As filed with the Securities and Exchange Commission on May 13, 2002
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 1995
REGISTRATION NO. 33-61329
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AIRBORNE, FREIGHT CORPORATION
(ExactINC.
(Exact name of Registrantregistrant as specified in its charter)
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Delaware 91-0837469
(State
(State or Other Jurisdiction of Incorporation) (I.R.S.
Incorporation or Organization)
91-2065027
(I.R.S. Employer Identification Number)
No.)
3101 Western Avenue
Post Office
P.O. Box 662
Seattle, Washington 98111
(206) 285-4600
(Address,
(Address, including zip code, and telephone number,
including area code, of registrant'sregistrant’s principal executive offices)
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(Address, including zip code, and telephone number, including area code, of
registrant's executive offices)
(Address, including zip code, and telephone number, including area code, of
registrant's executive offices)
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ROY C. LILJEBECK
SEE TABLE OF ADDITIONAL REGISTRANTS
Lanny H. Michael
Executive Vice President and Chief Financial Officer
AIRBORNE FREIGHT CORPORATION
Airborne, Inc.
3101 Western Avenue
Post Office
P.O. Box 662
Seattle, Washington 98111
(206) 285-4600
(Name,
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies
with copies to:
J. VERNON WILLIAMS
Frank C. Woodruff, Esq.
Riddell Williams, Bullitt & Walkinshaw
Suite 4400, P.S.
1001 Fourth Avenue Plaza, Suite 4500
Seattle, Washington 98154
(206) 624-3600
ROBERT M. THOMAS, JR.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
(212) 558-4000
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Approximate date of commencement of proposed sale to the public: From time to timeAs soon as practicable after the effective date of this Registration Statement as
determined by market conditions.
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registration statement
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: / /
box. ¨
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: /X/
box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
¨
If this formForm is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registrationregistrations statement number of the earlier effective registration statement for the same offering. / /
¨
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / /
¨
CALCULATION OF REGISTRATION FEE
Title Of Each Class of Securities To Be Registered | Amount To Be Registered | Proposed Maximum Aggregate Price Per Unit (1) | Proposed Maximum Aggregate Offering Price | Amount Of Registration Fee | ||||
| 5.75% Convertible Senior Notes Due April 1, 2007 | $150,000,000 | 115.875% | $173,812,500 | $15,991 | ||||
| Common Stock, par value $1.00 per share | (2) | — | — | — (2) | ||||
| Guarantees of Guarantor Subsidiaries (3) |
| (1) | Estimated solely for the purpose of |
| (2) | Includes such indeterminate number of shares of common stock as shall be issuable upon conversion of the 5.75% Convertible Senior Notes due April 1, 2007 being registered hereunder. Each note may be converted into common stock, initially at the conversion rate of 42.7599 shares per each $1,000 principal amount of notes (equal to a conversion price of approximately $23.39 per share), subject to adjustments. The initial number of shares of common stock issuable upon conversion of the notes is 6,413,985. Pursuant to Rule 416 there are also registered hereby the shares of common stock or other securities that may be issuable upon conversion of the notes as a result of a stock split, stock dividend, recapitalization or similar event. Pursuant to Rule 457(i), there is no additional filing fee required with respect to these securities because no additional consideration will be received in connection with the exercise of the conversion privilege. |
| (3) | Each of the following wholly owned direct and indirect domestic operating subsidiaries of Airborne, Inc. has fully and unconditionally guaranteed all payments of principal and interest on the notes: Airborne Express, Inc., ABX Air, Inc., Sky Courier, Inc., Wilmington Air Park, Inc., Airborne FTZ, Inc., Aviation Fuel, Inc. and Sound Suppression, Inc. Pursuant to Rule 457(n), there is no additional filing fee required with respect to these guarantees. |
The registrantsregistrant hereby amendamends this registration statement on such date or dates as may be necessary to delay its effective date until the registrantsregistrant shall file a further amendment whichthat specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION
TABLE OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 1995
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1995
[LOGO] $100,000,000
AIRBORNE FREIGHT CORPORATION
% NOTES DUE , 2005
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Interest onADDITIONAL REGISTRANTS
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER | STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION | I.R.S. EMPLOYER IDENTIFICATION NUMBER | ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT’S PRINCIPAL EXECUTIVE OFFICES | |||
| Airborne Express, Inc. | Delaware | 91-0837469 | 3101 Western Avenue P.O. Box 662 Seattle, Washington 98111 (206) 285-4600 | |||
| ABX Air, Inc. | Delaware | 91-1091619 | 145 Hunter Drive Wilmington, Ohio 45177 (937) 382-5591 | |||
| Sky Courier, Inc. | Delaware | 91-0894946 | 21240 Ridge Top Circle, Suite 160 Sterling, Virginia 20166 (703) 433-2800 | |||
| Wilmington Air Park, Inc. | Ohio | 34-1261776 | 145 Hunter Drive Wilmington, Ohio 45177 (937) 382-5591 | |||
| Airborne FTZ, Inc. | Ohio | 34-1375411 | 145 Hunter Drive Wilmington, Ohio 45177 (937) 382-5591 | |||
| Aviation Fuel, Inc. | Ohio | 31-1139601 | 145 Hunter Drive Wilmington, Ohio 45177 (937) 382-5591 | |||
| Sound Suppression, Inc. | Ohio | 31-1140852 | 145 Hunter Drive Wilmington, Ohio 45177 (937) 382-5591 |
The information in this prospectus is not complete and may be changed. The selling security holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion. Dated May 13, 2002.
PROSPECTUS
 | AIRBORNE, INC. |
$150,000,000 Principal Amount of
5.75% Convertible Senior Notes is payable onDue April 1, 2007
and
Shares of Common Stock Issuable Upon Conversion of the Notes
We issued these notes in a private placement in March 2002. This prospectus will be used by selling security holders to resell their notes and the common stock issuable upon conversion of each year,
commencing , 1995. The Notes are not redeemabletheir notes at market prices prevailing at the optiontime of sale, fixed or varying prices determined at the Company and are not entitledtime of sale, or at negotiated prices. The selling security holders may sell the notes or the common stock directly to a sinking fund. The Notes will be issued onlypurchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of Global Securities registereddiscounts or commissions. We will not receive any proceeds from this offering.
The notes will mature on April 1, 2007. You may convert the notes into shares of Airborne’s common stock at any time before their maturity unless Airborne has previously redeemed or repurchased them. The conversion rate is 42.7599 shares per each $1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to a conversion price of approximately $23.39 per share. On May 8, 2002 the name of The Depository Trust
Company or its nominee. Settlementlast reported sale price for the Notescommon stock of Airborne on the New York Stock Exchange was $21.19 per share. The common stock is listed under the symbol “ABF”.
Airborne will pay interest on the notes on April 1 and October 1 of each year. The first interest payment will be made on October 1, 2002. The notes are senior, unsecured obligations of Airborne, Inc. and rank equally in immediately
available funds.right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The Notes will trade in the Depositary's Same-Day Funds
Settlement System until maturity,notes are unconditionally guaranteed by our wholly owned direct and secondary market trading activity in the
Notes will therefore settle in immediately available funds. See "Description of
the Notes."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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(1) Plus accrued interest, if any, from indirect domestic operating subsidiaries, Airborne Express, Inc., 1995.
(2) The Company, ABX Air, Inc., Airborne Forwarding Corporation, Airborne FTZ,Sky Courier, Inc. and, Wilmington Air Park, Inc., Airborne FTZ, Inc., Aviation Fuel, Inc. and Sound Suppression, Inc. The notes are issued only in book-entry form in denominations of $1,000 and integral multiples of $1,000.
On or after April 1, 2005 Airborne has the option to redeem all or a portion of the notes that have agreednot been previously converted at the redemption prices set forth in this prospectus. You have the option, subject to indemnifycertain conditions, to require Airborne to repurchase any notes held by you in the Underwriters
againstevent of a “change in control”, as described in this prospectus, at a price equal to 100% of the principal amount of the notes plus accrued interest to the date of repurchase. The repurchase price is payable in cash or, at Airborne’s option, and subject to certain liabilities, including liabilities underconditions, in shares of common stock.
We have not applied for listing of the notes on any securities exchange or for quotation through any automated quotation system. The notes are eligible for trading on The PortalSM Market of the National Association of Securities Dealers, Inc.
Investing in the securities offered hereby involves risks that are described in the “Risk Factors” section beginning on page 4 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
This prospectus is dated , 2002.
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You should rely only on the information contained in or incorporated by reference in this prospectus. Airborne has not authorized anyone to provide you with different information. You should not assume that the information in this document is accurate as of any date other than that on the front page of this prospectus. We are not making an offer of these securities in any state where the offer is not permitted.
This prospectus includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of 1933.
(3) Before deducting estimated expensesthe Exchange Act. All statements contained in this prospectus other than statements of $239,983 payablehistorical fact are “forward-looking statements” for purposes of these provisions, including any statements of the plans and objectives for future operations and any statement of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the Company.
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use of terminology such as “may”, “will”, “expects”, “plans”, “anticipates”, “estimates”, “potential” or “continue”, or the negative thereof or other comparable terminology. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure investors that our assumptions and expectations will prove to have been correct. Actual results could differ materially from our forward-looking statements. Important factors that could cause our actual results to differ from our expectations are disclosed under “Risk Factors” and elsewhere in this prospectus. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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The Notes are offered severallyfollowing summary highlights some information from this prospectus and is qualified in its entirety by the Underwriters, as specified herein,
subject to receipt and acceptance by them and subject to their right to reject
any ordermore detailed information appearing elsewhere in whole or in part. It is expected thatthis prospectus. Prospective investors should consider carefully the Notes will be ready for
delivery in book-entry form only through the facilities of The Depository Trust
Company in New York, New York,information set forth beginning on or about , 1995 against payment
therefor in immediately available funds.
GOLDMAN, SACHS & CO. BA SECURITIES, INC.
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The datepage 4 of this Prospectus Supplementprospectus under the heading “Risk Factors”. Unless the context otherwise requires, the terms “we”, “us”, “our” and “Airborne” refer to Airborne, Inc., a Delaware corporation.
Airborne, Inc.
We are a leading provider of time definite small package delivery, freight forwarding and logistics services. Our strategy is to provide business customers with competitively priced time definite delivery services by maintaining a low cost structure while remaining flexible and responsive to customer needs. Using our trade name “Airborne Express”, 1995.
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THE COMPANY
Airborne Express provideswe provide door-to-door express and deferred delivery of small packages and documents throughout the United States and to and from most foreign countries. The CompanyWe also actsact as an international and domestic freight forwarder for shipments of any size. A majority of the Company's domestic
shipments are transported on its own airline and owned or contracted ground
transportation vehicles through its Company-owned airport and central sorting
facility in Wilmington, Ohio or one of ten regional hubs. The Company's
principal operating strategy is to be the low cost provider of expressOur services for high volume corporate customers.
USE OF PROCEEDS
The net proceeds to the Company from the sale of Notes offered hereby,
after deducting the underwriting discount and offering expenses, are estimated
to be $99.1 million and will be applied to reduce indebtedness outstanding under
the Company's revolving bank credit agreement and money market lines of credit.
Such indebtedness was incurred primarily to finance capital expenditures. As of
June 30, 1995, the balance owed under the revolving bank credit agreement and
money market lines of credit was $220.6 million. Amounts outstanding under the
money market lines of credit are generally due in less than 30 days and are
frequently repaid through borrowing under the revolving bank credit agreement,
or reborrowing under the money market lines of credit. Borrowings under the
revolving bank credit agreement are due May 31, 1998, unless extended as
provided in such agreement. Outstanding borrowings under the revolving bank
credit agreement and money market lines of credit bear interest at variable
rates (a weighted average of 6.332% at June 30, 1995).
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1995, and as adjusted to reflect the issuance of the Notes offered hereby
and the application of the net proceeds therefrom after deducting estimated
offering expenses and an assumed underwriting discount.
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SELECTED CONSOLIDATED FINANCIAL DATA
The Selected Consolidated Financial Data below should be read in
conjunction with the more detailed information appearing in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 and Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995, and other documents
available as described under "Incorporation of Certain Documents by Reference"
in the Prospectus. The Selected Consolidated Financial Data for each of the five
years ended December 31, 1994, except for the ratio of earnings to fixed
charges, have been derived from audited financial statements certain ofincludeOvernight Express, which are incorporated by reference herein. The Selected Consolidated Financial Data
for the six-month periods ended June 30, 1994 and June 30, 1995 are derived from
unaudited financial statements and, in the opinion of management, include all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the data for such periods.
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(1) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings before income taxes plus fixed charges excluding
capitalized interest. Fixed charges consist of interest expense, including
capitalized interest, and the estimated interest expense component of rental
expense.
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RECENT DEVELOPMENTS
Net earnings available to common shareholders for the second quarter of
1995 were $2.2 million, or $.10 per share, compared to $13.0 million, or $.61
per share, for the corresponding period in 1994. Total revenues for the second
quarter of 1995 were $545.9 million, an increase of 13% over 1994 second quarter
revenues of $484.5 million. Domestic revenues for the second quarter of 1995
increased 11% to $452.6 million, from 1994 second quarter revenues of $407.7
million, while international revenues increased 21% to $93.3 million compared to
1994 second quarter revenues of $76.9 million.
Net earnings for the first six months of 1995 were $4.0 million, or $.19
per share, compared to $19.4 million, or $.93 per share, for the corresponding
period in 1994. Total revenues increased 13% to $1,075.9 million for the first
six months of 1995 compared to the corresponding period in 1994. Domestic
revenues were $894.8 million for the first six months of 1995, an 11% increase
over the corresponding period in 1994, while international revenues increased
24% to $181.0 million for the first six months of 1995.
Earnings per share on a fully diluted basis for the second quarter of 1995
and 1994 were $.10 and $.57, respectively, and for the first six months of 1995
were $.19 compared to $.89 for the corresponding period in 1994.
Total shipments for the second quarter of 1995 increased 20% to 55.7
million as compared to the second quarter of 1994. During this period domestic
shipments increased 20% to 54.5 million, and international shipments increased
18% to 1.2 million. For the first six months of 1995 total shipments were 110.0
million, 20% higher than in the corresponding period in 1994. Domestic shipments
increased 20% to 107.8 million, while international shipments increased 17% to
2.2 million, compared to shipments in the first six months of 1994.
During the second quarter of 1995, the Company experienced similar
pressures on the average weight and revenue per domestic shipment as were
experienced in the first quarter of 1995, although the downward trend stabilized
during the second quarter. The average weight per domestic shipment was 4.5
pounds per shipment in both the second quarter and first quarter of 1995. The
average revenue per domestic shipment in the second quarter was $8.27 compared
to $8.29 in the first quarter of 1995. The average weight per domestic shipment
decreased 6.2% and the average revenue per domestic shipment decreased 8.0% in
the second quarter of 1995 corresponding to the same period in 1994.
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BUSINESS
Airborne Express provides door-to-door express delivery of small packages
and documents through-out the United States and to and from most foreign
countries. The Company also acts as an international and domestic freight
forwarder for shipments of any size. The Company's strategy is to be the low
cost provider of express services for high volume corporate customers.
DOMESTIC OPERATIONS
The Company's domestic operations, supported by over 250 facilities,
primarily involve express door-to-door delivery of small packages and documents
weighing less than 100 pounds. Shipments consist primarily of business documents
and other printed matter, electronic and computer parts, machine parts, health
care items, films and videotapes, and other items for which speed and
reliability of delivery are important.
The Company's primary service is its overnight express product. This
product, which comprised approximately 59% of the Company's domestic shipments
during the first six months of 1995, generally provides for before noon delivery on the next business day to most major metropolitan cities in the United States.
The Company also provides Saturday States,Next Afternoon Serviceand holiday pickup and deliverySecond Day Service, lower-priced alternatives to our Overnight Express service, for
most cities.
The Company offers a deferred service product, Select Delivery Service(TM)
("SDS")airborne@home, which provides for next afternoon or second day delivery. SDSserves the residential delivery needs of e-commerce and catalog businesses,Ground Delivery Service, a door-to-door, one to six-day ground transit service, generally provides for shipments weighing five pounds or less to be delivered on
a next afternoon basis with shipments weighing more than five pounds being
delivered on a second day basis. SDS shipments comprised approximately 41% of
total domestic shipments during the first six months of 1995. SDS shipments are
generally lower priced than the overnight express product reflecting the less
time sensitive nature of the shipments, but are also less capital intensive to
service than overnight express shipments due to reduced service requirements.
While the Company's domestic airline system is designed primarily to handle
express shipments, any available capacity is also utilized to carry shipmentsandInternational Services, which the Company would normally move on other carriers in its role as an air
freight forwarder.
Pickup and Delivery. The Company accomplishes its door-to-door pickup and
delivery service using approximately 11,900 radio dispatched delivery vans and
trucks, of which about 4,400 are operated by the Company. Independent
contractors under contract with the Company provide the balance of the pickup
and delivery services.
The Company's facilities are linked to FOCUS, a proprietary freight
tracking and message computer system which permits monitoring of overall system
performance and allows the Company and customers to ascertain the status of any
specific shipment. FOCUS receives information using several methods including
the use, by drivers, of hand-held scanners which read bar-coded information on
shipping documents. FOCUS provides many major customers direct access to the
status of their shipments 24 hours a day through the use of their own computer
systems.
Because convenience is an important factor in attracting business from less
frequent shippers, the Company has an ongoing program to place drop boxes in
convenient locations. The Company has approximately 9,000 boxes in service.
Sort Facilities. The majority of overnight express deliveries are routed
through the Company's main sort center located in Wilmington, Ohio. As express
delivery volume has increased, the main sort center has been expanded. The sort
center currently has the capacity to handle approximately 830,000 pieces during
the primary 2 1/2 hour nightly sort operation. In 1995, the Company plans to
expand the nightly sort capacity to handle 865,000 pieces. On average,
approximately 727,000 pieces were sorted each weekday night at the sorting
center during the second quarter of 1995. In addition to the sort facilities,
the Wilmington hub consists of a Company-owned airport which includes
maintenance, storage, training and refueling facilities; and operations and
administrative offices.
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The Company also conducts a daylight sort operation at Wilmington. The day
sort services SDS shipments weighing in excess of five pounds that are
consolidated at certain regional hub facilities and either flown or trucked into
or out of Wilmington.
The operation of the Wilmington facility is critical to the Company's
business. The inability to use the Wilmington airport, because of bad weather or
other factors, would have a serious adverse effect on the Company's service.
However, contingency plans, including landing at nearby airports and
transporting packages to and from the sort center by truck, can be implemented
to address temporary inaccessibility of the Wilmington airport.
In addition to the main sort facility at Wilmington, ten regional hub
facilities have been established primarily to sort shipments originating and
having a destination within approximately a 300 mile radius of a regional hub.
In the second quarter of 1995, approximately 61% and 16% of total shipment
weight was handled through the night sort and day sort operations at Wilmington,
respectively, with the remaining 23% being handled exclusively within the
regional hubs.
Shipment Routing. The logistical means of moving a shipment from its origin
to destination are determined by several factors. Shipments are routed
differently depending on shipment product type, weight, geographic distances
between origin and destination, and locations of Company stations relative to
the locations of sort facilities. Shipments generally are moved between stations
and sort facilities on either Company aircraft or contracted trucks. Certain
shipments are transported airport-to-airport on commercial air carriers.
Overnight express shipments and SDS shipments weighing five pounds or less
are picked up by local stations and generally consolidated with other stations'
shipments at Company airport facilities. Shipments that are not serviced through
regional hubs are loaded on Company aircraft departing each week-day evening
from various points within the United States and Canada. These aircraft may stop
at other airports to permit additional locations and feeder aircraft to
consolidate their cargo onto the larger aircraft before completing the flight to
the Wilmington hub. The aircraft are scheduled to arrive at Wilmington between
approximately 11:30 p.m. and 3:00 a.m., at which time shipments are sorted and
reloaded. The aircraft are scheduled to depart before 6:00 a.m. and return to
their respective destinations in time to complete scheduled next business
morning or next afternoon service commitments. The Wilmington hub also receives
shipments via truck from selected stations in the vicinity of Wilmington for
integration with the nightly sort process.
For the daylight sort operation, generally five aircraft return to
Wilmington from overnight service destinations on Tuesday through Thursday.
These aircraft, and trucks from six regional hubs, arrive at Wilmington between
10:00 a.m. and noon, at which time shipments are sorted and reloaded on the
aircraft or trucks by 3:00 p.m. for departure and return to their respective
destinations.
The Company also performs weekend sort operations at Wilmington to
accommodate Saturday pickups and Monday deliveries of both overnight express and
SDS shipments. This sort is supported by eleven Company aircraft and by
contracted trucks.
The Company believes its existing facilities and capacity are adequate to
meet its current needs.
Aircraft. The Company acquires and utilizes used aircraft manufactured in
the late 1960s and early 1970s. Upon acquisition, the aircraft are substantially
modified by the Company. At June 30, 1995, the Company's in-service fleet
consisted of a total of 101 aircraft, including 31 DC-8s (consisting of 11
series 61, 6 series 62 and 14 series 63), 59 DC-9s (consisting of 2 series 10,
40 series 30 and 17 series 40), and 11 YS-11 turboprop aircraft. The Company
owns the majority of the aircraft it operates, but has completed sale-leaseback
transactions with respect to six DC-8 and six DC-9 aircraft. In addition,
approximately 65 smaller aircraft are chartered nightly to connect small cities
with Company aircraft that then operate to and from Wilmington.
