<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended December 31, 1999
Commission File Number 0-11720
Air T, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52-1206400
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Post Office Box 488, Denver, North Carolina 28037
(Address of principal executive offices)
(704) 377-2109
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
2,748,153 Common Shares, par value of $.25 per share were outstanding as of
February 11, 2000
This filing contains 20 pages.
The exhibit index is on page 18.
</page>
<PAGE>
AIR T, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings (Loss)
for the three and nine-month periods ended
December 31, 1999 and 1998 (Unaudited) 3
Consolidated Balance Sheets at
December 31, 1999 (Unaudited)
and March 31, 1999 4
Consolidated Statements of Cash
Flows for the nine-month periods
ended December 31, 1999 and 1998 (Unaudited) 5
Notes to Consolidated Financial
Statements (Unaudited) 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8-14
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15-17
Exhibit Index 18
Exhibits 19-20
2 </page>
<PAGE>
<TABLE>
AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Operating Revenues:
Cargo $ 4,762,519 $ 4,925,340 $13,733,496 $14,496,799
Maintenance 2,842,958 2,982,195 9,777,530 9,743,912
Ground equipment 5,573,038 2,997,077 10,227,571 9,690,672
Aircraft services and other 2,400,631 1,560,400 6,536,989 3,959,814
15,579,146 12,465,012 40,275,586 37,891,197
Operating Expenses:
Flight operations 3,340,241 3,402,323 9,901,360 10,142,043
Maintenance and services 4,680,162 4,468,634 14,854,505 12,673,717
Ground equipment 4,696,544 2,746,920 9,075,590 8,233,800
General and administrative 1,864,927 1,561,109 5,490,636 5,232,802
Depreciation & amortization 236,108 186,414 700,510 538,177
14,817,982 12,365,400 40,022,601 36,820,539
Operating Income 761,164 99,612 252,985 1,070,658
Non-operating Expense
(Income):
Interest 165,199 101,124 467,531 225,810
Deferred retirement expense 6,249 6,249 19,003 18,747
Loss on asset sale 26,108 - 26,108 -
Investment income (38,579) (32,532) (129,620) (135,954)
158,977 74,841 383,022 108,603
Earnings (Loss) Before Income
Taxes 602,187 24,771 (130,037) 962,055
Income Taxes Expense
(Benefit) Provision 228,000 9,137 (50,000) 400,590
Net Earnings (Loss) $ 374,187 $ 15,634 $ (80,037) $ 561,465
Net Earnings (Loss) Per Share:
Basic $ 0.14 $ 0.01 $ (0.03) $ 0.21
Diluted $ 0.13 $ 0.01 $ (0.03) $ 0.20
Average Shares Outstanding:
Basic 2,759,153 2,688,653 2,762,820 2,698,875
Diluted 2,831,312 2,783,974 2,762,820 2,795,496
<FN>
See notes to consolidated financial statements.
</TABLE>
3</page>
<PAGE>
<TABLE>
AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, 1999 March 31,1999
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 91,221 $ 263,362
Marketable securities 1,228,484 2,086,259
Accounts receivable, net 7,397,059 7,008,987
Inventories 9,939,200 6,925,545
Deferred tax asset, net 424,980 424,980
Prepaid expenses and other 307,100 174,450
Total Current Assets 19,388,044 16,883,583
Property and Equipment 6,250,647 5,856,182
Less accumulated depreciation (3,630,873) (2,992,556)
2,619,774 2,863,626
Deferred Tax Asset 233,625 233,625
Intangible Pension Asset 570,119 498,119
Other Assets 489,516 372,691
Total Assets $ 23,301,078 $ 20,851,644
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank $ 5,406,068 $ 3,893,502
Accounts payable 5,912,409 4,267,890
Accrued expenses 1,458,791 1,690,036
Income taxes payable 150,444 -
Current portion of long-term obligations 55,241 57,853
Total Current Liabilities 12,982,953 9,909,281
Capital Lease Obligation (less current
Portion) 31,276 23,920
Deferred Retirement Obligation (less current
Portion) 1,287,150 1,282,545
Stockholders' Equity:
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
2,748,153 shares issued 686,366 690,491
Additional paid in capital 7,000,175 7,049,157
Accumulated other comprehensive loss (437,522) (154,745)
Retained earnings 1,750,680 2,050,995
8,999,699 9,635,898
Total Liabilities and Stockholders' Equity $ 23,301,078 $ 20,851,644
<FN>
See notes to consolidated financial statements.
