================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 19, 2002
----------
AVIALL, INC.
(Exact name of registrant as specified in charter)
DELAWARE 1-12380 65-0433083
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
2750 REGENT BOULEVARD 75261
DFW AIRPORT, TEXAS (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (972) 586-1000
Not Applicable
(Former name or former address, if changed since last report)
================================================================================
ITEM 5. OTHER EVENTS.
Effective January 1, 2002, we adopted the provisions of Statement of
Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS 142"). SFAS 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets. The adoption of SFAS 142 required us to
eliminate amortization of goodwill and intangible assets with indefinite lives
as of January 1, 2002 and to conduct a transitional impairment test of these
assets by June 30, 2002. Additional impairment tests are required on an annual
basis and under certain other circumstances in the future. We have completed the
transitional impairment tests of goodwill as of January 1, 2002 and found no
impaired goodwill.
In accordance with SFAS 142, we are filing this Form 8-K to present the
transitional disclosures required by paragraph 61 of SFAS 142 by presenting
adjusted net earnings in our selected financial data for the three years ended
December 31, 2001, as if SFAS 142 had been adopted at the beginning of each of
those years.
The following table summarizes certain of our selected financial
information that has been derived from our audited Consolidated Financial
Statements. You should read the information set forth below in conjunction with
"Item 7: Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Consolidated Financial Statements and Notes thereto
included in our Annual Report on Form 10-K as of and for the year ended December
31, 2001.
(Dollars in Thousands, Except Share Data) 2001 2000 1999 1998 1997
------------------------------------------------- -------------- -------------- -------------- -------------- --------------
Selected Operating Data:
Net sales(a) $ 506,160 485,920 371,901 404,207 389,887
Gross profit $ 116,694 111,264 95,425 101,603 101,024
Selling and administrative expenses(b) $ 90,107 84,765 75,987 69,361 71,739
Unusual gain (loss)(c) $ (9,787) -- (6,029) -- 1,436
Interest expense $ 10,291 8,407 3,345 2,681 3,201
Provision (benefit) for income taxes(d)(e) $ 3,046 7,526 4,949 (32,175) 1,096
Earnings from continuing operations(d) $ 3,463 10,566 5,115 61,736 26,424
Earnings from discontinued operations(f) $ 322 1,062 4,588 2,821 2,673
Earnings before extraordinary loss $ 3,785 11,628 9,703 64,557 29,097
Adjusted earnings before extraordinary loss(j) $ 5,701 13,544 11,932 n/a n/a
Extraordinary loss(g) $ (1,026) -- -- -- --
Net earnings(c)(d)(f)(g) $ 2,759 11,628 9,703 64,557 29,097
Adjusted net earnings(j) $ 4,675 13,544 11,932 n/a n/a
-------------- -------------- -------------- -------------- --------------
Other Financial Data:
Net cash (used for) provided by operating
activities $ (93,388) 7,668 (11,980) 20,252 10,111
Total assets $ 533,229 395,451 340,640 304,646 259,392
Total debt $ 200,854 90,422 78,011 45,628 36,560
Total debt to total capital(h) 46.08% 32.05% 30.33% 21.30% 22.30%
-------------- -------------- -------------- -------------- --------------
Basic Net Earnings Per Share Data:
Earnings from continuing operations $ 0.18 0.58 0.28 3.22 1.34
Earnings from discontinued operations 0.02 0.06 0.25 0.15 0.14
Extraordinary loss (0.06) -- -- -- --
-------------- -------------- -------------- -------------- --------------
Net earnings(c)(d)(f)(g) $ 0.14 0.64 0.53 3.37 1.48
Adjusted net earnings(j) $ 0.25 0.74 0.65 n/a n/a
-------------- -------------- -------------- -------------- --------------
Weighted average common shares 18,380,975 18,313,401 18,222,526 19,150,869 19,711,105
-------------- -------------- -------------- -------------- --------------
Diluted Net Earnings Per Share Data:(i)
Earnings from continuing operations $ 0.18 0.58 0.28 3.17 1.32
Earnings from discontinued operations 0.02 0.06 0.25 0.15 0.13
Extraordinary loss (0.06) -- -- -- --
-------------- -------------- -------------- -------------- --------------
Net earnings(c)(d)(f)(g) $ 0.14 0.64 0.53 3.32 1.45
Adjusted net earnings(j) $ 0.25 0.74 0.65 n/a n/a
-------------- -------------- -------------- -------------- --------------
Weighted average common and dilutive potential
common shares 18,718,979 18,337,161 18,474,038 19,466,419 20,061,205
-------------- -------------- -------------- -------------- --------------
(a) Net sales for the years 1999, 1998 and 1997 have been restated as a result
of the implementation of EITF 00-10 in 2000.
