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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 1996 1-6512
----------------------------------
AIRBORNE FREIGHT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 91-0837469
(State of Incorporation) (I.R.S. Employer Identification No.)
Airborne Freight Corporation
3101 Western Avenue
P.O. Box 662
Seattle, WA 98111
(Address of principal executive offices)
Registrant's telephone number including area code: 206-285-4600
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each class on which Registered
------------------- -------------------
Common Stock, Par Value New York Stock Exchange
$1.00 per share Pacific Stock Exchange
6 3/4% Convertible Subordinated New York Stock Exchange
Debentures Due August 15, 2001
Rights to Purchase Series A New York Stock Exchange
Participating Cumulative Pacific Stock Exchange
Preferred Stock
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.(X)
As of February 24, 1997, 21,308,812 shares (net of 315,150 treasury
shares) of the registrant's Common Stock were outstanding and the aggregate
market value of the voting stock held by non-affiliates of the registrant
(based on the closing price on that date on the New York Stock Exchange)
was approximately $600,367,932.(1)
Documents Incorporated by Reference
Portions of the 1996 Annual Report to Shareholders are incorporated by
reference into Part I and Part II.
Portions of the Proxy Statement for the 1997 Annual Meeting of
Shareholders to be held April 22, 1997 are incorporated by reference into
Part III.
(1) Excludes value of shares of Common Stock held of record by non-
employee directors and executive officers at February 24, 1997.
Includes shares held by certain depository organizations. Exclusion
of shares held by any person should not be construed to indicate that
such person possesses the power, direct or indirect, to direct or
cause the direction of the management or policies of the registrant,
or that such person is controlled by or is under common control with
the registrant.
AIRBORNE FREIGHT CORPORATION
1996 FORM 10-K ANNUAL REPORT
Table of Contents
Page
----
Part I
Item 1. Business 1
Item 2. Properties 8
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 4a. Executive Officers of the Registrant 9
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 11
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 11
Part III
Item 10. Directors and Executive Officers of the Registrant 12
Item 11. Executive Compensation 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management 12
Item 13. Certain Relationships and Related Transactions 12
Part IV
Item 14. Exhibits, Financial Statement Schedules, and 13
Reports on Form 8-K
PART I
ITEM 1. BUSINESS
- - ------------------
a) General Development of Business
-------------------------------
Airborne Freight Corporation (herein referred to as "Airborne Express"
or the "Company", which reference shall include its subsidiaries and their
assets and operations, unless the context clearly indicates otherwise) was
incorporated in Delaware on May 10, 1968. The Company is an air express
company and air freight forwarder that expedites shipments of all sizes to
destinations throughout the United States and most foreign countries.
The Company holds a certificate of registration issued by the United
States Patent and Trademark Office for the service mark AIRBORNE EXPRESS.
Most public presentation of the Company carries this name. The purpose of
using this trade name is to more clearly communicate to the market place
the primary nature of the business of the Company.
ABX Air, Inc., the Company's principal wholly-owned subsidiary (herein
referred to as "ABX"), was incorporated in Delaware on January 22, 1980.
ABX provides domestic express cargo service and cargo service to Canada.
The Company is the sole customer of ABX for this service. ABX also offers
limited charter service.
In 1996, the Company commemorated its first 50 years of service.
Founded in 1946 in San Francisco, Airborne Flower Association of California
began as a transporter of fresh flowers from Hawaii and California to East
Coast markets. As Airborne Flower grew and offered other expanded service
options and capabilities, it changed its name in 1956 to Airborne Freight
Corporation. In 1968, the Company was formed when its predecessor
consolidated with Pacific Air Freight, a freight forwarder founded in
Seattle in 1949, to transport perishables to Alaska. The Company retained
the name Airborne Freight Corporation. The Company is proud of its 50
years of successes and looks forward to the future.
b) Financial Information about Industry Segments
---------------------------------------------
None
c) Narrative Description of Business
---------------------------------
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. 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 approximately 280
facilities, primarily involve express door-to-door delivery of shipments
weighing less than 100 pounds. Shipments consist primarily of business
documents and other printed matter, electronic and computer parts,
software, 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 58% of the Company's domestic
shipments during 1996, generally provides for before noon delivery on the
next business day to most metropolitan cities in the United States. The
Company also provides Saturday and holiday pickup and delivery service for
most cities.
-1-
Beginning in 1995 and continuing into 1996, the Company redefined its
deferred service product through the creation of two distinct levels of
service. The services, Next Afternoon Service (NAS) and Second Day Service
(SDS) replaced Select Delivery Service, which had been the Company's
deferred service product since 1990. NAS is available for shipments
weighing five pounds or less and SDS is offered for shipments of all
weights. Select Delivery Service provided next afternoon service for
shipments weighing five pounds or less, with shipments weighing more than
five pounds delivered on a second day basis. Deferred service shipments,
which comprised approximately 42% of domestic shipments during 1996, are
lower priced than the overnight express product reflecting the less time
sensitive nature of the shipments. NAS rates are generally higher than SDS
rates.
While the Company's domestic airline system is designed primarily to
handle express shipments, any available capacity is also utilized to carry
shipments which the Company would normally move on other carriers in its
role as an air freight forwarder.
Communications System
- - ---------------------
FOCUS (Freight On-line Control and Update System) is a proprietary
communications system which provides real time information for purposes of
tracking and providing the status of customer's shipments as well as
monitoring the performance of the Company's operational systems. The
Company's facilities and international agents are linked to FOCUS and
provide inputs to the system, in part through the driver's use of hand-held
scanners which read bar-codes on the shipping documents, with information
necessary to determine the status and location of customer shipments 24
hours a day. FOCUS allows for direct customer access to shipment
information through the use of their own computer systems.
FOCUS provides the Company's personnel with important information for
use in coordinating its operational activities. Information regarding
Company-operated aircraft arrivals and departures, weather, and
documentation requirements for shipments destined to foreign locations are
several examples of the information maintained and provided by FOCUS.
Pickup and Delivery
- - -------------------
The Company accomplishes its door-to-door pickup and delivery service
using approximately 13,300 radio-dispatched delivery vans and trucks, of
which approximately 5,100 are owned by the Company. Independent
contractors under contract with the Company provide the balance of the
pickup and delivery services.
