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AIR T INC - Quarter Report: 2013 December (Form 10-Q)

airt10q_123113.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q
 
(Mark one)
    X
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended December 31, 2013
 
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____to _____

 
Commission File Number 0-11720
 
Air T, Inc.
 
(Exact name of registrant as specified in its charter)
 

 
                                                Delaware                                                                                                                 52-1206400
             (State or other jurisdiction of incorporation or organization)                                                     (I.R.S. Employer Identification No.)


3524 Airport Road, Maiden, North Carolina 28650
(Address of principal executive offices, including zip code)
                            (828) 464 –8741                  
(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes    x                              Noo
 

 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
       Yes     x                                     Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  (See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act).
Large Accelerated Filer o        Accelerated Filer o        Non-Accelerated Filer o        Smaller Reporting Companyx
                 (Do not check if smaller reporting company)
   

 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     o                             No  x
 

 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

       Common Stock                                                                           Outstanding Shares at January 31, 2014
    Common Shares, par value of $.25 per share                         2,355,028

 
 

 

 
AIR T, INC. AND SUBSIDIARIES
     
 
QUARTERLY REPORT ON FORM 10-Q
     
 
TABLE OF CONTENTS
     
         
     
Page
 
 
PART I
     
         
Item 1.
Financial statements
     
         
 
Condensed Consolidated Statements of Income (Unaudited)
    3  
 
Three Months and Nine Months Ended December 31, 2013 and 2012
       
           
 
Condensed Consolidated Balance Sheets
    4  
 
December 31, 2013 (Unaudited) and March 31, 2013
       
           
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
    5  
 
Nine Months Ended December 31, 2013 and 2012
       
           
 
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
    6  
 
Nine Months Ended December 31, 2013 and 2012
       
           
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
    7  
           
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
    10  
           
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
    15  
           
Item 4.
Controls and Procedures
    15  
           
           
 
PART II
       
           
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
    16  
Item 6.
Exhibits
    16  
 
Signatures
    17  
 
Exhibit Index
    18  
 
Certifications
    19  
 
Interactive Data Files
       

 
 

 

Item 1.  Financial Statements

AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

   
Three Months Ended December 31,
   
Nine Months Ended December 31,
 
   
2013
   
2012
   
2013
   
2012
 
Operating Revenues:
                       
Overnight air cargo
  $ 14,475,404     $ 12,416,819     $ 39,004,768     $ 35,201,746  
Ground equipment sales
    11,051,176       10,945,263       24,195,072       27,774,440  
Ground support services
    4,308,020       3,341,186       12,104,906       9,377,307  
      29,834,600       26,703,268       75,304,746       72,353,493  
                                 
Operating Expenses:
                               
Flight-air cargo
    5,537,259       5,139,155       14,941,658       14,538,786  
Maintenance-air cargo
    7,510,131       5,672,376       19,579,634       15,701,258  
Ground equipment sales
    8,585,518       9,313,331       19,234,785       23,842,551  
Ground support services
    3,441,110       2,520,219       9,721,227       7,575,169  
General and administrative
    3,775,264       2,935,399       9,543,520       8,325,090  
Depreciation and amortization
    214,636       136,246       540,290       379,493  
Gain on sale of assets
    (24,988 )     -       (24,988 )     -  
      29,038,930       25,716,726       73,536,126       70,362,347  
                                 
Operating Income
    795,670       986,542       1,768,620       1,991,146  
                                 
Non-operating Income (Expense):
                               
Investment income
    4,165       3,222       16,737       11,250  
Interest expense and Other
    (4,938 )     (4 )     (5,839 )     (7,191 )
      (773 )     3,218       10,898       4,059  
                                 
Income Before Income Taxes
    794,897       989,760       1,779,518       1,995,205  
                                 
Income Taxes
    340,000       357,000       730,000       718,000  
                                 
                                 
Net Income
  $ 454,897     $ 632,760     $ 1,049,518     $ 1,277,205  
                                 
Earnings Per Share:
                               
