8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): September 30, 2003

MERCURY AIR GROUP, INC.

(Exact name of Registrant as specified in Charter)

DELAWARE	1-7134	11-1800515
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

5456 McConnell Avenue, Los Angeles, CA 90066

(Address of Principal Executive Offices/Zip Code)

Registrant’s telephone number, including area code: (310) 827-2737

Not Applicable
(Former Name or Former Address, if Changed Since
Last Report)

TABLE OF CONTENTS

	Item 5. Other Events and Regulation FD Disclosure
	Item 7. Financial Statements and Exhibits
SIGNATURE
EX-99.1

TABLE OF CONTENTS

   Item 5.  Other Events and Regulation FD Disclosure

   Item 7.  Financial Statements and Exhibits

Signature

Exhibit 99.1

Item 5. Other Events and Regulation FD Disclosure

     On September 30, 2003, Mercury Air Group, Inc. (the “Company”) issued a press release and reported the preliminary operational results for the three- and twelve-month periods ended June 30, 2003. See exhibit 99.1 for the press release.

Item 7. Financial Statements and Exhibits

(c) Exhibits

Exhibit No.	Description
99.1	Press Release dated September 30, 2003.

SIGNATURE

     Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 8, 2003	MERCURY AIR GROUP, INC.
	By:	/s/ Robert Schlax
		Robert Schlax
		Chief Financial Officer
		(Principal Accounting Officer)

EX-99.1 3 a93508exv99w1.htm EX-99.1

Exhibit 99.1

–NEWS RELEASE–

Company Contact:	Investor Relations:
Joseph Czyzyk Mercury Air Group, Inc. (310) 827-2737	Larry Barrios The MWW Group (213)486-6560

Mercury Air Group, Inc. Reports Preliminary 4^th Quarter and Year-End
Financial Results

Los Angeles, CA (September 30, 2003) – Mercury Air Group, Inc. (AMEX/PCX: MAX) has announced today preliminary net loss for the three-month and twelve-month periods ended June 30, 2003 of $1,529,000, or $0.47 per basic and diluted share and $3,455,000, or $1.06 per basic and diluted share, respectively, in its filing with the Securities and Exchange Commission (“SEC”). The Company expects to report its final financial results upon its filing of its annual report with the SEC no later than October 13, 2003.

The results for the fiscal 2003 periods compare to the Company’s net earnings reported for the three-month and twelve-month periods ended June 30, 2002 of $4,653,000, or $1.42 per basic share and $1.39 per diluted share, and $5,033,000, or $1.53 per basic share and $1.50 per diluted share, respectively.

The adjusted preliminary net loss for the three-month period ended June 30, 2003 was $266,000, after adjusting the preliminary net loss for: 1) an after-tax accrual of $672,000 for a proposed retroactive rent increase associated with one of the Company’s warehouse facilities at the Los Angeles International Airport (LAX); and 2) an after-tax accrual of $591,000 for additional debt premiums associated with the Company’s subordinated note. This compares favorably to an adjusted loss of $881,000, after excluding: 1) an after-tax gain of $5,490,000 from the sale of the Company’s FBO operations in Bedford, Massachusetts at the end of fiscal 2002; 2) net income from the Bedford FBO operations of $172,000; and 3) a net loss from discontinued operations of $128,000.

Revenue for the three-month period ended June 30, 2003 was $96,131,000 as compared to revenue of $99,581,000 for the same period last year. When compared to last year’s adjusted revenue of $83,810,000, which excludes the revenue from the Bedford FBO of $2,186,000 and from the sales of aviation fuel to National Airlines, Inc. (National), which ceased operations in November 2002, of $13,585,000, revenue increased nearly 15%. The Company’s preliminary gross margin in the fourth quarter of fiscal 2003 was $6,203,000 as compared to last year’s fourth quarter gross margin of $6,229,000. After excluding the effects of the proposed LAX warehouse rent increase of $918,000 pre-tax from this year’s results and the margin contribution from: 1) the Bedford FBO operations of $473,000; and 2) the fuel sales to National of $265,000 from last year’s results, the adjusted preliminary gross margin for the three-month period ended June 30, 2003 increased 30% to $7,121,000 as compared to $5,491,000 for the same period last year.

