-----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, U2jHdnV2L3QD+URUp+013nLwOPYz5Uh8NWt3G3TnRLP9Jv+J6kTh9Eu614kaJ+ar u5b8GVv+uucuao03ygiNFg== 0000859307-01-000006.txt : 20010417 0000859307-01-000006.hdr.sgml : 20010417 ACCESSION NUMBER: 0000859307-01-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010228 FILED AS OF DATE: 20010416 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL AIRLINE SUPPORT GROUP INC CENTRAL INDEX KEY: 0000859307 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 592223025 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12893 FILM NUMBER: 1603315 BUSINESS ADDRESS: STREET 1: 1954 AIRPORT ROAD STREET 2: SUITE 200 CITY: ATLANTA STATE: GA ZIP: 30341 BUSINESS PHONE: 7704557575 MAIL ADDRESS: STREET 1: 1954 AIRPORT ROAD STREET 2: SUITE 200 CITY: ATLANTA STATE: GA ZIP: 30341 10-Q 1 0001.txt UNITED STATES 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 February 28, 2001 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 0-18352 ------- INTERNATIONAL AIRLINE SUPPORT GROUP, INC. ---------------------------------------------- Delaware 59-2223025 - ----------------------------------- ------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1954 Airport Road, Suite 200, Atlanta, GA 30341 - ----------------------------------------------- -------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (770) 455-7575 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO __ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. The number of shares of the registrant's common stock outstanding as of April 6, 2001 was 2,190,198. FORM 10-Q INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES INDEX Page No. --------- Part I FINANCIAL INFORMATION Item 1. Unaudited Financial Statements Condensed Consolidated Balance Sheets as of May 31, 2000 and February 28, 2001 3 Condensed Consolidated Statements of Earnings for the Three Months and Nine Months Ended February 29, 2000 and February 28, 2001 4 Condensed Consolidated Statements of Cash Flows for The Nine Months ended February 29, 2000 and February 28, 2001 5 Notes to Unaudited Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II OTHER INFORMATION Item 1. Legal Proceedings 14 Item 6. Exhibits and Reports on Form 8-K 14 - 2 - FORM 10-Q INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
May 31, February 28, 2000* 2001 ------------- ----------- (unaudited) Current assets Cash and cash equivalents $ 721,111 $ 199,567 Accounts receivable, net of allowance for doubtful accounts of approximately $172,722 at May 31, 2000 and $292,702 at February 28, 2001 2,647,215 2,198,933 Inventories 12,807,512 7,128,301 Deferred tax benefit - current 1,053,888 1,053,888 Other current assets 583,626 624,579 ------- ------- Total current assets 17,813,352 11,205,268 Property and equipment Aircraft in operations 1,114,919 - Aircraft and engines held for lease 12,832,298 19,658,393 Leasehold improvements 176,594 166,991 Machinery and equipment 1,074,576 1,086,341 --------- --------- 15,198,387 20,911,725 Accumulated depreciation 2,263,110 2,577,475 --------- --------- Property and equipment, net 12,935,277 18,334,250 Other assets Investment in joint ventures 3,860,136 5,464,832 Notes receivable affiliate - 740,761 Deferred debt costs, net 228,066 183,317 Deferred tax benefit 345,883 146,376 ------- ------- Total other assets 4,434,085 6,535,286 --------- --------- $ 35,182,714 $ 36,074,804 = ========== = ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term obligations $ 1,748,642 $ 2,604,850 Accounts payable 1,359,998 1,635,909 Deferred lease revenue - 91,667 Accrued expenses 1,261,147 1,107,105 --------- --------- Total current liabilities 4,369,787 5,439,531 Long-term obligations, less current maturities 18,345,079 17,950,982 Commitments and contingencies Stockholders' equity Preferred stock - $.001 par value; authorized 2,000,000 shares; 0 shares outstanding at May 31, 2000 and February 28, 2001. - - Common stock - $.001 par value; authorized 20,000,000 shares; issued and outstanding 2,661,723 shares at May 31, 2000 and 2,661,723 shares at February 28, 2001. 2,661 2,661 Additional paid-in capital 13,902,909 13,902,909 Retained earnings 527,769 744,212 Common stock held in treasury, at cost- 471,525 shares at May 31, 2000 and February 28, 2001 (1,965,491) (1,965,491) ----------- ----------- Total stockholders' equity 12,467,848 12,684,291 ---------- ---------- $ 35,182,714 $ 36,074,804 = ========== = ==========
