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U.S. Securities and Exchange Commission
Washington, D.C.
FORM 10-KSB
(Mark One)
[X ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal year ended April 30, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-22760
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Airport Systems International, Inc.
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(Name of small business issuer in its charter)
Kansas 48-1099142
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11300 West 89th Street, Overland Park, Kansas 66214
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (913) 495-2600
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Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
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(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 _____
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $14,227,000
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The aggregate market value of the voting stock held by non-affiliates
of the issuer on June 3, 1996, based upon the average bid and ask prices for
such stock on that date was $12,825,375. The number of shares of Common Stock
of the issuer outstanding as of June 3, 1996 was 2,230,500.
Documents incorporated by reference:
- Portions of the Annual Report to Shareholders for the year
ended April 30, 1996, are incorporated by reference into
Part II.
- Portions of the Proxy Statement for Airport Systems
International, Inc. (the Company) 1996 Annual Meeting of
Shareholders to be held September 10, 1996, are incorporated
by reference into Part III.
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Part I
Item 1. DESCRIPTION OF BUSINESS
(A) BUSINESS DEVELOPMENT
The Company's revenues are generated principally from sales of its products and
services to government agencies internationally and in the United States. The
products are sold directly to such agencies or through prime contractors for
integration into systems procured by those agencies. The Company's sales are
largely dependent upon government construction and procurement contracts. The
majority of the Company's revenues in any single quarter is typically derived
from relatively few customers and quarterly revenue will, therefore, fluctuate
based on a number of factors, including the timing and magnitude of orders,
customer installation schedules, and political and economic factors.
Sales are typically made pursuant to fixed price contracts and cost overruns,
if any, are assumed by the Company. Historically, the Company has not had any
contracts which have required significant product development efforts, however,
the Company may, in the future, enter into fixed price contracts which require
significant product development efforts. See "Certain Factors That May Effect
Future Results - Dependence on Fixed Price Contracts."
Generally, the time from when an order is accepted until the first equipment is
shipped is approximately six months. Training is normally completed during the
production of the equipment. Final acceptance of the installed equipment (and
thus completion of the installation portion of the contract) normally occurs
two to four months after the equipment is shipped. Installation time can vary,
however, with weather and site conditions, and the progress of other portions
of the construction project into which the Company's products are incorporated.
The Company generally provides a limited product warranty with its equipment.
Warranty costs are tracked by the Company and have historically not varied
materially from management's estimates.
The Company was incorporated on May 1, 1991, by Allsop Venture Partners III,
L.P. ("AVP"), Kansas Venture Capital, Inc. ("KVCI") and Fernau Holdings, Ltd.
("FHL"), a United Kingdom-based navaids manufacturer, for the purpose of
acquiring substantially all of the assets (the "Acquisition") of Aviation
Systems, Inc. ("Aviation"). At the time of the Acquisition, Aviation was a
debtor in possession in a Chapter 11 bankruptcy proceeding pending in the
United States Bankruptcy Court for the District of Kansas (the "Bankruptcy
Proceeding"). The Bankruptcy Proceeding was filed by Aviation on October 17,
1990. On May 7, 1991, a final order was issued in the Bankruptcy Proceeding
authorizing the sale of certain of Aviation's assets to the Company free and
clear of liens and interests. The closing of the Acquisition occurred on May
21, 1991, and the Company commenced operations on May 22, 1991.
Following the Acquisition, the Company has engaged in the design, manufacture,
marketing and installation of ground- based navaids. Navaids provide enroute
and approach to landing guidance to aircraft, allowing them to safely navigate
and land in poor visibility
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conditions. Navaids are required by the United States Federal Aviation
Administration ("FAA") and the International Civil Aviation Organization
("ICAO") regulations at all airports in the world that conduct all-weather
operations. In September, 1991, Mr. Keith Cowan, the Company's President and
Chief Executive Officer, commenced employment with Airport Systems. During its
first fiscal year following the Acquisition, the Company recruited an
experienced management team, developed domestic and international marketing and
distribution networks, made significant design improvements to the products
acquired in the Acquisition, instituted a total quality management system, and
enhanced the credibility of the Company with customers and vendors.
The Company completed an initial public offering on November 30, 1993, at which
time 1,550,000 shares of common stock were sold, including an over-allotment of
150,000 shares, 700,000 shares being sold by the Company and 850,000 shares
being sold by certain existing stockholders.
In September 1994, the Company acquired from Vomar International, Inc. and
Vomar Products, Inc. ("Vomar") certain contracts, inventories, machinery, and
intangibles relating to the Vomaglow line of airfield signage used to direct
aircraft along runways, taxiways and to terminals. The Company has been
engaged in the design, manufacture, marketing, and installation of airfield
signage subsequent to this date.
(B) BUSINESS OF THE COMPANY
Products, Markets and Distribution
The Company's primary products are Instrument Landing Systems (ILS), Very High
Frequency Omni-Range Transmitter (VOR), Distance Measuring Equipment (DME), and
Airfield Signage. ILS, VOR, and DME's are generally referred to as navaids.
Navaid products, such as those manufactured by the Company, are an integral
part of the air traffic control system used worldwide for navigation of
aircraft operating in Instrument Meteorological Conditions (IMC) under
Instrument-flight Rules (IFR). Signals generated by these products are
received by electronic avionics equipment installed in all aircraft equipped
for IFR. The avionics include cockpit displays which provide navigational
guidance to the pilot. Most navaids are radio frequency devices which use
measurement of angles and distance to establish aircraft position coordinates.
An ILS system provides the close-in navigation support to an aircraft during
the approach to landing phase. An ILS consists of three separate navaids: the
localizer provides lateral guidance to the left and right of the runway
centerline; the glide-slope provides vertical guidance above and below a
glidepath which intersects the runway touchdown point at about a three degree
angle; and between one and three marker beacon transmitters provide indication
of the aircraft's position at specific points on the approach path. The
Company manufactures and sells null reference and capture effect ILS
configurations, offering both single and dual transmitters. The null reference
configuration is less expensive, while the capture effect configuration is used
when difficult terrain conditions are present near the runway. Single
transmitter systems prevail in the United
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States, while dual systems are generally required at international sites to
provide redundancy.
An ILS is certified for use according to criteria which specify the applicable
landing decision height which is required for a particular approach procedure.
Decision height is that point above the approach end of the runway at which the
pilot must either establish positive visual contact with the runway, or execute
a missed approach. Category I ILS permits a landing decision height of 200
feet; Category II ILS permits a landing decision height of 100 feet; and
Category III ILS permits a landing decision height of 50 feet or less. The
Company produces Category I and II ILS.
VOR, in combination with DME, provide the principal means for enroute
navigation currently used in the air traffic control system. A VOR located
either at an airport or at enroute points between airports provides a line of
bearing from a ground station to an aircraft based on 360 specific radials
(each radial representing a point on the compass). Position accuracy is a
function of range from the ground station, since a VOR provides angular
bearings with an accuracy of plus or minus one degree. The Company offers both
conventional and doppler effect VOR. A doppler effect VOR typically is used
where difficult terrain conditions can affect signal quality.
A DME provides distance measurement from the aircraft to the DME with an
accuracy of approximately 500 feet. A DME uses a pulsed system, like radar, in
which the ground-based DME station replies with a pulse to an interrogating
signal received from an aircraft. The distance is computed by measuring the
time between signals. The Company manufactures and sells a low power DME for
use at airports and a high power DME for use enroute. A DME can be used in
place of marker beacons in an ILS to provide distance information to the pilot.
Airfield signage is used to direct aircraft along runways, taxiways, and to
terminals. The signs offer value-added design features, which reduce airfield
activity disruption, and readily adapt to all categories and sizes of airports.
The signs incorporate a unique two-post swinging design, which reduces damage
from jet blasts and lowers installation costs when compared with traditional
fixed-position signs.
The Company serves three primary markets: international; United States
non-federal; and the United States government.
The international market consists of all sales where the installation of the
Company's products is outside the United States. Almost all countries have
civil aviation authorities which regulate the airways within their borders and
procure equipment for their air traffic control systems and airports. The
Company sells either directly to these international organizations through a
network of representatives and distributors, or through prime contractors. The
Company has over 41 independent sales representatives representing over 47
countries. The Company's international sales were 72% and 74%, of total sales
for the fiscal years ended April 30, 1996, and 1995, respectively.
The United States non-federal market is comprised primarily of state and local
governmental entities which have responsibility for airport development,
improvement and management. The Company either contracts
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directly with the governmental entity constructing or improving an airport for
the navaids portion of the project, or acts as a subcontractor to a prime
contractor. The Company's United States non-federal sales were 23% and 13%, of
total sales for the fiscal years ended April 30, 1996, and 1995, respectively.