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 11,100 boxes
in service.
Sort Facilities
- - ---------------
The Company's main sort center is located in Wilmington, Ohio. As
express delivery volume has increased, the main sort center has been
expanded. In 1995, the sort center was expanded and currently has the
capacity to handle approximately 980,000 pieces during the primary 2-1/2
hour nightly sort operation. On average, approximately 835,000 pieces were
sorted each weekday night at the sort center during the fourth quarter of
1996.
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.
The Company also conducts a day sort operation at Wilmington which
services SDS shipments. The day sort receives shipments weighing five
pounds or less from flights
-2-
arriving during the previous night sort operation. Shipments weighing more
than five pounds are either trucked or flown to the day sort from the
regional hub facilities.
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, in part, temporary inaccessibility of the
Wilmington airport.
In the fourth quarter of 1996, approximately 54% and 19% of total
shipment weight was handled through the night sort and day sort operations
at Wilmington, respectively, with the remaining 27% being handled
exclusively by the regional hubs.
Shipment Routing
- - ----------------
The logistics of moving a shipment from its origin to destination is
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. A limited
number of shipments are transported airport-to-airport on commercial air
carriers.
Overnight express shipments, NAS 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 weekday 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 the shipments are
sorted and reloaded. The aircraft are scheduled to depart before 6:00 a.m.
and return to their applicable destinations in time to complete scheduled
next business morning or deferred service commitments. The Wilmington hub
also receives shipments via truck from selected stations in the vicinity of
the Wilmington hub for integration with the nightly sort process.
For the day sort operation, handling SDS shipments weighing over five
pounds, generally 12 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 2:00 p.m., at
which time shipments are sorted and reloaded on the aircraft or trucks by
3:30 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 deferred service shipments. This sort is supported by 14
Company aircraft and by trucks.
Aircraft
- - --------
The Company currently utilizes used aircraft manufactured in the late
1960s and early 1970s. Upon acquisition, the aircraft are modified by the
Company. At the end of 1996, the Company's in-service fleet consisted of a
total of 110 aircraft, including 35 McDonnell Douglas DC-8s (consisting of
13 series 61, 6 series 62 and 16 series 63), 66 DC-9s (consisting of 2
series 10, 43 series 30 and 21 series 40), and 9 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.
-3-
In December 1995, the Company announced an agreement to purchase 12
used Boeing 767-200's between the years 1997 and 2000 and its plans to
pursue the acquisition of 10 to 15 additional used 767-200's between the
years 2000 and 2004. This newer generation of aircraft should increase
operating efficiency and allow the Company to meet anticipated demand for
additional lift capacity. There are no plans to retire any aircraft as a
result of these acquisitions, although retirement is an option if shipment
growth does not require the added capacity.
At year end 1996, the nightly lift capacity of the system was about
3.8 million pounds versus approximately 3.5 million pounds and 3.1 million
pounds at the end of 1995 and 1994, respectively. During 1996, the
Company's utilization of available lift capacity approximated 74%.
In response to increased public awareness regarding the operation of
older aircraft, the Federal Aviation Administration ("FAA") periodically
mandates additional maintenance requirements for certain aircraft,
including the type operated by the Company. In recent years, the Company
has completed, and continues to perform, a number of inspection and
maintenance programs pertaining to various Airworthiness Directives issued
by the FAA. The FAA could, in the future, impose additional maintenance
requirements for aircraft and engines of the type operated by the Company
or interpret existing rules in a manner which could have a material effect
on the Company's operations and financial position.
In accordance with federal law and FAA regulations, only subsonic
turbojet aircraft classified as Stage 2 or 3 by the FAA may be operated in
the United States. Generally, Stage 3 aircraft produce less noise than a
comparable Stage 2 aircraft.
In 1990, Congress passed the Airport Noise and Capacity Act of 1990
(the "Noise Act"). Among other things, the Noise Act generally requires
turbojet aircraft weighing in excess of 75,000 pounds and operating in the
United States (the type of DC-8 and DC-9 aircraft operated by the Company)
to comply with Stage 3 noise emission standards on or before December 31,
1999. The Company's YS-11 turboprop aircraft are not subject to these
requirements. In accordance with the Noise Act, the FAA has issued
regulations establishing interim compliance deadlines. These rules
required air carriers to reduce the base level of Stage 2 aircraft they
operate 50% by December 31, 1996; and 75% by December 31, 1998. As of
December 31, 1996, the Company has complied with interim compliance
deadline and expects to meet or exceed the December 31, 1998 interim
compliance deadline. As of December 31, 1996, 61% of the Company's
turbojet aircraft (25 DC-8 and 37 DC-9 aircraft) were Stage 3 aircraft, the
balance being Stage 2 aircraft. In addition to FAA regulation, certain
local airports also regulate noise compliance. See "Business -
Regulation".
The Company, in conjunction with several other companies, has
developed noise suppression technology known as hush kits for its DC-9
series aircraft which have been certified to meet FAA Stage 3 requirements.
The capital cost for Stage 3 hush kits is approximately $1.4 million for
each DC-9 series aircraft. The Company has installed hush kits which
satisfy Stage 3 compliance requirements on all of its DC-8-62 and DC-8-63
series aircraft and three of its DC-8-61 series aircraft. The capital cost
to modify the Company's remaining DC-8-61 aircraft to meet Stage 3 noise
standards is approximately $5.7 million per aircraft.
International Operations
- - ------------------------
The Company provides international express door-to-door delivery and a
variety of freight services. These services are provided in most foreign
countries on an inbound 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 to or from almost anywhere in the world. In
addition to its extensive domestic network, the Company operates its own
offices in the Far East, Australia, New Zealand, and
-4-
the United Kingdom. The Company's freight and express agents worldwide are
connected to FOCUS, Airborne's on-line communication network, through which
the Company can provide its customers with immediate access to the status
of shipments 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. The Company also offers 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 and from overseas
destinations and origins. Additionally, 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 currently 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. In order to expand its 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. Joint ventures have
been formed in Japan, Thailand, Malaysia, the Netherlands, and South
Africa.
