GIA Gulfstream

FORT LAUDERDALE, Fla., April 1, 2008 /PRNewswire-FirstCall/ -- Gulfstream International Group, Inc. (AMEX:GIA) announced today that it is filing a Form 12b-25, Notification of Late Filing, with the Securities and Exchange Commission (SEC) relating to its Annual Report on Form 10-K for the year ended December 31, 2007. This filing automatically extends the March 31, 2008 filing due date for up to 15 calendar days under SEC rules. Gulfstream expects to file its Form 10-K with the SEC within this extension period. Gulfstream also announced today its preliminary financial results for the year ended December 31, 2007, which included the following highlights for the year: -- Revenue for 2007 was $112.3 million, or 6.7% higher than 2006; -- Pre-tax operating loss for 2007 was $3.9 million, compared to pro forma pre-tax income of $1.5 million for 2006; -- Pre-tax operating loss for 2007 was approximately $1.1 million, after excluding the following non-cash charges: -- a goodwill impairment charge of $2,391,000 associated with the Gulfstream Training Academy; -- an increase of $200,000 in compensation expense in 2007 due to accelerated vesting of stock options; and -- a $174,000 loss due to the write-off of debt issuance costs related to the redemption of subordinated debt prior to maturity; and -- Net loss for 2007 was $3.1 million, or ($1.52 per diluted share) compared to pro forma net income of $1.0 million for 2006, or $0.43 per diluted share. Airline operating results during 2007 were negatively impacted by: -- a relentless rise in fuel prices; -- an increased rate of pilot attrition amidst an industry-wide pilot shortage, which contributed to pilot training costs that were more than $1 million above 2006 levels; and -- increased costs for flight operations, maintenance and passenger service. In October 2007, jet fuel prices began to increase significantly above the prior-year level. By December 2007, the average price per gallon had risen to $2.91, or 38.5% above the same month last year. Since December 31, 2007, crude oil prices have continued to spike even higher reaching $111.80 per barrel during March 2008. The current average jet fuel price is approximately $3.40 per gallon, which is approximately 67% higher than at this time last year. In reaction to the operating results for 2007 and increased operating costs, senior management led by David Hackett, President and Chief Executive Officer, developed and began implementation of a revised business plan in January 2008. The plan includes an aggressive cost reduction initiative to mitigate as much as possible the effects of the increased price of jet fuel, as well as to maintain operational reliability and lower our operating costs. The revised business plan calls for: -- raising several million dollars through the refinancing and/or sale of certain aircraft and related parts inventory; -- restructuring our route network to eliminate city pairs that are no longer profitable in the present high fuel price environment, and to redeploy assets to higher margin routes; and -- cost reduction initiatives related to flight operations, maintenance, passenger service and general and administrative; Commenting on the Company's 2007 operating results and revised business plan, David F. Hackett, President and Chief Executive Officer, stated, "These are very difficult times for the airline industry, given the unprecedented increases in jet fuel prices and a weakening economy. In response to theses challenges, we are planning to reduce the complexity of our operations, aggressively lower our operating expenses and improve liquidity by refinancing or selling certain aircraft, all of which are necessary steps to assure the long-term viability of the business." About Gulfstream International Group, Inc. Gulfstream International Group, Inc. is a holding company that operates two independent subsidiaries: Gulfstream International Airlines, Inc. ("Gulfstream") and Gulfstream Training Academy, Inc. (the "Academy"). Gulfstream is a Fort Lauderdale, Florida-based commercial airline currently operating more than 200 scheduled flights per day, serving twelve destinations in Florida and ten destinations in the Bahamas. The Academy provides flight training services to licensed commercial pilots. For more information on the company, visit the company's website at http://www.gulfstreamair.com/. Special Note Regarding Forward-Looking Statements In addition to historical information, this release contains forward- looking statements. Gulfstream may, from time-to-time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things: our business strategy; our value proposition; the market opportunity for our services, including expected demand for our services; information regarding the replacement, deployment, acquisition and financing of certain numbers and types of aircraft, and projected expenses associated therewith; costs of compliance with FAA regulations, Department of Homeland Security regulations and other rules and acts of Congress; the ability to pass taxes, fuel costs, inflation, and various expense to our customers; certain projected financial obligations; our estimates regarding our capital requirements; and any of our other plans, objectives, expectations and intentions contained in this release that are not historical facts. These statements, in addition to statements made in conjunction with the words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and similar expressions, are forward-looking statements. These statements relate to future events or our future financial performance and only reflect management's expectations and estimates. All forward-looking statements included in this release are made as of the date hereof and are based on information available to Gulfstream as of such date. The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements: changes to external competitive, business, budgeting, fuel cost or supply, weather or economic conditions; changes in our relationships with employees or code share partners; availability and cost of funds for financing new