-----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, Bz4dR7jnfpsC6UAC1PnON7ME9+mp6eaXMGTJcuN5QD2FlmvLai6zxan3DldsvWkF qMaBpEU9lu26EFZ9US9gDw== 0000950150-00-000083.txt : 20000214 0000950150-00-000083.hdr.sgml : 20000214 ACCESSION NUMBER: 0000950150-00-000083 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCURY AIR GROUP INC CENTRAL INDEX KEY: 0000052532 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM & PETROLEUM PRODUCTS (NO BULK STATIONS) [5172] IRS NUMBER: 111800515 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07134 FILM NUMBER: 536884 BUSINESS ADDRESS: STREET 1: 5456 MCCONNELL AVE CITY: LOS ANGELES STATE: CA ZIP: 90066 BUSINESS PHONE: 3106462994 FORMER COMPANY: FORMER CONFORMED NAME: IPM TECHNOLOGY INC DATE OF NAME CHANGE: 19891225 FORMER COMPANY: FORMER CONFORMED NAME: IDEAL PRECISION METER CO INC DATE OF NAME CHANGE: 19690911 FORMER COMPANY: FORMER CONFORMED NAME: PRECISION METER CO INC DATE OF NAME CHANGE: 19670906 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 1999. [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition period from to Commission File No. 1-7134 MERCURY AIR GROUP, INC. (Exact name of registrant as specified in its charter) New York 11-1800515 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 5456 McConnell Avenue, Los Angeles, CA 90066 -------------------------------------- ------ (Address of principal executive offices) (Zip Code) (310) 827-2737 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] No[ ] Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.
Number of Shares Outstanding Title As of February 9, 2000 ----- ------------------------ Common Stock, $.01 Par Value 6,472,955
2 MERCURY AIR GROUP, INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS DECEMBER 31, JUNE 30, 1999 1999 ------------- ------------- CURRENT ASSETS: Cash and cash equivalents $ 2,225,000 $ 4,797,000 Trade accounts receivable, net of allowance for doubtful accounts of $1,627,000 at 12/31/99 and $1,953,000 at 6/30/99 60,162,000 50,134,000 Notes receivable - current portion 555,000 555,000 Inventories, principally aviation fuel 2,812,000 1,892,000 Prepaid expenses and other current assets 2,597,000 2,603,000 ------------- ------------- Total current assets 68,351,000 59,981,000 CASH-RESTRICTED -- 785,000 PROPERTY, EQUIPMENT AND LEASEHOLDS, net of accumulated depreciation and amortization of $39,657,000 (12/31/99); $35,787,000 (6/30/99) 58,809,000 56,110,000 NOTES RECEIVABLE 323,000 454,000 OTHER ASSETS (Note 8) 11,006,000 9,972,000 ------------- ------------- $ 138,489,000 $ 127,302,000 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 31,873,000 $ 21,312,000 Accrued expenses and other current liabilities 4,656,000 6,241,000 Current portion of long-term debt 6,391,000 6,806,000 ------------- ------------- Total current liabilities 42,920,000 34,359,000 LONG-TERM DEBT 41,266,000 44,285,000 DEFERRED INCOME TAXES 223,000 223,000 SENIOR SUBORDINATED NOTE (Note 8) 24,000,000 CONVERTIBLE SUBORDINATED DEBENTURES (Note 8) 19,852,000 COMMITMENTS AND CONTINGENCIES (Note 7) STOCKHOLDERS' EQUITY (Notes 4): Preferred Stock - $.01 par value; authorized 3,000,000 shares; no shares outstanding Common Stock - $ .01 par value; authorized 18,000,000 shares; outstanding 6,520,755 shares 12/31/99; outstanding 6,641,175 shares 6/30/99 65,000 66,000 Additional paid-in capital 19,627,000 19,873,000 Retained earnings 11,234,000 9,543,000 Cumulative translation adjustment (238,000) (237,000) Notes receivable from sale of stock (608,000) (662,000) ------------- ------------- Total stockholders' equity 30,080,000 28,583,000 ------------- ------------- $ 138,489,000 $ 127,302,000 ============= =============
2 3 MERCURY AIR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
SIX MONTHS ENDED THREE MONTHS ENDED DECEMBER 31, DECEMBER 31, --------------------------------- --------------------------------- 1999 1998 1999 1998 ------------- ------------- ------------- ------------- Sales and Revenues: Sales $ 115,286,000 $ 69,506,000 $ 62,246,000 $ 34,671,000 Service revenues 42,887,000 39,759,000 21,287,000 21,994,000 ------------- ------------- ------------- ------------- 158,173,000 109,265,000 83,533,000 56,665,000 ------------- ------------- ------------- ------------- Costs and Expenses: Cost of sales 100,289,000 55,913,000 54,542,000 27,984,000 Operating expenses 39,995,000 37,779,000 20,249,000 20,764,000 ------------- ------------- ------------- ------------- 140,284,000 93,692,000 74,791,000 48,748,000 ------------- ------------- ------------- ------------- Gross Margin (Excluding depreciation and amortization) 17,889,000 15,573,000 8,742,000 7,917,000 ------------- ------------- ------------- ------------- Expenses (Income): Selling, general and administrative 3,672,000 3,356,000 1,827,000 1,614,000 Provision for bad debts 928,000 902,000 569,000 451,000 Depreciation and amortization 4,762,000 3,691,000 2,404,000 1,860,000 Interest expense 2,796,000 2,025,000 1,545,000 1,041,000 Interest income (106,000) (115,000) (51,000) (49,000) ------------- ------------- ------------- ------------- 12,052,000 9,859,000 6,294,000 4,917,000 ------------- ------------- ------------- ------------- Income Before Provision for Income Taxes 5,837,000 5,714,000 2,448,000 3,000,000 Provision for Income Taxes 2,276,000 2,228,000 954,000 1,173,000 ------------- ------------- ------------- ------------- Net Income Before Extraordinary Item 3,561,000 3,486,000 1,494,000 1,827,000 ------------- ------------- ------------- ------------- Extraordinary Item (Note 8) (Less applicable income taxes of $625,000; $120,000; $0: $22,000) (979,000) (187,000) (1,000) (34,000) ------------- ------------- ------------- ------------- Net Income $ 2,582,000 $ 3,299,000 $ 1,493,000 $ 1,793,000 ============= ============= ============= ============= Net Income Per Common Share (Note 5): Basic: Before extraordinary item $ 0.54 $ 0.52 $ 0.22 $ 0.28 Extraordinary item (0.15) (0.03) (0.01) ============= ============= ============= ============= Net income $ 0.39 $ 0.49 $ 0.22 $ 0.27 ============= ============= ============= ============= Diluted: Before extraordinary item $ 0.46 $ 0.38 $ 0.21 $ 0.21 Extraordinary item (0.12) (0.02) ============= ============= ============= ============= Net income $ 0.34 $ 0.37 $ 0.21 $ 0.20 ============= ============= ============= =============