*Condensed from audited Financial Statements The accompanying notes are an integral part of these condensed financial statements 3 FORM 10-Q INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2000 2001 2000 2001 ------------ ----------- ---------- ---------- Revenues Net sales $ 4,872,593 $ 4,318,505 $ 18,457,102 $ 14,147,239 Aircraft in Operation - - - 171,579 Lease and service revenue 485,926 902,706 2,107,362 2,347,403 ---------- --------- ----------- ----------- Total revenues 5,358,519 5,221,211 20,564,464 16,666,216 Cost of sales 3,680,504 3,541,039 13,641,925 11,213,916 Selling, general and administrative expenses 1,231,872 1,340,590 4,292,851 4,226,643 Depreciation and amortization 266,115 275,695 857,069 791,446 ---------- --------- ----------- ----------- Total operating costs 5,178,491 5,157,324 18,791,845 16,232,005 Equity in net earnings of unconsolidated joint venture 441,735 412,250 1,263,537 1,391,839 ---------- --------- ----------- ----------- Earnings from operations 621,763 476,137 3,036,156 1,826,050 Interest expense 444,138 497,019 1,163,877 1,510,678 Interest and other income (11,343) (101,312) (39,171) (100,578) ---------- --------- ----------- ----------- Earnings before income taxes 188,968 80,430 1,911,450 415,950 Provision for income taxes 73,066 50,647 744,787 199,507 ---------- --------- ----------- ----------- Net earnings $ 115,902 $ 29,783 $ 1,166,663 $ 216,443 ========== ========= =========== =========== Per share data: Earnings per share available for common stockholders - Basic $ 0.05 $ 0.01 $ 0.53 $ 0.10 Weighted average number of shares of common stock outstanding - Basic 2,187,198 2,190,198 2,187,448 2,190,198 ========== ========= =========== =========== Earnings per share available for common stockholders - Diluted $ 0.05 $ 0.01 $ 0.51 $ 0.10 Weighted average number of shares of common stock outstanding - Diluted 2,240,141 2,190,198 2,289,300 2,200,034 ========== ========= =========== ===========
The accompanying notes are an integral part of these condensed financial statements - 4 - FORM 10-Q INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine months ended February 29, February 29, 2000 2001 ---------- ---------- Cash flows from operating activities: Net earnings $ 1,166,663 $ 216,443 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 857,069 758,518 Undistributed equity in earnings of joint venture (1,263,537) (1,494,314) Provision for income taxes - deferred 744,787 242,632 Changes in assets and liabilities (3,203,554) 4,936,190 --------- -------- Total adjustments (2,865,235) 4,443,026 Net cash (used in) provided by operating activities (1,698,572) 4,659,469 Cash flows from investing activities: Capital equipment and leasehold improvements (71,728) (19,596) Investment in unconsolidated joint venture (29,845) (380,382) Distributions received from joint venture 270,000 270,000 Additions to aircraft and engines held for lease, net (6,375,000) (5,456,699) --------- -------- Net cash used in investing activities (6,206,573) (5,586,677) Cash flows from financing activities: Net increase in debt obligations 7,981,538 462,111 Proceeds from exercise of employee stock options 10,707 - Repurchase of common stock (18,000) - Payment of debt offering costs (123,375) (56,447) --------- -------- Net cash provided by financing activities 7,850,870 405,664 --------- -------- Net (decrease) increase in cash (54,275) (521,544) Cash and cash equivalents at beginning of period 892,283 721,111 --------- -------- Cash and cash equivalents at end of period $ 838,008 $ 199,567 = ======= = =======
The accompanying notes are an integral part of these condensed financial statements. - 5 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain adjustments (consisting only of normal and recurring adjustments) necessary to present fairly International Airline Support Group, Inc.'s condensed consolidated balance sheets as of May 31, 2000 and February 28, 2001, the condensed consolidated statements of earnings for the three and nine months ended February 29, 2000 and February 28, 2001, and the condensed consolidated statements of cash flows for the nine months ended February 29, 2000 and February 28, 2001. The accounting policies followed by the Company are described in the May 31, 2000 financial statements. The results of operations for the three and nine months ended February 28, 2001 are not necessarily indicative of the results to be expected for the full year. 2. Inventories consisted of the following: May 31,2000 February 28,2001 ------------ ------------------ Aircraft parts $ 7,382,143 $ 7,128,301 Aircraft and Engines available for sale 5,425,369 - ----------- ----------- $12,807,512 $ 7,128,301 =========== =========== 3. Earnings Per Share The Company's basic earnings