Basic
  $ 0.19     $ 0.26     $ 0.43     $ 0.52  
Diluted
  $ 0.19     $ 0.26     $ 0.43     $ 0.52  
                                 
Dividends Declared Per Share
  $ -     $ -     $ 0.30     $ 0.25  
                                 
Weighted Average Shares Outstanding:
                         
Basic
    2,408,198       2,446,286       2,433,544       2,446,286  
Diluted
    2,441,569       2,447,349       2,458,040       2,450,837  
                                 
                                 
                                 
                                 
                                 
                                 
See notes to condensed consolidated financial statements.
                         


3
 
 

 



AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

   
December 31, 2013
   
March 31, 2013
 
ASSETS
 
(Unaudited)
       
Current Assets:
           
Cash and cash equivalents
  $ 6,872,582     $ 9,197,492  
Accounts receivable, less allowance for
               
  doubtful accounts of $122,000 and $66,000
    10,019,366       11,687,515  
Notes and other receivables-current
    146,613       145,485  
Income tax receivable
    315,000       287,000  
Inventories
    11,775,327       8,181,700  
Deferred income taxes
    410,000       410,000  
Prepaid expenses and other
    977,762       619,128  
  Total Current Assets
    30,516,650       30,528,320  
                 
Property and Equipment, net
    3,973,859       3,472,539  
                 
Cash Surrender Value of Life Insurance Policies
    1,832,186       1,781,185  
Notes and Other Receivables-Long Term
    77,193       158,276  
Other Assets
    120,428       114,270  
  Total Assets
  $ 36,520,316     $ 36,054,590  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current Liabilities:
               
Accounts payable
  $ 6,202,385     $ 5,741,371  
Accrued expenses
    3,066,837       2,120,000  
 Total Current Liabilities
    9,269,222       7,861,371  
                 
Deferred income taxes
    69,000       69,000  
                 
Stockholders' Equity:
               
Preferred stock, $1.00 par value, 50,000 shares authorized,
    -       -  
Common stock, $.25 par value; 4,000,000 shares authorized,
         
  2,355,028 and 2,446,286 shares issued and outstanding
    588,755       611,571  
Additional paid-in capital
    5,086,469       6,321,411  
Retained earnings
    21,506,870       21,191,237  
  Total Stockholders' Equity
    27,182,094       28,124,219  
  Total Liabilities and Stockholders’ Equity
  $ 36,520,316     $ 36,054,590  
                 
                 
                 
                 
                 
                 
See notes to condensed consolidated financial statements.
         
                 

 

 


AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

   
Nine Months Ended December 31,
 
   
2013
   
2012
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 1,049,518     $ 1,277,205  
Adjustments to reconcile net income to net
               
  cash provided by operating activities:
               
(Gain) loss on disposal of equipment
    (24,988 )     2,184  
Change in accounts receivable and inventory reserves
    105,072       (19,293 )
Depreciation and amortization
    540,290       379,493  
Change in cash surrender value of life insurance
    (51,001 )     (51,003 )
Warranty reserve
    240,942       153,493  
Compensation expense related to stock options
    17,824       7,000  
Change in operating assets and liabilities:
               
  Accounts receivable
    1,611,563       450,284  
  Notes receivable and other non-trade receivables
    79,955       208,873  
  Inventories
    (4,430,352 )     1,044,841  
  Prepaid expenses and other
    (364,792 )     234,341  
  Accounts payable
    461,014       (190,899 )
  Accrued expenses
    705,895       487,210  
  Income taxes receivable/ payable
    (28,000 )     636,200  
Total adjustments
    (1,136,578 )     3,342,724  
 Net cash provided by (used in) operating activities
    (87,060 )     4,619,929  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Capital expenditures
    (267,523 )     (292,513 )
Proceeds from sale of assets
    39,140       8,000  
 Net cash used in investing activities
    (228,383 )     (284,513 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from line of credit
            -  
Payment of cash dividend
    (733,885 )     (611,571 )
Repurchase of common stock
    (1,078,217 )     -  
Proceeds from exercise of stock options
    25,375       -  
Repurchase of stock options
    (222,740 )     -  
 Net cash used in financing activities
    (2,009,467 )     (611,571 )
                 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    (2,324,910 )     3,723,845  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    9,197,492       5,814,184  
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 6,872,582     $ 9,538,029  
                 
