-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Rs+9NZockaf3VV6Vjjp1XBKfKkGXslCzDIlxANsantrS8FkQhN6qWIlpZP6QS07l sa38op87/invt6c7e5A+FQ== 0000950123-95-001323.txt : 19950512 0000950123-95-001323.hdr.sgml : 19950512 ACCESSION NUMBER: 0000950123-95-001323 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUDSON GENERAL CORP CENTRAL INDEX KEY: 0000048948 STANDARD INDUSTRIAL CLASSIFICATION: AIRPORTS, FLYING FIELDS & AIRPORT TERMINAL SERVICES [4581] IRS NUMBER: 131947395 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05896 FILM NUMBER: 95536766 BUSINESS ADDRESS: STREET 1: 111 GREAT NECK RD CITY: GREAT NECK STATE: NY ZIP: 11021 BUSINESS PHONE: 5164878610 MAIL ADDRESS: STREET 1: P O BOX 355 CITY: GREAT NECK STATE: NY ZIP: 11022 FORMER COMPANY: FORMER CONFORMED NAME: HUDSON LEASING CORP DATE OF NAME CHANGE: 19711207 10-Q 1 HUDSON GENERAL CORPORATION - FORM 10-Q 1 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 March 31, 1995 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 1-5896 HUDSON GENERAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-1947395 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 111 GREAT NECK ROAD, GREAT NECK, NEW YORK 11021 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (516) 487-8610 Not Applicable (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 ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $l.00 per share: 1,214,702 shares outstanding at May 8, 1995. Page 1 of 17 2 PART I - FINANCIAL STATEMENTS 2 3 HUDSON GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Nine Months Ended March 31, March 31, 1995 1994 1995 1994 ------------------------------ ------------------------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) ----------- ----------- ------------ ------------ Revenues . . . . . . . . . . . . . . . . . . . $37,953,000 $50,910,000 $102,478,000 $110,443,000 ----------- ----------- ------------ ------------ Costs and expenses: Operating . . . . . . . . . . . . . . . . . . 28,429,000 34,582,000 80,057,000 81,402,000 Depreciation and amortization . . . . . . . . 2,588,000 1,861,000 5,884,000 5,328,000 Selling, general & administrative . . . . . . 3,461,000 6,554,000 10,377,000 12,816,000 Interest . . . . . . . . . . . . . . . . . . . 116,000 329,000 467,000 1,045,000 ----------- ----------- ------------ ------------ Total costs and expenses . . . . . . . . . 34,594,000 43,326,000 96,785,000 100,591,000 ----------- ----------- ------------ ------------ Earnings before equity in loss of joint venture, provision (benefit) for income taxes and cumulative effect of change in the method of accounting for income taxes . . 3,359,000 7,584,000 5,693,000 9,852,000 Equity in loss of joint venture . . . . . . . . (660,000) (420,000) (1,805,000) (1,282,000) ----------- ----------- ------------ ------------ Earnings before provision (benefit) for income taxes and cumulative effect of change in the method of accounting for income taxes.. 2,699,000 7,164,000 3,888,000 8,570,000 Provision (benefit) for income taxes . . . (775,000) 2,922,000 (454,000) 3,249,000 ----------- ----------- ------------ ------------ Earnings before cumulative effect of change in the method of accounting for income taxes . . . . . . . . . . . . . . . . . . . . 3,474,000 4,242,000 4,342,000 5,321,000 Cumulative effect of change in the method of accounting for income taxes . . . . . . . . . - - - 450,000 ----------- ----------- ------------ ------------ Net earnings . . . . . . . . . . . . . . . . . $ 3,474,000 $ 4,242,000 $ 4,342,000 $ 5,771,000 =========== =========== ============ ============ Earnings per share, primary: Earnings before cumulative effect of change in the method of accounting for income taxes $ 2.76 $ 3.40 $ 3.45 $ 4.28 Cumulative effect of change in the method of accounting for income taxes . . . . . . . . . - - - .36 ------- ------ ------ ------ Net earnings . . . . . . . . . . . . . . . . $ 2.76 $ 3.40 $ 3.45 $ 4.64 ======= ====== ====== ====== Earnings per share, fully diluted: Earnings before cumulative effect of change in the method of accounting for income taxes $ 1.75 $ 2.12 $ 2.42 $ 2.89 Cumulative effect of change in the method of accounting for income taxes . . . . . . . . . - - - .21 ------- ------ ------ ------ Net earnings . . . . . . . . . . . . . . . . $ 1.75 $ 2.12 $ 2.42 $ 3.10 ======= ====== ====== ====== Cash dividends per common share . . . . . . . . $ - $ - $ .25 $ - ======= ====== ====== ====== Weighted average common and common equivalent shares outstanding: Primary . . . . . . . . . . . . . . . . . . . 1,258,000 1,247,000 1,260,000 1,244,000 =========== =========== ========= ========= Fully diluted . . . . . . . . . . . . . . . . 2,143,000 2,135,000 2,148,000 2,134,000 =========== =========== ========= =========
See accompanying notes to consolidated financial statements. 3 4 HUDSON GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31 June 30 1995 1994 ------------ ----------- (Unaudited) Assets Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $11,196,000 $ 6,727,000 Accounts and notes receivable - net . . . . . . . . . . . . . . . 14,546,000 14,628,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 823,000 904,000 Prepaid expenses and other assets . . . . . . . . . . . . . . . . 836,000 1,090,000 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 4,246,000 2,946,000 ----------- ----------- Total current assets . . . . . . . . . . . . . . . . . . . . . . 31,647,000 26,295,000 Property, equipment and leasehold rights at cost, less accumulated depreciation and amortization . . . . . . . . . . 32,134,000 31,047,000 Investment in Hawaii joint venture - net . . . . . . . . . . . . . 16,037,000 15,621,000 Long-term receivables - net . . . . . . . . . . . . . . . . . . . . 2,719,000 3,138,000 Other assets - net . . . . . . . . . . . . . . . . . . . . . . . . 783,000 862,000 Excess cost over fair value of net assets acquired . . . . . . . . 822,000 926,000 ----------- ----------- $84,142,000 $77,889,000 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,865,000 $ 8,652,000 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . 1,327,000 1,224,000 Accrued expenses and other liabilities . . . . . . . . . . . . . . 19,221,000 18,079,000 ----------- ----------- Total current liabilities . . . . . . . . . . . . . . . . . . . 30,413,000 27,955,000 ----------- ----------- Long-term debt, subordinated . . . . . . . . . . . . . . . . . . . 29,000,000 29,000,000 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . 1,655,000 1,711,000 ----------- ----------- Total noncurrent liabilities . . . . . . . . . . . . . . . . . . 30,655,000 30,711,000 ----------- ----------- Stockholders' Equity: Serial preferred stock (authorized 100,000 shares of $1 par value) - none outstanding . . . . . . . . . . . . . . . - - Common stock (authorized 7,000,000 shares of $1 par value) - issued and outstanding 1,252,802 and 1,250,802 shares . . . . . . . . . . . . . . . . . . . . . . . . 1,253,000 1,251,000 Paid in capital . . . . . . . . . . . . . . . . . . . . . . . . . 6,745,000 6,717,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 16,744,000 12,716,000 Equity adjustments from foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,668,000) (1,461,000) ----------- ----------- Total stockholders' equity . . . . . . . . . . . . . . . . . . . 23,074,000 19,223,000 ----------- ----------- $84,142,000 $77,889,000 =========== ===========
