0001104659-15-024618.txt : 20150331 0001104659-15-024618.hdr.sgml : 20150331 20150331145623 ACCESSION NUMBER: 0001104659-15-024618 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20150326 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20150331 DATE AS OF CHANGE: 20150331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AAR CORP CENTRAL INDEX KEY: 0000001750 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT & PARTS [3720] IRS NUMBER: 362334820 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06263 FILM NUMBER: 15738639 BUSINESS ADDRESS: STREET 1: 1100 N WOOD DALE RD CITY: WOOD DALE STATE: IL ZIP: 60191 BUSINESS PHONE: 6302272000 MAIL ADDRESS: STREET 1: 1100 N WOOD DALE RD CITY: WOOD DALE STATE: IL ZIP: 60191 FORMER COMPANY: FORMER CONFORMED NAME: ALLEN AIRCRAFT RADIO INC DATE OF NAME CHANGE: 19700204 8-K 1 a15-8048_18k.htm 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.   20549

 


 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

March 26, 2015

Date of Report (Date of earliest event reported)

 

AAR CORP.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

(State or other jurisdiction of incorporation)

 

1-6263

 

36-2334820

(Commission File Number)

 

(IRS Employer Identification No.)

 

One AAR Place, 1100 N. Wood Dale Road

Wood Dale, Illinois 60191

(Address and Zip Code of Principal Executive Offices)

 

Registrant’s telephone number, including area code:  (630) 227-2000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o                       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o                       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o                       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o                        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.01                                           Completion of Acquisition or Disposition of Assets

 

On March 26, 2015, AAR CORP. (the “Company”) completed the previously announced sale of its Telair Cargo Group (the “Business”) to TransDigm, Inc. (“Buyer”) for an aggregate purchase price of $725 million (along with the assumption by the Buyer of certain liabilities related to the Business), subject to adjustments.

 

The terms of the sale are set forth in a Purchase Agreement dated February 20, 2015 attached as Exhibit 2.1 to the Form 8-K filed by the Company on February 24, 2015 and which is incorporated into this Item 2.01 by reference.

 

Item 9.01                                           Financial Statements and Exhibits

 

(b)                                 Pro Forma Financial Information

 

99.1                        Unaudited Pro Forma Condensed Consolidated Financial Information

 

2



 

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 hereunto duly authorized.

 

 

Date:                  March 31, 2015

 

 

 

AAR CORP.

 

 

 

 

 

By:

/s/ JOHN C. FORTSON

 

 

John C. Fortson

 

 

Vice President, Chief Financial Officer and

 

 

Treasurer

 

3



 

EXHIBIT INDEX

 

Exhibit Number

 

Description

 

 

 

99.1

 

Unaudited Pro Forma Condensed Consolidated Financial Information

 

4


EX-99.1 2 a15-8048_1ex99d1.htm EX-99.1

Exhibit 99.1

 

AAR CORP.

 

Unaudited Pro Forma Condensed Consolidated Financial Information

 

On February 23, 2015, AAR CORP., a Delaware corporation (the “Company”), announced that AAR International, Inc., an Illinois corporation (“AAR International”), AAR Manufacturing, Inc., an Illinois corporation (“AAR Manufacturing” and, together with AAR International, “Sellers”), TransDigm Inc., a Delaware corporation (“TransDigm”) and TransDigm Germany GmbH, a limited liability company incorporated under the law of Germany (“TransDigm Germany” and, together with TransDigm, “Buyers”), entered into a Purchase Agreement dated as of February 20, 2015 (the “Purchase Agreement”), pursuant to which, subject to the terms and conditions set forth in the Purchase Agreement, the Buyers will acquire (the “Transaction”) from the Sellers their interest in the Telair Cargo Group, which is comprised of Telair International GmbH, Nordisk Aviation Products AS and certain assets of AAR Manufacturing, and relates to the design, engineering, manufacture, marketing, sale, distribution and support of cargo-handling systems and certain other products for passenger, military and freight aircraft (collectively, the “Business”).  The selling price was $725 million, subject to certain post-closing adjustments, including a working capital adjustment.  The Transaction closed on March 26, 2015.  Cash received by the Sellers at closing was $705 million, with the remaining consideration of $20 million placed in escrow and payable to the Sellers subject to the occurrence of certain post-closing events related to a large cargo system development program.

 

The unaudited pro forma condensed consolidated financial information set forth below has been derived by the application of pro forma adjustments to our historical financial statements.  The unaudited pro forma condensed consolidated statements of income for the nine months ended February 28, 2015 and for the year ended May 31, 2014 reflect the Company’s results as if the Transaction and events described below had occurred on June 1, 2013, and do not reflect the gain on the Transaction.  The unaudited pro forma condensed consolidated balance sheet as of February 28, 2015 gives effect to the Transaction and events described below as if they had occurred on February 28, 2015.

 

The unaudited pro forma condensed consolidated financial information gives effect to the following:

 

·                  The Transaction; and

·                  The anticipated redemption of $325 million of 7.25% Senior Notes due 2022 funded from the proceeds of the Transaction.

