-----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, GR7RCeTXmu5yxnK9yerz9pDJdUEsz4Tf7nBwNUuRHtrp+6/EB48xX2yukh2FNJGN LhmHjm5sIjQO67LTjBtIKA== 0000912057-95-008450.txt : 19951011 0000912057-95-008450.hdr.sgml : 19951011 ACCESSION NUMBER: 0000912057-95-008450 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951010 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AAR CORP CENTRAL INDEX KEY: 0000001750 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 362334820 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06263 FILM NUMBER: 95579648 BUSINESS ADDRESS: STREET 1: 1111 NICHOLAS BLVD CITY: ELK GROVE VILLAGE STATE: IL ZIP: 60007 BUSINESS PHONE: 7084393939 MAIL ADDRESS: STREET 1: 1111 NICHOLAS BLVD CITY: ELK GROVE VILLAG STATE: IL ZIP: 60007 FORMER COMPANY: FORMER CONFORMED NAME: ALLEN AIRCRAFT RADIO INC DATE OF NAME CHANGE: 19700204 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ________________ FOR QUARTERLY PERIOD ENDED AUGUST 31, 1995 Commission file number 1-6263 ---------------- -------- AAR CORP. ------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 36-2334820 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1111 NICHOLAS BOULEVARD, ELK GROVE VILLAGE, ILLINOIS 60007 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (708) 439-3939 ----------------------------- - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 . --------- --------- (APPLICABLE ONLY TO CORPORATE ISSUERS) Indicate the number of shares outstanding of each on the issuer's classes of common stock, as of the latest practicable date. $1.00 par value, 15,959,200 shares outstanding as of AUGUST 31, 1995. - ------- ---------- --------------- AAR CORP. and Subsidiaries Quarterly Report on Form 10Q August 31, 1995 Table of Contents Page ---- PART I - FINANCIAL INFORMATION Item 1 Financial Statements Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Income 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6-7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 PART II - OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K Exhibits 10 Reports on Form 8-K 10 Signature Page 11 - 2 - PART I, ITEM 1 - FINANCIAL STATEMENTS AAR CORP. and Subsidiaries Condensed Consolidated Balance Sheets As of August 31, 1995 and May 31, 1995 (000s omitted)
August 31, May 31, 1995 1995 ----------- ---------- (Unaudited) (Derived from audited financial ASSETS statements) - ------ Current assets: Cash and cash equivalents $ 28,557 $ 22,487 Accounts receivable, less allowances of $2,680 and $2,400 at each date 98,143 110,420 Inventories (Note B) 147,451 151,827 Equipment on or available for short-term lease 20,169 18,501 Deferred tax assets, deposits and other 16,951 18,397 ------- ------- Total current assets 311,271 321,632 ------- ------- Property, plant and equipment, net 56,279 56,596 ------- ------- Other assets: Investment in leveraged leases 31,493 31,952 Cost in excess of underlying net assets of acquired companies 6,025 6,101 Retirement benefits, notes receivable and other 6,294 9,533 ------- ------- 43,812 47,586 ------- ------- $411,362 $425,814 ------- ------- ------- ------- LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Current maturities of long-term debt $ 1,473 $ 1,632 Accounts payable 37,475 51,393 Accrued liabilities 12,563 14,958 Accrued taxes on income 4,486 4,138 Accrued interest 3,487 1,019 ------- ------- Total current liabilities 59,484 73,140 ------- ------- Long-term debt, less current maturities 119,392 119,766 Deferred tax liabilities 30,660 30,660 Retirement benefit obligation and deferred credits (Note D) 3,883 5,129 ------- ------- 153,935 155,555 ------- ------- Stockholders' equity: Preferred stock, $1.00 par value, authorized 250 shares; none issued - - Common stock, $1.00 par value, authorized 80,000 shares; issued 16,301 and 16,284 shares at each date 16,301 16,284 Capital surplus 82,336 82,132 Retained earnings 103,620 102,309 Treasury stock, 342 and 323 shares at each date, at cost (4,026) (3,733) Cumulative translation adjustments (Note D) 72 1,497 Minimum pension liability adjustment (Note D) (360) (1,370) ------- ------- 197,943 197,119 ------- ------- $411,362 $425,814 ------- ------- ------- -------
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. - 3 - AAR CORP. and Subsidiaries Condensed Consolidated Statements of Income For the three months ended August 31, 1995 and 1994 (Unaudited) (000s omitted except per share data)
Three Months Ended August 31, ---------------------- 1995 1994 -------- -------- Net sales $109,593 $ 97,191 ------- ------- Costs and operating expenses: Cost of sales 89,096 80,377 Selling, general and administrative 13,606 11,563 ------- ------- 102,702 91,940 ------- ------- Operating income 6,891 5,251 Interest expense (2,664) (2,597) Interest income 364 171 ------- ------- Income before provision for income taxes 4,591 2,825 Provision for income taxes 1,365 820 ------- ------- Net income $ 3,226 $ 2,005 ------- ------- ------- ------- Net income per share of common stock (Note E) $ .20 $ .13 ------- ------- ------- ------- Dividends paid and declared per share of common stock $ .12 $ .12 ------- ------- ------- ------- Average shares outstanding 15,956 15,907
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. - 4 - AAR CORP. and Subsidiaries Condensed Consolidated Statements of Cash Flows For the Three Months Ended August 31, 1995 and 1994 (Unaudited) (000s omitted)
