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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 2003
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 (I.R.S. Employer
incorporation or organization) Identification No.)
Post Office Box 488, Denver, North Carolina 28037
(Address of principal executive offices)
(704) 377-2109
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
2,726,320 Common Shares, par value of $.25 per share were outstanding as
of July 29, 2003
This filing contains 24 pages.
AIR T, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the three-months ended
June 30, 2003 and 2002 (Unaudited) 3
Condensed Consolidated Balance Sheets at
June 30, 2003 (Unaudited)
and March 31, 2003 4
Condensed Consolidated Statements of Cash
Flows for the three-months
ended June 30, 2003 and 2002 (Unaudited) 5
Condensed Consolidated Statement of Stockholders'
Equity and Other Comprehensive Loss at
June 30, 2003 (Unaudited) 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) 7-11
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 12-17
Item 3. Quantitative and Qualitative Disclosure
About Market Risk 17
Item 4. Controls and Procedures 17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
Exhibit Index 20
Officers' Certifications 21-24
2
AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
June 30,
2003 2002
Operating Revenues:
Cargo $ 4,664,521 $ 4,526,838
Maintenance 2,620,947 2,095,845
Ground equipment 3,770,593 3,575,459
11,056,061 10,198,142
Operating Expenses:
Flight 3,152,385 3,209,409
Maintenance 2,400,511 2,142,676
Ground equipment 2,867,801 2,884,973
General and administrative 1,822,861 1,772,871
Depreciation and amortization 137,557 147,423
10,381,115 10,157,352
Operating Income 674,946 40,790
Non-operating (Income) Expense:
Interest (41,724) (15,235)
Cash surrender value of life insurance (8,500) (6,000)
Deferred retirement expense 5,250 5,250
Loss on impairment of marketable securities - 161,197
Investment income and other (36,084) (33,638)
(81,058) 111,574
Earnings (Loss) From Continuing Operations
Before Income Taxes 756,004 (70,784)
Income Tax Expense (Benefit) 312,304 (30,148)
Earnings (Loss) From Continuing Operations 443,700 (40,636)
Loss From Discontinued Operations,
Net of Income Taxes (94,912) (120,512)
Net Earnings (Loss) $ 348,788 $ (161,148)
Basic and Diluted Earnings (Loss) Per Share:
Continuing Operations $ 0.16 $ (0.01)
Discontinued Operations (0.03) (0.05)
Total Basic and Diluted Net
Earnings (Loss) Per Share $ 0.13 $ (0.06)
Weighted Average Shares Outstanding:
Basic and Diluted 2,726,320 2,726,320
See notes to condensed consolidated financial statements.
3
AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2003 March 31,2003
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 408,959 $ 79,715
Marketable securities 805,312 1,057,042
Accounts receivable, less allowance
for doubtful accounts of $464,166
at June 30, 2003 and $449,358 at
March 31, 2003. 4,656,364 6,239,144
Costs and estimated earnings in excess
of billings on uncompleted contracts 67,114 -
Inventories 5,515,843 6,275,288
Assets held for sale 1,950,000 1,950,000
Deferred tax asset 1,036,998 1,036,998
Prepaid expenses and other 135,076 129,029
Total Current Assets 14,575,666 16,767,216
Property and Equipment 6,834,969 7,092,032
Less accumulated depreciation (4,857,105) (4,788,779)
Property and Equipment, net 1,977,864 2,303,253
Deferred Tax Asset 1,196,883 1,096,883
Intangible Pension Asset 219,862 219,862
Other Assets 946,478 940,479
Total Assets $ 18,916,753 $ 21,327,693
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,296,046 $ 4,436,291
Accrued expenses 2,154,061 1,691,341
Billings in excess of costs and estimated
earnings on uncompleted contracts - 760,979
Income taxes payable 431,747 180,278
Current portion of long-term obligations 113,130 113,130
Total Current Liabilities 4,994,984 7,182,019
Capital Lease Obligation (less current
portion) 40,493 50,070
Long-term Debt (less current portion) 1,663,166 2,345,910
Deferred Retirement Obligations (less
current portion) 2,164,233 2,138,712
Committments and Contingencies
Stockholders' Equity:
Preferred stock, $1 par value, authorized
50,000 shares, none issued - -
Common stock, par value $.25; authorized
4,000,000 shares; 2,726,320 and
2,726,320 shares issued and outstanding 681,580 681,580
Additional paid in capital 6,863,898 6,863,898
Retained Earnings 2,878,344 2,529,556
Accumulated other comprehensive loss (369,945) (464,052)
Total Stockholders' Equity 10,053,877 9,610,982
Total Liabilities & Stockholders' Equity $ 18,916,753 $ 21,327,693
See notes to condensed consolidated financial statements.
