<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------------------
FORM 8-K/A2
----------------------------------------------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 10, 1997
-------------------------
KELLSTROM INDUSTRIES, INC.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-23764 13-3753725
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
14000 N.W. 4th Street, Sunrise, Florida 33325
- ------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (954) 845-0427
Not Applicable
------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
<PAGE>
This Form 8-K/A2 amends the Form 8-K filed with the Commission on September 24,
1997 relating to the acquisition by Kellstrom Industries, Inc. (the "Company")
of substantially all of the assets and certain liabilities of Aero Support USA
Inc. ("Aero Support"). This Form 8-K/A2 amends the information referred to in
Item 7 of the Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
a. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Independent Auditors' Report
Balance Sheet as of December 31, 1996
Statement of Earnings and Retained Earnings for the year ended December 31, 1996
Statement of Cash Flows for the year ended December 31, 1996
Notes to Financial Statements
Condensed Balance Sheets as of June 30, 1997 and June 30, 1996
Condensed Statements of Earnings for the six month periods ended June 30, 1997
and June 30, 1996
Condensed Statements of Cash Flows for the six month periods ended June 30, 1997
and June 30, 1996
Notes to Condensed Financial Statements
-2-
<PAGE>
<PAGE>
b. PRO FORMA FINANCIAL INFORMATION.
Pro Forma Consolidated Condensed Statement of Earnings for the year ended
December 31, 1996
Pro Forma Consolidated Condensed Statements of Earnings for the nine month
periods ended September 30, 1997 and September 30, 1996
-3-
<PAGE>
<PAGE>
c. EXHIBITS.
<TABLE>
<S> <C>
2. The Asset Purchase Agreement by and among
the Company, Kellstrom Subsidiary, Aero
Support and the Principals.*
10.1 Warrant dated September 10, 1997, issued by the
Company to Zvi Bar-On.*
10.2 Warrant dated September 10, 1997, issued by the
Company to Mordechai Markowicz.*
10.3 Warrant dated September 10, 1997, issued by the
Company to Michael Navon.*
99.1 Press Release issued by the Company dated
September 10, 1997.*
</TABLE>
- --------------
(*) Previously filed as part of Form 8-K dated September 10, 1997, filed on
September 24, 1997.
-4-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KELLSTROM INDUSTRIES, INC.
Date: February 27, 1998 By: /s/ Michael Wallace
---------------------------------
Michael Wallace
Chief Financial Officer
-5-
<PAGE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
No. Description
--- -----------
<S> <C>
2. The Asset Purchase Agreement by and among the Company, Kellstrom
Subsidiary, Aero Support and the Principals.*
10.1 Warrant dated September 10, 1997, issued by the Company to Zvi
Bar-On.*
10.2 Warrant dated September 10, 1997, issued by the Company to
Mordechai Markowicz.*
10.3 Warrant dated September 10, 1997, issued by the Company to
Michael Navon.*
99.1 Press Release issued by the Company dated September 10, 1997.*
</TABLE>
- --------------
(*) Previously filed as part of Form 8-K dated September 10, 1997, filed on
September 24, 1997.
<PAGE>
<PAGE>
AERO SUPPORT USA, INC.
Financial Statements
December 31, 1996
(With Independent Auditors' Report Thereon)
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Aero Support, USA, Inc.:
We have audited the accompanying balance sheet of Aero Support USA, Inc. as of
December 31, 1996, and the related statements of earnings and retained earnings
and cash flows for the year 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Aero Support USA, Inc. as of
December 31, 1996 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
November 3, 1997
<PAGE>
<PAGE>
AERO SUPPORT USA, INC.
BALANCE SHEET
December 31, 1996
<TABLE>
<S> <C>
Assets
Current assets:
Cash and cash equivalents $ 251,109
Accounts receivable, net of allowance for doubtful accounts and
returns of $150,000 2,988,198
Inventories 4,966,337
Prepaid expenses and other assets 106,772
----------
Total current assets 8,312,416
----------
Property and equipment, net (note 2) 279,943
Other assets 9,290
------------
Total assets $ 8,601,649
=========
Liabilities and Stockholders' Equity
Current liabilities:
Note payable to bank (note 3) $ 1,800,000
Current portion of long-term debt (note 3) 49,755
Accounts payable 3,511,528
Accrued expenses 250,057
----------
Total current liabilities 5,611,340
----------
Stockholders' equity
Common stock par value $.01 per share.
