SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
Form 10-K
_________________
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended March 31, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to _____________
commission file number 0-11720
Air T, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52-1206400
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
3524 Airport Road
Maiden, North Carolina 28650
(Address of principal executive offices) (Zip Code)
(704) 377-2109
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.25 per share
(Title of Class)
__________________
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 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]
The aggregate market value of voting stock held by non-affiliates
of the registrant as of June 5, 2002, computed by reference to the
average of the closing bid and asked prices for such stock on such date,
was $2,723,997. As of the same date, 2,724,320 shares of Common Stock
were outstanding.
PART I
Item 1. Business.
Air T, Inc., incorporated under the laws of the State of Delaware
in 1980 (the "Company"), operates in three industry segments, providing
overnight air cargo services to the air express delivery industry
through its wholly owned subsidiaries, Mountain Air Cargo, Inc. ("MAC")
and CSA Air, Inc. ("CSA"), aviation related parts brokerage and overhaul
services through its wholly owned subsidiary, Mountain Aircraft
Services, LLC ("MAS"), and aviation ground support equipment products
through its wholly owned subsidiary, Global Ground Support, LLC
("Global"). For the fiscal year ended March 31, 2002 the Company's air
cargo services through MAC and CSA accounted for approximately 41.2% of
the Company's consolidated revenues, aircraft deice and other ground
support equipment products through Global accounted for 42.8% of
consolidated revenues and aviation related parts brokerage and overhaul
services through MAS accounted for 16.0% of consolidated revenues. The
Company's air cargo services are provided exclusively to one customer --
Federal Express Corporation ("Federal Express"). Revenues from
contracts with Federal Express accounted for approximately 41.2% of the
Company's consolidated revenues for the year ended March 31, 2002.
Certain financial data with respect to the Company's overnight air
cargo, aviation services and ground support equipment segments are set
forth in Note 15 of Notes to Consolidated Financial Statements included
under Part II, Item 8 of this report. Such data are incorporated herein
by reference.
The principal place of business of the Company and MAC is Maiden,
North Carolina; the principal places of business of CSA, MAS and Global
are, respectively: Iron Mountain, Michigan; Kinston, North Carolina; and
Olathe, Kansas.
Diversification and Acquisition.
In October 1993, the Company organized MAS to diversify its
customer base and business mix. MAS provides aircraft maintenance,
parts and other aviation related services to the commercial and military
aviation industries. MAS is organized as a limited liability company
100% owned by Air T.
In August 1997, the Company organized Global to acquire the Simon
Deicer Division of Terex Aviation Ground Equipment, and the acquisition
was completed that month. Global is located in Olathe, Kansas and
manufactures, sells and services aircraft ground support equipment sold
to domestic and international passenger and cargo airlines, as well as
to airports. During the fiscal year ended March 31, 2000, Global
diversified its product line to include additional models of aircraft
deicers and scissor-lift ground support equipment. Global is organized
as a limited liability company 100% owned by Air T.
The organization of MAS and Global reflects the Company's strategy
to diversify its operations within the aviation industry to reduce its
dependence on the air cargo service segment.
Overnight Air Cargo Services.
MAC and CSA provide small package overnight air freight delivery
services on a contract basis throughout the eastern half of the United
States and Canada, and in Puerto Rico and the U.S. Virgin Islands. MAC
and CSA's revenues are derived principally pursuant to "dry-lease"
service contracts. Under the dry-lease service contracts, the customer
leases its aircraft to MAC (or CSA) for a nominal amount and pays an
administrative fee to MAC (or CSA). Under these arrangements, all
direct costs related to the operation of the aircraft (including fuel,
maintenance, landing fees and pilot costs) are passed through to the
customer. For the most recent fiscal year, operations under dry-lease
service contracts accounted for 98.0% of MAC and CSA's revenues (41.2%
of the Company's consolidated revenues).
For the fiscal year ended March 31, 2002, MAC and CSA provided air
delivery service exclusively to Federal Express. As of March 31, 2002,
MAC and CSA operated an aggregate of 95 aircraft under agreements with
Federal Express. Separate agreements cover the three types of aircraft
operated by MAC and CSA for Federal Express -- Cessna Caravan, Fokker F-
27 and Short Brothers SD3-30. Cessna Caravan and Fokker F-27 aircraft
are dry-leased from Federal Express, and Short Brothers SD3-30 aircraft
are owned by the Company and operated under "wet-lease" arrangements
with Federal Express which provide for a fixed fee per flight regardless
of the amount of cargo carried. Pursuant to such agreements, Federal
Express determines the schedule of routes to be flown by MAC and CSA.
Agreements with Federal Express are renewable annually and may be
terminated by Federal Express any time upon 15 to 30 days' notice. The
Company believes that the short term and other provisions of its
agreements with Federal Express are standard within the air freight
contract delivery service industry. Loss of Federal Express as a
customer would have a material adverse effect on MAC, CSA and the
Company.
MAC and CSA operate under separate aviation certifications. MAC is
certified to operate under Part 121, Part 135 and Part 145 of the
regulations of the Federal Aviation Administration (the "FAA"). These
certifications permit MAC to operate and maintain aircraft that can
carry up to 18,000 pounds of cargo and provide maintenance services to
third party operators. CSA is certified to operate under Part 135 of
the FAA regulations. This certification permits CSA to operate aircraft
with a maximum cargo capacity of 7,500 pounds.
MAC and CSA, together, operated or held for sale the following
aircraft as of March 31, 2002:
Form of Number of
Type of Aircraft Model Year Ownership Aircraft
Cessna Caravan, 208A and 208B
(single turbo prop) 1985-1996 dry lease 73
Fokker F-27 (twin turbo prop) 1968-1981 dry lease 20
Short Brothers SD3-30
(twin turbo prop) 1981 owned 2
Total 95
Of the 95 aircraft fleet, 93 aircraft (the Cessna Caravan and
Fokker F-27 aircraft) are owned by Federal Express. Under the dry-lease
service contracts, certain maintenance expense, including cost of parts
inventory, and maintenance performed by personnel not employed by the
Company, is passed directly to the customer, and the expense of daily,
routine maintenance and aircraft service checks is charged to the
customer on an hourly basis. Accordingly, the Company does not
anticipate maintenance expense, such as engine overhauls, to be material
to the Company's operating results.
All FAA Part 135 aircraft, including Cessna Caravan models 208A and
208B, and Short Brothers SD3-30 aircraft are maintained on FAA approved
inspection programs. The inspection intervals range from 100 to 200
hours. The engines are produced by Pratt & Whitney, and overhaul
periods are based on FAA approved schedules. The current overhaul
period on the Cessna aircraft is 7,500 hours. The Short Brothers
manufactured aircraft are maintained on an "on condition" maintenance
program (i.e., maintenance is performed when performance deviates from
certain specifications) with engine inspections at each phase inspection
and in-shop maintenance at predetermined intervals.
The Fokker F-27 aircraft are maintained under a FAA Part 121
maintenance program. The program consists of A, B, C, D and I service
checks. The engine overhaul period is 6,700 hours.
In May 2000, MAC completed its FAA certification to commence
operation of a Part 145 maintenance facility at its Kinston, N.C.
location. MAC's future plans include the ability to perform heavy
maintenance for regional/trunk FAA Part 121 certified carriers.
The Company operates in highly competitive markets and competes
with approximately 50 other contract cargo carriers in the United
States. MAC and CSA's contracts are renewed on an annual basis.
Accurate industry data is not available to indicate the Company's
position within its marketplace (in large measure because most of the
Company's competitors are privately held), but management believes that
MAC and CSA, combined, constitute one of the largest contract carriers
of the type described immediately above.
The Company's air cargo operations are not materially seasonal.
Aircraft Deice and Other Equipment Products.
Global manufactures, sells, services and supports aircraft devices
on a worldwide basis. During the fiscal year ended March 31, 2000,
Global diversified its product line to include additional models of
aircraft deicers and scissor-lift ground support equipment. Global's
primary customers are passenger and cargo airlines, the U.S. Air Force,
as well as airports located in the United States and in international
markets. Global's operations are located in Olathe, Kansas.
In the manufacture of its ground service equipment, Global
assembles components acquired from third party suppliers. Components
are readily available from a number of different suppliers. The primary
components are the chassis (which is similar to the chassis of a medium
to heavy truck) and heating equipment.
Global manufactures five basic models of mobile deicing equipment
ranging from 700 to 3,200 gallon capacity models in addition to fixed
pedestal mounted deicers. Each model can be customized as requested by
the customer, including the addition of twin engine deicing systems,
fire suppressant equipment, modifications for open or enclosed cab
design, a recently patented forced-air deicing nozzle to substantially
reduce glycol usage, and color and style of the exterior finish. Global
also manufactures three models of scissor-lift equipment, for catering,
cabin service and maintenance service of aircraft. Global competes
primarily on the basis of reliability of its products, prompt delivery
and price. The market for aviation ground service equipment is highly
competitive.
Global's mobile deicing equipment business has historically been
highly seasonal, with the bulk of deicing equipment being purchased by
customers in the late summer and fall in preparation for winter months.
Historically, the bulk of Global's revenues have occurred during the
second and third fiscal quarters, and comparatively little revenue has
occurred during the first and fourth fiscal quarters. The Company has
reduced Global's seasonal fluctuation in revenues by the introduction of
a line of non-deicer related ground support equipment, the January 2000
commencement of a long-term contract to provide deicing equipment to the
U.S. Air Force and the award of a $7.1 million pedestal-mounted deicer
contract with the Philadelphia International Airport.
Revenue from Global's contract with the U.S. Air Force accounted
for approximately 13.9% of the Company's consolidated revenue for the
year ended March 31, 2002.
Aviation Related Parts Brokerage and Overhaul Services.
MAS provides aircraft maintenance and parts and other aviation
related services to the commercial and military aviation industries.
MAS's principal offices and primary overhaul facilities are located at
the Global TransPark in Kinston, North Carolina and Miami, Florida.
Services offered by MAS include engine overhaul management,
aircraft maintenance and component repair. Services are provided under
standard purchase contracts.
In addition, MAS sells aircraft parts, of which approximately 1% of
the amount sold in the fiscal year ended March 31, 2002 were used in
connection with maintenance performed by MAS. Sales of parts by MAS do
not include any parts purchased for maintenance of aircraft operated by
MAC or CSA.
MAS's inventory of parts held for sale was approximately $4.8
million at March 31, 2002 and included parts for use in primarily 15
types of commercial and military aircraft, all of which are generally in
current use. MAS maintains its own inventory controls and
documentation, sets stocking levels and determines the conditions for
surplus parts disposal.
MAS's customers include the commercial air cargo and passenger
aviation industries and manufacturers of commercial and military
aircraft and contract maintenance companies serving the commercial and
military aviation industry. MAS also provides parts or services under
contracts directly with the U.S. government. For the fiscal year ended
March 31, 2002, MAS provided services or parts to over 75 customers,
with five customers accounting for approximately 95% of MAS's revenues
for the year.
MAS's operations are not materially seasonal.
Backlog.
The Company's backlog consists of "firm" orders supported by
customer purchase orders with fixed delivery dates for the deicing
equipment sold by Global and for parts and equipment sold by MAS. At
March 31, 2002, the Company's backlog of orders was $3.0 million, of
which $2.7 million was attributable to Global and approximately $.3
million was attributable to MAS, all of which the Company expects to be
filled in the current fiscal year.
Governmental Regulation.
Under the Federal Aviation Act of 1958, as amended, the FAA has
safety jurisdiction over flight operations generally, including flight
equipment, flight and ground personnel training, examination and
certification, certain ground facilities, flight equipment maintenance
programs and procedures, examination and certification of mechanics,
flight routes, air traffic control and communications and other matters.
The FAA also has power to suspend or revoke for cause the certificates
it issues and to institute proceedings for imposition and collection of
fines for violation of federal aviation regulations. The Company has
secured appropriate operating certificates and airworthiness
certificates for all aircraft operated by it.
The FAA periodically conducts routine reviews of MAC and CSA's
operating procedures and flight and maintenance records.
The Airline Deregulation Act of 1978 created a new class of
domestic certificated all-cargo carriers. Pursuant to such certificate,
aircraft of specified size may be operated within the United States,
without restriction on routes.