Customers and Marketing
- - -----------------------
The Company's primary domestic strategy focuses on express services
for high volume corporate customers. Most high volume customers have
entered into service agreements providing for specified rates or rate
schedules for express deliveries. As of December 31, 1996, the Company
serviced approximately 460,000 active customer shipping locations.
The Company determines prices for any particular domestic express
customer based on competitive factors, anticipated costs, shipment volume
and weight, and other considerations. The Company believes that it
generally offers prices that are competitive with, or lower than, prices
quoted by its principal competitors for comparable services.
Internationally, the Company's marketing strategy is to target the
outbound express and freight shipments of U.S. corporate customers, and to
sell the inbound service of the Company's distribution capabilities in the
United States.
Both in the international and domestic markets, the Company believes
that its customers are most effectively reached by a direct sales force
and, accordingly, does not currently engage in mass media advertising.
Domestic sales representatives are responsible for selling both domestic
and international express shipments. In addition, the International
Division has its own dedicated direct sales organization for selling
international freight service.
The Company's sales force currently consists of approximately 300
domestic representatives and approximately 80 international specialists.
The Company's sales efforts are supported by the Marketing and
International Divisions, based at the Company headquarters. Senior
management is also active in marketing the Company's services to major
accounts.
Value-added services continue to be important factors in attracting
and retaining customers. Accordingly, the Company is automating more of
its operations to make the service easier for customers to use and to
provide them with valuable management information. The Company believes
that it is generally competitive with other express carriers in terms of
reliability, value-added services and convenience.
-5-
For many of its high volume customers, the Company offers a metering
device, called LIBRA II, which is installed at the customer's place of
business. With minimum data entry, the metering device weighs the package,
calculates the shipping charges, generates the shipping labels and provides
a daily shipping report. At year end 1996, the system was in use at
approximately 9,300 domestic customer locations and 900 international
customer locations. Use of LIBRA II not only benefits the customer
directly, but also lowers the Company's operating costs, since LIBRA II
shipment data is transferred into the Airborne FOCUS shipment tracking
system automatically, thus avoiding duplicate data entry.
"Customer Linkage", an electronic data interchange ("EDI") program
developed for Airborne's highest volume shippers, allows customers, with
their computers, to create shipping documentation at the same time they are
entering orders for their goods. At the end of each day, shipping
activities are transmitted electronically to the Airborne FOCUS system
where information is captured for shipment tracking and billing purposes.
Customer Linkage benefits the customer by eliminating repetitive data entry
and paperwork and also lowers the Company's operating costs by eliminating
manual data entry. EDI also includes electronic invoicing and payment
remittance processing. The Company also has available a software program
known as Quicklink, which significantly reduces programming time required
by customers to take advantage of linkage benefits.
In 1995, the Company unveiled "LIGHTSHIP TRACKER", a PC-based tracking
software, which was the first in a series of software products designed to
improve customer productivity and provide convenient access to the
Company's various services. LIGHTSHIP TRACKER allows customers, working
from their PCs, to view the status of and receive information regarding
their shipments through access to the Airborne FOCUS system.
In 1997, the Company will provide customers with additional
flexibility and productivity opportunities through the introduction of its
PC-based software program, "LIGHTSHIP SHIPPER". Through personal or office
computers via modem connection to the Airborne FOCUS system, customers will
be able to obtain estimated shipping rates and delivery times, fill out and
print shipping labels, schedule pickups, as well as track the status of
their shipments.
The Company offers a number of special logistics programs to customers
through Airborne Logistics Services ("ALS"), a division of ABX Air, Inc.
ALS operates the Company's Stock Exchange and Hub Warehousing and other
logistics programs. These programs provide customers the ability to
maintain inventories which can be managed either by Company or customer
personnel. Items inventoried at Wilmington can be delivered utilizing
either the Company's airline system or, if required, commercial airlines on
a next-flight-out basis. ALS' Central Print program allows information to
be sent electronically to customer computers located at Wilmington where
Company personnel monitor printed output and ship the material according to
customer instructions.
In addition, the Company's Sky Courier business provides expedited
next-plane-out service at premium prices. Sky Courier also offers a
Regional Warehousing program where customer inventories are managed at any
of over 60 locations around the United States and Canada.
The Company has obtained ISO 9000 certification for its Chicago,
Philadelphia and London stations and its Seattle Headquarters. ISO 9000 is
a program developed by the International Standards Organization ("ISO"),
based in Geneva, Switzerland. This organization provides a set of
international standards on quality management and quality assurance
presently recognized in over 90 countries. The certification is an asset
in doing business worldwide and provides evidence of the Company's
commitment to excellence and quality.
-6-
Competition
- - -----------
The market for the Company's 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 continues to be the dominant competitor in the
domestic express business, followed by United Parcel Service. Airborne
Express ranks third in shipment volume behind these two companies in the
domestic express business. Other domestic express competitors include the
U.S. Postal Service's Express Mail Service and several other transportation
companies offering next morning or next-plane-out delivery service. The
Company also competes to some extent with companies offering ground
transportation services and with facsimile and other forms of electronic
transmission.
The Company believes it is important to maintain an active capital
expansion program to increase capacity, improve service and increase
productivity as its volume of shipments increases. However, the Company
has significantly less capital resources than its two primary competitors.
In the international markets, in addition to Federal Express and
United Parcel Service, the Company competes with DHL, TNT and other air
freight forwarders or carriers and most commercial airlines.
Employees
- - ---------
As of December 31, 1996, the Company and its subsidiaries had
approximately 12,700 full-time employees and 8,000 part-time and casual
employees. Approximately 6,000 full-time employees (including the
Company's 715 pilots) and 3,200 part-time and casual employees are employed
under union contracts, primarily with locals of the International
Brotherhood of Teamsters and Warehousemen.
Labor Agreements
- - ----------------
Most labor agreements covering the Company's ground personnel are for
a four-year term expiring in 1998. The Company's pilots are covered by a
contract which became amendable on July 31, 1995. The Company has not
experienced any significant disruption from labor disputes in the past.
However, negotiations with the pilots are in mediation, and the Company
cannot predict whether the contract with the pilots will be amended without
experiencing any work disruption.