Authorized 1,000 shares, issued and outstanding 200 shares 2
Additional paid-in capital 80,000
Retained earnings 2,910,307
---------
Total stockholders' equity 2,990,309
----------
Total liabilities and stockholders' equity $ 8,601,649
=========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<PAGE>
AERO SUPPORT USA, INC.
STATEMENT OF EARNINGS AND RETAINED EARNINGS
For the year ended December 31, 1996
<TABLE>
<S> <C>
Net sales $ 17,297,718
Cost of goods sold 11,797,863
-----------
Gross profit 5,499,855
Operating expenses:
Selling 844,704
General and administrative 2,995,091
-----------
Total operating expenses 3,839,795
-----------
Operating profit 1,660,060
-----------
Other income (expense):
Interest income 956
Interest expense (182,918)
-----------
Total other expense, net (181,962)
-----------
Net income 1,478,098
Retained earnings:
Balance, beginning of year 2,117,223
Distributions to stockholders (685,014)
-----------
Balance, end of year $ 2,910,307
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<PAGE>
AERO SUPPORT USA, INC.
STATEMENT OF CASH FLOWS
For the year ended December 31, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 1,478,098
---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 139,193
Increase in accounts receivable (1,449,427)
Decrease in inventories 1,041,929
Increase in prepaid expenses and other assets (6,366)
Decrease in accounts payable (562,122)
Decrease in accrued expenses (71,701)
------------
Total adjustments (908,494)
------------
Net cash provided by operating activities 569,604
----------
Cash flows from investing activities:
Expenditures for property and equipment (88,436)
Decrease in due from stockholder 11,414
-----------
Net cash used in investing activities (77,022)
-----------
Cash flows from financing activities:
Payments of long-term debt (54,167)
Borrowings under note payable to bank 5,700,000
Repayments on note payable to bank (5,401,190)
Distributions to stockholders (685,014)
----------
Net cash used in financing activities (440,371)
----------
Net increase in cash and cash equivalents 52,211
Cash and cash equivalents, beginning of year 198,898
----------
Cash and cash equivalents, end of year $ 251,109
==========
Supplemental disclosure of cash flow information:
Interest paid $ 166,156
==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<PAGE>
AERO SUPPORT USA, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) DESCRIPTION OF BUSINESS
Aero Support USA, Inc. (the "Company") is engaged in the
purchasing, refurbishing (through subcontractors), and
distribution of turbo-jet engines and turbo-jet engine parts for
helicopters and large transport aircraft.
(b) REVENUE RECOGNITION
Revenue is recognized when the product is shipped to the customer,
net of an estimated allowance for sales returns.
(c) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with
original maturities of three months or less to be cash equivalents.
(d) INVENTORIES
Inventories are stated at the lower of cost or market. Inventories
are comprised of individual engines and parts, as well as parts
acquired in lots. Cost is determined by using the specific
identification method for engines and parts and by applying a cost
percentage to parts acquired in lots.
(e) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost.
Depreciation is calculated on the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are
amortized straight-line over the shorter of the lease term or
estimated useful life of the asset.
(f) INCOME TAXES
The Company is taxed as an S corporation for income tax purposes,
whereby the Company's income is reported by the stockholders.
Accordingly, no provision has been made for income taxes.
(Continued)
<PAGE>
<PAGE>
-2-
AERO SUPPORT USA, INC.
NOTES TO FINANCIAL STATEMENTS
(g) FINANCIAL INSTRUMENTS
The fair value of financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, accrued
expenses, note payable to bank and carrying amount of long-term
debt approximate fair value due to the short maturities of
these instruments.
(Continued)
<PAGE>
<PAGE>
-3-
(h) USE OF ESTIMATES
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare
these financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those
estimates.
