-----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, MdbJ0FagR7ng7A4p+bPV5vGd2mwwVvYkNNHCMwH+MCcJmXymbFo8QnJj0FvNWCbS atC0L64xDSLiqdMYK63+Gg== 0000003000-95-000010.txt : 19950517 0000003000-95-000010.hdr.sgml : 19950516 ACCESSION NUMBER: 0000003000-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRBORNE FREIGHT CORP /DE/ CENTRAL INDEX KEY: 0000003000 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [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: 95537464 BUSINESS ADDRESS: STREET 1: P O BOX 662 CITY: SEATTLE STATE: WA ZIP: 98111 BUSINESS PHONE: 2062854600 10-Q 1 3/31/95 FORM 10Q 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, 1995 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, 1995 21,050,336 shares ----------------- AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF NET EARNINGS (Dollars in thousands except per share data) (Unaudited)
Three Months Ended March 31 ------------------ 1995 1994 ---- ---- REVENUES: Domestic $442,177 $396,884 International 87,739 69,668 -------- -------- 529,916 466,552 OPERATING EXPENSES: Transportation purchased 188,785 154,998 Station and ground operations 165,114 145,210 Flight operations and maintenance 78,061 65,782 General and administrative 37,494 35,716 Sales and marketing 15,631 13,295 Depreciation and amortization 34,802 33,765 -------- -------- 519,887 448,766 -------- -------- EARNINGS FROM OPERATIONS 10,029 17,786 INTEREST, NET 6,725 5,941 -------- -------- EARNINGS BEFORE INCOME TAXES 3,304 11,845 INCOME TAXES 1,424 4,845 -------- -------- NET EARNINGS 1,880 7,000 PREFERRED STOCK DIVIDENDS 71 584 -------- -------- NET EARNINGS AVAILABLE TO COMMON $1,809 $6,416 SHAREHOLDERS ======== ======== NET EARNINGS PER COMMON SHARE $.09 $.32 ======== ======== DIVIDENDS PER COMMON SHARE $ .075 $ .075 ======== ========
See notes to consolidated financial statements. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
March 31 December 31 ------------ ----------- 1995 1994 ---- ---- (Unaudited) ASSETS ------ CURRENT ASSETS: Cash $ 10,815 $ 10,318 Trade accounts receivable, less allowance 217,635 221,788 of $7,550 and $7,500 Spare parts and fuel inventory 29,643 28,071 Deferred income tax assets 12,862 12,458 Prepaid expenses 22,242 20,701 ---------- ---------- TOTAL CURRENT ASSETS 293,197 293,336 PROPERTY AND EQUIPMENT, NET 790,662 766,346 EQUIPMENT DEPOSITS and OTHER ASSETS 18,125 18,824 ---------- ---------- TOTAL ASSETS $1,101,984 $1,078,506 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 121,479 $ 117,194 Salaries, wages and related taxes 41,016 43,858 Accrued expenses 63,853 59,053 Income taxes payable 104 342 Current portion of debt 6,079 6,018 ---------- ---------- TOTAL CURRENT LIABILITIES 232,531 226,465 LONG-TERM DEBT 300,168 279,422 SUBORDINATED DEBT 118,580 118,580 DEFERRED INCOME TAX LIABILITIES 29,656 30,402 OTHER LIABILITIES 28,101 31,239 REDEEMABLE PREFERRED STOCK 3,948 5,000 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 21,365,486 and 21,285,924 shares 21,366 21,286 Additional paid-in capital 185,661 184,369 Retained earnings 182,944 182,714 ---------- ---------- 389,971 388,369 Treasury stock, 315,150 shares, at cost (971) (971) ---------- ---------- 389,000 387,398 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,101,984 $1,078,506 ========== ==========
See notes to consolidated financial statements. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Three Months Ended March 31 ------------------ 1995 1994 ---- ---- OPERATING ACTIVITIES: Net Earnings $ 1,880 $ 7,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 32,335 31,319 Provision for aircraft engine 2,467 2,446 overhauls Deferred income taxes (1,150) (1,006) Other (3,175) (3,495) -------- -------- CASH PROVIDED BY OPERATIONS 32,357 36,264 Change in: Receivables 4,153 (10,448) Inventories and prepaid expenses (3,113) 1,183 Accounts payable 4,285 6,133 Accrued expenses, salaries and taxes 1,720 7,321 payable -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 39,402 40,453 INVESTING ACTIVITIES: Additions to property and equipment (55,588) (49,106) Dispositions of property and equipment 55 39 Expenditures for engine overhauls (2,555) (676) Other (291) (1,443) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (58,379) (51,186) FINANCING ACTIVITIES: Proceeds on bank notes, net 33,700 6,200 Principal payments on debt (12,893) (453) Proceeds from common stock issuance 320 2,636 Dividends paid (1,653) (2,149) -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 19,474 6,234 -------- -------- NET INCREASE (DECREASE) IN CASH 497 (4,499) CASH AT JANUARY 1 10,318 7,134 -------- -------- CASH AT MARCH 31 $ 10,815 $ 2,635 ======== ========
See notes to consolidated financial statements. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1995 (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 1995 presentation. NOTE B--LONG-TERM DEBT: Long-term debt consists of the following:
March 31 December 31 1995 1994 ---- ---- (In thousands) Senior debt: Revolving bank credit $170,000 $135,000 Notes payable 15,700 17,000 Senior notes 100,000 100,000 Revenue bonds 13,200 13,200 Other debt 3,777 16,670 -------- -------- 302,677 281,870 Subordinated debt: Senior subordinated notes 7,150 7,150 Convertible subordinated debentures 115,000 115,000 -------- -------- 122,150 122,150 -------- -------- Total long-term debt 424,827 404,020 Less current portion 6,079 6,018 -------- -------- $418,748 $398,002 ======== ========