Subsidiaries
- - ------------
The Company has the following wholly-owned subsidiaries:
1. ABX Air, Inc., a Delaware corporation, is a certificated air
carrier which owns and operates the Company's domestic express
cargo service. Its wholly-owned subsidiaries are as follows:
a) Wilmington Air Park, Inc., an Ohio corporation, is the owner
of the Wilmington airport property (Airborne Air Park).
b) Airborne FTZ, Inc., an Ohio corporation, is the holder of a
foreign trade zone certificate at the Wilmington airport
property and owns and manages the Company's expendable
aircraft parts inventory.
c) Aviation Fuel, Inc., an Ohio corporation, purchases and
sells aviation and other fuels.
-7-
d) Advanced Logistics Services Corp., an Ohio corporation,
provided customized warehousing, inventory management and
shipping services, through late 1996. Logistics services
are currently provided by Airborne Logistic Services, a
division of ABX Air, Inc.
e) Sound Suppression, Inc., an Ohio corporation with no
current operating activities.
2. Awawego Delivery, Inc., a New York corporation, holds trucking
rights in New York and Connecticut.
3. Airborne Forwarding Corporation, a Delaware corporation doing
business as Sky Courier, provides expedited courier service.
4. Airborne Freight Limited, a New Zealand corporation, provides
air express and air freight services.
Regulation
- - ----------
The Company's operations are regulated by the United States Department
of Transportation ("DOT"), the FAA, and various other federal, state, local
and foreign authorities.
The DOT, under federal transportation statutes, grants air carriers
the right to engage in domestic and international air transportation. The
DOT issues certificates to engage in air transportation and has the
authority to modify, suspend or revoke such certificates for cause,
including failure to comply with federal law or the DOT regulations. The
Company believes it possesses all necessary DOT-issued certificates to
conduct its operations.
The FAA regulates aircraft safety and flight operations generally,
including equipment, ground facilities, maintenance, security procedures,
and communications. The FAA issues operating certificates to carriers who
possess the technical competence to conduct air carrier operations. In
addition, the FAA issues certificates of airworthiness to each aircraft
which meets the requirements for aircraft design and maintenance. The
Company believes it holds all airworthiness and other FAA certificates
required for the conduct of its business, although the FAA has the power to
suspend or revoke such certificates for cause, including failure to comply
with federal law.
The federal government generally regulates aircraft engine noise at
its source. However, local airport operators may, under certain
circumstances, regulate airport operations based on aircraft noise
considerations. The Noise Act provides that in the case of Stage 2
aircraft restrictions, the airport operator must notify air carriers of its
intention to propose rules and satisfy the requirements of federal statutes
before implementation of the rules or in the case of Stage 3 aircraft, the
airport operator must obtain the carriers' or the governments' approval of
the rule prior to its adoption. The Company believes the operation of its
aircraft either complies with or is exempt from compliance with currently
applicable local airport rules. However, if more stringent aircraft
operating regulations were adopted on a widespread basis, the Company might
be required to expend substantial sums, make schedule changes or take other
actions.
The Company's aircraft currently meet all known requirements for
emission levels. However, under the Clean Air Act, individual states or
the Federal Environmental Protection Agency (the "EPA") may adopt
regulations requiring the reduction in emissions for one or more localities
based on the measured air quality at such localities. The EPA has proposed
regulations for portions of California calling for emission reductions
through restricting the use of emission producing ground service equipment
or aircraft auxiliary power units. There can be no assurance, that if such
regulations are adopted in the future or changes in existing laws or
regulations are promulgated, such laws or rules would not have a material
adverse effect on the Company.
-8-
Under currently applicable federal aviation law, the Company's airline
subsidiary could cease to be eligible to operate as an all-cargo carrier if
more than 25% of the voting stock of the Company were owned or controlled
by non-U.S. citizens or the airline were not effectively controlled by U.S.
citizens. Moreover, in order to hold an all-cargo air carrier certificate,
the president and at least two-thirds of the directors and officers of an
air carrier must be U.S. citizens. To the best of the Company's knowledge,
foreign stockholders do not control more than 25% of the outstanding voting
stock. Two of the Company's 42 officers are not U.S. citizens.
The Company believes that its current operations are substantially in
compliance with the numerous regulations to which its business is subject;
however, various regulatory authorities have jurisdiction over significant
aspects of the Company's business, and it is possible that new laws or
regulations or changes in existing laws or regulations or the
interpretations thereof could have a material adverse effect on the
Company's operations.
Financial Information Regarding International and Domestic Operations
- - ---------------------------------------------------------------------
Financial information relating to foreign and domestic operations for
each of the three years in the period ended December 31, 1996 is presented
in Note J (Segment Information) of the Notes to Consolidated Financial
Statements appearing in the 1996 Annual Report to Shareholders and is
incorporated herein by reference.
ITEM 2. PROPERTIES
- - --------------------
The Company leases general and administrative office facilities
located in Seattle, Washington.
At year end the Company maintained approximately 280 domestic and 40
foreign stations, most of which are leased. The majority of the facilities
are located at or near airports.
The Company owns the airport at the Airborne Air Park, in Wilmington,
Ohio. The airport currently consists of two runways, taxi-ways, aprons,
buildings serving as aircraft and equipment maintenance facilities, sort
facilities, storage facilities, a training center, and operations and
administrative offices.
The Company believes its existing facilities are adequate to meet
current needs.