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At June 30, 1995, the nightly lift capacity of the system was about 3.2
million pounds versus approximately 3.1 million pounds and 2.8 million pounds at
years ended 1994 and 1993, respectively. Over the past several years the
Company's utilization of available lift capacity has exceeded 80%.
INTERNATIONAL OPERATIONS
The Company provides international express door-to-door delivery and a variety of freight services. These services are provided
We had total revenues of $3.21 billion and a net loss of $19.5 million in most foreign
countries on an inbound2001. Our total shipment volume was 329.2 million in 2001. We rank third in shipment volume behind Federal Express Corporation, or FedEx, and outbound basis through a network of Airborne offices
and independent agents. Most international deliveries are accomplished within 24
to 96 hours of pickup.
The Company's domestic stations are staffed and equipped to handle
international shipments toUnited Parcel Service, Inc., or from almost anywhereUPS, in the world. domestic air express business.
On March 25, 2002, we consummated the sale to the initial purchasers of $150,000,000 aggregate principal amount of the notes described in this prospectus. The net proceeds to us from that sale were approximately $144.7 million, after deducting commissions and offering expenses.
Our principal executive offices are located at 3101 Western Avenue, Seattle, Washington 98111. Our telephone number is 206-285-4600. Our web site is atwww.airborne.com.
The Offering
| Securities offered | $150,000,000 aggregate principal amount of 5.75% Convertible Senior Notes due April 1, 2007, and the shares of common stock issuable upon conversion of the notes. |
| Interest | 5.75% per annum. We will pay interest on the notes semi-annually on April 1 and October 1 of each year, commencing October 1, 2002. |
| Conversion | You may convert the notes into shares of our common stock at a conversion rate of 42.7599 shares of common stock per each $1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to a conversion price of approximately $23.39 per share. The conversion rate is subject to adjustment in certain events. The notes will be convertible at any time before the close of business on April 1, 2007, unless we have previously redeemed or repurchased the notes. Holders of notes called for redemption or submitted for repurchase will be entitled to convert the notes up to the close of business on the business day immediately preceding the date fixed for redemption or repurchase, as the case may be. |
| Ranking | The notes are senior, unsecured obligations of Airborne, Inc. and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The indenture under which the notes were issued does not restrict the incurrence of senior or other indebtedness or other liabilities by us or any of our subsidiaries. |
| Guarantees | The notes are unconditionally guaranteed by our wholly owned direct and indirect domestic operating subsidiaries, Airborne Express, Inc., ABX Air, Inc., Sky Courier, Inc., Wilmington Air Park, Inc., Airborne FTZ, Inc., Aviation Fuel, Inc. and Sound Suppression, Inc., which we refer to as the “guarantor subsidiaries”. |
| Global note: Book-entry system | The notes are issued only in fully registered form without interest coupons and in minimum denominations of $1,000. The notes are evidenced by a global note deposited with the trustee for the notes, as custodian for The Depository Trust Company, or DTC. Beneficial interests in the global note will be shown on, and transfers of those beneficial interests can only be made through, records maintained by DTC and its participants. |
| Optional redemption by Airborne | We may redeem the notes, at our option, in whole or in part, on or after April 1, 2005, at the redemption prices set forth in this prospectus plus accrued and unpaid interest to the redemption date. |
| Repurchase at option of holders upon a change in control | If a “change in control”, as defined in the indenture under which the notes were issued, occurs, you will have the right, subject to certain conditions and restrictions, to require us to repurchase your notes, in whole or in part, at 100% of their principal amount, plus accrued but unpaid interest to, but excluding, the repurchase date. The repurchase price is payable in cash or, at our option, and subject to certain conditions, in shares of common stock. |
| Use of proceeds | We will not receive any of the proceeds from the sale by any selling security holder of the notes or the common stock issuable upon conversion of the notes. |
| Risk factors | You should read the “Risk Factors” section, beginning on page 4 of this prospectus, so that you understand the risks associated with an investment in the notes. |
| Ratio of earnings to fixed charges | See “Ratio of Earnings to Fixed Charges” on page 11 of this prospectus. |
In addition to its extensive domestic network, the Company operates its own officesother information contained in this prospectus, you should carefully consider the following risk factors in evaluating an investment in our notes or our common stock. The trading price of our notes or our common stock could decline due to any of these risks, and you may lose all or part of your investment.
Risks Related to Airborne
The current economic recession may continue to adversely affect our business and results of operations.
Businesses are the primary customers for our various services, and our success is therefore highly dependent on the level of business activity and overall economic conditions in the Far
East, Australia, New Zealand,markets in which we operate. Our business and results of operations have been adversely affected by the recession in the United States and elsewhere, and we expect that our business and results of operations will continue to be adversely affected as a result of the recession. We cannot predict when or the extent to which economic growth will resume in the future.
The terrorist attacks of September 11, 2001, and the United Kingdom. The Company's freightresulting government responses may continue to harm our business, reduce our revenues and express agents worldwide are connected to FOCUS, Airborne's on-line
communication network. The Company is capable of providing its customers with
immediate access to the status of shipments via FOCUS almost anywhere in the
world.
The Company's international air express service is intended for the
movement of non-dutiable and certain dutiable shipments weighing less than 99
pounds. The Company's international air freight service handles heavier weight
shipments on either an airport-to-airport, door-to-airport or door-to-door
basis. In 1994, the Company began offering ocean service capabilities for
customers who want a lower cost shipping option.
The Company's strategy is to use a variable-cost approach in delivering and
expanding international services to its customers. This strategy uses existing
commercial airline lift capacity in connection with the Company's domestic
network to move shipments to overseas destinations. Additionally, exclusive
service arrangements with independent freight and express agents have been
entered into to accommodate shipments in locations not currently served by
Company-owned operations. The Company believes there are no significant service
advantages which would justify the operation of its own aircraft on
international routes, or making significant investment in additional offshore
facilities or ground operations. increase our costs.
As a result of the Company's abilityterrorist acts of September 11, 2001, we experienced significant flight disruption costs due to provide
competitive international delivery service is dependent uponthe FAA’s temporary grounding of all U.S. air traffic, increased security and other costs and reduced capacity utilization. Further terrorist attacks involving aircraft, or the threat of such attacks, could result in another grounding of our fleet, and would likely result in additional reductions in capacity utilization, along with increased security and other costs. In addition, terrorist attacks not involving aircraft, or the general increase in hostilities relating to reprisals against terrorist organizations or otherwise, could adversely affect our business.
We expect that the general increase in hostilities relating to reprisals against terrorist organizations and the continued availabilitythreat of further terrorist attacks may continue to negatively impact our revenues and costcosts in the near and mid-term.
The extent of other airlines' freight services. In orderthe impact that the terrorist attacks and their aftermath will have on our operations, and the sufficiency of our financial resources to expand
itsabsorb this impact, may depend on a number of factors, including:
| • | the magnitude and duration of the adverse impact of the terrorist attacks on the economy in general and business activity in particular; |
| • | the higher costs associated with potential new airline security directives and any other increased regulation of air carriers; |
| • | the higher costs of insurance coverage for future claims caused by acts of war, terrorism, sabotage, hijacking and other similar perils, and the extent to which such insurance will continue to be available; |
| • | our ability to raise additional financing; |
| • | the price and availability of jet and motor fuel, and the availability to us of fuel hedges in light of current industry conditions; |
| • | the number of pilots who may be called for duty in the reserve forces of the armed services and the resulting impact on our ability to operate as planned; |
| • | any resulting declines in the values of the aircraft in our fleet; |
| • | the extent of the benefits received by us under the Air Transportation Safety and System Stabilization Act; and |
| • | the scope and nature of any future terrorist attacks and resulting government responses. |
If we are unable to compete successfully, our business at a reasonable cost, the Company continues to explore possible
joint venture agreements which combine the Company's management expertise,
domestic express system and information systems with local business knowledge
and market reputation of suitable partners.
COMPETITION
will be materially harmed.
The market for the Company'sour services has been and is expected to remain highly competitive. The principal competitive factors in both domestic and
international markets are price, the ability to provide reliable pickup and
delivery, and value-added services.
Federal Express Corporation continues to be theFedEx is our dominant competitor in the domestic air express business, followed by United Parcel Service. The Company
currently ranksUPS. We rank third in shipment volume behind these two companies in the domestic air express business. Other domestic air express competitors include the U.S. Postal Service'sService’s Express and Priority Mail ServiceServices and several other transportation companies offering next morning or next-plane-out delivery service. The CompanyWe also competes to some extentcompete with companies offering domestic ground transportation services, including UPS and FedEx, and with facsimile and other forms of electronic transmission. In the international markets, in addition to Federal ExpressFedEx and United
Parcel Service, the Company competesUPS, we compete with DHL Worldwide Express, TNT and otherExpress, air freight forwarders orand carriers and most commercial airlines. S-8
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EMPLOYEES
AsWe have significantly less capital resources than our two primary competitors. If we are unable to compete successfully with these competitors, our business and results of June 30, 1995,operations will be adversely affected.
If our new Ground Delivery Service is not successful, we may lose customers and our results of operations may suffer.
In 2001, we undertook a number of initiatives targeted to improve revenue growth and profitability. These included introduction of our new Ground Delivery Service, a new pricing structure for our domestic services, e-commerce and marketing alliances and an expansion of our sales force. Our new Ground Delivery Service is intended to provide product parity with our competitors and enable us to offer our customers both air and ground services utilizing a bundled marketing approach. Our revenue growth depends in part on the Companysuccess of our new Ground Delivery Service as well as on our success in increasing our customers’ use of our higher-margin products. If we do not effectively implement and its subsidiaries had approximately
11,200 full-timeexecute these and other appropriate initiatives, our business and results of operations will suffer.
Strikes, work stoppages and slowdowns by our employees can negatively affect our results of operations.
Our business depends to a significant degree on our ability to avoid strikes and 7,300 part-timeother work stoppages and casualslowdowns by our employees. Approximately 5,100 full-time employees (including the Company's 600 pilots) and
3,100 part-time and casual employees are employed under union contracts,
primarily with locals of theThe International Brotherhood of Teamsters and Warehousemen. Most laborother unions represent about 7,500, including our 800 pilots, or about one-half, of our full-time employees, and 2,500, or about one-third, of our part-time and casual employees. Collective bargaining agreements covering the Company'smost of our union ground personnel were renegotiated in 1994 or 1995 for four-year terms expiring in 1998 or 1999. The
Company's1999 and expire in either 2003 or 2004.
Our pilots are covered by a contract whichthat became amendable on July 31, 1995. Negotiations2001. This contract is governed by the Railway Labor Act, which provides that an amendable contract continues in effect upon the expiration of its stated term while the parties negotiate a new contract. We are ongoingin the mediation phase
of negotiations with the International Brotherhood of Teamsters. Because the terms of new labor agreements will be determined by collective bargaining, we cannot predict the outcome of the remaining negotiations at this time or the effect of the terms of a new contract on our business or results of operations. If our pilots and althoughwe are unable to successfully renegotiate a new labor agreement, our pilots may strike or institute a work stoppage or slowdown. Any prolonged strike or work stoppage or slowdown by our pilots or other employees would have a material adverse effect on our business, results of operations and financial condition.
If we are unable to generate sufficient cash flows from our operations, our liquidity will suffer and we may be unable to satisfy our obligations.
We require significant capital to fund our business. As of December 31, 2001, we had approximately:
| • | $282.4 million of long-term debt; |
| • | $381.7 million of operating lease commitments; |
| • | $191.1 million of unconditional obligations for committed aircraft and aircraft related acquisitions; |
| • | $43.1 million of capital lease obligations; and |
| • | $138.1 million of commercial commitments, including standby letters of credit and surety bonds. |
Approximately $250.5 million of those obligations are due in 2002. In addition, we are required to fund approximately $54.0 million of our pension plan liabilities in 2002 and anticipate our capital expenditures to be approximately $175.0 million in 2002, which includes unconditional purchase obligations of approximately $60.1 million for committed aircraft and aircraft related acquisitions. While we believe we have the ability to sufficiently fund our planned operations and capital expenditures for 2002, circumstances could arise that would materially affect our liquidity. For example, cash flows from our operations could be affected by deterioration in shipment volumes caused by a prolonged recession or a further slowdown in the economy or our inability to successfully implement sales growth initiatives in a cost effective manner or further terrorist attacks. Our operating results could also be negatively impacted by prolonged labor disputes or changes in our cost structure such as from a significant increase in fuel prices. If available cash on hand and cash flows from our operations are not sufficient to fund our obligations, it may be necessary for us to secure alternative financing. We may be unsuccessful in securing alternative financing when needed, on terms that we consider acceptable, or at all.
Our level of earnings depends on our ability to match our fixed costs, including aircraft, vehicles and sort capacity, with customer shipment volumes.
We are subject to a high degree of operating leverage. The revenues that we generate from a particular delivery route, flight or truck linehaul vary directly with the amount of shipments that we carry on that segment. However, since fixed costs comprise a high proportion of the operating costs of each segment, the expenses of each segment do not vary proportionately with the amount of shipments that we carried. Accordingly, a decrease in our revenues could result in a disproportionately higher decrease in our earnings because our expenses would basically remain the same.
Increases in jet and motor fuel prices can negatively affect our results of operations.
We require significant quantities of gasoline, diesel fuel and jet fuel for our aircraft and delivery vehicles. We therefore are exposed to commodity price risk associated with variations in the market price for petroleum products. Although we historically have implemented temporary fuel surcharges to mitigate the earnings impact of unusually high fuel prices, competitive and other pressures may prevent us from passing these costs on to our customers. We cannot assure you that our supply of these products will continue uninterrupted, that rationing will not be imposed or that the prices of, or taxes on, these products will not increase significantly in the future. Increases in prices that we are unable to pass on to our customers will adversely affect our results of operations.
Our failure to comply with, or the costs of complying with, government regulations could negatively affect our results of operations.
Our operations are subject to complex aviation, transportation, environmental, labor, employment and other laws and regulations. These laws and regulations generally require us to maintain and comply with a wide variety of certificates, permits, licenses and other approvals. Our failure to maintain required certificates, permits or licenses, or to comply with applicable laws, ordinances or regulations, could result in substantial fines or, in the case of FAA requirements, possible revocation of our authority to conduct our operations.
New laws or regulations may be adopted or become applicable to us. For example:
| • | the FAA may issue maintenance directives and other mandatory orders relating to, among other things, inspection of aircraft and replacement of aircraft structures, components and parts, based on the age of the aircraft and other factors; |
| • | recent legislation requires that the FAA mandate the installation of collision avoidance systems in all cargo aircraft by October 2003; |
| • | the Transportation Security Administration, or TSA, may adopt security related regulations, including new requirements for the screening of cargo, that could have an impact on our ability to efficiently process cargo or otherwise increase costs in order to comply with new regulatory requirements; and |
| • | the TSA may require that we reimburse it for the cost of security services it may provide us in the future. |
We cannot assure you that existing laws or regulations will not be revised or that new laws or regulations, which could have an adverse impact on our operations, will not be adopted or become applicable to us. We also cannot assure you that we will be able to recover any or all increased costs of compliance from our customers or that our business and financial condition will not be adversely affected by future changes in applicable laws and regulations.
Economic and other conditions in the international markets in which we operate can affect demand for our services and our results of operations.
A key component of our business is our operations outside of the United States. For the year ended December 31, 2001, we derived approximately 11% of our revenues from international operations. If we are unable to compete successfully in these markets, our results of operations will be adversely affected. Operations in international markets present currency exchange, inflation, governmental and other risks. In
some countries where we operate, economic and monetary conditions could affect our ability to convert our earnings to United States dollars or to remove funds from those countries. We may experience adverse tax consequences as we attempt to repatriate funds to the United States from other countries.
Risks Related to the Notes
We significantly increased our leverage as a result of the sale of the notes.
We incurred $150,000,000 of indebtedness as a result of the sale of the notes to the initial purchasers, and we have other significant debt service obligations. The degree to which we are leveraged could materially and adversely affect our ability to obtain additional financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures. Our ability to meet our debt service obligations will be dependent upon our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control.
The notes and the guarantees are effectively subordinated to the secured debt of our subsidiaries.
We have granted security interests in all of the equity interests in our receivables finance subsidiary, Airborne Credit, Inc., to secure our guarantee of certain indebtedness of our subsidiaries. In addition, our most significant direct and indirect subsidiaries have granted security interests in a substantial majority of their assets to secure certain of their existing indebtedness and guarantees. As a result, the notes and the guarantees are effectively subordinated to the secured debt of our subsidiaries to the extent of the value of the assets that secure the indebtedness. As of December 31, 2001, our subsidiaries had approximately $325.5 million of secured indebtedness outstanding.
The indenture governing the notes does not limit our ability, or that of any of our presently existing or future subsidiaries, to incur indebtedness or other liabilities or to pledge assets to secure any indebtedness or liabilities. We and our subsidiaries may incur additional indebtedness and grant security interests to secure that indebtedness, which could adversely affect our ability to pay our obligations under the notes and our guarantor subsidiaries’ ability to perform under the guarantees.
Federal and state statutes allow courts, under specific circumstances, to void guarantees.
The guarantees may be subject to review under United States federal or state fraudulent transfer law. To the extent that a United States court were to find that:
| • | a guarantee was incurred by a guarantor subsidiary with intent to hinder, delay or defraud any present or future creditor, or a guarantor subsidiary contemplated insolvency with a design to prefer one or more creditors to the exclusion in whole or in part of others, or |
| • | a guarantor subsidiary did not receive fair consideration or reasonably equivalent value for issuing its guarantee, and the guarantor subsidiary was insolvent, |
| • | was rendered insolvent by reason of the issuance of the guarantee, |
| • | was engaged or about to engage in a business or transaction for which its remaining assets constituted unreasonably small capital to carry on its business, or |
| • | intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured, |
a court could avoid or subordinate the guarantee in favor of the guarantor subsidiary’s creditors. If one or more guarantees are subordinated, payments of principal and interest on the notes generally would be subject to the prior payment in full of all indebtedness and other liabilities of the affected guarantor subsidiaries. Among other things, a legal challenge of a guarantee on fraudulent conveyance grounds may focus on the benefits, if any, realized by a guarantor subsidiary as a result of the issuance by Airborne of the notes. The extent, if any, to which a particular guarantor subsidiary may be deemed to have received such benefits may depend on Airborne’s use of the proceeds from the offering of the notes, including the extent, if any, to which such proceeds or benefits therefrom are contributed to the guarantor subsidiary. The measure of insolvency for purposes of the foregoing will vary depending on the law of the applicable jurisdiction. Generally, however, an entity will be considered insolvent if the sum of its debts, including contingent or unliquidated debts, is greater than all of its property at a fair valuation or if the present fair saleable value of its assets is less than the amount that will be required to pay its probable liability under its existing debts as such debts become absolute and matured.
The notes will effectively be subordinated to the liabilities of our subsidiaries if a court avoids or subordinates the guarantees.
Airborne, Inc. is a holding company whose primary assets are its equity interests in its subsidiaries. If a court avoids or subordinates the guarantees in favor of our guarantor subsidiaries’ creditors, Airborne, Inc.’s obligations, including the notes, will be effectively subordinated in right of payment to all existing and future indebtedness and other obligations, including trade payables and lease obligations, of our subsidiaries. As of December 31, 2001, our subsidiaries had approximately $912.6 million of indebtedness and other liabilities (excluding intercompany liabilities).
We may be unable to repay or repurchase the notes.
At maturity, the entire outstanding principal amount of the notes will become due and payable by us. In addition, if a “change in control”, as defined in the indenture, occurs, each holder of the notes may require that we repurchase all or a portion of that holder’s notes. We cannot assure you that we will have sufficient funds or will be able to arrange for additional financing to pay the principal amount or repurchase price due. Under the terms of the indenture for the notes, we may elect, if we meet certain conditions, to pay the repurchase price with shares of common stock. Our existing revolving credit agreement contains prohibitions against our repurchase of the notes prior to their maturity and provides that an acceleration of the maturity of the notes, including upon a “change in control”, would constitute an event of default under the credit agreement. In addition, future borrowing arrangements or agreements to which we become a party may contain restrictions on, or prohibitions against, our repayment or repurchase of the notes. In the event that the maturity date or “change in control” occurs at a time when we are prohibited from repaying or repurchasing the notes, we could attempt to obtain the consent of the lenders under those arrangements to purchase the notes or we could attempt to refinance the borrowings that contain the restrictions. If we do not obtain the necessary consents or refinance these borrowings, we will be unable to repay or repurchase the notes.
The price of our stock and the notes may be subject to wide fluctuations.
