-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HYY0iEVZtLlAjC0R59GPE0J1rWCz7PYIMeG8rsCh/7tdH7yEBr66d6r18r2TsmuC QOM7dyjKZYwJaBJ3r6NYMA== 0000950129-98-002130.txt : 19980518 0000950129-98-002130.hdr.sgml : 19980518 ACCESSION NUMBER: 0000950129-98-002130 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE USA AIRFREIGHT INC CENTRAL INDEX KEY: 0001001718 STANDARD INDUSTRIAL CLASSIFICATION: ARRANGEMENT OF TRANSPORTATION OF FREIGHT & CARGO [4731] IRS NUMBER: 760094895 STATE OF INCORPORATION: TX FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27288 FILM NUMBER: 98621764 BUSINESS ADDRESS: STREET 1: 15340 VICKERY DR CITY: HOUSTON STATE: TX ZIP: 77032 BUSINESS PHONE: 281-618-3428 MAIL ADDRESS: STREET 1: 15350 VICKERY DR CITY: HOUSTON STATE: TX ZIP: 77032 10-Q 1 EAGLE USA AIRFREIGHT, INC. - DATED 03/31/98 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended MARCH 31, 1998 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________ to ________ COMMISSION FILE NUMBER 0-27288 EAGLE USA AIRFREIGHT, INC. (Exact name of registrant as specified in its charter) TEXAS 76-0094895 - --------------------------------- ---------------------- (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification Number) 15350 VICKERY DRIVE, HOUSTON, TEXAS 77032 (281) 618-3100 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices, Including Registrant's Zip Code, and Telephone Number, Including Area Code) 3214 LODESTAR, HOUSTON, TEXAS 77032 - -------------------------------------------------------------------------------- Former Name, Former Address and former Fiscal Year, if Changed Since Last Report 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 --- --- The number of shares of the registrant's common stock as of April 30, 1998: 19,043,330 shares. ================================================================================ 2 EAGLE USA AIRFREIGHT, INC. INDEX TO FORM 10-Q
PAGE PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Condensed Consolidated Balance Sheet as of ............................. 3 March 31, 1998 (unaudited) and September 30, 1997 (audited) Condensed Consolidated Statement of Income for the Six ................. 4 Months ended March 31, 1998 and 1997 (unaudited) Condensed Consolidated Statement of Income for the Three ............... 5 Months ended March 31, 1998 and 1997 (unaudited) Condensed Consolidated Statement of Cash Flows for ..................... 6 the Six Months ended March 31, 1998 and 1997 (unaudited) Condensed Consolidated Statement of Shareholders' ...................... 7 Equity for the Six Months ended March 31, 1998 (unaudited) Notes to Condensed Consolidated Financial Statements (unaudited) ....... 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...................................... 10 PART II. OTHER INFORMATION ............................................... 17 SIGNATURES ............................................................... 20 INDEX TO EXHIBITS ........................................................ 21
2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EAGLE USA AIRFREIGHT, INC. CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS, EXCEPT PAR VALUES)
March 31, September 30, 1998 1997 (unaudited) (audited) ----------- ------------- Assets Current assets: Cash and cash equivalents $ 39,807 $ 25,107 Short-term investments 8,178 2,679 Accounts receivable - trade, net 50,505 54,662 Prepaid expenses and other 3,406 4,557 ----------- ------------- Total current assets 101,896 87,005 Property and equipment, net 16,970 14,090 Other assets 5,556 5,776 ----------- ------------- $ 124,422 $ 106,871 =========== ============= Liabilities and Shareholders' Equity Current liabilities: Accounts payable - trade $ 7,196 $ 7,757 Accrued transportation costs 5,094 6,062 Accrued compensation and employee benefits 9,043 10,454 Other current liabilities 1,008 2,094 ----------- ------------- Total current liabilities 22,341 26,367 ----------- ------------- Long-term indebtedness ----------- ------------- Shareholders' equity: Preferred Stock, $0.001 par value, 10,000 shares authorized Common stock, $0.001 par value, 100,000 and 30,000 shares authorized, 18,766 and 18,210 shares issued 19 18 Additional paid-in capital 64,084 52,387 Retained earnings 37,978 28,099 ----------- ------------- 102,081 80,504 ----------- ------------- $ 124,422 $ 106,871 =========== =============
See notes to unaudited condensed consolidated financial statements. 3 4 EAGLE USA AIRFREIGHT, INC. CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Six Months Ended March 31, ----------------------- 1998 1997 ---------- ---------- Revenues $ 188,189 $ 129,075 Cost of transportation 104,182 72,877 ---------- ---------- 84,007 56,198 ---------- ---------- Operating expenses: Personnel costs 44,936 29,173 Other selling, general and administrative expenses 23,658 15,802 ---------- ---------- 68,594 44,975 ---------- ---------- Operating income 15,413 11,223 ---------- ---------- Interest and other income 773 974 Interest expense ---------- ---------- Nonoperating income 773 974 ---------- ---------- Income before provision for income taxes 16,186 12,197 Provision for income taxes 6,307 4,735 ---------- ---------- Net income $ 9,879 $ 7,462 ========== ========== Basic weighted average common shares outstanding 18,418 17,621 ========== ========== Diluted weighted average common and common equivalent shares outstanding 19,156 18,554 ========== ========== Basic earnings per share (Note 2) $ 0.54 $ 0.42 ========== ========== Diluted earnings per share (Note 2) $ 0.52 $ 0.40 ========== ==========
See notes to unaudited condensed consolidated financial statements. 4 5 EAGLE USA AIRFREIGHT, INC. CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended March 31, ----------------------- 1998 1997 ---------- ---------- Revenues $ 90,544 $ 61,489 Cost of transportation 50,575 34,806 ---------- ---------- 39,969 26,683 ---------- ---------- Operating expenses: Personnel costs 21,681 14,885 Other selling, general and administrative expenses 12,224 7,773 ---------- ---------- 33,905 22,658 ---------- ---------- Operating income 6,064 4,025 Interest and other income 468 701 Interest expense ---------- ---------- Nonoperating income 468 701 ---------- ---------- Income before provision for income taxes 6,532 4,726 Provision for income taxes 2,543 1,778 ---------- ---------- Net income $ 3,989 $ 2,948 ========== ========== Basic weighted average common shares outstanding 18,580 17,717 ========== ========== Diluted weighted average common and common equivalent shares outstanding 19,261 18,643 ========== ========== Basic earnings per share (Note 2) $ 0.21 $ 0.17 ========== ========== Diluted earnings per share (Note 2) $ 0.21 $ 0.16 ========== ==========
See notes to unaudited condensed consolidated financial statements. 5 6 EAGLE USA AIRFREIGHT, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Six Months Ended March 31, ------------------------ 1998 1997 ---------- ---------- Cash flows from operating activities $ 15,751 $ (1,929) ---------- ---------- Cash flows from investing activities: Purchase of investments (5,499) (4,101) Maturity of investments 3,128 Acquisition of property and equipment, net (4,419) (3,367) Other (43) ---------- ---------- Net cash used by investing activities (9,961) (4,340) ---------- ---------- Cash flows from financing activities: Issuance of common stock, net of related costs 6,701 6,165 Offering fee paid by selling shareholder 375 Proceeds from exercise of stock options 2,209 399 ---------- ---------- Net cash provided by financing activities 8,910 6,939 ---------- ---------- Net increase in cash and cash equivalents 14,700 670 Cash and cash equivalents, beginning of period 25,107 26,696 ---------- ---------- Cash and cash equivalents, end of period $ 39,807 $ 27,366 ========== ==========
See notes to unaudited condensed consolidated financial statements. 6 7 EAGLE USA AIRFREIGHT, INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) (IN THOUSANDS)
COMMON STOCK ADDITIONAL ----------------- PAID-IN RETAINED SHARES AMOUNT CAPITAL EARNINGS TOTAL ------ ------ ---------- -------- --------- Balance at September 30, 1997 18,210 $ 18 $ 52,387 $ 28,099 $ 80,504 Issuance of Common Stock, net of related costs (Note 1) 262 6,701 6,701 Exercise of stock options 294 1 2,208 2,209 Tax benefit from exercise of stock options 2,788 2,788 Net income 9,879 9,879 ------ ------ ---------- -------- --------- Balance at March 31, 1998 18,766 $ 19 $ 64,084 $ 37,978 $ 102,081 ====== ====== ========== ======== =========
See notes to unaudited condensed consolidated financial statements. 7 8 EAGLE USA AIRFREIGHT, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) The accompanying unaudited condensed consolidated financial statements have been prepared by Eagle USA Airfreight, Inc. (the Company) in accordance with the rules and regulations of the Securities and Exchange Commission (the SEC) for interim financial statements and accordingly do not include all information and footnotes required under generally accepted accounting principles for complete financial statements. The financial statements have been prepared in conformity with the accounting principles and practices disclosed in, and should be read in conjunction with, the annual financial statements of the Company included in the Company's Annual Report on Form 10-K (File No. 0-27288). In the opinion of management, these interim financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the Company's financial position at March 31, 1998 and the results of its operations for the six and three months ended March 31, 1998 and 1997. Results of operations for the six and three months ended March 31, 1998 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 1998. NOTE 1 - ORGANIZATION, OPERATIONS, AND SIGNIFICANT ACCOUNTING POLICIES: Eagle USA Airfreight, Inc. (the Company) was organized in 1984 to provide ground and air freight forwarding services. The Company maintains operating facilities throughout the United States, Mexico, Canada, and three acquired facilities in the United Kingdom on April 14, 1998. The Company operates in one principal industry segment. In February 1997, the Company completed an underwritten secondary public offering of 1,779,922 shares of its Common Stock at a price to the public of $28.25 per share. The Company sold 232,164 of these shares, and the net proceeds received by the Company after deducting underwriting discounts and commissions were $6.2 million and will be used for general corporate purposes. The Company did not receive any of the proceeds from the sale of the 1,547,758 of these shares sold by Daniel S. Swannie, a former executive officer and director of the Company. Pursuant to an agreement between the Company and Mr. Swannie entered into in connection with the offering, Mr. Swannie reimbursed the Company for all of its out-of-pocket expenses incurred in connection with the offering and made a payment to the Company of $375,000 for the Company's estimated internal costs relating to the offering. The agreement also restricts Mr. Swannie's ability to compete against the Company for a three-year term and places certain other limitations on his ability to act against the interests of the Company. On September 19, 1997, the Company acquired the operating assets and assumed certain liabilities of Michael Burton Enterprises, Inc., a transportation and value-added logistics service provider in Columbus, Ohio. The Company paid approximately $5.6 million in cash and issued 33,362 shares of Common Stock in this transaction. The acquisition agreement also provides for three contingent payments if certain annual sales goals are achieved. The acquisition was accounted for as a purchase; accordingly, the purchase price was allocated over the basis of estimated fair market value of the net assets acquired. The results of operations for the acquired operations were included in the consolidated statement of income from the acquisition date forward. On January 30, 1998, the Company completed an underwritten secondary public offering of 2,012,500 shares of its Common Stock at a price to the public of $27.75 per share. The Company sold 262,500 of these shares and the net proceeds received by the Company after deducting underwriting discounts and commissions and offering expenses were approximately $6.6 million and will be used for general corporate purposes. The Company did not receive any of the proceeds from the sale of 1,750,000 of these shares sold by James R. Crane, the Company's Chairman of the Board of Directors, President and Chief Executive Officer. 8 9 EAGLE USA AIRFREIGHT, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) On April 3, 1998, the Company acquired substantially all of the operating assets of Eagle Transfer, Inc. ("Eagle Companies"), a privately-held international freight forwarder based in Miami, Florida. Eagle Companies is a full-service forwarder whose services include customs clearing services, ocean forwarding and airfreight import and export. Eagle Companies' operations focus on Argentina, Brazil and Chile and other South American countries. Sales for Eagle Companies totaled approximately $19.8 million in the twelve-month period ended December 31, 1997. Despite the similarity in names, the Company and Eagle Companies have had no prior affiliation. The Company paid an undisclosed sum, consisting of cash, Common Stock, and a three-year contigent earnout payable in Common Stock if certain performance benchmarks are met. The acquisition was accounted for as a purchase; accordingly, the purchase price was allocated over the basis of the estimated fair market value of the net assets acquired. The results of operations for the acquired operations will be included in the consolidated statement of income from the acquisition date forward. On April 14, 1998, the Company acquired all of the stock of S. Boardman (Air Services) Limited and Subsidiaries (S. Boardman), a privately-held full service based in London, England. S. Boardman serves the international freight forwarding market from three facilities in London, Manchester and Birmingham, England. For the twelve-month period ended March 31, 1997, total revenues for S. Boardman were approximately $25 million and revenues excluding customs, duties and value added taxes were approximately $13 million. The Company paid an undisclosed cash sum and three-year contigent cash earnout if certain performance benchmarks are met. The acquisition was accounted for as a purchase; accordingly, the purchase price was allocated over the basis of the estimated fair market value of the net assets acquired. The results of operations for the acquired operations will be included in the consolidated statement of income from the acquisition date forward. NOTE 2 - EARNINGS PER SHARE: The Company has adopted Statement of Financial Accounting Standard No. 128 (SFAS 128), "Earnings Per Share". Adoption of SFAS 128 has resulted in the retroactive restatement of earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share includes potential dilution that could occur if securities to issue common stock were exercised. The computation of basic and diluted earnings per share are as follows:
