| |||||
| x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, | ||||
| ☐ |
| Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____to _____ | ||||
| Delaware | 52-1206400 | ||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock | AIRT | NASDAQ Global Market | ||||||
| Alpha Income Preferred Securities (also referred to as 8% Cumulative Capital Securities) (“AIP”) | AIRTP | NASDAQ Global Market | ||||||
| Warrant to purchase AIP | AIRTW | NASDAQ Global Market | ||||||
| Large accelerated filer ☐ | Accelerated filer ☐ | ||||
Non-accelerated filer | Smaller reporting company | ||||
Emerging growth company ☐ | |||||
No
x| Common Stock | Common Shares, par value of $.25 per share | ||||
| Outstanding Shares at November 6, 2019 | |||||
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| Item 5. |
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| Exhibit Index | ||||||||
| Certifications | ||||||||
| Interactive Data Files | ||||||||
Three Months Ended September 30, Six Months Ended September 30, 2018 2017 2018 2017 Operating Revenues: Overnight air cargo Ground equipment sales Ground support services Printing equipment and maintenance Commercial jet engines and parts Corporate Operating Expenses: Overnight air cargo Ground equipment sales Ground support services Printing equipment and maintenance Commercial jet engines and parts Research and development General and administrative Depreciation, amortization and impairment Operating Income (Loss) Non-operating Income (Expense): Foreign currency gain (loss), net Other-than-temporary impairment loss on investments Other investment income (loss), net Interest expense Gain on asset retirement obligation Unrealized gain on interest rate swap Bargain purchase acquisition gain Income from equity method investments Other income, net Income (Loss) Before Income Taxes Income Taxes (Benefit) Net Income (Loss) Net (Income) Loss Attributable to Non-controlling Interests Net Income (Loss) Attributable to Air T, Inc. Stockholders Income (Loss) Per Share: Basic Diluted Weighted Average Shares Outstanding: Basic Diluted (In Thousands) (In Thousands) Three Months Ended September 30, Six Months Ended September 30, 2019 2018 2019 2018 Operating Revenues: $ 17,064,600 $ 18,081,073 $ 34,705,258 $ 34,823,248 Overnight air cargo $ 19,745 $ 17,064 $ 38,064 $ 34,705 12,838,796 15,516,109 19,223,577 21,465,765 Ground equipment sales 12,741 12,838 24,991 19,224 8,474,037 8,801,326 17,521,677 17,914,399 139,945 1,302,922 438,768 4,434,303 Printing equipment and maintenance 249 139 313 439 10,642,791 5,125,244 37,962,966 17,850,585 Commercial jet engines and parts 17,801 10,643 34,128 37,963 180,608 34,816 356,000 70,563 49,340,777 48,861,490 110,208,246 96,558,863 Corporate and other Corporate and other 157 183 385 356 50,693 40,867 97,881 92,687 Operating Expenses: 15,349,754 15,919,557 30,524,150 30,481,700 Overnight air cargo 17,707 15,350 34,226 30,524 10,979,913 13,273,845 15,917,225 18,028,060 Ground equipment sales 10,358 10,980 20,089 15,917 8,022,462 6,982,270 15,827,671 14,400,663 48,903 1,082,751 194,431 2,583,807 Printing equipment and maintenance 121 49 160 194 5,662,788 3,321,385 25,783,906 13,391,235 Commercial jet engines and parts 11,050 5,663 19,336 25,784 - - - 195,653 9,070,053 7,276,486 17,654,856 13,861,154 General and administrative 9,288 7,997 18,960 15,378 1,826,905 529,538 3,322,306 928,365 Depreciation and amortization Depreciation and amortization 1,695 1,697 3,635 3,057 Impairment Impairment 7 10 14 21 Loss on sale of property and equipment Loss on sale of property and equipment 1 — (4) — 50,960,778 48,385,832 109,224,545 93,870,637 50,227 41,746 96,416 90,875 (1,620,001 ) 475,658 983,701 2,688,226 Operating Income (Loss) 466 (879) 1,465 1,812 Non-operating Income (Expense): 50 (60,482 ) (2,132 ) (249,106 ) - - - (771,173 ) 277,923 42,150 (37,584 ) 72,801 (714,091 ) (322,199 ) (1,421,290 ) (471,718 ) - 562,500 - 562,500 47,885 - 145,222 - - - 1,983,777 501,880 160,558 61,840 169,741 29,937 27,686 - 27,686 - (199,989 ) 283,809 865,420 (324,879 ) (1,819,990 ) 759,467 1,849,121 2,363,347 Other-than-temporary impairment loss on investments Other-than-temporary impairment loss on investments (395) — (1,210) — Interest expense Interest expense (2,047) (714) (3,071) (1,421) Gain on settlement of bankruptcy Gain on settlement of bankruptcy 18 — 4,527 — Bargain purchase acquisition gain Bargain purchase acquisition gain 14 — 49 1,984 Income (loss) from equity method investments Income (loss) from equity method investments (34) 160 (355) 170 Other Other (440) 354 (205) 133 (2,884) (200) (265) 866 Income (Loss) from continuing operations before income taxes Income (Loss) from continuing operations before income taxes (2,418) (1,079) 1,200 2,678 (393,000 ) 281,000 (6,000 ) 655,000 Income Taxes (Benefit) (296) (300) (668) 117 Net income (Loss) from continuing operations Net income (Loss) from continuing operations (2,122) (779) 1,868 2,561 (1,426,990 ) 478,467 1,855,121 1,708,347 Loss from discontinued operations, net of tax Loss from discontinued operations, net of tax (235) (648) (70) (705) Gain on sale of discontinued operations, net of tax Gain on sale of discontinued operations, net of tax 8,359 — 8,359 — Net income (loss) Net income (loss) 6,002 (1,427) 10,157 1,856 $ 105,805 $ (56,766 ) $ (347,612 ) $ (318,257 ) Net (Income) Loss Attributable to Non-controlling Interests (287) 106 (2,660) (348) $ (1,321,185 ) $ 421,701 $ 1,507,509 $ 1,390,090 Net Income (Loss) Attributable to Air T, Inc. Stockholders $ 5,715 $ (1,321) $ 7,497 $ 1,508 $ (0.65 ) $ 0.21 $ 0.74 $ 0.68 $ (0.65 ) $ 0.21 $ 0.74 $ 0.68 2,043,823 2,042,789 2,043,716 2,042,789 2,043,823 2,046,945 2,049,393 2,047,305
|
| Income (Loss) from continuing operations per share (Note 6) | |||||||||||||||||||||||
| Basic | $ | (0.80) | $ | (0.22) | $ | (0.30) | $ | 0.72 | |||||||||||||||
| Diluted | $ | (0.80) | $ | (0.22) | $ | (0.30) | $ | 0.72 | |||||||||||||||
| Income (Loss) from discontinued operations per share (Note 6) | |||||||||||||||||||||||
| Basic | $ | 2.69 | $ | (0.21) | $ | 3.14 | $ | (0.23) | |||||||||||||||
| Diluted | $ | 2.68 | $ | (0.21) | $ | 3.13 | $ | (0.23) | |||||||||||||||
| Weighted Average Shares Outstanding: | |||||||||||||||||||||||
| Basic | 3,025 | 3,066 | 2,641 | 3,066 | |||||||||||||||||||
| Diluted | 3,029 | 3,066 | 2,645 | 3,074 | |||||||||||||||||||
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income (loss) | $ | (1,426,990 | ) | $ | 478,467 | $ | 1,855,121 | $ | 1,708,347 | |||||||
| �� | ||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation gain | 32,214 | 98,577 | 79,874 | 233,366 | ||||||||||||
Unrealized gain on interest rate swaps, net of tax | 29,124 | - | 29,124 | - | ||||||||||||
Unrealized net loss on marketable securities | - | (230,804 | ) | - | (1,151,087 | ) | ||||||||||
Tax effect of unrealized net loss on marketable securities | - | (53,679 | ) | - | 278,057 | |||||||||||
Total unrealized net loss on marketable securities, net of tax | - | (284,483 | ) | - | (873,030 | ) | ||||||||||
Reclassification of other-than-temporary impairment loss on investments, net of gains on sale of marketable securities, included in income (loss) before income taxes | - | - | - | 771,173 | ||||||||||||
Tax effect of reclassification | - | - | - | (277,622 | ) | |||||||||||
Reclassification adjustment, net of tax | - | - | - | 493,551 | ||||||||||||
Total Other Comprehensive Income (Loss) | 61,338 | (185,906 | ) | 108,998 | (146,113 | ) | ||||||||||
Total Comprehensive Income (Loss) | (1,365,652 | ) | 292,561 | 1,964,119 | 1,562,234 | |||||||||||
Comprehensive Loss (Income) Attributable to Non-controlling Interests | 97,841 | 228,608 | (372,728 | ) | (341,295 | ) | ||||||||||
Comprehensive Income (Loss) Attributable to Air T, Inc. Stockholders | $ | (1,267,811 | ) | $ | 521,169 | $ | 1,591,391 | $ | 1,220,939 | |||||||
| Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||||||||||||||||
| (In Thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||
| Net income (loss) | $ | 6,002 | $ | (1,427) | $ | 10,157 | $ | 1,856 | |||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||||||||
| Foreign currency translation gain | 41 | 32 | 23 | 79 | |||||||||||||||||||||||||
| Unrealized gain (loss) on interest rate swaps, net of tax | (88) | 29 | (264) | 29 | |||||||||||||||||||||||||
| Total Other Comprehensive Income (loss) | (47) | 61 | (241) | 108 | |||||||||||||||||||||||||
| Total Comprehensive Income (Loss) | 5,955 | (1,366) | 9,916 | 1,964 | |||||||||||||||||||||||||
| Comprehensive (Income) Loss Attributable to Non-controlling Interests | (290) | 98 | (2,675) | (373) | |||||||||||||||||||||||||
| Comprehensive Income (Loss) Attributable to Air T, Inc. Stockholders | $ | 5,665 | $ | (1,268) | $ | 7,241 | $ | 1,591 | |||||||||||||||||||||
|
September 30, 2018 | March 31, 2018 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents (Delphax $314,481 and $241,430)** | $ | 5,612,472 | $ | 4,803,238 | ||||
Marketable securities | 2,341,786 | 290,449 | ||||||
Restricted cash | 18,865 | 269,659 | ||||||
Restricted investments | 1,062,239 | 1,235,405 | ||||||
Accounts receivable, less allowance for doubtful accounts of $727,169 and $801,000 (Delphax $298,199 and $317,000)** | 18,634,629 | 15,157,855 | ||||||
Costs and estimated earnings in excess of billings on uncompleted projects | - | 2,012,121 | ||||||
Income tax receivable | 2,109,543 | 1,557,180 | ||||||
Inventories, net | 29,450,138 | 34,231,005 | ||||||
Other current assets | 3,393,812 | 658,630 | ||||||
Prepaid expenses (Delphax $58,754 and $72,269)** | 1,919,611 | 1,455,566 | ||||||
Total Current Assets | 64,543,095 | 61,671,108 | ||||||
Investments in securities | 3,045,435 | 1,026,920 | ||||||
Property and equipment, net of accumulated depreciation of $8,749,057 and $6,347,253 | 37,071,213 | 20,273,171 | ||||||
Cash surrender value of life insurance policies, net of policy loans | 481,764 | 2,356,507 | ||||||
Other tax receivables-long-term (Delphax $311,000 and $311,000)** | 311,000 | 311,000 | ||||||
Investments in funds | 342,619 | 324,854 | ||||||
Equity method investments | 5,465,501 | 5,032,268 | ||||||
Other assets | 687,973 | 420,981 | ||||||
Intangible assets, net of accumulated amortization of $1,960,734 and $1,788,598 | 1,347,606 | 1,312,472 | ||||||
Goodwill | 4,417,605 | 4,417,605 | ||||||
Total Assets | $ | 117,713,811 | $ | 97,146,886 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable (Delphax $2,146,938 and $2,145,847)** | $ | 14,730,946 | $ | 10,181,143 | ||||
Income tax payable (Delphax $11,312 and $11,312)** | 34,312 | 23,000 | ||||||
Accrued expenses (Delphax $3,234,808 and $3,244,514)** | 13,769,010 | 11,743,973 | ||||||
Current portion of long-term debt | 15,242,526 | 9,229,690 | ||||||
Total Current Liabilities | 43,776,794 | 31,177,806 | ||||||
Long-term debt (Delphax $0 and $0)** | 44,123,009 | 38,855,260 | ||||||
Deferred tax liabilities | 689,655 | 92,000 | ||||||
Other non-current liabilities | 775,046 | 785,797 | ||||||
Total Liabilities | 89,364,504 | 70,910,863 | ||||||
Redeemable non-controlling interest | 2,583,162 | 1,992,939 | ||||||
Commitments and contingencies (Note 15) | ||||||||
Equity: | ||||||||
Air T, Inc. Stockholders' Equity: | ||||||||
Preferred stock, $1.00 par value, 50,000 shares authorized | - | - | ||||||
Common stock, $.25 par value; 4,000,000 shares authorized, 2,044,614 and 2,043,607 shares issued and outstanding | 511,152 | 510,901 | ||||||
Additional paid-in capital | 4,187,833 | 4,171,869 | ||||||
Retained earnings | 22,075,937 | 20,695,981 | ||||||
Accumulated other comprehensive loss | (70,677 | ) | (260,900 | ) | ||||
Total Air T, Inc. Stockholders' Equity | 26,704,245 | 25,117,851 | ||||||
Non-controlling Interests | (938,100 | ) | (874,767 | ) | ||||
Total Equity | 25,766,145 | 24,243,084 | ||||||
Total Liabilities and Equity | $ | 117,713,811 | $ | 97,146,886 | ||||
| (In thousands, except share amounts) | September 30, 2019 | March 31, 2019 | |||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 27,434 | $ | 12,417 | |||||||
| Marketable securities | 1,423 | 1,760 | |||||||||
| Restricted cash | 102 | 123 | |||||||||
| Restricted investments | 1,018 | 831 | |||||||||
| Accounts receivable, net of allowance for doubtful accounts of $382 and $408 | 18,464 | 10,881 | |||||||||
| Income tax receivable | 1,030 | 142 | |||||||||
| Inventories, net | 40,370 | 27,455 | |||||||||
| Other current assets | 9,232 | 6,138 | |||||||||
| Current assets of discontinued operations | — | 11,601 | |||||||||
| 99,073 | 71,348 | ||||||||||
| Assets on lease, net of accumulated depreciation of $6,007 and $6,689 | 21,019 | 25,164 | |||||||||
| Property and equipment, net of accumulated depreciation of $3,935 and $3,470 | 4,310 | 4,264 | |||||||||
| Right-of-use assets | 7,154 | — | |||||||||
| Cash surrender value of life insurance policies, net of policy loans | 80 | 122 | |||||||||
| Other tax receivables-long-term | — | 311 | |||||||||
| Deferred income taxes | 781 | 548 | |||||||||
| Investments in securities | 785 | 1,086 | |||||||||
| Equity method investments | 4,046 | 5,611 | |||||||||
| Other assets | 284 | 200 | |||||||||
| Intangible assets, net of accumulated amortization of $2,229 and $2,097 | 898 | 998 | |||||||||
| Goodwill | 4,227 | 4,227 | |||||||||
| Non-current assets of discontinued operations | — | 1,264 | |||||||||
| Total Assets | 142,657 | 115,143 | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts payable | 12,540 | 11,409 | |||||||||
| Income tax payable | 940 | 888 | |||||||||
| Advanced customer deposits | 9,996 | 1,520 | |||||||||
| Accrued expenses and other | 1,380 | 12,314 | |||||||||
| Deferred income | 295 | 341 | |||||||||
| Current portion of long-term debt | 29,836 | 24,735 | |||||||||
| Short-term lease liability | 1,131 | — | |||||||||
| Current liabilities of discontinued operations | — | 1,587 | |||||||||
| 56,118 | 52,794 | ||||||||||
| Long-term debt | 45,544 | 32,918 | |||||||||
| Long-term lease liability | 6,446 | — | |||||||||
| Other non-current liabilities | 1,202 | 597 | |||||||||
| Total Liabilities | 109,310 | 86,309 | |||||||||
| Redeemable non-controlling interest | 6,000 | 5,476 | |||||||||
| Commitments and contingencies (Note 16) | |||||||||||
|
|
| Equity: | |||||||||||
| Air T, Inc. Stockholders' Equity: | |||||||||||
| Preferred stock, $1.00 par value, 50,000 shares authorized | — | — | |||||||||
