<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended MARCH 31, 1998
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to ________
COMMISSION FILE NUMBER 0-27288
EAGLE USA AIRFREIGHT, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0094895
- --------------------------------- ----------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
15350 VICKERY DRIVE, HOUSTON, TEXAS 77032
(281) 618-3100
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices, Including Registrant's
Zip Code, and Telephone Number, Including Area Code)
3214 LODESTAR, HOUSTON, TEXAS 77032
- --------------------------------------------------------------------------------
Former Name, Former Address and former Fiscal Year, if Changed Since Last Report
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
--- ---
The number of shares of the registrant's common stock as of April 30, 1998:
19,043,330 shares.
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<PAGE> 2
EAGLE USA AIRFREIGHT, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet as of ............................. 3
March 31, 1998 (unaudited) and September 30, 1997 (audited)
Condensed Consolidated Statement of Income for the Six ................. 4
Months ended March 31, 1998 and 1997 (unaudited)
Condensed Consolidated Statement of Income for the Three ............... 5
Months ended March 31, 1998 and 1997 (unaudited)
Condensed Consolidated Statement of Cash Flows for ..................... 6
the Six Months ended March 31, 1998 and 1997 (unaudited)
Condensed Consolidated Statement of Shareholders' ...................... 7
Equity for the Six Months ended March 31, 1998 (unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited) ....... 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ...................................... 10
PART II. OTHER INFORMATION ............................................... 17
SIGNATURES ............................................................... 20
INDEX TO EXHIBITS ........................................................ 21
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EAGLE USA AIRFREIGHT, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PAR VALUES)
<TABLE>
<CAPTION>
March 31, September 30,
1998 1997
(unaudited) (audited)
----------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 39,807 $ 25,107
Short-term investments 8,178 2,679
Accounts receivable - trade, net 50,505 54,662
Prepaid expenses and other 3,406 4,557
----------- -------------
Total current assets 101,896 87,005
Property and equipment, net 16,970 14,090
Other assets 5,556 5,776
----------- -------------
$ 124,422 $ 106,871
=========== =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable - trade $ 7,196 $ 7,757
Accrued transportation costs 5,094 6,062
Accrued compensation and employee benefits 9,043 10,454
Other current liabilities 1,008 2,094
----------- -------------
Total current liabilities 22,341 26,367
----------- -------------
Long-term indebtedness
----------- -------------
Shareholders' equity:
Preferred Stock, $0.001 par value, 10,000 shares
authorized
Common stock, $0.001 par value, 100,000 and 30,000
shares authorized, 18,766 and 18,210 shares issued 19 18
Additional paid-in capital 64,084 52,387
Retained earnings 37,978 28,099
----------- -------------
102,081 80,504
----------- -------------
$ 124,422 $ 106,871
=========== =============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
<PAGE> 4
EAGLE USA AIRFREIGHT, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenues $ 188,189 $ 129,075
Cost of transportation 104,182 72,877
---------- ----------
84,007 56,198
---------- ----------
Operating expenses:
Personnel costs 44,936 29,173
Other selling, general and administrative expenses 23,658 15,802
---------- ----------
68,594 44,975
---------- ----------
Operating income 15,413 11,223
---------- ----------
Interest and other income 773 974
Interest expense
---------- ----------
Nonoperating income 773 974
---------- ----------
Income before provision for income taxes 16,186 12,197
Provision for income taxes 6,307 4,735
---------- ----------
Net income $ 9,879 $ 7,462
========== ==========
Basic weighted average common shares outstanding 18,418 17,621
========== ==========
Diluted weighted average common and common
equivalent shares outstanding 19,156 18,554
========== ==========
Basic earnings per share (Note 2) $ 0.54 $ 0.42
========== ==========
Diluted earnings per share (Note 2) $ 0.52 $ 0.40
========== ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
4
<PAGE> 5
EAGLE USA AIRFREIGHT, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenues $ 90,544 $ 61,489
Cost of transportation 50,575 34,806
---------- ----------
39,969 26,683
---------- ----------
Operating expenses:
Personnel costs 21,681 14,885
Other selling, general and administrative expenses 12,224 7,773
---------- ----------
33,905 22,658
---------- ----------
Operating income 6,064 4,025
Interest and other income 468 701
Interest expense
---------- ----------
Nonoperating income 468 701
---------- ----------
Income before provision for income taxes 6,532 4,726
Provision for income taxes 2,543 1,778
---------- ----------
Net income $ 3,989 $ 2,948
========== ==========
Basic weighted average common shares outstanding 18,580 17,717
========== ==========
Diluted weighted average common and common
equivalent shares outstanding 19,261 18,643
========== ==========
Basic earnings per share (Note 2) $ 0.21 $ 0.17
========== ==========
Diluted earnings per share (Note 2) $ 0.21 $ 0.16
========== ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
5
<PAGE> 6
EAGLE USA AIRFREIGHT, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities $ 15,751 $ (1,929)
---------- ----------
Cash flows from investing activities:
Purchase of investments (5,499) (4,101)
Maturity of investments 3,128
Acquisition of property and equipment, net (4,419) (3,367)
Other (43)
---------- ----------
Net cash used by investing activities (9,961) (4,340)
---------- ----------
Cash flows from financing activities:
Issuance of common stock, net of related costs 6,701 6,165
Offering fee paid by selling shareholder 375
Proceeds from exercise of stock options 2,209 399
---------- ----------
Net cash provided by financing activities 8,910 6,939
---------- ----------
Net increase in cash and cash equivalents 14,700 670
Cash and cash equivalents, beginning of period 25,107 26,696
---------- ----------
Cash and cash equivalents, end of period $ 39,807 $ 27,366
========== ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
6
<PAGE> 7
EAGLE USA AIRFREIGHT, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
----------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1997 18,210 $ 18 $ 52,387 $ 28,099 $ 80,504
Issuance of Common Stock, net
of related costs (Note 1) 262 6,701 6,701
Exercise of stock options 294 1 2,208 2,209
Tax benefit from exercise of stock
options 2,788 2,788
Net income 9,879 9,879
------ ------ ---------- -------- ---------
Balance at March 31, 1998 18,766 $ 19 $ 64,084 $ 37,978 $ 102,081
====== ====== ========== ======== =========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
7
<PAGE> 8
EAGLE USA AIRFREIGHT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
The accompanying unaudited condensed consolidated financial statements
have been prepared by Eagle USA Airfreight, Inc. (the Company) in accordance
with the rules and regulations of the Securities and Exchange Commission (the
SEC) for interim financial statements and accordingly do not include all
information and footnotes required under generally accepted accounting
principles for complete financial statements. The financial statements have been
prepared in conformity with the accounting principles and practices disclosed
in, and should be read in conjunction with, the annual financial statements of
the Company included in the Company's Annual Report on Form 10-K (File No.
0-27288). In the opinion of management, these interim financial statements
contain all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the Company's financial position at March
31, 1998 and the results of its operations for the six and three months ended
March 31, 1998 and 1997. Results of operations for the six and three months
ended March 31, 1998 are not necessarily indicative of the results that may be
expected for the fiscal year ending September 30, 1998.
NOTE 1 - ORGANIZATION, OPERATIONS, AND SIGNIFICANT ACCOUNTING POLICIES:
Eagle USA Airfreight, Inc. (the Company) was organized in 1984 to
provide ground and air freight forwarding services. The Company maintains
operating facilities throughout the United States, Mexico, Canada, and three
acquired facilities in the United Kingdom on April 14, 1998. The Company
operates in one principal industry segment.
In February 1997, the Company completed an underwritten secondary
public offering of 1,779,922 shares of its Common Stock at a price to the public
of $28.25 per share. The Company sold 232,164 of these shares, and the net
proceeds received by the Company after deducting underwriting discounts and
commissions were $6.2 million and will be used for general corporate purposes.
The Company did not receive any of the proceeds from the sale of the 1,547,758
of these shares sold by Daniel S. Swannie, a former executive officer and
director of the Company. Pursuant to an agreement between the Company and Mr.
Swannie entered into in connection with the offering, Mr. Swannie reimbursed the
Company for all of its out-of-pocket expenses incurred in connection with the
offering and made a payment to the Company of $375,000 for the Company's
estimated internal costs relating to the offering. The agreement also restricts
Mr. Swannie's ability to compete against the Company for a three-year term and
places certain other limitations on his ability to act against the interests of
the Company.
On September 19, 1997, the Company acquired the operating assets and
assumed certain liabilities of Michael Burton Enterprises, Inc., a
transportation and value-added logistics service provider in Columbus, Ohio. The
Company paid approximately $5.6 million in cash and issued 33,362 shares of
Common Stock in this transaction. The acquisition agreement also provides for
three contingent payments if certain annual sales goals are achieved. The
acquisition was accounted for as a purchase; accordingly, the purchase price was
allocated over the basis of estimated fair market value of the net assets
acquired. The results of operations for the acquired operations were included in
the consolidated statement of income from the acquisition date forward.
On January 30, 1998, the Company completed an underwritten secondary
public offering of 2,012,500 shares of its Common Stock at a price to the public
of $27.75 per share. The Company sold 262,500 of these shares and the net
proceeds received by the Company after deducting underwriting discounts and
commissions and offering expenses were approximately $6.6 million and will be
used for general corporate purposes. The Company did not receive any of the
proceeds from the sale of 1,750,000 of these shares sold by James R. Crane, the
Company's Chairman of the Board of Directors, President and Chief Executive
Officer.
8
<PAGE> 9
EAGLE USA AIRFREIGHT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
On April 3, 1998, the Company acquired substantially all of the
operating assets of Eagle Transfer, Inc. ("Eagle Companies"), a privately-held
international freight forwarder based in Miami, Florida. Eagle Companies is a
full-service forwarder whose services include customs clearing services, ocean
forwarding and airfreight import and export. Eagle Companies' operations focus
on Argentina, Brazil and Chile and other South American countries. Sales for
Eagle Companies totaled approximately $19.8 million in the twelve-month period
ended December 31, 1997. Despite the similarity in names, the Company and Eagle
Companies have had no prior affiliation. The Company paid an undisclosed sum,
consisting of cash, Common Stock, and a three-year contigent earnout payable in
Common Stock if certain performance benchmarks are met. The acquisition was
accounted for as a purchase; accordingly, the purchase price was allocated over
the basis of the estimated fair market value of the net assets acquired. The
results of operations for the acquired operations will be included in the
consolidated statement of income from the acquisition date forward.
On April 14, 1998, the Company acquired all of the stock of S. Boardman
(Air Services) Limited and Subsidiaries (S. Boardman), a privately-held full
service based in London, England. S. Boardman serves the international freight
forwarding market from three facilities in London, Manchester and Birmingham,
England. For the twelve-month period ended March 31, 1997, total revenues for S.
Boardman were approximately $25 million and revenues excluding customs, duties
and value added taxes were approximately $13 million. The Company paid an
undisclosed cash sum and three-year contigent cash earnout if certain
performance benchmarks are met. The acquisition was accounted for as a purchase;
accordingly, the purchase price was allocated over the basis of the estimated
fair market value of the net assets acquired. The results of operations for the
acquired operations will be included in the consolidated statement of income
from the acquisition date forward.
NOTE 2 - EARNINGS PER SHARE:
The Company has adopted Statement of Financial Accounting Standard No.
128 (SFAS 128), "Earnings Per Share". Adoption of SFAS 128 has resulted in the
retroactive restatement of earnings per share. Basic earnings per share excludes
dilution and is computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding for the period. Diluted
earnings per share includes potential dilution that could occur if securities to
issue common stock were exercised.
The computation of basic and diluted earnings per share are as follows:
<TABLE>
<CAPTION>
Six Months Ended March 31,
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Net income $ 9,879 $ 7,462
Shares used in basic calculation:
Weighted average shares outstanding 18,418 17,621
---------- ----------
Total basic shares 18,418 17,621
Additional shares for diluted computation:
Effect of stock options 738 933
---------- ----------
Total diluted shares 19,156 18,554
========== ==========
Basic earnings per share $ 0.54 $ 0.42
========== ==========
Diluted earnings per share $ 0.52 $ 0.40
========== ==========
</TABLE>
9
<PAGE> 10
EAGLE USA AIRFREIGHT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended March 31,
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Net income $ 3,989 $ 2,948
Shares used in basic calculation:
Weighted average shares outstanding 18,580 17,717
---------- ----------
Total basic shares 18,580 17,717
Additional shares for diluted computation:
Effect of stock options 681 926
---------- ----------
Total diluted shares 19,261 18,643
========== ==========
Basic earnings per share $ 0.21 $ 0.17
========== ==========
Diluted earnings per share $ 0.21 $ 0.16
========== ==========
</TABLE>
NOTE 3 - NEW ACCOUNTING PRONOUNCEMENTS:
In February 1997, the Financial Accounting Standards Board issued SFAS
129 "Disclosure of Information About Capital Structure" for all periods ending
after December 15, 1997. SFAS 129 contains no changes in the disclosure
requirements for the Company because it was previously subject to such
requirements pursuant to other Statements and Opinions.