The stock market has recently experienced significant price and volume fluctuations that have affected the market prices of virtually all public companies. The market price of our common stock, and consequently the price of the notes, may be subject to wide fluctuations in response to the factors discussed above as well as the following factors, some of which are beyond our control:
| • | changes in customer demand patterns, including the impact of technology developments on demand for our services; |
| • | operating results that vary from the expectations of securities analysts and investors and changes in estimates of our earnings by securities analysts; |
| • | our ability to match aircraft, vehicle and sort capacity with customer shipment volumes; |
| • | any inability to use our facilities in Wilmington, Ohio or elsewhere because of bad weather or other factors; |
| • | changes in market valuations of other transportation and logistics companies; |
| • | general market and economic conditions; |
| • | announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; |
| • | downgrades in the ratings of our or our subsidiaries’ outstanding debt; |
| • | announcements by third parties of significant claims or proceedings against us or adverse litigation or arbitration results; and |
| • | future sales of our common stock or other equity or debt securities. |
There may be no public market for the notes, and an active trading market for the notes may not develop.
The notes are a new class of securities for which there is no established public trading market, and there can be no assurance as to:
| • | the liquidity of any such market that may develop; |
| • | the ability of the holders of the notes to sell their notes; or |
| • | the price at which the holders of the notes would be able to sell their notes. |
If such a market were to exist, the Company believes this contract willnotes could trade at prices that may be settled without any significant
disruptionhigher or work stoppage. The Company considers its employee relations to be
good.
SHIPMENT DATA SUMMARY
In recent periods, the lower yielding SDS shipments have grown at a faster
rate than the Company's higher yielding overnight shipments. SDS shipments
increased 37% in 1994 compared to 1993, and 41% in the first six months of 1995
compared to the same period in 1994. Overnight shipments increased 7% and 9% in
1994 and the first six months of 1995, respectively. Domestic yields in the
first six months of 1995 were negatively impacted by a decline in the average
weight per shipment. Coupled with the higher growth rate of lower yielding SDS
shipments, this resulted in a higher than normal decline in the average revenue
per domestic shipment. For a discussion of the Company's results of operations,
reference is made to "Management's Discussion and Analysis of Results of
Operations and Financial Condition" in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994 and the Company's Quarterly Reports on Form
10-Q which are incorporated herein by reference.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity for financing capital
expenditures and operations have included cash provided by operations, bank
borrowings, aircraft sale-leaseback financings and public and private offerings
of debt and equity.
Capital expenditures and associated financing continue to be the primary
factors affecting the financial condition of the Company. The Company currently
anticipates total capital expenditures to approximate $230 million in 1995, of
which a significant portion is related to the acquisition and modification of
aircraft. During the first six months of 1995, total capital expenditures net of
dispositions were $106 million. The principal sources of liquidity for financing
capital expenditures during the first six months of 1995 were cash provided by
operations and financing under the Company's bank lines of credit.
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 also currently 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, 1995, a total of
$220.6 million was outstanding under the revolving bank credit and money market
credit lines.
The Company amended its revolving bank credit agreement effective March 31,
1995, increasing the total commitment to $250 million, subject to a maximum
level of Company indebtedness permitted by certain covenants in the agreement
and other loan agreements. The amended agreement is effective through May 31,
1998, with options to extend to May 31, 2000.
In management's opinion, proceeds from the offering made hereby, coupled
with anticipated cash provided by operations and borrowing capacity available
under the existing bank credit agreements, will provide adequate flexibility for
financing future growth.
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DESCRIPTION OF THE NOTES
The Notes are a series of Debt Securities described in the accompanying
Prospectus. The following description of the terms of the Notes, referred to in
the Prospectus as "Offered Securities," supplements, and to the extent
inconsistent therewith, replaces, the description of the general terms and
provisions of Debt Securities set forth in the Prospectus, to which description
reference is hereby made. Capitalized terms not otherwise defined herein shall
have the meanings given to them in the Prospectus.
GENERAL
The Notes will be limited to $100,000,000 aggregatetheir principal amount and
will matureor purchase price, depending on , 2005. many factors, including:
| • | prevailing interest rates; |
| • | the market price of our common stock; |
| • | the market for similar notes; and |
| • | our financial performance and the performance of our subsidiaries. |
The Notes will bear interest at the rate per
annum shown on the cover of this Prospectus Supplement from , 1995
or from the most recent Interest Payment Date to which interest has been paid or
providednotes are eligible for payable semi-annually on and of each year to
the Person in whose name the Note (or any predecessor Note) is registered at the
close of business on the or , as the case may be, next
preceding such Interest Payment Date. The Notes will be issued in registered
form in denominations of $1,000 and integral multiples thereof. Interest will be
calculated on the basis of a 360-day year of twelve 30-day months. The Notes are
not redeemable at the option of the Company and are not entitled to a sinking
fund.
BOOK-ENTRY SYSTEM
The Notes will be represented by Global Securities that will be deposited
with, or on behalf of, The Depository Trust Company (the "Depositary") and
registered in the name of a nominee of the Depositary.
The Depositary has advised the Company and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. The Depositary was created to hold securities of its participating
organizations ("participants") and to facilitate the clearance and settlement of
securities transactions, such as transfers and pledges, among its participants
in such securities through electronic computerized book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. Participants include securities brokers and dealers
(including the Underwriters), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own the
Depositary. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly. Persons who are not participants may beneficially own securities
held by the Depositary only through participants.
Unless and until they are exchanged in whole or in part for certificated
Notes in definitive form, the Global Securities may not be transferred except as
a whole by the Depositary to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary.
The Notes represented by the Global Securities are exchangeable for
certificated Notes in definitive registered form of like tenor as such Notes in
denominations of $1,000 and in any greater amount that is an integral multiple
thereof if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for the Global Securities or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, (ii) the Company in its discretion at any time
determines not to have all of the Notes represented by the Global Securities and
notifies the Trustee thereof or (iii) an Event of Default with respect to the
Notes represented by such Global Securities has occurred and is continuing. Any
Notes that are exchangeable pursuant to the preceding sentence are exchangeable
for certificated Notes issuable in authorized denominations and
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registered in such names as the Depositary shall direct. Subject to the
foregoing, the Global Securities are not exchangeable except for a Global
Security or Global Securities of the same aggregate denominations to be
registered in the name of the Depositary or its nominee.
Payments of principal of and interest on the Notes will be made by the
Company through the Trustee to the Depositary or its nominee, as the case may
be, as the registered owner of the Global Securities. Neither the Company nor
the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests. The Company expects
that the Depositary, upon receipt of any payment of principal or interest in
respect of the Global Securities, will credit the accounts of the related
participants with payment in amounts proportionate to their respective holdings
in principal amount of beneficial interest in the Global Securities as shown on
the records of the Depositary. The Company also expects that payments by
participants to owners of beneficial interests in the Global Securities will be
governed by standing customer instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Securities will trade in the Depositary's Same-Day Funds Settlement
System, in which secondary market trading activity in those beneficial interests
will be required by the Depositary to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in such beneficial interests.
A further description of the Depositary's procedures with respect to the
Notes is set forth in the accompanying Prospectus under the heading "Description
of Debt Securities -- Book-Entry Debt Securities."
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below (the "Underwriters"), and each of the Underwriters has severally agreed to
purchase, the principal amount of the Notes set forth opposite its name below:
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of % of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
% of the principal amount of the Notes to certain brokers and dealers.
After the Notes are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
Affiliates of BA Securities, Inc. have performed commercial banking
services for the Company in the past for which they received customary
compensation. In addition, Bank of America, N.T. & S.A., and Seattle-First
National Bank, affiliates of BA Securities, Inc., are lenders under the
Company's revolving bank credit agreement and Seattle-First National Bank has
extended a money market line of credit to the Company. Affiliates of BA
Securities, Inc. may receive more than 10% of the net proceeds from this
offering (not including any underwriting compensation) in repayment of certain
indebtedness of the Company. Accordingly, this offering is being made in
accordance with Section 44(c)(8) of Article III of the Rules of Fair PracticePortalRichard M. Rosenberg,
Chairman and Chief Executive Officer of BankAmerica Corporation,We have been advised by the parent of
BA Securities, Inc., is a directorinitial purchasers of the Companynotes that they presently intend to make a market in the notes. However, the initial purchasers are not obligated to do so, and Robert S. Cline, Chief
Executive Officermarket-making
activity with respect to the notes may be discontinued at any time without notice. In addition, such market-making activity will be subject to limitations imposed by federal securities laws. There can be no assurance as to the development or liquidity of any market for the notes. If an active market for the notes fails to develop or be sustained, the trading price of the Company, is a directornotes could be materially and adversely affected.
Securities we issue to fund our operations could dilute your ownership.
We may decide to raise additional funds through public or private debt or equity financing to fund our operations. If we raise funds by issuing equity securities, the percentage ownership of Seattle-First National Bank.
The Companycurrent shareholders will be reduced and the Guarantorsnew equity securities may have agreedrights prior to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933.
VALIDITY OF SECURITIES
The validitythose of the Notes offered hereby will be passedcommon stock issuable upon for the
Company by Riddell, Williams, Bullitt & Walkinshaw, Seattle, Washington, and for
the Underwriters by Sullivan & Cromwell, New York, New York. Membersconversion of the firmnotes. We may not obtain sufficient financing on terms that are favorable to you or us. We may delay, limit or eliminate some or all of Riddell, Williams, Bullitt & Walkinshaw ownedour proposed or existing operations if adequate funds are not available.
Provisions in our charter documents and Delaware law may delay or prevent an aggregateacquisition of approximately
13,565 sharesus, which could decrease the value of our common stock and our notes.
Our certificate of incorporation and by-laws and Delaware law contain provisions that could make it harder for a third party to acquire us without the consent of our board of directors. Delaware law imposes some restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock. Our certificate of incorporation contains additional restrictions on business combinations. Our certificate of incorporation and by-laws include staggered board provisions that provide that only a minority of the Company's Common Stocktotal number of our board members can be elected each year, which may make it more difficult for a potential purchaser to elect enough directors to assure control of us. In addition, our board of directors has the right to issue preferred stock without shareholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer. Although we believe these provisions of our certificate of incorporation and by-laws and Delaware law will provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our board of directors, these provisions apply even if the offer may be considered beneficial by some shareholders. In addition, under currently applicable federal aviation law, our operating subsidiary, ABX Air, Inc., could cease to be eligible to operate as an all-cargo carrier if more than 25% of September 1, 1995. Mr. J.
Vernon Williams, a partnerour voting stock were owned or controlled by non-U.S. citizens or the airline were not effectively controlled by U.S. citizens.
Set forth below is the ratio of Riddell, Williams, Bullitt & Walkinshaw, serves as
assistant secretary of the Company, and other partners of the firm serve as
officers and/or directors of certain subsidiaries of the Company.
S-13
16
EXPERTS
The consolidated financial statements of the Company as of December 31,
1994 and 1993, andour earnings to fixed charges for each of the three years in the five year period ended December 31, 1994, have been audited by Deloitte & Touche LLP, independent auditors, as set
forth in their report with respect thereto (which report expresses an
unqualified opinion2001.
Year Ended December 31, | ||||||||
1997 | 1998 | 1999 | 2000 | 2001 | ||||
| 5.68x | 7.94x | 5.53x | 1.40x | — | ||||
For the purpose of calculating the ratio of earnings to fixed charges, earnings represents pre-tax earnings (loss) from operations plus fixed charges less interest capitalized during the period. Our fixed charges consist of interest expensed and includes an explanatory paragraph referring tocapitalized, amortization of financing costs and the adoption, asportion of January 1, 1993, of Statements of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" and No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions"), and are incorporated by reference
herein in reliance upon such report given upon the authority of said firm as
experts in accounting and auditing.
S-14
17
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 1995
AIRBORNE FREIGHT CORPORATION
DEBT SECURITIES
------------------------
The Company may from time to time offer Debt Securities consisting of
debentures, notes and/or other unsecured evidences of indebtedness in one or
more series at an aggregate initial offering price not to exceed $100,000,000 or
its equivalent in any other currency or composite currency. The Debt Securities
may be offered as separate series in amounts, at prices and on terms to be
determined at the time of sale. The accompanying Prospectus Supplement sets
forth with regard to the series of Debt Securities in respect of which this
Prospectusoperating rental expense that management believes is being delivered the title, aggregate principal amount,
denominations (which may be in United States dollars, in any other currency or
in a composite currency), maturity, rate, if any (which may be fixed or
variable), and time of payment of any interest, any terms for redemption at the
optionrepresentative of the Companyinterest component of rental expense. Our fixed charges in 2001 exceeded earnings, as so defined, by approximately $31.3 million.
Airborne will not receive any proceeds from the sale by any selling security holder of the notes or the holder, any terms for sinking fund payments, any
listing on a securities exchange and the initial public offering price and any
other terms in connection with the offering and sale of such series of Debt
Securities. The Debt Securities will be fully and unconditionally, and jointly
and severally, guaranteed by ABX Air, Inc. ("ABX") and Airborne Forwarding
Corporation ("AFC"), wholly-owned subsidiariescommon stock issuable upon conversion of the Company, and Airborne FTZ,
Inc. ("FTZ") and Wilmington Air Park, Inc. ("WAP"), wholly-owned subsidiaries of
ABX. ABX, AFC, FTZ and WAP are referred to collectively as the "Guarantors."
These guarantees will rank pari passu with the guarantees provided to the banks
under the Company's revolving bank credit agreement.
The Company may sell Debt Securities to or through underwriters, and also
may sell Debt Securities directly to other purchasers or through agents. Such
underwriters may include Goldman, Sachs & Co. and BA Securities, Inc., or may be
a group of underwriters represented by firms including Goldman, Sachs & Co. and
BA Securities, Inc. Goldman, Sachs & Co. and BA Securities, Inc. may also act as
agents. The accompanying Prospectus Supplement sets forth the names of any
underwriters or agents involved in the sale of the Debt Securities in respect of
which this Prospectusnotes.
Our common stock is being delivered, the principal amounts, if any, to be
purchased by underwriters and the compensation, if any, of such underwriters or
agents. See "Plan of Distribution" for possible indemnification arrangements for
underwriters, agents and their controlling persons.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
GOLDMAN, SACHS & CO. BA SECURITIES, INC.
------------------------
The date of this Prospectus is , 1995.
18
AVAILABLE INFORMATION
Airborne Freight Corporation ("Airborne," "Airborne Express" or the
"Company," which terms include its subsidiaries unless the context indicates
otherwise) is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the Commission's Regional
Offices located at 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, such material may also be inspected and
copied at the offices oflisted on the New York Stock Exchange Inc., 20 Broad Street, New
York, New York 10005, and the Pacific Exchange, Inc. under the symbol “ABF”. The following table shows, for the periods indicated, the high and low closing sales prices per share of our common stock as reported by the New York Stock Exchange.
Quarter ended | High | Low | ||||
Calendar Year 2002: | ||||||
| June 30, 2002 (through May 8, 2002) | $ | 21.36 | $ | 16.49 | ||
| March 31, 2002 | 20.67 | 13.97 | ||||
Calendar Year 2001: | ||||||
| December 31, 2001 | $ | 14.97 | $ | 9.04 | ||
| September 30, 2001 | 14.20 | 8.25 | ||||
| June 30, 2001 | 11.80 | 8.54 | ||||
| March 31, 2001 | 13.61 | 9.56 | ||||
Calendar Year 2000: | ||||||
| December 31, 2000 | $ | 10.94 | $ | 8.44 | ||
| September 30, 2000 | 19.31 | 10.19 | ||||
| June 30, 2000 | 22.94 | 18.38 | ||||
| March 31, 2000 | 25.38 | 17.25 | ||||
Calendar Year 1999: | ||||||
| December 31, 1999 | $ | 25.38 | $ | 20.00 | ||
| September 30, 1999 | 28.88 | 21.06 | ||||
| June 30, 1999 | 36.63 | 24.69 | ||||
| March 31, 1999 | 41.63 | 28.63 | ||||
On May 8, 2002, the last sale price of our common stock, as reported by the New York Stock Exchange, 301 Pine Street, San
Francisco, California 94104.
The Company has filedwas $21.19 per share.
We have paid a cash dividend of $.04 per share of common stock in each calendar quarter of the last two calendar years. Under our primary credit facility, we cannot declare or pay more than $2 million in dividends during any calendar quarter plus, with respect to any common stock issued upon conversion of the notes, an additional amount not exceeding $300,000 during any calendar quarter.
On February 5, 2002, our board of directors terminated the rights that had traded with the Commissioncommon stock under our shareholder rights plan. In connection with this termination, the board authorized a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain alldistribution in redemption of the information set forth in the Registration
Statement, certain partsrights of $.005 per share of common stock, which are omitted in accordance with the rules and
regulationswill be paid on May 28, 2002 to shareholders of the Commission. For further information, reference is hereby made
to the Registration Statement. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of each document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each statement is
qualified in its entirety by such reference. No separate financial statements of
the Guarantors are included herein. The Company and the Guarantors do not
consider such financial statements to be material to holders of the Debt
Securities. The Company's non-guarantor subsidiaries are inconsequential, both
individually and in the aggregate, to the Company's consolidated financial
statements.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
record on May 14, 2002.
The following documents filed with the Commission (File No. 1-6512)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year endedtable sets forth our capitalization as of December 31, 1994,2001 and as amended;
2. The Company's Quarterly Reports on Form 10-Q for the quarter ended
March 31, 1995 and for the quarter ended June 30, 1995, as amended;
3. The Company's Current Report on Form 8-K, dated April 25, 1995;
and
4. All other documents filed by the Company pursuantadjusted to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequentgive effect to the date of
this Prospectus and prior to the termination of this offering.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to the Company, P.O. Box 662,
Seattle, Washington 98111, Attention: David C. Anderson, Corporate
Secretary/Counsel, telephone: (206) 285-4600.
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such
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statement. Any statement so modified shall not be deemed to constitute a part of
this Prospectus except as so modified, and any statement so superseded shall not
be deemed to constitute part of this Prospectus.
THE COMPANY
Airborne Express provides door-to-door express delivery of small packages
and documents throughout the United States and to and from most foreign
countries. The Company also acts as an international and domestic freight
forwarder for shipments of any size. A majority of the Company's domestic
shipments are transported on its own airline and owned or contracted ground
transportation vehicles through its Company-owned airport and central sorting
facility in Wilmington, Ohio or one of ten regional hubs. The Company's
principal operating strategy is to be the low cost provider of express services
for high volume corporate customers.
Airborne is a Delaware corporation organized on May 10, 1968. The Company's
executive offices are located at 3101 Western Avenue, Post Office Box 662,
Seattle, Washington 98111, telephone: (206) 285-4600.
USE OF PROCEEDS
Except as may be set forth in an applicable Prospectus Supplement
accompanying this Prospectus, the net proceeds to be received by the Company
from the issuance of up to $100,000,000 aggregate principal amount of the Company's debt securities (the "Debt Securities") offered hereby will be used to
reduce indebtedness outstanding under the Company's revolving bank credit
agreement and money market lines of credit.
notes on March 25, 2002.
As of December 31, 2001 | ||||||||
Actual | As Adjusted | |||||||
(in thousands) | ||||||||
| Short-term debt: | ||||||||
| Current portion of long-term debt | $ | 107,410 | $ | 107,410 | ||||
| Total short-term debt | $ | 107,410 | $ | 107,410 | ||||
| Long-term debt (less current portion): | ||||||||
| Pre-offering long-term debt | $ | 218,053 | $ | 218,053 | ||||
| 5.75% Convertible Senior Notes due April 1, 2007 | — | 150,000 | ||||||
| Total long-term debt | 218,053 | 368,053 | ||||||
| Shareholders’ equity | ||||||||
| Preferred stock, no par value, 6,000,000 shares authorized, none issued and outstanding | — | — | ||||||
| Common stock, $1.00 par value, 120,000,000 shares authorized, 51,375,711 shares issued and outstanding | 51,376 | 51,376 | ||||||
| Additional paid-in capital | 304,984 | 304,984 | ||||||
| Retained earnings | 540,544 | 540,544 | ||||||
| Accumulated other comprehensive income (loss) | (2,820 | ) | (2,820 | ) | ||||
| 894,084 | 894,084 | |||||||
| Treasury stock, 3,240,526 shares, at cost | (59,868 | ) | (59,868 | ) | ||||
| Total shareholders’ equity | 834,216 | 834,216 | ||||||
| Long-term debt (excluding current portion) and shareholders’ equity | $ | 1,052,269 | $ | 1,202,269 | ||||
We issued the notes under an Indenture (the "Indenture"),
as amended by a First Supplemental Indentureindenture among us, the Company, ABX, AFC, FTZ,
WAPguarantor subsidiaries and The Bank of New York, as Trustee (the "Trustee").trustee. Because this section is a summary, it does not describe every aspect of the notes, the related guarantees and the indenture. The following summaries of certain provisions of the Indenturethese documents do not purport to be complete and are subject to, and are qualified in their entirety by reference to all the detailed provisions of the Indenture,notes, the related guarantees and the indenture, including the definitions therein of certain terms.
Wherever particular Sections or defined terms
General
The notes are senior, unsecured obligations of Airborne, Inc. The aggregate principal amount of the Indenturenotes is $150,000,000. We are referredrequired to hereinrepay the principal amount of the notes in full on their maturity date, which is April 1, 2007.
The notes bear interest at the rate of 5.75% per annum from March 25, 2002, the original issue date. We will pay interest on the notes on April 1 and October 1 of each year, commencing on October 1, 2002. Interest payable per $1,000 principal amount of notes for the period from March 25, 2002 to October 1, 2002 will be $29.71.