3 4 MERCURY AIR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED DECEMBER 31, ------------------------------- 1999 1998 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,582,000 $ 3,299,000 Non-cash component of extraordinary charge 824,000 203,000 Adjustments to derive cash flow from operating activities: Bad debt expense 928,000 902,000 Depreciation and amortization 4,762,000 3,691,000 Amortization of officers' loans 20,000 20,000 Changes in operating assets and liabilities: Trade and other accounts receivable (10,956,000) (5,620,000) Inventories (920,000) (321,000) Prepaid expenses and other current assets 6,000 (778,000) Accounts payable 10,561,000 1,068,000 Income taxes payable 0 (511,000) Accrued expenses and other current liabilities (1,585,000) 782,000 ------------ ------------ Net cash provided by operating activities 6,222,000 2,735,000 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Reduction in restricted cash-tax exempt bond 785,000 5,622,000 (Increase) Decrease in notes receivable 131,000 (179,000) Addition to other assets (1,823,000) (405,000) Acquisition of businesses (3,100,000) (4,200,000) Additions to property, equipment and leaseholds (4,417,000) (9,104,000) ------------ ------------ Net cash used in investing activities (8,424,000) (8,266,000) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 3,288,000 10,000,000 Reduction of long-term debt (6,722,000) (1,987,000) Reduction of note receivable from sale of stock 54,000 Reduction of convertible subordinated debentures (19,534,000) (4,025,000) Repurchase of common stock (1,456,000) (4,686,000) Proceeds from senior subordinated note 24,000,000 Proceeds from issuance of common stock 15,000 ------------ ------------ Net cash used in financing activities (370,000) (683,000) ------------ ------------ NET DECREASE IN CASH AND CASH EQUIVALENTS (2,572,000) (6,214,000) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,797,000 7,836,000 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,225,000 $ 1,622,000 ============ ============ CASH PAID DURING THE PERIOD: Interest $ 3,465,000 $ 2,310,000 Income taxes $ 2,000,000 $ 2,619,000 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Issuance of 124,224 shares of common stock for acquisition $ 1,000,000 of assets of Weather Data Conversion of 318 debentures into 43,590 shares of common stock $ 318,000 Issuance of note payable for the acquisition of assets of Jackson FBO $ 2,800,000
4 5 MERCURY AIR GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999 (Unaudited) NOTE 1 - BASIS OF PRESENTATION: The accompanying unaudited financial statements reflect all adjustments (consisting of normal, recurring accruals only) which are necessary to fairly present the results for the interim periods. Such financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and therefore do not include all the information or footnotes necessary for a complete presentation. They should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, 1999 and the notes thereto. The results of operations for the six months ended December 31, 1999 are not necessarily indicative of results for the full year. NOTE 2 - INCOME TAXES: Income taxes have been computed based on the estimated annual effective income tax rate for the respective years. NOTE 3 - ACQUISITIONS: On October 22, 1999, the Company acquired certain assets of Air Tulsa, Inc., an FBO located in Tulsa, Oklahoma. Assets acquired included refueling equipment and tank farms utilized in the FBO business, customer contracts, inventory, prepaid expenses and a sublease. Total consideration was $2.4 million in cash which the Company funded under its acquisition line. The agreement includes a second closing to occur within eighteen months to include the purchase of hangars, buildings and the leasehold for an additional cash consideration of $3.8 million. The Company's Senior lenders have agreed to fund the amount under the acquisition line. On October 5, 1999, the Company acquired certain FBO assets of Charleston Equities, Inc. for $700,000 cash. The purchase consolidated the leasehold at Charleston International Airport and includes the leasehold at John's Island Executive Airport. NOTE 4 - STOCKHOLDINGS' EQUITY: During the six month period ended December 31, 1999, the Company repurchased 186,575 shares of its common stock at a cost of approximately $1,456,000, or an average price of $7.80 per share, which was charged to: Common Stock $2,000; Additional paid in capital $563,000; and Retained Earnings $891,000. 5 6 NOTE 5- EARNINGS PER SHARE: Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average number of common shares and common stock equivalents. Common stock equivalents include stock options, warrants and shares resulting from the assumed conversion of subordinated debentures, when dilutive.
