-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PA+PjkDYQ5LQJDIAuBTp1ns77Vf4vicKIx0xS7XNpBBh/wZNli4kcFyGHkOtutOa MYbrcwfxgPeE8RTMCYMgMA== /in/edgar/work/20000821/0000898430-00-002484/0000898430-00-002484.txt : 20000922 0000898430-00-002484.hdr.sgml : 20000922 ACCESSION NUMBER: 0000898430-00-002484 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWKER PACIFIC AEROSPACE CENTRAL INDEX KEY: 0001049625 STANDARD INDUSTRIAL CLASSIFICATION: [3728 ] IRS NUMBER: 953528840 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-29490 FILM NUMBER: 707063 BUSINESS ADDRESS: STREET 1: 11240 SHERMAN WAY CITY: SUN VALLEY STATE: CA ZIP: 91352-4942 BUSINESS PHONE: 8187656201 MAIL ADDRESS: STREET 1: 11240 SHERMAN WAY CITY: SUN VALLEY STATE: CA ZIP: 913524942 10-Q 1 0001.txt FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________. Commission File Number: 0-29490 HAWKER PACIFIC AEROSPACE (Exact name of registrant as specified in its charter) California 95-3528840 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11240 Sherman Way, Sun Valley, California 91352 (Address of principal executive offices) (Zip Code) (818) 765-6201 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ______ ----- The number of shares of the registrant's common stock outstanding on August 18, 2000, was 5,853,653 shares. ================================================================================ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
June 30, December 31, ASSETS 2000 1999 ----------- ------------ Current assets Cash $ 1,425,000 $ 2,227,000 Trade accounts receivable, net 13,847,000 18,246,000 Other receivables 338,000 260,000 Inventories 27,292,000 24,680,000 Prepaid expenses 1,035,000 550,000 ----------- ------------ Total current assets 43,937,000 45,963,000 Equipment and leasehold improvements, net 15,035,000 13,822,000 Exchange assets, net 35,765,000 37,613,000 ----------- ------------ Total fixed assets 50,800,000 51,435,000 Other assets 4,810,000 5,765,000 ----------- ------------ Total assets $99,547,000 $103,163,000 =========== ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Line of credit $54,680,000 $ 52,617,000 Accounts payable 12,409,000 13,402,000 Deferred revenue 3,386,000 3,397,000 Accrued payroll and employee benefits 1,993,000 1,495,000 Accrued expenses and other liabilities 4,242,000 4,186,000 Current portion of notes payable 621,000 623,000 Preferred stock dividends payable 134,000 -- ----------- ------------ Total current liabilities 77,465,000 75,720,000 Long-term debt Bank note 3,924,000 5,617,000 Related party 2,500,000 2,500,000 ----------- ------------ Total long term debt 6,424,000 8,117,000 Commitments and contingencies Redeemable convertible preferred stock 5,000,000 shares authorized; issued and outstanding: 300 shares; $3,750,000 redemption value 3,750,000 1,792,000 Shareholders' equity Common stock: 20,000,000 shares authorized; issued and outstanding: 5,828,281 and 5,822,822 at June 30, 2000, and December 31, 1999, respectively 22,386,000 22,384,000 Retained earnings (deficit) (6,597,000) (3,474,000) Accumulated other comprehensive income (loss) (3,881,000) (1,376,000) ----------- ------------ Total shareholders' equity 11,908,000 17,534,000 ----------- ------------ Total liabilities and shareholders' equity $99,547,000 $103,163,000 =========== ============
See accompanying Notes to Condensed Consolidated Financial Statements -2- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three months ended June 30 ------- 2000 1999 ------------- ------------- Revenue $ 20,299,000 $ 17,395,000 Cost of revenue 16,895,000 18,099,000 ------------- ------------- Gross margin 3,404,000 (704,000) Selling, general and administrative expense 2,230,000 2,524,000 ------------- ------------- Income (loss) from operations 1,174,000 (3,228,000) Interest expense, net (2,288,000) (1,515,000) Miscellaneous expense (20,000) -- ------------- ------------- Loss before income taxes (1,134,000) (4,743,000) Provision (benefit) for income taxes (455,000) (1,761,000) ------------- ------------- Net loss ($ 679,000) ($ 2,982,000) ============= ============= Accretion of discount and redemption premium on preferred stock (831,000) -- Preferred stock dividend (60,000) -- ------------- ------------- Net loss available to common shareholders ($ 1,570,000) ($ 2,982,000) ============= ============= Loss per common share - basic and diluted ($ 0.27) ($ 0.51) Weighted average shares outstanding - basic and diluted 5,824,589 5,822,222
See accompanying Notes to Condensed Consolidated Financial Statements -3- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Six months ended June 30 ------- Revenue $ 41,787,000 $ 33,590,000 Cost of revenue 34,317,000 30,896,000 ------------- ------------- Gross margin 7,470,000 2,694,000 Selling, general and administrative expense 5,113,000 4,717,000 ------------- ------------- Income (loss) from operations 2,357,000 (2,023,000) Interest expense, net (3,990,000) (2,656,000) Miscellaneous expense (86,000) -- ------------- ------------- Loss before income taxes (1,719,000) (4,679,000) Provision (benefit) for income taxes (689,000) (1,737,000) ------------- ------------- Net loss ($ 1,030,000) ($ 2,942,000) ============= ============= Accretion of discount and redemption premium on preferred stock (1,958,000) -- Preferred stock dividend (134,000) -- ------------- ------------- Net loss available to common shareholders ($ 3,122,000) ($ 2,942,000) ============= ============= Loss per common share - basic and diluted ($ 0.54) ($ 0.51) Weighted average shares outstanding - basic and diluted 5,823,491 5,822,222