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The adoption of both
statements are required for fiscal years beginning after December 15, 1997.
Under SFAS No. 130, companies are required to report in the financial
statements, in addition to net income, comprehensive income including, as
applicable, foreign currency items, minimum pension liability adjustments and
unrealized gains and losses on certain investments in debt and equity
securities. SFAS No. 131 requires that companies report separately, in the
financial statements, certain financial and descriptive information about
operating segments, if applicable. The Company does not expect the adoption of
SFAS No. 130 or SFAS No. 131 to have a material impact on its consolidated
financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected certain aspects of the Company's
financial position and operating results during the periods included in the
accompanying unaudited condensed consolidated financial statements. This
discussion should be read in conjunction with the discussion under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the annual financial statements included in the Company's Annual Report on Form
10-K (File No. 0-27288) and the accompanying unaudited condensed consolidated
financial statements.
10
<PAGE> 11
EAGLE USA AIRFREIGHT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
General
The Company's revenues have increased to $291.8 million in the fiscal
year ended September 30, 1997 from $126.2 million in the fiscal year ended
September 30, 1995, and its operating income has increased to $25.7 million in
fiscal 1997 from $12.2 million in fiscal 1995. The Company's recent growth has
been generated almost exclusively by increasing the number of terminals operated
by the Company and growth in revenue produced by existing terminals. The opening
of a new terminal generally has an initial negative impact on profitability due
to operating losses of the new terminal. The opening of a new terminal generally
does not require significant capital expenditures. Additionally, personnel costs
are contained at the time of the opening of a new terminal because commissions
are generally not paid until salesmen achieve minimum sales levels and until
managers achieve terminal profitability. Although future new terminals may be
opened in cities smaller than those in which the Company's more mature terminals
are located, the Company believes the results of new terminals should benefit
from a ready base of business provided by its existing customers. Historically,
the Company's operating results have been subject to a limited degree to
seasonal trends when measured on a quarterly basis. The second quarter has
traditionally been the weakest and the fourth quarter has traditionally been the
strongest.
The Company intends to continue to expand its international freight
forwarding business. International shipments typically generate higher revenues
per shipment than domestic shipments. The Company anticipates that the costs of
transportation for international freight will be higher than for domestic
freight as a percentage of such revenues, resulting in lower gross margins than
domestic shipments; however, the Company does not expect its operating expenses
to increase in proportion to such revenues. In April 1998, the Company expanded
its international operations through the completion of the acquisition of
substantially all of the assets of Eagle Transfer, Inc. and the stock of S.
Boardman (Air Services Limited). The Company also intends to continue the growth
of its local pick-up and delivery operations. By providing local pick-up and
delivery services with respect to shipments for which it is the freight
forwarder, the Company has been able to increase its gross margin with respect
to such shipments because it captures margins which were previously paid to
third parties. However, the Company's local pick-up and delivery services
provided to other (non-forwarding) customers generate a lower gross margin than
the Company's domestic forwarding operations due to their higher transportation
costs as a percentage of revenues.
Six Month Ended March 31, 1998 compared to the Six Months Ended March 31, 1997
Revenues increased 45.8% to $188.2 million for the six months ended
March 31, 1998 from $129.1 million for the six months ended March 31, 1997
primarily due to increases in the number of shipments and the total weight of
cargo shipped, which in turn resulted from an increase in the number of
terminals open during such period, an increase in penetration in existing
markets and the addition of significant national accounts customers.
Operating data for the period were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Freight forwarding terminals at end of period 60 53
Local delivery locations at end of period 54 40
Freight forwarding shipments 476,856 358,875
Average weight (lbs.) per freight forwarding shipment 577 552
</TABLE>
11
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EAGLE USA AIRFREIGHT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
For those freight forwarding terminals open as of the beginning of
fiscal 1997 (47 terminals), revenues increased 32.3% to $159.5 million for the
six months ended March 31, 1998 from $120.6 million for the six months ended
March 31, 1997.
Revenues for the six months ended March 31, 1998 were comprised of
$173.9 million of forwarding revenues, $14.0 million of local pick-up and
delivery revenues and $303,000 of other freight forwarding service revenues, as
compared to $121.6 million, $7.2 million and $327,000, respectively, for the
corresponding period in 1997.
Cost of transportation decreased as a percentage of revenues to 55.4% in
the first six months of fiscal 1998 from 56.5% in the comparable period in
fiscal 1997. This was primarily attributable to the continued expansion of the
Company's local pick-up and delivery operations, enabling the Company to capture
margins previously paid to third parties. Cost of transportation increased in
absolute terms by 43.0% to $104.2 million for the six months ended March 31,
1998 from $72.9 million in the same period in fiscal 1997 as a result of
increases in volume of freight shipped. Gross margin increased to 44.6% in the
six months ended March 31, 1998 from 43.5% in the same period in fiscal 1997.
The primary reasons for the margin improvement were increased shipping volumes
and the continued expansion of pickup and delivery operations. Gross profit
increased 49.5% to $84.0 million for the six months ended March 31, 1998 from
$56.2 million in the same period in fiscal 1997.
Operating expenses increased as a percentage of revenues to 36.4% in the
first six months of fiscal 1998 from 34.8% in the same period in fiscal 1997.
The $23.6 million of increased costs in absolute terms was attributable
primarily to continued growth in the level of operations from additional
terminals and expansion of local delivery operations. Personnel costs increased
as a percentage of revenues to 23.9% for the six months ended March 31, 1998
from 22.6% in the same period in fiscal 1997, and increased in absolute terms by
54.0% to $44.9 million due to increased staffing needs associated with the
opening of 7 new terminals, the opening of 14 new local delivery operations,
expanded operations at existing terminals and increased revenues, which resulted
in increased commissions and expanded corporate infrastructure. Such personnel
costs include all compensation expenses, including those relating to sales
commission and salaries and to headquarters employees and executive officers.
The Company has recently added personnel to build corporate infrastructure, to
keep pace with its recent significant growth, to deepen the staff of its
domestic, international and local delivery operating units and to prepare for
expected growth during fiscal 1998. Other selling, general and administrative
expenses increased as a percentage of revenues to 12.6% for the six months ended
March 31, 1998 from 12.2% in the same period in fiscal 1997, and increased in
absolute terms by 49.7% to $23.7 million in the first six months ended March 31,
1998 from $15.8 million in the same period in fiscal 1997. For the six months
ended March 31, 1998, selling expenses as a percentage of revenues decreased by
0.1% and other general and administrative expenses as a percentage of revenue
increased 0.5% compared to the same period in fiscal 1997. The absolute
increases in selling, general and administrative expenses were due to overall
increases in the level of the Company's activities in the fiscal 1998 period.
Operating income increased 37.3% to $15.4 million in the first six
months of fiscal 1998 from $11.2 million in the comparable period in fiscal
1997. Operating margin for the first six months of fiscal 1998 was 8.2% down
from 8.7% for the same period in fiscal 1997 primarily due to the higher
operating expenses as a percentage of revenues during the six months ended March
31, 1998.
Interest and other income decreased to $773,000 in the first six months
of fiscal 1998 from $974,000 in the comparable period in fiscal 1997 as a result
of a one-time payment of $375,000 made in the second quarter of fiscal 1997 by
Daniel S. Swannie, a former executive officer and director of the Company, in
connection with the reimbursement of the Company's internal costs related to the
February 1997 secondary public offering.
12
<PAGE> 13
EAGLE USA AIRFREIGHT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Income before provision for income taxes increased 32.7% to $16.2
million for the first six months of fiscal 1998 from $12.2 million in the
comparable period of fiscal 1997. Provision for income taxes increased 33.2% to
$6.3 million for the six months ended March 31, 1998 from $4.7 million for the
six months ended March 31, 1997. Net income increased 32.4% to $9.9 million for
the six months ended March 31, 1998 from net income of $7.5 million in the same
period in fiscal 1997. Diluted earnings per share increased 30.0% to $0.52 for
the six months ended March 31, 1998 from $0.40 in the same period in fiscal
1997.
Three Months Ended March 31, 1998 compared to the Three Months Ended March 31,
1997
Revenues increased 47.3% to $90.5 million in the three months ended
March 31, 1998 from $61.5 million in the same period of fiscal 1997 primarily
due to increases in the number of shipments and the total weight of cargo
shipped, which in turn resulted from an increase in the number of terminals open
during such period, penetration in existing markets and the addition of
significant national account customers.
Operating data for the period were as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
---------- ----------
<S> <C> <C>
Freight forwarding terminals at end of period 60 53
Local delivery locations at end of period 54 40
Freight forwarding shipments 240,361 174,059
Average weight (lbs.) per freight forwarding shipment 555 562
</TABLE>
For those freight forwarding terminals opened as of the beginning of
fiscal 1997 (47 terminals), revenues increased 33.5% to $76.4 million for the
three months ended March 31, 1998 from $57.2 million for the three months ended
March 31, 1997.
Revenues for the three months ended March 31, 1998 were comprised of $82.6
million of forwarding revenues, $7.8 million of local pick and delivery revenues
and $155,000 of other freight forwarding service revenues, as compared to $57.8
million, $3.6 million and $142,000, respectively, for the three months ended
March 31, 1997.
Cost of transportation decreased during the quarter as a percentage of
revenues to 55.9% from 56.6% in the comparable period in fiscal 1997. The
decrease was primarily attributable to the continued expansion of the local pick
up and delivery operations, enabling the Company to capture margins previously
paid to third parties. Cost of transportation increased in absolute terms by
45.3% to $50.6 million in the fiscal 1998 quarter from $34.8 million in the
fiscal 1997 quarter as a result of increases in volume of freight shipped. Gross
margin increased to 44.1% in the first quarter of fiscal 1998 from 43.4% in the
same period in fiscal 1997. The primary reasons for the margin improvement were
increased shipping volumes, and the continued expansion of pickup and delivery
operations. Gross profit increased 49.8% to $40.0 million in the first quarter
of fiscal 1998 from $26.7 million in the same period in fiscal 1997.
Operating expenses increased as a percentage of revenues to 37.4% in the
second quarter of fiscal 1998 from 36.8% for the same period in fiscal 1997. The
$11.2 million increased costs in absolute terms was attributable primarily to
continued growth in the level of operations from additional terminals and
expansion of local delivery operations. Personnel costs decreased as a
percentage of revenues to 23.9% in the second quarter of fiscal 1998 from 24.2%
in the same period in fiscal 1997, and increased in absolute terms by 45.7% to
$21.7 million due to increased staffing needs associated with the opening of 7
new terminals, the opening of 14 new local delivery locations, expanded
operations at existing terminals and increased revenues, which resulted in an
increase in commissions and expanded corporate infrastructure. Such personnel
costs include all compensation expenses, including those relating to sales
commissions and salaries and to
13
<PAGE> 14
EAGLE USA AIRFREIGHT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
headquarters employees and executive officers. The Company has recently added
personnel to build corporate infrastructure, to keep pace with its recent
significant growth, to deepen the staff of its domestic, international and local
delivery operating units and to prepare for expected growth during fiscal 1998.
Other selling, general and administrative expenses increased as a percentage of
revenues to 13.5% in the second quarter of fiscal 1998 from 12.6% in the second
quarter of fiscal 1997, and increased in absolute terms by 57.3% to $12.2
million in the fiscal 1998 period from $7.8 million in the fiscal 1997 period.
In the second quarter of fiscal 1998, selling expenses as a percentage of
revenues decreased by 0.4% and other general and administrative expenses as a
percentage of revenues increased by 1.3% compared to the second quarter of
fiscal 1997. The absolute increases in selling, general and administrative
expenses were due to overall increases in the level of the Company's activities
in the fiscal 1998 period.
Operating income increased 50.7% to $6.1 million in the second quarter
of fiscal 1998 from $4.0 million in the comparable period in fiscal 1997.
