-----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, L/PBnSy/icRn0E9Vj2bp+dYqD0N0kgdhmF/9lB6UZQMb8tR7utdgwidWcWdrdOSY EJhC7mY31iwXbWDr6OV/vw== 0000003000-96-000015.txt : 19960813 0000003000-96-000015.hdr.sgml : 19960813 ACCESSION NUMBER: 0000003000-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRBORNE FREIGHT CORP /DE/ CENTRAL INDEX KEY: 0000003000 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [4513] IRS NUMBER: 910837469 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06512 FILM NUMBER: 96608072 BUSINESS ADDRESS: STREET 1: P O BOX 662 CITY: SEATTLE STATE: WA ZIP: 98111 BUSINESS PHONE: 2062854600 10-Q 1 6/30/96 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 June 30, 1996 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 June 30, 1996 21,134,281 shares ----------------- AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF NET EARNINGS (Dollars in thousands except per share data) (Unaudited)
Three Months Ended Six Months Ended ------------------ ---------------- June 30 June 30 ------- ------- 1996 1995 1996 1995 ---- ---- ---- ---- REVENUES: Domestic $524,055 $452,631 $1,030,176 $ 894,808 International 98,343 93,309 190,131 181,048 -------- -------- ---------- ---------- 622,398 545,940 1,220,307 1,075,856 OPERATING EXPENSES: Transportation purchased 207,207 196,726 409,739 385,511 Station and ground operations 193,346 170,812 385,663 335,926 Flight operations and maintenance 92,973 79,311 187,742 157,372 General and administrative 47,903 37,019 91,165 74,513 Sales and marketing 15,030 16,250 30,478 31,881 Depreciation and amortization 40,124 34,846 78,985 69,648 -------- -------- ---------- ---------- 596,583 534,964 1,183,772 1,054,851 -------- -------- ---------- ---------- EARNINGS FROM OPERATIONS 25,815 10,976 36,535 21,005 INTEREST, NET 8,191 6,964 16,532 13,689 -------- -------- ---------- ---------- EARNINGS BEFORE INCOME TAXES 17,624 4,012 20,003 7,316 INCOME TAXES 6,935 1,750 8,000 3,174 -------- -------- ---------- ---------- NET EARNINGS 10,689 2,262 12,003 4,142 PREFERRED STOCK DIVIDENDS 68 68 136 139 -------- -------- ---------- ---------- NET EARNINGS AVAILABLE $ 10,621 $ 2,194 $ 11,867 $ 4,003 TO COMMON SHAREHOLDERS ======== ======== ========== ========== NET EARNINGS PER COMMON SHARE: Primary - $ .50 $ .10 $ .56 $ .19 ======== ======== ========== ========== Fully Diluted - $ .48 $ .10 $ .56 $ .19 ======== ======== ========== ========== DIVIDENDS PER COMMON SHARE $ .075 $ .075 $ .15 $ .15 ======== ======== ========== ==========
See notes to consolidated financial statements. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
June 30 December 31 ------- ----------- 1996 1995 ---- ---- (Unaudited) ASSETS ------ CURRENT ASSETS: Cash $ 12,362 $ 17,906 Trade accounts receivable, less allowance of $7,915 and $7,750 263,075 259,408 Spare parts and fuel inventory 35,645 33,792 Deferred income tax assets 17,828 16,135 Prepaid expenses 21,926 24,887 ---------- ---------- TOTAL CURRENT ASSETS 350,836 352,128 PROPERTY AND EQUIPMENT, NET 854,618 842,703 EQUIPMENT DEPOSITS and OTHER ASSETS 25,094 22,553 ---------- ---------- TOTAL ASSETS $1,230,548 $1,217,384 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 123,602 $ 136,987 Salaries, wages and related taxes 51,419 49,106 Accrued expenses 67,728 66,679 Income taxes payable 4,637 1,967 Current portion of debt 1,050 5,790 ---------- ---------- TOTAL CURRENT LIABILITIES 248,436 260,529 LONG-TERM DEBT 378,649 364,621 SUBORDINATED DEBT 115,000 115,000 DEFERRED INCOME TAX LIABILITIES 40,145 38,242 OTHER LIABILITIES 28,784 28,729 REDEEMABLE PREFERRED STOCK 3,948 3,948 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 21,449,431 and 21,397,865 shares 21,449 21,398 Additional paid-in capital 186,470 185,947 Retained earnings 208,638 199,941 ---------- ---------- 416,557 407,286 Treasury stock, 315,150 shares, at cost (971) (971) ----------- ---------- 415,586 406,315 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,230,548 $1,217,384 ========== ==========
See notes to consolidated financial statements. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Six Months Ended June 30 ---------------- 1996 1995 ---- ---- OPERATING ACTIVITIES: Net Earnings $ 12,003 $ 4,142 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 72,965 64,689 Provision for aircraft engine overhauls 6,020 4,959 Deferred income taxes 211 (1,178) Other 147 (2,791) -------- -------- CASH PROVIDED BY OPERATIONS 91,346 69,821 Change in: Receivables (3,667) 1,901 Inventories and prepaid expenses 1,108 (2,938) Accounts payable (13,385) (5,545) Accrued expenses, salaries & taxes payable 6,032 2,283 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 81,434 65,522 INVESTING ACTIVITIES: Additions to property and equipment (85,621) (106,098) Dispositions of property and equipment 52 340 Expenditures for engine overhauls (6,966) (3,922) Other (998) (257) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (93,533) (109,937) FINANCING ACTIVITIES: Proceeds from bank note borrowings, net 14,200 68,600 Principal payments on debt (4,912) (17,071) Proceeds from common stock issuance 574 320 Dividends paid (3,307) (3,301) -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 6,555 48,548 -------- -------- NET INCREASE (DECREASE) IN CASH (5,544) 4,133 CASH AT JANUARY 1 17,906 10,318 -------- -------- CASH AT JUNE 30 $ 12,362 $ 14,451 ======== ========