Three Months Ended August 31, --------------------- 1995 1994 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,226 $ 2,005 Adjustments to reconcile net income to net cash provided from (used in) operating activities: Depreciation and amortization 2,612 2,557 Change in certain assets and liabilities: Accounts receivable, net 11,893 (472) Inventories, net 3,418 (10,695) Equipment on or available for short-term lease (1,668) 3,982 Deferred tax assets, deposits and other 710 (3,255) Accounts payable (13,736) (3,012) Accrued liabilities and taxes on income (1,897) (2,416) Accrued interest 2,468 2,436 ------- ------- Net cash provided from (used in) operating activities 7,026 (8,870) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment expenditures, net (2,151) (1,812) Investment in leveraged leases 459 46 Notes receivable and other 3,294 115 ------- ------- Net cash provided from (used in) investing activities 1,602 (1,651) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Change in other borrowings, net (533) 1,426 Cash dividends (1,915) (1,909) Purchase of treasury stock (293) - Proceeds from exercise of stock options and other 221 7 ------- ------- Net cash used in financing activities (2,520) (476) ------- ------- Effect of exchange rate changes on cash (38) 122 ------- ------- Increase (decrease) in cash and cash equivalents 6,070 (10,875) Cash and cash equivalents, beginning of period 22,487 18,074 ------- ------- Cash and cash equivalents, end of period $ 28,557 $ 7,199 ------- ------- ------- -------
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. - 5 - AAR CORP. and Subsidiaries NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS August 31, 1995 (000s omitted) NOTE A - BASIS OF PRESENTATION The accompanying condensed consolidated financial statements include the accounts of AAR CORP. ("the Company")and its subsidiaries after elimination of intercompany accounts and transactions. These statements have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The condensed consolidated balance sheet as of May 31, 1995 has been derived from audited financial statements. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest annual report on Form 10-K. In the opinion of management of the Company, the condensed consolidated financial statements reflect all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the condensed consolidated financial position of AAR CORP. and its subsidiaries as of August 31, 1995 and the condensed consolidated results of operations and cash flows for the three months ended August 31, 1995 and 1994. The results of operations for such interim periods are not necessarily indicative of the results for the full year. Certain prior period amounts have been reclassified to conform to the August 31, 1995 presentation. NOTE B - INVENTORY The summary of inventories is as follows:
August 31, May 31, 1995 1995 ---------- -------- Raw materials and parts $ 28,271 $ 29,316 Work-in-process 11,588 11,891 Purchased aircraft, parts, engines and components held for sale or exchange 107,896 110,948 Finished goods 1,758 1,734 ------- ------- 149,513 153,889 Progress billings on long-term contracts and programs (2,062) (2,062) ------- ------- $147,451 $151,827 ------- ------- ------- -------
- 6 - AAR CORP.and Subsidiaries NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS August 31, 1995 (Continued) (000s omitted) NOTE C - SUPPLEMENTAL CASH FLOWS INFORMATION Supplemental information on cash flows:
Three Months Ended August 31, ------------------ 1995 1994 ------ ------ Interest paid $ 160 $ 110 Income taxes paid 1,520 1,270 Income tax refunds received - 140
NOTE D - CUMULATIVE TRANSLATION AND MINIMUM PENSION LIABILITY ADJUSTMENTS The Cumulative translation adjustments account decreased due to a net translation loss of $1,425 for the three-month period ended August 31, 1995. The loss resulted from a decrease in the value of the Company's net investment in foreign subsidiaries primarily resulting from an increase in the value of the U.S. dollar against most European currencies. The Company reduced the minimum pension liability by $1,246 during the three-month period ended August 31, 1995 reported within Retirement benefit obligation in the Condensed Consolidated Balance Sheets with a corresponding increase of $1,010 to Stockholders' equity in accordance with the method of accounting prescribed by SFAS No. 87, "Employers' Accounting for Pensions". The liability decreased as the result of the market-driven increase in the discount rate used by the Company to determine pension obligations and improved market values of the pension plan's assets. The noncash adjustment did not affect the Company's results of operations. NOTE E - EARNINGS PER SHARE The per share data was calculated using the weighted average shares outstanding for the periods presented. Common stock equivalents consisting of employee stock options have not been included in the per share calculation as their dilutive effect is not material. - 7 - PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AAR CORP. AND SUBSIDIARIES RESULTS OF OPERATIONS (000s omitted except percent data) THREE-MONTH PERIOD ENDED AUGUST 31, 1995 (as compared with the same period of the prior year) The following table sets forth net sales for the Company's classes of similar products and services within the Company's Aviation Services business segment:
Three Months Ended August 31, ---------------------- 1995 1994 -------- -------- Net Sales: Trading $53,628 $47,671 Overhaul 31,655 24,121 Manufacturing 24,310 25,399 ------- ------ $109,593 $97,191 ------- ------ ------- ------
Consolidated net sales for the first quarter of the fiscal year ending May 31, 1996 (fiscal 1996) increased $12,402 or 12.8% over the same period in the prior year. Trading sales increased $5,957 or 12.5% over the prior year as a result of increased airframe and large component part sales. Overhaul sales increased $7,534 or 31.2% due to increased airframe and large airframe component overhaul services. These increased sales were partially offset by a decline in Manufacturing sales of $1,089 or 4.3% due to the Company's disposition of certain small manufactured product lines since the prior year. Consolidated gross profit increased $3,683 or 21.9% over the prior year due to increased consolidated net sales and an increase in the consolidated gross profit margin to 18.7% compared to the prior years 17.3 % margin. Higher profit margins were experienced across most classes of products and services primarily due to favorable product mix and better pricing of products and services. Consolidated operating income increased $1,640 or 31.2% over the prior year as a result of the increased net sales and gross profit margin percentage partially offset by higher selling, general and administrative expenses from higher personnel costs and marketing support costs. Consolidated net income increased $1,221 or 60.9% over the prior year due to the increased consolidated net sales, improved consolidated gross profit margin and increased interest income on investment of the Company's cash and cash equivalents. - 8 - PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AAR CORP. AND SUBSIDIARIES FINANCIAL CONDITION (000s omitted except ratios) AT AUGUST 31, 1995 (as compared with May 31, 1995) In the three-month period ended August 31, 1995, the Company generated $7,026 of cash from operations through increased earnings and working capital management. The cash generated from operations was supplemented by payment of a note receivable obtained in the previous sale of a partial residual interest of an aircraft subject to a leveraged lease. The Company's cash and cash equivalent position increased $6,070 at the end of the three month period after making capital expenditures and paying dividends of $2,151, and $1,915 respectively. The Company further strengthened its financial position during the first quarter of fiscal 1996 by increasing cash and cash equivalents, generating additional working capital of $3,295, eliminating short-term borrowings during the three month period and decreasing its long-term debt to capitalization ratio to 37.6%. The Company continues to maintain available sources of financing from $133,300 of unused available bank lines and a shelf registration on file with the Securities and Exchange Commission for $85,000 of medium or long-term debt securities, which it may issue at its discretion and subject to market conditions. The Company believes that its cash and cash equivalents, available sources of financing and future income will continue to give the Company the ability to meet its ongoing working capital requirements, make anticipated capital expenditures, and pursue favorable business opportunities. A summary of key financial conditions, ratios, and lines of credit follows:
Description August 31, 1995 May 31, 1995 ----------------------- --------------- ------------ Working capital $251,787 $248,492 Current ratio 5.2:1 4.4:1 Bank Credit Lines: Borrowings outstanding $ - $ - Available but unused lines 133,300 133,750 ------- ------- 133,300 $133,750 ------- ------- ------- ------- Long-term debt less current maturities $119,392 $119,766 Ratio of long-term debt to capitalization 37.6% 37.8%
- 9 - PART II - OTHER INFORMATION AAR CORP. and Subsidiaries AUGUST 31, 1995 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS ITEM 27. Financial 27.1 Financial Data Schedule for the Registrant's three- Data month interim period ended August 31, 1995. Schedule (b) REPORTS ON FORM 8-K FOR QUARTER ENDED AUGUST 31, 1995: The Company filed no reports on Form 8-K during the three (3) months ended August 31, 1995. - 10 - SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AAR CORP. ----------------------------------- (Registrant) Date: October 9, 1995 /s/ Timothy J. Romenesko -------------------- ----------------------------------- Timothy J. Romenesko Vice President, Chief Financial Officer and Treasurer. (Principal accounting officer and officer duly authorized to sign on behalf of registrant) - 11 - EX-27.1 2 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S REPORT ON FORM 10-Q FOR THE THREE MONTH INTERIM PERIOD ENDED AUGUST 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 3-MOS MAY-31-1996 JUN-01-1995 AUG-31-1995 1 28,557 0 100,823 2,680 147,451 311,271 130,362 74,083 411,362 59,484 119,392 16,301 0 0 181,642 411,362 109,593 109,593 89,096 102,702 0 280 2,300 4,591 1,365 3,226 0 0 0 3,226 .20 .20 Provision for doubtful accounts is included in Total Costs and Expenses. Interest expense is presented net of $364 of interest income.
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