The Company has been subject to FAA regulation since the
commencement of its business activities. The FAA is concerned with
safety and the regulation of flight operations generally, including
equipment used, ground facilities, maintenance, communications and other
matters. The FAA can suspend or revoke the authority of air carriers or
their licensed personnel for failure to comply with its regulations and
can ground aircraft if questions arise concerning airworthiness. The
Company, through its subsidiaries, holds all operating airworthiness and
other FAA certificates that are currently required for the conduct of
its business, although these certificates may be suspended or revoked
for cause.
The FAA has authority under the Noise Control Act of 1972, as
amended, to monitor and regulate aircraft engine noise. The aircraft
operated by the Company are in compliance with all such regulations
promulgated by the FAA. Moreover, because the Company does not operate
jet aircraft, noncompliance is not likely. Such aircraft also comply
with standards for aircraft exhaust emissions promulgated by the
Environmental Protection Agency pursuant to the Clean Air Act of 1970,
as amended.
Because of the extensive use of radio and other communication
facilities in its aircraft operations, the Company is subject to the
Federal Communications Act of 1934, as amended.
Maintenance and Insurance.
The Company, through its subsidiaries, maintains its aircraft under
the appropriate FAA standards and regulations.
The Company has secured public liability and property damage
insurance in excess of minimum amounts required by the United States
Department of Transportation. The Company has also obtained all-risk
hull insurance on Company-owned aircraft.
The Company maintains cargo liability insurance, workers'
compensation insurance and fire and extended coverage insurance, for
leased as well as owned facilities and equipment.
Employees.
At May 24, 2002, the Company and its subsidiaries had 379 full-time
and full-time-equivalent employees, of which 10 are employed by the
Company, 257 are employed by MAC, 52 are employed by CSA, 21 are
employed by MAS and 39 are employed by Global. None of the Company's
employees are represented by a union. The Company believes its
relations with its employees are good.
Item 2. Properties.
The Company leases the Little Mountain Airport in Maiden, North
Carolina from a corporation whose stock is owned in part by J. Hugh
Bingham, William H. Simpson and John J. Gioffre, officers and directors
of the Company, and the estate of David Clark, of which, Walter Clark,
the Company's chairman and Chief Executive Officer, is a co-executor and
beneficiary, and Allison Clark, a director, is a beneficiary. The
facility consists of approximately 65 acres with one 3,000 foot paved
runway, approximately 20,000 square feet of hangar space and
approximately 10,300 square feet of office space. The operations of the
Company and MAC are headquartered at this facility. The lease for this
facility extends through May 31, 2006, and the monthly lease payment is
$9,155.
The Company also leases approximately 800 square feet of office
space and approximately 6,000 square feet of hangar space at the Ford
Airport in Iron Mountain, Michigan. CSA's operations are headquartered
at these facilities. These facilities are leased, from a third party,
under an annually renewable agreement with a monthly rental payment, as
of March 31, 2002, of approximately $1,698.
On November 16, 1995, the Company entered into a twenty-one and a
half year premises and facilities lease with Global TransPark
Foundation, Inc. to lease approximately 53,000 square feet of a 66,000
square foot aircraft hangar shop and office facility at the North
Carolina Global TransPark in Kinston, North Carolina. On August 10,
1996, MAS's component repair services and part of MAC's aircraft
maintenance operations were relocated to this facility. Rent under this
lease increases over time as follows: the first 18 months, no rent; the
next 5-year period, $2.25 per square foot; the next 5-year period, $3.50
per square foot; the next 5-year period, $4.50 per square foot; and the
final 5-year period, $5.90 per square foot. This lease is cancelable
under certain conditions at the Company's option. The Company currently
considers the lease to be non-cancelable for seven years and has
calculated rent expense on a straight-line basis over this portion of
the lease term. The Company began operations at this facility in August
1996.
MAS operates an engine overhaul management facility in Miami,
Florida, leasing, from a third party, approximately 4,700 square feet of
shop space. The lease expired on March 31, 2002 and MAS relocated to a
smaller facility in April 2002 and signed a lease expiring February 2003
at a monthly rental payment of $1,523. MAS also operates a 145 repair
shop facility in Kinston, North Carolina. The lease expired on March
31, 2002 and MAS relocated to a smaller facility under a month to month
lease in May 2002, with a monthly rental payment of $1,225.
Global leases a 112,500 square foot production facility in Olathe,
Kansas. The facility is leased, from a third party, under a five-year
lease agreement which expires in August 2006. The monthly rental
payment, as of March 31, 2002, was $29,341, and the monthly rental will
increase to $29,809 over the life of the lease.
As of March 31, 2002, the Company leased hangar space from third
parties at 35 other locations for aircraft storage. Such hangar space
is leased, from third parties, at prevailing market terms.
The table of aircraft presented in Item 1 lists the aircraft
operated by the Company's subsidiaries and the form of ownership.
Item 3. Legal Proceedings.
Global and one of its employees are defendants in a lawsuit filed
in March 2002 in the United States District Court for the District of
Columbia, Catalyst & Chemical Services et al v. Terex, et al. In this
action, the plaintiffs allege that they provided to Global and the
employee certain trade secrets regarding aircraft de/anti-icing systems
that were then disclosed by Global and the employee to third parties.
The plaintiffs allege misappropriation of trade secrets, breach of
contract and violation of the federal Racketeer Influenced and Corrupt
Organization Act and seek monetary damages. An answer in this action is
not yet due and has not yet been filed. The Company does not believe
that the action has any merit and intends to defend the lawsuit
vigorously.
The Company is currently aware of certain employee, product
liability and environmental matters, some of which involve pending or
threatened lawsuits. If adversely decided, management believes the
results of these pending or threatened lawsuits would not have a
material adverse effect on the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
PART II
Item 5. Registrant's Common Equity and Related Stockholder Matters.
The Company's common stock is publicly traded in the over-the-
counter market under the NASDAQ symbol "AIRT."
As of June 5, 2002 the number of holders of record of the Company's
Common Stock was approximately 362. Over-the-counter market quotations
reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions. The
range of high and low bid quotations per share for the Company's common
stock from April 2000 through March 2002 is as follows:
Common Stock
Quarter Ended High Low
June 30, 2000 3.875 3.000
September 30, 2000 3.750 2.750
December 31, 2000 4.000 2.250
March 31, 2001 4.438 3.000
June 30, 2001 4.480 2.810
September 30, 2001 4.150 2.290
December 31, 2001 6.490 2.500
March 31, 2002 6.310 2.700
The Company's Board of Directors has adopted a policy to pay a
regularly scheduled annual cash dividend in the first quarter of each
fiscal year. The $0.12 per share cash dividend, declared on May 22,
2002, will be paid on June 20, 2002 to stockholders of record on June 5,
2002.
Item 6. Selected Financial Data
(In thousands except per share data)
Year Ended March 31,
2002 2001 2000 1999 1998
Operating revenues $ 70,958 $ 70,246 $ 58,846 $ 52,120 $ 51,001
Net earnings $ 1,278 $ 1,289 $ 362 $ 523 $ 1,706
Net earnings per share-
Basic $ 0.47 $ 0.47 $ 0.13 $ 0.19 $ 0.64
Net earnings per share-
Diluted $ 0.46 $ 0.46 $ 0.13 $ 0.19 $ 0.61
Total assets $ 22,903 $ 28,533 $ 23,936 $ 20,852 $ 18,289
Long-term obligations,
including
current portion $ 4,158 $ 5,969 $ 1,486 $ 1,364 $ 1,144
Stockholders' equity $ 11,100 $ 10,170 $ 9,383 $ 9,636 $ 9,712
Average common shares
outstanding-Basic 2,717 2,733 2,758 2,698 2,660
Average common shares
outstanding-Diluted 2,789 2,781 2,837 2,794 2,788
Dividend declared per
common share
(1) $ 0.15 $ 0.10 $ 0.08 $ 0.14 $ 0.10
Dividend paid per common
share
(1) $ 0.15 $ 0.10 $ 0.08 $ 0.14 $ 0.10
__________________________
___
(1) On May 22, 2002, the Company declared a cash dividend of
$0.12 per common share payable
on June 20, 2002 to stockholders of record on June 5, 2002.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
The Company's two most significant components of revenue, which
accounted for 42.8% and 41.2% of revenue in fiscal 2002 were generated,
respectively, through its ground support equipment subsidiary, Global
Ground Support, LLC (Global), and its air cargo subsidiaries, Mountain
Air Cargo, Inc. (MAC) and CSA Air, Inc. (CSA).
Global manufactures, services and supports aircraft deicers and
ground support equipment on a worldwide basis. Global's revenue
contributed approximately $30,345,000 and $31,406,000 to the Company's
revenues in fiscal 2002 and 2001, respectively. The small decrease in
revenues in 2002 was primarily due to decreased commercial equipment
orders being virtually offset by a large scale airport deicer contract,
which commenced in February 2001.
MAC and CSA are short-haul express air freight carriers. MAC and
CSA's revenue contributed approximately $29,264,000 and $30,262,000 to
the Company's revenues in fiscal 2002 and 2001, respectively. Under the
terms of the dry-lease service agreements, which currently cover
approximately 98% of the revenue aircraft operated, the Company passes
through to its customer certain cost components of its operations
without markup. The cost of fuel, flight crews, landing fees, outside
maintenance, parts and certain other direct operating costs are included
in operating expenses and billed to the customer as cargo and
maintenance revenue, at cost.
Separate agreements cover the three types of aircraft operated by
MAC and CSA-Cessna Caravan, Fokker F-27, and Short Brothers SD3-30.
Cessna Caravan and Fokker F-27 aircraft (a total of 93 aircraft at March
31, 2002) are owned by and dry-leased from a major air express company
(Customer), and Short Brothers SD3-30 aircraft (two aircraft at March
31, 2002) are owned by the Company and operated periodically under wet-
lease arrangements with the Customer. Pursuant to such agreements, the
Customer determines the type of aircraft and schedule of routes to be
flown by MAC and CSA, with all other operational decisions made by the
Company.
Agreements are renewable annually and may be terminated by the
Customer at any time upon 15 to 30 days' notice. The Company believes
that the short term and other provisions of its agreements with the
Customer are standard within the air freight contract delivery service
industry. The Company is not contractually precluded from providing
such services to other firms, and has done so in the past. Loss of its
contracts with the Customer would have a material adverse effect on the
Company.
Mountain Aircraft Services, LLC's (MAS) aircraft component parts
brokerage and repair services contributed approximately $11,349,000 and
$8,578,000 to the Company's revenues in fiscal 2002 and 2001,
respectively, and are included in Aircraft Services and Other in the
accompanying consolidated statement of earnings.
The Company's four subsidiaries operate in three business segments.
Each business segment has separate management teams and infrastructures
that offer different products and services. The subsidiaries have been
combined into the following reportable segments: air cargo, aviation
ground equipment and aviation services in the accompanying consolidated
financial statements.
The following table summarizes the changes and trends in the
Company's expenses as a percentage of revenue:
Fiscal Year Ended March 31,
2002 2001 2000
Operating revenue (in thousands) $ 70,958 $ 70,246 $ 58,846
Expense as a percentage of revenue:
Flight operations 20.32% 21.30% 23.31%
Maintenance and brokerage 29.33 24.06 35.11
Ground equipment 33.19 37.43 25.58
General and administrative 12.88 12.44 12.78
Depreciation and amortization 0.94 1.18 1.57
Total costs and expenses 96.65% 96.41% 98.35%
Critical Accounting Policies and Estimates
The preparation of the Company's financial statements in conformity
with accounting principles generally accepted in the U.S. requires the
use of estimates and assumptions to determine certain assets,
liabilities, revenues and expenses. Management bases these estimates
and assumptions upon the best information available at the time of the
estimates or assumptions. The Company's estimates and assumptions could
change materially as conditions within and beyond our control change.