Six Months Ended March 31, --------------------------- 1998 1997 ---------- ---------- Net income $ 9,879 $ 7,462 Shares used in basic calculation: Weighted average shares outstanding 18,418 17,621 ---------- ---------- Total basic shares 18,418 17,621 Additional shares for diluted computation: Effect of stock options 738 933 ---------- ---------- Total diluted shares 19,156 18,554 ========== ========== Basic earnings per share $ 0.54 $ 0.42 ========== ========== Diluted earnings per share $ 0.52 $ 0.40 ========== ==========
9 10 EAGLE USA AIRFREIGHT, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Quarter Ended March 31, --------------------------- 1998 1997 ---------- ---------- Net income $ 3,989 $ 2,948 Shares used in basic calculation: Weighted average shares outstanding 18,580 17,717 ---------- ---------- Total basic shares 18,580 17,717 Additional shares for diluted computation: Effect of stock options 681 926 ---------- ---------- Total diluted shares 19,261 18,643 ========== ========== Basic earnings per share $ 0.21 $ 0.17 ========== ========== Diluted earnings per share $ 0.21 $ 0.16 ========== ==========
NOTE 3 - NEW ACCOUNTING PRONOUNCEMENTS: In February 1997, the Financial Accounting Standards Board issued SFAS 129 "Disclosure of Information About Capital Structure" for all periods ending after December 15, 1997. SFAS 129 contains no changes in the disclosure requirements for the Company because it was previously subject to such requirements pursuant to other Statements and Opinions. In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The adoption of both statements are required for fiscal years beginning after December 15, 1997. Under SFAS No. 130, companies are required to report in the financial statements, in addition to net income, comprehensive income including, as applicable, foreign currency items, minimum pension liability adjustments and unrealized gains and losses on certain investments in debt and equity securities. SFAS No. 131 requires that companies report separately, in the financial statements, certain financial and descriptive information about operating segments, if applicable. The Company does not expect the adoption of SFAS No. 130 or SFAS No. 131 to have a material impact on its consolidated financial statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors which have affected certain aspects of the Company's financial position and operating results during the periods included in the accompanying unaudited condensed consolidated financial statements. This discussion should be read in conjunction with the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the annual financial statements included in the Company's Annual Report on Form 10-K (File No. 0-27288) and the accompanying unaudited condensed consolidated financial statements. 10 11 EAGLE USA AIRFREIGHT, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) General The Company's revenues have increased to $291.8 million in the fiscal year ended September 30, 1997 from $126.2 million in the fiscal year ended September 30, 1995, and its operating income has increased to $25.7 million in fiscal 1997 from $12.2 million in fiscal 1995. The Company's recent growth has been generated almost exclusively by increasing the number of terminals operated by the Company and growth in revenue produced by existing terminals. The opening of a new terminal generally has an initial negative impact on profitability due to operating losses of the new terminal. The opening of a new terminal generally does not require significant capital expenditures. Additionally, personnel costs are contained at the time of the opening of a new terminal because commissions are generally not paid until salesmen achieve minimum sales levels and until managers achieve terminal profitability. Although future new terminals may be opened in cities smaller than those in which the Company's more mature terminals are located, the Company believes the results of new terminals should benefit from a ready base of business provided by its existing customers. Historically, the Company's operating results have been subject to a limited degree to seasonal trends when measured on a quarterly basis. The second quarter has traditionally been the weakest and the fourth quarter has traditionally been the strongest. The Company intends to continue to expand its international freight forwarding business. International shipments typically generate higher revenues per shipment than domestic shipments. The Company anticipates that the costs of transportation for international freight will be higher than for domestic freight as a percentage of such revenues, resulting in lower gross margins than domestic shipments; however, the Company does not expect its operating expenses to increase in proportion to such revenues. In April 1998, the Company expanded its international operations through the completion of the acquisition of substantially all of the assets of Eagle Transfer, Inc. and the stock of S. Boardman (Air Services Limited). The Company also intends to continue the growth of its local pick-up and delivery operations. By providing local pick-up and delivery services with respect to shipments for which it is the freight forwarder, the Company has been able to increase its gross margin with respect to such shipments because it captures margins which were previously paid to third parties. However, the Company's local pick-up and delivery services provided to other (non-forwarding) customers generate a lower gross margin than the Company's domestic forwarding operations due to their higher transportation costs as a percentage of revenues. Six Month Ended March 31, 1998 compared to the Six Months Ended March 31, 1997 Revenues increased 45.8% to $188.2 million for the six months ended March 31, 1998 from $129.1 million for the six months ended March 31, 1997 primarily due to increases in the number of shipments and the total weight of cargo shipped, which in turn resulted from an increase in the number of terminals open during such period, an increase in penetration in existing markets and the addition of significant national accounts customers. Operating data for the period were as follows:
SIX MONTHS ENDED MARCH 31, --------------------------- 1998 1997 ---------- ---------- Freight forwarding terminals at end of period 60 53 Local delivery locations at end of period 54 40 Freight forwarding shipments 476,856 358,875 Average weight (lbs.) per freight forwarding shipment 577 552
11 12 EAGLE USA AIRFREIGHT, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) For those freight forwarding terminals open as of the beginning of fiscal 1997 (47 terminals), revenues increased 32.3% to $159.5 million for the six months ended March 31, 1998 from $120.6 million for the six months ended March 31, 1997. Revenues for the six months ended March 31, 1998 were comprised of $173.9 million of forwarding revenues, $14.0 million of local pick-up and delivery revenues and $303,000 of other freight forwarding service revenues, as compared to $121.6 million, $7.2 million and $327,000, respectively, for the corresponding period in 1997. Cost of transportation decreased as a percentage of revenues to 55.4% in the first six months of fiscal 1998 from 56.5% in the comparable period in fiscal 1997. This was primarily attributable to the continued expansion of the Company's local pick-up and delivery operations, enabling the Company to capture margins previously paid to third parties. Cost of transportation increased in absolute terms by 43.0% to $104.2 million for the six months ended March 31, 1998 from $72.9 million in the same period in fiscal 1997 as a result of increases in volume of freight shipped. Gross margin increased to 44.6% in the six months ended March 31, 1998 from 43.5% in the same period in fiscal 1997. The primary reasons for the margin improvement were increased shipping volumes and the continued expansion of pickup and delivery operations. Gross profit increased 49.5% to $84.0 million for the six months ended March 31, 1998 from $56.2 million in the same period in fiscal 1997. Operating expenses increased as a percentage of revenues to 36.4% in the first six months of fiscal 1998 from 34.8% in the same period in fiscal 1997. The $23.6 million of increased costs in absolute terms was attributable primarily to continued growth in the level of operations from additional terminals and expansion of local delivery operations. Personnel costs increased as a percentage of revenues to 23.9% for the six months ended March 31, 1998 from 22.6% in the same period in fiscal 1997, and increased in absolute terms by 54.0% to $44.9 million due to increased staffing needs associated with the opening of 7 new terminals, the opening of 14 new local delivery operations, expanded operations at existing terminals and increased revenues, which resulted in increased commissions and expanded corporate infrastructure. Such personnel costs include all compensation expenses, including those relating to sales commission and salaries and to headquarters employees and executive officers. The Company has recently added personnel to build corporate infrastructure, to keep pace with its recent significant growth, to deepen the staff of its domestic, international and local delivery operating units and to prepare for expected growth during fiscal 1998. Other selling, general and administrative expenses increased as a percentage of revenues to 12.6% for the six months ended March 31, 1998 from 12.2% in the same period in fiscal 1997, and increased in absolute terms by 49.7% to $23.7 million in the first six months ended March 31, 1998 from $15.8 million in the same period in fiscal 1997. For the six months ended March 31, 1998, selling expenses as a percentage of revenues decreased by 0.1% and other general and administrative expenses as a percentage of revenue increased 0.5% compared to the same period in fiscal 1997. The absolute increases in selling, general and administrative expenses were due to overall increases in the level of the Company's activities in the fiscal 1998 period. Operating income increased 37.3% to $15.4 million in the first six months of fiscal 1998 from $11.2 million in the comparable period in fiscal 1997. Operating margin for the first six months of fiscal 1998 was 8.2% down from 8.7% for the same period in fiscal 1997 primarily due to the higher operating expenses as a percentage of revenues during the six months ended March 31, 1998. Interest and other income decreased to $773,000 in the first six months of fiscal 1998 from $974,000 in the comparable period in fiscal 1997 as a result of a one-time payment of $375,000 made in the second quarter of fiscal 1997 by Daniel S. Swannie, a former executive officer and director of the Company, in connection with the reimbursement of the Company's internal costs related to the February 1997 secondary public offering. 12 13 EAGLE USA AIRFREIGHT, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Income before provision for income taxes increased 32.7% to $16.2 million for the first six months of fiscal 1998 from $12.2 million in the comparable period of fiscal 1997. Provision for income taxes increased 33.2% to $6.3 million for the six months ended March 31, 1998 from $4.7 million for the six months ended March 31, 1997. Net income increased 32.4% to $9.9 million for the six months ended March 31, 1998 from net income of $7.5 million in the same period in fiscal 1997. Diluted earnings per share increased 30.0% to $0.52 for the six months ended March 31, 1998 from $0.40 in the same period in fiscal 1997. Three Months Ended March 31, 1998 compared to the Three Months Ended March 31, 1997 Revenues increased 47.3% to $90.5 million in the three months ended March 31, 1998 from $61.5 million in the same period of fiscal 1997 primarily due to increases in the number of shipments and the total weight of cargo shipped, which in turn resulted from an increase in the number of terminals open during such period, penetration in existing markets and the addition of significant national account customers. Operating data for the period were as follows:
Three Months Ended March 31, ---------------------------- 1998 1997 ---------- ---------- Freight forwarding terminals at end of period 60 53 Local delivery locations at end of period 54 40 Freight forwarding shipments 240,361 174,059 Average weight (lbs.) per freight forwarding shipment 555 562
For those freight forwarding terminals opened as of the beginning of fiscal 1997 (47 terminals), revenues increased 33.5% to $76.4 million for the three months ended March 31, 1998 from $57.2 million for the three months ended March 31, 1997. Revenues for the three months ended March 31, 1998 were comprised of $82.6 million of forwarding revenues, $7.8 million of local pick and delivery revenues and $155,000 of other freight forwarding service revenues, as compared to $57.8 million, $3.6 million and $142,000, respectively, for the three months ended March 31, 1997. Cost of transportation decreased during the quarter as a percentage of revenues to 55.9% from 56.6% in the comparable period in fiscal 1997. The decrease was primarily attributable to the continued expansion of the local pick up and delivery operations, enabling the Company to capture margins previously paid to third parties. Cost of transportation increased in absolute terms by 45.3% to $50.6 million in the fiscal 1998 quarter from $34.8 million in the fiscal 1997 quarter as a result of increases in volume of freight shipped. Gross margin increased to 44.1% in the first quarter of fiscal 1998 from 43.4% in the same period in fiscal 1997. The primary reasons for the margin improvement were increased shipping volumes, and the continued expansion of pickup and delivery operations. Gross profit increased 49.8% to $40.0 million in the first quarter of fiscal 1998 from $26.7 million in the same period in fiscal 1997. Operating expenses increased as a percentage of revenues to 37.4% in the second quarter of fiscal 1998 from 36.8% for the same period in fiscal 1997. The $11.2 million increased costs in absolute terms was attributable primarily to continued growth in the level of operations from additional terminals and expansion of local delivery operations. Personnel costs decreased as a percentage of revenues to 23.9% in the second quarter of fiscal 1998 from 24.2% in the same period in fiscal 1997, and increased in absolute terms by 45.7% to $21.7 million due to increased staffing needs associated with the opening of 7 new terminals, the opening of 14 new local delivery locations, expanded operations at existing terminals and increased revenues, which resulted in an increase in commissions and expanded corporate infrastructure. Such personnel costs include all compensation expenses, including those relating to sales commissions and salaries and to 13 14 EAGLE USA AIRFREIGHT, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) headquarters employees and executive officers. The Company has recently added personnel to build corporate infrastructure, to keep pace with its recent significant growth, to deepen the staff of its domestic, international and local delivery operating units and to prepare for expected growth during fiscal 1998. Other selling, general and administrative expenses increased as a percentage of revenues to 13.5% in the second quarter of fiscal 1998 from 12.6% in the second quarter of fiscal 1997, and increased in absolute terms by 57.3% to $12.2 million in the fiscal 1998 period from $7.8 million in the fiscal 1997 period. In the second quarter of fiscal 1998, selling expenses as a percentage of revenues decreased by 0.4% and other general and administrative expenses as a percentage of revenues increased by 1.3% compared to the second quarter of fiscal 1997. The absolute increases in selling, general and administrative expenses were due to overall increases in the level of the Company's activities in the fiscal 1998 period. Operating income increased 50.7% to $6.1 million in the second quarter of fiscal 1998 from $4.0 million in the comparable period in fiscal 1997. Operating margin for the quarter ended March 31, 1998 was 6.7%, up from 6.5% for the three months ended March 31, 1997. Interest and other income decreased to $468,000 from $701,000 in the comparable period in fiscal 1997 as a result of a one-time payment of $375,000 made in the second quarter of fiscal 1997 by Daniel S. Swannie, a former Executive Officer and Director of the Company, in connection with the reimbursement of the Company's internal costs related to the February 1997 secondary public offering. Income before provision for income taxes increased 38.2% to $6.5 million in the second quarter of fiscal 1998 from $4.7 million in the comparable period of fiscal 1997. Provision for income taxes increased 43.0% to $2.5 million for the three months ended March 31, 1998 from $1.8 for the three months ended March 31, 1997. Net income increased 35.3% to $4.0 million in the second quarter of fiscal 1998 from net income of $2.9 million in the same period in fiscal 1997. Diluted earnings per share increased 31.3% to $0.21 per share for the quarter ended March 31, 1998 from $0.16 in the same period in fiscal 1997. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and short-term investments increased $20.2 million to $48.0 million at March 31, 1998 from $27.8 million at September 30, 1997. At March 31, 1998, the Company had working capital of $79.6 million and a current ratio of 4.56 compared to working capital of $60.6 million and a current ratio of 3.30 at September 30, 1997. The Company's working capital has increased during this period primarily as a result of proceeds from the January 1998 secondary offering , profitable growth associated with the expansion of the Company's operations and increased accounts receivable collections. Capital expenditures for the six months ended March 31, 1998 were approximately $4.4 million. The Company believes that cash flow from operations and the remaining proceeds from its public offerings will be adequate to support its normal working capital and capital expenditures requirements for at least the next 12 months. Other than its initial and 1997 and 1998 public offerings, the Company's cash generated from operations has been its primary source of liquidity, although it has from time to time made limited use of bank borrowing and lease purchase arrangements. The Company had a $10 million revolving credit facility with NationsBank of Texas, N.A. which expired in January 1998. The Company is currently considering implementing alternative facilities. The Company expects to retain all available earnings generated by its operations for the development and growth of its business and does not anticipate paying any cash dividends on its Common Stock in the foreseeable future. As of March 31, 1998, the Company had outstanding non-qualified stock options to purchase an aggregate of 3,152,111 shares of Common Stock at exercise prices equal to the fair market value of the underlying Common Stock on the dates of grant (prices ranging from $1.25 to $35.125). At the time a non-qualified stock option is exercised, the Company will generally be entitled to a deduction for federal and state income tax purposes equal to the difference between the fair market value of the common stock on the date of exercise and the option price. As a result of exercises for the six 14 15 EAGLE USA AIRFREIGHT, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) months ended March 31, 1998 of non-qualified stock options to purchase an aggregate of 293,526 shares of Common Stock, the Company is entitled to a federal income tax deduction of approximately $7.0 million. Assuming an effective tax rate of 40%, the Company expects to realize a tax benefit of approximately $2.8 million with respect to the six months ended March 31, 1998, accordingly, the Company recorded such an increase in additional paid-in capital and a decrease in current income taxes payable pursuant to the provisions of FAS No. 109, "Accounting for Income Taxes." Any exercises for non-qualified stock options in the future at exercise prices below the then fair market value of the common stock may also result in tax benefits for the difference between such amounts, although there can be no assurance as to whether or not such exercises will occur, the amount of any deductions or the Company's ability to fully utilize such tax deductions. On January 10, 1997, the Company entered into a five-year operating lease agreement with two unrelated parties for financing the construction of its recently completed Houston terminal, warehouse and headquarters facility (the Houston facility). Estimated costs of the Houston facility are $8.5 million. Under the terms of the lease agreement, average monthly lease payments are approximately $60,000 (including monthly interest costs based upon LIBOR rate plus 200 basis points) beginning upon the completion of the construction of the facility and continuing for a term of 52 months with a balloon payment equal to the outstanding lease balance (initially equal to the cost of the facility) due at the end of the lease term. The Company has an option, exercisable at anytime during the lease term, and under certain circumstances may be obligated, to acquire the facility for an amount equal to the outstanding lease balance. In the event the Company does not exercise the purchase option, and is not otherwise required to acquire the facility, it is subject to a deficiency payment computed as the amount equal to the outstanding lease balance minus the then current fair market value of the Houston facility. The Company expects that the amount of any such deficiency payment would be expensed. As of March 31, 1998, the lease balance was approximately $8.5 million. In February 1997, the Company completed an underwritten secondary public offering of 1,779,922 shares of its Common Stock at a price to the public of $28.25 per share. The Company sold 232,164 of these shares, and the net proceeds received by the Company after deducting underwriting discounts and commissions were $6.2 million and will be used for general corporate purposes. The Company did not receive any of the proceeds from the sale of the 1,547,758 of these shares sold by Daniel S. Swannie, a former executive officer and director of the Company. Pursuant to an agreement between the Company and Mr. Swannie entered into in connection with the offering, Mr. Swannie reimbursed the Company for all of its out-of-pocket expenses incurred in connection with the offering and made a payment to the Company of $375,000 for the Company's estimated internal costs relating to the offering. The agreement also restricts Mr. Swannie's ability to compete against the Company for a three-year term and places certain other limitations on his ability to act against the interest of the Company. On January 30, 1998, the Company completed an underwritten secondary public offering of 2,012,500 shares of its Common Stock at a price to the public of $27.75 per share. The Company sold 262,500 of these shares and the net proceeds received by the Company after deducting underwriting discounts and commissions and offering expenses were approximately $6.6 million and will be used for general corporate purposes. The Company did not receive any of the proceeds from the sale of 1,750,000 of these shares sold by James R. Crane, the Company's Chairman of the Board of Directors, President and Chief Executive Officer. On April 3, 1998, the Company acquired substantially all of the operating assets of Eagle Transfer, Inc. ("Eagle Companies"), a privately-held international freight forwarder based in Miami, Florida. Eagle Companies is a full-service forwarder whose services include customs clearing services, ocean forwarding and airfreight import and export. Eagle Companies' operations focus on Argentina, Brazil and Chile and other South American countries. Sales for Eagle Companies totaled approximately $19.8 million in the twelve-month period ended December 31, 1997. Despite the similarity in names, the Company and Eagle Companies have had no prior affiliation. The Company paid an undisclosed sum, consisting of cash, Common Stock, and a three-year contingent earnout payable in Common Stock if certain 15 16 EAGLE USA AIRFREIGHT, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) performance benchmarks are met. The acquisition was accounted for as a purchase; accordingly, the purchase price was allocated over the basis of the estimated fair market value of the net assets acquired. The results of operations for the acquired operations will be included in the consolidated statement of income from the acquisition date forward. On April 14, 1998, the Company acquired all of the outstanding stock of S. Boardman (Air Services) Limited and Subsidiaries ("S. Boardman"), a privately-held full service based in London, England. S. Boardman serves the international freight forwarding market from three facilities in London, Manchester and Birmingham, England. For the twelve-month period ended March 31, 1997, total revenues for S. Boardman were approximately $25 million and revenues excluding customs, duties and value added taxes were approximately $13 million. The Company paid an undisclosed cash sum and a three-year contingent cash earnout if certain performance benchmarks are met. The acquisition was accounted for as a purchase; accordingly, the purchase price was allocated over the basis of the estimated fair market value of the net assets acquired. The results of operations for the acquired operations will be included in the consolidated statement of income from the acquisition date forward. On April 3, 1998, the Company entered into a five-year $20 million master operating lease agreement with two unrelated parties for financing the acquisition and construction of terminal and warehouse facilities throughout the United States designated by the Company from time to time (each, a "Financed Facility"). Under the terms of the master operating lease agreement, average monthly lease payments (including monthly interest costs based upon LIBOR rate plus 150 basis points) begin upon the completion of the construction of each Financed Facility and continue for a term of 52 months with a balloon payment equal to the outstanding lease balance (initially equal to the cost of the facility) due at the end of the lease term. The Company has an option, exercisable at anytime during the lease term, and under certain circumstances may be obligated, to acquire each Financed Facility for an amount equal to the outstanding lease balance. In the event the Company does not exercise the purchase option, and is not otherwise required to acquire the Financed Facility, it is subject to a deficiency payment computed as the amount equal to the outstanding lease balance minus the then current fair market value of each Financed Facility. The Company expects that the amount of any such deficiency payment would be expensed. As of April 30, 1998, no amounts were outstanding under the master operating lease agreement, although the Company expects to finance facilities under the master operating lease agreement in the future. The Company is assessing the impact of the Year 2000 issue on its operations. Based on existing information, the Company believes that its information systems are Year 2000 compliant and does not currently believe that such Year 2000 issues will have a material effect on the financial position, cash flows or results of operations of the Company. There can be no assurance, however, as to the ultimate effect of the Year 2000 issue on the Company. 16 17 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS USE OF PROCEEDS The Company's Registration Statement on Form S-1 (Registration No. 33-97606), as amended, with respect to the initial public offering (the "Offering") of shares of Company's Common Stock, par value $0.001 per share (the "Common Stock"), was declared effective by the Securities and Exchange Commission on November 30, 1995. The Offering commenced on December 1, 1995 and has since terminated, resulting in the sale by the Company of 2,300,000 shares of Common Stock on December 6, 1995 (including 300,000 shares of Common Stock sold pursuant to the exercise of the underwriters' over-allotment option). The shares sold constitute all of the shares of Common Stock covered by the Registration Statement. The managing underwriters for the Offering were Donaldson, Lufkin & Jenrette Securities Corporation and the Robinson-Humphrey Company, Inc. The aggregate price to the public for the shares sold in the Offering was $37,950,000. The expenses incurred by the Company with respect to the Offering were as follows: Underwriter Discounts and Commissions...... $2,656,500 Other Expenses............................. 734,000 Total...................................... $3,390,500
Approximately $22,000 of Other Expenses consisted of payments to a corporation owned by the Company's Chairman of Board in reimbursement for expenses related to the use of that corporation's owned aircraft in the Offering. None of the other amounts set forth above as Other Expenses were direct or indirect payments to directors or officers of the Company or their associates, to persons owning ten percent or more of any class of equity securities of the Company or to affiliates of the Company. The net proceeds to the Company from the Offering were $34.6 million. As of March 31, 1998, the Company has used such net proceeds as follows: (i) to repay $2.1 million of indebtedness outstanding under the Company's revolving credit facility, (ii) to repay $11.6 million of promissory notes outstanding to certain of the Company's directors and officers, (iii) to pay $4.0 million of expenses relating to the upgrade of the Company's information systems, (iv) to pay $5.6 million for a fiscal 1997 acquisition, (v) to pay $900,000 to purchase the site of the Company's Newark terminal, (vi) to pay $1.7 million of costs related to the Company's new headquarters facility, and (vii) to make $8.7 million in cash equivalents and short-term investments. Except as set forth in clause (ii), none of such payments were direct or indirect payments to directors or officers of the Company or their associates, to persons owning ten percent or more of any class of equity securities of the Company or to affiliates of the Company. ITEM 3. DEFAULTS UPON SENIOR SECURITIES, NONE 17 18 ITEM 4. SUBMISSION OF MATTERS OF A VOTE OF SECURITY-HOLDERS (a) ANNUAL MEETING OF SHAREHOLDERS ON FEBRUARY 23, 1998.