| Common stock, $.25 par value; 4,000,000 shares authorized, 3,022,745 and 2,022,637 shares issued and outstanding | 756 | 506 | |||||||||
| Additional paid-in capital | 2,410 | 2,866 | |||||||||
| Retained earnings | 23,610 | 21,191 | |||||||||
| Accumulated other comprehensive loss | (461) | (205) | |||||||||
| Total Air T, Inc. Stockholders' Equity | 26,315 | 24,358 | |||||||||
| Non-controlling Interests | 1,032 | (1,000) | |||||||||
| Total Equity | 27,347 | 23,358 | |||||||||
| Total Liabilities and Equity | $ | 142,657 | $ | 115,143 | |||||||
Six Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 1,855,121 | $ | 1,708,347 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Gain (Loss) on sale of property and equipment | 1,661 | (1,091 | ) | |||||
Change in inventory reserves | (276,494 | ) | 24,946 | |||||
Change in accounts receivable reserves | (74,261 | ) | (23,849 | ) | ||||
Depreciation, amortization and impairment | 3,322,306 | 928,365 | ||||||
Change in cash surrender value of life insurance | (22,045 | ) | (20,599 | ) | ||||
Gain on asset retirement obligation | - | (562,500 | ) | |||||
Bargain purchase acquisition gain | (1,983,777 | ) | (501,880 | ) | ||||
Change in warranty reserve | (980 | ) | 906 | |||||
Other-than-temporary impairment loss on investments | - | 771,173 | ||||||
Unrealized loss on marketable securities | 99,471 | - | ||||||
Unrealized gain on interest rate swap | (145,222 | ) | - | |||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | (1,462,724 | ) | (236,911 | ) | ||||
Costs and estimated earnings in excess of billings and uncompleted projects | 2,012,121 | - | ||||||
Notes receivable and other non-trade receivables | (2,735,178 | ) | 155,049 | |||||
Inventories | 9,969,314 | 4,899,652 | ||||||
Prepaid expense and other assets | (559,682 | ) | 488,537 | |||||
Accounts payable | 3,262,959 | 129,166 | ||||||
Accrued expenses | 1,908,945 | (196,594 | ) | |||||
Income taxes payable/receivable | (541,051 | ) | (651,923 | ) | ||||
Non-current liabilities | 240,745 | 125,278 | ||||||
Total adjustments | 13,016,108 | 5,327,725 | ||||||
Net cash provided by operating activities | 14,871,229 | 7,036,072 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of marketable securities | (2,013,921 | ) | (734,600 | ) | ||||
Acquisition of businesses, net of cash acquired | (3,375,700 | ) | (2,900,000 | ) | ||||
Cash used for equity method investments | (263,492 | ) | - | |||||
Investment in reinsurance entity | (2,000,000 | ) | - | |||||
Capital expenditures | (19,973,209 | ) | (8,259,215 | ) | ||||
Proceeds from sale of property and equipment | 50,602 | 1,861 | ||||||
Net cash used in investing activities | (27,575,720 | ) | (11,891,954 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from lines of credit | 51,151,570 | 48,450,994 | ||||||
Payments on lines of credit | (58,355,499 | ) | (46,617,448 | ) | ||||
Proceeds from term loan | 21,714,000 | 2,400,000 | ||||||
Payments on term loan | (3,190,136 | ) | (800,000 | ) | ||||
Debt issuance costs | (107,844 | ) | - | |||||
Proceeds from loan against cash surrender value of life insurance policies | 1,896,788 | - | ||||||
Distribution to non-controlling member | (55,837 | ) | - | |||||
Contribution from non-controlling member | 210,000 | - | ||||||
Payments for repurchase of stock | (22,759 | ) | - | |||||
Proceeds from exercise of stock options | 17,762 | - | ||||||
Net cash provided by financing activities | 13,258,045 | 3,433,546 | ||||||
Effect of foreign currency exchange rates on cash and cash equivalents | 4,886 | 17,890 | ||||||
NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | 558,440 | (1,404,446 | ) | |||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 5,072,897 | 3,653,734 | ||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 5,631,337 | $ | 2,249,288 | ||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES: | ||||||||
Equipment leased to customers transferred to inventory | $ | 234,151 | - | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the year for: | ||||||||
Interest | $ | 1,149,603 | $ | 382,535 | ||||
Income taxes | 358,051 | 1,312,980 | ||||||
| (In Thousands) | Six Months Ended September 30, | ||||||||||||||||
| 2019 | 2018 | ||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||
| Net income | $ | 10,157 | $ | 1,856 | |||||||||||||
| Loss from discontinued operations, net of income tax | 70 | 705 | |||||||||||||||
| Gain on sale of discontinued operations, net of income tax | (8,359) | — | |||||||||||||||
| Net income (loss) from continuing operations | 1,868 | 2,561 | |||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | 3,648 | 3,077 | |||||||||||||||
| Bargain purchase acquisition gain | (49) | (1,984) | |||||||||||||||
| Impairment of investment | 1,210 | — | |||||||||||||||
| Gain on settlement of bankruptcy | (4,527) | — | |||||||||||||||
| Other | (1,785) | (464) | |||||||||||||||
| Change in operating assets and liabilities: | |||||||||||||||||
| Accounts receivable | (7,331) | (1,853) | |||||||||||||||
| Costs and estimated earnings in excess of billings and uncompleted projects | — | 2,012 | |||||||||||||||
| Notes receivable and other non-trade receivables | (2,984) | (3,126) | |||||||||||||||
| Inventories | 5,891 | 10,123 | |||||||||||||||
| Accounts payable | 3,188 | 3,124 | |||||||||||||||
| Accrued expenses | 739 | 2,233 | |||||||||||||||
| Other | (359) | (300) | |||||||||||||||
| Total adjustments | (856) | 12,213 | |||||||||||||||
| Net cash provided by (used in) operating activities - continuing operations | (491) | 15,403 | |||||||||||||||
| Net cash provided by (used in) operating activities - discontinued operations | 1,094 | (532) | |||||||||||||||
| Net cash provided by operating activities | 603 | 14,871 | |||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||
| Purchases of marketable securities | (187) | (2,014) | |||||||||||||||
| Acquisition of businesses, net of cash acquired | (500) | (3,376) | |||||||||||||||
| Investment in reinsurance entity | — | (2,000) | |||||||||||||||
| Capital expenditures related to property & equipment | (575) | (763) | |||||||||||||||
| Capital expenditures related to assets on lease | (17,614) | (19,149) | |||||||||||||||
| Other | 346 | (213) | |||||||||||||||
| Net cash used in investing activities - continuing operations | (18,530) | (27,515) | |||||||||||||||
| Net cash provided by (used in) investing activities - discontinued operations | 20,463 | (61) | |||||||||||||||
| Net cash provided by (used in) investing activities | 1,933 | (27,576) | |||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||
| Proceeds from lines of credit | 48,267 | 51,151 | |||||||||||||||
| Payments on lines of credit | (35,324) | (58,355) | |||||||||||||||
| Proceeds from term loan | 13,001 | 21,714 | |||||||||||||||
| Payments on term loan | (17,900) | (3,190) | |||||||||||||||
| Proceeds received from exercise of warrants | 5,407 | — | |||||||||||||||
| Proceeds from life insurance policy loan | — | 1,897 | |||||||||||||||
| Other | (1,124) | 41 | |||||||||||||||
| Net cash provided by financing activities - continuing operations | 12,327 | 13,258 | |||||||||||||||
| Effect of foreign currency exchange rates on cash and cash equivalents | 26 | 5 | |||||||||||||||
|
| NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | 14,889 | 558 | |||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 12,647 | 5,073 | |||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 27,536 | $ | 5,631 | |||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||
| Equipment leased to customers transferred to inventory | 18,710 | 234 | |||||||||
| Issuance of Debt - Trust Preferred Securities | 4,000 | — | |||||||||
| Issuance of warrant liability | 840 | — | |||||||||
Equity | ||||||||||||||||||||||||||||
Air T, Inc. Stockholders' Equity | ||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||
Common Stock | Additional | Other | ||||||||||||||||||||||||||
Paid-In | Retained | Comprehensive | Non-controlling | Total | ||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Income (Loss) | Interests | Equity | ||||||||||||||||||||||
Balance, March 31, 2017 | 2,042,789 | $ | 510,696 | $ | 4,205,536 | $ | 18,461,347 | $ | (212,047 | ) | $ | (803,138 | ) | $ | 22,162,394 | |||||||||||||
Net income (loss)* | - | - | - | 1,390,090 | - | (317 | ) | 1,389,773 | ||||||||||||||||||||
Net change from marketable securities, net of tax | - | - | - | - | (379,480 | ) | - | (379,480 | ) | |||||||||||||||||||
Foreign currency translation gain | - | - | - | - | 210,328 | 23,038 | 233,366 | |||||||||||||||||||||
Redeemable non-controlling interest | - | - | (33,550 | ) | - | - | - | (33,550 | ) | |||||||||||||||||||
Balance, September 30, 2017 | 2,042,789 | $ | 510,696 | $ | 4,171,986 | $ | 19,851,437 | $ | (381,199 | ) | $ | (780,417 | ) | $ | 23,372,503 | |||||||||||||
| Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Air T, Inc. Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In Thousands) | (In Thousands) | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2018 | Balance, March 31, 2018 | 2,044 | $ | 511 | $ | 4,172 | $ | 20,696 | $ | (261) | $ | (875) | $ | 24,243 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss)* | Net income (loss)* | — | — | — | 2,829 | — | (46) | 2,782 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of unrealized loss on marketable securities, net of tax | Reclassification of unrealized loss on marketable securities, net of tax | — | — | — | (106) | 106 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | Foreign currency translation gain | — | — | — | — | 31 | 17 | 48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2018 | Balance, June 30, 2018 | 2,044 | $ | 511 | $ | 4,172 | $ | 23,418 | $ | (124) | $ | (904) | $ | 27,073 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss* | Net loss* | — | — | — | (1,321) | — | (42) | (1,363) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | Exercise of stock options | 2 | — | 18 | — | — | — | 18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | Repurchase of common stock | (1) | — | (2) | (21) | — | — | (23) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | Foreign currency translation gain | — | — | — | — | 24 | 8 | 32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized gain on interest rate swaps, net of tax | Unrealized gain on interest rate swaps, net of tax | — | — | — | — | 29 | — | 29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2018 | Balance, September 30, 2018 | 2,045 | $ | 511 | $ | 4,188 | $ | 22,076 | $ | (71) | $ | (938) | $ | 25,766 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Air T, Inc. Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paid-In | Retained | Comprehensive | Non-controlling | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Income (Loss) | Interests* | Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2018 | 2,043,607 | $ | 510,901 | $ | 4,171,869 | $ | 20,695,981 | $ | (260,900 | ) | $ | (874,767 | ) | $ | 24,243,084 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss)* | - | - | - | 1,507,509 | - | (88,449 | ) | 1,419,060 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adoption of ASU 2016-01 | - | - | - | (106,341 | ) | 106,341 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 1,682 | 421 | 17,341 | - | 17,762 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | (675 | ) | (170 | ) | (1,377 | ) | (21,212 | ) | - | - | (22,759 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation gain | - | - | - | - | 54,758 | 25,116 | 79,874 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on interest rate swap | - | - | - | - | 29,124 | - | 29,124 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2018 | 2,044,614 | $ | 511,152 | $ | 4,187,833 | $ | 22,075,937 | $ | (70,677 | ) | $ | (938,100 | ) | $ | 25,766,145 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Air T, Inc. Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In Thousands) | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2019 | 2,022 | $ | 506 | $ | 2,866 | $ | 21,191 | $ | (205) | $ | (1,000) | $ | 23,358 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income* | — | — | — | 1,782 | — | 2,034 | 3,816 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of Common Stock | (17) | (4) | — | (122) | — | — | (126) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Split | 1,010 | 252 | (252) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Debt - Trust Preferred Securities | — | — | — | (4,000) | — | — | (4,000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Warrants | — | — | — | (840) | — | — | (840) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adoption of ASC 842 - Leasing | — | — | — | (41) | — | — | (41) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized loss on interest rate swaps, net of tax | — | — | — | — | (176) | — | (176) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain (loss) | — | — | — | — | (30) | 12 | (18) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to fair value of redeemable non-controlling interest | — | — | (985) | — | — | — | (985) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2019 | 3,015 | $ | 754 | $ | 1,629 | $ | 17,970 | $ | (411) | $ | 1,046 | $ | 20,988 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss)* | — | — | — | 5,715 | — | (17) | 5,698 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | 8 | 2 | — | (75) | — | — | (73) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | — | — | — | — | 38 | 3 | 41 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to fair value of redeemable non-controlling interest | — | — | 781 | — | — | — | 781 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on interest rate swaps, net of tax | — | — | — | — | (88) | — | (88) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2019 | 3,023 | $ | 756 | $ | 2,410 | $ | 23,610 | $ | (461) | $ | 1,032 | $ | 27,347 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(UNAUDITED)
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It is suggested that these
RecentlyAdopted Accounting Pronouncements
In May 2014,