See accompanying notes to consolidated financial statements. 4 5 HUDSON GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 1995 1994 ------------------------------ (Unaudited) (Unaudited) ----------- ------------ Cash flows from operating activities: Earnings before cumulative effect of change in the method of accounting for income taxes . . . . . . . . . . $ 4,342,000 $ 5,321,000 Adjustments to reconcile earnings before cumulative effect of change in the method of accounting for income taxes to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . 5,884,000 5,328,000 Decrease in deferred income tax liabilities excluding cumulative effect of change in the method of accounting for income taxes . . . . . . . . . . . . . . . . (70,000) - Equity in loss of joint venture . . . . . . . . . . . . . . . 1,805,000 1,282,000 Capitalization of interest costs on Hawaii joint venture advances . . . . . . . . . . . . . . . . . . . (1,057,000) (678,000) Gain on sale or disposal of equipment . . . . . . . . . . . . (463,000) (174,000) Change in other current assets and liabilities: Accounts and notes receivables - net . . . . . . . . . . . . 29,000 (10,345,000) Prepaid expenses and other assets . . . . . . . . . . . . . 251,000 144,000 Deferred income taxes . . . . . . . . . . . . . . . . . . . (1,300,000) (1,000,000) Accounts payable . . . . . . . . . . . . . . . . . . . . . . 1,224,000 1,945,000 Income taxes payable . . . . . . . . . . . . . . . . . . . . 103,000 3,550,000 Accrued expenses and other liabilities . . . . . . . . . . . 1,226,000 7,841,000 Decrease in inventory . . . . . . . . . . . . . . . . . . . . 76,000 33,000 Decrease in other assets . . . . . . . . . . . . . . . . . . . 79,000 122,000 Decrease in long-term receivables . . . . . . . . . . . . . . 419,000 17,000 Other - net . . . . . . . . . . . . . . . . . . . . . . . . . 95,000 100,000 ----------- ---------- Net cash provided by operating activities . . . . . . . . 12,643,000 13,486,000 ----------- ---------- Cash flows from investing activities: Purchases of property, equipment and leasehold rights . . . . . (7,508,000) (7,780,000) Proceeds from sale of property and equipment . . . . . . . . . . 900,000 572,000 Advances to Hawaii joint venture . . . . . . . . . . . . . . . . (1,164,000) (740,000) ----------- ---------- Net cash used by investing activities . . . . . . . . . . (7,772,000) (7,948,000) ----------- ---------- Cash flows from financing activities: Proceeds from issuance of common stock . . . . . . . . . . . . . 30,000 118,000 Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . (314,000) - Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . - 500,000 Principal repayments of borrowings . . . . . . . . . . . . . . . - (5,833,000) ----------- ---------- Net cash used by financing activities . . . . . . . . . . (284,000) (5,215,000) ----------- ---------- Effect of exchange rate changes on cash . . . . . . . . . . . . . (118,000) (281,000) ----------- ---------- Net increase in cash and cash equivalents . . . . . . . . . . . . 4,469,000 42,000 Cash and cash equivalents at beginning of period . . . . . . . . 6,727,000 6,376,000 ----------- ---------- Cash and cash equivalents at end of period . . . . . . . . . . . $11,196,000 $6,418,000 =========== ==========
See accompanying notes to consolidated financial statements. 5 6 HUDSON GENERAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited consolidated financial statements were prepared in accordance with generally accepted accounting principles and include all adjustments which, in the opinion of management, are necessary to present fairly the consolidated financial position of Hudson General Corporation and Subsidiaries (the Company) as of March 31, 1995 and June 30, 1994, and the results of operations for the three and nine months, and cash flows for the nine months, ended March 31, 1995 and 1994. In the opinion of management, all necessary adjustments that were made are of a normal recurring nature. The accounting policies followed by the Company are stated in Note 1 to the Company's consolidated financial statements in the 1994 Hudson General Corporation Annual Report filed under Item 8 to Form 10-K for the Company's fiscal year ended June 30, 1994. 2. The Company is a partner in a joint venture (the Venture) which was formed to acquire, develop and sell approximately 4,000 contiguous acres of land in Hawaii. The Company accounts for its investment in the Venture under the equity method of accounting. The summary balance sheets for the Venture are as follows:
March 31 June 30 1995 1994 ----------- ----------- (Unaudited) Cash and equivalents $ 97,000 $ 121,000 Land and development costs 26,380,000 26,255,000 Mortgages, accounts and notes receivable 8,908,000 10,197,000 Other assets - net 4,906,000 4,778,000 ----------- ----------- $40,291,000 $41,351,000 =========== =========== Notes payable $ 3,467,000 $ 4,759,000 Partner advances and accrued interest payable 42,605,000 38,664,000 Accounts payable and accrued expenses 1,666,000 1,765,000 Partners' deficit (7,447,000) (3,837,000) ----------- ----------- $40,291,000 $41,351,000 =========== ===========
Summary results of operations for the Venture are as follows:
Three Months Ended Nine Months Ended March 31, March 31, 1995 1994 1995 1994 ----------------------------- --------------------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) ----------------------------- --------------------------- Sales (net of discounts) $ 180,000 $ 335,000 $ 339,000 $ 466,000 ----------- ---------- ----------- ----------- Cost of sales 93,000 193,000 93,000 193,000 Selling, general and administrative 627,000 710,000 1,755,000 2,010,000 Interest - net 780,000 271,000 2,101,000 826,000 ----------- ---------- ----------- ---------- Total costs 1,500,000 1,174,000 3,949,000 3,029,000 ----------- ---------- ----------- ---------- Loss $(1,320,000) $ (839,000) $(3,610,000) $(2,563,000) =========== ========== =========== ===========
The Company's 50% share of the Venture's results were losses of $660,000 and $420,000 for the three months ended March 31, 1995 and 1994, respectively, and $1,805,000 and $1,282,000 for the nine months ended March 31, 1995 and 1994, respectively, and have been included in "Equity in loss of joint venture" in the accompanying consolidated statements of earnings. The Company's partner in the Venture is Oxford Kohala, Inc. (Oxford Kohala), a subsidiary of Oxford First Corporation (Oxford First). Under the Restated Joint Venture Agreement dated April 29, 1981, as amended (the Agreement), the partners have agreed to make equal advances to the Venture for all costs necessary for the orderly development of the land and to share profits and losses equally. On October 13, 1994, Oxford First filed for reorganization under Chapter 11 of the Bankruptcy Code. Pursuant to an order of the Bankruptcy Court dated November 28, 1994, Oxford First (through its subsidiary, The Oxford Finance Companies, Inc.) was permitted to transfer funds to Oxford Kohala in an amount not to exceed $180,000 with respect to the period October 1, 1994 through December 31, 1994 and $195,000 with respect to the period January 1, 1995 through March 31, 1995, which amounts were intended to enable Oxford First to honor its obligation to make funds available to Oxford Kohala so that Oxford 6 7 Kohala could make its share of advances required by the Venture. The amount authorized by the Bankruptcy Court with respect to the period January 1, 1995 through March 31, 1995 was not sufficient to allow Oxford Kohala to make its full share of required advances. To date, the Company has opted to make additional advances (the Additional Advances) to cover the Oxford Kohala funding deficiency. As of March 31, 1995 and the date of this filing, the amount of the Additional Advances was $270,000 and $420,000, respectively. Oxford First has filed a motion with the Bankruptcy Court requesting that Oxford First be permitted to transfer funds to Oxford Kohala in an amount sufficient to allow Oxford Kohala to reimburse the Company for advances made to cover the Oxford Kohala funding deficiency and to make its share of the Venture's required fundings through September 30, 1995. The Company, at present, is unable to determine whether the Bankruptcy Court will authorize Oxford First to transfer such funds to Oxford Kohala or whether any transfers authorized by the Bankruptcy Court will be sufficient in order for Oxford Kohala to so reimburse the Company and make its share of future advances to the Venture. Should Oxford Kohala continue to be unable to make its share of such advances to the Venture, the Company has the option to make Additional Advances necessary up to the limits set forth in its revolving credit agreement (the Credit Agreement) with a group of banks (see Note 4). Oxford Kohala did not file for reorganization under Chapter 11 of the Bankruptcy Code. During the nine months ended March 31, 1995, the Company advanced $894,000 as its 50% share of the Venture's required fundings. The Company's total advances, including the Additional Advances, to the Venture (including accrued interest) at March 31, 1995 were $21,573,000. 3. Accrued expenses and other liabilities consisted of the following:
March 31 June 30 1995 1994 ----------- ----------- (Unaudited) Salaries and wages $ 4,421,000 $ 5,137,000 Interest 450,000 956,000 Insurance 5,620,000 3,607,000 Operating expenses payable 3,271,000 2,748,000 Other 5,459,000 5,631,000 ----------- ----------- $19,221,000 $18,079,000 =========== ===========
4. Effective March 15, 1995 the Credit Agreement was amended whereby its term was extended by two years to December 31, 2000, the limit on capital expenditures that the Company may incur in any fiscal year was increased from $10,000,000 to $13,000,000 and the interest rate that the Company must pay on outstanding borrowings was reduced and will be 12.5 to 50 basis points less than the prior rate depending on the interest rate option selected by the Company. Furthermore, the amendment permits the Company, until March 31, 1996, to expend up to $3,000,000 to repurchase shares of its common stock in addition to purchases already permitted under the Credit Agreement as discussed below so long as no proceeds from borrowings under the Credit Agreement are utilized for such purpose. On May 2, 1995, the Company announced that its Board of Directors had approved the repurchase of approximately 112,000 shares of its common stock from time to time in either open market or privately negotiated transactions. This authorization was in addition to the purchase of 38,100 shares by the Company on April 21, 1995. The Credit Agreement contains various restrictions, among which are provisions restricting the Company from paying cash dividends or purchasing, redeeming or retiring its stock unless consolidated tangible net worth (TNW), as defined, is greater than $16,500,000 both immediately before and after giving effect to such dividend, purchase, redemption or retirement. Furthermore, any such payments are limited to an annual amount not to exceed the lesser of (i) $1,200,000 or (ii) 50% of consolidated net income, as defined, for the most recently ended fiscal year. On November 18, 1994, the Board of Directors of the Company declared a regular semi-annual dividend of 25 cents per share of common stock, aggregating $314,000, which was paid on January 4, 1995. At March 31, 1995, the Company's TNW was $23,920,000. Pursuant to the Credit Agreement the Company may advance up to $2,000,000 to the Venture in any fiscal year or up to $4,000,000 during the term of the Credit Agreement, net of any distributions received from the Venture by the Company during such periods. Since the inception of the Credit Agreement the Company has increased its net advances to the Venture by $2,249,000. 7 8 5. The Company had an option which was exercisable until January 31, 1994 to renew the subleases (Subleases) covering its fixed base operation (FBO) locations at several Canadian airports beyond their October 31, 1994 expiration dates. The renewal option provided that it could only be exercised for all of the FBO locations. These FBO's had experienced operating losses, and the Company had previously determined that it would not renew the Subleases on their then present terms and conditions. Negotiations with the Company's landlord to revise the sublease terms were not successful, and the Company did not exercise its renewal option. Accordingly, the term of the Subleases expired on October 31, 1994. At June 30, 1993, the Company accelerated the amortization of the remaining carrying value of its sublease rights in the amount of $4,287,000. The Company's decision not to exercise its renewal option is not expected to have a further material effect on its consolidated financial position or results of operations. 6. The Company has an option which is exercisable until May 31, 1995 to renew the lease on a hangar facility at a domestic airport location. The Company has determined that it will not exercise its renewal option and, accordingly, the term of the lease will expire on May 31, 1995. At March 31, 1995, the Company accelerated the amortization of the remaining carrying value of its leasehold improvements made to this hangar facility in the amount of $744,000, which amount is included in depreciation and amortization in the accompanying consolidated statements of earnings. The Company's decision not to exercise its renewal option is not expected to have a further material effect on its consolidated financial position or results of operations. 7. Effective with the Company's July 1, 1993 adoption of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, the Company provided a 100% valuation allowance for the net operating loss carryforwards and depreciation differences relating to its Canadian operations since realization of the related deferred tax assets was uncertain at that time. The net change in the valuation allowance for deferred tax assets for the nine months ended March 31, 1995 was a decrease of $2,232,000. The decrease reflects the utilization of a portion of the Company's Canadian depreciation differences to offset its provision for foreign income taxes in the amount of $800,000, and the recognition of $1,300,000 of deferred tax assets resulting from a reevaluation of the operating results of the Company's Canadian subsidiary. 8. Certain reclassifications of fiscal 1994 balances have been made to conform with the fiscal 1995 presentation. 8 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------- Results of Operations Revenues for the three and nine months ended March 31, 1995 decreased $13.0 and $8.0 million, or 25.5% and 7.2%, respectively, compared with the corresponding periods of the previous year. The decrease reflects lower: (i) snow removal revenues of $13.2 and $13.1 million, respectively, due mainly to the mild winter weather in the United States during fiscal 1995; (ii) aircraft fueling and hangar rental revenues in Canada of $1.7 and $4.1 million, respectively, due to lower volumes of retail fuel sales and the expiration on October 31, 1994 of the Company's subleases (see Note 5) at its Canadian fixed base operations (FBO's); and (iii) revenues due to the effect of fluctuation in the average rates of exchange used in translating Canadian revenues to their U.S. dollar equivalent. Partially offsetting the revenue decreases were higher: (i) ground handling service revenues (net of decreased sales volumes of deicing fluid) of $.2 and $4.8 million, respectively, due primarily to expanded services to new and existing customers and to a new contract to provide various winter related aircraft ground handling services at Terminal 1 in Toronto's Lester B. Pearson International Airport; (ii) domestic aircraft fueling revenues of $1.6 and $3.8 million, respectively, resulting primarily from expanded intoplane fueling services at new and existing locations; and (iii) ground transportation revenues of $.5 and $1.6 million, respectively, due