per share are calculated by dividing net earnings by the weighted average shares outstanding during the period. The computation of diluted earnings per share includes all dilutive common stock equivalents in the weighted average shares outstanding. Financial Accounting Standards Board (FASB) Statement 128 "Earnings Per Share" was adopted by the Company on January 1, 1998 and requires the dual presentation of basic and diluted earnings per share on the face of the statement of earnings. The reconciliation between the computation is as follows: Three Months Ended February 29/ Net Basic Basic Diluted Diluted February 28, Earnings Shares EPS Shares EPS ------------- -------- ------ --- ------ --- 2000 $115,902 2,187,198 $0.05 2,240,141 $0.05 2001 $ 29,783 2,190,198 $0.01 2,190,198 $0.01 - 6 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Nine Months Ended February 29/ Net Basic Basic Diluted Diluted February 28, Earnings Shares EPS Shares EPS - ------------- -------- ------ --- ------ --- 2000 $1,166,663 2,187,448 $0.53 2,289,300 0.51 2001 $ 216,443 2,190,198 $0.10 2,200,034 $0.10 Included in diluted shares are common stock equivalents relating to stock options of 52,943 and 0 for the three months ended February 29, 2000 and February 28, 2001, respectively, and 101,852 and 9,836 for the nine months ended February 29, 2000 and February 28, 2001, respectively. 4. Credit Facility The Credit Agreement originally entered into by the Company in October of 1996 provided for a $3 million term loan and up to an $11 million revolving credit. The Credit Agreement has been amended eleven times to create several new term loan facilities and to increase the revolving credit to $14 million (collectively referred to as the "Credit Facility"). In the most recent amendment, the maturity of the revolving credit facility and the term loan were extended to December 2005, as well as providing an increase in availability as a result of the new term loan. The interest rate that the Company is assessed is subject to fluctuation and may change based upon certain financial covenants. As of April 6, 2001, the interest rate under the Credit Facility was the lender's base rate minus 0.25% (7.75%). The Credit Facility is secured by substantially all of the assets of the Company and availability of amounts for borrowing is subject to certain limitations and restrictions. Such limitations and restrictions are discussed in the Company's Proxy Statement/Prospectus filed with the Securities and Exchange Commission on August 29, 1996 and in the Amendments to the Credit Facility filed on various dates as listed below in Item 6. Exhibits and Reports on Form 8-K. 5. Supplemental Cash Flow Disclosures: Cash payments for interest were $1,005,000 and $1,368,000 for the nine months ended February 29, 2000 and February 28, 2001, respectively. Cash and cash equivalents include $335,519 and $42,500 of restricted cash at May 31, 2000 and February 28, 2001, respectively. Restricted cash includes customer receipts deposited into the Company's lockbox account, which are applied the next business day against the outstanding amount of the Credit Facility, and customer deposits on aircraft and engines leases. - 7 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 6. Related Party Transactions: The Company had notes receivables affiliate in the principal amount of $740,761 as of February 28, 2001 relating to loans provided to North-South Airways, which are secured by aircraft operated by the airline. The loans are priced at market rates, ranging from 8.75% to 9.50%, with monthly principal payments extending through August 2004. For more information, see Note 7 - Unconsolidated Subsidiaries. As of February 28, 2001, the Company leased three EMB-120 aircraft to North-South Airways. The leases originated from September 2000 to February 2001 and have three-year terms. The leases contain similar terms and conditions to other EMB-120 aircraft leases completed by the Company. The Company anticipates leasing a fourth EMB-120 aircraft to North-South Airways, under the same terms and conditions, during the fourth quarter of Fiscal 2001. Total lease revenue from these three aircraft leases was $135,000 and $240,00 for the three and nine months ended February 28, 2001. 