Operating margin for the quarter ended March 31, 1998 was 6.7%, up from 6.5% for
the three months ended March 31, 1997. Interest and other income decreased to
$468,000 from $701,000 in the comparable period in fiscal 1997 as a result of a
one-time payment of $375,000 made in the second quarter of fiscal 1997 by Daniel
S. Swannie, a former Executive Officer and Director of the Company, in
connection with the reimbursement of the Company's internal costs related to the
February 1997 secondary public offering.
Income before provision for income taxes increased 38.2% to $6.5 million
in the second quarter of fiscal 1998 from $4.7 million in the comparable period
of fiscal 1997. Provision for income taxes increased 43.0% to $2.5 million for
the three months ended March 31, 1998 from $1.8 for the three months ended March
31, 1997. Net income increased 35.3% to $4.0 million in the second quarter of
fiscal 1998 from net income of $2.9 million in the same period in fiscal 1997.
Diluted earnings per share increased 31.3% to $0.21 per share for the quarter
ended March 31, 1998 from $0.16 in the same period in fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and short-term investments increased $20.2 million to
$48.0 million at March 31, 1998 from $27.8 million at September 30, 1997. At
March 31, 1998, the Company had working capital of $79.6 million and a current
ratio of 4.56 compared to working capital of $60.6 million and a current ratio
of 3.30 at September 30, 1997. The Company's working capital has increased
during this period primarily as a result of proceeds from the January 1998
secondary offering , profitable growth associated with the expansion of the
Company's operations and increased accounts receivable collections. Capital
expenditures for the six months ended March 31, 1998 were approximately $4.4
million. The Company believes that cash flow from operations and the remaining
proceeds from its public offerings will be adequate to support its normal
working capital and capital expenditures requirements for at least the next 12
months.
Other than its initial and 1997 and 1998 public offerings, the Company's
cash generated from operations has been its primary source of liquidity,
although it has from time to time made limited use of bank borrowing and lease
purchase arrangements. The Company had a $10 million revolving credit facility
with NationsBank of Texas, N.A. which expired in January 1998. The Company is
currently considering implementing alternative facilities. The Company expects
to retain all available earnings generated by its operations for the development
and growth of its business and does not anticipate paying any cash dividends on
its Common Stock in the foreseeable future.
As of March 31, 1998, the Company had outstanding non-qualified stock
options to purchase an aggregate of 3,152,111 shares of Common Stock at exercise
prices equal to the fair market value of the underlying Common Stock on the
dates of grant (prices ranging from $1.25 to $35.125). At the time a
non-qualified stock option is exercised, the Company will generally be entitled
to a deduction for federal and state income tax purposes equal to the difference
between the fair market value of the common stock on the date of exercise and
the option price. As a result of exercises for the six
14
<PAGE> 15
EAGLE USA AIRFREIGHT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
months ended March 31, 1998 of non-qualified stock options to purchase an
aggregate of 293,526 shares of Common Stock, the Company is entitled to a
federal income tax deduction of approximately $7.0 million. Assuming an
effective tax rate of 40%, the Company expects to realize a tax benefit of
approximately $2.8 million with respect to the six months ended March 31, 1998,
accordingly, the Company recorded such an increase in additional paid-in capital
and a decrease in current income taxes payable pursuant to the provisions of FAS
No. 109, "Accounting for Income Taxes." Any exercises for non-qualified stock
options in the future at exercise prices below the then fair market value of the
common stock may also result in tax benefits for the difference between such
amounts, although there can be no assurance as to whether or not such exercises
will occur, the amount of any deductions or the Company's ability to fully
utilize such tax deductions.
On January 10, 1997, the Company entered into a five-year operating
lease agreement with two unrelated parties for financing the construction of its
recently completed Houston terminal, warehouse and headquarters facility (the
Houston facility). Estimated costs of the Houston facility are $8.5 million.
Under the terms of the lease agreement, average monthly lease payments are
approximately $60,000 (including monthly interest costs based upon LIBOR rate
plus 200 basis points) beginning upon the completion of the construction of the
facility and continuing for a term of 52 months with a balloon payment equal to
the outstanding lease balance (initially equal to the cost of the facility) due
at the end of the lease term. The Company has an option, exercisable at anytime
during the lease term, and under certain circumstances may be obligated, to
acquire the facility for an amount equal to the outstanding lease balance. In
the event the Company does not exercise the purchase option, and is not
otherwise required to acquire the facility, it is subject to a deficiency
payment computed as the amount equal to the outstanding lease balance minus the
then current fair market value of the Houston facility. The Company expects that
the amount of any such deficiency payment would be expensed. As of March 31,
1998, the lease balance was approximately $8.5 million.
In February 1997, the Company completed an underwritten secondary public
offering of 1,779,922 shares of its Common Stock at a price to the public of
$28.25 per share. The Company sold 232,164 of these shares, and the net proceeds
received by the Company after deducting underwriting discounts and commissions
were $6.2 million and will be used for general corporate purposes. The Company
did not receive any of the proceeds from the sale of the 1,547,758 of these
shares sold by Daniel S. Swannie, a former executive officer and director of the
Company. Pursuant to an agreement between the Company and Mr. Swannie entered
into in connection with the offering, Mr. Swannie reimbursed the Company for all
of its out-of-pocket expenses incurred in connection with the offering and made
a payment to the Company of $375,000 for the Company's estimated internal costs
relating to the offering. The agreement also restricts Mr. Swannie's ability to
compete against the Company for a three-year term and places certain other
limitations on his ability to act against the interest of the Company.
On January 30, 1998, the Company completed an underwritten secondary
public offering of 2,012,500 shares of its Common Stock at a price to the public
of $27.75 per share. The Company sold 262,500 of these shares and the net
proceeds received by the Company after deducting underwriting discounts and
commissions and offering expenses were approximately $6.6 million and will be
used for general corporate purposes. The Company did not receive any of the
proceeds from the sale of 1,750,000 of these shares sold by James R. Crane, the
Company's Chairman of the Board of Directors, President and Chief Executive
Officer.
On April 3, 1998, the Company acquired substantially all of the
operating assets of Eagle Transfer, Inc. ("Eagle Companies"), a privately-held
international freight forwarder based in Miami, Florida. Eagle Companies is a
full-service forwarder whose services include customs clearing services, ocean
forwarding and airfreight import and export. Eagle Companies' operations focus
on Argentina, Brazil and Chile and other South American countries. Sales for
Eagle Companies totaled approximately $19.8 million in the twelve-month period
ended December 31, 1997. Despite the similarity in names, the Company and Eagle
Companies have had no prior affiliation. The Company paid an undisclosed sum,
consisting of cash, Common Stock, and a three-year contingent earnout payable in
Common Stock if certain
15
<PAGE> 16
EAGLE USA AIRFREIGHT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
performance benchmarks are met. The acquisition was accounted for as a purchase;
accordingly, the purchase price was allocated over the basis of the estimated
fair market value of the net assets acquired. The results of operations for the
acquired operations will be included in the consolidated statement of income
from the acquisition date forward.
On April 14, 1998, the Company acquired all of the outstanding stock of
S. Boardman (Air Services) Limited and Subsidiaries ("S. Boardman"), a
privately-held full service based in London, England. S. Boardman serves the
international freight forwarding market from three facilities in London,
Manchester and Birmingham, England. For the twelve-month period ended March 31,
1997, total revenues for S. Boardman were approximately $25 million and revenues
excluding customs, duties and value added taxes were approximately $13 million.
The Company paid an undisclosed cash sum and a three-year contingent cash
earnout if certain performance benchmarks are met. The acquisition was accounted
for as a purchase; accordingly, the purchase price was allocated over the basis
of the estimated fair market value of the net assets acquired. The results of
operations for the acquired operations will be included in the consolidated
statement of income from the acquisition date forward.
On April 3, 1998, the Company entered into a five-year $20 million
master operating lease agreement with two unrelated parties for financing the
acquisition and construction of terminal and warehouse facilities throughout the
United States designated by the Company from time to time (each, a "Financed
Facility"). Under the terms of the master operating lease agreement, average
monthly lease payments (including monthly interest costs based upon LIBOR rate
plus 150 basis points) begin upon the completion of the construction of each
Financed Facility and continue for a term of 52 months with a balloon payment
equal to the outstanding lease balance (initially equal to the cost of the
facility) due at the end of the lease term. The Company has an option,
exercisable at anytime during the lease term, and under certain circumstances
may be obligated, to acquire each Financed Facility for an amount equal to the
outstanding lease balance. In the event the Company does not exercise the
purchase option, and is not otherwise required to acquire the Financed Facility,
it is subject to a deficiency payment computed as the amount equal to the
outstanding lease balance minus the then current fair market value of each
Financed Facility. The Company expects that the amount of any such deficiency
payment would be expensed. As of April 30, 1998, no amounts were outstanding
under the master operating lease agreement, although the Company expects to
finance facilities under the master operating lease agreement in the future.
The Company is assessing the impact of the Year 2000 issue on its
operations. Based on existing information, the Company believes that its
information systems are Year 2000 compliant and does not currently believe that
such Year 2000 issues will have a material effect on the financial position,
cash flows or results of operations of the Company. There can be no assurance,
however, as to the ultimate effect of the Year 2000 issue on the Company.
16
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
USE OF PROCEEDS
The Company's Registration Statement on Form S-1 (Registration No.
33-97606), as amended, with respect to the initial public offering
(the "Offering") of shares of Company's Common Stock, par value
$0.001 per share (the "Common Stock"), was declared effective by
the Securities and Exchange Commission on November 30, 1995. The
Offering commenced on December 1, 1995 and has since terminated,
resulting in the sale by the Company of 2,300,000 shares of Common
Stock on December 6, 1995 (including 300,000 shares of Common
Stock sold pursuant to the exercise of the underwriters'
over-allotment option). The shares sold constitute all of the
shares of Common Stock covered by the Registration Statement. The
managing underwriters for the Offering were Donaldson, Lufkin &
Jenrette Securities Corporation and the Robinson-Humphrey Company,
Inc.
The aggregate price to the public for the shares sold in the
Offering was $37,950,000. The expenses incurred by the Company
with respect to the Offering were as follows:
<TABLE>
<S> <C>
Underwriter Discounts and Commissions...... $2,656,500
Other Expenses............................. 734,000
Total...................................... $3,390,500
</TABLE>
Approximately $22,000 of Other Expenses consisted of payments to a
corporation owned by the Company's Chairman of Board in
reimbursement for expenses related to the use of that
corporation's owned aircraft in the Offering. None of the other
amounts set forth above as Other Expenses were direct or indirect
payments to directors or officers of the Company or their
associates, to persons owning ten percent or more of any class of
equity securities of the Company or to affiliates of the Company.
The net proceeds to the Company from the Offering were $34.6
million. As of March 31, 1998, the Company has used such net
proceeds as follows: (i) to repay $2.1 million of indebtedness
outstanding under the Company's revolving credit facility, (ii) to
repay $11.6 million of promissory notes outstanding to certain of
the Company's directors and officers, (iii) to pay $4.0 million of
expenses relating to the upgrade of the Company's information
systems, (iv) to pay $5.6 million for a fiscal 1997 acquisition,
(v) to pay $900,000 to purchase the site of the Company's Newark
terminal, (vi) to pay $1.7 million of costs related to the
Company's new headquarters facility, and (vii) to make $8.7
million in cash equivalents and short-term investments. Except as
set forth in clause (ii), none of such payments were direct or
indirect payments to directors or officers of the Company or their
associates, to persons owning ten percent or more of any class of
equity securities of the Company or to affiliates of the Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES, NONE
17
<PAGE> 18
ITEM 4. SUBMISSION OF MATTERS OF A VOTE OF SECURITY-HOLDERS
(a) ANNUAL MEETING OF SHAREHOLDERS ON FEBRUARY 23, 1998.