mainly to expanded services to existing customers. Costs and expenses for the three and nine months ended March 31, 1995 decreased $8.7 and $3.8 million, or 20.2% and 3.8%, respectively, compared with the corresponding periods of the previous year. Operating costs for the three and nine months ended March 31, 1995 decreased $6.2 and $1.3 million, or 17.8% and 1.7%, respectively, compared with the corresponding periods of the previous year. The decrease was attributable to lower: (i) snow removal costs due to the mild winter weather in the U.S.; (ii) fuel and facility rental costs in Canada due to lower volumes of retail fuel sales and the expiration on October 31, 1994 of the Company's subleases (see Note 5) at the Company's Canadian FBO's; and (iii) the effect of fluctuation in the average rates of exchange used in translating Canadian costs to their U.S. dollar equivalent. Partially offsetting the decreases were higher: (i) domestic labor and related costs due primarily to expanded services to new and existing customers; (ii) rental costs due mainly to equipment funded under operating leases related to expanded intoplane fueling and ground transportation services; (iii) labor and related costs associated with ground handling operations in Canada due primarily to expanded services to new and existing customers; and (iv) domestic maintenance associated with expansion of the Company's fleet of equipment. 9 10 Depreciation and amortization expenses for the three and nine months ended March 31, 1995 increased $.7 and $.6 million, or 39.1% and 10.4%, respectively, compared with the corresponding periods of the previous year. The increase was due to the accelerated amortization of the remaining carrying value of leasehold improvements made to a hangar facility at a domestic airport location (see Note 6). Selling, general and administrative expenses for the three and nine months ended March 31, 1995 decreased $3.1 and $2.4 million, or 47.2% and 19.0%, respectively, compared with the corresponding periods of the previous year. The decrease reflects: (i) the absence of an accrual of $2.3 million made in the quarter ended March 31, 1994 for the uninsured portion of a jury award rendered against the Company in a civil lawsuit (which accrual was reversed in the following quarter), and (ii) a lower provision in the current year periods with respect to the Company's Executive Incentive Program. Interest expense for the three and nine months ended March 31, 1995 decreased $.2 and $.6 million, or 64.7% and 55.3%, respectively, compared with the corresponding periods of the previous year due mainly to lower average outstanding borrowings and the increase in the Company's capitalization of interest on its advances to the joint venture in Hawaii (the Venture). Earnings before equity in loss of joint venture, provision (benefit) for income taxes and cumulative effect of change in the method of accounting for income taxes for each of the three and nine months ended March 31, 1995, decreased $4.2 million compared with the corresponding periods of the previous year due primarily to: (i) reduced results from snow removal operations and lower sales volumes of deicing fluid due mainly to the mild winter weather in the U.S.; and (ii) the accelerated amortization of the remaining carrying value of leasehold improvements as noted above. Partially offsetting the decreases were: (i) lower selling, general and administrative expenses as described above; (ii) improved results from ground handling operations (net of deicing fluid sales); (iii) lower interest expense - net; and (iv) improved results from domestic aircraft fueling and ground transportation operations. Results of the Company's aircraft ground handling operations fluctuate depending upon the flight activity and schedules of customers and the ability of the Company to deploy equipment and manpower in the most efficient manner to service such customers. The Company's snow removal and aircraft deicing services are seasonal in nature. The results of these operations are normally reflected in the second and third quarters of the fiscal year, and fluctuate depending upon the severity of the winter season. 10 11 The Company's 50% share of losses from the Venture for the three and nine months ended March 31, 1995 increased $.2 and $.5 million, respectively, compared with the corresponding periods of the previous year. The Venture's losses result primarily from a lack of sales of the Venture's land parcels, which sales have been negatively impacted by general economic conditions and the cessation of interest capitalization by the Venture on Phase IV of the Project as of July 1, 1994. As is usual for companies with land development operations, the contribution to future results from such operations will fluctuate depending upon land sales closed in each reported period. The state of the North American aviation industry has resulted in increased competitive pressures on the pricing of aviation services and in the exploration of alliances between major commercial airline carriers. While these factors may have an adverse effect on the Company, the state of the airline industry has resulted in several airlines outsourcing services to independent aviation service companies, and this trend has provided additional opportunities for the Company. The Company is unable, at this time, to evaluate the future effects of these factors nor the impact of the Open Skies Agreement between the United States and Canada, whereby there will be more access for airlines to fly between these bordering countries. Furthermore, the economic climate is having and may continue to have a negative impact upon the sale of land parcels in Hawaii. The Company's provision for income taxes for each of the three and nine months ended March 31, 1995, decreased $3.7 million compared with the corresponding periods of the previous year. The decrease reflects: (i) lower federal and state tax provisions of $2.4 million in both periods due to decreased pre-tax earnings in the U.S. associated primarily with the reduction in snow removal services and an increase in the Company's share of losses from the Venture; and (ii) the recognition in the current year period of $1.3 million of deferred tax assets resulting from a reevaluation of the operating results of the Company's Canadian subsidiary (see Note 7). In addition, during the nine months ended March 31, 1995 and 1994, the Company utilized $1.8 and $1.7 million, respectively, of its Canadian depreciation differences and Canadian net operating loss carryforwards, to offset its provision for foreign income taxes in the amount of $.8 and $.7 million, respectively. Effective July 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, and reported a benefit of $450,000 as the cumulative effect of the change in the method of accounting for income taxes. Such benefit was reported inclusive of the effect of Canadian depreciation differences and net operating loss carryforwards, net of the related valuation allowance, in the consolidated statement of earnings for the nine months ended March 31, 1994. 