The United States government market includes all governmental agencies which
have a need for navaid products for installation in the United States. The
primary customer for Airport Systems in this market is the FAA. The Company's
sales to the United States Government were approximately 5% and 13%, of total
sales for the fiscal periods ended April 30, 1996, and 1995, respectively. The
Company has, to date, approached this market as both a subcontractor and direct
provider.
Status of Publicly Announced New Product
Satellite-based navigation systems for aircraft navigation and landing is an
emerging technology in the navaids industry. The Global Positioning System
("GPS"), controlled jointly by the Department of Defense and Department of
Transportation, uses 24 orbiting satellites and is the only such system
currently operating. Approach-to-landing satellite guidance, however, is
currently affected by accuracy and integrity limitations.
The Company entered into a strategic alliance during fiscal 1995 with a leading
manufacturer of military global positioning system products, Interstate
Electronics Corporation ("Interstate"). The Company is jointly developing with
Interstate a Differential Global Positioning System ("DGPS") that measures GPS
signal errors from a precisely known ground location and transmits corrections
to approaching aircraft. As part of a contract awarded in 1995 by Crossair AG,
a subsidiary of Swissair, and Swisscontrol, the Company has installed a
preliminary ground station at Lugano Switzerland; and initial flight testing
has begun. The basic design work for the final system has been completed, and
the Company and Interstate are currently engaged in integrating hardware and
software components. Testing of precision approaches using the completed
system is expected to begin late in calendar 1996, with commissioning
anticipated soon thereafter.
Competition
The Company competes against several large multi-national companies which
provide a broad spectrum of products and which serve a wide customer base.
Most contracts in the navaid and sign markets are awarded through a sealed bid
or competitive request for proposal process. The principal competitive factors
in these markets are (i) product conformance with FAA and ICAO specifications,
(ii) quality of product manufactured and ease of customer usability and
maintenance, (iii) delivery time, (iv) customer training and support, and (v)
price. To date, the international and United States non-federal markets have
accounted for a substantial portion of the Company's revenues. It is the
Company's belief that significant barriers to entry into the markets for its
existing products are presented by the difficulty and expense of developing the
products and obtaining FAA and ICAO approvals.
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The Company's principal navaid competitor in the United States non-federal
market is Wilcox Electric Company, which is, to the Company's knowledge, the
only other United States manufacturer of ground-based Navaids of the type sold
by the Company that has products certified for use in AIP funded projects.
To date, the Company is unaware of any DGPS equipment that has been certified
for use by commercial aviation either domestically or internationally. The
Company is aware of a number of major electronic and air traffic control
equipment manufacturers who have publicly announced they are pursuing
development of DGPS equipment. The Company is unable to determine the extent
to which these potential competitors will effect the competitive future of the
DGPS product.
The Company has several competitors both domestically and internationally in
airfield signage. Domestically, the Company's primary competitors are ADB
Alnaco (a division of Siemens, Inc.), Crouse Hinds (a division of Cooper
Industries) and Standard Signs, Inc. (a privately held company).
Internationally, the Company competes primarily against ADB Alnaco and local
indigenous sign manufacturers.
Sources and Availability of Raw Materials and Principle Suppliers
Raw materials used in the manufacture of the Company's products are readily
available from a number of sources in the United States.
Dependence on One or a Few Major Customers
The Company had sales to two customers which, in the aggregate, accounted for
33% of total sales in fiscal 1996, and sales to one different customer which
accounted for 32% of total sales in fiscal 1995. Because of the nature of the
Company's business, it is possible that future revenues could be dependent on
one or a few major customers.
Patents, Trademarks, Licenses
The Company holds no United States or foreign patents. The Company's only
trademark is the "AIRPORT SYSTEMS" name and design which is registered with the
United States Patent and Trademark office. The Company's material intellectual
property consists of drawings, plans, software, specifications and engineering
and manufacturing know how which the Company maintains as confidential
proprietary information. In November, 1992, the Company paid Fernau Avionics,
Ltd. $217,225 for an irrevocable, fully transferrable, non-exclusive perpetual
royalty-free license to manufacture, sell and maintain products using DME
technology owned by FAL, replacing an earlier license agreement. In addition,
the Company's strategic alliance with Interstate for the development and sale
of DGPS equipment provides that each party shall develop and own certain
intellectual property which is incorporated into the DGPS equipment.
Generally, the Company's portion is focused on radio frequency transmission and
reception, and Interstate's portion is focused on differential correction
software and hardware.
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Government Approvals
All navigation aids to be installed in the United States, whether purchased by
airport owners, local or state governments or the FAA, require FAA and United
States Federal Communications Commission ("FCC") approval. The Company has
received all applicable FCC approvals for the products it sells in the United
States.
FAA approval takes different forms depending on how the equipment is procured.
When the FAA purchases equipment it typically issues a detailed specification
describing the functional performance requirements, and the design and
production methods. FAA design and production requirements historically have
contained more detailed specifications than those required in the international
and the United States non-federal markets, resulting in products which are more
costly to produce. The Company has not yet participated in FAA sponsored
design and production contracts.
Local or state governments typically procure equipment in accordance with the
technical requirements of FAA Federal Airways Regulations ("FAR") Part 171.
FAR Part 171 is a functional performance requirement which does not include
specific design and construction methods. Because no design or construction
specifications are required to be met, products sold in the United States
non-federal market cost less than similar products procured by the FAA. The
types of ILS, VOR and DME sold by the Company in the United States non-federal
market have been approved in accordance with FAR Part 171 by the FAA.
In addition, certain local or state airport projects for which the Company
contracts are partially funded by the Airport Improvement Program ("AIP"), a
United States government trust-fund program funded by airport user fees. When
ILS or DME equipment are procured under a program funded by the AIP, the buyer
of the equipment typically transfers ownership, maintenance and operation of
the equipment to the FAA after installation is complete. There is an
additional FAA approval process required for AIP funded contracts which
requires demonstration that the FAA can successfully maintain and operate the
equipment. The Company's ILS and DME products are approved by the FAA for AIP
funded contracts. To the Company's knowledge, there is only one other company
in the United States with approval to supply ILS and DME equipment for AIP
funded contracts.
The ICAO is a United Nations chartered organization which establishes
international standards for navigation equipment, and member countries' navaids
must conform with ICAO functional standards. Equipment for international
procurement normally is tested after installation to insure conformance with
ICAO standards. In some cases, international programs may require proof of FAA
FAR 171 approval prior to bid. Airfield signage must meet the requirements of
FAA Circular AC150/5345-44F. The Company's airfield signage line meets these
requirements.
Effect of Existing or Probable Governmental Regulations on the Business
The Company is subject to federal, state and local regulations concerning the
environment, occupational safety and health. The Company has not experienced
significant difficulty in complying with such regulations and compliance has
not had a material impact on the
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Company's business or its financial results.
Research and Development
During fiscal 1996, approximately 42% of the Company's engineering staff time
was spent on research and development activities, none of which was borne by
the customer. In fiscal 1995, the amount of engineering time spent on research
and development was 32%, none of which was borne by the customer.
Total Number of Employees
At April 30, 1996, the Company had 98 full time employees. Of these, 52 are
engaged in manufacturing, 6 in sales and marketing, 18 in engineering, 6 in
quality assurance and 16 in administration. The Company's employees are not
represented by a labor organization.
Certain Factors That May Effect Future Results
This annual report on Form 10-KSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1993, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. In addition,
from time to time, the Company or its representatives have made or may make
forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but are not limited to, various filings made by
the Company with the Securities and Exchange Commission, press releases or oral
statements made by or with the approval of an authorized executive officer of
the Company. Forward-looking statements consist of any statement other than a
recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate,"
or "continue" or the negative thereof or other variations thereon or comparable
terminology. Actual results could differ materially from those projected or
suggested in any forward-looking statements as a result of a wide variety of
factors and conditions, including, but not limited to, the factors summarized
below and the factors and conditions which are described under the headings
"Backlog," and "Quarterly Results" in the discussion of "Results of Operations"
contained in Management's Discussion and Analysis of Financial Condition and
Results of Operations under Item 6 of this Form 10KSB, as well as those which
have been included in other documents the Company files from time to time with
the Securities and Exchange Commission including the Company's annual reports
on Form 10-KSB, quarterly reports on Form 10-QSB and current reports on Form
8-K, and holders of the Company's securities are specifically referred to these
documents with regard to the factors and conditions that may affect future
results. The reader or listener is cautioned that the Company does not have a
policy of updating or revising forward-looking statements and thus he or she
should not assume that silence by management of the Company over time means
that actual events are bearing out as estimated in such forward-looking
statements.