<TABLE>
<CAPTION>
BROKER
(c) PROPOSALS FOR AGAINST WITHHELD ABSTAIN NONVOTES
------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
(PROXY TOTALS IN THOUSANDS)
ELECTION OF DIRECTORS
JAMES R. CRANE 15,149 * 10 -- *
DOUGLAS A. SECKEL 15,149 * 10 -- *
WILLIAM P. O'CONNELL 15,149 * 10 -- *
NEIL E. KELLEY 15,149 * 10 -- *
FRANK J. HEVRDEJS 15,149 * 10 -- *
APPROVAL TO AMEND THE COMPANY'S 14,451 685 * 11 12
RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE COMPANY'S
AUTHORIZED COMMON STOCK
APPROVAL OF THE COMPANY'S 13,277 760 * 12 1,109
LONG-TERM INCENTIVE PLAN WHICH
WILL BE AMENDED AND RESTATED TO
INCREASE THE SHARES OF COMMON
STOCK RESERVED UNDER THE PLAN
APPROVAL OF THE COMPANY'S 14,000 51 * 9 1,098
EMPLOYEE STOCK PURCHASE PLAN
APPROVAL OF APPOINTMENT OF 15,149 3 * 7 --
PRICE WATERHOUSE LLP AS
INDEPENDENT PUBLIC
ACCOUNTANTS
</TABLE>
*NOT APPLICABLE
ITEM 5. OTHER INFORMATION
FORWARD LOOKING STATEMENTS
The statements contained in all parts of this document, including,
but not limited to, those relating to the Company's plans for
international air freight forwarding services; the future expansion
and results of the Company's terminal network; plans for local
delivery services; expected growth; future marketing; construction of
new facilities; future operating expenses; any seasonality of the
Company's business; future margins; future dividend plans; use of
offering proceeds; future acquisitions, and any effects, benefits,
results, terms or other aspects of such acquisitions; effects of the
Year 2000 issue; ability to continue growth and implement growth and
business strategy; the ability of expected sources of liquidity and
offering proceeds to support working capital and capital expenditure
requirements; the tax benefit of any stock option exercises; and any
other statements regarding future growth, cash needs, terminals,
operations, business plans and financial results and any other
statements which are not historical facts are forward-looking
statements. When used in this documents, the words "anticipate,"
"estimate," "expect,"
18
<PAGE> 19
"may," "plans," "project," and similar expressions are intended to be
among the statements that identify forward-looking statements. Such
statements involve risks and uncertainties, including, but not
limited to, those relating to the Company's dependence on its ability
to attract and retain skilled managers and other personnel; the
intense competition within the freight industry; the uncertainty of
the Company's ability to manage and continue its growth and implement
its business strategy; the Company's dependence on the availability
of cargo space to serve its customers; the potential for liabilities
if certain independent owner/operators that serve the Company are
determined to be employees; effects of regulation; results of
litigation; the Company's vulnerability to general economic
conditions and dependence on its principal customers; the control by
the Company's principal shareholder; the Company's potential exposure
to claims involving its local pick-up and delivery operations; the
Company's future financial and operating results, cash needs and
demand for its services; and the Company's ability to maintain and
comply with permits and licenses; as well as other factors detailed
in the Company's filings with the Securities and Exchange Commission.
Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual outcomes may
vary materially from those indicated. The Company undertakes no
responsibility to update for changes related to these or any other
factors that may occur subsequent to this filing.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(A) EXHIBITS.
3(i) Second Amended and Restated Articles of
Incorporation of the Company, as amended.
*3(ii) Amended and Restated Bylaws of the Company,
as amended (Exhibit 3.2 to the Company's
Registration Statement on from S-1
(Registration No. 33-97606)).
10(i) Employees Stock Purchase Plan (effective
July 1, 1998).
10(ii) Long-Term Incentive Plan, as Amended and
Restated.
11(i) Computation of Per Share Earnings for the
Six Months ended March 31, 1998 and 1997.
11(ii) Computation of Per Share Earnings for the
Three Months ended March 31, 1998 and 1997.
27 Financial Data Schedule.
27.1 Restated Financial Data Schedule.
- ----------
* Incorporated by reference as indicated.
(B) The Company filed a Form 8-K dated January 5, 1998, regarding
the Acquisition of S. Boardman (Air Services) Limited and
Subsidiaries and Eagle Companies.
The Company filed a Form 8-K dated January 22, 1998, regarding
earnings results for the quarter ended December 31, 1997.
19
<PAGE> 20
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.
EAGLE USA AIRFREIGHT, INC.
(Registrant)
Date: May 15, 1998 By: /s/ JAMES R. CRANE
---------------------------- -------------------------------------
James R. Crane
President
Date: May 15, 1998 By: /s/ DOUGLAS A. SECKEL
---------------------------- -------------------------------------
Douglas A. Seckel
Chief Financial Officer
20
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- -------- -----------
<S> <C>
3(i) Second Amended and Restated Articles of Incorporation of the
Company as amended.
*3(ii) Amended and Restated Bylaws of the Company, as amended
(Exhibit 3.2 to the Company's Registration Statement on Form
S-1 (Registration No. 33-97606).
10(i) Employee Stock Purchase Plan (effective July 1, 1998).
10(ii) Long-Term Incentive Plan, as Amended and Restated.
11(i) Computation of Per Share Earnings for the Six Months ended
March 31, 1998 and 1997.
11(ii) Computation of Per Share Earnings for the Three Months ended
March 31, 1998 and 1997.
27 Financial Data Schedule.
27.1 Restated Financial Data Schedule.
</TABLE>
- ----------
*Incorporated by reference as indicated.
21
<PAGE> 1
EXHIBIT 3(i)
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
EAGLE USA AIR FREIGHT, INC.
ARTICLE ONE
Eagle USA Air Freight, Inc., a Texas corporation (the
"Company"), pursuant to the provisions of Article 4.07 of the Texas Business
Corporation Act, hereby adopts these Second Amended and Restated Articles of
Incorporation, which accurately copy the Amended and Restated Articles of
Incorporation of the Company in effect on the date hereof, as further amended
by these Second Amended and Restated Articles of Incorporation as hereinafter
set forth, and contain no other change in any provisions thereof.
ARTICLE TWO
The Amended and Restated Articles of Incorporation of the
Company are amended by these Second Amended and Restated Articles of
Incorporation as follows:
The amendments made by these Second Amended and Restated
Articles of Incorporation (the "Amendments") alter or change Articles One
through Ten of the Amended and Restated Articles of Incorporation. The full
text of each provision altered or added is as set forth in Article Five hereof.
ARTICLE THREE
The Amendments have been effected in conformity with the
provisions of the Texas Business Corporation Act and the Second Amended and
Restated Articles of Incorporation were duly adopted by all of the shareholders
of the Company on September 29, 1995.
ARTICLE FOUR
On that date there were 6,000,000 shares of Common Stock, par
value $0.001 per share (the "Common Stock"), of the Company outstanding, all of
which were entitled to vote on the Amendments. All 6,000,000 shares of Common
Stock were voted in favor of the Amendments.
1
<PAGE> 2
ARTICLE FIVE
The Amended and Restated Articles of Incorporation of the
Company filed with the Secretary of State of the State of Texas on September
30, 1994 are hereby superseded by the following Second Amended and Restated
Articles of Incorporation, which accurately copy the entire text thereof as
amended hereby:
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
EAGLE USA AIRFREIGHT, INC.
ARTICLE ONE
The name of the corporation is Eagle USA Airfreight, Inc.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose or purposes for which the corporation is organized
is the transaction of all lawful business for which a corporation may be
incorporated under the corporation laws of the State of Texas.
ARTICLE FOUR
The aggregate number of shares that the corporation shall have
the authority to issue is 40,000,000 shares, consisting of 30,000,000 shares of
Common Stock, par value $0.001 per share, and 10,000,000 shares of Preferred
Stock, par value $0.001 per share.
The descriptions of the different classes of capital stock of
the corporation and the preferences, designations, relative rights, privileges
and powers, and the restrictions, limitations and qualifications thereof, of
said classes of stock are as follows:
2
<PAGE> 3
Division A
The shares of Preferred Stock may be divided into and issued
in one or more series, the relative rights and preferences of which series may
vary in any and all respects. The board of directors of the corporation is
hereby vested with the authority to establish series of Preferred Stock by
fixing and determining all the preferences, limitations and relative rights of
the shares of any series so established, to the extent not provided for in
these articles of incorporation or any amendment hereto, and with the authority
to increase or decrease the number of shares within each such series; provided,
however, that the board of directors may not decrease the number of shares
within a series below the number of shares within such series that is then
issued. The authority of the board of directors with respect to each such
series shall include, but not be limited to, determination of the following:
(1) the distinctive designation and number of shares of
that series;
(2) the rate of dividend (or the method of calculation
thereof) payable with respect to shares of that series, the dates,
terms and other conditions upon which such dividends shall be payable,
and the relative rights of priority of such dividends to dividends
payable on any other class or series of capital stock of the
corporation;
(3) the nature of the dividend payable with respect to
shares of that series as cumulative, noncumulative or partially
cumulative, and if cumulative or partially cumulative, from which date
or dates and under what circumstances.
(4) whether shares of that series shall be subject to
redemption, and, if made subject to redemption, the times, prices,
rates, adjustments and other terms and conditions of such redemption
(including the manner of selecting shares of that series for
redemption if fewer than all shares of such series are to be
redeemed);
(5) the rights of the holders of shares of that series in
the event of voluntary or involuntary liquidation, dissolution or
winding up of the corporation (which rights may be different if such
action is voluntary than if it is involuntary), including the relative
rights of priority in such event as to the rights of the holders of
any other class or series of capital stock of the corporation;
(6) the terms, amounts and other conditions of any
sinking or similar purchase or other fund provided for the purchase or
redemption of shares of that series;
(7) whether shares of that series shall be convertible
into or exchangeable for shares of capital stock or other securities
of the corporation or of any other corporation
3
<PAGE> 4
or entity, and, if provision be made for conversion or exchange, the
times, prices, rates, adjustments and other terms and conditions of
such conversion or exchange;
(8) the extent, if any, to which the holders of shares of
that series shall be entitled (in addition to any voting rights
provided by law) to vote as a class or otherwise with respect to the
election of directors or otherwise;
(9) the restrictions and conditions, if any, upon the
issue or reissue of any additional Preferred Stock ranking on a parity
with or prior to shares of that series as to dividends or upon
liquidation, dissolution or winding up;
(10) any other repurchase obligations of the corporation,
subject to any limitations of applicable law; and
(11) notwithstanding their failure to be included in (1)
through (10) above, any other designations, preferences, limitations
or relative rights of shares of that series.
Any of the designations, preferences, limitations or relative rights (including
the voting rights) of any series of Preferred Stock may be dependent on facts
ascertainable outside these articles of incorporation.
Shares of any series of Preferred Stock shall have no voting
rights except as required by law or as provided in the preferences, limitations
and relative rights of such series.
Division B
1. Dividends. Dividends may be paid on the Common Stock
out of any assets of the corporation available for such dividends subject to
the rights of all outstanding shares of capital stock ranking senior to the
Common Stock in respect of dividends.
2. Distribution of Assets. In the event of any
liquidation, dissolution or winding up of the corporation, after there shall
have been paid to or set aside for the holders of capital stock ranking senior
to the Common Stock in respect of rights upon liquidation, dissolution or
winding up the full preferential amounts to which they are respectively
entitled, the holders of the Common Stock shall be entitled to receive, pro
rata, all of the remaining assets of the corporation available for distribution
to its shareholders.
3. Voting Rights. The holders of the Common Stock shall
be entitled to one vote per share for all purposes upon which such holders are
entitled to vote.
4
<PAGE> 5
Division C
1. No Preemptive Rights. No shareholder of the
corporation shall by reason of his holding shares of any class have any
preemptive or preferential right to acquire or subscribe for any additional,
unissued or treasury shares of any class of the corporation now or hereafter to
be authorized, or any notes, debentures, bonds or other securities convertible
into or carrying any right, option or warrant to subscribe to or acquire shares
of any class now or hereafter to be authorized, whether or not the issuance of
any such shares, or such notes, debentures, bonds or other securities, would
adversely affect the dividends or voting or other rights of such shareholder,
and the board of directors may issue or authorize the issuance of shares of any
class, or any notes, debentures, bonds or other securities convertible into or
carrying rights, options or warrants to subscribe to or acquire shares of any
class, without offering any such shares of any class, either in whole or in
part, to the existing shareholders of any class.
2. Share Dividends. Subject to any restrictions in favor of
any series of Preferred Stock provided in the relative rights and preferences
of such series, the corporation may pay a share dividend in shares of any class
or series of capital stock of the corporation to the holders of shares of any
class or series of capital stock of the corporation.
3. No Cumulative Voting. Cumulative voting for the election
of directors is expressly prohibited as to all shares of any class or series.
ARTICLE FIVE
The corporation will not commence business until it has
received for the issuance of its shares consideration of the value of One
Thousand Dollars ($1,000.00).
ARTICLE SIX
The address of the corporation's registered office is 811
Dallas Avenue, Houston, Texas 77002 and the name of its registered agent at
such address is CT Corporation System.
