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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
Form 10-K
_________________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended March 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to _____________
commission file number 0-11720
AIR TRANSPORTATION HOLDING
COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1206400
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
3524 Airport Road
Maiden, North Carolina 28650
(Address of principal executive offices) (Zip Code)
(704) 377-2109
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.25 per share
(Title of Class)
__________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes No ___
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [
]
The aggregate market value of voting stock held by non-affiliates
of the registrant as of May 1, 1999, computed by reference to the
average of the closing bid and asked prices for such stock on such
date, was $3,256,733. As of the same date, 2,764,653 shares of Common
Stock were outstanding.
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PART I
Item 1. Business.
Air Transportation Holding Company, Inc., incorporated under the
laws of the State of Delaware in 1980 (the "Company"), operates in three
industry segments, providing overnight air cargo services to the air
express delivery industry through its wholly owned subsidiaries,
Mountain Air Cargo, Inc. ("MAC") and CSA Air, Inc. ("CSA"), aviation
related parts brokerage and overhaul services through its wholly owned
subsidiary, Mountain Aircraft Services, LLC ("MAS"), and aviation ground
support equipment products through its wholly owned subsidiary, Global
Ground Support, LLC ("Global"). For the fiscal year ended March 31,
1999 the Company's air cargo services through MAC and CSA accounted for
approximately 64.1% of the Company's consolidated revenues, aviation
related parts brokerage and overhaul services through MAS accounted for
10.2% of consolidated revenues and aircraft deice and other equipment
products through Global accounted for 25.7% of consolidated revenues.
The Company's air cargo services are provided primarily to one customer
- -- Federal Express Corporation ("Federal Express"). Revenues from
contracts with Federal Express accounted for approximately 63.1% of the
Company's consolidated revenues for the year ended March 31, 1999.
Certain financial data with respect to the Company's overnight air
cargo, aviation services deice equipment segments are set forth in Note
14 of Notes to Consolidated Financial Statements included under Part II,
Item 8 of this report. Such data are incorporated herein by reference.
The principal place of business of the Company, MAC and MAS is
Maiden, North Carolina, the principal place of business of CSA is Iron
Mountain, Michigan and the principal place of business for Global is
Olathe, Kansas.
Diversification and Acquisition.
In October 1993, the Company organized MAS to diversify its
customer base and business mix. MAS provides aircraft maintenance,
parts and other aviation related services to the commercial and military
aviation industries. MAS is organized as a limited liability company,
of which the Company and MAC are members (99% of the profits and losses
are allocated to the Company and 1% to MAC).
In August 1997, the Company organized Global to acquire the Simon
Deicer Division of Terex Aviation Ground Equipment, and the acquisition
was completed that month. Global is located in Olathe, Kansas and
manufactures, sells and services aircraft deicers sold to domestic and
international passenger and cargo airlines, as well as to airports.
During the fiscal year ended March 31, 1999, the Company diversified
Global's product line to include additional model aircraft deicers and
scissor-lift ground support equipment. Global is organized as a limited
liability company, of which the Company and MAS are members (99% of the
profits and losses are allocated to MAS and 1% to the Company).
The organization of MAS and Global reflects the Company's strategy
to diversify its operations within the aviation industry to reduce its
dependence on the air cargo service segment.
Overnight Air Cargo Services.
MAC and CSA provide small package overnight air freight delivery
services on a contract basis throughout the eastern half of the United
States and Canada, and in Puerto Rico and the U.S. Virgin Islands. MAC
and CSA's revenues are derived principally pursuant to "dry-lease"
service contracts. Under the dry-lease service contracts, the customer
leases its aircraft to MAC (or CSA) for a nominal amount and pays an
administrative fee to MAC (or CSA). Under these arrangements, all
direct costs related to the operation of the aircraft (including fuel,
maintenance, landing fees and pilot costs) are passed through to the
customer. For the most recent fiscal year, operations under dry-lease
service contracts accounted for 95.8% of MAC and CSA's revenues (61.5%
of the Company's consolidated revenues).
For the fiscal year ended March 31, 1999, MAC and CSA provided air
delivery service primarily to Federal Express. As of March 31, 1999,
MAC and CSA operated an aggregate of 96 aircraft under agreements with
Federal Express. Separate agreements cover the three types of aircraft
operated by MAC and CSA for Federal Express -- Cessna Caravan, Fokker F-
27 and Short Brothers SD3-30. Cessna Caravan and Fokker F-27 aircraft
are dry-leased from Federal Express, and Short Brothers SD3-30 aircraft
are owned by the Company and operated under "wet-lease" arrangements
with Federal Express which provide for a fixed fee per flight regardless
of the amount of cargo carried. Pursuant to such agreements, Federal
Express determines the schedule of routes to be flown by MAC and CSA.
As of March 31, 1999, MAC and CSA were flying approximately 75 routes
pursuant to their agreements with Federal Express.
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Agreements with Federal Express are renewable annually and may be
terminated by Federal Express any time upon 15 to 30 days' notice. The
Company believes that the short term and other provisions of its
agreements with Federal Express are standard within the air freight
contract delivery service industry. Loss of Federal Express as a
customer would have a material adverse effect on MAC, CSA and the
Company.
MAC and CSA operate under separate aviation certifications. MAC is
certified to operate under Part 121 and Part 135 of the regulations of
the Federal Aviation Administration (the "FAA"). This certification
permits MAC to operate aircraft that can carry up to 18,000 pounds of
cargo. CSA is certified to operate under Part 135 of the FAA
regulations. This certification permits CSA to operate aircraft with a
maximum cargo capacity of 7,500 pounds.
MAC and CSA, together, operated or held for sale the following
aircraft as of March 31, 1999:
Form of Number of
Type of Aircraft Model Year Ownership Aircraft
Cessna Caravan, 208A and 208B
(single turbo prop)1985-1996 dry lease 73
Fokker F-27 (twin turbo prop) 1968-1981dry lease 21
Short Brothers SD3-30
(twin turbo prop) 1981 owned 2
Total 96
Of the 96 aircraft fleet, 94 aircraft (the Cessna Caravan and Fokker F-
27 aircraft) are owned by Federal Express. Under the dry-lease service
contracts, certain maintenance expense, including cost of parts
inventory, and maintenance performed by personnel not employed by the
Company, is passed directly to the customer, and the expense of daily,
routine maintenance and aircraft service checks is charged to the
customer on an hourly basis. Accordingly, the Company does not
anticipate maintenance expense, such as engine overhauls, to be material
to the Company's operating results.
All FAA Part 135 aircraft, including Cessna Caravan models 208A and
208B, and Short Brothers SD3-30 aircraft are maintained on FAA approved
inspection programs. The inspection intervals range from 100 to 200
hours. The engines are produced by Pratt & Whitney, and overhaul
periods are based on FAA approved schedules. The current overhaul
period on the Cessna aircraft is 6,500 hours. The Short Brothers
manufactured aircraft are maintained on an "on condition" maintenance
program (i.e., maintenance is performed when performance deviates from
certain specifications) with engine inspections at each phase inspection
and in-shop maintenance at predetermined intervals.
The Fokker F-27 aircraft are maintained under a FAA Part 121
maintenance program. The program consists of A, B, C, D and I service
checks. The engine overhaul period is 5,700 hours.
The Company operates in highly competitive markets and competes
with approximately 50 other contract cargo carriers in the United
States. MAC and CSA's contracts are renewed on an annual basis.
Accurate industry data is not available to indicate the Company's
position within its marketplace (in large measure because most of the
Company's competitors are privately held), but management believes that
MAC and CSA, combined, constitute one of the largest contract carriers
of the type described immediately above.
The Company's air cargo operations are not materially seasonal.
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Aviation Related Parts Brokerage and Overhaul Services.
In October 1993, the Company organized MAS to diversify its
customer base and business mix. MAS provides aircraft maintenance and
parts and other aviation related services to the commercial and military
aviation industries. MAS's principal offices are located in Maiden,
North Carolina and its primary maintenance facilities are located at the
Global TransPark in Kinston, North Carolina, Maiden, North Carolina and
Miami, Florida.
Services offered by MAS include engine overhaul management,
aircraft maintenance and component repair. Services are provided under
standard purchase contracts.
In addition, MAS sells aircraft parts, of which approximately 5% of
the amount sold in the fiscal year ended March 31, 1999 were used in
connection with maintenance performed by MAS. Sales of parts by MAS do
not include any parts purchased for maintenance of aircraft operated by
MAC or CSA.
MAS's inventory of parts held for sale was approximately $1.8
million at March 31, 1999 and included parts for use in primarily 15
types of commercial and military aircraft, all of which are generally in
current use. MAS maintains its own inventory controls and
documentation, sets stocking levels and determines the conditions for
surplus parts disposal.
MAS's customers include the commercial air cargo and passenger
aviation industries and manufacturers of commercial and military
aircraft and contract maintenance companies serving the commercial and
military aviation industry. MAS generally does not provide parts or
services under contracts directly with the U.S. government. For the
fiscal year ended March 31, 1999, MAS provided services or parts to over
150 customers, with no single customer accounting for more than 5% of
the Company's revenues for the year.
MAS's operations are not materially seasonal.
Aircraft Deice and Other Equipment Products.
In August 1997, the Company organized Global to acquire the Simon
Deicer Division of Terex Aviation Ground Equipment to further diversify
the Company's customer base and business mix within the aviation
industry. Global manufactures, sells, services and supports aircraft
devices on a worldwide basis. During the fiscal year ended March 31,
1999, the Company diversified Global's product line to include
additional model aircraft deicers and scissor-lift ground support
equipment. Global's primary customers are passenger and cargo airlines,
as well as airports located in the United States and in international
markets. Global's operations are located in Olathe, Kansas.
In the manufacture of its ground service equipment, Global
assembles components acquired from third party suppliers. Components
are readily available from a number of different suppliers. The primary
components are the chassis (which is similar to the chassis of a medium
to heavy truck) and heating equipment.
Global manufactures four basic models of deicing equipment: a
3,200 gallon capacity model, a 2,100 gallon capacity model, a 1,200
gallon capacity model and a 700 gallon capacity model. Each model can
be customized as requested by the customer, including the addition of
fire suppressant equipment, modifications for open or enclosed cab
design, a recently patented forced-air deicing nozzle to substantially
reduce glycol usage and color and style of the exterior finish. Global
also manufactures three basic models of scissor-lift equipment, for
catering, cabin service and maintenance service of aircraft.
Global competes primarily on the basis of reliability of its
products, prompt delivery and price. The market for deicing equipment
is highly competitive. Although the Company believes that Global is the
second largest supplier of deicing equipment in the United States, the
Company believes that FMC Corp. is the dominant competitor in the
industry and is several times larger and has more financial resources
than Global.
Global's business has historically been highly seasonal, with the
bulk of deicing equipment being purchased by customers in the late
summer and fall in preparation for winter months. Accordingly, the bulk
of Global's revenues have occurred during the second and third fiscal
quarters, and comparatively little revenue has occurred during the first
and fourth fiscal quarters. The Company plans to reduce Global's
seasonal fluctuation in revenues by the recent introduction of ground
support equipment to broaden its product line.
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Backlog.
The Company's backlog consists of "firm" orders supported by
customer purchase orders with fixed delivery dates for deicing equipment
sold by Global and for parts and equipment sold by MAS. At March 31,
1999, the Company's backlog of orders was $3.1 million, of which $1.0
million was attributable to Global and approximately $2.1 million was
attributable to MAS, all of which the Company expects to be filled in
the current fiscal year.
Governmental Regulation.
