<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1997
Commission file number: 1-8306
AIR EXPRESS INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2074327
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
120 Tokeneke Road, Darien, Connecticut 06820
(203) 655-7900
(Address of, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
NONE
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 3 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
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date (applicable only to corporate
registrants).
The number of shares of common stock outstanding as of August 11, 1997 was
34,456,606 (Net of 122,517 Treasury Shares).
<PAGE>
AIR EXPRESS INTERNATIONAL CORPORATION
June 1997 Form 10-Q Quarterly Report
Table of Contents
Part I - Financial Information
Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as at
June 30, 1997 and December 31, 1996.......................... 2
Condensed Consolidated Statements of Operations -
three months and six months ended June 30, 1997
and 1996..................................................... 3
Consolidated Statements of Cash Flows -
six months ended June 30, 1997 and 1996...................... 4
Notes to Condensed Consolidated Financial
Statements................................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 8
Part II - Other Information
Item 1. Legal Proceedings............................................... 11
Item 6. Exhibits and Reports on Form 8-K................................ 11
<PAGE>
<TABLE>
Page 2
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, 1997 Dec 31, 1996
(Unaudited)
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents ......................... $ 51,037 $ 46,516
Accounts receivable, (less allowance for
doubtful accounts of $4,480 and $4,721) .......... 339,163 346,323
Other current assets .............................. 7,463 6,295
Total current assets ........................ 397,663 399,134
Investment in unconsolidated affiliates .............. 18,470 13,991
Property, plant and equipment (less accumulated
depreciation and amortization of $55,681
and $53,455) ........................................ 59,393 61,112
Deposits and other assets ............................ 16,608 15,226
Goodwill (less accumulated amortization
of $11,484 and $10,673) ............................. 87,014 91,866
Total assets ................................ $ 579,148 $ 581,329
Liabilities and stockholders' investment
Current Liabilities:
Current portion of long-term debt ................. $ 2,809 $ 3,915
Bank overdrafts payable ........................... 1,437 2,058
Transportation payables ........................... 166,234 166,686
Accounts payable .................................. 44,633 50,201
Accrued liabilities ............................... 57,180 61,347
Income taxes payable .............................. 9,990 14,691
Total current liabilities ................... 282,283 298,898
Long-term debt .................................... 15,204 16,616
Other liabilities ................................. 6,540 6,729
Total liabilities ........................... 304,027 322,243
Stockholders' Investment:
Capital stock-
Preferred (authorized 1,000,000 shares,
none outstanding) ................................ -- --
Common, $.01 par value (authorized 40,000,000
shares, issued 34,380,278 and 34,179,512 shares .. 344 342
Capital surplus ................................... 139,036 137,060
Cumulative translation adjustments ................ (19,839) (15,633)
Retained earnings ................................. 156,486 137,989
276,027 259,758
Less: 51,027 and 40,958 shares of treasury stock,
at cost ....................................... (906) (672)
Total stockholders' investment .................... 275,121 259,086
Total liabilities and stockholders' investment .... $ 579,148 $ 581,329
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
Page 3
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except
per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues ..................... $ 386,591 $ 320,660 $ 737,746 $ 615,447
Operating expenses:
Transportation ............. 264,325 214,926 503,049 416,571
Terminal ................... 64,387 55,479 128,513 108,141
Selling, general and
administrative ............ 38,468 34,577 74,486 64,954
Operating profit ............. 19,411 15,678 31,698 25,781
Other income (expense):
Interest, net .............. 270 (828) 478 (1,815)
Other, net ................. 1,074 1,066 2,352 2,027
1,344 238 2,830 212
Income before provision
for income taxes ............ 20,755 15,916 34,528 25,993