7. Unconsolidated Subsidiaries On September 16, 1998, the Company entered into a joint venture (the "Air 41 Joint Venture") for the acquisition of 20 DC-9-41H aircraft from Scandinavian Airlines System ("SAS"). The aircraft were leased back to SAS and the leases had an average term of 39 months. The Company's original investment in the Air 41 Joint Venture was approximately $1.5 million. The Company's Air 41 Joint Venture partner is AirCorp, Inc., a privately held company. The aircraft were financed through the joint venture, utilizing non-recourse debt to the partners. The Air 41 Joint Venture is accounted for under the equity method and the leases are treated as operating leases. Equity in Net Earnings of Unconsolidated Joint Ventures for the first nine months of fiscal 2001 was $1,392,000. Without the Company's share of Air 41's earnings the Company would have had a pretax loss for the first nine months of fiscal 2001. It should also be noted that substantially all of Air 41's cash flow is pledged to service Air 41's indebtedness. Although Air 41 was able to re-lease two of the first aircraft returned off-lease from SAS at favorable terms, one additional aircraft has been returned to Air 41 and other aircraft are scheduled to be returned in the near term. Air 41 is in discussion with a number of carriers for the re-lease of these aircraft, however there can be no assurance that any of these aircraft will be able to be re-leased on as favorable terms, if at all. Should Air 41 be unable to re-lease or sell these aircraft, the Company's stated operating income would be significantly impacted. - 8 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 7. Unconsolidated Subsidiaries (cont.) The Company is exploring opportunities for the aircraft after the end of the term of the leases with SAS. Such opportunities include re-leasing the aircraft with SAS, leasing the aircraft to one or more different lessees, selling the aircraft, parting out the aircraft, or directly placing the aircraft into either passenger or cargo service, whereby the Company may have a principal interest in an airline. At this time, other than as previously mentioned, the Company has no firm commitment for the aircraft after the SAS leases expire. During the second quarter of fiscal 2001, the Company's regional airline subsidiary, doing business as North-South Airways, sold additional shares of stock raising approximately $1,000,000. This sale of stock reduced the Company's ownership interest in North-South Airways from 100% to approximately 35%. Accordingly commencing September 1, 2000, the Company is accounting for their investment in North-South Airways under the equity method. - 9 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following is management's discussion and analysis of certain significant factors which have affected the Company's operating results and financial position during the periods included in the accompanying condensed consolidated financial statements. RESULTS OF OPERATIONS: - ------------------------ Revenues - -------- Total revenue for the three and nine months ended February 28, 2001 was $5.2 million and $16.7 million, respectively, compared to $5.4 million and $20.6 million, respectively, during the three and nine months ended February 29, 2000. Net sales for the three and nine months ended February 28, 2001 were $4.3 million and $14.1 million, respectively, compared to $4.9 million and $18.5 million, respectively, during the three and nine months ended February 29, 2000. Net sales include parts sales as well as aircraft and engine sales. Aircraft and engine sales are unpredictable transactions and may fluctuate significantly from year to year, dependent, in part, upon the Company's ability to purchase an aircraft or engine at an attractive price and resell it within a relatively brief period of time, as well as the overall market for used aircraft or engines. For the nine-month period, total revenue was lower due to a decrease in part and aircraft sales offset by an increase in lease and service revenue. For the three-month period, total revenue was lower due to a decrease in parts sales partially offset by an increase in aircraft and engine sales and an increase in lease and service revenue. Lease and service revenue increased from $486,000 and $2.1 million, respectively, for the three and nine months ended February 29, 2000 to $903,000 and $2.3 million, respectively, for the three and nine months ended February 28, 2001, primarily due to higher lease revenue as the Company has more assets under lease. Under the equity method of accounting, lease revenue from the Air41 Joint Venture is not included in the Company's revenue. Cost of Sales - --------------- Cost of sales decreased 3.8% from $3.7 million during the three months ended February 29, 2000 to $3.5 million during the three months ended February 28, 2001. Cost of sales decreased 17.8% from $13.6 million during