Accordingly, actual results could differ materially from estimates. The
most significant estimates made by management include allowance for
doubtful accounts receivable, reserves for excess and obsolete
inventories, deferred tax asset valuation, retirement benefit
obligations, valuation of revenue recognized under the percentage of
completion method and valuation of long-lived assets. Following is a
discussion of critical accounting policies and related management estimates
and assumptions necessary in determining the value of related assets or
liabilities. A full description of all significant accounting policies is
included in Note 1 to our Consolidated Financial Statements included
elsewhere in this Report.
Allowance for Doubtful Accounts. An allowance for doubtful
accounts receivable is established based on management's estimates of
the collectability of accounts receivable. The required allowance is
determined using information such as customer credit history, industry
information, credit reports and customer financial condition. The
estimates can be affected by changes in the aviation industry, customer
credit issues or general economic conditions.
Inventories. The Company's parts inventories are valued at the
lower of cost or market. Provisions for excess and obsolete inventories
are based on assessment of slow-moving and obsolete inventories.
Historical part usage and estimated future demand provide the basis for
estimates. Estimates are subject to volatility and can be affected by
reduced equipment utilization, the retirement of aircraft or ground
equipment and changes in the aviation industry.
Deferred Taxes. Deferred tax assets net of valuation allowance,
if any, reflect the likelihood of the recoverability of these assets.
Company judgement of the recoverability of these assets is based
primarily on estimates of current and expected future earnings and tax
planning.
Retirement Benefits Obligation. The Company determines the value
of retirement benefits assets and liabilities on an actuarial basis.
Values are affected by our outside actuary's estimates of the expected
return on plan assets, insurance policies and the discount rates used.
Actual changes in the fair market value of plan assets, differences
between the actual return and the expected return on plan assets and
changes in the discount rate used will affect the amount of pension gain
or loss recognized.
Revenue Recognition. Cargo revenue is recognized upon completion
of contract terms and maintenance revenue is recognized when the service
has been performed. Revenue from product sales is recognized when
contract terms are completed and title has passed to customers.
Revenues from overhaul contracts on customer owned parts and long term
fixed price manufacturing projects are recognized on the percentage-of-
completion method. Revenues for contracts under percentage of
completion are measured by the percentage of cost incurred to date, to
estimated total cost for each contract or workorder.
Valuation of Long-Lived Assets. The Company adopted Financial
Accounting Standards Board Statement of Financial Accounting Standards
(SFAS) No. 144, "Accounting for Impairment or Disposal of Long-Lived
Assets" on April 1, 2002. If required, the Company will record
impairment charges on long-lived assets used in operations when events
and circumstances indicate the assets may be impaired and the
undiscounted cash flows estimated to be generated by those assets are
less than their carrying amount. In the event it is determined that the
carrying values of long-lived assets are in excess of estimated gross
future cash flows for those assets, the Company then will write-down the
value of the assets to a level commensurate with their fair value using a
discounted cash flow approach.
Seasonality
Global's business has historically been highly seasonal. Due to
the nature of its product line, the bulk of Global's revenues and
earnings have typically occurred during the second and third fiscal
quarters in anticipation of the winter season, and comparatively little
has occurred during the first and fourth fiscal quarters. The Company
has continued its efforts, started in fiscal 1999, to reduce Global's
seasonal fluctuation in revenues and earnings by broadening its product
line to increase revenues and earnings in the first and fourth fiscal
quarters. In June 1999, Global was awarded a four-year contract to
supply deicing equipment to the United States Air Force (USAF) for a
total amount of approximately $25 million, and in January 2001 Global
received a $7.1 million pedestal-mounted deicer contract with the
Philadelphia International Airport, expected to be completed in the
first quarter of fiscal 2003. The Company anticipates that revenue
from the USAF contract will continue to contribute to management's plan
to reduce Global's seasonal fluctuation in revenues. The Company
believes that this seasonal trend was not reflected in Global's current
third quarter results due to the September 11, 2001 terrorist attacks
and weakening aviation market discussed below. The remainder of the
Company's business is not materially seasonal.
Results of Operations
Fiscal 2002 vs. 2001
Consolidated revenue increased $712,000 (1.0%) to $70,958,000 for
the fiscal year ended March 31, 2002 compared to the prior fiscal year.
The increase in 2002 revenue primarily resulted from increases in
revenue from MAS of $2,685,000 (31.0%) to $11,349,000 partially offset
by decreases in Global revenue of $1,061,000 (3.4%) to $30,345,000 and a
$912,000 (3.0%) decrease in air cargo revenue to $29,264,000.
Operating expenses increased $854,000 (1.3%) to $68,582,000 for
fiscal 2002 compared to fiscal 2001. The net increase in operating
expenses consisted of the following changes: cost of flight operations
decreased $547,000 (3.7%) as a result of decreases in fuel, landing
fees, and costs associated with pilot travel partially offset by
increases in pilot and flight personnel costs; maintenance and brokerage
expenses increased $3,906,000 (23.1%) primarily as a result of cost
associated with the sale of an aircraft engine, partially offset by
lower outside maintenance and parts costs at MAC; ground equipment costs
decreased $2,748,000 (10.5%), as a result of decreased sales at Global;
depreciation and amortization decreased $160,000 (19.3%) as a result of
certain assets becoming fully depreciated, or written off during fiscal
2002; the general and administrative expense increase of $402,000 (4.6%)
is primarily the result of increases in general wages and benefits,
insurance cost and staff expense.
On a segment basis, the most significant impacts on the Company's
operating results comparing the fiscal year ended March 31, 2002 to the
prior period resulted from changes in the ground equipment operation at
Global and the aircraft services operation at MAS. In the fiscal year
ended March 31, 2002, Global had operating income of $3,335,000 compared
to prior period income of $2,049,000 and MAS had an operating loss of
$905,000 compared to a $274,000 profit in the prior year. Several
factors contributed to the changes in Global's and MAS's operating
results. Global's current fiscal year operating income increased
compared to its prior fiscal year primarily due to commencement of a
large scale airport contract and higher sales volume on its U.S. Air
Force contract offsetting declines in commercial equipment orders.
MAS's current fiscal year revenue increased 31.4% compared to its prior
fiscal year revenue, primarily due to a large engine sale offsetting
declines in service revenue. The net decrease, exclusive of the engine
sale, in MAS revenue, and operating income, was primarily due to
decreased brokerage sales and parts overhaul revenue. Operating income
for the Company's overnight air cargo operations was $2,216,000 in the
fiscal year ended March 31, 2002, a decrease of 10.5% from $2,476,000 in
the prior fiscal year revenue. The decrease resulted from decreased
levels of aircraft maintenance.
Non-operating expense decreased a net $305,000 due to decreased
current year interest expense related to decreased borrowing on the
Company's line of credit.
Provision for income taxes increased $175,000 (26.6%) due to
changes in the effective tax rate. The provision for income taxes for
the fiscal years ended March 31, 2002, 2001 and 2000 were different from
the Federal statutory rates due to state tax provisions and a reduction
in the Company's excise tax accrual due to a favorable tax ruling.
Although fiscal 2002's revenues and net earnings closely match fiscal
2001, the effect of the September 11th terrorist attacks and a softening
aviation market during fiscal 2002 substantially affected Air T's operations
during the second half of the current year. Air T's operating subsidiaries
experienced significant decreases in current fourth quarter revenues and
earnings compared to the prior year's fourth quarter. Additional accruals
contributed to the Company's current period fourth quarter loss of $38,000.
Fiscal 2001 vs. 2000
Consolidated revenue increased $11,400,000 (19.4%) to $70,246,000
for the fiscal year ended March 31, 2001 compared to the prior fiscal
year. The increase in 2001 revenue primarily resulted from increases in
revenue from Global of $14,397,000 (84.6%) to $31,406,000 partially
offset by decreases in MAS revenue of $591,000 (6.4%) to $8,578,000 and
a $2,405,000 (7.4%) decrease in air cargo revenue to $30,262,000.
Operating expenses increased $9,857,000 (17.0%) to $67,729,000 for
fiscal 2001 compared to fiscal 2000. The net increase in operating
expenses consisted of the following changes: cost of flight operations
increased $1,248,000 (9.1%) as a result of increases in fuel, landing
fees, pilot and flight personnel and costs associated with pilot travel;
maintenance and brokerage expenses decreased $3,755,000 (18.2%)
primarily as a result of decreases associated with cost of parts stock
purchases and labor related to the decreased revenue of MAS's repair
facility and by lower outside maintenance costs at MAC; ground equipment
costs increased $11,244,000 (74.7%), as a result of increased sales at
Global; depreciation and amortization decreased $96,000 (10.4%) as a
result of certain assets becoming fully depreciated, or written off
during fiscal 2001; the general and administrative expense increase of
$1,217,000 (16.2%) is primarily the result of increases in general
wages and benefits, professional fees and staff expense.
On a segment basis, the most significant impacts on the Company's
operating results comparing the fiscal year ended March 31, 2001 to the
prior period resulted from changes in parent company revenue and
expense, the ground equipment operation at Global and the aircraft
services operation at MAS. Current year corporate operating loss
increased $420,000 due to increased general and administrative expense
over the prior year and decreased investment income. In the fiscal year
ended March 31, 2001, Global had an operating income of $2,049,000
compared to a prior period loss of $591,000, MAS had operating income of
$274,000 compared to $650,000 in the prior year. Several factors
contributed to the changes in Global's and MAS's operating results.
Global's current fiscal year revenue increased 84.6% compared to its
prior fiscal year primarily due to commencement of the USAF contract.
MAS's current fiscal year revenue decreased 6.4% compared to its prior
fiscal year revenue. The decrease in MAS revenue, and operating income,
was primarily due to decreased brokerage sales and parts overhaul
revenue. Operating income for the Company's overnight air cargo
operations was $2,476,000 in the fiscal year ended March 31, 2001, a
decrease of 7.6% from $2,680,000 in the prior fiscal year revenue. The
MAC decrease resulted from decreased levels of aircraft maintenance.
Non-operating expense increased a net $225,000 due to increased
current year interest expense related to higher levels of borrowing on
the Company's line of credit to fund the expanded operations of Global
and MAS and a decrease in investment income.
Provision for income taxes increased $390,000 (146.9%) due to
increased taxable income. The provision for income taxes for the fiscal
years ended March 31, 2001, 2000 and 1999 were different from the
Federal statutory rates due to state tax provisions and a reduction in
the Company's excise tax accrual due to a favorable tax ruling.
Liquidity and Capital Resources
As of March 31, 2002 the Company's working capital amounted to
$11,221,000, a decrease of $1,028,000 compared to March 31, 2001. The
net decrease primarily resulted from decreases in accounts receivable
and inventory and an increase in accrued expenses, partially offset by
decreased accounts payable and increased deferred tax assets.
On May 23, 2001 the Company expanded its bank financing line to a
$10,000,000 credit facility. Under the terms of the agreement, a
$7,000,000 secured long-term revolving credit line which expires on
August 31, 2003 replaced the Company's $8,500,000 unsecured short-term
revolving credit line. The remaining $3,000,000 of the credit facility
is a five-year term loan which matures on May 31, 2006; with quarterly
payments of $150,000, plus accrued interest.
The credit facility contains customary events of default and
restrictive covenants that, among other matters, require the Company to
maintain certain financial ratios. As of March 31, 2002, the Company
was in compliance with all of the restrictive covenants. The amount of
credit available to the Company under the agreement at any given time is
determined by an availability calculation, based on the eligible
borrowing base, as defined in the credit agreement, which includes the
Company's outstanding receivables, inventories and equipment, with
certain exclusions. The credit facility is secured by substantially all
of the Company's assets.
Amounts advanced under the credit facility bear interest at the 30-
day "LIBOR" rate plus 137 basis points. The LIBOR rate at March 31,
2002 was 1.85%. At March 31, 2002 and 2001, the amounts outstanding
against the credit facility were $3,860,000 and $5,763,000, respectively.
At March 31, 2002, $5,690,000 was available under the entire credit facility.
The Company has classified $3,260,000 of its outstanding balance on
the credit facility as of March 31, 2002 as long-term to reflect the terms
included under the agreement signed on May 31, 2001. The Company
entered into two swap agreements on May 31, 2001 to fix the interest
rate on the $3,000,000 term portion and $2,000,000 of the revolving
portion of the credit facility at respective interest rates of 6.97% and
6.50%.