BROKER (c) PROPOSALS FOR AGAINST WITHHELD ABSTAIN NONVOTES ------- ------- -------- ------- -------- (PROXY TOTALS IN THOUSANDS) ELECTION OF DIRECTORS JAMES R. CRANE 15,149 * 10 -- * DOUGLAS A. SECKEL 15,149 * 10 -- * WILLIAM P. O'CONNELL 15,149 * 10 -- * NEIL E. KELLEY 15,149 * 10 -- * FRANK J. HEVRDEJS 15,149 * 10 -- * APPROVAL TO AMEND THE COMPANY'S 14,451 685 * 11 12 RESTATED ARTICLES OF INCORPORATION TO INCREASE THE COMPANY'S AUTHORIZED COMMON STOCK APPROVAL OF THE COMPANY'S 13,277 760 * 12 1,109 LONG-TERM INCENTIVE PLAN WHICH WILL BE AMENDED AND RESTATED TO INCREASE THE SHARES OF COMMON STOCK RESERVED UNDER THE PLAN APPROVAL OF THE COMPANY'S 14,000 51 * 9 1,098 EMPLOYEE STOCK PURCHASE PLAN APPROVAL OF APPOINTMENT OF 15,149 3 * 7 -- PRICE WATERHOUSE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
*NOT APPLICABLE ITEM 5. OTHER INFORMATION FORWARD LOOKING STATEMENTS The statements contained in all parts of this document, including, but not limited to, those relating to the Company's plans for international air freight forwarding services; the future expansion and results of the Company's terminal network; plans for local delivery services; expected growth; future marketing; construction of new facilities; future operating expenses; any seasonality of the Company's business; future margins; future dividend plans; use of offering proceeds; future acquisitions, and any effects, benefits, results, terms or other aspects of such acquisitions; effects of the Year 2000 issue; ability to continue growth and implement growth and business strategy; the ability of expected sources of liquidity and offering proceeds to support working capital and capital expenditure requirements; the tax benefit of any stock option exercises; and any other statements regarding future growth, cash needs, terminals, operations, business plans and financial results and any other statements which are not historical facts are forward-looking statements. When used in this documents, the words "anticipate," "estimate," "expect," 18 19 "may," "plans," "project," and similar expressions are intended to be among the statements that identify forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, those relating to the Company's dependence on its ability to attract and retain skilled managers and other personnel; the intense competition within the freight industry; the uncertainty of the Company's ability to manage and continue its growth and implement its business strategy; the Company's dependence on the availability of cargo space to serve its customers; the potential for liabilities if certain independent owner/operators that serve the Company are determined to be employees; effects of regulation; results of litigation; the Company's vulnerability to general economic conditions and dependence on its principal customers; the control by the Company's principal shareholder; the Company's potential exposure to claims involving its local pick-up and delivery operations; the Company's future financial and operating results, cash needs and demand for its services; and the Company's ability to maintain and comply with permits and licenses; as well as other factors detailed in the Company's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. The Company undertakes no responsibility to update for changes related to these or any other factors that may occur subsequent to this filing. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: (A) EXHIBITS. 3(i) Second Amended and Restated Articles of Incorporation of the Company, as amended. *3(ii) Amended and Restated Bylaws of the Company, as amended (Exhibit 3.2 to the Company's Registration Statement on from S-1 (Registration No. 33-97606)). 10(i) Employees Stock Purchase Plan (effective July 1, 1998). 10(ii) Long-Term Incentive Plan, as Amended and Restated. 11(i) Computation of Per Share Earnings for the Six Months ended March 31, 1998 and 1997. 11(ii) Computation of Per Share Earnings for the Three Months ended March 31, 1998 and 1997. 27 Financial Data Schedule. 27.1 Restated Financial Data Schedule. - ---------- * Incorporated by reference as indicated. (B) The Company filed a Form 8-K dated January 5, 1998, regarding the Acquisition of S. Boardman (Air Services) Limited and Subsidiaries and Eagle Companies. The Company filed a Form 8-K dated January 22, 1998, regarding earnings results for the quarter ended December 31, 1997. 19 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EAGLE USA AIRFREIGHT, INC. (Registrant) Date: May 15, 1998 By: /s/ JAMES R. CRANE ---------------------------- ------------------------------------- James R. Crane President Date: May 15, 1998 By: /s/ DOUGLAS A. SECKEL ---------------------------- ------------------------------------- Douglas A. Seckel Chief Financial Officer 20 21 INDEX TO EXHIBITS
EXHIBITS DESCRIPTION - -------- ----------- 3(i) Second Amended and Restated Articles of Incorporation of the Company as amended. *3(ii) Amended and Restated Bylaws of the Company, as amended (Exhibit 3.2 to the Company's Registration Statement on Form S-1 (Registration No. 33-97606). 10(i) Employee Stock Purchase Plan (effective July 1, 1998). 10(ii) Long-Term Incentive Plan, as Amended and Restated. 11(i) Computation of Per Share Earnings for the Six Months ended March 31, 1998 and 1997. 11(ii) Computation of Per Share Earnings for the Three Months ended March 31, 1998 and 1997. 27 Financial Data Schedule. 27.1 Restated Financial Data Schedule.
- ---------- *Incorporated by reference as indicated. 21 EX-3.I 2 SECOND AMEND. ARTICLES OF INCORPORATION OF COMPANY 1 EXHIBIT 3(i) SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF EAGLE USA AIR FREIGHT, INC. ARTICLE ONE Eagle USA Air Freight, Inc., a Texas corporation (the "Company"), pursuant to the provisions of Article 4.07 of the Texas Business Corporation Act, hereby adopts these Second Amended and Restated Articles of Incorporation, which accurately copy the Amended and Restated Articles of Incorporation of the Company in effect on the date hereof, as further amended by these Second Amended and Restated Articles of Incorporation as hereinafter set forth, and contain no other change in any provisions thereof. ARTICLE TWO The Amended and Restated Articles of Incorporation of the Company are amended by these Second Amended and Restated Articles of Incorporation as follows: The amendments made by these Second Amended and Restated Articles of Incorporation (the "Amendments") alter or change Articles One through Ten of the Amended and Restated Articles of Incorporation. The full text of each provision altered or added is as set forth in Article Five hereof. ARTICLE THREE The Amendments have been effected in conformity with the provisions of the Texas Business Corporation Act and the Second Amended and Restated Articles of Incorporation were duly adopted by all of the shareholders of the Company on September 29, 1995. ARTICLE FOUR On that date there were 6,000,000 shares of Common Stock, par value $0.001 per share (the "Common Stock"), of the Company outstanding, all of which were entitled to vote on the Amendments. All 6,000,000 shares of Common Stock were voted in favor of the Amendments. 1 2 ARTICLE FIVE The Amended and Restated Articles of Incorporation of the Company filed with the Secretary of State of the State of Texas on September 30, 1994 are hereby superseded by the following Second Amended and Restated Articles of Incorporation, which accurately copy the entire text thereof as amended hereby: SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF EAGLE USA AIRFREIGHT, INC. ARTICLE ONE The name of the corporation is Eagle USA Airfreight, Inc. ARTICLE TWO The period of its duration is perpetual. ARTICLE THREE The purpose or purposes for which the corporation is organized is the transaction of all lawful business for which a corporation may be incorporated under the corporation laws of the State of Texas. ARTICLE FOUR The aggregate number of shares that the corporation shall have the authority to issue is 40,000,000 shares, consisting of 30,000,000 shares of Common Stock, par value $0.001 per share, and 10,000,000 shares of Preferred Stock, par value $0.001 per share. The descriptions of the different classes of capital stock of the corporation and the preferences, designations, relative rights, privileges and powers, and the restrictions, limitations and qualifications thereof, of said classes of stock are as follows: 2 3 Division A The shares of Preferred Stock may be divided into and issued in one or more series, the relative rights and preferences of which series may vary in any and all respects. The board of directors of the corporation is hereby vested with the authority to establish series of Preferred Stock by fixing and determining all the preferences, limitations and relative rights of the shares of any series so established, to the extent not provided for in these articles of incorporation or any amendment hereto, and with the authority to increase or decrease the number of shares within each such series; provided, however, that the board of directors may not decrease the number of shares within a series below the number of shares within such series that is then issued. The authority of the board of directors with respect to each such series shall include, but not be limited to, determination of the following: (1) the distinctive designation and number of shares of that series; (2) the rate of dividend (or the method of calculation thereof) payable with respect to shares of that series, the dates, terms and other conditions upon which such dividends shall be payable, and the relative rights of priority of such dividends to dividends payable on any other class or series of capital stock of the corporation; (3) the nature of the dividend payable with respect to shares of that series as cumulative, noncumulative or partially cumulative, and if cumulative or partially cumulative, from which date or dates and under what circumstances. (4) whether shares of that series shall be subject to redemption, and, if made subject to redemption, the times, prices, rates, adjustments and other terms and conditions of such redemption (including the manner of selecting shares of that series for redemption if fewer than all shares of such series are to be redeemed); (5) the rights of the holders of shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation (which rights may be different if such action is voluntary than if it is involuntary), including the relative rights of priority in such event as to the rights of the holders of any other class or series of capital stock of the corporation; (6) the terms, amounts and other conditions of any sinking or similar purchase or other fund provided for the purchase or redemption of shares of that series; (7) whether shares of that series shall be convertible into or exchangeable for shares of capital stock or other securities of the corporation or of any other corporation 3 4 or entity, and, if provision be made for conversion or exchange, the times, prices, rates, adjustments and other terms and conditions of such conversion or exchange; (8) the extent, if any, to which the holders of shares of that series shall be entitled (in addition to any voting rights provided by law) to vote as a class or otherwise with respect to the election of directors or otherwise; (9) the restrictions and conditions, if any, upon the issue or reissue of any additional Preferred Stock ranking on a parity with or prior to shares of that series as to dividends or upon liquidation, dissolution or winding up; (10) any other repurchase obligations of the corporation, subject to any limitations of applicable law; and (11) notwithstanding their failure to be included in (1) through (10) above, any other designations, preferences, limitations or relative rights of shares of that series. Any of the designations, preferences, limitations or relative rights (including the voting rights) of any series of Preferred Stock may be dependent on facts ascertainable outside these articles of incorporation. Shares of any series of Preferred Stock shall have no voting rights except as required by law or as provided in the preferences, limitations and relative rights of such series. Division B 1. Dividends. Dividends may be paid on the Common Stock out of any assets of the corporation available for such dividends subject to the rights of all outstanding shares of capital stock ranking senior to the Common Stock in respect of dividends. 2. Distribution of Assets. In the event of any liquidation, dissolution or winding up of the corporation, after there shall have been paid to or set aside for the holders of capital stock ranking senior to the Common Stock in respect of rights upon liquidation, dissolution or winding up the full preferential amounts to which they are respectively entitled, the holders of the Common Stock shall be entitled to receive, pro rata, all of the remaining assets of the corporation available for distribution to its shareholders. 3. Voting Rights. The holders of the Common Stock shall be entitled to one vote per share for all purposes upon which such holders are entitled to vote. 4 5 Division C 1. No Preemptive Rights. No shareholder of the corporation shall by reason of his holding shares of any class have any preemptive or preferential right to acquire or subscribe for any additional, unissued or treasury shares of any class of the corporation now or hereafter to be authorized, or any notes, debentures, bonds or other securities convertible into or carrying any right, option or warrant to subscribe to or acquire shares of any class now or hereafter to be authorized, whether or not the issuance of any such shares, or such notes, debentures, bonds or other securities, would adversely affect the dividends or voting or other rights of such shareholder, and the board of directors may issue or authorize the issuance of shares of any class, or any notes, debentures, bonds or other securities convertible into or carrying rights, options or warrants to subscribe to or acquire shares of any class, without offering any such shares of any class, either in whole or in part, to the existing shareholders of any class. 2. Share Dividends. Subject to any restrictions in favor of any series of Preferred Stock provided in the relative rights and preferences of such series, the corporation may pay a share dividend in shares of any class or series of capital stock of the corporation to the holders of shares of any class or series of capital stock of the corporation. 