10-K
Analysis:
AAR CORP.
ASIA
中中 (China)
India
中中 (Japan)
한한 (Korea)
中中 (Taiwan)
10-K ANALYSIS: AAR CORP.
I. Introduction
AAR CORP, formerly Allen Aircra Radio Corporation, become a public company since 1967.
Today the company leads by David P. Storch which started his leadership as Chief Executive O(cer in
1996. Company with headquarter at Wood Dale; Illinois prepares its annual financial report which
ended every 31 May, and the latest 10K report provided by company was ended at 31 May 2012.
Audit process of its financial statement has completed by KPMG with unquali-ed opinion.
Consolidated financial statement which consists of consolidated balance sheets, statement of
incomes, change in equity, and cash 5ows has been audited in accordance with the standards of the
Public Company Oversight Board, and the opinion shown that all financial statement items present
fairly, in all material respects, in conformity with U.FS. Generally Accepted Accounting Principles.
Current stock price of AAR Corp is $13.56 (as November 16, 2012) with dividends per share $120.8
(as May 31, 2012).
AAR CORP is international aerospace services provider. Its business divided into four
segments, which are: (1) Aviation Supply Chain, (2) Government and Defense Services, (3)
Maintenance, Repair and Overhaul, (4) Structures and Systems. The products and services that they
provide in Aviation Supply Chain are related with supply chain solutions, aircra and engine parts
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supply, component repair, aircra and engine sales and leasing. The Government and Defense
Services include a variety of special service that helps the government for its vital defense and
humanitarian acts. While in Maintenance, Repair, and Overhaul division, AAR supports maintenance
and structural repairs to aircra, landing gear, engineering, and technical service. The last division is
Structure and Systems which support Aviation Supply chain, and emphasize on design and
manufacture for cargo system and aircra’s interior.
Main geographic area of activity the company is in United States. In fact, U.S. Department of
Defense and its contractor U.S. Department of State are some of principal customers in Government
and Defense Services. Other main customer is foreign military organization or governments.
Department of Defense and its contractor also company’s main customers in Structures and System
segment.
II. Industry situation and company plans
A. Management Letter
The Independent Auditor conduct audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that reveal material weakness, and testing and
evaluating the design and operating eEectiveness of internal control based on the assessed risk. The
auditor’s opinion is that the Company maintained eEective internal control over financial reporting
as of May 31, 2012 in all material respects, based on criteria established issued by COSO (Internal
Control-Integrated Framework issued by the CommiGee of Sponsoring Organizations of the Tread
way Commission). The independent auditor conducted its audit of internal control over financial
reporting of the Company excluded an evaluation of the internal control over financial reporting of
Airinmar, Telair and Nordisk.
1. The scope of managements’ assessment of the eEectiveness of internal control over financial
reporting as of May 31, 2012 includes all of the Company’s business units except for Telair
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International Gmbh (‘‘Telair’’) and Nordisk Aviation Products, AS (‘‘Nordisk’’), which were
acquired by the Company on December 2, 2011, and Airinmar Holdings Limited (‘‘Airinmar’’),
which was acquired by the Company on October 11, 2011.
2. Consolidated amount of sales for the year-ended May 31, 2012 were $2,064,998, of which
Telair, Nordisk and Airinmar represented $93,880, $25,549 and $26,058, respectively.
3. Consolidated assets as of May 31, 2012 were $2,195,653, of which Telair, Nordisk and
Airinmar represented $287,587, $53,570 and $46,486, respectively.
4. The independent auditor conducted its audit of internal control over financial reporting of
the Company excluded an evaluation of the internal control over financial reporting of
Airinmar, Telair and Nordisk.
B. Review Company’s Products and Services
i. Aviation Supply Chain
In 2012, this segment contributed 28% of sales. Since 2008, company’s strategy has been to