You may convert the notes into shares of our common stock at any time before the close of business on the maturity date, unless the notes have been previously redeemed or repurchased by us. Holders of notes called for redemption or submitted for repurchase will be entitled to convert the notes up to and including the business day immediately preceding the date fixed for redemption or repurchase, as the case may be. The initial conversion rate is 42.7599 shares of common stock per each $1,000 principal amount of notes, but it may be adjusted as described below.
We may redeem the notes at our option at any time on or after April 1, 2005, in whole or in a Prospectus Supplement, such Sections or defined terms are
incorporated herein or thereinpart, at the redemption prices set forth below under “—Optional Redemption by reference.
The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series of Debt Securities offered by any Prospectus
Supplement will be described in such Prospectus Supplement relating to such
series.
GENERAL
The Indenture does not limit the aggregate amount of Debt Securities which
may be issued thereunder,Airborne”, plus accrued and Debt Securities may be issued thereunder from time
to time in separate series upunpaid interest to the aggregate amount from timeredemption date. If we undergo a change in control, you will have the right to time
authorized by the Company for each series. require us to repurchase your notes as described below under “—Repurchase at Option of Holders Upon a Change in Control”.
The Debt Securities will be unsecured
and unsubordinated obligations of the Company. The Debt Securities willnotes rank senior in right of payment to all subordinated indebtedness of the Company,
presently consisting of 10% Senior Subordinated Debt and 6 3/4% Convertible
Subordinated Debentures, and will rank pari passuequally in right of payment with all borrowingsof our existing and other obligationsfuture unsecured and unsubordinated indebtedness. We have granted security interests in all of the Companyequity interests in our receivables finance subsidiary, Airborne Credit, Inc., to secure our guarantee of certain indebtedness of our subsidiaries. In addition, our most significant direct and itsindirect subsidiaries underhave granted security interests in a substantial majority of their assets to secure certain of their existing indebtedness and guarantees. As a result, the Company's revolving bank credit agreement.
The applicable Prospectus Supplement will describenotes and the following termsguarantees are effectively subordinated to the secured indebtedness of our subsidiaries to the extent of the series of Debt Securities ("Offered Securities") in respect of which this
Prospectus is being delivered: (1) the titlevalue of the Offered Securities; (2) any
limit on the aggregate principal amountassets that secure that indebtedness. As of the Offered Securities; (3) whether
anyDecember 31, 2001, our subsidiaries had approximately $325.5 million of the Offered Securities are to be issuable in permanent global form and,
if so, the
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terms and conditions, if any, upon which interests in such Offered Securities in
global form may be exchanged, in whole or in part, for the individual Offered
Securities represented thereby; (4) the person to whom any interest on any
Offered Security of the series shall be payable if other than the person in
whose name the Offered Security is registered on the Regular Record Date; (5)
the date or dates onsecured indebtedness outstanding.
The indenture under which the principalnotes were issued does not limit our ability or the ability of the Offered Securities will be
payable; (6) the rate or rates at which the Offered Securities will bear
interest, if any; (7) the date or dates from which any such interest will
accrue, the Interest Payment Dates on which any such interest on the Offered
Securities will be payable and the Regular Record Date for any interest payable
on any Interest Payment Date; (8) the place or places where the principal of,
premium (if any) and interest on the Offered Securities will be payable; (9) the
period or periods within which, and the price or prices at which, the Offered
Securities may, pursuantour subsidiaries to any optional or mandatory provisions, be redeemed or
purchased, in whole or in part, by the Company and any terms and conditions
relevant thereto; (10) the denominations in which any Offered Securities will be
issuable, if other than denominations of $1,000 and any integral multiple
thereof; (11) the currency, currencies or currency units of payment of principal
of and any premium and interest on the Offered Securities if other than U.S.
dollars; (12) any index used to determine the amount of payments of principal of
and any premium and interest on the Offered Securities; (13) if the principal of
or premium (if any) or interest on the Offered Securities is to be payable, at
the election of the Company or a Holder thereof, in one or more currencies or
currency units other than that or those in which the Offered Securitiesincur debt, including secured debt.
Subsidiary Guarantees
The notes are
stated to be payable, such currency, currencies or currency units and the
periods within which and the terms and conditions upon which such election is to
be made; (14) if other than the principal amount thereof, the portion of the
principal amount of the Offered Securities of the series which will be payable
upon declaration of the acceleration of the Maturity thereof; (15) any Events of
Default with respect to the Offered Securities, if not otherwise set forth under
"Events of Default;" (16) the applicability of the provisions described under
"Defeasance;" and (17) any other terms of the Offered Securities not
inconsistent with the provisions of the Indenture.
Debt Securities may be issued at a discount from their principal amount.
Federal income tax considerations and other special considerations applicable to
any such Original Issue Discount Securities will be described in the applicable
Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities and such foreign
currency or currencies or foreign currency unit or units will be set forth in
the applicable Prospectus Supplement.
GUARANTEES
The Debt Securities will be fully and unconditionally, and jointly and severally, guaranteed on an unsecured basis as to the payment of principal, premium, (if any)if any, and interest by our wholly owned direct and indirect domestic operating subsidiaries, Airborne Express, Inc., ABX AFC,Air, Inc., Sky Courier, Inc., Wilmington Air Park, Inc., Airborne FTZ, Inc., Aviation Fuel, Inc. and WAP pursuantSound Suppression, Inc., which we refer to guarantees (the "Guarantees")as
“guarantor subsidiaries”. These GuaranteesIf we form or acquire a new direct or indirect subsidiary that is or becomes a material subsidiary, that material subsidiary will rank pari passu withbe required to guarantee the guarantees providednotes on the same basis as the then existing guarantor subsidiaries. A “material subsidiary” is a domestic subsidiary that has revenues or sales equal to 5% or more of our consolidated revenues or sales, or assets equal to 5% or more of our consolidated assets. If any subsidiary guaranteeing the banksnotes is sold or otherwise disposed of in a matter permitted by the indenture under which the Company's revolving bank credit agreement. ABX, AFC, FTZ and WAP maynotes were issued, that subsidiary will be released from their respectiveall of its obligations under the Guarantees as described
under "Defeasance."
As wholly-owned direct or indirect subsidiariesits guarantee of the Companynotes. For selected summary financial data of the guarantor subsidiaries, see “Note R—Subsequent Event” to our consolidated financial statements included in our Current Report on Form 8-K filed with the Securities and ABX,
ABX, AFC, FTZ and WAP areExchange Commission, or SEC, on May 9, 2002.
The guarantees may be subject to control by the Company with respect to
their financing activities, the dispositionreview under United States federal or state fraudulent transfer law. A court could avoid or subordinate a guarantee in favor of their assets and otherwise. The
Indenture contains no restriction on the ability of ABX, AFC, FTZ or WAP to
transfer their assets to the Company, by dividend or otherwise, or on the
ability of the Company to dispose of or encumber the assets of ABX, AFC, FTZ or
WAP to finance or satisfy obligations of the Company, except to the extent
limited by the covenants described in "Limitations on Liens" and "Limitations on
Sale and Leaseback Transactions" in "Certain Covenants," below. Accordingly,
there can be no assurance that there would be sufficient assets available at
ABX, AFC, FTZ or WAP to satisfy any claim of the Holders of the Debt Securities
under the Guarantees. Although the Company has no present intent to transfer by
dividend or otherwise, dispose of, or otherwise encumber the assets of ABX,
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21
AFC, FTZ or WAP to finance or satisfy obligations of the Company, ABX, AFC, FTZ
and WAP may from time to time transfer, dispose of or encumber their assets as
permitted by the Indenture.
In addition, various laws, including laws relating to fraudulent
conveyances, enacted for the protection ofa guarantor subsidiary’s creditors may be utilized to
challenge the Guarantees to the extent that ABX, AFC, FTZ or WAPthe guarantor subsidiary did not receive fair consideration or reasonably equivalent value for issuing its guarantee and the Guarantees. To the
extent that the Guarantees were voided or held unenforceable as a fraudulent
conveyance or otherwise, the Holdersguarantor subsidiary was insolvent, was rendered insolvent by reason of the Debt Securities would cease to be
creditors of ABX, AFC, FTZ or WAP as the case may be, and would be creditors
solelyissuance of the Company. In such event,guarantee, was engaged or about to engage in a business or transaction for which the claimsremaining assets of the Holdersguarantor subsidiary constituted unreasonably small capital to carry on its business or intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured. If one or more guarantees are subordinated, payments of principal and interest on the Debt
Securities against the assets of ABX, AFC, FTZ or WAPnotes generally would be subject to such
extent, to the prior payment in full of all indebtedness and other liabilities of ABX, AFC, FTZ or WAP,
respectively.
EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise indicatedthe affected guarantor subsidiaries. As of December 31, 2001, our subsidiaries had approximately $912.6 million of indebtedness and other liabilities (excluding intercompany liabilities). See “Risk Factors—Risks Related to the Notes—Federal and state statutes allow courts, under specific circumstances, to void guarantees”.
Form, Denomination, Transfer, Exchange and Book-Entry Procedures
The notes are issued:
| • | only in fully registered form; |
| • | without interest coupons; |
| • | and in denominations of $1,000 and greater multiples. |
The notes are currently evidenced by a note, which we refer to as the “global note”, which has been deposited with the trustee as custodian for DTC and registered in the applicable Prospectus Supplement, paymentname of principal, premium (if any)Cede & Co., as nominee of DTC. The global note and interest onany notes issued in exchange for the Debt Securitiesglobal note will be payable,subject to restrictions on transfer and the exchange of and the transfer of Debt Securities will be
registrable, at the office or agencybear a legend regarding those restrictions. Except as set forth below, record ownership of the Company maintained for such purpose
and at any other office or agency maintained for such purpose. (Sections 301,
305 and 1002) Unless otherwise indicated in the applicable Prospectus
Supplement, the Debt Securities will be issued in denominations of $1,000 and
any integral multiple thereof. (Section 302) No service charge will be made for
any registration of transfer or exchange of the Debt Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith. (Section 305)
All moneys paid by the Company to a Paying Agent for the payment of
principal of any premium or interest on any Debt Security which remain unclaimed
for two years after such principal, premium or interest has become due and
payableglobal note may be repaid to the Company and thereafter the Holder of such Debt
Security may look only to the Company for payment thereof. (Section 1003)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a Depositary or its nominee
identified in the applicable Prospectus Supplement. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of Outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchangedtransferred, in whole or in part, for Debt
Securities in registered form, a Global Security may not, subjectonly to certain
exceptions, be registered for transfer or exchange except to the Depositary for
such Global Security or aanother nominee of such Depositary. (Sections 204 and 305)
DTC or to a successor of DTC or its nominee.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities toglobal note will not be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered in the name of such Depositaryany person, or its nominee. Uponexchanged for notes that are registered in the issuancename of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositaryany person, other than DTC or its nominee, ("participants"). The accounts to be creditedunless either of the following occurs:
| • | DTC notifies us that it is unwilling, unable or no longer qualified to continue acting as the depositary for the global note; or |
| • | an event of default with respect to the notes represented by the global note has occurred and is continuing. |
In those circumstances, DTC will determine in whose names any securities issued in exchange for the global note will be designated by the
underwritersregistered.
DTC or agents of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interest in such Global Securityits nominee will be limited to participants or Persons that
may hold interests through participants. Ownershipconsidered the sole owner and holder of beneficial interests by
participants in such Global Security will be shown on,the global note for all purposes, and the transfer of that
ownership interest will be effected only through, records maintained by the
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Depositary for such Global Security. Ownership of beneficial interests in such
Global Security by Persons that hold through participants will be shown on, and
the transfer of that ownership interest within such participant will be effected
only through, records maintained by such participant. as a result:
| • | you cannot receive notes registered in your name if they are represented by the global note; |
| • | you cannot receive physical certificated notes in exchange for your beneficial interest in the global note; |
| • | you will not be considered to be the owner or holder of the global note or any note it represents for any purpose; and |
| • | all payments on the global note will be made to DTC or its nominee. |
The laws of some jurisdictions require that certain kinds of purchasers, of securities take physical
delivery of such as insurance companies, can only own securities in definitive certificated form. The foregoing limitations and
suchThese laws may impair thelimit your ability to transfer your beneficial interests in the global note to these types of purchasers.
Only institutions, such Global
Securities.
So long as the Depositary for a Global Security,securities broker or dealer, that have accounts with DTC or its nominee (called participants) and persons that may hold beneficial interests through participants can own a beneficial interest in the global note. The only place where the ownership of beneficial interests in the global note will appear and the only way the transfer of those interests can be made will be on the records kept by DTC (for their participants’ interests) and the records kept by those participants (for interests of persons held by participants on those persons’ behalf).
Secondary trading in bonds and notes of corporate issuers is generally settled in clearinghouse (that is, next-day) funds. In contrast, beneficial interests in a global note usually trade in DTC’s same-day funds settlement system, and settle in immediately available funds. We make no representations as to the effect that settlement in immediately available funds will have on trading activity in those beneficial interests.
We will make cash payments of interest on and principal of, and the redemption or repurchase price of, the global note, as well as any payment of liquidated damages, to Cede & Co., the nominee for DTC, as the registered owner of such Global Security, such Depositary or such nominee, as
the case may be,global note. We will be consideredmake these payments by wire transfer of immediately available funds on each payment date.
We have been informed that DTC’s practice is to credit participants’ accounts on the sole owner or Holder ofpayment date with payments in amounts proportionate to their respective beneficial interests in the Securitiesnotes represented by such Global Security for all purposes under the Indenture. Unless
otherwise specified in the applicable Prospectus Supplement,global note as shown on DTC’s records, unless DTC has reason to believe that it will not receive payment on that payment date. Payments by participants to owners of beneficial interests in notes represented by the global note held through participants will be the responsibility of those participants, as is now the case with securities held for the accounts of customers registered in street name.
We will send any redemption notices to Cede & Co. We understand that if less than all the notes are being redeemed, DTC’s practice is to determine by lot the amount of the holdings of each participant to be redeemed.
We also understand that neither DTC nor Cede & Co. will consent or vote with respect to the notes. We have been advised that under its usual procedures, DTC will mail an omnibus proxy to us as soon as
possible after the record date. The omnibus proxy assigns the consenting and voting rights of Cede & Co. to those participants to whose accounts the notes are credited on the record date identified in a listing attached to the omnibus proxy.
Because DTC can only act on behalf of participants, who in turn act on behalf of indirect participants, the ability of a person having a beneficial interest in the principal amount represented by the global note to pledge the interest to persons or entities that do not participate in the DTC book-entry system, or otherwise take actions in respect of that interest, may be affected by the lack of a physical certificate evidencing its interest.
DTC has advised us that it will take any action permitted to be taken by a holder of notes (including the presentation of notes for exchange) only at the direction of one or more participants to whose account with DTC interests in the global note are credited and only in respect of such Global Securityportion of the principal amount of the notes represented by the global note as to which such participant or participants has or have given such direction.
DTC has also advised us as follows:
| • | DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a clearing corporation within the meaning of the Uniform Commercial Code, as amended, and a clearing agency registered pursuant to the provisions of Section 17A of the Exchange Act; |
| • | DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants; |
| • | Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations; |
| • | Certain participants, or their representatives, together with other entities, own DTC; and |
| • | Indirect access to the DTC System is available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. |
The policies and procedures of DTC, which may change periodically, will apply to payments, transfers, exchanges and other matters relating to beneficial interests in the global note. We and the trustee have no responsibility or liability for any aspect of DTC’s or any participants’ records relating to beneficial interests in the global note, including for payments made on the global note. Further, we and the trustee are not responsible for maintaining, supervising or reviewing any of those records.
Conversion Rights
You have the option to convert any portion of the principal amount of any note that is an integral multiple of $1,000 into shares of our common stock at any time on or prior to the close of business on April 1, 2007, unless the notes have been previously redeemed or repurchased. The conversion rate is equal to 42.7599 shares per each $1,000 principal amount of notes, subject to adjustment in certain circumstances. The conversion rate is equivalent to a conversion price of approximately $23.39 per share. Your right to convert a note called for redemption or delivered for repurchase will terminate at the close
of business on the business day immediately preceding the redemption date or repurchase date for that note, unless we default in making the payment due upon redemption or repurchase.
You may convert all or part of any note by delivering the note at the Corporate Trust Office of the trustee in the Borough of Manhattan, The City of New York, accompanied by a duly signed and completed conversion notice, a copy of which may be obtained from the trustee. The conversion date will be the date on which the note and the duly signed and completed conversion notice are so delivered.
As promptly as practicable on or after the conversion date, we will issue and deliver to the trustee a certificate or certificates for the number of full shares of our common stock issuable upon conversion, together with payment in lieu of any fraction of a share. The certificate or certificates will then be sent by the trustee to the conversion agent for delivery to the holder of the note being converted. The shares of our common stock issuable upon conversion of the notes will be fully paid and nonassessable and will rank equally with the other shares of our common stock.
If you surrender a note for conversion on a date that is not an interest payment date, you will not be entitled to have Debt
Securitiesreceive any interest for the period from the next preceding interest payment date to the conversion date, except as described below in this paragraph. Any note surrendered for conversion during the period from the close of business on any regular record date to the series representedopening of business on the next succeeding interest payment date (except notes, or portions thereof, called for redemption on a redemption date or to be repurchased on a repurchase date for which the right to convert would terminate during such period) must be accompanied by payment of an amount equal to the interest payable on such Global Security registeredinterest payment date on the principal amount of notes being surrendered for conversion. In the case of any note that has been converted after any regular record date but before the next succeeding interest payment date, interest payable on such interest payment date shall be payable on such interest payment date notwithstanding such conversion, and such interest shall be paid to the holder of such note on such regular record date.
No other payment or adjustment for interest, or for any dividends in their
names,respect of our common stock, will be made upon conversion. Holders of our common stock issued upon conversion will not receive or be entitled to receive physical deliveryany dividends payable to holders of Debt
Securitiesour common stock as of such seriesany record time or date before the close of business on the conversion date. We will not issue fractional shares upon conversion. Instead, we will pay cash in certificated form andlieu of fractional shares based on the market price of our common stock at the close of business on the conversion date. For a summary of the U.S. federal income tax considerations relating to conversion of a note, see “Certain United States Federal Income Tax Consequences—Conversion of the Notes”.
You will not be consideredrequired to pay any taxes or duties relating to the Holders thereofissue or delivery of our common stock on conversion but you will be required to pay any tax or duty relating to any transfer involved in the issue or delivery of our common stock in a name other than yours. Certificates representing shares of our common stock will not be issued or delivered unless all taxes and duties, if any, payable by you have been paid.
The conversion rate will be subject to adjustment for, any purposes underamong other things:
| • | dividends and other distributions payable in our common stock on shares of our capital stock; |
| • | the issuance to all holders of our common stock of rights, options or warrants entitling them to subscribe for or purchase our common stock at less than the then current market price of such common stock as of the record date for shareholders entitled to receive such rights, options or warrants; |
| • | subdivisions, combinations and reclassifications of our common stock; |
| • | distributions to all holders of our common stock of evidences of our indebtedness, shares of capital stock, cash or assets, including securities, but excluding: |
| • | those dividends, rights, options, warrants and distributions referred to above; |
| • | dividends and distributions paid exclusively in cash; and |
| • | distributions upon mergers or consolidations discussed below; |
| • | distributions consisting exclusively of cash, excluding any cash portion of distributions referred to immediately above, or cash distributed upon a merger or consolidation to which the next succeeding bullet point applies, to all holders of our common stock in an aggregate amount that, combined together with: |
| • | other all-cash distributions made within the preceding 365-day period in respect of which no adjustment has been made; and |
| • | any cash and the fair market value of other consideration payable in connection with any tender offer by us or any of our subsidiaries for our common stock concluded within the preceding 365-day period in respect of which no adjustment has been made, |
exceeds 10% of our market capitalization, being the Indenture. (Sections 204 and 305)
Accordingly, each Person owning a beneficial interest in such Global Security
must relyproduct of the current market price per share of the common stock on the proceduresrecord date for such distribution and the number of shares of common stock then outstanding; and
| • | the successful completion of a tender offer made by us or any of our subsidiaries for our common stock that involves an aggregate consideration that, together with: |
| • | any cash and other consideration payable in a tender offer by us or any of our subsidiaries for our common stock expiring within the 365-day period preceding the expiration of that tender offer in respect of which no adjustment has been made; and |
| • | the aggregate amount of all cash distributions referred to above to all holders of our common stock within the 365-day period preceding the expiration of that tender offer in respect of which no adjustments have been made, exceeds 10% of our market capitalization on the expiration of such tender offer. |
We reserve the right to effect such increases in the conversion rate in addition to those required by the foregoing provisions as we consider to be advisable in order that any event treated for United States federal income tax purposes as a dividend of stock or stock rights will not be taxable to the recipients. We will not be required to make any adjustment to the conversion rate until the cumulative adjustments amount to 1.0% or more of the Depositaryconversion rate. We will compute all adjustments to the conversion rate and if such person is not a
participant, on the procedureswill give notice of any adjustments by mail to holders of the participant through whichnotes.