Provision for income taxes ... 7,713 6,207 12,947 10,137
Net income ................... $ 13,042 $ 9,709 $ 21,581 $ 15,856
Income per common share:
Primary .................. $ .37 $ .33 $ .62 $ .53
Fully diluted ............ $ .37 $ .30 $ .61 $ .50
Weighted average number
of common shares (000's):
Primary .................. 35,058 29,805 34,952 29,612
Fully diluted ............ 35,177 34,653 35,116 34,616
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
Page 4
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Dollars in thousands)
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................ $ 21,581 $ 15,856
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................. 6,170 4,676
Amortization of goodwill ....................... 1,296 1,163
Amortization of bond discount .................. -- 115
Deferred income taxes .......................... 538 635
Equity in earnings of unconsolidated
affiliates ................................... (1,614) (508)
Losses (gains) on sales of assets .............. 34 (100)
Changes in assets and liabilities, net of
business acquisitions:
(Increase) in accounts receivable, net .......... (2,708) (3,407)
(Increase) in other current assets .............. (978) (825)
(Increase) in other assets ...................... (1,887) (428)
Increase (decrease) in transportation
payables ...................................... 3,378 (15,928)
(Decrease) in accounts payable .................. (2,370) (3,459)
(Decrease) increase in accrued liabilities ...... (2,894) 667
(Decrease) increase in income taxes payable ..... (3,319) 2,832
(Decrease) increase in other liabilities ........ (18) 104
Total adjustments .......................... (4,372) (14,463)
Net cash provided by operating activities ..... 17,209 1,393
Cash flows from investing activities:
Business acquisitions, net of cash acquired ..... -- (6,282)
Other investing activities ...................... 387 (330)
Proceeds from sales of assets ................... 300 272
Capital expenditures ............................ (6,382) (4,633)
Investment in unconsolidated affiliates ......... (3,596) (71)
Net cash used in investing activities ......... (9,291) (11,044)
Cash flows from financing activities:
Net (repayments) borrowings in bank overdrafts
payable .......................................... (425) 468
Payment of long-term debt ......................... (959) (1,387)
Issuance of common stock .......................... 1,978 977
Payment of cash dividends ......................... (2,732) (1,859)
Purchase of treasury stock ........................ (234) (14)
Net cash used by financing activities ......... (2,372) (1,815)
Effect of foreign currency exchange rates on cash ..... (1,025) (627)
Net increase (decrease) in cash and cash equivalents .. 4,521 (12,093)
Cash and cash equivalents at beginning of period ...... 46,516 54,463
Cash and cash equivalents at end of period ............ $ 51,037 $ 42,370
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
Page 5
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. The consolidated balance sheet at June 30, 1997, the consolidated
statements of operations for the three-month and six-month periods ended
June 30, 1997 and 1996, and the consolidated statements of cash flows
for the six-month periods ended June 30, 1997 and 1996 were prepared by
the Company without audit. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of
operations, and cash flows for the interim periods were made. Certain
items in the June 30, 1996 financial statements were reclassified to
conform to the classification of June 30, 1997 financial statements.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, were condensed or omitted. Accordingly, these
condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report to stockholders for the year
ended December 31, 1996.
Statements included herein which are not historical facts are
forward-looking statements. These statements are based upon information
available to the Company on the date hereof. Inherent in these
statements are a variety of risks and other factors, both known and
unknown, which may cause the Company's actual results to differ
materially from those in forward-looking statements. Accordingly, the
realization of forward-looking statements is not certain, and all such
statements should be evaluated based upon the applicable risks and
uncertainties affecting the Company. Consequently, the results of
operations for the three and six month periods ended June 30, 1997 are
not necessarily indicative of the results of operations expected for the
full year ending December 31, 1997.
