x |
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended December 31,
2009
|
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the transition period from _____to
_____
|
AIR
T, INC. AND SUBSIDIARIES
|
|||||
QUARTERLY
REPORT ON FORM 10-Q
|
|||||
TABLE
OF CONTENTS
|
|||||
Page
|
|||||
PART
I
|
|||||
Item
1.
|
Financial
Statements
|
||||
Condensed
Consolidated Statements of Income
|
3 | ||||
Three
Months and Nine Months Ended December 31, 2009 and 2008
(Unaudited)
|
|||||
Condensed
Consolidated Balance Sheets
|
4 | ||||
December
31, 2009 (Unaudited) and March 31, 2009
|
|||||
|
|||||
Condensed
Consolidated Statements of Cash Flows
|
5 | ||||
Nine
Months Ended December 31, 2009 and 2008 (Unaudited)
|
|||||
Condensed
Consolidated Statements of Stockholders’ Equity and Comprehensive
Income
|
6 | ||||
Nine
Months Ended December 31, 2009 and 2008 (Unaudited)
|
|||||
|
|||||
Notes
to Condensed Consolidated Financial Statements (Unaudited)
|
7 | ||||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
11 | |||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
16 | |||
Item
4(T)
|
Controls
and Procedures
|
16 | |||
PART
II
|
|||||
Item
1.
|
Legal
Proceedings
|
16 | |||
Item
6
|
Exhibits
|
16 | |||
Signatures
|
17 | ||||
Exhibit
Index
|
18 | ||||
Certifications
|
19 | ||||
Three
Months Ended December 31,
|
Nine
Months Ended December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Operating
Revenues:
|
||||||||||||||||
Overnight
air cargo
|
$ | 9,991,420 | $ | 10,846,052 | $ | 28,594,095 | $ | 31,862,596 | ||||||||
Ground
equipment sales
|
9,769,016 | 10,649,024 | 25,964,537 | 32,699,772 | ||||||||||||
Ground
support services
|
2,560,691 | 2,042,497 | 6,852,590 | 5,404,103 | ||||||||||||
22,321,127 | 23,537,573 | 61,411,222 | 69,966,471 | |||||||||||||
Operating
Expenses:
|
||||||||||||||||
Flight-air
cargo
|
4,516,982 | 4,942,896 | 12,797,373 | 14,983,677 | ||||||||||||
Maintenance-air
cargo
|
4,038,547 | 4,356,229 | 11,312,464 | 11,944,107 | ||||||||||||
Ground
equipment sales
|
7,477,230 | 8,437,235 | 19,438,142 | 24,596,610 | ||||||||||||
Ground
support services
|
1,801,877 | 1,653,918 | 4,887,652 | 4,163,519 | ||||||||||||
General
and administrative
|
2,612,140 | 2,753,136 | 7,824,147 | 8,562,832 | ||||||||||||
Depreciation
and amortization
|
105,706 | 107,744 | 317,070 | 330,347 | ||||||||||||
20,552,482 | 22,251,158 | 56,576,848 | 64,581,092 | |||||||||||||
Operating
Income
|
1,768,645 | 1,286,415 | 4,834,374 | 5,385,379 | ||||||||||||
Non-operating
Expense (Income):
|
||||||||||||||||
Lawsuit
settlement income
|
- | (550,000 | ) | - | (550,000 | ) | ||||||||||
(Gain)
Loss on retirement plan settlement
|
- | 195,299 | (8,460 | ) | 195,299 | |||||||||||
Interest
expense
|
262 | 45,784 | 17,182 | 81,518 | ||||||||||||
Investment
income
|
(20,875 | ) | (14,994 | ) | (72,628 | ) | (72,828 | ) | ||||||||
(20,613 | ) | (323,911 | ) | (63,906 | ) | (346,011 | ) | |||||||||
Earnings
Before Income Taxes
|
1,789,258 | 1,610,326 | 4,898,280 | 5,731,390 | ||||||||||||
Income
Taxes
|
542,000 | 636,000 | 1,686,000 | 2,095,000 | ||||||||||||
Net
Earnings
|
$ | 1,247,258 | $ | 974,326 | $ | 3,212,280 | $ | 3,636,390 | ||||||||
Earnings
Per Share:
|
||||||||||||||||
Basic
|
$ | 0.51 | $ | 0.40 | $ | 1.32 | $ | 1.50 | ||||||||
Diluted
|
$ | 0.51 | $ | 0.40 | $ | 1.32 | $ | 1.50 | ||||||||
Dividends
Declared Per Share
|
$ | - | $ | - | $ | 0.33 | $ | 0.30 | ||||||||
Weighted
Average Shares Outstanding:
|
||||||||||||||||
Basic
|
2,424,486 | 2,424,503 | 2,424,486 | 2,424,043 | ||||||||||||
Diluted
|
2,459,754 | 2,424,503 | 2,434,751 | 2,424,043 | ||||||||||||
See
notes to condensed consolidated financial statements.