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Exhibit 99.1

“While Mercury has shown continued improvement in our overall business performance, our results have been negatively impacted by one-time charges and debt service costs. We are focused on reducing debt and returning Mercury to profitability,” said Joseph A. Czyzyk, CEO and President of Mercury Air Group, Inc.

MercFuel, Inc.’s (MercFuel) sales volume was 65.4 million gallons in the latest quarter, representing an increase of 18% from last year’s sales volume, after taking into consideration the cessation of operations by National. Mercury Air Centers, Inc.’s (Air Centers) sales volume was 8.8 million gallons in the latest quarter, representing an increase of 9% from last year’s fourth quarter sales volume as adjusted for the sale of the Bedford FBO at the end of the 2002 fiscal year.

“Our sales volumes continue to grow and our average margins have remained strong. The increase in aviation fuel sales volume combined with improved results from our Air Cargo operations contributed to the improved operating profits on a year-to-year basis,” added Czyzyk.

The preliminary net loss for the twelve-month period ended June 30, 2003 includes negative items composed of: 1) the retroactive rent adjustment for one of the Company’s LAX warehouse facilities of $672,000; 2) accrued debt premium associated with the Company’s subordinated note of $1,262,000; 3) the write-off of unamortized debt issuance cost of $1,298,000; and 4) $1,065,000 associated with the extension of stock options, recapitalization and financing alternatives and reserves for environmental remediation of previously disposed property and settlement of labor disputes, all after-tax.

Last year’s net earnings of $5,033,000 reflect: 1) an after-tax gain of $5,490,000 associated with the sale of the Bedford FBO operations; 2) after-tax operating earnings from the Bedford FBO of $709,000; 3) net expense of $601,000 associated with the aborted spin-off of MercFuel; and 3) net loss of $170,000 from discontinued operations.

Adjusted for these material items, the Company would have reported net earnings of $842,000 for fiscal 2003 as compared to a net loss of $395,000, for fiscal 2002.

Revenue for the twelve-month period ended June 30, 2003 was $429,015,000, representing an increase of nearly 12% from last year’s twelve-month revenue of $383,342,000. After adjusting the full-year results for each year to exclude the revenue from the sales to National of $24,728,000 and $49,085,000 for fiscal 2003 and 2002, respectively, and from the Bedford FBO operations of $7,476,000 in fiscal 2002, adjusted revenue for the fiscal 2003 was $404,287,000 as compared to $326,781,000 for fiscal 2002, an increase of nearly 24%.

The Company’s preliminary gross margin for fiscal 2003 was $25,504,000 as compared to $28,272,000 for the same period last year, a reduction of nearly 10%. After excluding the effect in fiscal 2003 of: 1) the retroactive rent adjustment of $918,000 and 2) the sales to National of $406,000 and excluding the contributions in fiscal 2002 from: 1) the Bedford FBO operations of $1,791,000; and 2) the sales to National of $939,000, preliminary adjusted gross margin for fiscal 2003 was $26,016,000 as compared to $25,542,000 for fiscal 2002. Sales volume for the twelve-month period ended June 30, 2003 for MercFuel and the Air Centers was 286.9 million gallons and 33.8 million gallons, respectively.

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Exhibit 99.1

1.     About Mercury Air Group

Los Angeles-based Mercury Air Group (AMEX/PCX:MAX) provides aviation petroleum products, air cargo services and transportation, and support services for international and domestic commercial airlines, general and government aircraft and specialized contract services for the United States government. Mercury Air Group operates four business segments worldwide: Mercury Air Centers, Inc., MercFuel, Inc., Maytag Aircraft Corporation and Mercury Air Cargo, Inc. For more information, please visit www.mercuryairgroup.com.

Statements contained in this news release which are not historical facts are forward looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in The Company’s filings with the Securities and Exchange Commission.