4
AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
June 30,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 348,788 $(161,148)
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:
Change in accounts receivable
and inventory reserves 27,589 3,936
Depreciation and amortization 137,557 177,712
Deferred tax provision (100,000) -
Loss on disposal of assets and
impairment of investments - 175,007
Net periodic pension cost 39,999 15,249
Change in assets and liabilities which provided
(used) cash:
Accounts receivable 1,567,972 (853,218)
Inventories 981,769 1,735,138
Prepaid expenses and other (12,046) 2,228
Accounts payable (2,140,245) (1,098,046)
Accrued expenses 448,242 (68,749)
Billings in excess of costs and estimated
earnings on uncompleted contracts (760,979) 234,000
Costs and estimated earnings in excess
of billings on uncompleted contracts (67,114) -
Income taxes payable 251,469 (283,374)
Total adjustments 374,213 39,883
Net cash provided by (used in)
operating activities 723,001 (121,265)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable securities 325,575 -
Capital expenditures (47,273) (13,828)
Net cash provided by (used in)
investing activities 278,302 (13,828)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings on
line of credit (672,059) 484,232
Payment of cash dividend - (325,854)
Proceeds from exercise of stock options - 5,500
Net cash (used in) provided by
financing activities (672,059) 163,878
NET INCREASE IN CASH & CASH EQUIVALENTS 329,244 28,785
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 79,715 31,770
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 408,959 $ 60,555
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 37,803 $ 90,007
Income taxes 108,408 179,330
SUMMARY OF SIGNIFICANT NON-CASH INFORMATION:
Increase (decrease) in fair value
of derivatives $ 20,262 $ (44,000)
See notes to condensed consolidated financial statements.
5
AIR T, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
AND OTHER COMPREHENSIVE LOSS (UNAUDITED)
Accumulated
Other
Additional Comprehensive Total
Common Stock Paid-In Retained Income stockholders'
Shares Amount Capital Earnings (Loss) Equity
Balance, March
31, 2003 2,726,320 $681,580 $6,863,898 $2,529,556 $(464,052) $9,610,982
Comprehensive Income:
Net earnings 348,788
Other Comprehensive Income:
Unrealized
gain on securities 73,845
Change in fair value of
derivatives 20,262
Total comprehensive
income 442,895
Balance, June
30, 2003 2,726,320 $681,580 $6,863,898 $2,878,344 $(369,945)10,053,877
6
AIR T, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. Financial Statements
The Condensed Consolidated Balance Sheet as of June 30, 2003, the
Condensed Consolidated Statements of Operations for the three-months ended
June 30, 2003 and 2002 and the Condensed Consolidated Statements of Cash
Flows for the three-months ended June 30, 2003 and 2002 have been prepared
by Air T, Inc. (the Company) without audit. In the opinion of management,
all adjustments (consisting only of normal recurring adjustments) necessary
to present fairly the financial position, results of operations and cash
flows as of June 30, 2003, and for prior periods presented, have been made.
It is suggested that these financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended March 31, 2003. The results of
operations for the period ended June 30 are not necessarily indicative of the
operating results for the full year.
B. Income Taxes
The tax effect of temporary differences, primarily asset reserves and
accrued liabilities, gave rise to the Company's deferred tax asset in the
accompanying June 30, 2003 and March 31, 2003 consolidated balance sheets.
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.
The income tax provision (benefit) for continuing operations for the
respective three-months ended June 30, 2003 and 2002 differ from the federal
statutory rate primarily as a result of state income taxes and permanent tax
timing differences.
