8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 9, 2007

ABX AIR, INC.

(Exact name of registrant as specified in its charter)

DE	0-50368	91-1091619
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer I.D. No.)

145 Hunter Drive, Wilmington, OH 45177

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (937) 382-5591

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 4.02 Non-Reliance on Previously Issued Financial Statement or a Related Audit Report or Completed Interim Review

(a) On August 9, 2007, the management of ABX Air, Inc. (the “Company”) concluded and the Audit Committee of the Board of Directors approved that the previously filed consolidated financial statements contained in Forms 10-Q for the three month periods ended March 31, 2006, June 30, 2006, September 30, 2006 and March 31, 2007 and the Form 10-K for the year ended December 31, 2006 (collectively the “2006 and 2007 Reports”), as well as the related report of the Company’s independent registered public accounting firm, should no longer be relied upon.

During the preparation of the Company’s quarterly report on Form 10-Q for the three months ended June 30, 2007, the management of the Company determined that the 2006 and 2007 Reports did not appropriately classify cash payments for capital expenditures as investing activities in the consolidated statements of cash flows. Specifically, certain capital expenditures were incorrectly classified as cash used for operating activities. This misclassification resulted in an understatement of cash provided by operating activities and an equal understatement of cash used in investing activities for all aforementioned periods. As a result, management concluded that the Consolidated Statements of Cash Flows and discussion of cash flows in Management’s Discussion and Analysis of Financial Condition and Results of Operations reported in the Company’s 2006 and 2007 Reports should be restated in order to correct the errors. Management of the Company is currently reassessing the effectiveness of the Company’s design and operation of the disclosure controls and procedures for the periods reported in the 2006 and 2007 Reports.

As a result of the restatement, the Company expects that cash provided from operating activities will increase $33.5 million, while cash used for capital expenditures will increase by an equal amount for the three month period ended March 31, 2007. For the year ended December 31, 2006 and for the three, six and nine month quarter-end periods of 2006, the Company expects that the restatement will increase cash provided from operating activities by $10.6 million, while cash used for capital expenditures will increase by the same amount.

The Company will file an amended Form 10-Q for the three months ended March 31, 2007, amended Form 10-K for the fiscal year ended December 31, 2006, and other Form 10-Q’s as required, as soon as reasonably practicable to include the restated cash flow statements and any other required disclosure. The Company will also correct June 30, 2006 and September 30, 2006 consolidated statements of cash flows when it files its Forms 10-Q for the second and third quarters of 2007.

The restatements discussed above will not change our previously reported consolidated balance sheets or statements of earnings, including net income, earnings per share or stockholders’ equity, for all aforementioned periods.

Management and the Audit Committee discussed these matters with the Company’s independent registered public accounting firm, Deloitte & Touche LLP.

Item 2.02 Results of Operations and Financial Condition

On August 9, 2007, ABX Air, Inc. issued a press release relating to its results for the quarter ended June 30, 2007. A copy of the press release is attached as Exhibit 99.1.

This information, including the exhibits attached hereto, shall not be deemed “filed” for purposes of section 18 of the Securities Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information shall not be deemed to be incorporated by reference in any filing under the securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific references to this Form 8-K in such a filing.

Item 9.01 Financial Statement and Exhibits

(d) The following exhibit is being furnished as part of this Form 8-K:

Exhibit 99.1 Press release issued by ABX Air, Inc. on August 9, 2007, relating to its results for the three and six month periods ended June 30, 2007.

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.

ABX AIR, INC.
By:	/s/ W. Joseph Payne
	W. Joseph Payne
	Vice President, General Counsel and Secretary

Date: August 9, 2007

EX-99.1

Exhibit 99.1

ABX AIR, INC. REPORTS SECOND QUARTER FINANCIAL RESULTS

Continues to Achieve Strong Business Momentum in its Global Air Charter Business; Expands its Fleet of Boeing 767 Freighters

WILMINGTON, Ohio - August 9, 2007 - ABX Air, Inc. (NASDAQ:ABXA) today reported solid financial results compared with the second quarter of 2006, as pre-tax earnings from its rapidly growing, higher-margin air charter business more than offset reductions in pre-tax earnings from its commercial agreements with DHL.

For the second quarter, ABX Air’s results included:

• $4.5 million, or $0.08 per diluted share, in net earnings, which included $2.8 million in deferred (non-cash) income tax expense. That compares with $6.5 million, or $0.11 per diluted share, in net income for the same period last year, when no income tax expense was recorded. In 2006, income tax expense was offset by reductions in the tax valuation allowance.