MERCURY AIR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(all amounts in thousands of dollars, except per share amounts)

		Twelve Months Ended						Three Months Ended
		June 30,						June 30,
		2003			2002			2003			2002
Sales and Revenues:
	Sales	$	337,217		$	293,731		$	73,730		$	77,528
	Service revenues		91,798			89,611			22,401			22,053
			429,015			383,342			96,131			99,581
Costs and Expenses:
	Cost of sales		298,686			253,264			64,039			66,933
	Operating expenses		104,825			101,806			25,889			26,419
			403,511			355,070			89,928			93,352
	Gross Margin (Excluding depreciation and amortization)		25,504			28,272			6,203			6,229
Expenses (Income):
	Selling, general and adminstrative		11,294			11,518			3,089			3,749
	Provision for bad debts		1,648			1,358			447			111
	Depreciation and amortization		7,872			9,213			1,819			2,183
	Interest expense		7,716			5,710			2,361			1,390
	Costs and expenses of stock offering					985
	Debt extinguishment costs		1,773
	Loss on Investment		196						196
	Gain on sale of property					(8,929	)					(9,000	)
	Interest income		(192	)		(112	)		(62	)		(40	)
			30,307			19,743			7,850			(1,607	)

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Exhibit 99.1

		Twelve Months Ended						Three Months Ended
		June 30,						June 30,
		2003			2002			2003			2002
Income (Loss) from Continuing Operations Before Provision for Income Taxes			(4,803	)		8,529			(1,647	)		7,836
	(Benefit from) Provision for Income Taxes		(1,268	)		3,326			(38	)		3,055
Income (Loss) from Continuing Operations			(3,535	)		5,203			(1,609	)		4,781
Minority Interest in Loss of Subsidiary			80						80
Loss from Discontinued Operations net of income tax benefit of $109 for twelve months and $82 for three months ended June 30, 2002						(170	)					(128	)
Net Income (Loss)			($3,455	)	$	5,033			($1,529	)	$	4,653
Accrued preferred stock dividends			19						9
Net income (loss) applicable to common stockholders			($3,474	)	$	5,033			($1,538	)	$	4,653
Net Income (Loss) Per Common Share:
Basic:
	From Continuing Operations		($1.08	)	$	1.59			($0.49	)	$	1.46
	Minority Interest		0.02						0.02
	(Loss) from Discontinued Operations		0.00			(0.06	)		0.00			(0.04	)
	Net income (loss)		($1.06	)	$	1.53			($0.47	)	$	1.42
Diluted:
	From Continuing Operations		($1.08	)	$	1.56			($0.49	)	$	1.43
	Minority Interest		0.02						0.02
	(Loss) from Discontinued Operations		0.00			(0.06	)		0.00			(0.04	)
	Net income (loss)		($1.06	)	$	1.50			($0.47	)	$	1.39

Mercury Air Group, Inc.
Selected Business Segment Data
For the Twelve Month and Three Month Periods
Ended June 30, 2003 and 2002
(all amounts in thousands of dollars)
Unaudited

		Twelve Months Ended					Three Months Ended
		June 30,					June 30,
		2003			2002		2003			2002
Revenue
	MercFuel	$	280,136		$	232,573	$	62,025		$	61,220
	Mercury Air Centers		96,249			94,417		24,062			24,842
	Mercury Air Cargo		32,691			28,124		7,851			7,038
	Maytag Aircraft		24,421			28,228		5,911			6,481
	Intersegment elimination		(4,482	)				(3,718	)

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Exhibit 99.1

		Total Revenue	$	429,015	$	383,342	$	96,131		$	99,581
Gross Margin
	MercFuel		$	5,926	$	6,581	$	1,185		$	1,412
	Mercury Air Centers			12,854		13,545		4,070			3,090
	Mercury Air Cargo			2,126		1,357		(290	)		349
	Maytag Aircraft			4,598		6,789		1,238			1,378
		Total Gross Margin	$	25,504	$	28,272	$	6,203		$	6,229
Depreciation and Amoritization
	MercFuel		$	318	$	63	$	105		$	32
	Mercury Air Centers			5,179		5,780		1,216			1,479
	Mercury Air Cargo			1,887		2,292		342			612
	Maytag Aircraft			349		715		84			331
	Other			139		363		72			(271	)
		Total Dep & Amort	$	7,872	$	9,213	$	1,819		$	2,183
Sales Volume (thousands of gals)
	MercFuel			286,873		287,651		65,387			74,307
	Mercury Air Centers			33,800		36,025		8,784			8,943

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EX-99.1

EX-99.1