B. Interest, net was as follows:
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest expense ....... $(396) $(1,503) $ (779) $(3,012)
Interest income ........ 666 675 1,257 1,197
$ 270 $ (828) $ 478 $(1,815)
</TABLE>
C. Other, net was as follows:
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Equity in earnings of
unconsolidated affiliates ... $ 905 $ 615 $1,617 $1,180
Foreign exchange gains ....... 230 374 769 747
Other ........................ (61) 77 (34) 100
$1,074 $1,066 $2,352 $2,027
</TABLE>
<PAGE>
Page 6
D. Supplemental disclosures of cash flow information:
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest and income taxes paid:
Interest ............... $ 287 $ 176 $ 551 $ 2,560
Income taxes ........... 9,626 3,599 14,444 6,122
$ 9,913 $ 3,775 $14,995 $ 8,682
</TABLE>
Non cash investing and financing activities:
In June 1996, as a result of conversions of the 6.0% Convertible
Subordinated Debentures ("Debentures"), the Company issued 469,688 shares
of Common Stock valued at approximately $7.1 million.
E. Common Stock Split:
On June 19, 1997, the Company's Board of Directors declared a
three-for-two split of the Company's Common Stock, payable in the form of
a stock dividend. The additional shares will be distributed on July 25,
1997 to shareholders of record on July 11, 1997. Accordingly, all share
and per share information throughout the consolidated financial statements
have been restated to reflect this split.
F. Subsequent Event:
The Company entered into a ground lease agreement dated July 1, 1997 with
the Port Authority of New York/New Jersey in conjunction with a lease
development agreement entered into with the New York City Industrial
Development Agency for the construction of a 135,000 square foot air cargo
facility terminal building at John F. Kennedy International Airport. The
Company will finance the development in part through the issuance of
tax-exempt New York City Industrial Development Agency Special Facility
Revenue Bonds (1997 Air Express International Corporation Project), Series
1997, in aggregate principal amount of $19.0 million due July 1, 2024 (the
"Series 1997 Bonds").
Interest shall initially be payable at a weekly rate set by the
Remarketing Agent using the minimum rate necessary (as determined by the
Remarketing Agent based on the examination of tax-exempt obligations
comparable to the Series 1997 Bonds known by the Remarketing Agent to have
been priced or traded under then-prevailing market conditions) for the
Remarketing Agent to sell the Series 1997 Bonds on the effective date of
such weekly rate at a price equal to 100% of their principal amount
(without regard to accrued interest). The Company may from time to time
change the method of determining the interest rate on the Series 1997
Bonds to a daily, weekly, commercial paper or long-term interest rate. If
<PAGE>
Page 7
the appropriate interest rate is not or cannot be determined for whatever
reason, the method of determining interest on the Series 1997 Bonds shall
be equal to the Public Securities Association Municipal Index or such
other weekly high-grade index comprised of seven-day, tax-exempt variable
rate demand notes produced by Municipal Market Data, Inc. In no event
shall the interest rate on the Series 1997 Bonds exceed the maximum annual
interest rate of 15.0%.
The Series 1997 Bonds are fully secured by an irrevocable direct-pay
letter of credit issued by a U.S. Bank with a termination date of July 16,
2002. The Company is obligated to reimburse the U.S. Bank for amounts
drawn under the letter of credit in accordance with a reimbursement
agreement between the Company and the U.S. Bank (the "Reimbursement
Agreement"). The Series 1997 Bonds may be redeemed in whole or in part at
the direction of the Company. Among the various covenants contained in the
Reimbursement Agreement, the Company is to maintain certain ratios and
balances as to minimum stockholders' investment, debt to stockholders'
investment and fixed charge coverage. The Company is in compliance with
all conditions of the Reimbursement Agreement.
