceeds from sale of property and equipment 8,000 -
------------ ------------
Net cash used in investing activities (1,939) (3,677)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings from related parties 150,000 -
Proceeds from borrowings from bank line 247,000 -
Proceeds from borrowings under long-term debt - 1,075,000
Proceeds from exercise of warrants - 63,333
Proceeds from issuance of common stock - -
------------ ------------
Net cash provided by financing activities 397,000 1,138,333
------------ ------------
Net increase (decrease) in cash 17,905 174,861
Cash and cash equivalents at beginning of period 138,591 14,798
------------ ------------
Cash and cash equivalents at end of period $156,496 $189,659
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 43,704 $ 120,382
Income taxes - -
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
1995:
Exchange of $6,400,000 in debentures for 640,000 shares of common stock.
Repayment of accrued interest of $106,764 was waived.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations; however, the
Company believes that the disclosures are adequate to make the information
presented not misleading. In the opinion of the Company, all adjustments
necessary to present fairly the financial position of Commander Aircraft
Company as of March 31, 1996 and December 31, 1995, and the results of
operations for the three month period ended March 31, 1996 and 1995, and
the cash flows for the three month period ended March 31, 1996 and 1995
have been included and are of a normal, recurring nature. The results of
operations for such interim periods are not necessarily indicative of the
results for the full year. It is suggested that these condensed financial
statements be read in conjunction with the Company's 1995 Annual Report on
Form 10-K, as incorporated by reference in the Company's filing of this
Form 10-Q.
2. The earnings per share of common stock was computed by using the weighted
average number of shares of common stock outstanding during the period.
3. Through March 6, 1995, the Company's majority shareholder, and an affiliate
of the shareholder, purchased $1,075,000 in subordinated debentures at 10%
interest, payable in arrears, with principal due September 30, 1996. On
March 7, 1995, the Company accepted the offer of its majority shareholder,
and an affiliate of the shareholder, to exchange $6,400,000 of subordinated
debt for 640,000 shares of newly issued common stock at $10 per share. The
payment of accrued interest related to this debt in 1995 of $106,764 was
waived at the time of the exchange for common stock.
4. On February 6, 1996, the Company entered into an agreement with Will Rogers
Bank of Oklahoma City, for a line of credit in the amount of $600,000,
secured by specific aircraft to supplant working capital and to purchase
pre-owned aircraft to be refurbished and sold.
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.
GENERAL:
The Company reported sales for the quarter ended March 31, 1996 of $1,462,930
compared to sales of $3,322,971 for the quarter ended March 31, 1995. The net
loss for the quarter was $994,449, or $0.15 per share, compared to a net loss of
$396,075, or $0.06 per share in the comparable period of fiscal 1995. During
the first quarter of 1996, the Company sold three new and one pre-owned
Commander single engine high performance aircraft as compared to ten new
aircraft for the first quarter of 1995. Traditionally, the first quarter is
relatively slow due to inclement weather and other uncontrollable factors. The
first quarter of 1995 was unusual as 40% of the prior year's total aircraft
sales were delivered in that three month period. The lower volume for the first
quarter of 1996 was due to an administrative delay in the delivery of three
Commander 114AT training aircraft sold to a foreign government agency. We
anticipate that these aircraft will be delivered in the second quarter of 1996.
During the quarter ended March 31, 1996, the Company realigned its sales
territories and added new personnel.
RESULTS FROM OPERATIONS:
Revenues from the sale of aircraft for the first quarters of 1996 and 1995
totaled $1,277,987 and $2,995,005 respectively. One pre-owned aircraft was sold
in the first quarter of 1996 and none were sold in the same period in 1995.
Service revenues decreased in the quarter ended March 31, 1996 to $184,943 from
$327,966 in the quarter ended March 31, 1995. This decrease in service revenues
was due to several large repair and refurbishment jobs as well as the
retrofitting of the new air conditioning option to licensed aircraft in the
first quarter of 1995.
Cost of aircraft sales for the three month period ended March 31, 1996 totaled
$1,304,952, compared to $2,493,067 for the three month period ended March 31,
1995. Average cost per aircraft sold increased in the period ended March 31,
1996 due to the absorption of fixed costs over a smaller number of units sold.
Cost of sales for aircraft service increased to $220,550 for the three month
period ended March 31, 1996 from $202,489 for the three months ended March 31,
1995, as a result of work performed in the first quarter that will be completed
in the second quarter. Service revenues during the first quarter of 1995
included a number of retrofitted air conditioning installations and paint and
interior refurbishments, which did not occur in 1996.