</TABLE>
4</page>
<PAGE>
<TABLE>
AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Nine Months Ended
December 31,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings $ (80,037) $ 561,465
Adjustments to reconcile net (loss) earnings
to net cash used in operations:
Depreciation and amortization 700,510 538,177
Change in deferred tax asset -
(242,625)
Loss on sale of assets (26,108) -
Change in retirement obligation 4,605 52,773
Change assets and liabilities:
Accounts receivable (388,072) 1,017,203
Inventories (3,013,654) (1,572,131)
Prepaid expenses and other (321,476) (85,021)
Accounts payable 1,644,519 (981,422)
Accrued expenses (226,500) (422,067)
Income taxes payable 150,444 (648,880)
Total adjustments (1,475,732) (2,343,993)
Net cash used in
operating activities (1,555,769) (1,782,528)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (430,551) (553,552)
Purchase of marketable securities (100,000) (189,250)
Sale of marketable securities 674,998 450,283
Net cash provided by (used in)
investing activities 144,447 (292,519)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit, net 1,512,566 2,455,222
Payment of cash dividend (220,278) (377,687)
Repurchase of common stock ( 53,107) (149,500)
Net cash provided by
financing activities 1,239,181 1,928,035
NET DECREASE IN CASH
& CASH EQUIVALENTS (172,141) (147,012)
CASH & CASH EQUIVALENTS AT BEGINNING
OF PERIOD 263,362 193,918
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 91,221 $ 46,906
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
Unrealized loss on available-for-sale securities $ 282,777 -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 454,618 $ 194,586
Income/Franchise taxes 50,746 1,439,144
<FN>
See notes to consolidated financial statements.
</TABLE>
5</page>
<PAGE>
AIR T, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. Financial Statements
The Consolidated Balance Sheet as of December 31, 1999, the
Consolidated Statements of Earnings (Loss) for the three and nine-month
periods ended December 31, 1999 and 1998 and the Consolidated
Statements of Cash Flows for the nine-month periods ended December 31,
1999 and 1998 have been prepared by Air T, Inc. (formerly Air
Transportation Holding Company, Inc.) (the Company) without audit. On
August 13, 1999, Air Transportation Holding Company, Inc. stockholders
approved a name change to Air T, Inc.; Air T, Inc. common shares will
continue to be traded on NASDAQ under the symbol AIRT. In the opinion
of management, all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows as of December 31, 1999, and for
prior periods presented, have been made.
It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended March 31,
1999. The results of operations for the period ended December 31 are
not necessarily indicative of the operating results for the full year.
B. Income Taxes
The tax effect of temporary differences, primarily asset reserves
and accrued liabilities, gave rise to the Company's deferred tax asset
in the accompanying December 31, 1999 and March 31, 1999 consolidated
balance sheets.
The income tax provisions for the nine-months ended December 31,
1999 and 1998 differ from the federal statutory rate primarily as a
result of state income taxes and timing differences.
C. Net Earnings (Loss) Per Share
Basic earnings (loss) per share has been calculated by dividing
net earnings (loss) by the weighted average number of common shares
outstanding during each period. For purposes of calculating diluted
earnings per share, shares issuable under employee stock options were
considered common share equivalents and were included in the weighted
average common shares. For the nine-months ended December 31, 1999,
shares issuable under employee stock options were excluded from the
diluted loss per share calculation due to their anti-dilutive effect.
6</page>
<PAGE>
The computation of basic and diluted earnings (loss) per common share
is as follows:
Three Months Ended Nine Months Ended
December 31, December 31,
1999 1998 1999 1998
Net earnings (loss) $ 374,187 $ 15,634 $ (80,037)$ 561,465
Weighted average common shares:
Shares outstanding - basic 2,759,153 2,688,653 2,762,820 2,698,875
Dilutive stock options 72,159 95,321 - 96,621
Shares outstanding - diluted 2,831,312 2,783,974 2,762,820 2,795,496
Net earnings (loss) per common share:
Basic $ 0.14 $ 0.01 $ (0.03)$ 0.21
Diluted $ 0.13 $ 0.01 $ (0.03)$ 0.20
7</page>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Overview
On August 13, 1999, Air Transportation Holding Company, Inc.
stockholder's approved a name change to AIRT, Inc.; AIRT Inc. common
shares will continue to be traded on NASDAQ under the symbol AIRT.
Statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" or made by management of
the Company which contain more than historical information may be
considered forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995) which are subject to
risks and uncertainties. Actual results may differ materially from
those expressed in the forward-looking statements because of important
risks and uncertainties, including but not limited to the effects of
economic, competitive and market conditions in the aviation industry.
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 four types of aircraft operated by
MAC and CSA-Cessna Caravan, Fokker F-27, Short Brothers SD3-60, and
Short Brothers SD3-30. Cessna Caravan, Fokker F-27 and Shorts SD3-60
aircraft (a total of 95 aircraft at December 31, 1999) are owned by and
dry-leased from a major air express company (Customer), and Short
Brothers SD3-30 aircraft (two aircraft at December 31, 1999) are owned
by the Company and periodically 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.
8</page>
<PAGE>
MAC and CSA's revenue contributed $23,601,000 and $24,481,000 to
consolidated revenue for the nine-month periods ended December 31, 1999
and 1998, respectively.
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
$6,429,000 and $3,695,000 to the Company's revenues for the nine-month
periods ended December 31, 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 aviation ground support equipment
on a worldwide basis. Global, operated as a subsidiary of MAS,
contributed revenues of approximately $10,228,000 and $9,691,000 for
the nine-month periods ended December 31, 1999 and 1998, respectively.
In June 1999, Global was awarded a four-year, $25,000,000 contract
to supply deicing equipment to the United States Air Force. The
Company was subsequently made aware that a competing bidder had filed a
protest opposing the awarding of the contract to Global. In September
1999 the General Accounting Office finalized the denial of the protest
and upheld the awarding of the Air Force contract to Global.
As a result of the delays created by this protest, revenue
originally anticipated to commence during the quarter ending December
31, 1999, is currently projected to be delayed until the quarter ending
March 31, 2000. Additionally, the protest and its resulting delay
caused Global to incur substantial legal fees and additional overhead
costs per direct labor hour due to reallocation of fixed production
costs to other product lines during the nine-month period ended
December 31, 1999.
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, and comparatively
little has occurred during the first and fourth fiscal quarters due to
the nature of its product line. The Company's award of the $25,000,000
de-icing equipment contract contributes to management's plans to reduce
Global's seasonal fluctuation in revenues and earnings by broadening
its product line to increase revenues in the first and fourth fiscal
quarters. The remainder of the Company's business is not materially
seasonal.
Results of Operations
Consolidated revenue increased $2,384,000 (6.3%) to $40,276,000
and $3,114,000 (25.0%) to $15,579,000, respectively, for the nine and
three-month periods ended December 31, 1999 compared to their
equivalent 1998 periods. The nine and three-month current periods' net
increase in revenue primarily resulted from increased sales by Global
and MAS, partially offset by decreased revenue at MAC.
9</page>
<PAGE>
Results of Operations (Cont'd)
Operating expenses increased $3,202,000 (8.7%) to $40,023,000 for
the nine-month period ended December 31, 1999 and $2,453,000 (19.8%) to
$14,818,000 for the three-month period ended December 31, 1999 compared
to their equivalent 1998 periods. The change in operating expenses for
the nine-month period consisted of the following: cost of flight
operations decreased $241,000 (2.4%), primarily as a result of
decreases in pilot and flight personnel costs and costs associated with
pilot travel, offset by a $88,000 MAC retroactive insurance adjustment;
maintenance and services expense increased $2,181,000 (17.2%),
primarily as a result of increases associated with personnel and cost
of parts and labor related to the expansion of MAS's repair shop, and
increased personnel cost and a $72,000 prior period insurance
adjustment at MAC; ground equipment increased $842,000 (10.2%), as a
result of increased Global cost of sales and higher than normal
production costs associated with the introduction of new products and
unused plant capacity related to the Air Force contract protest and
resulting delays; depreciation and amortization increased $162,000
(30.2%) as a result of increased depreciation related to the expansion
of MAS and Global; general and administrative expense increased
$258,000 (4.9%) primarily as a result of increased wages and benefits,
legal fees, rent, and staff travel expense partially offset by
decreased accrued profit sharing.