In the event that we consolidate or merge with or into another entity or another entity is merged into us, or in case of any sale or transfer of all or substantially all of our assets, each note then outstanding will become convertible only into the kind and amount of securities, cash and other property receivable upon such Person owns
its interest, to exercise any rights ofconsolidation, merger, sale or transfer by a Holder under the Indenture. The
Company understands that under existing industry practices, if the Company
requests any action of Holders or an owner of a beneficial interest in such
Global Security desires to give any notice or take any action a Holder is
entitled to give or take under the Indenture, the Depositary would authorize the
participants to give such notice or take such action, and participants would
authorize beneficial owners owning through such participants to give such notice
or take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
CERTAIN COVENANTS
Limitation on Liens. The Indenture provides that the Company will not, and
will not permit any Restricted Subsidiary (as defined below), to incur any lien
on any Principal Property (as defined below) to secure any debt without making,
or causing such Restricted Subsidiary to make, effective provision for securing
the Debt Securities (and, if the Company shall so determine, any other debtholder of the Companynumber of shares of common stock into which is not subordinate to the Debt Securities or of such
Restricted Subsidiary) (x) equally and ratably with such debt as to such
Principal Property for so long as such debt shall be so secured or (y) in the
event such debt is debt of the Company which is subordinate in right of payment
to the Debt Securities, prior to such debt as to such Principal Property for so
long as such debt shall be so secured unless the sum of (i) the amount of debt
secured by a lien and otherwise prohibited by the Indenture and (ii) the
Attributable Value (as defined below) of all sale and leaseback transactions
otherwise prohibited by the Indenture does not exceed 15% of Consolidated Net
Tangible Assets (as defined below). (Section 1008) This limitation does not
apply to (i) liens with respect to debt existing on the date of the Indenture,
(ii) liens securing only the Debt Securities, (iii) liens in favor of the
Company, (iv) liens on property existingnote was convertible immediately prior to the timeconsolidation or merger or sale or transfer. The
preceding sentence will not apply to a merger or sale of acquisition thereof andall or substantially all of our assets that does not result in anticipationany reclassification, conversion, exchange or cancellation of the financingcommon stock.
We may increase the conversion rate for any period of at least 20 days if our board of directors determines that the increase would be in our best interest. The board of directors’ determination in this regard will be conclusive. We will give holders of notes at least 15 days’ notice of such acquisition, (v) liens to secure industrial revenue or development bonds, (vi)
liens onan increase in the conversion rate. Any increase, however, will not be taken into account for purposes of determining whether the closing price of our common stock exceeds the conversion price by 105% in connection with an event that otherwise would be a change in control as defined below.
If at any time we make a distribution of property to secure debt incurredour shareholders that would be taxable to financesuch shareholders as a dividend for United States federal income tax purposes, such as a distribution of evidences of indebtedness or assets by us, but generally not stock dividends on common stock or rights to subscribe for common stock, and, pursuant to the anti-dilution provisions of the indenture under which the notes were issued, the number of shares into which notes are convertible is increased, that increase may be deemed for United States federal income tax purposes to be the payment of a taxable dividend to holders of notes. See “Certain United States Federal Income Tax Consequences—Dividends”.
Optional Redemption by Airborne
On or after April 1, 2005, we may redeem the notes in whole or in part, at the prices set forth below. If we elect to redeem all or part of the costnotes, we will give at least 30, but no more than 60, days notice to you.
The redemption price, expressed as a percentage of acquiring, repairing, constructingprincipal amount, is as follows for the following periods:
Period | Redemption Price | |
| Beginning on April 1, 2005 and ending on March 31, 2006 | 102.30% | |
| Beginning on April 1, 2006 and ending on March 31, 2007 | 101.15% |
and thereafter is equal to 100% of the principal amount. In each case, we will pay interest to, but excluding the redemption date.
No sinking fund is provided for the notes, which means that the indenture does not require us to redeem or improving such property so longretire the notes periodically.
Payment and Conversion
We will make all payments of principal and interest on the notes by dollar check drawn on an account maintained at a bank in The City of New York. If you are the registered holder of notes with a face value greater than $2,000,000, at your request we will make payments of principal or interest to you by wire transfer to an account maintained by you at a bank in The City of New York.
Payment of any interest on the notes will be made to the person in whose name the note, or any predecessor note, is registered at the close of business on March 15 or September 15, whether or not a business day, immediately preceding the relevant interest payment date (a “regular record date”). If you are the registered holder of notes with a face value in excess of $2,000,000 and you would like to receive payments by wire transfer, you will be required to provide the trustee with wire transfer instructions at least 15 days prior to the relevant payment date.
Payments on any global note registered in the name of DTC or its nominee will be payable by the trustee to DTC or its nominee in its capacity as the commitmentregistered holder under the indenture. Under the terms of the creditorindenture, we and the trustee will treat the persons in whose names the notes, including any global note, are registered as the owners for the purpose of receiving payments and for all other purposes. Consequently, neither we, the trustee nor any of our agents or the trustee’s agents has or will have any responsibility or liability for:
| • | any aspect of DTC’s records or any participant’s or indirect participant’s records relating to or payments made on account of beneficial ownership interests in the global note, or for maintaining, supervising or reviewing any of DTC’s records or any participant’s or indirect participant’s records relating to the beneficial ownership interests in the global note; or |
| • | any other matter relating to the actions and practices of DTC or any of its participants or indirect participants. |
We will not be required to extendmake any payment on the credit securednotes due on any day that is not a business day until the next succeeding business day. The payment made on the next succeeding business day will be treated as though it were paid on the original due date and no interest will accrue on the payment for the additional period of time.
Notes may be surrendered for conversion at the Corporate Trust Office of the trustee in the Borough of Manhattan, New York. Notes surrendered for conversion must be accompanied by such lienappropriate notices and any payments in respect of interest or taxes, as applicable, as described above under “—Conversion Rights”.
We have initially appointed the trustee as paying agent and conversion agent. We may terminate the appointment of any paying agent or conversion agent and appoint additional or other paying agents and conversion agents. However, until the notes have been delivered to the trustee for cancellation, or moneys sufficient to pay the principal of, premium, if any, and interest on the notes have been made available for payment and either paid or returned to us as provided in the indenture, the trustee will maintain an office or agency in the Borough of Manhattan, New York for surrender of notes for conversion. Notice of any termination or appointment and of any change in the office through which any paying agent or conversion agent will act will be given in accordance with “—Notices” below.
All moneys deposited with the trustee or any paying agent, or then held by us, in trust for the payment of principal of, premium, if any, or interest on any notes that remain unclaimed at the end of two years after the payment has become due and payable will be repaid to us, and you will then look only to us for payment.
Repurchase at Option of Holders Upon a Change in Control
If a “change in control” as defined below occurs, you will have the right, at your option, to require us to repurchase all of your notes not previously called for redemption, or any portion of the principal amount thereof, that is made no
later than 120equal to $1,000 or an integral multiple of $1,000. The price we are required to pay is 100% of the principal amount of the notes to be repurchased, together with interest accrued but unpaid to, but excluding, the repurchase date.
At our option, instead of paying the repurchase price in cash, we may pay the repurchase price in our common stock valued at 95% of the average of the closing prices of our common stock for the five trading days immediately preceding and including the third trading day prior to the repurchase date. We
may only pay the repurchase price in our common stock if we satisfy conditions provided in the indenture.
Within 30 days after the lateroccurrence of (A) the completiona change in control, we are obligated to give to you notice of the acquisition,
substantial repairchange in control and of the repurchase right arising as a result of the change in control. We must also deliver a copy of this notice to the trustee. To exercise the repurchase right, you must deliver on or substantial improvementbefore the 30th day after the date of our notice irrevocable written notice to the trustee of your exercise of your repurchase right, together with the notes with respect to which the right is being exercised. We are required to repurchase the notes on the date that is 45 days after the date of our notice.
A change in control will be deemed to have occurred at the time after March 25, 2002 that any of the following occurs:
| • | any person acquires beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of our capital stock entitling the person to exercise 50% or more of the total voting power of all shares of our capital stock that is entitled to vote generally in elections of directors, other than an acquisition by us, any of our subsidiaries or any of our employee benefit plans; or |
| • | we merge or consolidate with or into any other person, another person merges into us or we convey, sell, transfer, lease or otherwise dispose of all or substantially all of our assets to another person, other than any such transaction: |
| • | that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of our capital stock; and |
| • | pursuant to which the holders of 50% or more of the total voting power of all shares of our capital stock entitled to vote generally in elections of directors immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to vote generally in the election of directors of the continuing or surviving corporation immediately after such transaction; or |
| • | any transaction that is effected solely to change our jurisdiction of incorporation and results in a reclassification, conversion or exchange of outstanding shares of our common stock into solely shares of common stock. |
However, a change in control will not be deemed to have occurred if:
| • | the closing price per share of our common stock for any five trading days within the period of 10 consecutive trading days ending immediately after the later of the change in control or the public announcement of the change in control, in the case of a change in control relating to an acquisition of capital stock, or the period of 10 consecutive trading days ending immediately before the change in control, in the case of change in control relating to a merger, consolidation or asset sale, equals or exceeds 105% of the conversion price of the notes in effect on each of those trading days; or |
| • | all of the consideration, excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights, in a merger or consolidation otherwise constituting a change in control under the first and second bullet points in the preceding paragraph above consists of shares of common stock, depository receipts or other certificates representing common equity interests traded on a national securities exchange or quoted on the Nasdaq National |
Market, or will be so traded or quoted immediately following such merger or consolidation, and as a result of such Principal Propertymerger or consolidation the notes become convertible solely into such common stock, depository receipts or other certificates representing common equity interests.
For purposes of these provisions:
| • | the conversion price is equal to $1,000 divided by the conversion rate; |
| • | whether a person is a “beneficial owner” will be determined in accordance with Rule 13d-3 under the Exchange Act; and |
| • | “person” includes any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act. |
The rules and (B)regulations promulgated under the placing in operationExchange Act require the dissemination of such Principal Property, (vii) liensprescribed information to secure debt
incurred to extend, renew, refinance or refund debt secured by liens referred tosecurity holders in the event of an issuer tender offer and may apply in the event that the repurchase option becomes available to you. We will comply with these rules to the extent they apply at that time.
We may, to the extent permitted by applicable law, at any time purchase notes in the open market, by tender at any price or by private agreement. Any note that we purchase may, to the extent permitted by applicable law and subject to restrictions contained in the purchase agreement with the underwriters, be re-issued or resold or may, at our option, be surrendered to the trustee for cancellation. Any notes surrendered for cancellation may not be re-issued or resold and will be canceled promptly.
The definition of change in control includes a phrase relating to the conveyance, transfer, sale, lease or disposition of all or substantially all of our assets. There is no precise, established definition of the phrase “substantially all” under applicable law. Accordingly, your ability to require us to repurchase your notes as a result of conveyance, transfer, sale, lease or other disposition of less than all of our assets may be uncertain.
The foregoing clauses (i)provisions would not necessarily provide you with protection if we are involved in a highly leveraged or other transaction that may adversely affect you.
Our ability to (vi) so long as such lien does not extendrepurchase notes upon the occurrence of a change in control is subject to anyimportant limitations. Some of the events constituting a change in control could result in an event of default under, or be prohibited or limited by, the terms of our other property andsenior debt. Although we have the debt so secured is not increased, and (viii)right to repurchase the notes with our common stock, subject to certain conditions, liens securing debt owingwe cannot assure you that we would have the financial resources, or would be able to arrange financing, to pay the repurchase price in cash for all the notes that might be delivered by holders of notes seeking to exercise the Company to a wholly-owned
subsidiary.
Limitation on Salerepurchase right.
Mergers and Leaseback Transactions. The Indenture provides that
the Company willSales of Assets by Airborne
We may not and will not permit any Restricted Subsidiary to, enterconsolidate with or merge into any saleother entity or convey, transfer, sell or lease our properties and leaseback transaction with
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respectassets substantially as an entirety to any Principal Property (except for a term, including any renewal
thereof, not exceeding 36 months), unless (i) the Company or such Restricted
Subsidiary would be entitled to enter into such sale and leaseback transaction
as described in the first sentence of the immediately preceding paragraph
without equally and ratably securing the Debt Securities, (ii) the commitment by
the purchaser is obtained no later than 120 days after the later of (A) the
completion of the acquisition, substantial repair or substantial improvement of
such Principal Property or (B) the placing in operation of such Principal
Property, or (iii) the Company or such Restricted Subsidiary applies to the
retirement of Debt Securities or other debt of the Company or a Restricted
Subsidiary (other than debt that is subordinated in right of payment to the Debt
Securities) an amount equal to (A) either (i) the lesser of the net proceeds of
the sale or transfer or the book value at the date of such sale or transfer of
the Principal Property leased, if the transaction is for cash, or (ii) the fair
market value of the Principal Property leased, if the transaction is forentity other than cash, minus (B) an amount equal to the principal amount of Debt Securities
delivered to the Trustee within such 90 days for cancellation and the principal
amount of debt voluntarily retired within such 90 days. (Section 1009)
Certain Definitions. "Restricted Subsidiary" means, at any time, any
corporation of which: (i) more than 50% of the voting stock at such time is
owned or controlled by the Company or by one or more of our subsidiaries, and we may not permit any entity to consolidate with or merge into us or convey, transfer, sell or lease such entity’s properties and assets substantially as an entirety to us unless:
| • | the entity formed by such consolidation or into or with which we are merged or the entity to which our properties and assets are so conveyed, transferred, sold or leased, shall be a corporation, limited liability company, partnership or trust organized and existing under the laws |
of the other Restricted
Subsidiaries, (ii) the operating assets and principal business at such time
shall be carried onUnited States, any State within the United States or Canadathe District of Columbia and, (iii) which at such
time owns a Principal Property. "Principal Property" means any propertyif we are not the surviving entity, the surviving entity assumes the payment of
whatever character owned by or leased to the Company or a Restricted Subsidiary
having an acquisition cost plus capitalized improvements in excess of 0.5% of
Consolidated Net Tangible Assets as well as capital stock and indebtedness of
all Restricted Subsidiaries. The Company estimates that as of June 30, 1995, the
book value of the Principal Property of the Company and its subsidiaries,
consisting primarily of aircraft, was approximately $603 million. "Attributable
Value" means (i) as to any particular lease under which the Company or a
Restricted Subsidiary is at the time liable other than a capital lease
obligation, and at any date as of which the amount thereof is to be determined,
the total net amount of rent required to be paid by the Company or such
Restricted Subsidiary under such lease during the initial term thereof as
determined in accordance with generally accepted accounting principles,
discounted from the last date of such initial term to the date of determination
at a rate per annum equal to the discount rate which would be applicable to a
capital lease obligation with like term in accordance with generally accepted
accounting principles and (ii) as to a capital lease obligation under which the
Company or such Restricted Subsidiary is at the time liable and at any date as
of which the amount thereof is to be determined, the capitalized amount thereof
that would appear on the face of a balance sheet of such Person in accordance
with generally accepted accounting principles. "Consolidated Net Tangible
Assets" means the aggregate amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom (i) all current liabilities
and (ii) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles of the Company and its
consolidated subsidiaries, all as set forth on the most recent balance sheet of
the Company and its consolidated subsidiaries prepared in accordance with
generally accepted accounting principles. As of June 30, 1995, the Consolidated
Net Tangible Assets of the Company and its subsidiaries was approximately $894
million.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to the
Debt Securities of any series: (a) failure to pay the principal of, or premium, (if any) onif any, Debt Security of that series when due; (b) failure to pay anyand interest on any Debt Securitythe notes and the performance of that series when due, continued for 30 days;
(c) default inour other covenants under the depositindenture; and
| • | immediately after giving effect to the transaction, no event of default, and no event that, after notice or lapse of time or both, would become an event of default, will have occurred and be continuing. |
Events of any sinking fund payment when and as due by the
termsDefault
The following will be events of a Debt Security of that series; (d) failure to perform any other
covenant of the Company in the Indenture (other than a covenant included in the
Indenture solely for the benefit of a series of Debt Securities other than that
series), continued for 60 days after written notice as provided in the
Indenture; (e) a default under any indebtedness for money borrowed by the Company or a Restricted Subsidiary (including a default with respect to Debt
Securities of any series other than that series) which default shall constitute
a failure to pay any portion of such indebtedness in an amount exceeding
$5,000,000 when due and payable after
7
24
the expiration of any applicable grace period with respect thereto or shall have
resulted in such indebtedness in an amount exceeding $5,000,000 becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable, if such indebtedness is not discharged, or such
acceleration is not annulled, within 10 days after written notice as provided in
the Indenture; and (f) certain events in bankruptcy, insolvency or
reorganization relating to the Company. (Section 501) indenture:
| • | we fail to pay principal of or premium, if any, on any note when due; |
| • | we fail to pay any interest, including any liquidated damages, on any note when due, which failure continues for 30 days; |
| • | we fail to provide notice of a change in control; |
| • | we fail to perform any other covenant in the indenture, which failure continues for 60 days following notice as provided in the indenture; |
| • | any indebtedness under any bonds, debentures, notes or other evidences of indebtedness for money borrowed, or any guarantee thereof, by us or any of our significant subsidiaries, in an aggregate principal amount in excess of $10 million is not paid when due either at its stated maturity or upon acceleration thereof, and such indebtedness is not discharged, or such acceleration is not rescinded or annulled, within a period of 30 days after notice as provided in the indenture; and |
| • | certain events of bankruptcy, insolvency or reorganization involving us or any of our significant subsidiaries. |
Subject to the provisions of the Indentureindenture relating to the duties of the Trusteetrustee in case an Eventevent of Default (as defined)default shall occur and be continuing, the Trusteetrustee will be under no obligation to exercise any of its rights or powers under the Indentureindenture at the request or direction of any ofholder, unless the Holders, unless such Holdersholder shall have offered reasonable indemnity to the Trustee reasonable indemnity. (Section 603)trustee. Subject to such
provisions for theproviding indemnification of the Trustee,trustee, the Holdersholders of a majority in aggregate principal amount of the Outstanding Debt Securities of any seriesoutstanding notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee,trustee or exercising any trust or power conferred on the Trustee, with respect to the Debt Securities of that series.
(Section 512)
trustee.
If an Eventevent of Default with respect to Outstanding Debt Securitiesdefault other than an event of any
series shall occurdefault arising from events of insolvency, bankruptcy or reorganization occurs and beis continuing, either the Trusteetrustee or the Holdersholders of at least 25% in aggregate principal amount of the Outstanding Debt Securities of
that seriesoutstanding notes may declareaccelerate the principal amount (or, if the Debt Securities of that
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series)maturity of all Debt Securities
of that series to be due and payable immediately; provided, however, thatnotes. However, after such acceleration, but before a judgment or decree based on acceleration, the Holdersholders of a majority in aggregate principal amount of the Outstanding Debt
Securities of that seriesoutstanding notes may, under certain circumstances, rescind and annul suchthe acceleration if all Eventsevents of Default,default, other than the non-payment of accelerated principal of the notes that have become due solely by such declaration of acceleration, have been cured or waived as provided in the Indenture.
(Section 502)indenture. If an event of default arising from events of insolvency, bankruptcy or reorganization occurs, then the principal of, and accrued interest on, all the notes will automatically become immediately due and
payable without any declaration or other act on the part of the holders of the notes or the trustee. For information as to waiver of defaults, see "Modification“—Meetings, Modification and Waiver."
No Holder of any Debt Security of any seriesWaiver” below.
You will not have any right to institute any proceeding with respect to the Indentureindenture, or for any remedy thereunder, unless such Holder shall have previously given tounder the Trustee
written notice of a continuing Event of Default and unless also the Holders of
at least 25% in aggregate principal amount of the Outstanding Debt Securities of
that series shall have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceeding as trustee, and the Trustee shall
not have received from the Holders of a majority in aggregate principal amount
of the Outstanding Debt Securities of that series a direction inconsistent with
such request and shall have failed to institute such proceeding within 60 days.
(Section 507) indenture, unless:
| • | you give the trustee written notice of a continuing event of default; |
| • | the holders of at least 25% in aggregate principal amount of the outstanding notes have made written request and offered reasonable indemnity to the trustee to institute proceedings; |
| • | the trustee has not received from the holders of a majority in aggregate principal amount of the outstanding notes a direction inconsistent with the written request; and |
| • | the trustee shall have failed to institute such proceeding within 60 days of the written request. |
However, suchthese limitations do not apply to a suit instituted by a
Holder of a Debt Securityyou for the enforcement of payment of the principal of, or
premium, (if any)if any, or interest, including liquidated damages, on such Debt Securityyour note on or after the respective due dates expressed in such Debt Security. (Section 508)
The Companyyour note or your right to convert your note in accordance with the indenture.
We will be required to furnish to the Trusteetrustee annually a statement as to theour performance by the Company of certain of itsour obligations under the Indentureindenture and as to any default in such performance. (Section 1004)
MERGER AND CONSOLIDATION
Meetings, Modification and Waiver
The Companyindenture contains provisions for convening meetings of the holders of notes to consider matters affecting their interests.
Certain limited modifications of the indenture may be made without the necessity of obtaining the consent of the holders of the notes.