Emerging Technology - The Company's products are based upon proven ground-based
radio technology which has been the standard for navaids worldwide and is the
technology used in the vast majority of navaids currently in service. However,
currently there are potentially competitive technologies being procured or
actively considered by the
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FAA, ICAO and civil aviation authorities around the world, the most significant
of which is GPS. Based on future FAA, ICAO and other civil aviation
authorities' actions with regard to satellite technologies, the long-term
ability of the Company to compete successfully will depend in large measure on
its ability to acquire or develop products which are compatible with
technological changes and advances in the navaids industry. The
Company's ability to develop a GPS-based landing system depends to some degree
on the success of a teaming agreement it has entered into with Interstate
Electronics Corporation. See "Business of the Company - Status of Publicly
Announced New Product."
Competition - The Company is in direct competition with one other supplier of
navaids in the United Sates. This competitor, Wilcox Electric, Inc. ("Wilcox"),
is a subsidiary of Thomson-CSF, a French defense and electronics company
partially owned by the French government. Thomson-CSF has substantially
greater resources than the Company, and Wilcox has been, for many years, the
principal supplier of navaids to the FAA. In the international market, there
are several foreign competitors for one or more of the products produced by the
Company, most of which are substantially larger and have greater resources than
the Company. See "Business of the Company - Competition."
The market potential for satellite based landing systems has resulted in
alliances being formed between industry participants and companies not
historically involved in ground-based navigation and may over time result in
additional competitors.
Dependence on FAA Approvals - The Company's products used in the United States'
national airspace system have been approved by the FAA. These approvals are
required in order for the Company to sell its navaids to public use airports in
the United States. Furthermore, although not specifically required, FAA
approval of the Company's navaids is a very strong selling point in
international sales. While the Company has no reason to expect withdrawal of
FAA approvals of the Company's navaids, withdrawal of any such approvals would
have an adverse impact on the ability of the Company to sell its products both
domestically and internationally. See "Business of The Company - Government
Approvals."
Product Liability - The Company currently carries a $50 million product
liability insurance policy, however, it is possible that judgment in an amount
greater than the policy limits could be awarded in the event the Company's
equipment was found to have been a contributing cause to an aircraft crash.
Any judgment in excess of the Company's product liability insurance limits
could have a material adverse effect on the Company.
The United States Dollar Exchange Rates - The Company competes internationally
with competitors from Europe and Japan and is thus subject to the effects of
changes in United States dollar exchange rates. To date, this has not had an
adverse effect on the Company's ability to compete for international projects.
If the United States dollar gains strength against the currencies of its
principal competitors, it could impede the marketing of the Company's products
by making them relatively more expensive in international markets compared to
competitors' products. The Company's contracts are denominated in
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United States dollars.
Dependence on Key Personnel - The future success of the Company is highly
dependent upon several executive officers. The Company has signed employment
agreements with four executives and has purchased key man life insurance on
five executive officers. There can be no assurance that the loss of any one of
these individuals would not have a material adverse effect on the Company's
operations or profits. See "Executive Officers of the Company."
Possible Volatility of Stock Price - Company's Trading Volume Historically
Limited - The trading price of the Common Stock could be subject to significant
fluctuations in response to announcements of developments related to the
Company's business, the Company's financial results, general conditions in the
industry, the United States dollar exchange rates and the general economy.
Historically, the trading volume of the Company's Common Stock on the NASDAQ
National Market has been limited due to the relatively few number of
shareholders and shares outstanding.
Dependence on Fixed-Price Contracts - Sales are typically made pursuant to
fixed price contracts and cost overruns, if any, are assumed by the Company.
Revenues from fixed-price contracts are recognized using
percentage-of-completion units of delivery method. Revisions in revenue and
profit estimates are reflected in the period in which the conditions that
require the revision become known and are estimable. Therefore, adjustments
for profits or losses may have a material effect on results for the quarter in
question. The risks inherent in fixed-price contracts include the forecasting
of costs and schedules, while the recognition of contract revenues relates to
delivery of equipment and completion of contract services.
Competitive Bidding - Airport Systems generally obtains its contracts through
the process of competitive bidding. There can be no assurance that the Company
will continue to be successful in having its bids accepted or, if accepted,
that awarded contracts will generate sufficient revenues to result in
profitability for the Company. To the extent that actual costs exceed the
projected costs on which bids or contract prices were based, the Company's
profitability could be materially adversely affected.
Additional Financing Requirements - Although at April 30, 1996 the Company had
$621,000 in cash, the financing requirements of all of the various
opportunities it is currently considering, if funded solely by the Company may
exceed this amount. This includes working capital to meet current and future
contract obligations as well as funding for product expansion either through
acquisition or internal development. The extent of such total capital
requirements cannot be quantified at this time since many of these
opportunities are at an early stage of consideration. In order to fully fund
all such projects, the Company may need to issue debt or equity securities or
engage in other financing activities. There can be no assurance that such
financing will be available on favorable terms or on a timely basis, if at all.
Any issuance of equity securities by the Company may result in a dilution of
shareholders' equity. In addition, additional debt may have an adverse impact
on operating results.
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Item 2. DESCRIPTION OF PROPERTY
Real Estate. The Company conducts all of its navaid and administrative
operations from its facility at 11300 West 89th Street in Overland Park,
Kansas, which consists of approximately 50,000 square feet. Approximately
26,000 square feet is used for manufacturing, approximately 17,000 is used for
engineering and training, while the remaining 7,000 square feet is used for
administration and marketing. The building and the seven acres on which it is
located are owned by the Company, subject to a mortgage due June, 2011. The
principal balance of the mortgage at April 30, 1996, was $1,237,000, with a
final payment of approximately $788,200 due on the due date assuming no
prepayments. The Company believes that its existing facility provides adequate
capacity for growth for the foreseeable future. No specific plans have been
formed at the present time for expanding the facility, however, the Company
believes that it has a range of suitable alternatives for future expansion.
The Company conducts production of airfield signage from a leased facility at
8920 Bond in Overland Park, Kansas, which consists of approximately 7,200
square feet. The Company has a 2 year renewable lease for this facility. The
Company believes this facility will provide adequate capacity for the remaining
lease term.
Manufacturing and Engineering Equipment. The Company's manufacturing
equipment, including automatic lead forming/cutting and wave solder capability,
is suitable for its low volume electronics production. Through-hole components
are manually placed with the assistance of semi-automatic component insertion
equipment. Surface mount components are manually placed and attached. The test
department is equipped with general purpose and automatic test equipment such
as network analyzers, spectrum analyzers and vector voltmeters. Hot mock-up
test beds are used to ensure subassembly functionality, with all Navaid
assemblies tested environmentally in a temperature chamber. The Company's
engineering department is equipped with state of the art design and test
equipment, including advanced computer-aided design systems, radio frequency
signal modeling software and necessary test and design equipment.
Item 3. LEGAL PROCEEDINGS
On February 22, 1995, the Company was named in a suit filed in the District
Court of Johnson County, Kansas Civil Department by Raju Kakarlapudi, d/b/a
Communications International, for commissions on certain contracts with respect
to the sale of products for ultimate use in India. The petition seeks damages
of approximately $2.1 million plus interest. The litigation is in the
discovery phase, and the case is set for trial in December 1996. The Company
terminated the representative's contract prior to any commissions being due and
as a result believes that the plaintiff's claim is without merit, denies
liability for such commissions and intends to vigorously defend this claim.
Presently, counsel for the Company is unable to estimate the range of possible
loss, if any, which could result from this claim.
The Company is not a party to any other lawsuits, but is subject to claims
arising in the ordinary course of business, which the Company
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believes will not have, either individually or in the aggregate, a material
adverse effect on the Company's business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter to a vote of security holders, through a
solicitation of proxies or otherwise, during the fourth quarter of the
Company's fiscal year ended April 30, 1996.
Supplementary Item - EXECUTIVE OFFICERS OF THE COMPANY
The following are the executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------- ----- ---------------------------------
<S> <C> <C>
Keith S. Cowan 42 President, Chief Executive Officer and Director
Thomas C. Cargin 41 Vice President-Finance and Administration, Secretary and Director
John C. Roos 55 Vice President-Engineering
Michael M. Warner 42 Vice President-Business Development
John R. Wharton 54 Vice President-Sales
Bruce E. Chapman 49 Vice President-Programs
Wayne S. Howard 56 Vice President-Manufacturing Operations
Diane D. Johnson 34 Vice President-Quality
</TABLE>
Each of the executive officers is a full-time employee of the Company. Set
forth below are descriptions of the backgrounds of the executive officers of
the Company.