the nine months ended February 29, 2000 to $11.2 million during the nine months ended February 28, 2001. Cost of sales for the three and nine month periods was lower primarily due to lower revenue. As a percentage of total revenues, cost of sales for the three and nine months ended February 28, 2001 was 69% and 67%, respectively, compared to 69% and 66% for the three and nine months ended February 29, 2000, respectively. - 10 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES Selling, General and Administrative Expenses - ------------------------------------------------ Selling, general and administrative expenses increased 8.8% from $1.2 million during the three months ended February 29, 2000 to $1.3 million during the three months ended February 28, 2001, primarily due to an increase in outside professional fees and commission relating to the acquisition of new brokered inventory and aircraft ownership costs. Selling, general and administrative expenses decreased 1.5% from $4.3 million during the nine months ended February 29, 2000 to $4.2 million during the nine months ended February 28, 2001, primarily due to lower professional fees, and commissions, partially offset by an increase in insurance costs. Depreciation and Amortization - ------------------------------- Depreciation and amortization for the three and nine months ended February 29, 2000 totaled $266,000 and $857,000, respectively, compared to $276,000 and $791,000 for the three and nine months ended February 28, 2001, respectively. Although the Company had more assets on lease for fiscal 2001 than fiscal 2000, the assets held for lease are newer and thus are depreciated over a longer useful life. Interest Expense - ----------------- Interest expense for the three and nine months ended February 29, 2000 was $444,000 and $1.2 million, respectively, compared to $497,000 and $1.5 million for the three and nine months ended February 28, 2001, respectively. The increase in interest expense from 2000 to 2001 was due to an increase in total debt outstanding during this period from $17.6 million at February 29, 2000 to $20.6 million at February 28, 2001, partially offset by lower interest rates. Net Earnings - ------------- Earnings per share - diluted for the third quarter of fiscal 2000 were $0.05, based on 2,240,141 weighted average shares outstanding, compared to earnings per share - diluted for the third quarter of fiscal 2001 of $0.01, based on 2,190,198 weighted average shares outstanding. Earnings per share - diluted for the first nine months of fiscal 2000 were $0.51, based on 2,289,300 weighted average shares outstanding, compared to earnings per share - diluted for the first nine months of fiscal 2001 of $0.10 per share - diluted, based on 2,200,034 weighted average shares outstanding. - 11 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES Liquidity and Capital Resources - ---------------------------------- The Credit Agreement originally entered into by the Company in October of 1996 provided for a $3 million term loan and up to an $11 million revolving credit. The Credit Agreement has been amended eleven times to create several new term loan facilities and to increase the revolving credit to $14 million (collectively referred to as the "Credit Facility"). In the most recent amendment, the maturity of the revolving credit facility and the term loan were extended to December 2005, as well as providing an increase in availability as a result of the new term loan. The interest rate that the Company is assessed is subject to fluctuation and may change based upon certain financial covenants. As of April 6, 2001, the interest rate under the Credit Facility was the lender's base rate minus 0.25% (7.75%). The Credit Facility is secured by substantially all of the assets of the Company and availability of amounts for borrowing is subject to certain limitations and restrictions. Such limitations and restrictions are discussed in the Company's Proxy Statement/Prospectus filed with the Securities and Exchange Commission on August 29, 1996 and in the Amendments to the Credit Facility filed on various dates as listed below in Item 6. Exhibits and Reports on Form 8-K. Net cash (used in) provided by operating activities for the nine months ended February 29, 2000 and February 28, 2001 were ($1,699,000) and $4,659,000, respectively. The cash used in operating activities for nine months ended February 29, 2000 was due primarily to an increase in inventory relating to the acquisition of aircraft and engines held for sale. The cash provided by operations for the nine months ended