<PAGE>
Page 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
The Company considers its total business to represent a single segment
comprised of three major services: airfreight forwarding, ocean freight
forwarding, and customs brokerage and other services, all of which are fully
integrated. The following table sets forth the gross revenues and net revenues
(gross revenues minus transportation expenses) for each of these three service
categories, as well as the Company's internal operating expenses (terminal and
selling, general and administrative expenses) and operating profit:
<TABLE>
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Gross Revenues:
Airfreight ............................... $296.6 $244.4 $569.2 $476.0
Ocean freight ............................ 53.5 49.2 97.8 89.4
Customs brokerage and other .............. 36.5 27.1 70.7 50.0
Total Gross Revenues ................... $386.6 $320.7 $737.7 $615.4
Net Revenues:
Airfreight ............................... $ 77.0 $ 67.4 $146.4 $129.6
Ocean freight ............................ 15.3 14.2 28.5 24.5
Customs brokerage and other .............. 30.0 24.1 59.8 44.8
Total Net Revenues ..................... 122.3 105.7 234.7 198.9
Internal Operating Expenses:
Terminal ................................. 64.4 55.5 128.5 108.1
Selling, general and administrative ...... 38.5 34.5 74.5 65.0
Total Internal Operating Expenses ...... 102.9 90.0 203.0 173.1
Operating Profit ........................... $ 19.4 $ 15.7 $ 31.7 $ 25.8
</TABLE>
Consolidated gross revenues for the second quarter and six months ended
June 30, 1997 increased 20.5% to $386.6 million and 19.9% to $737.7 million,
respectively, over the comparable periods in 1996. Additionally, the increase in
gross revenues for the quarter and six months included the negative effect of
approximately $6.3 million and $10.8 million, respectively, resulting from a
stronger U.S. dollar when converting foreign currency revenues into U.S. dollars
for financial reporting purposes. Consolidated net revenues for the second
quarter and first six months of 1997 increased 15.7% to $122.3 million and 18.0%
to $234.7 million, respectively, over the comparable 1996 periods.
Gross airfreight revenues for the second quarter and first six months of
1997 increased 21.4% to $296.6 million and 19.6% to $569.2 million,
respectively, over the comparable 1996 periods. Airfreight net revenues for the
second quarter and first six months of 1997 increased 14.2% to $77.0 million and
13.0% to $146.4 million, respectively, over the comparable 1996 periods. The
increases in gross and net revenues from airfreight services for both the
<PAGE>
Page 9
quarter and six months were attributable to increases in shipments and the total
weight of cargo shipped. For the quarter, shipments increased 17.7% and the
weight of cargo shipped increased 21.7% over the second quarter of 1996. For the
six month period, shipments increased 13.4% and the weight of cargo shipped
increased 19.3% over the first six months of 1996. The gross margin (net
revenues as a percentage of gross revenues) for the second quarter and first six
months of 1997 decreased 1.6% from 27.6% to 26.0% and 1.5% from 27.2% to 25.7%,
respectively, when compared to the comparable 1996 periods. The decreases were
mainly due to reduced yields associated with the increases in the weight of
cargo shipped.
Ocean freight gross revenues for the second quarter and first six months of
1997 increased 8.7% to $53.5 million and 9.4% to $97.8 million, respectively,
over the comparable 1996 periods. Ocean freight net revenues for the second
quarter and first six months of 1997 increased 7.7% to $15.3 million and 16.3%
to $28.5 million, respectively, over the comparable 1996 periods. The increase
in both the gross and net ocean freight revenues was due to increased shipping
volumes from existing customers and the Company's continuing penetration into
the ocean freight market.
Customs brokerage and other gross revenues for both the second quarter and
first six months of 1997 increased 34.7% to $36.5 million and 41.4% to $70.7
million, respectively, over the comparable 1996 periods. Customs brokerage and
other net revenues for the second quarter and first six months of 1997 increased
24.5% to $30.0 million and 33.5% to $59.8 million, respectively, over the
comparable 1996 periods. The increase in both the gross and net customs
brokerage and other revenues was mainly attributable to the Company's continuing
efforts to expand its customs brokerage activities to existing and new
customers.
Internal operating expenses increased $12.9 million or 14.3% for the second
quarter and $29.9 million or 17.3% for the first six months of 1997 over the
comparable periods in 1996. These increases were mainly attributable to the
additional expenses incurred in connection with greater shipping volumes.
Operating profit for the second quarter of 1997 increased $3.7 million or
23.6% over the second quarter of 1996. For the first six months of 1997,
operating profit increased $5.9 million or 22.9% over the comparable 1996
period.
