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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 June 30, 2002
 
Commission File Number 1-6512
 
 
AIRBORNE, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
(State of incorporation or organization)
 
91-2065027
(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 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 3,234,526 treasury shares)
as of June 30, 2002
   
48,396,921 shares
 
 

 
FORWARD LOOKING STATEMENTS
 
Statements contained in this quarterly report on Form 10-Q that 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 for the year ended December 31, 2001.
 

 
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 June 30
     
Six Months Ended June 30
  
    
2002
     
2001
     
2002
     
2001
  
REVENUES:
                                    
Domestic
   
$
719,913
 
   
$
720,235
 
   
$
1,431,980
 
   
$
1,450,334
 
International
   
 
90,538
 
   
 
91,990
 
   
 
166,991
 
   
 
185,412
 
    
  
  
  
    
 
810,451
 
   
 
812,225
 
   
 
1,598,971
 
   
 
1,623,746
 
OPERATING EXPENSES:
                                    
Transportation purchased
   
 
267,368
 
   
 
266,085
 
   
 
516,399
 
   
 
533,124
 
Station and ground operations
   
 
265,957
 
   
 
264,780
 
   
 
530,076
 
   
 
545,154
 
Flight operations and maintenance
   
 
132,531
 
   
 
143,686
 
   
 
257,897
 
   
 
295,372
 
General and administrative
   
 
65,237
 
   
 
66,821
 
   
 
128,651
 
   
 
132,888
 
Sales and marketing
   
 
23,492
 
   
 
23,329
 
   
 
45,768
 
   
 
47,331
 
Depreciation and amortization
   
 
46,731
 
   
 
52,684
 
   
 
95,852
 
   
 
105,322
 
    
  
  
  
    
 
801,316
 
   
 
817,385
 
   
 
1,574,643
 
   
 
1,659,191
 
    
  
  
  
EARNINGS (LOSS) FROM OPERATIONS
   
 
9,135
 
   
 
(5,160
)
   
 
24,328
 
   
 
(23,445
)
OTHER INCOME (EXPENSE):
                                    
Interest, net
   
 
(7,485
)
   
 
(4,454
)
   
 
(14,356
)
   
 
(8,951
)
Discounts on sales of receivables
   
 
(885
)
   
 
(2,229
)
   
 
(2,190
)
   
 
(5,986
)
Other
   
 
407
 
   
 
2,304
 
   
 
2,303
 
   
 
2,576
 
    
  
  
  
EARNINGS (LOSS) BEFORE INCOME TAXES
   
 
1,172
 
   
 
(9,539
)
   
 
10,085
 
   
 
(35,806
)
INCOME TAX (EXPENSE) BENEFIT
   
 
715
 
   
 
(3,178
)
   
 
4,360
 
   
 
(12,450
)
    
  
  
  
NET EARNINGS (LOSS)
   
$
457
 
   
$
(6,361
)
   
$
5,725
 
   
$
(23,356
)
    
  
  
  
NET EARNINGS (LOSS) PER SHARE:
                                    
BASIC
   
$
0.01
 
   
$
(0.13
)
   
$
0.12
 
   
$
(0.48
)
    
  
  
  
DILUTED
   
$
0.01
 
   
$
(0.13
)
   
$
0.12
 
   
$
(0.48
)
    
  
  
  
DIVIDENDS PER SHARE
   
$
0.04
 
   
$
0.04
 
   
$
0.08
 
   
$
0.08
 
    
  
  
  
 
See notes to consolidated financial statements.