Keith S. Cowan has served as President and a Director of the Company since
September, 1991, and as Chief Executive Officer of the Company since August,
1993. Prior to joining the Company, Mr. Cowan was an employee of the Teledyne
Controls Division of Teledyne, Inc. for more than five years, last serving as
Vice President, Airport and Instrumentation Products. Mr. Cowan has over 22
years of system engineering, project management and corporate experience in the
development, manufacturing and sale of electronic systems.
Thomas C. Cargin has served as Vice President-Finance and Administration of the
Company since December, 1991, as its Secretary since March, 1993, and as a
Director of the Company since October, 1993. Prior to joining the Company, Mr.
Cargin was a partner in the accounting firm of Ifft & Barber since 1989 and
prior to that was an employee of DYMON, Inc., a specialty chemical manufacturer
located in Kansas City, Kansas, since 1983, last serving as Vice President of
Finance and Chief Financial Officer. Mr. Cargin is a Certified Public
Accountant with over 19 years of public accounting and private industry
accounting experience. He is also a licensed pilot holding an instrument
rating.
John C. Roos has served as Vice President-Engineering of the Company
Page 12
<PAGE> 13
since December, 1991. Prior to joining the Company, Mr. Roos was an employee
of AIL Systems, Inc., a subsidiary of Eaton Corporation, for more than five
years, last serving as Manager of Design Engineering. Mr. Roos has over 30
years in engineering management experience in radio frequency design,
government contracting and engineering project management.
Michael M. Warner has served as Vice President-Business Development since
January, 1995. Prior to that, he held the position of Director-Business
Development with Harris Corporation from 1993 to 1995. From 1982 to 1993 he
held various positions with Hughes Aircraft Company, last serving as Manager,
New Business Development. He has over 14 years experience in marketing and
managing air traffic control systems projects.
John R. Wharton has served as Vice President-Sales of the Company since May,
1991. Prior to joining the Company, Mr. Wharton was employed by Aviation
Systems, Inc., since 1988, last serving as Vice President of Marketing, and
prior thereto by Wilcox for over 20 years. Mr. Wharton was an executive
officer and director of Aviation Systems, Inc., at the time of its bankruptcy
filing in 1990. See "Business-Business Development". Mr. Wharton has over 32
years experience in marketing airport navigation aids both in the United States
and internationally.
Bruce E. Chapman has served as Vice President-Programs of the Company since
March, 1993, and prior thereto he held the position of Director of Program
Management of the Company since June, 1992. Prior to joining the Company, Mr.
Chapman was an employee of the ECI Division of E-Systems Inc., a manufacturer
of electronic equipment, for more than five years, last serving as Senior
Program Manager, Mr. Chapman has over 27 years of experience managing
electronic system development programs.
Wayne S. Howard has served as Vice President-Manufacturing Operations of the
Company since March, 1994. Prior to joining the Company, Mr. Howard was an
employee of New Bedford Panoramics Corporation for more than five years, last
serving as Manufacturing Manager. Mr. Howard has over 28 years of electronic
components manufacturing experience.
Diane D. Johnson has served as Vice President-Quality of the Company since
October, 1993, and prior thereto she held the position of Manager of Quality of
the Company since May 1, 1992. Prior to joining the Company, Ms. Johnson was
an employee of Allied Signal Aerospace, Kansas City Division, for more than
five years, last serving as a Senior Product Engineer. Ms. Johnson has over 11
years of production and quality engineering experience and is an American
Society for Quality Control Certified Quality Engineer.
Page 13
<PAGE> 14
Part II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by Item 5 is set forth on page 20 of the Company's
1996 Annual Report to shareholders and such information is incorporated herein
by reference.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by Item 6 is set forth on pages 8 through 10 of the
Company's 1996 Annual Report to shareholders and such information is
incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 7 is set forth on pages 11 through 19 of the
Company's 1996 Annual Report to shareholders and such information is
incorporated herein by reference.
Item 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Page 14
<PAGE> 15
Part III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to the Company's Directors required by Item 9 is set
forth on pages 5 to 6 of the Company's proxy statement for its 1996 Annual
Meeting of Shareholders and such information is incorporated herein by
reference.
The information relating to filing of Forms 3, 4, and 5 required by Item 9 is
set forth on page 8 of the Company's proxy statement for its 1996 Annual
Meeting of Shareholders and such information is incorporated herein by
reference.
Information relating to the Company's Executive Officers, as required by Item 9
is set forth under the heading, Supplementary Item - Executive Officers of the
Company, pages 9 to 10 of Part I of this Form 10-KSB, and is incorporated
herein by reference.
Item 10. EXECUTIVE COMPENSATION
The information required by Item 10 is set forth on page 7 of the Company's
definitive Proxy Statement for its 1996 Annual Meeting of Shareholders and such
information is incorporated herein by reference.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by Item 11 is set forth on pages 3 and 4 of the
Company's definitive proxy statement for its 1996 Annual Meeting of
Shareholders and such information is incorporated herein by reference.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 12 is set forth on page 6 of the Company's
definitive proxy statement for its 1996 Annual Meeting of Shareholders and such
information is incorporated herein by reference.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits have been or are being filed herewith,
and are numbered in accordance with Item 601 of Regulation S-B:
<TABLE>
<CAPTION>
PAGE
NUMBER DESCRIPTION NO.
- ------ ------------------------------------------------------ ---
<S> <C>
3.1 ARTICLES OF INCORPORATION
The amended Articles of Incorporation of the Company
dated September 14, 1994, attached as Exhibit 3.1
pages 19-55 of the Company's Form 10-KSB, filed
July 31, 1995 with the Securities and Exchange
Commission is incorporated herein by reference.
</TABLE>
Page 15
<PAGE> 16
<TABLE>
<CAPTION>
PAGE
NUMBER DESCRIPTION NO.
- ------ ------------------------------------------------------ ---
<S> <C>
3.2 BY-LAWS
The Restated By-Laws of the Company dated October 1,
1993, attached as Exhibit 3.2, of the Company's
Registration Statement, Form SB-2, filed November 29,
1993 with the Securities and Exchange Commission,
are incorporated herein by reference.
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
A specimen stock certificate representing shares of
the common stock, par value $.01 per share, attached
as Exhibit 4.1 of the Company's Registration Statement,
Form SB-2, filed November 29, 1993 with the Securities
and Exchange Commission, is incorporated herein by reference.
10 MATERIAL CONTRACTS
(a) Teaming agreement between Airport Systems International,
Inc. and Interstate Electronics Corporation
(Portions omitted pursuant to a request for confidential
treatment) attached as exhibit 10.1 of the Company's
Form 10-QSB, filed March 17, 1995 with the Securities
and Exchange Commission, is incorporated herein by
reference.
(b) A copy of the warrant issued by the Company to
Fahnestock & Company, Inc., attached as Exhibit 4.7 of
the Company's Registration Statement, Form SB-2,
filed November 29, 1993 with the Securities and
Exchange Commission, is incorporated herein by
reference.
(c) Restated 1991 Stock Option Plan attached as Exhibit
10.5 of the Company's Registration Statement, Form
SB-2, filed November 29, 1993 with the Securities
and Exchange Commission, is incorporated herein by
reference.
(d) Stock Option Agreement dated September 3, 1991, by
and between the Company and Keith S. Cowan, as
amended, attached as Exhibit 10.6 of the Company's
Registration Statement, Form SB-2, filed
November 29, 1993 with the Securities and Exchange
Commission, is incorporated herein by reference.
(e) Stock Option Agreement dated January 15, 1992, by
and between the company and Thomas C. Cargin,
attached as Exhibit 10.7 of the Company's
Registration Statement, Form SB-2, filed November
29, 1993 with the Securities and Exchange Commission,
is incorporated herein by reference.
(f) Stock Option Agreement dated January 15, 1992, by
and between the Company and John C. Roos, attached
as Exhibit 10.8 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(g) Stock Option Agreement dated January 15, 1992, by
and between the Company and John R. Wharton, attached
as Exhibit 10.9 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
</TABLE>
Page 16
<PAGE> 17
<TABLE>
<CAPTION>
PAGE
NUMBER DESCRIPTION NO.