February 28, 2001 was due primarily to a decrease in inventories. Net cash used for investing activities for the nine months ended February 29, 2000 amounted to $6,207,000 compared to $5,587,000 for the nine months ended February 28, 2001. The net cash used for investing activities for the nine months ended February 29, 2000 was primarily the result of the addition of aircraft and engines held for lease. The net cash used for investing activities for the nine months ended February 28, 2001 was primarily the result of the addition of aircraft and engines held for lease. Net cash provided by financing activities for nine months ended February 29, 2000 amounted to $7,851,000 compared to $406,000 for the nine months ended February 28, 2001. The net cash provided by financing activities for the nine months ended February 29, 2000 was the result of a net increase in debt obligations primarily resulting from the acquisition of aircraft and engines held for sale and for lease. The net cash provided by financing activities for the nine months ended February 28, 2001 was primarily the result of a net increase in debt obligations. At April 6, 2001, the Company was permitted to borrow up to an additional $4.2 million pursuant to the revolving credit facility. The Company believes that amounts available to be borrowed pursuant to the Credit Agreement and cash flow from operations will be sufficient to meet the requirements of the Company's business for the foreseeable future. The Company had no material commitments for capital expenditures as of February 28, 2001. - 12 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES Recent Accounting Pronouncements - ---------------------------------- In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (FAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." FAS No. 133, as amended by FAS 138, establishes standards for accounting and reporting for derivative instruments, and conforms the requirements for treatment of different types of hedging activities. This statement is effective for all fiscal years beginning after June 15, 2000. Management does not expect this standard to have a significant impact on the Company's operations. Forward Looking Statements - ---------------------------- This Form 10-Q contains statements that may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those statements include statements regarding the capital spending and future financing plans of the Company and reflect the intent, belief or current expectations of the Company and members of its management team. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. - 13 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The Company is from time to time subject to legal proceedings and claims that arise in the ordinary course of its business. On the date hereof, no such proceedings are pending and no such claims have been asserted. Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -------- EXHIBIT NUMBER DESCRIPTION PAGE NUMBER OR METHOD OF FILING 2.4 Credit Incorporated by reference to Exhibit 2.4 to Agreement Amendment No. 2 to the Company's Registration between BNY Statement on Form S-4 filed on August 29, 1996 (File Financial No. 333-08065). Corporation and the Registrant (the "Credit Agreement"). 2.5 First Amendment, Incorporated by Reference. Waiver and Agreement, dated as of March 24, 1997, between BNY Financial Corporation and the Registrant and related to the Credit Agreement. 2.6 Second Incorporated by Reference. Amendment and Agreement, dated as of September 9, 1997, between BNY Financial Corporation and the Registrant and related to the Credit Agreement. 2.7 Third Amendment and Incorporated by Reference. Agreement, dated as of October 15, 1997, between BNY Financial Corporation and the Registrant and related to the Credit Agreement. 2.8 Fourth Amendment and Incorporated by Reference. Agreement, dated as of February 2, 1998, between BNY Financial Corporation and the Registrant and related to the Credit Agreement. 2.9 Fifth Amendment, Incorporated by Reference. dated as of July 16, 1998, between BNY Financial Corporation and the Registrant and related to the Credit Agreement. 2.10 Sixth Amendment, Incorporated by Reference dated as of May 30, 1998, between BNY Financial Corporation and the Registrant and related to the Credit Agreement. 2.11 Seventh Amendment, Incorporated by Reference. dated as of October 28, 1998, between BNY Financial Corporation and the Registrant and related to the Credit Agreement. - 14 - EXHIBIT NUMBER DESCRIPTION PAGE NUMBER OR METHOD OF FILING 2.12 Eight Amendment and Agreement Incorporated by Reference. dated as of December 8, 1998, by and among BNY Financial Corporation and the Registrant and related to the Credit Agreement. 