• A 13% increase in pre-tax earnings to $7.3 million from $6.5 million, as pre-tax earnings more than doubled from ABX Air’s operations outside its commercial agreements with DHL.

• Revenues of $281.3 million, down 7.3% from a year ago, as revenues from operations related to the DHL agreements declined 12.2%. Prior-year second quarter revenues included a $17.5 million reimbursement from DHL for line-haul management services, which did not recur in 2007. Second quarter revenues from business unrelated to DHL reached $22.4 million, an increase of 156.8%.

“These results validate our strategy of expanding our diversified, technically oriented, and higher margin growth businesses,” President and CEO Joe Hete said. “While our two commercial agreements with DHL remain a key component of our business and generate significant earnings and cash flow, we are focused on accelerating the strong momentum we have achieved in other businesses, principally the global air charter services provided by our expanding fleet of reliable, fuel-efficient Boeing 767 freighters. At the same time, we have continued to provide extremely reliable air service in the DHL network, with aircraft mechanical dispatch reliability again exceeding 99%.”

ABX Air’s second quarter revenues from DHL declined compared with the prior year period. In addition to the $17.5 million reduction in line-haul management revenues, DHL’s mid-2006 consolidation of its air network has reduced the number of ABX Air aircraft and crews dedicated to DHL service.

At the same time, ABX Air’s revenues from sources outside its principal DHL agreements have expanded rapidly, offsetting a portion of the DHL decline. Revenues in the second quarter from those businesses were $22.4 million, generating pre-tax earnings of $3.3 million, a 15% margin. The principal driver of these results was the deployment of additional Boeing 767 freighter aircraft to service other global customers, including All Nippon Airways Co. (ANA). ABX Air’s unique, two-year agreement to dedicate two of its 767s in support of ANA’s Asian cargo network began in mid-May.

First-half pre-tax earnings were $14.2 million, compared with $14.6 million for the first half of 2006. In 2006, management of DHL’s line-haul operations added $1.3 million in first-half pre-tax earnings on revenues of $82.8 million, prior to the transfer of those operations to DHL in May 2006.

For the first six months of 2007, ABX Air’s net earnings were $8.8 million, or $0.15 per diluted share, on revenues of $569.4 million, compared with net earnings of $14.6 million, or $0.25 per diluted share, on revenues of $672.7 million, in the prior year period. Deferred (non-cash) income tax expense, which ABX Air began recognizing in the first quarter of 2007, represented $5.4 million, or 94% of the $5.7 million decline in first-half net earnings compared with the first half of 2006.

“ABX Air continues to deliver the highest quality air service to DHL,” said Hete. “We continue to adjust staffing levels to match package volumes. Our management of the majority of DHL’s U.S. package delivery network remains a top priority. We understand that cost control is extremely important to DHL, but it must be achieved without compromising DHL’s goal of being the premier package delivery provider in the United States.”

Results from Operations Other than DHL Commercial Agreements

Charter revenues grew during the second quarter of 2007 to $14.2 million, compared with $5.4 million in the second quarter of 2006. During the quarter, ABX Air operated seven Boeing 767 freighter aircraft dedicated to serving customers outside of the DHL agreements. Charter pre-tax earnings of $2.2 million for the second quarter of 2007 increased from $0.7 million during the second quarter of 2006 due to the increase in the number of aircraft in service. The additional aircraft increased the number of revenue-generating block hours by 157% from the second quarter a year ago. During the second quarter of 2006, ABX operated two Boeing 767 freighter aircraft outside of the DHL commercial agreements.

ABX Air’s revenues from non-DHL businesses other than charter grew 148.0% to $8.3 million in the second quarter of 2007, and earnings from those operations increased 52.3% to $1.1 million. This growth was driven by two additional US Postal sort centers that ABX Air began operating in September 2006 and an increase in contract maintenance services for other aircraft operators.

In July, ABX added two more 767 freighters to the seven it operated at the end of the second quarter of 2007. By year-end, twelve 767s will be in charter service for customers throughout the world, with two more scheduled for 2008.

Net interest income declined to $0.6 million from $1.4 million as ABX Air recognized interest expense from financing a portion of its 767 fleet additions.

