-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, G5CuRuVwUmHyiW1yvy8u/fqcPBhz5AiyXNXSe/MemxB03Pp1ewUUNNRod84vqSSE pIN5qRLo0vRIjJVIvE7VzQ== 0000003000-94-000009.txt : 19940513 0000003000-94-000009.hdr.sgml : 19940513 ACCESSION NUMBER: 0000003000-94-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRBORNE FREIGHT CORP /DE/ CENTRAL INDEX KEY: 0000003000 STANDARD INDUSTRIAL CLASSIFICATION: 4513 IRS NUMBER: 910837469 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06512 FILM NUMBER: 94527539 BUSINESS ADDRESS: STREET 1: P O BOX 662 CITY: SEATTLE STATE: WA ZIP: 98111 BUSINESS PHONE: 2062854600 10-Q 1 3/31/94 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1994 Commission File Number 1-6512 AIRBORNE FREIGHT CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware ---------------------------------------- (State of incorporation or organization) 91-0837469 --------------------------------- (IRS Employer Identification No.) 3101 Western Avenue P.O. Box 662 Seattle, Washington 98111-0662 ------------------------------ (Address of Principal Executive Office) Registrant's telephone number, including area code: (206) 285-4600 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: XXX No: --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the close of the period covered by this report. Common Stock, par value $1 per share Outstanding (net of 315,150 treasury shares) as of March 31, 1994 20,949,045 shares ----------------- 2 AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF NET EARNINGS (Dollars in thousands except per share data) (Unaudited)
Three Months Ended March 31 ------------------ 1994 1993 ---- ---- REVENUES: Domestic $396,884 $345,960 International 69,668 52,806 -------- -------- 466,552 398,766 OPERATING EXPENSES: Transportation purchased 154,998 124,780 Station and ground operations 145,210 126,557 Flight operations and maintenance 65,782 58,619 General and administrative 35,716 32,006 Sales and marketing 13,295 12,651 Depreciation and amortization 33,765 32,217 -------- -------- 448,766 386,830 -------- -------- EARNINGS FROM OPERATIONS 17,786 11,936 INTEREST, NET 5,941 5,960 -------- -------- EARNINGS BEFORE INCOME TAXES 11,845 5,976 INCOME TAXES 4,845 2,350 -------- -------- NET EARNINGS BEFORE CHANGES IN 7,000 3,626 ACCOUNTING CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING -- 3,828 -------- -------- NET EARNINGS 7,000 7,454 PREFERRED STOCK DIVIDENDS 584 681 -------- -------- NET EARNINGS AVAILABLE TO COMMON $6,416 $ 6,773 SHAREHOLDERS ======== ======== NET EARNINGS PER COMMON SHARE: Before changes in accounting $.32 $ .15 Cumulative effect of changes in -- .20 accounting -------- -------- Net earnings available to common $.32 $ .35 shareholders ======== ======== DIVIDENDS PER COMMON SHARE $ .075 $ .075 ======== ======== See notes to consolidated financial statements.
3 AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
March 31 December 31 ------------ ----------- 1994 1993 ---- ---- (Unaudited) ASSETS ------ CURRENT ASSETS: Cash $ 2,635 $ 7,134 Trade accounts receivable, less allowance 201,235 190,787 of $7,290 and $6,925 Spare parts and fuel inventory 27,011 27,224 Deferred income tax assets 15,912 15,206 Prepaid expenses 17,845 18,815 ---------- ---------- TOTAL CURRENT ASSETS 264,638 259,166 PROPERTY AND EQUIPMENT, NET 754,729 733,963 EQUIPMENT DEPOSITS and OTHER ASSETS 15,956 13,780 ---------- ---------- TOTAL ASSETS $1,035,323 $1,006,909 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 100,461 $ 95,684 Salaries, wages and related taxes 38,175 37,885 Accrued expenses 60,406 55,545 Income taxes payable 5,808 3,638 Current portion of debt 6,092 5,850 ---------- ---------- TOTAL CURRENT LIABILITIES 210,942 198,602 LONG-TERM DEBT 281,555 269,250 SUBORDINATED DEBT 122,150 122,150 DEFERRED INCOME TAX LIABILITIES 27,962 28,262 OTHER LIABILITIES 26,326 29,821 REDEEMABLE PREFERRED STOCK 6,000 40,000 SHAREHOLDERS' EQUITY: Preferred Stock, without par value - Authorized 5,200,000 shares, no shares issued Common stock, par value $1 per share - Authorized 60,000,000 shares Issued 21,264,195 and 19,688,731 shares 21,264 19,689 Additional paid-in capital 184,188 149,156 Retained earnings 155,907 150,950 ---------- ---------- 361,359 319,795 Treasury stock, 315,150 shares, at cost (971) (971) ---------- ---------- 360,388 318,824 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,035,323 $1,006,909 ========== ========== See notes to consolidated financial statements.