Effective April 1, 2018,additional information. Unless otherwise indicated, the Company adopteddisclosures accompanying the standard using the modified retrospective transition method. Results for reporting periods beginning after April 1, 2018 will be presented according to ASU 2014-09 while prior period amounts will not be adjusted and will continue to be reported in accordance with the Company’s historic accounting policies. The Company applied the standard to all open contracts at the date of the initial application. The main area impacted by ASU 2014-09 includes the recognition of revenue with the Company’s Ground Equipment Sales segment transitioning from percentage of completion to point in time for its government contracts which are included in the product sales revenue stream. Additionally, certain repair service revenues which were previously recorded at a point-in-time upon completion of service are now recognized over-time. Due to the short-term nature of these contracts, over-time recognition does not result in a material difference from point-in-time recognition. The Company calculated the transition adjustment based on the open contracts at April 1, 2018 and concluded that there was an immaterial impact due to the adoption of ASC 606 and thus has not recorded the adjustment.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, that amends the guidance on the classification and measurement of financial instruments (Subtopic 825-10). ASU 2016-01 becomes effective in fiscal years beginning after December 15, 2017, including interim periods therein. ASU 2016-01 removes equity securities from the scope of Accounting Standards Codification (“ASC”) Topic 320 and creates ASC Topic 321, Investments – Equity Securities. Under the new guidance, all equity securities with readily determinable fair values are measured at fair value on the statement of financial position, with changes in fair value recorded through earnings. The update eliminates the option to record changes in the fair value of equity securities through other comprehensive income. Transitional guidance provided that entities with unrealized gains or losses on available for sale (“AFS”) equity securities were required to reclassify those amounts to beginning retained earnings in the year of adoption. The Company adopted the guidance within ASU 2016-01 as of April 1, 2018. As a result, the Company has reclassified the beginning amount of accumulated other comprehensive income related to AFS securities to accumulated deficit and all changes in fair values of these securities are reflected in the Company’s consolidated statement of income (loss) for the period.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The update requires retrospective application to all periods presented but may be applied prospectively if retrospective application is impracticable. The Company adopted the guidance within ASU 2016-15 as of April 1, 2018. The adoption of this standard did not have a material impact on the Company’scondensed consolidated financial statements.
In November 2016,statements reflect the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 requires that the statement of cash flows explain the changes in the combined total of restricted and unrestricted cash balance. Amounts generally described as restricted cash or restricted cash equivalents will be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Further, the ASU requires a reconciliation of balances from the statement of cash flows to the balance sheet in situations in which the balance sheet includes more than one-line item of cash, cash equivalents, and restricted cash. Companies will also be disclosing the nature of the restrictions. ASU 2016-18 is effective for financial statements issued for fiscal years beginning after December 15, 2017. The Company adopted the guidance within ASU 2016-18 as of April 1, 2018. The impact of ASU 2016-18 on its financial statements was as follows: (1) changes in restricted cash balances are no longer shown in the statements of cash flows as previously presented in investing activities, as these balances are now included in the beginning and ending cash balances in the statements of cash flows; and (2) included within Note 4 is a reconciliation between cash balances presented on the balance sheets with the amounts presented in the statements of cash flows. The Company continued to hold restricted cash as of September 30, 2018.
In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (Topic 805). This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for fiscal years that begin after December 15, 2017 and is to be applied prospectively. The Company adopted the guidance within ASU 2017-01 as of April 1, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. This update is effective for all entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company adopted the guidance within ASU 2017-01 as of April 1, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which provides guidance on hedge accounting for both financial and commodity risks. The provisions in this standard create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes, for investors and analysts. The standard is effective for public companies for fiscal years beginning after December 15, 2018. Early adoption is permitted in any interim period or fiscal years before the effective date of the standard. The Company early adopted the guidance and designated both interest rate swaps as effective hedging arrangements as of August 1, 2018. As a result, all changes in the fair value of the derivatives subsequent to August 1, 2018 are now reflected in the accumulated other comprehensive loss.
In February 2018, the FASB amended the Financial Instruments Topic of the Accounting Standards Codification. The amendments clarify certain aspects of the guidance issued in ASU 2016-01, including the measurement of equity securities without a readily determinable fair value, forward contracts and purchased options and presentation of certain fair value option liabilities. Public business entities with fiscal years beginning between December 15, 2017, and June 15, 2018, are not required to adopt these amendments until the interim period beginning after June 15, 2018. The Company adopted the new standards as of September 30, 2018. Adoption of these amendments did not have a material impact on the Company’s consolidated financial statements.
Recently Issued AdoptedAccounting Pronouncements
1. Packageto determine the impact of the adoption of the standard on its consolidated financial statements. Implementation had an immaterial cumulative effect on retained earnings. Adoption resulted in the recognition of right-of-use assets of approximately $10.7 million, and lease liabilities of approximately $11.2 million.
2. Hindsight practical expedient – to permit an entity to use hindsight in determining the lease term.
The Company expects to adopt the standard using a full retrospective approach and elect to apply all of the practical expedients available and applicable. The Company is still evaluating the impact of the adoption of the standard on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step Two from the goodwill impairment test. Step Two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this standard, an entity will recognize an impairment charge for the amount by which the carrying value of a reporting unit exceeds its fair value. The standard is effective for any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements.
In AugustOctober 2018, the FASB amendedupdated the Fair Value Measurement
In August 2018, the FASB amended the Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Topicof the Accounting Standards Codification. The amendment is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, for all entities. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.
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The Company accounts for revenue in accordance with ASC 606, which was adopted on April 1, 2018, using the modified retrospective method. As substantially
| Type of Revenue | Nature, Timing of Satisfaction of Performance Obligations, and Significant Payment Terms | ||||
Product Sales | The Company generates revenue from sales of various distinct products such as parts, aircraft equipment, printing equipment, jet engines, airframes, and scrap metal to its customers. A performance obligation is created when the Company accepts an order from a customer to provide a specified product. Each product ordered by a customer represents a performance obligation.
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Support Services | The Company provides a variety of support services such as aircraft maintenance, printer maintenance, and short-term repair services to its customers. Additionally, the Company operates certain aircraft routes on behalf of FedEx. A performance obligation is created when the Company agrees to provide a particular service to a customer. For each service, the Company recognizes revenues over time as the customer simultaneously receives the benefits provided by the Company's performance. This revenue recognition can vary from when the Company has a right to invoice to the output or input method depending on the structure of the contract and management’s analysis.
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In addition to the above type of revenues, the Company also has Leasing Revenue, which is in scope under Topic 840842 (Leases) and out of scope under Topic 606 and Other Revenues (Freight, Management Fees, etc.) which are immaterial for disclosure under Topic 606.
Three Months Ended | Six Months Ended | |||||||
September 30, 2018 | September 30, 2018 | |||||||
Product Sales | ||||||||
Air Cargo | $ | 5,003,482 | $ | 10,523,093 | ||||
Ground equipment sales | 12,447,475 | 18,616,578 | ||||||
Ground support services | 2,293,684 | 4,716,265 | ||||||
Commercial jet engines and parts | 7,379,607 | 32,408,721 | ||||||
Printing equipment and maintenance | 122,238 | 408,880 | ||||||
Corporate | - | - | ||||||
Support Services | ||||||||
Air Cargo | 11,985,052 | 24,081,926 | ||||||
Ground equipment sales | 148,118 | 248,710 | ||||||
Ground support services | 6,180,353 | 12,785,618 | ||||||
Commercial jet engines and parts | 1,327,328 | 2,293,154 | ||||||
Printing equipment and maintenance | 12,293 | 19,951 | ||||||
Corporate | 16,475 | 16,475 | ||||||
Leasing Revenue | ||||||||
Air Cargo | - | - | ||||||
Ground equipment sales | 15,357 | 46,359 | ||||||
Ground support services | - | - | ||||||
Commercial jet engines and parts | 1,825,861 | 3,027,372 | ||||||
Printing equipment and maintenance | - | - | ||||||
Corporate | 32,182 | 72,249 | ||||||
Other | ||||||||
Air Cargo | 76,066 | 100,240 | ||||||
Ground equipment sales | 227,847 | 311,930 | ||||||
Ground support services | - | 19,795 | ||||||
Commercial jet engines and parts | 109,995 | 233,719 | ||||||
Printing equipment and maintenance | 5,414 | 9,937 | ||||||
Corporate | 131,950 | 267,275 | ||||||
Total | $ | 49,340,777 | $ | 110,208,246 | ||||
| Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
| Product Sales | |||||||||||||||||||||||||||||||||||
| Air Cargo | $ | 6,680 | $ | 5,003 | $ | 12,094 | $ | 10,523 | |||||||||||||||||||||||||||
| Ground equipment sales | 12,489 | 12,447 | 24,492 | 18,617 | |||||||||||||||||||||||||||||||
| Commercial jet engines and parts | 13,218 | 7,380 | 24,388 | 32,409 | |||||||||||||||||||||||||||||||
| Printing equipment and maintenance | 20 | 122 | 68 | 409 | |||||||||||||||||||||||||||||||
| Corporate and other | — | — | — | — | |||||||||||||||||||||||||||||||
| Support Services | |||||||||||||||||||||||||||||||||||
| Air Cargo | 13,033 | 11,985 | 25,927 | 24,082 | |||||||||||||||||||||||||||||||
| Ground equipment sales | 105 | 148 | 210 | 249 | |||||||||||||||||||||||||||||||
| Commercial jet engines and parts | 1,597 | 1,327 | 3,007 | 2,293 | |||||||||||||||||||||||||||||||
| Printing equipment and maintenance | 225 | 12 | 236 | 20 | |||||||||||||||||||||||||||||||
| Corporate and other | (8) | 16 | 33 | 16 | |||||||||||||||||||||||||||||||
| Leasing Revenue | |||||||||||||||||||||||||||||||||||
| Air Cargo | — | — | — | — | |||||||||||||||||||||||||||||||
| Ground equipment sales | 33 | 15 | 53 | 46 | |||||||||||||||||||||||||||||||
| Commercial jet engines and parts | 2,941 | 1,826 | 6,655 | 3,027 | |||||||||||||||||||||||||||||||
| Printing equipment and maintenance | — | — | — | — | |||||||||||||||||||||||||||||||
| Corporate and other | 36 | 32 | 81 | 72 | |||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Air Cargo | 32 | 76 | 43 | 100 | |||||||||||||||||||||||||||||||
| Ground equipment sales | 114 | 228 | 236 | 312 | |||||||||||||||||||||||||||||||
| Commercial jet engines and parts | 45 | 110 | 78 | 234 | |||||||||||||||||||||||||||||||
| Printing equipment and maintenance | 4 | 5 | 9 | 10 | |||||||||||||||||||||||||||||||
| Corporate and other | 129 | 135 | 271 | 268 | |||||||||||||||||||||||||||||||
| Total | $ | 50,693 | $ | 40,867 | $ | 97,881 | $ | 92,687 | |||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||
September 30, 2018 | September 30, 2018 | |||||||
Air Cargo | $ | 17,064,600 | $ | 34,705,258 | ||||
Ground equipment sales | 12,838,796 | 19,223,577 | ||||||
Ground support services | 8,474,037 | 17,521,677 | ||||||
Commercial jet engines and parts | 10,642,791 | 37,962,966 | ||||||
Printing equipment and maintenance | 139,945 | 438,768 | ||||||
Corporate | 180,608 | 356,000 | ||||||
Total | $ | 49,340,777 | $ | 110,208,246 | ||||
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||
| Air cargo | $ | 19,745 | $ | 17,064 | $ | 38,064 | $ | 34,705 | ||||||||||||||||||||||||
| Ground equipment sales | 12,741 | 12,838 | 24,991 | 19,224 | ||||||||||||||||||||||||||||
| Commercial jet engines and parts | 17,801 | 10,643 | 34,128 | 37,963 | ||||||||||||||||||||||||||||
| Printing equipment and maintenance | 249 | 139 | 313 | 439 | ||||||||||||||||||||||||||||
| Corporate and other | 157 | 183 | 385 | 356 | ||||||||||||||||||||||||||||
| Total | $ | 50,693 | $ | 40,867 | $ | 97,881 | $ | 92,687 | ||||||||||||||||||||||||
The Company does not have material contract assets,
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Acquisition of AirCo Assets
On May 2, 2017 and May 31, 2017, our newly formed subsidiaries, AirCo, LLC and AirCo Services, LLC (collectively, “AirCo”) acquired the inventory and principal business assets, and assumed specified liabilities, of Aircraft Instrument and Radio Company, Incorporated, and Aircraft Instrument and Radio Services, Inc. (collectively, the “AirCo Sellers”). The acquired business, which is based in Wichita, Kansas, distributes and sells airplane and aviation parts and maintains a license under Part 145 of the regulations of the Federal Aviation Administration. The consideration paid for the acquired business was $2,400,000.
