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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 MARCH 31, 1998
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: 0-29490
HAWKER PACIFIC AEROSPACE
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3528840
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
11240 SHERMAN WAY, SUN VALLEY, CALIFORNIA 91352
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(818) 765-6201
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES NO X
-------- -------
The number of shares of the registrant's common stock outstanding on May
12, 1998 was 5,822,222 shares.
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HAWKER PACIFIC AEROSPACE
Report on Form 10-Q
For the Quarter Ended March 31, 1998
Table of Contents
Page
------
Cover Page .............................................................. 1
Table of Contents........................................................ 2
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Condensed Balance Sheets............................. 3
Consolidated Condensed Statements of Income - Three Months........ 4
Consolidated Condensed Statements of Cash Flows................... 5
Consolidated Condensed Statements of Shareholder's Equity......... 6
Notes to Consolidated Condensed Financial Statements.............. 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 10
Part II - Other Information
Item 2 - Changes in Securities and Use of Proceeds.................. 13
Item 4 - Submission of Matters to a Vote of Security Holders........ 14
Item 6 - Exhibits and Reports on Form 8K............................ 15
Signatures............................................................... 16
Exhibit 27 - Financial Data Schedule
2
HAWKER PACIFIC AEROSPACE
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31 December 31
1998 1997
----------- ------------
ASSETS (Unaudited)
Current Assets:
Cash $ 552,000 $ 160,000
Accounts receivable 10,971,000 7,351,000
Other receivables 136,000 80,000
Inventories 18,183,000 14,814,000
Prepaid expenses and other current assets 633,000 240,000
----------- ------------
Total current assets 30,475,000 22,645,000
Equipment and leasehold improvements, net 9,229,000 5,083,000
Landing gear exchange, net 26,005,000 11,067,000
Goodwill, net 6,000 145,000
Deferred financing costs, net 510,000 262,000
Deferred offering costs - 766,000
Other assets 413,000 930,000
----------- ------------
$66,638,000 $40,898,000
----------- ------------
----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,013,000 $ 6,946,000
Line of credit 5,050,000 8,529,000
Accrued liabilities 4,899,000 1,976,000
Current portion of long term debt 812,000 1,450,000
----------- ------------
Total current liabilities 14,774,000 18,901,000
----------- ------------
Long-term debt 28,688,000 17,700,000
Shareholders' equity 23,176,000 4,297,000
----------- ------------
Total Liabilities and Shareholders'
Equity $ 66,638,000 $40,898,000
----------- ------------
----------- ------------
See accompanying Notes to Consolidated Condensed Financial Statements
3
HAWKER PACIFIC AEROSPACE
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31
-------------------------
1998 1997
----------- ------------
Revenues $13,667,000 $9,814,000
Cost of Revenues 10,470,000 7,531,000
----------- ------------
Gross Profit 3,197,000 2,283,000
Selling, General and Administrative Expenses 1,862,000 1,395,000
----------- ------------
Income from Operations 1,335,000 888,000
Interest expense (648,000) (579,000)
----------- ------------
Income Before Provision for Income Taxes 687,000 309,000
Provision for Income Taxes 259,000 114,000
----------- ------------
Net Income $ 428,000 $ 195,000
----------- ------------
----------- ------------
Earnings per common share $ .09 $ .06
----------- ------------
----------- ------------
Earnings per common share - assuming dilution $ .08 $ .06
----------- ------------
----------- ------------
See accompanying Notes to Consolidated Condensed Financial Statements
4
HAWKER PACIFIC AEROSPACE
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31
---------------------------
1998 1997
----------- -----------
Operating Activities
Net income $ 428,000 $ 195,000
Adjustments to reconcile net income to net cash used in
operating activities:
Deferred income taxes 140,000 115,000
Depreciation and amortization 500,000 334,000
Other noncash Items 14,000 -
Changes in operating assets and liabilities:
Accounts receivable (3,660,000) (665,000)
Inventory (1,410,000) 235,000
Prepaid expenses and other current assets (216,000) (175,000)
Accounts payable (2,679,000) (831,000)
Deferred Revenue 1,014,000 (77,000)
Accrued liabilities 1,632,000 (248,000)
----------- -----------
Cash used in operating activities (4,237,000) (1,117,000)
Investing Activities
Purchase of British Airways' inventory (1,947,000) -
