-----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, PGGS8/8e1Mv439FaFYg5Q+lmP9Xyp9ih7efZSS9UJFk0SrkqAPm5+xNuY7FTn4b9 F2s9wAa2vmHif2IqqJ6N6g== 0000700674-96-000007.txt : 19960515 0000700674-96-000007.hdr.sgml : 19960515 ACCESSION NUMBER: 0000700674-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIR EXPRESS INTERNATIONAL CORP /DE/ CENTRAL INDEX KEY: 0000700674 STANDARD INDUSTRIAL CLASSIFICATION: ARRANGEMENT OF TRANSPORTATION OF FREIGHT & CARGO [4731] IRS NUMBER: 362074327 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08306 FILM NUMBER: 96563472 BUSINESS ADDRESS: STREET 1: 120 TOKENEKE RD PO BOX 1231 CITY: DARIEN STATE: CT ZIP: 06820 BUSINESS PHONE: 2036557900 MAIL ADDRESS: STREET 1: 120 TOKENEKE RD STREET 2: P O BOX 1231 CITY: DARIEN STATE: CT ZIP: 06820 10-Q 1 1ST QUARTER 1996-10-Q 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, 1996 Commission file number: 1-8306 AIR EXPRESS INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 36-2074327 (State or Other of Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 120 Tokeneke Road, Darien, Connecticut 06820 (203) 655-7900 (Address of, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) NONE 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 Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 3 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date (applicable only to corporate registrants). The number of shares of common stock outstanding as of May 10, 1996 was 19,360,094 (Net of 25,807 Treasury Shares). AIR EXPRESS INTERNATIONAL CORPORATION March 1996 Form 10-Q Quarterly Report Table of Contents Part I - Financial Information Page Item 1. Financial Statements Condensed Consolidated Balance Sheets as at March 31, 1996 and December 31, 1995............................ 2 Condensed Consolidated Statements of Operations - three months ended March 31, 1996 and 1995...................... 3 Consolidated Statements of Cash Flows - three months ended March 31, 1996 and 1995...................... 4 Notes to Condensed Consolidated Financial Statements...................................................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................ 7 Part II - Other Information Item 1. Legal Proceedings................................................. 9 Item 6. Exhibits and Reports on Form 8-K.................................. 9 Page 2
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) Mar 31, 1996 Dec 31, 1995 (Unaudited) Assets Current Assets: Cash and cash equivalents .........................$ 49,869 $ 54,463 Accounts receivable, (less allowance for doubtful accounts of $4,719 and $4,695) .......... 267,092 268,289 Other current assets .............................. 4,347 4,754 Total current assets ....................... 321,308 327,506 Investment in unconsolidated affiliates .............. 13,470 13,228 Property, plant and equipment (less accumulated depreciation and amortization of $45,726 and $43,242) ...................................... 53,936 54,149 Deposits and other assets ............................ 12,664 12,999 Goodwill (less accumulated amortization of $8,755 and $8,269) ............................ 79,547 78,961 Total assets ...............................$ 480,925 $ 486,843 Liabilities and stockholders' investment Current Liabilities: Current portion of long-term debt .................$ 2,965 $ 2,690 Bank overdrafts payable ........................... 683 620 Transportation payables ........................... 132,832 149,536 Accounts payable .................................. 46,303 41,625 Accrued liabilities ............................... 47,054 45,556 Income taxes payable .............................. 10,705 10,581 Total current liabilities .................. 240,542 250,608 Long-term debt .................................... 82,826 82,762 Other liabilities ................................. 5,915 5,907 Total liabilities .......................... 329,283 339,277 Stockholders' Investment: Capital stock- Preferred (authorized 1,000,000 shares, none outstanding) ................................ -- -- Common, $.01 par value (authorized 40,000,000 shares, issued 18,608,012 and 18,577,880 shares) . 186 186 Capital surplus ................................... 60,596 60,164 Cumulative translation adjustments ................ (14,098) (12,539) Retained earnings ................................. 105,589 100,372 152,273 148,183 Less: 25,807 and 25,279 shares of treasury stock, at cost .................................... (631) (617) Total stockholders' investment .................... 151,642 147,566 Total liabilities and stockholders' investment ....$ 480,925 $ 486,843
The accompanying notes are an integral part of these financial statements. Page 3