respect to product sales. The following table summarizes the fair values of assets acquired andpresents outstanding contract liabilities assumed by AirCo as of May 2, 2017,April 1, 2019 and September 30, 2019 and the dateamount of contract liabilities that were recognized as revenue during the completionsix-month period ended September 30, 2019 (in thousands):
| Outstanding contract liabilities | Outstanding contract liabilities as of April 1, 2019 Recognized as Revenue | ||||||||||
| As of September 30, 2019 | $ | 10,291 | |||||||||
| As of April 1, 2019 | 1,867 | ||||||||||
| For the six months ended September 30, 2019 | 1,781 | ||||||||||
May 2, 2017 | ||||
Assets acquired and liabilities assumed at fair value: | ||||
Accounts receivables | $ | 748,936 | ||
Inventories | 3,100,000 | |||
Property and equipment | 26,748 | |||
Accounts payable | (313,117 | ) | ||
Accrued expenses | (382,687 | ) | ||
Net assets acquired | $ | 3,179,880 | ||
Net assets acquired | 3,179,880 | |||
Consideration paid | 2,400,000 | |||
Bargain purchase gain | $ | 779,880 | ||
The Company’s purchase price accounting reflects the estimated net fair value of the AirCo Sellerscontract assets acquired and liabilities assumed as of the AirCo Closing Date.
The transaction resulted in a bargain purchase because AirCo was a non-marketed transactionApril 1, 2019 and in financial distress at the time of the acquisition. The inventory was not being marketed appropriately and as a result, the company was unable to realize market prices for the parts. The tax impact related to the bargain purchase gain was to record a deferred tax liability and record tax expense against the bargain purchase gain of approximately $278,000. The resulting net bargain purchase gain after taxes was approximately $502,000.
Pro forma financial information is not presented as the results are not material to the Company’s condensed consolidated financial statements.
September 30, 2019 (in thousands):
| Contract assets | |||||
| As of September 30, 2019 | $5,174 | ||||
| As of April 1, 2019 | 1,743 | ||||
Inc.
Worthington is primarily engaged in the business of operating, distributing and selling airplane and aviation parts along with repair services. The Company agreed to acquire the assets and liabilities in exchange for payment to Worthington of $50,000 as earnest money upon execution of the Agreement and a cash payment of $3,300,000 upon closing. Total consideration is summarized in the table below:
Earnest money | $ | 50,000 | ||
Cash consideration | 3,300,000 | |||
Cash acquired | (24,300 | ) | ||
Total consideration | $ | 3,325,700 |
| Earnest money | $ | 50 | |||
| Cash consideration | 3,300 | ||||
| Cash acquired | (24) | ||||
| Total consideration | $ | 3,326 | |||
May 4, 2018 | ||||
ASSETS | ||||
Accounts receivable | $ | 1,929,120 | ||
Inventories | 4,564,437 | |||
Other current assets | 149,792 | |||
Property and equipment | 391,892 | |||
Investment in JVs | 189,607 | |||
Intangible assets - tradename | 138,000 | |||
Total assets | 7,362,848 | |||
LIABILITIES | ||||
Accounts payable | 1,289,150 | |||
Accrued expenses | 175,222 | |||
Deferred tax liability | 589,000 | |||
Total liabilities | 2,053,372 | |||
Net assets acquired | $ | 5,309,476 | ||
Consideration paid | $ | 3,350,000 | ||
Less: Cash acquired | (24,301 | ) | ||
Bargain purchase gain | $ | 1,983,777 | ||
As of September 30, 2018 the purchase price allocation is considered preliminary. The Company’s initial accounting for this acquisition is incomplete as of the date of this report. Therefore, as permitted by applicable accounting guidance, the foregoing amounts are provisional. All relevant facts and circumstances are still being considered by management prior to finalization of the purchase price allocation.
(in thousands):
| May 4, 2018 | |||||
| ASSETS | |||||
| Accounts receivable | $ | 1,929 | |||
| Inventories | 4,564 | ||||
| Other current assets | 150 | ||||
| Property and equipment | 392 | ||||
| Other assets | 189 | ||||
| Intangible assets - tradename | 138 | ||||
| Total assets | 7,362 | ||||
| LIABILITIES | |||||
| Accounts payable | 1,289 | ||||
| Accrued expenses | 175 | ||||
| Deferred tax liability | 589 | ||||
| Total liabilities | 2,053 | ||||
| Net assets acquired | 5,309 | ||||
| Consideration paid | 3,350 | ||||
| Less: Cash acquired | (24) | ||||
| Bargain purchase gain | $ | 1,983 | |||
The following table sets forth the revenue and expenses of Worthington, prior to intercompany eliminations, that are included in the Company’s condensed consolidated statement of income (loss) for the six months ended September 30, 2018:
Revenue | $ | 7,104,386 | ||
Cost of Sales | 4,842,616 | |||
Operating Expenses | 1,646,577 | |||
Operating Income | 615,193 | |||
Non-operating Income | 1,927,898 | |||
Net Income | $ | 2,543,091 |
Pro Forma Financial Information
The following unaudited pro forma consolidated results of operations for the three and six-month periods ended September 30, 2018 and 2017 present consolidated information of the Company as if the acquisition of Worthington had occurred as of April 1, 2017:
Pro-Forma Three | Pro-Forma Three | |||||||
Months Ended | Months Ended | |||||||
September 30, 2018 | September 30, 2017 | |||||||
Revenue | $ | 49,340,777 | $ | 53,543,645 | ||||
Operating income (loss) | (1,620,001 | ) | 112,480 | |||||
Net income (loss) Attributable to Air T, Inc. Stockholders | (1,321,185 | ) | 155,027 | |||||
Basic income (loss) per share | (0.65 | ) | 0.08 | |||||
Dilutive income (loss) per share | $ | (0.65 | ) | $ | 0.08 | |||
Pro-Forma Six | Pro-Forma Six | |||||||
Months Ended | Months Ended | |||||||
September 30, 2018 | September 30, 2017 | |||||||
Revenue | $ | 111,652,117 | $ | 104,756,018 | ||||
Operating income | 779,434 | 2,098,294 | ||||||
Net income (loss) attributable to Air T, Inc. stockholders | (620,366 | ) | 2,904,365 | |||||
Basic income (loss) per share | (0.30 | ) | 1.42 | |||||
Dilutive income (loss) per share | $ | (0.30 | ) | $ | 1.42 | |||
The unaudited pro forma consolidated results for the three and six-month periods were prepared using the acquisition method of accounting and are based on the historical financial information of Worthington and the Company. The historical financial information has been adjusted to give effect to pro forma adjustments that are: (i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The pro forma six months ended September 30, 2018 exclude the bargain purchase gain recognized in connection with the acquisition as that gain is included in the pro-forma six months ended September 30, 2017. The unaudited pro forma consolidated results are not necessarily indicative of what the Company’s consolidated results of operations actually would have been had it completed these acquisitions on April 1, 2017.
Other Acquisitions and Business Investments
On June 7, 2017, the Company’s Space Age Insurance Company subsidiary (“SAIC”) invested $500,000 for a 40% interest in TFS Partners LLC (“TFS Partners”), a single-purpose investment entity organized by SAIC and other investors for the purpose of making an investment in a limited liability company, The Fence Store LLC (“Fence Store LLC”), organized for the purpose of acquiring substantially all of the assets of The Fence Store, Inc. (“Fence Store Inc.”). TFS Partners acquired a 60% interest in Fence Store LLC, which has completed the purchase of substantially all of the assets of Fence Store Inc. Prior to this transaction, Fence Store Inc. operated a business under the tradename “Town and Country Fence” selling and installing residential and commercial fencing in the greater Twin Cities, Minnesota area. Fence Store LLC intends to continue this business. The Company accounts for its investment in TFS Partners using the equity method of accounting.
On December 15, 2017, BCCM, Inc. (“BCCM”), a newly-formed, wholly-owned subsidiary of the Company, completed the acquisition of Blue Clay Capital Management, LLC (“Blue Clay Capital”). In connection with the transaction, BCCM acquired the assets of, and assumed certain liabilities of Blue Clay Capital. Blue Clay Capital, BCCM, BCCM Advisors, LLC (“BCCM Advisors”), a wholly-owned subsidiary of BCCM purchased the general partnership interests in certain investment funds previously managed by Blue Clay Capital for a purchase price equal to $227,000. Upon acquisition of each of the general partnership interests, BCCM Advisors was admitted as the general partner of each fund.
On July 31, 2018, the Company purchased 100% of the outstanding common units of Ambry Hill Technologies, LLC. (“AHT”) for $50,000. AHT offers the aviation business community technology to help them manage high volumes of request for quotes for aircraft part purchases. Subsequent to the acquisition, AHT is accounted for as a wholly-owned subsidiary of the Company.
Pro forma financial information is not presented for the above acquisitions as the results are not material to the Company’s consolidated financial statements.
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| Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
| Net sales | $ | 8,120 | $ | 8,474 | $ | 16,637 | $ | 17,522 | |||||||||||||||||||||||||||
| Operating Expense | (9,015) | (9,215) | (17,319) | (18,350) | |||||||||||||||||||||||||||||||
| Loss from discontinued operations before income taxes | (895) | (741) | (682) | (828) | |||||||||||||||||||||||||||||||
| Income tax benefit | (660) | (93) | (612) | (123) | |||||||||||||||||||||||||||||||
| Loss from discontinued operations, net of tax | $ | (235) | $ | (648) | $ | (70) | $ | (705) | |||||||||||||||||||||||||||
September 30, 2018 | March 31, 2018 | |||||||
Cash and cash equivalents | $ | 5,612,472 | $ | 4,803,238 | ||||
Restricted cash | 18,865 | 269,659 | ||||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | 5,631,337 | $ | 5,072,897 | ||||
| |||||
| Assets: | March 31, 2019 | ||||
| Cash | $ | 107 | |||
| Accounts receivable, net | 8,197 | ||||
| Income tax receivable | 17 | ||||
| Inventories, net | 2,512 | ||||
| Other current assets | 769 | ||||
| Current assets of | 11,601 | ||||
| Property and equipment, net | 554 | ||||
| Intangible assets, net | 228 | ||||
| Goodwill | 190 | ||||
| Other non-current assets | 292 | ||||
| Non-current assets of discontinued operations | 1,264 | ||||
| Liabilities: | |||||
| Accounts payable | 1,144 | ||||
| Income tax payable | (226) | ||||
| Accrued expenses | 669 | ||||
| Current liabilities of discontinued operations | $ | 1,587 | |||
The Company is the beneficiary of corporate-owned life insurance policies on certain former employees with a net cash surrender value of approximately $482,000 and $2,357,000 at September 30, 2018 and March 31, 2018, respectively.
In September 2018, the Company received proceeds of $1.9 million through loans against the cash value of its life insurance policies. The loan balance is recorded net against the cash surrender value of life insurance in the accompanying condensed consolidated balance sheet at September 30, 2018.