The following table of material debt and lease commitments at March
31, 2002 summarizes the effect these obligations are expected to have on
the Company's cash flow in the future periods.
Related Cash Outflows
Contractual
Obligations Total 2003 2004 2005 2006 2007
Long-term bank
debt $3,860,000 $ 600,000 $1,910,000 $ 600,000 $ 600,000 $ 150,000
Operating
leases 2,827,000 638,000 622,000 629,000 637,000 301,000
Capital leases 149,000 51,000 46,000 39,000 13,000 -
Total $6,836,000 $1,289,000 $2,578,000 $1,268,000 $1,250,000 $ 451,000
The respective years ended March 31, 2002, 2001 and 2000 resulted
in the following changes in cash flow: operating activities provided
$2,890,000 and $262,000, respectively in 2002 and 2000 and used
$1,129,000 in 2001. Investing activities used $657,000, $227,000, and
$172,000, respectively, in 2002, 2001 and 2000 and financing activities
used $2,300,000 and $209,000, respectively, in 2002 and 2000 and
provided $1,310,000 in 2001. Net cash decreased $66,000, $47,000 and
$119,000, respectively, in 2002, 2001 and 2000.
Cash provided by operating activities was $4,020,000 more for the
year ended March 31, 2002, compared to 2001 principally due to decreases
in accounts receivable and inventory, partially offset by decreases in
accounts payable. Cash used in investing activities for the year ended
March 31, 2002 was approximately $430,000 more than 2001, principally
due to a sale of marketable securities in 2001. Cash used in financing
activities was $3,609,000 more in 2002 compared to 2001 principally due
to changes relating to borrowings under the line of credit.
During the fiscal year ended March 31, 2002 the Company repurchased
13,500 shares of its common stock at a total cost of $42,785. Pursuant
to its previously announced stock repurchase program, $147,134 remains
available for repurchase of common stock.
There are currently no commitments for significant capital
expenditures. The Company's Board of Directors, on August 7, 1997,
adopted the policy to pay an annual cash dividend in the first quarter
of each fiscal year, in an amount to be determined by the board. The
Company paid a $0.15 per share cash dividend in June 2001 and declared a
$0.12 per share cash dividend on May 22, 2002, to be paid on June 20,
2002 to shareholders of record dated June 5, 2002.
Deferred Retirement Obligation
The Company's former Chairman and Chief Executive Officer passed
away on April 18, 1997. The death benefits are payable in the amount of
$75,000 per year for 10 years.
Impact of Inflation
The Company believes the impact of inflation and changing prices
on its revenues and net earnings will not have a material effect on its
manufacturing operations because increased costs due to inflation could
be passed on to its customers, or on its air cargo business since the
major cost components of its operations, consisting principally of fuel,
crew and certain maintenance costs are reimbursed, without markup, under
current contract terms.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has approved SFAS No. 143,
"Accounting for Asset Retirement Obligations" and No. 144, "Accounting
for the Impairment or Disposal of Long-lived Assets". SFAS No. 143
addresses financial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the associated
asset retirement costs. It requires that the fair value of a liability
for an asset retirement obligation be recognized in the period in which
it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived asset. SFAS No. 143 is effective for
fiscal years beginning after June 15, 2002. SFAS No. 144 supersedes
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of" and amends, Accounting
Principles Bulletin (APB) No. 30. Along with establishing a single
accounting model, based on the framework established in SFAS No. 121,
for long-lived assets to be disposed of by sale, this standard retains
the basic provisions of APB No. 30 for the presentation of discontinued
operations in the income statement but broadens that presentation to
include a component of an entity. SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001. The Company does not expect the
adoption of SFAS No. 143 or 144 to have a material effect on our financial
position and results of operations.
Derivative Financial Instruments
On April 1, 2001, the Company adopted Statement of Financial
Accounting Standard No. 133, "Accounting for Derivative Instruments and
Hedging Activities", as amended. SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. It requires that entities recognize all derivatives as
either assets or liabilities in the statement of financial position and
measure those instruments at fair value.
The Company is exposed to market risk, such as changes in interest
rates. To manage the volatility relating to interest rate risk, we may
enter into interest rate hedging arrangements from time to time. The
Company does not utilize derivative financial instruments for trading or
speculative purposes.
During the first quarter of fiscal 2002, the Company entered into
two interest rate swaps with a notional amount of $3 million, and $2
million respectively. These agreements were entered into as cash flow
hedges to fix the interest rates on the $3 million term portion and $2
million of the revolving portion of the credit facility at interest
rates of 6.97% and 6.50%, respectively; the maturity dates of the swaps
vested the respective maturity dates of the underlying debt instruments.
The fair value of these swaps had decreased by $119,000 at March 31,
2002. Because the swaps are considered completely effective the change
in fair market value of the swaps are recorded in other comprehensive
loss and long-term debt on the balance sheet.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company does not hold or issue derivative financial instruments
for trading purposes. On May 31, 2001 the Company entered into swap
agreements to fix the interest rates on the $3 million term portion and
$2 million of the revolving portion of its credit facility at respective
interest rates of 6.97% and 6.50% to reduce its exposure to the
fluctuations of LIBOR-based variable interest rates. The Company is
exposed to changes in interest rates on certain portions of its line of
credit, which bears interest based on the 30-day LIBOR rate plus 137
basis points. If the LIBOR interest rate had been increased by one
percentage point, based on the year-end balance of the line of credit,
annual interest expense would have increased by approximately $39,000.
Item 8. Financial Statements and Supplementary Data.
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Air T, Inc.
Denver, North Carolina
We have audited the accompanying consolidating balance sheets of
Air T, Inc. and subsidiaries (the "Company") as of March 31, 2002
and 2001, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the three years
in the period ended March 31, 2002. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of the Company as of
March 31, 2002 and 2001, and the results of its operations and
its cash flows for each of the three years in the period ended
March 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
May 31, 2002
AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended March 31,
2002 2001 2000
Operating Revenues (Note 10):
Cargo $ 19,861,747 $ 20,258,595 $ 18,823,692
Maintenance 9,366,524 9,917,749 13,712,681
Ground equipment 30,344,889 31,405,711 17,009,311
Aircraft services and other 11,384,943 8,663,818 9,300,454
70,958,103 70,245,873 58,846,138
Operating Expenses:
Flight operations 14,418,205 14,965,001 13,717,147
Maintenance and brokering 20,810,379 16,903,938 20,658,917
Ground equipment 23,547,474 26,295,686 15,052,477
General and administrative 9,139,897 8,738,131 7,521,446
Depreciation and amortization 666,389 826,018 921,791
68,582,343 67,728,774 57,871,778
Operating Income 2,375,759 2,517,099 974,360
Non-operating Expense (Income):
Interest 491,387 745,077 638,138
Deferred retirement
expense (Note 12) 88,078 24,996 24,996
Investment income (115,562) (114,467) (183,227)
Increase in cash surrender
value of life insurance (164,000) (95,457) (133,378)
Other (33,142) 12,075 256
266,761 572,224 346,785
Earnings Before Income Taxes 2,108,998 1,944,875 627,575
Income Taxes (Note 11) 830,499 655,950 265,718
Net Earnings $ 1,278,499 $ 1,288,925 $ 361,857
Net Earnings Per Share (Note 13):
Basic $ 0.47 $ 0.47 $ 0.13
Diluted $ 0.46 $ 0.46 $ 0.13
Weighted Average Shares Outstanding:
Basic 2,716,823 2,733,428 2,757,549
Diluted 2,788,700 2,780,732 2,837,398
See notes to consolidated financial statements.
AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31,
2002 2001
ASSETS (Note 6)
Current Assets:
Cash and cash equivalents $ 31,770 $ 97,799
Marketable securities (Note 2) 982,028 875,836
Accounts receivable, less
allowance for doubtful accounts
of $455,805 in 2002 and
$163,862 in 2001 5,875,754 11,089,528
Costs and estimated earnings in
excess of billings on uncompleted
contracts (Note 4) 14,320 194,067
Inventories, net (Note 3) 9,907,430 10,783,686
Deferred tax asset (Note 11) 727,665 444,764
Prepaid expenses and other 188,245 203,765
Total Current Assets 17,727,212 23,689,445
Property and Equipment (Note 1):
Furniture, fixtures and
improvements 7,210,133 6,500,938
Flight equipment and
rotables inventory 1,329,153 1,153,301
8,539,286 7,654,239
Less accumulated depreciation (5,020,238) (4,400,067)
Property and equipment, net 3,519,048 3,254,172
Deferred Tax Asset (Note 11) 568,186 567,282
Intangible Pension Asset (Note 12) 290,862 361,631
Other Assets 797,454 660,682
Total Assets $ 22,902,762 $ 28,533,212
See notes to consolidated financial statements.
AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31,
2002 2001
LIABILITIES AND STOCKHOLDERS'EQUITY
Current Liabilities:
Accounts payable $ 3,543,568 $ 8,879,628
Accrued expenses (Note 5) 1,915,605 1,573,468
Income taxes payable (Note 11) 355,195 287,846
Current portion of long-term
obligations (Notes 6 & 7) 691,812 699,719
Total Current Liabilities 6,506,180 11,440,661
Capital Lease Obligations (less
current portion) (Note 7) 87,718 105,007
Long-term Debt (less current
portion) (Note 6) 3,378,934 5,163,829
Deferred Retirement Obligations
(less current portion) (Note 12) 1,830,205 1,653,400
Stockholders' Equity (Note 9):
Preferred stock, $1 par value,
authorized 50,000 shares, none
issued - -
Common stock, par value $.25;
authorized 4,000,000 shares;
2,724,320 and 2,705,153 shares
issued and outstanding
in 2002 and 2001,respectively 681,080 676,288
Additional paid in capital 6,858,898 6,828,640
Retained earnings 4,079,621 3,206,642
Accumulated other comprehensive loss (519,874) (541,255)
Total Stockholders'Equity 11,099,725 10,170,315
Total Liabilities and
Stockholders' Equity $ 22,902,762 $ 28,533,212
See notes to consolidated financial statements.
AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended March 31,
2002 2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,278,499 $ 1,288,925 $ 361,857
Adjustments to reconcile net
earnings to net cash provided by
(used in) operating activities:
Increase in accounts receivable
and inventory reserves 616,049 172,844 93,478
Depreciation and amortization 666,389 826,018 921,791
Deferred tax provision (283,805) (252,395) (101,046)
Net periodic pension cost 253,609 240,385 219,456
Changes in assets and liabilities
which provided (used)cash:
Accounts receivable 4,921,831 (3,133,354) (987,870)
Inventories 291,324 (1,834,225) (2,873,729)
Prepaid expenses and other 58,495 (49,547) (461,826)
Accounts payable (5,336,060) 1,361,988 3,249,750
Accrued expenses 356,793 432,626 (629,703)
Income taxes payable 67,349 (182,401) 470,247
Total adjustments 1,611,974 (2,418,061) (99,452)
Net cash provided by (used in)
operating activities 2,890,473 (1,129,136) 262,405
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of
property and equipment 50,000 30,581 -
Capital expenditures (720,428) (720,545) (647,084)
Purchase of marketable securities - - (100,000)
Sale and maturity of
marketable securities 13,496 462,617 575,143
Net cash used in investing
activities (656,932) (227,347) (171,941)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings on
line of credit (1,479,100) 1,740,910 89,402
Repayment of term loan (450,000) - -
Payment of cash dividend (405,520) (274,858) (220,278)
Repurchase of common stock (42,785) (186,783) (78,437)
Proceeds from exercise of stock
options 77,835 30,500 -
Net cash (used in) provided by
financing activities (2,299,570) 1,309,769 (209,313)
NET DECREASE IN CASH AND CASH
EQUIVALENTS (66,029) (46,714) (118,849)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 97,799 144,513 263,362
CASH AND CASH EQUIVALENTS AT END
OF YEAR $ 31,770 $ 97,799 $ 144,513
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Capital leases entered into
during fiscal year $ 24,581 $ 138,181 $ 30,236
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest $ 609,912 $ 722,885 $ 608,938
Income taxes paid/(refunds
received) 1,039,595 1,091,684 (596,993)
See notes to consolidated financial statements.
AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock (Note 9) Addit- Accumulated
ional Other Total
Paid-In Retained Comprehensive Stock-
Shares Amount Capital Earnings Income holder's
(Loss) Equity
Balance,March
31, 1999 2,764,653 $ 690,491 $7,049,157 $2,050,995 $ (154,745) $9,635,898
Comprehensive Income:
Net earnings 361,857
Other Comprehensive
Loss:
Unrealized loss
on available-for-
sale securities (315,438)
Excess of additional
pension liability over
unrecognized prior
service cost (127,721)
Total Comprehensive
Loss (81,302)
Repurchase and retirement
Of common
stock (24,300) (6,075) (72,362) - - (78,437)
Cash dividend
($.08 per share) - - - (220,278) - (220,278)
Balance, March
31,2000 2,740,353 684,416 6,976,795 2,192,574 (597,904) 9,255,881
Comprehensive Income:
Net earnings 1,288,925
Other Comprehensive
Income:
Unrealized gain
on available-for-
sale securities 74,980
Excess of additional
pension liability over
unrecognized prior
service cost (18,331)
Total Comprehensive
Income 1,345,574
Repurchase and retirement
of common
stock (61,200) (14,628) (172,155) - - (186,783)
Exercise of stock
options 26,000 6,500 24,000 30,500
Cash dividend
($.10 per share) - - - (274,858) - (274,858)
Balance, March
31, 2001 2,705,153 676,288 6,828,640 3,206,642 (541,255) 10,170,315
Comprehensive Income:
Net earnings 1,278,499
Other Comprehensive
Income:
Unrealized gain
on available-for-
sale securities 119,690
Excess of additional
pension liability
over unrecognized
prior service cost 20,691
Change in fair
value of derivatives (119,000)
Total Comprehensive
Income 1,299,880
Repurchase and retirement
of common
stock (13,500) (3,375) (39,410) - - (42,785)
Exercise of stock
options 32,667 8,167 69,668 77,835
Cash dividend
($.15 per share) - - - (405,520) (405,520)
Balance, March
31,2002 2,724,320 $ 681,080 $6,858,898 $4,079,621 $ (519,874)$11,099,725
See notes to consolidated financial statements.
AIR T, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2002, 2001, AND 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principal Business Activities - Air T, Inc. (Company), through its
operating subsidiaries, is an air cargo carrier specializing in the
overnight delivery of small package air freight, a provider of
aircraft parts, engine overhaul management and component repair
services and a manufacturer of aircraft ground service equipment.
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its wholly-owned
subsidiaries, Mountain Air Cargo, Inc., CSA Air, Inc., Mountain
Aircraft Services, LLC and Global Ground Support, LLC (Global).
All significant intercompany transactions and balances have been
eliminated.
Concentration of Credit Risk - The Company's potential exposure to
concentrations of credit risk consists of trade accounts
receivable. Accounts receivable are normally due within 30 days
and the Company performs periodic credit evaluations of its
customers' financial condition.
Substantially all of the Company's customers are concentrated in
the aviation industry and revenue can be materially affected by
current economic conditions and the price of certain supplies such
as fuel, the cost of which is passed through to the customer. The
Company has customer concentrations in two areas of operations, air
cargo which provides service to one major customer and ground
support equipment which provides equipment and services to
approximately 90 customers, one of which is considered a major
customer. The loss of a major customer would have a material
impact on the Company's results of operations.
Cash Equivalents - Cash equivalents consist of liquid investments
with maturities of three months or less when purchased.
Marketable Securities - Marketable securities consists primarily of
investments in mutual funds and REITs. The Company has classified
marketable securities as available-for-sale and they are carried at
fair value. Unrealized gains and losses on such securities are
excluded from earnings and reported as a component of accumulated
comprehensive loss until realized. Realized gains and losses on
marketable securities are determined by calculating the difference
between the basis of each specifically identified marketable
security sold and its sales price.
Inventories - Inventories of the manufacturing subsidiary are
carried at the lower of cost (first in, first out) or market.
Aviation parts and supplies inventories are carried at the lower of
average cost or market. Consistent with industry practice, the
Company includes aircraft parts and supplies in current assets,
although a certain portion of these inventories may not be used
within one year.
Property and Equipment - Property and equipment is stated at cost
or, in the case of equipment under capital leases, the present
value of future lease payments. Rotables inventory represents
aircraft parts which are repairable, capitalized and depreciated
over their estimated useful lives. Depreciation and amortization
are provided on a straight-line basis over the asset's service life
or related lease term, as follows:
Flight equipment and intellectual property 7 years
Other equipment and furniture 3 to 7 years
Revenue Recognition - Cargo revenue is recognized upon completion
of contract terms and maintenance revenue is recognized when the
service has been performed. Revenue from product sales is
recognized when contract terms are completed and title has passed
to customers. Revenues from overhaul contracts on customer owned
parts and long term fixed price construction projects are
recognized on the percentage-of-completion method, in accordance
with AICPA Statement of Position No. 81-1, "Accounting for
Performance of Construction Type and Certain Production Type
Contracts". Revenues for contracts under percentage of completion
are measured by the percentage of cost incurred to date to
estimated total cost for each contract or workorder. Contract costs
include all direct material and labor costs and overhead costs
related to contract performance. Unanticipated changes in job
performance, job conditions and estimated profitability may result
in revisions to costs and income, and are recognized in the period
in which the revisions are determined or future periods. Such contracts
generally have no customer retainage provisions. Except for a
construction contract at Global, which is billed on a progress billing
basis, the Company generally bills its customer at the time of
completion of the contract or workorder.
Operating Expenses Reimbursed by Customer - The Company, under the
terms of its air cargo dry-lease service contracts, passes through
to its major customer certain cost components of its operations
without markup. The cost of flight crews, fuel, landing fees,
outside maintenance and certain other direct operating costs are
included in operating expenses and billed to the customer, at cost,
as cargo and maintenance revenue.
Stock Based Compensation - The Company measures employee stock
compensation plans using the intrinsic method with pro-forma
disclosure of net earnings and earnings per share determined as if
the fair value based method had been applied in measuring
compensation cost.
Income Taxes - Income taxes are provided for temporary differences
between the tax and financial accounting bases of assets and
liabilities using the asset and liability method. Deferred income
taxes are recognized for the tax consequence of such temporary
differences at the enacted tax rate expected to be in effect when
the differences reverse.
Accounting Estimates - The preparation of consolidated financial
statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates
and assumptions that affect the amounts reported. Actual results could
differ from those estimates. Significant estimates include the
allowance for doubtful account, inventory reserve, intangible pension
asset, deferred retirement obligations and revenue recognized under the
percentage of completion method.
Derivative Financial Instruments - In June 1998, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standard No. 133, ("SFAS 133") "Accounting for
Derivative Instruments and Hedging Activities", which requires all
derivative instruments to be recognized on the balance sheet at
their fair value. Changes in the fair value of derivatives are to
be recorded each period either in other comprehensive income or in
current earnings depending on the use of the derivative and whether
it qualifies for hedge accounting. SFAS No. 133 was effective for
the Company beginning on April 1, 2001. The adoption of SFAS No.
133 did not significantly impact the Company's financial
statements.
Recent Accounting Pronouncements -
The Financial Accounting Standards Board has approved SFAS No. 143,
"Accounting for Asset Retirement Obligations" and No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets".
SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. It requires that
the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of
the long-lived asset. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. SFAS No. 144 supersedes SFAS No.
121 and amends, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of" and Accounting
Principles Bulletin (APB No. 30). Along with establishing a single
accounting model, based on the framework established in SFAS No.
121, for long-lived assets to be disposed of by sale, this standard
retains the basic provisions of APB No. 30 for the presentation of
discontinued operations in the income statement but broadens that
presentation to include a component of an entity. SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001. The
Company does not expect the adoption of SFAS No. 143 or 144 to have
a material effect on our financial position and results of
operations.
Reclassifications - Certain reclassifications have been made to
2001 and 2000 amounts to conform to the current year presentation.
2. MARKETABLE SECURITIES
At March 31, 2002 and 2001, marketable securities consist of the
following investment types:
2002 2001
Real estate investment trusts $ 242,200 $ 98,000
Mutual funds 739,828 764,336
Certificate of deposit - 13,500
Total $ 982,028 $ 875,836
The Company recorded a realized gain of approximately $40,000 in
2001 and a realized loss of approximately $26,000 in 2000 in the
accompanying consolidated statements of earnings due to the sale of
securities.
3. INVENTORIES
Inventories consist of the following:
March 31,
2002 2001
Aircraft parts and supplies $ 5,373,398 $ 5,571,721
Aircraft equipment manufacturing:
Raw materials 2,777,175 2,819,329
Work in process 914,730 1,131,565
Finished goods 1,432,332 1,527,170
Total inventory 10,497,635 11,049,785
Reserves (590,205) (266,099)
Total, net of reserves $9,907,430 $10,783,686
4. UNCOMPLETED CONTRACTS
Overhaul contracts in process accounted for under the percentage of
completion method at March 31, 2002 and 2001 are summarized as
follows:
2002 2001
Costs incurred on uncompleted contracts $ 6,337 $ 53,953
Estimated earnings 7,983 140,114
Subtotal 14,320 194,067
Less billings to date - -
Costs and estimated earnings in excess of
billings on uncompleted contracts $ 14,320 $194,067
5. ACCRUED EXPENSES
Accrued expenses consist of the following:
March 31,
2002 2001
Salaries, wages and related items $ 613,671 $ 661,600
Profit sharing 556,363 403,466
Health insurance 305,834 -
Other 439,737 508,402
$ 1,915,605 $ 1,573,468
6. FINANCING ARRANGEMENTS
On May 23, 2001 the Company expanded its bank financing line to a
$10,000,000 credit facility. Under the terms of the agreement, a
$7,000,000 secured long-term revolving credit line, which expires
on August 31, 2003, replaced the Company's $8,500,000 unsecured
short-term revolving credit line. The remaining $3,000,000 of the
credit facility is a five-year term loan which matures on May 31,
2006; with quarterly payments of $150,000, plus accrued interest.
Long-term debt maturities are as follows:
2003 $ 600,000
2004 1,910,000
2005 600,000
2006 600,000
2007 150,000
Total $ 3,860,000
Both the revolving credit line and the term loan contain customary
events of default and restrictive covenants that, among other
matters, require the Company to maintain certain financial ratios.
As of March 31, 2002, the Company was in compliance with all of the
restrictive covenants. The amount of credit available to the
Company under the agreement at any given time is determined by an
availability calculation, based on the eligible borrowing base, as
defined in the credit agreement which includes the Company's
outstanding receivables, inventories and equipment, with certain
exclusions. The credit facility is secured by substantially all of
the Company's assets.
Amounts advanced under the credit facility bear interest at the 30-
day "LIBOR" rate plus 137 basis points. The LIBOR rate at March
31, 2002 was 1.85%. At March 31, 2002 and 2001, the amounts
outstanding against the credit facility were $3,860,000 and $5,764,000,
respectively. At March 31, 2002, $5,690,000 was available under
the entire credit facility.
The Company has classified $3,260,000 of its outstanding bank debt
as long-term as of March 31, 2002 to reflect the terms included
under the agreement signed on May 31, 2001. The Company entered
into two swap agreements on May 31, 2001 to fix the interest rate
on the $3,000,000 term portion and $2,000,000 of the revolving
portion of the credit facility at respective interest rates of
6.97% and 6.50%. See Footnote 8.
7. LEASE COMMITMENTS
The Company has operating lease commitments for office equipment
and its office and maintenance facilities as well as capital leases
for certain office and other equipment. The Company leases its
corporate offices from a company controlled by Company officers for
$9,155 per month under a five-year lease which expires in May 2006.
In August 1996, the Company relocated certain portions of its
maintenance operations to a new maintenance facility located at the
Global TransPark in Kinston, N. C. Under the terms of the long-
term facility lease, after an 18 month grace period (from date of
occupancy), rent will escalate from $2.25 per square foot to $5.90
per square foot, per year, over the 21.5 year life of the lease.
However, based on the occurrence of certain events the lease may be
canceled by the Company. The Company currently considers the lease
to be non-cancelable for seven years and has calculated rent
expense on a straight-line basis over this portion of the lease
term.