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Three Months Ended March 31, 1996 1995 Revenues $ 294,787 $ 279,962 Operating expenses: Transportation 201,645 199,148 Terminal 52,662 43,627 Selling, general and administrative 29,812 28,602 Operating profit 10,668 8,585 Other income (expense): Interest expense, net (987) (667) Other, net 396 386 (591) (281) Income before provision for income taxes 10,077 8,304 Provision for income taxes 3,930 3,191 Net income $ 6,147 $ 5,113 Income per common share: Primary $ .33 $ .29 Fully diluted $ .31 $ .28 Weighted average number of common shares (000's): Primary 18,863 17,833 Fully diluted 22,239 21,204
The accompanying notes are an integral part of these financial statements. Page 4
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED March 31, 1996 AND 1995 (Dollars in thousands) 1996 1995 Cash flows from operating activities: Net income ............................................. $ 6,147 $ 5,113 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ...................... 2,229 1,641 Amortization of goodwill ........................... 547 419 Amortization of bond discount ...................... 57 57 Deferred income taxes .............................. 647 30 Undistributed (earnings) losses of affiliates ...... (565) 4 (Gains) on sales of assets, net ..................... (23) (69) Changes in assets and liabilities, net of business acquisitions: Decrease in accounts receivable, net ............... 11,265 3,909 (Increase) in other current assets .................. (729) (611) (Increase) decrease in other assets ................. (288) 465 (Decrease) in transportation payables ............... (16,408) (6,256) (Decrease) increase in accounts payable ............. (4,863) 695 Increase (decrease) in accrued liabilities ......... 598 (3,704) Increase in income taxes payable ................... 613 582 Increase (decrease) in other liabilities ........... 6 (117) Total adjustments ............................. (6,914) (2,955) Net cash (used) provided by operating activities ... (767) 2,158 Cash flows from investing activities: Business acquisitions, net of cash acquired ............ (1,259) 22 Gains (losses) from hedging activities ................. 170 (522) Proceeds from sales of assets .......................... 89 167 Capital expenditures ................................... (2,009) (6,850) Investment in unconsolidated affiliates ................ -- (196) Net cash used in investing activities .............. (3,009) (7,379) Cash flows from financing activities: Net borrowings (repayments) in bank overdrafts payable . 81 (340) Additions to long-term debt ............................ -- 3,119 Payment of long-term debt .............................. (214) (610) Issuance of common stock ............................... 432 434 Payment of cash dividends .............................. (929) (698) Purchase of treasury stock ............................. (14) (73) Net cash (used) provided by financing activities ... (644) 1,832 Effect of foreign currency exchange rates on cash .......... (174) 605 Net (decrease) in cash and cash equivalents ................ (4,594) (2,784) Cash and cash equivalents at beginning of period ........... 54,463 44,168 Cash and cash equivalents at end of period ................. $ 49,869 $ 41,384
The accompanying notes are an integral part of these financial statements. Page 5 AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A. The consolidated balance sheet at March 31, 1996, the consolidated statements of operations for the three-month periods ended March 31, 1996 and 1995, and the consolidated statements of cash flows for the three-month periods ended March 31, 1996 and 1995 have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods have been made. Certain items in the March 31, 1995 financial statements have been reclassified to conform to the classification of March 31, 1996. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report to stockholders for the year ended December 31, 1995. The results of operations for the period ended March 31, 1996 are not necessarily indicative of the results of operations expected for the full year ending December 31, 1996. B. Investments in equity affiliates are recorded using the equity method. Consolidated net income reflects joint venture profit of $565,000 for the quarter ended March 31, 1996, compared with a profit of $124,000 for the quarter ended March 31, 1995. C. Interest expense, net is as follows:
Three Months Ended March 31, 1996 1995 Interest expense ............................. $(1,509) $(1,450) Interest income .............................. 522 783 Interest expense, net ........................ $ (987) $ (667)
Page 6 D. Other income (expense) is as follows:
Three Months Ended March 31, 1996 1995 Foreign exchange gains, net .............. $373 $317 Other, net ............................... 23 69 $396 $386
E. Statement of cash flows - interest and income taxes paid:
Three Months Ended March 31, 1996 1995 Interest ................................. $2,384 $2,437 Income Taxes ............................. 2,523 2,856 $4,907 $5,293
Page 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth the gross revenues and net revenues (gross revenues minus transportation expenses) for each of the Company's three service categories: airfreight forwarding, ocean freight forwarding and customs brokerage and other services, as well as the Company's internal operating expenses (terminal, selling, general and administrative expenses) and operating profit:
Three Months Ended March 31, 1996 1995 ($ in millions) Gross Revenues: Airfreight ........................................... $232.8 $229.7 Ocean Freight ........................................ 40.2 33.7 Customs Brokerage and Other .......................... 21.8 16.6 Total Gross Revenues ............................... $294.8 $280.0 Net Revenues: Airfreight ........................................... $ 63.2 $ 56.1 Ocean Freight ........................................ 10.3 8.3 Customs Brokerage and Other .......................... 19.6 16.4 Total Net Revenues ................................. $ 93.1 $ 80.8 Internal Operating Expenses: Terminal ............................................. $ 52.7 $ 43.6 Selling, general and administrative .................................. 29.7 28.6 Total Internal Operating Expenses .................. $ 82.4 $ 72.2 Operating Profit ....................................... $ 10.7 $ 8.6
Gross revenues for the first quarter of 1996 increased $14.8 million (5.3%) over the first quarter of 1995. The increase was composed of a $3.1 million (1.3%) increase in airfreight revenues, a $6.5 million (19.3%) increase in ocean freight revenues, and a $5.2 million (31.3%) increase in customs brokerage and other revenues. Additionally, included in the increase in gross revenues was the negative effect of approximately $2.5 million resulting from a stronger U.S. dollar when converting foreign currency revenues into U.S. dollars for financial reporting purposes. Net revenues (gross revenues minus transportation expenses) increased $12.3 million (15.2%) over the comparable 1995 period. Reflected in this increase was a $7.1 million (12.7%) increase in airfreight net revenues, a $2.0 million (24.1%) increase in ocean freight net revenues, and a $3.2 million (19.5%) increase in customs brokerage and other net revenues. The increases in gross and net revenues from airfreight services were attributable to an increase of 4.2% in the number of shipments and an increase of 1.0% in the total weight of cargo shipped. Despite the marginal increase in airfreight gross revenues, lower transportation costs, mainly due to reduced airline rates in certain markets, resulted in the 12.7% increase in airfreight net revenues. The increases in gross and net revenues from ocean freight services were attributable to greater shipping volumes from existing customers and to the inclusion of business from acquisitions made subsequent to the first quarter of 1995. The increases in gross and net revenues from customs brokerage and other services were primarily due to the acquisition of Radix in June 1995. Page 8 The Company's internal operating expenses (terminal, selling, general and administrative expenses) increased $10.2 (14.1%) over the first quarter of 1995. The increase was primarily attributable to the additional expenses incurred in connection with greater shipping volumes and to the additional expenses of companies acquired subsequent to the first quarter of 1995. As a percentage of gross revenues, internal operating expenses increased to 28.0% for the first quarter of 1996 compared to 25.8% for the first quarter of 1995. The increase was mainly attributable to acquisitions which the Company made subsequent to the first quarter of 1995. However, due to a slowdown in economic activity in Europe, the Company has experienced a weakening in its airfreight shipping volumes (over prior year comparable periods) which resulted in approximately zero growth since the third quarter of 1995. The Company has implemented operating cost reductions in certain European countries to minimize the impact of the weaker shipping volumes. These cost reductions implemented in Europe have resulted in first quarter 1996 internal operating expenses declining approximately $3.0 million or 3.5% from the fourth quarter of 1995. Operating profit for the first quarter of 1996 increased $2.1 million (24.4%) over the first quarter of 1995. The increase reflects