C. Net Earnings (Loss) Per Share
Basic earnings (loss) per share has been calculated by dividing net
earnings (loss) by the weighted average number of common shares outstanding
during each period. For purposes of calculating diluted earnings (loss) per
share, shares issuable under employee stock options were considered potential
common shares and were included in the weighted average common shares unless
they were anti-dilutive. As of June 30, 2003 all outstanding stock options
were anti-dilutive.
The computation of basic and diluted earnings (loss) per common share is as
follows:
Three months ended June 30,
2003 2002
Net Earnings (Loss) $ 348,788 $ (161,148)
Basic and Diluted Earnings (Loss) Per Share:
Continuing Operations $ 0.16 $ (0.01)
Discontinued Operations (0.03) (0.05)
Total Basic and Diluted Net
Earnings (Loss) Per Share $ 0.13 $ (0.06)
Weighted Average Shares Outstanding:
Basic and Diluted 2,726,320 2,726,320
7
D. Inventories
Inventories consist of the following:
June 30, 2003 March 31, 2003
Aircraft parts and supplies $ 1,935,572 $ 2,088,315
Aircraft equipment manufacturing:
Raw materials 2,423,819 2,595,448
Work in process 195,643 745,409
Finished goods 2,067,551 1,940,077
Total Inventory 6,622,585 7,369,249
Reserves (1,106,742) (1,093,961)
Total, net of reserves $ 5,515,843 $ 6,275,288
E. Recent Accounting Pronouncements
The FASB has issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" and SFAS 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 was effective for
the Company beginning April 1, 2003. Adoption of SFAS No. 143 did not
have an effect on the Company's financial position and results of
operations.
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 "Reporting
the Results of Operations-Discontinued Events and Extraordinary Items".
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 was effective for the Company beginning April 1,
2002. The effect of the adoption of SFAS No. 144 on management's plan to
discontinue the operations of MAS is reflected in the Company's Condensed
consolidated statements of financial position and results of operations
and is detailed in Note H Discontinued Operations.
In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others". This
Interpretation elaborates on the disclosures to be made by a guarantor
in its interim and annual financial statements about its obligations
under certain guarantees that it has issued. It also clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. The disclosure requirements of this Interpretation are
currently effective and did not affect the Company's financial position
and results of operations. The initial recognition and initial
measurement provisions of this Interpretation are applicable on a
prospective basis to guarantees issued or modified after December 31,
2002. The Company has evaluated all of its guarantees under the
provisions of FIN 45 and does not believe the effect of its adoption on
its financial position and results of operations will be material.
The Company's ground equipment subsidiary warranties its products
for up to a two-year period from date of sale. Product warranty
reserves are recorded at time of sale based on the historical average
warranty cost and are adjusted as actual warranty cost becomes known.
As of June 30, 2003 the Company's warranty reserve amounted to $117,000.
8
Product warranty reserve activity during the three-months ended June 30,
2003 is as follows:
Balance at 3/31/03 $116,000
Additions to reserve 24,000
Use of reserve (23,000)
Balance at 6/30/03 $117,000
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure". This Statement
amends FASB Statement No. 123, "Accounting for Stock-Based
Compensation", to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-
based employee compensation. In addition, this Statement amends the
disclosure requirements of Statement 123 to require prominent
disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the
effect of the method used on reported results. Because the Company has
elected to continue to account for its stock-based compensation under
the provisions of Accounting Principles bulletin No. 25, SFAS No. 148
has no impact on the Company's consolidated statement of operations for
the quarters ended June 30,2003 and 2002.
In January 2003, the FASB issued FASB Interpretation No. 46,
Consolidation of Variable Interest Entities ("FIN 46"). This
Interpretation requires that variable interest entities created after
January 31, 2003, and variable interest entities in which an interest is
obtained after that date, be evaluated for consolidation into an
entity's financial statements. This Interpretation also applies,
beginning July 1, 2003, to all variable interest entities in which an
enterprise holds an interest that it acquired before February 1, 2003.