See notes to consolidated financial statements. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1996 (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 1996 presentation. NOTE B--LONG-TERM DEBT: Long-term debt consists of the following:
June 30 December 31 ------- ----------- 1996 1995 ---- ---- (In thousands) Senior debt: Revolving bank credit $135,000 $115,000 Notes payable 22,500 28,300 Senior notes 200,000 200,000 Revenue bonds 13,200 13,200 Other debt 8,999 10,331 -------- -------- 379,699 366,831 Subordinated debt: Senior subordinated notes -- 3,580 Convertible subordinated debentures 115,000 115,000 -------- -------- 115,000 118,580 -------- -------- Total long-term debt 494,699 485,411 Less current portion 1,050 5,790 -------- -------- $493,649 $479,621 ======== ========
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 June 30, 1996, assumes conversion of the Company's redeemable preferred stock and convertible subordinated debentures as well as the dilutive common equivalent shares applicable to the assumed exercise of stock options. Net earnings as adjusted for the elimination of preferred stock dividends and interest expense, net of applicable taxes, relative to the assumed conversion was $11,753,285 for the three month period. Fully diluted earnings per share for the six month period ended June 30, 1996 and the three and six month periods ended June 30, 1995 were the same as primary earnings per share. Average shares outstanding used in earnings per share computations were as follows:
Three Months Ended Six Months Ended ------------------ ---------------- June 30 June 30 ------- ------- 1996 1995 1996 1995 ---- ---- ---- ---- AVERAGE SHARES OUTSTANDING Primary 21,316 21,178 21,321 21,182 Fully Diluted 24,728 21,180 21,322 21,182
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS: The Company's operating performance in the second quarter of 1996 resulted in significantly higher operating income and net earnings compared to the second quarter of 1995, and compared to the weather-hampered results of the first quarter of 1996. Key factors contributing to the improved operating results include yield improvements, productivity gains, and solid shipment growth. Net earnings available to common shareholders for the second quarter of 1996 were $10.6 million, or $0.50 per share, compared to $2.2 million, or $0.10 per share, for the second quarter of 1995. Net earnings were $11.9 million, or $0.56 per share for the first six months of 1996, compared to $4.0 million, or $0.19 per share for the corresponding period in 1995. Earnings per share on a fully diluted basis for the second quarter of 1996 and 1995 were $0.48 and $0.10, respectively, and for the first six months of 1996 were $0.56 compared to $0.19 for the corresponding period in 1995. The following table sets forth selected shipment and revenue data for the periods indicated:
Three Months Ended Six Months Ended ------------------ ---------------- June 30 June 30 ------- ------- 1996 1995 1996 1995 ---- ---- ---- ---- Shipments (in thousands): Domestic Overnight Letters 9,620 9,017 19,147 18,147 0-2 Lbs. 14,173 12,208 28,003 24,221 3-99 Lbs. 12,312 10,509 24,629 20,981 ------ ------ ------- ------- 36,105 31,734 71,779 63,349 Select Delivery Service 0-2 Lbs. 17,751 14,558 34,941 28,461 3-99 Lbs. 9,352 8,143 18,859 15,819 ------ ------ ------- ------ 27,103 22,701 53,800 44,280 100 Lbs. & over 75 81 148 162 ------ ------ ------- ------- Total Domestic 63,283 54,516 125,727 107,791 ------ ------ ------- ------- International Express 1,129 1,013 2,187 1,949 All Other 150 142 296 272 ------ ------ ------- ------- Total International 1,279 1,155 2,483 2,221 ------ ------ ------- ------- Total Shipments 64,562 55,671 128,210 110,012 ====== ====== ======= ======= Average Pounds per Shipment: Domestic 4.5 4.5 4.5 4.5 International 57.2 62.5 57.8 65.0 Average Revenue per Pound: Domestic $1.82 $ 1.80 $1.81 $ 1.81 International $1.32 $ 1.30 $1.30 $ 1.26 Average Revenue per Shipment: Domestic $ 8.25 $ 8.27 $ 8.17 $ 8.28 International $76.89 $80.79 $76.57 $81.52