“Growth in our non-DHL business continues to exceed our projections,” said Hete. “With pre-tax operating margins of 15% and year-over-year revenue growth of more than 150% for the quarter, we believe these businesses are poised to continue their rapid growth and deliver strong profitability for the foreseeable future. Our positive outlook stems from the Boeing 767-200 freighters we are adding to our fleet and strong customer demand. These aircraft are very fuel efficient as compared with comparable sized freighters and have advanced avionics, which enable them to fly in low visibility conditions. These factors, coupled with cargo load flexibility, demonstrate why demand for such aircraft and their lift capacity continues to be at a premium within the sector. There is a scarcity of such aircraft in the secondary market, and prices for them are much greater than the average cost of those already in ABX Air’s fleet. In May, we announced that two 767s have been allocated to All Nippon Airways for service in Asia. We expect to grow that relationship with ANA later this year, while increasing utilization of the remaining fleet as we serve several other customers and expand our other, non-charter businesses.”

Results Associated with the DHL Agreements

ABX Air has two commercial agreements with DHL: an aircraft, crew, maintenance and insurance agreement (“ACMI agreement”), and a hub services agreement (“Hub Services agreement”). Under each agreement, ABX Air earns a base mark-up of 1.75% on eligible costs and can earn incremental mark-ups for meeting certain quarterly cost-related goals, plus annual cost and service-related goals.

ABX Air’s pre-tax earnings from its two commercial agreements with DHL were $3.4 million during the second quarter of 2007 on revenues of $258.9 million. The 2007 results included $2.9 million in base mark-up earnings, and $0.5 million from incremental, cost-related mark-up. All of the second-quarter incremental mark-up was earned under the ACMI agreement and represented approximately 84% of the incremental mark-up potential under that agreement.

During the second quarter of 2006, ABX Air’s earnings from its two commercial agreements with DHL were $3.6 million, on revenues of $294.8 million, which included $2.9 million in earnings from base mark-up. All of the $0.7 million in incremental, cost-related markup was earned under the ACMI agreement, and represented approximately 100% of the potential mark-up under that agreement.

Outlook

“For the remainder of 2007, we expect continued rapid growth in our non-DHL revenue and earnings, with second-half revenues in our ACMI/charter segment that are more than double our first-half revenues of $21.2 million,” stated Hete. “This progress reflects the five additional 767 freighters we will have deployed in that segment during the second half, as well as the impact of our 767 service to ANA that began in mid-May. In 2008, when we expect all of the additional 767s to be in service, we anticipate continued strong growth in our non-DHL air cargo revenues. At the same time, we expect continued margin improvement in our other business units, including our management of sorting facilities for the U.S. Postal Service.”

Form 8-K and Notice of Late Filing

Separately, the Company is filing a Form 8-K with the Securities and Exchange Commission related to an anticipated restatement of its financial statements for 2006 and the first quarter of 2007. As described in the 8-K, the Company determined that its 2006 and 2007 reports did not appropriately classify cash payments for certain capital expenditures as investing activities, but instead classified them as cash used for operating activities.

The restatements and reclassifications will not change previously reported balance sheets or statements of operations, including net income, earnings per share, or stockholder’s equity. The Company is also filing a Notice of Late Filing instead of its Form 10-Q for the second quarter of 2007. The Company anticipates filing the second quarter 2007 10-Q, along with amended filings for each of its financial statements dating back to the first quarter of 2006 as soon as reasonably practicable.

ABX Air is a cargo airline that operates out of Wilmington, Ohio, and 16 hubs throughout the United States. In addition to providing airlift capacity and sort facility staffing to DHL, ABX Air provides charter, maintenance and package handling services to a diverse group of customers. ABX Air is the largest employer in a several-county area in southwestern Ohio.

Conference Call

ABX Air will host a conference call to review its financial results for the second quarter of 2007 on August 10, 2007, at 10 AM Eastern Daylight Time. Participants should dial (866) 578-5801 and international participants should dial (617) 213-8058 ten minutes before the scheduled start of the call and ask for conference ID #79937489. The call will also be webcast live (listen-only mode) via either www.abxair.com/ir or www.earnings.com for individual investors and www.streetevents.com for institutional investors. A replay of the conference call will be available an hour after the conclusion of the call. It will be available by phone through August 15, 2007 at (888) 286-8010 (international callers (617) 801-6888); use pass code ID #71754268. The webcast replay will remain available via www.abxair.com/ir or www.earnings.com for 30 days.