- ------ ------------------------------------------------------ ---
<S> <C>
(h) Stock Option Agreement dated June 25, 1993, by
and between the Company and Keith S. Cowan, attached
as Exhibit 10.11 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(I) Stock Option Agreement dated June 25, 1993, by
and between the Company and Thomas C. Cargin, attached
as Exhibit 10.12 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(j) Stock Option Agreement dated June 25, 1993, by
and between the Company and John C. Roos, attached
as Exhibit 10.13 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(k) Stock Option Agreement dated June 25, 1993, by and
between the Company and John R. Wharton, attached
as Exhibit 10.14 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(l) Stock Option Agreement dated October 1, 1993, by
and between the Company and Keith S. Cowan, attached
as Exhibit 10.15 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(m) Stock Option Agreement dated October 1, 1993, by
and between the Company and Thomas C. Cargin, attached
as Exhibit 10.16 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(n) Stock Option Agreement dated October 1, 1993, by
and between the Company and John C. Roos, attached
as Exhibit 10.17 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(o) Stock Option Agreement dated October 1, 1993, by
and between the Company and John R. Wharton, attached
as Exhibit 10.18 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(p) Stock Option Agreement dated October 1, 1993, by
and between the Company and Barry L. Harris, attached
as Exhibit 10.19 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(q) Stock Option Agreement dated April 15, 1994, by
and between the Company and Wayne Howard, attached as
Exhibit 10 of the Company's Form 10-KSB, filed July 28,
1994 with the Securities and Exchange Commission, is
incorporated herein by reference.
</TABLE>
Page 17
<PAGE> 18
<TABLE>
<CAPTION>
PAGE
NUMBER DESCRIPTION NO.
- ------ ------------------------------------------------------ ---
<S> <C> <C>
(r) Stock Option agreement dated January 23, 1995, by
and between the Company and Michael M. Warner,
attached as exhibit 10.1 of the Company's Form 10-QSB,
filed March 17, 1995 with the Securities and
Exchange Commission, is incorporated herein by
reference.
(s) Employment Agreement dated June 22, 1993, by
and between the Company and Keith S. Cowan, attached
as Exhibit 10.1 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(t) Employment Agreement dated October 11, 1993, by
and between the Company and Thomas C. Cargin, attached
as Exhibit 10.2 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(u) Employment Agreement dated October 11, 1993, by
and between the Company and John C. Roos, attached
as Exhibit 10.3 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
(v) Employment Agreement dated October 11, 1993, by
and between the Company and John R. Wharton, attached
as Exhibit 10.4 of the Company's Registration
Statement, Form SB-2, filed November 29, 1993 with
the Securities and Exchange Commission, is incorporated
herein by reference.
11. STATEMENT OF COMPUTATION OF PER SHARE EARNINGS 21
13. ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED 22-45
APRIL 30, 1996 (pages 1 through 8 of such report shall not be
deemed filed).
21. SUBSIDIARIES OF THE COMPANY INCLUDE:
Subsidiary Jurisdiction
------------------- ------------------
ASII International, Inc. Barbados, W.I.
23. CONSENT OF INDEPENDENT AUDITORS 46
27. FINANCIAL DATA SCHEDULE (for SEC use only)
(b) REPORTS ON FORM 8-K: None
</TABLE>
Page 18
<PAGE> 19
PART IV
Signatures
Pursuant to the requirements of Section 13 or 15 (d) 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.
AIRPORT SYSTEMS INTERNATIONAL, INC.
By: /s/ Keith S. Cowan
--------------------------------------
Keith S. Cowan
President and Chief Executive Officer
Date: July 25, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated:
/s/ Keith S. Cowan Date: July 25, 1996
- ------------------------------------------
Keith S. Cowan
President, and Director
(Chief Executive Officer)
/s/ Thomas C. Cargin Date: July 25, 1996
- -------------------------------------------
Thomas C. Cargin
Director
(Vice President-Finance and
Administration, Principle Financial
Officer, and Secretary)
/s/ Michael J. Meyer Date: July 25, 1996
- -------------------------------------------
Michael J. Meyer
Director
/s/ Thomas C. Blackburn Date: July 25, 1996
- -------------------------------------------
Thomas C. Blackburn
Director
Page 19
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description Page
- ------ ----------- ----
<S> <C> <C>
11. STATEMENT OF COMPUTATION OF PER SHARE EARNINGS 21
13. ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED 22-45
APRIL 30, 1996 (pages 1 through 6 of such report
shall not be deemed filed).
23. CONSENT OF INDEPENDENT AUDITORS 46
27. FINANCIAL DATA SCHEDULE (for SEC use only)
</TABLE>
Page 20
<PAGE> 1
EXHIBIT 11
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
NET INCOME (LOSS) PER SHARE COMPUTATION
(In thousands, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30,
-----------------------------
1996 1995
--------- ---------
<S> <C> <C>
PRIMARY
- ---------------------------------------------
Net income (loss) applicable to common stockholders ($212) $ 1,194
======== =======
Weighted average number of common
shares outstanding during the periods 2,192 2,190
Add - dilutive common equivalent shares
(determined using the "treasury stock method")
representing shares issuable upon the exercise
of stock options -- 206
-------- -------
Weighted average number of shares used
in calculation of primary net income per share 2,192 2,396
======== =======
Net income (loss) per common share - primary ($0.10) $ 0.50
======== =======
FULLY DILUTED
- ------------------------------------------------
Net income (loss) applicable to common stockholders ($212) $ 1,194
======== =======
Weighted average number of shares used in calculating
primary net income (loss) per common share computation 2,192 2,396
Add (deduct) incremental shares representing:
Shares issuable upon exercise of stock options
included in primary calculation above --- (206)
Shares issuable upon exercise of stock options
based on period-end market price --- 206
======== =======
Weighted average number of shares used in
calculation or fully diluted net income (loss) per shares 2,192 2,396
======== =======
Net income (loss) per common share - fully diluted ($0.10) $ 0.50
======== =======
</TABLE>
Page 21
<PAGE> 1
EXHIBIT 13
Airport Systems International, Inc.
Selected Financial Data
<TABLE>
<CAPTION>
Year ended April 30
1996 1995
========= ==========
<S> <C> <C>
(In thousands except per share data)
INCOME STATEMENT DATA:
Sales $ 14,227 $ 18,131
Cost of products sold 10,064 12,193
--------- ----------
Gross margin 4,163 5,938
Operating expenses 4,451 4,360
Interest expense (135) (133)
Other income, net 103 360
Income (loss) before income taxes (320) 1,805
Income tax provision (benefit) (108) 611
--------- ----------
Net income (loss) $ (212) $ 1,194
========= ==========
Net income (loss) per common and common
equivalent share - primary and fully diluted $ (0.10) $ 0.50
Weighted average common and common equivalent
shares outstanding - primary and fully diluted 2,192 2,396
BALANCE SHEET DATA:
Working capital $ 6,792 $ 6,583
Total assets 12,878 13,456
Current portion of long-term debt 16 9
Long-term debt, less current portion 1,221 1,237
Stockholders' equity(1) 8,930 9,136
========= ==========
</TABLE>
(1) The Company has never declared or paid any dividends to the common
stockholders.
<PAGE> 2
Airport Systems International, Inc.
Managements' Discussion and Analysis of Financial Condition and Results of
Operations
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain income
statement data:
<TABLE>
<CAPTION>
YEAR ENDED Year Ended
APRIL 30, 1996 April 30, 1995
(Dollars in Thousands)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 14,227 100.0% $ 18,131 100.0%
Cost of products sold 10,064 70.7% 12,193 67.3%
-----------------------------------------------
Gross margin 4,163 29.3% 5,938 32.7%
Selling, general and administrative expenses 3,460 24.3% 3,537 19.5%
Research and development expenses 991 7.0% 823 4.5%
Operating income (loss) (288) (2.0%) 1,578 8.7%
Interest expense (135) (0.9%) (133) (0.7%)
Other income, net 103 0.7% 360 2.0%
-----------------------------------------------
Income (loss) before income taxes (320) (2.2%) 1,805 10.0%
Income tax provision (benefit) (108) (0.7%) 611 3.4%
-----------------------------------------------
Net income (loss) $ (212) (1.5%) $ 1,194 6.6%
===============================================
</TABLE>
Sales in 1996 were $14.2 million, or 22% lower than sales in 1995. Of the
$14.2 million, approximately $4.7 million, or 33%, represented deliveries to
two customers. The decline in sales, compared to 1995, was due to a reduced
number of units shipped as a result of a lower beginning of the year backlog
and decreased bookings the first 6 months of the current fiscal year.
Gross margin was $4.2 million, or 29% of sales, down approximately 30%
from $5.9 million, or 33% of sales, in 1995. Gross margin and gross margin as a
percent of sales declined due to delivery of lower gross margin product and
services, including lower margin installation and sign revenue. In response to
lower sales levels and margins, the Company reduced manufacturing overhead
during 1996 and has instituted programs it believes will reduce manufacturing
overhead, labor and materials for 1997.
Selling, general and administration ("SG&A") expenses decreased $77,000,
or 2% in 1996 reflecting reduced staffing levels and other related expenses
associated with lower sales levels. Since certain of these costs are fixed in
nature, SG&A expenses, as a percent of sales, increased to 24% in 1996 from
approximately 20% in 1995. In addition, higher marketing expenses were incurred
related to increased international bidding activity.