Six Months Ended December 31, 1999 December 31, 1998 ---------------------- ---------------------- Diluted Basic Diluted Basic ------- ----- ------- ----- Weighted average number of common shares outstanding during the period 6,652,000 6,652,000 6,708,000 6,708,000 Common stock equivalents resulting from the assumed exercise of stock options and warrants 373,000 -- 365,000 -- Common shares resulting from the assumed conversion of debentures 1,126,000 -- 3,643,000 -- ------------ ------------ ------------ ------------ Weighted average number of common and common equivalent shares outstanding during the period 8,151,000 6,652,000 10,716,000 6,708,000 ============ ============ ============ ============ Net income before extraordinary item $ 3,561,000 $ 3,561,000 $ 3,486,000 $ 3,486,000 Interest expense, net of tax, on convertible debenture 179,000 -- 632,000 -- ------------ ------------ ------------ ------------ Adjusted income before extraordinary item $ 3,740,000 $ 3,561,000 $ 4,118,000 $ 3,486,000 ------------ ------------ ------------ ------------ Extraordinary item (979,000) (979,000) (187,000) (187,000) ------------ ------------ ------------ ------------ Adjusted income $ 2,761,000 $ 2,582,000 $ 3,931,000 $ 3,299,000 ------------ ------------ ------------ ------------ Common and common share equivalents 8,151,000 6,652.000 10,716,000 6.708.000 ============ ============ ============ ============ Earnings per share: Before Extraordinary Item $ .46 $ .54 $ .38 $ .52 Extraordinary Item (.12) (.15) (.02) (.03) ------------ ------------ ------------ ------------ Net Income $ .34 $ .39 $ .37 $ .49 ============ ============ ============ ============
Three Months Ended December 31, 1999 December 31, 1998 ---------------------- ----------------------- Diluted Basic Diluted Basic ------- ----- ------- ----- Weighted average number of common shares outstanding during the period 6,653,000 6,653,000 6,582,000 6,582,000 Common stock equivalents resulting from the assumed exercise of stock options and warrants 428,000 -- 365,000 -- Common shares resulting from the assumed conversion of debentures 62,000 -- 3,390,000 -- ------------ ------------ ------------ ------------ Weighted average number of common and common equivalent shares outstanding during the period 7,143,000 6,653,000 10,337,000 6,582,000 ============ ============ ============ ============ Net income before extraordinary item $ 1,494,000 $ 1,494,000 $ 1,827,000 $ 1,827,000 Interest expense, net of tax, on convertible debenture 7,000 -- 294,000 -- ------------ ------------ ------------ ------------ Adjusted income before extraordinary item $ 1,501,000 $ 1,494,000 $ 2,121,000 $ 1,827,000 ------------ ------------ ------------ ------------ Extraordinary item (1,000) (1,000) (34,000) (34,000) ------------ ------------ ------------ ------------ Adjusted income $ 1,500,000 $ 1,493,000 $ 2,087,000 $ 1,793,000 ------------ ------------ ------------ ------------ Common and common share equivalents 7,143,000 6,653,000 10,337,000 6,582,000 ============ ============ ============ ============ Earnings per share: Before Extraordinary Item $ .21 $ .22 $ .21 $ .28 Extraordinary Item -- -- -- (.01) ------------ ------------ ------------ ------------ Net Income $ .21 $ .22 $ .20 $ .27 ============ ============ ============ ============
6 7 NOTE 6 - COMPREHENSIVE INCOME: In June of 1997, the Financial Accounting Standards Board issued statement of Financial Accounting Standard No. 130 "Reporting Comprehensive Income." This statement, which the Company adopted in fiscal 1999, establishes standards for reporting and displaying comprehensive income and its components in a full set of financial statements. For the periods presented, adjustments to derive comprehensive income were insignificant . NOTE 7- LITIGATION: In connection with the Chapter 7 bankruptcy filing for Western Pacific Airlines, Inc. ("WPAI") the Company received a letter, dated August 25, 1999, from the bankruptcy trustee's attorneys making a formal demand for recovery of alleged preference payments of approximately $11.4 million. This amount represents cash received for payment of fuel and sales during the 90 days prior to WPAI's initial bankruptcy filing. The Company believes this claim is without merit and the entire amount is defensible based on the transaction 1) having been a substantially contemporaneous exchange for value, 2) being made in the ordinary course of business, and 3) involving an exchange for new value. Accordingly, the Company believes it will ultimately prevail and that no provision is required. In October, 1999, Mr. Rene Perez, formerly the president of RPA, notified the Company of certain alleged violations of his employment contract dated February 28, 1998 between the Company, RPA and Mr. Perez asserting among other things constructive termination. The Company subsequently filed a suit seeking declaratory relief regarding the employment contract in United States District Court for the Northern California (San Francisco) in November, 1999. The Company subsequently amended, on November 30, 1999, that suit as a result of its investigation seeking damages against Mr. Perez. Mr. Perez filed a lawsuit, which was filed in November and served in December, in the Circuit Court of the 11th Judicial Circuit in Dade County, Florida seeking damages in excess of the jurisdictional limit. At this time, the Company believes that no provision is required. 7 8 NOTE 8 - SENIOR SUBORDINATED NOTE/EXTRAORDINARY ITEM: On September 10, 1999, the Company issued, in a private placement, $24,000,000 Senior Subordinated 12% Notes ("the Note") due 2006 with detachable warrants to acquire 503,126 shares of the Company's common stock exercisable at $6.50 per share for seven years. Proceeds of the Note were used to redeem the Company's 7 3/4% convertible subordinated debentures due February 1, 2006 at 104% of the principal amount plus accrued interest and pay expenses of the transaction as follows: Principal balance of debentures redeemed $19,509,000 Redemption premium of 4% 780,000 Accrued interest 164,000 Placement fees, legal fees and other expenses of transaction capitalized as other assets 1,750,000 Cash received 1,797,000 ----------- Proceeds $24,000,000 ===========
As a result of this transaction the Company recorded an extraordinary charge of $979,000 net of a $625,000 tax benefit in the first quarter of fiscal 2000. The extraordinary charge includes the redemption premium of $780,000 plus write off of related capitalized fees of $824,000. 8 9 NOTE 9 - SEGMENT REPORTING: The Company operates and reports it's activities through four principal units: 1) Fuel Sales and Services, which also includes RPA, 2) Fixed Based Operations, 3) Cargo Operations, and 4) Government Contract Services.