The Company has determined that the adoption of FIN 46 will not have an
impact on the Company's consolidated financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities
and Equity". SFAS No. 150 is effective for the Company beginning July
1,2003. The Company is in the process of evaluating the impact of
adopting SFAS No. 150 and has not yet determined the effect of its
adoption on its financial position and results of operations.
F. Derivative Financial Instruments
As required by SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", the Company recognizes all
derivatives as either assets or liabilities in the statement of
financial position and measures 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, the
Company 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 2003, the Company had
outstanding two interest rate swaps with a notional amount of $2.4
million, and $2 million respectively. These agreements were originally
entered into at respective interest rates of 6.97% and 6.5%
respectively. On July 31, 2002 the Company elected to unwind its
$2,000,000 (6.5%) revolving credit line swap in consideration for
$58,750, the fair-market-value termination fee as of that date. The fair
value of the remaining swap changed by $9,000 from a liability of
$129,000 at March 31, 2003, to a liability of $120,000 as of June 30,
2003. This liability is included in long-term debt in the condensed
consolidated balance sheets. The Company assesses the effectiveness of
the swap using the hypothetical derivative method and has determined that
it qualifies as an effective hedge at June 30, 2003 and March 31, 2003
under SFAS No. 133.
G. Financing Arrangements
On August 31, 2002 the Company amended its bank financing line to
a $7,000,000 credit facility. Under the terms of the amended agreement,
the $7,000,000 secured long-term revolving credit line expires on August
31, 2004.
9
The revolving credit line contains customary events of default, a
subjective acceleration clause and restrictive covenants that, among
other matters, require the Company to maintain certain financial ratios.
As of June 30, 2003, 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 150 basis points. The LIBOR rate at June 30,
2003 was 1.32%. At June 30, 2003 and March 31, 2003, the amounts outstanding
against the line were $1,543,000 and $2,217,000, respectively. At June
30, 2003, $2,785,000 was available under the terms of the credit
facility.
The Company has classified its outstanding bank debt of $1,543,000
as long-term as of June 30, 2003, to reflect the terms included under
the agreement signed on August 31, 2002.
H. Discontinued Operations
During the fourth quarter of fiscal 2003, Company management,
agreed to a plan to sell the assets of Mountain Aircraft Services, LLC
(MAS) and to discontinue the operations of the Company's aviation
service sector business. The Company entered into a letter of intent on
June 19, 2003 to sell the business operations of MAS. Accordingly, the
accompanying condensed consolidated financial statements reflect the MAS
assets as held for sale and reclassify the net operations of MAS as
discontinued operations, net of tax, for all periods presented.
A summary of the assets held for sale at June 30, 2003 and March 31,
2003 is as follows:
Inventory $1,900,000
Property, plant and equipment 50,000
Assets held for sale $1,950,000
A summary of the operating results of the discontinued operations for
the three-months ended June 30, 2003 and 2002 is as follows:
Revenue $2,105,613 $1,692,806
Operating loss $ (57,389) $ (73,065)
Loss before income taxes $ (155,593) $ (197,564)
Income tax benefit 60,681 77,052
Net loss $ (94,912) $ (120,512)
10
I. Segment Information
The Company operates three subsidiaries in two continuing business
segments. Each business segment has separate management teams and
infrastructures that offer different products and services. During the fourth
quarter of fiscal 2003, Company management agreed to a plan to sell the assets
of MAS and to discontinue the operations of the Company's aviation service
sector business. The operations of MAS are, therefore, not presented in the
segment information below. The subsidiaries with continuing operations have
been combined into the following two reportable segments: overnight air cargo
and ground equipment. The overnight air cargo segment encompasses services
provided primarily to one customer, Federal Express Corporation, and the
ground equipment segment encompasses the operations of Global Ground Support,
LLC.
The Company evaluates the performance of its operating segments based on
operating income from continuing operations.