In August 1997 Global, located in Olathe, Kansas, leased
approximately 57,000 square feet of manufacturing space for $17,030
per month, under a two-year operating lease originally set to
expire in September 1999. In September 1998, the lease was
expanded to 112,500 square feet of manufacturing and office space
for $35,903 per month expiring August 2001. In April 2001 the
lease was renewed through August 2006; monthly rental will increase
from $28,967 to $30,842 over the life of the lease.
At March 31, 2002, future minimum annual lease payments under
capital and non-cancellable operating leases with initial or
remaining terms of more than one year are as follows:
Capital Operating
Leases Leases
2003 $ 50,590 $ 637,901
2004 46,388 622,340
2005 38,703 629,474
2006 13,115 636,608
2007 - 300,227
Total minimum lease payments $ 148,796 $ 2,826,549
Less amount representing interest 20,028
Present value of lease payments 128,768
Less current maturities 41,050
Long-term maturities $ 87,718
Rent expense for operating leases totaled approximately $759,000,
$819,000, and $728,000 for 2002, 2001 and 2000, respectively. Rent
expense to related parties was $109,860 for 2002 and $96,900 for
2001 and 2000, respectively.
8. DERIVATIVE FINANCIAL INSTRUMENTS
On April 1, 2001, the Company adopted Statement of Financial
Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities", as amended. SFAS 133 establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that entities
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at
fair value.
The Company is exposed to market risk, such as changes in interest
rates. To manage the volatility relating to interest rate risk, we
may enter into interest rate hedging arrangements from time to
time. The Company does not utilize derivative financial
instruments for trading or speculative purposes.
During the first quarter of fiscal 2002, the Company entered into
two interest rate swaps with a notional amount of $3 million, and
$2 million respectively. These agreements were entered into as
cash flow hedges to fix the interest rates on the $3 million term
portion and $2 million of the revolving portion of the credit
facility at interest rates of 6.97% and 6.50%, respectively; the
maturity dates of the swaps match the respective maturity dates of
the underlying debt instruments. The fair value of these swaps had
decreased by $119,000 at March 31, 2002. Because the swaps are
considered completely effective the change in fair market value of
the swaps are recorded in other comprehensive loss and long-term
debt on the balance sheet.
9. STOCKHOLDERS' EQUITY
The Company may issue up to 50,000 shares of preferred stock, in
one or more series, on such terms and with such rights, preferences
and limitations as determined by the Board of Directors. No
preferred shares have been issued as of March 31, 2002.
The Company has granted options to purchase up to a total of
285,200 shares of common stock to certain Company employees and
outside directors at prices ranging from $2.75 to $6.38 per share.
As of March 31, 2002, 79,800 shares remain available for future
issuance. All options were granted at exercise prices which
approximated the fair market value of the common stock on the date
of grant. Options granted in fiscal 1999 and 2000 vest over one to
three year periods and must be exercised within one to ten years of
the vesting date.
The following table summarizes information about stock options at
March 31, 2002:
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Option Remaining Average Average
Grant Exercise Options Contractual Exercise Options Exercise
Date Price Outstanding Life (years) Price Exerciable Price
3/19/99 $ 2.75 132,533 1.0 $ 2.75 132,533 $ 2.75
1/28/00 3.19 89,000 2.3 3.19 79,000 3.19
8/13/98 6.38 5,000 6.4 6.38 5,000 6.38
$2.75 to $6.38 226,533 1.6 $ 3.00 216,533 $ 2.99
Option information is summarized as follows:
Weighted
Average
Shares Exercise Price Per Share
Outstanding March 31, 1999 196,200 2.57
Granted 89,000 3.19
Outstanding March 31, 2000 285,200 2.77
Exercised (26,000) 1.17
Outstanding March 31, 2001 259,200 2.93
Exercised (32,667) 2.75
Outstanding March 31, 2002 226,533 3.00
The fair value of options granted in 2000 and 1999, is estimated on
the date of grant using the Black-Scholes option-pricing model with
the assumptions listed below. No options were granted in 2002 or
2001.
2000 1999
Weighted average fair value per option $ 1.62 $ 1.15
Assumptions used:
Weighted average expected volatility 65.1% 61.0%
Weighted average expected dividend yield 2.4% 2.2%
Weighted average risk-free interest rate 6.59% 5.70%
Weighted average expected life, in years 4.6 3.0
The Company measures stock-based compensation using the intrinsic
value method in accordance with APB Opinion No. 25. Had
compensation cost for the Company's stock-based compensation awards
been determined at the grant dates based on the fair market value
method described in FASB Statement No. 123, "Accounting for Stock-
Based Compensation" the Company's pro forma net income would have
been $1,232,623, or $0.44 per diluted share, $1,240,350, or $0.45
per diluted share, and $279,927, or $0.10 per diluted share,
respectively, for 2002, 2001 and 2000.
The Company has announced its intention to repurchase up to
$3,400,000 of the Company's common stock under a share repurchase
program. At March 31, 2002 the Company had repurchased a total of
789,780 shares at a total cost of $3,257,622 and may expend up to
an additional $142,378 under this program.
10. REVENUES FROM MAJOR CUSTOMER
Approximately 41.2%, 43.1% and 55.5% of the Company's revenues were
derived from services performed for a major air express company in
2002, 2001 and 2000, respectively. In addition, approximately
22.9% and 13.9% of the Company's revenues for 2002 and 2001
respectively, were generated from Global's US Air Force contract.
11. INCOME TAXES
The provision for income taxes consists of:
Year Ended March 31,
2002 2001 2000
Current:
Federal $ 911,000 $ 730,000 $ 300,000
State 203,000 178,000 67,000
Total current 1,114,000 908,000 367,000
Deferred:
Federal (214,000) (207,000) (83,000)
State (70,000) (45,000) (18,000)
Total deferred (284,000) (252,000) (101,000)
Total $ 830,000 $ 656,000 $ 266,000
The consolidated income tax provision was different from the amount
computed using the statutory Federal income tax rate for the
following reasons:
2002 2001 2000
Income tax provision at U.S. Statutory rate $ 716,000 $ 661,000 $ 213,000
State income taxes 99,000 94,000 32,000
Meal and entertainment disallowance 25,000 21,000 17,000
Other, net (10,000) 17,000 4,000
Reduction in valuation allowance - (137,000) -
Income tax provision $ 830,000 $ 656,000 $ 266,000
The tax effect of temporary differences that gave rise to the
Company's deferred tax assets at March 31, 2002 and 2001 are as
follows:
2002 2001
Book accruals over tax, net:
Warranty reserve $ 47,742 $ 80,123
Accounts receivable reserve 177,008 66,210
Inventory reserve 227,937 102,767
Accrued insurance (7,103) 25,561
Accrued vacation 86,879 79,467
Deferred compensation 565,097 519,111
Other 198,277 96,117
Fixed assets 14 42,690
Total $ 1,295,851 $ 1,012,046
The deferred tax asset is classified in the accompanying 2001 and
2000 consolidated balance sheets according to the classification of
the related asset and liability.
12. EMPLOYEE BENEFITS
The Company has a 401K defined contribution plan (AirT 401(K)
Retirement Plan). All employees of the Company are eligible to
participate in the plan. The Company's contribution to the 401(K)
plan for the years ended March 31, 2002, 2001 and 2000 was
$228,000, $229,000, and $229,000, respectively.
The Company, in each of the past three years, has paid a
discretionary profit sharing bonus in which all employees have
participated. The Company's expense for the years ended March 31,
2002, 2001, and 2000 was $562,000, $400,000 and $126,000, respectively.
Effective January 1, 1996 the Company entered into supplemental
retirement agreements with certain key executives of the Company,
to provide for a monthly benefit upon retirement. The following
table sets forth the funded status of the plan at March 31, 2002
and 2001.
March 31,
2002 2001
Vested benefit obligation and
accumulated benefit obligation $ 1,555,827 $ 1,392,100
Projected benefit obligation 1,555,827 1,395,178
Plan assets at fair value - -
Projected benefit obligation greater than plan assets 1,555,827 1,395,178
Unrecognized prior service cost (290,862) (361,631)
Unrecognized actuarial loss (125,361) (147,552)
Adjustment required to recognize minimum liability 416,223 506,105
Accrued pension cost recognized in the
consolidated balance sheet $ 1,555,827 $ 1,392,100
In accordance with the provisions of Statement of Financial
Accounting Standards No. 87, "Employers' Accounting for Pensions,"
the Company has recorded an additional minimum liability
representing the excess of the accumulated benefit obligation over
the fair value of plan assets and accrued pension liability for its
pension plan. The additional liability has been offset by an
intangible asset to the extent of prior service cost. The portion
of unrecognized prior service cost in excess of additional
liability in fiscal 2002 totaled $20,691 and is reported as a
component of accumulated other comprehensive loss.
The projected benefit obligation was determined using an assumed
discount rate of 7% and an assumed rate of return on assets of 7%.
The liability relating to these benefits has been included in
deferred retirement obligation in the accompanying financial
statements.
Net periodic pension expense for fiscal 2002 and 2001 included the
following:
2002 2001 2000
Future service cost $ 62,944 $ 58,826 $ 53,106
Interest cost 97,665 87,425 77,987
Amortization 93,000 94,134 88,363
Net periodic pension cost $ 253,609 $ 240,385 $ 219,456
A rollforward of the projected benefit obligation (PBO) is as follows:
PBO March 31, 2001 $ 1,395,178
Actuarial loss 40
Future service cost 62,944
Interest cost 97,665
PBO March 31, 2002 $ 1,555,827
The Company's former Chairman and CEO passed away on April 18,
1997. Under the terms of his supplemental retirement agreement,
approximately $498,000 in present value of death benefits is
required to be paid to fulfill death benefit payments over the next
10 years. As of March 31, 2002 accruals related to the unpaid
present value of the benefit amounted to approximately $324,000 (of
which approximately $274,000 is included under deferred retirement
obligations in the accompanying balance sheet). The net periodic
pension costs are included in general and administrative expenses
in the accompanying consolidated statements of earnings.
13. NET EARNINGS PER COMMON SHARE
Basic earnings per share has been calculated by dividing net
earnings by the weighted average number of common shares
outstanding during each period. For purposes of calculating
diluted earnings per share, shares issuable under employee stock
options were considered potential common shares and were included
in the weighted average common shares.
The computation of basic and diluted earnings per common share is
as follows:
Year Ended March 31,
2002 2001 2000
Net earnings $ 1,278,499 $ 1,288,925 $ 361,857
Weighted average common shares:
Shares outstanding - basic 2,716,823 2,733,428 2,757,549
Dilutive stock options 71,877 47,304 79,849
Shares outstanding - diluted 2,788,700 2,780,732 2,837,398
Net earnings per common share:
Basic $ 0.47 $ 0.47 $ 0.13
Diluted $ 0.46 $ 0.46 $ 0.13
14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(in thousands except per share data)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
2002
Operating Revenues $ 17,573 $ 25,273 $ 15,769 $ 12,343
Operating Income (Loss) 701 1,331 382 (38)
Earnings Before Income Taxes 571 1,230 278 30
Net Earnings 343 746 156 34
Net Earnings Per Share-Basic $ 0.13 $ 0.27 $ 0.06 $ 0.01
Net Earnings Per Share-Diluted 0.12 0.27 0.06 0.01
2001
Operating Revenues $ 14,412 $ 15,110 $ 20,583 $ 20,141
Operating Income 406 458 1,051 602
Earnings Before Income Taxes 280 282 822 561
Net Earnings 165 167 498 459
Net Earnings Per Share-Basic $ 0.06 $ 0.06 $ 0.18 $ 0.17
Net Earnings Per Share-Diluted 0.06 0.06 0.18 0.16
15. SEGMENT INFORMATION
The Company's four subsidiaries operate in three business segments.
Each business segment has separate management teams and
infrastructures that offer different products and services. The
subsidiaries have been combined into the following reportable
segments: overnight air cargo, ground equipment, and aviation
services.
The accounting policies for all reportable segments are the same as
those described in Footnote 1 of Notes to Consolidated Financial
Statements. The Company evaluates the performance of its operating
segments based on operating income.