4 AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Three Months Ended March 31 ------------------ 1994 1993 ---- ---- OPERATING ACTIVITIES: Net Earnings $ 7,000 $ 7,454 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 31,319 29,470 Provision for aircraft engine 2,446 2,747 overhauls Deferred income taxes (1,006) (1,145) Cumulative effect of changes in -- (3,828) accounting Other (3,495) (3,176) -------- -------- CASH PROVIDED BY OPERATIONS 36,264 31,522 Change in: Receivables (10,448) (12,780) Inventories and prepaid expenses 1,183 (2,077) Accounts payable 6,133 (3,724) Accrued expenses, salaries and taxes 7,321 16,003 payable -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 40,453 28,944 INVESTING ACTIVITIES: Additions to property and equipment (49,106) (40,385) Dispositions of property and equipment 39 112 Expenditures for engine overhauls (676) (340) Other (1,443) (1,230) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (51,186) (41,843) FINANCING ACTIVITIES: Proceeds from bank note borrowings, net 6,200 21,500 Principal payments on debt (453) (4,459) Proceeds from common stock issuance 2,636 386 Dividends paid (2,149) (2,131) -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 6,234 15,296 -------- -------- NET INCREASE (DECREASE) IN CASH (4,499) 2,397 CASH AT JANUARY 1 7,134 10,179 -------- -------- CASH AT MARCH 31 $ 2,635 $ 12,576 ======== ======== See notes to consolidated financial statements.
5 AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1994 (Unaudited) NOTE A--SUMMARY OF FINANCIAL STATEMENT PREPARATION: The consolidated financial statements included herein are unaudited but include all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods reported. Certain amounts for prior periods have been reclassified to conform to the 1994 presentation. NOTE B--LONG-TERM DEBT: Long-term debt consists of the following:
March 31 December 31 1994 1993 ---- ---- (In thousands) Senior debt: Revolving bank credit $111,200 $105,000 Notes payable 34,000 34,000 Senior notes 100,000 100,000 Revenue bonds 13,200 13,200 Other debt 25,677 19,330 -------- -------- 284,077 271,530 Subordinated debt: Senior subordinated notes 10,720 10,720 Convertible subordinated debentures 115,000 115,000 -------- -------- 125,720 125,720 -------- -------- Total long-term debt 409,797 397,250 Less current portion 6,092 5,850 -------- -------- $403,705 $391,400 ======== ========
NOTE C--EARNINGS PER COMMON SHARE: Net earnings per common share are computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the interim period plus dilutive common equivalent shares applicable to the assumed exercise of employee stock options. Fully diluted earnings per common share are the same as net earnings per common share for the interim periods presented herein. Average common shares outstanding used in earnings per share computations at March 31, 1994 and 1993 were 20,173,000 and 19,507,000, respectively. NOTE D--ACCOUNTING CHANGES: The Company adopted several new accounting standards as of January 1, 1993 and recorded the effect of the changes in the quarter ended March 31, 1993. The new standards changed the Company's methods used to account for income taxes and post-retirement health care benefit costs. The net cumulative effect of adopting these standards was to increase net earnings for the period ended March 31, 1993 by $3,828,000 or $.20 per share. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS: The Company's operating performance in the first quarter of 1994 resulted in significantly higher operating income and net earnings compared to the first quarter of 1993. This improvement was the result of strong productivity gains and cost controls, achieved despite the negative impact of severe winter weather and the Los Angeles earthquake in the early part of the quarter. Net earnings available to common shareholders for the first quarter of 1994 were $6.4 million, or $.32 per share, compared to $2.9 million, or $.15 per share for the first quarter of 1993. The 1993 net earnings are before the cumulative effect of changes in accounting which resulted in a net increase to earnings of $.20 per share increasing the net earnings available to common shareholders to $.35 per share. The following table sets forth selected shipment and revenue data for the periods indicated:
Three Months Ended March 31 --------------------------- 1994 1993 ---- ---- Shipments (in thousands): Domestic Overnight Letters 8,476 7,919 0-2 Lbs. 10,788 9,781 3-99 Lbs. 9,628 8,275 ------ ------ 28,892 25,975 Select Delivery Service 0-2 Lbs. 9,566 7,381 3-99 Lbs. 5,782 4,012 ------ ------ 15,348 11,393 100 Lbs. and over 86 84 ------ ------ Total Domestic 44,326 37,452 ------ ------ International Express 804 745 All Other 112 94 ------ ------ Total International 916 839 ------ ------ Total Shipments 45,242 38,291 ====== ====== Average Pounds per Shipment: Domestic 4.7 4.7 International 61.5 44.0 Average Revenue per Pound: Domestic $ 1.90 $ 1.97 International $ 1.23 $ 1.42 Average Revenue per Shipment: Domestic $ 8.95 $ 9.24 International $76.06 $62.94
7 Total shipments increased 18% in the first quarter of 1994 compared to an increase of 23% in the first quarter of 1993. Domestic and international shipments increased by 18% and 9%, respectively, in the first quarter of 1994 compared to 24% and 6%, respectively, in the first quarter of 1993. Domestic shipments increased 16% and international shipments increased 7% on a per-day basis in the first quarter of 1993 when adjusted for one extra day in the first quarter of 1994 compared to 1993. The growth in domestic shipments continues to be aided by growth in the Company's deferred service product, Select Delivery Service (SDS). For the first quarter of 1994, SDS accounted for 35% of total domestic shipments, compared to 30% for the first quarter of 1993. Domestic overnight shipments increased 9.5% on a per day basis in the first quarter of 1994, compared to 12% in the first quarter of 1993. The growth in international shipments was aided by growth in higher yielding freight shipments which increased 19% in the first quarter of 1994. Total revenues increased 17% in the first quarter of 1994 compared to 11% in the first quarter of 1993 with domestic revenues increasing 15% and 14%, respectively. International revenues increased 32% in the first quarter of 1994 compared to a decrease of 5% in the first quarter of 1993. The significant growth rate in international revenue in the first quarter of 1993, was attributable to the strong growth in higher yielding freight shipments. The domestic pricing environment has improved over the last year and a half and is currently very competitive but relatively stable. Average domestic revenue per shipment for the first quarter of 1994 declined only 3.1% compared to the first quarter of 1993 to $8.95 per shipment. International revenue per shipment increased as a result of the strong growth in heavier weight freight shipments. Operating expenses as a percentage of revenues were 96.2% for the first quarter of 1994 compared to 97.0% in the first quarter of 1993 and 95.2% for all of 1993. Severe winter weather and the Los Angeles earthquake had a negative impact on the level of business in the early part of the first quarter of 1994, and required added operating expenses. However, the Company experienced strong productivity gains and cost control in the balance of the quarter, resulting in a 2% decrease in the operating cost per shipment handled compared to the first quarter of 1993. Comparisons of certain operating expense components are discussed below. Transportation purchased increased as a percentage of revenues to 33.2% in the first quarter of 1994 compared to 31.3% in 1993. This increase was primarily due to additional commercial airline costs resulting from the growth in international freight shipments. Station and ground expense as a percentage of revenues was 31.1% in the first quarter of 1994 compared to 31.7% in the first quarter of 1992, as productivity gains achieved offset costs incurred to maintain service integrity. Flight operations and maintenance expense as a percentage of revenues during the first quarter of 1994 was 14.1%, compared to 14.7% in the first quarter of 1993. The average aviation fuel price for the first quarter of 1994 was $.60 per gallon compared to $.66 per gallon in the first quarter of 1993. Aviation fuel consumption increased 18% to 30.1 million gallons in the first quarter of 1994 compared to the first quarter of 1993. The increase in fuel consumption is a result of additional Company operated aircraft placed in service since the first quarter of 1993 and the disruption to air operations as a result of the severe winter weather. The increased number of aircraft in service also accounted for the increase in depreciation and amortization expense in the first quarter of 1994 compared to the same period in 1993. General and administrative and sales and marketing expenses decreased