Total shipments increased 16.0% in the second quarter of 1996 compared to an increase of 20.0% in the second quarter of 1995. Domestic and international shipments increased 16.1% and 10.7%, respectively, during this period of 1996 compared to 20.0% and 17.7%, respectively, for the corresponding period of 1995. Domestic shipments increased 16.6% and international shipments increased 11.8% in the first half of 1996 compared to 20.1% and 17.1%, respectively, in the first half of 1995. The growth in domestic shipments has been aided by improved growth in the Company's overnight service product. For the first six months of 1996, overnight shipments increased 13.3% compared to an increase of 9.1% for the comparable period in 1995. Also, domestic shipment growth continued to be aided by solid growth in the deferred service product, which increased 21.5% in the first six months of 1996, accounting for 42.8% of total domestic shipments in the first half of 1996 compared to 41.1% for the same period in 1995. Domestic revenues increased 15.8% in the second quarter of 1996 and 15.1% for the first six months of 1996 compared to 11.0% and 11.2% for the comparable periods in 1995, respectively. The Company experienced a milestone during the second quarter of 1996 relative to domestic revenue growth that has not occurred in several years. The percentage growth in domestic revenue did not lag shipment growth, but was relatively equal to the percentage growth in domestic shipments. Also, the average revenue per domestic shipment increased during the second quarter of 1996 to $8.25, compared to $8.08 in the first quarter of 1996. These improved domestic revenue trends reflect the extra focus placed on enhancing yields. This focus began in the third quarter of 1995 and these efforts continue to be an ongoing focus of the Company. International shipments increased 10.7% and 11.8% in the second quarter and first six months of 1996, respectively, compared to 17.7% and 17.1% in the comparable periods of 1995. International revenues increased 5.4% in the second quarter of 1996 compared to 21.4% in 1995, and for the first half of 1996 and 1995 increased 5.0% and 23.5%, respectively. International revenue per shipment and the average weight per shipment decreased as a result of the lower unit growth in higher yielding freight shipments in the first half of 1996 compared to 1995. However, gross margins on international business improved 13.0% over the first half of 1995. Assuming the economy remains strong, the factors that contributed to the Company's growth and improved operating results during the second quarter, should have a positive effect through the balance of 1996. However, the overall growth in business during the last couple weeks of the second quarter and the first few weeks of the third quarter has not been as strong as expected. While this lower growth may not be indicative of a definitive trend, a continuing softness could negatively impact operating results in the last half of the year. Operating expenses as a percentage of revenues were 97.0% for the first six months of 1996 compared to 98.0% in the first six months of 1995 and 96.9% for all of 1995. Operating cost per shipment handled decreased 3.8% to $9.23 for the first six months 1996 compared to the first six months of 1995. The operating cost per shipment for the second quarter of 1996 decreased 3.9% to $9.24, compared to the second quarter of 1995. The Company experienced a 5.4% improvement in productivity for the second quarter of 1996, compared to the second quarter of 1995, as measured by shipments handled per paid employee hour while productivity improvement for the first half of the year was approximately 4.2% over the corresponding period of 1995. Operating expenses were negatively impacted during the first quarter of 1996 by severe winter weather conditions which diminished productivity improvements, added significantly to operating costs, and resulted in lost business. Comparisons of certain operating expense components are discussed below. Transportation purchased decreased as a percentage of revenues to 33.6% in the first six months of 1996 compared to 35.8% in 1995. This decrease was primarily due to two factors. Commercial airline costs were lower as a percentage of total revenues due to the lower growth in international freight shipments discussed above. Also, the suspension of the Federal Aviation Excise Tax on January 1, 1996 resulted in the avoidance of costs in the first half of 1996 of $11.0 million, compared to the first half of 1995 when approximately $10.4 million of costs related to this tax were incurred. Station and ground expense as a percentage of revenues was 31.6% in the first six months of 1996 compared to 31.2% in the first six months of 1995. This category of expense was negatively impacted by the weather during the first quarter of 1996. Flight operations and maintenance expense as a percentage of revenues during the first six months of 1996 was 15.4%, compared to 14.6% in the first six months of 1995. This category of cost was negatively impacted during the first half of 1996 by higher jet fuel costs. The average aviation fuel price for the first half of 1996 was $0.71 per gallon (including the $0.043 per gallon Federal Excise Tax implemented October 1, 1995) compared to $0.59 per gallon in the first half of 1995. Aviation fuel consumption increased to 79.3 million gallons in the first six months of 1996, a 16.8% increase compared to the first six months of 1995. The increase in fuel consumption is a result of additional Company operated aircraft placed in service since the first half in 1995 and the impact of the severe weather in 1996. The increased number of aircraft in service also accounted for a large portion of the increase in depreciation and amortization expense in the first half of 