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 November 30, 1999 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
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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 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 Company's common stock outstanding as of
January 4, 2000 was 2,187,198.
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARYINDEX
Page No.
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Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of 3
May 31, 1999 and November 30, 1999
Condensed Consolidated Statements of Earnings 4
for the Three Months and Six Months
Ended November 30,1998 and 1999
Condensed Consolidated Statements of Cash Flows 5
for the Six Months Ended
November 30, 1998 and 1999
Notes to Condensed Consolidated Financial 6
Statements
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial Condition 9
Part II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a
Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
- 2 -
3
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
May 31, November 30
1999* 1999
------------- -----------
(unaudited)
Current assets
Cash and cash equivalents $ 892,283 $ 797,703
Accounts receivable, net of allowance for
doubtful accounts of approximately
$342,000 at May 31, 1999 and $436,000
at November 30, 1999 2,812,500 2,109,760
Inventories 11,131,059 12,405,723
Deferred tax benefit - current 1,128,302 1,128,302
Other current assets 134,274 592,525
------- -------
Total current assets 16,098,418 17,034,013
Property and equipment
Aircraft and engines held for lease 4,593,854 10,968,854
Leasehold improvements 157,175 164,059
Machinery and equipment 988,983 1,048,940
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5,740,012 12,181,853
Accumulated depreciation 1,734,503 2,301,440
--------- ---------
Property and equipment, net 4,005,509 9,880,413
Other assets
Investment in joint venture 2,373,572 3,042,219
Deferred debt costs, net 360,406 333,194
Deferred tax benefit 1,071,959 400,238
Deposits and other assets 66,155 50,206
------ ------
Total other assets 3,872,092 3,825,857
--------- ---------
$ 23,976,019 $ 30,740,283
= ========== = ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term
obligations $ 1,455,600 $ 2,340,805
Accounts payable 910,029 1,037,840
Accrued expenses 2,209,191 1,851,566
--------- ---------
Total current liabilities 4,574,820 5,230,211
Long-term obligations, less current maturities 8,138,059 13,256,910
Stockholders' equity
Preferred stock - $.001 par value;
authorized 2,000,000 shares; 0 shares
outstanding at May 31, 1999 and
November 30, 1999 - -
Common stock - $.001 par value;
authorized 20,000,000 shares; issued and
outstanding 2,655,723 shares at May 31,
1999 and 2,658,723 shares at
November 30, 1999 2,655 2,658
Additional paid-in capital 13,936,089 13,946,793
(Accumulated deficit) retained earnings (728,824) 279,033
Common stock held in treasury, at
cost - 467,325 shares at May 31, 1999 and
471,525 shares at November 30, 1999 (1,946,780) (1,975,322)
----------- ----------
Total stockholders' equity 11,263,140 12,253,162
----------- ----------
$ 23,976,019 $ 30,740,283
= ========== = ==========
*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 SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
November 30, November 30,
1998 1999 1998 1999
------------ ----------- ---------- ----------
Revenues
Net sales $ 5,041,727 $ 5,249,175 $ 9,830,111 $13,578,257
Lease and service revenue 794,236 958,258 1,580,798 1,627,687
------------ ----------- ---------- ----------
Total revenues 5,835,963 6,207,433 11,410,909 15,205,944
Cost of sales 3,501,982 3,843,089 6,758,905 9,961,421
Selling, general and administrative expenses 1,117,854 1,354,107 2,160,738 3,060,978
Depreciation and amortization 337,842 313,187 595,672 590,954
------------ ----------- ---------- ----------
Total operating costs 4,957,678 5,510,384 9,515,315 13,613,353
Equity in net earnings of
unconsolidated joint venture 348,106 420,737 348,106 821,802
------------ ----------- ---------- ----------
Earnings from operations 1,226,391 1,117,786 2,243,700 2,414,393
Interest expense 341,539 390,574 652,028 719,740
Interest income and other (income) expenses 15,003 (23,887) 9,387 (27,829)
------------ ----------- ---------- ----------
Earnings before income taxes 869,849 751,099 1,582,285 1,722,482
Provision for income taxes 330,541 297,532 601,267 671,720
------------ ----------- ---------- ----------
Net earnings $ 539,308 $ 453,567 981,018 $ 1,050,762
============ =========== ========== ==========