Under the Federal Aviation Act of 1958, as amended, the FAA has
safety jurisdiction over flight operations generally, including flight
equipment, flight and ground personnel training, examination and
certification, certain ground facilities, flight equipment maintenance
programs and procedures, examination and certification of mechanics,
flight routes, air traffic control and communications and other matters.
The FAA also has power to suspend or revoke for cause the certificates
it issues and to institute proceedings for imposition and collection of
fines for violation of federal aviation regulations. The Company has
secured appropriate operating certificates and airworthiness
certificates for all aircraft operated by it.
The FAA is currently conducting a periodic routine review of MAC
and CSA's operating procedures and flight and maintenance records.
The Airline Deregulation Act of 1978 created a new class of
domestic certificated all-cargo carriers. Pursuant to such certificate,
aircraft of specified size may be operated within the United States,
without restriction on routes.
The Company has been subject to FAA regulation since the
commencement of its business activities. The FAA is concerned with
safety and the regulation of flight operations generally, including
equipment used, ground facilities, maintenance, communications and other
matters. The FAA can suspend or revoke the authority of air carriers or
their licensed personnel for failure to comply with its regulations and
can ground aircraft if questions arise concerning airworthiness. The
Company, through its subsidiaries, holds all operating airworthiness and
other FAA certificates that are currently required for the conduct of
its business, although these certificates may be suspended or revoked
for cause.
The FAA has authority under the Noise Control Act of 1972, as
amended, to monitor and regulate aircraft engine noise. The aircraft
operated by the Company are in compliance with all such regulations
promulgated by the FAA. Moreover, because the Company does not operate
jet aircraft noncompliance is not likely. Such aircraft also comply
with standards for aircraft exhaust emissions promulgated by the
Environmental Protection Agency pursuant to the Clean Air Act of 1970,
as amended.
Because of the extensive use of radio and other communication
facilities in its aircraft operations, the Company is subject to the
Federal Communications Act of 1934, as amended.
Maintenance and Insurance.
The Company, through its subsidiaries, maintains its aircraft under
the appropriate FAA standards and regulations.
The Company has secured public liability and property damage
insurance in excess of minimum amounts required by the United States
Department of Transportation. The Company has also obtained all-risk
hull insurance on Company-owned aircraft.
The Company maintains cargo liability insurance, workers'
compensation insurance and fire and extended coverage insurance, for
leased as well as owned facilities and equipment.
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Employees.
At May 1, 1999, the Company and its subsidiaries had 449 full-time
and full-time-equivalent employees, of which 8 are employed by the
Company, 307 are employed by MAC, 65 are employed by CSA, 30 are
employed by MAS and 39 are employed by Global. None of the Company's
employees are represented by a union. The Company believes its
relations with its employees are good.
Item 2. Properties.
The Company leases the Little Mountain Airport in Maiden, North
Carolina from a corporation whose stock is owned in part by J. Hugh
Bingham, William H. Simpson and John J. Gioffre, officers and directors
of the Company and the estate of David Clark. The facility consists of
approximately 65 acres with one 3,000 foot paved runway, approximately
20,000 square feet of hangar space and approximately 10,300 square feet
of office space. The operations of the Company and MAC are
headquartered at this facility. The lease for this facility was renewed
in May 1996, and is currently scheduled to expire on May 31, 2001, and
may be renewed for an additional five-year period. In connection with
the renewal, the monthly rental payment for this facility increased to
$8,073.
The Company also leases approximately 800 square feet of office
space and approximately 6,000 square feet of hangar space at the Ford
Airport in Iron Mountain, Michigan. CSA's operations are headquartered
at these facilities. These facilities are leased under an annually
renewable agreement with a monthly rental payment, as of March 31, 1999,
of approximately $1,500.
On November 16, 1995, the Company entered into a twenty-one and a
half year premises and facilities lease with Global TransPark
Foundation, Inc. to lease approximately 53,000 square feet of a new
66,000 square foot aircraft hangar shop and office facility at the North
Carolina Global TransPark in Kinston, North Carolina. On August 10,
1996, MAS's component repair services and part of MAC's aircraft
maintenance operations were relocated to this facility. Rent under this
lease increases over time as follows: the first 18 months, no rent; the
next 5-year period, $2.25 per square foot; the next 5-year period, $3.50
per square foot; the next 5-year period, $4.50 per square foot; and the
final 5-year period, $5.90 per square foot. This lease is cancelable
under certain conditions at the Company's option. The Company began
operations at this facility in August 1996.
MAS operates an engine overhaul management facility in Miami,
Florida, leasing approximately 4,700 square feet of shop space. The
lease expires in April 2000, and the monthly rental payment is $2,750.
Global leases a 112,500 square foot production facility in Olathe,
Kansas. The facility is leased under a three-year lease agreement which
expires in August 2001. The monthly rental payment, as of March 31,
1999, was $35,903.
As of March 31, 1999, the Company leased hangar space at 35 other
locations for aircraft storage. Such hangar space is leased at
prevailing market terms.
The table of aircraft presented in Item 1 lists the aircraft
operated by the Company's subsidiaries and the form of ownership.
Item 3. Legal Proceedings.
The Company is not aware of any pending or threatened lawsuits that
if adversely decided would have a material adverse effect on the
Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders.
PART II
Item 5. Registrant's Common Equity and Related Stockholder Matters.
The Company's common stock is publicly traded in the over-the-
counter market under the NASDAQ symbol "AIRT."
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As of May 1, 1999, the number of holders of record of the Company's
Common Stock was approximately 390. Over-the-counter market quotations
reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions. The
range of high and low bid quotations per share for the Company's common
stock from April 1997 through March 1999 is as follows:
Common Stock
Quarter Ended High Low
June 30, 1997 $5 1/2 $3 1/8
September 30, 1997 4 7/8 4 1/8
December 31, 1997 5 1/2 4
March 31, 1998 15 4 3/8
June 30, 1998 14 9 1/2
September 30, 1998 11 5 7/8
December 31, 1998 7 4 1/2
March 31, 1999 6 1/4 2 1/4
The Company's Board of Directors has adopted a policy to pay a
regularly scheduled annual cash dividend in the first quarter of each
fiscal year. The current year's $.08 per share cash dividend will be
paid on June 9, 1999 to stockholders of record on May 14, 1999.
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Item 6. Selected Financial Data
(In thousands except per share data)
Year Ended March 31,
1999 1998 1997 1996 1995
Operating Revenues $52,120 $51,001 $34,979 $35,432 $32,813
Net earnings $ 523 $ 1,706 $ 1,323 $ 1,612 $ 1,598
Earnings per share-Basic $ 0.19 $ 0.64 $ 0.51 $ 0.58 $ 0.56
Earnings per share-Diluted $ 0.19 $ 0.61 $ 0.47 $ 0.53 $ 0.48
Total assets $20,852 $18,289 $11,118 $10,220 $10,161
Long-term obligations,
including current portion $ 1,364 $ 1,144 $ 222 $ 10 $ 14
Stockholders' equity $ 9,636 $ 9,712 $ 8,254 $ 7,414 $ 7,130
Average common shares
outstanding-Basic 2,698 2,660 2,619 2,771 2,868
Average common shares
outstanding-Diluted 2,794 2,788 2,794 3,021 3,295
Dividend declared per
common share (1)(2)(3) $ 0.14 $ 0.10 $ - $ 0.15 $ 0.06
Dividend paid per
common share (1)(2)(3) $ 0.14 $ 0.10 $ 0.08 $ 0.07 $ 0.06
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(1) On February 1, 1996, the Company declared a cash dividend of $.08
per common share that was paid on April 22, 1996.
(2) On May 14, 1998, the Company declared a cash dividend of $.14 per
common share payable on June 12, 1998 to stockholders of record on May 19,1998.
(3) On April 30, 1999, the Company declared a cash dividend of $.08 per
common share payable on June 9, 1999 to stockholders of record on May 14, 1999.
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Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
The Company's most significant component of revenue is generated
through its air cargo subsidiaries, Mountain Air Cargo, Inc. (MAC) and
CSA Air, Inc. (CSA), which are short-haul express air freight carriers
flying nightly contracts for a major express delivery company out of 80
cities, principally located in 30 states in the eastern half of the
United States and in Puerto Rico, Canada and the Virgin Islands.
Separate agreements cover the three types of aircraft operated by
MAC and CSA-Cessna Caravan, Fokker F-27, and Short Brothers SD3-30.
Cessna Caravan and Fokker F-27 aircraft (a total of 94 aircraft at March
31, 1999) are owned by and dry-leased from a major air express company
(Customer), and Short Brothers SD3-30 aircraft (two aircraft at
March 31, 1999) are owned by the Company and operated under wet-lease
arrangements with the Customer. Pursuant to such agreements, the
Customer determines the type of aircraft and schedule of routes to be
flown by MAC and CSA, with all other operational decisions made by the
Company. Under the terms of the dry-lease service agreements, which
currently cover approximately 98% of the revenue aircraft operated, the
Company passes through to its customer certain cost components of its
operations without markup. The cost of fuel, flight crews, landing
fees, outside maintenance, parts and certain other direct operating
costs are included in operating expenses and billed to the customer as
cargo and maintenance revenue, at cost.
Agreements are renewable annually and may be terminated by the
Customer at any time upon 15 to 30 days notice. The Company believes
that the short term and other provisions of its agreements with the
Customer are standard within the air freight contract delivery service
industry. The Company is not contractually precluded from providing
such services to other firms, and has done so in the past. Loss of its
contracts with the Customer would have a material adverse effect on the
Company.
In May 1997, to expand its revenue base, the Company's Mountain
Aircraft Services, LLC (MAS) subsidiary expanded its offering of
aircraft component repair services. MAS's revenue contributed
approximately $5,291,000 and $4,626,000 to the Company's revenues in
fiscal 1999 and 1998, respectively.
In August 1997, the Company acquired certain assets and order
backlog and assumed certain liabilities of Simon Deicer Company, a
division of Terex Aviation Ground Equipment, Inc. located in Olathe,
Kansas. The acquisition renamed Global Ground Support, LLC (Global),
manufactures, services and supports aircraft deicers on a worldwide
basis. Global is operated as a subsidiary of MAS. Global's revenue
contributed approximately $13,396,000 and $12,763,000 to the Company's
revenues in fiscal 1999 and 1998, respectively.
The following table summarizes the changes and trends in the
Company's expenses as a percentage of revenue:
Fiscal Year Ended March 31,
1999 1998 1997
Operating revenue (in thousands) $52,120 $51,001 $34,979
Expense as a percentage of revenue:
Flight operations 27.20% 27.29% 36.89%
Maintenance and brokerage 33.87 33.17 44.62
Ground equipment 22.03 20.89 -
General and administrative 13.84 11.19 12.10
Depreciation and amortization 1.25 1.12 1.63
Facility start-up/merger expenses - 0.37 0.99
Total costs and expenses 98.19% 94.03% 96.23%
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Seasonality
Global's business has historically been highly seasonal. In
general, the bulk of Global's revenues and earnings have typically
occurred during the second and third fiscal quarters in anticipation of
the winter season, and comparatively little has occurred during the
first and fourth fiscal quarters due to the nature of its product line.
The Company is currently attempting to reduce Global's seasonal
fluctuation in revenues and earnings by broadening its product line to
increase revenues and earnings in the first and fourth fiscal quarters.