1996. General and administrative and sales and marketing expenses on a combined basis as a percentage of revenues in the first half of 1996 was 10.0% compared to 9.9% in the comparable period of 1995. Any inflationary pressure on costs has effectively been offset as the result of continuing productivity gains and a strong focus on all discretionary spending. Interest expense in the first half of 1996 was higher than the same period in 1995 due to higher average outstanding borrowings and to the lower level of capitalized interest in the 1996 period. The Company's effective tax rate was 40.0% in the first six months of 1996 compared to 43.4% in the first six months of 1995 and 39.9% for all of 1995. The higher effective tax rate for the first half of 1995 compared to 1996 was a result of certain taxes that are not directly related to the level of earnings, resulting in a higher rate in periods of lower earnings. LIQUIDITY AND CAPITAL RESOURCES: Capital expenditures and associated financing continued to be the primary factors affecting the financial condition of the Company. The Company anticipates total capital expenditures to approximate $210 - $220 million in 1996, of which a significant portion is related to the acquisition and modification of aircraft. During the first half of 1996, total capital expenditures net of dispositions were $86 million. The principal sources of liquidity for financing capital expenditures during the first half of 1996 were cash provided by operations and financing under the Company's bank lines of credit. The Company's $250 million unsecured revolving bank credit agreement has traditionally been used as a major source of liquidity for periods between other financing transactions. The Company also has available $65 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 June 30, 1996, a total of $157.5 million was outstanding under the revolving bank credit and money market credit lines. The Company amended its revolving bank credit agreement effective May 1, 1996, resulting in the agreement being effective for a five-year term through May 31, 2001. In management's opinion, the available capacity under the bank credit agreements coupled with internally generated cash flow from remaining 1996 operations and other sources of borrowing should provide adequate flexibility to finance anticipated capital expenditures for the balance of 1996. PART II. OTHER INFORMATION -------------------------- Item 5. Other Information. Mary Agnes Wilderotter, currently Executive Vice President, National Operations of AT&T Wireless Services (AWS) and Chief Executive Officer of AWS's Aviation Communications Division, was appointed to the Company's Board of Directors at the April 23, 1996 board meeting. Ms. Wilderotter will join the board on August 7, 1996. Item 6. Exhibits and Reports or Form 8-K. (a) Exhibits - EXHIBIT NO. 10 - Material Contracts 10(a) Airborne Freight Corporation Director Stock Bonus Plan dated April 23, 1996. 10(b) Second Amendment to Credit Agreement dated May 1, 1996 among the Company, as borrower, and Wachovia Bank of Georgia, N.A., as Agent, and Wachovia Bank of Georgia, N.A., ABN AMRO Bank N.V., United States National Bank of Oregon, Bank of America NW, N.A., CIBC, Inc., National City Bank, Columbus, as assignee of Continental Bank N.A., Bank of America National Trust and Savings Association, The Bank of New York and NBD Bank, N.A., as banks. EXHIBIT NO. 27 - Financial Data Schedule 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: 8/12/96 /s/Roy C. Liljebeck ------------------------- ------------------------- Roy C. Liljebeck Executive Vice President, Chief Financial Officer Date: 8/12/96 /s/Lanny H. Michael ------------------------- ------------------------- Lanny H. Michael Senior Vice President, Treasurer and Controller
EX-10 2 DIRECTOR STOCK BONUS PLAN Exhibit 10(a) AIRBORNE FREIGHT CORPORATION DIRECTOR STOCK BONUS PLAN AIRBORNE FREIGHT CORPORATION, a Delaware corporation (the "Company"), hereby establishes and sets forth the terms of the Airborne Freight Corporation Director Stock Bonus Plan (the "Plan"). 1. Purpose of Plan --------------- The purpose of the Plan is to enable the Company to attract and retain outside persons of the highest caliber to serve on the Board of Directors of the Company (the "Board"), as such persons can make important contributions to the success of the Company. The Plan will seek to achieve this purpose by means of automatic awards of Common Stock of the Company, $1.00 par value per share (the "Common Stock"). The Plan will be effective as of April 26, 1996 (the "Effective Date"). 