(i) ACCOUNTING FOR LONG-LIVED ASSETS
The Company adopted the provisions of SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, on January 1, 1996. This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets
exceed the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less
costs to sell. Adoption of this Statement did not have a material
impact on the Company's financial position, results of operations
or liquidity.
(2) PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following at December 31, 1996:
<TABLE>
<CAPTION>
Estimated
Useful Lives
<S> <C> <C>
Office equipment $ 346,892 5 years
Furniture and fixtures 290,313 7 years
Leasehold improvements 414,242 15 years
Transportation equipment 20,541 5 years
-----------
1,071,988
Less accumulated depreciation and
amortization (792,045)
-----------
$ 279,943
===========
</TABLE>
(Continued)
<PAGE>
<PAGE>
-4-
AERO SUPPORT USA, INC.
NOTES TO FINANCIAL STATEMENTS
(3) NOTE PAYABLE TO BANK
The Company has a short-term bank line of credit. The borrowings under
this line bear interest at a rate of 1.0 percent above the prevailing
prime rate. In addition, in November 1994, the Company entered into a
long-term debt agreement with the bank which requires monthly payments
of $4,167 plus interest at an annual rate of 10.5 percent through
November 1997. Both obligations are collateralized by all of the
Company's assets, a mortgage on personal real estate of a stockholder,
and are guaranteed by a stockholder. The Company is subject to certain
financial restrictions and the maintenance of certain minimum financial
amounts and ratios.
(Continued)
<PAGE>
<PAGE>
-5-
AERO SUPPORT USA, INC.
NOTES TO FINANCIAL STATEMENTS
(4) PROFIT-SHARING PLAN
The Company has a defined contribution profit-sharing plan covering
substantially all full-time employees. Contributions are made at the
discretion of the board of directors. Plan expense for the year ended
December 31, 1996 was $50,000.
(5) COMMITMENTS AND CONTINGENCIES
In October 1996, the Company entered into a noncancelable operating
lease for office and warehouse space, which expires in September 2001.
The Company also occupies office and warehouse space in a building owned
by a stockholder, under a lease which expires December 1998. Minimum
rental commitments on noncancelable operating leases at December 31,
1996 are as follows:
<TABLE>
<S> <C>
1997 $ 173,766
1998 158,645
1999 147,600
2000 15,600
2001 11,700
Thereafter -
-------
$ 507,311
=======
</TABLE>
Rent expense was approximately $163,000, including real estate taxes and
$132,000 to a stockholder, for the year ended December 31, 1996.
The Company has guaranteed a mortgage on a building owned by a
stockholder in which the Company occupies space. The balance at December
31, 1996 was approximately $675,000.
The Company is involved in various claims and lawsuits incidental to its
business. In the opinion of management, these claims and suits in the
aggregate will not have a material adverse effect on the Company's
results of operations or financial position.
(6) BUSINESS AND CREDIT CONCENTRATIONS
The financial instrument which potentially subjects the Company to
concentrations of credit risk is accounts receivable. During 1996, one
customer accounted for approximately 16 percent of the Company's sales.
At December 31, 1996, approximately 47 percent of the Company's accounts
receivable, net of allowances, were represented by two customers. The
Company performs ongoing credit evaluations of its customers' financial
conditions, and generally requires no collateral from its customers. The
allowance for doubtful accounts is
(Continued)
<PAGE>
<PAGE>
-6-
AERO SUPPORT USA, INC.
NOTES TO FINANCIAL STATEMENTS
based on the expected collectibility of all accounts receivable.
Consequently, an adverse change in those factors could affect the
Company's estimate of its bad debts.
(7) SUBSEQUENT EVENT (UNAUDITED)
On September 10, 1997, substantially all of the assets of the Company
were acquired by Kellstrom Industries, Inc. ("Kellstrom"). Upon
consummation of this acquisition, the Company's existing debt was
assumed by Kellstrom and immediately paid. In addition, certain
operating leases were cancelled in connection with the acquisition.
<PAGE>
<PAGE>
AERO SUPPORT USA, INC.