See accompanying Notes to Condensed Consolidated Financial Statements -4- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six months ended June 30 ------- 2000 1999 ------------- ------------- Operating Activities Net loss ($ 1,030,000) ($ 2,942,000) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Deferred income taxes (706,000) (1,668,000) Depreciation 1,004,000 816,000 Amortization 1,235,000 1,272,000 Other non-cash items -- (85,000) Changes in operating assets and liabilities: Accounts receivable and other receivables 3,916,000 2,514,000 Inventory (3,798,000) (1,167,000) Other assets 441,000 407,000 Prepaid expenses 485,000 67,000 Accounts payable (534,000) 295,000 Deferred revenue 23,000 2,900,000 Accrued liabilities 1,335,000 (973,000) ------------- ------------- Cash provided by operating activities 2,371,000 1,436,000 Investing Activities Purchase of equipment, leasehold improvements and landing gear (2,946,000) (5,200,000) Payments for construction in progress (678,000) (4,447,000) ------------- ------------- Cash used in investing activities (3,624,000) (9,647,000) Financing Activities Principal payments on bank notes (1,686,000) (5,156,000) Borrowings on line of credit 2,062,000 15,694,000 Payments on line of credit -- (1,062,000) Deferred offering costs 39,000 (130,000) Deferred acquisition and loan fee expense 36,000 89,000 ------------- ------------- Cash provided by financing activities 451,000 9,435,000 ------------- ------------- Increase (decrease) in cash (802,000) 1,224,000 Cash, beginning of period 2,227,000 560,000 ------------- ------------- Cash, end of period $ 1,425,000 $ 1,784,000 ============= ============= Supplemental disclosure of cash flow information Cash paid during the period for: Interest $ 3,770,000 $ 991,000 Income taxes 11,000 3,000
See accompanying Notes to Condensed Consolidated Financial Statements -5- CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)
Other Common Stock Accumulated Comprehensive -------------------------- # of Shares Amount Deficit Income (Loss) Total ------------ ------------ ------------ ------------- -------------- Balances at December 31, 1999 5,822,222 $22,384,000 ($3,474,000) ($ 1,376,000) $17,534,000 Net loss (1,030,000) (1,030,000) Foreign currency translation adjustment (2,505,000) (2,505,000) ---------- Comprehensive loss (3,535,000) Issuance of common stock 6,059 2,000 2,000 Preferred stock dividend (134,000) (134,000) Accretion of discount and redemption premium on preferred stock (1,959,000) (1,959,000) - -------------------------------------------------------------------------------------------------------------- Balances at June 30, 2000 5,828,281 $22,386,000 ($6,597,000) ($ 3,881,000) $11,908.000 ========= =========== ========== =========== ===========
See accompanying Notes to Consolidated Condensed Financial Statements -6- Hawker Pacific Aerospace NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. BASIS OF PRESENTATION Interim Condensed Financial Statements During interim periods, Hawker Pacific Aerospace (the "Company") follows the accounting policies set forth in its Annual Report to Shareholders and applies appropriate interim financial reporting standards, as indicated below. Users of financial information produced for interim periods are encouraged to refer to the notes contained in the Annual Report to Shareholders when reviewing interim financial results. Interim financial reporting standards require management to make estimates that are based on assumptions regarding the outcome of future events and circumstances not known at the present time, including the use of estimated effective tax rates. Inevitably, some assumptions may not materialize and unanticipated events and circumstances may occur which vary from those estimates and such variations may significantly affect the Company's future results. In the opinion of management, the accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the Securities and Exchange Commission's requirements of Form 10-Q and contain all adjustments of a normal and recurring nature which are necessary to present fairly the financial position of the Company as of June 30, 2000, and December 31, 1999, and the results of its operations and cash flows for the three month and/or six month periods ended June 30, 2000 and 1999. Contingencies The Company is occasionally party to various legal proceedings incidental to its business. There are currently no claims, suits or complaints arising in the ordinary course of business which have been filed or are pending against the Company. Based on facts now known to the Company, management is not aware of any matters that are not adequately provided for, covered by insurance or, which involve such amounts that would materially and adversely affect the consolidated results of operations and cash flows or financial position of the Company. Earnings (Loss) per Share