 

The unaudited pro forma condensed consolidated financial information were prepared in accordance with the regulations of the Securities and Exchange Commission (the “SEC”) and should not be considered indicative of the financial position or results of operations that would have occurred if the Transaction and events above had been consummated on the dates indicated, nor are they

 



 

indicative of the future financial position or results of operations of the Company.  In accordance with SEC regulations, the unaudited pro forma consolidated financial statements reflect adjustments to the extent they are directly attributable to the Transaction, factually supportable and, for income statement purposes, are expected to have a continuing impact on the Company’s operating results.

 

The unaudited pro forma condensed consolidated financial information should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2014 filed with the SEC on July 17, 2014 and the unaudited consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarter and nine months ended February 28, 2015 filed with the SEC on March 31, 2015.

 



 

AAR CORP. and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of February 28, 2015

(In millions)

 

 

 

As Reported

 

Disposition
of Telair
Cargo Group

 

Use of
Proceeds

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

67.0

 

$

687.0

(a)

$

(370.0

)(f)

$

384.0

 

Accounts receivable, net

 

249.6

 

 

 

249.6

 

Inventories

 

451.0

 

 

 

451.0

 

Rotable spares and equipment on or available for short-term lease

 

139.9

 

 

 

139.9

 

Assets of Telair Cargo Group

 

496.9

 

(496.9

)(b)

 

 

Other current assets

 

90.5

 

 

 

90.5

 

Total current assets

 

1,494.9

 

190.1

 

(370.0

)

1,315.0

 

Property, plant and equipment, net

 

247.4

 

 

 

247.4

 

Other assets:

 

 

 

 

 

 

 

 

 

Goodwill

 

123.6

 

 

 

123.6

 

Intangible assets, net

 

38.0

 

 

 

38.0

 

Equipment on or available for long-term lease

 

110.8

 

 

 

110.8

 

Investment in joint ventures

 

27.3

 

 

 

27.3

 

Other

 

91.8

 

 

(6.3

)(g)

85.5

 

 

 

391.5

 

 

(6.3

)

385.2

 

Total assets

 

$

2,133.8

 

$

190.1

 

$

(376.3

)

$

1,947.6

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

43.9

 

$

 

$

 

$

43.9

 

Accounts and trade notes payable

 

164.6

 

 

 

164.6

 

Accrued liabilities

 

130.2

 

70.0

(c)

(15.5

)(h)

184.7

 

Liabilities of Telair Cargo Group

 

52.1

 

(52.1

)(b)

 

 

Total current liabilities

 

390.8

 

17.9

 

(15.5

)

393.2

 

Long-term debt, less current maturities

 

599.4

 

 

(332.0

)(i)

267.4

 

Deferred tax liabilities

 

139.1

 

 

 

139.1

 

Other liabilities and deferred income

 

62.7

 

 

 

62.7

 

 

 

801.2

 

 

(332.0

)

469.2

 

Equity:

 

 

 

 

 

 

 

 

 

Common stock

 

45.0

 

 

 

45.0

 

Capital surplus

 

442.2

 

 

 

442.2

 

Retained earnings

 

632.2

 

128.2

(d)

(28.8

)(j)

731.6

 

Treasury stock

 

(99.8

)

 

 

(99.8

)

Accumulated other comprehensive loss

 

(78.7

)

44.9

(e)

 

(33.8

)

Total AAR stockholders’ equity

 

940.9

 

173.1

 

(28.8

)

1,085.2

 

Noncontrolling interest

 

0.9

 

(0.9

)(e)

 

 

Total equity

 

941.8

 

172.2

 

(28.8

)

1,085.2

 

Total liabilities and equity

 

$

2,133.8

 

$

190.1

 

$

(376.3

)

$

1,947.6

 

 

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet

 



 

AAR CORP. and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Statement of Income

For the Nine Months Ended February 28, 2015

(In millions, except per share data)

 

 

 

As Reported

 

Pro Forma
Adjustments

 

Pro Forma

 

Sales:

 

 

 

 

 

 

 

Sales from products

 

$

656.9

 

$

 

$

656.9

 

Sales from services

 

521.6

 

 

521.6

 

 

 

1,178.5

 

 

1,178.5

 

Cost and operating expenses:

 

 

 

 

 

 

 

Cost of products

 

568.6

 

 

568.6

 

Cost of services

 

430.2

 

 

430.2

 

Selling, general and administrative

 

120.3

 

 

120.3

 

 

 

1,119.1

 

 

1,119.1

 

Earnings from joint ventures

 

1.8

 

 

1.8

 

Operating income

 

61.2

 

 

61.2

 

Interest expense

 

(19.4

)

11.9

(k)

(7.5

)

Interest income

 

0.2

 

 

0.2

 

Income from continuing operations before provision for income taxes

 

42.0

 

11.9

 

53.9

 

Provision for income taxes

 

14.4

 

4.2

(l)

18.6

 

Income from continuing operations

 

$

27.6

 

$

7.7

 

$

35.3

 

 

 

 

 

 

 

 

 

Per share information:

 

 

 

 

 

 

 

Income from continuing operations — basic

 

$

0.70

 

 

 