Interest expense for the second quarter and first six months of 1997
decreased approximately $1.1 million and $2.2 million, respectively, when
compared to the comparable 1996 periods due primarily to the elimination of
interest expense associated with the Debentures which were converted on or
before July 8, 1996.
The effective income tax rates for the second quarter and the first six
months of 1997 decreased to 37.2% and 37.5%, respectively, when compared to
39.0% for the comparable 1996 periods. The decreases were largely the result of
<PAGE>
Page 10
a shift in the mix of worldwide earnings to countries with lower effective
income tax rates, along with a reduction in the total of nondeductible expenses
as a percentage of pre-tax income.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 "Earnings Per Share" (FASB 128), which
establishes standards for computing and presenting earnings per share. FASB 128
will be effective for periods ending after December 15, 1997. Adoption of this
accounting standard is not expected to have a material impact upon the Company's
earnings per share computations assuming the current capital structure.
Liquidity and Capital Resources
At June 30, 1997, cash and cash equivalents increased approximately $4.5
million to $51.0 million from $46.5 million at December 31, 1996. For the first
six months of 1997, the Company's primary source of cash was approximately $17.2
million from operating activities, while its primary uses were for: capital
expenditures of $6.4 million, investment in unconsolidated affiliates of $3.6
million and dividend payments of $2.7 million. Cash flow provided by operating
activities increased approximately $15.8 million over the first six months of
1996. This increase was impacted by the on-going integration of prior years'
acquisitions which has resulted in improvements in the management of working
capital. Working capital increased approximately $15.1 million in the six months
to $115.4 million. The increase was mainly due to the increase in profits.
Capital expenditures increased approximately $1.8 million from $4.6 million
for the six months of 1996 to $6.4 million for the six months of 1997. The $6.4
million of capital expenditures was primarily for improvement and expansion of
facilities and management information services.
At June 30, 1997, the Company had available for future borrowings
approximately $71.8 million of its $75.0 million revolving credit facility. The
Company utilized approximately $3.2 million under this facility mainly for
letters of credit issued in connection with its insurance programs.
Additionally, various of the Company's foreign subsidiaries maintained overdraft
facilities with foreign banks, aggregating approximately $18.6 million, of which
approximately $1.4 million was outstanding.
In July 1997, with the issuance of the Industrial Development Revenue Bonds
(See Note F), the Company's long-term debt will increase $19.0 million and
correspondingly its debt to equity ratio (total long-term debt as a percentage
of stockholders' investment) will increase from 6.5% at June 30, 1997 to
approximately 13.0%.
In June 1997, the Company's Board of Directors authorized an increase in
the quarterly cash dividend from four cents ($.04) to five cents ($.05) per
share.
<PAGE>
Page 11
Management believes that the Company's available cash and sources of
credit, together with expected future sources of credit and cash generated from
operations, will be sufficient to satisfy its anticipated needs for working
capital, capital expenditures and dividends.
PART II - OTHER INFORMATION
Item 1. - Legal Proceedings
The Company believes that there are no legal proceedings, other than ordinary
routine litigation incidental to the business of the Company, to which the
Company or any of its subsidiaries is a party. Management is of the opinion that
the ultimate outcome of existing legal proceedings, if adverse, would not have a
material effect on the Company's consolidated financial position.
Item 6. - Exhibits and Reports on Form 8-K
a) Exhibits:
Exhibit 10 - Employment Agreement
Exhibit 11 - Computation of Earnings Per Common Share.
Exhibit 27 - Financial Data Schedule.
b) Reports on Form 8-K:
None.
<PAGE>
Page 12
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 Express International Corporation
(Registrant)
Date: August 13, 1997 /s/ Dennis M. Dolan
Dennis M. Dolan
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: August 13, 1997 /s/ Walter L. McMaster
Walter L. McMaster
Vice President - Controller
(Principal Accounting Officer)
Exhibit 10
EMPLOYMENT AGREEMENT
Agreement made as of July 1, 1997, by and between AIR EXPRESS INTERNATIONAL
CORPORATION, a Delaware corporation with its offices at 120 Tokeneke Road,
Darien, Connecticut 06820 ("AEI") and HENDRIK J. HARTONG, JR. of Two Soundview
Drive, Greenwich, Connecticut 06830 ("HJH").