The Company expended exceptional effort in the second, third and fourth
quarters of fiscal 1999 to design and produce prototype equipment to
expand its current product line to include three basic models of scissor-
lift equipment for catering, cabin service and maintenance service of
aircraft. In addition, in June 1999, the Company was awarded a four-
year contract to supply deicing equipment to the United States Air Force
for a total amount of approximately $25 million. Although the first
shipments under this contract will not commence until the quarter ended
December 31, 1999, the Company anticipates that revenue from this
contract will lessen Global's seasonal fluctuation in earnings. The
remainder of the Company's business is not materially seasonal.
Results of Operations
Fiscal 1999 vs. 1998
Consolidated revenue increased $1,094,000 (2.1%) to $52,120,000 for
the fiscal year ended March 31, 1999 compared to the prior fiscal year.
The increase in 1999 revenue primarily resulted from increases in
revenue from MAS and the impact of a full year of revenue from Global in
fiscal 1999. However, Global's revenue for the full fiscal year ended
March 31, 1999 was only approximately 5.0% greater than revenue for the
seven months of operations of Global included in the prior fiscal year.
Operating expenses increased $3,219,000 (6.7%) to $51,173,000 for
fiscal 1999 compared to fiscal 1998. The increase in operating expenses
consisted of the following changes: cost of flight operations increased
$256,000 (1.8%) as a result of increases in pilot and flight personnel
and costs associated with pilot travel; maintenance and brokerage
expenses increased $739,000 (4.4%) primarily as a result of increases
associated with cost of parts and labor related to the expansion of
MAS's repair facility offset in part by lower outside maintenance costs;
ground equipment costs increased $830,000 (7.8%), as a result of twelve
months of Global operation in fiscal 1999 versus seven months of
operation in fiscal 1998; depreciation and amortization increased
$80,000 (14.0%) as a result of a full year of depreciation related to
Global's acquired assets and additional depreciable assets acquired
during fiscal 1999; the general and administrative expense increase of
$1,503,000 (26.3%) is primarily the result of costs associated with the
Company's full twelve month fiscal 1999 operation of Global, the
expansion of MAS's repair shop operations and increases in professional
fees and staff expense.
On a segment basis, the most significant impact on the Company's
operating results comparing the fiscal year ended March 31, 1999 to the
prior period resulted from the ground equipment operation at Global. In
the fiscal year ended March 31, 1999, Global had an operating loss of
$497,629 compared to operating income in the prior period of $1,070,636.
Several factors contributed to this change in Global's operating
results. First, Global's revenue for the full fiscal year ended March
31, 1999 was only 5.0% greater than revenue for the seven months of
operations included in the prior fiscal year. The Company believes that
fiscal 1999 revenue reflects both the effect of significantly reduced
demand for aircraft deicer equipment due to above-normal winter
temperatures and significant price competition that resulted in above-
normal sales discounts. The Company anticipates that the four-year
contract recently awarded to Global to supply the United States Air
Force with deicing equipment for a total of $25 million will reduce the
sensitivity of Global's operating results to seasonal weather
conditions. Because management expects shipments under that contract
will not commence until the quarter ending December 31, 1999, the full
impact of the contract will not occur until the year ending March 31,
2001. Second, during fiscal 1999, Global incurred significant expense
developing new products to diversify its product line. In fiscal 1999,
Global designed three basic models of scissor-lift equipment for
catering, cabin service and maintenance service of aircraft, as well as
lower priced aircraft deicer models. Operating income for the Company's
overnight air cargo operations was $2,881,800 in the fiscal year ended
March 31, 1999, down 8.2% from $3,140,747 in the prior fiscal year.
Aviation services provided by MAS had an operating loss of $79,329 in
the fiscal year ended March 31, 1999 compared to an operating loss of
$138,663 the prior year.
Non-operating expense decreased a net $139,000 (77.7%) due to a
fiscal 1998 $418,000 provision to fulfill contractual benefits related
to the death of the Company's Chairman partially offset by increased
current year interest expense related to the use of the Company's line
of credit for the operation of Global and MAS.
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Provision for income taxes decreased $802,000 (67.6%) due to
decreased taxable income offset in part by a higher effective tax rate.
The provision for income taxes for the fiscal years ended March 31, 1999
and 1998 were different from the Federal statutory rates due to state
tax provisions.
Fiscal 1998 vs. 1997
Consolidated revenue increased $15,922,000 (45.4%) to $51,026,000
for the fiscal year ended March 31, 1998 compared to the prior fiscal
year. The increase in 1998 revenue primarily resulted from the
$12,763,000 increase in revenue associated with the August 1997
acquisition of Global as well as increases in maintenance service,
engine overhaul and parts revenue.
Operating expenses increased $14,492,000 (43.3%) to $47,955,000 for
fiscal 1998 compared to fiscal 1997. The increase in operating expenses
consisted of the following changes: cost of flight operations increased
$1,018,000 (7.9%) as a result of additional costs associated with flight
crews, fuel and airport fees; maintenance expense increased $1,309,000
(8.4%) primarily as a result of increases in parts purchases and
mechanic staffing; ground equipment increased $10,652,000, as a result
of the August 1997 Global acquisition; depreciation and amortization
increased $198,000 (53.2%) as a result of additional depreciable assets
purchased in the acquisition of Global, offset by depreciation related
to the sale of aircraft in fiscal 1997; the general and administrative
expense increase of $1,475,000 (34.8%) is a result of $950,000 in G&A
costs associated with the Company's operation of Global and increased
insurance, employee benefits, staffing, salary and wage rates.
Non-operating expense increased a net $697,000 (134.6%) due to a
fiscal 1998 $418,000 provision to fulfill contractual benefits related
to the death of the Company's Chairman and CEO, a fiscal 1997 $182,000
gain on sale of aircraft and increased current year interest related to
the use of the Company's line of credit for the operation of Global.
Pretax earnings increased $733,000 (33.9%) to $2,892,000 for fiscal
1998. The pretax earnings increase was primarily related to the
profitable results of Global, which added $1,052,000 to the Company's
pretax earnings and a $571,000 increase in pre-tax earnings for MAC
partly offset by the increased non-operating expense discussed above.
Provision for income taxes increased $350,000 (41.8%) due to the
increased earnings generated by Global and MAC and also due to a higher
effective rate in fiscal 1998 which resulted, in part, from the complete
utilization of Company NOL's in the second quarter of fiscal 1997. The
provision for income taxes for the fiscal years ended March 31, 1998 and
1997 were different from the Federal statutory rates due to state tax
provisions and changes to the deferred tax valuation allowance.
Liquidity and Capital Resources
As of March 31, 1999 the Company's working capital amounted to
$6,974,000, a decrease of $592,000 compared to March 31, 1998. The net
decrease primarily resulted from cash required for the operation of
Global and decreased profitability.
The Company's unsecured line of credit provides credit in the
aggregate of up to $7,000,000 and matures in August 1999. Amounts
advanced under the line of credit bear interest at the 30 day "LIBOR"
rate plus 137 basis points. The Company anticipates that it will renew
the line of credit before its scheduled expiration.
Under the terms of the line of credit the Company may not encumber
certain real or personal property. As of March 31, 1999, the Company
was in a net borrowing position against its credit line of $3,894,000.
Management believes that funds anticipated from operations and existing
credit facilities will provide adequate cash flow to meet the Company's
future financial needs.
The respective years ended March 31, 1999, 1998 and 1997 resulted
in the following changes in cash flow: operating activities used
$1,528,000 and $759,000 in 1999 and 1998, and provided $1,262,000 in
1997. Investing activities used $936,000, $2,093,000 and $397,000 in
1999, 1998 and 1997 and financing activities provided $2,533,000 and
$668,000 in 1999 and 1998, and used $701,000 in 1997. Net cash
increased $69,000 and $164,000 for 1999 and 1997, respectively and
decreased $2,184,000 1998.
</page>
<PAGE>
Cash used in operating activities was $769,000 more for the year
ended March 31, 1999 compared to 1998 principally due to a decrease in
profitable operations and decreases in the changes in accounts payable,
accrued expenses, accounts receivable and inventories. Cash used in
investing activities for the year ended March 31, 1999 was approximately
$1,157,000 less than 1998, principally due to expenditures related to
the acquisition of Global, and a decrease in purchase of marketable
securities. Cash provided by financing activities was $1,865,000 more
in 1999 compared to 1998 principally due to an increase in borrowings
under the line of credit.
During the fiscal year ended March 31, 1999 the Company repurchased
23,000 shares of its common stock at a total cost of $149,500. Pursuant
to its previously announced stock repurchase program, $255,000 remains
available for repurchase of common stock.
There are currently no commitments for significant capital
expenditures. The Company's Board of Directors, on August 7, 1997,
adopted the policy to pay an annual cash dividend in the first quarter
of each fiscal year, in an amount to be determined by the board. The
Company paid a $0.14 per share cash dividend in June 1998 and declared
an $.08 per share cash dividend on April 30, 1999, payable on June 9,
1999 to shareholders of record dated May 14, 1999.
Recent Accounting Pronouncements
In June 1997, Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130) was issued. SFAS 130
requires disclosure of comprehensive income (which is defined as "the
change in equity during a period excluding changes resulting from
investments by shareholders and distributions to shareholders") and its
components. SFAS 130 is effective for fiscal years beginning after
December 15, 1997, with reclassification of comparative years. The
Company adopted SFAS 130 in the year ended March 31, 1999.
Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information" (SFAS 131) was
issued in June 1997. SFAS 131 is effective for the Company in the fiscal
year ended March 31, 1999. SFAS 131 redefines how operating segments
are determined and requires disclosure of certain financial and
descriptive information about a company's operating segments.
The Company's four subsidiaries operate in three business segments.
Each business segment has separate management teams and infrastructures
that offer different products and services. The subsidiaries have been
combined into the following reportable segments: air cargo, aviation
services and aviation ground equipment.
The accounting policies for all reportable segments are the same as
those described in the other portions of Footnote 1 of Notes to
Consolidated Financial Statements. The Company evaluates the
performance of its operating segments based on operating income.
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities", requires all
derivative instruments to be recognized on the balance sheet at their
fair value. Changes in the fair value of derivatives are to be recorded
each period either in other comprehensive income or in current earnings
depending on the use of the derivatives and whether it qualifies for
hedge accounting. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2001. The Company is currently
evaluating the impact of SFAS No. 133 on financial position and results
of operations.
Deferred Retirement Obligation
The Company's former Chairman and Chief Executive Officer passed
away on April 18, 1997. In addition to amounts previously expensed,
under the terms of his supplemental retirement agreement, death benefits
with a present value of approximately $418,000 were expensed in the
first quarter 1998. The death benefits are payable in the amount of
$75,000 per year for 10 years.
Impact of Inflation
The Company believes that due to the current low levels of
inflation the impact of inflation and changing prices on its revenues
and net earnings will not have a material effect on its manufacturing
operations, or on its air cargo business since the major cost components
of its operations, consisting principally of fuel, crew and certain
maintenance costs are reimbursed, without markup, under current contract
terms.
</page>
<PAGE>
Recent IRS Audit
During the fiscal year ended March 31, 1999, the Internal Revenue
Service (IRS) concluded an examination of the Company's fiscal years
1997, 1996 and 1995 tax returns. The outcome of the IRS audit did not
have a material impact on the Company's financial condition or results
of operations.
Year 2000 Issue
The Company has initiated a comprehensive review of its operations
and computer systems to identify the extent to which it could be
affected by the "year 2000 issue", which is the result of computer
programs written using two digits rather than four to define the
applicable year. The Company has broken down its review to assess its
information technology systems (IT Systems), the aspects of its
operations that rely on devices that may contain embedded microchips
(Non-IT Systems) and its relationships and reliance on vendors,
suppliers, customers and others with whom the Company deals whose
operations may be affected by the year 2000 issue. This review was
conducted by the Company's Year 2000 committee, authorized to assess the
Company's risks and develop a comprehensive plan to address the year
2000 issue.