Information regarding collateralization of certain property and lease
commitments of the Company is set forth in Notes E and F of the Notes to
Consolidated Financial Statements appearing in the 1996 Annual Report to
Shareholders and is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS
- - ---------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - -------------------------------------------------------------
None
-9-
ITEM 4a. EXECUTIVE OFFICERS OF THE REGISTRANT
- - ----------------------------------------------
Positions and Offices Presently
Name Age Held and Business Experience
- - ---- --- ----------------------------
Robert S. Cline 59 Chairman and Chief Executive Officer (1984
to date); Vice Chairman and Chief Financial
Officer (1978 to 1984); Executive Vice
President and Chief Financial Officer (1973
to 1978); Senior Vice President, Finance
(1970 to 1973); Vice President, Finance
(1968 to 1970); Vice President, Finance,
Pacific Air Freight, Inc. (1966 to 1968)
Robert G. Brazier 59 President and Chief Operating Officer (1978
to date); Executive Vice President and
Chief Operating Officer (1973 to 1978);
Senior Vice President, Operations (1970 to
1973); Vice President, Operations (1968 to
1970); Vice President, Sales and
Operations, Pacific Air Freight, Inc. (1964
to 1968)
Roy C. Liljebeck 59 Chief Financial Officer (1984 to date);
Executive Vice President, Finance Division
(1979 to date); Senior Vice President (1973
to 1979); Treasurer (1968 to 1988)
Kent W. Freudenberger 56 Executive Vice President, Marketing
Division (1980 to date); Senior Vice
President (1978 to 1980); Vice President
(1973 to 1978)
Raymond T. Van Bruwaene 58 Executive Vice President, Field Services
Division (1980 to date); Senior Vice
President (1978 to 1980); Vice President
(1973 to 1978)
John J. Cella 56 Executive Vice President, International
Division (1985 to date); Senior Vice
President, International Division (1982 to
1985); Vice President, International Divi
sion (1981 to 1982); Vice President, Far
East (1971 to 1981)
Carl D. Donaway 45 President and Chief Executive Officer, ABX
Air, Inc. (1992 to date); offices held in
the Company: Vice President, Business
Analysis (1992); Vice President, Customer
Support (1990 to 1992); Director, Customer
Support (1988 to 1990)
-10-
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
- - ---------------------------------------------------------------
STOCKHOLDERS MATTERS
- - --------------------
The response to this Item is contained in the 1996 Annual Report to
Shareholders and the information contained therein is incorporated by
reference.
On February 24, 1997 there were 1,298 shareholders of record of the
Common Stock of the Company based on information provided by the Company's
transfer agent.
ITEM 6. SELECTED FINANCIAL DATA
- - ---------------------------------
The response to this Item is contained in the 1996 Annual Report to
Shareholders and the information contained therein is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - -------------------------------------------------------------------------
RESULTS OF OPERATIONS
- - ---------------------
The response to this Item is contained in the 1996 Annual Report to
Shareholders and the information contained therein is incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- - -----------------------------------------------------
The response to this Item is contained in the 1996 Annual Report to
Shareholders and the information contained therein is incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- - -------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- - --------------------
None
-11-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- - ------------------------------------------------------------
The response to this Item is contained in part in the Proxy Statement
for the 1997 Annual Meeting of Shareholders under the captions "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance"
and the information contained therein is incorporated herein by reference.
The executive officers of the Company are elected annually at the
Board of Directors meeting held in conjunction with the annual meeting of
shareholders. There are no family relationships between any directors or
executive officers of the Company. Additional information regarding
executive officers is set forth in Part I, Item 4a.
ITEM 11. EXECUTIVE COMPENSATION
- - --------------------------------
The response to this Item is contained in the Proxy Statement for the
1997 Annual Meeting of Shareholders under the caption "Executive
Compensation" and the information contained therein is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- - ------------------------------------------------------------------------
The response to this Item is contained in the Proxy Statement for the
1997 Annual Meeting of Shareholders under the captions "Voting at the
Meeting" and "Stock Ownership of Management" and the information contained
therein is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- - --------------------------------------------------------
The response to this Item is contained in the Proxy Statement for the
1997 Annual Meeting of Shareholders under the caption "Executive
Compensation" and the information contained therein is incorporated herein
by reference.
-12-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- - -------------------------------------------------------------------------
(a)1. Financial Statements
--------------------
The following consolidated financial statements of Airborne Freight
Corporation and its subsidiaries as contained in its 1996 Annual Report to
Shareholders are incorporated by reference in Part II, Item 8:
Consolidated Statements of Net Earnings
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a)2. Financial Statement Schedules
-----------------------------
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or are not
required, or because the required information is included in the
consolidated financial statements or notes thereto.
(a)3. Exhibits
- - ---------------
A) The following exhibits are filed with this report:
EXHIBIT NO. 3 Articles of Incorporation and By-laws
- - ----------------------------------------------------
3(a) The Restated Certificate of Incorporation of the Company,
dated as of August 4, 1987 (incorporated herein by reference
from Exhibit 3(a) to the Company's Form 10-K for the year
ended December 31, 1987).
3(b) The By-laws of the Company as amended to February 4,
1997.
EXHIBIT NO. 4 Instruments Defining the Rights of Security Holders
- - ------------------------------------------------------------------
Including Indentures
- - --------------------
4(a) Indenture dated as of August 15, 1991, between the
Company and Bank of America National Trust and Savings
Association, as Trustee, with respect to the Company's 6-3/4%
Convertible Subordinated Debentures due August 15, 2001
(incorporated herein by reference from Exhibit 4(i) to
Amendment No. 1 to the Company's Registration Statement on
Form S-3 No. 33-42044 filed with the Securities and Exchange
Commission on August 15, 1991).
4(b) First Supplemental Trust Indenture dated as of June 30,
1994 between the Company and LaSalle National Bank, as
Successor Trustee, with respect to the Company's 6-3/4%
Convertible Subordinated Debentures due August 15, 2001
(incorporated by reference from Exhibit 4(d) to the Company's
Form 10-K for the year ended December 31, 1996).
-13-
4(c) Indenture dated as of December 3, 1992, between the
Company and The Bank of New York, as trustee, relating to the
Company's 8-7/8% Notes due 2002 (incorporated by reference
from Exhibit 4(a) to Amendment No. 1 to the Company's
Registration Statement on Form S-3, No. 33-54560 filed with
the Securities and Exchange Commission on December 4, 1992).
4(d) First Supplemental Indenture dated as of September 15,
1995, between the Company and The Bank of New York, as
trustee, relating to the Company's 7.35% Notes due 2005
(incorporated by reference from Exhibit 4(b) to Amendment No.
1 to the Company's Registration Statement on Form S-3, No. 33-
61329, filed with the Securities and Exchange Commission on
September 5, 1995).
4(e) Second Supplemental Indenture dated as of February 12,
1997 between the Company and The Bank of New York, as trustee,
relating to the Company's 8-7/8% Notes due 2002.