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Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net Income (Loss) Attributable to Air T, Inc. Stockholders | $ | (1,321,185 | ) | $ | 421,701 | $ | 1,507,509 | $ | 1,390,090 | |||||||
Income (Loss) Per Share: | ||||||||||||||||
Basic | $ | (0.65 | ) | $ | 0.21 | $ | 0.74 | $ | 0.68 | |||||||
Diluted | $ | (0.65 | ) | $ | 0.21 | $ | 0.74 | $ | 0.68 | |||||||
Weighted Average Shares Outstanding: | ||||||||||||||||
Basic | 2,043,823 | 2,042,789 | 2,043,716 | 2,042,789 | ||||||||||||
Diluted | 2,043,823 | 2,046,945 | 2,049,393 | 2,047,305 | ||||||||||||
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TheThree Months Ended September 30, Six Months Ended September 30, 2019 2018 2019 2018 Net income (loss) from continuing operations $ (2,122) $ (779) $ 1,868 $ 2,561 Net (income) loss from continuing operations attributable to non-controlling interests (287) 106 (2,660) (348) Net income (loss) from continuing operations attributable to Air T, Inc. stockholders (2,409) (673) (792) 2,213 Income (loss) from continuing operations per share: Basic $ (0.80) $ (0.22) $ (0.30) $ 0.72 Diluted $ (0.80) $ (0.22) $ (0.30) $ 0.72 Loss from discontinued operations, net of tax $ (235) $ (648) $ (70) $ (705) Gain on sale of discontinued operations, net of tax 8,359 — 8,359 — Gain (loss) from discontinued operations attributable to Air T, Inc. stockholders 8,124 (648) 8,289 (705) Income (loss) from discontinued operations per share: Basic $ 2.69 $ (0.21) $ 3.14 $ (0.23) Diluted $ 2.68 $ (0.21) $ 3.13 $ (0.23) Weighted Average Shares Outstanding: Basic 3,025 3,066 2,641 3,066 Diluted 3,029 3,066 2,645 3,074
AtFinancial Condition and Results of Operations.
Income.
In June 2018, the Company invested $2,000,000 in a quota share reinsurance program in the form of participating notes. The investment period is 3 years; subject to early redemption if applicable. The investment is reported at amortized cost of $2,000,000 at September 30, 2018.
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The Company’s$24,032. In addition, due to the adverse financial results as reported in Insignia's Form 10-Q for the quarter ended June 30, 2019 in addition to consideration of analyst reports and other qualitative factors, the Company determined that it has suffered from an other-than-temporary impairment in its investment in The Fence Store LLC (“TFS”) is also accounted for underInsignia . As such, the equity methodCompany recorded an impairment charge of accounting. The Company’s net investment basis is approximately $566,000 at September 30, 2018. For$395,031 during the quarter ended September 30, 2019. After the impairment, the Company's net investment basis in Insignia is $3,439,547 as of September 30, 2019.
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Three
Months Ended
June 30, 2019Three
Months Ended
June 30, 2018Revenue $ 5,842 $ 8,245 Gross Profit 1,465 3,005 Operating income (loss) (683) 253 Net income (loss) (488) 184 Net income attributable to Air T, Inc. stockholders $ (166) $ 31
September 30, 2018 | March 31, 2018 | ||||||||||||||||||
Ground support service parts | $ | 2,532,639 | $ | 2,489,433 | |||||||||||||||
| September 30, 2019 | March 31, 2019 | ||||||||||||||||||
Ground equipment manufacturing: | Ground equipment manufacturing: | ||||||||||||||||||
Raw materials | 3,829,494 | 3,198,939 | Raw materials | $ | 4,191 | $ | 2,498 | ||||||||||||
Work in process | 1,972,549 | 20,089 | Work in process | 910 | 1,660 | ||||||||||||||
Finished goods | 4,117,452 | 1,768,897 | Finished goods | 1,922 | 973 | ||||||||||||||
Printing equipment and maintenance | Printing equipment and maintenance | ||||||||||||||||||
Raw materials | 870,592 | 747,778 | Raw materials | 476 | 401 | ||||||||||||||
Finished goods | 395,044 | 553,847 | Finished goods | 912 | 1,048 | ||||||||||||||
Commercial jet engines and parts | 15,732,368 | 25,452,022 | Commercial jet engines and parts | 32,133 | 21,032 | ||||||||||||||
Total inventories | $ | 29,450,138 | $ | 34,231,005 | Total inventories | 40,544 | $ | 27,612 | |||||||||||
| Reserves | Reserves | (174) | (157) | ||||||||||||||||
| Total inventories, net of reserves | Total inventories, net of reserves | $ | 40,370 | $ | 27,455 | ||||||||||||||
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Air T, Inc. maintains a stock option plan
No options were granted under Air T, Inc.’s stock option plan during the three and six-month periods ended September 30, 2018 and 2017. A total of 1,682 options were exercised during the three-month period ended September 30, 2018 at a weighted average exercise price of $10.56. Stock-based compensation expense with respect to this plan in the amount of $0 was recognizedlease cost for the three and six-month periodssix months ended September 30, 2018 and 2017, respectively. At September 30, 2018, there was no unrecognized compensation expense related to2019 are as follows (in thousands):
| Three Months Ended September 30, 2019 | Six Months Ended September 30, 2019 | ||||||||||
| Operating lease cost | $ | 514 | $ | 920 | |||||||
| Short-term lease cost | 50 | 255 | |||||||||
| Variable lease cost | 71 | 207 | |||||||||
| Sublease income | — | — | |||||||||
| Total lease cost | $ | 635 | $ | 1,382 | |||||||
No options were granted or exercised duringconsolidated balance sheets for leases where we are the three and six-month periodslessee as of the quarter ended September 30, 2018 and 2017 under any of Delphax’s stock option plans.
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| September 30, 2019 | ||||||||
| Operating leases | ||||||||
| Operating lease right-of-use assets | $ | 7,154 | ||||||
| Operating lease liabilities | $ | 7,577 | ||||||
| Weighted-average remaining lease term | 15.50 years | |||||||
| Operating leases | ||||||||
| Weighted-average discount rate | 4.51 | % | ||||||
| Operating leases | ||||||||
| Operating Leases | |||||
| 2020 (excluding the six months ended September 30, 2019) | $ | 786 | |||
| 2021 | 1,311 | ||||
| 2022 | 1,131 | ||||
| 2023 | 938 | ||||
| 2024 | 637 | ||||
| 2025 | 402 | ||||
| Thereafter | 5,757 | ||||
| Total undiscounted lease payments | $ | 10,962 | |||
| Less: Interest | 2,890 | ||||
| Less: Discount | 495 | ||||
| Total lease liabilities | $ | 7,577 | |||
| Year ended March 31, | |||||
| 2020 | $ | 3,133 | |||
| 2021 | 2,115 | ||||
| 2022 | 1,625 | ||||
| 2023 | 1,241 | ||||
| 2024 | 692 | ||||
| Thereafter | 6,267 | ||||
| Total minimum lease payments | $ | 15,073 | |||
September 30, 2018 | March 31, 2018 | Maturity Date | |||||||
Revolver | $ | 6,972,133 | $ | - | November 30, 2019 | ||||
Term Note A | 9,250,000 | 9,750,000 | January 1, 2028 | ||||||
Term Note B | 4,625,000 | 4,875,000 | January 1, 2028 | ||||||
Term Note D | 1,640,800 | 1,674,400 | January 1, 2028 | ||||||
Air T Debt | 22,487,933 | 16,299,400 | |||||||
Revolver | 5,000,000 | 5,000,000 | February 21, 2019 | ||||||
Term Loan | 716,775 | 2,404,775 | March 26, 2019 | ||||||
AirCo Debt | 5,716,775 | 7,404,775 | |||||||
Revolver | - | 14,826,062 | May 5, 2019 | ||||||
Term Loan | 9,515,465 | 9,920,000 | January 26, 2021 | ||||||
Term Loan | 18,000,000 | - | September 14, 2021 | ||||||
Contrail Debt | 27,515,465 | 24,746,062 | |||||||
Term Loan | 3,400,000 | - | November 30, 2019 | ||||||
MB&T - Revolver | 650,000 | - | November 30, 2019 | ||||||
Worthington Debt | 4,050,000 | - | |||||||
Total Debt | 59,770,173 | 48,450,238 | |||||||
Less: Unamortized Debt Issuance Costs | (404,638 | ) | (365,288 | ) | |||||
Total Debt, net | $ | 59,365,535 | $ | 48,084,950 | |||||
| (In Thousands) | September 30, 2019 | March 31, 2019 | Maturity Date | Interest Rate | Unused commitments as of September 30, 2019 | |||||||||||||||||||||
| Revolver - MB&T | $ | 18,424 | $ | 12,403 | November 30, 2019 | Prime - 1% | $ | 1,576 | ||||||||||||||||||
| Term Note A - MB&T | 8,250 | 8,750 | January 1, 2028 | 1-month LIBOR + 2% | ||||||||||||||||||||||
| Term Note B - MB&T | 4,125 | 4,375 | January 1, 2028 | 4.5% | ||||||||||||||||||||||
| Term Note D - MB&T | 1,574 | 1,607 | January 1, 2028 | 1-month LIBOR + 2% | ||||||||||||||||||||||
| Debt - Trust Preferred Securities | 9,632 | — | June 7, 2049 | 8% | ||||||||||||||||||||||
| Air T Debt | 42,005 | 27,135 | ||||||||||||||||||||||||
| Revolver - MB&T | — | 3,820 | May 21, 2019 | 7.5% | ||||||||||||||||||||||
| Revolver - MB&T | 6,921 | — | November 30, 2019 | greater of 6.50% or Prime + 2% | 3,078 | |||||||||||||||||||||
| Term Loan - MB&T | — | 450 | December 17, 2019 | 7.50% | ||||||||||||||||||||||
| Term Loan - MB&T | — | 400 | June 17, 2020 | 7.25% | ||||||||||||||||||||||
| Term Loan - Park State | — | 2,100 | June 17, 2020 | 8.50% | ||||||||||||||||||||||
| AirCo Debt | 6,921 | 6,770 | ||||||||||||||||||||||||
| Revolver | — | — | September 5, 2021 | 1-month LIBOR + 3% | 20,000 | |||||||||||||||||||||
| Term Loan A | 7,466 | 8,617 | January 26, 2021 | 1-month LIBOR + 3.75% | ||||||||||||||||||||||
| Term Loan B | 6,500 | 15,500 | September 14, 2021 | 1-month LIBOR + 3.75% | ||||||||||||||||||||||
| Term Loan C | 12,805 | — | August 1, 2024 | 1-month LIBOR + 3.75% | ||||||||||||||||||||||
| Contrail Debt - Old National | 26,771 | 24,117 | ||||||||||||||||||||||||
| Total Debt | 75,697 | 58,022 | ||||||||||||||||||||||||
| Less: Unamortized Debt Issuance Costs | (317) | (369) | ||||||||||||||||||||||||
| Total Debt, net | $ | 75,380 | $ | 57,653 | ||||||||||||||||||||||
At September 30, 2018,2019, our contractual financing obligations, including payments due by period, are as follows:
Due by | Amount | |||
September 30, 2019 | $ | 15,287,544 | ||
September 30, 2020 | 17,473,185 | |||
September 30, 2021 | 16,195,244 | |||
September 30, 2022 | 1,567,200 | |||
September 30, 2023 | 1,567,200 | |||
Thereafter | 7,679,800 | |||
| 59,770,173 | ||||
Less: Unamortized Debt Issuance Costs | (404,638 | ) | ||
| $ | 59,365,535 | |||
Refer
| Due by | Amount | |||||||
| September 30, 2020 | $ | 29,836 | ||||||
| September 30, 2021 | 17,535 | |||||||
| September 30, 2022 | 4,172 | |||||||
| September 30, 2023 | 4,271 | |||||||
| September 30, 2024 | 4,138 | |||||||
| Thereafter | 15,745 | |||||||
| 75,697 | ||||||||
| Less: Unamortized Debt Issuance Costs | (317) | |||||||
| $ | 75,380 | |||||||
Fair Value Measurement as of September 30, 2019 | |||||
| Warrant liability (Level 2) | $ | 614,720 | |||
NASDAQ Global Market. The liability is classified as Level 2 in the hierarchy (Level 2 is defined as quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability).
the Air T Revolver to February 28, 2020. The principal amount reverted back to $17 million. Concurrently, the Company also extended the maturity date of the AirCo MBT revolver ("AirCo Revolver") to February 28, 2020. Principal amount and terms of the AirCo Revolver remained unchanged.