Basic earnings (loss) per share are based upon the weighted average number of common shares outstanding. The weighted average common shares used in calculating basic earnings per share were 5,824,589 and 5,822,222 for the three months ended June 30, 2000 and 1999, respectively, and 5,823,491 and 5,822,222 for the six months ended June 30, 2000 and 1999, respectively. Diluted earnings per share are based on the number of shares used in the basic earnings per share calculation plus the dilutive effects of stock options under the treasury stock method. Options to purchase 680,354 shares of common stock at exercise prices between $2.85 and $9.88 were outstanding and vested during the second quarter of 2000. None of these were included in the computation of diluted earnings (loss) per share because the exercise price was greater than the average market price of the common shares and/or the Company incurred a loss for the period, therefore, the effect would be antidilutive. Inventories Inventories are comprised of the following: June 30, December 31, 2000 1999 ----------- ----------- Purchased parts and assemblies $20,733,000 $20,246,000 Work in process 6,559,000 4,434,000 ----------- ----------- $27,292,000 $24,680,000 =========== =========== Forward Looking Statements Statements included in this filing which are not historical in nature are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements regarding the Company's future performance and financial results are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth for a variety of reasons. Factors that may impact such forward looking statements include, among others, changes in the condition of the industry, changes in general economic conditions and the success of the Company's strategic operating plans. -7- Hawker Pacific Aerospace NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 2. LINE OF CREDIT AND NOTES PAYABLE On December 22, 1998, the Company secured a $66.3 million senior credit facility from Heller Financial, Inc., and NMB-Heller Limited (collectively, "Heller"). The Loan and Security Agreement (the "Heller Agreement") provides a $55.0 million revolving line of credit, a Term Loan A in the amount of $4.3 million, and a Term Loan B in the amount of $7.0 million. The revolver and both term loans expire in five years. At June 30, 2000, the interest rate for all three loans was 12%. Availability for the $55.0 million revolving line of credit may be limited by borrowing base criteria related to levels of accounts receivable, inventory and exchange assets. At June 30, 2000, the Company's borrowing base was $55.0 million, of which $54.7 million had been advanced, leaving remaining availability of $0.3 million. On April 5, 2000, the Company and Heller executed an amendment to the Heller Agreement. This amendment extends certain covenant provisions of the Heller Agreement until August 31, 2000, and provides for an escalation of certain fees to Heller. The Company expects to execute a further amendment to the Heller Agreement prior to August 31, 2000, to extend the agreement to October 31, 2000, and to reduce certain fees allowed under the current amendment. The Company is also working to secure a new senior credit facility prior to October 31, 2000. 3. REDEEMABLE CONVERTIBLE PREFERRED STOCK In December 1999, the Company issued 300 shares of 8% Series C Convertible Preferred Stock ("Series C") for $3,000,000. In connection with the issuance of preferred stock, the Company issued a warrant to the broker to purchase 50,000 shares of common stock at $2.85 per share. The warrant was valued at $240,000 and is included in the costs associated with the issuance. The Company incurred an additional $205,000 in costs associated with the issuance of preferred stock. In connection with the issuance of preferred stock, the Company issued a warrant to the preferred stock holder to purchase 125,000 shares of common stock at $7.37 per share. The warrant was valued at $286,000. Series C also contains a redemption feature that calls for the preferred stock to be redeemed, under certain circumstances, for 125% of the stated value ($3,750,000) and as such the preferred stock was being accreted to $3,750,000 over the 180 day period from December 1999 until June 2000. This accretion was charged to retained earnings, similar to a preferred dividend, as a reduction of earnings (loss) to common shares. Series C provides for a multiple-step beneficial conversion feature, which has been valued for financial statement purposes at $750,000. The resulting discount on the Series C was amortized over the 180 day period from December 1999 to June 2000, and charged to retained earnings, similar to a preferred dividend, as a reduction of earnings (loss) to common shares. The amount of accretion related to the redemption premium, conversion discount, associated warrants, and costs of issuance which are included in the calculation of the loss per share for the three months ended June 30, 2000, was $831,000. The Company also accrued $60,000 of dividends payable on Series C during the second quarter. 4. SEGMENT INFORMATION The Company operates in one segment. The following table sets forth certain geographic information related to the Company's operations.