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, 1995 and 1994 were 21,184,000 and 20,173,000, respectively. 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 1995 resulted in significantly lower operating income and net earnings compared to the first quarter of 1994. Domestic yields were negatively impacted by a decline in the average weight per shipment. Coupled with the higher growth rate of lower yielding deferred service shipments, this resulted in a higher than normal decline in the average revenue per domestic shipment. Operating costs per shipment were lowered during the quarter, aided by strong productivity improvement. However, the operating cost decreases were not adequate to keep pace with the decline in average revenue per shipment. Net earnings available to common shareholders for the first quarter of 1995 were $1.8 million, or $.09 per share, compared to $6.4 million, or $.32 per share for the first quarter of 1994. The following table sets forth selected shipment and revenue data for the periods indicated:
Three Months Ended March 31 --------------------------- 1995 1994 ---- ---- Shipments (in thousands): Domestic Overnight Letters 9,130 8,476 0-2 Lbs. 12,013 10,788 3-99 Lbs. 10,472 9,628 ------ ------ 31,615 28,892 Select Delivery Service 0-2 Lbs. 13,903 9,566 3-99 Lbs. 7,676 5,782 ------ ------ 21,579 15,348 100 Lbs. and over 81 86 ------ ------ Total Domestic 53,275 44,326 ------ ------ International Express 936 804 All Other 130 112 ------ ------ Total International 1,066 916 ------ ------ Total Shipments 54,341 45,242 ====== ====== Average Pounds per Shipment: Domestic 4.5 4.7 International 67.8 61.5 Average Revenue per Pound: Domestic $ 1.82 $ 1.90 International $ 1.22 $ 1.23 Average Revenue per Shipment: Domestic $ 8.29 $ 8.95 International $82.31 $76.06
Total shipments increased 20% in the first quarter of 1995 compared to 18% in the first quarter of 1994. Total revenues increased 14% in the first quarter of 1995 compared to 17% in 1994. Domestic shipments increased 20% in the first quarter of 1995 compared to 18% for the same period of 1994. The growth in domestic shipments continued to be aided by strong growth in the Company's deferred service product, Select Delivery Service (SDS). For the first quarter of 1995, SDS accounted for over 40% of total domestic shipments, compared to 35% for the first quarter of 1994. Domestic overnight shipment growth was 9% in the first quarter of 1995 compared to 11% for the same period in 1994. Domestic revenues increased 11% in the first quarter of 1995, compared to 15% in 1994. Revenue growth was negatively impacted by a 3.5% decline in the average weight per domestic shipment. This decline in average weight in combination with the trend of a higher growth rate in lower yielding SDS shipments, resulted in a decrease in the average revenue per domestic shipment of more than 7.5% to $8.29 per shipment in the first quarter of 1995 versus $8.95 in 1994. The decline in average weight per shipment is assumed to be due to the market place adjusting to current inventory levels and economic conditions. The stabilization of domestic weight per shipment and related revenue per shipment yields will be key to quarterly results in upcoming quarters of 1995. International shipments increased 16% in the first quarter of 1995 compared to 9% in 1994. The growth in international shipments continues to be aided by the growth in higher yielding freight shipments which increased 16% in the first quarter of 1995 compared to 19% for the same period of 1994. International revenues increased 26% in the first quarter of 1995 compared to 32% in 1994. International revenue per shipment and the average weight per shipment increased significantly as a result of the continued strong unit growth in higher yielding freight shipments. Operating expenses as a percentage of revenues were 98.1% for the first quarter of 1995 compared to 96.2% in the first quarter of 1994 and 95.5% for all of 1994. Operating cost per shipment handled decreased 3.5% for the first quarter of 1995 compared to 2% decrease in 1994. During the early part of the first quarter of 1994, operating expenses were negatively impacted by severe winter weather and the California earthquake. The Company experienced a 9.5% improvement in productivity for the first quarter of 1995, as measured by shipments handled per paid employee hour, compared to 6% in first quarter of 1994. Comparisons of certain operating expense components are discussed below. Transportation purchased increased as a percentage of revenues to 35.6% in the first quarter of 1995 compared to 33.2% in 1994. This increase was primarily due to additional commercial airline costs resulting from the growth in international freight shipments discussed above. Station and ground expense as a percentage of revenues was 31.2% in the first quarter of 1995 which is comparable to the first quarter of 1994, as productivity gains achieved offset any inflationary pressures on costs. Flight operations and maintenance expense as a percentage of revenues during