The change in operating expenses for the three-month period
consisted of the following: cost of flight operations decreased a net
of $62,000 (1.8%), primarily as a result of decreased personnel and
travel cost; maintenance and brokerage expense increased $212,000
(4.7%), primarily as a result of increases associated with personnel
and cost of parts and labor related to the expansion of MAS's repair
shop; ground equipment increased $1,950,000 (71.0%), as a result of
increased Global sales and higher than normal production costs
associated with the introduction of new products and unused plant
capacity related to the Air Force contract protest and resulting
delays; depreciation and amortization increased $50,000 (26.7%) as a
result of increased depreciation related to the expansion of MAS and
Global; general and administrative expense increased $304,000 (19.5%)
primarily as a result of increased benefits costs, rent and staffing
associated with the expansion of Global and MAS.
Non-operating expense increased $274,000 and $84,000,
respectively, for the nine and three-month periods ended December 31,
1999 and December 31, 1998. The increases were principally due to
increased credit line interest associated with higher levels of
borrowing.
10</page>
<PAGE>
Results of Operations (Cont'd)
Pretax earnings decreased $1,092,000 and increased $577,000,
respectively, for the nine and three-month periods ended December 31,
1999, compared to their respective December 31, 1998 periods. The nine-
month decrease was principally due to a $613,000 increase in the loss
at Global and decreased earnings at MAC, partially offset by an
increase in MAS earnings. The pretax earnings increase for the three-
month period ended December 31, 1999 compared to 1998 was primarily due
to a $607,000 decrease in the loss at Global, increased profitability
at MAS, partially offset by decreased earnings at MAC. The substantial
increase in Global's nine-month current period loss was primarily due
to lost revenue, unused productive capacity and legal cost associated
with the protest and delay in finalizing the Air Force contract, higher
than normal production, engineering and design cost associated with the
introduction of new products and higher levels of interest expense to
fund its operations. Global was able to return to profitability during
the third quarter due to increased sales and the substantial completion
of development costs incurred during the current period's first and
second quarter. MAC's decreased earnings are primarily related to
retroactive insurance adjustments, decreased wet lease cargo and
maintenance revenue and increased operating costs.
The provision for income taxes decreased $451,000 and increased
$219,000, respectively, for the nine and three-month periods ended
December 31, 1999 compared to their respective 1998 periods due to
decreased taxable income in the nine-month period and increased taxable
income in the current three-month period ended December 31, 1999.
Liquidity and Capital Resources
As of December 31, 1999 the Company's working capital amounted to
$6,405,000, a decrease of $569,000 compared to March 31, 1999.
In August 1999, the Company renewed its $7,000,000 unsecured line
of credit to August 2000. In December 1999, the Company temporarily
increased its unsecured line of credit to $7,500,000 for a ninety-day
period to end March 31, 2000. The line, which matures August 31, 2000,
is expected to be renewed before its expiration date. Amounts advanced
under the line of credit bear interest at the 30-day "LIBOR" rate plus
137 basis points.
Under the terms of the line of credit the Company must maintain
certain financial ratios and may not encumber certain real or personal
property. At December 31, 1999 the Company was in a net borrowing
position against its credit line of $5,388,000. Management believes
that funds anticipated from operations and the continuation of existing
credit facilities will provide adequate cash flow to meet the Company's
future financial needs.
11</page>
<PAGE>
Liquidity and Capital Resources (Cont'd)
The respective nine-month periods ended December 31, 1999 and 1998
resulted in the following changes in cash flow: operating activities
used $1,556,000 and $1,783,000, investing activities provided $144,000
and used $293,000 and financing activities provided $1,239,000 and
$1,928,000. Net cash decreased $172,000 and $147,000 for the
respective nine-month periods ended December 31, 1999 and 1998.
Cash used in operating activities was $227,000 less for the nine-
months ended December 31, 1999 compared to the similar 1998 period,
principally due to decreased earnings and increased inventory and
accounts receivable partially offset by increases in accounts payable
and taxes payable.
Cash used in investing activities for the nine-months ended
December 31, 1999 was approximately $437,000 less than the comparable
period in 1998, principally due to lower capital expenditures and
higher net proceeds from marketable securities transactions in 1999.
Cash provided by financing activities for the nine-months ended
December 31, 1999 was approximately $689,000 less than the comparable
1998 period, principally due to decreases in borrowings under the line
of credit, cash dividend and repurchase of common stock in 1999.