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September 30, 2018 | March 31, 2018 | ||||||||||||||||||
| September 30, 2019 | March 31, 2019 | ||||||||||||||||||
ASSETS | ASSETS | ||||||||||||||||||
Current assets: | Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 314,481 | $ | 241,430 | Cash and cash equivalents | $ | 13 | $ | 12 | ||||||||||
Accounts receivable, net | 40,844 | 316,542 | Accounts receivable, net | 50 | 47 | ||||||||||||||
Other current assets | 58,754 | 72,269 | Other current assets | 9 | 59 | ||||||||||||||
Total current assets | 414,079 | 630,241 | Total current assets | 72 | 118 | ||||||||||||||
Other tax receivables-long-term | 311,000 | 311,000 | Other tax receivables-long-term | — | 311 | ||||||||||||||
Total assets | $ | 725,079 | $ | 941,241 | Total assets | 72 | 429 | ||||||||||||
LIABILITIES | LIABILITIES | ||||||||||||||||||
Current liabilities: | Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 2,146,938 | $ | 2,145,847 | Accounts payable | 96 | 2,151 | ||||||||||||
Income tax payable | 11,312 | 11,312 | |||||||||||||||||
Accrued expenses | 3,234,808 | 3,244,514 | Accrued expenses | 392 | 3,158 | ||||||||||||||
Short-term debt | 1,772,660 | 1,788,285 | Short-term debt | — | 1,750 | ||||||||||||||
Total current liabilities | 7,165,718 | 7,189,958 | Total current liabilities | 488 | 7,059 | ||||||||||||||
Long-term debt | - | - | |||||||||||||||||
Other long-term liabilities | - | - | |||||||||||||||||
Total liabilities | $ | 7,165,718 | $ | 7,189,958 | Total liabilities | 488 | 7,059 | ||||||||||||
Net Assets | $ | (6,440,639 | ) | $ | (6,248,717 | ) | |||||||||||||
| Net Liabilities | Net Liabilities | $ | (416) | $ | (6,630) | ||||||||||||||
The short-term debt is comprised of amounts due from Delphax to Air T, Inc. Those amounts have been eliminated in consolidation. As of September 30, 2018, the outstanding principal amount of the Senior Subordinated Note was approximately $725,000 ($900,000 as of March 31, 2018) and there were no borrowings under the Delphax Senior Credit Agreement. Short-term debt as reflected in the above table includes approximately $1,048,000 and $888,000 of accrued interest, due to the Company from Delphax Technologies, Inc. under the Senior Subordinated Note as of September 30, 2018 and March 31, 2018. As a result of the foreclosure completed
The assets of Delphax can only be used to satisfy the obligations of Delphax. Furthermore, Delphax’s creditors do not have recourse to the assets of Air T, Inc. or its subsidiaries.
On January 6, 2017, the Company notified Delphax and Delphax Canada of certain “Events of Default” (as defined under the Delphax Senior Credit Agreement) existing under the Delphax Senior Credit Agreement and that the Company was reserving all rights to exercise remedies under the Delphax Senior Credit Agreement and that no delay in exercising any such remedy is to be construed as a waiver of any of its remedies. Also, on January 6, 2017, the Company and Delphax Canada entered into a Forbearance and Amendment Agreement dated as of January 6, 2017, which amended the Senior Subordinated Note to increase the default rate of interest from an annual rate of 10.5% to an annual rate of 18%, to be in effect until all amounts under the Senior Subordinated Note are paid in full, and which provides that so long as no Event of Default (as defined in the Senior Subordinated Note) occurs under the Senior Subordinated Note, other than Events of Default that existed as of January 6, 2017, the Company agreed to forbear from exercising its remedies under the Senior Subordinated Note until May 31, 2017 and further provided for the payment by Delphax Canada to the Company of a forbearance fee equal to approximately $141,000. Notwithstanding the existence of events of default, during the first six calendar months of 2017, the Company permitted additional borrowings under the Delphax Senior Credit Agreement to, among other things, fund a final production run by Delphax Canada of consumable products for its legacy printing systems, which production run was primarily completed over that period. Delphax Canada was Delphax's sole manufacturing subsidiary.
In light of continuing events of default under the Delphax Senior Credit Agreement and the conclusion of final production run by Delphax Canada of consumable products for Delphax’s legacy printing systems, on July 13, 2017, the Company delivered a demand for payment and Notice of Intention to Enforce Security to Delphax Canada. On August 10, 2017, the Company foreclosed on all personal property and rights to undertakings of Delphax Canada. The Company foreclosed as a secured creditor with respect to amounts owed to it by Delphax Canada under the Delphax Senior Credit Agreement. The Company provided notice of its intent to foreclose to Delphax Canada and its secured creditors and shareholders on July 26, 2017. The outstanding amount owed to the Company by Delphax Canada under the Delphax Senior Credit Agreement on July 26, 2017 was approximately $1,510,000. The Company also submitted an application to the Ontario Superior Court of Justice in Bankruptcy and Insolvency (the "Ontario Court") seeking that Delphax Canada be adjudged bankrupt. On August 8, 2017, the Ontario Court issued an order adjudging Delphax Canada to be bankrupt. The recipients of the foreclosure notice did not object to the foreclosure or redeem. As a result, the foreclosure was completed on August 10, 2017, and the Company accepted the personal property and rights to undertakings of Delphax Canada in satisfaction of the amount secured by the Delphax Senior Credit Agreement.
With it being adjudged bankrupt on August 8, 2017, Delphax Canada ceased to have capacity to deal with its property. The property, of Delphax Canadawhich then vested in the trustee in bankruptcy of Delphax Canada subject to the rights of secured creditors. The Company’s rights under Delphax Senior Credit Agreement permitted it to foreclose upon the personal property and rights of undertakings of Delphax Canada. Since the Company foreclosed on Delphax Canada’s assets within very close time proximity to the commencement of bankruptcy proceedings and because the bankruptcy and foreclosure were undertaken in contemplation of one another, the Company treated these as one single financial reporting event. In accordance with applicable accounting guidance, the Company considered whether Delphax Canada was still a business post-bankruptcy and foreclosure of the assets by the Company and concluded that Delphax Canada no longer constituted a business as it is defined by accounting principles generally accepted in the United States of America and, accordingly, derecognition of Delphax Canada’s liabilities will occur when Delphax Canada is legally released as the primary obligor with respect to the liabilities in the bankruptcy proceedings. As of SeptemberJune 30, 2018,2019, the bankruptcy proceedings were ongoingfinalized in accordance with Canadian law and, therefore, Delphax Canada was still the primary obligorlegally discharged of its liabilities.
The intercompany balances underconclusion of the bankruptcy proceedings also resulted in the dissolution of Delphax Senior Subordinated NoteCanada. In addition, on June 11, 2019, the Company has also fully dissolved Delphax UK. As such, the only Delphax entity that remains in existence as of September 30, 2018 are eliminated in2019 is Delphax France. The Company extinguished the presentationassets and liabilities of Delphax Canada and Delphax UK during the consolidated financial statements.
quarter ended June 30, 2019 and recognized a gain on dissolution of entities of $4,509,302.
As a result of the application of the above-described attribution methodology, for the quarters ended September 30, 20182019 and September 30, 20172018 the attribution of Delphax losses to non-controlling interests was 33% and 0%33%, respectively.
2018 | 2017 | |||||||
(Unaudited) | (Unaudited) | |||||||
Operating Revenues | $ | - | $ | 4,434,303 | ||||
Operating Expenses: | ||||||||
Cost of sales | - | 2,583,807 | ||||||
General and administrative | 222,244 | 1,001,896 | ||||||
Research and development | - | 195,653 | ||||||
Depreciation, amortization and impairment | - | 8,007 | ||||||
| 222,244 | 3,789,363 | |||||||
Operating Income (Loss) | (222,244 | ) | 644,940 | |||||
Non-operating Expenses, net | (45,782 | ) | (188,000 | ) | ||||
Income (Loss) Before Income Taxes | (268,026 | ) | 456,940 | |||||
Income Taxes | - | - | ||||||
Net Income (Loss) | $ | (268,026 | ) | $ | 456,940 | |||
Non-operating income (expense), net, includes interest expense of approximately $159,000 associated with the Senior Subordinated Note for the quarter ended September 30, 2018 and approximately $440,000 associated with the Senior Subordinated Note and the Delphax Senior Credit Agreement for the quarter ended September 30, 2017. This interest expense was eliminated for purposes of net income (loss) presented in the Company’s accompanying consolidated statements of income (loss) and comprehensive income (loss) for the three months ended September 30, 2019 and 2018 and 2017, though the effect of intercompany interest under the Senior Subordinated note and the Delphax Senior Credit Agreement is reflected in the attribution of Delphax net income or losses attributed to non-controlling interests.
Unconsolidated Variable Interest Entities and Other Entities
As discussed in Note 3, BCCM Advisors holds equity interests in certain investment funds as of March 31, 2018 and September 30, 2018. The Company determined that the equity interests it holds as the general partner in the following funds are variable interests based on the applicable GAAP guidance: Blue Clay Capital Partners CO I LP, Blue Clay Capital Partners CO III LP, Blue Clay Capital SMid-Cap LO LP and AO Partners II LP. However, the Company further determined that these funds should not be consolidated as BCCM Advisors is not the primary beneficiary of these variable interest entities. The Company determined that its equity interest in the Blue Clay Capital Master Fund Ltd. is not a variable interest and should not be consolidated based on the applicable GAAP guidance. The Company’s total investment within these investment funds at September 30, 2018 is valued at approximately $343,000. The Company’s exposure to loss is limited to its initial investment.
As discussed in Note 8, the Company has an investment in Oxbridge RE NS in the amount of $2,000,000. The Company determined that this investment represents a variable interest based on the applicable GAAP guidance. However, the Company further determined that the Company should not consolidate Oxbridge RE NS as the Company is not the primary beneficiary of the variable interest entity. The Company’s exposure to loss is limited to its initial investment.
|
|
Six Months Ended September 30, 2019 2018 Operating Revenues $ — $ — Operating Expenses: Cost of sales — — General and administrative 125 222 125 222 Operating Loss (125) (222) Non-operating Income (Expenses), net 6,237 (46) Income (Loss) Before Income Taxes 6,112 (268) Income Taxes — — Net Income (Loss) $ 6,112 $ (268)
|
|
September 30, 2018 | March 31, 2018 | September 30, 2019 | March 31, 2019 | ||||||||||||||||
United States | $ | 5,224,050 | $ | 5,209,831 | United States | $ | 18,321 | $ | 4,393 | ||||||||||
Foreign | 31,847,163 | 15,063,340 | Foreign | 7,008 | 25,035 | ||||||||||||||
Total property and equipment, net | $ | 37,071,213 | $ | 20,273,171 | Total property and equipment, net | $ | 25,329 | $ | 29,428 | ||||||||||
September 30, 2018 | March 31, 2018 | September 30, 2019 | March 31, 2019 | ||||||||||||||||
Australia | $ | 5,246 | $ | - | Australia | $ | 3 | $ | 5 | ||||||||||
United Kingdom | 5,142 | - | |||||||||||||||||
Canada | 17,993 | - | |||||||||||||||||
Mexico | 3,516,541 | 4,352,257 | Mexico | 1,845 | 2,681 | ||||||||||||||
Romania | 3,293,210 | 3,626,136 | |||||||||||||||||
Netherlands | 6,202,377 | 7,084,947 | Netherlands | 5,160 | 5,541 | ||||||||||||||
China | 18,806,654 | - | China | — | 16,808 | ||||||||||||||
Total property and equipment, net | $ | 31,847,163 | $ | 15,063,340 | Total property and equipment, net | $ | 7,008 | $ | 25,035 | ||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2019 | September 30, 2018 | ||||||||||||||||
