SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A Amendment #1 to Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1995 Commission File Number 1-6512 AIRBORNE FREIGHT CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware ---------------------------------------- (State of incorporation or organization) 91-0837469 --------------------------------- (IRS Employer Identification No.) 3101 Western Avenue P.O. Box 662 Seattle, Washington 98111-0662 ------------------------------ (Address of Principal Executive Office) Registrant's telephone number, including area code: (206) 285-4600 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: XXX No: --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the close of the period covered by this report. Common Stock, par value $1 per share Outstanding (net of 315,150 treasury shares) as of June 30, 1995 21,050,336 shares ----------------- AIRBORNE FREIGHT CORPORATION Amendment #1 to June 30, 1995 Form 10-Q The undersigned registrant hereby amends the following financial statements of it Form 10-Q dated June 30, 1995, as set forth in the pages attached hereto: Part I - Financial Information: Item I - Financial Statements: Notes to the Financial Statements have been amended to include Note D - Supplemental Guarantor Information. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF NET EARNINGS (Dollars in thousands except per share data) (Unaudited) Three Months Ended Six Months Ended ------------------ ---------------- June 30 June 30 ------- ------- 1995 1994 1995 1994 ---- ---- ---- ---- REVENUES: Domestic $452,631 $407,657 $ 894,808 $ 804,541 International 93,309 76,885 181,048 146,553 -------- -------- ---------- --------- 545,940 484,542 1,075,856 951,094 OPERATING EXPENSES: Transportation purchased 196,726 162,534 385,511 317,532 Station and ground operations 170,812 144,931 335,926 290,141 Flight operations and maintenance 79,311 65,454 157,372 131,236 General and administrative 37,019 36,552 74,513 72,268 Sales and marketing 16,250 14,037 31,881 27,332 Depreciation and amortization 34,846 33,309 69,648 67,074 -------- -------- ---------- --------- 534,964 456,817 1,054,851 905,583 -------- -------- ---------- --------- EARNINGS FROM OPERATIONS 10,976 27,725 21,005 45,511 INTEREST, NET 6,964 6,069 13,689 12,010 -------- -------- ---------- --------- EARNINGS BEFORE INCOME TAXES 4,012 21,656 7,316 33,501 INCOME TAXES 1,750 8,593 3,174 13,438 -------- -------- ---------- --------- NET EARNINGS 2,262 13,063 4,142 20,063 PREFERRED STOCK DIVIDENDS 68 103 139 687 -------- -------- ---------- --------- NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS $ 2,194 $ 12,960 $ 4,003 $ 19,376 ======== ======== ========== ========= NET EARNINGS PER COMMON SHARE: Primary - $ .10 $ .61 $ .19 $ .93 ======== ======== ========== ========= Fully Diluted - $ .10 $ .57 $ .19 $ .89 ======== ======== ========== ========= DIVIDENDS PER COMMON SHARE $ .075 $ .075 $ .15 $ .15 ======== ======== ========== ========= <FN> See notes to consolidated financial statements. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) June 30 December 31 ------- ----------- ASSETS ------ 1995 1994 ---- ---- (Unaudited) CURRENT ASSETS: Cash $ 14,451 $ 10,318 Trade accounts receivable, less allowance of $7,550 and $7,500 219,887 221,788 Spare parts and fuel inventory 30,845 28,071 Deferred income tax assets 13,040 12,458 Prepaid expenses 20,865 20,701 ---------- ---------- TOTAL CURRENT ASSETS 299,088 293,336 PROPERTY AND EQUIPMENT, NET 806,832 766,346 EQUIPMENT DEPOSITS and OTHER ASSETS 18,557 18,824 ---------- ---------- TOTAL ASSETS $1,124,477 $1,078,506 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 111,649 $ 117,194 Salaries, wages and related taxes 45,299 43,858 Accrued expenses 59,889 59,053 Income taxes payable 348 342 Current portion of debt 6,152 6,018 ---------- ---------- TOTAL CURRENT LIABILITIES 223,337 226,465 LONG-TERM DEBT 334,397 279,422 SUBORDINATED DEBT 115,000 118,580 DEFERRED INCOME