State of Readiness
IT Systems. As a result of such review, as of the date of this
Annual Report on Form 10-K, the Company believes it has catalogued all
IT Systems utilized directly by the Company. The Company has revised,
and is testing, certain customized IT Systems to enable such systems to
work properly following the year 2000 and has verified that recently
acquired IT Systems from third-party vendors are "year 2000 compliant".
Management utilized external resources to upgrade internal software
systems to become year 2000 compliant. Management believes that such
systems will be completely tested by June 30, 1999.
Non-IT Systems. The Company utilizes a number of devices that
include embedded microchips that may be affected by the year 2000 issue,
including aircraft operated under lease agreements with its major
customer. The Company anticipates completing the testing and replacing
of any noncompliant devices by June 30, 1999. Under its agreements with
its major customer the cost of replacing such components in aircraft
leased by the Company from its customer would be passed on to the
customer.
Material Third Parties. The Company is making concerted efforts to
understand the year 2000 compliance readiness of third parties
(including, among others, domestic and international government agencies
and air traffic control systems material to the Company's operations,
vendors, suppliers and major customers) whose year 2000 non-compliance
could either have a material adverse effect on the Company's business,
financial condition or results of operations or involve a safety risk to
employees or customers.
The Company has actively encouraged year 2000 compliance on the
part of third parties and has developed contingency plans in the event
of their year 2000 non-compliance by June 30, 1999. The Company has
contacted, in writing and by telephone, each "mission critical" vendor
and supplier, requesting completion of a questionnaire to assess such
third party's year 2000 compliance. The Company's vendors and suppliers
are under no contractual obligation to provide such information to the
Company. Although the Company has received written or verbal assurances
of compliance by June 30, 1999, year 2000 issue disruptions experienced
by "mission critical" vendors could adversely affect the Company's
operations.
The Company has met with its major air cargo customer on numerous
occasions to discuss year 2000 readiness. In addition, the Company has
reviewed public filings of its major customer to assess the customer's
state of year 2000 compliance. Such discussions and filings indicate
plans by such customer to be 100% internal systems year 2000 compliant,
including operating subsidiaries, by November 1, 1999. However, such
customer's operations rely on many third parties, including governmental
agencies, airports and air traffic control systems described below.
In conjunction with the Company's major air cargo customer and
industry trade associations, the Company is involved in an industry-wide
effort to understand the year 2000 compliance status of airports, air
traffic systems, and other U.S. and international government agencies
that may affect the Company's air cargo operations. The Company's air
cargo routes are selected and scheduled by its major customer.
</page>
<PAGE>
In addition to general risks raised by the year 2000 issue, the
Company's primary business segment, providing air cargo services to the
overnight express delivery industry, is subject to significant
additional risks. First, the Company's relationship with its major air
cargo customer is based, in significant part, on the Company's operating
reliability. A failure to timely confirm its year 2000 compliance to
the customer could result in a loss of such relationship.
The Company has provided this customer with an anticipated time
schedule for completion of its year 2000 compliance program, which the
Company has verified fits within the customer's planned schedule. In
addition, the bulk of the Company's aircraft fleet is leased from such
customer and is dedicated for use in flying routes designated by the
customer.
Costs
The Company estimates the cost incurred to date for year 2000
compliance is approximately $120,000. No future cost are expected to be
incurred. The foregoing costs do not include the allocation of internal
employee time since the Company does not track such internal costs.
Contingency Plans
The Company has developed contingency plans for year 2000 non-
compliance, some of which are discussed above. Due to the Company's
dependence upon, and its current uncertainty with, the year 2000
compliance of certain government agencies, third-party suppliers,
vendors and customers with whom the Company deals, the Company is unable
to determine at this time its most reasonably likely worst case
scenario. While costs related to the lack of year 2000 compliance by
third parties, business interruptions, litigation and other liabilities
related to year 2000 issues could materially and adversely affect the
Company's business, results of operations and financial condition, the
Company expects its internal year 2000 compliance efforts to reduce
significantly the Company's level of uncertainty about the impact of
year 2000 issues affecting both its IT Systems and non-IT Systems.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
</page>
<PAGE>
The Company does not hold or issue derivative financial instruments
for trading or other purposes. The Company is exposed to changes in
interest rates on its line of credit, which bears interest based on the
30-day LIBOR rate plus 137 basis points. If the LIBOR interest rate had
been increased by one percentage point, based on the year-end balance of
the line of credit, annual interest expense would have increased by
approximately $39,000.
</page>
<PAGE>
Item 8. Financial Statements and Supplementary Data.
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Air Transportation Holding Company, Inc.
Denver, North Carolina
We have audited the accompanying consolidated balance sheets of Air
Transportation Holding Company, Inc. and subsidiaries (the "Company") as
of March 31, 1999 and 1998, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for each of the three
years in the period ended March 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Air Transportation
Holding Company, Inc. and subsidiaries as of March 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the
three years in the period ended March 31, 1999 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
May 28, 1999
</page>
<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
Year Ended March 31,
1999 1998 1997
<S> <C> <C> <C>
Operating Revenues (Note 9):
Cargo $ 19,546,633 $18,999,331 $18,521,298
Maintenance 13,603,365 14,226,260 12,966,027
Ground equipment 13,395,761 12,763,091 -
Aircraft services and other 5,574,258 5,011,840 3,491,958
52,120,017 51,000,522 34,979,283
Operating Expenses:
Flight operations 14,176,484 13,920,520 12,902,342
Maintenance and brokering 17,653,906 16,915,164 15,606,161
Ground equipment 11,481,881 10,652,102 -
General and administrative 7,212,251 5,709,003 4,234,113
Depreciation and amortization 648,929 569,329 371,615
Start-up/merger expense (Note 2) - 188,520 347,960
51,173,451 47,954,638 33,462,191
Operating Income 946,566 3,045,884 1,517,092
Non-operating Expense (Income):
Interest 330,821 22,382 566
Deferred retirement expense (Note 11) 24,996 438,833 -
Investment income (196,624) (281,857) (336,222)
Cash value of life insurance (121,929) (25,118) (123,989)
Loss (gain) on asset sale 2,828 - (182,359)
40,092 154,240 (642,004)
Earnings Before Income Taxes 906,474 2,891,644 2,159,096
Income Taxes (Note 10) 383,770 1,185,574 835,892
Net Earnings $ 522,704 $ 1,706,070 $ 1,323,204
Net Earnings Per Share (Note 12):
Basic $ 0.19 $ 0.64 $ 0.51
Diluted $ 0.19 $ 0.61 $ 0.47
Average Shares Outstanding:
Basic 2,697,509 2,659,765 2,618,599
Diluted 2,793,954 2,787,875 2,793,891
<FN>
See notes to consolidated financial statements.
</TABLE>
</page>
<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Year Ended March 31,
1999 1998
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 263,362 $ 193,918
Marketable securities (Note 3) 2,086,259 2,556,257
Accounts receivable, Less allowance for
Doubtful accounts of $123,180 in 1999 and
$104,000 in 1998 7,008,987 6,673,101
Inventories (Note 4) 6,925,545 5,325,613
Deferred tax asset (Note 10) 424,980 272,980
Prepaid expenses and other 174,450 33,922
Total Current Assets 16,883,583 15,055,791
PROPERTY AND EQUIPMENT (Note 1)
Furniture, fixtures and improvements 4,845,932 3,765,745
Flight equipment and rotables inventory 1,010,250 927,523
5,856,182 4,693,268
Less accumulated depreciation (2,992,556) (2,429,031)
2,863,626 2,264,237
Deferred Tax Asset (Note 10) 233,625 152,000
Intangible Pension Asset (Note 11) 498,119 389,495
Other Assets 372,691 427,880
Total Assets $ 20,851,644 $ 18,289,403
</TABLE>
</page>
<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Year Ended March 31,
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Notes payable to bank (Note 6) $ 3,893,502 $ 916,079
Accounts payable 4,267,890 3,975,633
Accrued expenses (Note 5) 1,690,036 1,778,664
Income taxes payable (Note 10) - 762,961
Current portion of long-term obligations 57,853 56,241
Total Current Liabilities 9,909,281 7,489,578
Capital Lease Obligation (less current portion) 23,920 30,904
Deferred Retirement Obligation (less current
portion) (Note 11) 1,282,545 1,056,795
Stockholders' Equity (Note 8):
Preferred stock, $1 par value, authorized
10,000,000 shares, none issued - -
Common stock, par value $.25; authorized
4,000,000 shares; 2,764,653 and
2,711,653 shares issued and outstanding
in 1999 and 1998, respectively 690,491 677,241
Additional paid in capital 7,049,157 7,128,907
Accumulated other comprehensive loss (154,745) -
Retained earnings 2,050,995 1,905,978
9,635,898 9,712,126
Total Liabilities and Stockholders' Equity $ 20,851,644 $ 18,289,403
<FN>
See notes to consolidated financial statements.
</TABLE>
</page>
<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Year Ended March 31,
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net earnings $ 522,704 $ 1,706,070 $ 1,323,204
Adjustments to reconcile net earnings to net
cash (used in) provided by operations:
Depreciation and amortization 648,929 569,329 371,615
Deferred tax provision (233,625) (80,000) 122,858
Change in retirement obligation 225,750 445,767 221,533
Loss (gain) on sale of assets 2,828 - (182,359)
Charge in lieu of income taxes
credited to goodwill - - 15,837
Change in assets and liabilities which
provided (used) cash:
Accounts receivable (335,886) (3,359,098) (177,140)
Inventories (1,599,932) (2,733,378) (343,703)
Prepaid expenses and other (193,962) (131,608) (144,483)
Accounts payable 292,257 3,163,849 14,974
Accrued expenses (94,001) (712,731) (111,771)
Income taxes payable (762,961) 373,045 151,803
Total adjustments (2,050,603) (2,464,825) (60,836)
Net cash (used in) provided by
operating activities (1,527,899) (758,755) 1,262,368
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisition - (715,981) -
Capital expenditures (1,251,146) (1,050,626) (472,019)
Proceeds from sale of equipment - - 415,000
Purchase of marketable securities (189,250) (1,042,995) (674,194)
Sale of marketable securities 504,503 716,446 334,305
Net cash used in investing activities (935,893) (2,093,156) (396,908)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit, net 2,977,423 916,079 -
Payment of cash dividend (377,687) (265,144) (218,435)
Repurchase of common stock (149,500) (67,254) (549,468)
Proceeds from exercise of stock options 83,000 84,250 66,500
Net cash provided by (used in)
financing activities 2,533,236 667,931 (701,403)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 69,444 (2,183,980) 164,057
CASH & CASH EQUIVALENTS AT BEGINNING
OF PERIOD 193,918 2,377,898 2,213,841
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 263,362 $ 193,918 $2,377,898
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
Unrealized loss on available-for-sale
Securities, net of deferred taxes $ 154,745 $ - $ -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 349,560 $ 20,108 $ 572
Income/Franchise taxes 1,470,814 840,477 613,396
<FN>
See notes to consolidated financial statements.
