Current Report — Form 8-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 8-K Avteam, Inc. Form 8-K Dated 10/12/98 4 14K
2: EX-2.1 Asset Purchase Agreement 10/12/98 51 240K
3: EX-99.1 Press Release 3± 15K
EX-99.1 — Press Release
EX-99.1 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
---|
EXHIBIT 99.1
AVTEAM ANNOUNCES AGREEMENT TO ACQUIRE LEADING ENGINE REPAIR FACILITY AND REPORTS
PRELIMINARY THIRD QUARTER RESULTS
PR Newswire - October 12, 1998 16:15
MIRAMAR, Fla., Oct. 12 /PRNewswire/ AVTEAM, Inc. (Nasdaq: AVTM), a global
supplier of aftermarket aircraft engines, engine parts and airframe components,
today announced a definitive agreement to acquire M&M Aircraft Services, Inc.,
which management believes is one of the largest privately held jet engine
overhaul operations in the world. The company said also that third quarter 1998
net sales are expected to be approximately $15 million, compared with $13.3
million a year earlier, and that earnings are expected to increase at a similar
rate.
AVTEAM said it will pay $30 million in cash and 350,000 shares of its class A
common stock to acquire the assets and assume certain liabilities of M&M, an
engine and engine component repair operation licensed by the Federal Aviation
Administration. The transaction is subject to certain regulatory approvals and
other customary conditions.
Donald Graw, AVTEAM's chairman and chief executive officer, said the acquisition
of M&M Aircraft Services significantly increases the company's sales and growth
prospects and is "a giant step toward our goal of becoming a provider of a full
range of services to airlines around the world." He said M&M will greatly
enhance AVTEAM's access to the $28 billion worldwide aviation maintenance,
repair and overhaul market. M&M Aircraft Services reported revenue of
approximately $27 million in 1997 and more than $30 million in the first nine
months of 1998. AVTEAM expects the acquisition to have little or no effect on
earnings this year, but to be accretive to earnings in 1999.
Mr. Graw said M&M "adds an entirely new and important dimension to AVTEAM,
giving us the means to more effectively control the marketing, sale and repair
of our engine-related products." Both AVTEAM and M&M specialize in the JT8D
series of aircraft engines, the most widely used jet engines in the world, and
both companies seek to expand their capabilities to include the CFM56, which
today is produced in greater quantities than any other jet aircraft engine in
the world. M&M, founded in 1984, recently opened a new state-of-the-art facility
in Medley, Fla., less than ten miles from AVTEAM's headquarters.
Simultaneously with announcing the M&M agreement, AVTEAM stated that although
sufficient data is not yet available for determining third quarter 1998 profits,
the company expects a gain in earnings commensurate with the sales increase. The
company had net income of $803,000 in last year's third quarter. Management
expects this year's fourth quarter's results to surpass those for the fourth
quarter of 1997, when the company had net income of $1.5 million on revenue of
$20.7 million.
Mr. Graw said third-quarter 1998 sales and earnings growth was slower than
expected because of aggressive pricing of whole engines by competitors. He added
that AVTEAM declined to match these actions by sharply reducing the price of
engines it had in inventory. Instead the company acted to maintain its normal
gross margins.
"There are indications in the marketplace that this price pressure is beginning
to lift," he said. "We believe that -- partly because we did not sell at all
costs in the third quarter -- we have a whole-engine inventory that is well
suited to meet customer demand in the fourth quarter. In any case, clearly this
whole pricing situation has not been a big enough problem to stop our sales and
earnings from continuing to grow.
"Certainly we regret this turbulence in our markets, but we remain very
optimistic about the outlook for our company," Mr. Graw continued. "We intend to
continue expanding our capabilities, and our global reputation continues to be a
tremendous competitive asset. We think it is noteworthy that AVTEAM is
continuing to achieve strong internal growth, and that our growth up to this
point has not been dependent on acquisitions."
Mr. Graw said the company's growth strategy, which involves broadening the
products and services it offers and increasing direct sales to airlines,
continues to produce positive results. For example, he said, AVTEAM recently
executed a contract, renewable annually, under which it provides engine
management services to Southwest Airlines for certain JT8D engines. This is in
addition to AVTEAM's hush kit installation contract with Southwest Airlines and
therefore expands the relationship. He added that the company's parts sales
remain strong.
AVTEAM, which is headquartered in Miramar, Fla., and also has operations in
Dallas, Texas, last year completed an initial public offering of approximately
4.8 million shares, raising net proceeds of approximately $25.6 million. Since
beginning operations in 1992, the company has focused on the purchase and resale
of Pratt & Whitney JT8D engines and components, which power approximately 33
percent of the world's commercial aviation fleet. Recently AVTEAM has expanded
its product line to include CF6 engine parts and DC10 material, extending the
company's capabilities into the wide-body market. The company also offers
equipment leasing, engine management services and certain on-wing engine
maintenance services.
Except for the historical information contained in this news release, the
matters discussed in this news release are "forward-looking statements" within
the meaning of the federal securities law and are not guarantees of future
performance. For a variety of reasons, the company's actual results could differ
materially from any forward-looking statements made in this news release. Among
the factors that could cause actual results to differ from predicted or expected
results are the following: the company's ability to effectively integrate
acquired companies and the effects of increased indebtedness as a result of the
company's acquisitions; a decline in the demand for aftermarket aircraft
engines, engine parts and airframe components, which could materially adversely
affect the company's revenues; the availability of aircraft engines, engine
parts and airframe components for resale, which could hamper the company's
ability to maintain adequate levels of inventory and meet customer demand; the
possibility that regulatory changes and unforeseen events could impact the
company's ability to provide products and services to its customers; existing
competition from national and regional competitors and the condition of the
airline industry, which could result in pricing, supply and demand, and other
pressures on profitability and market share; and other risks and uncertainties
set forth in the company's filings with the Securities and Exchange Commission,
including but not limited to the company's prospectus dated October 30, 1997,
for its initial public offering and the company's annual report on Form 10-K for
the year ended December 31, 1997. Consequently, the reader is cautioned to
consider all forward-looking statements in light of the risks to which they are
subject.
SOURCE AVTEAM, Inc.
/CONTACT: Donald A. Graw, Chairman and Chief Executive
Officer of AVTEAM,
954-431-2359; or General Info, Jerry Meyer, Analyst
Info, John McNamara, or
Media Info, Claudine Cornelis, all of The Financial
Relations Board,
212-661-8030/
Dates Referenced Herein and Documents Incorporated by Reference
This ‘8-K’ Filing | | Date | | Other Filings |
---|
| | |
Filed on: | | 10/15/98 |
For Period End: | | 10/12/98 |
| | 12/31/97 | | 10-K |
| | 10/30/97 |
| List all Filings |
↑Top
Filing Submission 0000950144-98-011494 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Fri., May 17, 7:49:12.1pm ET