Government Fuel Sales Fixed Base Cargo Contract (Dollars in Thousands) and Services Operations Operations Services Total QUARTER ENDED DECEMBER 31, 1999 Revenues $ 50,925 $ 17,692 $ 9,031 $ 5,885 $ 83,533 Gross Margin 1,452 2,737 3,356 1,197 8,742 Depreciation and Amortization 272 1,112 812 208 2,404 Capital Expenditures 63 2,161 163 40 2,427 Segment Assets 61,482 27,517 31,542 17,948 138,489 QUARTER ENDED DECEMBER 31, 1998 Revenues $ 29,400 $ 13,310 $ 7,743 $ 6,212 $ 56,665 Gross Margin 2,365 2,927 1,397 1,228 7,917 Depreciation and Amortization 290 589 769 212 1,860 Capital Expenditures 1,087 3,564 505 68 5,224 Segment Assets 53,673 23,420 25,181 16,722 118,996 SIX MONTHS ENDED DECEMBER 31, 1999 Revenues $ 95,021 $ 32,874 $ 17,350 $ 12,928 $158,173 Gross Margin 3,473 5,448 6,310 2,658 17,889 Depreciation and Amortization 491 2,110 1,725 436 4,762 Capital Expenditures 63 3,796 510 48 4,417 Segment Assets 61,482 27,517 31,542 17,948 138,489 SIX MONTHS ENDED DECEMBER 31, 1998 Revenues $ 57,102 $ 26,597 $ 13,423 $ 12,143 $109,265 Gross Margin 4,306 6,061 2,625 2,581 15,573 Depreciation and Amortization 623 1,150 1,517 401 3,691 Capital Expenditures 1,242 6,595 864 403 9,104 Segment Assets 53,673 23,420 25,181 16,722 118,996
Gross margin is used as the measure of profit and loss for segment reporting purposes as it is viewed by key decision makers as the principal operating indicator in measuring segment profitability 9 10 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS- COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998 AND COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998. The following tables set forth, for the periods indicated, the revenues and gross margin for each of the Company's four operating units, as well as selected other financial statement date.
Six Months Ended December 31, Three Months Ended December 31, ----------------------------- ------------------------------- ($ in millions) 1999 1998 1999 1998 Amount % of Total Amount % of Total Amount % of Total Amount % of Total Revenues Revenues Revenues Revenues Revenues: Fuel sales and services $ 95.0 60.0% $ 57.1 52.3% $ 50.9 61.0% $ 29.4 51.9% FBOs 32.9 20.8% 26.6 24.3% 17.7 21.2% 13.3 23.5% Cargo operations 17.4 11.0% 13.4 12.3% 9.0 10.8% 7.7 13.6% Government contract services 12.9 8.2% 12.1 11.1% 5.9 7.0% 6.2 11.0% ------ ------ ------ ------ ------ ------ ------ ------ Total Revenue $158.2 100.0% $109.3 100.0% $ 83.5 100.0% $ 56.6 100.0% ====== ====== ====== ====== ====== ====== ====== ======
Amount % of Unit Amount % of Unit Amount % of Unit Amount % of Unit Revenues Revenues Revenues Revenues Gross Margin (1): Fuel sales and services $ 3.5 3.7% $ 4.3 7.5% $ 1.5 2.8% $ 2.4 8.0% FBOs 5.4 16.6% 6.1 22.8% 2.7 15.5% 2.9 22.0% Cargo operations 6.3 36.4% 2.6 19.6% 3.4 37.2% 1.4 18.0% Government contract services 2.7 20.6% 2.6 21.3% 1.2 20.3% 1.2 19.8% ------ ------ ------ ------ ------ ------ ------ ------ Total Gross Margin $ 17.9 11.3% $ 15.6 14.3% $ 8.8 10.5% $ 7.9 14.0% ====== ====== ====== ====== ====== ====== ====== ======
Amount % of Total Amount % of Total Amount % of Total Amount % of Total Revenues Revenues Revenues Revenues Selling, General and Administrative $ 3.7 2.3% $ 3.4 3.1% $ 1.8 2.2% $ 1.6 2.8% Provision for bad debts 0.9 0.6% .9 0.8% 0.6 0.7% 0.5 0.8% Depreciation and amortization 4.8 3.0% 3.7 3.4% 2.4 2.9% 1.9 3.3% Interest expense and other 2.7 1.7% 1.9 1.7% 1.5 1.8% 0.9 1.8% ------ ------ ------ ------ ------ ------ ------ ------ Income before income taxes 5.8 3.7% 5.7 5.2% 2.5 2.9% 3.0 5.3% Provision for income taxes 2.3 1.4% 2.2 2.0% 1.0 1.2% 1.2 2.1% ------ ------ ------ ------ ------ ------ ------ ------ Net income before extraordinary item $ 3.6 2.3% $ 3.5 3.2% $ 1.5 1.8% $ 1.8 3.2% ------ ------ ------ ------ Extraordinary item (1.0) (0.6)% (.2) (0.2)% -- -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ Net income $ 2.6 1.6% $ 3.3 3.0% $ 1.5 1.8% $ 1.8 3.2% ====== ====== ====== ====== ====== ====== ====== ======
(1) Gross margin as used here and throughout Management's Discussion excludes depreciation and amortization and selling, general and administrative expense. 10 11 THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO DECEMBER 31, 1998. Revenue increased by 47.4% to $83.5 million in the current period from $56.7 million a year ago due to an increase in both the price of fuel and volume of fuel sold. Gross margin increased 10.4% to $8.7 million in the current period from $7.9 million a year ago due to an increase in gross margins from the cargo operations. Revenues from fuel sales and services represented 61.0% of total revenues in the current period compared to 51.9% of total revenues a year ago. Revenues from fuel sales and services increased 73.2% to $50.9 million from $29.4 million last year. The increase in revenues from fuel sales and services was due to an increase of 31.5% in the volume of fuel sold and an increase of 41.5% in the price of fuel. Gross margin from fuel sales and service decreased by 38.6% to $1.5 million in the current period from $2.4 million last year due to a loss of $626,000 from RPA in the current period compared with gross margin of $522,000 a year ago. Revenues and operating income from fuel sales and services include the activities of Mercury's contract fueling business as well as revenues from RPA, its airline information software company. Revenue from RPA was $818,000 in the current period compared with $2.5 million a year ago. In January 2000, the Company appointed a new Chief Executive Officer of RPA. Revenues from FBOs increased by 32.9% in the current period to $17.7 million from $13.3 million a year ago due to the addition of Tulsa, Charleston and John's Island locations and higher fuel prices in the period. Gross margin decreased 6.5% in the current period to $2.7 million from $2.9 million last year. The decrease was attributable to an increase in the price of fuel, all of which was not passed on to customers, and higher operating expenses at Burbank since opening its new facility in February 1999. Revenues from cargo operations in the current period increased 16.6% to $9.0 million from $7.7 million a year ago. This increase was due to an increase in space brokerage and cargo handling revenues. Gross margin from cargo operations in the current period increased 