</TABLE>
</page>
<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Common Stock (Note 8) Accumulated
Additional Other Retained
Paid-In Compre- Earnings Total
Shares Amount Capital hensive (Deficit) Equity
Income
(Loss)
<S> <C> <C> <C> <C> <C> <C>
Balance,
March 31, 1996 2,725,433 $ 681,358 $7,299,045 $ - $ (566,435) $7,413,968
Comprehensive Income:
Net earnings 1,323,204
Other Comprehensive
Income:
Unrealized loss on
available-for-sale
securities -
Total Comprehensive Income 1,323,204
Repurchase and retirement of
common stock (135,000) (33,750) (224,001) - (291,717) (549,468)
Exercise of
stock options 61,000 15,250 51,250 - - 66,500
Balance,
March 31, 1997 2,651,433 662,858 7,126,294 - 465,052 8,254,204
Comprehensive Income:
Net earnings 1,706,070
Other Comprehensive Income:
Unrealized loss on
available-for-sale
securities -
Total Comprehensive Income 1,706,070
Repurchase and retirement of
common stock (15,780) (4,617) (62,637) - - (67,254)
Exercise of
stock options 76,000 19,000 65,250 - - 84,250
Cash dividend ($.10 per
share) - - - - (265,144) (265,144)
Balance,
March 31, 1998 2,711,653 677,241 7,128,907 - 1,905,978 9,712,126
Comprehensive Income:
Net earnings 522,704
Other comprehensive
loss:
Unrealized loss on
available-for-sale
securities (154,745)
Total Comprehensive Income 367,959
Repurchase and retirement of
common stock (23,000) (5,750) (143,750) - - (149,500)
Exercise of
stock options 76,000 19,000 64,000 - - 83,000
Cash dividend ($.14 per
share) - - - - (377,687) (377,687)
Balance,
March 31, 1999 2,764,653 $ 690,491 $7,049,157 $(154,745)$2,050,995 $9,635,898
<FN>
See notes to consolidated financial statements.
</TABLE>
</page>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1999, 1998, AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principal Business Activity - The Company, through its operating
subsidiaries, is an air cargo carrier specializing in the overnight
delivery of small package air freight, a provider of aircraft parts,
engine overhaul management and component repair services and a
manufacturer of aircraft ground service equipment.
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries,
Mountain Air Cargo, Inc., CSA Air, Inc., Mountain Aircraft Services, LLC
and Global Ground Support, LLC. All significant intercompany
transactions and balances have been eliminated.
Concentration of Credit Risks - The Company's potential exposure to
concentrations of credit risk consists of trade accounts receivable and
investments. Accounts receivable are normally due within 30 days and
the Company performs periodic credit evaluations of its customers'
financial condition.
Substantially all of the Company's customers are concentrated in the
aviation industry and revenue can be materially affected by current
economic conditions and the price of certain supplies such as fuel. The
Company has customer concentrations in two areas of operations, air
cargo which provides service to one major customer and aviation parts
and repair service which provides service to approximately 150 customers
two of which are considered major customers. The loss of a major
customer would have a material impact on the Company's results of
operations.
Cash Equivalents - Cash equivalents consist of liquid investments with
maturities of three months or less when purchased.
Inventories - Inventories of the manufacturing subsidiary are carried
at the lower of cost (first in, first out) or market. Parts and
supplies inventory are carried at the lower of average cost or market.
Consistent with industry practice, the Company includes in current
assets aircraft parts and supplies, although a certain portion of these
inventories are not expected to be used within one year.
Property and Equipment - Property and equipment is stated at cost or, in
the case of equipment under capital leases, the present value of future
lease payments. Rotables inventory represents aircraft parts which are
repairable, capitalized and depreciated over their estimated useful
lives. Depreciation and amortization are provided on a straight-line
basis over the asset's service life or related lease term, as follows:
Flight equipment and intellectual property
7 years
Other equipment and furniture 3 to 6 years
Revenue Recognition - Cargo revenue is recognized upon completion of
contract terms and maintenance revenue is recognized when the service
has been performed. Revenue from product sales is recognized when
contract terms are completed and title has passed to customers.
Operating Expenses Reimbursed by Customer - The Company, under the terms
of its air cargo dry-lease service contracts, passes through to its
major customer certain cost components of its operations without markup.
The cost of flight crews, fuel, landing fees, outside maintenance and
certain other direct operating costs are included in operating expenses
and billed to the customer, at cost, as cargo and maintenance revenue.
Stock Based Compensation - SFAS No. 123 "Accounting for Stock-Based
Compensation," requires companies to measure employee stock compensation
plans based on the fair value method of accounting. However, the
Statement allows the alternative of continued use of Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees," with pro-forma disclosure of net earnings and earnings per
share determined as if the fair value based method had been applied in
measuring compensation cost. The Company adopted the new standard in
fiscal 1997 and elected the continued use of APB Opinion No. 25.
Income Taxes - Income taxes are provided for temporary differences
between the tax and financial accounting bases of assets and liabilities
using the asset and liability method. Deferred income taxes are
recognized for the tax consequence of such temporary differences at the
enacted tax rate expected to be in effect when the differences reverse.
</page>
<PAGE>
Accounting Estimates - The preparation of consolidated financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
amounts reported. Actual results could differ from those estimates.
Recent Accounting Pronouncements - In June 1997, Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS
130) was issued. SFAS 130 requires disclosure of comprehensive income
(which is defined as "the change in equity during a period excluding
changes resulting from investments by shareholders and distributions to
shareholders") and its components. SFAS 130 is effective for fiscal
years beginning after December 15, 1997, with reclassification of
comparative years. Unrealized gains or losses on available-for-sale
securities were immaterial in fiscal 1998 and 1997. The Company adopted
SFAS 130 in the year ending March 31, 1999.
Statement of Financial Accounting Standard No. 131, "Disclosure about
Segments of an Enterprise and Related Information" (SFAS 131) was also
issued in June 1997. SFAS 131 redefines how operating segments are
determined and requires disclosure of certain financial information
about a company's operating segments. The Company adopted SFAS 131 in
the fiscal year ending March 31, 1999.
The Company's four subsidiaries operate in three business segments.
Each business segment has separate management teams and infra-structures
that offer different products and services. The subsidiaries have been
combined into the following reportable segments: air cargo, aviation
services, and aviation ground equipment.
The accounting policies for all reportable segments are the same as
those described in the other portions of Footnote 1 of Notes to
Consolidated Financial Statements. The Company evaluates the
performance of its operating segments based on operating income.
Statement of Financial Accounting Standard No. 133, Accounting for
Derivative Instruments and Hedging Activities, requires all derivative
instruments to be recognized on the balance sheet at their fair value.
Changes in the fair value of derivatives are to be recorded each period
either in other comprehensive income or in current earnings depending on
the use of the derivative and whether it qualifies for hedge accounting.
SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 2001. The Company is currently evaluating the
effects of SFAS No. 133 on financial position and results of operations.
Reclassifications - Certain prior year reclassifications have been made
to 1998 and 1997 amounts to conform to current year presentation.
2. BUSINESS ACQUISITION, FACILITY START-UP AND MERGER EXPENSES
On August 29, 1997, the Company acquired certain assets and assumed
certain liabilities of the Simon Deicer Division of Terex, Inc. for
$716,000 cash. The acquired entity, renamed Global Ground Support, LLC
(Global), manufactures, sells and services aircraft deice equipment on a
worldwide basis. The acquisition was accounted for using the purchase
method; accordingly, the assets and liabilities (which included
$1,523,000 inventory, $288,000 fixed assets and $3,000 accounts
receivable, net of $1,049,000 in customer deposits and $49,000 warranty
obligation) of the acquired entity have been recorded at their estimated
fair value at the date of acquisition. Global's results of operations
have been included in the Consolidated Statements of Earnings since the
date of acquisition.
The following table presents unaudited pro-forma results of operations
as if the acquisition had occurred on April 1, 1997. These pro-forma
results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisition
been made at the beginning of fiscal 1998 or of results, which may occur
in the future. Furthermore, no effect has been given in the pro-forma
information for operating benefits that are expected to be realized
through the combination of the entities because precise estimates of
such benefits cannot be quantified.
</page>
<PAGE>
Year Ended March 31,
1998
Operating revenues $ 52,761,000
Net earnings 1,718,000
Net earnings per share - diluted .65
During fiscal year 1998 the Company incurred $189,000 in costs related
to the start-up of a newly certificated FAA 145 component repair
facility and professional fees associated with fiscal 1997 merger
discussions, terminated in April 1997. These costs have been expensed
in the accompanying Consolidated Statement of Earnings.
During fiscal year 1997 the Company incurred $348,000 in start-up and
merger expenses related to the relocation of certain of its aircraft
maintenance facilities and the above mentioned proposed merger
terminated in April 1997.
3. MARKETABLE SECURITIES
Marketable securities consists primarily of individual stocks and bonds
and mutual funds. The Company has classified marketable securities as
available-for-sale and they are carried at fair value. If significant,
unrealized gains and losses on such securities are excluded from
earnings and reported as a separate component of stockholders' equity,
net of the related income taxes, until realized. Realized gains and
losses on marketable securities are determined by calculating the
difference between the basis of each specifically identified marketable
security sold and its sales price. During 1999 and 1998, the Company
recorded realized gains of approximately $155,000 and $19,000,
respectively, in the accompanying consolidated statements of earnings.
At March 31, 1999 and 1998, marketable securities consist of the
following investment types:
1999 1998
Real estate trust $ 245,882 $ 350,000
Mutual funds 1,313,628 1,398,719
Equity securities 430,601 261,366
Government bonds - 433,700
Corporate bonds 96,148 112,472
Total $ 2,086,259 $ 2,556,257
4. INVENTORIES
Inventories consist of the following:
March 31,
1999 1998
Aircraft parts and supplies $ 2,395,333 $ 1,559,225
Aircraft equipment manufacturing:
Raw materials 2,111,076 3,197,008
Work in process 850,758 5,871
Finished goods 1,568,378 563,509
Total $ 6,925,545 $ 5,325,613
</page>
<PAGE>
5. ACCRUED EXPENSES
Accrued expenses consist of the following:
March 31,
1999 1998
Salaries, wages and
related items $ 1,055,426 $ 1,027,028
Profit sharing 163,150 466,425
Other 471,460 285,211
$ 1,690,036 $ 1,778,664
6. FINANCING ARRANGEMENTS
During fiscal 1999 the Company increased its bank financing line to
$7,000,000 under an unsecured revolving line of credit which expires on
August 31, 1999. The Company anticipates it will renew the line of
credit prior to its scheduled expiration. Amounts advanced bear interest
at the 30-day "LIBOR" rate plus 137 basis points. The LIBOR rate at
March 31, 1999 was 5.00%. At March 31, 1999 and 1998, the amounts
outstanding against the line were $3,893,502 and $916,079, respectively.
At March 31, 1999, $5,659,000 was available under the line.
7. LEASE COMMITMENTS
The Company has operating lease commitments for office equipment and its
office and maintenance facilities. The Company leases its corporate
office and certain maintenance facilities from a company controlled by
Company officers for $8,073 per month under a five year lease which
expires in May 2001.
In August 1996, the Company relocated certain portions of its
maintenance operations to a new maintenance facility located at the
Global TransPark in Kinston, N. C. Under the terms of the long-term
facility lease, after an 18 month grace period (from date of occupancy),
rent will escalate from $2.25 per square foot to $5.90 per square foot,
per year, over the 21.5 year life of the lease. However, based on the
occurrence of certain events the lease may be canceled by the Company.
The Company currently considers the lease to be non- cancelable for four
years and has calculated rent expense on a straight-line basis over this
portion of the lease term.
In August 1997 Global, located in Olathe, Kansas, leased approximately
57,000 square feet of manufacturing space for $17,030 per month. The
two-year operating lease expires in September 1999. In September 1998,
the lease was expanded to 112,500 square feet of manufacturing and
office space for $35,903 per month expiring August 2001.
