| AAR Reports 1st Quarter Fiscal Year 2003 Results
WOOD DALE, Ill., Sep 26, 2002 /PRNewswire-FirstCall via COMTEX/ -- AAR (NYSE:
AIR) today reported net sales of $151.2 million and a net loss of $4.9 million
or $0.15 per share for the first quarter ended August 31, 2002.
Lower than anticipated sales and margins in the Inventory & Logistic Services
and Maintenance, Repair & Overhaul segments reflect reduced demand from the
Company's commercial airline customers due to their difficult environment. Net
sales in the Manufacturing segment increased 27% over last year driven by
continued strong demand for the Company's products that support the U.S.
Military's tactical deployment needs. The Company expects continued growth in
this market. "Although sales and margins for our businesses supporting the commercial airline
industry continue to experience pressure, I am pleased that we generated $4.8
million of cash flow from operations and $2.5 million in free cash flow during
the quarter. We remain very focused on improving capital turns and generating
cash," said AAR President and CEO David P. Storch. "In addition, during the
first quarter we further reduced corporate, administrative and other overhead
costs associated with under-performing business units and are on track to
complete the consolidation and sale of two facilities by the end of the fiscal
year. The annual savings from these actions exceed $8 million and we will begin
to realize savings in the second quarter of the fiscal year." "Our funded backlog is 13% higher than the beginning of the quarter and we are
seeing increased deal flow," Storch continued. "Over the past year, we have
enhanced the Company's competitive position by investing in our stronger
businesses with newer technology assets and capabilities. We believe that the
airlines will outsource more services as they continue to reduce their cost
structure and focus on core competencies. This, in combination with strong
military demand and a lower cost structure, will improve the Company's
performance."
Recent Wins
In early September the Company entered into the following agreements that should
benefit this fiscal year:
* A 28-month agreement with Alaska Airlines to provide heavy airframe
maintenance services for its fleet of MD-80 and B737 series aircraft.
* A five-year agreement with Midwest Express Airlines, Inc. to provide
landing gear overhaul services for its fleet of DC-9 and MD-80 series
aircraft.
* An agreement with IAI / Bedek Aviation Group to design and manufacture
new 767-200 special freighter cargo loading systems for the Airborne
Express freighter conversion program.
The Company also announced today that Mr. Storch would assume the additional
role of Chief Operating Officer following the resignation of Joseph M. Gullion,
who had been Executive Vice President and Chief Operating Officer since June
2001. Gullion resigned to accept an opportunity with a company outside the
aviation industry.
Storch said, "We appreciate the contributions Joe made in his short tenure with
the Company and wish him well in his future endeavors."
AAR (NYSE: AIR) is the leading provider of aftermarket support to the worldwide
aviation/aerospace industry. Products and services include customized inventory
management and logistics programs, encompassing supply, repair and manufacture
of spare parts and systems. Headquartered in Wood Dale, Illinois, AAR serves
commercial and government aircraft fleet operators and independent service
customers throughout the world. Further information can be found at
www.aarcorp.com.
AAR will hold its quarterly conference call at 10:30 AM (CST) on September 26,
2002. The conference call can be accessed via dial-in (1-719-457-2661;
conference 627050). A replay of the call will be available (1-719-457-0820;
conference code 627050) until 12 AM on October 2, 2002.
This press release contains certain statements relating to future results, which
are forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on
beliefs of Company management, as well as assumptions and estimates based on
information currently available to the Company, and are subject to certain risks
and uncertainties that could cause actual results to differ materially from
historical results or those anticipated, including those factors discussed under
Item 7, entitled "Factors Which May Affect Future Results", included in the
Company's May 31, 2002 Form 10-K. Should one or more of these risks or
uncertainties materialize adversely, or should underlying assumptions or
estimates prove incorrect, actual results may vary materially from those
described. These events and uncertainties are difficult or impossible to predict
accurately and many are beyond the Company's control. The Company assumes no
obligation to publicly release the result of any revisions that may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events. For additional information, see the comments included in AAR's filings
with the Securities and Exchange Commission.
AAR and Subsidiaries
Comparative Statement of Earnings Three Months Ended
(In thousands except per share data) August 31,
2002 2001
(Unaudited)
Sales $151,165 $202,993
Cost of sales 133,400 173,853
Gross profit 17,765 29,140
SG&A 20,781 23,695
Operating income (loss) (3,016) 5,445
Interest expense 4,867 5,544
Interest income 376 747
Pretax income (loss) (7,507) 648
Provision (benefit) for income taxes (2,628) 162
Net income (loss) (4,879) 486
Earnings (loss) per share-Basic ($0.15) $0.02
Earnings (loss) per share-Diluted ($0.15) $0.02
Average shares outstanding-Basic 31,866 26,945
Average shares outstanding-Diluted 31,866 27,209
Balance Sheet Highlights August 31, May 31,
(In thousands except per share data) 2002 2002
(Unaudited) (Derived from
audited
financial
statements)
Cash and cash equivalents $ 35,553 $ 34,522
Current assets 418,117 436,656
Net property, plant and equipment 101,259 102,591
Current liabilities 142,645 150,464
Working capital 275,472 286,192
Total assets 722,944 710,199
Short-term debt 41,989 42,525
Non-recourse debt* 33,108 -
Long-term debt 213,714 217,699
Stockholders' equity 306,560 310,235
Book value per share $ 9.62 $ 9.73
Shares outstanding 31,865 31,870
* On June 20, 2002 the Company purchased the equity interest in an aircraft
joint venture from its partner for nominal consideration as disclosed in the
Company's May 31, 2002 Form 10-K. As a result, the book value of the aircraft
and the associated non-recourse debt were recorded on the Company's consolidated
balance sheet. The debt is currently being serviced by the underlying aircraft
lease. Sales By Business Segment Three Months Ended
(In thousands) August 31,
2002 2001
(Unaudited)
Inventory & Logistic Services $61,299 $81,186
Maintenance, Repair & Overhaul 46,926 56,687
Manufacturing 27,987 21,955
Aircraft & Engine Sales & Leasing 14,953 43,165
$151,165 $202,993 |
