First Aviation Announces Fourth Quarter & Full Year Results.Business Editors WESTPORT Westport, residential town (1990 pop. 24,407), Fairfield co., SW Conn., on Long Island Sound at the mouth of the Saugatuck River; settled 1645–50, inc. 1835. It serves as a popular residence for New York City commuters. Westport has a summer theater. , Conn.--(BUSINESS WIRE)--May 1, 2003 First Aviation Services Inc. (Nasdaq:FAVS FAVS Fabbrica Armi Valle Susa FAVS Fighter Attack Visual System ), one of the premier suppliers of products and services to the aerospace industry worldwide, today announced fourth quarter and full year results. For the fourth quarter, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight decreased $1.6 million, or 6.4% over that reported in the prior year, while gross profit decreased $1.0 million, or 21.0%, from the prior year. Principally as a result of non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to increase its bad debt reserves ($0.8 million), due to industry and economic conditions, and to establish an allowance against its deferred income tax assets ($2.0 million), the Company incurred a net loss for the three months January January: see month. 31, 2003 of $3.3 million, or $0.45 per share, compared to net income of $0.9 million, or $0.12 per share in the prior year. The income tax charge to establish the valuation allowance against the Company's deferred income tax assets was in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the provisions of Statement of Financial Accounting Standards Pronouncement No. ("FAS") 109, "Accounting for Income Taxes." The valuation allowance will be reversed in future years if financial results increase sufficiently to support the book value of the assets. Without the charge to increase the allowance for doubtful accounts Allowance for Doubtful Accounts An estimation made by a company and documented on its balance sheet for receivables that might go uncollected. Notes: It is standard practice for a company to have funds set aside for money that cannot be collected. , selling, general, and administrative expenses for the quarter increased decreased 4.4% from that reported in the prior year. Corporate expenses decreased 8.2% from the previous year. In the fourth quarter, the Company reclassified shipping and handling costs to cost of sales from selling, general and administrative expenses. This change was been reflected in all periods presented. Full year and fourth quarter results were negatively impacted by depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. economic conditions and declining aerospace industry activity. Highlights for the year ended January 31, 2003 were as follows: -- Net cash provided by operating activities for the year was $3.4 million -- an 81% increase over the prior year. The net change in cash was a use of $5.1 million, principally due to the payment of a dividend in January. -- In January the Company paid a special cash dividend of $1.00 per share for a total payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. of $7.3 million. -- Cash on hand at January 31, 2003 was 26.0 million, or $3.59 per share, book value was $36.1 million, or $4.98 per share. -- In July July: see month. , Aerospace Products International Inc. ("API (Application Programming Interface) A language and message format used by an application program to communicate with the operating system or some other control program such as a database management system (DBMS) or communications protocol. ") was awarded a five-year contract with Gulfstream Aerospace Gulfstream Aerospace Corporation is a producer of several models of private jet aircraft. Gulfstream Aerospace Corporation has been a unit of General Dynamics since 2001. Gulfstream's main facility is located in Savannah, Georgia, United States. Corporation for supply chain management services for its aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. support business. -- Allowance for bad debts was increased $1.0 million, to 11% of the gross trade receivable balances. -- Corporate expenses decreased 8.9% for the year compared to the prior year. -- The Company took a charge in the first quarter of $2.7 million to write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. its goodwill upon adoption of FAS 142, "Goodwill and Other Intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. ." Michael Culver Michael Culver (born June 16, 1938 in Hampstead, London) is an English actor, best known to television viewers for his role as Major Erwin Brandt in the 1970s BBC drama Secret Army. He also played the strict Prior Robert ("Brother Prior") in the television series Cadfael. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of First Aviation, said, "We are pleased that our net cash provided by operating activities for the full year increased 81% over that of the prior year. The fourth quarter was disappointing in terms of results and brought to a close a very difficult year for our industry. However, competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. in the industry that are not as strong as First Aviation are experiencing financial difficulties and liquidity issues. Various aerospace industry indices indicate that business is down at least 20% over the prior year. With a 6.4% decrease in sales in the quarter, we believe that API is taking market share. Our balance sheet is strong, and our cash position, liquidity and borrowing capability continue to be excellent, and, we believe, among the tops in our industry. We believe that the Company's stock price continues to be undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. with a book value per share of $4.98 and cash per share of $3.59." For the full year net sales decreased to $101.7 million, or 3.7%, compared to $105.7 million reported for the prior year. Gross profit decreased to $18.5 million, or 2.9%, compared to $19.0 million reported for the prior year. Selling, general and administrative expenses increased $0.8 million, or 4.5%, due to the increase in the allowance for doubtful accounts previously described. Without this charge, selling, general and administrative expenses essentially were flat. Culver cul·ver n. A dove or pigeon. [Middle English, from Old English culufre, from Vulgar Latin *columbra, from Latin columbula, diminutive of columba, dove.] further