|
||||||||||||||||
December
31, 2009
|
March
31, 2009
|
|||||||
ASSETS
|
(Unaudited)
|
|||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 4,152,866 | $ | 6,852,713 | ||||
Short-term
investments
|
1,007,924 | 1,002,221 | ||||||
Accounts
receivable, less allowance for
|
||||||||
doubtful
accounts of $139,000 and $111,000
|
11,598,404 | 6,253,007 | ||||||
Notes
and other non-trade receivables-current
|
217,145 | 292,744 | ||||||
Income
tax receivable
|
36,000 | 117,000 | ||||||
Inventories
|
8,924,941 | 9,830,956 | ||||||
Deferred
income taxes
|
632,000 | 599,000 | ||||||
Prepaid
expenses and other
|
394,768 | 317,153 | ||||||
Total
Current Assets
|
26,964,048 | 25,264,794 | ||||||
Property
and Equipment, net
|
1,391,007 | 1,607,840 | ||||||
Deferred
Income Taxes
|
317,000 | 638,000 | ||||||
Cash
Surrender Value of Life Insurance Policies
|
1,482,443 | 1,431,440 | ||||||
Notes
and Other Non-Trade Receivables-LongTerm
|
155,932 | 314,295 | ||||||
Other
Assets
|
87,968 | 84,968 | ||||||
Total
Assets
|
$ | 30,398,398 | $ | 29,341,337 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$ | 3,515,696 | $ | 3,021,074 | ||||
Accrued
compensation to executive
|
- | 950,000 | ||||||
Accrued
expenses
|
2,571,433 | 3,135,698 | ||||||
Current
portion of long-term obligations
|
11,706 | 462,708 | ||||||
Total
Current Liabilities
|
6,098,835 | 7,569,480 | ||||||
Long-term
Obligations
|
- | 18,619 | ||||||
Stockholders'
Equity:
|
||||||||
Preferred
stock, $1.00 par value, 50,000 shares authorized,
|
- | - | ||||||
Common
stock, $.25 par value; 4,000,000 shares authorized,
|
||||||||
2,424,486
shares issued and outstanding
|
606,121 | 606,121 | ||||||
Additional
paid in capital
|
6,179,455 | 6,045,330 | ||||||
Retained
earnings
|
17,513,987 | 15,101,787 | ||||||
Total
Stockholders' Equity
|
24,299,563 | 21,753,238 | ||||||
Total
Liabilities and Stockholders’ Equity
|
$ | 30,398,398 | $ | 29,341,337 | ||||
See
notes to condensed consolidated financial statements.
|
Nine
Months Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
earnings
|
$ | 3,212,280 | $ | 3,636,390 | ||||
Adjustments
to reconcile net earnings to net
|
||||||||
cash
(used in) provided by operating activities:
|
||||||||
(Gain)
Loss on sale of assets
|
2,839 | (16,275 | ) | |||||
Change
in accounts receivable and inventory reserves
|
27,657 | (606 | ) | |||||
Depreciation
and amortization
|
317,070 | 330,347 | ||||||
Change
in cash surrender value of life insurance
|
(51,003 | ) | (51,003 | ) | ||||
Deferred
income taxes
|
288,000 | (176,000 | ) | |||||
Periodic
pension cost
|
- | 45,829 | ||||||
(Gain)
Loss on retirement plan settlement
|
(8,460 | ) | 195,299 | |||||
Warranty
reserve
|
100,002 | 195,528 | ||||||
Compensation
expense related to stock options
|
134,125 | 254,490 | ||||||
Change
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(5,373,054 | ) | 3,324,492 | |||||
Notes
receivable and other non-trade receivables
|
233,963 | (491,216 | ) | |||||
Inventories
|
905,467 | (1,746,244 | ) | |||||
Prepaid
expenses and other
|
(86,319 | ) | (43,977 | ) | ||||
Accounts
payable
|
494,622 | (1,782,811 | ) | |||||
Accrued
expenses
|
(664,268 | ) | (171,816 | ) | ||||
Accrued
compensation to executive
|
(941,540 | ) | - | |||||
Income
taxes receivable/payable
|
81,000 | (179,000 | ) | |||||
Total
adjustments
|