Other modifications and amendments of the indenture may be made, compliance by us with certain restrictive provisions of the indenture may be waived and any past defaults by us under the indenture (except a default in the payment of principal, premium, if any, or interest) may be waived, either:
| • | with the written consent of the holders of not less than a majority in aggregate principal amount of the notes at the time outstanding; or |
| • | by the adoption of a resolution, at a meeting of holders of the notes at which a quorum is present, by the holders of at least 66 2/3% in aggregate principal amount of the notes represented at such meeting. |
The quorum at any meeting called to adopt a resolution will be persons holding or representing a majority in aggregate principal amount of the notes at the time outstanding and, at any reconvened meeting adjourned for lack of a quorum, 25% of such aggregate principal amount.
However, a modification or amendment requires the consent of the holder of each outstanding note affected if it would:
| • | change the stated maturity of the principal or interest of a note; |
| • | reduce the principal amount of, or any premium or interest on, any note; |
| • | reduce the amount payable upon a redemption or mandatory repurchase; |
| • | modify the provisions with respect to the repurchase rights of holders of notes in a manner adverse to the holders; |
| • | modify our right to redeem the notes in a manner adverse to the holders; |
| • | impair the right to institute suit for the enforcement of any payment on any note; |
| • | modify our obligation to maintain an office or agency in New York City; |
| • | modify the ranking of the notes in a manner that is adverse to the holders of the notes; |
| • | adversely affect the right to convert the notes other than a modification or amendment required by the terms of the indenture; |
| • | modify our obligation to deliver information required under Rule 144A to permit resales of the notes and common stock issued upon conversion of the notes if we cease to be subject to the reporting requirements under the Exchange Act; |
| • | reduce the above-stated percentage of the principal amount of the holders whose consent is needed to modify or amend the indenture; |
| • | reduce the percentage of the principal amount of the holders whose consent is needed to waive compliance with certain provisions of the indenture or to waive certain defaults; or |
| • | reduce the percentage required for the adoption of a resolution or the quorum required at any meeting of holders of notes at which a resolution is adopted. |
As permitted by Delaware law, our certificate of incorporation contains a provision pursuant to which application may be made to a court of equitable jurisdiction within the State of Delaware to order a meeting of our creditors or a class of our creditors whenever a compromise or arrangement is proposed between us and our creditors or a class of our creditors. If 75% of our creditors or that class of creditors, as the case may be, agrees to any compromise or arrangement, such compromise or arrangement, if sanctioned by the court, will be binding on all of our creditors or that class of creditors and on us. This provision is also applicable to any compromise or arrangement between us and our shareholders or a class of our shareholders. The certificates of incorporation of certain subsidiary guarantors also contain similar provisions.
Registration Rights
We and the guarantor subsidiaries have entered into a registration rights agreement with the initial purchasers of the notes. In the registration rights agreement we agreed, for the benefit of the holders of the notes and related guarantees and the shares of common stock issuable upon conversion of the notes, commonly referred to as the registrable securities, that we would, at our expense:
| • | file with the SEC, within 90 days after the date the notes were originally issued, a shelf registration statement covering resales of the registrable securities; |
| • | use our best efforts to cause the shelf registration statement to be declared effective under the Securities Act no later than 180 days after the date the notes were originally issued; and |
| • | use our best efforts to keep effective the shelf registration statement until two years after the date the shelf registration statement is declared effective or, if earlier, until there are no outstanding registrable securities. |
We satisfied the first of these requirements when we filed our shelf registration statement on Form S-3 in May 2002, and we will satisfy the second of these requirements so long as the date of this prospectus is on or before September 21, 2002.
We will be permitted to suspend the use of this prospectus in connection with the sales of registrable securities during prescribed periods of time for reasons relating to pending corporate developments, public filings with the SEC and other events. The periods during which we can suspend the use of this prospectus may not, consolidatehowever, exceed a total of 30 days in any 90-day period or a total of 90 days in any 365-day period. We will provide to each holder of registrable securities copies of this prospectus, notify each holder when the shelf registration statement has become effective and take certain other actions required to permit public resales of the registrable securities.
We may, upon written notice to all the holders of notes, postpone having the shelf registration statement declared effective, for a reasonable period not to exceed 90 days, if our board of directors has determined in good faith that because of valid business reasons, including the acquisition or divestiture of assets, pending corporate developments and similar events, it is in our best interests to postpone having the shelf registration statement declared effective. Notwithstanding any such postponement, additional interest referred to as “liquidated damages” will accrue on the notes if either of the following registration defaults occurs:
| • | on or prior to 90 days following the date the notes were originally issued, a shelf registration statement has not been filed with the SEC; or |
| • | on or prior to 180 days following the date the notes were originally issued, the shelf registration statement is not declared effective. |
In that case, liquidated damages will accrue on any notes, and shares issued on conversion of the notes, that are then restricted securities from and including the day following the registration default to but excluding the day on which the registration default has been cured. Liquidated damages will be paid semi-annually in arrears, with the first semi-annual payment due on the first interest payment date following the date on which the liquidated damages began to accrue.
The rates at which liquidated damages will accrue will be as follows:
| • | 0.25% of the principal amount per annum to and including the 90th day after the registration default; and |
| • | 0.5% of the principal amount per annum from and after the 91st day after the registration default. |
In addition, the interest rate on all of the notes will be increased if either of the following effectiveness defaults occurs:
| • | the shelf registration statement ceases to be effective, or we otherwise prevent or restrict holders of registrable securities from making sales under the shelf registration statement, for more than 30 days, whether or not consecutive, during any 90-day period; or |
| • | the shelf registration statement ceases to be effective, or we otherwise prevent or restrict holders of registrable securities from making sales under the shelf registration statement, for more than 90 days, whether or not consecutive, during any 365-day period. |
In either event, the interest rate on the notes will increase by an additional 0.5% per annum from the 31st day or merge intothe 91st day, as the case may be, of the effectiveness default. The increased rate will continue until the earlier of the following:
| • | the time the shelf registration statement again becomes effective or the holders of registrable securities are again able to make sales under the shelf registration statement; or |
| • | two years after the date the shelf registration statement is declared effective or, if earlier, until there are no outstanding registrable securities. |
A holder who elects to sell any registrable securities pursuant to the shelf registration statement:
| • | will be required to be named as a selling security holder in this prospectus; |
| • | will be required to complete and return to us a notice and questionnaire in the form that we have provided to the holders of registrable securities; |
| • | may be required to deliver a prospectus to purchasers; |
| • | may be subject to certain civil liability provisions under the Securities Act in connection with those sales; and |
| • | will be bound by the provisions of the registration rights agreement that apply to a holder making such an election, including certain indemnification provisions. |
We have mailed a notice and questionnaire to the holders of registrable securities. The registration statement requires us to mail that notice not less than 30 calendar days prior to the time the shelf registration statement is declared effective.
No holder of registrable securities will be entitled:
| • | to be named as a selling security holder in the shelf registration statement as of the date the shelf registration statement is declared effective; or |
| • | to use this prospectus for offers and resales of registrable securities at any time, |
unless such holder has returned a completed and signed notice and questionnaire to us by the deadline for response set forth in the notice and questionnaire.
Holders of registrable securities will, however, have at least 28 calendar days from the date on which the notice and questionnaire is first mailed to return a completed and signed notice and questionnaire to us.
Beneficial owners of registrable securities who have not returned a notice and questionnaire by the questionnaire deadline described above may receive another notice and questionnaire from us upon request. Following our receipt of a completed and signed notice and questionnaire, we will include the registrable securities covered thereby in the shelf registration statement as provided in the registration rights agreement.
We agreed in the registration rights agreement to use our best efforts to cause the shares of common stock issuable upon conversion of the notes to be listed on the New York Stock Exchange. However, if the common stock is not then listed on the New York Stock Exchange, we will use our best efforts to cause the shares of common stock issuable upon conversion of the notes to be listed on whichever other stock exchange or trading system the common stock primarily trades on prior to the effectiveness of the shelf registration statement.
Because this section is a summary, it does not describe every aspect of the registration rights agreement. This summary is subject to, and qualified in its entirety by reference to, all the provisions of the registration rights agreement.
Notices
Notice to holders of the registered notes will be given by mail to the addresses as they appear in the security register. Notices will be deemed to have been given on the date of such mailing.
Notice of a redemption of notes will be given not less than 30 nor more than 60 days prior to the redemption date and will specify the redemption date. A notice of redemption of the notes will be irrevocable.
Replacement of Notes
We will replace any note that becomes mutilated, destroyed, stolen or lost at the expense of the holder upon delivery to the trustee of the mutilated notes or evidence of the loss, theft or destruction satisfactory to us and the trustee. In the case of a lost, stolen or destroyed note, indemnity satisfactory to the trustee and us may be required at the expense of the holder of the note before a replacement note will be issued.
Payment of Stamp and Other Taxes
We will pay all stamp and other duties, if any, that may be imposed by the United States or any political subdivision thereof or taxing authority thereof or therein with respect to the issuance of the notes or of shares of common stock upon conversion of the notes. We will not be required to make any payment with respect to any other corporationtax, assessment or transfergovernmental charge imposed by any government or lease allany political subdivision thereof or substantially alltaxing authority thereof or therein.
Governing Law
The indenture, the notes, the guarantees and the registration rights agreement will be governed by and construed in accordance with the laws of the State of New York.
The Trustee
If an event of default occurs and is continuing, the trustee will be required to use the degree of care of a prudent person in the conduct of his own affairs in the exercise of its assets to any person unless,
after giving effectpowers. Subject to such transaction,provisions, the trustee will be under no Eventobligation to exercise any of Default, and no event
which, after noticeits rights or lapsepowers under the
indenture at the request of time or both, would become an Eventany of Default,the holders of notes, unless they shall have happenedfurnished to the trustee reasonable security or indemnity.
The Bank of New York is a lender on our revolving credit agreement and has in the past, and may in the future, engage in other commercial banking transactions with us. In addition, The Bank of New York is the trustee under a separate indenture for Airborne Express, Inc.’s 8.875% Notes due December 15, 2002 and 7.35% Notes due September 15, 2005. Pursuant to the Trust Indenture Act, upon the occurrence of a default with respect to the notes, The Bank of New York may be continuingdeemed to have a conflicting interest by virtue of its lending and other business relationships with us. In that event, The Bank of New York would be required to resign as a trustee or eliminate the corporation formed by such
consolidation orconflicting interest.
This section describes the material U.S. federal income tax considerations relating to the purchase, ownership, and disposition of the notes and of common stock into which the Companynotes may be converted. This description is mergedbased on the opinion of Riddell Williams P.S., special tax counsel to Airborne. This description does not provide a complete analysis of all potential tax considerations. The information provided below is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed regulations under the Code, published rulings and court decisions, all as in effect on May 1, 2002. These authorities may change, possibly on a retroactive basis, or the Internal Revenue Service (the “IRS” ) might interpret the existing authorities differently. In either case, the tax consequences of purchasing, owning or disposing of notes or common stock could differ from those described below. This description assumes that (i) U.S. Holders (as defined below) hold the notes (or common stock into which the notes have been converted) as “capital assets” (generally, property held for investment) within the meaning of section 1221 of the Code; and (ii) the notes are not subject to the contingent payment debt instrument rules as further described herein.
This description generally applies only to “U.S. Holders”. For purposes of this description, a “U.S. Holder” is (i) a citizen or resident of the United States; (ii) a corporation which
acquiresorganized in or leases all or substantially all of its assets, (i) is organized under the laws of the United States or any state thereof or(including the District of ColumbiaColumbia); (iii) an estate (other than a foreign estate as defined in Code section 7701(a)(31)(A)); or (iv) a trust if: (a) a court within the United States can exercise primary supervision over its administration; and (ii) assumes(b) one or more United States persons have the authority to control all the obligations of the Companysubstantial decisions of such trust, or any trust if such trust validly elects to be treated as a United States person for United States federal income tax purposes.
This description is general in nature and does not discuss all aspects of U.S. federal income taxation that may be relevant to a particular U.S. Holder in light of the U.S. Holder’s particular circumstances, or to certain types of U.S. Holders subject to special treatment under U.S. federal income tax laws (such as financial institutions, real estate investment trusts, regulated investment companies, grantor trusts, insurance companies, tax-exempt organizations, brokers, dealers or traders in securities or foreign currencies, persons holding notes or common stock as part of a position in a “straddle” or as part of a “hedging”, “conversion” or “integrated” transaction for U.S. federal income tax purposes, and persons that have a “functional currency” other than the United States dollar). This description also does not address U.S. federal, state, local and foreign tax consequences for persons that are not U.S. Holders, which consequences may differ from the consequences described below for U.S. Holders. In addition, this description does not consider the effect of any foreign, state, local or other tax laws, or any U.S. tax considerations (e.g., estate or gift tax) other than U.S. federal income tax considerations, that may be applicable to particular U.S. Holders.
Investors considering the purchase of notes should consult their own tax advisors regarding the application of the U.S. federal income tax laws to their particular situations and the consequences of U.S. federal estate and gift tax laws, foreign, state and local laws, and tax treaties.
Taxation of Interest
U.S. Holders will be required to recognize as ordinary income any interest paid or accrued on the notes, in accordance with their regular method of accounting.
If the amount or timing of any payments on a debt instrument is contingent, the debt instrument may be subject to special rules that apply to contingent payment debt instruments. These rules generally require holders of debt instruments to accrue interest income at a rate higher than the stated interest rate on the debt instruments and to treat as ordinary income (rather than capital gain) any gain recognized on a sale, exchange or retirement of the debt instruments before the resolution of the contingencies. Under the terms of the notes, upon a change in control, an investor could require us to repurchase some or all of the investor’s notes and we might elect to pay the repurchase price in shares of our common stock. It is possible, in that case, that the value of the stock could exceed the sum of the principal amount of the notes and accrued and unpaid interest. We do not believe that the notes should be treated as contingent payment debt instruments. Therefore, for purposes of filing tax or information returns with the IRS, we do not intend to treat the notes as contingent payment debt instruments.
Investors considering the purchase of notes should make their own decision as to whether the notes are contingent payment debt instruments and should consult their own tax advisors in that connection.
Market Discount; Acquisition Premium
A U.S. Holder that purchases a note with “market discount”, which generally occurs when the purchase price for the note is less than the note’s principal amount, will be subject to special rules. Under a de minimis exception, however, those special rules will not apply if the amount of market discount does not exceed one quarter of one percent for each full year remaining until the maturity of the notes. If the special rules apply, any gain recognized by the U.S. Holder upon a sale or other disposition of the note will be treated as ordinary income rather than capital gain to the extent of that portion of the market discount that accrued prior to the disposition. Market discount generally accrues on a straight line basis over the remaining term of the note, but the U.S. Holder can elect to compute accrued market discount based on the economic yield of the note. The U.S. Holder of a note with market discount might be required to recognize gain to the extent of accrued market discount even if the disposition takes a form, such as a gift, in which the U.S. Holder would not normally be required to recognize gain. The market discount rules will not affect the tax consequences to the U.S. Holder upon conversion of the note, which will generally be nontaxable under the Debt
Securitiesrules described below under “—Conversion of the Notes”. The market discount accrued prior to conversion, however, will be carried over to the stock received on conversion, so that, to that extent, any gain recognized by the U.S. Holder upon disposition of the stock will be treated as ordinary (interest) income. Finally, if the U.S. Holder’s purchase of the notes is debt-financed, the U.S. Holder will not be entitled to deduct interest expense allocable to accrued market discount until the U.S. Holder recognizes the corresponding income. The U.S. Holder of a note with market discount may elect to include the market discount in income as it accrues. If a U.S. Holder makes this election, any gain recognized on a disposition of the note will be entirely capital gain, and the Indenture. (Section 801)
Unless otherwise disclosedrules deferring the deduction of interest on related loans will not apply.
If a U.S. Holder purchases a note at a price that exceeds the principal amount plus accrued interest, the U.S. Holder can elect to amortize the premium as a reduction to interest income so that the income reported by the U.S. Holder each period reflects the U.S. Holder’s economic yield. Any premium paid on
acquiring a note is not amortizable, however, to the extent that it reflects the value of the conversion privilege of the note. Once made, such an election is revocable only with IRS consent. The election applies to all bonds, other than bonds the interest on which is not includible in gross income, held by the electing U.S. Holder at the beginning of the first taxable year to which the election applies and all such bonds thereafter acquired by the U.S. Holder. If the U.S. Holder elects to amortize premium, the amortized premium would reduce the U.S. Holder’s tax basis in the note.
Sale, Exchange or Redemption of the Notes
A U.S. Holder generally will recognize capital gain or loss if the U.S. Holder disposes of a note in a sale, redemption or exchange other than a conversion of the note into common stock. The U.S. Holder’s gain or loss will equal the difference between the amount realized by the U.S. Holder and the U.S. Holder’s adjusted tax basis in the note. The U.S. Holder’s adjusted tax basis in the note will generally equal the amount the U.S. Holder paid for the note. The amount realized by the U.S. Holder will include the amount of any cash and the fair market value of any other property received for the note, except that the portion of any proceeds attributable to accrued interest, including accrued unrecognized market discount, as discussed above, will not be taken into account in computing the U.S. Holder’s capital gain or loss. Instead, that portion will be recognized as ordinary interest income to the extent that the U.S. Holder has not previously included the accrued interest in income. The gain or loss recognized by a U.S. Holder on a disposition of the note will be long-term capital gain or loss if the U.S. Holder held the note for more than one year. Long-term capital gains of non-corporate taxpayers are taxed at lower rates than those applicable Prospectus Supplement,to ordinary income. The deductibility of capital losses is subject to certain limitations.
If, upon a change in control, a holder requires us to repurchase some or all of the holder’s notes and we elect to pay the repurchase price in shares of our common stock, the redemption may qualify as a recapitalization for U.S. federal income tax purposes if the notes qualify as “securities” for those purposes. While the notes probably qualify as “securities”, the matter is not free from doubt. If the redemption qualifies as a recapitalization, a U.S. Holder would not recognize any income, gain or loss on the holder’s receipt of our common stock in exchange for notes, except to the extent the stock received is attributable to accrued interest. If the holder receives cash in lieu of fractional shares of stock, however, the holder would be treated as if he received the fractional share and then had the fractional share redeemed for cash. The holder would recognize gain or loss equal to the difference between the cash received and that portion of his basis in the stock attributable to the fractional share. The holder’s aggregate basis in the stock (including any fractional share for which cash is paid) would equal his adjusted basis in the note. The holder’s holding period for the stock would include the period during which he held the note. If the redemption does not qualify as a recapitalization, a U.S. Holder will generally recognize capital gain or loss equal to the difference between the amount realized by the U.S. Holder and the U.S. Holder’s adjusted tax basis in the note as described above.
Conversion of the Notes
A U.S. Holder who converts his note into common stock generally will not recognize any income, gain or loss, except to the extent the stock received is attributable to accrued interest. The U.S. Holder will also recognize gain to the extent that he receives cash in lieu of a fractional share as described above. The U.S. Holder’s aggregate adjusted basis in the common stock (including any fractional share for which cash is paid) will equal his adjusted basis in the note, and the U.S. Holder’s holding period for the stock will include the period during which he held the note.
Dividends
If a U.S. Holder converts a note into common stock and we make a distribution (other than of our own stock) in respect of that stock, the distribution will be treated as a dividend, taxable to the U.S. Holder as ordinary income, to the extent it is paid from our current or accumulated earnings and profits. If the distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a nontaxable return of capital reducing the U.S. Holder’s adjusted tax basis in the U.S. Holder’s stock to the extent of the U.S. Holder’s adjusted tax basis in the U.S. Holder’s stock. Any remaining excess will be treated as capital gain. We are required to provide shareholders who receive dividends with an information return on Form 1099-DIV that states the extent to which the dividend is paid from our current or accumulated earnings and profits. If a U.S. Holder is a U.S. corporation, it will be able to claim the deduction allowed to U.S. corporations in respect of dividends received from other U.S. corporations equal to a portion of any dividends received subject to generally applicable limitations on that deduction.
The terms of the notes allow for changes in the conversion price of the notes in certain circumstances. A change in conversion price that allows U.S. Holders of notes to receive more shares of common stock on conversion may increase those noteholders’ proportionate interests in our earnings and profits or assets. In that case, those noteholders could be treated as though they received a dividend in the form of our stock. Such a constructive stock dividend could be taxable to those noteholders, although they would not actually receive any cash or other property. A taxable constructive stock dividend would result to U.S. Holders of notes, for example, if the conversion price were adjusted to compensate noteholders for distributions of cash or property to our shareholders. However, a change in conversion price to prevent the dilution of the noteholders’ interests upon a stock split or other change in capital structure, if made under a bona fide, reasonable adjustment formula, should not increase noteholders’ proportionate interests in our earnings and profits or assets and should not be treated as a constructive stock dividend. On the other hand, if an event occurs that dilutes the noteholders’ interests and the conversion price is not adjusted, the resulting increase in the proportionate interests of our shareholders could be treated as a taxable stock dividend to those shareholders. Any taxable constructive stock dividends resulting from a change to, or failure to change, the conversion price would be treated in the same manner as dividends paid in cash or other property. Such dividends would result in ordinary income to the recipient, to the extent of our current or accumulated earnings and profits, with any excess treated as a nontaxable return of capital or as capital gain as more fully described above.