the first quarter of 1995 was 14.7%, compared to 14.1% in the first quarter of 1994. The average aviation fuel price for the first quarter of 1995 was $.59 per gallon compared to $.60 per gallon in the first quarter of 1994. Aviation fuel consumption increased to 33.7 million gallons in the first quarter of 1995, a 12% increase compared to the first quarter of 1994. The increase in fuel consumption is a result of additional Company operated aircraft placed in service since the first quarter in 1994. The effect of comparatively lower average fuel costs in the first quarter of 1995 was offset by higher aircraft maintenance costs. The Company anticipates aircraft maintenance costs in the second quarter of 1995 will be comparable to the first quarter costs, but will decrease as a percent of revenues in the third and fourth quarters. The increased number of aircraft in service also accounted for the increase in depreciation and amortization expense in the first quarter of 1995. General and administrative and sales and marketing expenses on a combined basis decreased as a percentage of revenues in the first quarter of 1995 compared to 1994. This was primarily the result of continuing productivity gains and a strong focus on all discretionary spending. Interest expense in the first quarter of 1995 was higher than the same period of 1994. This increase was the result of slightly higher average outstanding borrowings combined with higher effective interest rates. The Company's effective tax rate was 43.1% in the first quarter of 1995 compared to 40.9% in the first quarter of 1994 and 39.6% for all of 1994. The higher effective tax rate for the first quarter of 1995 was a result of certain taxes that are not directly related to the level of earnings. 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 $235 million in 1995, of which a significant portion is related to the acquisition and modification of aircraft. During the first quarter of 1995, total capital expenditures net of dispositions were $56 million. The principal sources of liquidity for financing capital expenditures during the first quarter of 1995 were cash provided by operations and financing under the Company's bank lines of credit. 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 also has available $45 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, 1995, a total of $185.7 million was outstanding under the revolving bank credit and money market credit lines. The Company amended its revolving bank credit agreement effective March 31, 1995, increasing the total commitment from $240 million to $250 million, subject to a maximum level of Company indebtedness permitted by certain covenants in the agreement and other loan agreements. The amended agreement is effective through May 31, 1998, with option to extend to May 31, 2000. The $100 million aircraft financing facility commitment with Mitsui & Co. expired in March 1995. In management's opinion, the available capacity under the bank credit agreements coupled with internally generated cash flow from remaining 1995 operations and other sources of borrowing should provide adequate flexibility to finance anticipated capital expenditures for the balance of 1995. PART II. OTHER INFORMATION -------------------------- Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits - EXHIBIT NO. 10 Material Contracts 10. First Amendment to Revolving Loan Facility dated as of March 31, 1995 among the Company, as borrower, and Wachovia Bank of Georgia, N.A., as Agent, and Wachovia Bank of Georgia, N.A., ABN AMRO Bank N.V., United States National Bank of Oregon, Seattle-First National Bank, CIBC, Inc., National City Bank, Columbus, Bank of America National Trust and Savings Association, The Bank of New York and NBD Bank, N.A. EXHIBIT NO. 27 Financial Data Schedule (b) Reports on form 8-K - A Form 8-K dated May 2, 1995, has been duly filed. The form included the following information: (1) Election of Directors for terms expiring in 1998. (2) Adopted the 1995 - 1999 Executive Incentive Compensation Plan (3) Approval of the selection of Deloitte & Touche LLP 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. 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: 5/12/95 /s/Roy C. Liljebeck ------- -------------------- Roy C. Liljebeck Executive Vice President, Chief Financial Officer Date: 5/12/95 /s/Lanny H. Michael ------- ------------------- Lanny H. Michael Senior Vice President, Treasurer and Controller
EX-10 2 EXHIBIT 10, BANK CONTRACT EXHIBIT 10 FIRST AMENDMENT TO CREDIT AGREEMENT THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") is dated as of the 31st day of March, 1995 among AIRBORNE FREIGHT CORPORATION (the "Borrower"), WACHOVIA BANK OF GEORGIA, N.A., as Agent (the "Agent") and WACHOVIA BANK OF GEORGIA, N.A., ABN AMRO BANK N.V., UNITED STATES NATIONAL BANK OF OREGON, SEATTLE - FIRST NATIONAL BANK, CIBC, INC., NATIONAL CITY BANK, COLUMBUS (as assignee of Continental Bank N.A.), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE BANK OF NEW YORK and NBD BANK, N.A. (collectively, the ("Banks"); W I T N E S S E T H: WHEREAS, the Borrower, the Agent and the Banks executed and delivered that certain Credit Agreement, dated as of the 19th day of November, 1993 (the "Credit Agreement"); WHEREAS, the Borrower has requested and the Agent and the Banks have agreed to certain amendments to the Credit Agreement, subject to the terms and conditions hereof; NOW, THEREFORE, for and in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged by the parties hereto, the Borrower, the Agent and the Banks hereby covenant and agree as follows: 1. Definitions. Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Credit Agreement shall from and after the date hereof refer to the Credit Agreement as amended hereby. 2. Amendments to Section 1.01. Section 1.01 of the Credit Agreement hereby is amended in the following respects: (a) the definition of "Applicable Margin" hereby is amended by deleting the percentages in clause (ii) (x), (y) and (z) thereof, as set forth below, and substituting therefor the new percentages set forth below opposite the deleted percentages:
Deleted % Substituted % clause (ii)(x) 0.4375% 0.275% clause (ii)(y) 0.6875% 0.35% clause (ii)(z) 0.875% 0.55%
(b) the definition of "Commitment" hereby is amended by deleting the words "signature pages hereof" in the second and third lines thereof, and substituting therefor the words "Schedule of Commitments attached hereto" (c) the definition of "Mitsui Agreement" hereby is deleted in its entirety; 3. Amendment to Section 2.03(b). Section 2.03(b) of the Credit Agreement hereby is amended by deleting the last sentence thereof and substituting therefor the following: Except as otherwise provided in the preceding sentence, the Borrower shall not make more than (x) 2 Money Market Quote Requests within any 5 consecutive Business Days and (y) 3 Money Market Quote Requests within any 10 consecutive Domestic Business Days. 4. Amendment to Section 2.05(c). Section 2.05(c) of the Credit Agreement hereby is amended by: (i) deleting the phrase "May 31, 1995 and May 31, 1996" in the eleventh line thereof, and substituting therefor the phrase "May 31, 1995, May 31, 1996 and May 31, 1997"; and (ii) adding the following to the last sentence thereof: , and if the Termination Date is not extended for any additional one year period on or before May 31, 1996, then the Borrower may not request that the Termination Date be extended for an additional one year period on May 31, 1997. 5. Amendment to Section 2.07(a). Section 2.07(a) of the Credit Agreement hereby is deleted in its entirety, and the following is substituted therefor: Section 2.07(a). [INTENTIONALLY OMITTED] 6. Amendment to Section 2.07(b). Section 2.07(b) of the Credit Agreement hereby is amended by deleting the percentages in clauses (ii) and (iii) thereof, as set forth below, and substituting therefor the percentages set forth below opposite the deleted percentages:
Deleted % Substituted % clause (ii) 0.1875% 0.15% clause (iii) 0.375% 0.25%
7. Amendment to Section 5.01(b). Section 5.01(b) of the Credit Agreement hereby is deleted in its entirety and the following is substituted therefor: (b) within 45 days after the end of each Fiscal Quarter of each Fiscal Year, a (i) consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Quarter and the related statements of net earnings for such Fiscal Quarter and for that portion of the Fiscal Year ended with such Fiscal Quarter and the related statements of cash flows for that portion of the Fiscal Year ended with such Fiscal Quarter, setting forth (x) in the case of net earnings, in comparative form the figures for the corresponding Fiscal Quarter and the corresponding portion of the previous Fiscal Year and (y) in the case of cash flow, in comparative form the figures for the corresponding portion of the previous Fiscal Year, and (ii) certification by the chief financial officer or the chief accounting officer of the Borrower that the financial statements referred to in clause (i) of this paragraph fairly present the consolidated financial position of the Borrower in conformity with GAAP (subject to normal year end adjustments); 8. Amendment to Section 5.05. Section 5.05 of the Credit Agreement hereby is deleted in its entirety and the following is substituted therefor: Subsequent to December 31, 1993, Consolidated Tangible Net Worth will at no time be less than $300,000,000 plus (i) the sum of (x) 50% of the cumulative Net Proceeds of Capital Stock received during any period after December 31, 1993, calculated as of the end of each Fiscal Year, minus (ii) the sum of the redemption payments made by the Borrower in respect of the Cumulative Convertible Preferred Stock (provided, that, such redemption payments may not exceed during any Fiscal Year those amounts set forth on Schedule 1.01). 9. Amendments to Section 5.09. Section 5.09 of the Credit Agreement hereby is amended in the following respects: (a) Section 5.09(a) hereby is amended by deleting the figure and symbol "7.5%" in the third line thereof and substituting therefor the figure and symbol "12.50%" (b) Section 5.09(c) hereby is amended by deleting the semicolon and the word "and" at the end thereof and substituting therefor a period. (c) Section 5.09(d) hereby is deleted in its entirety. 