stated, "We are examining all our activities in order to focus on those that produce value and those that do not. These actions will serve to refine our business model to be appropriate for the environment ahead. We set aggressive goals for our management team for fiscal year 2004." First Aviation, located in Westport, Connecticut Westport is a coastal town in Fairfield County, Connecticut, in the United States. The 2004 population estimate was 26,644. The town is as affluent as other expensive Fairfield County towns, boasting a per capita income of more than $70,000. is a worldwide leader in providing aerospace products and services to aircraft operators of some of the most widely used commercial and general aviation aircraft. Its operations include API, based in Memphis, Tennessee For the ancient Egyptian capital, see . Memphis is a city in the southwest corner of Tennessee, and the county seat of Shelby County. Memphis rises above the Mississippi River on the 4th Chickasaw Bluff just below the mouth of the Wolf River. . In addition to its components and parts supply services, API offers overhaul and repair services for brakes and starter/generators, and builds custom hose assemblies. API also is a leading provider of supply chain management and customized third party logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. services and technology solutions, including inventory management services, to the aerospace industry worldwide. With locations in the U.S., Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and Asia Pacific, plus partners throughout the world, API continues to be one of the premier suppliers of aviation products, supply chain management services and technology solutions in the industry. The Company will host a conference call to discuss fourth quarter and full year results on Monday Monday: see week. , May 5, 2003 at 10:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . Interested parties should call 888/394-8045 before 9:55 a.m. EDT. A replay will be available through May 6, 2003. Please call 877/519-4471; PIN is 3910672. More information about First Aviation can be found on the World Wide Web at http://www.favs.com and, http://www.apiparts.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements discussed in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements are not statements of historical facts, but rather reflect the Company's current expectations concerning future events and results. Such forward-looking statements, including those concerning the Company's expectations, involve known and unknown risks, uncertainties and other factors, some of which are beyond the Company's control, that may cause the Company's actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: the Company's ability to obtain parts and components from its principal suppliers on a timely basis; depressed domestic and international market and economic conditions; especially those currently facing the aviation industry as a whole; the impact of changes in fuel and other freight The price or compensation paid for the transportation of goods by a carrier. Freight is also applied to the goods transported by such carriers. The liability of a carrier for freight damaged, lost, or destroyed during shipment is determined by contract, statute, or related costs; relationships with its customers; the ability of the Company's customers to meet their financial obligations to the Company; the ability to obtain and service supply chain management contracts; changes in regulations or accounting standards; the ability to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. suitable acquisitions and expand; other items that are beyond the Company's control may cause actual results to differ from management's expectations; and other factors as are described in Item 7, (Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations) in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended January 31, 2003. In addition, specific consideration should be given to the various factors described in this release.
First Aviation Services Inc.
Consolidated Condensed Statements of Operations
(in thousands, except share amounts)
(unaudited)
Three months ended Year ended
Jan. 31, Jan. 31,
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net sales $ 23,963 $ 25,608 $ 101,737 $ 105,696
Cost of sales 20,219 20,854 83,264 86,680
---------- ---------- ---------- ----------
Gross profit 3,744 4,754 18,473 19,016
Selling, general and
administrative expenses 4,798 4,177 17,656 16,896
---------- ---------- ---------- ----------
Operating income (loss)
before corporate
expenses (1,054) 577 817 2,120
Corporate expenses 513 559 2,394 2,628
Litigtion (income) - (937) - (735)
---------- ---------- ---------- ----------
Income (loss) from
operations (1,567) 955 (1,577) 227
Net interest income and
other 75 (87) 206 301
Minority interest in
subsidiary (10) (11) (42) (42)
---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before income taxes (1,502) 857 (1,413) 486
Provision for income
taxes (1,751) (232) (1,786) (194)
---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before cumulative
effect
of accounting change (3,253) 625 (3,199) 292
Gain from dispositions
of subsidiaries, net of
provision for income
taxes of $175 and $580,
respectively - 253 - 960
Cumulative effect of
accounting change, net
of benefit for income
taxes of $922 - - (2,735) -
---------- ---------- ---------- ----------
Net income (loss) $ (3,253) $ 878 $ (5,934) $ 1,252
========== ========== ========== ==========
Basic net income (loss)
per share, and net
income (loss) per share
- assuming dilution:
Income (loss) from
continuing
operations before
cumulative effect
of accounting
change (0.45) 0.09 (0.44) 0.04
Income from
dispositions of
subsidiaries - 0.03 - 0.13
Cumulative effect of
accounting change - - (0.38) -
---------- ---------- ---------- ----------
Basic net income (loss)
per share, and net
income (loss) per
share - assuming
dilution $ (0.45) $ 0.12 $ (0.82) $ 0.17
========== ========== ========== ==========
Weighted average shares
outstanding - basic 7,236,521 7,206,559 7,224,532 7,197,941
========== ========== ========== ==========
Weighted average shares
outstanding - assuming
dilution 7,236,521 7,217,343 7,224,532 7,208,725
========== ========== ========== ==========
First Aviation Services Inc.
