-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, rexjc5oDHkFj6Vr2VoNAX7ihbIeGpPZvVvqOpzJYa+vfymkVACjYu+PPb0jTEwwl bKDa+bw+hIVKlJdzn155gw== 0000003000-94-000014.txt : 19941121 0000003000-94-000014.hdr.sgml : 19941121 ACCESSION NUMBER: 0000003000-94-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRBORNE FREIGHT CORP /DE/ CENTRAL INDEX KEY: 0000003000 STANDARD INDUSTRIAL CLASSIFICATION: 4513 IRS NUMBER: 910837469 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06512 FILM NUMBER: 94558540 BUSINESS ADDRESS: STREET 1: P O BOX 662 CITY: SEATTLE STATE: WA ZIP: 98111 BUSINESS PHONE: 2062854600 10-Q 1 9/30/94 FORM 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1994 Commission File Number 1-6512 AIRBORNE FREIGHT CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware ---------------------------------------- (State of incorporation or organization) 91-0837469 --------------------------------- (IRS Employer Identification No.) 3101 Western Avenue P.O. Box 662 Seattle, Washington 98111-0662 ------------------------------ (Address of Principal Executive Office) Registrant's telephone number, including area code: (206) 285-4600 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: XXX No: --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the close of the period covered by this report. Common Stock, par value $1 per share Outstanding (net of 315,150 treasury shares) as of September 30, 1994 20,967,374 shares ----------------- AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF NET EARNINGS (Dollars in thousands except per share data) (Unaudited)
Three Months Ended Nine Months Ended September 30 September 30 ------------------ ----------------- 1994 1993 1994 1993 ---- ---- ---- ---- REVENUES: Domestic $415,417 $378,276 $1,219,958 $1,087,980 International 74,327 55,947 220,880 164,890 -------- -------- ---------- ---------- 489,744 434,223 1,440,838 1,252,870 OPERATING EXPENSES: Transportation purchased 164,745 133,685 482,277 389,919 Station and ground operations 147,915 131,001 438,056 388,227 Flight operations and maintenance 73,046 60,635 204,282 180,389 General and administrative 35,898 36,346 108,166 103,051 Sales and marketing 13,679 12,942 41,011 38,071 Depreciation and amortization 34,763 33,472 101,837 98,841 -------- -------- ---------- ---------- 470,046 408,081 1,375,629 1,198,498 -------- -------- ---------- ---------- EARNINGS FROM OPERATIONS 19,698 26,142 65,209 54,372 INTEREST, NET 6,212 6,108 18,222 18,134 -------- -------- ---------- ---------- EARNINGS BEFORE INCOME TAXES 13,486 20,034 46,987 36,238 INCOME TAXES 5,341 8,968 18,779 15,264 -------- -------- ---------- ---------- NET EARNINGS BEFORE CHANGES IN 8,145 11,066 28,208 20,974 ACCOUNTING CUMULATIVE EFFECT OF CHANGES IN - - - 3,828 ACCOUNTING -------- -------- ---------- ---------- NET EARNINGS 8,145 11,066 28,208 24,802 PREFERRED STOCK DIVIDENDS 105 695 792 2,064 -------- -------- ---------- ---------- NET EARNINGS AVAILABLE TO COMMON $ 8,040 $ 10,371 $ 27,416 $ 22,738 SHAREHOLDERS ======== ======== ========== ========== NET EARNINGS PER COMMON SHARE: Primary - Before changes in accounting $ .38 $ .53 $ 1.31 $ .97 Cumulative effect of changes in - - - .19 accounting -------- -------- ---------- ---------- Net earnings available to common $ .38 $ .53 $ 1.31 $ 1.16 shareholders ======== ======== ========== ========== Fully Diluted - Before changes in accounting $ .38 $ .52 $ 1.31 $ .97 Cumulative effect of changes in - - - .19 accounting -------- -------- ---------- ---------- Net earnings available to common $ .38 $ .52 $ 1.31 $ 1.16 shareholders ======== ======== ========== ========== DIVIDENDS PER COMMON SHARE $ .075 $ .075 $ .225 $ .225 ======== ======== ========== ========== See notes to consolidated financial statements.
AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
September 30 December 31 ------------ ----------- ASSETS 1994 1993 ------ ---- ---- (Unaudited) CURRENT ASSETS: Cash $ 10,622 $ 7,134 Trade accounts receivable, less 205,582 190,787 allowance of $7,443 and $6,925 Spare parts and fuel inventory 27,498 27,224 Deferred income tax assets 16,962 15,206 Prepaid expenses 15,541 18,815 ---------- ---------- TOTAL CURRENT ASSETS 276,205 259,166 PROPERTY AND EQUIPMENT, NET 757,817 733,963 EQUIPMENT DEPOSITS and OTHER ASSETS 15,489 13,780 ---------- ---------- TOTAL ASSETS $1,049,511 $1,006,909 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 110,770 $ 95,684 Salaries, wages and related taxes 35,487 37,885 Accrued expenses 63,609 55,545 Income taxes payable 1,727 3,638 Current portion of debt 5,958 5,850 ---------- ---------- TOTAL CURRENT LIABILITIES 217,551 198,602 LONG-TERM DEBT 270,234 269,250 SUBORDINATED DEBT 118,580 122,150 DEFERRED INCOME TAX LIABILITIES 31,231 28,262 OTHER LIABILITIES 27,505 29,821 REDEEMABLE PREFERRED STOCK 6,000 40,000 SHAREHOLDERS' EQUITY: Preferred Stock, without par value - Authorized 5,200,000 shares, no shares issued Common stock, par value $1 per share - Authorized 60,000,000 shares Issued 21,282,524 and 19,688,731 21,283 19,689 shares Additional paid-in capital 184,338 149,156 Retained earnings 173,760 150,950 ---------- ---------- 379,381 319,795 Treasury stock, 315,150 shares, at cost (971) (971) ---------- ---------- 378,410 318,824 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,049,511 $1,006,909 ========== ========== See notes to consolidated financial statements.
AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Nine Months Ended September 30 ---------------- 1994 1993 ---- ---- OPERATING ACTIVITIES: Net Earnings $ 28,208 $ 24,802 Adjustments to reconcile net earnings to net cash provided by operating activities: Cumulative effect of changes in -- (3,828) accounting Depreciation and amortization 94,511 90,411 Provision for aircraft engine 7,326 8,430 overhauls Deferred income taxes 1,213 444 Other (2,316) (1,055) -------- -------- CASH PROVIDED BY OPERATIONS 128,942 119,204 Change in: Receivables (14,795) (14,421) Inventories and prepaid expenses 3,000 (4,452) Accounts payable 16,442 3,335 Accrued expenses, salaries and 3,755 23,069 taxes payable -------- -------- NET CASH PROVIDED BY OPERATING 137,344 126,735 ACTIVITIES INVESTING ACTIVITIES: Additions to property and equipment (125,861) (113,184) Disposition of property and equipment 913 228 Expenditures for engine overhauls (3,064) (2,821) Other (653) (1,889) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (128,665) (117,666) FINANCING ACTIVITIES: Proceeds from bank note borrowings, net 37,100 (2,500) Principal payments on debt (39,578) (5,034) Proceeds from common stock issuance 2,805 626 Dividends paid (5,518) (6,399) -------- -------- NET CASH PROVIDED (USED) BY FINANCING (5,191) (13,307) ACTIVITIES -------- -------- NET INCREASE (DECREASE) IN CASH 3,488 (4,238) CASH AT JANUARY 1 7,134 10,179 -------- -------- CASH AT SEPTEMBER 30 $ 10,622 $ 5,941 ======== ======== See notes to consolidated financial statements.
AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1994 (Unaudited) NOTE A--SUMMARY OF FINANCIAL STATEMENT PREPARATION: The consolidated financial statements included herein are unaudited but include all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods reported. Certain amounts for prior periods have been reclassified to conform to the 1994 presentation. NOTE B--LONG-TERM DEBT: Long-term debt consists of the following:
September 30 December 31 ------------ ------------ 1994 1993 ---- ---- (In thousands) Senior debt: Revolving bank credit $142,100 $105,000 Notes payable -- 34,000 Senior notes 100,000 100,000 Revenue bonds 13,200 13,200 Other debt 17,322 19,330 -------- -------- 272,622 271,530 Subordinated debt: Senior subordinated notes 7,150 10,720 Convertible subordinated debentures 115,000 115,000 -------- -------- 122,150 125,720 -------- -------- Total long-term debt 394,772 397,250 Less current portion 5,958 5,850 -------- -------- $388,814 $391,400 ======== ========
NOTE C--EARNINGS PER COMMON SHARE: Primary earnings per common share are based upon the weighted average number of common shares outstanding during the interim period plus dilutive common equivalent shares applicable to the assumed exercise of outstanding stock options. Fully diluted earnings per share for the three months ended September 30, 1993, assumes conversion of the Company's redeemable preferred stock and the dilutive common equivalent shares applicable to the assumed exercise of stock options. Net earnings as adjusted for the elimination of preferred stock dividends relative to the assumed conversion was $11,067,000 for the three month period. Average shares outstanding used in earnings per share computations were as follows:
Three Months Ended Nine Months Ended ------------------ ----------------- September 30 September 30 ------------ ------------ 1994 1993 1994 1993 ---- ---- ---- ---- AVERAGE SHARES OUTSTANDING Primary 21,288 19,542 20,955 19,540 Fully Diluted 21,288 21,298 20,955 19,590
NOTE D--ACCOUNTING CHANGES: The Company adopted several new accounting standards as of January 1, 1993 and recorded the effect of the changes in the quarter ended March 31, 1993. The new standards change the Company's methods used to account for income taxes and post-retirement health care benefit costs. The net cumulative effect of adopting these standards was to increase net earnings for the period ended March 31, 1993 by $3,828,000 or $.19 per share. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS: The Company's operating performance during the first nine months of 1994 resulted in higher operating income and net earnings compared to the first nine months of 1993. However, operating results in the third quarter were disappointing due primarily to three factors: a slowdown in the growth rate of higher yielding overnight domestic shipments; higher than normal aircraft maintenance costs; and, a negative impact to international margins due to higher linehaul rates on certain lane segments. Net earnings available to common shareholders for the first nine months of 1994 were $27.4 million, or $1.31 per share, compared to $22.7 million, or $.97 per share for the first nine months of 1993. The 1993 net earnings are before the cumulative effect of changes in accounting which resulted in a net increase to earnings of $.19 per share, increasing the net earnings available to common shareholders to $1.16 per share. Third quarter 1994 earnings available to common shareholders were $.38 per share compared to $.53 per share for the third quarter of 1993. The following table sets forth selected shipment and revenue data for the comparative periods indicated:
Three Months Ended Nine Months Ended ------------------ ---------------- September 30 September 30 ------------ ------------ 1994 1993 1994 1993 ---- ---- ---- ---- Shipments (in thousands): Domestic Overnight Letters 8,571 8,277 25,545 24,340 0-2 Lbs. 11,128 10,628 32,918 30,700 3-99 Lbs. 9,877 9,142 29,175 26,134 ------- ------- ------- ------- 29,576 28,047 87,638 81,174 Select Delivery Service 0-2 Lbs. 10,808 7,800 30,506 22,779 3-99 Lbs. 6,475 4,706 18,281 13,112 ------- ------- ------- ------- 17,283 12,506 48,787 35,891 100 Lbs. and over 89 90 265 261 ------- ------- ------- ------- Total Domestic 46,948 40,643 136,690 117,326 ------- ------- ------- ------- International Express 891 795 2,554 2,323 All Other 120 97 354 291 ------- ------- ------- ------- Total International 1,011 892 2,908 2,614 ------- ------- ------- ------- Total Shipments 47,959 41,535 139,598 119,940 ======= ======= ======= ======= Average Pounds per Shipment: Domestic 4.8 4.8 4.8 4.7 International 60.0 42.9 62.1 43.7 Average Revenue per Pound: Domestic $ 1.83 $ 1.93 $ 1.87 $ 1.96 International $ 1.23 $ 1.47 $ 1.22 $ 1.45 Average Revenue per Shipment: Domestic $ 8.85 $ 9.31 $ 8.92 $ 9.27 International $ 73.52 $ 62.72 $ 75.96 $ 63.08