increases in operating profit in the Company's U.S. and Far East operations offset by a $.4 million decrease in its European operations. Interest expense, net was approximately $.3 million higher for the first quarter of 1996 compared to the first quarter of 1995. The increase resulted from lower interest income due to a reduction in the amount of funds the Company had invested during the quarter and a reduction in the interest rate earned on those funds. The effective income tax rate for the first quarter of 1996 was 39.0% compared to 38.4% for the first quarter of 1995. The .6% increase in the effective rate was primarily due to losses in countries where no tax credit is available and an increase in the amount of nondeductible expenses. Liquidity and Capital Resources At March 31, 1996, the Company's working capital increased approximately $3.9 million to $80.8 million from $76.9 million at December 31, 1995. The increase was mainly attributable to the increase in profits. Capital expenditures decreased $4.9 million from $6.9 million in the first quarter of 1995 to $2.0 million in the first quarter of 1996. The decrease was primarily due to expenditures incurred during the first quarter of 1995 for the Company's new warehouse and distribution facility in Singapore which was completed during the third quarter of 1995. The $2.0 million for capital expenditures was primarily for facility improvements and management information systems. At March 31, 1996, various of the Company's foreign subsidiaries maintained overdraft facilities with foreign banks, aggregating approximately $14.1 million, of which approximately $.6 million was outstanding. In April 1996, the Company signed a commitment letter for a syndicated unsecured revolving credit facility for approximately $75.0 million and anticipates securing this facility during the second quarter of 1996. Page 9 Management believes that the Company's available cash and sources of credit, together with expected future sources of credit and cash generated from operations, will be sufficient to satisfy its anticipated needs for working capital, capital expenditures and dividends. PART II - OTHER INFORMATION Item 1. - Legal Proceedings The Company believes that there are no legal proceedings, other than ordinary routine litigation incidental to the business of the Company, to which the Company or any of its subsidiaries is a party. Management is of the opinion that the ultimate outcome of existing legal proceedings, if adverse, would not have a material effect on the Company's consolidated financial position. Item 6. - Exhibits and Reports on Form 8-K a) Exhibits: Exhibit 11 - Computation of Earnings Per Common Share. Exhibit 27 - Financial Data Schedule. b) Reports on Form 8-K: None. Page 10 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. Air Express International Corporation (Registrant) Date: May 14, 1996 /s/ Dennis M. Dolan Dennis M. Dolan Vice President and Chief Financial Officer (Principal Financial Officer) Date: May 14, 1996 /s/ Walter L. McMaster Walter L. McMaster Vice President - Controller (Principal Accounting Officer) EX-11 2 COMPUTE EARNINGS PER COMMON SHARE
Exhibit 11 AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited) (In thousands, except per share amounts) Three Months Ended March 31, 1996 1995 Primary: Net income applicable to common shares ................................... $ 6,147 $ 5,113 Weighted average of common shares outstanding .............................. 18,564 17,458 Common share equivalents .......................... 299 375 Average common shares outstanding ................. 18,863 17,833 Earnings per common share ......................... $ .33 $ .29 Fully diluted: Weighted average of common shares outstanding ............................... 18,564 17,458 Common share equivalents .......................... 384 455 Common shares issuable upon assumed conversion of subordinated debentures ............ 3,291 3,291 Average common shares outstanding ................. 22,239 21,204 Earnings per common share ......................... $ .31 $ .28 Primary earnings per share is computed by dividing net income by the weighted average common and common share equivalents outstanding during the period. For the quarters ended March 31, 1996 and 1995, fully diluted earnings per share is calculated assuming the conversion of the subordinated debentures and the elimination of the associated interest expense, net of tax, of approximately $.73 million.
EX-27 3
5 1000 3-MOS DEC-31-1996 MAR-31-1996 49,869 0 271,811 4,719 0 321,308 99,662 45,726 480,925 240,542 82,826 186 0 0 166,185 480,925 0 294,787 0 201,645 52,662 290 1,509 10,077 3,930 6,147 0 0 0 6,147 .33 .31
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