United States United Kingdom Consolidated As of June 30 2000 1999 2000 1999 2000 1999 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- Total assets $52,096,000 $50,241,000 $47,451,000 $43,743,000 $99,547,000 $93,984,000 Total long-lived assets (net of depreciation and amortization) 18,861,000 21,594,000 31,939,000 26,842,000 50,800,000 48,436,000 For the quarter ended June 30 - ----------------------------- Revenue by location of operations 15,332,000 12,309,000 4,966,000 5,086,000 20,298,000 17,395,000 Income (loss) before income tax (58,000) (346,000) (1,075,000) (4,202,000) (1,134,000) (4,548,000)
The Company generated revenue from customers located outside of the United States of $7,337,000 and $7,633,000 for the quarter ended June 30, 2000 and 1999, respectively. -8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The following analysis compares material changes in the Company's financial position from December 31, 1999, to June 30, 2000. During 2000 the Company has generated positive cash flow from operations, and it is expected that the Company will continue to generate positive cash flow throughout 2000 and beyond. Cash provided by operations during the first six months of 2000 amounted to $2,371,000. The Company's cash position remains tight, however, as a result of the substantial amount of deferred payments in 2000 for capital expenditures related to the establishment and relocation of the new United Kingdom facility, and the construction of a new plating shop. The final payments for the UK facility have just been completed within the last month, and, coupled with the improving performance of the UK operation, the Company expects its cash position to improve noticeably with each successive month. The Company's most recent amendment to its senior loan facility extended certain covenant provisions to August 31, 2000. The Company expects to execute an agreement with its senior lender prior to August 31, 2000, which would extend these covenant provisions to October 31, 2000, and further provide for a material reduction in certain fees charged by the lender. This agreement will be subject to the completion of separate transactions which would provide additional funding for the Company. The Company and the shareholders of Unique Investment Corporation ("Unique") are currently in the final stage of negotiations with a strategic partner (the "Acquirer"). The Acquirer has proposed to purchase 40% of the Company's common stock from the Unique shareholders in a private transaction. Based upon the current status of these negotiations, upon the conclusion of this purchase the Acquirer would provide approximately $10 million of subordinated debt to the Company, in exchange for which it would receive warrants to purchase up to 2,500,000 shares of the Company's common stock at $4.25. The issuance of 1,330,000 of these warrants would be subject to approval by the shareholders of the Company. The senior management of the Company, who hold approximately 3% of the Company's outstanding common stock, would transfer to the Acquirer the voting rights for these shares. If all 2,500,000 warrants are approved and exercised, the Acquirer would control approximately 60% of the Company's common stock. Upon the closing of the transaction, the three directors who are also shareholders of Unique would be replaced by three directors designated by the Acquirer. In addition, the Acquirer would provide further financial support for the Company by purchasing $10 million of the Company's senior credit facility. This loan participation with the Company's senior lender would minimize the potential for additional issues with the Company's lender, and would further provide for a material reduction in fees charged by the lender. The Company can provide no assurances that the contemplated transaction with the Acquirer will be successfully concluded. If this transaction does not close by August 25, 2000, the Company will seek to renegotiate its facility with its senior lender. If the contemplated transaction does not close, the Company still believes that cash provided from operations will continue to provide sufficient liquidity to meet the Company's cash requirements for the next twelve months provided that its senior credit facility can be successfully extended. In this case, an extension of the senior credit facility would not be necessary to meet the Company's operating cash requirements, but rather would only be necessary to meet the Company's cash requirements for additional fees charged by its lender. If the contemplated transaction does close, as the Company expects, the Company's liquidity will be enhanced considerably, and the Company will renew efforts to replace its senior lender prior to October 31, 2000. Results of Operations The following analysis compares the Company's results of operations for the quarter