Purchase of equipment, and landing gear from British Airways (17,524,000) -
Purchase of equipment, leasehold improvements and landing gear (1,334,000) (304,000)
----------- -----------
Cash used in investing activities (20,805,000) (304,000)
Financing Activities
New borrowings:
Revolving credit line 5,050,000 750,000
Bank note 24,500,000 -
Net proceeds from equity offering 18,834,000 -
Debt reduction:
Notes payable (14,150,000) -
Revolving credit line (8,529,000) -
Deferred loan fees (271,000) -
----------- -----------
Cash provided by financing activities 25,434,000 750,000
----------- -----------
Increase (decrease) in cash 392,000 (671,000)
Cash, beginning of period 160,000 1,055,000
----------- -----------
Cash, end of period $ 552,000 $ 384,000
----------- -----------
----------- -----------
See accompanying Notes to Consolidated Condensed Financial Statements
5
HAWKER PACIFIC AEROSPACE
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Preferred Stock Common Stock
------------------- ----------------------- Other
Number of Retained Comprehensive
Shares Amount Shares Amount Earnings Income Total
------ ---------- ----------- -------- ---------- -------------- ------------
Balances at
December 31, 1997 400 $2,000,000 2,972,222 $1,040,000 $1,257,000 $ - $4,297,000
----------
Net Income - - - 428,000 - 428,000
Foreign currency
translation adjustment - - - - 383,000 383,000
----------
Comprehensive income - - - - 811,000
----------
Conversion of preferred stock (400) (2,000,000) 250,000 2,000,000 - - -
Issuance of common stock - - 2,600,000 18,068,000 - - 18,068,000
----- ----------- --------- ----------- ---------- --------- -----------
Balances at
March 31, 1998 - - 5,822,222 $21,108,000 $1,685,000 $383,000 $23,176,000
----- ----------- --------- ----------- ---------- --------- -----------
----- ----------- --------- ----------- ---------- --------- -----------
See accompanying Notes to Consolidated Condensed Financial Statements
6
HAWKER PACIFIC AEROSPACE
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
INTERIM CONDENSED FINANCIAL STATEMENTS
During interim periods, Hawker Pacific Aerospace (the "Company") follows the
accounting policies set forth in its Annual Report to Shareholders and applies
appropriate interim financial reporting standards, as indicated below. Users of
financial information produced for interim periods are encouraged to refer to
the notes contained in the Annual Report to Shareholders when reviewing interim
financial results.
Interim financial reporting standards require management to make estimates that
are based on assumptions regarding the outcome of future events and
circumstances not known at the present time, including the use of estimated
effective tax rates. Inevitably, some assumptions may not materialize and
unanticipated events and circumstances may occur which vary from those estimates
and such variations may significantly affect the Company's future results.
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements of the Company have been prepared in accordance with the
Securities and Exchange Commission's requirements of form 10-Q and contain all
adjustments, of a normal and recurring nature, which are necessary to present
fairly the financial position of the Company as of March 31, 1998, and the
results of its operations and cash flows for the three month period ended March
31, 1998 and 1997.
CONTINGENCIES
The Company is party to various legal and environmental proceedings incidental
to its business. Certain claims, suits and complaints arising in the ordinary
course of business have been filed or are pending against the Company. Based on
facts now known to the Company, management believes all such matters are
adequately provided for, covered by insurance or, if not so covered or provided
for, are without merit, or involve such amounts that would not materially
adversely affect the consolidated results of operations and cash flows or
financial position of the Company.
EARNINGS PER SHARE
Basic earnings per share are based upon the weighted average number of common
shares outstanding including the 250,000 shares issued upon the automatic
conversion of the convertible preferred stock as if the conversion occurred at
the beginning of the periods presented. The weighted average common shares used
in calculating basic earnings per share were 5,013,333 and 3,120,603 for the
three months ended March 31, 1998 and 1997, respectively. Diluted earnings per
share is based on the number of shares used in the basic earnings per share
calculation plus the dilutive effects of stock options under the treasury stock
method. The weighted average of common and common equivalent shares used in
calculating diluted earnings per share were 5,091,457 and 3,120,603, for the
three months ended March 31, 1998 and 1997, respectively.