3. No Cumulative Voting. Cumulative voting for the election of directors is expressly prohibited as to all shares of any class or series. ARTICLE FIVE The corporation will not commence business until it has received for the issuance of its shares consideration of the value of One Thousand Dollars ($1,000.00). ARTICLE SIX The address of the corporation's registered office is 811 Dallas Avenue, Houston, Texas 77002 and the name of its registered agent at such address is CT Corporation System. ARTICLE SEVEN The number of directors of the corporation shall be fixed by, or in the manner provided in, the bylaws. The number of directors constituting the current board of directors is five, and the name and address of the person who is to serve as director until such director's successor is elected and qualified is: 5 6 Name Address ---- ------- James R. Crane 3214 Lodestar Road Houston, Texas 77032 Daniel S. Swannie 3214 Lodestar Road Houston, Texas 77032 Donald P. Roberts 3214 Lodestar Road Houston, Texas 77032 Douglas A. Seckel 3214 Lodestar Road Houston, Texas 77032 William P. O'Connell 3214 Lodestar Road Houston, Texas 77032 ARTICLE EIGHT A director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for an act or omission in the director's capacity as a director, except that this article does not eliminate or limit the liability of a director for: (1) a breach of a director's duty of loyalty to the corporation or its shareholders; (2) an act or omission not in good faith that constitutes a breach of duty of that director to the corporation or an act or omission that involves intentional misconduct or a knowing violation of the law; (3) a transaction from which a director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's office; or (4) an act or omission for which the liability of a director is expressly provided for by an applicable statute. If the Texas Miscellaneous Corporation Laws Act or the Texas Business Corporation Act ("TBCA") is amended to authorize action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by such statutes, as so amended. Any repeal or modification of this article shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification. 6 7 ARTICLE NINE The vote of shareholders required for approval of (1) any plan of merger, consolidation, or exchange for which the TBCA requires a shareholder vote, (2) any disposition of assets for which the TBCA requires a shareholder vote, (3) any dissolution of the corporation for which the TBCA requires a shareholder vote, and (4) any amendment of the articles of incorporation of the corporation for which the TBCA requires a shareholder vote, shall be (in lieu of any greater vote required by the TBCA) the affirmative vote of the holders of a majority of the outstanding shares entitled to vote thereon, unless any class or series of shares is entitled to vote as a class thereon, in which event the vote required shall be the affirmative vote of the holders of a majority of the outstanding shares within each class or series of shares entitled to vote thereon as a class and at least a majority of the outstanding shares otherwise entitled to vote thereon. ARTICLE TEN Special meetings of shareholders may be called by the corporation's chairman of the board, the president or the board of directors. Subject to the provisions of the corporation's bylaws governing special meetings, holders of not less than 50% of the outstanding shares of stock entitled to vote at the proposed special meeting may also call a special meeting of shareholders by furnishing the corporation a written request which states the purpose or purposes of the proposed meeting in the manner set forth in the bylaws. EXECUTED AND EFFECTIVE this 29th day of September, 1995. EAGLE USA AIR FREIGHT, INC. By: /s/ JAMES R. CRANE ---------------------------------- James R. Crane President 7 8 ARTICLES OF AMENDMENT to SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION of EAGLE USA AIRFREIGHT, INC. Pursuant to the provisions of Article 4.04 of the Texas Business Corporation Act, the undersigned corporation adopts the following articles of amendment to its Second Amended and Restated Articles of Incorporation: 1. The name of the corporation is Eagle USA Airfreight, Inc. 2. The following amendment to the Second Amended and Restated Articles of Incorporation of the corporation increases the authorized shares of the corporation. The amendment alters the first sentence of Article Four of the Second Amended and Restated Articles of Incorporation to read, in full: "The aggregate number of shares that the corporation shall have the authority to issue is 110,000,000 shares, consisting of 100,000,000 shares of Common Stock, par value $0.001 per share, and 10,000,000 shares of Preferred Stock, par value $0.001 per share." 3. The amendment made by these articles of amendment was duly adopted by the shareholders of the corporation at a meeting duly held on February 23, 1998. 4. The number of shares outstanding as of the date hereof is 18,764,180 shares of Common Stock, par value $0.001 per share; the number of shares outstanding as of the close of business on December 30, 1997, the record date for such meeting of shareholders, was 18,269,061 shares of Common Stock, par value $0.001 per share, and all of such 18,269,061 shares were entitled to vote on the amendment; the number of such shares voted for the amendment was 14,451,374; and the number of such shares voted against the amendment was 685,124. IN WITNESS WHEREOF, these articles of amendment have been executed on March 5, 1998. EAGLE USA AIRFREIGHT, INC. By: /s/ Douglas A. Seckel --------------------------- Douglas A. Seckel Secretary EX-10.I 3 EMPLOYEE STOCK PURCHASE PLAN, EFFECTIVE 07/01/98 1 EXHIBIT 10(i) EAGLE USA AIR FREIGHT, INC. EMPLOYEE STOCK PURCHASE PLAN (EFFECTIVE JULY 1, 1998) 1. PURPOSE The Eagle USA Air Freight, Inc. Employee Stock Purchase Plan (the "Plan") is designed to encourage and assist all employees of Eagle USA Air Freight, Inc., a Texas corporation ("Eagle") and Subsidiaries (as defined in Section 4) (hereinafter collectively referred to as the "Company"), where permitted by applicable laws and regulations, to acquire an equity interest in Eagle through the purchase of shares of common stock, .001 par value, of Eagle ("Common Stock"). It is intended that this Plan shall constitute an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). 2. ADMINISTRATION OF THE PLAN The Plan shall be administered and interpreted by the Compensation Committee (the "Committee") appointed by the Board of Directors of Eagle (the "Board"), which Committee shall consist of at least two (2) persons. The Committee shall supervise the administration and enforcement of the Plan according to its terms and provisions and shall have all powers necessary to accomplish these purposes and discharge its duties hereunder including, but not by way of limitation, the power to (i) employ and compensate agents of the Committee for the purpose of administering the accounts of participating employees; (ii) construe or interpret the Plan; (iii) determine all questions of eligibility; and (iv) compute the amount and determine the manner and time of payment of all benefits according to the Plan. The Committee may act by decision of a majority of its members at a regular or special meeting of the Committee or by decision reduced to writing and signed by all members of the Committee without holding a formal meeting. 3. NATURE AND NUMBER OF SHARES The Common Stock subject to issuance under the terms of the Plan shall be shares of Eagle's authorized but unissued shares, previously issued shares reacquired and held by Eagle or shares purchased on the open market. The aggregate number of shares which may be issued under the Plan shall not exceed two hundred thousand (200,000) shares of Common Stock. All shares purchased under the Plan, regardless of source, shall be counted against the two hundred thousand (200,000) share limitation. In the event of any reorganization, stock split, reverse stock split, stock dividend, combination of shares, merger, consolidation, offering of rights or other similar change in the capital structure of Eagle, the Committee may make such adjustment, if any, as it deems appropriate in the number, kind and purchase price of the shares available for purchase under the Plan and in the maximum number of shares which may be issued under the Plan, subject to the approval of the Board and in accordance with Section 19. 4. ELIGIBILITY REQUIREMENTS Each "Employee" (as hereinafter defined), except as described in the next following paragraph, shall become eligible to participate in the Plan in accordance with Section 5 on the first "Enrollment Date" (as defined therein) following employment by the Company. Participation in the Plan is voluntary. The following Employees are not eligible to participate in the Plan: (i) Employees who would, immediately upon enrollment in the Plan, own directly or indirectly, or hold options or rights to acquire, an aggregate of five percent (5%) or more of the total combined voting power or value of all outstanding shares of all classes of the Company or any subsidiary (in determining 1 2 stock ownership of an individual, the rules of Section 424(d) of the Code shall be applied, and the Committee may rely on representations of fact made to it by the employee and believed by it to be true); (ii) Employees who are customarily employed by the Company less than twenty (20) hours per week or less than five (5) months in any calendar year; and (iii) Employees who have not completed at least six (6) months of service with the Company as of an Enrollment Date. "Employee" shall mean any individual employed full-time by Eagle or any Subsidiary (as hereinafter defined). "Subsidiary" shall mean Eagle Freight Services, Inc. and any other corporation (a) which is in an unbroken chain of corporations beginning with Eagle if, on or after the Effective Date, each of the corporations other than the last corporation in the chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain and (b) which has adopted the Plan with the approval of the Committee. 5. ENROLLMENT Each eligible Employee of Eagle or any Subsidiary as of July 1, 1998 (the "Effective Date" herein) may enroll in the Plan as of the Effective Date. Each other eligible Employee of Eagle or a participating Subsidiary who thereafter becomes eligible to participate may enroll in the Plan on the first to occur of January 1 or July 1 following the date he first meets the eligibility requirements of Section 4. Any eligible Employee not enrolling in the Plan when first eligible may enroll in the Plan any subsequent January 1 or July 1. Any eligible Employee may enroll or re-enroll in the Plan on the dates hereinabove prescribed or such other specific dates established by the Committee from time to time ("Enrollment Dates"). In order to enroll, an eligible Employee must complete, sign and submit the appropriate form to the person designated by the Committee. 6. METHOD OF PAYMENT Payment for shares is to be made as of the applicable "Purchase Date" (as defined in Section 9) through payroll deductions on an after-tax basis (with no right of prepayment) over the Plan's designated purchase period (the "Purchase Period"), with the first such deduction commencing with the first payroll period ending after the Enrollment Date. Each Purchase Period under the Plan shall be a period of six (6) calendar months beginning on each January 1 and ending on the following June 30 and on each July 1 and ending on the following December 31 or such other period as the Committee may prescribe; provided, however, that the Purchase Period beginning on the Effective Date shall commence on the Effective Date and end on December 31, 1998. Each participating Employee (hereinafter referred to as a "Participant") will authorize such deductions from his pay for each month during the Purchase Period and such amounts will be deducted in conformity with his employer's payroll deduction schedule. Each Participant may elect to make contributions each pay period in amounts not less than $10, not to exceed an annual contribution equal to $20,000 (or such other dollar amounts as the Committee may establish from time to time before an Enrollment Date for all purchases to occur during the relevant Purchase Period). In establishing other dollar amounts of permitted contributions, the Committee may take into account the "Maximum Share Limitation" (as defined in Section 8). The rate of contribution shall be designated by the Participant in the enrollment form. A Participant may elect to increase or decrease the rate of contribution effective as of the first day of the Purchase Period by giving prior written notice to the person designated by the Committee on the appropriate form. A Participant may not elect to increase or decrease the rate of contribution during a Purchase Period. A Participant may suspend payroll deductions at any time during the Purchase Period, by giving prior written notice to the person designated by the Committee on the appropriate form. If a Participant elects to suspend his payroll deductions, such Participant's account will continue to accrue interest and will be used to purchase stock at the end of the Purchase Period. A Participant may also elect to withdraw his entire contributions for the current Purchase Period in accordance with Section 8 by giving prior written notice to the person 2 3 designated by the Committee on the appropriate form. Any Participant who withdraws his contributions will receive, as soon as practicable, his entire account balance, including interest and dividends, if any. Any Participant who suspends payroll deductions or withdraws contributions during any Purchase Period cannot resume payroll deductions during such Purchase Period and must re-enroll in the Plan in order to participate in the next Purchase Period. Except in case of cancellation of election to purchase, death, resignation or other terminating event, the amount in a Participant's account at the end of the Purchase Period will be applied to the purchase of the shares. 