SOURCE: Global Aircraft Solutions, Inc.

August 14, 2008 17:51 ET

Global Aircraft Solutions Announces Second Quarter 2008 Financial Results

TUCSON, AZ--(Marketwire - August 14, 2008) - Global Aircraft Solutions, Inc. (OTCBB: GACF), an integrated aviation company engaged in aircraft trading, aircraft parts sales, and scheduled maintenance, repair and overhaul (MRO) services for commercial airlines, charter airlines and aviation leasing companies, today announced its financial results for the second quarter ended June 30, 2008.

2008 Q2 Significant Events

--  Revenue increased 8.7% to $7.48 million compared to $6.88 million in
    Q1 2008
--  The Company reported a net loss of $4.26 million, driven by $3.0
    million of aircraft inventory write downs and a $1.8 million increase in
    receivable reserves
    

Net sales for the three months ended June 30, 2008 decreased approximately $3.69 million, or 33%, to $7.48 million from $11.17 million for the three months ended June 30, 2007. Cost of sales for the three months ended June 30, 2008 increased approximately $315,000, or 3.4%, to $9.62 million from $9.30 million for the three months ended June 30, 2007. Gross loss for the three months ended June 30, 2008 totaled $2.1 million compared to a $1.86 million gross profit for the second quarter of 2007.

The Company reported an operating loss of $6,366,148 and a net loss of $4,255,309 for the second quarter of 2008 compared to $337,285 operating profit and $140,530 net income for the second quarter 2007. The Q2 loss encompassed aircraft write downs in inventory of $3 million, increased accounts receivables reserves of $1.8 million, a charge against a previous aircraft sale of $923,000, and various non-repeatable one-time expenses of approximately $200,000. These events, related to activities in other periods, totaled $5.9 million during Q2 of 2008. The roughly $3.0 million inventory write-down taken in the second quarter pertains almost exclusively to aircraft inventory originally booked as part of the JetGlobal settlement agreement dated April 20, 2007. This inventory write down was occasioned by changed circumstances in specific sales transactions pursued by the Company and by changes in the market at large as airlines moved to aggressively divest themselves of older less fuel efficient aircraft in response to increased fuel prices. Virtually all of the approximately $1.8 million in bad debt expense arose due to the Company's decision to write down its BCI (approximately $800,000) and Avolar (approximately $315,000) receivables, and as a result of a delivery condition deficiency claim (approximately $656,000) made by GALP regarding a 737-300 sold to GALP by Global. The Company is pursuing legal remedies in an attempt to reverse the BCI and Avolar bad debt expenses. Interest expense for the quarter was $380,360, virtually unchanged from the $378,889 incurred in the same quarter last year.

On the balance sheet, the Company reported total current assets of $24.9 million and total assets of $26.0 million. Total current liabilities were $16.1 million and total liabilities of $16.2 million, representing a current ratio of 1.6 to 1. Diluted share count for the quarter ending June 30, 2008 was 40.37 million, versus 35.89 million one year ago. Stockholders' equity was $9.74 million or $.24/share fully diluted.

Gordon Hamilton, CEO of Global Aircraft Solutions, Inc. stated, "Clearly, our second quarter financial results were overshadowed by the inventory and receivable write-downs taken during this period. Accounting adjustments of this type are always painful and generally unpopular. Nonetheless, it is the responsibility of Management to provide a dispassionate and conservative valuation of the Company's assets in an ever-changing market environment. It is worth noting that, without these write-downs, both our core operating entities, World Jet and Hamilton Aerospace, would have shown quarter to quarter growth in both revenue and pre-tax income. Our top priority at this time is to return our aircraft-trading business segment to profitability. The recent changes to our board, management, and corporate governance are the most visible of the numerous steps we are taking to improve our aircraft-trading operations."

Conference Call

The conference call will take place on Friday, August 15, 2008 at 1:00 p.m. EST. Anyone interested in participating should call 1-800-762-8795 if calling within the United States, or 1-480-629-9041 if calling internationally. Please dial in approximately 5-10 minutes prior to 1:00 p.m. to ensure timely participation on the call. There will be a playback available until August 22, 2008. To listen to the playback, please call 1-800-406-7325 if calling within the United States, or 1-303-590-3030 if calling internationally. Please use pass code 3911692 for the replay.

This call is being webcast by ViaVid Broadcasting and can be accessed at Global's Web site http://www.globalaircraftsolutions.com. The webcast may also be accessed at ViaVid's Web sites at http://www.viavid.net. The webcast can be accessed through September 15, 2008.