11 12 Liquidity and Capital Expenditures and Commitments The Company's recurring sources of liquidity are funds provided from operations and bank lines of credit. The Company has a Revolving Credit Agreement (the Credit Agreement) with a group of banks which provides for a revolving credit facility. Effective March 15, 1995 the Credit Agreement was amended whereby its term was extended by two years to December 31, 2000, the limit on capital expenditures that the Company may incur in any fiscal year was increased from $10.0 to $13.0 million, and the interest rate that the Company must pay on outstanding borrowings was reduced and will be 12.5 to 50 basis points less than the prior rate depending on the interest rate option selected by the Company. Furthermore, the amendment permits the Company, until March 31, 1996, to expend up to $3,000,000 to repurchase shares of its common stock in addition to purchases already permitted under the Credit Agreement so long as no proceeds from borrowings under the Credit Agreement are utilized for such purpose (see Note 4). Pursuant to the Amended Credit Agreement, the Company may borrow funds up to a limit of $18.3 million (the Limit) until March 31, 1997. At such time, and at the end of each subsequent quarter, the Limit will be reduced by one-sixteenth of the Limit that was in effect on December 31, 1996 until December 31, 2000, at which time the Credit Agreement terminates. As of March 31, 1995, there were no direct borrowings and $3.7 million of letters of credit were outstanding under the Credit Agreement. During the nine months ended March 31, 1995 and 1994 net cash provided by operating activities was $12.6 and $13.5 million, respectively. Net cash used by advances to the Hawaii joint venture was $1.2 and $.7 million for the nine months ended March 31, 1995 and 1994, respectively. Capital expenditures net of proceeds from the sale of property and equipment were $6.6 and $7.2 million for the nine months ended March 31, 1995 and 1994, respectively. At March 31, 1995 cash and cash equivalents were $11.2 million compared with $6.7 million at June 30, 1994. At March 31, 1995 the Company had commitments to fund approximately $2.7 million for operating equipment, the majority of which is expected to be expended during the fourth quarter of fiscal 1995. Capital expenditures are primarily for equipment and facilities used in the Company's operations. The Company is unable to determine the extent of additional future capital expenditures since, as a service company, its capital expenditure requirements fluctuate depending upon facility requirements and equipment purchases associated with the Company's ability to successfully obtain additional contracts. On May 2, 1995, the Company announced that its Board of Directors had approved the repurchase of approximately 112,000 shares of its common stock from time to time in either open market or privately negotiated transactions. This authorization was in addition to the purchase of 38,100 shares made by the Company on April 21, 1995. 12 13 At March 31, 1995, the Venture had commitments aggregating $2.9 million for project expenditures. Included in this amount is $1.7 million for the construction of water well equipment and a reservoir by June 30, 1996. It is currently expected that approximately $60,000 of the Venture's commitments will be expended during the remainder of fiscal 1995. Should the Venture be unsuccessful in its efforts to dispute the imposition on it of a 4% Hawaii excise tax, the Venture would have to expend an additional amount of up to approximately $.6 million, which has been previously accrued by the Venture. At March 31, 1995, the Venture had $100,000 of cash available for its requirements. During fiscal 1992, the County of Hawaii passed an ordinance pursuant to which the Venture, after subdivision approvals are obtained, would be able to develop Phase IV of the project into 1,490 units. Pursuant to such ordinance, the Venture is required to expend (in addition to the $2.9 million of commitments noted above) approximately $2.3 million for improvements and payments related to the project, which are expected to be expended subsequent to fiscal 1995. However, shortly after passage of the ordinance, a lawsuit against the County of Hawaii was filed by two local residents of Hawaii (Plaintiffs) seeking to invalidate such ordinance on various grounds including that the ordinance was adopted without following State of Hawaii procedure relating to the preparation of an Environmental Impact Statement. During fiscal 1993, the Judge in this action granted Plaintiffs' motion for partial summary judgment without indicating any effect on Phase IV zoning. The County and the Venture have appealed this ruling. The appeal was heard before the Hawaii Supreme Court in March 1994, and the Court has taken the matter under advisement. The Venture cannot, at this time, determine the impact of the Court's ruling on the timing of development of Phase IV or the expenditures related thereto. The Joint Venture Agreement provides that the Company and its partner in the Venture, Oxford Kohala, Inc. (the Partner), are obligated to make equal advances of any of the Venture's required fundings. It is anticipated that the Venture's capital commitments will be funded by cash flow from its operations and advances from the Company and the Partner. It is expected that any advances which the Company may be required to make to the Venture will be provided from the Company's cash flow and lines of credit. Pursuant to the Credit Agreement the Company may advance up to $2.0 million to the Venture in any fiscal year or up to $4.0 million during the term of the Credit Agreement, net of any distributions received from the Venture by the Company during such periods. Since the inception of the Credit Agreement the Company has increased its net advances to the Venture by $2.2 million. At present, it is anticipated that the advances required to meet the 13 14 obligations of the Venture will not exceed the limits set forth in the Credit Agreement or that the Credit Agreement will be amended to allow for any excess. The Partner is a subsidiary of Oxford First Corporation (Oxford First). On October 13, 1994, Oxford First filed for reorganization under Chapter 11 of the Bankruptcy Code. Pursuant to an order of the Bankruptcy Court dated November 28, 1994, Oxford First (through its subsidiary, The Oxford Finance Companies, Inc.) was permitted to transfer funds to the Partner in an amount not to exceed $180,000 with respect to the period October 1, 1994 through December 31, 1994 and $195,000 with respect to the period January 1, 1995 through March 31, 1995, which amounts were intended to enable Oxford First to honor its obligation to make funds available to the Partner so that the Partner could make its share of advances required by the Venture. The amount authorized by the Bankruptcy Court with respect to the period January 1, 1995 through March 31, 1995 was not sufficient to allow the Partner to make its full share of required advances. To date, the Company has opted to make additional advances (the Additional Advances) to cover the Partner's funding deficiency. As of March 31, 1995 and the date of this filing, the amount of the Additional Advances was $.3 and $.4 million, respectively. Oxford First has filed a motion with the Bankruptcy Court requesting that Oxford First be permitted to transfer funds to the Partner in an amount sufficient to allow the Partner to reimburse the Company for advances made to cover the Partner's funding deficiency and to make its share of the Venture's required fundings through September 30, 1995. During the nine months ended March 31, 1995, the Company advanced $.9 million as its 50% share of the Venture's required fundings. The Company, at present, is unable to determine whether the Bankruptcy Court will authorize Oxford First to transfer funds to the Partner subsequent to March 31, 1995 or whether any transfers authorized by the Bankruptcy Court will be sufficient in order for the Partner to so reimburse the Company and make its share of future advances to the Venture. Should the Partner be unable to make its share of such advances to the Venture, the Company has the option to make Additional Advances necessary up to the limits set forth in the Credit Agreement. The Partner did not file for reorganization under Chapter 11 of the Bankruptcy Code. 14 15 The extent to which advances by the Company to the Venture will be required in the future, as well as the timing of the return to the Company of the advances made by it, will depend upon the amount of sales generated by the Venture, the terms upon which parcels are sold, expenses incurred in the planning and development of future phases of the project and the ability of the Partner to fund its obligations under the Joint Venture Agreement. The general economic climate has negatively impacted the sale of the Venture's land parcels. Since July 1, 1992 seven lots have been sold, four of which were resales of lots that had been previously foreclosed upon. Distributions, if any, received by the Company with respect to the Venture, net of advances made by the Company during the applicable period, in excess of $4.0 million in any four consecutive quarters, or in excess of $2.0 million in any fiscal year, reduce the Limit. It is expected that the sources of the Company's liquidity, as noted above, will provide sufficient funding to allow the Company to meet its liquidity requirements. 