Total shipments increased 16% in the first nine months of 1994 compared to 24% in the first nine months of 1993. Total revenues increased 15% in the first nine months of 1994 compared to 15% in 1993. Domestic shipments increased 17% in the first nine months of 1994 compared to 25% for the same period of 1993. Domestic shipments increased 16% in the third quarter of 1994 compared to 23% in 1993. The growth in domestic shipments continues to be aided by growth in the Company's deferred service product, Select Delivery Service (SDS), which provides next afternoon and second-day delivery service. For the first nine months of 1994, SDS accounted for over 36% of total domestic shipments, compared to 31% for the first nine months of 1993. While the overall domestic growth rate during the first three quarters of 1994 is fairly strong, it is lower than experienced in previous periods. Domestic revenues increased 12% in the first nine months of 1994 compared to 18% in 1993. The lower growth rate of higher yielding overnight shipments of 5.5% was a primary contributor to the decline in the average domestic revenue per shipment for the third quarter of 1994 to $8.85 per shipment versus $8.98 in the second quarter of 1994. This represents a 1.4% decline compared to the second quarter of 1994 and 4.9% decline compared to the third quarter of 1993. The domestic growth rate will be key to results in the fourth quarter of the year. International shipments increased 11% in the first nine months of 1994 compared to 7% in 1993, and 13% in the third quarter of 1994 compared to 8% in the same period of 1993. The growth in international shipments was aided by the growth in higher yielding freight shipments which increased 22% in the first nine months of 1994 compared to a decrease of 7% for the same period of 1993. International revenues increased 34% in the first nine months of 1994 compared to a decrease of 2% in 1993. International revenue per shipment and the average weight per shipment increased significantly as a result of the strong unit growth in higher yielding freight shipments. International margins were negatively impacted in September of 1994 as the international carriers raised rates on traffic moving out of the Far East to the U.S. Operating expenses as a percentage of revenues were 95.5% for the first nine months of 1994 compared to 95.7% in the first nine months of 1993 and 95.2% for all of 1993. Operating cost per shipment handled decreased less than 2% for the first nine months of 1994 compared to 1993. This decline appears low due to the increase of costs in the transportation purchased category and the correlating increase in the transportation purchased cost per shipment. Operating cost per shipment decreased approximately 5% for all other operating expense categories combined, factoring out transportation purchased, for this same period. The Company experienced a 6% improvement in productivity for the third quarter of 1994 as measured by shipments handled per paid employee hour. Comparisons of certain operating expense components are discussed below. Transportation purchased increased as a percentage of revenues to 33.5% in the first nine months of 1994 compared to 31.1% in 1993. This increase was primarily due to higher commercial airline costs resulting from the increase in international freight shipments discussed above. Station and ground expense as a percentage of revenues in the first nine months of 1994 was 30.4% compared to 31.0% in the first nine months of 1993, as productivity gains helped offset any inflationary pressures on costs. Flight operations and maintenance expense as a percentage of revenues during the first nine months of 1994 was 14.2%, compared to 14.4% in the first nine months of 1993. This category of expense as a percentage of revenues increased to 14.9% in the third quarter of 1994 compared to 14.0% in the same