About Global Aircraft Solutions

Global Aircraft Solutions provides parts support and maintenance, repair and overhaul (MRO) services for large passenger jet aircraft to scheduled and charter airlines and aviation leasing companies. Hamilton Aerospace and World Jet, both divisions of Global Aircraft Solutions, operate from adjacent facilities comprising about 35 acres located at Tucson International Airport. These facilities include hangars, workshops, warehouses, offices and other buildings. Notable customers include G.A. Telesis, AfriJet, Zero G, Swift Air, Pamir Airways, Wind Rose Aviation, Jetran International, the Mexican Presidential Fleet, SEDENA, Canadian North Airlines, CanJet Airlines, Iraqi Airways, Ryan International Airlines, and Alant Soyuz.

Global's website is located at www.globalaircraftsolutions.com.

Except for the historical information presented, this press release contains "forward-looking statements" made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 or regulations thereunder including, but not limited to expected and estimated revenue and earnings. Forward-looking statements are made based upon management's expectations and belief concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management's expectations or that the effect of future developments on the Company will be those anticipated by management.

The words "believes," "expects," "intends," "plans," "anticipates," "hopes," "likely," "will," and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company or its subsidiaries or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements. These risks include the economic health of the airline industry, demand for Global Aircraft Solutions' services, and competitive pricing pressures.

In addition, other risks are detailed in Global's Form 10-KSB for the year ended December 31, 2007 and Global's Form 10-Q for the quarter ended March 31, 2008. These statements speak only as of above dates, and Global disclaims any intent or obligation to update them.

                      GLOBAL AIRCRAFT SOLUTIONS, INC.
                  Condensed Consolidated Balance Sheets
                    June 30, 2008 and December 31, 2007
                                (unaudited)

                                   ASSETS
                                                    June 30,   December 31,
                                                      2008         2007
                                                  ------------ ------------
CURRENT ASSETS
Cash and cash equivalents                         $    646,091 $  1,221,598
Accounts receivable, net                             5,337,724    7,412,120
Due from equity investee partner                       347,000      472,000
Inventory, net                                      12,903,662   16,429,501
Costs and estimated earnings on contracts in
 excess of billings on contracts in progress, net      231,625
Restricted funds                                       446,007      196,181
Deferred income taxes                                3,895,966    1,682,948
Other current assets                                 1,075,081      752,784
                                                  ------------ ------------

  TOTAL CURRENT ASSETS                              24,883,156   28,167,132

Property, plant and equipment, net                     881,167    1,024,837
Investments in and advances to affiliates               20,000       20,000
Goodwill                                                38,992       38,992
Deferred taxes                                          76,718       76,718
Other assets                                            39,951      366,469
                                                  ------------ ------------

  TOTAL ASSETS                                    $ 25,939,984 $ 29,694,148
                                                  ============ ============

The accompanying notes, which are not included in this press release, are
an integral part of these condensed consolidated financial statements.




                      GLOBAL AIRCRAFT SOLUTIONS, INC.
                  Condensed Consolidated Balance Sheets
                    June 30, 2008 and December 31, 2007
                                (unaudited)

                   LIABILITIES AND STOCKHOLDERS' EQUITY

                                                  June 30,    December 31,
                                                    2008          2007
                                                ------------  ------------
CURRENT LIABILITIES
Notes payable                                   $  9,135,091  $ 10,268,091
Accounts payable - trade                           2,323,772     3,051,776
Customer deposits                                  3,294,674       419,076
Billings in excess of costs and estimated
 earnings on contracts in progress, net                  ---       822,782
Accrued liabilities                                  647,727       484,109
Income taxes payable                                 596,874       673,453
Current maturities - capital lease obligations        65,080        62,038
                                                ------------  ------------

  TOTAL CURRENT LIABILITIES                       16,063,218    15,781,325

LONG-TERM LIABILITIES


 Capitalized lease obligations                       138,044       170,990
                                                ------------  ------------

   TOTAL LONG-TERM LIABILITIES                       138,044       170,990
                                                ------------  ------------

  TOTAL LIABILITIES                               16,201,262    15,952,315
                                                ============  ============