There are currently no commitments for significant capital
expenditures. The Company's Board of Directors, on August 7, 1998,
adopted the policy to pay an annual cash dividend in the first quarter
of each fiscal year, in an amount to be determined by the board. The
Company paid a $0.08 per share cash dividend in June 1999.
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 $420,000 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 the impact of inflation and changing prices
on its revenues and net earnings will not have a material effect on its
manufacturing operations because increased costs due to inflation could
be passed on to its customers, or on its air cargo business since the
major cost components of its operations, consisting principally of
fuel, crew and certain maintenance costs are reimbursed, without
markup, under current contract terms.
12</page>
<PAGE>
Year 2000 Issue - Overview and Results to Current Period
In 1998 the Company 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 broke 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. As detailed below,
this review was conducted and completed by the end of the Company's
current period second quarter by the Company's Year 2000 compliance
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 the Company catalogued all IT
Systems utilized directly by the Company. The Company revised, and
tested, certain customized IT Systems to enable such systems to work
properly following the year 2000 and verified that recently acquired IT
Systems from third-party vendors are "year 2000 compliant".
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 completed the testing and replacing of any
noncompliant devices.
Material Third Parties. The Company made 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 actively encouraged year 2000 compliance on the part of
third parties and developed contingency plans in the event of their
year 2000 non-compliance. The Company 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 were under no
contractual obligation to provide such information to the Company.
The Company met with its major air cargo customer on numerous
occasions, to discuss and co-ordinate year 2000 readiness and
contingency planning. In addition, the Company reviewed public filings
of its major customer to assess the customer's state of year 2000
compliance.
13</page>
<PAGE>
In conjunction with the Company's major air cargo customer and
industry trade associations, the Company was 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 have affected the Company's air cargo operations.
The Company provided this customer with detailed plans and the
time schedule for completion of its year 2000 compliance program, which
the Company 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 for year 2000 compliance is
approximately $90,000. No material future costs are expected to be
incurred.
Contingency Plans
The Company developed contingency plans for year 2000 non-compliance,
including the pre-arranging of alternative operating methods and
locations, the stockpiling of critical inventory and supplies and
implementing back-up systems and procedures, including manual systems
to perform mission-critical functions while IT systems can be brought
back on line. Contingency plans also called for alternative Company-
wide communications systems and complete on-site staffing of key
executive and management personnel during the transition through to
January 3, 2000.
Results of Year 2000 Compliance Effort
The Company did not experience any disruptions to its business or the
services it provides customers as a result of any Year 2000 issues.
Additionally, the Company has not been notified by any customers of any
Year 2000 related problems related to products or services provided by
the Company. Although the Company has not yet experienced or been made
aware of any Year 2000 problems to date, there can be no assurance that
there will not be any Year 2000 related issues in the future.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
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 quarter-end
balance of the line of credit, annual interest expense would have
increased by approximately $54,000.
14</page>
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) 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 Amendment to Certificate of Incorporation dated August 11, 1999
3.3 By-laws of the Company, incorporated by reference to
Exhibit 3.2 of the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996
4.1 Specimen Common Stock Certificate, incorporated by
reference to exhibit 4.1 of the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1994
10.1 Aircraft Dry Lease and Service Agreement dated February 2,
1994 between Mountain Air Cargo, Inc. and Federal Express
Corporation, incorporated by reference to Exhibit 10.13 to
Amendment No. 1 on Form 10-Q/A to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended December 31, 1993
10.2 Loan Agreement among Bank of America, the Company and its
subsidiaries, dated August 31, 1999, incorporated by reference
to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1999
10.3 Aircraft Wet Lease Agreement dated April 1, 1994 between
Mountain Air Cargo, Inc. and Federal Express Corporation,
incorporated by reference to Exhibit 10.4 of Amendment No. 1 on
Form 10-Q/Q to the Company's Quarterly Report on Form 10-Q for
the period ended September 30, 1994
10.4 Adoption Agreement regarding the Company's Master 401(k) Plan and Trust,
incorporated by reference to Exhibit 10.7 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993*
10.5 Form of options 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
J. Hugh Bingham 30,000 30,000
John J. Gioffre 20,000 20,000
William H. Simpson 40,000 40,000
incorporated by reference to Exhibit 10.8 of the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1993
15</page>
<PAGE>
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 10-K 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 Omibus Securities Award Plan, incorporated by reference to Exhibit 10.11
for the Quarterly Report on Form 10-Q for the quarter ended June 30,
1999.*
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
Form 10Q for the quarter 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 Form 10Q for the quarter
ended December 31, 1998.