140.2% to $3.4 million from $1.4 million in the year ago period primarily due to increased space brokerage, higher cargo handling revenues and elimination of losses at the Miami cargo location, which was sold in fiscal 1999. Revenues from government contract services decreased 5.3% in the current period to $5.9 million from $6.2 million in the year ago period. The decrease in revenues from government contract services was due primarily to a reduction in the number of Weather Data contracts. Gross margin from government contract services was approximately $1.2 million in each period. Selling, general and administrative expenses in the current period increased 13.2% to $1.8 million from $1.6 million in last year's period due primarily to higher compensation expense and professional fees. Provision for bad debts increased 26.2% in the current period to $569,000 from $451,000 in the year ago period due to higher sales in the current period and greater exposure due to significantly higher fuel prices. Depreciation and amortization expense increased 29.2% in the current period to $2.4 million from $ 1.9 million a year ago primarily due to the Burbank FBO expansion during fiscal 1999, acquisitions of Jackson and Charleston FBO's in fiscal 1999, acquisition of Tulsa FBO in October 1999 and various capital expenditures. Interest expense increased 48.4% in the current period to $1.5 million from $1.0 million a year ago due to higher interest rates and higher average outstanding borrowings. Income tax expense approximated 39.0% of pre-tax income in each period reflecting the expected effective annual income tax rate. In last year's three month period, extraordinary item of $34,000 consists of a charge of $56,000 related to the cost of repurchasing convertible subordinated debentures in excess of par value and related bond issuance costs, net of a tax benefit of $22,000. 11 12 SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED TO DECEMBER 31, 1998. Revenues increased 44.8% to $158.2 million in the current period from $109.3 million a year ago. Gross margin increased 14.9% to $17.9 million in the current period from $15.6 million a year ago due to an increase in gross margin from cargo operations and were partially offset by lower gross margins from fuel sales and services and FBO's. Revenues from fuel sales and services represented 60.0% of total revenues in the current period compared to 52.3% of total revenue a year ago. Revenues from fuel sales and services increased 66.4% to $95.0 million from $57.1 million last year. The increase in revenues from fuel sales and services was due to an increase of 58% in the price of fuel and an increase of 10.5% in the volume of fuel sold. Gross margin from fuel sales and services decreased 19.3% in the current period to $3.5 million from $4.3 million a year ago. The decrease in gross margin from fuel sales and services was due to a loss from RPA of $0.9 million in the current period compared to gross margin of $0.6 million last year, due to lower revenues. Revenue from RPA was $1.9 million in the current six month period compared to $3.7 million last year. Revenue from FBOs increased 23.6% in the current period to $32.9 million from $26.6 million a year ago due to higher fuel prices and the addition of Jackson and Charleston in fiscal 1999 and Tulsa in October 1999. Gross margin decreased 10.1% to $5.4 million from $6.1 million in the year ago period due primarily to an increase in the price of fuel , all of which was not passed on to customers, resulting in lower per gallon margins. Revenues from cargo operations in the current period increased 29.3% to $17.4 million from $13.4 million a year ago. The increase was primarily due to an increase in space brokerage and cargo handling revenues. Gross margin from cargo operations in the current period increased 140.4% to $6.3 million from $2.6 million in the year ago period primarily due to increased space brokerage, higher cargo handling revenues and elimination of losses in its Miami cargo handling operation which was sold in fiscal 1999. Revenues from government contract services in the current period increased 6.5% to $12.9 million from $12.1 million in the year ago period. The increase in revenues from government contract services in the current period compared to last year was primarily due to the addition of the Weather Data contracts as of August 1, 1998. Gross margin from government contract services in the current period increased 3.0% to $2.7 million from $2.6 million last year due to higher revenues. Selling general and administrative expenses in the current period increased 9.4% to $3.7 million from $3.4 million in the year ago period. The increase was primarily due to higher compensation expense and higher professional fees. Depreciation and amortization expense in the current period increased 29.0% to $4.8 million from $3.7 million a year ago. The increase in the current period is primarily related to the Burbank FBO expansion during fiscal 1999, acquisitions of Jackson and Charleston FBO's in fiscal 1999, acquisition of Tulsa FBO in October 1999 and various capital expenditures. Interest expense increased 38.1% in the current six months to $2.8 million from $2.0 million a year ago due to higher interest rates and higher average outstanding borrowings. Income tax expense approximated 39.0% of pretax income in both periods reflecting the expected effective annual tax rate. Extraordinary item of $979,000 in the current six months consisted of charges associated with the redemption of the company's 7 3/4% convertible subordinated debentures in September 1999. The charge includes a $780,000 redemption premium plus write off of capitalized fees of $824,000, less a tax benefit of $625,000. 