Per share data:
Earnings per share available for
common stockholders - basic $ 0.21 $ 0.21 $ 0.38 $ 0.48
Weighted average number of common
stock outstanding - basic 2,569,167 2,187,198 2,566,520 2,187,762
============ =========== ========== ==========
Earnings per share available for
common stockholders - diluted $ 0.20 $ 0.20 $ 0.35 $ 0.45
Weighted average number of common
stock outstanding - diluted 2,723,198 2,324,796 2,779,285 2,326,034
============ =========== ========== ==========
The accompanying notes are an integral part of these condensed financial
statements
- 4 -
FORM 10-Q
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months ended
November 30,
1998 1999
---------- ----------
Cash flows from operating activities:
Net earnings $ 981,018 $ 1,050,762
Adjustments to reconcile net earnings to net cash
(used in) provided by operating activities:
Depreciation and amortization 595,672 590,954
Loss on sale of investment 20,074 -
Undistributed equity in earnings of joint venture (348,106) (821,802)
Provision for income taxes - deferred 330,541 671,720
Changes in assets and liabilities (1,834,010) (1,312,291)
Total adjustments (1,235,829) (871,419)
Net cash (used in) provided by
operating activities (254,811) 179,343
Cash flows from investing activities:
Capital equipment additions (43,421) (66,841)
Investment in unconsolidated joint venture (1,514,000) -
Proceeds from sale of investment 94,665 -
Distributions received from joint venture, net - 153,155
Additions to aircraft and engines held for lease, net (1,949,917) (6,375,000)
Net cash used in investing activities (3,412,673) (6,288,686)
Cash flows from financing activities:
Net increase in debt obligations 3,809,507 6,004,056
Proceeds from exercise of employee stock options 23,250 10,707
Net cash provided by financing activities 3,832,757 6,014,763
Net increase (decrease) in cash 165,273 (94,580)
Cash and cash equivalents at beginning of period 438,403 892,283
Cash and cash equivalents at end of period $ 603,676 $ 797,703
= ======= = =======
- 5 -
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
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. and its Subsidiary's condensed consolidated balance sheets
as of May 31, 1999 and November 30, 1999, the condensed consolidated statements
of earnings for the three and six months ended November 30, 1998 and 1999, and
the condensed consolidated statements of cash flows for the six months ended
November 30, 1998 and 1999.
The accounting policies followed by the Company are described in the May
31, 1999 financial statements.
The results of operations for the three and six months ended November 30,
1999 are not necessarily indicative of the results to be expected for the full
year.
2. Inventories consisted of the following:
May 31, 1999 November 30, 1999
-------------- --------------------
Aircraft parts $ 8,679,059 $ 7,168,762
Aircraft and Engines
available for sale 2,452,000 5,236,961
------------ -----------
$11,131,059 $12,405,723
============ ===========
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 Net Basic Basic Diluted Diluted
November 30, Earnings Shares EPS Shares EPS
------------- -------- ------ --- ------ ---
1998 $ 539,308 2,569,167 $0.21 2,723,198 $0.20
1999 $ 453,567 2,187,198 $0.21 2,324,796 $0.20
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Six Months
Ended Net Basic Basic Diluted Diluted
November 30, Earnings Shares EPS Shares EPS
------------- -------- ------ --- ------ ---
1998 $ 981,018 2,566,520 $0.38 2,779,285 $0.35
1999 $1,050,762 2,187,279 $0.48 2,326,034 $0.45
Included in diluted shares are common stock equivalents relating to stock
options of 154,031 and 137,598 for the three months ended November 30, 1998 and
1999, respectively, and 212,765 and 138,755 for the six months ended November
30, 1998 and 1999, respectively.
4. Credit Facility
On October 3, 1996, the Company entered into the Credit Agreement, which
provided for a $3 million term loan and up to an $11 million revolving credit.
The Credit Agreement was amended on various occasions to create new term loan
facilities and to increase the revolving credit to $14 million (collectively
referred to as the "Credit Facility"). 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.
5. Supplemental Cash Flow Disclosures:
Cash payments for interest were $537,611 and $550,127 for the six months
ended November 30, 1998 and November 30, 1999, respectively. Cash and cash
equivalents include $582,651 and $159,950 of restricted cash at May 31, 1999 and
November 30, 1999, 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.