Product development and engineering costs decreased to $86,708 for the quarter
ended March 31, 1996 from $129,578 for the quarter ended March 31, 1995. The
decrease was due to the completion of certification efforts in 1995 for the
Commander 114TC, a turbocharged version of the Commander 114B.
Sales and marketing expense increased to $661,978 for the three month period
ended March 31, 1996 from $635,882 for the quarter ended March 31, 1995. The
Company continued its highly focused domestic and international advertising and
public relations program that includes product advertising in leading business
and aviation publications. Advertising, shows and demonstration expenses totaled
$338,992 and $383,191 for the three month periods ended March 31, 1996 and 1995,
respectively. Salaries and related benefits totaled $180,887 and $150,884 for
the three
<PAGE>
month periods ended March 31, 1996 and 1995, respectively. The increase was due
to additional professional sales personnel hired during the three month period
ended March 31, 1996.
General and administrative costs decreased to $228,832 for the quarter ended
March 31, 1996 from $238,711 for the quarter ended March 31, 1995, as a result
of the Company's continued efforts to improve efficiency.
Other income totaling $121,635 and $88,499 for the first quarter of 1996 and
1995, respectively, consisted primarily of interest receivable on a note from a
related party. Interest expense of $66,181 for the three month period ended
March 31, 1996 resulted from interest accrued on notes payable to related
parties. Interest expense for the three month period ended March 31, 1995,
totaled $106,764, representing interest accrued on the subordinated debentures
prior to the exchange for common stock on March 7, 1995. Other expense for the
first quarter of 1996 totaled $9,813 compared to $1,054 for the three month
period ended March 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES:
Total inventories increased for the three months ended March 31, 1996 by $57,302
from December 31, 1995. For the three months ended March 31, 1996, parts and
work in process inventories increased $261,115 while finished aircraft and
demonstrator inventory decreased $203,813.
Accounts receivable decreased to $37,475 as of March 31, 1996 from $267,232 for
the period ended December 31, 1995. This reduction was due to payment received
by the Company from two customers in early January for balances due on new
aircraft. Notes receivable from related parties decreased to $3,415,741 at
March 31, 1996 from $4,223,743 at December 31, 1995, reflecting payments of
principal and interest totalling $1,000,000 made during the first quarter of
1996. Notes receivable as of March 31, 1996 include four aircraft sold by the
Company to non-affiliates. The Company has agreed to finance three of these
aircraft in consideration for notes with principal and interest payments due
monthly. A short-term note in the amount of $276,656 matures in the second
quarter of 1996.
Accounts payable decreased to $583,973 at March 31, 1996 from $1,357,660 at
December 31, 1995, due to substantial payments to suppliers and a slowing of
inventory receipts during the winter.
During the first quarter of 1996, the Company established a $600,000 line of
credit with its local bank, which provides funds to acquire used aircraft for
resale, as well as additional working capital. As of March 31, 1996 the
Company had borrowed $247,000 on this line.
Notes payable to related parties increased to $2,600,000 at March 31, 1996 from
$2,450,000 as of December 31, 1995. This debt accrues interest at 10% with
interest payable quarterly in arrears, and is due June 30, 1996.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURE
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.
COMMANDER AIRCRAFT COMPANY
--------------------------
(Registrant)
By /s/ Stephen R. Buren
------------------------
Stephen R. Buren
Vice President Finance
(Chief Financial Officer and
Authorized Signatory)
Date: May 13, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 156,496
<SECURITIES> 0
<RECEIVABLES> 3,780,694
<ALLOWANCES> 0
<INVENTORY> 7,488,146
<CURRENT-ASSETS> 11,512,403
<PP&E> 1,774,729
<DEPRECIATION> 680,900
<TOTAL-ASSETS> 13,130,146
<CURRENT-LIABILITIES> 4,083,974
<BONDS> 0
0
0
<COMMON> 3,360,274
<OTHER-SE> 5,685,898
<TOTAL-LIABILITY-AND-EQUITY> 13,130,146
<SALES> 1,462,930
<TOTAL-REVENUES> 1,462,930
<CGS> 1,525,502
<TOTAL-COSTS> 1,525,502
<OTHER-EXPENSES> 977,518
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,181
<INCOME-PRETAX> (994,449)
<INCOME-TAX> 0
<INCOME-CONTINUING> (994,449)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (994,449)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> 0
</TABLE>