ARTICLE SEVEN
The number of directors of the corporation shall be fixed by,
or in the manner provided in, the bylaws. The number of directors constituting
the current board of directors is five, and the name and address of the person
who is to serve as director until such director's successor is elected and
qualified is:
5
<PAGE> 6
Name Address
---- -------
James R. Crane 3214 Lodestar Road
Houston, Texas 77032
Daniel S. Swannie 3214 Lodestar Road
Houston, Texas 77032
Donald P. Roberts 3214 Lodestar Road
Houston, Texas 77032
Douglas A. Seckel 3214 Lodestar Road
Houston, Texas 77032
William P. O'Connell 3214 Lodestar Road
Houston, Texas 77032
ARTICLE EIGHT
A director of the corporation shall not be liable to the
corporation or its shareholders for monetary damages for an act or omission in
the director's capacity as a director, except that this article does not
eliminate or limit the liability of a director for: (1) a breach of a
director's duty of loyalty to the corporation or its shareholders; (2) an act
or omission not in good faith that constitutes a breach of duty of that
director to the corporation or an act or omission that involves intentional
misconduct or a knowing violation of the law; (3) a transaction from which a
director received an improper benefit, whether or not the benefit resulted from
an action taken within the scope of the director's office; or (4) an act or
omission for which the liability of a director is expressly provided for by an
applicable statute.
If the Texas Miscellaneous Corporation Laws Act or the Texas
Business Corporation Act ("TBCA") is amended to authorize action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the corporation shall be eliminated or limited to the fullest
extent permitted by such statutes, as so amended. Any repeal or modification
of this article shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or
modification.
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ARTICLE NINE
The vote of shareholders required for approval of (1) any plan
of merger, consolidation, or exchange for which the TBCA requires a shareholder
vote, (2) any disposition of assets for which the TBCA requires a shareholder
vote, (3) any dissolution of the corporation for which the TBCA requires a
shareholder vote, and (4) any amendment of the articles of incorporation of the
corporation for which the TBCA requires a shareholder vote, shall be (in lieu
of any greater vote required by the TBCA) the affirmative vote of the holders
of a majority of the outstanding shares entitled to vote thereon, unless any
class or series of shares is entitled to vote as a class thereon, in which
event the vote required shall be the affirmative vote of the holders of a
majority of the outstanding shares within each class or series of shares
entitled to vote thereon as a class and at least a majority of the outstanding
shares otherwise entitled to vote thereon.
ARTICLE TEN
Special meetings of shareholders may be called by the
corporation's chairman of the board, the president or the board of directors.
Subject to the provisions of the corporation's bylaws governing special
meetings, holders of not less than 50% of the outstanding shares of stock
entitled to vote at the proposed special meeting may also call a special
meeting of shareholders by furnishing the corporation a written request which
states the purpose or purposes of the proposed meeting in the manner set forth
in the bylaws.
EXECUTED AND EFFECTIVE this 29th day of September, 1995.
EAGLE USA AIR FREIGHT, INC.
By: /s/ JAMES R. CRANE
----------------------------------
James R. Crane
President
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ARTICLES OF AMENDMENT
to
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
of
EAGLE USA AIRFREIGHT, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following articles of
amendment to its Second Amended and Restated Articles of Incorporation:
1. The name of the corporation is Eagle USA Airfreight, Inc.
2. The following amendment to the Second Amended and Restated
Articles of Incorporation of the corporation increases the authorized
shares of the corporation. The amendment alters the first sentence of
Article Four of the Second Amended and Restated Articles of Incorporation
to read, in full:
"The aggregate number of shares that the corporation shall have
the authority to issue is 110,000,000 shares, consisting of
100,000,000 shares of Common Stock, par value $0.001 per share, and
10,000,000 shares of Preferred Stock, par value $0.001 per share."
3. The amendment made by these articles of amendment was duly
adopted by the shareholders of the corporation at a meeting duly held on
February 23, 1998.
4. The number of shares outstanding as of the date hereof is
18,764,180 shares of Common Stock, par value $0.001 per share; the number
of shares outstanding as of the close of business on December 30, 1997, the
record date for such meeting of shareholders, was 18,269,061 shares of
Common Stock, par value $0.001 per share, and all of such 18,269,061 shares
were entitled to vote on the amendment; the number of such shares voted for
the amendment was 14,451,374; and the number of such shares voted against
the amendment was 685,124.
IN WITNESS WHEREOF, these articles of amendment have been executed on
March 5, 1998.
EAGLE USA AIRFREIGHT, INC.
By: /s/ Douglas A. Seckel
---------------------------
Douglas A. Seckel
Secretary
<PAGE> 1
EXHIBIT 10(i)
EAGLE USA AIR FREIGHT, INC. EMPLOYEE STOCK PURCHASE PLAN
(EFFECTIVE JULY 1, 1998)
1. PURPOSE
The Eagle USA Air Freight, Inc. Employee Stock Purchase Plan (the "Plan")
is designed to encourage and assist all employees of Eagle USA Air Freight,
Inc., a Texas corporation ("Eagle") and Subsidiaries (as defined in Section 4)
(hereinafter collectively referred to as the "Company"), where permitted by
applicable laws and regulations, to acquire an equity interest in Eagle through
the purchase of shares of common stock, .001 par value, of Eagle ("Common
Stock"). It is intended that this Plan shall constitute an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code").
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered and interpreted by the Compensation
Committee (the "Committee") appointed by the Board of Directors of Eagle (the
"Board"), which Committee shall consist of at least two (2) persons. The
Committee shall supervise the administration and enforcement of the Plan
according to its terms and provisions and shall have all powers necessary to
accomplish these purposes and discharge its duties hereunder including, but not
by way of limitation, the power to (i) employ and compensate agents of the
Committee for the purpose of administering the accounts of participating
employees; (ii) construe or interpret the Plan; (iii) determine all questions of
eligibility; and (iv) compute the amount and determine the manner and time of
payment of all benefits according to the Plan.
The Committee may act by decision of a majority of its members at a regular
or special meeting of the Committee or by decision reduced to writing and signed
by all members of the Committee without holding a formal meeting.
3. NATURE AND NUMBER OF SHARES
The Common Stock subject to issuance under the terms of the Plan shall be
shares of Eagle's authorized but unissued shares, previously issued shares
reacquired and held by Eagle or shares purchased on the open market. The
aggregate number of shares which may be issued under the Plan shall not exceed
two hundred thousand (200,000) shares of Common Stock. All shares purchased
under the Plan, regardless of source, shall be counted against the two hundred
thousand (200,000) share limitation.
In the event of any reorganization, stock split, reverse stock split, stock
dividend, combination of shares, merger, consolidation, offering of rights or
other similar change in the capital structure of Eagle, the Committee may make
such adjustment, if any, as it deems appropriate in the number, kind and
purchase price of the shares available for purchase under the Plan and in the
maximum number of shares which may be issued under the Plan, subject to the
approval of the Board and in accordance with Section 19.
4. ELIGIBILITY REQUIREMENTS
Each "Employee" (as hereinafter defined), except as described in the next
following paragraph, shall become eligible to participate in the Plan in
accordance with Section 5 on the first "Enrollment Date" (as defined therein)
following employment by the Company. Participation in the Plan is voluntary.
The following Employees are not eligible to participate in the Plan:
(i) Employees who would, immediately upon enrollment in the Plan, own
directly or indirectly, or hold options or rights to acquire, an aggregate
of five percent (5%) or more of the total combined voting power or value of
all outstanding shares of all classes of the Company or any subsidiary (in
determining
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stock ownership of an individual, the rules of Section 424(d) of the Code
shall be applied, and the Committee may rely on representations of fact
made to it by the employee and believed by it to be true);
(ii) Employees who are customarily employed by the Company less than
twenty (20) hours per week or less than five (5) months in any calendar
year; and
(iii) Employees who have not completed at least six (6) months of
service with the Company as of an Enrollment Date.
"Employee" shall mean any individual employed full-time by Eagle or any
Subsidiary (as hereinafter defined). "Subsidiary" shall mean Eagle Freight
Services, Inc. and any other corporation (a) which is in an unbroken chain of
corporations beginning with Eagle if, on or after the Effective Date, each of
the corporations other than the last corporation in the chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain and (b) which has
adopted the Plan with the approval of the Committee.
5. ENROLLMENT
Each eligible Employee of Eagle or any Subsidiary as of July 1, 1998 (the
"Effective Date" herein) may enroll in the Plan as of the Effective Date. Each
other eligible Employee of Eagle or a participating Subsidiary who thereafter
becomes eligible to participate may enroll in the Plan on the first to occur of
January 1 or July 1 following the date he first meets the eligibility
requirements of Section 4. Any eligible Employee not enrolling in the Plan when
first eligible may enroll in the Plan any subsequent January 1 or July 1. Any
eligible Employee may enroll or re-enroll in the Plan on the dates hereinabove
prescribed or such other specific dates established by the Committee from time
to time ("Enrollment Dates"). In order to enroll, an eligible Employee must
complete, sign and submit the appropriate form to the person designated by the
Committee.
6. METHOD OF PAYMENT
Payment for shares is to be made as of the applicable "Purchase Date" (as
defined in Section 9) through payroll deductions on an after-tax basis (with no
right of prepayment) over the Plan's designated purchase period (the "Purchase
Period"), with the first such deduction commencing with the first payroll period
ending after the Enrollment Date. Each Purchase Period under the Plan shall be a
period of six (6) calendar months beginning on each January 1 and ending on the
following June 30 and on each July 1 and ending on the following December 31 or
such other period as the Committee may prescribe; provided, however, that the
Purchase Period beginning on the Effective Date shall commence on the Effective
Date and end on December 31, 1998. Each participating Employee (hereinafter
referred to as a "Participant") will authorize such deductions from his pay for
each month during the Purchase Period and such amounts will be deducted in
conformity with his employer's payroll deduction schedule.
Each Participant may elect to make contributions each pay period in amounts
not less than $10, not to exceed an annual contribution equal to $20,000 (or
such other dollar amounts as the Committee may establish from time to time
before an Enrollment Date for all purchases to occur during the relevant
Purchase Period). In establishing other dollar amounts of permitted
contributions, the Committee may take into account the "Maximum Share
Limitation" (as defined in Section 8). The rate of contribution shall be
designated by the Participant in the enrollment form.
A Participant may elect to increase or decrease the rate of contribution
effective as of the first day of the Purchase Period by giving prior written
notice to the person designated by the Committee on the appropriate form. A
Participant may not elect to increase or decrease the rate of contribution
during a Purchase Period. A Participant may suspend payroll deductions at any
time during the Purchase Period, by giving prior written notice to the person
designated by the Committee on the appropriate form. If a Participant elects to
suspend his payroll deductions, such Participant's account will continue to
accrue interest and will be used to purchase stock at the end of the Purchase
Period. A Participant may also elect to withdraw his entire contributions for
the current Purchase Period in accordance with Section 8 by giving prior written
notice to the person
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<PAGE> 3
designated by the Committee on the appropriate form. Any Participant who
withdraws his contributions will receive, as soon as practicable, his entire
account balance, including interest and dividends, if any. Any Participant who
suspends payroll deductions or withdraws contributions during any Purchase
Period cannot resume payroll deductions during such Purchase Period and must
re-enroll in the Plan in order to participate in the next Purchase Period.
Except in case of cancellation of election to purchase, death, resignation
or other terminating event, the amount in a Participant's account at the end of
the Purchase Period will be applied to the purchase of the shares.
7. CREDITING OF CONTRIBUTIONS, INTEREST AND DIVIDENDS
Contributions shall be credited to a Participant's account as soon as
administratively feasible after payroll withholding. Unless otherwise prohibited
by laws and regulations, Participant contributions will receive interest at a
rate realized for the investment vehicle or vehicles designated by the Committee
for purposes of the Plan. Interest will be credited to a Participant's account
from the first date on which such Participant's contributions are deposited with
the investment vehicle until the earlier of (i) the end of the Purchase Period
or (ii) in the event of cancellation, death, resignation or other terminating
event, the last day of the month prior to the date on which such contributions
are returned to the Participant. Dividends on shares held in a Participant's
account in the Plan will also be credited to such Participant's account. Any
such contributions, interest and dividends shall be deposited in or held by a
bank or financial institution designated by the Committee for this purpose (the
"Custodian").