10. Amendment to Section 5.13. Section 5.13 of the Credit Agreement hereby is deleted in its entirety and substituting therefor the following: The Borrower will not, nor will it permit any Subsidiary to, sell, lease or otherwise transfer all or any substantial part of its assets to any other Person, provided, that, the Borrower and its Consolidated Subsidiaries may sell (i) up to $100,000,000 of Consolidated Total Assets during the time period from the Closing Date to and including December 31, 1994, plus (ii) additional increments of Consolidated Total Assets sold in the ordinary course of business of up to $5,000,000 in each successive Fiscal Year subsequent to the Fiscal Year ended December 31, 1993, plus (iii) additional increments of Consolidated Total Assets, whether or not sold in the ordinary course of business, of up to $30,000,000 in each successive Fiscal Year subsequent to the Fiscal Year ended December 31, 1994, plus (iv) any unused portion of permitted sales from any preceding Fiscal Year under clauses (i) and (iii). 11. Amendments to Signature Pages; Schedule of Commitments. The signature pages to the Credit Agreement hereby are amended by deleting the amounts set forth opposite the name of each of the Banks, and all references on such pages to Commitments and Total Commitments. A Schedule of Commitments in the form of the Schedule of Commitments attached hereto hereby is added to the Credit Agreement immediately following the last signature page and prior to Exhibit A-1. 12. Amendments to Compliance Certificate. The Compliance Certificate (Exhibit F to the Credit Agreement) hereby is amended by amending the Compliance Checklist attached thereto in the following respects: (a) Paragraph 3 of the Compliance Checklist is deleted in its entirety, and the following is substituted therefor: 3. Minimum Consolidated Tangible Net Worth (Section 5.05) (a) $300,000,000 (b) 50% of the cumulative Net Proceeds of Capital Stock $_________ (c) Sum of redemption payments made in respect of Cumulative Preferred Stock $_________ (d) Limitation on such redemption payments per Schedule 1.01 $_________ Required Minimum Consolidated Tangible Net Worth (the sum of (a) plus (b) minus the lesser of (c) and (d) $_________ Consolidated Tangible Net Worth Schedule - 1 $_________ (b) Paragraph 5 of the Compliance Checklist is deleted in its entirety, and the following is substituted therefor: 5. Negative Pledge (Section 5.09) (a) Consolidated Total Assets $_________ (b) Amount of Debt Secured by Liens (other than those referred to in clauses (b) and (c) of Section 5.09) $_________ Limitation (product of (a) multiplied by 0.125) $_________ 13. Amendment to Exhibit A-2 Exhibit A-2 to the Credit Agreement hereby is deleted in its entirety and Exhibit A-2 hereto is substituted therefor. 14. Restatement of Representations and Warranties. The Borrower hereby restates and renews each and every representation and warranty heretofore made by it in the Credit Agreement and the other Loan Documents as fully as if made on the date hereof and with specific reference to this First Amendment and all other loan documents executed and/or delivered in connection herewith. 15. Effect of Amendment. Except as set forth expressly hereinabove, all terms of the Credit Agreement and the other Loan Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding and enforceable obligations of the Borrower. The amendments contained herein shall be deemed to have prospective application only, unless otherwise specifically stated herein. 16. Ratification. The Borrower hereby restates, ratifies and reaffirms each and every term, covenant and condition set forth in the Credit Agreement and the other Loan Documents effective as of the date hereof. 17. Counterparts. This First Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. 18. Section References. Section titles and references used in this First Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby. 19. No Default. To induce the Agent and the Banks to enter into this First Amendment and to continue to make advances pursuant to the Credit Agreement, the Borrower hereby acknowledges and agrees that, as of the date hereof, and after giving effect to the terms hereof, there exists (i) no Default or Event of Default (the Agent and the Banks hereby acknowledging and agreeing that the delivery prior to the date hereof of financial statements complying with the provisions of Section 5.01(b) of the Credit Agreement as modified by this First Amendment, shall constitute compliance with the provisions of Section 5.01(b) as in effect prior to the date of this First Amendment for all purposes) and (ii) no right of offset, defense, counterclaim, claim or objection in favor of the Borrower arising out of or with respect to any of the Obligations. 20. Further Assurances. The Borrower agrees to take such further actions as the Agent shall reasonably request in connection herewith to evidence the amendments herein contained to the Borrower. 21. Governing Law. This First Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of Georgia. 