and six months ended June 30, 2000, with the quarter and six months ended June 30, 1999. Revenue for the quarter increased by $2,904,000, or 17%, to $20,299,000 from $17,395,000 for the comparable period in 1999. Revenue for the six months increased by $8,197,000, or 24%, to $41,787,000 from $33,590,000 in 1999. Most of the revenue growth occurred in the Sun Valley division, which recorded a year-to-date increase in revenue of 34%. Revenue in the UK operation also increased by 7% year-to-date. Revenue growth was developed mostly from new landing gear customer contracts, and from increased component services and line replacement unit repair work in the UK. -9- Cost of revenue for the second quarter decreased by $1,204,000, or 7%, from the comparable period of 1999. Cost of revenue was unfavorably affected during the second quarter of 1999 by the UK facility relocation, and a non-recurring inventory adjustment of $826,000 in Sun Valley. Cost of revenue for the second quarter of 2000 was adversely affected by the Company's tight cash position, which has caused significantly increased purchasing costs, and delays and difficulties in securing parts on a timely basis to achieve rapid turnaround times on landing gear and hydromechanical jobs. Cost of revenue for the first six months of 2000 increased by $3,421,000, or 11%, over the comparable period of 1999, primarily as a result of the increase in revenue. The increase in cost of revenue was partially offset by continuing improvements in the operating performance of the UK subsidiary. These improvements helped generate an increase in consolidated gross margin from 8% for the first six months of 1999 to 18% during 2000. The increase in gross margin was accomplished despite extra costs incurred in Sun Valley to lease or acquire additional landing gear shipsets to meet tight customer schedules during 2000. Sun Valley gross margin was also lower than normal because of unusually high material costs on a few isolated jobs, and some unscheduled overhauls which had to be subcontracted, with resulting loss of margin. Most of the unusual costs which reduced Sun Valley gross margin during 2000 are not expected to recur routinely. Further the Company expects to receive new funding shortly, and to obtain new senior financing during the fourth quarter. Although the impact on gross margin from the Company's tight cash position will be reflected to a lesser extent in the third quarter, the Company does not believe that the margins recorded for the quarter or six months will be necessarily indicative of future results. Selling, general and administrative expense for the second quarter decreased by $294,000, or 12%, from the same period in 1999. This decrease was primarily the result of a reduction in UK pension expense, and a reclassification of certain financing fees from corporate overhead to interest expense. Year-to-date operating expense was $396,000, or 8%, higher than the comparable period of 1999 because of higher legal and professional fees, and sales commissions incurred during the first quarter of 2000. The increased amount of legal and professional fees resulted from additional work necessary with regard to the Company's senior lender, and the December 1999 private placement. These costs are not expected to be present in future periods once the Company has replaced its senior lender. Interest expense for the quarter increased by $773,000 as a result of increased borrowings on the line of credit, an increased rate of interest, and additional financing costs charged by the Company's senior lender. These additional costs plus the amount of interest charged in excess of a fair market rate amount to $734,000 during the first six months of 2000. In addition, during the period July 1 to August 18, 2000, the lender has charged the Company further fees of $1,020,000. As a result of the increased costs from the Company's senior lender, and the higher than normal cost of revenue and operating expenses, the Company recorded a net loss for the quarter of $679,000, as compared with a net loss of $2,982,000 in the second quarter of 1999. The Company also recorded a year-to- date net loss of $1,030,000, as compared to a net loss of $2,942,000 for the prior comparable period. For the reasons stated above, the Company does not believe that gross margin, operating expense and interest expense for the reported periods will be representative of future results of operations. For the quarter and six months, the Company recorded $0.15 and $0.36 per share charges, respectively, to record accretion of a discount and redemption premium on preferred stock, along with the issue's cumulative dividends. The accretion charge represents a pro rata share of the maximum possible benefit that the preferred shareholders might receive through both conversion and redemption, as well as other costs