15 16 PART II - OTHER INFORMATION Item 5. Other Information On May 2, 1995, the Company announced that its Board of Directors had approved the repurchase of approximately 112,000 shares of its common stock from time to time in either open market or privately negotiated transactions. The Company also said that it had amended its Revolving Credit Agreement (the Credit Agreement) with a group of banks to allow such repurchases so long as no proceeds from borrowings under the Credit Agreement are utilized for such purpose. This authorization was in addition to the previously announced purchase of 38,100 shares by the Company on April 21, 1995. The Credit Agreement permits the Company to expend a maximum of $1,200,000 per fiscal year for stock repurchases, subject to certain earnings and net worth tests, less the amount of any dividends paid on the Company's stock. The amendment permits the Company, until March 31, 1996, to expend up to an additional $3,000,000 to repurchase shares of its common stock. The amendment also includes provisions whereby the term of the Credit Agreement is extended by two years to December 31, 2000, the limit on capital expenditures that the Company may incur in any fiscal year is increased from $10,000,000 to $13,000,000, and the interest rate that the Company must pay on outstanding borrowings is reduced and will be 12.5 to 50 basis points less than the prior rate depending on the interest rate option selected by the Company. Item 6. Exhibits and Reports on Form 8-K a) Exhibits 4.4(k) Third Amendment to the Revolving Credit and Term Loan Agreement dated as of November 25, 1992 among the Registrant, various banking institutions named therein and The First National Bank of Boston, as agent, dated as of March 15, 1995. 11 Computations of Earnings Per Share Information, Primary and Fully Diluted, from Earnings Before Cumulative Effect of Change in the Method of Accounting for Income Taxes and Net Earnings. 27 Financial Data Schedule b) Reports on Form 8-K - None 16 17 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. HUDSON GENERAL CORPORATION --------------------------- (Registrant) Date: May 10, 1995 /s/ JAY B. LANGNER --------------------------- Jay B. Langner President /s/ MICHAEL RUBIN --------------------------- Michael Rubin Chief Financial Officer 17 18 HUDSON GENERAL CORPORATION & SUBSIDIARIES EXHIBIT INDEX
Exhibit No. Exhibit Page No. - ------------------------------------------------------------------------------------------------------------------- 4.4(k) Third Amendment to the Revolving Credit and Term Loan Agreement dated as of November 25, 1992 among the Registrant, various banking institutions named therein and the First National Bank of Boston, as agent, dated as of March 15, 1995. 19-25 11 Computations of Earnings Per Share Information, Primary and Fully Diluted, from Earnings Before Cumulative Effect of Change in the Method of Accounting for Income Taxes and Net Earnings 26-30 27 Financial Data Schedule 31-32
18 EX-4.4K 2 AMEND #3 TO REVOLVING CREDIT & TERM LOAN AGREEMENT 1 EXHIBIT 4.4(k) Third Amendment to the Revolving Credit and Term Loan Agreement dated as of November 25, 1992 among the Registrant, various banking institutions named therein and the First National Bank of Boston, as agent, dated as of March 15, 1995. 19 2 HUDSON GENERAL CORPORATION THIRD AMENDMENT THIRD AMENDMENT ("Amendment"), dated as of March 15, 1995, among Hudson General Corporation, a Delaware corporation (the "Company"), the banking institutions party to the Credit Agreement referred to below (the "Banks"), and The First National Bank of Boston as agent for itself and the Banks (the "Agent"). The parties hereto hereby agree as follows: 1. REFERENCE TO CREDIT AGREEMENT. Reference is made to the Revolving Credit and Term Loan Agreement, dated as of November 25, 1992, as amended (as so amended, the "Credit Agreement"), among Hudson General Corporation, the banking institutions named therein and The First National Bank of Boston as agent for itself and the other banking institutions. Capitalized terms which are used herein without definition and which are defined in the Credit Agreement shall have the same meanings herein as therein. 2. AMENDMENT OF CREDIT AGREEMENT. The Credit Agreement is hereby amended as follows: (a) Paragraph 1.8 of the Credit Agreement (Drawings) is hereby amended by deleting the phrase "1/2% above" where it appears in the eighth line of such paragraph and where it appears in the nineteenth line of such paragraph. (b) Paragraph 1.11 of the Credit Agreement (Letter of Credit Fee) is hereby amended by deleting "1-1/2%" where it appears in the twelfth line thereof and substituting therefor "1-3/8%". (c) Paragraph 3.1 of the Credit Agreement (Agent's Fee) is hereby amended by deleting "$20,000" where it appears in the last line thereof and substituting therefor "$15,000". (d) Paragraph 3.3 of the Credit Agreement (Interest) is hereby amended by (i) deleting the phrase "1/2 of 1% above" where it appears in the second line of clause (a) thereof, and (ii) deleting "1-3/4%" where it appears in the third line of clause (b) thereof and substituting therefor "1-3/8%". (e) Paragraph 6.16(g) of the Credit Agreement (Investments and Contingent Liabilities) is hereby amended by deleting the phrase "no more than $5,000,000 of which shall be issued other than in connection with the Kohala Joint Venture" where it appears therein and substituting therefor the phrase "no more than $3,500,000 of which shall be issued in connection with the Kohala Joint Venture". 20 3 (f) Paragraph 6.18 of the Credit Agreement (Limitation on Dividends) is hereby amended by adding "(A)" after the heading thereof and by adding the following paragraph after the first paragraph thereof: (B) Notwithstanding the foregoing provisions of subparagraph (A) of this Paragraph 6.18, the Company may purchase, redeem or otherwise retire shares of the Company's common stock on or before March 15, 1996, provided that (1) the aggregate amount paid by the Company to purchase, redeem or otherwise retire such shares does not exceed $3,000,000, (2) no proceeds of the Loans will be used in connection with such purchase, redemption or retirement, and (3) no Default has occurred and is continuing and no condition which would, with either or both the giving of notice or the lapse of time, result in a Default has occurred and is continuing at the time such shares are purchased, redeemed or otherwise retired and no Default or condition which would, with either or both the giving of notice or the lapse of time, result in a Default shall result from the purchase, redemption or retirement of such shares. The amount paid by the Company to purchase, redeem or otherwise retire shares of the Company's common stock pursuant to this subparagraph (B) shall not be considered in computing the aggregate amount of dividends which the Company may declare or pay or the aggregate amount the Company may pay to purchase, redeem or otherwise retire shares in any fiscal year of the Company under subparagraph (A) of this Paragraph 6.18. (g) Paragraph 6.19 of the Credit Agreement (Limitations on Capital Expenditures) is hereby amended by deleting "$10,000,000" where it appears therein and substituting therefor "$13,000,000". (h) The definition of "Initial Revolving Period" set forth in Exhibit A to the Credit Agreement is hereby amended by deleting "December 31, 1994" where it appears therein and substituting therefor "December 31, 1996". (i) The definition of "Reduction Commencement Date" set forth in Exhibit A to the Credit Agreement is hereby amended by deleting "December 31, 1994" where it appears therein and substituting therefor "December 31, 1996". (j) Schedule 4.18(b) to the Credit Agreement is hereby amended by adding thereto the Supplement to Schedule 4.18(b) attached to this Amendment. 