2. Administration of the Plan -------------------------- The Plan shall be administered by the Board, except as provided in Section 8.2. Awards of Common Stock under the Plan shall be automatic as described in Section 4. However, the Board shall, subject to the provisions of the Plan, have the complete authority, in its sole and absolute discretion, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, and to make all of the determinations necessary or advisable for the administration of the Plan. All such interpretations, rules, regulations and determinations shall, in the absence of fraud or patent mistake, be conclusive and binding on all persons with any interest in the Plan. The Board shall have all powers necessary or appropriate to accomplish its duties under the Plan. 3. Eligibility to Participate -------------------------- Each individual who meets the following requirements on an Award Date (as defined in Section 4.1) shall be eligible to participate in the Plan (each such individual will be referred to as an "Eligible Director"): (a) The individual is a member of the Board; and (b) The individual was not an employee of or consultant to the Company or any of its direct or indirect subsidiaries at any time during the calendar year in which the Award Date falls or during the preceding calendar year. An Eligible Director will cease to be eligible for further participation in the Plan if he or she does not meet the foregoing eligibility requirements on any Award Date. Such cessation of participation shall not affect the Eligible Director's rights with respect to the shares of Common Stock that are carried in his or her Stock Account (as defined in Section 5.1). 4. Share Awards ------------ Effective on April 26, 1996, and effective on the third (3rd) business day after the date of the Company's annual meeting of shareholders in 1997 and in each succeeding year during which shares of Common Stock remain available under Section 9 (each such date will be referred to as an "Award Date"), the Company hereby awards, to each individual who is an Eligible Director on the Award Date, the number of shares of Common Stock (which number, if not a whole number, shall be rounded down to the nearest whole number) obtained by dividing (a) $3,000, by (b) the closing sales price of a share of Common Stock on the New York Stock Exchange on the Award Date (each such award to an Eligible Director will be referred to as a "Share Award"). If on any Award Date the number of shares of Common Stock available under Section 9 is insufficient to permit Share Awards covering the number of shares of Common Stock specified in the preceding sentence to be awarded to each Eligible Director, then each Eligible Director shall instead be granted a Share Award covering the largest whole number of shares of Common Stock as can then be awarded without exceeding the number of shares of Common Stock then available. All Share Awards shall occur automatically without further action of the Board. 5. Deferral of Issuance of Shares ------------------------------ Issuance of the shares of Common Stock under each Share Award shall be deferred as provided in this Section 5. 5.1. For each Eligible Director who has received a Share Award, the Company shall maintain an unfunded account (the "Stock Account") as follows: (a) The Stock Account shall be credited with the number of shares of Common Stock under each Share Award awarded to the Eligible Director. (b) Whenever cash dividends are declared on shares of Common Stock of the Company, a dividend equivalent shall be computed with respect to each Stock Account. The amount of the dividend equivalent shall be the product of (i) the number of shares of Common Stock in the Stock Account on the date as of which the Company determines the holders of record of its Common Stock who are entitled to receive the dividend, and (ii) the per share dividend amount. The dividend equivalent shall be deemed reinvested in additional shares of Common Stock by crediting to the Stock Account, effective on the date the cash dividend is paid, the number of shares of Common Stock (which number may be fractional) obtained by dividing (A) the amount of the dividend equivalent, by (B) the closing sales price of a share of Common Stock on the New York Stock Exchange on the dividend payment date. Dividend equivalents shall be credited and deemed reinvested under this Section 5.1(b) until all shares of Common Stock carried in the Stock Account have been issued to the Eligible Director or his or her estate. (c) The Stock Account shall be debited for any shares of Common Stock that are issued under Section 5.2 or Section 8. (d) The Stock Account shall be subject to any adjustment required or permitted pursuant to Section 8. 5.2. The shares of Common Stock carried in the Stock Account of an Eligible Director (the "Account Shares") shall be issued to the Eligible Director as provided in this Section 5.2. (a) All of the Account Shares of an Eligible Director shall be issued to the Eligible Director as soon as practicable after the end of the calendar year in which he or she ceases to be a director of the Company. (b) Notwithstanding the provisions of Section 5.2(a), if an Eligible Director ceases to be a director of the Company and becomes a proprietor, officer, partner or employee of, or otherwise becomes affiliated with, any business that is in competition with the Company or any of its direct or indirect subsidiaries, all of the Account Shares of the Eligible Director shall be issued to the Eligible Director as soon as practicable thereafter. (c) Notwithstanding the provisions of Section 5.2(a), if an Eligible Director should die prior to issuance of his or her Account Shares, they shall be issued to the Eligible Director's estate as soon as practicable thereafter. (d) Notwithstanding the provisions of Section 5.2(a), the Company shall have the right, exercisable at any time in its sole and absolute discretion, to immediately issue to an Eligible Director all of his or her Account Shares in full satisfaction of all obligations to the Eligible Director under the Plan, whether or not the Eligible Director has ceased to be a director of the Company. 