TAX LIABILITIES 29,806 30,402 OTHER LIABILITIES 28,374 31,239 REDEEMABLE PREFERRED STOCK 3,948 5,000 SHAREHOLDERS' EQUITY: Preferred Stock, without par value - Authorized 5,200,000 shares, no shares issued Common stock, par value $1 per share - Authorized 60,000,000 shares Issued 21,365,486 and 21,285,924 shares 21,366 21,286 Additional paid-in capital 185,661 184,369 Retained earnings 183,559 182,714 ---------- ---------- 390,586 388,369 Treasury stock, 315,150 shares, at cost (971) (971) ---------- ---------- 389,615 387,398 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,124,477 $1,078,506 ========== ========== <FN> See notes to consolidated financial statements. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Six Months Ended June 30 ---------------- 1995 1994 ---- ---- OPERATING ACTIVITIES: Net Earnings $ 4,142 $ 20,063 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 64,689 62,119 Provision for aircraft engine overhauls 4,959 4,955 Deferred income taxes (1,178) 301 Other (2,791) (2,920) -------- -------- CASH PROVIDED BY OPERATIONS 69,821 84,518 Change in: Receivables 1,901 (13,544) Inventories and prepaid expenses (2,938) 3,620 Accounts payable (5,545) 12,218 Accrued expenses, salaries & taxes payable 2,283 2,437 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 65,522 89,249 INVESTING ACTIVITIES: Additions to property and equipment (106,098) (94,267) Dispositions of property and equipment 340 755 Expenditures for engine overhauls (3,922) (3,064) Other (257) (889) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (109,937) (97,465) FINANCING ACTIVITIES: Proceeds from bank note borrowings, net 68,600 47,000 Principal payments on debt (17,071) (38,838) Proceeds from common stock issuance 320 2,803 Dividends paid (3,301) (3,838) -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 48,548 7,127 -------- -------- NET INCREASE (DECREASE) IN CASH 4,133 (1,089) CASH AT JANUARY 1 10,318 7,134 -------- -------- CASH AT JUNE 30 $ 14,451 $ 6,045 ======== ======== <FN> See notes to consolidated financial statements. AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1995 (Unaudited) NOTE A--SUMMARY OF FINANCIAL STATEMENT PREPARATION: The consolidated financial statements included herein are unaudited but include all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods reported. Certain amounts for prior periods have been reclassified to conform to the 1995 presentation. NOTE B--LONG-TERM DEBT: Long-term debt consists of the following: June 30 December 31 ------- ----------- 1995 1994 ---- ---- (In thousands) Senior debt: Revolving bank credit $219,000 $135,000 Notes payable 1,600 17,000 Senior notes 100,000 100,000 Revenue bonds 13,200 13,200 Other debt 3,169 16,670 -------- -------- 336,969 281,870 Subordinated debt: Senior subordinated notes 3,580 7,150 Convertible subordinated debentures 115,000 115,000 -------- -------- 118,580 122,150 -------- -------- Total long-term debt 455,549 404,020 Less current portion 6,152 6,018 -------- -------- $449,397 $398,002 ======== ======== NOTE C--EARNINGS PER COMMON SHARE: Primary earnings per common share are based upon the weighted average number of common shares outstanding during the interim period plus dilutive common equivalent shares applicable to the assumed exercise of outstanding stock options. Fully diluted earnings per share for the three and six months ended June 30, 1995 are the same as primary earnings per share. Fully diluted earnings per share for the three and six month period ended June 30, 1994, assumes conversion of the Company's redeemable preferred stock and convertible subordinated debentures as well as the dilutive common equivalent shares applicable to the assumed exercise of stock options. Net earnings as adjusted for the elimination of preferred stock dividends and interest expense, net of applicable taxes, relative to the assumed conversion was $14,128,000 and $22,193,000 for the three and six month periods, respectively. Average