Segment data is summarized as follows:
Segment Information
Three months ended June 30,
2003 2002
Operating Revenues
Overnight Air Cargo $ 7,285,468 $ 6,622,683
Ground Equipment 3,770,593 3,575,459
Total $ 11,056,061 $ 10,198,142
Operating Income (Loss)
Overnight Air Cargo $ 1,017,797 $ 614,634
Ground Equipment 318,410 (16,654)
Corporate (1) (661,261) (557,190)
Total $ 674,946 $ 40,790
Depreciation and Amortization
Overnight Air Cargo $ 54,801 $ 64,935
Ground Equipment 41,668 48,061
Corporate 41,088 34,427
Total $ 137,557 $ 147,423
Capital expenditures, net
Overnight Air Cargo $ 31,596 $ 8,614
Ground Equipment 6,798 4,417
Corporate 8,879 797
Total $ 47,273 $ 13,828
As of,
June 30, 2003 March 31, 2003
Identifiable Assets
Overnight Air Cargo $ 3,180,580 $ 4,130,676
Ground Equipment 6,784,827 8,615,032
Corporate 4,698,436 4,684,070
Total $ 14,663,843 $ 17,429,778
(1) Includes income from inter-segment transactions, which eliminates in
consolidation.
11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Continuing Operations.
As discussed above, the operations of MAS have been reclassified as
discontinued operations and, therefore, are not included in the Results of
Continuing Operations discussed below.
Overview
The Company's most significant component of revenue, which accounted for
65.9% of revenue, was generated by its air cargo subsidiaries, Mountain Air
Cargo, Inc.(MAC) and CSA Air, Inc.(CSA).
MAC and CSA are short-haul express air freight carriers. MAC and CSA's
revenue contributed approximately $7,285,000 and $6,623,000 to the Company's
revenues for the three-month periods ended June 30, 2003 and 2002,
respectively. The increase in revenue was primarily attributed to increased
cargo and maintenance services provided during the current period. Under
the terms of the dry-lease service agreements, which currently cover
approximately 98% of the revenue generating 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 June 30, 2003) are owned
by and dry-leased from Federal Express Corporation (Customer), and Short
Brothers SD3-30 aircraft (two aircraft at June 30, 2003) are owned by the
Company and operated 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.
Global Ground Support, LLC (Global), another subsidiary of the Company,
manufactures, services and supports aircraft deicers and other ground support
equipment on a worldwide basis. Global's revenue contributed approximately
$3,771,000 and $3,575,000 to the Company's revenues for the three-month
periods ended June 30, 2003 and 2002, respectively. The increase in revenues
in 2003 was primarily related to a first quarter increase in billings related
to a large scale airport contract, partially offset by a temporary reduction
in orders to supply deicing equipment to the United States Air Force under a
long-term supply agreement.
The business of Global has been adversely affected by reduced orders from
commercial airlines and aviation related companies, due principally to the
continued severe downturn in the commercial aviation industry, which started
in early 2001 and significantly increased after September 11, 2001. Although
this business also derives a significant portion of its revenue from sale of
products for military applications, certain military programs that use the
Company's products have not been fully funded to date and the Company is
uncertain as to the timing of such funding or the final decision to use
Company products.
The Company operates three subsidiaries in two continuing 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
and ground equipment in the accompanying condensed consolidated financial
statements.
12
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 associated with the MAS
operations. Following is a discussion of critical accounting policies and
related management estimates and assumptions necessary in determining the
value of related assets or liabilities.
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,
estimated future demand and anticipated transactions between willing buyers
and sellers 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 and liabilities 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 currently determines the value
of retirement benefits assets and liabilities on an actuarial basis using an
appropriate discount rate. Values are affected by the Company's outside
actuary's
estimates of the expected return on insurance policies and the discount rates
used. Changes in the discount rate used will affect the amount of pension
gain or loss recognized in other comprehensive income.
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, certain labor service contracts 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; 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.
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. The Company assesses long-lived assets used in operations for
impairment 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 the fair value of those
assets, the Company then will write-down the value of the assets to fair value.
The Company has applied the discontinued operations provisions of SFAS No. 144
for the MAS operations and has reflected the long-lived assets associated with
the MAS subsidiary at management's best estimate of their fair value at June 30,
2003.
13
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 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. Global is currently in the fifth year of a multi-year 1999 contract
to supply deicing equipment to the United States Air Force, and has been
awarded two large scale contracts, each of which the Company believes
contributed to management's plan to reduce seasonal airport deicer fluctuation
in revenues. However, as these contracts are completed, seasonal trends for
Global's business may resume. The remainder of the Company's business is not
materially seasonal.