as a percentage of revenues in the first quarter of 1994 compared to 1993. This was primarily the result of continuing productivity gains and a strong focus on all discretionary spending. Interest expense in the first quarter of 1994 was comparable to the level of expense in the same period of 1993, as slightly higher effective interest rates and a lower amount of capitalized interest were offset by the benefit of lower average outstanding borrowings. The Company's effective tax rate was 40.9% in the first quarter of 1994 compared to 39.3% in the first quarter of 1993 and 40.2% for all of 1993. The Company anticipates the effective tax rate for the 1994 year to be comparable to the first quarter of 1994. LIQUIDITY AND CAPITAL RESOURCES: Capital expenditures and associated financing continue to be the primary factors affecting the financial condition of the Company. The Company anticipates total capital expenditures to approximate $190 million in 1994, of which a significant portion is related to the acquisition and modification of aircraft. During the first quarter of 1994, total capital expenditures net of dispositions were $49 million. The principal sources of liquidity for financing capital expenditures during the first quarter of 1994 were cash provided by operations and financing under the Company's bank lines of credit. 8 The Company's unsecured revolving bank credit agreement has traditionally been used as a major source of liquidity for periods between other financing transactions. The Company has a revolving bank credit agreement providing for a total commitment of $240 million, subject to a maximum level of Company indebtedness permitted by certain covenants in the agreement and other loan agreements. The Company also has available $20 million under unsecured uncommitted money market lines of credit with several banks, used in conjunction with the revolving credit agreement to facilitate settlement and accommodate short-term borrowing fluctuations. At March 31, 1994, a total of $111.2 million was outstanding under the revolving bank credit and money market credit lines. The Company filed a post-effective amendment with the Securities & Exchange Commission effective February 28, 1994, thereby withdrawing the remaining $100 million shelf registration of debt securities outstanding since December 1992. This registration was due to expire in December 1994, and the Company determined that additional financing under the registration would not be required. In March 1994, certain holders of the Company's 6.9% redeemable cumulative convertible preferred stock converted their preferred shares into common stock. The conversion of 680,000 preferred shares with a par value of $34 million, resulted in the issuance of 1,453,000 shares of common stock. The balance of preferred stock outstanding at March 31, 1994 was $6 million par value representing 120,000 preferred shares. In management's opinion, the available capacity under the bank credit agreements coupled with internally generated cash flow from remaining 1994 operations and other sources of borrowing should provide adequate flexibility to finance anticipated capital expenditures for the balance of 1994. 9 PART II. OTHER INFORMATION -------------------------- Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits - None (b) Reports on form 8-K - A Form 8-K dated April 26, 1994, has been duly filed. The form included the following information: (1) Election of Directors for terms expiring in 1997. (2) Adopted the 1994 Airborne Key Employee Stock Option and Stock Appreciation Rights Plan (3) Approval of the selection of Deloitte & Touche as the independent public accountants for the ensuing year. (4) Re-election of all exiting officers including the principal executive officers of the corporation.
Name Title ----- ----- Robert S. Cline Chairman of the Board Chief Executive Officer Robert G. Brazier President Chief Operating Officer
(5) Declared dividends on common and preferred stock. (6) Amended the By-laws of the Company. 10 SIGNATURES ---------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: AIRBORNE FREIGHT CORPORATION ---------------------------- (Registrant)
Date: 5/12/94 /s/Roy C. Liljebeck ------- -------------------- Roy C. Liljebeck Executive Vice President, Chief Financial Officer Date: 5/12/94 /s/Lanny H. Michael ------- ------------------- Lanny H. Michael Senior Vice President, Treasurer and Controller
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