United States | $ | 96,788,427 | $ | 85,319,178 | United States | $ | 75,891 | $ | 79,267 | ||||||||||
Foreign | 13,419,819 | 11,239,685 | Foreign | 21,990 | 13,420 | ||||||||||||||
Total revenue | $ | 110,208,246 | $ | 96,558,863 | |||||||||||||||
| Total revenue from continuing operations | Total revenue from continuing operations | $ | 97,881 | $ | 92,687 | ||||||||||||||
|
|
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Operating Revenues by Segment: | ||||||||||||||||
Overnight Air Cargo | $ | 17,064,600 | $ | 18,081,073 | $ | 34,705,258 | $ | 34,823,248 | ||||||||
Ground Equipment Sales: | ||||||||||||||||
Domestic | 11,069,537 | 15,046,892 | 16,361,554 | 20,323,258 | ||||||||||||
International | 1,775,983 | 469,217 | 2,871,080 | 1,142,507 | ||||||||||||
Total Ground Equipment Sales | 12,845,520 | 15,516,109 | 19,232,634 | 21,465,765 | ||||||||||||
Ground Support Services | 8,474,037 | 8,801,326 | 17,521,677 | 17,914,399 | ||||||||||||
Printing Equipment and Maintenance | ||||||||||||||||
Domestic | 2,824 | 280,328 | 193,726 | 1,724,310 | ||||||||||||
International | 137,121 | 1,022,594 | 245,042 | 2,709,993 | ||||||||||||
Total Printing Equipment and Maintenance | 139,945 | 1,302,922 | 438,768 | 4,434,303 | ||||||||||||
Commercial Jet Engines and Parts: | ||||||||||||||||
Domestic | 5,341,234 | 2,275,190 | 27,659,269 | 10,466,075 | ||||||||||||
International | 5,301,557 | 2,851,729 | 10,303,697 | 7,387,185 | ||||||||||||
Total Commercial Jet Engines and Parts | 10,642,791 | 5,126,919 | 37,962,966 | 17,853,260 | ||||||||||||
Corporate | 189,297 | 325,349 | 364,689 | 651,628 | ||||||||||||
Intercompany | (15,412 | ) | (292,208 | ) | (17,746 | ) | (583,740 | ) | ||||||||
Total | $ | 49,340,777 | $ | 48,861,490 | $ | 110,208,246 | $ | 96,558,863 | ||||||||
Operating Income (Loss): | ||||||||||||||||
Overnight Air Cargo | $ | 197,870 | $ | 896,506 | $ | 1,254,562 | $ | 1,713,172 | ||||||||
Ground Equipment Sales | 697,557 | 1,165,430 | 1,091,057 | 1,331,224 | ||||||||||||
Ground Support Services | (742,482 | ) | 276,113 | (830,206 | ) | 632,937 | ||||||||||
Printing Equipment and Maintenance | (413,298 | ) | (482,222 | ) | (654,368 | ) | 441,814 | |||||||||
Commercial Jet Engines and Parts | 574,974 | (48,760 | ) | 3,788,153 | 762,180 | |||||||||||
Corporate | (1,934,819 | ) | (1,381,192 | ) | (3,665,694 | ) | (2,244,210 | ) | ||||||||
Intercompany | 198 | 49,783 | 198 | 51,109 | ||||||||||||
Total | $ | (1,620,001 | ) | $ | 475,658 | $ | 983,701 | $ | 2,688,226 | |||||||
Capital Expenditures: | ||||||||||||||||
Overnight Air Cargo | $ | 28,460 | $ | 20,346 | $ | 34,456 | $ | 20,346 | ||||||||
Ground Equipment Sales | 156,230 | 2,258 | 296,320 | 2,258 | ||||||||||||
Ground Support Services | 8,062 | 117,919 | 60,500 | 143,284 | ||||||||||||
Printing Equipment and Maintenance | - | 8,491 | - | 8,491 | ||||||||||||
Commercial Jet Engines and Parts | 19,286,871 | 7,078,004 | 19,470,692 | 7,082,981 | ||||||||||||
Corporate | 34,010 | 542,202 | 111,240 | 1,001,855 | ||||||||||||
Total | $ | 19,513,634 | $ | 7,769,220 | $ | 19,973,209 | $ | 8,259,215 | ||||||||
Depreciation, Amortization and Impairment: | ||||||||||||||||
Overnight Air Cargo | $ | 21,178 | $ | 30,128 | $ | 43,941 | $ | 61,144 | ||||||||
Ground Equipment Sales | 65,384 | 117,499 | 156,733 | 250,379 | ||||||||||||
Ground Support Services | 119,816 | 113,625 | 244,871 | 225,256 | ||||||||||||
Printing Equipment and Maintenance | 15,307 | 3,316 | 29,638 | 8,007 | ||||||||||||
Commercial Jet Engines and Parts | 1,456,129 | 151,338 | 2,554,062 | 197,114 | ||||||||||||
Corporate | 150,416 | 114,956 | 295,711 | 189,115 | ||||||||||||
Intercompany | (1,324 | ) | (1,324 | ) | (2,649 | ) | (2,650 | ) | ||||||||
Total | $ | 1,826,905 | $ | 529,538 | $ | 3,322,306 | $ | 928,365 | ||||||||
|
|
(In Thousands) Three Months Ended
September 30,Six Months Ended
September 30,2019 2018 2019 2018 Operating Revenues by Segment: Overnight Air Cargo $ 19,745 $ 17,064 $ 38,065 $ 34,705 Ground Equipment Sales: Domestic 12,102 11,070 22,960 16,362 International 639 1,776 2,030 2,871 Total Ground Equipment Sales 12,741 12,846 24,990 19,233 Printing Equipment and Maintenance: Domestic 175 3 197 194 International 74 137 120 245 Total Printing Equipment and Maintenance 249 140 317 439 Commercial Jet Engines and Parts: Domestic 6,203 5,341 14,631 27,659 International 11,699 5,302 19,840 10,304 Total Commercial Jet Engines and Parts 17,902 10,643 34,471 37,963 Corporate and other 542 189 1,141 365 Intercompany (486) (15) (1,103) (18) Total 50,693 40,867 97,881 92,687 Operating Income (Loss): Overnight Air Cargo 216 197 264 1,253 Ground Equipment Sales 1,221 697 2,568 1,091 Printing Equipment and Maintenance (381) (413) (837) (654) Commercial Jet Engines and Parts 1,193 575 3,191 3,788 Corporate and other (1,902) (1,935) (3,860) (3,666) Intercompany 119 — 139 — Total 466 (879) 1,465 1,812 Capital Expenditures: Overnight Air Cargo 26 29 56 34 Ground Equipment Sales 286 156 10 296 Printing Equipment and Maintenance — — — — Commercial Jet Engines and Parts 16,005 19,287 17,656 19,471 Corporate and other 51 34 72 111 Total 16,368 19,506 17,794 19,912 Depreciation, Amortization and Impairment: Overnight Air Cargo 19 21 37 44 Ground Equipment Sales 63 65 116 157 Printing Equipment and Maintenance 27 15 30 30 Commercial Jet Engines and Parts 1,456 1,456 3,192 2,554 Corporate and other 137 151 277 296 Intercompany — (1) (3) (3) Total $ 1,702 $ 1,707 $ 3,649 $ 3,078
2019.
|
|
As discussed in Note$10 million. All other terms for both agreements remained unchanged.
On November 12, 2018, the Company entered into an Amended and Restated Revolving Credit Note and Amendment No. 2 to its Credit Agreement with Minnesota Bank & Trust. The Amended and Restated Revolving Credit Note and Credit Agreement Amendment increased the amount of the revolving credit facility from $10,000,000 to $13,000,000.
share over time.
•Overnight air cargo, which operates in the air express delivery services industry;
•Ground equipment sales, which manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers;
Ground support services, which provides local ground support equipment maintenance•Commercial aircraft, engines and facilities maintenance services to domestic airlines and aviation service providers;
Commercial jet engine and airframe asset management and logistics,parts, which manages and leases aviation assets; supplies surplus and aftermarket commercial jet engine components; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines and commercial aircraft companies;
•Printing equipment and maintenance, segment, which designs, manufactures and sells advanced digital print production equipment and provides maintenance services to commercial customers; and
•Corporate and other, which acts as the capital allocator and resource for other segments.
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Three Months September 30, | Six Months Ended September 30, | |||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
Overnight Air Cargo: | ||||||||||||||||||||||||||||||||
FedEx | $ | 17,065 | 35 | % | $ | 18,081 | 37 | % | $ | 34,705 | 31 | % | $ | 34,823 | 36 | % | ||||||||||||||||
Ground Equipment Sales: | ||||||||||||||||||||||||||||||||
Military | 454 | 1 | % | 715 | 1 | % | 2,918 | 3 | % | 1,060 | 1 | % | ||||||||||||||||||||
Commercial - Domestic | 10,608 | 22 | % | 14,331 | 29 | % | 13,434 | 12 | % | 19,263 | 20 | % | ||||||||||||||||||||
Commercial - International | 1,776 | 4 | % | 469 | 1 | % | 2,871 | 3 | % | 1,142 | 1 | % | ||||||||||||||||||||
| 12,839 | 26 | % | 15,515 | 32 | % | 19,224 | 17 | % | 21,465 | 22 | % | |||||||||||||||||||||
Ground Support Services | 8,474 | 17 | % | 8,801 | 18 | % | 17,522 | 16 | % | 17,914 | 19 | % | ||||||||||||||||||||
Commercial Jet Engines and Parts | ||||||||||||||||||||||||||||||||
Domestic | 5,341 | 11 | % | 2,274 | 5 | % | 27,659 | 25 | % | 10,465 | 11 | % | ||||||||||||||||||||
International | 5,302 | 11 | % | 2,852 | 6 | % | 10,304 | 9 | % | 7,387 | 8 | % | ||||||||||||||||||||
| 10,643 | 22 | % | 5,126 | 10 | % | 37,963 | 34 | % | 17,852 | 18 | % | |||||||||||||||||||||
Printing Equipment and Maintenance | ||||||||||||||||||||||||||||||||
Domestic | 3 | 0 | % | 280 | 1 | % | 194 | 0 | % | 1,724 | 2 | % | ||||||||||||||||||||
International | 137 | 0 | % | 1,023 | 2 | % | 245 | 0 | % | 2,710 | 3 | % | ||||||||||||||||||||
| 140 | 0 | % | 1,303 | 3 | % | 439 | 0 | % | 4,434 | 5 | % | |||||||||||||||||||||
Corporate | 180 | 0 | % | 35 | 0 | % | 355 | 0 | % | 71 | 0 | % | ||||||||||||||||||||
| $ | 49,341 | 100 | % | $ | 48,861 | 100 | % | $ | 110,208 | 100 | % | $ | 96,559 | 100 | % | |||||||||||||||||
Second Quarter Fiscal 20192020 Compared to Second Quarter Fiscal 2018
2019
(Dollars in thousands) | ||||||||||||||||
Three Months Ended September 30, | Change | |||||||||||||||
2018 | 2017 | |||||||||||||||
Overnight Air Cargo | $ | 17,065 | $ | 18,081 | $ | (1,016 | ) | -6 | % | |||||||
Ground Equipment Sales | 12,839 | 15,515 | (2,676 | ) | -17 | % | ||||||||||
Ground Support Services | 8,474 | 8,801 | (327 | ) | -4 | % | ||||||||||
Commercial Jet Engines and Parts | 10,643 | 5,126 | 5,517 | 108 | % | |||||||||||
Printing Equipment and Maintenance | 140 | 1,303 | (1,163 | ) | -89 | % | ||||||||||
Corporate | 180 | 35 | 145 | 414 | % | |||||||||||
| $ | 49,341 | $ | 48,861 | $ | 480 | 1 | % | |||||||||
segment, net of intercompany during the three months ended September 30, 2019 compared to the same quarter in the prior fiscal year (in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||
| 2019 | 2018 | ||||||||||||||||||||||||||||||||||
| Overnight Air Cargo | $ | 19,745 | $ | 17,064 | $ | 2,681 | 16 | % | |||||||||||||||||||||||||||
| Ground Equipment Sales | 12,741 | 12,838 | (97) | (1) | % | ||||||||||||||||||||||||||||||
| Commercial Jet Engines and Parts | 17,801 | 10,643 | 7,158 | 67 | % | ||||||||||||||||||||||||||||||
| Printing Equipment and Maintenance | 249 | 139 | 110 | 79 | % | ||||||||||||||||||||||||||||||
| Corporate and other | 157 | 183 | (26) | (14) | % | ||||||||||||||||||||||||||||||
| $ | 50,693 | $ | 40,867 | $ | 9,826 | 24 | % | ||||||||||||||||||||||||||||
FedEx.
The ground support services segment contributed approximately $8,474,000 and $8,801,000 to the Company’s revenues for the three-month periods ended September 30, 2018 and 2017, respectively, representing a $327,000 (4%) decrease in the current quarter principally due to the loss of a contract in one of the Company’s shops.
2018.
Revenues from printing equipmentprimarily driven by Contrail's higher aircraft and maintenance segment declined by $1,163,000 (89%) compared to the comparable prior quarter due to the bankruptcy of Delphax Canadacomponent sales as discussed in Note 13 and a lack of new printer saleswell as higher lease revenue in the current year.
quarter.
(Dollars in thousands) | ||||||||||||||||
Three Months Ended September 30, | Change | |||||||||||||||
2018 | 2017 | |||||||||||||||
Overnight Air Cargo | $ | 198 | $ | 897 | $ | (699 | ) | -78 | % | |||||||
Ground Equipment Sales | 696 | 1,165 | (469 | ) | -40 | % | ||||||||||
Ground Support Services | (741 | ) | 276 | (1,017 | ) | -368 | % | |||||||||
Commercial Jet Engines and Parts | 575 | (49 | ) | 624 | -1279 | % | ||||||||||
Printing Equipment and Maintenance | (413 | ) | (432 | ) | 19 | -4 | % | |||||||||
Corporate | (1,935 | ) | (1,381 | ) | (553 | ) | 40 | % | ||||||||
| $ | (1,620 | ) | $ | 476 | $ | (2,096 | ) | -441 | % | |||||||
| Three Months Ended September 30, 2019 | Change | ||||||||||||||||||||||||||||||||||
| 2019 | 2018 | ||||||||||||||||||||||||||||||||||
| Overnight Air Cargo | $ | 254 | $ | 198 | $ | 56 | 28 | % | |||||||||||||||||||||||||||
| Ground Equipment Sales | 1,221 | 696 | 525 | 75 | % | ||||||||||||||||||||||||||||||
| Commercial Jet Engines and Parts | 1,083 | 575 | 508 | 88 | % | ||||||||||||||||||||||||||||||
| Printing Equipment and Maintenance | (300) | (413) | 113 | (27) | % | ||||||||||||||||||||||||||||||
| Corporate and other | (1,791) | (1,935) | 144 | (7) | % | ||||||||||||||||||||||||||||||
| $ | 467 | $ | (879) | $ | 1,346 | n/m | |||||||||||||||||||||||||||||
Consolidated operating lossincome for the quarter ended September 30, 20182019 was $1,620,000, a decrease$467, an increase of $2,096,000$1,346 from the operating incomeloss of $476,000 for$879 in the comparable quarter of the prior year.