8. GRANT OF RIGHT TO PURCHASE SHARES ON ENROLLMENT
Enrollment in the Plan by an Employee on an Enrollment Date will constitute
the grant by the Company to the Participant of the right to purchase shares of
Common Stock under the Plan. Re-enrollment by a Participant in the Plan will
constitute a grant by the Company to the Participant of a new opportunity to
purchase shares on the Enrollment Date on which such re-enrollment occurs. A
Participant who has not (a) terminated employment, (b) withdrawn his
contributions from the Plan, or (c) notified the Company in writing, by such
date as the Committee shall establish (which date shall not be later than June 1
or December 1, as applicable), of his election to withdraw his payroll
deductions plus interest as of the applicable of June 30 or December 31 will
have shares of Common Stock purchased for him on the applicable Purchase Date,
and he will automatically be re-enrolled in the Plan on the Enrollment Date
immediately following the Purchase Date on which such purchase has occurred,
unless each Participant notifies the person designated by the Committee on the
appropriate form that he elects not to re-enroll.
Each right to purchase shares of Common Stock under the Plan during a
Purchase Period shall have the following terms:
(i) the right to purchase shares of Common Stock during a particular
Purchase Period shall expire on the earlier of: (A) the completion of the
purchase of shares on the Purchase Date occurring in the Purchase Period,
or (B) the date on which participation of such Participant in the Plan
terminates for any reason;
(ii) payment for shares purchased will be made only through payroll
withholding and the crediting of interest and dividends, if applicable, in
accordance with Sections 6 and 7;
(iii) purchase of shares will be accomplished only in accordance with
Section 9;
(iv) the price per share will be determined as provided in Section 9;
(v) the right to purchase shares (taken together with all other such
rights then outstanding under this Plan and under all other similar stock
purchase plans of Eagle or any Subsidiary) will in no event give the
Participant the right to purchase a number of shares during a calendar year
in excess of the number of shares of Common Stock derived by dividing
$25,000 by the fair market value of the Common Stock (the "Maximum Share
Limitation") on the applicable Grant Date determined in accordance with
Section 9;
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(vi) shares purchased under this Plan may not be sold within six (6)
months of the Purchase Date, unless the Compensation Committee, in its sole
discretion, waives this requirement; and
(vii) the right to purchase shares will in all respects be subject to
the terms and conditions of the Plan, as interpreted by the Committee from
time to time.
9. PURCHASE OF SHARES
The right to purchase shares of Common Stock granted by the Company under
the Plan is for the term of a Purchase Period. The fair market value of the
Common Stock ("Fair Market Value") to be purchased during such Purchase Period
will be the final closing sales price per share of the Common Stock on the
NASDAQ National Market System on the first trading day of the calendar month of
January or July, as applicable, or such other trading date designated by the
Committee (the "Grant Date"). The Fair Market Value of the Common Stock will
again be determined in the same manner on the last trading day of the calendar
month of June or December, as applicable, or such other trading date designated
by the Committee (the "Purchase Date"); however, in no event shall the
Committee, in the exercise of its discretion, designate a Purchase Date beyond
twenty-seven (27) months from the related Enrollment Date or otherwise fail to
meet the requirements of Section 423(b)(7) of the Code. These dates constitute
the date of grant and the date of exercise for valuation purposes of Section 423
of the Code.
As of the Purchase Date, the Committee shall apply the funds then credited
to each Participant's account to the purchase of whole shares of Common Stock.
The cost to the Participant for the shares purchased during a Purchase Period
shall be the lower of:
(i) eighty-five percent (85%) of the Fair Market Value of Common Stock
on the Grant Date; or
(ii) eighty-five percent (85%) of the Fair Market Value of Common
Stock on the Purchase Date.
Certificates evidencing shares purchased shall be delivered to the
Custodian or to any other bank or financial institution designated by the
Committee for this purpose or delivered to the Participant (if the Participant
has elected by written notice to the Committee to receive the certificate) as
soon as administratively feasible after the Purchase Date; however, certificates
shall not be delivered to the Participant within six (6) months of the Purchase
Date of the underlying shares, except as otherwise provided herein.
Notwithstanding the foregoing, Participants shall be treated as the record
owners of their shares effective as of the Purchase Date. Shares that are held
by the Custodian or any other designated bank or financial institution shall be
held in book entry form. Any cash equal to less than the price of a whole share
of Common Stock shall be credited to a Participant's account on the Purchase
Date and carried forward in his account for application during the next Purchase
Period. Any Participant (i) who purchases stock at the end of a Purchase Period
and is not re-enrolled in the Plan for the next Purchase Period or (ii) who
withdraws his contributions from the Plan prior to the next Purchase Date will
receive a certificate for the number of shares held in his account for at least
six (6) months as of the most recent Purchase Date and any cash, dividends or
interest remaining in his account. Such Participant may elect to receive a
certificate for the remaining number of shares held in his account six (6)
months after such shares were purchased or, if earlier, upon such Participant's
termination of employment. This six-month holding requirement may be waived by
the Compensation Committee, in its sole discretion. Until such certificates are
distributed to the Participant, the Participant will not be permitted to
transfer ownership of the certificates except as contemplated by Section 14 of
the Plan. Any Participant who terminates employment will receive a certificate
for the number of shares held in his account and a cash refund attributable to
amounts equal to less than the price of a whole share, and any accumulated
contributions, dividends and interest. If for any reason the purchase of shares
with a Participant's allocations to the Plan exceeds or would exceed the Maximum
Share Limitation, such excess amounts shall be refunded to the Participant as
soon as practicable after such excess has been determined to exist.
If as of any Purchase Date the shares authorized for purchase under the
Plan are exceeded, enrollments shall be reduced proportionately to eliminate the
excess. Any funds that cannot be applied to the purchase of shares due to excess
enrollment shall be refunded as soon as administratively feasible, including
interest determined in accordance with Section 7. The Committee in its
discretion may also provide that excess
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<PAGE> 5
enrollments may be carried over to the next Purchase Period under this Plan or
any successor plan according to the regulations set forth under Section 423 of
the Code.
10. MANNER OF WITHDRAWAL
A Participant may elect to withdraw at any time (without withdrawing from
participation in the Plan) shares which have been held in his account for at
least six (6) months by giving notice to the person designated by the Committee
on the appropriate form. Upon receipt of such notice from the person designated
by the Committee, the Custodian, bank or other financial institution designated
by the Committee for this purpose will arrange for the issuance and delivery of
such shares held in the Participant's account as soon as administratively
feasible.
11. TERMINATION OF PARTICIPATION
The right to participate in the Plan terminates immediately when a
Participant ceases to be employed by the Company for any reason whatsoever
(including death, unpaid disability or when the Participant's employer ceases to
be a Subsidiary) or the Participant otherwise becomes ineligible. Participation
also terminates immediately when the Participant voluntarily withdraws his
contributions from the Plan. Participation terminates immediately after the
Purchase Date if the Participant is not re-enrolled in the Plan for the next
Purchase Period or if the Participant has suspended payroll deductions during
any Purchase Period and has not re-enrolled in the Plan for the next Purchase
Period. As soon as administratively feasible after termination of participation,
the Committee shall pay to the Participant or his beneficiary or legal
representative all amounts credited to his account, including interest and
dividends, if applicable, determined in accordance with Section 7, and shall
cause a certificate for the number of shares held in his account to be delivered
to the Participant, subject to the restrictions in Section 9. For purposes of
the Plan, a Participant is not deemed to have terminated his employment if he
transfers employment from Eagle to a Subsidiary, or vice versa, or transfers
employment between Subsidiaries.
12. UNPAID LEAVE OF ABSENCE
Unless the Participant has voluntarily withdrawn his contributions from the
Plan, shares will be purchased for his account on the Purchase Date next
following commencement of an unpaid leave of absence by such Participant,
provided such leave does not constitute a termination of employment. The number
of shares to be purchased will be determined by applying to the purchase the
amount of the Participant's contributions made up to the commencement of such
unpaid leave of absence plus interest on such contributions and dividends, if
applicable, both determined in accordance with Section 7. If the Participant's
unpaid leave of absence both commences and terminates during the same Purchase
Period and he has resumed eligible employment prior to the Purchase Date related
to that Purchase Period, he may also resume payroll deductions immediately, and
shares will be purchased for him on such Purchase Date as otherwise provided in
Section 9.
13. DESIGNATION OF BENEFICIARY
Each Participant may designate one or more beneficiaries in the event of
death and may, in his sole discretion, change such designation at any time. Any
such designation shall be effective upon receipt by the person designated by the
Committee and shall control over any disposition by will or otherwise.
As soon as administratively feasible after the death of a Participant,
amounts credited to his account, including interest and dividends, if
applicable, determined in accordance with Section 7, shall be paid in cash and a
certificate for any shares shall be delivered to the Participant's designated
beneficiaries or, in the absence of such designation, to the executor,
administrator or other legal representative of the Participant's estate. Such
payment shall relieve the Company of further liability to the deceased
Participant with respect to the Plan. If more than one beneficiary is
designated, each beneficiary shall receive an equal portion of the account
unless the Participant has given express contrary instructions.
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14. ASSIGNMENT
Except as provided in Section 13, the rights of a Participant under the
Plan will not be assignable or otherwise transferable by the Participant, other
than by will or the laws of descent and distribution or pursuant to a "qualified
domestic relations order," as defined in Section 414(p) of the Code. No
purported assignment or transfer of such rights of a Participant under the Plan,
whether voluntary or involuntary, by operation of law or otherwise, shall vest
in the purported assignee or transferee any interest or right therein
whatsoever, but immediately upon such assignment or transfer, or any attempt to
make the same, such rights shall terminate and become of no further effect. If
this provision is violated, the Participant's election to purchase Common Stock
shall terminate, and the only obligation of the Company remaining under the Plan
will be to pay to the person entitled thereto the amount then credited to the
Participant's account. No Participant may create a lien on any funds,
securities, rights or other property held for the account of the Participant
under the Plan, except to the extent that there has been a designation of
beneficiaries in accordance with the Plan, and except to the extent permitted by
will or the laws of descent and distribution if beneficiaries have not been
designated. A Participant's right to purchase shares under the Plan shall be
exercisable only during the Participant's lifetime and only by him.
15. COSTS
All costs and expenses incurred in administering this Plan shall be paid by
the Company. Any brokerage fees for the sale of shares purchased under the Plan
shall be paid by the Participant.
16. REPORTS
At the end of each Purchase Period, the Company shall provide or cause to
be provided to each Participant a report of his contributions, including
interest earned, and the number of whole shares of Common Stock purchased with
such contributions by that Participant on each Purchase Date.
17. EQUAL RIGHTS AND PRIVILEGES
All eligible Employees shall have equal rights and privileges with respect
to the Plan so that the Plan qualifies as an "employee stock purchase plan"
within the meaning of Section 423 or any successor provision of the Code and
related regulations. Any provision of the Plan which is inconsistent with
Section 423 or any successor provision of the Code shall without further act or
amendment by the Company be reformed to comply with the requirements of Section
423. This Section 17 shall take precedence over all other provisions in the
Plan.
18. RIGHTS AS SHAREHOLDERS
A Participant will have no rights as a stockholder under the election to
purchase until he becomes a stockholder as herein provided. A Participant will
become a stockholder with respect to shares for which payment has been completed
as provided in Section 9 at the close of business on the last business day of
the Purchase Period.
19. MODIFICATION AND TERMINATION
The Board may amend or terminate the Plan at any time insofar as permitted
by law. No amendment shall be effective unless within one (1) year after it is
adopted by the Board it is approved by the holders of Eagle's outstanding shares
if and to the extent such amendment is required to be approved by shareholders
in order to cause the rights granted under the Plan to purchase shares of Common
Stock to meet the requirements of Section 423 of the Code (or any successor
provision).
The Plan shall terminate after all Common Stock issued under the Plan has
been purchased, unless terminated earlier by the Board or unless additional
Common Stock is issued under the Plan with the approval of the shareholders. In
the event the Plan is terminated, the Committee may elect to terminate all
outstanding rights to purchase shares under the Plan either immediately or upon
completion of the purchase of shares on
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the next Purchase Date, unless the Committee has designated that the right to
make all such purchases shall expire on some other designated date occurring
prior to the next Purchase Date. If the rights to purchase shares under the Plan
are terminated prior to expiration, all funds contributed to the Plan which have
not been used to purchase shares shall be returned to the Participants as soon
as administratively feasible, including interest and dividends, if applicable,
determined in accordance with Section 7.
20. BOARD AND SHAREHOLDER APPROVAL; EFFECTIVE DATE
Effective Date of Plan. This Plan was adopted by the Board on February 23,
1998. This Plan shall be effective as of the Effective Date. Notwithstanding the
foregoing, the adoption of this Plan is expressly conditioned upon the approval
by written consent of the holders of a majority of shares of outstanding shares
of Common Stock on or before February 23, 1998. If the shareholders of the
Company should fail so to approve this Plan on or before such date, this Plan
shall terminate and cease to be of any further force or effect and all purchases
of shares of Common Stock under the Plan shall be null and void.