6. Joint Venture
On September 16, 1998, the Company entered into a joint venture (the "Air41
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
Air41 Joint Venture was approximately $1.5 million. The Company's Air41 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 Air41 Joint Venture is accounted for under the equity method and the leases
are treated as operating leases.
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. Joint Venture (cont.)
The Company is exploring opportunities for the aircraft after the end of
the term of the leases with SAS. Such opportunities include releasing the
aircraft with SAS, leasing the aircraft to one or more different lessee(s),
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, the Company has no firm commitment for
the aircraft after the SAS leases expire.
7. Treasury Stock
In the third quarter of 1999, the Company began acquiring shares of its
common stock in connection with a stock repurchase program approved by the
Company's Board of Directors and lender in December 1998. During the six months
ended November 30, 1999, the Company repurchased 6,500 shares of its common
stock at an average price of $4.39 for a total expenditure of $28,542. This
repurchase brings the total number of shares repurchased to 471,525 at an
average price of $4.19 and a total expenditure of $1,975,322. The Company does
not have a formal plan in place to purchase any additional shares; however, the
Company is authorized by the Board to make further purchases if deemed to be in
the best interest of the Company. The Company's lender must also approve any
such purchases.
- 8 -
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
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 six months ended November 30, 1999 was $6.2
million and $15.2 million, respectively, compared to $5.8 million and $11.4
million, respectively, during the three and six months ended November 30, 1998.
Net sales for the three and six months ended November 30, 1999 were $5.2 million
and $13.6 million, respectively, compared to $5.0 million and $9.8 million,
respectively, during the three and six months ended November 30, 1998, primarily
relating to an increase in turboprop parts sales and aircraft and engine sales.
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. Lease and service revenue increased to $958,000 and $1.6 million,
respectively, for the three and six months ended November 30, 1999 from $794,000
and $1.6 million, respectively, for the three and six months ended November 30,
1998, primarily due to an increase in service revenue and the lease of two
aircraft to Skywest Airlines. 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 increased 10% from $3.5 million during the three months ended
November 30, 1998 to $3.8 million during the three months ended November 30,
1999. Cost of sales increased 47% from $6.8 million during the six months ended
November 30, 1998 to $10.0 million during the six months ended November 30,
1999. These increases were due primarily to increases in revenue, an increase
in the sale of brokered parts and a higher cost of sales for aircraft and
engines. As the Company continues to expand its brokered part sales, gross
margins should decrease from historical levels, which reflect higher levels of
sales of parts out of inventory. As a percentage of total revenues, cost of
sales for the three and six months ended November 30, 1998 was 60.0% and 59.2%,
respectively, compared to 61.9% and 65.5% during the three and six months ended
November 30, 1999, respectively. The increase in costs of sales as a percentage
of total revenue is due to an increase in the sale of brokered parts at a lower
gross margin than owned parts. As the sales of brokered parts is expected to
increase, the gross profit percentage should continue to decline in the future.
- 9 -
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
Selling, General and Administrative Expenses
- ------------------------------------------------
Selling, general and administrative expenses increased 21% from $1.1
million during the three months ended November 30, 1998 to $1.4 million during
the three months ended November 30, 1999. Selling, general and administrative
expenses increased 42% from $2.2 million during the six months ended November
30, 1998 to $3.1 million during the six months ended November 30, 1999. These
increases are due, in part, to the increase in revenue resulting in increases in
commissions, bonuses and outside professional fees, higher advertising and
promotional expenses, and an increase in the provision for doubtful accounts.
In addition during the six months ended November 30, 1998, the Company's
provision for doubtful accounts was offset by the recovery of a certain doubtful
account. Selling, general, and administrative costs as a percentage of total
revenue were 21.8% and 20.1%, respectively, for the three and six months ended
November 30, 1999 compared to 19.2% and 18.9%, respectively, for the three and
six months ended November 30, 1998.
Depreciation and Amortization
- -------------------------------
Depreciation and amortization for the three and six months ended November
30, 1998 totaled $338,000 and $596,000, respectively, compared to $313,000 and
$591,000, respectively, for the three and six months ended November 30, 1999,
respectively.