Segment data is summarized as follows:
Year Ended March 31,
2002 2001 2000
Operating Revenues
Overnight Air Cargo $ 29,264,031 $ 30,262,362 $ 32,667,694
Ground Equipment 30,344,889 31,405,711 17,009,311
Aviation Services 11,349,183 8,577,800 9,169,133
Corporate - - -
Total $ 70,958,103 $ 70,245,873 $ 58,846,138
Operating Income (Loss)
Overnight Air Cargo $ 2,215,901 $ 2,475,522 $ 2,679,793
Ground Equipment 3,335,477 2,048,843 (591,440)
Aviation Services (904,911) 274,337 650,033
Corporate (1) (2,270,708) (2,281,603) (1,764,026)
Total $ 2,375,759 $ 2,517,099 $ 974,360
Identifiable Assets
Overnight Air Cargo $ 3,852,042 $ 4,957,327 $ 5,168,813
Ground Equipment 10,051,691 13,531,515 10,284,886
Aviation Services 6,142,237 8,862,645 6,111,755
Corporate 2,856,792 1,181,725 2,370,993
Total $ 22,902,762 $ 28,533,212 $ 23,936,447
Capital Expenditures, net
Overnight Air Cargo $ 107,264 $ 371,505 $ 353,409
Ground Equipment 271,672 77,288 58,483
Aviation Services 38,308 229,650 132,238
Corporate 303,184 42,102 108,497
Total $ 720,428 $ 720,545 $ 652,627
Depreciation and Amortization
Overnight Air Cargo $ 228,051 $ 261,122 $ 322,479
Ground Equipment 197,708 271,496 283,664
Aviation Services 149,437 146,683 161,781
Corporate 91,193 146,717 153,867
Total $ 666,389 $ 826,018 $ 921,791
(1) Excludes income from inter-segment transactions.
16. COMMITMENTS AND CONTINGENCIES
Global and one of its employees are defendants in a lawsuit filed
in March 2002 in the United States District Court for the District
of Columbia, Catalyst & Chemical Services et al v. Terex, et al.
In this action, the plaintiffs allege that they provided to Global
and the employee certain trade secrets regarding aircraft de/anti-
icing systems that were then disclosed by Global and the employee
to third parties. The plaintiffs allege misappropriation of trade
secrets, breach of contract and violation of the federal Racketeer
Influenced and Corrupt Organization Act and seek monetary damages.
An answer in this action is not yet due and has not yet been filed.
The Company does not believe that the action has any merit and
intends to defend the lawsuit vigorously.
The Company is currently aware of certain employee, intellectual
property and environmental matters, some of which involve pending
or threatened lawsuits. If adversely decided, management believes
the results of these pending or threatened lawsuits would not have
a material adverse effect on the Company.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
The Company had no disagreements on accounting or financial
disclosure matters with its independent certified public accountants to
report under this Item 9.
PART III
Item 10. Directors and Executive Officers of the Registrant.
J. Hugh Bingham, age 56, has served as President and Chief
Operating Officer of the Company since April 1997, as Senior Vice
President of the Company from June 1990 until April 1997, as Executive
Vice President from June 1983 to June 1990, and as a director since
March 1987. Mr. Bingham also serves as Chief Executive Officer and a
director of MAC, as Chief Executive Officer of MAS and as an Executive
Vice President and director of CSA.
Walter Clark, age 45, has served as Chairman of the Board of
Directors of the Company and Chief Executive Officer since April 1997.
Mr. Clark also serves as a director of MAC and CSA. Mr. Clark was
elected a director of the Company in April 1996. Mr. Clark was self-
employed in the real estate development business from 1985 until April
1997.
John J. Gioffre, age 58, has served as Vice President-Finance and
Chief Financial Officer of the Company since April 1984 and as
Secretary/Treasurer of the Company since June 1983. He has served as a
director of the Company since March 1987. Mr. Gioffre also serves as
Vice-President, Secretary/Treasurer and a director of MAC and CSA and as
Vice President-Finance, Treasurer and Secretary of MAS.
J. Leonard Martin, age 65, was elected a director in August 1994
and joined the Company as a Vice President in April 1997. From June
1995 until April 1997, Mr. Martin was an independent aviation
consultant. From April 1994 to June 1995, Mr. Martin served as Chief
Operating Officer of Musgrave Machine & Tool, Inc., a machining company.
From January 1989 to April 1994, Mr. Martin served as a consultant to
the North Carolina Air Cargo Authority in connection with the
establishment of the Global TransPark air cargo facility in Kinston,
North Carolina. From 1955 through 1988 Mr. Martin was employed by
Piedmont Airlines, a commercial passenger airline, in various
capacities, ultimately serving as Senior Vice President-Passenger
Services.
William H. Simpson, age 54, has served as Executive Vice President
of the Company since June 1990, as Vice President from June 1983 to June
1990, and as a director of the Company since June 20, 1985. Mr. Simpson
is also the President and a director of MAC, the Chief Executive Officer
and a director of CSA and Executive Vice President of MAS.
Menda J. Street, age 50, has served as Vice President of MAC since
1984, and in various other capacities at MAC since 1979.
Claude S. Abernethy, Jr., age 75, was elected as director of the
Company in June 1990. For the past five years, Mr. Abernethy has served
as a Senior Vice President of Wachovia Securities, a securities
brokerage and investment banking firm, and its predecessor. Mr.
Abernethy is also a director of Carolina Mills, Inc. and Wellco
Enterprises.
Sam Chesnutt, age 65, was elected a director of the Company in
August 1994. Mr. Chesnutt serves as President of Sam Chesnutt and
Associates, an agribusiness consulting firm. From November 1988 to
December 1994, Mr. Chesnutt served as Executive Vice President of
AgriGeneral Company, L.P., an agribusiness firm.
Allison T. Clark, age 46, has served as a director of the Company
since May 1997. Mr. Clark has been self-employed in the real estate
development business since 1987.
Herman A. Moore, age 72, was elected a director of the Company on
June 22, 1998. Mr. Moore is the president of Herman A. Moore & Assoc.,
Inc., a real estate development company.
George C. Prill, age 79, has served as a director of the Company
since June 1982, as Chief Executive Officer and Chairman of the Board of
Directors from August 1982 until June 1983, and as President from August
1982 until spring 1984. Mr. Prill has served as an Editorial Director
for General Publications, Inc., a publisher of magazines devoted to the
air transportation industry, from November 1992 until 2001 and was
retired from 1990 until that time. From 1979 to 1990, Mr. Prill served
as President of George C. Prill & Associates, Inc., of Charlottesville,
Virginia, which performed consulting services for the aerospace and
airline industry. Mr. Prill has served as President of Lockheed
International Company, as Assistant Administrator of the FAA, as a
Senior Vice President of the National Aeronautic Association and
Chairman of the Aerospace Industry Trade Advisory Committee.
The officers of the Company and its subsidiaries each serve at the
pleasure of the Board of Directors. Allison Clark and Walter Clark are
brothers.
Each director receives a director's fee of $500 per month and an
attendance fee of $500 is paid to outside directors for each meeting of
the board of directors or a committee thereof. Pursuant to the
Company's 1998 Omnibus Securities Award Plan (the "Plan") each director
who is not an employee of the Company received an option to purchase
1,000 shares of Common Stock at an exercise price of $6.375 per share
(the closing bid price per share on the date of stockholder approval of
the Plan.) The Plan provides for a similar option award to any director
first elected to the board after the date the stockholders approved the
Plan. Such options expire ten years after the date they were granted.
To the Company's knowledge, based solely on review of the copies of
reports under Section 16(a) of the Securities Exchange Act of 1934 that
have been furnished to the Company and written representations that no
other reports were required, during the fiscal year ended March 31, 2002
all executive officers, directors and greater than ten-percent
beneficial owners have complied with all applicable Section 16(a) filing
requirements.
Item 11. Executive Compensation.
The following table sets forth a summary of the compensation paid
during each of the three most recent fiscal years to the Company's Chief
Executive Officer and to the four other executive officers on March 31,
2002 with total compensation of $100,000 or more.
SUMMARY COMPENSATION TABLE
Long-term
Compensation
Name and Principal Awards
Position Securities
Annual Compensation Underlying
Year Salary ($)(1) Bonus ($) Options (#)
Walter Clark 2002 111,522 52,140 -
Chief Executive 2001 125,732 46,900 -
Officer 2000 126,035 15,080 50,000
J. Hugh Bingham 2002 193,304 52,564 -
President 2001 193,004 46,900 -
2000 196,032 15,080 -
John J. Gioffre 2002 122,058 39,880 -
Vice President 2001 121,788 35,175 -
2000 121,948 11,311 -
J. Leonard Martin 2002 122,659 59,900 -
Vice President 2001 122,673 24,880 -
2000 122,205 6,880 -
William H. Simpson 2002 195,364 52,140 -
Executive Vice 2001 194,803 46,900 -
President 2000 195,169 15,080 9,000
__________________________________________
(1) Includes perquisites in aggregate amount no greater than 10% of the
officer's base salary plus bonus.
The following table sets forth, for each of the executive officers
listed in the Summary Compensation Table who exercised options to
purchase shares of Common Stock during the most recent fiscal year, the
number of shares purchased and the value realized upon exercise, which
is determined based on the aggregate fair market value of the shares at
the time of the exercise minus the aggregate exercise price. The table
also sets forth the number of shares of Common Stock underlying
unexercised options at March 31, 2002 held by each of the executive
officers listed in the Summary Compensation Table. The table also
includes the value of such options at March 31, 2002 based upon the
closing bid price of the Company's Common Stock in the over-the-counter
market on that date ($3.50 per share) and the exercise price of the
options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of Value of
Securities Unexercised
Shares Underlying In-the-Money
Acquired Value Unexercised Options
On Realized Options at FY-End(#) at FY-End ($)
Name Exercise# ($) Exercis- Unexercis- Exercis- Unexercis-
able able able able
Walter Clark - - 50,000 - 15,500 -
J. Hugh Bingham - - 9,000 - 6,750 -
John J. Gioffre - - 9,000 - 6,750 -
J. Leonard Martin 6,000 4,800 3,000 - 2,250 -
William H. Simpson 8,000 20,400 9,000 - 2,790 -
EMPLOYMENT AGREEMENTS
Effective January 1, 1996, the Company and each of its subsidiaries
entered into employment agreements with J. Hugh Bingham, John J. Gioffre
and William H. Simpson, each of substantially similar form. Each of
such employment agreements provides for an annual base salary ($130,000,
$103,443 and $165,537 for Messrs. Bingham, Gioffre and Simpson,
respectively) which may be increased upon annual review by the
Compensation Committee of the Company's Board of Directors. In
addition, each such agreement provides for the payment of annual
incentive bonus compensation equal to a percentage (2.0%, 1.5% and 2.0%
for Messrs. Bingham, Gioffre and Simpson, respectively) of the Company's
consolidated earnings before income taxes and extraordinary items as
reported by the Company in its Annual Report on Form 10-K. Payment of
such bonus is to be made within 15 days after the Company files its
Annual Report on Form 10-K with the Securities and Exchange Commission.
The initial term of each such employment agreement expired on March 31,
1999, and the term is automatically extended for additional one-year
terms unless either such executive officer or the Company's Board of
Directors gives notice to terminate automatic extensions which must be
given by December 1 of each year (commencing with December 1, 1996).
Each such agreement provides that upon the executive officer's
retirement, he shall be entitled to receive an annual benefit equal to
$75,000 ($60,000 for Mr. Gioffre), reduced by three percent for each
full year that the termination of his employment precedes the date he
reaches age 65. The retirement benefits under such agreements may be
paid at the executive officer's election in the form of a single life
annuity or a joint and survivor annuity or a life annuity with a ten-
year period certain. In addition, such executive officer may elect to
receive the entire retirement benefit in a lump sum payment equal to the
present value of the benefit based on standard insurance annuity
mortality tables and an interest rate equal to the 90-day average of the
yield on ten-year U.S. Treasury Notes.