21.1 List of subsidiaries of the Company, incorporated by reference to Exhibit
21.1 of the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997
27.1 Financial Data Schedule (For SEC use only
______________________
* Management compensatory plan or arrangement required to be filed as an
exhibit to this report.
b. Reports on Form 8-K
No Current Reports on Form 8-K were filed in the first nine months of
the fiscal year ending March 31, 2000.
16</page>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Air T, Inc.
(Registrant)
Date: February 11, 2000 /s/ Walter Clark
Walter Clark, Chief Executive Officer
Date: February 11, 2000 /s/ John Gioffre
John J. Gioffre, Chief Financial Officer
17</page>
<PAGE>
AIR T, INC.
EXHIBIT INDEX
EXHIBIT PAGE
3.2 Amendment to Certificate of Incorporation
dated August 11, 1999. 19-20
18</page>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from Air T, Inc.
SEC Form 10-Q for quarter ended December 31, 1999 (identify spectific financial
statements) and is qualified in its entirety by reference to such financial
statements."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 91221
<SECURITIES> 1228484
<RECEIVABLES> 6925545
<ALLOWANCES> 0
<INVENTORY> 9922553
<CURRENT-ASSETS> 19388044
<PP&E> 6250647
<DEPRECIATION> 3630873
<TOTAL-ASSETS> 23301078
<CURRENT-LIABILITIES> 12982953
<BONDS> 0
0
0
<COMMON> 686366
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23301078
<SALES> 40275586
<TOTAL-REVENUES> 40275586
<CGS> 0
<TOTAL-COSTS> 40022601
<OTHER-EXPENSES> 383022
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (130037)
<INCOME-TAX> (50000)
<INCOME-CONTINUING> (80037)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (80037)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 13, 1999
Air T, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-11720 52-1206400
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
3524 Airport Road
Maiden, North Carolina 28650
(Address of Principal Executive Offices)
(Zip Code)
704) 377-2109
(Registrant's Telephone Number, Including Area Code)
AIR TRANSPORTATION HOLDING COMPANY, INC.
(Former name or address, if changed from last report)
Item 5. Other Events.
On August 13, 1999, the Registrant changed its name form Air
Transportation Holding Company, Inc. to Air T, Inc. The trading
symbol for the Registrant's common stock will continue to be AIRT
and the CUSIP number for the Registrant's common stock changed to
009207 01 1.
A copy of the Registrant's Certificate of Amendment of
Certificate of Incorporation effecting the change of the
Registrant's name is filed as Exhibit 4.1 to this report.
Item 7. Financial Statements and Exhibits.
.
(a) Exhibits
Exhibit 4.1 -- Certificate of
Amendment to Certificate of Incorporation
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: August 13, 1999
AIR TRANSPORTATION HOLDING COMPANY,
INC.
By: /s/ John J.
Gioffre
John J. Gioffre, Secretary
Exhibit 4.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AIR TRANSPORTATION HOLDING COMPANY, INC.
Air Transportation Holding Company, Inc., a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation,
duly adopted a resolution setting forth a proposed amendment of
the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable, and calling a meeting of the
stockholders of said corporation for consideration thereof. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of
Incorporation of Air Transportation Holding
Company, Inc. be amended to change the name
of the Company to "Air T, Inc." and that
Article 1 of the Certificate of Incorporation
be amended to read in its entirety as
follows: "The name of the Corporation is Air
T, Inc."
SECOND: That thereafter, a meeting of the stockholders of
said corporation was duly called and held, upon notice in
accordance with Section 222 of the General Corporation Law of the
State of Delaware at which meeting the stockholders unanimously
voted in favor of the amendment.
THIRD: That the aforesaid amendments were duly adopted in
accordance with the applicable provisions of Sections 242 and 222
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Air Transportation Holding Company,
Inc. has caused this certificate to be signed by Walter Clark,
its Chairman of the Board of Directors, this 11th day of August,
1999.
AIR TRANSPORTATION HOLDING COMPANY, INC.
By: /s/ Walter Clark
Walter Clark
Chairman of the Board of
Directors