(4,539,899 | ) | (312,963 | ) | ||||
Net
cash (used in) provided by operating activities
|
(1,327,619 | ) | 3,323,427 | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds
from sale of investments
|
900 | 6,679,235 | ||||||
Purchase
of investments
|
- | (6,657,345 | ) | |||||
Capital
expenditures
|
(103,428 | ) | (162,765 | ) | ||||
Net
cash used in investing activities
|
(102,528 | ) | (140,875 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Aircraft
term loan payments
|
(450,035 | ) | (85,264 | ) | ||||
Payment
of cash dividend
|
(800,080 | ) | (727,050 | ) | ||||
Payment
on capital leases
|
(19,585 | ) | (15,419 | ) | ||||
Proceeds
from exercise of stock options
|
- | 6,375 | ||||||
Repurchase
of common stock
|
(122 | ) | ||||||
Net
cash used in financing activities
|
(1,269,700 | ) | (821,480 | ) | ||||
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(2,699,847 | ) | 2,361,072 | |||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
6,852,713 | 51,858 | ||||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 4,152,866 | $ | 2,412,930 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$ | 21,924 | $ | 70,534 | ||||
Income
taxes
|
1,318,000 | 2,477,644 | ||||||
See
notes to condensed consolidated financial statements.
|
||||||||
Accumulated
|
||||||||||||||||||||||||
Common
Stock
|
Additional
|
Other
|
Total
|
|||||||||||||||||||||
Paid-In
|
Retained
|
Comprehensive
|
Stockholders'
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
(Loss)
|
Equity
|
|||||||||||||||||||
Balance,
March 31, 2008
|
2,423,506 | $ | 605,876 | $ | 5,700,002 | $ | 11,450,192 | $ | (41,513 | ) | $ | 17,714,557 | ||||||||||||
Net
earnings
|
3,636,390 | |||||||||||||||||||||||
Other
comprehensive income,
|
||||||||||||||||||||||||
net
of tax
|
41,513 | |||||||||||||||||||||||
Comprehensive
Income
|
3,677,903 | |||||||||||||||||||||||
Cash
dividend ($0.30 per share)
|
(727,050 | ) | (727,050 | ) | ||||||||||||||||||||
Exercise
of stock options
|
1,000 | 250 | 6,125 | 6,375 | ||||||||||||||||||||
Compensation
expense related to
|
||||||||||||||||||||||||
stock
options
|
254,490 | 254,490 | ||||||||||||||||||||||
Stock
repurchase
|
(20 | ) | (5 | ) | (117 | ) | (122 | ) | ||||||||||||||||
Balance,
December 31, 2008
|
2,424,486 | $ | 606,121 | $ | 5,960,500 | $ | 14,359,532 | $ | - | $ | 20,926,153 | |||||||||||||
Accumulated
|
||||||||||||||||||||||||
Common
Stock
|
Additional
|
Other
|
Total
|
|||||||||||||||||||||
Paid-In
|
Retained
|
Comprehensive
|
Stockholders'
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Equity
|
|||||||||||||||||||
Balance,
March 31, 2009
|
2,424,486 | $ | 606,121 | $ | 6,045,330 | $ | 15,101,787 | $ | - | $ | 21,753,238 | |||||||||||||
Net
earnings
|
3,212,280 | |||||||||||||||||||||||
Other
comprehensive income
|
- | |||||||||||||||||||||||
Comprehensive
Income
|
3,212,280 | |||||||||||||||||||||||
Cash
dividend ($0.33 per share)
|
(800,080 | ) | (800,080 | ) | ||||||||||||||||||||
Compensation
expense related to
|
||||||||||||||||||||||||
stock
options
|
134,125 | 134,125 | ||||||||||||||||||||||
Balance,
December 31, 2009
|
2,424,486 | $ | 606,121 | $ | 6,179,455 | $ | 17,513,987 | $ | - | $ | 24,299,563 | |||||||||||||
See
notes to condensed consolidated financial statements.
|
||||||||||||||||||||||||
1.
|
Financial Statement
Presentation
|
2.
|
Income
Taxes
|
3.