12 13 In last years six month period, extraordinary item of $187,000 consists of a charge of $307,000 related to the cost of repurchasing convertible subordinated debentures in excess of par value and related bond issuance costs, net of a tax benefit of $120,000. LIQUIDITY AND CAPITAL RESOURCES: Mercury has historically financed its operations primarily through operating cash flow, bank debt and various public and private placements of bonds and subordinated debt. Mercury's cash balance at December 31, 1999 totaled $2,225,000. Net cash provided by operating activities totaled $6,222,000 during the six month period ended December 31, 1999. During this period, the primary sources of net cash provided by operating activities was net income and depreciation and amortization totalling $7,344,000 and increase in accounts payable of $10,561,000. The primary use of cash from operating activities was an increase in accounts receivable of $10,956,000. Accounts receivable at December 31, 1999 increased to $60,162,000 from $50,134,000 at June 30, 1999 due to significantly higher sales in the current six month period. Days sales outstanding were approximately 65 at December 31, 1999 versus approximately 74 at June 30, 1999. Net cash used in investing activities was $8,424,000 during the current six month period. The primary use of cash from investing activities included additions to property, equipment and leaseholds of $4,417,000, acquisition of businesses of $3,100,000 and addition to other assets of $1,823,000. Net cash used in financing activities totaled $370,000 during the current six month period. The primary use of cash from financing activities in the current six month period was the reduction in convertible subordinated debentures of $19,534,000, reduction of long term debt totaling $6,722,000 and repurchase of common stock totalling $1,456,000. The primary source of cash from financing activities was proceeds from senior subordinated note of $24,000,000 and proceeds from long-term debt of $3,288,000. The Company's Senior secured bank credit facility consists of a $40,000,000 Revolver, a term loan with an outstanding balance of $22,000,000 at December 31, 1999 and a $15,000,000 acquisition facility with an outstanding balance of $2,898,000 at December 31, 1999. At December 31, 1999, there was $3,000,000 outstanding under the Revolver and $19.0 million in letters of credit issued. Principal installments are due quarterly on the term loan over a five year period maturing in March 2004. Balances owed under the Revolver and acquisition facility are due in March 2004. On September 10, 1999, the Company redeemed $19,509,000 principal balance of convertible subordinated debentures plus a redemption premium of 4% totalling $780,000. Financing of the redemption was accomplished by issuing a $24,000,000 Senior Subordinate Note due in September 2006. The Note pays interest quarterly at the per annum rate of 12%. In connection with the issuance of the Note, the Company issued warrants to purchase 503,126 shares of common stock exerciseable at $6.50 per share. Absent a major prolonged surge in oil prices or a capital intensive acquisition, the Company believes its operating cash flow, revolver, vendor credit and cash balance will provide it with sufficient liquidity during the next twelve months. In the event that fuel prices increase significantly for an extended period of time, the Company's liquidity could be adversely affected unless the Company is able to increase vendor credit or increase lending limits under its revolving credit facility. The Company believes, however, its revolver and vendor credit should provide it with sufficient liquidity in the event of a major temporary surge in oil prices. Since June 1999, fuel prices rose approximately 30% through December 31, 1999 and have subsequently risen higher. Significantly higher fuel prices for an extended period of time have a negative impact on the aviation industry as it increases the airlines operating expenses. Smaller, less well capitalized airlines may be more seriously impacted. As a result, Mercury has increased its charge to bad debt expense in this quarter to $569,000 from $359,000 in the September 1999 quarter. Future periods may also be impacted as the allowance for bad debt requirement may increase due to higher sales based on higher fuel prices and will depend upon actual experience. The Company has a note receivable 13 14 of approximately $850,000 from a former fuel customer, Saeta, an Ecuadorian Airline. Due to political and financial crisis in Ecuador, Saeta has defaulted on its January 1, 2000 payment obligation of approximately $48,000. While they have requested another ninety days, the Company has initiated legal action and has obtained a default judgement against individual guarantors in the U.S. and is proceeding against Saeta in Ecuador. While no assurance can be given, the Company believes the note will ultimately be collected. Bad debt reserves will include an assessment of the Saeta note in future periods. The Company has the following significant contracts or commitments for the purchase of equipment or installation of facilities. On October 22, 1999, the Company acquired certain assets of an FBO in Tulsa, Oklahoma for $2.4 million cash funded from its acquisition line. In a second step to this transaction, the Company will acquire the leasehold and buildings for $3.8 million within eighteen months of the first closing. The Company expects to fund this from its acquisition line. The Company began construction of a 30,000 square foot hangar at its Bedford Massachusetts FBO in this fiscal period at an estimated cost of $3.8 million. Approximately $450,000 has been spent to date and is being funded under the company's acquisition line. YEAR 2000 ISSUE During the past two years the Company established a year 2000 compliance plan which involved information technology, facilities and equipment and major suppliers. The Company's year 2000 compliance efforts included assessment of at risk systems and technology as well as remediation and testing of affected systems. Remediation and testing of all systems and technology used by the Company was completed in November 1999. We are not aware of any adverse effects of year 2000 issues on the Company, including its systems and operations. Additionally, the Company's major suppliers and third parties were included in a year 2000 survey which was completed in December 1999. We have no information that indicated that a significant vendor may be unable to sell to the Company; a significant customer or client may be unable to purchase from the Company, or a significant service provider may be unable to provide services to the Company, in each case because of year 2000 compliance problems. As of December 31, 1999, the Company has incurred approximately $100,000 