Results of Operations
As discussed above, the operations of MAS have been reclassified as
discontinued operations and, therefore, are not included in the Results of
Continuing Operations discussed below.
Consolidated revenue increased $858,000 (8.4%) to $11,056,000 for the
three-month period ended June 30, 2003 compared to its equivalent 2002 period.
The increase in revenue resulted from an increase in sales from each of the
subsidiaries, as detailed above in Overview.
Operating expenses increased $224,000 (2.2%) to $10,381,000 for the three-
month period ended June 30, 2003 compared to its equivalent 2002 period. The
net increase in operating expenses consisted of the following: cost of flight
operations decreased $57,000 (1.8%) primarily as a result of decreased fuel
costs; maintenance expense increased $258,000 (12.0%) primarily as a result of
increases in cost of parts related to the overhaul and repair operations of
MAC; ground equipment decreased $17,000 (0.6%), as a result of lower cost of
contract services; and general and administrative expense increased $50,000
(2.8%) primarily as a result of increased insurance and facilities maintenance
costs.
The current period's increased revenue ($858,000) and operating income
($634,000) resulted primarily from increased orders for services and products
related to the air cargo sectors, and ground equipment mentioned above in
Overview.
Non-operating income increased $193,000 as a result of a $26,000
increase in interest income and no loss on impairment of marketable
securities in the three-month period ended June 30, 2003. The Company
experienced a $161,000 loss on impairment of marketable securities in the
three-month period ended June 30, 2002.
Pretax earnings increased $827,000 for the three-month period ended June
30, 2003 compared to 2002, principally due to the above stated increase in
current period revenue related earnings for the air cargo and ground equipment
segments.
The provision for income taxes for the three-month period ended June 30,
2003 increased $342,000 compared to the 2002 period, primarily due to
increased current period earnings for quarter ended June 30, 2003. The
effective tax rate for the three-month periods ended June 30, 2003 and 2002
was 41.3% and 42.6%, respectively.
Liquidity and Capital Resources
As of June 30, 2003 the Company's working capital amounted to $9,581,000,
a decrease of $5,000 compared to March 31, 2003. The net decrease primarily
resulted from decreases in accounts payable, accounts receivable, inventories
and billings in excess of costs and estimated earnings on uncompleted contracts,
partially offset by an increase in accrued expenses.
On August 31, 2002 the Company amended its bank financing line to a
$7,000,000 credit facility. Under the terms of the agreement, the $7,000,000
secured long-term revolving credit line expires on August 31, 2004.
14
The credit facility contains customary events of default, a subjective
clause and restrictive covenants that, among other matters, require the
Company to maintain certain financial ratios. As of June 30, 2003, 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 150 basis points. The LIBOR rate at June 30, 2003 was
1.32%. At June 30, 2003 and March 31, 2003, the amounts outstanding against
the line were $1,543,000 and $2,217,000, respectively. At June 30, 2003,
an additional $2,785,000 was available under the terms of the credit facility.
The Company has not currently, nor in the past, engaged in the use of
structured finance arrangements, known as off-balance sheet financing
transactions, with unconsolidated entities or other persons.
The Company has classified the $1,543,000 outstanding balance on its credit
line as of June 30, 2003 as long-term to reflect the terms included under the
amendment signed on August 31, 2002.
The respective three-month periods ended June 30, 2003 and 2002 resulted in
the following changes in cash flow: operating activities provided $723,000 in
2003 and used $121,000 in 2002, investing activities provided $278,000 in 2003
and used $14,000 in 2002 and financing activities used $672,000 in 2003 and
provided $164,000 in 2002. Net cash increased $329,000 and $29,000 during the
three months ended June 30, 2003 and 2002, respectively.
Cash provided by operating activities was $844,000 more for the three-
months ended June 30, 2003 compared to the similar 2002 period, principally
due to increased earnings and accrued expenses and decreased accounts
receivables and inventories, partly offset by decreased billings in excess
of costs and estimated earnings on uncompleted contracts.