The parties agree as follows:
1. That HJH is hereby employed by AEI as the Chairman of the Board of
Directors of AEI to:
* Serve as Chairman of the Meetings of the Board of Directors of AEI.
* Serve as Chairman of the Meetings of the Shareholders of AEI.
* Serve as Chairman of the Executive Committee of the Board of
Directors of AEI.
In addition, HJH shall provide such evaluation and due diligence of
acquisition candidates and investor relations services as shall be
requested by the Chief Executive Officer of AEI.
2. This Agreement shall commence on July 1, 1997 and end on June 30,
2002. The Agreement may be terminated at any time by the Board of
Directors of AEI or by mutual agreement of HJH and the Board of
Directors of AEI. In either event, on termination of this Agreement,
HJH will be paid a sum equal to the annual salary payable by AEI to
HJH hereunder for the remaining term of this Agreement.
3. If there is a "change in control" of AEI, as is defined in this
Agreement, either party will have the right to terminate this
Agreement at any time after the change in control, and in the event of
such termination, HJH will be paid a sum equal to the annual salary
payable by AEI to HJH hereunder for the remaining term of this
Agreement. "Change in control" is defined to have occurred when: a)
more than 40 percent of AEI's outstanding common stock (or the
equivalent in voting power of any class or classes of outstanding
securities of AEI ordinarily entitled to vote in the election of
directors) shall be beneficially held or acquired by any corporation
or person or group; or (b) there is a sale or other disposition of all
or substantially all of the assets or business of AEI.
Page 1 of 2
<PAGE>
4. HJH will receive an annual salary of $150,000.00 and shall be eligible
to participate in the AEI medical/dental/life insurance and 401(k)
benefit plans.
5. AEI will continue to provide life insurance coverage to HJH under
General American Life Insurance Policy Number 6127139 during the term
of this Agreement.
6. This Agreement shall be governed by the laws of the State of
Connecticut and constitutes the only agreement between the parties
relating to the employment of HJH by AEI, and supersedes and
terminates all previous consulting, employment and severance
agreements between HJH and AEI.
AIR EXPRESS INTERNATIONAL CORPORATION
Attest: By: ________________________________________
Guenter Rohrmann, President
______________________________ and Chief Executive Officer
Daniel J. McCauley, Secretary
________________________________________
HENDRIK J. HARTONG, JR.
Page 2 of 2
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(Unaudited)
(In thousands, except
per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Primary:
Net income applicable to
common shares .................... $13,042 $ 9,709 $21,581 $15,856
Weighted average of common
shares outstanding ............... 34,283 29,154 34,235 29,072
Common share equivalents ........... 775 651 717 540
Average common shares out-
standing ......................... 35,058 29,805 34,952 29,612
Earnings per common share .......... $ .37 $ .33 $ .62 $ .53
Fully diluted:
Weighted average of common
shares outstanding ............... 34,283 29,154 34,235 29,072
Common share equivalents ........... 894 678 881 673
Common shares issuable upon
assumed conversion of subor-
dinated debentures ............... -- 4,821 -- 4,871
Average common shares
outstanding ...................... 35,177 34,653 35,116 34,616
Earnings per common share .......... .37 .30 .61 .50
<FN>
Primary earnings per share was computed by dividing net income by the
weighted average common and common share equivalents outstanding during the
period. For the quarter and six months ended June 30, 1996, fully diluted
earnings per share was calculated assuming the conversion of the Debentures
and the elimination of the associated interest expense, net of tax, of
approximately $.73 million and $1.46 million, respectively. Effective July
8, 1996, the Company completed the redemption for all of its Debentures.
Therefore, the Debentures and related interest expense were not a component
of the Company's fully diluted earnings per share calculation for the
quarter and six months ended June 30, 1997.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 51,037
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0
0
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</TABLE>