7. CREDITING OF CONTRIBUTIONS, INTEREST AND DIVIDENDS Contributions shall be credited to a Participant's account as soon as administratively feasible after payroll withholding. Unless otherwise prohibited by laws and regulations, Participant contributions will receive interest at a rate realized for the investment vehicle or vehicles designated by the Committee for purposes of the Plan. Interest will be credited to a Participant's account from the first date on which such Participant's contributions are deposited with the investment vehicle until the earlier of (i) the end of the Purchase Period or (ii) in the event of cancellation, death, resignation or other terminating event, the last day of the month prior to the date on which such contributions are returned to the Participant. Dividends on shares held in a Participant's account in the Plan will also be credited to such Participant's account. Any such contributions, interest and dividends shall be deposited in or held by a bank or financial institution designated by the Committee for this purpose (the "Custodian"). 8. GRANT OF RIGHT TO PURCHASE SHARES ON ENROLLMENT Enrollment in the Plan by an Employee on an Enrollment Date will constitute the grant by the Company to the Participant of the right to purchase shares of Common Stock under the Plan. Re-enrollment by a Participant in the Plan will constitute a grant by the Company to the Participant of a new opportunity to purchase shares on the Enrollment Date on which such re-enrollment occurs. A Participant who has not (a) terminated employment, (b) withdrawn his contributions from the Plan, or (c) notified the Company in writing, by such date as the Committee shall establish (which date shall not be later than June 1 or December 1, as applicable), of his election to withdraw his payroll deductions plus interest as of the applicable of June 30 or December 31 will have shares of Common Stock purchased for him on the applicable Purchase Date, and he will automatically be re-enrolled in the Plan on the Enrollment Date immediately following the Purchase Date on which such purchase has occurred, unless each Participant notifies the person designated by the Committee on the appropriate form that he elects not to re-enroll. Each right to purchase shares of Common Stock under the Plan during a Purchase Period shall have the following terms: (i) the right to purchase shares of Common Stock during a particular Purchase Period shall expire on the earlier of: (A) the completion of the purchase of shares on the Purchase Date occurring in the Purchase Period, or (B) the date on which participation of such Participant in the Plan terminates for any reason; (ii) payment for shares purchased will be made only through payroll withholding and the crediting of interest and dividends, if applicable, in accordance with Sections 6 and 7; (iii) purchase of shares will be accomplished only in accordance with Section 9; (iv) the price per share will be determined as provided in Section 9; (v) the right to purchase shares (taken together with all other such rights then outstanding under this Plan and under all other similar stock purchase plans of Eagle or any Subsidiary) will in no event give the Participant the right to purchase a number of shares during a calendar year in excess of the number of shares of Common Stock derived by dividing $25,000 by the fair market value of the Common Stock (the "Maximum Share Limitation") on the applicable Grant Date determined in accordance with Section 9; 3 4 (vi) shares purchased under this Plan may not be sold within six (6) months of the Purchase Date, unless the Compensation Committee, in its sole discretion, waives this requirement; and (vii) the right to purchase shares will in all respects be subject to the terms and conditions of the Plan, as interpreted by the Committee from time to time. 9. PURCHASE OF SHARES The right to purchase shares of Common Stock granted by the Company under the Plan is for the term of a Purchase Period. The fair market value of the Common Stock ("Fair Market Value") to be purchased during such Purchase Period will be the final closing sales price per share of the Common Stock on the NASDAQ National Market System on the first trading day of the calendar month of January or July, as applicable, or such other trading date designated by the Committee (the "Grant Date"). The Fair Market Value of the Common Stock will again be determined in the same manner on the last trading day of the calendar month of June or December, as applicable, or such other trading date designated by the Committee (the "Purchase Date"); however, in no event shall the Committee, in the exercise of its discretion, designate a Purchase Date beyond twenty-seven (27) months from the related Enrollment Date or otherwise fail to meet the requirements of Section 423(b)(7) of the Code. These dates constitute the date of grant and the date of exercise for valuation purposes of Section 423 of the Code. As of the Purchase Date, the Committee shall apply the funds then credited to each Participant's account to the purchase of whole shares of Common Stock. The cost to the Participant for the shares purchased during a Purchase Period shall be the lower of: (i) eighty-five percent (85%) of the Fair Market Value of Common Stock on the Grant Date; or (ii) eighty-five percent (85%) of the Fair Market Value of Common Stock on the Purchase Date. Certificates evidencing shares purchased shall be delivered to the Custodian or to any other bank or financial institution designated by the Committee for this purpose or delivered to the Participant (if the Participant has elected by written notice to the Committee to receive the certificate) as soon as administratively feasible after the Purchase Date; however, certificates shall not be delivered to the Participant within six (6) months of the Purchase Date of the underlying shares, except as otherwise provided herein. Notwithstanding the foregoing, Participants shall be treated as the record owners of their shares effective as of the Purchase Date. Shares that are held by the Custodian or any other designated bank or financial institution shall be held in book entry form. Any cash equal to less than the price of a whole share of Common Stock shall be credited to a Participant's account on the Purchase Date and carried forward in his account for application during the next Purchase Period. Any Participant (i) who purchases stock at the end of a Purchase Period and is not re-enrolled in the Plan for the next Purchase Period or (ii) who withdraws his contributions from the Plan prior to the next Purchase Date will receive a certificate for the number of shares held in his account for at least six (6) months as of the most recent Purchase Date and any cash, dividends or interest remaining in his account. Such Participant may elect to receive a certificate for the remaining number of shares held in his account six (6) months after such shares were purchased or, if earlier, upon such Participant's termination of employment. This six-month holding requirement may be waived by the Compensation Committee, in its sole discretion. Until such certificates are distributed to the Participant, the Participant will not be permitted to transfer ownership of the certificates except as contemplated by Section 14 of the Plan. Any Participant who terminates employment will receive a certificate for the number of shares held in his account and a cash refund attributable to amounts equal to less than the price of a whole share, and any accumulated contributions, dividends and interest. If for any reason the purchase of shares with a Participant's allocations to the Plan exceeds or would exceed the Maximum Share Limitation, such excess amounts shall be refunded to the Participant as soon as practicable after such excess has been determined to exist. If as of any Purchase Date the shares authorized for purchase under the Plan are exceeded, enrollments shall be reduced proportionately to eliminate the excess. Any funds that cannot be applied to the purchase of shares due to excess enrollment shall be refunded as soon as administratively feasible, including interest determined in accordance with Section 7. The Committee in its discretion may also provide that excess 4 5 enrollments may be carried over to the next Purchase Period under this Plan or any successor plan according to the regulations set forth under Section 423 of the Code. 10. MANNER OF WITHDRAWAL A Participant may elect to withdraw at any time (without withdrawing from participation in the Plan) shares which have been held in his account for at least six (6) months by giving notice to the person designated by the Committee on the appropriate form. Upon receipt of such notice from the person designated by the Committee, the Custodian, bank or other financial institution designated by the Committee for this purpose will arrange for the issuance and delivery of such shares held in the Participant's account as soon as administratively feasible. 11. TERMINATION OF PARTICIPATION The right to participate in the Plan terminates immediately when a Participant ceases to be employed by the Company for any reason whatsoever (including death, unpaid disability or when the Participant's employer ceases to be a Subsidiary) or the Participant otherwise becomes ineligible. Participation also terminates immediately when the Participant voluntarily withdraws his contributions from the Plan. Participation terminates immediately after the Purchase Date if the Participant is not re-enrolled in the Plan for the next Purchase Period or if the Participant has suspended payroll deductions during any Purchase Period and has not re-enrolled in the Plan for the next Purchase Period. As soon as administratively feasible after termination of participation, the Committee shall pay to the Participant or his beneficiary or legal representative all amounts credited to his account, including interest and dividends, if applicable, determined in accordance with Section 7, and shall cause a certificate for the number of shares held in his account to be delivered to the Participant, subject to the restrictions in Section 9. For purposes of the Plan, a Participant is not deemed to have terminated his employment if he transfers employment from Eagle to a Subsidiary, or vice versa, or transfers employment between Subsidiaries. 12. UNPAID LEAVE OF ABSENCE Unless the Participant has voluntarily withdrawn his contributions from the Plan, shares will be purchased for his account on the Purchase Date next following commencement of an unpaid leave of absence by such Participant, provided such leave does not constitute a termination of employment. The number of shares to be purchased will be determined by applying to the purchase the amount of the Participant's contributions made up to the commencement of such unpaid leave of absence plus interest on such contributions and dividends, if applicable, both determined in accordance with Section 7. If the Participant's unpaid leave of absence both commences and terminates during the same Purchase Period and he has resumed eligible employment prior to the Purchase Date related to that Purchase Period, he may also resume payroll deductions immediately, and shares will be purchased for him on such Purchase Date as otherwise provided in Section 9. 13. DESIGNATION OF BENEFICIARY Each Participant may designate one or more beneficiaries in the event of death and may, in his sole discretion, change such designation at any time. Any such designation shall be effective upon receipt by the person designated by the Committee and shall control over any disposition by will or otherwise. As soon as administratively feasible after the death of a Participant, amounts credited to his account, including interest and dividends, if applicable, determined in accordance with Section 7, shall be paid in cash and a certificate for any shares shall be delivered to the Participant's designated beneficiaries or, in the absence of such designation, to the executor, administrator or other legal representative of the Participant's estate. Such payment shall relieve the Company of further liability to the deceased Participant with respect to the Plan. If more than one beneficiary is designated, each beneficiary shall receive an equal portion of the account unless the Participant has given express contrary instructions. 5 6 14. ASSIGNMENT Except as provided in Section 13, the rights of a Participant under the Plan will not be assignable or otherwise transferable by the Participant, other than by will or the laws of descent and distribution or pursuant to a "qualified domestic relations order," as defined in Section 414(p) of the Code. No purported assignment or transfer of such rights of a Participant under the Plan, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the purported assignee or transferee any interest or right therein whatsoever, but immediately upon such assignment or transfer, or any attempt to make the same, such rights shall terminate and become of no further effect. If this provision is violated, the Participant's election to purchase Common Stock shall terminate, and the only obligation of the Company remaining under the Plan will be to pay to the person entitled thereto the amount then credited to the Participant's account. No Participant may create a lien on any funds, securities, rights or other property held for the account of the Participant under the Plan, except to the extent that there has been a designation of beneficiaries in accordance with the Plan, and except to the extent permitted by will or the laws of descent and distribution if beneficiaries have not been designated. A Participant's right to purchase shares under the Plan shall be exercisable only during the Participant's lifetime and only by him. 15. COSTS All costs and expenses incurred in administering this Plan shall be paid by the Company. Any brokerage fees for the sale of shares purchased under the Plan shall be paid by the Participant. 16. REPORTS At the end of each Purchase Period, the Company shall provide or cause to be provided to each Participant a report of his contributions, including interest earned, and the number of whole shares of Common Stock purchased with such contributions by that Participant on each Purchase Date. 17. EQUAL RIGHTS AND PRIVILEGES All eligible Employees shall have equal rights and privileges with respect to the Plan so that the Plan qualifies as an "employee stock purchase plan" within the meaning of Section 423 or any successor provision of the Code and related regulations. Any provision of the Plan which is inconsistent with Section 423 or any successor provision of the Code shall without further act or amendment by the Company be reformed to comply with the requirements of Section 423. This Section 17 shall take precedence over all other provisions in the Plan. 18. RIGHTS AS SHAREHOLDERS A Participant will have no rights as a stockholder under the election to purchase until he becomes a stockholder as herein provided. A Participant will become a stockholder with respect to shares for which payment has been completed as provided in Section 9 at the close of business on the last business day of the Purchase Period. 