CONDENSED BALANCE SHEETS
June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,430 200,126
Accounts receivable, net of allowances for doubtful accounts and
returns of $150,000 and $120,000, respectively 2,662,281 2,829,493
Inventories 5,883,899 3,823,052
Prepaid expenses and other assets 190,444 185,302
---------- -----------
Total current assets 8,746,054 7,037,973
Property and equipment, net 329,976 373,542
Other assets 7,790 7,290
------------ ---------
Total assets $ 9,083,820 7,418,805
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Note payable to bank $ 2,600,000 2,000,000
Current portion of long-term debt 86,550 50,000
Accounts payable and accrued expenses 3,688,857 2,633,694
--------- ---------
Total current liabilities 6,375,407 4,683,694
Long-term debt, less current portion 133,333 28,922
---------- -----------
Total liabilities 6,508,740 4,712,616
Stockholders' equity:
Common stock, par value $.01 per share. Authorized 1,000 shares,
issued and outstanding 200 shares 2 2
Additional paid-in capital 80,000 80,000
Retained earnings 2,495,078 2,626,187
--------- ---------
Total stockholders' equity 2,575,080 2,706,189
--------- ---------
Total liabilities and stockholders' equity $ 9,083,820 7,418,805
========= =========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
<PAGE>
<PAGE>
AERO SUPPORT USA, INC.
CONDENSED STATEMENTS OF EARNINGS
For the six month periods ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net sales $ 10,073,232 9,592,380
Cost of goods sold 7,142,941 6,718,322
----------- ---------
Gross profit 2,930,291 2,874,058
Operating expenses:
Selling 510,650 400,807
General and administrative 1,873,126 1,528,667
----------- ---------
Total operating expenses 2,383,776 1,929,474
----------- ---------
Operating profit 546,515 944,584
------------ ----------
Other income and expenses:
Other income 668 881
Other expenses (142,412) (133,987)
------------- ----------
Total other expense, net (141,744) (133,106)
------------ ----------
Net income $ 404,771 811,478
============ ==========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
<PAGE>
<PAGE>
AERO SUPPORT USA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the six month periods ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 404,771 811,478
---------- ----------
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 169,648 37,501
(Increase) decrease in:
Accounts receivable, net 325,917 (1,290,722)
Inventories (917,562) 2,185,214
Prepaid expenses and other assets (82,172) (71,482)
Accounts payable and accrued expenses (72,728) (1,761,715)
----------- ---------
Total adjustments (576,897) (901,204)
---------- -----------
Net cash used in operating activities (172,126) (89,726)
---------- -----------
Cash flows from investing activities:
Expenditures for property and equipment (219,681) (80,343)
---------- -----------
Net cash used in investing activities (219,681) (80,343)
---------- -----------
Cash flows from financing activities:
Payments of long-term debt - (25,000)
Net change in short-term borrowings 970,128 498,811
Distributions to stockholders (820,000) (302,514)
---------- ----------
Net cash provided by financing activities 150,128 171,297
---------- ----------
Net (decrease) increase in cash (241,679) 1,228
Cash and cash equivalents, beginning of year 251,109 198,898
---------- ----------
Cash and cash equivalents, end of period 9,430 200,126
Supplemental disclosure of cash flow information:
Interest paid $ 137,271 117.289
============ ==========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
<PAGE>
<PAGE>
AERO SUPPORT USA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1997 and 1996
(1) BASIS OF PRESENTATION
The accompanying condensed financial statements have been prepared by
the Company without audit, pursuant to generally accepted accounting
principles. Certain information and footnote disclosures, normally
included in financial statements prepared in accordance with generally
accepted accounting principles, have been condensed or omitted. These
condensed financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's
December 31, 1996 financial statements.
In the opinion of management of the Company, the condensed financial
statements reflect all adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the condensed
financial position of Aero Support USA, Inc. as of June 30, 1997 and
1996, and the condensed results of earnings for the six month periods
ended June 30, 1997 and 1996 and the condensed statements of cash flows
for the six month periods ended June 30, 1997 and 1996. The results of
operations for such interim periods are not necessarily indicative of
the results for the full year.