and discounts associated with the issue of the preferred stock. These non-cash and non-operating charges are recorded on the Company's Statement of Operations below the net loss amount. The total of net loss, less these additional amounts, represents net loss available to common shareholders. Forward Looking Statements This Quarterly Report contains forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, such as statements of the Company's plans, objectives, expectations and intentions, that involve risks and uncertainties that could cause actual results to differ materially from those discussed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report and in the Company's various filings with the Securities and Exchange Commission, including without limitation the Company's Annual Report on Form 10-K/A for the year ended December 31, 1999. This discussion and analysis should be read in conjunction with the Company's financial statements and related notes thereto included herein, and with the information set forth under Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10- K/A for the year ended December 31, 1999. -10- ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk refers to the potential effects of unfavorable changes in certain prices and rates on the Company's financial results and condition, primarily foreign currency exchange rates and interest rates on borrowings. The Company does not utilize derivative instruments in managing its exposure to such changes. Foreign Currency Risk. The Company has operations in the United Kingdom and the Netherlands. The currencies of these two countries have been relatively stable as compared with the U.S. dollar. The Company manages foreign currency risk, in part, by generally requiring that customers pay for the services of the Company's foreign operating units in the currency of the country where the operating unit is located. The Company also does not routinely exchange material sums of money between the operating units. The Company has not to date seen the need for currency hedging transactions in the ordinary course of business. Interest Rate Risk. The Company's senior credit facility is comprised of two notes payable and a revolving line of credit, each of which currently carries an interest rate which varies in accordance with a Base Rate equal to the higher of the Federal Reserve prime rate, or the Federal Funds Effective Rate. The Company is presently subject to potentially material fluctuations in its debt service as the Base Rate changes. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11 Statement re Computation of Per Share Earnings 27 Financial Data Schedule (b) Form 8-K No reports were filed on Form 8-K during the quarter ended June 30, 2000. -11- Hawker Pacific Aerospace 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. HAWKER PACIFIC AEROSPACE Date: August 18, 2000 By /s/ Philip M. Panzera --------------------- Philip M. Panzera Executive Vice President (Principal Financial and Accounting Officer) -12- EX-11 2 0002.txt STATEMENT RE COMPUTATION OF PER SHARE EARNINGS Exhibit 11 COMPUTATION OF PER SHARE EARNINGS For the quarter ended June 30, 2000
No. Days in Cumulative Days No. Shares Weighted Ave. Month in Year Weighting Outstanding Shares Out ----------- --------------- --------- ----------- ------------- January 31 31 17.03% 5,822,222 991,697 February 29 60 15.93% 5,822,222 927,717 March 31 91 17.03% 5,822,722 991,782 April 30 121 16.48% 5,822,722 959,789 May 31 152 17.03% 5,822,822 991,799 June 30 182 16.48% 5,828,281 960,706 ----------- --------- ------------- 182 100.00% 5,823,491 Add: fully diluted from Employee Stock Options - Year to Date 0 Add: fully diluted from conversion of preferred stock 0 ------------- Average diluted shares outstanding at month end - year to date 5,823,491 ============= Net income (loss) for the period ($3,122,000) Earnings per share - diluted ($ 0.54) ============= Second Quarter -------------- April 30 30 32.97% 5,822,722 1,919,579 May 31 61 34.07% 5,822,822 1,983,599 June 30 91 32.97% 5,828,281 1,921,411 ------------- 5,824,589 Add: fully diluted from Employee stock Options - 2nd quarter 0 Add: fully diluted from conversion of preferred stock 0 ------------- Average diluted shares outstanding at month end - 2nd quarter 5,824,589 ============= Net income (loss) for the period ($1,570,000) Earnings per share - diluted ($ 0.27) =============
EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS OF HAWKER PACIFIC AEROSPACE FOR THE QUARTER ENDED JUNE 30, 2000. 3-MOS DEC-31-2000 APR-01-2000 JUN-30-2000 1,425,000 0 14,196,000 349,000 27,292,000 43,937,000 60,873,000 10,073,000 99,547,000 77,465,000 0 3,750,000 0 22,386,000 0 99,547,000 0 20,299,000 0 16,895,000 2,250,000 0 2,288,000 (1,134,000) (455,000) (679,000) 0 0 0 (679,000) (.27) (.27)
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