Sale of Common Stock
A U.S. Holder will generally recognize capital gain or loss on a sale or exchange of common stock. The U.S. Holder’s gain or loss will equal the difference between the amount realized by the U.S. Holder and the U.S. Holder’s adjusted tax basis in the stock as described above in “—Conversion of the Notes” and “—Sale, Exchange or Redemption of the Notes”. Subject to the special market discount discussed above, the amount realized by the U.S. Holder will include the amount of any cash and the fair market value of any other property received for the stock. Gain or loss recognized by a U.S. Holder on a sale or exchange of stock will be long-term capital gain or loss if the holder held the stock for more than one year. Long-term capital gains of non-corporate taxpayers are taxed at lower rates than those applicable to ordinary income. The deductibility of capital losses is subject to certain limitations.
Backup Withholding and Information Reporting
The Code and U.S. Treasury Regulations require persons who make certain specified payments to report the payments to the IRS. Among the specified payments are interest, dividends, and proceeds paid by brokers to their customers. This reporting regime is reinforced by “backup withholding” rules. These rules require the payers to withhold tax from payments subject to information reporting if the recipient
fails to provide his taxpayer identification number to the payer or furnishes an incorrect identification number, or if the recipient has been notified by the IRS that he has failed to report interest or dividends on his returns. The information reporting and backup withholding rules do not apply to payments to U.S. corporations.
Payments of interest or dividends to individual U.S. Holders of notes or common stock generally will be subject to information reporting, and generally will be subject to backup withholding, unless the U.S. Holder provides us or our paying agent with a correct taxpayer identification number.
Payments made to U.S. Holders by a broker upon a sale of notes or common stock generally will be subject to information reporting and backup withholding. If, however, the sale is made through a foreign office of a U.S. broker, the sale will be subject to information reporting but not backup withholding. If the sale is made through a foreign office of a foreign broker, the sale generally will not be subject to either information reporting or backup withholding. This exception will not apply, however, if the foreign broker is owned or controlled by U.S. persons, or is engaged in a U.S. trade or business.
Any amounts withheld from a payment to a U.S. Holder of notes or common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the U.S. Holder.
The preceding discussion of certain U.S. federal income tax considerations is for general information only. It is not tax advice. Each prospective investor should consult his own tax advisor regarding the particular U.S. federal, state, local and foreign tax consequences of purchasing, holding, and disposing of our notes or common stock, including the consequences of any proposed change in applicable laws.
Airborne has 126,000,000 authorized shares of capital stock, consisting of 120,000,000 shares of common stock, $1.00 par value, and 6,000,000 shares of preferred stock. As of March 31, 2002, we had 48,307,185 shares of common stock (net of treasury shares) and no shares of preferred stock outstanding.
The following is a summary of certain provisions of Delaware law and our certificate of incorporation and by-laws. This summary does not purport to be complete and is qualified in its entirety by reference to the Indenture would not necessarily afford corporate law of Delaware and our certificate of incorporation and by-laws.
Description of Common Stock
Holders of common stock are entitled to such dividends as our board of directors, in its discretion, may declare out of legally available funds, subject to any preference of the Debt
Securities protectionholders of any outstanding preferred stock. Dividends and other distributions are subject to certain restrictions under our existing revolving credit agreement. The shares of common stock are not redeemable, and holders of common stock have no preemptive or other rights to purchase any of our securities. If Airborne liquidates, holders of common stock will be entitled to receive pro rata, subject to any preference of the holders of any outstanding preferred stock, all remaining assets available for distribution to shareholders after payment of all our debts and other liabilities. Holders of common stock are entitled to cast one vote per share, except that they are entitled to cumulate votes in the eventelection of directors.
Preferred Stock
Our board of directors has the authority, without shareholder approval, to issue shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions of each series, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares in each series that is issued. The issuance of this preferred stock may have the effect of delaying, deferring or preventing a highly leveraged
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transaction, reorganization, restructuring, merger, change in control of control or similar
transaction involving the Company thatAirborne and may adversely affect the Holders.
MODIFICATION AND WAIVER
Modificationsvoting and amendmentsother rights of the Indenture may be made by the Company
and the Trustee with the consentholders of our common stock.
Antitakeover Effects of Provisions of the HoldersCharter and By-laws
Shareholders’ rights and related matters are governed by Delaware law and our certificate of 66 2/3%incorporation and by-laws. Certain provisions of Delaware law and our certificate of incorporation and by-laws, which are summarized below, may discourage or make more difficult a takeover attempt that a shareholder might consider in aggregate
principal amounthis interest. Such provisions may also adversely affect prevailing market prices for our common stock.
Staggered Board of Directors
Our certificate of incorporation provides that our board of directors is divided into three classes. Our by-laws provide that each director is elected for a three-year term. This provision could discourage a takeover attempt because at no time is a majority of the Outstanding Debt Securitiesboard of each series affected
thereby; provided, however,directors standing for re-election.
Advance Notice Requirements for Shareholder Proposals and Director Nominations
Our by-laws require a shareholder to provide advance notice if the shareholder wishes to submit a proposal or nominate candidates for directors at an annual meeting of shareholders. These procedures provide that no such modification or amendment may, without
the consentnotice of the Holder of each Outstanding Debt Security affected thereby,
(a) change the Stated Maturity of the principal of, or any installment of
interest on, any Debt Security, (b) reduce the principal amount of, or the
premium (if any) or the interest on, any Debt Security, (c) reduce the amount of
principal of an Original Issue Discount Security payable upon acceleration of
the maturity thereof, (d) change the place or currency of payment of principal
of, or the premium (if any) or interest on, any Debt Security, (e) impair the
right to institute suitshareholder proposals and shareholder nominations for the enforcementelection of any payment on or with respect to
any Debt Security, (f) reducedirectors at an annual meeting must be in writing and received by our secretary at least 45 days before the above-stated percentagefirst anniversary of Outstanding Debt
Securities of that series necessary to modify or amend the Indenture, or (g)
reduce the percentage of aggregate principal amount of Outstanding Debt
Securities of that series necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults. (Section 902)
The Holders of 66 2/3% in aggregate principal amount of the Outstanding
Debt Securities of any series may on behalf of the Holders of all Debt
Securities of that series waive compliance by the Company with the restrictive
covenants contained in Sections 1008 and 1009. (Section 1010) The Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of any
series may on behalf of the Holders of all Debt Securities of that series waive
any past default under the Indenture, except a default in the payment of
principal, premium (if any) or interest. (Section 513)
DEFEASANCE
Unless otherwise indicated in the applicable Prospectus Supplement with
respect to the Debt Securities of a series (i) the Company will be discharged
from any and all obligations in respect of the Debt Securities of such series
(except for certain obligations to register the transfer or exchange of Debt
Securities of such series to replace destroyed, stolen, lost or mutilated Debt
Securities of such series, and to maintain Paying Agents and hold moneys for
payment in trust) ("legal defeasance") and ABX, AFC, FTZ and WAP will be
released from the Guarantees or (ii) the Company will be released from its
obligations with respect to the Debt Securities of such series under Sections
801, 1008 and 1009 in the Indenture, and the occurrence of an event described in
clause (c) under "Events of Default" above with respect to any defeased covenant
and clause (d) under "Events of Default" above shall no longer be an Event of
Default with respect to such series ("covenant defeasance") and ABX, AFC, FTZ
and WAP will be released from the Guarantees if, in either case, the Company
deposits with the Trustee, in trust, money or U.S. Government Obligations that
through the payment of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay all the principal
of and premium (if any) and interest on the Debt Securities of such series on
the dates such payments are due in accordance with the terms of the Debt
Securities of such series. Such a trust may only be established if, among other
things, (a) no Event of Default or event which with notice or lapse of time, or
both, would become an Event of Default with respect to the Debt Securities of
such series shall have occurred and be continuing on the date of such deposit,
(b) no Eventmailing of Default described under clause (f) under "Events of Default"
above or event whichour proxy statement in connection with the givingpreceding annual meeting of notice or lapse of time, or both, would
become an Event of Default described under such clause (f) shall have occurred
and be continuing at any time during the period ending on the 90th day following
such date of deposit, and (c) the Company shall have delivered an Opinion of
Counsel to the effect that the Holders of the Debt Securities of such series
will not recognize gain or loss for Federal income tax purposes as a result of
such deposit or defeasance and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as if such defeasance had not
occurred. Such opinion, inshareholders. In the case of a legal defeasance,nominations for election as directors, the notice must referset forth certain information about each nominee who is not an incumbent director.
Business Combination Provisions
We are subject to and be
based upon a rulingthe provisions of Section 203 of the Internal Revenue Service orDelaware General Corporation Law. This statute prohibits a changepublicly held Delaware corporation like us from engaging in applicable
federal
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income tax law occurringa business combination with an interested stockholder for a period of three years after the date of the Indenture. transaction in which the stockholder became an interested stockholder, unless:
| • | prior to that date, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; |
| • | upon consummation of the transaction that resulted in that person becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding, for purposes of determining the number of shares outstanding, shares owned by directors who are also officers and by certain employee stock plans; or |
| • | on or after the date the stockholder became an interested stockholder, the business combination is approved by our board of directors and authorized by the affirmative vote, and not by written |
| consent, of at least two-thirds of the outstanding voting stock, excluding the stock owned by the interested stockholder. |
A “business combination” includes a merger or consolidation, asset sale or other transaction resulting, directly or indirectly, in a financial benefit to the interested stockholder. An “interested stockholder” is a person, other than us and any direct or indirect majority owned subsidiary of ours, who:
| • | is the owner of 15% or more of any class of our outstanding voting stock or an affiliate or associate of such person; or |
| • | is an affiliate or associate of ours and was the owner of 15% or more of any class of our outstanding voting stock at any time within the preceding three years including the affiliates or associates of that person. |
Section 203 expressly exempts from the requirements described above any business combination by a corporation with an interested stockholder who became an interested stockholder at a time when the section did not apply to the corporation.
In the event the
Company omits to comply with its remaining obligationsaddition, under the Indenture after
a defeasanceAirborne’s certificate of incorporation, any “business combination” involving an “interested shareholder” must be approved by holders of 80% of the Indentureoutstanding common stock (and of 80% of the voting power of all outstanding stock) unless our board of directors has approved the business combination (for purposes of such approval, the vote of certain directors affiliated with respector representing the interested shareholders will not be counted) or certain minimum price and procedural requirements are met.
A “business combination” for purposes of our certificate of incorporation includes a merger or consolidation, asset sale or other transaction resulting, directly or indirectly, in a financial benefit to the Debt Securitiesinterested shareholder or an affiliate or associate of an interested shareholder and a liquidation or dissolution of us proposed by or on behalf of an interested shareholder or an affiliate or associate of an interested shareholder.
An “interested shareholder” for purposes of our certificate of incorporation is a person, other than us or a corporation of which a majority of each class of equity security is owned, directly or indirectly, by us, who:
| • | is the beneficial owner, directly or indirectly, of more than 20% of the voting power of the outstanding voting stock; |
| • | is a director of us and, at any time within the preceding two years of the date on which it is sought to be determined whether the person is an interested shareholder, was the beneficial owner, directly or indirectly, of more than 20% of the voting power of the then outstanding voting stock; or |
| • | is an assignee of or has otherwise succeeded to the beneficial ownership of any shares of voting stock that were, at any time within the preceding two years of the date on which it is sought to be determined whether the person is an interested shareholder, beneficially owned by an interested shareholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act. |
Limitation of Liability of Directors
Our certificate of incorporation provides that a director will not be personally liable to us or our shareholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any series
as described under clause (ii) above and the Debt Securities of such series are
declared due and payable becausebreach of the occurrencedirector’s duty of loyalty to us or our shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful dividend payments, stock repurchases or stock redemptions, or (iv) for any undefeased Event of
Default,transaction from which the amount of money and U.S. Government Obligations on deposit withdirector derived an improper personal benefit.
We originally issued the Trustee may be insufficient to pay amounts due on the Debt Securities of such
series at the timenotes in a private placement in March 2002. The initial purchasers of the acceleration resultingnotes have advised us that the notes were resold in transactions exempt from such Eventthe registration requirements of Default.
However, the Company will remain liableSecurities Act to “qualified institutional buyers”, as defined in respectRule 144A of such payments. (Article
Thirteen)
REGARDING THE TRUSTEE
The Trustee maintains an office at 101 Barclay Street, New York, NY 10286,
for the transfer and exchange of and the payment of principal of and interest on
the Debt Securities.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters and also
may sell Debt Securities directly to otherAct. These subsequent purchasers, or through agents. Such
underwriterstheir transferees, pledgees, donees or successors, may include Goldman, Sachs & Co. and BA Securities, Inc., or a
group of underwriters represented by firms including Goldman, Sachs & Co. and BA
Securities, Inc. Goldman, Sachs & Co. and BA Securities, Inc. may also act as
agents.
The distribution of the Debt Securities may be effected from time to time offer and resell any or all of the notes and/or shares of common stock issuable upon conversion of the notes pursuant to this prospectus.
The selling security holders may choose to sell notes and/or the shares of common stock issuable upon conversion of the notes from time to time. See “—Plan of Distribution”.
The following table, which is based on the information supplied to us by the selling security holders named in onethe table, sets forth:
| • | the name of each selling security holder who has provided us with notice, as of the date of this prospectus, pursuant to the registration rights agreement, of such security holder’s intent to sell or otherwise dispose of notes and/or shares of common stock issuable upon conversion of the notes pursuant to the registration statement; |
| • | the principal amount of notes and the number of shares of our common stock issuable upon conversion of the notes that they may sell from time to time pursuant to the registration statement; and |
| • | the amount of outstanding notes and our common stock beneficially owned by the selling security holder prior to the offering, assuming no conversion of the notes. |
To our knowledge, no selling security holder or moreany affiliate of a selling security holder has held any position or office or has had any material relationship with us or our affiliates during the three years prior to the date of this prospectus.
A selling security holder may offer and resell all or a portion of the notes and shares of common stock issuable upon conversion of the notes. Accordingly, no estimate can be given as to the amount or percentage of the notes or our common stock that will be held by the selling security holders upon termination of sales pursuant to this prospectus. In addition, the selling security holders identified below may have sold, transferred or disposed of all or a portion of their notes since the date on which they provided the information regarding their holdings in transactions at a fixed price or prices, which may be changed, or
at market prices prevailingexempt from the registration requirements of the Securities Act.
The information contained under the column “Shares of Common Stock That May Be Sold” assumes conversion of the full amount of the notes held by the holder at the initial rate of 42.7599 shares of common stock per each $1,000 principal amount of notes. This rate is subject to adjustment in certain circumstances, as provided for in the indenture. As a result, the amount of common stock issuable upon conversion of the notes may increase or decrease in the future.
Name(1) | Principal Amount of Notes Owned Before Offering | Principal Amount of Notes That May Be Sold | Common Stock Owned Before Offering | Shares of Common Stock That May Be Sold | ||||
| [Details on selling security holders to be inserted] | ||||||||
| Unknown (2)(3) |
| (1) | The above table does not currently include all of the security holders of notes. We will use post-effective amendments to identify missing security holders before those security holders make any offers or resales of the subject securities, and we will use prospectus supplements if we are only making changes to the selling security holder table. |
| (2) | Assumes that any other holders of notes, or any future transferees, pledgees, donees or successors of or from any such other holders of notes, do not beneficially own any common stock other than the common stock issuable upon conversion of the notes at the initial conversion rate. |
| (3) | The name “Unknown” represents the remaining selling security holders. We are unable to provide the names of these security holders because these notes are currently evidenced by a global note which has been deposited with DTC and registered in the name Cede & Co., as DTC’s nominee. |
If, after the date of this prospectus, a security holder notifies us pursuant to the registration rights agreement of its intention to dispose of the notes pursuant to the registration statement, we will file a post-effective amendment if we are making additions to the selling security holder table, and will file a prospectus supplement if we are making changes to the selling security holder table.
We are registering the notes and the shares of common stock issuable upon conversion of the notes to permit public secondary trading of these securities by the holders from time to time after the date of sale, at prices related to such
prevailing market prices or at negotiated prices.
Inthis prospectus. We will bear all expenses of registration incurred in connection with this offering, but all selling and other expenses incurred by the selling security holders will be borne by the selling security holders.
We will not receive any proceeds from the sale of Debt Securities, underwritersnotes or shares of common stock issuable upon conversion of the notes by the selling security holders. The notes and shares of common stock issuable upon conversion of the notes may receive
compensationbe sold pursuant to this prospectus from the Company or from purchasers of Debt Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securitiestime to time directly by any selling security holder or through dealers, and such dealersunderwriters, broker-dealers or agents who may receive compensation in the form of discounts, concessions or commissions from the selling security holders or the purchasers of the securities. If notes or shares of common stock issuable upon conversion of the notes are sold through underwriters and/or broker-dealers, the selling security holders will be responsible for underwriting discounts or commissions or agents’ commissions.
The notes or shares of common stock issuable upon conversion of the notes may be sold in one or more transactions at:
| • | fixed prices, |
| • | prevailing market prices at the time of sale, |
| • | varying prices determined at the time of sale, or |
| • | negotiated prices. |
These sales may be effected in transactions by one or more of the following methods:
| • | block trades in which the broker or dealer so engaged will attempt to sell the notes or shares of common stock issuable upon conversion of the notes as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| • | purchases by a broker or dealer as principal and resale by the broker or dealer for its own account pursuant to this prospectus; |
| • | an exchange distribution in accordance with the rules of any stock exchange on which the notes or shares of common stock issuable upon conversion of the notes are listed; |
| • | in privately negotiated transactions; |
| • | through the distribution of notes or shares of common stock issuable upon conversion of the notes by any selling security holder to its partners, members or security holders; |
| • | on any national securities exchange or quotation service on which the notes or shares of common stock issuable upon conversion of the notes may be listed or quoted at the time of sale, including the New York Stock Exchange in the case of the sale of the common stock; |
| • | in the over-the-counter market; |
| • | in transactions otherwise than on a national securities exchange or quotation service or in the over-the-counter market; |
| • | through the writing of options; or |
| • | any combination of the described methods. |
These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as an agent on both sides of the trade.
In connection with sales of the notes or shares of common stock issuable upon conversion of the notes or otherwise, any selling security holder may:
| • | enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the notes or shares of common stock issuable upon conversion of the notes in the course of hedging the positions they assume; |
| • | sell the notes and underlying common stock short and deliver notes or shares of common stock issuable upon conversion of the notes to close out the short positions; or |
| • | lend or pledge notes or shares of common stock issuable upon conversion of the notes to broker-dealers that in turn may sell the securities. |
In addition, any shares covered by this prospectus that qualify for sale pursuant to Rule 144, Rule 144A or any other available exemption from registration under the Securities Act may be sold under Rule 144, Rule 144A or any of the other available exemptions rather than pursuant to this prospectus.
Our common stock is listed on the New York Stock Exchange and the Pacific Exchange, Inc. under the symbol “ABF”. We have been advised by the initial purchasers of the notes that they intend to make a market in the notes. However, the initial purchasers are not obligated to do so, and market-making activity with respect to the notes may be discontinued at any time without notice. In addition, such market-making activity will be subject to limitations imposed by federal securities laws. There can be no assurance as to the development or liquidity of any market for whom they may
act as agents. Underwriters, dealersthe notes. We do not intend to apply for listing of the notes on any securities exchange or the Nasdaq Stock Market. Accordingly, we cannot assure that a trading market for the notes will develop or have any liquidity.
The selling security holders and any broker-dealers, agents or underwriters that participate with the selling security holders in the distribution of Debt Securitiesthe notes or the shares of common stock issuable upon conversion of the notes may be deemed to be “underwriters” within the meaning of the Securities Act, in which event any commissions or discounts received by these broker-dealers, agents or underwriters and any discounts or commissions receivedprofits realized by them from the Company and any profitselling security holder on the resale of Debt Securities by themthe notes or the shares may be deemed to be underwriting discounts and
commissions,compensation under the Securities Act. If the selling security holders are deemed to be underwriters, the selling security holders may be subject to certain statutory and regulatory liabilities, including liabilities imposed pursuant to Sections 11, 12 and 17 of the Securities Act of 1933 (the "Act"). Any suchand Rule 10b-5 under the Exchange Act.
To our knowledge, there are currently no plans, arrangements, or understandings between any selling security holders and any underwriter, broker-dealer or agent regarding the sale of the notes and the underlying common stock by the selling security holders. We cannot assure investors that any selling security holder will sell any or all of the notes or shares of common stock issuable upon conversion of the notes described in this prospectus, and any selling security holder may transfer, devise or gift the securities by other means not described in this prospectus.
The selling security holders and any other person participating in such distribution will be identified,subject to the Exchange Act and the rules thereunder. The Exchange Act rules include, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the notes and the underlying common stock by the selling security holders and any other such compensation received fromperson. In addition, Regulation M of the Company
will be described, inExchange Act may restrict the Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participateability of any person engaged in the distribution of Debt Securitiesthe notes and the underlying common stock to engage in market-marking activities with respect to the particular notes and the underlying common stock being distributed for a period of up to five business days prior to the commencement of such distribution. This may be entitledaffect the marketability of the notes and the underlying common stock and the ability of any person or entity to indemnification byengage in market-marking activities with respect to the Companynotes and the underlying common stock.
We originally sold the notes to the initial purchasers in March 2002 in a private placement. We agreed to indemnify and hold harmless each other against certain liabilities, including certain liabilities under the Securities Act. VALIDITY OF SECURITIES
Unless otherwise provided inThe registration rights agreement provides for us and the Prospectus Supplement,selling security holders to indemnify and hold harmless each other against certain liabilities, including certain liabilities under the Securities Act.