(2) ACQUISITION
On September 10, 1997, substantially all of the assets of the Company
were acquired by Kellstrom Industries, Inc. ("Kellstrom"). Upon
consummation of this acquisition, the Company's existing debt was
assumed by Kellstrom and immediately paid.
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
PRO FORMA
COMBINED
---------------------
<S> <C>
Net revenues $ 64,588,918
Cost of goods sold (42,748,920)
Selling, general and administrative expenses (8,243,017)
Depreciation and amortization (2,989,380)
---------------------
Operating income $ 10,607,601
Interest expense, net of interest income (4,543,090)
---------------------
Income before income taxes $ 6,064,511
Income tax expense (2,158,359)
---------------------
Net income $ 3,906,152
---------------------
---------------------
Net income per share $ 0.48
---------------------
---------------------
Weighted average number of common shares outstanding 8,076,865
---------------------
---------------------
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed
statement of earnings
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES, INC.
PRO FORMA CONSOLIDATED COMBINED CONDENSED STATEMENT OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------------------------------
HISTORICAL
-------------------------- AERO PRO FORMA PRO FORMA
KELLSTROM IASI SUPPORT ADJUSTMENTS(A) ADJUSTMENTS(B)
----------- ----------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net revenues $24,921,587 $22,863,747 17,297,718 $ (494,134)
Cost of goods sold (16,235,159) (15,083,516) (11,797,863) 367,618
Selling, general and administrative expenses (3,491,457) (1,744,434) (3,700,602) 693,476
Depreciation and amortization (441,854) (937,716) (139,193) 23,952 (875,928)
(690,068) 71,427
----------- ----------- ----------- -------------- --------------
Operating income $ 4,753,117 $ 5,098,081 $ 1,660,060 $ (99,156) $ (804,501)
Interest expense, net of interest income (644,527) (1,023,141) (181,962) 942,515 182,918
(2,521,555) (1,297,338)
Expenses related to sale of business -- (234,866) 234,866
----------- ----------- ----------- -------------- --------------
Income before income taxes $ 4,108,590 $ 3,840,074 $ 1,478,098 $ (1,443,330) $ (1,918,921)
Income tax expense (1,462,247) (3,075) 0 (849,926) 156,889
----------- ----------- ----------- -------------- --------------
Net income $ 2,646,343 $ 3,836,999 $ 1,478,098 $ (2,293,256) $ (1,762,032)
----------- ----------- ----------- -------------- --------------
----------- ----------- ----------- -------------- --------------
Net income per share $ 0.45
-----------
-----------
Weighted average number of common shares
outstanding 8,147,455
-----------
-----------
<CAPTION>
PRO FORMA
COMBINED
-----------
<S> <C>
Net revenues $64,588,918
Cost of goods sold (42,748,920)
Selling, general and administrative expenses (8,243,017)
Depreciation and amortization (2,989,380)
-----------
Operating income $10,607,601
Interest expense, net of interest income (4,543,090)
Expenses related to sale of business --
-----------
Income before income taxes $ 6,064,511
Income tax expense (2,158,359)
-----------
Net income $ 3,906,152
-----------
-----------
Net income per share .48
-----------
-----------
Weighted average number of common shares
outstanding 8,076,865
-----------
-----------
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed
statement of earnings
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES, INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(Unaudited)
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(A) For purposes of presenting the pro forma consolidated condensed statement of
earnings, the following adjustments have been made for the IASI acquisition:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
Increase (decrease) in income:
Decrease in net revenues from inter-company sales $ (494,134)
Decrease in cost of goods sold from inter-company sales 367,618
Decrease in IASI selling, general and administrative expenses due to elimination of pension plan
and bonus program and consolidation of functions 693,476
Elimination of IASI goodwill related to IASI acquisition 23,952
Amortization of goodwill related to acquisition (690,068)
Reduction of bank interest expense -- exercise of warrants 942,515
Interest expense on IASI acquisition debt (2,521,555)
Elimination of expenses related to the sale of IASI 234,866
-----------
To adjust pro forma tax provision to 37.5% of income before taxes $(1,443,330)
Net adjustment (849,926)
-----------
$(2,293,256)
-----------
-----------
</TABLE>
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES, INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(Unaudited)