Consolidated Condensed Balance Sheets
(in thousands, except share amounts)
Jan. 31, Jan. 31,
2003 2002
---------- ----------
(unaudited) (a)
Assets
Current assets:
Cash and cash equivalents $ 26,013 $ 31,113
Trade receivables, net of allowance for
doubtful accounts of $1,656 and $707,
respectively 12,978 15,396
Inventory, net of allowance for obsolete
and slow moving inventory of $997 and
$885, respectively 20,617 23,016
Prepaid expenses, deferred income taxes
and other 1,794 3,063
---------- ----------
Total current assets 61,402 72,588
Plant and equipment, net 3,639 4,100
Goodwill, net - 3,856
---------- ----------
$ 65,041 $ 80,544
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 10,324 $ 11,464
Accrued compensation and related expenses,
and other accrued liabilities 2,069 2,748
Income taxes payable 1,009 1,293
Obligations under capital leases 4 180
---------- ----------
Total current liabilities 13,406 15,685
Long-term debt 14,500 14,800
Minority interest in subsidiary 1,041 1,041
---------- ----------
Total liabilities 28,947 31,526
Stockholders' equity:
Common stock, $0.01 par value, 25,000,000
shares authorized, 7,250,710 and 7,213,753
shares outstanding, respectively 91 91
Additional paid-in capital 38,445 38,516
Retained earnings 7,543 20,728
Accumulated other comprehensive loss (96) (193)
---------- ----------
45,983 59,142
Less: Treasury stock, at cost (9,889) (10,124)
---------- ----------
Total stockholders' equity 36,094 49,018
---------- ----------
Total liabilities and stockholders' equity $ 65,041 $ 80,544
========== ==========
(a) Balances were derived from the audited balance sheet as of January
31, 2002.
First Aviation Services Inc.
Consolidated Statements of Cash Flows
(in thousands)
Year ended Jan. 31,
-------------------------------
2003 2002 2001
--------- --------- ---------
(unaudited)
Cash flows from operating activities
Net income (loss) $ (5,934) $ 1,252 $ (1,830)
Adjustments to reconcile net income
(loss) to net cash from operating
activities - non cash expense
(income):
Depreciation and amortization 1,372 1,399 1,251
Deferred income taxes 1,786 - (148)
Compensation paid through issuance
of stock 104 112 72
Loss from discontinued operation - - 1,117
Gain from dispositions of
subsidiaries - (960) (593)
Cumulative effect of accounting
change 2,735 - -
(Increase) decrease in working
capital assets:
Trade receivables 2,418 467 (2,050)
Inventories 2,399 1,708 (7,661)
Prepaid expenses and other
assets 421 (73) (1,662)
Increase (decrease) in working
capital liabilities:
Accounts payable (1,140) (2,032) 5,232
Other accrued liabilities (685) - (7,812)
Income taxes payable (87) - -
--------- --------- ---------
Net cash provided by (used in)
operating activities 3,389 1,873 (14,084)
Cash flows from investing activities
Purchases of plant and equipment and
other assets - continuing operations (925) (683) (1,529)
Purchase of assets from Superior,
including acquisition costs - (5,028) -
Purchases of plant and equipment -
discontinued operations - - (1,494)
--------- --------- ---------
Net cash used in investing activities (925) (5,711) (3,023)
Cash flows from financing activities
Net borrowings (repayments) on long-
term debt and capital lease
obligations (476) 3,076 3,411
Repurchases of common stock for
treasury - (5) (4,834)
Dividends paid (7,251) - -
Other 60 25 281
--------- --------- ---------
Net cash provided by (used in)
financing activities (7,667) 3,096 (1,142)
Effect of exchange rate changes on
cash and cash equivalents 103 - -
--------- --------- ---------
Net change in cash and cash
equivalents $ (5,100) $ (742) $(18,249)
Cash and cash equivalents at the
beginning of the year 31,113 31,855 50,104
--------- --------- ---------
Cash and cash equivalents at the end
of the year $ 26,013 $ 31,113 $ 31,855
========= ========= =========
Supplemental cash flow disclosures
Cash paid for:
Interest $ 54 $ 130 $ 455
========= ========= =========
Income taxes (refunded) paid, net $ (322) $ (748) $ 4,196
========= ========= =========
Acquisition of equipment through
incurrence of capital lease
obligation $ - $ - $ 315
========= ========= =========
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