At March 31, 1999, future minimum annual rental payments under non-
cancelable operating leases with initial or remaining terms of more than
one year are as follows:
2000 $ 701,851
2001 584,119
2002 208,307
2003 8,428
Total minimum lease payments$ 1,502,705
Rent expense for operating leases amounted to approximately $623,000,
$369,000, and $236,000 for 1999, 1998 and 1997, respectively. Rent
expense to related parties was $96,900, $96,900 and $94,700 for 1999,
1998 and 1997, respectively.
8. STOCKHOLDERS' EQUITY
The Company may issue up to 10,000,000 shares of preferred stock, in one
or more series, on such terms and with such rights, preferences and
limitations as determined by the Board of Directors. No preferred
shares have been issued as of March 31, 1999.
</page>
<PAGE>
The Company has granted options to purchase shares of common stock to
certain Company employees and outside directors at prices ranging from
$1.00 to $6.375 per share. All options were granted at exercise prices
which approximated the fair market value of the common stock on the date
of grant. Options granted in fiscal 1991 and 1992 vested over a five
year period and must be exercised within five years of the vesting date
while options granted in fiscal 1999 vest over one to three year periods
and must be exercised within one to ten years of the vesting date.
Options outstanding at March 31, 1999 have a weighted average
contractual life of 3.8 years. The Company has reserved an aggregate of
199,000 common shares for issuance upon exercise of these stock options.
Of the outstanding options at March 31, 1999 the exercise prices per
share range from $1.00 to $6.38, and 39,000 shares are currently
exercisable.
The following table summarizes information about stock options at March
31, 1999:
Options Outstanding Options Exercisible
Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Options Contractual Exercise Options Exercise
Price Outstanding Life (Years) Price Exercisible Price
$ 1.00 8,000 1.4 $ 1.00 8,000 $ 1.00
1.25 26,000 2.1 1.25 26,000 1.25
2.75 157,200 4.0 2.75 - -
6.38 5,000 9.4 6.38 5,000 6.38
$1.00 to 6.38 196,200 3.8 $ 2.57 39,000 $ 1.86
Option information is summarized as follows:
Executive Stock Option Plan
Weighted Average
Shares Exercise Price Per Share
Outstanding March 31, 1996 247,000 $ 1.11
Exercised 61,000 1.09
Outstanding March 31, 1997 186,000 1.12
Exercised 76,000 1.11
Outstanding March 31, 1998 110,000 1.12
Granted 162,200 2.86
Exercised 76,000 1.09
Outstanding March 31, 1999 196,200 2.57
The fair value of each option granted in 1999 is estimated on the date
of grant using the Black-Scholes option-pricing model with the
assumptions listed below.
Weighted average fair value per option $ 1.15
Assumptions used:
Weighted average expected volatility 61%
Weighted average expected dividend yield 2.2%
Weighted average risk-free interest rate 5.7%
Weighted average expected life, in years 3
No disclosure of pro-forma net income has been provided since the value
of employee stock options vested in fiscal 1999 was immaterial.
The Company has announced its intention to repurchase up to $3,200,000
of the Company's common stock under a share repurchase program. At
March 31, 1999 the Company had repurchased a total of 690,780 shares at
a total cost of $2,944,862 and may expend up to an additional $255,138
under this program.
9. REVENUES FROM MAJOR CUSTOMER
Approximately 63.1%, 64.0% and 89.5% of the Company's revenues were
derived from services performed for a major air express company in 1999,
1998 and 1997, respectively.
</page>
<PAGE>
10. INCOME TAXES
The provision for income taxes consists of:
Year Ended March 31,
1999 1998 1997
Current:
Federal $ 582,625 $ 1,080,000 $ 519,000
State 35,000 186,000 178,000
Total current 617,625 1,266,000 697,000
Deferred:
Federal (191,280) (65,500) 113,806
State (42,345) (14,500) 25,194
Total deferred (233,625) (80,000) 139,000
Total $ 384,000 $ 1,186,000 $ 836,000
The consolidated income tax provision was different from the amount
computed using the statutory Federal income tax rate for the following
reasons:
1999 1998 1997
Income tax provision at
U.S. Statutory rate $ 308,000 $ 983,000 $ 734,000
State income taxes 52,000 159,000 118,000
Reduction in valuation
allowance - (133,200) (37,000)
Meal and entertainment
disallowance 21,000 85,000 90,000
Other net 3,000 92,200 (69,000)
Income tax provision $ 384,000 $ 1,186,000 $ 836,000
The tax effect of temporary differences that gave rise to the Company's
deferred tax asset at March 31, 1999 and 1998 are as follows:
1999 1998
Book accruals over tax, net:
Warranty reserve $ 16,787 $ 3,420
Accounts receivable reserve 46,808 47,993
Accrued insurance 48,471 50,106
Accrued vacation 63,868 60,590
Deferred compensation 317,082 287,030
Other 73,447 (176,159)
Fixed assets 92,142 152,000
Total $ 658,605 $ 424,980
The deferred tax asset is classified in the accompanying 1999 and 1998
consolidated balance sheets according to the classification of the
related asset and liability.
The Internal Revenue Service (IRS) has recently completed an audit of
the Company's fiscal year 1997, 1996 and 1995 tax returns. The outcome
of the IRS audit did not have a material impact on the Company's results
of operations.
11. EMPLOYEE BENEFITS
The Company has a 401K defined contribution plan (AirT 401(K) Retirement
Plan). All employees of the Company are eligible to participate in the
plan. The Company's contribution to the 401(K) plan for the years ended
March 31, 1999, 1998 and 1997 was $191,000, $203,000, and $203,000,
respectively.
</page>
<PAGE>
The Company, in each of the past three years, has paid a discretionary
profit sharing bonus in which all employees have participated.
The Company's March 31, 1999, 1998, and 1997 expense was $147,000,
$466,000 and $352,000, respectively.
Effective January 1, 1996 the Company entered into supplemental
retirement agreements with certain key executives of the Company, to
provide for a monthly benefit upon retirement. The following table sets
forth the funded status of the plan at March 31, 1999 and 1998.
March 31,
1999 1998
Vested benefit obligation $ 918,575 $ 648,796
Accumulated benefit obligation 924,835 648,796
Projected benefit obligation 911,230 648,796
Plan assets at fair value - -
Projected benefit obligation
greater than plan assets 911,230 648,796
Unrecognized prior service cost (503,083) (389,495)
Unrecognized actuarial gain 18,569 -
Adjustment required to
recognize minimum liability 498,119 389,495
Accrued pension cost recognized in
the consolidated balance sheet $ 924,835 $ 648,796
In accordance with the provisions of Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions," the Company has
recorded an additional minimum liability representing the excess of the
accumulated benefit obligation over the fair value of plan assets and
accrued pension liability for its pension plan. The additional
liability has been offset by an intangible asset to the extent of prior
service cost.
The projected benefit obligation was determined using an assumed
discount rate of 7%. The liability relating to these benefits has been
included in deferred retirement obligation in the accompanying financial
statements.
Net periodic pension expense for fiscal 1999 and 1998 included the
following:
1999 1998
Future service cost $ 41,965 $ 31,317
Interest cost 56,867 61,229
Amortization 68,021 89,667
Net periodic pension cost $ 166,853 $ 182,213
The Company's former Chairman and CEO passed away on April 18, 1997.
Under the terms of his supplemental retirement agreement, approximately
$498,000 in present value of death benefits is required to be paid to
fulfill death benefit payments over the next 10 years. As of March 31,
1999 accruals related to the unpaid present value of the benefit
amounted to approximately $408,000.
12. NET EARNINGS PER COMMON SHARE
Basic earnings per share has been calculated by dividing net earnings by
the weighted average number of common shares outstanding during each
period. For purposes of calculating diluted earnings per share, shares
issuable under employee stock options were considered common share
equivalents and were included in the weighted average common shares.
</page>
<PAGE>
The computation of basic and diluted earnings per common share is as
follows:
Year Ended March 31,
1999 1998 1997
Net earnings $ 522,704 $ 1,706,070 $ 1,323,204
Weighted average common shares:
Shares outstanding
- basic 2,697,509 2,659,765 2,618,599
Dilutive stock
options 96,445 128,110 175,292
Shares outstanding
- diluted 2,793,954 2,787,875 2,793,891
Net earnings per common share:
Basic $ 0.19 $ 0.64 $ 0.51
Diluted $ 0.19 $ 0.61 $ 0.47
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(in thousands except per share data)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
1999
Operating Revenues $ 12,510 $ 12,916 $ 12,465 $ 14,229
Operating Income (Loss) 525 446 100 (124)
Earnings (Loss) Before
Income Taxes 511 426 25 (56)
Net Earnings (Loss) 307 239 16 (39)
Net Earnings (Loss)
Per Share -Basic $ 0.11 $ 0.09 $ 0.01 $ (0.02)
Net Earnings (Loss)
Per Share -Diluted 0.11 0.09 0.01 (0.02)
1998
Operating Revenues $ 8,159 $ 10,752 $ 16,463 $ 15,652
Operating Income 465 615 1,373 618
Earnings Before
Income Taxes 124 687 1,412 669
Net Earnings 94 419 893 300
Net Earnings
Per Share -Basic $ 0.03 $ 0.15 $ 0.34 $ 0.12
Net Earnings
Per Share -Diluted 0.03 0.15 0.32 0.11
</page>
<PAGE>
14. SEGMENT INFORMATION
The Company operates in three different business segments, overnight air
cargo, aviation services, and ground equipment. The ground equipment
segment represents operations since its acquisition in August 1997.
Segment data is summarized as follows:
Year Ended March 31,
1999 1998 1997
Operating Revenues
Overnight Air Cargo $ 33,433,473 $ 33,609,527 $ 31,530,661
Ground Equipment 13,395,761 12,763,091 -
Aviation Services 5,290,783 4,626,089 3,448,622
Corporate - 26,933 123,989
Total $ 52,120,017 $ 51,025,640 $ 35,103,272
Operating Income
Overnight Air Cargo $ 2,881,801 $ 3,140,747 $ 2,456,249
Ground Equipment (497,629) 1,070,636 -
Aviation Services (79,329) (138,663) 52,979
Corporate (1) (1,358,277) (1,001,718) (868,147)
Total $ 946,566 $ 3,071,002 $ 1,641,081
Identifiable Assets
Overnight Air Cargo $ 10,231,038 $ 8,950,619 $ 7,385,257
Ground Equipment 2,056,020 1,566,686 -
Aviation Services 210,882 374,742 1,766,081
Corporate 8,353,704 7,397,356 1,967,073
Total $ 20,851,644 $18,289,403 $ 11,118,411
Capital Expenditures, net
Overnight Air Cargo $ 258,621 $ 373,560 $ 228,998
Ground Equipment 623,545 463,556 -
Aviation Services 195,930 213,510 243,021
Corporate 173,050 - -
Total $ 1,251,146 $ 1,050,626 $ 472,019
Depreciation and Amortization
Overnight Air Cargo $ 203,954 $ 248,810 $ 178,302
Ground Equipment 174,415 63,611 -
Aviation Services 156,856 176,546 72,756
Corporate 113,704 80,362 120,557
Total $ 648,929 $ 569,329 $ 371,615
(1) Includes income from inter-segment transactions.
</page>
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
The Company had no disagreements on accounting or financial
disclosure matters with its independent certified public accountants to
report under this Item 9.
PART III
Item 10. Directors and Executive Officers of the Registrant.