Commitments and contingencies

STOCKHOLDERS' EQUITY
 Preferred stock, $.001 par value, 5,000,000
  shares authorized no shares issued or
  outstanding 2008 and 2007                              ---           ---
 Common stock, $.001 par value, 100,000,000
  shares authorized and 41,081,301 and
  40,181,301 shares issued and outstanding
  2008 and 2007                                       41,081        40,181
 Additional paid-in capital                       14,107,524    13,755,973
 Contributed capital                                 620,289       620,289
 Subscriptions receivable                            154,035
 Accumulated deficit                              (4,876,137)     (674,610)
                                                ------------  ------------

  TOTAL STOCKHOLDERS' EQUITY                       9,738,722    13,741,833
                                                ============  ============

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $ 25,939,984  $ 29,694,148
                                                ============  ============

The accompanying notes, which are not included in this press release, are
an integral part of these condensed consolidated financial statements.



                         GLOBAL AIRCRAFT SOLUTIONS, INC.
                Condensed Consolidated Statements of Operations
     For the Three and Six Months ended June 30, 2008 and June 30, 2007
                                   (unaudited)

                    Three Months  Three Months   Six Months    Six Months
                     ended June    Ended June    ended June    ended June
                        30,           30,           30,           30,
                        2008          2007          2008          2007
Sales
  Sales, maintenance,
   repair and
   overhaul         $  5,118,194  $  2,742,659  $  8,689,349  $  8,276,990
  Sales, aircraft
   trading             1,556,167     7,850,000     3,549,917     7,900,000
  Sales, parts           744,552       594,800     1,851,014     1,225,468
  Sales, other            64,050       (13,569)      271,668           432
                    ------------  ------------  ------------  ------------
Total sales            7,482,963    11,173,890    14,361,948    17,402,890
Cost of sales
  Cost of sales,
   maintenance,
   repair and
   overhaul           (3,959,445)   (2,207,074)   (6,266,010)   (5,958,354)
  Cost of sales,
   aircraft trading   (2,185,599)   (6,846,000)   (3,405,730)   (6,846,234)
  Cost of sales,
   parts                (383,225)     (193,084)     (952,870)     (567,093)
  Cost of sales,
   other                 (57,630)                   (198,398)         (435)
  Inventory
   write-down         (3,037,350)      (61,741)   (3,075,288)      (61,741)
                    ------------  ------------
Total cost of sales   (9,623,249)   (9,307,899)  (13,898,296)  (13,433,857)
                    ------------  ------------  ------------  ------------

Gross profit          (2,140,286)    1,865,991       463,652     3,969,033

Selling, general
 and administrative
 expense              (4,225,862)   (1,528,706)   (6,356,833)   (3,128,191)
                    ------------  ------------  ------------  ------------

Income from
 operations           (6,366,148)      337,285    (5,893,181)      840,842

Other income
 (expense):
  Interest income          3,074       177,848         7,566       184,291
  Interest expense      (380,360)     (378,889)     (776,174)     (510,489)
  Miscellaneous
   income                 46,304        52,746        48,478        74,745
  Legal settlement       200,000         - - -       200,000      (100,000)
  Loss on asset
   disposal                 (157)        - - -        (1,234)        - - -
  Equity in income of
   unconsolidated
   affiliate                                                       214,800
  Gain on sale of
   interest in
   unconsolidated
   affiliate               - - -        27,210         - - -        27,210
                    ------------  ------------  ------------  ------------

Net income, before
 taxes                (6,497,287)      216,200    (6,414,545)      731,399
  Provision for
   income taxes        2,241,978       (75,670)    2,213,018      (256,004)
                    ------------  ------------  ------------  ------------

Net income          $ (4,255,309) $    140,530  $ (4,201,527) $    475,395
                    ============  ============  ============  ============
Net income per
 share:
  Basic             $      (0.11) $       0.00  $      (0.10) $       0.01
                    ============  ============  ============  ============
  Diluted           $      (0.11) $       0.00  $      (0.10) $       0.01
                    ============  ============  ============  ============
Weighted average
 number of common
 shares
 outstanding:
  Basic               40,369,213    34,779,327    40,275,527    39,719,669
                    ============  ============  ============  ============
  Diluted             40,369,213    35,894,478    40,275,527    40,783,188
                    ============  ============  ============  ============

The accompanying notes, which are not included in this press release, are
an integral part of these condensed consolidated financial statements.

Contact Information

  • Contact:
    Global Aircraft Solutions, Inc.
    Gordon Hamilton, (520) 547-8631
    Email Contact
    Or
    Alliance Advisors, LLC
    Alan Sheinwald, 914-669-0222
    Email Contact