$

0.90

 

Income from continuing operations — diluted

 

0.69

 

 

 

0.89

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

38.7

 

 

 

38.7

 

Weighted average shares outstanding — diluted

 

39.2

 

 

 

39.2

 

 

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Income

 



 

AAR CORP. and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Statement of Income

For the Year Ended May 31, 2014

(In millions, except per share data)

 

 

 

As Reported

 

PSM in
Discontinued
Operations

 

Disposition
of Telair
Cargo Group

 

Pro Forma
Adjustments

 

Pro Forma

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

Sales from products

 

$

1,226.3

 

$

(64.5

)(m)

$

(260.5

)(n)

$

 

$

901.3

 

Sales from services

 

808.7

 

(0.3

)(m)

(0.6

)(n)

 

807.8

 

 

 

2,035.0

 

(64.8

)

(261.1

)

 

1,709.1

 

Cost and operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of products

 

1,068.4

 

(72.9

)(m)

(201.5

)(n)

 

794.0

 

Cost of services

 

626.4

 

(0.1

)(m)

(0.1

)(n)

 

626.2

 

Selling, general and administrative

 

197.6

 

(4.6

)(m)

(26.7

)(n)

 

166.3

 

 

 

1,892.4

 

(77.6

)

(228.3

)

 

1,586.5

 

Earnings from joint ventures

 

3.1

 

 

(0.1

)(n)

 

3.0

 

Operating income

 

145.7

 

12.8

 

(32.9

)

 

125.6

 

Interest expense

 

(42.0

)

2.6

(m)

11.0

(n)

15.8

(k)

(12.6

)

Interest income

 

1.6

 

 

 

 

1.6

 

Income from continuing operations before provision for income taxes

 

105.3

 

15.4

 

(21.9

)

15.8

 

114.6

 

Provision for income taxes

 

32.1

 

3.5

(m)

(4.2

)(n)

5.5

(l)

36.9

 

Income from continuing operations

 

$

73.2

 

$

11.9

 

$

(17.7

)

$

10.3

 

$

77.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share information:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations — basic

 

$

1.85

 

 

 

 

 

 

 

$

1.97

 

Income from continuing operations — diluted

 

1.83

 

 

 

 

 

 

 

1.94

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

38.6

 

 

 

 

 

 

 

38.6

 

Weighted average shares outstanding — diluted

 

39.1

 

 

 

 

 

 

 

39.1

 

 

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Income

 



 

AAR CORP. & Subsidiaries

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

(In millions)

 


(a)                     Represents gross cash proceeds from the Transaction of $705 million less estimated transaction costs of $18 million.

 

(b)                     To eliminate assets and liabilities held for sale related to Telair Cargo Group.

 

(c)                      Represents estimated income tax expense related to the Transaction gain on disposition.

 

(d)                     Represents the adjustment to retained earnings to reflect the estimated gain on the Transaction, including income tax effects.

 

Gross proceeds received from Buyer

 

$

705.0

 

Transaction expenses

 

(18.0

)

Net assets sold

 

(444.8

)

Accumulated other comprehensive loss realized

 

(44.9

)

Elimination of noncontrolling interest

 

0.9

 

Estimated tax expense

 

(70.0

)

 

 

$

128.2

 

 

(e)                      Represents the currency translation adjustment, minimum pension liabilities and noncontrolling interest related to the Telair Cargo Group.

 

(f)                       Represents cash paid to redeem 7.25% Senior Notes:

 

Redemption of 7.25% Senior Notes

 

$

325.0

 

Make-whole premium associated with 7.25% Senior Notes

 

45.0

 

 

 

$

370.0

 

 

(g)                      Represents unamortized deferred financing costs associated with the 7.25% Senior Notes.

 

(h)                     Represents estimated income tax benefit related to the redemption of the 7.25% Senior Notes at the statutory rate of 35%.

 

(i)                         Represents the redemption of $325 million of 7.25% Senior Notes including the unamortized premium of $7.0 million.

 



 

(j)                        Represents the adjustment to retained earnings to reflect the estimated loss on the redemption of the 7.25% Senior Notes:

 

Make-whole premium

 

$

45.0

 

Unamortized deferred financing costs

 

6.3

 

Unamortized premium

 

(7.0

)

Estimated tax benefit

 

(15.5

)

 

 

$

28.8

 

 

(k)                     Represents the reduction in interest expense, including amortization of deferred financing costs, from the redemption of $325 million of 7.25% Senior Notes.  The make-whole premium, which is a non-recurring charge, has been excluded from the unaudited pro forma condensed consolidated statements of income for the nine months ended February 28, 2015 and for the year ended May 31, 2014.

 

(l)                         Represents the tax impact of the reduction in interest expense at the statutory rate of 35%.

 

(m)                 Adjustment to eliminate the historical sales and expenses of Precision Systems Manufacturing (“PSM”), including estimated taxes.  Effective with the third quarter of fiscal 2015, PSM was reported as a discontinued operation in connection with the management’s decision to sell the business.

 

(n)                     Adjustment to eliminate the historical sales and expenses of the Telair Cargo Group, including estimated taxes.