STOCK SPLITS
The information set forth herein reflects a 579.48618 for one stock split
effected in November 1997 and a one for .9907406 reverse stock split effected
in January 1998. All references in the accompanying financial statements
and notes to the number of shares of common stock and per common share
amounts have been retroactively adjusted to reflect the stock splits.
7
HAWKER PACIFIC AEROSPACE
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
(Unaudited)
INVENTORIES
Inventories are comprised of the following:
March 31
1998 1997
----------- -----------
Purchased parts and assemblies $15,923,000 $11,961,000
Work-in-process 2,260,000 2,853,000
----------- -----------
$18,183,000 $14,814,000
----------- -----------
----------- -----------
RECENTLY ISSUED ACCOUNTING STANDARDS
As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components. However, the adoption of
this Statement had no impact on the Company's net income or shareholders'
equity. Under Statement 130, the Company has elected to report other
comprehensive income, which includes unrealized gains or losses on the Company's
foreign currency translation adjustments, within the Statement of Shareholder
Equity. Comprehensive income for the quarter ended March 31, 1997 was the same
as net income for the period.
During the first quarter of 1998, total comprehensive income amounted to
$811,000.
FORWARD LOOKING STATEMENTS
Statements included in this filing which are not historical in nature are
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward looking statements regarding the
Company's future performance and financial results are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those set forth in the forward looking statements due to a variety of factors.
Factors that may impact such forward looking statements include, among other,
changes in the condition of the industry, changes in general economic conditions
and the success of the Company's strategic operating plans.
2. ACQUISITIONS
On February 4, 1998, the Company completed the acquisition of certain assets
("BA Assets") of the British Airways plc landing gear operation (the "BA
Acquisition") for a purchase price of approximately $19.5 million, (including
acquisition related expenses) excluding one asset that is to be acquired during
the second quarter of fiscal 1998 for approximately $2.9 million.
3. NOTES PAYABLE
On January 23, 1998, the Company and Bank of America entered into the Amended
and Restated Business Loan Agreement (the "Amended Loan Agreement"), which
agreement increased the maximum amount of credit available to the Company from
$26.5 million to $45.5 million. The credit facilities of the Amended Loan
Agreement became available upon the completion of the Company's initial public
offering and consummation of the BA Acquisition. The Company used approximately
$9.2 million of the proceeds available under the Amended Loan Agreement to fund
a portion of the purchase price of the BA Assets. The Amended Loan Agreement
provides the Company with a $15.0 million revolving line of credit, a $24.5
million term loan, and a $6.0 million capital expenditure facility. The
revolving line of credit matures in January 2001, and the term loan and capital
expenditure facilities mature in January 2005. The Amended Loan Agreement is
secured by a lien on all of the assets of the Company, including the BA Assets.
At the Company's election, the rate of interest on each of the three facilities
8
available under the Amended Loan Agreement is either Bank of America's reference
rate or the inter-bank eurodollar rates on either, at the Company's option, the
London market or the Cayman Islands market.
4. INITIAL PUBLIC OFFERING
On February 3, 1998, the Company completed an initial public offering (the
"Offering") of 2,766,667 shares of the Company's common stock ("Common Stock").
Of the 2,766,667 shares of Common Stock sold in the Offering, 2,600,000 shares
were sold by the Company and 166,667 shares were sold by a principal shareholder
of the Company. The principal shareholder sold 415,000 additional shares of
Common Stock pursuant to the exercise of an over allotment option granted to the
underwriters by the principal shareholder. The Company received net proceeds of
approximately $18.1 million net of expenses of approximately $2.7 million. The
Company used approximately $9.2 million of the net proceeds to fund a portion of
the purchase price for certain assets of British Airways as discussed in Note 3,
and approximately $7.6 million to repay a portion of the revolving and term debt
previously outstanding under the Company's credit facility. The balance of the
net proceeds has been used for working capital purposes.