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(B) For purposes of presenting the pro forma consolidated condensed statement
of earnings, the following adjustments have been made for the Aero
Support acquisition:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
Increase (decrease) in income:
Amortization of goodwill and noncompete agreement related to Aero Support acquisition $ (875,928)
Elimination of Leasehold amortization expense on assets not acquired 71,427
Reduction of interest expense due Aero Support to pay-off of debt on Aero Support line of credit 182,918
Interest expense on acquisition debt and debt incurred to repay
existing Aero Support line of credit (1,297,338)
-----------
To adjust pro forma tax provision to 37.5% of income before taxes $(1,918,921)
Net adjustment 156,889
-----------
$(1,762,032)
-----------
-----------
</TABLE>
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1997 September 30, 1996
Pro Forma Pro Forma
Combined Combined
<S> <C> <C>
Net revenues $ 67,992,136 $ 48,456,038
Cost of goods sold (44,312,903) (31,214,556)
Selling, general and administrative expenses (9,230,093) (6,551,474)
Depreciation and amortization (1,488,795) (1,810,661)
------------------- -------------------
Operating income $ 12,960,345 $ 8,879,347
Interest expense, net of interest income (3,659,776) (3,289,903)
------------------- -------------------
Income before income taxes $ 9,300,569 $ 5,589,444
Income tax expense (3,487,713) (2,096,041)
------------------- -------------------
Net income $ 5,812,856 3,493,403
=================== ===================
Net income per share $ 0.65 $ 0.41
=================== ===================
Weighted average number of common shares outstanding 8,953,824 8,721,360
=================== ===================
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed
statements of earnings
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES, INC.
PRO FORMA CONSOLIDATED COMBINED CONDENSED STATEMENT OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
--------------------------------------------------
HISTORICAL PRO FORMA PRO FORMA
KELLSTROM AERO SUPPORT ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
Net revenues $54,768,424 $ 14,942,734 $ (1,719,022) $ 67,992,136
Cost of goods sold (35,655,889) (9,640,013) 982,999 (44,312,903)
Selling, general and administrative expenses (5,995,448) (3,414,461) 179,816 (9,230,093)
Depreciation and amortization (985,540) (61,098) 4,167 (1,488,795)
(604,760)
158,436
-------- ------- --------- ----------
Operating income $12,131,547 $ 1,827,162 $ (998,364) $ 12,960,345
Interest expense, net of interest income (2,662,138) (208,063) 840 (3,659,776)
208,063
(998,478)
---------- ------- ------- ----------
Income before income taxes $ 9,469,409 $ 1,619,099 $ (1,787,939) $ 9,300,569
Income tax expense (3,542,175) 0 54,462 (3,487,713)
---------- ------- ------- ----------
Net income $ 5,927,234 $ 1,733,477 $ (1,733,477) $ 5,812,856
============ ============ ========== ============
Net income per share $ 0.67 $ 0.65
============ ============
Weighted average number of common shares outstanding 9,238,851 8,953,824
========= =========
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed
statements of earnings
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES, INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(A) For purposes of presenting the pro forma consolidated condensed statement
of earnings, the following adjustments have been made:
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1997
<S> <C>
Increase (decrease) to income:
Reversal of Aero Support net revenues for the period September 10, 1997
to September 30, 1997 $(1,719,022)
Reversal of Aero Support cost of goods sold for the period
September 10, 1997 to September 30, 1997 982,999
Reversal of Aero Support selling, general and administrative expenses for the
period September 10, 1997 to September 30, 1997 179,816
Reversal of Aero Support depreciation for the period September 10, 1997 to
September 30, 1997 4,167
Amortization of goodwill and noncompete agreement related to Aero Support
acquisition (604,760)
Elimination of leasehold amortization expense for assets not acquired 158,436
Reversal of Aero Support interest expense for the period September 10,1997 to
September 30, 1997 840
Reduction of interest expense due to pay-off of debt on Aero Support line of
credit 208,063
Interest expense on acquisition debt and debt incurred to repay existing Aero
Support line of credit (998,478)
--------
$ (1,787,939)
To adjust pro forma tax provision to 37.5% of income before taxes 54,462
-------
Net Adjustment $ (1,733,477)
============
</TABLE>
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES, INC.