Research and development expenses increased from $823,000 in 1995 to
$991,000 in 1996, a difference of $168,000. Research and development activities
relating to new product development, primarily continued work on the
differential global positioning systems ("DGPS"), the ground component required
for aircraft use of satellite-based navigation systems to achieve precision
approach accuracy and integrity standards, as well as product enhancements
accounted for the increase. Research and development activities are expected
to remain at or near the 1996 levels as the Company continues product line
enhancements and new product development of DGPS.
Other income decreased $257,000 in 1996, due mainly to non-recurring
income in 1995 of $140,000 from the forfeiture of a customer down payment and
approximately $60,000 resulting from a settlement reached on a contract left
from the predecessor company. The remaining difference is due to decreased
interest income from lower average cash and investment balances as compared to
the comparative period in 1995.
The Company's effective income tax rate was approximately 34% in 1996 and
1995. Tax benefits associated with the Company's foreign sales corporation
resulted in a lower effective tax rate in 1996 and 1995, as further described
in Note 6 to the financial statements.
As a result of the above, the net loss for 1996 was $212,000, or 2% of
sales, compared to net income of $1.2 million, or 7.0% of sales, in 1995.
<PAGE> 3
Airport Systems International, Inc.
BACKLOG
The following table sets forth the domestic and international backlog as
of the dates indicated:
<TABLE>
<CAPTION>
April 30, 1996 April 30, 1995
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Domestic $ 1,183 18.3% $ 1,775 35.5%
International 5,295 81.7 3,224 64.5
------- ----- -------- -----
TOTAL $ 6,478 100.0% $ 4,999 100.0
======= ===== ======== =====
</TABLE>
The Company's backlog increased $1.5 million or 30% to $6.5 million at
April 30, 1996, compared to $5.0 million at April 30, 1995. Approximately 37%
of the backlog at April 30, 1996 was represented by a contract from the Middle
East, and 31% of the backlog relates to various contracts with the Republic of
Korea. Substantially all of the backlog at April 30, 1996 is expected to be
completed and shipped in 1997.
The increase in backlog, as compared to April 30, 1995, is the result of
approximately $12.0 million in contract awards during the last 6 months of the
fiscal year. The Company attributes this increase in bookings to the increased
level of contracts being awarded by civil aviation authorities as well as
processes implemented in its bidding strategy to insure that bids are submitted
only on projects likely to be awarded and for which the Company is positioned
to win. A substantial number of bids remained active at year end, but the
Company is unable to determine when or if the related contracts will be
awarded. The Company plans to continue to strengthen its marketing group and
expand its international sales representative network during 1997. The Company
expects that these actions, combined with a planned increase in marketing
activities, will better position the Company to capture existing programs and
identify and market upcoming programs. The Company expects backlog and bidding
activities as well as contract awards to continue to fluctuate due to the size
and timing of contract programs.
QUARTERLY RESULTS
The following table sets forth selected unaudited financial information
for the Company for the four fiscal quarters of the year ended April 30, 1996.
This unaudited information has been prepared on the same basis as the fiscal
period financial statements contained elsewhere in this Annual Report and, in
the opinion of the Company, reflects all adjustments necessary for a fair
presentation thereof:
<TABLE>
<CAPTION>
July 31 October 31 January 31 April 30
In thousands
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 3,314 $ 2,671 $ 3,676 $ 4,566
Gross margin 1,088 570 1,050 1,455
Operating income (loss) - (580) (109) 401
Net income (loss) $ 1 $ (368) $ (74) $ 229
Gross margin % 32.8% 21.3% 28.6% 31.9%
======= ======= ======= =======
</TABLE>
The Company has experienced quarterly fluctuations in operating results
and anticipates that these fluctuations will continue. Fluctuations in
quarterly sales are caused by a number of factors, including the timing of
contract awards, delivery schedules, construction or funding delays, customers'
budget cycles, changes in procurement patterns and shifting political and
economic factors of the Company's customers. Profitability on contracts also
will vary depending upon the product mix, the geographical location of the
customer, the market served and the pricing strategies of its competitors.
<PAGE> 4
Airport Systems International, Inc.
INFLATION
The effect of inflation on the Company has not been significant over the
past four years. However, an extended period of inflation could be expected to
have an impact on the Company's earnings by causing interest rates, as well as
material and labor rates to increase faster than prices could be increased on
new contracts.
LIQUIDITY AND CAPITAL RESOURCES
Net cash of $1.7 million was used in operations for 1996 compared to $1.2
million provided in 1995. The decrease was principally the result of a decrease
in net income compared to the prior year. In addition, inventory levels
increased $1.0 million over April 30, 1995, due to the increase in backlog and
production of equipment for shipment early in the first quarter of 1997.
Cash provided by investing activities was $1.8 million for 1996 compared
to cash used of $1.3 million in 1995. The difference is due primarily to $1.3
million of cash paid during 1995 in connection with the airfield signage
acquisition. In addition, a larger net reduction of short-term investments
provided additional cash during 1996, the proceeds of which were used to fund
operations during the year.
The Company expects that it will meet ongoing requirements for working
capital and capital expenditures from a combination of cash expected to be
generated from operations, existing cash and cash equivalents, and available
borrowings under the existing line of credit facility.
<PAGE> 5
Airport Systems International, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
April 30
1996 1995
-----------------------
<S> <C> <C>
(In thousands except share data)
-------- --------
ASSETS:
Current assets:
Cash and cash equivalents $ 621 $ 556
Restricted cash - 61
Short-term investments - 1,939
Accounts receivable, less allowances of $49
in 1996 and $52 in 1995 (Note 2) 4,722 4,243
Refundable income taxes (Note 6) 201 -
Inventories (Note 2) 3,686 2,678
Prepaid expenses 289 189
-------- --------
Total current assets 9,519 9,666
Property and equipment, at cost (Notes 2 and 3):
Land 224 224
Building and improvements 1,180 1,172
Equipment 1,626 1,508
-------- --------
3,030 2,904
Accumulated depreciation and amortization (1,136) (764)
-------- --------
1,894 2,140
Deferred income taxes (Note 6) 15 61
Other assets (Note 9) 113 179
Cost in excess of net assets acquired (Note 9) 1,337 1,410
-------- --------
Total assets $ 12,878 $ 13,456
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 1,279 $ 915
Accrued expenses 1,267 1,975
Income taxes payable - 69
Deferred income taxes (Note 6) 165 115
Current portion of long-term debt (Note 3) 16 9
-------- --------
Total current liabilities 2,727 3,083
Long-term debt, less current portion (Note 3) 1,221 1,237
Stockholders' equity (Note 5):
Common stock, $.01 par value:
Authorized shares - 5,000,000;
Issued and outstanding shares - 2,207,750
in 1996 and 2,190,250 in 1995 22 22
Additional paid-in capital 7,286 7,280
Retained earnings 1,622 1,834
-------- --------
Total stockholders' equity 8,930 9,136
-------- --------
Total liabilities and stockholders' equity $ 12,878 $ 13,456
======== ========
</TABLE>
See accompanying notes.
<PAGE> 6
Airport Systems International, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
April 30
1996 1995
-----------------------
<S> <C> <C>
(In thousands except per share data)
Sales $ 14,227 $ 18,131
Cost of products sold 10,064 12,193
-------- --------
Gross margin 4,163 5,938
Selling, general and administrative expenses 3,460 3,537
Research and development expenses 991 823
-------- --------
Operating income (loss) (288) 1,578
Other income (expense):
Interest expense (135) (133)
Other income, net 105 361
Other expense (2) (1)
-------- --------
Income (loss) before income taxes (320) 1,805
Income tax provision (benefit) (Note 6) (108) 611
-------- --------
Net income (loss) $ (212) $ 1,194
======== ========
Net income (loss) per common and common
equivalent shares - primary and fully diluted $ (0.10) $ 0.50
======== ========
Weighted average common shares outstanding
- primary and fully diluted 2,192 2,396
======== ========
</TABLE>
See accompanying notes.
<PAGE> 7
Airport Systems International, Inc.