5.3. No fractional shares of Common Stock shall be issued under the Plan. If a fractional share of Common Stock would be issuable under the Plan in the absence of the preceding sentence, the number of shares of Common Stock issuable to the person entitled thereto shall instead be rounded down to the nearest whole number. 6. Rights as Shareholder --------------------- An Eligible Director shall have no voting or other rights as a shareholder of the Company on account of shares of Common Stock for which no certificate has been issued, regardless of the fact that the shares may have been credited to his or her Stock Account or become issuable under the provisions of the Plan. Except as expressly provided in Section 5.1(b) and Section 8, no adjustment will be made for dividends on, or other property or rights distributed with respect to, the Common Stock. 7. Rights Nontransferable ---------------------- The rights of an Eligible Director under the Plan, including any rights with respect to any Stock Account maintained pursuant hereto, may not be transferred, assigned, pledged or hypothecated by the Eligible Director during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process, and any attempt so to do shall be void and of no effect. 8. Adjustments ----------- 8.1. If the outstanding shares of Common Stock of the Company are increased, decreased, changed into, or exchanged for a different number or kind of shares or securities of the Company through reorganization, merger, recapitalization, reclassification, stock split-up, or other material alteration in the capital structure of the Company, the Board shall make such adjustment to the Plan (which adjustment may include, but shall not necessarily be limited to, a change in the number of shares of Common Stock available under Section 9) and to the shares of Common Stock carried in the Stock Accounts at the time of the material alteration (which adjustment may include, but shall not necessarily be limited to, a change in the number of such shares or in the securities thereafter to be carried in the Stock Accounts) as the Board determines to be appropriate and equitable under the circumstances. If the Board determines that the nature of a material alteration in the capital structure of the Company is such that it is not feasible or advisable to make any such adjustment, such event shall be subject to Section 8.2. For purposes of this Section 8.1, neither (a) the issuance of additional shares of Common Stock or other securities of the Company in exchange for adequate consideration (including services), nor (b) the conversion into Common Stock of any securities of the Company now or hereafter outstanding, shall constitute a material alteration in the capital structure of the Company. 8.2. Upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, upon the acquisition by any person, partnership, or corporation of more than 25% of the outstanding shares of Common Stock, upon a sale of substantially all of the property of the Company, or upon a material change in the capital structure of the Company that is subject to this Section 8.2 in accordance with the last sentence of Section 8.1, a majority of the Continuing Directors of the Company (as the term "Continuing Director" is defined in Section 11.3(g) of the Restated Certificate of Incorporation of the Company, as amended) shall have the power to determine, in their sole discretion, upon the effective date of such event or within thirty (30) days thereafter, what effect, if any, such event shall have on the Plan and the shares of Common Stock carried in the Stock Accounts at the time of the event, including, but not limited to, the power to cause the Stock Accounts to be terminated and the shares of Common Stock carried in the Stock Accounts to be issued to the Eligible Directors for whom the Stock Accounts are then held. Upon the dissolution or liquidation of the Company, the Plan shall terminate, and all shares of Common Stock carried in the Stock Accounts shall, prior to any distribution of assets of the Company pursuant to the dissolution or liquidation, be issued to the Eligible Directors for whom the Stock Accounts are then held. 9. Term of the Plan ---------------- The Plan shall become effective on the Effective Date and, if not sooner terminated under Section 8.2, shall terminate at such time as all Account Shares of all Eligible Directors have been issued to the Eligible Directors or their estates in accordance with Section 5. 