Operating income for the air cargo
Operatinghigher medical claims costs at other companies in the same segment.
prior fiscal year (in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| 2019 | 2018 | ||||||||||||||||||||||
| Other-than-temporary impairment loss on investments | $ | (395) | $ | — | $ | (395) | |||||||||||||||||
| Interest expense | (2,047) | (714) | (1,333) | ||||||||||||||||||||
| Gain on settlement of bankruptcy | 18 | — | 18 | ||||||||||||||||||||
| Bargain purchase acquisition gain | 14 | — | 14 | ||||||||||||||||||||
| Income (Loss) from equity method investments | (34) | 160 | (194) | ||||||||||||||||||||
| Other | (440) | 354 | (794) | ||||||||||||||||||||
| $ | (2,884) | $ | (200) | $ | (2,684) | ||||||||||||||||||
First Six Months of Fiscal 2019 Compared to First Six Months of Fiscal 2018
(Dollars in thousands) | ||||||||||||||||
Six Months Ended September 30, | Change | |||||||||||||||
2018 | 2017 | |||||||||||||||
Overnight Air Cargo | $ | 34,705 | $ | 34,823 | $ | (118 | ) | - | ||||||||
Ground Equipment Sales | 19,224 | 21,465 | (2,241 | ) | -10 | % | ||||||||||
Ground Support Services | 17,522 | 17,914 | (392 | ) | -2 | % | ||||||||||
Commercial Jet Engines and Parts | 37,963 | 17,852 | 20,111 | 113 | % | |||||||||||
Printing Equipment and Maintenance | 439 | 4,434 | (3,995 | ) | -90 | % | ||||||||||
Corporate | 355 | 71 | 284 | 400 | % | |||||||||||
| $ | 110,208 | $ | 96,559 | $ | 13,649 | 14 | % | |||||||||
segment (in thousands):
| Six Months Ended September 30, | Change | |||||||||||||||||||||||||||||||
| 2019 | 2018 | 6 mos | ||||||||||||||||||||||||||||||
| Overnight Air Cargo | $ | 38,064 | $ | 34,705 | $ | 3,359 | 10 | % | ||||||||||||||||||||||||
| Ground Equipment Sales | 24,991 | 19,224 | 5,767 | 30 | % | |||||||||||||||||||||||||||
| Printing Equipment and Maintenance | 313 | 439 | (126) | (29) | % | |||||||||||||||||||||||||||
| Commercial Jet Engines and Parts | 34,128 | 37,963 | (3,835) | (10) | % | |||||||||||||||||||||||||||
| Corporate | 385 | 356 | 29 | 8 | % | |||||||||||||||||||||||||||
| $ | 97,881 | $ | 92,687 | $ | 5,194 | 6 | % | |||||||||||||||||||||||||
The ground support services segment contributed approximately $17,522,000 and $17,914,000 to the Company’s revenues for the six-month periods ended September 30, 2018 and 2017, respectively, representing a $392,000 (2%) decrease in the current period principally due to the lossincreased orders of a contractcommercial and military deicers in one of the Company’s shops.
addition to new customers.
Revenues from printing equipment and maintenance segment declined by $3,995,000 (90%)2019 compared to the first sixthree months of the prior fiscal year due to the bankruptcy of Delphax Canada as discussed in Note 13 and a lack of new printer sales in the current year.
ended September 30, 2018.
(Dollars in thousands) | ||||||||||||||||
Six Months Ended September 30, | Change | |||||||||||||||
2018 | 2017 | |||||||||||||||
Overnight Air Cargo | $ | 1,255 | $ | 1,713 | $ | (459 | ) | -27 | % | |||||||
Ground Equipment Sales | 1,089 | 1,331 | (242 | ) | -18 | % | ||||||||||
Ground Support Services | (828 | ) | 633 | (1,461 | ) | -231 | % | |||||||||
Commercial Jet Engines and Parts | 3,788 | 762 | 3,026 | 397 | % | |||||||||||
Printing Equipment and Maintenance | (654 | ) | 492 | (1,146 | ) | -233 | % | |||||||||
Corporate | (3,666 | ) | (2,243 | ) | (1,423 | ) | 63 | % | ||||||||
| $ | 984 | $ | 2,688 | $ | (1,705 | ) | -63 | % | ||||||||
segment during the six months ended September 30, 2019 compared to the same six months in the prior fiscal year (in thousands):
| Six Months Ended September 30, | Change | |||||||||||||||||||||||||||||||
| 2019 | 2018 | 6 mos | ||||||||||||||||||||||||||||||
| Overnight Air Cargo | $ | 271 | $ | 1,255 | $ | (984) | (78) | % | ||||||||||||||||||||||||
| Ground Equipment Sales | 2,568 | 1,089 | 1,479 | 136 | % | |||||||||||||||||||||||||||
| Printing Equipment and Maintenance | (682) | (654) | (28) | (4) | % | |||||||||||||||||||||||||||
| Commercial Jet Engines and Parts | 2,971 | 3,788 | (817) | (22) | % | |||||||||||||||||||||||||||
| Corporate | (3,663) | (3,666) | 3 | — | % | |||||||||||||||||||||||||||
| $ | 1,465 | $ | 1,812 | $ | (347) | (19) | % | |||||||||||||||||||||||||
pilot headcount.
Operating income of the commercial jet engines and parts segment improved by $3,026,000 (397%) duegenerated an operating income of $2,971 in the current-year six months compared to Contrail having record levelsan operating income of $3,788 in the prior-year six months. The decrease corresponded to the decrease in sales driven by the sale of four engines totaling $17.35 million during the quarter ended June 30, 2018in this segment in addition to the acquisition of Worthington in May 2018. Thehigher medical claim costs when compared to prior year six months.
Operating expenses increased by $15,356,000 (16%)$5,541 or 6% to $109,225,000$96,416 in the first six-monthssix months ended September 30, 2018 compared to the equivalent prior year period.2019. The increase in operating expenses was primarily driven by the increases in the overnight air cargo segment due to higher pilot salaries and the ground equipment sales segment (higher operating expenses as a result of increased sales), offset by the decrease in the commercial jet engines and parts segment which increased $17,084,000 principally due to costas a result of decreased sales relatedat Contrail and higher medical claims costs at other companies in the same segment.
prior fiscal year (in thousands):
| Six Months Ended September 30, | Change | ||||||||||||||||||||||
| 2019 | 2018 | 6 months | |||||||||||||||||||||
| Other-than-temporary impairment loss on investments | $ | (1,210) | $ | — | $ | (1,210) | |||||||||||||||||
| Interest expense | (3,071) | (1,421) | (1,650) | ||||||||||||||||||||
| Gain on settlement of bankruptcy | 4,527 | — | 4,527 | ||||||||||||||||||||
| Bargain purchase acquisition gain | 49 | 1,984 | (1,935) | ||||||||||||||||||||
| Income (Loss) from equity method investments | (355) | 170 | (525) | ||||||||||||||||||||
| Other | (205) | 133 | (338) | ||||||||||||||||||||
| $ | (265) | $ | 866 | $ | (1,131) | ||||||||||||||||||
UK.
$(347) as explained above.
, the change in valuation allowance and the presentation of the tax impact of the bargain purchase gain.
Seasonality
The ground equipment sales segment business has historically been seasonal, with the revenues and operating income typically being lower in the first and fourth fiscal quarters as commercial deicers are typically delivered prior to the winter season. Other segments are not susceptible to material seasonal trends.
2019. Six Months Ended September 30, 2018 2017 Net Cash Provided by Operating Activities Net Cash Used in Investing Activities Net Cash Provided by Financing Activities Effect of foreign currency exchange rates on cash and cash equivalents Net Increase/(Decrease) in Cash and Cash Equivalents and Restricted Cash Warrants to purchase TruPs.2018,2019, the Company held approximately $5,631,000$27,536 in cash and cash equivalents and restricted cash. The Company also held $250,000$1,018 in restricted investments held as statutory reserve of SAIC and the remaining $812,000$102 of restricted investments pledged to secure SAIC’s participation in certain reinsurance pools, and $49,000 was invested in accounts not insured by the Federal Deposit Insurance Corporation (“FDIC”).pools. The Company has approximately $3.4 million$4,862 of marketable securities as of September 30, 2018. In addition, the Company also owns approximately 3.5 million shares of common stock of Insignia with a market value of $6.1 million as of September 30, 2018.2018,2019, the Company’s working capital amounted to $20,766,000, a decrease$42,955, an increase of $9,727,000$24,401 compared to March 31,September 30, 2018.six-month periodssix months ended September 30, 2019 and 2018 and 2017: $ 14,871,000 $ 7,036,000 (27,576,000 ) (11,892,000 ) 13,258,000 3,434,000 5,000 18,000 $ 558,000 $ (1,404,000 ) Cash(in thousands):Six Months Ended September 30, 2019 2018 Net Cash Provided by Operating Activities 603 14,871 Net Cash Provided by (Used in) Investing Activities 1,933 (27,576) Net Cash Provided by Financing Activities 12,327 13,258 Effect of foreign currency exchange rates on cash and cash equivalents 26 5 Net Increase in Cash and Cash Equivalents and Restricted Cash 14,889 558 $14,871,000$603 for the six-month period ended September 30, 20182019 compared to the net cash used provided by operating activities of $7,036,000$14,871 in prior year period. The primary drivers in the decrease in cash provided by operating activities for the six months ended September 30, 2019 was the decrease in inventory due to the sale of inventory in the commercial jet engines and parts segment (primarily the 4 engines Contrail sold during the quarter ended June 30, 2018) and an increase in accounts payablereceivable at GGS due to significant increase in commercial deicer sales as well as increased inventory levels at Contrail due to two engines coming off lease into inventory and accrued expenses.Cash usedat GGS due to significant backlog and production requirements in the current quarter.20182019 was $27,576,000$1,933 compared to $11,892,000net cash used in investing activities of $(27,576) in prior year period. The primary driversdriver in generating cash from investing activities was the lower cash used in investing activities for the six months ended September 30, 2018 was the $20,000,000 inbusiness combinations, purchases of marketable securities as well as lower capital expenditures, which includes $19,100,000 of aircrafts on lease with Contrail, cash used in the acquisition of Worthington in May 2018 of $3,326,000 and cash used for investments in marketable securitiesprovided by the sale of $2,014,000 and in Oxbridge RE NS of $2,000,000.CashGAS.20182019 was $13,258,000$12,327 compared to net cash provided by financing activities of $3,434,000$13,258 in the prior year period. The cash provided by financing activitiesslight decrease was primarily driven by the $18,000,000 term loan that Contrail obtained to fund the acquisitionlower net cash proceeds from lines of aircraft, $3,400,000 term loan to fund the acquisition of Worthington in Maycredit and $1,900,000 of proceeds obtained from a loan against the cash surrender of life insurance policies where the Company is the beneficiary. These proceeds were partially offset by payments on the Company’s existing term loans, in addition to cash proceeds from exercise of $3,200,000 and net payments on the revolver of $7,204,000 during the six-months ended September 30, 2018.itsthis business’ operations, consistingconsist principally of fuel, and certain other direct operating costs, and certain maintenance costs that are reimbursed by its customer. Significant increases in inflation rates could, however, have a material impact on future revenue and operating income.
|
|
|
|
|
|
Total Number of Shares | Maximum Number of | |||||||||||||||
Purchased as Part of | Shares that May Yet Be | |||||||||||||||
Dates of | Total Number of | Average Price | Public Announced | Purchased Under the | ||||||||||||
Shares Purchased | Shares Purchased | Paid per Share | Plans or Programs | Plans or Programs | ||||||||||||
July 1 - July 31, 2018 | - | $ | - | - | 750,000 | |||||||||||
August 1 - August 31, 2018 | - | $ | - | - | 750,000 | |||||||||||
September 1 - September 30, 2018 | 675 | $ | 33.72 | 675 | 749,325 | |||||||||||
| Dates of Shares Purchased | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Public Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| July 1 - July 31, 2019 | 2,097 | $ | 17.81 | 24,438 | 699,027 | |||||||||||||||||||||
| August 1 - August 31, 2019 | 2,674 | $ | 17.87 | 21,764 | 677,263 | |||||||||||||||||||||
| September 1 - September 30, 2019 | 1,112 | $ | 14.32 | 20,652 | 656,611 | |||||||||||||||||||||
| 5,883 | ||||||||||||||||||||||||||
| No. | Description | ||||
| 10.1 | |||||
| 10.2 | |||||
| 10.3 | |||||
| 10.4 | |||||
| 10.5 | |||||
| |||||
| 10.7 | |||||
| 10.8 | |||||
| 10.9 | |||||
| 10.10 | |||||
| 10.11 | |||||
| 10.12 | |||||
| 10.13 | |||||
| 10.14 | |||||
| 10.15 | |||||
| 10.16 | |||||
| 10.17 | |||||
| |||||
| 10.19 | |||||
| 10.20 | |||||
| 10.21 | |||||
| |||||
| |||||
| |||||
| |||||
| |||||
| |||||
| |||||
| |||||
| 10.28 | |||||
| 10.29 | |||||
| 10.30 | |||||
| |||||
| 10.32 | |||||
| 10.33 | |||||
| 10.34 | |||||
| 10.35 | |||||
| 10.36 | |||||
| 10.37 | |||||
| 10.38 | |||||
*Portions of the exhibit are treated as confidential pursuant to a request for confidential treatment filed by Air T, Inc. with the Securities and Exchange Commission.
| |||||
| 31.1 |
| |||||
| 31.2 |
| |||||
| 32.1 |
| |||||
| 99.1 | |||||
| 101 | The following financial information from the Quarterly Report on Form 10-Q for the quarter ended September 30, |
| AIR T, INC. | ||||||||
| Date: November | ||||||||
/s/ Nick Swenson | ||||||||
| Nick Swenson, Chief Executive Officer and Director | ||||||||
/s/ | ||||||||
34