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Additional Total
Common Paid-In Retained Stockholders'
Stock Capital Earnings Equity
==================================================
(In thousands)
<S> <C> <C> <C> <C>
Balance at April 30, 1994 $ 22 $ 7,266 $ 640 $ 7,928
Net income - - 1,194 1,194
Exercise of stock options - 14 - 14
Balance at April 30, 1995 22 7,280 1,834 9,136
Net loss - - (212) (212)
Exercise of stock options - 6 - 6
Balance at April 30, 1996 $ 22 $ 7,286 $1,622 $ 8,930
===============================================
</TABLE>
See accompanying notes
<PAGE> 8
Airport Systems International, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
April 30
1996 1995
---- ----
<S> <C> <C>
(In thousands)
OPERATING ACTIVITIES:
Net income (loss) $ (212) $ 1,194
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 522 484
Loss on sale of equipment 3 3
Provision for doubtful accounts 2 19
Deferred income tax provision 96 237
Changes in operating assets and liabilities, net of the
effects of the airfield signage line acquisition:
Restricted cash 61 29
Accounts receivable (481) (1,280)
Refundable income taxes (201) -
Inventories (1,008) 1,491
Prepaid expenses (100) 8
Accounts payable 364 (106)
Accrued expenses (708) (822)
Income taxes payable (69) (44)
--------- ---------
Net cash provided by (used in) operating activities (1,731) 1,213
INVESTING ACTIVITIES:
Proceeds from sale of short-term investments 2,431 3,294
Purchases of short-term investments (492) (2,914)
Purchases of property and equipment (140) (369)
Proceeds from sale of property and equipment - 2
Purchase of the net assets of the airfield signage line - (1,312)
--------- ---------
Net cash provided by (used in) investing activities 1,799 1,299
FINANCIAL ACTIVITIES:
Principal payments on long-term
debt and capital lease obligations (9) (27)
Proceeds from exercise of stock options 6 14
--------- ---------
Net cash used in financing activities (3) (13)
--------- ---------
Net increase (decrease) in cash and cash equivalents 65 (99)
--------- ---------
Cash and cash equivalents at beginning of year 556 655
--------- ---------
Cash and cash equivalents at end of year $ 621 $ 556
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 136 $ 122
======== ========
Income taxes $ 66 $ 418
======== ========
</TABLE>
<PAGE> 9
Airport Systems International, Inc.
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business. Airport Systems International, Inc. and Subsidiary (the
Company) designs, manufactures, markets and installs ground-based aircraft
radio navigation equipment and airfield signage, both of which are sold
internationally and domestically.
Principles of Consolidation. The accompanying consolidated financial statements
include the accounts of Airport Systems International, Inc. and its wholly
owned subsidiary ASII International, Inc. (a foreign sales corporation). All
significant intercompany balances and transactions have been eliminated in
consolidation.
Use of Estimates. The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results could
differ from these estimates.
Cash and Cash Equivalents. Cash and cash equivalents include all cash and
highly liquid investments with original maturities of three months or less.
Short-Term Investments. Short-term investments at April 30, 1995 consisted of
United States government obligations, stated at cost, which approximate market.
All short-term investments were sold during 1996. In May 1993, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." The Company adopted SFAS No. 115 effective May 1, 1994 and
classified its investments as available-for-sale. Under this classification,
investments are carried at fair value, with unrealized gains and losses
reported in stockholders' equity until realized. The cumulative effect of
adopting SFAS 115 as well as the effect of unrealized gains and losses at April
30, 1995 was not material.
Concentration of Credit Risk. The Company grants credit to customers who meet
the Company's pre-established credit requirements. The Company generally
requires foreign customers to issue letters of credit which secure payment of
the accounts receivable balances. Credit losses are provided for in the
Company's consolidated financial statements and have been within management's
expectations.
Financial Instruments. The carrying value of the Company's financial
instruments, including cash, short-term investments, accounts receivable,
accounts payable and long-term debt, as reported in the accompanying
consolidated balance sheets, approximates fair value.
Revenue Recognition. Generally, the Company generates revenues pursuant to
contracts with its customers, most of which are less than one year in duration.
Revenue on the Company's contracts is principally recognized using the
percentage of completion, units of delivery method.
Inventories. Inventories are stated at the lower of cost, or market.
Inventories valued using the last-in, first-out (LIFO) method comprised 85% and
87% of consolidated inventories at April 30, 1996 and 1995, respectively.
Inventories not valued by the LIFO method are valued using the first-in,
first-out (FIFO) method. At April 30, 1996 and 1995, cost determined by using
the LIFO method exceeded current cost by approximately $313,000 and $210,000,
respectively. During the year ended April 30, 1995, the Company liquidated
certain LIFO inventory layers, the effect of which was a decrease in net income
of approximately $146,000.
<TABLE>
<CAPTION>
Inventories are summarized by major classifications as follows:
April 30
(In thousands) 1996 1995
---- ----
<S> <C> <C>
Raw materials $ 1,875 $ 1,474
Work-in-process 1,562 960
Finished goods $ 249 $ 244
---------------- ----------------
$ 3,686 $ 2,678
================ ================
</TABLE>
Property and Equipment. Depreciation is computed using the straight-line method
over the following estimated useful lives:
<TABLE>
<S> <C>
Description Years
Building and improvements 30
Equipment 5
</TABLE>
<PAGE> 10
Airport Systems International, Inc.
Income Taxes. The Company accounts for income taxes using the liability method
in accordance with SFAS No. 109. The liability method provides that deferred
tax assets and liabilities are recorded based upon the difference between the
tax bases of assets and liabilities and their carrying amount for financial
reporting purposes, as measured by the enacted tax rates which will be in
effect when these differences are expected to reverse.
Letters of Credit. The Company has issued and outstanding secured letters of
credit totaling $1,452,000 and $1,267,000 at April 30, 1996 and 1995,
respectively.
Advertising Costs. The Company expenses advertising costs as incurred.
Advertising expense charged to operations amounted to $68,300 and $50,300 for
the years ended April 30, 1996 and 1995, respectively.
Net Income Per Share. Net income per common and common equivalent share is
computed by dividing net income applicable to common stock by the weighted
average common and common equivalent shares outstanding during each year. The
dilutive effect of options for the purchase of common stock is included in the
per share computations in 1995. The options for the purchase of common stock
are antidilutive in 1996 and are excluded from the computations.
New Accounting Standards. In March 1995, the FASB issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of," which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. SFAS No. 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The
Company will adopt SFAS No. 121 in the first quarter of 1997 and, based on
current circumstances, does not believe the effect of adoption will be
material.
2. NOTES PAYABLE TO BANKS
The Company has a line of credit agreement with a bank which expires
September 2, 1996. The agreement allows for borrowings up to a maximum of
$3,000,000, at an interest rate of prime (8.25% at April 30, 1996), secured by
accounts receivable, inventory and equipment. The Company had no borrowings
outstanding under this line of credit at April 30, 1996 or 1995.
3. LONG-TERM DEBT
At April 30, 1996 and 1995, long-term debt consisted of a note payable
amounting to $1,237,000 and $1,246,000, respectively. The note payable bears
interest, adjustable May 1996, 2001 and 2006, at the prior five-year treasury
index average plus 2.5% (8.81% at April 30, 1996), and is due in monthly
installments of $9,486, including interest, through June 2011 with a final
payment of approximately $788,200 due on that date. The note is secured by a
first mortgage on real property and improvements with a net book value of
$1,182,000 at April 30, 1996.
The aggregate amount of principal to be paid on this note payable during
each of the next five years ending April 30 is as follows:
<TABLE>
<S> <C>
Year (In thousands)
1997 $ 16
1998 18
1999 19
2000 21
2001 22
</TABLE>
Pursuant to the provisions of the Company's long-term debt and line of
credit agreements, the Company is subject to certain restrictive covenants
which, among other things, require the maintenance of certain financial ratios
and minimum levels of working capital.
4. OPERATING LEASES
The Company leases certain operating facilities and equipment under
noncancelable operating leases. Future minimum lease payments due under
noncancelable operating leases are $14,000 in 1997. Rent expense under all
operating leases was $49,000 and $35,000 for the years ended April 30, 1996 and
1995, respectively.
5. STOCK OPTIONS AND WARRANTS
The Company has reserved 375,000 shares of common stock for issuance to
employees and consultants of the Company pursuant to the 1991 stock option plan
(the Plan) which the Company adopted in December 1991.
<PAGE> 11
Airport Systems International, Inc.
According to the terms of the Plan, both incentive stock options and
nonqualified stock options to purchase common stock of the Company may be
granted to key employees of and consultants to the Company, at the discretion of
the Board of Directors. Incentive stock options may not be granted at prices
which are less than the approximate fair market value on the date of grant.
Non-qualified options may be granted at prices determined appropriate by the
Board of Directors of the Company. Generally, these options become exercisable
and vest over one to five years and expire within 10 years of the date of grant.