J. Hugh Bingham, age 53, has served as President and Chief
Operating Officer of the Company since April 1997, as Senior Vice
President of the Company from June 1990 until April 1997, as Executive
Vice President from June 1983 to June 1990, and as a director since
March 1987. Mr. Bingham also serves as Chief Executive Officer and a
director of MAC, as Chief Executive Officer of MAS and as an Executive
Vice President and director of CSA.
Walter Clark, age 42, has served as Chairman of the Board of
Directors of the Company and Chief Executive Officer since April 1997.
Mr. Clark also serves as a director of MAC and CSA. Mr. Clark was
elected a director of the Company in April 1996. Mr. Clark was self-
employed in the real estate development business from 1985 until April
1997.
John J. Gioffre, age 55, has served as Vice President-Finance and
Chief Financial Officer of the Company since April 1984 and as
Secretary/Treasurer of the Company since June 1983. He has served as a
director of the Company since March 1987. Mr. Gioffre also serves as
Vice-President, Secretary/Treasurer and a director of MAC and CSA and as
Vice President-Finance, Treasurer and Secretary of MAS.
J. Leonard Martin, age 62, was elected a director in August 1994
and joined the Company as a Vice President in April 1997. From June
1995 until April 1997, Mr. Martin was an independent aviation
consultant. From April 1994 to June 1995, Mr. Martin served as Chief
Operating Officer of Musgrave Machine & Tool, Inc., a machining company.
From January 1989 to April 1994, Mr. Martin served as a consultant to
the North Carolina Air Cargo Authority in connection with the
establishment of the Global TransPark air cargo facility in Kinston,
North Carolina. From 1955 through 1988 Mr. Martin was employed by
Piedmont Airlines, a commercial passenger airline, in various
capacities, ultimately serving as Senior Vice President-Passenger
Services.
William H. Simpson, age 51, has served as Executive Vice President
of the Company since June 1990, as Vice President from June 1983 to June
1990, and as a director of the Company since June 20, 1985. Mr. Simpson
is also the President and a director of MAC, the Chief Executive Officer
and a director of CSA and Executive Vice President of MAS.
Menda J. Street, age 47, has served as Vice President of MAC since
1984, and in various other capacities at MAC since 1979.
Claude S. Abernethy, Jr., age 72, was elected as director of the
Company in June 1990. For the past five years, Mr. Abernethy has served
as a Senior Vice President of IJL Wachovia Securities, a securities
brokerage and investment banking firm, and its predecessor. Mr.
Abernethy is also a director of Carolina Mills, Inc. and Ridgeview
Incorporated.
Sam Chesnutt, age 65, was elected a director of the Company in
August 1994. Mr. Chesnutt serves as President of Sam Chesnutt and
Associates, an agribusiness consulting firm. From November 1988 to
December 1994, Mr. Chesnutt served as Executive Vice President of
AgriGeneral Company, L.P., an agribusiness firm.
Allison T. Clark, age 43, has served as a director of the Company
since May 1997. Mr. Clark is self-employed in the real estate
development business since 1987.
Herman A. Moore, age 69, was elected a director of the Company on
June 22, 1998. Mr. Moore is the president of Herman A. Moore & Assoc.,
Inc., a real estate development company.
</page>
<PAGE>
George C. Prill, age 76, has served as a director of the Company
since June 1982, as Chief Executive Officer and Chairman of the Board of
Directors from August 1982 until June 1983, and as President from August
1982 until spring 1984. Mr. Prill has served as an Editorial Director
for General Publications, Inc., a publisher of magazines devoted to the
air transportation industry, since November 1992 and was retired from
1990 until that time. From 1979 to 1990, Mr. Prill served as President
of George C. Prill & Associates, Inc., of Charlottesville, Virginia,
which performed consulting services for the aerospace and airline
industry. Mr. Prill has served as President of Lockheed International
Company, as Assistant Administrator of the FAA, as a Senior Vice
President of the National Aeronautic Association and Chairman of the
Aerospace Industry Trade Advisory Committee.
The officers of the Company and its subsidiaries each serve at the
pleasure of the Board of Directors. Allison Clark and Walter Clark are
brothers.
Each director receives a director's fee of $500 per month and an
attendance fee of $500 is paid to outside directors for each meeting of
the board of directors or a committee thereof. Pursuant to the
Company's 1998 Omnibus Securities Award Plan (the "Plan"), upon approval
of the Plan by the Company's stockholders, each director who is not an
employee of the Company received an option to purchase 1,000 shares of
Common Stock at an exercise price of $6.375 per share (the closing bid
price per share on the date of stockholder approval of the Plan.) The
Plan provides for a similar option award to any director first elected
to the board after the date the stockholders approved the Plan. Such
options expire ten years after the date they were granted.
To the Company's knowledge, based solely on review of the copies of
reports under Section 16(a) of the Securities Exchange Act of 1934 that
have been furnished to the Company and written representations that no
other reports were required, during the fiscal year ended March 31, 1997
all executive officers, directors and greater than ten-percent
beneficial owners have complied with all applicable Section 16(a) filing
requirements, except that Mr. Moore was late in filing a Form 4 report
with respect to his acquisition of shares in February 1999.
Item 11. Executive Compensation.
The following table sets forth a summary of the compensation paid
during each of the three most recent fiscal years to the Company's Chief
Executive Officer and to the four other executive officers on March 31,
1999 with total compensation of $100,000 or more.
</page>
<PAGE>
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Principal Long-term Compensation
Position Awards
Securities Underlying
Year Salary ($) Bonus ($) Options (#)
Walter Clark (1) 1999 132,527 20,900 -
Chief Executive Officer 1998 76,236 10,000 -
1997 - - -
J. Hugh Bingham 1999 203,774 20,900 9,000
Senior Vice President 1998 184,445 70,721 -
1997 148,289 50,222 -
John J. Gioffre 1999 128,297 15,675 9,000
Vice President 1998 127,142 52,641 -
1997 121,208 37,667 -
J. Leonard Martin (2) 1999 129,955 4,000 9,000
Vice President 1998 117,751 15,953 -
1997 - - -
William H. Simpson 1999 204,008 20,900 -
Executive Vice President 1998 195,809 70,721 -
1997 186,299 50,222 -
__________________________________________
(1) Mr. Clark commenced his employment in April 1997.
(2) Mr. Martin commenced his employment in April 1997.
The following table sets forth, for each of the executive officers
listed in the Summary Compensation Table information with respect to
grants of options to purchase Common Stock made by the Company to such
executive officers during the fiscal year ended March 31, 1999, as well
as a calculation of the potential realizable value based upon assumed
annual rates of stock price appreciation of five and ten percent per
year.
</page>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Percent
Grants of Total
Number of Options
Securities Granted Exercise
Underlying to or
Options (1) Employees Base Appreciation for Option
Name Granted (#) in Fiscal Price Expiration Term (2)
Year ($/SH) Date 5%($) 10%($)
Walter Clark - - - - - -
J. Hugh Bingham 9,000 5.73 2.75 3/19/03 5,334 11,487
John J. Gioffre 9,000 5.73 2.75 3/19/03 5,334 11,487
J. Leonard Martin 9,000 5.73 2.75 3/19/03 5,334 11,487
William H. Simpson - - - - - -
_________________
(1)The options were granted pursuant to the Company's 1998 Omnibus
Securities Award Plan (the "Plan"). Options become exercisable with
respect to one-third of the total number of shares each year
beginning on the first anniversary of the date of grant. In
addition, upon a "change in control" of the Company, as defined in
the Plan, the options become immediately exercisable. The options
expire four years after the date of grant. In addition, the options
expire immediately upon the termination of employment, other than
termination by the Company without cause or as a result of death,
permanent disability or retirement after age 55 with the consent of
the Company. Options expire three months after termination of
employment without cause, one year after death, permanent disability
or retirement after age 55 with the consent of the Company.
(2)These amounts, based on the assumed 5% and 10% appreciation rates
prescribed by the Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the
price of the Common Stock and may not reflect the actual value
ultimately realized by recipients of the options.
The following table sets forth, for each of the executive officers
listed in the Summary Compensation Table who exercised options to
purchase shares of Common Stock during the most recent fiscal year, the
number of shares purchased and the value realized upon exercise, which
is determined based on the aggregate fair market value of the shares at
the time of the exercise minus the aggregate exercise price. The table
also sets forth the number of shares of Common Stock underlying
unexercised options at March 31, 1999 held by each of the executive
officers listed in the Summary Compensation Table. The table also
includes the value of such options at March 31, 1999 based upon the
closing bid price of the Company's Common Stock in the over-the-counter
market on that date ($3.625 per share) and the exercise price of the
options.
</page>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Shares Number of Securities Value of Unexercised
Acquired Value Underlying Unxercised In-the-Money Options
On Realized Options at FY-End (#) at FY-End ($)
Name Exercise# ($) Exer- Unexer- Exer- Unexer-
cisable cisable cisable cisable
Walter Clark - - - - - -
J. Hugh Bingham 32,000 35,000 6,000 9,000 14,250 7,875
John J. Gioffre 16,000 18,000 4,000 9,000 9,500 7,875
J. Leonard Martin - - - 9,000 - 7,875
William H. Simpson 28,000 30,000 24,000 - 61,000 -
Employment Agreements.
Effective January 1, 1996, the Company and each of its subsidiaries
entered into employment agreements with J. Hugh Bingham, John J. Gioffre
and William H. Simpson, each of substantially similar form. Each of
such employment agreements provides for an annual base salary ($130,000,
$103,443 and $165,537 for Messrs. Bingham, Gioffre and Simpson,
respectively) which may be increased upon annual review by the
Compensation Committee of the Company's Board of Directors. In
addition, each such agreement provides for the payment of annual
incentive bonus compensation equal to a percentage (2.0%, 1.5% and 2.0%
for Messrs. Bingham, Gioffre and Simpson, respectively) of the Company's
consolidated earnings before income taxes and extraordinary items as
reported by the Company in its Annual Report on Form 10-K. Payment of
such bonus is to be made within 15 days after the Company files its
Annual Report on Form 10-K with the Securities and Exchange Commission.
The initial term of each such employment agreement expires on March
31, 1999, and the term is automatically extended for additional one-year
terms unless either such executive officer or the Company's Board of
Directors gives notice to terminate automatic extensions which must be
given by December 1 of each year (commencing with December 1, 1996).
Each such agreement provides that upon the executive officer's
retirement, he shall be entitled to receive an annual benefit equal
$75,000 ($60,000 for Mr. Gioffre), reduced by three percent for each
full year that the termination of his employment precedes the date he
reaches age 65. The retirement benefits under such agreements may be
paid at the executive officer's election in the form of a single life
annuity or a joint and survivor annuity or a life annuity with a ten-
year period certain. In addition, such executive officer may elect to
receive the entire retirement benefit in a lump sum payment equal to the
present value of the benefit based on standard insurance annuity
mortality tables and an interest rate equal to the 90-day average of the
yield on ten-year U.S. Treasury Notes.
Retirement benefits shall be paid commencing on such executive
officer's 65th birthday, provided that such executive officer may elect
to receive benefits on the later of his 62nd birthday, in which case
benefits will be reduced as described above, or the date on which his
employment terminates, provided that notice of his termination of
employment is given at least one year prior to the termination of
employment. Any retirement benefits due under the employment agreement
shall be offset by any other retirement benefits that such executive
officer receives under any plan maintained by the Company. In the event
such executive officer becomes totally disabled prior to retirement, he
will be entitled to receive retirement benefits calculated as described
above.