4(f) Rights Agreement, dated as of February 14, 1997 between
the Company and The Bank of New York, as Rights Agent
(incorporated by reference from Exhibit 1 to the Company's
Registration Statement on Form 8-A, filed with the Securities
and Exchange Commission on February 12, 1997).
4(g) Certificate of the Voting Powers, Designations,
Preferences and Relative Participating, Optional and Other
Special Rights and Qualifications, Limitations or Restrictions
of Series A Participating Cumulative Preferred Stock of
Airborne Freight Corporation (incorporated by reference from
Exhibits 1 and 2 to the Company's Registration Statement on
Form 8-A, filed with the Securities and Exchange Commission on
February 12, 1997.)
4(h) Form of Right Certificate relating to the Rights
Agreement (see 4(f) above, incorporated by reference from
Exhibits 2 and 3 to the Company's Registration Statement on
Form 8-A, filed with the Securities and Exchange Commission on
February 12, 1997.)
EXHIBIT NO. 10 Material Contracts
- - ---------------------------------
Executive Compensation Plans and Agreements
- - -------------------------------------------
10(a) 1983 Airborne Freight Corporation Key Employee Stock
Option and Stock Appreciation Rights Plan, as amended through
February 2, 1987 (incorporated by reference from Exhibit 10(c)
to the Company's Form 10-K for the year ended December 31,
1986).
10(b) 1989 Airborne Freight Corporation Key Employee Stock
Option and Stock Appreciation Rights Plan (incorporated herein
by reference from Exhibit 10(d) to the Company's Form 10-K for
the year ended December 31, 1989).
10(c) 1994 Airborne Freight Corporation Key Employee Stock Option
and Stock Appreciation Rights Plan (incorporated herein by
reference from the Addendum to the Company's Proxy Statement
for the 1994 Annual Meeting of Shareholders).
10(d) Airborne Freight Corporations Directors Stock Option
Plan (incorporated herein by reference from the Addendum to
the Company's Proxy Statement for the 1991 Annual Meeting of
Shareholders).
10(e) Airborne Freight Corporation Director Stock Bonus
Plan dated April 23, 1996 (incorporated by reference from
Exhibit 10(a) to the Company's Form 10-Q for the quarter ended
June 30, 1996).
-14-
10(f) Airborne Express Executive Deferral Plan dated
January 1, 1992 (incorporated by reference from Exhibit 10(b)
to the Company's Form 10-K for the year ended December 31,
1991).
10(g) Airborne Express Supplemental Executive Retirement
Plan dated January 1, 1992 (incorporated by reference from
Exhibit 10(c) to the Company's Form 10-K for the year ended
December 31, 1991).
10(h) Airborne Express 1995-1999 Executive Incentive
Compensation Plan, amended as of January 1, 1997.
10(i) Airborne Express 1997-1999 Executive Group Incentive
Compensation Plan as of January 1, 1997.
10(j) Employment Agreement dated December 15, 1983, as
amended November 20, 1986, between the Company and Mr. Robert
G. Brazier, President and Chief Operating Officer
(incorporated by reference from Exhibit 10(a) to the Company's
Form 10-K for the year ended December 31, 1986). Identical
agreements exist between the Company and the other six
executive officers.
10(k) Employment Agreement dated November 20, 1986 between
the Company and Mr. Lanny H. Michael, then Vice President,
Treasurer and Controller (incorporated by reference from
Exhibit 10(b) to the Company's Form 10-K for the year ended
December 31, 1986). The Company and its principal subsidiary,
ABX Air, Inc., have entered into substantially identical
agreements with most of their officers.
Other Material Contracts
------------------------
10(l) $240,000,000 Revolving Loan Facility dated as of
November 19, 1993 among the Company, as borrower, and Wachovia
Bank of Georgia, N.A., as agent, and Wachovia Bank of Georgia,
N.A., ABN AMRO Bank N.V., United States National Bank of
Oregon, Seattle-First National Bank, CIBC, Inc., Continental
Bank N.A., Bank of America National Trust and Savings
Association, The Bank of New York, NBD Bank, N.A., as banks
(incorporated herein by reference from Exhibit 10(k) to the
Company's Form 10-K for the year ended December 31, 1993).
10(m) First Amendment to Revolving Loan Facility dated as
of March 31, 1995 among the Company, as borrower, and Wachovia
Bank of Georgia, N.A., as Agent, and Wachovia Bank of Georgia,
N.A., ABN AMRO Bank N.V., United States National Bank of
Oregon, Seattle-First National Bank, CIBC, Inc., National City
Bank, Columbus, Bank of America National Trust and Savings
Association, The Bank of New York, and NBD Bank, N.A., as
banks (incorporated by reference from Exhibit 10(a) to the
Company's Form 10-Q for the quarter ended March 31, 1995).
10(n) Second Amendment to Credit Agreement dated May 1,
1996 among the Company, as borrower, and Wachovia Bank of
Georgia, N.A., as Agent, and Wachovia Bank of Georgia, N.A.,
ABN AMRO Bank N.V., United States National Bank of Oregon,
Bank of America NW, N.A., CIBC, Inc., National City Bank,
Columbus, as assignee of Continental Bank N.A., Bank of
America National Trust and Savings Association, The Bank of
New York and NBD Bank, N.A., as banks (incorporated by
reference from Exhibit 10(b) to the Company's Form 10-Q for
the quarter ended June 30, 1996).
-15-
10(o) Used Aircraft Sales Agreement entered into as of
December 22, 1995 between ABX Air, Inc. and KC-One, Inc; KC-
Two, Inc.; and KC-Three, Inc. Confidential treatment has been
granted for confidential commercial and financial information,
pursuant to Rule 24b-2 under the Securities Exchange Act of
1934 (incorporated herein by reference from Exhibit 10(n) to
the Company's From 10-K for the year ended December 31,
1996.).