Cash provided by investing activities for the three-months ended June 30,
2003 was approximately $292,000 more than the comparable period in 2002 due to
the sale of marketable securities in the quarter ended June 30, 2003.
Cash used in financing activities was $836,000 more in the 2003 three-month
period than in the corresponding 2002 period due to increased payments on
the line of credit.
There are currently no commitments for significant capital expenditures.
The Company's Board of Directors on August 7, 1998 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 $0.12 per share cash
dividend in June 2002. On May 27, 2003, the Company declared that, due to
losses sustained in fiscal 2003, no common share dividend would be paid during
fiscal 2004.
Deferred Retirement Obligation
Contractual death benefits for the Company's former Chairman and Chief
Executive Officer who passed away on April 18, 1997 are payable by the Company
in the amount of $75,000 per year for 10 years from the date of his death.
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.
15
Recent Accounting Pronouncements
The FASB has issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" and SFAS 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 was effective for the
Company beginning April 1, 2003. Adoption of SFAS No. 143 did not have an
effect on the Company's financial position and results of operations.
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 "Reporting the Results of
Operations-Discontinued Events and Extraordinary Items". 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 was effective for the
Company beginning April 1, 2002. The effect of the adoption of SFAS No. 144 on
management's plan to discontinue the operations of MAS is reflected in the
Company's condensed consolidated statements of financial position and results
of operations and is detailed in Note H Discontinued Operations.
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". This Interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued.
It also clarifies that a guarantor is required to recognize, at the inception
of a guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The disclosure requirements of this Interpretation are
currently effective and did not affect the Company's financial position and
results of operations. The initial recognition and initial measurement
provisions of this Interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The Company has
evaluated all of its guarantees under the provisions of FIN 45 and does not
believe the effect of its adoption on its financial position and results of
operations will be material.
The Company's ground equipment subsidiary warranties its products for up to
a two-year period from date of sale. Product warranty reserves are recorded
at time of sale based on the historical average warranty cost and are adjusted
as actual warranty cost becomes known. As of June 30, 2003 the Company's
warranty reserve amounted to $117,000.
Product warranty reserve activity during the three-months ended June 30, 2003
is as follows:
Balance at 3/31/03 $116,000
Additions to reserve 24,000
Use of reserve (23,000)
Balance at 6/30/03 $117,000
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-
Based Compensation - Transition and Disclosure". This Statement amends FASB
Statement No. 123, "Accounting for Stock-Based Compensation", to provide
alternative methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation. In
addition, this Statement amends the disclosure requirements of Statement 123
to require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. Because
the Company has elected to continue to account for its stock-based
compensation under the provisions of Accounting Principles bulletin No. 25,
SFAS No. 148 has no impact on the Company's consolidated statement of
operations for the quarters ended June 30, 2003 and 2002.
16
In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation
of Variable Interest Entities ("FIN 46"). This Interpretation requires that
variable interest entities created after January 31, 2003, and variable
interest entities in which an interest is obtained after that date, be
evaluated for consolidation into an entity's financial statements. This
Interpretation also applies, beginning July 1, 2003, to all variable interest
entities in which an enterprise holds an interest that it acquired before
February 1, 2003. The Company has determined that the adoption of FIN 46 will
not have an impact on the Company's consolidated financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity".
SFAS No. 150 is effective for the Company beginning July 1,2003. The Company
is in the process of evaluating the impact of adopting SFAS No. 150 and has
not yet determined the effect of its adoption on its financial position and
results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company does not hold or issue derivative financial instruments for
trading purposes. As of June 30, 2003 the Company had outstanding one
interest rate swap agreement 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 150 basis points. If the LIBOR interest
rate had been increased by one percentage point, based on the balance of the
line of credit at June 30, 2003, annual interest expense would have increased
by approximately $15,000.
Item 4. Controls and Procedures
The Company's Chief Executive Officer and Chief Financial Officer have
evaluated the Company's disclosure controls and procedures as of the end of
the period covered by this Quarterly Report on Form 10-Q, and they have
concluded that these disclosure controls and procedures are effective.