22. Conditions Precedent. This First Amendment shall become effective only upon: (i) execution and delivery of this First Amendment by each of the parties hereto; (ii) execution and delivery of the Consent and Reaffirmation of Guarantors at the end hereof by each of the Guarantors; (iii) receipt by the Agent of an opinion letter (together with any opinions of local counsel relied on therein) of David C. Anderson, counsel for the Borrower, dated as of the date hereof, substantially in the form of Exhibit A; (iv) receipt by the Agent of a certificate of incumbency of each of the Borrower and the Guarantors, signed by the Secretary or an Assistant Secretary of the Borrower and the Guarantors, certifying as to the names, true signatures and incumbency of the officer or officers of the Borrower authorized to execute and deliver this First Amendment and certified copies of the following items, for the Borrower : (i) Certificate/Articles of Incorporation, (ii) Bylaws, (iii) a certificate of the Secretary of State of the state of its incorporation as to its good standing as a corporation in that state, and (iv) the action taken by the Board of Directors authorizing the execution, delivery and performance of this First Amendment; (v) execution and delivery of a new Money Market Loan Note in the form of Exhibit A-2 for each of the Banks (and the old Money Market Loan Notes shall be canceled); and (vi) execution and delivery of a new Syndicated Loan Note in the form of Exhibit C for Wachovia (and the old Syndicated Loan Notes of Wachovia shall be canceled). IN WITNESS WHEREOF, the Borrower, the Agent and each of the Banks has caused this First Amendment to be duly executed, under seal, by its duly authorized officer as of the day and year first above written. AIRBORNE FREIGHT CORPORATION, as Borrower (SEAL) By: /s/Lanny H. Michael --------------------------- -------- Title: Senior Vice President, Treasurer & Controller WACHOVIA BANK OF GEORGIA, N.A., as Agent and as a Bank (SEAL) By: /s/Douglas L. Williams ----------------------------------- Title: Senior Vice President Group Executive ABN AMRO BANK N.V., as a Bank (SEAL) By: /s/J.J. Rice ----------------------------------- Title: Vice President By: /s/Leif H. Olsson ----------------------------------- Title: Group Vice President UNITED STATES NATIONAL BANK OF OREGON, as a Bank (SEAL) By: /s/Matthew S. Thoreson ----------------------------------- Title: Vice President SEATTLE - FIRST NATIONAL BANK, as a Bank (SEAL) By: /s/Stan Diddams ----------------------------------- Title: Vice President CIBC, INC., as a Bank (SEAL) By: /s/Dean J. Decker ----------------------------------- Title: Assistant Vice President NATIONAL CITY BANK, COLUMBUS, as a Bank (SEAL) By: /s/Jeffrey L. Hawthorne ----------------------------------- Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank (SEAL) By: /s/Timothy C. Hintz ----------------------------------- Title: Vice President THE BANK OF NEW YORK, as a Bank (SEAL) By: /s/Robert Lonk ----------------------------------- Title: Vice President NBD BANK, N.A., as a Bank (SEAL) By: /s/James R. Frye ----------------------------------- Title: First Vice President SCHEDULE OF COMMITMENTS
Bank Commitment Wachovia Bank of Georgia, N.A. $ 50,000,000 ABN AMRO Bank N.V. $ 30,000,000 United States National Bank of Oregon $ 30,000,000 Seattle - First National Bank $ 30,000,000 CIBC, Inc. $ 25,000,000 National City Bank, Columbus $ 25,000,000 Bank of America National Trust and Savings Association $ 20,000,000 The Bank of New York $ 20,000,000 NBD Bank, N.A. $ 20,000,000 ------------ Total Commitments $250,000,000 ============
EXHIBIT A OPINION OF COUNSEL FOR THE BORROWER [Date] To the Banks and the Agent Referred to Below c/o Wachovia Bank of Georgia, N.A., as Agent 191 Peachtree Street, N.E. Atlanta, Georgia 30303-1757 Attn: Syndications Group Dear Sirs: I am Corporate Secretary-Counsel of Airborne Freight Corporation (the "Borrower") and have acted as counsel for the Borrower in connection with the First Amendment to Credit Agreement (the "First Amendment") dated as of March 31, 1995, among the Borrower, the banks listed on the signature pages thereof and Wachovia Bank of Georgia, N.A., as Agent. Capitalized terms contained herein but not defined herein shall have the meanings attributed thereto in the First Amendment or in the Credit Agreement referred to therein. I have examined such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as I have deemed necessary or advisable for purposes of this opinion. For purposes of this opinion, I have assumed the genuineness of all signatures, the authenticity of all documents provided to us as originals, the conformity to authentic original documents of all documents provided to us as certified, conformed or photostatic copies, and the completeness and accuracy of all certificates obtained from public officials. As to questions of fact material to the following opinions, when all of the facts were not independently established, I have relied upon oral and written representations of officers and representatives of the Borrower, without any independent investigation or confirmation; provided, that in connection with any such reliance, I have no reason to believe that such representations are untrue. I have also assumed that the First Amendment has been duly authorized, executed and delivered by each Bank and by the Agent, and that the First Amendment constitutes the valid and binding obligation of each Bank and of the Agent. As used in this opinion, the phrase "actual knowledge" or "my actual knowledge" means such knowledge as I have obtained from (a) my review of (i) the First Amendment and (ii) the Certificate of Incorporation, Bylaws, and minutes of meetings and consent resolutions of the Board of Directors of the Borrower; and (b) inquiry of officers of the Borrower, and written certificates furnished to me by such officers, but without further investigation or verification on my part. "Actual knowledge" does not include constructive or inquiry knowledge other than the knowledge acquired as a result of the inquiries described in (b) of the preceding sentence. Opinion Based upon the foregoing and subject to the assumptions and qualifications set out herein, I am of the opinion that: 1. The execution, delivery and performance by the Borrower of the First Amendment (i) is within the Borrower's corporate powers, (ii) has been duly authorized by all necessary corporate action, (iii) requires no action by or in respect of, or filing with, any governmental body, agency or official, (iv) does not contravene, or constitute a default under, the certificate of incorporation or by-laws of the Borrower, or any provision of applicable law or regulation or, to my actual knowledge, any agreement, judgment, injunction, order, decree or other instrument, which is binding upon the Borrower, and (v) to my actual knowledge, does not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries. 2. The First Amendment constitutes a valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms. 3. To my actual knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, consolidated financial position or consolidated results of operations of the Borrower and its Consolidated Subsidiaries, considered as a whole, or which in any manner questions the validity or enforceability of the First Amendment, the Credit Agreement, the Guaranty or any Note. Qualifications and Limitations The opinions rendered herein are subject to and qualified in all respects by the following qualifications and limitations: a. My opinion as to the enforceability of the First Amendment is limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, voidable preference, moratorium or similar laws applicable to creditors' rights or remedies or to the collection of debtors' obligations generally, (ii) general principles of equity and public policy including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law), and (iii) principles governing the availability of specific performance, injunctive relief, or any other equitable remedy, which generally provide that the award of such remedies is in the discretion of the court to which application for such relief is made. b. The enforceability of the First Amendment is limited by Washington decisions which permit the admission of extrinsic evidence, both oral and written, to ascertain the intent of the parties to documents, regardless of the presence or absence of ambiguity in any of such agreements or instruments and regardless of a statement by the party in the documents that such agreements or instruments constitute an integrated expression of their agreement (Berg v. Hudesman, 115 Wn.2d 657 (1990)). c. I note that the First Amendment provides that it is to be governed by, and construed and interpreted in accordance with, the laws of the State of Georgia. For purposes of this opinion, and except as otherwise provided in paragraph d. below, you have authorized us to assume that the First Amendment and all related documents and instruments provide for the application of, and will be governed by and construed in accordance with, Washington law (without regard to Washington law regarding choice of law or conflict of law). d. In all respects, the opinions expressed herein are based on the laws and facts existing on the date hereof, and no opinion is expressed with respect to the effect of any subsequent change in such law or facts. My opinion is limited to the effects, on the persons and transactions herein described, of (i) the laws of the State of Washington, (ii) as to the opinions expressed in paragraph 1 above concerning corporate status, standing, power and authorization, the corporate laws of the State of Delaware, and (iii) except as provided in paragraph e. below, the federal laws of the United States, all as presently in force. I express no opinion as to the applicability or effect of the laws of any other jurisdiction. e. I express no opinion regarding matters of federal or state aviation or transportation law. f. The foregoing opinions, to the extent they relate to the organization, existence, good standing and qualification of Borrower are based solely upon my review of the certificates of incorporation and good standing certificate of Borrower, copies of which have been provided to you. This opinion is delivered to you in connection with the transaction referenced above and may be relied upon only by you, any Assignee, Participant or other Transferee under the Credit Agreement and by no other person or entity without my prior written consent. Very truly yours, --------------------- David C. Anderson EXHIBIT A-2 MONEY MARKET LOAN NOTE As of March 31, 1995 For value received, AIRBORNE FREIGHT CORPORATION, a Delaware corporation (the "Borrower"), promises to pay to the order of ___________________, (the "Bank"), for the account of its Lending