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, 2003
Commission File Number 1-6512
AIRBORNE, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
91-2065027 | |
| (State of incorporation or organization) |
(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: x No: ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes: x 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 3,228,526 treasury shares) as of March 31, 2003 |
48,450,991 shares |
FORWARD LOOKING STATEMENTS
Statements contained in this quarterly report on Form 10-Q, which are not historical facts, are considered forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995). These forward-looking statements are based on expectations, estimates and projections as of the date of this filing, and involve risks and uncertainties that are inherently difficult to predict. Actual results may differ materially from those expressed in the forward-looking statements for any number of reasons, including those described in this report or in “Risk Factors” contained in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2002.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AIRBORNE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
| Three Months Ended |
||||||||
| 2003 |
2002 |
|||||||
| REVENUES: |
||||||||
| Domestic |
$ |
744,395 |
|
$ |
714,139 |
| ||
| International |
|
80,475 |
|
|
76,453 |
| ||
|
|
824,870 |
|
|
790,592 |
| |||
| OPERATING EXPENSES: |
||||||||
| Transportation purchased |
|
265,536 |
|
|
249,031 |
| ||
| Station and ground operations |
|
279,488 |
|
|
264,119 |
| ||
| Flight operations and maintenance |
|
142,143 |
|
|
125,366 |
| ||
| General and administrative |
|
72,992 |
|
|
65,486 |
| ||
| Sales and marketing |
|
21,774 |
|
|
22,276 |
| ||
| Depreciation and amortization |
|
44,442 |
|
|
49,121 |
| ||
| Federal legislation compensation |
|
650 |
|
|
— |
| ||
|
|
827,025 |
|
|
775,399 |
| |||
| EARNINGS (LOSS) FROM OPERATIONS |
|
(2,155 |
) |
|
15,193 |
| ||
| OTHER INCOME (EXPENSE): |
||||||||
| Interest income |
|
1,096 |
|
|
808 |
| ||
| Interest expense |
|
(7,179 |
) |
|
(7,679 |
) | ||
| Discount on sales of receivables |
|
(1,059 |
) |
|
(1,305 |
) | ||
| Other |
|
(64 |
) |
|
1,896 |
| ||
| EARNINGS (LOSS) BEFORE INCOME TAXES |
|
(9,361 |
) |
|
8,913 |
| ||
| INCOME TAX (EXPENSE) BENEFIT |
|
3,773 |
|
|
(3,645 |
) | ||
| NET EARNINGS (LOSS) |
$ |
(5,588 |
) |
$ |
5,268 |
| ||
| EARNINGS (LOSS) PER SHARE: |
||||||||
| PER BASIC SHARE |
$ |
(0.12 |
) |
$ |
0.11 |
| ||
| PER DILUTED SHARE |
$ |
(0.12 |
) |
$ |
0.11 |
| ||
| DIVIDENDS PER SHARE |
$ |
0.04 |
|
$ |
0.04 |
| ||
See notes to consolidated financial statements.