2.13 Ninth Amendment and Agreement Incorporated by Reference. dated as of July 1, 1999, by and between the Registered and BNY Factoring LLC, as successor in interest to BNY Financial Corporation and related to the Credit Agreement. 2.14 Tenth Amendment and Agreement Incorporated by Reference. dated as of November 17, 1999, by and between the Registered and GMAC Commercial Credit LLC, as successor in interest By merger to BNY Financial Corporation And related to the Credit Agreement. 2.15 Eleventh Amendment, Waiver and Incorporated by Reference. Agreement dated as of January 5, 2001, by and between the Registered and GMAC Commercial Credit LLC, as successor in interest By merger to BNY Financial Corporation And related to the Credit Agreement. 3.1 Amended and Incorporated by reference to Exhibit 3.1 to the Restated Company's Annual Report on Form 10-K for the fiscal Certificate year ended May 31, 1996 (the "1996 Form 10-K"). of Incorporation of the Registrant. 3.2 Restated and Incorporated by reference to Exhibit 3.2 to the 1996 Amended Form 10-K. Bylaws of the Registrant. 4.1 Specimen Incorporated by reference to Exhibit 4.1 to the 1996 Common Stock Form 10-K. Certificate. 10.1.1 Employment Incorporated by reference to Exhibit 10.1.1 to the Agreement, 1996 Form 10-K dated as of December 1, 1995, between the Registrant and Alexius A. Dyer III, as amended on October 3, 1996. 10.1.2 Employment Incorporated by reference to Exhibit 10.1.2 to the Agreement Company's Quarterly Report for the quarter ended dated as of February 28, 1997. October 3, 1996, between the Registrant and George Murnane III. 10.2.1 1996 Long- Incorporated by reference to Appendix B to the Proxy Term Statement/Prospectus included in the Company's Incentive and Registration Statement on Form S-4 (File Share Award No. 333-08065), filed on July 12, 1996. Plan. - 15 - EXHIBIT NUMBER DESCRIPTION PAGE NUMBER OR METHOD OF FILING 10.2.2 401(k) Plan. Incorporated by reference to Exhibit 10-H to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1992 (the "1992 Form 10-K"). 10.2.3 Bonus Plan. Incorporated by reference to Exhibit 10.2.4 to the 1992 Form 10-K. 10.2.4 Cafeteria Incorporated by reference to Exhibit 10.2.5 of the Plan. Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1993. 10.2.5 Form of Incorporated by reference to Exhibit 10.2.5 to the Option 1996 Form 10-K. Certificate (Employee Non-Qualified Stock Option). 10.2.6 Form of Incorporated by reference to Exhibit 10.2.6 to the Option 1996 Form 10-K. Certificate (Director Non-Qualified Stock Option). 10.2.7 Form of Incorporated by reference to Exhibit 10.2.7 to the Option 1996 Form 10-K. Certificate (Incentive Stock Option). 10.14 Commission Incorporated by reference to Exhibit 10.14 to the Agreement 1996 Form 10-K. Dated December 1, 1995 between the Registrant and J.M. Associates, Inc. 10.15 Operating Incorporated by reference to Exhibit 10.14 to the Air41 LLC, Exhibit 10.15 to the 1999 Form 10-K dated as of September 9, 1998, by and between AirCorp, Inc. and the Company 10.16 Office Lease Incorporated by reference to Exhibit 10.17 to the Agreement 1997 Form 10-K. dated January 31, 1997 between the Registrant and Globe Corporate Center, as amended. 10.17 Lease Incorporated by reference to Exhibit 10.18 to the Agreement 1997 Form 10-K. dated March 31, 1997 between the Registrant and Port 95- 4, Ltd. 10.18 Securities Purchase Filed herewith Agreement, dated September, 18, 2000, among Diamond Aviation, Inc., the Registrant And the purchasers named therein. 10.19 Stockholders Agreement, dated September 18, 2000, among Diamond Aviation, Inc., and The stockholders therof. 27 Financial Filed herewith. Data Schedule.
(b) Reports on Form 8-K ---------------------- None - 17 - INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES 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. INTERNATIONAL AIRLINE SUPPORT GROUP, INC. - -------------------------------------------- (Registrant) /s/James M. Isaacson April 16, 2001 - ---------------------- ---------------- James M. Isaacson Date Chief Financial Officer EX-27 2 0002.txt FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 9-MOS May-31-2001 28-Feb-01 199,567 0 2,198,933 292,702 7,128,301 11,205,268 18,334,250 2,577,475 36,074,804 5,439,531 17,950,982 2,661 0 0 13,902,909 36,074,804 14,147,234 16,666,216 11,213,916 16,232,005 0 170,626 1,510,678 415,950 199,507 0 0 0 0 216,442 0.10 0.10
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