Except for historical information contained herein, the matters discussed in this release contain forward-looking statements that involve risks and uncertainties. ABX Air, Inc.’s actual results may differ materially from the results discussed in the forward-looking statements. There are a number of important factors that could cause the Company’s actual results to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, reductions in the scope of services, and maintaining cost and service level performance, under the commercial agreements with DHL, the timely modification and deployment of incremental aircraft into revenue service, the ability to generate revenues from sources other than DHL, an allocation of overhead to ABX Air’s non-DHL business operations and other factors that are contained from time to time in ABX Air’s filings with the U.S. Securities and Exchange Commission, including ABX Air’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should carefully review this release and should not place undue reliance on the Company’s forward-looking statements. These forward-looking statements were based on information, plans and estimates as of the date of this release. ABX Air undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

ABX AIR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

	Three Months Ended June 30						Six Months Ended June 30
	2007			2006			2007			2006
REVENUES	$	281,297		$	303,578		$	569,359		$	672,743
OPERATING EXPENSES:
Salaries, wages and benefits		151,114			152,592			309,039			317,357
Fuel		61,398			69,714			120,351			131,052
Maintenance, materials and repairs		22,673			23,211			45,545			55,849
Depreciation and amortization		12,837			11,350			24,780			22,353
Landing and ramp		4,377			4,516			14,178			12,122
Rent		2,195			2,280			4,713			4,710
Purchased line-haul and yard management		1,546			18,955			3,217			84,449
Other		15,640			12,910			29,232			27,019
		271,780			295,528			551,055			654,911
		9,517			8,050			18,304			17,832
INTEREST EXPENSE, NET OF INTEREST INCOME		(2,212	)		(1,591	)		(4,117	)		(3,280	)
INCOME BEFORE INCOME TAXES		7,305			6,459			14,187			14,552
INCOME TAXES		(2,760	)		—			(5,375	)		—
NET EARNINGS	$	4,545		$	6,459		$	8,812		$	14,552
EARNINGS PER SHARE:
Basic earnings per share	$	0.08		$	0.11		$	0.15		$	0.25
Diluted earnings per share	$	0.08		$	0.11		$	0.15		$	0.25
WEIGHTED AVERAGE SHARES:
Basic		58,282			58,270			58,282			58,270
Diluted		58,635			58,567			58,612			58,481

ABX AIR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 30, 2007		December 31, 2006
ASSETS:
Cash	$	38,684	$	63,219
Marketable securities		20,450		15,374
Accounts receivable, net		12,543		10,365
Deferred income taxes		14,691		14,691
Other current assets		20,671		22,521
Total Current Assets		107,039		126,170
Other assets		14,377		7,966
Deferred income taxes		78,082		87,024
Property and equipment, net		507,923		458,638
Total Assets	$	707,421	$	679,798
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current Liabilities	$	129,812	$	144,278
Post-retirement liabilities		224,943		222,587
Other long-term obligations		219,888		192,723
Stockholders’ Equity		132,778		120,210
Total Liabilities and Stockholders’ Equity	$	707,421	$	679,798

ABX AIR, INC.

PRE-TAX EARNINGS SUMMARY

(In thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2007		2006		2007		2006
REVENUES
DHL
ACMI
Base mark-up	$	109,800	$	114,938	$	225,887	$	243,083
Incremental mark-up		489		683		1,137		1,431
Total ACMI		110,289		115,621		227,024		244,514
Hub Services
Base mark-up		77,428		81,081		158,694		229,564
Incremental mark-up		—		—		—		792
Total Hub Services		77,428		81,081		158,694		230,356
Other Reimbursable		71,163		98,147		146,115		180,791
Total DHL Contracts		258,880		294,849		531,833		655,661
Charters		14,162		5,401		21,207		9,251
Other Activities		8,255		3,328		16,319		7,831
Total Revenues	$	281,297	$	303,578	$	569,359	$	672,743
EXPENSES
DHL
ACMI	$	108,133	$	113,163	$	222,432	$	239,217
Hub services		76,178		79,898		156,066		226,761
Other Reimbursable		71,163		98,147		146,115		180,791
Total DHL		255,474		291,208		524,613		646,769
Charters		11,947		4,697		18,002		8,305
Other Activities		7,143		2,598		14,095		5,801
Total Expenses	$	274,564	$	298,503	$	556,710	$	660,875
PRE-TAX EARNINGS
DHL	$	3,406	$	3,641	$	7,220	$	8,892
Charters		2,215		704		3,205		946
Other Activities		1,112		730		2,224		2,030
Interest Income and Other		572		1,384		1,538		2,684
Total Pre-tax Earnings	$	7,305	$	6,459	$	14,187	$	14,552

The Company does not allocate overhead costs that are reimbursed by DHL to its non-DHL activities. The provisions of the commercial agreements with DHL do not require an allocation of overhead until such time as ABX derives more than 10% of its total revenue from non-DHL business activities.