19. MODIFICATION AND TERMINATION The Board may amend or terminate the Plan at any time insofar as permitted by law. No amendment shall be effective unless within one (1) year after it is adopted by the Board it is approved by the holders of Eagle's outstanding shares if and to the extent such amendment is required to be approved by shareholders in order to cause the rights granted under the Plan to purchase shares of Common Stock to meet the requirements of Section 423 of the Code (or any successor provision). The Plan shall terminate after all Common Stock issued under the Plan has been purchased, unless terminated earlier by the Board or unless additional Common Stock is issued under the Plan with the approval of the shareholders. In the event the Plan is terminated, the Committee may elect to terminate all outstanding rights to purchase shares under the Plan either immediately or upon completion of the purchase of shares on 6 7 the next Purchase Date, unless the Committee has designated that the right to make all such purchases shall expire on some other designated date occurring prior to the next Purchase Date. If the rights to purchase shares under the Plan are terminated prior to expiration, all funds contributed to the Plan which have not been used to purchase shares shall be returned to the Participants as soon as administratively feasible, including interest and dividends, if applicable, determined in accordance with Section 7. 20. BOARD AND SHAREHOLDER APPROVAL; EFFECTIVE DATE Effective Date of Plan. This Plan was adopted by the Board on February 23, 1998. This Plan shall be effective as of the Effective Date. Notwithstanding the foregoing, the adoption of this Plan is expressly conditioned upon the approval by written consent of the holders of a majority of shares of outstanding shares of Common Stock on or before February 23, 1998. If the shareholders of the Company should fail so to approve this Plan on or before such date, this Plan shall terminate and cease to be of any further force or effect and all purchases of shares of Common Stock under the Plan shall be null and void. 21. GOVERNMENTAL APPROVALS OR CONSENTS This Plan and any offering or sale made to Employees under it are subject to any governmental approvals or consents that may be or become applicable in connection therewith. Subject to the provisions of Section 19, the Board may make such changes in the Plan and include such terms in any offering under the Plan as may be desirable to comply with the rules or regulations of any governmental authority. 22. LISTING OF SHARES AND RELATED MATTERS If at any time the Board or the Committee shall determine, based on opinion of legal counsel, that the listing, registration or qualification of the shares covered by the Plan upon any national securities exchange or reporting system or under any state or federal law is necessary or desirable as a condition of, or in connection with, the sale or purchase of shares under the Plan, no shares will be sold, issued or delivered unless and until such listing, registration or qualification shall have been effected or obtained, or otherwise provided for, free of any conditions not acceptable to legal counsel. 23. EMPLOYMENT RIGHTS The Plan shall neither impose any obligation on Eagle or on any Subsidiary to continue the employment of any Participant, nor impose any obligation on any Participant to remain in the employ of Eagle or of any Subsidiary. 24. WITHHOLDING OF TAXES The Committee may make such provisions as it may deem appropriate for the withholding of any taxes which it determines is required in connection with the purchase of Common Stock under the Plan. 25. GOVERNING LAW The Plan and rights to purchase shares that may be granted hereunder shall be governed by and construed and enforced in accordance with the laws of the state of Texas. 26. USE OF GENDER The gender of words used in the Plan shall be construed to include whichever may be appropriate under any particular circumstances of the masculine, feminine or neuter genders. 7 8 27. OTHER PROVISIONS The agreements to purchase shares of Common Stock under the Plan shall contain such other provisions as the Committee and the Board shall deem advisable, provided that no such provision shall in any way be in conflict with the terms of the Plan. ADOPTED effective July 1, 1998. EAGLE USA AIR FREIGHT, INC. 8 EX-10.II 4 LONG-TERM INCENTIVE PLAN 1 EXHIBIT 10(ii) EAGLE USA AIR FREIGHT, INC. LONG-TERM INCENTIVE PLAN (As Amended and Restated Effective November 10, 1997) 1. OBJECTIVES. The Eagle USA Air Freight, Inc. Long-Term Incentive Plan (the "Plan") is designed to retain selected employees of Eagle USA Air Freight, Inc. (the "Company") and its Subsidiaries and reward them for making significant contributions to the success of the Company and its Subsidiaries. These objectives are to be accomplished by making awards under the Plan and thereby providing Participants with a proprietary interest in the growth and performance of the Company and its Subsidiaries. 2. DEFINITIONS. As used herein, the terms set forth below shall have the following respective meanings: "AWARD" means the grant of any form of stock option, stock appreciation right, stock award or cash award, whether granted singly, in combination or in tandem, to a Participant pursuant to any applicable terms, conditions and limitations as the Committee may establish in order to fulfill the objectives of the Plan. "AWARD AGREEMENT" means a written agreement between the Company and a Participant that sets forth the terms, conditions and limitations applicable to an Award. "BOARD" means the Board of Directors of the Company. "CODE" means the Internal Revenue Code of 1986, as amended from time to time. "COMMITTEE" means such committee of two or more members of the Board as is designated by the Board to administer the Plan. "COMMON STOCK" means the Common Stock, par value $.001 per share, of the Company. "DIRECTOR" means an individual serving as a member of the Board. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time. "FAIR MARKET VALUE" means, as of a particular date, (a) if the shares of Common Stock are listed on a national securities exchange, the mean between the highest and lowest sales price per share of Common Stock on the consolidated transaction reporting system for the principal such national securities exchange on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (b) if the shares of Common Stock are not so listed but are quoted on the Nasdaq National Market, the mean between the highest and lowest sales price per share of Common Stock on the Nasdaq National Market on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (c) if the Common Stock is not so listed or quoted, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by Nasdaq, or, if not reported by Nasdaq, by the National Quotation Bureau, Inc. or (d) if none of the above is applicable, such amount as may be determined by the Board (or an Independent Third Party, should the Board elect in its sole discretion to instead utilize an Independent Third Party for this purpose), in good faith, to be the fair market value per share of Common Stock. "INDEPENDENT THIRD PARTY" means an individual or entity independent of the Company (and any transferor or transferee of Common Stock acquired upon the exercise of an option under the Plan, if applicable) with experience in providing investment banking appraisal or valuation services and with expertise generally in the valuation of securities or other property of the type at issue, that is chosen by the Board, in its sole discretion, to value securities or other property for purposes of this Plan. The Company's independent accountants shall be deemed to satisfy the criteria for an Independent Third Party if selected by the Board for that purpose. The Board may utilize one or more Independent Third Parties. "PARTICIPANT" means an employee of the Company or any of its Subsidiaries to whom an Award has been made under this Plan. 1 2 "RESTRICTED STOCK" means Common Stock that is restricted or subject to forfeiture provisions. "SUBSIDIARY" means (i) with respect to any Awards other than incentive stock options within the meaning of Code Section 422, any corporation, limited liability company, general or limited partnership, or similar entity of which the Company directly or indirectly owns shares representing more than 50% of the voting power of all classes or series of equity securities of such entity, which have the right to vote generally on matters submitted to a vote of the holders of equity interests in such entity, and (ii) with respect to Awards of incentive stock options, any subsidiary within the meaning of Section 424(f) of the Code or any successor provision. 3. ELIGIBILITY. All employees consultants and independent contractors of the Company and its Subsidiaries are eligible for Awards under this Plan. The Committee shall select the Participants in the Plan from time to time by the grant of Awards under the Plan. 4. COMMON STOCK AVAILABLE FOR AWARDS. There shall be available for Awards granted wholly or partly in Common Stock (including rights or options which may be exercised for or settled in Common Stock) during the term of this Plan an aggregate of 6,100,000 shares of Common Stock, subject to adjustment as provided in Paragraph 14 (but including all previous adjustments pursuant to such paragraph prior to the Effective Date of this Plan, as amended and restated). The Board and the appropriate officers of the Company shall from time to time take whatever actions are necessary to file required documents with governmental authorities and stock exchanges and transaction reporting systems to make shares of Common Stock available for issuance pursuant to Awards. Common Stock related to Awards that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or in a manner such that all or some of the shares covered by an Award are not issued to a Participant, or are exchanged for Awards that do not involve Common Stock, shall immediately become available for Awards hereunder. The Committee may from time to time adopt and observe such procedures concerning the counting of shares against the Plan maximum as it may deem appropriate. 5. ADMINISTRATION. This Plan shall be administered by the Committee, which shall have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of this Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to carry it into effect. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. No member of the Committee or officer of the Company to whom it has delegated authority in accordance with the provisions of Paragraph 6 of this Plan shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute. 6. DELEGATION OF AUTHORITY. The Committee may delegate to the President and to other senior officers of the Company its duties under this Plan pursuant to such conditions or limitations as the Committee may establish, except that the Committee may not delegate to any person the authority to grant Awards to, or take other action with respect to, Participants who are subject to Section 16 of the Exchange Act. 7. AWARDS. The Committee shall determine the type or types of Awards to be made to each Participant under this Plan. Each Award made hereunder shall be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee in its sole discretion and shall be signed by the Participant and by the President or any Vice President of the Company for and on behalf of the Company. An Award Agreement may include provisions for the repurchase by the Company of Common Stock acquired pursuant to the Plan and the repurchase of a Participant's option rights under the Plan. Awards may consist of those listed in this Paragraph 7 and may be granted singly, in combination or in tandem. Awards may also be made in combination or in tandem with, in replacement of, or as alternatives to grants or rights (a) under this Plan or any other employee plan of the Company or any of its Subsidiaries, including the plan of any acquired entity, or (b) made to any Company or Subsidiary employee by the Company or any Subsidiary. An Award may provide for the granting or issuance of additional, replacement or alternative 2 3 Awards upon the occurrence of specified events, including the exercise of the original Award. Notwithstanding anything herein to the contrary, no Participant may be granted Awards consisting of stock options or stock appreciation rights exercisable for more than 620,000 shares of Common Stock, subject to adjustment as provided in Paragraph 14 (i.e., 20% of the shares of Common Stock originally authorized for Awards under this Plan, as previously adjusted pursuant to Paragraph 14). In the event of an increase in the number of shares authorized under the Plan, the 20% limitation will apply to the number of shares authorized. (i) STOCK OPTION. An Award may consist of a right to purchase a specified number of shares of Common Stock at a price specified by the Committee in the Award Agreement or otherwise. A stock option may be in the form of an incentive stock option ("ISO") which, in addition to being subject to applicable terms, conditions and limitations established by the Committee, complies with Section 422 of the Code. Notwithstanding the foregoing, no ISO can be granted under the Plan more than ten years following the Effective Date of the Plan. (ii) STOCK APPRECIATION RIGHT. An Award may consist of a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value or other specified valuation of a specified number of shares of Common Stock on the date the stock appreciation right ("SAR") is exercised over a specified strike price as set forth in the applicable Award Agreement. (iii) STOCK AWARD. An Award may consist of Common Stock or may be denominated in units of Common Stock. All or part of any stock Award may be subject to conditions established by the Committee and set forth in the Award Agreement, which conditions may include, but are not limited to, continuous service with the Company and its Subsidiaries, achievement of specific business objectives, increases in specified indices, attaining specified growth rates and other comparable measurements of performance. Such Awards may be based on Fair Market Value or other specified valuations. The certificates evidencing shares of Common Stock issued in connection with a stock Award shall contain appropriate legends and restrictions describing the terms and conditions of the restrictions applicable thereto. (iv) CASH AWARD. An Award may be denominated in cash with the amount of the eventual payment subject to future service and such other restrictions and conditions as may be established by the Committee and set forth in the Award Agreement, including, but not limited to, continuous service with the Company and its Subsidiaries, achievement of specific business objectives, increases in specified indices, attaining specified growth rates and other comparable measurements of performance. 