9
HAWKER PACIFIC AEROSPACE
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Quarterly Report contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, such as statements of the Company's plans, objectives, expectations and
intentions, that involve risks and uncertainties that could cause actual results
to differ materially from those discussed in such forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this Quarterly Report and in the Company's
various filings with the Securities and Exchange Commission, including without
limitation the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
The following discussion and analysis should be read in conjunction with the
Company's financial statements and related notes thereto included herein and
with the information set forth under Management's Discussion and Analysis of
Financial Condition and Results of Operations of the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.
RESULTS OF OPERATIONS
The following table sets forth certain statement of operations data for the
periods indicated:
(unaudited)
For the Three Months
Ended March 31,
-------------------------
Increase
Summary of Sales by Product Line 1998 1997 Over 1997
------------ ----------- ----------
Landing gear repairs $7,991,000 $4,361,000 83.2%
Hydromechanics repairs 4,862,000 4,513,000 7.7%
Spares & other 814,000 940,000 -13.4%
---------- ----------
Total revenue 13,667,000 9,814,000 39.3%
Gross profit 3,197,000 2,283,000 40.1%
Selling, general and administrative expense 1,862,000 1,395,000 33.4%
---------- ----------
Income from operations 1,335,000 888,000 50.3%
Interest expense (648,000) (579,000) 11.9%
---------- ----------
Income before provision for income taxes 687,000 309,000 122.3%
Provision for income taxes 259,000 114,000 127.1%
---------- ----------
Net income $ 428,000 $ 195,000 120.0%
---------- ----------
---------- ----------
Net revenues increased 39.3 percent to $13.7 million for the first quarter of
the fiscal year ending December 31, 1998 ("fiscal 1998") compared to $9.8
million for the same period in 1997. 18.4 percent of this growth was due to
expansion of existing landing gear business through new contracts such as the
American Airlines 757 program. The remaining 20.9 percent increase resulted
from the revenues attributable to certain assets acquired from British Airways
in the first quarter of fiscal 1998.
10
Gross profit for the first quarter of fiscal 1998 increased 40.1 percent to $3.2
million compared to $2.3 million for the same period in 1997. This increase in
gross profit is proportional to the increase in revenues. Gross profit as a
percentage of revenues increased slightly to 23.4 percent in the first quarter
of fiscal 1998 compared to 23.3 percent for the same period in 1997.
Selling, general and administrative expenses for the first quarter of fiscal
1998 increased 33.4 percent to $1.9 million from $1.4 million for the same
period in 1997. This increase is attributable to the addition of the new
subsidiary in the United Kingdom due to the acquisition of certain assets from
British Airways plc. Also, the Company incurred additional personnel costs,
professional services fees and travel expenses during the first quarter of
fiscal 1998 as a result of its recapitalization and acquisition activities. As
a percentage of sales, selling, general and administrative costs declined .6
percent to 13.6 percent of revenues during the first quarter of fiscal 1998 from
14.2 percent in 1997.
Income from operations increased 50.3 percent to $1.3 million during the first
quarter of fiscal 1998, compared to $.9 million during the first quarter of
1997. As a percentage of revenue, income from operations increased from 9.0
percent in the first quarter of 1997 to 9.8 percent in the first quarter of
fiscal 1998. This was a result of improved operating expense leverage on
selling, general and administrative expenses as noted above.
Interest expense increased 11.9 percent to $648,000 during the first quarter of
fiscal 1998 compared to $579,000 during the first quarter of 1997 due to
increased borrowing to fund expansion of existing business and costs related to
the recapitalization process. Interest expense is expected to continue to
increase as a result of increased borrowings.
The effective tax rate for the first quarter of fiscal 1998 was 37.7% compared
to 36.9% in the first quarter of 1997. The effective tax rate differs from the
statutory rates due to certain non deductible expenses. At March 31, 1998, the
Company had a valuation reserve of $519,000 for the deferred tax assets. If the
Company generates sufficient income in the future, this reserve may be reflected
as a reduction to the tax expense in the future periods.
The increases in gross profit and operating income more than offset the
increased tax rate to contribute to a 63 percent increase in net income as a
percent of sales from 1.9 percent to 3.1 percent. Net income during the first
quarter of fiscal 1998 increased 120 percent over the first quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities was $4.2 million for the three months
ended March 31, 1998, compared to $1.1 million for the same period in 1997. The
increased use of cash relates to increases in accounts receivable and inventory.