1
AIRBORNE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (Unaudited) |
||||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ |
327,060 |
|
$ |
339,900 |
| ||
| Restricted cash |
|
51,430 |
|
|
36,333 |
| ||
| Trade accounts receivable, less allowance of $14,259 and $13,616 |
|
153,268 |
|
|
169,880 |
| ||
| Spare parts and fuel inventory |
|
38,239 |
|
|
36,223 |
| ||
| Refundable income taxes |
|
1,288 |
|
|
627 |
| ||
| Deferred income tax assets |
|
37,787 |
|
|
32,444 |
| ||
| Prepaid expenses and other |
|
35,466 |
|
|
31,404 |
| ||
| TOTAL CURRENT ASSETS |
|
644,538 |
|
|
646,811 |
| ||
| PROPERTY AND EQUIPMENT, NET |
|
1,191,692 |
|
|
1,181,430 |
| ||
| OTHER ASSETS |
|
47,347 |
|
|
50,845 |
| ||
| TOTAL ASSETS |
$ |
1,883,577 |
|
$ |
1,879,086 |
| ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ |
147,831 |
|
$ |
160,772 |
| ||
| Salaries, wages and related taxes |
|
100,423 |
|
|
94,581 |
| ||
| Accrued expenses |
|
150,709 |
|
|
132,744 |
| ||
| Income taxes payable |
|
— |
|
|
4,912 |
| ||
| Current portion of long-term obligations |
|
11,290 |
|
|
10,372 |
| ||
| TOTAL CURRENT LIABILITIES |
|
410,253 |
|
|
403,381 |
| ||
| LONG-TERM OBLIGATIONS |
|
370,844 |
|
|
370,091 |
| ||
| DEFERRED INCOME TAX LIABILITIES |
|
146,199 |
|
|
146,321 |
| ||
| POSTRETIREMENT LIABILITIES |
|
59,853 |
|
|
59,720 |
| ||
| OTHER LIABILITIES |
|
64,011 |
|
|
60,410 |
| ||
| COMMITMENTS AND CONTINGENCIES |
||||||||
| SHAREHOLDERS’ EQUITY: |
||||||||
| Preferred stock, without par value— |
||||||||
| Authorized 6,000,000 shares, no shares issued |
||||||||
| Common stock, par value $1 per share— |
||||||||
| Authorized 120,000,000 shares |
||||||||
| Issued 51,679,517 and 51,657,886 shares |
|
51,680 |
|
|
51,658 |
| ||
| Additional paid-in capital |
|
309,491 |
|
|
308,813 |
| ||
| Retained earnings |
|
539,883 |
|
|
547,409 |
| ||
| Accumulated other comprehensive loss |
|
(8,788 |
) |
|
(8,859 |
) | ||
|
|
892,266 |
|
|
899,021 |
| |||
| Treasury stock, 3,228,526 and 3,234,526 shares, at cost |
|
(59,849 |
) |
|
(59,858 |
) | ||
|
|
832,417 |
|
|
839,163 |
| |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
1,883,577 |
|
$ |
1,879,086 |
| ||
See notes to consolidated financial statements.
2
AIRBORNE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| OPERATING ACTIVITIES: |
||||||||
| Net earnings (loss) |
$ |
(5,588 |
) |
$ |
5,268 |
| ||
| Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
|
44,442 |
|
|
49,121 |
| ||
| Deferred income taxes |
|
(5,465 |
) |
|
(420 |
) | ||
| Postretirement obligations |
|
13,634 |
|
|
12,929 |
| ||
| Casualty insurance |
|
1,861 |
|
|
5,683 |
| ||
| Other |
|
(54 |
) |
|
(803 |
) | ||
| Change in assets and liabilities: |
||||||||
| Restricted cash |
|
(15,097 |
) |
|
— |
| ||
| Trade accounts receivable |
|
16,612 |
|
|
(6,979 |
) | ||
| Inventories and prepaid expenses |
|
(6,078 |
) |
|
(7,676 |
) | ||
| Refundable income taxes |
|
(661 |
) |
|
26,983 |
| ||
| Accounts payable |
|
(12,941 |
) |
|
(21,295 |
) | ||
| Accrued expenses, salaries and taxes payable |
|
7,214 |
|
|
12,271 |
| ||
| NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
37,879 |
|
|
75,082 |
| ||
| INVESTING ACTIVITIES: |
||||||||
| Additions to property and equipment |
|
(50,179 |
) |
|
(27,199 |
) | ||
| Proceeds from sale of securities |
|
— |
|
|
3,656 |
| ||
| Other |
|
3,237 |
|
|
(3,877 |
) | ||
| NET CASH USED BY INVESTING ACTIVITIES |
|
(46,942 |
) |
|
(27,420 |
) | ||
| FINANCING ACTIVITIES: |
||||||||