aircraft and our ability to profitably manage our existing fleet; adverse reaction and publicity that might result from any accidents; the impact of current or future laws and government investigations and regulations affecting the airline industry and our operations; additional terrorist attacks; and consumer unwillingness to incur greater costs for flights. Gulfstream assumes no obligation to update any forward-looking statement. Risk factors, cautionary statements and other conditions which could cause actual results to differ from management's current expectations are contained in Gulfstream's filings with the Securities and Exchange Commission, including the section of Gulfstream's Registration Statement on Form S-1, as amended on December 13, 2007, entitled "Risk Factors." Results of Operations for 2006 and 2007 The table below presents unaudited results of operations for 2006 and 2007. Pro forma financial results for the year ended December 31, 2006 include our results for the period from March 15, 2006 to December 31, 2006, combined with the results of our predecessor from January 1, 2006 to March 14, 2006, adjusted to give effect to our March 14, 2006 acquisition as though it had occurred on January 1, 2006. As a result of the acquisition, the results of operations of the predecessor are not comparable to the results of operations of the successor. Such presentation does not comply with generally accepted accounting principles and is being made solely to highlight changes in the results of operations for the periods presented in the financial statements. Percent Year Ended December 31, Change Pro Forma 2006 to 2006 2007 2007 Revenue Airline passenger revenue $98,554 $104,230 5.8% Academy, charter and other revenue 6,705 8,066 20.3% Total Revenue 105,259 112,296 6.7% Operating Expenses Flight operations 11,943 13,794 15.5% Aircraft fuel 23,559 25,774 9.4% Aircraft rent 6,191 6,430 3.9% Maintenance 21,237 24,574 15.7% Passenger service 22,171 23,312 5.1% Promotion & sales 7,920 7,782 -1.7% General and administrative 6,263 7,325 17.0% Depreciation and amortization 3,431 3,761 9.6% Goodwill impairment - 2,391 Operating Expenses 102,715 115,143 12.1% Income (loss) from operations 2,544 (2,847) Non-Operating Income and (Expense) Interest (expense) (1,215) (1,146) -5.7% Loss on Extinguishment of debt - (174) Other income 174 227 30.5% Non-Operating Income and (Expense) (1,041) (1,093) 5.0% Income (loss) before taxes 1,503 (3,940) Provision for income taxes 528 (834) Income (loss) before minority interest 975 (3,106) Minority interest (5) - Net income (loss) $970 $(3,106) Net income per share: Basic $0.48 $(1.50) Diluted $0.43 $(1.52) Shares used in computing net income per share: Basic 2,006 2,075 Diluted 2,006 2,075 GULFSTREAM INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2005, 2006 and 2007 (In thousands, except per share data) (Unaudited) Predecessor Successor Period from Year January 1, Ended to Year Ended December 31, March 14, December 31, 2005 2006 2006 2007 Operating Revenues Passenger revenue $87,983 $20,264 $78,290 $104,230 Academy, charter and other revenue 5,282 1,165 5,540 8,066 Total Operating Revenues 93,265 21,429 83,830 112,296 Operating Expenses Flight operations 9,923 2,266 9,679 13,794 Aircraft fuel 20,544 4,203 19,356 25,774 Maintenance 17,220 3,843 17,394 24,574 Passenger and traffic service 20,390 4,798 17,373 23,312 Aircraft rent 6,827 1,300 4,891 6,430 Promotion and sales 7,530 1,561 6,359 7,782 General and administrative 7,067 1,269 4,951 7,325 Depreciation and amortization 2,355 503 2,726 3,761 Goodwill Impairment - - - 2,391 Total Operating Expenses 91,856 19,743 82,729 115,143 Operating income (loss) 1,409 1,686 1,101 (2,847) Non-operating (expense) income Interest expense (699) (158) (954) (1,146) Interest Income 48 1 171 141 Gain on sale of equipment 132 - - - Loss on extinguishment of debt - - - (174) Other income (expense) 40 (6) 9 86 Total non-operating (expense) income (479) (163) (774) (1,093) Income (loss) before provision for income taxes and minority interest 930 1,523 327 (3,940) Income tax provision (benefit) 230 523 137 (834) Income (loss) before minority interest 700 1,000 190 (3,106) Minority interest - - (5) - Net income (loss) $700 $1,000 $185 $(3,106) Net income (loss) per share: Basic - - $0.11 $(1.50) Diluted - - $0.08 $(1.52) Shares used in calculating net income per share: Basic - - 1,681 2,075 Diluted - - 1,681 2,075 GULFSTREAM INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2006 and 2007 (In thousands) (Unaudited) 2006 2007 (Restated) Assets Cash and cash equivalents $3,143 $3,938 Accounts receivable, net 3,384 2,910 Due From Related Entity 606 640 Expendable parts 1,549 1,951 Prepaid expenses 517 539 Total Current Assets 9,199 9,978 Property and Equipment Flight equipment 18,165 23,855 Other property and equipment 756 1,533 Less - accumulated depreciation (2,804) (5,390) Property and Equipment, net 16,117 19,998 Intangible assets, net 4,301 4,053 Goodwill 5,094 2,703 Deferred tax assets 472 1,509 Other assets 1,797 1,180 Total Assets $36,980 $39,421 Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued expenses $10,977 $15,869 Long-term debt - current portion 1,273 2,268 Engine return liability - current portion 3,060 2,800 Air traffic liability 1,351 1,270 Deferred tuition revenue 281 408 Total Current Liabilities 16,942 22,615 Long-term Liabilities Long-term debt, net of current portion 6,250 6,415 Subordinated debentures, net of debt issuance costs 3,273 - Engine return liability, net of current portion 2,490 990 Total Liabilities 28,955 30,020 Commitments and Contingencies Minority Interest 5 - Stockholders' Equity Common stock 20 28 Additional paid-in capital 7,755 12,234 Common stock warrants 61 61 Retained earnings (deficit) 184 (2,922) Total Stockholders' Equity 8,020 9,401 Total Liabilities & Stockholders' Equity $36,980 $39,421 DATASOURCE: Gulfstream International Group, Inc. CONTACT: Robert M. Brown, Chief Financial Officer of Gulfstream International Group, Inc., +1-954-985-1500 x236 Web site: http://www.gulfstreamair.com/

Copyright