EXHIBIT NO. 11 Statement Re Computation of Per Share Earnings
- - -------------------------------------------------------------
11 Statement re computation of earnings per share
EXHIBIT NO. 12 Statements Re Computation of Ratios
- - --------------------------------------------------
12 Statement re computation of ratio of senior long-term
debt and total long-term debt to total capitalization
EXHIBIT NO. 13 Annual Report to Security Holders
- - ------------------------------------------------
13 Portions of the 1996 Annual Report to Shareholders of
Airborne Freight Corporation
EXHIBIT NO. 21 Subsidiaries of the Registrant
- - ---------------------------------------------
21 The subsidiaries of the Company are listed in Part I of
this report on Form 10-K for the year ended December 31, 1996.
EXHIBIT NO. 23 Consents of Experts and Counsel
- - ----------------------------------------------
23 Independent Auditors' Consent and Report on Schedule
EXHIBIT NO. 27 Financial Data Schedule
- - --------------------------------------
27 Financial Data Schedule
All other exhibits are omitted because they are not
applicable, or not required, or because the required
information is included in the consolidated financial
statements or notes thereto.
(b) Reports on Form 8-K
-------------------
A Form 8-K was filed February 12, 1997 which disclosed the following
information:
(1) Approval, by the Board of Directors, of a shareholder rights
plan effective February 14, 1997.
(2) Summary description of the shareholder rights plan.
-16-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
AIRBORNE FREIGHT CORPORATION
By /s/ Robert S. Cline
--------------------------
Robert S. Cline
Chief Executive Officer
By /s/ Robert G. Brazier
--------------------------
Robert G. Brazier
Chief Operating Officer
By /s/ Roy C. Liljebeck
--------------------------
Roy C. Liljebeck
Chief Financial Officer
By /s/ Lanny H. Michael
--------------------------
Lanny H. Michael
Treasurer and Controller
Date: March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
/s/ Robert G. Brazier /s/ Andrew V. Smith
- - ----------------------------- -----------------------------
Robert G. Brazier (Director) Andrew V. Smith (Director)
/s/ Robert S. Cline /s/ Mary Agnes Wilderotter
- - ----------------------------- -----------------------------
Robert S. Cline (Director) Mary Agnes Wilderotter (Director)
/s/ Harold M. Messmer, Jr. /s/ James H. Carey
- - ----------------------------- -----------------------------
Harold M. Messmer, Jr.(Director) James H. Carey (Director)
-17-
AIRBORNE FREIGHT CORPORATION
AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
Balance at Charged to Balance at
Beginning Costs and End
Description of Period Expenses Deductions of Period
-------- -------- -------- -------- --------
DEDUCTED FROM ASSETS TO WHICH THEY APPLY:
1. Allowance for doubtful accounts -
Year Ended December 31, 1996 $7,750 $16,157 $15,562 $8,345
Year Ended December 31, 1995 $7,500 $13,309 $13,059 $7,750
Year Ended December 31, 1994 $6,925 $12,631 $12,056 $7,500
-18-
EXHIBIT INDEX
Exhibit Page
Number Description Number
- - ------- ------------ -------
(a)3. Exhibits
- - ---------------
A) The following exhibits are filed with this report:
EXHIBIT NO. 3 Articles of Incorporation and By-laws
- - ----------------------------------------------------
3(a) The Restated Certificate of Incorporation of the --
Company, dated as of August 4, 1987
(incorporated herein by reference from Exhibit
3(a) to the Company's Form 10-K for the year
ended December 31, 1987).
3(b) The By-laws of the Company as amended to --
February 4, 1997.
EXHIBIT NO. 4 Instruments Defining the Rights of Security Holders
- - ------------------------------------------------------------------
Including Indentures
- - --------------------
4(a) Indenture dated as of August 15, 1991, between --
the Company and Bank of America National Trust
and Savings Association, as Trustee, with
respect to the Company's 6-3/4% Convertible
Subordinated Debentures due August 15, 2001
(incorporated herein by reference from Exhibit
4(i) to Amendment No. 1 to the Company's
Registration Statement on Form S-3 No. 33-42044
filed with the Securities and Exchange
Commission on August 15, 1991).
4(b) First Supplemental Trust Indenture dated as of --
June 30, 1994 between the Company and LaSalle
National Bank, as Successor Trustee, with
respect to the Company's 6-3/4% Convertible
Subordinated Debentures due August 15, 2001
(incorporated by reference from Exhibit 4(d) to
the Company's Form 10-K for the year ended
December 31, 1996).
4(c) Indenture dated as of December 3, 1992, between --
the Company and The Bank of New York, as
trustee, relating to the Company's 8-7/8% Notes
due 2002 (incorporated by reference from Exhibit
4(a) to Amendment No. 1 to the Company's
Registration Statement on Form S-3, No. 33-54560
filed with the Securities and Exchange
Commission on December 4, 1992).
4(d) First Supplemental Indenture dated as of --
September 15, 1995, between the Company and The
Bank of New York, as trustee, relating to the
Company's 7.35% Notes due 2005 (incorporated by
reference from Exhibit 4(b) to Amendment No. 1
to the Company's Registration Statement on Form
S-3, No. 33-61329, filed with the Securities and
Exchange Commission on September 5, 1995).
4(e) Second Supplemental Indenture dated as of --
February 12, 1997 between the Company and The
Bank of New York, as trustee, relating to the
Company's 8-7/8% Notes due 2002.
4(f) Rights Agreement, dated as of February 14, 1997 --
between the Company and The Bank of New York, as
Rights Agent (incorporated by reference from
Exhibit 1 to the Company's Registration
Statement on Form 8-A, filed with the Securities
and Exchange Commission on February 12, 1997).
4(g) Certificate of the Voting Powers, Designations, --
Preferences and Relative Participating, Optional
and Other Special Rights and Qualifications,
Limitations or Restrictions of Series A
Participating Cumulative Preferred Stock of
Airborne Freight Corporation (incorporated by
reference from Exhibits 1 and 2 to the Company's
Registration Statement on Form 8-A, filed with
the Securities and Exchange Commission on
February 12, 1997.)
4(h) Form of Right Certificate relating to the Rights --
Agreement (see 4(f) above, incorporated by
reference from Exhibits 2 and 3 to the Company's
Registration Statement on Form 8-A, filed with
the Securities and Exchange Commission on
February 12, 1997.)