3. REGARDING REVOLVING CREDIT NOTES AND THE REVOLVING CREDIT LOAN MATURITY DATE. The Company hereby authorizes each Bank to change the Revolving Credit Loan Maturity Date set forth in such Bank's existing Revolving Credit Note to December 31, 2000. In accordance with Paragraph 1.4(b) of the Credit Agreement, the Company hereby represents and warrants to the Banks that each of the conditions precedent to the making of a Loan set forth in Paragraph 5 of the Credit Agreement (except for any conditions specifically relating only to the Funding Date) has been satisfied as of the date hereof. Each of the Banks hereby agrees to deliver to the Company a copy of such Bank's existing Revolving Credit Note as modified as set forth herein. 21 4 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Banks to enter into this Amendment, the Company represents and warrants to the Banks that (a) this Amendment and the Credit Agreement as amended hereby (the "Amended Credit Agreement") are its legal, valid and binding obligations, enforceable against the Company in accordance with their terms, (b) this Amendment and the Amended Credit Agreement do not conflict with any charter document, agreement, instrument or undertaking binding upon the Company or any of its properties, and (c) no Default, or situation which with the giving of notice or the passage of time or both would become a Default, now exists or will exist after giving effect to this Amendment. 5. CONDITIONS PRECEDENT. This Amendment shall become effective as of the date hereof upon satisfaction of each of the conditions precedent set forth in this Section 5: (a) Delivery. The Company, the Banks, the Agent and the Guarantors shall have executed and delivered this Amendment. (b) Corporate Standing and Action. Each of the Banks shall have received (i) a certificate of the Secretary of State of the State of Delaware as to the good standing of the Company as of a recent date, (ii) certificates of the Secretary of State of the State of New York and the Commonwealth of Massachusetts as to the good standing of the Company as a foreign corporation as of a recent date, and (iii) a certificate of the Secretary or Assistant Secretary of the Company, dated the date hereof, certifying (A) that attached thereto is a true and complete copy of the Certificate of Incorporation and bylaws of the Company, each as amended to the date hereof or that the Certificate of Incorporation and bylaws of the Company have not been modified, amended or supplemented since the Funding Date, (B) that attached thereto is a true and complete copy of resolutions of the Board of Directors of the Company authorizing the execution and delivery of this Amendment, which resolutions are in full force and effect without modification on the date hereof, and (C) that there have been no changes in the incumbency and signatures of the officers of the Company since the Funding Date. (c) Opinion of Counsel. Each of the Banks and the Agent shall have received a favorable legal opinion addressed to the Banks and the Agent, dated as of the date hereof, in form and substance satisfactory to the Banks and the Agent, from Noah Rockowitz, Vice President - General Counsel, counsel to the Company. (d) Transaction Fee. The Agent shall have received, for the accounts of the Banks pro rata in accordance with their Commitment Percentages (prior to the effectiveness of the assignment from BankBoston Canada to The Chase Manhattan Bank of Canada), a transaction fee equal to $20,000. (e) Proceedings and Documents. All proceedings in connection with the transactions contemplated by this Amendment and all documents incident hereto shall be satisfactory in form and substance to the Agent, and the Agent shall have received all information and such counterpart originals or certified or other copies of such documents as the Agent may reasonably request. 22 5 6. MISCELLANEOUS. The Amended Credit Agreement and all of the Loan Documents are each confirmed as being in full force and effect. This Amendment, the Amended Credit Agreement and the other Loan Documents constitute the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior understandings and agreements, whether written or oral. This Amendment and the Credit Agreement shall be read and construed as one agreement, and, except as expressly amended hereby, the Credit Agreement remains unchanged. The headings in this Amendment are for convenience of reference only and shall not alter, limit or otherwise affect the meaning hereof. This Amendment is a Loan Document as defined in the Amended Credit Agreement and may be executed in any number of counterparts, which together shall constitute one instrument, and shall bind and inure to the benefit of the parties and their respective successors and permitted assigns. The Company shall pay all costs and expenses, including reasonable legal fees and disbursements of the Agent's counsel, incurred by the Agent in preparing this Amendment. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (OTHER THAN THE CONFLICT OF LAWS RULES) OF THE COMMONWEALTH OF MASSACHUSETTS. IN WITNESS WHEREOF, each of the undersigned has executed this Amendment under seal by a duly authorized officer as of the date first set forth above. HUDSON GENERAL CORPORATION By: -------------------------------------- Title: THE FIRST NATIONAL BANK OF BOSTON, FOR ITSELF AND AS AGENT By: -------------------------------------- Title: EUROPEAN AMERICAN BANK By: -------------------------------------- Title: THE CHASE MANHATTAN BANK, N.A. By: -------------------------------------- Title: 23 6 The foregoing amendment is acknowledged and agreed to by the following Guarantors: HUDSON AVIATION SERVICES, INC. CALIFORNIA By: ------------------------------ Title: HUDSON AVIATION SERVICES, INC. DELAWARE By: ------------------------------ Title: HUDSON GENERAL COACH LINES, INC. By: ------------------------------ Title: HUDSON AVIATION SERVICES, INC. By: ------------------------------ Title HUDSON AVIATION SERVICES - OAKLAND, INC. By: ------------------------------ Title: 24 7 Supplement to Schedule 4.18(b) ENVIRONMENTAL NOTICES MASSPORT ENVIRONMENTAL CLAIM On April 19, 1994, a law firm representing the Massachusetts Port Authority ("Massport") sent a letter (the "Original Demand") to thirty-seven companies, including the Company, notifying the addressees that Massport believed that they were liable for contamination of soil and groundwater at Logan International Airport in East Boston, Massachusetts (the "Airport"). Massport claimed that it was performing response actions at the Airport, and stated that it was seeking "contribution, reimbursement and payment of an equitable share of the costs of past, current and future response actions undertaken