There was no change in internal controls over financial reporting during or
subsequent to the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the Company's internal control over
financial reporting.
17
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) 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
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
31.1 Section 302 Certification of Walter Clark
31.2 Section 302 Certification of John J. Gioffre
32.1 Section 906 Certification of Walter Clark
32.2 Section 906 Certification of John J. Gioffre
__________________
* Management compensatory plan or arrangement required to be filed as
an exhibit to this report.
b. Reports on Form 8-K
The Company filed a Current Report Form 8-K on June 25, 2003 to
announce the execution of a letter of intent regarding the sale of the
business of its Mountain Aircraft Services, LLC subsidiary.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIR T, INC.
(Registrant)
Date: July 29, 2003
Walter Clark, Chief Executive Officer
Date: July 29, 2003
John J. Gioffre, Chief Financial Officer
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIR T, INC.
(Registrant)
Date: July 29, 2003 /s/ Walter Clark
Walter Clark, Chief Executive Officer
Date: July 29, 2003 /s/ John Gioffre
John J. Gioffre, Chief Financial Officer
19
AIR T, INC
EXHIBIT INDEX
PAGE
31.1 Section 302 Certification of Walter Clark 21
31.2 Section 302 Certification of John J. Gioffre 22
32.1 Section 906 Certification of Walter Clark 23
32.2 Section 906 Certification of John J. Gioffre 24
20
Exhibit 31.1
CERTIFICATION
I, Walter Clark, Chief Executive Officer, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Air T, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting; and
Date: July 29, 2003
Walter Clark, Chief Executive Officer
21
Exhibit 31.1
CERTIFICATION
I, Walter Clark, Chief Executive Officer, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Air T, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting; and
Date: July 29, 2003 /s/ Walter Clark
Walter Clark, Chief Executive Officer
21
Exhibit 31.2
CERTIFICATION
I, John J. Gioffre, Chief Financial Officer, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Air T, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information;
and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting; and
Date: July 29, 2003
John J. Gioffre, Chief Financial Officer
22
Exhibit 31.2
CERTIFICATION
I, John J. Gioffre, Chief Financial Officer, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Air T, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information;
and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting; and
Date: July 29, 2003 /s/ John J. Gioffre
John J. Gioffre, Chief Financial Officer
22
Exhibit 32.1
CERTIFICATION
The undersigned hereby certifies in his capacity as an officer of Air T, Inc.
(the "Company") that the Quarterly Report of the Company on Form 10-Q for the
quarter ended June 30, 2003 fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934 and that the information
contained in such report fairly presents, in all material respects, the
financial condition of the Company at the end of such period and the results
of operations of the Company for such period.
Date: July 29, 2003 /s/ Walter Clark
Walter Clark, Chief Executive Officer
23
Exhibit 32.1
CERTIFICATION
The undersigned hereby certifies in his capacity as an officer of Air T, Inc.
(the "Company") that the Quarterly Report of the Company on Form 10-Q for the
quarter ended June 30, 2003 fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934 and that the information
contained in such report fairly presents, in all material respects, the
financial condition of the Company at the end of such period and the results
of operations of the Company for such period.
Date: July 29, 2003
Walter Clark, Chief Executive Officer
23
Exhibit 32.2
CERTIFICATION
The undersigned hereby certifies in his capacity as an officer of Air T, Inc.
(the "Company") that the Quarterly Report of the Company on Form 10-Q for the
quarter ended June 30, 2003 fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934 and that the information
contained in such report fairly presents, in all material respects, the
financial condition of the Company at the end of such period and the results
of operations of the Company for such period.
Date: July 29, 2003 /s/ John J. Gioffre
John J. Gioffre, Chief Financial Officer
24
Exhibit 32.2
CERTIFICATION
The undersigned hereby certifies in his capacity as an officer of Air T, Inc.
(the "Company") that the Quarterly Report of the Company on Form 10-Q for the
quarter ended June 30, 2003 fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934 and that the information
contained in such report fairly presents, in all material respects, the
financial condition of the Company at the end of such period and the results
of operations of the Company for such period.
Date: July 29, 2003
John J. Gioffre, Chief Financial Officer
24