1

 
AIRBORNE, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
    
June 30
     
December 31
  
    
2002
     
2001
  
    
(Unaudited)
         
ASSETS
                  
CURRENT ASSETS:
                  
Cash and cash equivalents
   
$
338,063
 
   
$
201,500
 
Trade accounts receivable, less allowance of $10,849 and $11,509
   
 
224,322
 
   
 
126,040
 
Spare parts and fuel inventory
   
 
37,085
 
   
 
38,413
 
Refundable income taxes
   
 
517
 
   
 
27,161
 
Deferred income tax assets
   
 
30,929
 
   
 
30,572
 
Prepaid expenses and other
   
 
33,496
 
   
 
28,021
 
    
  
TOTAL CURRENT ASSETS
   
 
664,412
 
   
 
451,707
 
PROPERTY AND EQUIPMENT, NET
   
 
1,214,131
 
   
 
1,247,373
 
EQUIPMENT DEPOSITS and OTHER ASSETS
   
 
52,424
 
   
 
47,764
 
    
  
TOTAL ASSETS
   
$
1,930,967
 
   
$
1,746,844
 
    
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                  
CURRENT LIABILITIES:
                  
Accounts payable
   
$
138,784
 
   
$
141,873
 
Salaries, wages and related taxes
   
 
81,233
 
   
 
75,458
 
Accrued expenses
   
 
148,978
 
   
 
145,997
 
Current portion of debt
   
 
108,173
 
   
 
107,410
 
    
  
TOTAL CURRENT LIABILITIES
   
 
477,168
 
   
 
470,738
 
LONG-TERM DEBT
   
 
366,387
 
   
 
218,053
 
DEFERRED INCOME TAX LIABILITIES
   
 
144,717
 
   
 
143,526
 
POST RETIREMENT LIABILITIES
   
 
66,964
 
   
 
39,423
 
OTHER LIABILITIES
   
 
38,816
 
   
 
40,888
 
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 51,631,447 and 51,375,711 shares
   
 
51,631
 
   
 
51,376
 
Additional paid-in capital
   
 
308,553
 
   
 
304,984
 
Retained earnings
   
 
542,163
 
   
 
540,544
 
Accumulated other comprehensive income
   
 
(5,574
)
   
 
(2,820
)
    
  
    
 
896,773
 
   
 
894,084
 
Treasury stock, 3,234,526 and 3,240,526 shares, at cost
   
 
(59,858
)
   
 
(59,868
)
    
  
    
 
836,915
 
   
 
834,216
 
    
  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   
$
1,930,967
 
   
$
1,746,844
 
    
  
 
See notes to consolidated financial statements.

2

 
AIRBORNE, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
    
Six Months Ended June 30
  
    
2002
     
2001
  
OPERATING ACTIVITIES:
                  
Net earnings (loss)
   
$
5,725
 
   
$
(23,356
)
Adjustments to reconcile net earnings to
                  
    net cash provided by operating activities:
                  
Depreciation and amortization
   
 
95,852
 
   
 
105,322
 
Deferred income taxes
   
 
834
 
   
 
9,623
 
Postretirement obligations
   
 
23,537
 
   
 
3,427
 
Other
   
 
(3,759
)
   
 
(2,299
)
    
  
CASH PROVIDED BY OPERATIONS
   
 
122,189
 
   
 
92,717
 
Change in:
                  
Receivable securitization facility
   
 
(100,000
)
   
 
50,000
 
Receivables
   
 
1,718
 
   
 
24,764
 
Inventories and prepaid expenses
   
 
(4,147
)
   
 
(5,327
)
Refundable income taxes
   
 
26,644
 
   
 
(3,669
)
Accounts payable
   
 
(3,089
)
   
 
(30,163
)
Accrued expenses, salaries and taxes payable
   
 
12,759
 
   
 
17,405
 
    
  
NET CASH PROVIDED BY OPERATING ACTIVITIES
   
 
56,074
 
   
 
145,727
 
INVESTING ACTIVITIES:
                  
Additions to property and equipment
   
 
(57,694
)
   
 
(73,389
)
Proceeds from sale of securities
   
 
3,778
 
   
 
—  
 
Proceeds from sale of radio frequencies
   
 
—  
 
   
 
2,071
 
Other
   
 
(6,995
)
   
 
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