Accounts receivable increased as a result of higher reserves and inventory was
increased to cover production requirements related to new contracts, including
contracts with American Airlines and Airbus landing gear contracts for Federal
Express.
On January 23, 1998, the Company and Bank of America entered into the Amended
and Restated Business Loan Agreement (the "Amended Loan Agreement"), which
agreement increased the maximum amount of credit available to the Company from
$26.5 million to $45.5 million. The credit facilities of the Amended Loan
Agreement became available upon the completion of the Company's initial public
offering and consummation of the acquisition of substantially all of the assets
of the landing gear repair and overhaul operations (the "BA Assets") of British
Airways plc. The Company used approximately $9.2 million of the proceeds
available under the Amended Loan Agreement to fund a portion of the purchase
price of the BA Assets. The Amended Loan Agreement provides the Company with a
$15.0 million revolving line of credit, a $24.5 million term loan, and a $6.0
million capital expenditure facility. The revolving line of credit matures in
January 2001, and the term loan and capital expenditure facilities mature in
January 2005. The Amended Loan Agreement is secured by a lien on all of the
assets of the Company, including the BA Assets. At the Company's election, the
rate of interest on each of the three facilities available under the Amended
Loan Agreement is either Bank of America's reference rate or the inter-bank
eurodollar rates on either, at the Company's option, the London market or the
Cayman Islands market.
11
On February 3, 1998, the Company completed an initial public offering of
2,766,667 shares of Common Stock at an offering price of $8 per share. The
Company received net proceeds from the offering of $18.1 million. $9.2 million
of this amount, together with proceeds from the Company's amended loan agreement
were used to acquire British Airways' landing gear operation in the United
Kingdom for approximately $19.5 million. This acquisition was accounted for as
a purchase of assets. The balance of the net offering proceeds was used to pay
down existing indebtedness and for working capital.
Approximately $2.9 million is to be paid to British Airways plc during the
second quarter of fiscal 1998 as part of the acquisition described in Note 2.
to the Financial Statements. which will be funded by borrowings against the
revolving credit line and working capital.
Working capital and current ratio were $15.7 million and 2.06 for the quarter
ended March 31, 1998. This is an increase of $3.7 million and .86 respectively
from December 31, 1997. The ratio of total debt to equity improved to 1.5 for
the quarter ended March 31, 1998 from 6.4 at December 31, 1997. This
improvement is the result of the increased equity from the public offering
consummated in the first quarter of fiscal 1998.
The Company is currently working to resolve the potential impact of the year
2000 on the processing of date-sensitive information by the Company's
computerized information systems. The year 2000 problem is the result of
computer programs being written using two digits (rather than four) to define
the applicable year. Any of the Company's programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the
year 2000, which could result in miscalculation or system failures. Based on
preliminary information, costs of addressing potential problems are currently
not expected to have a material adverse impact on the Company's financial
position, results of operations or cash flows in future periods. However, if
the Company, its customers or vendors are unable to resolve such processing
issues in a timely manner, it could result in a material financial risk.
Accordingly, the Company plans to devote the necessary resources to resolve
all significant year 2000 issues in a timely manner.
12
HAWKER PACIFIC AEROSPACE
PART II - OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds
RECENT SALES OF UNREGISTERED SECURITIES
In February 1998, pursuant to the Amended and Restated Articles of
Incorporation of the Company, 400 shares of Series A Preferred Stock held by
a principal shareholder of the Company were converted into an aggregate of
250,000 shares of Common Stock of the Company upon completion of the initial
public offering of the Company's Common Stock. The Company believes that the
conversion was exempt from registration under the Securities Act of 1933, as
amended, by virtue of Section 4(2) thereof as a transaction not involving a
public offering.