10. Shares Available for the Plan ----------------------------- The aggregate number of shares of Common Stock that may be issued under the Plan shall be twenty thousand (20,000). This number shall be subject to any adjustment required or permitted pursuant to Section 8. The Company's treasury stock shall be used for all issuances of shares of Common Stock issuable under the Plan. 11. Amendment --------- The Board may from time to time amend the Plan in any respect whatsoever, except that (a) without the consent of each Eligible Director affected thereby, no amendment shall materially alter or impair any rights of Eligible Directors under the Plan with respect to their respective Account Shares at the time of the amendment, and (b) regardless of whether the consent of Eligible Directors is obtained, the Plan may not be amended more than once every six (6) months to change the designation of the class of directors eligible to receive Share Awards, the timing of the Share Awards, or the number of shares of Common Stock to be covered by Share Awards (except as provided in Section 8), unless the purpose of such amendment or revision is to comport with changes in the Internal Revenue Code or the rules thereunder. 12. Governing Law ------------- The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Washington and construed accordingly. Adopted this 23rd day of April, 1996. AIRBORNE FREIGHT CORPORATION By /s/ Robert S. Cline ------------------------------------ Robert S. Cline Chairman and Chief Executive Officer EX-10 3 SECOND AMENDMENT TO CREDIT AGREEMENT Exhibit 10(b) SECOND AMENDMENT TO CREDIT AGREEMENT THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second Amendment") is dated as of the 1st day of May, 1996 among AIRBORNE FREIGHT CORPORATION (the "Borrower"), WACHOVIA BANK OF GEORGIA, N.A., as Agent (the "Agent") and WACHOVIA BANK OF GEORGIA, N.A., ABN AMRO BANK N.V., UNITED STATES NATIONAL BANK OF OREGON, BANK OF AMERICA NW, N.A., CIBC INC., NATIONAL CITY BANK, COLUMBUS (as assignee of Continental Bank N.A.), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE BANK OF NEW YORK and NBD BANK, N.A. (collectively, the "Banks"); W I T N E S S E T H : --------------------- WHEREAS, the Borrower, the Agent and the Banks are parties to that certain Credit Agreement, dated as of the 19th day of November, 1993 (as amended by the First Amendment dated as of March 31, 1995, the "Credit Agreement"); WHEREAS, the Borrower has requested and the Agent and the Banks have agreed to certain amendments to the Credit Agreement, subject to the terms and conditions hereof; NOW, THEREFORE, for and in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged by the parties hereto, the Borrower, the Agent and the Banks hereby covenant and agree as follows: 1. Definitions ----------- Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Credit Agreement shall from and after the date hereof refer to the Credit Agreement as amended hereby. 2. Amendments to Section 1.01 -------------------------- The following definitions contained in Section 1.01 of the Credit Agreement hereby are respectively amended in their entirety as set forth below: "Investment" means any investment in any Person, whether by means of purchase or acquisition of obligations or securities of such Person, capital contribution to such Person, loan or advance to such Person, making of a time deposit with such Person, Guarantee or assumption of any obligation of such Person or otherwise; provided, however, the term "Investment" shall not include any contributions to or any funds of non-qualified plans and trusts established by the Borrower. "Termination Date" means May 31, 2001. 3. Amendments to Section 2.05(c) ----------------------------- Section 2.05(c) of the Credit agreement is amended in its entirety as set forth below: (c) Notwithstanding the foregoing, the outstanding principal amount of the Loans, if any, together with all accrued but unpaid interest thereon, if any, shall be due and payable on the Termination Date. 4. Restatement of Representations and Warranties --------------------------------------------- The Borrower hereby restates an renews each and every representation and warranty heretofore made by it in the Credit agreement and other Loan Documents as fully as if made on the date hereof and with specific reference to this Second Amendment and all other loan documents executed and/or delivered in connection herewith. 5. Effect of Amendment ------------------- Except as set forth expressly hereinabove, all terms of the Credit Agreement and the other Loan Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding and enforceable obligations of the Borrower. The amendments contained herein shall be deemed to have prospective application only, unless otherwise specifically stated herein. 6. Ratification ------------ The Borrower hereby restates, ratifies and reaffirms each and every term, covenant and condition set forth in the Credit Agreement and the other Loan Documents effective as of the date hereof. 7. Counterparts ------------ This Second Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. 