Office, the unpaid principal amount of each Money Market Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, on the dates and in the amounts provided in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of this Note on the dates and at the rate or rates provided for in the Credit Agreement referred to below. Interest on any overdue principal of and, to the extent permitted by law, overdue interest on the principal amount hereof shall bear interest at the Default Rate, as provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of Wachovia Bank of Georgia, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia 30303-1757, or such other address as may be specified from time to time pursuant to the Credit Agreement. All Money Market Loans made by the Bank, the respective maturities thereof, the interest rates from time to time applicable thereto, and all repayments of the principal thereof shall be recorded by the Bank and, prior to any transfer hereof, endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This Note is one of the Money Market Loan Notes referred to in the Credit Agreement dated as of November 19, 1993 among the Borrower, the Banks listed on the signature pages thereof and Wachovia Bank of Georgia, N.A., as Agent (as amended as of even date herewith and as the same may hereafter be amended and modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the optional and mandatory prepayment and the repayment hereof and the acceleration of the maturity hereof. IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed, under seal, by its duly authorized officer as of the day and year first above written. AIRBORNE FREIGHT CORPORATION (SEAL) By: ________________________________ Title: LOANS AND PAYMENTS OF PRINCIPAL Amount Amount of Stated Interest of Principal Mat Notation Date Rate Loan Repaid Date Made By
_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ EXHIBIT C SYNDICATED LOAN NOTE As of March 31, 1995 For value received, AIRBORNE FREIGHT CORPORATION, a Delaware corporation (the "Borrower"), promises to pay to the order of Wachovia Bank of Georgia, a national bank (the "Bank"), for the account of its Lending Office, the principal sum of FIFTY MILLION and No/100 Dollars ($50,000,000), or such lesser amount as shall equal the unpaid principal amount of each Syndicated Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, on the dates and in the amounts provided in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of this Note on the dates and at the rate or rates provided for in the Credit Agreement referred to below. Interest on any overdue principal of and, to the extent permitted by law, overdue interest on the principal amount hereof shall bear interest at the Default Rate, as provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of Wachovia Bank of Georgia, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia 30303-1757, or such other address as may be specified from time to time pursuant to the Credit Agreement. All Syndicated Loans made by the Bank, the respective maturities thereof, the interest rates from time to time applicable thereto, and all repayments of the principal thereof shall be recorded by the Bank and, prior to any transfer hereof, endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This Note is one of the Syndicated Loan Notes referred to in the Credit Agreement dated as of November 19, 1993 among the Borrower, the Banks listed on the signature pages thereof and Wachovia Bank of Georgia, N.A., as Agent (as amended on even date herewith and as the same may hereafter be amended and modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the optional and mandatory prepayment and the repayment hereof and the acceleration of the maturity hereof. IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed, under seal, by its duly authorized officer as of the day and year first above written. AIRBORNE FREIGHT CORPORATION (SEAL) By: ________________________________ Title: LOANS AND PAYMENTS OF PRINCIPAL Base Rate Amoun Amount of or Euro- of Principal Maturity Notation Date Dollar Loan Loan Repaid Date Made By
_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ CONSENT AND REAFFIRMATION OF GUARANTORS Each of the undersigned (i) acknowledges receipt of the foregoing First Amendment to Credit Agreement (the "First Amendment"), (ii) consents to the execution and delivery of the First Amendment by the parties thereto and (iii) reaffirms all of its obligations and covenants under the Guaranty Agreement dated as of November 19, 1993 executed by it, and agrees that none of such obligations and covenants shall be affected by the execution and delivery of the First Amendment. This Consent and Reaffirmation may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. ABX AIR, INC. (SEAL) By: /s/Carl Donaway ----------------------------------- Title: President & CEO AIRBORNE FORWARDING CORPORATION (SEAL) By: /s/Lanny H. Michael ----------------------------------- Title: Treasurer EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 10,815 0 225,185 7,550 29,643 293,197 1,437,074 646,412 1,101,984 232,531 418,748 21,366 3,948 0 367,634 1,101,984 0 529,916 0 519,887 0 0 6,725 3,304 1,424 0 0 0 0 1,809 .09 .09
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