Retirement benefits shall be paid commencing on such executive officer's
65th birthday, provided that such executive officer may elect to receive
benefits on the later of his 62nd birthday, in which case benefits will
be reduced as described above, or the date on which his employment
terminates, provided that notice of his termination of employment is
given at least one year prior to the termination of employment. Any
retirement benefits due under the employment agreement shall be offset
by any other retirement benefits that such executive officer receives
under any plan maintained by the Company. In the event such executive
officer becomes totally disabled prior to retirement, he will be
entitled to receive retirement benefits calculated as described above.
In the event of such executive officer's death before retirement, the
agreement provides that the Company shall be required to pay an annual
death benefit to such officer's estate equal to the single life annuity
benefit such executive officer would have received if he had terminated
employment on the later of his 65th birthday or the date of his death,
payable over ten years; provided that such amount would be reduced by
five percent for each year such executive officer's death occurs prior
to age 65, but in no event more than 50 percent.
Each of the employment agreements provides that if the Company
terminates such executive officer's employment other than for "cause"
(as defined in the agreement), such executive officer be entitled to
receive a lump sum cash payment equal to the amount of base salary
payable for the remaining term of the agreement (at the then current
rate) plus one-half of the maximum incentive bonus compensation that
would be payable if such executive officer continued employment through
the date of the expiration of the agreement (assuming for such purposes
that the amount of incentive bonus compensation would be the same in
each of the years remaining under the agreement as was paid for the most
recent year prior to termination of employment). Each of the agreements
further provides that if any payment on termination of employment would
not be deductible by the Company under Section 280G(b)(2) of the
Internal Revenue Code, the amount of such payment would be reduced to
the largest amount that would be fully deductible by the Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.
CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock (determined in accordance with Rule
13d-3 of the Securities and Exchange Commission) of the Company as of
June 1, 2002 by each person that beneficially owns five percent or more
of the shares of Common Stock. Each person named in the table has sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned, except as otherwise set forth in the notes
to the table.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Amount of
Beneficial
Title of Name and Address of Ownership Percent
Class Beneficial Owner as of June 1, Of
2002 Class
Common Walter Clark and Caroline Clark, 1,342,416(1) 48.7%
Stock, par Executors(1)
value $.25 P.O. Box 488
per share Denver, North Carolina 28650
William H. Simpson 270,580(2) 9.9%
P.O. Box 488
Denver, North Carolina 28650
_____________________________
(1) Includes 1,279,272 shares controlled by such individuals as the
executors of the estate of David Clark, 10,922 shares owned by
Walter Clark, 50,000 shares purchasable by Walter Clark under
options awarded by the Company and 2,222 shares owned by Caroline
Clark.
(2) Includes 1,200 shares held jointly with J. Hugh Bingham and 9,000
shares under options granted by the Company.
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock of the Company by each director of
the Company and by all directors and executive officers of the Company
as a group as of June 1, 2002. Each person named in the table has sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned, except as otherwise set forth in the notes
to the table.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Shares and Percent of Common
Stock Beneficially Owned as
of June 1, 2002
Name Position with Company No. of Shares Percent
J. Hugh Bingham President, Chief 128,080(1)(2) 4.7%
Operating Officer,
Director
Walter Clark Chairman of the 1,340,194(3) 48.3%
Board of Directors
and Chief Executive
Officer
John J. Gioffre Vice President- 66,580(4) 2.4%
Finance, Chief
Financial Officer,
Secretary and
Treasurer, Director
J. Leonard Martin Vice President, 3,100(5) *
Director
William H.Simpson Executive Vice 270,580(1)(6) 9.9%
President, Director
Claude S. Abernethy, Jr. Director 44,011(7)(8) 1.6%
Sam Chesnutt Director 12,100(7) *
Allison T. Clark Director 3,222(7) *
Herman A. Moore Director 1,000(7) *
George C. Prill Director 46,966(7) 1.7%
All directors N/A 1,930,833(9) 68.5%
and executive
officers as a
group (11
persons)
__________________________________________
* Less than one percent.
(1) Includes 1,200 shares jointly held by Messrs. Simpson and Bingham.
(2) Includes 9,000 shares under options granted by the Company to Mr.
Bingham.
(3) Includes 1,279,272 shares held by the estate of David Clark, of
which Mr. Walter Clark is a co-executor and 50,000 shares under
options granted by the Company to Mr. Walter Clark.
(4) Includes 9,000 shares under options granted by the Company to
Mr. Gioffre.
(5) Such 100 shares are held by Mr. Martin's spouse of which shares Mr.
Martin disclaims beneficial ownership and 3,000 shares under
options granted by the Company to Mr. Martin.
(6) Includes 9,000 shares under options granted by the Company to Mr.
Simpson.
(7) Includes 1,000 shares under options granted by the Company.
(8) Includes 20,400 shares held by the Estate of Raenelle B. Abernethy,
of which Mr. Abernethy is the executor.
(9) Includes an aggregate of 94,000 shares of Common Stock members of
such group have the right to acquire within 60 days.
This table summarizes share and exercise price information about our
equity compensation plans as of March 31, 2002.
EQUITY COMPENSATION PLAN INFORMATION
Number of Number of
securities to Weighted- securities
be issued average remaining
upon exercise exercise price available for
of outstanding of outstanding future issuance
options, warrants options, warrants under equity
Plan Category and rights and rights compensation plan
Equity compensation
plans approved by
security holders 226,533 $3.00 79,800
Equity compensation
plans not approved by
security holders None N/A N/A
Item 13. Certain Relationships and Related Transactions.
The Company leases its corporate and operating facilities at the Little
Mountain, North Carolina airport from Little Mountain Airport
Associates, Inc. ("Airport Associates"), a corporation whose stock is
owned by J. Hugh Bingham, William H. Simpson, John J. Gioffre, the
estate of David Clark and three unaffiliated third parties. Walter
Clark and Allison Clark are beneficiaries of the estate of David Clark,
and Walter Clark is also a co-executor of the estate. On May 31, 2001,
the Company renewed its lease for this facility, scheduled to expire on
that date, for an additional five-year term, and adjusted the rent to
account for increases in the consumer price index. Upon the renewal,
the monthly rental payment was increased from $8,073 to $9,155. The
Company paid aggregate rental payments of $96,876 to Airport Associates
pursuant to such lease during the fiscal year ended March 31, 2002. The
Company believes that the terms of such lease are no less favorable to
the Company than would be available from an independent third party.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
The following documents are filed as part of this report:
1. Financial Statements
The following financial statements are incorporated herein by reference
in Item 8 of Part II of this report:
(i) Independent Auditors' Report.
(ii) Consolidated Balance Sheets as of March 31, 2002 and 2001.
(iii)Consolidated Statements of Earnings for each of the three
years in the period ended March 31, 2002.
(iv) Consolidated Statements of Stockholders' Equity for each of the
three years in the period ended March 31, 2002.
(v) Consolidated Statements of Cash Flows for each of the three years
in the period ended March 31, 2002.
(vi) Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
No schedules are required to be submitted.
3. Exhibits
No. Description
3.1 Restated Certificate of Incorporation, incorporated by reference to
Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 2001
3.2 By-laws of the Company, as amended, incorporated by reference to
Exhibit 3.2 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1996
4.1 Specimen Common Stock Certificate, incorporated by reference to
Exhibit 4.1 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1994
10.1 Aircraft Dry Lease and Service Agreement dated February 2, 1994
between Mountain Air Cargo, Inc. and Federal Express Corporation,
incorporated by reference to Exhibit 10.13 to Amendment No. 1 on Form 10-
Q/A to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1993
10.2 Loan Agreement among Bank of America, N.A. the Company and its
subsidiaries, dated May 23, 2001, incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 2001.
10.3 Aircraft Wet Lease Agreement dated April 1, 1994 between Mountain
Air Cargo, Inc. and Federal Express Corporation, incorporated by
reference to Exhibit 10.4 of Amendment No. 1 on Form 10-Q/Q to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1994
10.4 Adoption Agreement regarding the Company's Master 401(k) Plan and
Trust, incorporated by reference to Exhibit 10.7 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993*
10.5 Amendment No. 1 to Omnibus Securities Award Plan incorporated by
reference to Exhibit 10.14 of the Company's Annual Report on Form 10-K
for the year ended March 31, 2000*.
10.6 Premises and Facilities Lease dated November 16, 1995 between
Global TransPark Foundation, Inc. and Mountain Air Cargo, Inc.,
incorporated by reference to Exhibit 10.5 to Amendment No. 1 on Form 10-
Q/A to the Company's Quarterly Report on Form 10-Q for the period ended
December 31, 1995
10.7 Employment Agreement dated January 1, 1996 between the Company,
Mountain Air Cargo Inc. and Mountain Aircraft Services, LLC and William
H. Simpson, incorporated by reference to Exhibit 10.8 to the Company's
Annual Report Form 10-K for the fiscal year ended March 31, 1996*
10.8 Employment Agreement dated January 1, 1996 between the Company,
Mountain Air Cargo Inc. and Mountain Aircraft Services, LLC and John J.
Gioffre, incorporated by reference to Exhibit 10.9 to the Company's
Annual Report Form 10-K for the fiscal year ended March 31, 1996*
10.9 Employment Agreement dated January 1, 1996 between Company,
Mountain Air Cargo Inc. and Mountain Aircraft Services, LLC and J. Hugh
Bingham, incorporated by reference to Exhibit 10.10 to the Company's
Annual Report Form 10k for the fiscal year end March 31, 1996.*
10.10 Employment Agreement dated September 30, 1997 between Mountain
Aircraft Services, LLC and J. Leonard Martin, incorporated by reference
to Exhibit 10.10 to the Company's Quarterly Report Form 10-Q for the
quarter ended December 31, 1997.*
10.11 Omnibus Securities Award Plan, incorporated by reference to
Exhibit 10.11 to the Company's Quarterly Report Form 10-Q for the
quarter ended June 30, 1998.*
10.12 Commercial and Industrial Lease Agreement dated August 25,
1998 between William F. Bieber and Global Ground Support, LLC,
incorporated by reference to Exhibit 10.12 of the Company's Quarterly
Report on 10Q for the period ended September 30, 1998.
10.13 Amendment, dated February 1, 1999, to Aircraft Dry Lease and
Service Agreement dated February 2, 1994 between Mountain Air Cargo,
Inc. and Federal Express Corporation, incorporated by reference to
Exhibit 10.13 of the Company's Quarterly Report on 10Q for the period
ended December 31, 1998.
10.14 ISDA Schedule to Master Agreement between Bank of America,
N.A. and the Company dated May 23, 2001, incorporated by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 2001
21.1 List of subsidiaries of the Company, incorporated by reference to
Exhibit 21.1 to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1997
23.1 Consent of Deloitte & Touche LLP
__________________
* Management compensatory plan or arrangement required to be filed
as an exhibit to this report.
b. Reports on Form 8-K.
No Current Reports on Form 8-K were filed in the last quarter of
the fiscal year ended March 31, 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AIR T, INC.
By: /s/ Walter Clark
Walter Clark, Chief Executive Officer
(Principal Executive Officer)
Date: June 11, 2002
By: /s/ John J. Gioffre
John J. Gioffre, Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: June 11, 2002
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 dates
indicated.
By: /s/ Claude S. Abernethy
Claude S. Abernethy, Jr., Director
Date: June 11, 2002
By: /s/ J. Hugh Bingham
J. Hugh Bingham, Director
Date: June 11, 2002
By: /s/ Allison T. Clark
Allison T. Clark, Director
Date: June 11, 2002
By: /s/ Walter Clark
Walter Clark, Director
Date: June 11, 2002
By: /s/ Sam Chesnutt
Sam Chesnutt, Director
Date: June 11, 2002
By: /s/ John J. Gioffre
John J. Gioffre, Director
Date: June 11, 2002
By: /s/ J. Leonard Martin
J. Leonard Martin, Director
Date: June 11, 2002
By: /s/ Herman A. Moore
Herman A. Moore, Director
Date: June 11, 2002
By: /s/ George C. Prill
George C. Prill, Director
Date: June 11, 2002
By: /s/ William Simpson
William Simpson, Director
Date: June 11, 2002
EXHIBIT INDEX
Exhibit Number Document
23.1 Consent of Deloitte & Touche LLP