quarter of 1993. During the third quarter of 1994 a higher than normal number of periodic maintenance checks ("C" checks) were performed, and some of those checks turned out to be more costly than is standard. Average aviation fuel price for the first nine months of 1994 was $.59 per gallon compared to the average price of $.65 per gallon during the same period of 1993. Aviation fuel consumption increased 15% to 90 million gallons in the first nine months of 1994 compared to 1993. The increase in fuel consumption is a result of additional Company operated aircraft placed in service since the first quarter of 1993 and to the disruption to air operations as a result of severe winter weather. The increased number of aircraft in service also accounted for the slight increase in depreciation and amortization expense which, as a percentage of revenues in the first nine months of 1994 declined to 7.1%, compared to 7.9% for the same period in 1993. General and administrative, and sales and marketing expenses decreased as a percentage of revenues in the first nine months of 1994 compared to 1993. This was primarily the result of continuing productivity gains and a strong focus on all discretionary spending. Interest expense in the first nine months of 1994 was comparable to the level of expense in the same period of 1993, as slightly higher effective interest rates and lower amount of capitalized interest were offset by the benefit of lower average outstanding borrowings. The Company's effective tax rate was 40.0% in the first nine months of 1994 compared to 42.1% in the first nine months of 1993 and 40.2% for all of 1993. The Company anticipates the effective tax rate for the 1994 year to be comparable to the first nine months of 1994. LIQUIDITY AND CAPITAL RESOURCES: Capital expenditures and associated financing continue to be the primary factors affecting the financial condition of the Company. The Company anticipates total capital expenditures to approximate $180-$185 million in 1994, of which a significant portion is related to the acquisition and modification of aircraft. During the first nine months of 1994, total capital expenditures net of dispositions were $125 million. The principal source of liquidity for financing capital expenditures during the first nine months of 1994 was cash provided by operations. The Company's unsecured revolving bank credit agreement has traditionally been used as a major source of liquidity for periods between other financing transactions. The Company has a revolving bank credit agreement providing for a total commitment of $240 million, subject to a maximum level of Company indebtedness permitted by certain covenants in the agreement and other loan agreements. The Company also has available $25 million under unsecured uncommitted money market lines of credit with several banks, used in conjunction with the revolving credit agreement to facilitate settlement and accommodate short-term borrowing fluctuations. At September 30, 1994, a total of $142.1 million was outstanding under the revolving bank credit and money market credit lines. In management's opinion, the available capacity under the bank credit agreements coupled with internally generated cash flow from remaining 1994 operations and other sources of borrowing should provide adequate flexibility to finance anticipated capital expenditures for the balance of 1994. PART II. OTHER INFORMATION -------------------------- Item 6. Exhibits and Reports or Form 8-K. (a) Exhibits Exhibit No. 27 - Financial Data Schedule (b) Reports on Form 8-K - None Other information required under Part II is not applicable for the quarter ended September 30, 1994. SIGNATURES ---------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: AIRBORNE FREIGHT CORPORATION ---------------------------- (Registrant)
Date: 11/10/94 /s/Roy C. Liljebeck -------- ------------------- Roy C. Liljebeck Executive Vice President, Chief Financial Officer Date: 11/10/94 /s/Lanny H. Michael -------- ------------------- Lanny H. Michael Senior Vice President, Treasurer and Controller
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1994 JAN-01-1994 SEP-30-1994 10,622 0 213,025 7,443 27,498 276,205 1,352,498 594,681 1,049,511 217,551 388,814 21,283 6,000 0 357,127 1,049,511 0 1,440,838 0 1,375,629 0 0 18,222 46,987 18,779 0 0 0 0 28,208 1.31 1.31
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