EXHIBIT NO. 10 Material Contracts
- - ----------------------------------
Executive Compensation Plans and Agreements
- - -------------------------------------------
10(a) 1983 Airborne Freight Corporation Key Employee --
Stock Option and Stock Appreciation Rights Plan,
as amended through February 2, 1987
(incorporated by reference from Exhibit 10(c) to
the Company's Form 10-K for the year ended
December 31, 1986).
10(b) 1989 Airborne Freight Corporation Key Employee --
Stock Option and Stock Appreciation Rights Plan
(incorporated herein by reference from Exhibit
10(d) to the Company's Form 10-K for the year
ended December 31, 1989).
10(c) 1994 Airborne Freight Corporation Key Employee --
Stock Option and Stock Appreciation Rights Plan
(incorporated herein by reference from the
Addendum to the Company's Proxy Statement for
the 1994 Annual Meeting of Shareholders).
10(d) Airborne Freight Corporations Directors Stock --
Option Plan (incorporated herein by reference
from the Addendum to the Company's Proxy
Statement for the 1991 Annual Meeting of
Shareholders).
10(e) Airborne Freight Corporation Director Stock --
Bonus Plan dated April 23, 1996 (incorporated by
reference from Exhibit 10(a) to the Company's
Form 10-Q for the quarter ended June 30, 1996).
10(f) Airborne Express Executive Deferral Plan dated --
January 1, 1992 (incorporated by reference from
Exhibit 10(b) to the Company's Form 10-K for the
year ended December 31, 1991).
10(g) Airborne Express Supplemental Executive --
Retirement Plan dated January 1, 1992
(incorporated by reference from Exhibit 10(c) to
the Company's Form 10-K for the year ended
December 31, 1991).
10(h) Airborne Express 1995-1999 Executive Incentive --
Compensation Plan, amended as of January 1,
1997.
10(I) Airborne Express 1997-1999 Executive Group --
Incentive Compensation Plan as of January 1,
1997.
10(j) Employment Agreement dated December 15, 1983, as --
amended November 20, 1986, between the Company
and Mr. Robert G. Brazier, President and Chief
Operating Officer (incorporated by reference
from Exhibit 10(a) to the Company's Form 10-K
for the year ended December 31, 1986).
Identical agreements exist between the Company
and the other six executive officers.
10(k) Employment Agreement dated November 20, 1986 --
between the Company and Mr. Lanny H. Michael,
then Vice President, Treasurer and Controller
(incorporated by reference from Exhibit 10(b) to
the Company's Form 10-K for the year ended
December 31, 1986). The Company and its
principal subsidiary, ABX Air, Inc., have
entered into substantially identical agreements
with most of their officers.
Other Material Contracts
------------------------
10(l) $240,000,000 Revolving Loan Facility dated as of --
November 19, 1993 among the Company, as
borrower, and Wachovia Bank of Georgia, N.A., as
agent, and Wachovia Bank of Georgia, N.A., ABN
AMRO Bank N.V., United States National Bank of
Oregon, Seattle-First National Bank, CIBC, Inc.,
Continental Bank N.A., Bank of America National
Trust and Savings Association, The Bank of New
York, NBD Bank, N.A., as banks (incorporated
herein by reference from Exhibit 10(k) to the
Company's Form 10-K for the year ended December
31, 1993).
10(m) First Amendment to Revolving Loan Facility dated --
as of March 31, 1995 among the Company, as
borrower, and Wachovia Bank of Georgia, N.A., as
Agent, and Wachovia Bank of Georgia, N.A., ABN
AMRO Bank N.V., United States National Bank of
Oregon, Seattle-First National Bank, CIBC, Inc.,
National City Bank, Columbus, Bank of America
National Trust and Savings Association, The Bank
of New York, and NBD Bank, N.A., as banks
(incorporated by reference from Exhibit 10(a) to
the Company's Form 10-Q for the quarter ended
March 31, 1995).
10(n) Second Amendment to Credit Agreement dated May --
1, 1996 among the Company, as borrower, and
Wachovia Bank of Georgia, N.A., as Agent, and
Wachovia Bank of Georgia, N.A., ABN AMRO Bank
N.V., United States National Bank of Oregon,
Bank of America NW, N.A., CIBC, Inc., National
City Bank, Columbus, as assignee of Continental
Bank N.A., Bank of America National Trust and
Savings Association, The Bank of New York and
NBD Bank, N.A., as banks (incorporated by
reference from Exhibit 10(b) to the Company's
Form 10-Q for the quarter ended June 30, 1996).
10(o) Used Aircraft Sales Agreement entered into as of --
December 22, 1995 between ABX Air, Inc. and KC-
One, Inc; KC-Two, Inc.; and KC-Three, Inc.
Confidential treatment has been granted for
confidential commercial and financial
information, pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934 (incorporated
herein by reference from Exhibit 10(n) to the
Company's From 10-K for the year ended December
31, 1996.).
EXHIBIT NO. 11 Statement Re Computation of Per Share Earnings
- - --------------------------------------------------------------
11 Statement re computation of earnings per share --
EXHIBIT NO. 12 Statements Re Computation of Ratios
- - --------------------------------------------------
12 Statement re computation of ratio of senior long- --
term debt and total long-term debt to total
capitalization
EXHIBIT NO. 13 Annual Report to Security Holders
- - -------------------------------------------------
13 Portions of the 1996 Annual Report to --
Shareholders of Airborne Freight Corporation
EXHIBIT NO. 21 Subsidiaries of the Registrant
- - ----------------------------------------------
21 The subsidiaries of the Company are listed in --
Part I of this report on Form 10-K for the year
ended December 31, 1996.
EXHIBIT NO. 23 Consents of Experts and Counsel
- - -----------------------------------------------
23 Independent Auditors' Consent and Report on --
Schedules
EXHIBIT NO. 27 Financial Data Schedule
- - ---------------------------------------
27 Financial Data Schedule --
All other exhibits are omitted because they are not applicable, or
not required, or because the required information is included in the
consolidated financial statements or notes thereto.
(b) Reports on Form 8-K
-------------------
A form 8-K was filed February 12, 1997 which disclosed
the following information:
(1) Approval, by the Board of Directors, of a --
shareholder rights plan effective February 14,
1997.
(2) Summary description of the shareholder rights --
plan.