by Massport...". The Original Demand identified twenty-four (24) spills of fuel, oil and hydraulic fluid at various places at the Airport which allegedly had been caused by the Company between January 1982 and September 1992. In addition, the Original Demand proposed a settlement by which the Company would pay a per capita share of past response costs (such share to be a minimum of $311,761) and agree to pay a per capita share of all future response costs or undertake to perform all necessary future response actions at locations where it had releases. On July 1, 1994, the Company responded to the Original Demand, raising numerous objections to Massport's allegations and requesting considerable additional information in Massport's possession. Following an informational meeting held by Massport on September 21, 1994 for all parties which had received the Original Demand, Massport sent a letter dated October 5, 1994 to the Company (the "Massport Proposal") clarifying its position and proposing a greatly reduced settlement payment. The Massport Proposal first proposed a cash-out payment by the Company for past response costs of $29,968 in respect of a reduced total of twenty-two (22) spills. (By contrast, Massport alleged a grand total of 2,462 spills at the Airport since 1953). The Massport Proposal further limited Massport's claim against the Company for future response costs to three sites where the Company allegedly had a total of only ten (10) spills. The proposed settlement in respect of these future response costs was $526,154, bringing Massport's aggregate settlement proposal to $556,122. After obtaining additional information from Massport, the Company responded to the Massport Proposal by letter dated January 20, 1995 (the "Hudson Counterproposal"). The Hudson Counterproposal reiterated objections made previously and stated additional objections. However, the Company offered to pay Massport $75,000 in return for a complete release and a mutually acceptable settlement agreement that would include indemnification by Massport against any claims brought against the Company by any other party, including government agencies. The Company believes this to be fair and equitable offer in light of the legal and factual problems it identified with Massport's position. The Company has not yet received a response from Massport. 25 EX-11 3 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 Computations of Earnings Per Share Information, Primary and Fully Diluted, from Earnings Before Cumulative Effect of Change in the Method of Accounting for Income Taxes and Net Earnings. 26 2 HUDSON GENERAL CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE INFORMATION PRIMARY-EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGE IN THE METHOD OF ACCOUNTING FOR INCOME TAXES
Three Months Ended Nine Months Ended March 31, March 31, ------------------ ----------------- 1995 1994 1995 1994 ------------------ ----------------- (in thousands, except per share amounts) Earnings before cumulative effect of change in the method of accounting for income taxes per share - primary . . . . . . . . . . . . . . . . . . $3,474 $4,242 $4,342 $5,321 ====== ====== ====== ====== Weighted average number of common and common equivalent shares outstanding . . . . . . . . . . . . . . . . . . 1,258 1,247 1,260 1,244 ===== ===== ===== ====== Earnings before cumulative effect of change in the method of accounting for income taxes per common and common equivalent share - primary . . . $2.76 $3.40 $3.45 $4.28 ===== ===== ===== =====
27 3 HUDSON GENERAL CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE INFORMATION PRIMARY - NET EARNINGS
Three Months Ended Nine Months Ended March 31, March 31, ------------------ ----------------- 1995 1994 1995 1994 ------------------ ----------------- (in thousands, except per share amounts) Net earnings for computing earnings per share - primary . . . . . . . . . . . . . . . . . . $3,474 $4,242 $4,342 $5,771 ====== ====== ====== ====== Weighted average number of common and common equivalent shares outstanding . . . . . . . . . . . . . . . . . . 1,258 1,247 1,260 1,244 ===== ===== ===== ====== Net earnings per common and common equivalent share-primary . . . . . . . . . . . . $2.76 $3.40 $3.45 $4.64 ===== ===== ===== =====
28 4 HUDSON GENERAL CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE INFORMATION FULLY DILUTED - EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGE IN THE METHOD OF ACCOUNTING FOR INCOME TAXES
Three Months Ended Nine Months Ended March 31, March 31, -------------------------- ---------------------------- 1995 1994 1995 1994 ----------- ----------- ----------- ----------- (in thousands, except per share amounts) Earnings before cumulative effect of change in the method of accounting for income taxes for computing earnings per share - primary . . . . . . . $3,474 $4,242 $4,342 $5,321 Reduction of interest expense less applicable income taxes assuming conversion of 7% convertible subordinated debentures due 2011 . . . . . . . . . . . . 280 280 853 853 ---- ---- ---- ---- Earnings before cumulative effect of change in the method of accounting for income taxes for computing earnings per share-fully diluted . . . . . . . $3,754 $4,522 $5,195 $6,174 ====== ====== ====== ====== Weighted average number of common and common equivalent shares outstanding . . . . . . . . . . 1,258 1,250 1,263 1,249 Addition from assumed conversion as of the beginning of each period of the 7% convertible subordinated debentures outstanding at the end of each period . . . . 885 885 885 885 ---- ---- ---- ---- Weighted average number of common and common equivalent shares outstanding on a fully diluted basis . . . . . . . . . . . . . . . . . . . . . 2,143 2,135 2,148 2,134 ===== ===== ===== ===== Earnings before cumulative effect of change in the method of accounting for income taxes per common and common equivalent share - fully diluted . . . . . . $1.75 $2.12 $2.42 $2.89 ===== ===== ===== =====
29 5 HUDSON GENERAL CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE INFORMATION FULLY DILUTED - NET EARNINGS
Three Months Ended Nine Months Ended March 31, March 31, ----------------------------- ---------------------------- 1995 1994 1995 1994 ----------- ----------- ----------- ----------- (in thousands, except per share amounts) Net earnings for computing earnings per share - primary . . . . . . . . . . . . . . $3,474 $4,242 $4,342 $5,771 Reduction of interest expense less applicable income taxes assuming conversion of 7% convertible subordinated debentures due 2011 . . . . . . . . . . . . 280 280 853 853 ---- ---- ------ ------ Net earnings for computing earnings per share-fully diluted . . . . . . . . . . . . . . . . $3,754 $4,522 $5,195 $6,624 ====== ====== ====== ====== Weighted average number of common and common equivalent shares outstanding . . . . . . . . . . . . . 1,258 1,250 1,263 1,249 Addition from assumed conversion as of the beginning of each period of the 7% convertible subordinated debentures outstanding at the end of each period . . . . 885 885 885 885 ----- ----- ----- ----- Weighted average number of common and common equivalent shares outstanding on a fully diluted basis . . . . . . . . . . . . . . . . . . . . . . . . . 2,143 2,135 2,148 2,134 ===== ===== ===== ===== Net earnings per common and common equivalent share - fully diluted . . . . . . . . $1.75 $2.12 $2.42 $3.10 ===== ===== ===== =====
30 EX-27 4 FINANCIAL DATA SCHEDULE
5 9-MOS JUN-30-1995 JUL-01-1994 MAR-31-1995 11,196,000 0 14,546,000 0 823,000 31,647,000 32,134,000 0 84,142,000 30,413,000 29,000,000 1,253,000 0 0 21,821,000 84,142,000 102,478,000 102,478,000 80,057,000 85,941,000 10,377,000 0 467,000 3,888,000 (454,000) 0 0 0 0 4,342,000 3.45 2.42 AMOUNTS SHOWN NET.
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