|
Comprehensive
Income
|
Three
Months Ended December 31,
|
Nine
Months Ended December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
earnings
|
$ | 1,247,258 | $ | 974,326 | $ | 3,212,280 | $ | 3,636,390 | ||||||||
Other
Comprehensive Income:
|
||||||||||||||||
Amortization
of Net Actuarial Losses
|
||||||||||||||||
Net
of tax)
|
- | 37,741 | - | 41,513 | ||||||||||||
Total
Comprehensive Income
|
$ | 1,247,258 | $ | 1,012,067 | $ | 3,212,280 | $ | 3,677,903 | ||||||||
4.
|
Net Earnings Per
Share
|
Three
Months Ended December 31,
|
Nine
Months Ended December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
earnings
|
$ | 1,247,258 | $ | 974,326 | $ | 3,212,280 | $ | 3,636,390 | ||||||||
Earnings
Per Share:
|
||||||||||||||||
Basic
|
$ | 0.51 | $ | 0.40 | $ | 1.32 | $ | 1.50 | ||||||||
Diluted
|
$ | 0.51 | $ | 0.40 | $ | 1.32 | $ | 1.50 | ||||||||
Weighted
Average Shares Outstanding:
|
||||||||||||||||
Basic
|
2,424,486 | 2,424,503 | 2,424,486 | 2,424,043 | ||||||||||||
Diluted
|
2,459,754 | 2,424,503 | 2,434,751 | 2,424,043 | ||||||||||||
5.
|
Inventories
|
December
31,
|
March
31,
|
|||||||
2009
|
2009
|
|||||||
Aircraft
parts and supplies
|
$ | 128,873 | $ | 151,833 | ||||
Ground
equipment manufacturing:
|
||||||||
Raw
materials
|
6,801,898 | 6,935,490 | ||||||
Work
in process
|
1,231,051 | 2,439,072 | ||||||
Finished
goods
|
1,345,192 | 886,634 | ||||||
Total
inventories
|
9,507,014 | 10,413,029 | ||||||
Reserves
|
(582,073 | ) | (582,073 | ) | ||||
Total,
net of reserves
|
$ | 8,924,941 | $ | 9,830,956 | ||||
6.
|
Stock Based
Compensation
|
7.
|
Fair Value of
Financial Instruments
|
Fair
Value Measurements at
|
||||||||
December
31, 2009
|
March
31, 2009
|
|||||||
Cash
and cash equivalents
|
$ | 4,152,866 | $ | 6,852,713 | ||||
Short-term
investments
|
$ | 1,007,924 | $ | 1,002,221 | ||||
8.
|
Financing
Arrangements
|
|
|
9.
|
Segment
Information
|
Three
Months Ended December 31,
|
Nine
Months Ended December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Operating
Revenues:
|
||||||||||||||||
Overnight
Air Cargo
|
$ | 9,991,420 | $ | 10,846,052 | $ | 28,594,095 | $ | 31,862,596 | ||||||||
Ground
Equipment Sales:
|
||||||||||||||||
Domestic
|
8,109,459 | 8,793,398 | 20,139,466 | 27,946,479 | ||||||||||||
International
|
1,659,557 | 1,855,626 | 5,825,071 | 4,753,293 | ||||||||||||
Total
Ground Equipment Sales
|
9,769,016 | 10,649,024 | 25,964,537 | 32,699,772 | ||||||||||||
Ground
Support Services
|
2,560,691 | 2,042,497 | 6,852,590 | 5,404,103 | ||||||||||||
Total
|
$ | 22,321,127 | $ | 23,537,573 | $ | 61,411,222 | $ | 69,966,471 | ||||||||
Operating
Income
|
||||||||||||||||
Overnight
Air Cargo
|
$ | 627,161 | $ | 795,412 | $ | 2,027,105 | $ | 2,573,238 | ||||||||
Ground
Equipment Sales
|
1,280,647 | 1,096,170 | 3,588,369 | 4,770,227 | ||||||||||||
Ground
Support Services
|
397,433 | 114,051 | 962,724 | 243,185 | ||||||||||||
Corporate
|
(536,596 | ) | (719,218 | ) | (1,743,824 | ) | (2,201,271 | ) | ||||||||
Total
|
$ | 1,768,645 | $ | 1,286,415 | $ | 4,834,374 | $ | 5,385,379 | ||||||||
Capital
Expenditures:
|
||||||||||||||||
Overnight
Air Cargo
|
$ | 5,849 | $ | 7,285 | $ | 40,434 | $ | 22,905 | ||||||||
Ground
Equipment Sales
|
- | - | 20,436 | 7,185 | ||||||||||||
Ground
Support Services
|
- | 36,575 | 13,304 | 76,623 | ||||||||||||
Corporate
|
517 | 18,040 | 29,254 | 56,052 | ||||||||||||
Total
|
$ | 6,366 | $ | 61,900 | $ | 103,428 | $ | 162,765 | ||||||||
Depreciation
and Amortization:
|
||||||||||||||||
Overnight
Air Cargo
|
$ | 52,124 | $ | 62,172 | $ | 158,271 | $ | 199,586 | ||||||||
Ground
Equipment Sales
|
12,971 | 10,442 | 38,119 | 32,839 | ||||||||||||
Ground
Support Services
|
27,477 | 24,597 | 81,699 | 67,749 | ||||||||||||
Corporate
|
13,134 | 10,533 | 38,981 | 30,173 | ||||||||||||
Total
|
$ | 105,706 | $ | 107,744 | $ | 317,070 | $ | 330,347 | ||||||||
As
of :
|
||||||||||||||||
December
31, 2009
|
March
31, 2009
|
|||||||||||||||
Identifiable
Assets:
|
||||||||||||||||
Overnight
Air Cargo
|
$ | 5,173,732 | $ | 6,779,257 | ||||||||||||
Ground
Equipment Sales
|
18,248,487 | 12,299,439 | ||||||||||||||
Ground
Support Services
|
2,695,408 | 2,231,834 | ||||||||||||||
Corporate
|
4,280,771 | 8,030,807 | ||||||||||||||
Total
|
$ | 30,398,398 | $ | 29,341,337 | ||||||||||||
10.
|
Commitments and
Contingencies
|
11.
|
Subsequent
Events
|
(In
thousands)
|
|
|||||||||||||||||||||||||||||||
Three
Months Ended December 31,
|
Nine
Months Ended December 31,
|
|||||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||||||
Overnight
Air Cargo Segment:
|
||||||||||||||||||||||||||||||||
FedEx
|
$ | 9,991 | 45 | % | $ | 10,846 | 46 | % | $ | 28,594 | 47 | % | $ | 31,863 | 45 | % | ||||||||||||||||
Ground
Equipment Sales Segment:
|
||||||||||||||||||||||||||||||||
Military
|
4,759 | 21 | % | 2,935 | 12 | % | 12,395 | 20 | % | 14,193 | 20 | % | ||||||||||||||||||||
Commercial
- Domestic
|
3,350 | 15 | % | 5,858 | 25 | % | 7,744 | 13 | % | 13,754 | 20 | % | ||||||||||||||||||||
Commercial
- International
|
1,660 | 7 | % | 1,856 | 8 | % | 5,825 | 9 | % | 4,753 | 7 | % | ||||||||||||||||||||
9,769 | 43 | % | 10,649 | 45 | % | 25,964 | 42 | % | 32,700 | 47 | % | |||||||||||||||||||||
Ground
Support Services Segment
|
2,561 | 12 | % | 2,043 | 9 | % | 6,853 | 11 | % | 5,404 | 8 | % | ||||||||||||||||||||
$ | 22,321 | 100 | % | $ | 23,538 | 100 | % | $ | 61,411 | 100 | % | $ | 69,967 | 100 | % | |||||||||||||||||
Nine
Months Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Net
Cash Provided by (Used in) Operating Activities
|
$ | (1,328,000 | ) | $ | 3,323,000 | |||
Net
Cash Used in Investing Activities
|
(102,000 | ) | (141,000 | ) | ||||
Net
Cash Used in Financing Activities
|
(1,270,000 | ) | (821,000 | ) | ||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
$ | (2,700,000 | ) | $ | 2,361,000 | |||
|
(a) Exhibits
|
3.1
|
Restated
Certificate of Incorporation and Certificate of Amendment to Certificate
of Incorporation dated September 25, 2008, incorporated by reference to
Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the fiscal
period ended September 30, 2008 (Commission file No.
0-11720)
|
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 (Commission file No.
0-11720)
|
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 (Commission file No.
0-11720)
|
31.1
|
Section 302 Certification of Chief Executive
Officer
|
31.2
|
Section
302 Certification of Chief Financial
Officer
|
32.1
|
Section
1350 Certifications
|
|
3.1
|
Restated
Certificate of Incorporation and Certificate of Amendment to Certificate
of Incorporation dated September 25, 2008, incorporated by reference to
Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the fiscal
period ended September 30, 2008 (Commission file No.
0-11720)
|
|
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 (Commission file No.
0-11720)
|
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 (Commission file No. 0-
11720)
|