shares outstanding used in earnings per share computations were as follows: Three Months Ended Six Months Ended ------------------ ---------------- June 30 June 30 ------- ------- 1995 1994 1995 1994 ---- ---- ---- ---- AVERAGE SHARES OUTSTANDING Primary 21,178 21,404 21,182 20,788 Fully Diluted 21,180 24,900 21,182 24,900 NOTE D--SUPPLEMENTAL GUARANTOR INFORMATION: In connection with the proposed shelf offering by Airborne Freight Corporation (the "Company") of $100,000,000 of unsecured Senior Notes ("Notes") certain of its subsidiaries (collectively, "Guarantors") will fully and unconditionally guarantee, on a joint and several basis, the Company's obligations to pay principal, premium, if any, and interest with respect to the Notes. The Guarantors are ABX Air, Inc. ("ABX") and Airborne Forwarding Corporation ("AFC"), which are wholly-owned by the Company, and Airborne FTZ, Inc. ("FTZ") and Wilmington Air Park, Inc. ("WAP"), which are wholly-owned subsidiaries of ABX. Non-guarantor subsidiaries' assets, liabilities, revenues and net earnings are inconsequential both individually and on a combined basis in comparison to the Company's consolidated financial statement totals. Summarized financial information of the guarantors on a combined basis is presented below, management does not consider disclosure of separate subsidiary financial statements for each guarantor to be material. Summarized information is as follows (in thousands): Balance Sheet Information: June 30, 1995 1994 Current Assets $ 37,027 $ 32,689 Property & Equipment 699,380 676,499 Other Noncurrent Assets 8,713 7,199 Current Liabilities 63,127 58,893 Long-term Debt 13,797 16,483 Other Noncurrent Liabilities 65,630 57,112 Intercompany Payable 469,157 470,138 Earnings Statement Information: Six Months Ended June 30, 1995 1994 Revenues - Intercompany $316,570 $285,876 Revenues - Third-party 21,446 13,260 Operating Expenses 318,127 281,519 Earnings from Operations 16,889 17,617 Net Earnings 7,229 10,986 ABX is a certificated air carrier which owns and operates the domestic express cargo services for which the Company is the sole customer. ABX also offers air charter services on a limited basis to third-party customers. FTZ owns certain aircraft parts inventory which it sells primarily to ABX, with limited sales to third-party customers. FTZ is also the holder of a foreign trade zone certificate at Wilmington airport property. WAP is the owner of the Wilmington airport property which includes the Company's main sort facility, aircraft maintenance facilities, runway and related airport facilities and airline administrative and training facilities. ABX is the only occupant and customer of WAP. AFC, d.b.a. Sky Courier, provides expedited courier services and regional logistics warehousing primarily to third-party customers. Investment balances and revenues between Guarantor subsidiaries have been eliminated for purposes of presenting the above summarized financial information. Intercompany revenues and net earnings recorded by ABX, FTZ, and WAP are controlled by the Company and are based on various discretionary factors. Intercompany payable amounts represent net amounts due the Company by its Guarantor subsidiaries. The Company provides the Guarantor subsidiaries with substantially all cash necessary to fund operating and capital expenditure requirements. Federal income taxes allocated to the Guarantors have been computed assuming the subsidiaries filed a separate return. No state income taxes have been allocated to the Guarantor subsidiaries. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: AIRBORNE FREIGHT CORPORATION ---------------------------- (Registrant) Date: September 1, 1995 /s/Roy C. Liljebeck ----------------- ------------------------- Roy C. Liljebeck Executive Vice President, Chief Financial Officer Date: September 1, 1995 /s/Lanny H. Michael ----------------- ------------------------- Lanny H. Michael Senior Vice President, Treasurer and Controller