                 
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
         
Finished goods inventory transferred to equipment leased to customers
  $ 788,239     $ 661,050  
                 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
         
Cash paid during the period for:
               
Interest
  $ 5,800     $ 17,000  
Income taxes
    759,000       82,000  
                 
                 
                 
See notes to condensed consolidated financial statements.
               

 

 



AIR T, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)


   
Common Stock
   
Additional
         
Total
 
               
Paid-In
   
Retained
   
Stockholders'
 
   
Shares
   
Amount
   
Capital
   
Earnings
   
Equity
 
Balance, March 31, 2012
    2,446,286     $ 611,571     $ 6,308,411     $ 20,132,948     $ 27,052,930  
                                         
Net income
    -       -       -       1,277,205       1,277,205  
                                         
Cash dividend ($0.25 per share)
    -       -       -       (611,571 )     (611,571 )
                                         
Compensation expense related to
                                       
    stock options
    -       -       7,000       -       7,000  
                                         
Balance, December 31, 2012
    2,446,286     $ 611,571     $ 6,315,411     $ 20,798,582     $ 27,725,564  
                                         
                                         
                                         
                                         
                                         
   
Common Stock
   
Additional
           
Total
 
                   
Paid-In
   
Retained
   
Stockholders'
 
   
Shares
   
Amount
   
Capital
   
Earnings
   
Equity
 
Balance, March 31, 2013
    2,446,286     $ 611,571     $ 6,321,411     $ 21,191,237     $ 28,124,219  
                                         
Net income
    -       -       -       1,049,518       1,049,518  
                                         
Cash dividend ($0.30 per share)
    -       -       -       (733,885 )     (733,885 )
                                         
Exercise of stock options
    2,500       625       24,750               25,375  
                                         
Compensation expense related to
                                       
    stock options
    -       -       17,824       -       17,824  
                                         
Repurchase of stock options
                    (222,740 )             (222,740 )
                                         
Repurchase of common stock
    (93,758 )     (23,441 )     (1,054,776 )     -       (1,078,217 )
                                         
Balance, December 31, 2013
    2,355,028     $ 588,755     $ 5,086,469     $ 21,506,870     $ 27,182,094  
                                         
                                         
                                         
                                         
                                         
                                         
See notes to condensed consolidated financial statements.
                 
                                         

 
 6

 


AIR T, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.  
Financial Statement Presentation

The condensed consolidated financial statements of Air T, Inc. (the “Company”) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results for the periods presented have been made.

It is suggested that these financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 2013.  The results of operations for the periods ended December 31 are not necessarily indicative of the operating results for the full year.

         Reclassifications and Corrections

During the third quarter ended December 31, 2013, the Company discovered that accounting guidance regarding certain software development costs had been misapplied resulting in the capitalization of costs in the Company’s Ground Equipment Sales Segment that should have been expensed in prior periods beginning in fiscal 2011.  The error was discovered when the project was completed in the quarter ended December 31, 2013 at which time the Company intended to begin amortizing the costs.  The capitalization of costs resulted in an overstatement of pre-tax income that totaled $68,000, $33,000 and $50,000 for the years ended March 31, 2011, 2012 and 2013, respectively.  Management analyzed the error to determine if any of the prior years were materially misstated and determined that they were not.  Management also determined that correcting the error in the current year would not materially misstate this year’s results.  The Company recorded the correction to the prior periods in the quarter ended December 31, 2013, through a charge to Ground Equipment Sales Segment operating costs in the amount of $301,000, which included additional costs capitalized in the first two quarters of the current fiscal year.