At April 30, 1996, options to purchase 256,583 shares were vested and
exercisable. The Company accounts for stock options in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Information with respect to options granted under the Plan is as
follows:
<TABLE>
<CAPTION>
Shares Price
------- -------------
<S> <C> <C>
Outstanding at May 1, 1994 319,500 $ .34 - 8.75
Granted 35,000 5.25
Exercised (40,250) .34
Canceled - -
------- -------------
Outstanding at April 30, 1995 314,250 .34 - 8.75
Granted - -
Exercised (17,500) .34
Canceled - -
------- -------------
Outstanding at April 30, 1996 296,750 $ .34 - 8.75
======= =============
</TABLE>
In connection with the Company's initial public offering, the Company
issued a warrant that allows the holder to purchase up to an aggregate of
75,000 shares of common stock. The warrant is exercisable at a per share price
of $12.30 through December 1998.
6. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Current:
Inventory valuation $ - $ 7
Warranty accrual 36 89
Accrued expenses 101 126
Other 43 20
---------- -------------
180 242
Non-current:
Amortization of intangibles 62 69
---------- -------------
Total deferred tax assets 242 311
Deferred tax liabilities:
Current:
Basis differences in acquired assets (345) (357)
Non-current:
Basis differences in acquired assets (47) (8)
---------- --------------
Total deferred tax liabilities (392) (365)
---------- --------------
Net deferred tax liability $ (150) $ (54)
========== ==============
</TABLE>
The income tax provision (benefit) for the years ended April 30, 1996 and
1995 is as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
---- ----
<S> <C> <C>
Current $ (204) $ 374
Deferred 96 237
Total $ (108) $ 611
</TABLE>
<PAGE> 12
Airport Systems International, Inc.
The income tax provision (benefit) differs from amounts computed at the
statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
---- ----
<S> <C> <C>
Provision at statutory rate $ (109) $ 614
State income taxes, net of federal income tax effect - 81
Tax benefit from Foreign Sales Corporation - (85)
Other 1 1
------------ --------------
$ (108) $ 611
============ ==============
</TABLE>
7. SEGMENT INFORMATION
The Company had sales to two customers which accounted for 33% of total
sales for the year ended April 30, 1996, and sales to one different customer
which accounted for 32% of total sales for the year ended April 30, 1995.
The Company's export sales to foreign customers by primary geographic
region and in total are set forth below:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
---- ----
<S> <C> <C>
Asia $ 6,534 $ 8,310
Africa 3,257 1,732
Europe 109 1,617
South America 293 571
Australia 28 1,248
Other 29 15
---------- -------------
$ 10,250 $ 13,493
========== =============
</TABLE>
8. EMPLOYEE BENEFIT PLAN
The Company has a defined contribution employee benefit plan which covers
substantially all full-time employees who have attained age 21 and completed
six months of service. Each qualified employee is entitled to make voluntary
contributions to the plan. The Company contributes 50% of each employee's
contribution up to a maximum of 1% of the employee's base salary. Additionally,
the Company may make discretionary contributions to the plan. For the years
ended April 30, 1996 and 1995, Company contributions to the plan amounted to
approximately $27,000 and $32,000, respectively.
9. ACQUISITION
In September, 1994, the Company acquired from Vomar International, Inc.
and Vomar Products, Inc. (Vomar) certain contracts, inventories, machinery, and
intangibles relating to the VomaGlow line of airfield signage used to direct
aircraft along runways, taxiways and to terminals. In January 1995, the Company
identified certain warranty and product liabilities associated principally with
the signage line not meeting Federal Aviation Administration specifications in
all field conditions. The Company assumed these liabilities and negotiated an
amendment to the original purchase agreement. Under the amended agreement, the
Company was released from all guaranteed and contingent future payments and
commissions on future product orders, and was allowed to cancel stock options
granted to Vomar. The adjusted acquisition cost amounted to $1,730,000
including a $75,000 non-compete agreement included in other assets. The
transaction has been accounted for as a purchase with cost in excess of net
assets acquired of approximately $1,458,000 being amortized over 20 years using
the straight-line method.
10. CONTINGENCY
In 1995, a former sales representative of the Company filed a petition
containing a claim against the Company for commissions on certain contracts
with respect to the sale of products for ultimate use in India. The petition
seeks damages of approximately $2.1 million plus interest. The litigation is in
the discovery phase, and the case is set for trial in December 1996. The
Company terminated the representative's contract prior to any commissions being
due and as a result believes that the plaintiff's claim is without merit,
denies liability for such commissions and intends to vigorously defend this
claim. Presently, counsel for the Company is unable to estimate the range of
possible loss, if any, which could result from this claim. Accordingly, no
provision for any liability has been made in the accompanying consolidated
financial statements.
<PAGE> 13
Airport Systems International, Inc.
Report of Independent Auditors
THE BOARD OF DIRECTORS AND STOCKHOLDERS
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
We have audited the accompanying consolidated balance sheets of Airport
Systems International, Inc. and subsidiary (the Company) as of April 30, 1996
and 1995 and the related consolidated statements of operations, stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement . An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Airport
Systems International, Inc. and subsidiary at April 30, 1996 and 1995, and the
consolidated results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
Kansas City, Missouri /s/Ernest & Young LLP
June 14, 1996 -------------------------
<PAGE> 14
Airport Systems International, Inc.
Stockholder Information
CORPORATE HEADQUARTERS INDEPENDENT AUDITORS REGISTRAR & TRANSFER AGENT
11300 West 89th Street Ernst & Young LLP UMB Bank, N.A.
Overland Park, Kansas 66214 Kansas City, Missouri Post Office Box 410064
Telephone: (913) 495-2600 Kanasas City, MO 64141-0064
Fax: (913) 492-0870 Telephone: (816) 860-7761
GENERAL COUNSEL For change of name, address,
Sonnenschein Nath & Rosenthal or to replace lost stock
Kansas City, Missouri certificates, write or call
the Securities Transfer
Division.
INVESTOR RELATIONS
For corporate information, please contact:
Mr. Thomas C. Cargin
Vice President-Finance and Administration, Secretary
Telephone: (913) 495-2614
STOCK TRADING
The Company's common stock trades on The Nasdaq Stock Market (National Market)
under the symbol ASII.
COMMON STOCK PRICE RANGE AND DIVIDEND INFORMATION
The prices in the table below represent the high and low sales prices for
Airport Systems common stock as reported by the Nasdaq National Market. No
cash dividends have been declared. As of April 30, 1996, Airport Systems had
approximately 1,200 stockholders based on the number of holders of record and
an estimate of the number of individual participants represented by security
position listings.
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------ -----------------------------------------
High Low High Low
<S> <C> <C> <C> <C> <C>
First Quarter $6 $4 3/4 First Quarter $9 1/2 $6 1/4
Second Quarter 5 1/2 3 Second Quarter 7 4 1/2
Third Quarter 4 1/2 2 3/4 Third Quarter 6 1/2 3 3/4
Fourth Quarter 6 1/4 3 7/8 Fourth Quarter 6 1/2 3 1/2
For the Year $6 1/4 $2 3/4 For the Year $9 1/2 $3 1/2
</TABLE>
FORM 10-K
Stockholders may receive a copy of Airport System's 1996 Annual Report to the
Securities and Exchange Commission on Form 10-K by writing to Mr. Thomas C.
Cargin, Vice President-Finance and Administration, at the corporate
headquarters.
ANNUAL MEETING
Stockholders are cordially invited to attend the 1996 Annual Meeting of
Stockholders, which will be held at The Kansas City Marriott Downtown
commencing at 2:00 p.m., local time, on Tuesday, September 10, 1996.
<PAGE> 1
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form
10-KSB) of Airport Systems International, Inc. of our report dated June 14,
1996, included in the 1996 Annual Report to Shareholders of Airport Systems
International, Inc.
Ernst and Young LLP
Kansas City, Missouri
July 26, 1996
Page 46
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AIRPORT
SYSTEMS INTERNATIONAL, INC. ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR
ENDED APRIL 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH AS
EXHIBIT B OF THE AIRPORT SYSTEMS INTERNATIONAL, INC. FORM 10-KSB.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<CASH> 621
<SECURITIES> 0
<RECEIVABLES> 4,771
<ALLOWANCES> 49
<INVENTORY> 3,686
<CURRENT-ASSETS> 9,519
<PP&E> 3,030
<DEPRECIATION> 1,136
<TOTAL-ASSETS> 12,878
<CURRENT-LIABILITIES> 2,727
<BONDS> 1,221
0
0
<COMMON> 22
<OTHER-SE> 8,908
<TOTAL-LIABILITY-AND-EQUITY> 12,878
<SALES> 14,227
<TOTAL-REVENUES> 14,227
<CGS> 10,064
<TOTAL-COSTS> 14,515
<OTHER-EXPENSES> 2
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135
<INCOME-PRETAX> (320)
<INCOME-TAX> (108)
<INCOME-CONTINUING> (212)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (212)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