Interest Expense
- -----------------
Interest expense for the three and six months ended November 30, 1998 was
$342,000 and $652,000, respectively, compared to $391,000 and $720,000 for the
three and six months ended November 30, 1999, respectively. This increase in
interest expense was due to a higher average of total debt outstanding during
this period partially offset by a reduction in the interest rate assessed to the
Company (see Liquidity and Capital Resources).
Treasury Stock
- ---------------
In the third quarter of 1999, the Company began acquiring shares of its
common stock in connection with a stock repurchase program approved by the
Company's Board of Directors and lender in December 1998. During the three
months ended November 30, 1999, the Company repurchased 6,500 shares of its
common stock at an average price of $4.39 for a total expenditure of $28,542.
This repurchase brings the total number of shares repurchased to 471,525 at an
average price of $4.19 and a total expenditure of $1,975,322. The Company does
not have a formal plan in place to purchase any additional shares; however, the
Company is authorized by the Board to make further purchases if deemed to be in
the best interest of the Company. The Company's lender must also approve any
such purchases.
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INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
Net Earnings
- -------------
Earnings per share - diluted for the second quarter of fiscal 2000 were
$0.20, based on 2,324,796 weighted average shares outstanding, compared to
earnings per share - diluted for the second quarter of fiscal 1999 of $0.20,
based on 2,723,198 weighted average shares outstanding. Earnings per share -
diluted for the first six months of fiscal 2000 were $0.45, based on 2,326,034
weighted average shares outstanding, compared to earnings per share - diluted
for the first six months of fiscal 1999 of $0.35 per share - diluted, based on
2,779,285 weighted average shares outstanding. The decrease in the weighted
average shares outstanding - basic and diluted is the result of the Company's
stock repurchase program.
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 to create several new term loan
facilities and to increase the revolving credit to $14 million (collectively
referred to as the "Credit Facility"). The revolving credit facility matures in
October 2001 and the term loans mature between March 2000 and October 2001. The
interest rate that the Company is assessed is subject to fluctuation and may
change based upon certain financial covenants. As of January 4, 2000, the
interest rate under the Credit Facility was the lender's base rate (8.25%) minus
0.25%. 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.
Net cash provided by/used in operating activities for the six months ended
November 30, 1999 and November 30, 1998 were $179,000 and $250,000,
respectively. The cash provided by operating activities for six months ended
November 30, 1999 was due primarily to improved collection of accounts
receivables. The cash used in operating activities for the six months ended
November 30, 1998 was due primarily to an increase in accounts receivables.
Net cash used for investing activities for the six months ended November
30, 1999 amounted to $6,289,000 compared to $3,413,000 for the six months ended
November 30, 1998. The net cash used for investing activities for the six
months ended November 30, 1999 was primarily the result of the use of $6,375,000
to purchase aircraft and engines. The net cash used for investing activities
for the six months ended November 30, 1998 was primarily the result of an
investment in the Air41 Joint Venture and the addition of three JT8D-15 engines
held for lease offset by the proceeds from the sale of an engine that had been
held for lease.
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INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
Liquidity and Capital Resources (cont.)
- -------------------------------------------
Net cash provided by financing activities for the six months ended November 30,
1999 amounted to $6,015,000 compared to $3,833,000 for the six months ended
November 30, 1998. The net cash provided by financing activities for the six
months ended November 30, 1999 was the result of a net increase in debt
obligations of $6 million due to the borrowing of funds for the acquisition of
aircraft and engines. The net cash provided by financing activities for the six
months ended November 30, 1998 was primarily the result of a net increase in
debt obligations of $3.8 million due to the borrowing of funds for the
acquisition of the three JT8D-15 engines and the investment in the Air41 Joint
Venture.
At January 4, 2000, the Company was permitted to borrow up to an additional
$2.4 million pursuant to the revolving credit facility. As operations are
currently conducted, the Company believes that amounts available to be borrowed
pursuant to the Credit Agreement and its working capital will be sufficient to
meet the requirements of the Company's business for the foreseeable future (see
discussion in Recent Developments below). The Company had no material
commitments for capital expenditures as of November 30, 1999.