21. GOVERNMENTAL APPROVALS OR CONSENTS
This Plan and any offering or sale made to Employees under it are subject
to any governmental approvals or consents that may be or become applicable in
connection therewith. Subject to the provisions of Section 19, the Board may
make such changes in the Plan and include such terms in any offering under the
Plan as may be desirable to comply with the rules or regulations of any
governmental authority.
22. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board or the Committee shall determine, based on opinion
of legal counsel, that the listing, registration or qualification of the shares
covered by the Plan upon any national securities exchange or reporting system or
under any state or federal law is necessary or desirable as a condition of, or
in connection with, the sale or purchase of shares under the Plan, no shares
will be sold, issued or delivered unless and until such listing, registration or
qualification shall have been effected or obtained, or otherwise provided for,
free of any conditions not acceptable to legal counsel.
23. EMPLOYMENT RIGHTS
The Plan shall neither impose any obligation on Eagle or on any Subsidiary
to continue the employment of any Participant, nor impose any obligation on any
Participant to remain in the employ of Eagle or of any Subsidiary.
24. WITHHOLDING OF TAXES
The Committee may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with the
purchase of Common Stock under the Plan.
25. GOVERNING LAW
The Plan and rights to purchase shares that may be granted hereunder shall
be governed by and construed and enforced in accordance with the laws of the
state of Texas.
26. USE OF GENDER
The gender of words used in the Plan shall be construed to include
whichever may be appropriate under any particular circumstances of the
masculine, feminine or neuter genders.
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27. OTHER PROVISIONS
The agreements to purchase shares of Common Stock under the Plan shall
contain such other provisions as the Committee and the Board shall deem
advisable, provided that no such provision shall in any way be in conflict with
the terms of the Plan.
ADOPTED effective July 1, 1998.
EAGLE USA AIR FREIGHT, INC.
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EXHIBIT 10(ii)
EAGLE USA AIR FREIGHT, INC.
LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective November 10, 1997)
1. OBJECTIVES. The Eagle USA Air Freight, Inc. Long-Term Incentive Plan
(the "Plan") is designed to retain selected employees of Eagle USA Air Freight,
Inc. (the "Company") and its Subsidiaries and reward them for making significant
contributions to the success of the Company and its Subsidiaries. These
objectives are to be accomplished by making awards under the Plan and thereby
providing Participants with a proprietary interest in the growth and performance
of the Company and its Subsidiaries.
2. DEFINITIONS. As used herein, the terms set forth below shall have the
following respective meanings:
"AWARD" means the grant of any form of stock option, stock
appreciation right, stock award or cash award, whether granted singly, in
combination or in tandem, to a Participant pursuant to any applicable
terms, conditions and limitations as the Committee may establish in order
to fulfill the objectives of the Plan.
"AWARD AGREEMENT" means a written agreement between the Company and a
Participant that sets forth the terms, conditions and limitations
applicable to an Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITTEE" means such committee of two or more members of the Board
as is designated by the Board to administer the Plan.
"COMMON STOCK" means the Common Stock, par value $.001 per share, of
the Company.
"DIRECTOR" means an individual serving as a member of the Board.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"FAIR MARKET VALUE" means, as of a particular date, (a) if the shares
of Common Stock are listed on a national securities exchange, the mean
between the highest and lowest sales price per share of Common Stock on the
consolidated transaction reporting system for the principal such national
securities exchange on that date, or, if there shall have been no such sale
so reported on that date, on the last preceding date on which such a sale
was so reported, (b) if the shares of Common Stock are not so listed but
are quoted on the Nasdaq National Market, the mean between the highest and
lowest sales price per share of Common Stock on the Nasdaq National Market
on that date, or, if there shall have been no such sale so reported on that
date, on the last preceding date on which such a sale was so reported, (c)
if the Common Stock is not so listed or quoted, the mean between the
closing bid and asked price on that date, or, if there are no quotations
available for such date, on the last preceding date on which such
quotations shall be available, as reported by Nasdaq, or, if not reported
by Nasdaq, by the National Quotation Bureau, Inc. or (d) if none of the
above is applicable, such amount as may be determined by the Board (or an
Independent Third Party, should the Board elect in its sole discretion to
instead utilize an Independent Third Party for this purpose), in good
faith, to be the fair market value per share of Common Stock.
"INDEPENDENT THIRD PARTY" means an individual or entity independent of
the Company (and any transferor or transferee of Common Stock acquired upon
the exercise of an option under the Plan, if applicable) with experience in
providing investment banking appraisal or valuation services and with
expertise generally in the valuation of securities or other property of the
type at issue, that is chosen by the Board, in its sole discretion, to
value securities or other property for purposes of this Plan. The Company's
independent accountants shall be deemed to satisfy the criteria for an
Independent Third Party if selected by the Board for that purpose. The
Board may utilize one or more Independent Third Parties.
"PARTICIPANT" means an employee of the Company or any of its
Subsidiaries to whom an Award has been made under this Plan.
1
<PAGE> 2
"RESTRICTED STOCK" means Common Stock that is restricted or subject to
forfeiture provisions.
"SUBSIDIARY" means (i) with respect to any Awards other than incentive
stock options within the meaning of Code Section 422, any corporation,
limited liability company, general or limited partnership, or similar
entity of which the Company directly or indirectly owns shares representing
more than 50% of the voting power of all classes or series of equity
securities of such entity, which have the right to vote generally on
matters submitted to a vote of the holders of equity interests in such
entity, and (ii) with respect to Awards of incentive stock options, any
subsidiary within the meaning of Section 424(f) of the Code or any
successor provision.
3. ELIGIBILITY. All employees consultants and independent contractors of
the Company and its Subsidiaries are eligible for Awards under this Plan. The
Committee shall select the Participants in the Plan from time to time by the
grant of Awards under the Plan.
4. COMMON STOCK AVAILABLE FOR AWARDS. There shall be available for Awards
granted wholly or partly in Common Stock (including rights or options which may
be exercised for or settled in Common Stock) during the term of this Plan an
aggregate of 6,100,000 shares of Common Stock, subject to adjustment as provided
in Paragraph 14 (but including all previous adjustments pursuant to such
paragraph prior to the Effective Date of this Plan, as amended and restated).
The Board and the appropriate officers of the Company shall from time to time
take whatever actions are necessary to file required documents with governmental
authorities and stock exchanges and transaction reporting systems to make shares
of Common Stock available for issuance pursuant to Awards. Common Stock related
to Awards that are forfeited or terminated, expire unexercised, are settled in
cash in lieu of Common Stock or in a manner such that all or some of the shares
covered by an Award are not issued to a Participant, or are exchanged for Awards
that do not involve Common Stock, shall immediately become available for Awards
hereunder. The Committee may from time to time adopt and observe such procedures
concerning the counting of shares against the Plan maximum as it may deem
appropriate.
5. ADMINISTRATION. This Plan shall be administered by the Committee, which
shall have full and exclusive power to interpret this Plan and to adopt such
rules, regulations and guidelines for carrying out this Plan as it may deem
necessary or proper, all of which powers shall be exercised in the best
interests of the Company and in keeping with the objectives of this Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Award in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect. Any decision of
the Committee in the interpretation and administration of this Plan shall lie
within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned. No member of the Committee or officer of the
Company to whom it has delegated authority in accordance with the provisions of
Paragraph 6 of this Plan shall be liable for anything done or omitted to be done
by him or her, by any member of the Committee or by any officer of the Company
in connection with the performance of any duties under this Plan, except for his
or her own willful misconduct or as expressly provided by statute.
6. DELEGATION OF AUTHORITY. The Committee may delegate to the President and
to other senior officers of the Company its duties under this Plan pursuant to
such conditions or limitations as the Committee may establish, except that the
Committee may not delegate to any person the authority to grant Awards to, or
take other action with respect to, Participants who are subject to Section 16 of
the Exchange Act.
7. AWARDS. The Committee shall determine the type or types of Awards to be
made to each Participant under this Plan. Each Award made hereunder shall be
embodied in an Award Agreement, which shall contain such terms, conditions and
limitations as shall be determined by the Committee in its sole discretion and
shall be signed by the Participant and by the President or any Vice President of
the Company for and on behalf of the Company. An Award Agreement may include
provisions for the repurchase by the Company of Common Stock acquired pursuant
to the Plan and the repurchase of a Participant's option rights under the Plan.
Awards may consist of those listed in this Paragraph 7 and may be granted
singly, in combination or in tandem. Awards may also be made in combination or
in tandem with, in replacement of, or as alternatives to grants or rights (a)
under this Plan or any other employee plan of the Company or any of its
Subsidiaries, including the plan of any acquired entity, or (b) made to any
Company or Subsidiary employee by the Company or any Subsidiary. An Award may
provide for the granting or issuance of additional, replacement or alternative
2
<PAGE> 3
Awards upon the occurrence of specified events, including the exercise of the
original Award. Notwithstanding anything herein to the contrary, no Participant
may be granted Awards consisting of stock options or stock appreciation rights
exercisable for more than 620,000 shares of Common Stock, subject to adjustment
as provided in Paragraph 14 (i.e., 20% of the shares of Common Stock originally
authorized for Awards under this Plan, as previously adjusted pursuant to
Paragraph 14). In the event of an increase in the number of shares authorized
under the Plan, the 20% limitation will apply to the number of shares
authorized.
(i) STOCK OPTION. An Award may consist of a right to purchase a
specified number of shares of Common Stock at a price specified by the
Committee in the Award Agreement or otherwise. A stock option may be in the
form of an incentive stock option ("ISO") which, in addition to being
subject to applicable terms, conditions and limitations established by the
Committee, complies with Section 422 of the Code. Notwithstanding the
foregoing, no ISO can be granted under the Plan more than ten years
following the Effective Date of the Plan.
(ii) STOCK APPRECIATION RIGHT. An Award may consist of a right to
receive a payment, in cash or Common Stock, equal to the excess of the Fair
Market Value or other specified valuation of a specified number of shares
of Common Stock on the date the stock appreciation right ("SAR") is
exercised over a specified strike price as set forth in the applicable
Award Agreement.
(iii) STOCK AWARD. An Award may consist of Common Stock or may be
denominated in units of Common Stock. All or part of any stock Award may be
subject to conditions established by the Committee and set forth in the
Award Agreement, which conditions may include, but are not limited to,
continuous service with the Company and its Subsidiaries, achievement of
specific business objectives, increases in specified indices, attaining
specified growth rates and other comparable measurements of performance.
Such Awards may be based on Fair Market Value or other specified
valuations. The certificates evidencing shares of Common Stock issued in
connection with a stock Award shall contain appropriate legends and
restrictions describing the terms and conditions of the restrictions
applicable thereto.
(iv) CASH AWARD. An Award may be denominated in cash with the amount
of the eventual payment subject to future service and such other
restrictions and conditions as may be established by the Committee and set
forth in the Award Agreement, including, but not limited to, continuous
service with the Company and its Subsidiaries, achievement of specific
business objectives, increases in specified indices, attaining specified
growth rates and other comparable measurements of performance.
8. PAYMENT OF AWARDS.
(a) GENERAL. Payment of Awards may be made in the form of cash or
Common Stock or combinations thereof and may include such restrictions as
the Committee shall determine including, in the case of Common Stock,
restrictions on transfer and forfeiture provisions.
(b) DEFERRAL. The Committee may, in its discretion, (i) permit
selected Participants to elect to defer payments of some or all types of
Awards in accordance with procedures established by the Committee or (ii)
provide for the deferral of an Award in an Award Agreement or otherwise.
Any such deferral may be in the form of installment payments or a future
lump sum payment. Any deferred payment, whether elected by the Participant
or specified by the Award Agreement or by the Committee, may be forfeited
if and to the extent that the Award Agreement so provides.
(c) DIVIDENDS AND INTEREST. Dividends or dividend equivalent rights
may be extended to and made part of any Award denominated in Common Stock
or units of Common Stock, subject to such terms, conditions and
restrictions as the Committee may establish. The Committee may also
establish rules and procedures for the crediting of interest on deferred
cash payments and dividend equivalents for deferred payment denominated in
Common Stock or units of Common Stock.
(d) SUBSTITUTION OF AWARDS. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for another
Award or Awards of the same or different type.