on reprogramming and software and hardware upgrades relating to year 2000 remediation. As of February 2, 2000, the Company has not experienced any significant disruptions due to year 2000, although we can not predict whether disruptions will be experience in the future. FORWARD-LOOKING STATEMENTS Statements contained in this Quarterly Report on Form 10-Q which are not historical facts are forward-looking statements. In addition, Mercury, from time-to-time, makes forward-looking statements concerning its expected future operations and performance and other developments. Such forward-looking statements are necessarily estimates reflecting Mercury's best judgment based upon current information and involve a number of risks and uncertainties, and there can be no assurance that other factors will not affect the accuracy of such forward-looking statements. While it is impossible to identify all such factors, factors which could cause actual results to differ materially from those estimated by Mercury include, but are not limited to, risks associated with acquisitions, the financial condition of customers, non-renewal of contracts, government regulation, as well as operating risks, general conditions in the economy and capital markets, and other factors which may be identified from time-to-time in Mercury's Securities and Exchange Commission filings and other public announcements. 14 15 PART II - OTHER INFORMATION Item 1. Legal Proceedings In October, 1999, Mr. Rene Perez, formerly the president of RPA, notified the Company of certain alleged violations of his employment contract dated February 28, 1998 between the Company, RPA and Mr. Perez asserting among other things constructive termination. The Company subsequently filed a suit seeking declaratory relief regarding the employment contract in United States District Court for the Northern California (San Francisco) in November, 1999. The Company subsequently amended, on November 30, 1999, that suit as a result of its investigation seeking damages against Mr. Perez. Mr. Perez filed a lawsuit, which was filed in November and served in December, in the Circuit Court of the 11th Judicial Circuit in Dade County, Florida seeking damages in excess of the jurisdictional limit. At this time, the Company believes that no provision is required. Item 2. Change in Securities None Item 3. Default Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders On December 2, 1999, the Company held its annual meeting of Shareholders. All of the Company's directors were re-elected at the meeting by the following votes:
Name For Against Abstain Broker Non-Vote - ---- --- ------ ----------------------- Seymour Kahn 5,907,765 163,909 -0- Joseph A. Czyzyk 5,907,765 163,909 -0- Dr. Philip Fagan, Jr. 5,907,765 163,909 -0- Frederick H. Kopko 5,907,765 163,909 -0- William G. Langton 5,907,765 163,909 -0- Robert L. List 5,907,765 163,909 -0-
Item 5. Other Information None 15 16 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. Mercury Air Group, Inc. Registrant /s/ JOSEPH CZYZYK ------------------------------------------- Joseph Czyzyk Chief Executive Officer /s/ RANDY AJER ------------------------------------------- Randy Ajer Principal Financial and Accounting Officer February 09, 2000 16 17 Item 6. (a) Exhibits and Exhibit List (b) Reports on Form 8-K
6 (a) Exhibit No. Description - ------- ----------- 1.1 Underwriting Agreement for the Company's $25,000,000 7-3/4% Convertible Subordinated Debentures due February 1, 2006.(11) 3.1 Restated Certificate of Incorporation(4) 3.2 Form of Amendment to Restated Certificate of Incorporation creating the Series A 8% Convertible Cumulative Redeemable Preferred Stock(4) 3.3 Form of Amendment to Restated Certificate of Incorporation declaring the Separation Date for the Series A 8% Convertible Redeemable Preferred Stock(5) 3.4 Bylaws of the Company(4) 3.5 Amendment to Bylaws of the Company(10) 3.6 Amendment to Bylaws of the Company adopted on December 3, 1998 (19) 4.1 Form of Indenture between Mercury Air Group, Inc. and IBJ Schroder Bank & Trust Company.(11) 4.2 Negotiable Promissory Note, dated as of June 21, 1996, from Mercury Air Group, Inc. to Raytheon Aircraft Services, Inc.(13) 4.3 Legend Agreement, dated as of August 29, 1996 between Mercury Air Group, Inc. and Raytheon Aircraft Services, Inc.(13) 10.1 Employment Agreement dated December 10, 1993 between the Company and Seymour Kahn(8) 10.2 Stock Purchase Agreement between the Company, SK Acquisition, Inc., Randolph E. Ajer, Kevin J. Walsh, Grant Murray and Joseph Czyzyk(2) 10.3 Company's 1990 Long-Term Incentive Plan(6) 10.4 Company's 1990 Directors Stock Option Plan(1) 10.5 Lease for 6851 West Imperial Highway, Los Angeles, California(4) 10.6 Memorandum Dated September 15, 1997 regarding Summary of Officer Life Insurance Policies with Benefits Payable to Officers or Their Designated Beneficiaries(15) 10.7 Memorandum dated September 15, 1995 regarding Summary of Bonus Plans for Seymour Kahn, Joseph Czyzyk and Randolph E. Ajer(10) 10.8 Memorandum dated September 15, 1995 regarding Summary of Bonus Plans for Kevin Walsh and William Silva(10) 10.9 The Company's 401(k) Plan consisting of LCI Actuaries, Inc. Regional Prototype Defined Contribution Plan and Trust and Adoption Agreement(7) 10.10 Non-Qualified Stock Option Agreement by and between the Company and Seymour Kahn dated January 21, 1993(7) 10.11 Stock Purchase Agreement among the Company, SK Acquisition, Inc. and William L. Silva dated as of August 9, 1993(8) 10.12 Stock Exchange Agreement dated as of November 15, 1994 between Joseph Czyzyk and the Company(9) 10.13 Employment Agreement dated November 15, 1994 between the Company and Joseph Czyzyk(16) 10.14 Non-Qualified Stock Option Agreement dated August 24, 1995, by and between S.K. Acquisition and Mercury Air Group, Inc.(12) 10.15 Non-Qualified Stock Option Agreement dated March 21, 1996, by and between Frederick H. Kopko and Mercury Air Group, Inc.(12)