(b) In 2001, we expensed $1.4 million, which was included in selling and
administrative expenses, related to the relocation of our Dallas, Texas
facility.
(c) The unusual loss in 2001 was primarily related to the aviation industry
changes resulting from the September 11th terrorist attacks and consists of
inventory and intangible write-downs, unfavorable leases and doubtful
accounts, and costs related to our new capital structure. The unusual loss
in 1999 resulted from costs incurred related to the strategic review
process, executive severance pay and the write-down of inventory for
discontinued product lines. The 1997 unusual gain resulted from the
repayment of a discounted note.
(d) Earnings from continuing operations and net earnings in 1998 included a
$32.2 million tax benefit due to the release of a $33.5 million deferred
tax valuation allowance offset by provisions of certain U.S. state and
foreign taxes.
(e) Our cash payments for taxes are substantially below reported tax expense
due to our use of net operating losses, which are not expected to be fully
utilized for several years.
(f) In January 1996, we announced our intention to exit certain businesses and,
accordingly, reported these businesses as discontinued operations. The
earnings from discontinued operations resulted from changes in estimates
for certain retained liabilities.
(g) The extraordinary loss in 2001 resulted from the write-off of unamortized
financing costs in connection with refinancing our senior credit facility.
(h) Total capital consists of convertible preferred stock (net of issuance
costs) and shareholders' equity.
(i) Diluted net earnings per share were not dilutive, or lower than basic, in
2001. Therefore, diluted net earnings per share for 2001 is presented equal
to basic net earnings per share.
(j) Effective January 1, 2002, we adopted the provisions of Statement of
Financial Accounting Standards No. 142 "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS 142 addresses financial accounting and reporting
for acquired goodwill and other intangible assets. The statement eliminates
amortization of goodwill and intangible assets with indefinite lives and
requires a transitional impairment test of these assets within six months
of the date of adoption and an annual impairment test thereafter and in
certain circumstances. We have completed the transitional impairment tests
of goodwill as of January 1, 2002, and no impairment was noted. The
following table presents earnings and earnings per share, as adjusted for
goodwill amortization recognized in periods prior to our adoption of SFAS
142:
(Dollars In Thousands, Except Share Data) 2001 2000 1999
--------------------------------------------- ------------- ------------- -------------
Reported net earnings $ 2,759 11,628 9,703
Add: Goodwill amortization 1,916 1,916 2,229
------------- ------------- -------------
Adjusted net earnings $ 4,675 13,544 11,932
------------- ------------- -------------
Basic net earnings per share:
Reported net earnings $ 0.14 0.64 0.53
Goodwill amortization 0.11 0.10 0.12
------------- ------------- -------------
Adjusted net earnings $ 0.25 0.74 0.65
------------- ------------- -------------
Diluted net earnings per share:
Reported net earnings $ 0.14 0.64 0.53
Goodwill amortization 0.11 0.10 0.12
------------- ------------- -------------
Adjusted net earnings $ 0.25 0.74 0.65
------------- ------------- -------------
* * * * *
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AVIALL, INC.
By: /s/ JACQUELINE K. COLLIER
-----------------------------
Name: Jacqueline K. Collier
Title: Vice President and Controller
Date: July 19, 2002