3
<PAGE> 4
9. STOCK OPTION EXERCISE. The price at which shares of Common Stock may be
purchased under a stock option shall be paid in full at the time of exercise in
cash or, if permitted by the Committee, by means of tendering Common Stock or
surrendering all or part of that or any other Award, including Restricted Stock,
valued at Fair Market Value on the date of exercise, or any combination thereof.
The Committee shall determine acceptable methods for tendering Common Stock or
Awards to exercise a stock option as it deems appropriate. If permitted by the
Committee, payment may be made by successive exercises by the Participant. The
Committee may provide for procedures to permit the exercise or purchase of
Awards by (a) loans from the Company or (b) use of the proceeds to be received
from the sale of Common Stock issuable pursuant to an Award. Unless otherwise
provided in the applicable Award Agreement, in the event shares of Restricted
Stock are tendered as consideration for the exercise of a stock option, a number
of the shares issued upon the exercise of the stock option, equal to the number
of shares of Restricted Stock used as consideration therefor, shall be subject
to the same restrictions as the Restricted Stock so submitted as well as any
additional restrictions that may be imposed by the Committee.
10. TAX WITHHOLDING. The Company shall have the right to deduct applicable
taxes from any Award payment and withhold, at the time of delivery or vesting of
cash or shares of Common Stock under this Plan, an appropriate amount of cash or
number of shares of Common Stock or a combination thereof for payment of taxes
required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes. The
Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the Award
with respect to which withholding is required. If shares of Common Stock are
used to satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.
11. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law except that (a) no amendment or alteration that would impair the rights
of any Participant under any Award previously granted to such Participant shall
be made without such Participant's consent and (b) no amendment or alteration
shall be effective prior to approval by the Company's shareholders to the extent
such approval is required by applicable laws, regulations, stock exchange or
quotation system requirements.
12. TERMINATION OF EMPLOYMENT. Upon the termination of employment by a
Participant, any unexercised, deferred or unpaid Awards shall be treated as
provided in the specific Award Agreement evidencing the Award. Each Award
granted pursuant to this Plan which is a stock option shall provide that if the
Participant ceases to be employed by the Company or its affiliates for any
reason whatsoever, the option shall immediately terminate to the extent the
option is not vested (or does not become vested as a result of such termination
of employment) on the date the Participant terminates employment.
13. ASSIGNABILITY. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under this Plan
constituting a derivative security within the meaning of Rule 16a-1(c) under the
Exchange Act shall be assignable or otherwise transferable except by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. The Committee may prescribe and include
in applicable Award Agreements other restrictions on transfer. Any attempted
assignment of an Award or any other benefit under this Plan in violation of this
Paragraph 13 shall be null and void.
14. ADJUSTMENTS.
(a) The existence of outstanding Awards shall not affect in any manner
the right or power of the Company or its shareholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes
in the capital stock of the Company or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred
or prior preference stock (whether or not such issue is prior to, on a
parity with or junior to the Common Stock) or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding of any
kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.
4
<PAGE> 5
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock or declaration of a dividend payable in shares of
Common Stock or capital reorganization or reclassification or other
transaction involving an increase or reduction in the number of outstanding
shares of Common Stock, the Committee may adjust proportionally (i) the
number of shares of Common Stock reserved under this Plan and covered by
outstanding Awards denominated in Common Stock or units of Common Stock;
(ii) the exercise or other price in respect of such Awards; and (iii) the
appropriate Fair Market Value and other price determinations for such
Awards. Notwithstanding the foregoing, no adjustment is required for the
stock split effected or to be effected shortly before the initial grant of
Options under this Plan. In the event of any consolidation or merger of the
Company with another corporation or entity or the adoption by the Company
of a plan of exchange affecting the Common Stock or any distribution to
holders of Common Stock of securities or property (other than normal cash
dividends or dividends payable in Common Stock), the Committee shall make
such adjustments or other provisions as it may deem equitable, including
adjustments to avoid fractional shares, to give proper effect to such
event. Additionally, and without limiting the generality of the foregoing,
there shall be no adjustment for any dividend or distribution of cash, debt
or other property in respect of the Company's earnings or its accumulated
adjustments account as defined in Section 1368(e)(1) of the Code (including
any estimated amount of such account) in respect of the period in which the
Company is an "S" corporation within the meaning of Section 1361 of the
Code. In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Committee
shall be authorized, in its discretion, (i) to issue or assume stock
options, regardless of whether in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new options for previously
issued options or an assumption of previously issued options, (ii) to make
provision, prior to the transaction, for the acceleration of the vesting
and exercisability of, or lapse of restrictions with respect to, Awards and
the termination of options that remain unexercised at the time of such
transaction or (iii) to provide for the acceleration of the vesting and
exercisability of the options and the cancellation thereof in exchange for
such payment as shall be mutually agreeable to the Participant and the
Committee.
15. RESTRICTIONS. No Common Stock or other form of payment shall be issued
with respect to any Award unless the Company shall be satisfied based on the
advice of its counsel that such issuance will be in compliance with applicable
federal and state securities laws. It is the intent of the Company that this
Plan comply with Rule 16b-3 with respect to persons subject to Section 16 of the
Exchange Act unless otherwise provided herein or in an Award Agreement, that any
ambiguities or inconsistencies in the construction of this Plan be interpreted
to give effect to such intention and that, if any provision of this Plan is
found not to be in compliance with Rule 16b-3, such provision shall be null and
void to the extent required to permit this Plan to comply with Rule 16b-3.
Certificates evidencing shares of Common Stock delivered under this Plan may be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any securities exchange or transaction
reporting system upon which the Common Stock is then listed and any applicable
federal and state securities law. The Committee may cause a legend or legends to
be placed upon any such certificates to make appropriate reference to such
restrictions.
16. UNFUNDED PLAN. Insofar as it provides for Awards of cash, Common Stock
or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to cash, Common
Stock or rights thereto under this Plan, any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock or rights
thereto, nor shall this Plan be construed as providing for such segregation, nor
shall the Company, the Board or the Committee be deemed to be a trustee of any
cash, Common Stock or rights thereto to be granted under this Plan. Any
liability or obligation of the Company to any Participant with respect to a
grant of cash, Common Stock or rights thereto under this Plan shall be based
solely upon any contractual obligations that may be created by this Plan and any
Award Agreement, and no such liability or obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. None of the Company, the Board or the Committee shall be required to
give any security or bond for the performance of any obligation that may be
created by this Plan.
5
<PAGE> 6
17. GOVERNING LAW. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Texas.
18. EFFECTIVE DATE OF PLAN. This amendment and restatement of the Plan
shall be effective as of the date (the "Effective Date") it is approved by the
Board of Directors of the Company. Notwithstanding the foregoing, the amendment
and restatement of this Plan is expressly conditioned upon the approval by the
holders of a majority of outstanding shares of Common Stock present, or
represented, and entitled to vote at the 1998 annual meeting of shareholders. If
the shareholders of the Company should fail so to approve this Plan at such
annual meeting, this Plan shall terminate and cease to be of any further force
or effect except with respect to Awards then outstanding.
Attested to by the Secretary of
Eagle USA Air Freight, Inc. as
adopted by the Board of Directors
and Shareholders of Eagle USA Air
Freight, Inc. effective as of the
10th day of November, 1997 (the
"Effective Date").
/s/ DOUGLAS A. SECKEL
------------------------------------
Douglas A. Seckel
Secretary
6
<PAGE> 1
EXHIBIT 11(i)
EAGLE USA AIRFREIGHT, INC.
COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AND FOOTNOTE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Net income $ 9,879 $ 7,462
Shares used in basic calculation:
Weighted average shares outstanding 18,418 17,621
---------- ----------
Total basic shares 18,418 17,621
Additional shares for diluted computation:
Effect of stock options (1) 738 933
---------- ----------
Total diluted shares 19,156 18,554
========== ==========
Basic earnings per share $ 0.54 $ 0.42
========== ==========
Diluted earnings per share $ 0.52 $ 0.40
========== ==========
</TABLE>
- ----------
(1) For the six months ended March 31, 1998, calculated assuming exercise
of options for 3,152,111 shares of common stock at prices ranging from
$1.25 to $35.13 per share and assumed repurchase of shares at the
average market price of $29.55 computed as of the beginning of the
period. For the six months ended March 31, 1997, calculated assuming
exercise of options for 2,261,878 shares of common stock at prices
ranging from $1.25 to $30.63 per share and assumed repurchase of shares
at the average market price per share of $27.47 as of the beginning of
the period.
22
<PAGE> 1
EXHIBIT 11(ii)
EAGLE USA AIRFREIGHT, INC.
COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AND FOOTNOTE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Net income $ 3,989 $ 2,948
Shares used in basic calculation:
Weighted average shares outstanding 18,580 17,717
---------- ----------
Total basic shares 18,580 17,717
Additional shares for diluted computation:
Effect of stock options (1) 681 926
---------- ----------
Total diluted shares 19,261 18,643
========== ==========
Basic earnings per share $ 0.21 $ 0.17
========== ==========
Diluted earnings per share $ 0.21 $ 0.16
========== ==========
</TABLE>
- ----------
(1) For the three months ended March 31, 1998, calculated assuming exercise
of options for 3,152,111 shares of common stock at prices ranging from
$1.25 to $35.13 per share and assumed repurchase of shares at the
average market price of $28.53 computed as of the beginning of the
period. For the three months ended March 31, 1997, calculated assuming
exercise of options for 2,261,878 shares of common stock at prices
ranging from $1.25 to $30.63 per share and assumed repurchase of shares
at the average market price per share of $28.49 as of the beginning of
the period.
23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF EAGLE USA AIRFREIGHT, INC. FOR
THE SIX MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q REPORT
</LEGEND>
<CIK> 0001001718
<NAME> EAGLE USA AIRFREIGHT, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 39,807
<SECURITIES> 8,178
<RECEIVABLES> 50,869
<ALLOWANCES> 364
<INVENTORY> 0
<CURRENT-ASSETS> 101,896
<PP&E> 22,945
<DEPRECIATION> 5,975
<TOTAL-ASSETS> 124,422
<CURRENT-LIABILITIES> 22,341
<BONDS> 0
0
0
<COMMON> 19
<OTHER-SE> 102,062
<TOTAL-LIABILITY-AND-EQUITY> 124,422
<SALES> 188,189
<TOTAL-REVENUES> 188,189
<CGS> 104,182
<TOTAL-COSTS> 104,182
<OTHER-EXPENSES> 68,594
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16,186
<INCOME-TAX> 6,307
<INCOME-CONTINUING> 9,879
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,879
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.52
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF EAGLE USA AIRFREIGHT, INC. FOR YEAR
ENDED SEPTEMBER 30, 1997, THE NINE MONTHS ENDED JUNE 30, 1997, THE SIX
MONTHS ENDED MARCH 31, 1997 AND THE THREE MONTHS ENDED DECEMBER 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-K AND 10-Q REPORTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1997 SEP-30-1997 SEP-30-1997
<PERIOD-START> OCT-01-1996 OCT-01-1996 OCT-01-1996 OCT-01-1996
<PERIOD-END> DEC-31-1996 MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 21,571 27,366 23,899 25,107
<SECURITIES> 7,362 4,382 10,179 2,679
<RECEIVABLES> 39,195 41,155 42,316 55,228
<ALLOWANCES> 882 811 924 566
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 68,776 75,824 80,143 87,005
<PP&E> 12,961 14,336 15,218 18,663
<DEPRECIATION> 3,003 3,438 3,983 4,573
<TOTAL-ASSETS> 79,369 87,375 92,045 106,871
<CURRENT-LIABILITIES> 23,518 21,439 21,541 26,367
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 18 18 18 18
<OTHER-SE> 55,833 65,918 70,486 80,486
<TOTAL-LIABILITY-AND-EQUITY> 79,369 87,375 92,045 106,871
<SALES> 67,586 129,075 200,376 291,767
<TOTAL-REVENUES> 67,586 129,075 200,376 291,767
<CGS> 38,071 72,877 112,858 163,616
<TOTAL-COSTS> 38,071 72,877 112,858 163,616
<OTHER-EXPENSES> 22,317 44,975 69,943 102,452
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 0 0 0 0
<INCOME-PRETAX> 7,471 12,197 18,923 27,392
<INCOME-TAX> 2,957 4,735 7,357 10,594
<INCOME-CONTINUING> 4,514 7,462 11,566 16,798
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 4,514 7,462 11,566 16,798
<EPS-PRIMARY> 0.26 0.42 0.65 0.94
<EPS-DILUTED> 0.24 0.40 0.62 0.90
</TABLE>