18 10.16 Credit Agreement by and among Sanwa Bank California, Mellon Bank, N.A., The First National Bank of Boston and Mercury Air Group, Inc. dated March 14, 1997. (14) 10.17 First Amendment to Credit Agreement and Related Loan Documents dated as of November 1997, by and among Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (16) 10.18 First Amendment of 1998 to Credit Agreement and Other Loan Documents dated as of April 1, 1998, by and among Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (3) 10.19 Second Amendment of 1998 to Credit Agreement and Other Loan Documents dated as of April 1998, by and between Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (16) 10.20 Third Amendment of 1998 to Credit Agreement and Other Loan Documents dated as of August 31, 1998, by and between Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (16) 10.21 Loan Agreement between California Economic Development Financing Authority and Mercury Air Group, Inc. relating to $19,000,000 California Economic Development Financing Authority Variable Rate Demand Airport Facilities Revenue Bonds, Series 1998 (Mercury Air Group, Inc. Project) dated as of April 1, 1998. (3) 10.22 Reimbursement Agreement dated as of April 1, 1998, by and among Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (3) 10.23 First Amendment to Reimbursement Agreement and Other L/C Documents as of August 31, 1998, by and between Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (16) 10.24 Fourth Amendment of 1998 to Credit Agreement and Other Loan Documents by and between Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. dated September 15, 1998. (17) 10.25 Second Amendment to Reimbursement Agreement and Other L/C Documents by and between Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. dated September 15, 1998. (17) 10.26 Company's 1998 Long-Term Incentive Plan (18) 10.27 Company's 1998 Directors Stock Option Plan (18) 10.28 Amendment to Employment Agreement by and between Mercury Air Group, Inc. and Joseph A. Czyzyk dated October 15, 1998. (19) 10.29 Amendment No. 2 to Employment Agreement by and between Mercury Air Group, Inc. and Joseph A. Czyzyk dated April 12, 1999. (19) 10.30 First Amendment of 1999 to Credit Agreement and Other Loan Documents dated as of December 31, 1998 by and between Sanwa Bank California, Mellon Bank, N.A. and BankBoston, N.A. and Mercury Air Group, Inc. (19) 10.31 Third Amendment to Reimbursement Agreement and Other L/C Documents dated as of December 31, 1998 by and between Sanwa Bank California, Mellon Bank, N.A., BankBoston, N.A. and Mercury Air Group, Inc. (19) 10.32 Revolving Credit and Term Loan Agreement dated as of March 2, 1999 by and among Mercury Air Group, Inc., The Banks listed on Schedule 1 thereto, and BankBoston, N.A., as Agent. (19) 10.33 Securities Purchase Agreement dated September 10, 1999 by and among Mercury Air Group, Inc. and J.H. Whitney Mezzanine Fund, L.P. (20)
- -------------------------------- (1) Such document was previously filed as Appendix A to the Company's Proxy Statement for the December 10, 1993 Annual Meeting of Shareholders and is incorporated herein by reference. (2) Such document was previously filed as an Exhibit to the Company's Current Report on Form 8-K dated December 6, 1989 and is incorporated herein by reference. 19 (3) All such documents were previously filed as Exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and are incorporated herein by reference. (4) All such documents were previously filed as Exhibits to the Company's Registration Statement No. 33-39044 on Form S-2 and are incorporated herein by reference. (5) Such document was previously filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and is incorporated herein by reference. (6) Such document was previously filed as Appendix A to the Company's Proxy Statement for the December 2, 1992 Annual Meeting of Shareholders. (7) All such documents were previously filed as Exhibits to the Company's Annual Report on Form 10-K for the year ended June 30, 1993 and are incorporated herein by reference. (8) All such documents were previously filed as Exhibits to the Company's Annual Report on Form 10-K for the year ended June 30, 1994 and are incorporated herein by reference. (9) Such document was previously filed as an Exhibit to the Company's Current Report on Form 8-K dated November 15, 1994 and is incorporated herein by reference. (10) All such documents were previously filed as Exhibits to the Company's Annual Report on Form 10-K for the year ended June 30, 1995 and are incorporated herein by reference. (11) All such documents were previously filed as Exhibits to the Company's Registration Statement No. 33-65085 on Form S-1 and are incorporated herein by reference. (12) All such documents were previously filed as Exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and are incorporated herein by reference. (13) All such documents were previously filed as Exhibits to the Company's Report on Form 8-K filed September 13, 1996 and are incorporated herein by reference (14) Such document was previously filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and is incorporated herein by reference. (15) Such document was previously filed as an Exhibit to the Company's Annual Report on Form 10-K for the year ended June 30, 1997 and is incorporated herein by reference. (16) All such documents were previously filed as an Exhibit to the Company's Annual Report on Form 10-K for the year ended June 30, 1998 and is incorporated herein by reference. (17) Such document was previously filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1998 and is incorporated herein by reference. (18) Such document was previously filed as Appendix A to the Company's Proxy Statement for the December 3, 1998 Annual Meeting of Shareholders and is incorporated herein by reference. 20 (19) All such documents were previously filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 and incorporated herein by reference. (20) All such documents were previously filed as an Exhibit to the Company's Annual Report on Form 10-K for the year ended June 30, 1999 and is incorporated herein by reference. (b) Reports on Form 8-K: None EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET OF DECEMBER 31, 1998 AND THE CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS CONTAINED IN FORM 10-Q FOR THE PERIOD ENDED DECEMBER 31, 1999. 6-MOS JUN-30-1999 JUL-01-1999 DEC-31-1999 2,225 0 62,344 1,627 2,812 68,351 98,466 39,657 138,489 42,920 65,266 0 0 65 30,015 138,489 115,286 158,173 100,289 140,284 12,052 928 2,796 5,837 2,276 3,561 0 979 0 2,582 .39 .34
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