PRO FORMA CONSOLIDATED COMBINED CONDENSED STATEMENT OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1996
----------------------------------------------------------------------------------------------
HISTORICAL PRO FORMA PROFORMA PRO FORMA
KELLSTROM IASI AERO SUPPORT ADJUSTMENTS(A) ADJUSTMENTS(B) COMBINED
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenues $17,650,915 $18,279,161 12,848,867 $ (322,905) $48,456,038
Cost of goods sold (11,124,932) (10,636,027) (9,053,255) 248,588 (31,214,556)
(648,930)
--------
Selling, general and
administrative expenses (2,393,222) (1,998,456) (2,679,903) 520,107 (6,551,474)
Depreciation and amortization (526,231) (686,930) (56,250) (533,234) (656,946) (1,810,661)
648,930
----------- ----------- --------- ---------- --------- -----------
Operating income $ 3,606,530 $ 4,957,748 1,059,459 $ (87,444) (656,946) 8,879,347
Interest expense, net of
interest income (424,613) (795,219) (162,589) (1,946,431) (3,289,903)
162,589
787,266
(910,906)
----------- ----------- --------- ---------- --------- -----------
Income before income taxes $ 3,181,917 $ 4,162,529 896.870 $(1,246,609) (1,405,263) $5,589,444
Income tax expense (1,174,667) 0 0 (1,081,533) 160,159 (2,096,041)
--------- ----------- ------- ---------- ------- ----------
Net income $ 2,007,250 $ 4,162,529 896,870 $(2,328,142) (1,245,104) $ 3,493,403
=========== =========== ======= =========== ========== ===========
Net Income per share $ 0.34 $ 0.41
=========== ==========
Weighted average number
of common shares outstanding 8,050,454 8,721,360
========= =========
See accompanying notes to unaudited pro forma consolidated
condensed statements of earnings
</TABLE>
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES, INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(A) For purposes of presenting the pro forma consolidated condensed statement of
earnings, the following adjustments have been made for the IASI acquisition:
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1996
-------------------
<S> <C>
Increase (decrease) to income:
Decrease in net revenues due to intercompany sales $ (322,905)
Decrease in cost of goods sold due to intercompany sales 248,588
Reclassification entry to conform with current Kellstrom presentation (648,930)
Decrease in IASI selling, general and administrative expenses due to the elimination
of pension plan, bonus program and overall consolidation of functions 520,107
Amortization of goodwill related to IASI acquisition (533,234)
Reclassification entry to conform with current Kellstrom presentation 648,930
Interest expense on IASI acquisition debt (1,946,431)
Reduction of bank interest expense - exercise of warrants 787,266
-----------------
$ (1,246,609)
To adjust proforma tax provision to 37.5% of income before taxes (1,081,533)
-----------------
Net Adjustment $ (2,328,142)
=================
</TABLE>
<PAGE>
<PAGE>
KELLSTROM INDUSTRIES, INC.
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
NOTES TO UNAUDITED PROFORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(B) For purposes of presenting the pro forma consolidated condensed statement of
earnings, the following adjustments have been made for the Aero Support
acquisition:
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1996
------------------
<S> <C>
Increase (decrease) to income:
Amortization of goodwill and noncompete agreement related to Aero Support acquisition $ (656,946)
Reduction of interest expense due to pay-off of debt on Aero Support line of credit 162,589
Interest expense on Aero Support acquisition debt and debt incurred to repay existing
Aero Support line of credit (910,906)
----------------
$ (1,405,263)
To adjust pro forma tax provision to 37.5% of income before taxes 160,159
----------------
Net Adjustment $ (1,245,104)
================
</TABLE>