USE OF PROCEEDS
On January 29, 1998, the Company commenced the initial public offering of
2,766,667 shares of its Common Stock, pursuant to the Company's Registration
Statement (the "Offering") on Form S-1, as amended (the "Registration
Statement") (Registration No. 333-40295), which was declared effective under
the Securities Act of 1933, as amended, by the Securities and Exchange
Commission on January 29, 1998. The underwriters of the Offering were
represented by EVEREN Securities, Inc. and The Seidler Companies
Incorporated, acting as managing underwriters. All 2,600,000 shares of
Common Stock registered under the Registration Statement for the account of
the Company (consisting of an aggregate offering price of $20,800,000) and
all 166,667 shares registered for the account of the selling shareholder
(consisting of an aggregate offering price of $1,333,336) were sold in the
Offering. In addition, on February 24, 1998 the underwriters exercised their
option to purchase 415,000 additional shares of Common Stock to cover
over-allotments in connection with the Offering. All of the 415,000 shares
of Common Stock sold pursuant to the over-allotment option were registered
for the account of the selling shareholder of the Company (consisting of an
aggregate offering price of $3,320,000). The Offering has terminated.
The Company incurred the following expenses in connection with the Offering
(excluding expenses incurred by the selling shareholder):
CATEGORY OF EXPENSE AMOUNT OF EXPENSE
- - ------------------- -----------------
Underwriting discounts and commission $ 1,456,000
Finders' fees -0-
Expenses paid to or for underwriters 221,000
Other expenses 1,022,000
-----------
Total expenses $ 2,699,000
-----------
-----------
The total expenses were originally estimated at $3,000,000 and reported as
such in the Company's Annual Report on Form 10-K for the year ended December
31, 1997. None of the expenses incurred by the Company in connection with
the Offering was paid to directors, officers, ten percent shareholders or
affiliates of the Company.
Of the total net proceeds in the amount of approximately $18.1 million
received by the Company from its sale of 2,600,000 shares of Common Stock in
the Offering, the following amounts were used from the date of the Offering
through March 12, 1998:
CATEGORY OF USE AMOUNT OF USE
- - ------------------- --------------
Acquisition of other businesses $9.2 million
Repayment of Indebtedness $7.6 million
Working capital $1.3 million
None of the net proceeds to the Company of the Offering was paid to
directors, officers, ten percent shareholders or affiliates of the Company.
Other than the use of $9.2 million and $7.6 million of the net proceeds from
the Offering for the BA Acquisition and the repayment of indebtedness,
respectively, instead of $11 million and $6 million as described in the
Registration Statement, the foregoing use of proceeds does not represent a
material change from the use of proceeds as described in the Registration
Statement.
13
ITEM 4. Submission of Matters to a Vote of Security Holders
During the quarter ended March 31, 1998, the shareholders of the Company
approved the following matters: (i) the ratification of the Amended and
Restated Articles of Incorporation of the Company which, among other things,
provided for the change in the Company's name, increased the number of
authorized shares of the Company's common and preferred stock and effectuated
a 579.481618 for one stock split of the outstanding Common Stock; (ii) an
amendment to the Company's 1997 Stock Option Plan to provide the maximum
number of options that may be granted to an eligible person during any
twelve-month period; and (iii) amendments to the Amended and Restated
Articles of Incorporation of the Company to provide for the conversion of
outstanding shares of preferred stock of the Company into the Company's
Common Stock upon completion of a bona fide underwritten public offering of
the Company's Common Stock and one for .9907406 reverse stock split of the
Company's issued and outstanding shares of Common Stock. Each of these
matters was approved by all of the Company's shareholders by unanimous
written consent before the completion of the Company's initial public
offering of its Common Stock.
14
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
No. Exhibit Description
------- -------------------
10.1 Underlease, dated February 4, 1998, by and among British Airways plc, Hawker
Pacific Aerospace Limited and the Company (1)
10.2 Bailment and Services Agreement, dated as of September 1, 1997, by and between
Federal Express Corporation and the Company (1)
10.3 First Amendment to Mergers and Acquisitions Agreement, dated as of January 23,
1998, by and between Unique Investment Corp. and the Company.
27 Financial Data Schedule
___________________
(1) Portions of exhibits deleted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality.
(b) Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1998.
15
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.
HAWKER PACIFIC AEROSPACE
Date: May 12, 1998 By /s/ SCOTT W. HARTMAN
---------------------
Scott W. Hartman
CHAIRMAN OF THE BOARD
Date: May 13, 1998 By /s/ DAVID L. LOKKEN
---------------------
David L. Lokken
President and Chief Executive Officer
Date: May 13, 1998 By /s/ BRIAN S. AUNE
---------------------
Brian S. Aune
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
16