8. PAYMENT OF AWARDS. (a) GENERAL. Payment of Awards may be made in the form of cash or Common Stock or combinations thereof and may include such restrictions as the Committee shall determine including, in the case of Common Stock, restrictions on transfer and forfeiture provisions. (b) DEFERRAL. The Committee may, in its discretion, (i) permit selected Participants to elect to defer payments of some or all types of Awards in accordance with procedures established by the Committee or (ii) provide for the deferral of an Award in an Award Agreement or otherwise. Any such deferral may be in the form of installment payments or a future lump sum payment. Any deferred payment, whether elected by the Participant or specified by the Award Agreement or by the Committee, may be forfeited if and to the extent that the Award Agreement so provides. (c) DIVIDENDS AND INTEREST. Dividends or dividend equivalent rights may be extended to and made part of any Award denominated in Common Stock or units of Common Stock, subject to such terms, conditions and restrictions as the Committee may establish. The Committee may also establish rules and procedures for the crediting of interest on deferred cash payments and dividend equivalents for deferred payment denominated in Common Stock or units of Common Stock. (d) SUBSTITUTION OF AWARDS. At the discretion of the Committee, a Participant may be offered an election to substitute an Award for another Award or Awards of the same or different type. 3 4 9. STOCK OPTION EXERCISE. The price at which shares of Common Stock may be purchased under a stock option shall be paid in full at the time of exercise in cash or, if permitted by the Committee, by means of tendering Common Stock or surrendering all or part of that or any other Award, including Restricted Stock, valued at Fair Market Value on the date of exercise, or any combination thereof. The Committee shall determine acceptable methods for tendering Common Stock or Awards to exercise a stock option as it deems appropriate. If permitted by the Committee, payment may be made by successive exercises by the Participant. The Committee may provide for procedures to permit the exercise or purchase of Awards by (a) loans from the Company or (b) use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award. Unless otherwise provided in the applicable Award Agreement, in the event shares of Restricted Stock are tendered as consideration for the exercise of a stock option, a number of the shares issued upon the exercise of the stock option, equal to the number of shares of Restricted Stock used as consideration therefor, shall be subject to the same restrictions as the Restricted Stock so submitted as well as any additional restrictions that may be imposed by the Committee. 10. TAX WITHHOLDING. The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Award with respect to which withholding is required. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made. 11. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. The Board may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law except that (a) no amendment or alteration that would impair the rights of any Participant under any Award previously granted to such Participant shall be made without such Participant's consent and (b) no amendment or alteration shall be effective prior to approval by the Company's shareholders to the extent such approval is required by applicable laws, regulations, stock exchange or quotation system requirements. 12. TERMINATION OF EMPLOYMENT. Upon the termination of employment by a Participant, any unexercised, deferred or unpaid Awards shall be treated as provided in the specific Award Agreement evidencing the Award. Each Award granted pursuant to this Plan which is a stock option shall provide that if the Participant ceases to be employed by the Company or its affiliates for any reason whatsoever, the option shall immediately terminate to the extent the option is not vested (or does not become vested as a result of such termination of employment) on the date the Participant terminates employment. 13. ASSIGNABILITY. Unless otherwise determined by the Committee and provided in the Award Agreement, no Award or any other benefit under this Plan constituting a derivative security within the meaning of Rule 16a-1(c) under the Exchange Act shall be assignable or otherwise transferable except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder. The Committee may prescribe and include in applicable Award Agreements other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Paragraph 13 shall be null and void. 14. ADJUSTMENTS. (a) The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above. 4 5 (b) In the event of any subdivision or consolidation of outstanding shares of Common Stock or declaration of a dividend payable in shares of Common Stock or capital reorganization or reclassification or other transaction involving an increase or reduction in the number of outstanding shares of Common Stock, the Committee may adjust proportionally (i) the number of shares of Common Stock reserved under this Plan and covered by outstanding Awards denominated in Common Stock or units of Common Stock; (ii) the exercise or other price in respect of such Awards; and (iii) the appropriate Fair Market Value and other price determinations for such Awards. Notwithstanding the foregoing, no adjustment is required for the stock split effected or to be effected shortly before the initial grant of Options under this Plan. In the event of any consolidation or merger of the Company with another corporation or entity or the adoption by the Company of a plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Committee shall make such adjustments or other provisions as it may deem equitable, including adjustments to avoid fractional shares, to give proper effect to such event. Additionally, and without limiting the generality of the foregoing, there shall be no adjustment for any dividend or distribution of cash, debt or other property in respect of the Company's earnings or its accumulated adjustments account as defined in Section 1368(e)(1) of the Code (including any estimated amount of such account) in respect of the period in which the Company is an "S" corporation within the meaning of Section 1361 of the Code. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee shall be authorized, in its discretion, (i) to issue or assume stock options, regardless of whether in a transaction to which Section 424(a) of the Code applies, by means of substitution of new options for previously issued options or an assumption of previously issued options, (ii) to make provision, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, Awards and the termination of options that remain unexercised at the time of such transaction or (iii) to provide for the acceleration of the vesting and exercisability of the options and the cancellation thereof in exchange for such payment as shall be mutually agreeable to the Participant and the Committee. 15. RESTRICTIONS. No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. It is the intent of the Company that this Plan comply with Rule 16b-3 with respect to persons subject to Section 16 of the Exchange Act unless otherwise provided herein or in an Award Agreement, that any ambiguities or inconsistencies in the construction of this Plan be interpreted to give effect to such intention and that, if any provision of this Plan is found not to be in compliance with Rule 16b-3, such provision shall be null and void to the extent required to permit this Plan to comply with Rule 16b-3. Certificates evidencing shares of Common Stock delivered under this Plan may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed and any applicable federal and state securities law. The Committee may cause a legend or legends to be placed upon any such certificates to make appropriate reference to such restrictions. 16. UNFUNDED PLAN. Insofar as it provides for Awards of cash, Common Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto, nor shall this Plan be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to a grant of cash, Common Stock or rights thereto under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. None of the Company, the Board or the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan. 5 6 17. GOVERNING LAW. This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Texas. 18. EFFECTIVE DATE OF PLAN. This amendment and restatement of the Plan shall be effective as of the date (the "Effective Date") it is approved by the Board of Directors of the Company. Notwithstanding the foregoing, the amendment and restatement of this Plan is expressly conditioned upon the approval by the holders of a majority of outstanding shares of Common Stock present, or represented, and entitled to vote at the 1998 annual meeting of shareholders. If the shareholders of the Company should fail so to approve this Plan at such annual meeting, this Plan shall terminate and cease to be of any further force or effect except with respect to Awards then outstanding. Attested to by the Secretary of Eagle USA Air Freight, Inc. as adopted by the Board of Directors and Shareholders of Eagle USA Air Freight, Inc. effective as of the 10th day of November, 1997 (the "Effective Date"). /s/ DOUGLAS A. SECKEL ------------------------------------ Douglas A. Seckel Secretary 6 EX-11.I 5 COMPUTATION OF PER SHARE EARNINGS - SIX MONTHS 1 EXHIBIT 11(i) EAGLE USA AIRFREIGHT, INC. COMPUTATION OF PER SHARE EARNINGS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AND FOOTNOTE AMOUNTS)
SIX MONTHS ENDED MARCH 31, ----------------------- 1998 1997 ---------- ---------- Net income $ 9,879 $ 7,462 Shares used in basic calculation: Weighted average shares outstanding 18,418 17,621 ---------- ---------- Total basic shares 18,418 17,621 Additional shares for diluted computation: Effect of stock options (1) 738 933 ---------- ---------- Total diluted shares 19,156 18,554 ========== ========== Basic earnings per share $ 0.54 $ 0.42 ========== ========== Diluted earnings per share $ 0.52 $ 0.40 ========== ==========
- ---------- (1) For the six months ended March 31, 1998, calculated assuming exercise of options for 3,152,111 shares of common stock at prices ranging from $1.25 to $35.13 per share and assumed repurchase of shares at the average market price of $29.55 computed as of the beginning of the period. For the six months ended March 31, 1997, calculated assuming exercise of options for 2,261,878 shares of common stock at prices ranging from $1.25 to $30.63 per share and assumed repurchase of shares at the average market price per share of $27.47 as of the beginning of the period. 22 EX-11.II 6 COMPUTATION OF PER SHARE EARNINGS - THREE MONTHS 1 EXHIBIT 11(ii) EAGLE USA AIRFREIGHT, INC. COMPUTATION OF PER SHARE EARNINGS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AND FOOTNOTE AMOUNTS)
THREE MONTHS ENDED MARCH 31, ----------------------- 1998 1997 ---------- ---------- Net income $ 3,989 $ 2,948 Shares used in basic calculation: Weighted average shares outstanding 18,580 17,717 ---------- ---------- Total basic shares 18,580 17,717 Additional shares for diluted computation: Effect of stock options (1) 681 926 ---------- ---------- Total diluted shares 19,261 18,643 ========== ========== Basic earnings per share $ 0.21 $ 0.17 ========== ========== Diluted earnings per share $ 0.21 $ 0.16 ========== ==========
- ---------- (1) For the three months ended March 31, 1998, calculated assuming exercise of options for 3,152,111 shares of common stock at prices ranging from $1.25 to $35.13 per share and assumed repurchase of shares at the average market price of $28.53 computed as of the beginning of the period. For the three months ended March 31, 1997, calculated assuming exercise of options for 2,261,878 shares of common stock at prices ranging from $1.25 to $30.63 per share and assumed repurchase of shares at the average market price per share of $28.49 as of the beginning of the period. 23 EX-27 7 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF EAGLE USA AIRFREIGHT, INC. FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q REPORT 0001001718 EAGLE USA AIRFREIGHT, INC. 1,000 U.S. DOLLAR 6-MOS SEP-30-1998 OCT-01-1997 MAR-31-1998 1 39,807 8,178 50,869 364 0 101,896 22,945 5,975 124,422 22,341 0 0 0 19 102,062 124,422 188,189 188,189 104,182 104,182 68,594 0 0 16,186 6,307 9,879 0 0 0 9,879 0.54 0.52
EX-27.1 8 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF EAGLE USA AIRFREIGHT, INC. FOR YEAR ENDED SEPTEMBER 30, 1997, THE NINE MONTHS ENDED JUNE 30, 1997, THE SIX MONTHS ENDED MARCH 31, 1997 AND THE THREE MONTHS ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-K AND 10-Q REPORTS. 1,000 3-MOS 6-MOS 9-MOS 12-MOS SEP-30-1997 SEP-30-1997 SEP-30-1997 SEP-30-1997 OCT-01-1996 OCT-01-1996 OCT-01-1996 OCT-01-1996 DEC-31-1996 MAR-31-1997 JUN-30-1997 SEP-30-1997 21,571 27,366 23,899 25,107 7,362 4,382 10,179 2,679 39,195 41,155 42,316 55,228 882 811 924 566 0 0 0 0 68,776 75,824 80,143 87,005 12,961 14,336 15,218 18,663 3,003 3,438 3,983 4,573 79,369 87,375 92,045 106,871 23,518 21,439 21,541 26,367 0 0 0 0 0 0 0 0 0 0 0 0 18 18 18 18 55,833 65,918 70,486 80,486 79,369 87,375 92,045 106,871 67,586 129,075 200,376 291,767 67,586 129,075 200,376 291,767 38,071 72,877 112,858 163,616 38,071 72,877 112,858 163,616 22,317 44,975 69,943 102,452 0 0 0 0 0 0 0 0 7,471 12,197 18,923 27,392 2,957 4,735 7,357 10,594 4,514 7,462 11,566 16,798 0 0 0 0 0 0 0 0 0 0 0 0 4,514 7,462 11,566 16,798 0.26 0.42 0.65 0.94 0.24 0.40 0.62 0.90
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