The validity of the Debt Securities will benotes, the shares of common stock issuable upon conversion of the notes, and the guarantees of the notes by the guarantor subsidiaries has been passed upon for the CompanyAirborne by Riddell Williams Bullitt & Walkinshaw,P.S., 1001 Fourth Avenue, Suite 4500, Seattle, Washington,Washington. Stephen E. DeForest, a member of the firm, serves as a director and for any underwriters or agents by
Sullivan & Cromwell, New York, New York.
secretary of certain of the guarantor subsidiaries.
The consolidated financial statements of the Company as of December 31,
1994 and 1993, and for each of the three yearsincorporated in the period ended December 31,
1994,this prospectus by reference from Airborne’s Current Report on Form 8-K dated May 9, 2002 have been audited by Deloitte & Touche LLP, independent auditors, as set
forthstated in their report with respect theretowhich is incorporated by reference herein (which report expresses an unqualified opinion and includes an explanatory paragraph referringrelating to the
adoption, asa change in Airborne’s method of January 1, 1993, of Statements of Financial Accounting Standards
No. 109, "Accountingaccounting for Income Taxes" and No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions")major engine overhaul costs), and arehas been so incorporated by reference
herein in reliance upon the report of such reportfirm given upon thetheir authority of said firm as experts in accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
WHERE YOU CAN FIND MORE INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Airborne files annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document Airborne files at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public from the SEC’s web site atwww.sec.gov.
We have filed with the SEC a registration statement on Form S-3 to register with the SEC the resale of the notes and shares of our common stock described in this prospectus. This prospectus is part of that registration statement, and provides you with a general description of the notes and shares of common stock being registered, but does not include all the information you can find in the registration statement or the exhibits. You should refer to the registration statement and its exhibits for more information about Airborne, the notes and the shares of common stock being registered.
The SEC allows us to “incorporate by reference” information into this prospectus, which means that we can disclose important information to you by referring you to information in another document we have filed with the SEC. This information that we incorporate by reference is considered part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information.
We are incorporating by reference the following documents filed by us with the SEC:
| • | Our Annual Report on Form 10-K for the fiscal year ended December 31, 2001; |
| • | Our proxy statement, including supplements, submitted to shareholders in connection with our 2002 annual meeting of shareholders; |
| • | Our Current Report on Form 8-K filed with the SEC on March 15, 2002; |
| • | Our Current Report on Form 8-K filed with the SEC on March 25, 2002; |
| • | Our Current Report on Form 8-K filed with the SEC on May 9, 2002; and |
| • | The |
We are also incorporating by reference any additional documents that we may file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act before termination of this offering.
We will provide to you, without charge, a copy of any or all documents incorporated by reference into this prospectus (except exhibits to such documents, unless such exhibits are specifically incorporated by reference in such documents). You may obtain copies by requesting them in writing or by telephone from:
Airborne, Inc.
Attn: General Counsel
3101 Western Avenue
Seattle, Washington 98111
(206) 285-4600
$150,000,000
AIRBORNE, FREIGHT
CORPORATION
% NOTES
DUEINC.
5.75% Convertible Senior Notes Due April 1, 2007
and
Shares of Common Stock Issuable Upon Conversion of the Notes
PROSPECTUS
, 2005
------------------------
PROSPECTUS SUPPLEMENT
------------------------
GOLDMAN, SACHS & CO.
BA SECURITIES, INC.
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28
2002
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
- ---------------
* AllOther Expenses of Issuance and Distribution.
The following table sets forth an estimate of the expenses other thanthat will be incurred by Airborne in connection with the Securitiessale and Exchange Commission Registration
Feedistribution of the notes and Rating Agencies' Fees are estimated.
ITEMthe common stock issuable upon conversion of the notes being registered in this registration statement.
| Securities and Exchange Commission registration fee | $ | 15,991 | |
| Printing and engraving expenses | * | ||
| Legal fees and expenses | * | ||
| Accounting fees and expenses | * | ||
| Transfer agent and trustee fees and expenses | * | ||
| Miscellaneous | * | ||
| Total | $ | * | |
| * | To be specified in an amendment to this registration statement. |
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
TheIndemnification of Directors and Officers.
Article Twelfth of the Restated Certificate of Incorporation of the CompanyAirborne provides:
TWELFTH. 12.1
No director of the corporation shall be personally liable to the corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as a director; provided, however, that this Article TWELFTHTwelfth shall not eliminate or limit the liability of a director to the extent provided by applicable law (i) for any breach of the director'sdirector’s duty of loyalty to the corporation ofor its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware (or successor provision), or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article TWELFTHTwelfth shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
The Restated Certificate of Incorporation of the CompanyAirborne requires the
CompanyAirborne to indemnify its officers and directors from all expenses and liabilities to the full extent permitted by Delaware law, specifically providing for indemnities to any director, officer or former director or officer or any person who may have served at the Company'sAirborne’s request as a director or officer of another corporation (including any heirs, personal representatives and estates of any indemnified parties), against all costs and expenses, including attorneys'attorneys’ fees reasonably incurred by him/her or imposed on him/her in connection with any action, proceeding or investigation, whether civil, administrative or criminal (including any shareholder'sshareholder’s action and any other action in which the CompanyAirborne is a party, plaintiff or defendant), in which he/she is or may be made a party or is proceeded against or involved by any reason of any action alleged to have been taken by him/her or omitted by him/her in such action, proceeding or investigation, or sums paid in settlement or compromise thereof with the approval of the Board of Directors. The indemnification provisions do not apply unless the indemnified party acted in a manner reasonably believed by him/her to be in or not
II-1
opposed to the best interests of the corporation, and do not apply if such person is found (1) to be guilty of willful misconduct, bad faith or gross negligence in the performance of his/her duties to the corporation, in a derivative action or one brought by the corporation, or (2) to be guilty of willful misconduct or bad faith, if such action or proceeding is brought by a third party.
Expenses incurred in defending such action, proceeding or investigation may be paid by the CompanyAirborne in advance of the final disposition upon receipt of an undertaking by the indemnified party to
II-1
29 repay such amount if it shall ultimately be determined that he/she is not entitled to be indemnified by the Company.
Airborne.
In addition to the indemnification provision described above, the CompanyAirborne maintains a directors'directors and officers'officers liability policy which insures its officers and directors against certain liabilities.
ITEM
Item 16. EXHIBITS
Exhibits.
The following exhibits are filed herewith unless otherwise indicated.
Exhibit Number | Description | |
| 4.1 | Restated Certificate of Incorporation of Airborne, Inc. (incorporated by reference from Exhibit 3(a) to Airborne’s Form 10-K for the year ended December 31, 2000) | |
| 4.2 | Bylaws of Airborne, Inc. (incorporated by reference from Exhibit 3(a) to Airborne’s Form 10-Q for the quarter ended June 30, 2001) | |
| 4.3 | Form of | |
| 4.4 | Indenture dated March 25, 2002, among Airborne, | |
| 4.5 | Registration Rights Agreement dated March 25, 2002, among Airborne, Inc., as Issuer, Airborne Express, Inc., ABX Air, Inc., Sky Courier, Inc., Wilmington Air Park, Inc., Airborne FTZ, Inc., Aviation Fuel, Inc., and Sound Suppression, Inc., as Guarantors, and Goldman, Sachs & Co. and First Union Securities, Inc., as Initial Purchasers of the | |
| 4.6 | Form of | |
| 5.1 | Opinion of Riddell Williams | |
| 8.1 | Tax Opinion of Riddell Williams | |
| 12.1 | Statements Regarding Computation of Ratios | |
| 23.1 | Consents of Riddell Williams P.S. (included in | |
| 23.2 | Consent of Deloitte & Touche | |
| 24.1 | Powers of Attorney (included | |
| 25.1 | Form T-1 Statement of Eligibility of |
Item 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described in Item 15 above, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Undertakings.
The undersigned registrantsregistrant hereby undertake:
(1) undertakes:
| (1) | To file, during any period in |
| (a) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933 (the “Securities Act”); |
| (b) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, |
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individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement.registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range II-2
30
may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the “Commission”) pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20%20 percent change in the maximum aggregate offering price set forth in the "Calculation“Calculation of Registration Fee"Fee” table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided,
| (c) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
Provided, however, that paragraphs (1)(i)(a) and (1)(ii)(b) above do not apply if the
Registration Statement is on Form S-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrantregistrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) that are incorporated by reference in the Registration Statement.
(2) registration statement.
| (2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
| (1) | For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
| (2) | For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
The undersigned registrant hereby undertakes to file an application for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment and each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
anyeligibility of the securities being registered which remain unsold at the
terminationtrustee to act under subsection (a) of section 310 of the offering.
(4) ForTrust Indenture Act in accordance with the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430Arules and contained in a form of prospectus filedregulations prescribed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h)Commission under the Securities Act shall be deemed to be a
partsection 305(b)(2) of this registration statement as of the time it was declared
effective.
(5) For purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of Securities Exchange Act of 1934) that is
incorporated by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
act.
II-3 31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrantregistrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statementregistration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Citycity of Seattle, Statestate of Washington, on September 1, 1995.
AIRBORNE FREIGHT CORPORATION
By: /s/ ROBERT S. CLINE
--------------------------------------
Robert S. Cline
Chief Executive Officer
May 10, 2002.
AIRBORNE, INC. | ||
| By: | /s/ CARL D. DONAWAY | |
Carl D. Donaway, President and Chief Executive Officer | ||
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Carl D. Donaway and Lanny H. Michael, and each of them severally, such person’s true and lawful attorneys-in-fact and agents, with full power to act without the other and with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in each capacity stated below, any and all amendments and post-effective amendments to this registration statement, any and all supplements hereto, and any and all other instruments necessary or incidental in connection herewith, and to file the same with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statementregistration statement has been signed below by the following persons in the capacities and on the dates indicated below.
Signature | Title | Date | ||
/s/ CARL D. DONAWAY Carl D. Donaway | Chairman of the | May 10, 2002 | ||
/s/ LANNY H. MICHAEL Lanny H. Michael | Executive Vice President | May 10, 2002 | ||
/s/ ROBERT T. CHRISTENSEN Robert T. Christensen | Chief Accounting Officer | May 10, 2002 | ||
/s/ JAMES H. James H. Carey | Director | May 10, 2002 | ||
/s/ ANDREW B. Andrew B. Kim |
| Director | May 10, 2002 | |||
/s/ HAROLD M. Harold M. Messmer, Jr. | Director | May 10, 2002 | ||
/s/ RICHARD M. Richard M. Rosenberg | Director | May 10, 2002 | ||
/s/ WILLIAM SWINDELLS William Swindells | Director | May 10, 2002 | ||
/s/ MARY AGNES WILDEROTTER Mary Agnes Wilderotter | Director | May 10, 2002 | ||
/s/ ROSALIE J. WOLF Rosalie J. Wolf | Director | May 10, 2002 |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrantregistrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statementregistration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Citycity of Seattle, Statestate of Washington, on September 1, 1995.
ABX AIR, INC.
By: /s/ CARL D. DONAWAY*
--------------------------------------May 10, 2002.
AIRBORNE EXPRESS, INC. | ||
| By: | /s/ CARL D. DONAWAY | |
Carl D. Donaway, President and Chief Executive Officer | ||
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints each of Carl D. Donaway President and Chief Executive Officer
Lanny H. Michael such person’s true and lawful attorney-in-fact and agent, with full power to act without the other and with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in each capacity stated below, any and all amendments (including post-effective amendments) to this registration statement, and to file the same with all exhibits thereto, and any and all instruments or documents in connection therewith, with the Securities and Exchange Commission, and any such attorney-in-fact may make such changes and additions to this registration statement as such attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statementregistration statement has been signed below by the following persons in the capacities and on the dates indicated below.
Signature | Title | Date | ||
/s/ CARL D. Carl D. Donaway | Chairman of the Board, President and Chief | May 10, 2002 | ||
/s/ LANNY H. MICHAEL Lanny H. Michael | Executive Vice President | May 10, 2002 | ||
/s/ ROBERT T. CHRISTENSEN Robert T. Christensen | Chief Accounting | May 10, 2002 | ||
/s/ JAMES H. CAREY James H. Carey | Director | May 10, 2002 | ||
/s/ ANDREW B. KIM Andrew B. Kim | Director | May 10, 2002 | ||
/s/ HAROLD M. MESSMER, JR. Harold M. Messmer, Jr. | Director | May 10, 2002 | ||
/s/ RICHARD M. ROSENBERG Richard M. Rosenberg | Director | May 10, 2002 | ||
/s/ WILLIAM SWINDELLS William Swindells | Director | May 10, 2002 | ||
/s/ MARY AGNES WILDEROTTER Mary Agnes Wilderotter | Director | May 10, 2002 | ||
/s/ ROSALIE J. WOLF Rosalie J. Wolf | Director | May 10, 2002 |
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrantregistrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statementregistration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Citycity of Seattle, Statestate of Washington, on September 1, 1995.
AIRBORNE FORWARDING CORPORATION
By: /s/ ROBERT S. CLINE
------------------------------------
Robert S. Cline
President
May 10, 2002.
ABX AIR, INC. | ||
| By: | /s/ CARL D. DONAWAY | |
Carl D. Donaway, Chief Executive Officer | ||
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints each of Carl D. Donaway and Lanny H. Michael such person’s true and lawful attorney-in-fact and agent, with full power to act without the other and with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in each capacity stated below, any and all amendments (including post-effective amendments) to this registration statement, and to file the same with all exhibits thereto, and any and all instruments or documents in connection therewith, with the Securities and Exchange Commission, and any such attorney-in-fact may make such changes and additions to this registration statement as such attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statementregistration statement has been signed below by the following persons in the capacities and on the dates indicated below.
Signature | Title | Date | ||
/s/ CARL D. DONAWAY Carl D. Donaway | Chief Executive Officer (Principal Executive Officer) and Director | May 10, 2002 | ||
/s/ QUINT TURNER Quint Turner | Treasurer | May 10, 2002 | ||
/s/ JOE HETE Joe Hete | Director | May 10, 2002 |
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrantregistrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statementregistration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Citycity of Seattle, Statestate of Washington, on September 1, 1995.
AIRBORNE FTZ, INC.
By: /s/ CARL D. DONAWAY
---------------------------------
Carl D. Donaway
President
May 10, 2002.
SKY COURIER, INC. | ||
| By: | /s/ CARL D. DONAWAY | |
Carl D. Donaway, President | ||
POWER OF ATTORNEY
Each person whose individual signature appears below hereby constitutes and appoints Robert S. Cline as hiseach of Carl D. Donaway and Lanny H. Michael such person’s true and lawful attorney-in-fact and agent, with full power to act without the other and with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in each capacity stated below, and to file, any and all amendments (including post-effective amendments) to this Amendment No. 1registration statement, and to file the Registration Statement, includingsame with all exhibits thereto, and any and all post-effective amendments. instruments or documents in connection therewith, with the Securities and Exchange Commission, and any such attorney-in-fact may make such changes and additions to this registration statement as such attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statementregistration statement has been signed below by the following persons in the capacities and on the dates indicated below.
Signature | Title | Date | ||
/s/ CARL D. Carl D. Donaway | President | May 10, 2002 | ||
/s/ LANNY H. MICHAEL Lanny H. Michael | Treasurer (Principal Financial | May 10, 2002 | ||
/s/ DAVID C. ANDERSON David C. Anderson | Director | May 10, 2002 |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrantregistrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statementregistration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Citycity of Seattle, StateWilmington, state of Washington,Ohio, on September 1, 1995.
WILMINGTON AIR PARK, INC.
By: /s/ CARL D. DONAWAY
---------------------------
Carl D. Donaway
President
May 10, 2002.
WILMINGTON AIR PARK, INC. | ||
| By: | /s/ JOE HETE | |
Joe Hete, President | ||
POWER OF ATTORNEY
Each person whose individual signature appears below hereby constitutes and appoints Robert S. Cline as hiseach of Carl D. Donaway and Lanny H. Michael such person’s true and lawful attorney-in-fact and agent, with full power to act without the other and with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in each capacity stated below, and to file, any and all amendments (including post-effective amendments) to this Amendment No. 1registration statement, and to file the Registration Statement, includingsame with all exhibits thereto, and any and all post-effective amendments. instruments or documents connection therewith, with the Securities and Exchange Commission, and any such attorney-in-fact may make such changes and additions to this registration statement as such attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statementregistration statement has been signed below by the following persons in the capacities and on the dates indicated below.
Signature | Title | Date | ||
/s/ JOE HETE Joe Hete | President (Principal Executive Officer) and Director | May 10, 2002 | ||
/s/ QUINT TURNER Quint Turner | Treasurer (Principal Financial and | May 10, 2002 | ||
/s/ CARL D. DONAWAY Carl D. Donaway | Director | May 10, 2002 |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Wilmington, state of Ohio, on May 10, 2002.
AIRBORNE FTZ, INC. | ||
| By: | /s/ JOE HETE | |
Joe Hete, President | ||
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints each of Carl D. Donaway and Lanny H. Michael such person’s true and lawful attorney-in-fact and agent, with full power to act without the other and with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in each capacity stated below, any and all amendments (including post-effective amendments) to this registration statement, and to file the same with all exhibits thereto, and any and all instruments or documents in connection therewith, with the Securities and Exchange Commission, and any such attorney-in-fact may make such changes and additions to this registration statement as such attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated below.
Signature | Title | Date | ||
/s/ JOE HETE Joe Hete | President (Principal Executive Officer) and Director | May 10, 2002 | ||
/s/ QUINT TURNER Quint Turner | Vice President and Treasurer (Principal Financial and Accounting Officer) | May 10, 2002 | ||
/s/ CARL D. DONAWAY Carl D. Donaway | Director | May 10, 2002 |
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Wilmington, state of Ohio, on May 10, 2002.
AVIATION FUEL, INC. | ||
| By: | /s/ ROBERT HANKE | |
Robert Hanke, President | ||
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints each of Carl D. Donaway and Lanny H. Michael such person’s true and lawful attorney-in-fact and agent, with full power to act without the other and with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in each capacity stated below, any and all amendments (including post-effective amendments) to this registration statement, and to file the same with all exhibits thereto, and any and all instruments or documents in connection therewith, with the Securities and Exchange Commission, and any such attorney-in-fact may make such changes and additions to this registration statement as such attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated below.
Signature | Title | Date | ||
/s/ ROBERT HANKE Robert Hanke | President (Principal Executive Officer) and Director | May 10, 2002 | ||
/s/ TAMMY VOSS Tammy Voss | Controller (Principal Financial and Accounting Officer) | May 10, 2002 | ||
/s/ JOE PAYNE Joe Payne | Director | May 10, 2002 |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Wilmington, state of Ohio, on May 10, 2002.
SOUND SUPPRESSION, INC. | ||
| By: | /s/ AMIEL M. KULI | |
Amiel M. Kuli, President | ||
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints each of Carl D. Donaway and Lanny H. Michael such person’s true and lawful attorney-in-fact and agent, with full power to act without the other and with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in each capacity stated below, any and all amendments (including post-effective amendments) to this registration statement, and to file the same with all exhibits thereto, and any and all instruments or documents in connection therewith, with the Securities and Exchange Commission, and any such attorney-in-fact may make such changes and additions to this registration statement as such attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated below.
Signature | Title | Date | ||
/s/ AMIEL M. KULI Amiel M. Kuli | President (Principal Executive Officer) and Director | May 10, 2002 | ||
/s/ QUINT TURNER Quint Turner | Treasurer (Principal Financial and Accounting Officer) | May 10, 2002 | ||
/s/ ROBERT HANKE Robert Hanke | Director | May 10, 2002 |
II-11
EXHIBIT INDEX
Exhibit Number | Description | |
| 4.1 | Restated Certificate of Incorporation of Airborne, Inc. (incorporated by reference from Exhibit 3(a) to Airborne’s Form 10-K for the year ended December 31, 2000) | |
| 4.2 | Bylaws of Airborne, Inc. (incorporated by reference from Exhibit 3(a) to Airborne’s Form 10-Q for the quarter ended June 30, 2001) | |
| 4.3 | Form of | |
| 4.4 | Indenture dated March 25, 2002, among Airborne, | |
| 4.5 | Registration Rights Agreement dated March 25, 2002, among Airborne, Inc., as Issuer, Airborne Express, Inc., ABX Air, Inc., Sky Courier, Inc., Wilmington Air Park, Inc., Airborne FTZ, Inc., Aviation Fuel, Inc., and Sound Suppression, Inc., as Guarantors, and Goldman, Sachs & Co. and First Union Securities, Inc., as Initial Purchasers of the | |
| 4.6 | Form of | |
| 5.1 | Opinion of Riddell Williams | |
| 8.1 | Tax Opinion of Riddell Williams | |
| 12.1 | Statements Regarding Computation of Ratios | |
| 23.1 | Consents of Riddell Williams P.S. (included in | |
| 23.2 | Consent of Deloitte & Touche LLP | |
| 24.1 | Powers of Attorney (included | |
| 25.1 | Form T-1 Statement of Eligibility of Trustee |