8. Section References ------------------ Section titles and references used in this Second Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby. 9. No Default ---------- To induce the Agent and the Banks to enter into this Second Amendment and to continue to make advances pursuant to the Credit Agreement, the Borrower hereby acknowledges and agrees that, as of the date hereof, and after giving effect to the terms hereof, there exists (i) no Default or Event of Default, and (ii) no right of offset, defense, counterclaim, claim or objection in favor of the Borrower arising out of or with respect to any of the Obligations. 10. Further Assurances ------------------ The Borrower agrees to take such further actions as the Agent shall reasonably request in connection herewith to evidence the amendments herein contained to the Borrower. 11. Governing Law ------------- This Second Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of Georgia. 12. Conditions Precedent -------------------- This Second Amendment shall become effective only upon: (i) execution and delivery of this Second Amendment by each of the parties hereto; (ii) execution and delivery of the Consent and Reaffirmation of Guarantors at the end hereof by each of the Guarantors; and (iii) receipt by the Agent of a certificate of incumbency of each of the Borrower and Guarantors, signed by the Secretary or an Assistant Secretary of the Borrower and the Guarantors, certifying as to the names, true signatures and incumbency of the officer or officers of the officer or officers of the Borrower authorized to execute and deliver this Second Amendment and certified copies of the following items for each of the Borrower and the Guarantors (or certificates with respect to items (i) and (ii) below that no changes have occurred thereto since the later to occur of such Person's incorporation, or March 31, 1995): (i) Certificates/Articles of Incorporation, (ii) Bylaws, (iii) a certificate of the Secretary of State of the state of its incorporation as to its good standing as a corporation in that state, and (iv) the action taken by the Board of Directors authorizing the execution, delivery and performance of this Second Amendment. IN WITNESS WHEREOF, the Borrower, the Agent and each of the Banks has caused this Second Amendment to be duly executed, under seal, by its duly authorized officer as of the day and year first above written. AIRBORNE FREIGHT CORPORATION, as Borrower (SEAL) By: /s/ Lanny H. Michael -------------------------- Title: Senior Vice President & Treasurer WACHOVIA BANK OF GEORGIA, N.A. as Agent and as a Bank (SEAL) By: /s/ John A. Whitner -------------------------- Title: Vice President ABN AMRO BANK N.V., as a Bank (SEAL) By: /s/ J.J. Rice -------------------------- Title: Vice President & Director By: /s/ Leif H. Olsson -------------------------- Title: Group Vice President & Director UNITED STATES NATIONAL BANK OF OREGON, as a Bank (SEAL) By: /s/ Matthew S. Thoreson -------------------------- Title: Vice President BANK OF AMERICA NW, N.A., as a Bank (SEAL) By: /s/ Stan Diddams -------------------------- Title: Vice President CIBC INC., as a Bank (SEAL) By: /s/ Dean J. Decker -------------------------- Title: Associate Director NATIONAL CITY BANK, COLUMBUS, as a Bank (SEAL) By: /s/ Jeffrey L. Hawthorne -------------------------- Title: Vice President & Regional Manager BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank (SEAL) By: /s/ Timothy C. Hintz -------------------------- Title: Managing Director THE BANK OF NEW YORK, as a Bank (SEAL) By: /s/ Robert Louk -------------------------- Title: Vice President NBD BANK, N.A., as a Bank (SEAL) By: /s/ Timothy P. O'Neil -------------------------- Title: Authorized Agent CONSENT AND REAFFIRMATION OF GUARANTORS Each of the undersigned (i) acknowledges receipt of the foregoing Second Amendment to Credit Agreement (the "Second Amendment"), (ii) consents to the execution and delivery of the Second Amendment by the parties thereto and (iii) respectively, reaffirms all of its obligations and covenants under the Guaranty Agreement of ABX Air, Inc. and Airborne Forwarding Corporation dated as of October 5, 1995, and agrees that none of such obligations and covenants shall be affected by the execution and delivery of the Second Amendment. This Consent and Reaffirmation may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. ABX AIR, INC. (SEAL) By: /s/ Carl Donaway -------------------------- Title: President & CEO AIRBORNE FORWARDING CORPORATION (SEAL) By: /s/ Lanny H. Michael -------------------------- Title: Treasurer AIRBORNE FTZ, INC. (SEAL) By: /s/ Carl Donaway -------------------------- Title: President WILMINGTON AIR PARK, INC. (SEAL) By: /s/ Carl Donaway -------------------------- Title: President EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 12,362 0 270,990 7,915 35,645 350,836 1,662,780 808,162 1,230,548 248,436 493,649 0 3,948 21,449 394,137 1,230,548 0 1,220,307 0 1,183,772 0 0 16,532 20,003 8,000 12,003 0 0 0 11,867 .56 .56
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