Recent Developments
- --------------------
The Company intends to file an application for an Air Carrier Certificate
under Part 135 of the regulations of the Federal Aviation Administration or to
purchase a company that has a Part 135 certificate. A Part 135 certificate
permits the holder to operate aircraft for cargo transportation service up to a
maximum payload of 7,500 pounds or on-demand passenger charter service for up to
30 passengers. The Company intends to initiate service by the first quarter of
fiscal 2001. Earnings could be negatively impacted due to investment in this
subsidiary. The Company is evaluating the possibility of raising capital by
issuing debt or equity securities of the subsidiary to finance the startup and
initial operations of this subsidiary.
As of January 4, 2000, the Company owns four Embraer EMB-120 aircraft that
are not currently under lease. The Company intends to sell or lease these
aircraft; however, the aircraft are currently in maintenance for repairs. While
these aircraft are in maintenance and until they are utilized, future earnings
could be negatively impacted because the interest expense associated with debt
incurred to purchase the aircraft may not be offset by revenues generated from
the sale or lease of the aircraft.
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INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
Recent Accounting Pronouncements
- ----------------------------------
In June 1998, the FASB issued Statement of Financial Accounting Standards
(FAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities."
FAS No. 133 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.
Year 2000 Issues
- ------------------
The Company experienced no disruptions in the operation of its internal
information systems or in the availability of its facilities during its
transition to year 2000. The Company is not aware that any of its vendors
experienced any disruptions during their transitions to year 2000 or that there
have been any year 2000 problems with its material held for sale. The Company
will continue to monitor the transition to year 2000 and will act promptly to
resolve any problems that occur.
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 SUBSIDIARY
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant conducted an annual meeting of its stockholders on October
7, 1999. The Registrant solicited proxies pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended. There was no solicitation in
opposition to management's solicitation and all persons nominated by the
Registrant for election to its Board of Directors at the annual meeting were so
elected. The following sets forth a brief description of each other matter
acted upon during the Annual Meeting, indicating the number of votes cast for,
against and withheld, and the number of non-broker votes as to each matter.
1. The approval of amendments to the Registrant's Restated and Amended
Certificate of Incorporation and Restated Bylaws to provide for a Board of
Directors of not less than one nor more than 15 directors, as may be determined
by the Board of Directors from time to time.
For: 974,986 Against: 452,857
Abstain: 10,282 Brokered Non-Vote: 0
2. The approval of an amendment to the Company's 1996 Long Term Incentive
and Share Award Program to increase by 109,000 the number of shares available
for grant under the Plan.
For: 901,724 Against: 530,222
Abstain: 6,179 Brokered Non-Vote: 0
3. To ratify the appointment of Grant Thornton LLP as the Company's
independent auditors for the fiscal year ending May 31, 2000.
For: 1,388,999 Against: 47,982
Abstain: 1,144 Brokered Non-Vote: 0
- 14 -
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, Filed herewith.
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 Filed herewith.
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 Filed herewith.
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 Filed herewith.
Agreement, dated as of
February 2, 1998, between
BNY Financial Corporation
and the Registrant and
related to the Credit
Agreement.
2.9 Fifth
Amendment, Filed herewith.
dated as of July 16, 1998,
between BNY Financial
Corporation and the
Registrant and related
to the Credit Agreement.
2.10 Sixth
Amendment, Filed herewith.
dated as of May 30, 1998,
between BNY Financial
Corporation and the
Registrant and related
to the Credit Agreement.
2.11 Seventh
Amendment, Filed herewith.
dated as of October 28,
1998, between BNY Financial
Corporation and the Registrant
and related to the Credit
Agreement.
2.12 Eighth Amendment Filed herewith
dated as of December 8, 1998
1999, between BNY Financial
Corporation and the Registrant
and related to the Credit
Agreement.
2.13 Ninth Amendment Filed herewith
dated as of July 1, 1999
between BNY Financial
Corporation and the Registrant
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.
16
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.
27 Financial Filed herewith.
Data
Schedule.
(b) Reports on Form 8-K
----------------------
The Registrant filed a Current Report on Form 8-K on October 8, 1999. The
date of the report was also October 8, 1999. The report filed the consent of
Grant Thornton LLP to the incorporation of the audit report of such firm into
other filings made by the Registrant pursuant to the Securities Exchange Act of
1034, as amended.
- 17 -
INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY
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 January 5, 2000
- ---------------------- -----------------
James M. Isaacson Date
Chief Financial Officer