</page>
<PAGE>
In the event of such executive officer's death before retirement,
the agreement provides that the Company shall be required to pay an
annual death benefit to such officer's estate equal to the single life
annuity benefit such executive officer would have received if he had
terminated employment on the later of his 65th birthday or the date of
his death, payable over ten years; provided that such amount would be
reduced by five percent for each year such executive officer's death
occurs prior to age 65, but in no event more than 50 percent.
Each of the employment agreements provides that if the Company
terminates such executive officer's employment other than for "cause"
(as defined in the agreement), such executive officer be entitled to
receive a lump sum cash payment equal to the amount of base salary
payable for the remaining term of the agreement (at the then current
rate) plus one-half of the maximum incentive bonus compensation that
would be payable if such executive officer continued employment through
the date of the expiration of the agreement(assuming for such purposes
that the amount of incentive bonus compensation would be the same in
each of the years remaining under the agreement as was paid for the most
recent year prior to termination of employment). Each of the agreements
further provides that if any payment on termination of employment would
not be deductible by the Company under Section 280G(b)(2) of the
Internal Revenue Code, the amount of such payment would be reduced to
the largest amount that would be fully deductible by the Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock (determined in accordance with Rule
13d-3 of the Securities and Exchange Commission) of the Company as of
May 1, 1999 by each person that beneficially owns five percent or more
of the shares of Common Stock. Each person named in the table has sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned, except as otherwise set forth in the notes
to the table.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Amount of
Title of Name and Address of Beneficial Ownership Percent
Class Benefcial Owner as of May 1, 1999 of Class
Common Stock, Walter Clark and Caroline Clark,
par value Executors(1) 1,288,716(1) 46.6%
$.25 per P.O. Box 488
share Denver, North Carolina 28650
William H. Simpson 261,580(2) 9.4%
P.O. Box 488
Denver, North Carolina 28650
_____________________________
(1) Includes 1,279,272 shares controlled by such individuals as the
executors of the estate of David Clark, 7,222 shares owned by
Walter Clark and 2,222 shares owned by Caroline Clark.
(2) Includes 1,200 shares held jointly with J. Hugh Bingham and 24,000
shares under options granted by the Company.
</page>
<PAGE>
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock of the Company by each director of
the Company and by all directors and officers of the Company as a group
as of May 1, 1999. Each person named in the table has sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned, except as otherwise set forth in the notes to the
table.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Shares and Percent of Common
Stock Beneficially Owned as of May 1, 1999
Name Position with Company No. of Shares Percent
J. Hugh Bingham President, Chief Operating
Officer, Director 119,080(1)(2) 4.3%
Walter Clark Chairman of the Board of
Directors and Chief
Executive Officer 1,286,494(3) 46.5%
John J. Gioffre Vice President-Finance,
Secretary and Treasurer,
Director 57,580(4) 2.1%
J. Leonard Martin Vice President, Director 100(5) *
William H. Simpson Executive Vice President,
Director 261,580(1)(6) 9.4%
Claude S. Abernethy, Jr. Director 23,611(7) *
Sam Chesnutt Director 9,600(7) *
Allison T. Clark Director 3,222(7) *
Herman A. Moore Director 31,000(7) 1.1%
George C. Prill Director 46,966(7) 1.7%
All directors and
executive officers
as a group (11 persons) N/A 1,853,033(8) 66.1%
__________________________________________
* Less than one percent.
(1) Includes 1,200 shares jointly held by Messrs. Simpson and Bingham.
(2) Includes 6,000 shares under options granted by the Company to Mr.
Bingham.
(3) Includes 1,279,272 shares held by the estate of David Clark, of
which Mr. Walter Clark is a co-executor.
(4) Includes 4,000 shares under options granted by the Company to
Mr. Gioffre.
(5) Such 100 shares are held by Mr. Martin's spouse of which shares Mr.
Martin disclaims beneficial ownership.
(6) Includes 24,000 shares under options granted by the Company to Mr.
Simpson.
(7) Includes 1,000 shares under options granted by the Company.
(8) Includes an aggregate of 39,000 shares of Common Stock members of
such group have the right to acquire within 60 days.
</page>
<PAGE>
Item 13. Certain Relationships and Related Transactions.
The Company leases its corporate and operating facilities at the
Little Mountain, North Carolina airport from Little Mountain Airport
Associates, Inc. ("Airport Associates"), a corporation whose stock is
owned by J. Hugh Bingham, William H. Simpson, John J. Gioffre, the
estate of David Clark and three unaffiliated third parties. On May 30,
1996, the Company renewed its lease for this facility, scheduled to
expire on that date, for an additional five-year term, and adjusted the
rent to account for increases in the consumer price index. The lease
may be extended for an additional five-year term, with rental payments
to be adjusted to reflect changes in the consumer price index. Upon the
renewal, the monthly rental payment was increased from $7,000 to $8,073.
The Company paid aggregate rental payments of $96,876 to Airport
Associates pursuant to such lease during the fiscal year ended March 31,
1999. The Company believes that the terms of such lease are no less
favorable to the Company than would be available from an independent
third party.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
The following documents are filed as part of this report:
1. Financial Statements
The following financial statements are incorporated herein by
reference in Item 8 of Part II of this report:
(i) Independent Auditors' Report.
(ii) Consolidated Balance Sheets as of March 31, 1999 and
1998.
(iii)Consolidated Statements of Earnings for each of
the three years in the period ended March 31, 1999.
(iv) Consolidated Statements of Stockholders' Equity for
each of the three years in the period ended March 31,
1999.
(v) Consolidated Statements of Cash Flows for each of
the three years in the period ended March 31, 1999.
(vi) Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
No schedules are required to be submitted.
3. Exhibits
No. Description
3.1 Certificate of Incorporation, as amended,
incorporated by reference to Exhibit 3.1 of the Company's
Annual Report on Form 10-K for the fiscal year ended
March 31, 1994
3.2 By-laws of the Company, as amended, incorporated by
reference to Exhibit 3.2 of the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1996
4.1 Specimen Common Stock Certificate, incorporated by
reference to Exhibit 4.1 of the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1994
10.1 Aircraft Dry Lease and Service Agreement dated
February 2, 1994 between Mountain Air Cargo, Inc. and
Federal Express Corporation, incorporated by reference to
Exhibit 10.13 to Amendment No. 1 on Form 10-Q/A to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1993
10.2 Loan Agreement among NationsBank of North Carolina,
N.A., the Company and its subsidiaries, dated January 17,
1995, incorporated by reference to Exhibit 10.7 to the
Company's Quarterly Report on Form 10-Q for the period
ended December 31, 1994
10.3 Aircraft Wet Lease Agreement dated April 1, 1994
between Mountain Air Cargo, Inc. and Federal Express
Corporation, incorporated by reference to Exhibit 10.4 of
Amendment No. 1 on Form 10-Q/Q to the Company's Quarterly
Report on Form 10-Q for the period ended September 30,
1994
10.4 Adoption Agreement regarding the Company's Master
401(k) Plan and Trust, incorporated by reference to
Exhibit 10.7 to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1993*
</page>
<PAGE>
10.5 Form of option to purchase the following amounts of
Common Stock issued by the Company to the following
executive officers during the following fiscal years
ended March 31: *
Number of Shares
Executive Officer 1993 1992 1991
J. Hugh Bingham 30,000 30,000 40,000
John J. Gioffre 20,000 20,000 25,000
William H. Simpson 40,000 40,000 60,000
incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1993
10.6 Premises and Facilities Lease dated November 16,
1995 between Global TransPark Foundation, Inc. and
Mountain Air Cargo, Inc., incorporated by reference to
Exhibit 10.5 to Amendment No. 1 on Form 10-Q/A to the
Company's Quarterly Report on Form 10-Q for the period
ended December 31, 1995
10.7 Employment Agreement dated January 1, 1996 between
the Company, Mountain Air Cargo Inc. and Mountain
Aircraft Services, LLC and William H. Simpson,
incorporated by reference to Exhibit 10.8 to the
Company's Annual Report Form 10-K for the fiscal year
ended March 31, 1996*
10.8 Employment Agreement dated January 1, 1996 between
the Company, Mountain Air Cargo Inc. and Mountain
Aircraft Services, LLC and John J. Gioffre, incorporated
by reference to Exhibit 10.9 to the Company's Annual
Report Form 10-K for the fiscal year ended March 31,
1996*
10.9 Employment Agreement dated January 1, 1996 between
Company, Mountain Air Cargo Inc. and Mountain Aircraft
Services, LLC and J. Hugh Bingham, incorporated by
reference to Exhibit 10.10 to the Company's Annual Report
Form 10k for the fiscal year end March 31, 1996.*
10.10 Employment Agreement dated September 30, 1997
between Mountain Aircraft Services, LLC and J. Leonard
Martin, incorporated by reference to Exhibit 10.10 to the
Company's Quarterly Report Form 10-Q for the quarter
ended December 31, 1997.*
10.11 Omnibus Securities Award Plan, incorporated by
reference to Exhibit 10.11 to the Company's Quarterly
Report Form 10-Q for the quarter ended June 30, 1998.*
10.12 Commercial and Industrial Lease Agreement dated
August 25, 1998 between William F. Bieber and Global
Ground Support, LLC, incorporated by reference to Exhibit
10.12 of the Company's Quarterly Report on 10Q for the
period ended September 30, 1998.
10.13 Amendment, dated February 1, 1999, to Aircraft
Dry Lease and Service Agreement dated February 2, 1994
between Mountain Air Cargo, Inc. and Federal Express
Corporation, incorporated by reference to Exhibit 10.13
of the Company's Quarterly Report on 10Q for the period
ended December 31, 1998.
21.1 List of subsidiaries of the Company, incorporated by
reference to Exhibit 21.1 to the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1998
27.1 Financial Data Schedules
__________________
* Management compensatory plan or arrangement required to be
filed as an exhibit to this report.
</page>
<PAGE>
b. Reports on Form 8-K.
No Current Reports on Form 8-K were filed in the last quarter
of the fiscal year ended March 31, 1999.
</page>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AIR TRANSPORTATION HOLDING COMPANY, INC.
By: /s/ Walter Clark
Walter Clark, Chief Executive Officer
(Principal Executive Officer)
Date: June 11, 1999
By: /s/ John J. Gioffre
John J. Gioffre, Vice President - Finance
(Principal Financial and Accounting Officer)
Date: June 11, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Claude S. Abernethy
Claude S. Abernethy, Jr., Director
Date: June 11, 1999
By: /s/ J. Hugh Bingham
J. Hugh Bingham, Director
Date: June 11, 1999
By: /s/ Allison T. Clark
Allison T. Clark, Director
Date: June 11, 1999
By: /s/ Walter Clark
Walter Clark, Director
</page>
<PAGE>
Date: June 11, 1999
By: /s/ Sam Chesnutt
Sam Chesnutt, Director
Date: June 11, 1999
By: /s/ John J. Gioffre
John J. Gioffre, Director
Date: June 11, 1999
By: /s/ J. Leonard Martin
J. Leonard Martin, Director
Date: June 11, 1999
By: /s/ Herman A. Moore
Herman A. Moore, Director
Date: June 11, 1999
By: /s/ George C. Prill
George C. Prill, Director
Date: June 11, 1999
By: /s/ William Simpson
William Simpson, Director
Date: June 11, 1999
</page>
<PAGE>
EXHIBIT INDEX
Exhibit Number Document
27.1 Financial Data Schedules
</page>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from Air
Transportation Holding Company, Inc. SEC Form 10-K for year ended March
31, 1998 (identify specific financial statements) and is qualified in its
entirety by reference to such financial statements."
</LEGEND>
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0
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