Certain reclassifications have been made to the prior quarter amounts to conform to the current quarter presentation.  Specifically, certain station expenses, including rents and salaries, totaling $301,000 and $831,000, respectively, have been reclassified from general and administrative expenses to Ground Support Services operating expenses in the financial statements for the three-month and nine-month periods ended December 31, 2013.  The reclassification had no impact on segment operating income.


2.  
Income Taxes

The tax effect of temporary differences, primarily asset reserves, stock-based compensation and accrued liabilities, gave rise to the Company's deferred tax asset in the accompanying December 31, 2013 and March 31, 2013 consolidated balance sheets. Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted tax rate expected to be in effect when the differences reverse.

The income tax provisions for the respective three-month and nine-month periods ended December 31, 2013 and 2012 differ from the federal statutory rate primarily as a result of state income taxes.  In addition, during the quarter ended December 31, 2013, the Company settled an open federal tax audit for the year ended March 31, 2011 and agreed to pay additional federal tax of $62,485, which has increased the income tax provisions for the three and nine-month periods ended December 31, 2013.

3.  
Net Earnings Per Share

Basic earnings per share have been calculated by dividing net earnings by the weighted average number of common shares outstanding during each period.  For purposes of calculating diluted earnings per share, shares issuable under employee and director stock options were considered potential common shares and were included in the weighted average common shares unless they were anti-dilutive.


 
7

 
The computation of basic and diluted earnings per common share is as follows:


   
Three Months Ended December 31,
   
Nine Months Ended December 31,
 
   
2013
   
2012
   
2013
   
2012
 
                         
Net earnings
  $ 454,897     $ 632,760     $ 1,049,518     $ 1,277,205  
Earnings Per Share:
                               
Basic
  $ 0.19     $ 0.26     $ 0.43     $ 0.52  
Diluted
  $ 0.19     $ 0.26     $ 0.43     $ 0.52  
Weighted Average Shares Outstanding:
                               
Basic
    2,408,198       2,446,286       2,433,544       2,446,286  
Diluted
    2,441,569       2,447,349       2,458,040       2,450,837  
                                 

[For the three months ended December 31, 2012, options to acquire 43,500 shares of common stock (none for the three months ended December 31, 2013) and for the nine months ended December 31, 2013 and 2012, respectively, options to acquire 10,000 and 43,500 shares of common stock, were not included in computing diluted earnings per common share because their effects were anti-dilutive.


4.  
Inventories

Inventories consisted of the following:


   
December 31, 2013
   
March 31, 2013
 
 Aircraft parts and supplies
  $ 119,638     $ 119,638  
 Ground support service parts
    591,101       327,753  
 Ground equipment manufacturing:
               
Raw materials
    8,296,539       4,989,335  
Work in process
    1,707,354       1,305,029  
Finished goods
    1,899,336       2,230,100  
 Total inventories
    12,613,968       8,971,855  
 Reserves
    (838,641 )     (790,155 )
                 
Total, net of reserves
  $ 11,775,327     $ 8,181,700  
                 

5.  
Stock-Based Compensation

The Company maintains stock-based compensation plans which allow for the issuance of stock options to officers, other key employees of the Company, and to members of the Board of Directors.  The Company accounts for stock compensation using fair value recognition provisions.

During the three-month period ended December 31, 2012, options for 10,000 shares were granted to an employee and during the three-month periods ended September 30, 2013 and 2012, options for 10,000 and 2,500 shares, respectively, were granted to directors.  During the three-month period ended December 31, 2013, options for 2,500 shares were exercised, options for 71,000 shares were repurchased by the company and cancelled and options for 2,500 shares expired.  No other options were granted, exercised or cancelled during the nine-month periods ended December 31, 2013 and 2012.  Stock-based compensation expense in the amount of $17,824 and $7,000 was recognized for the nine-month periods ended December 31, 2013 and 2012, respectively.  At December 31, 2013, there was $14,300 in unrecognized compensation expense related to the stock options.

6.  
Financing Arrangements

The Company has a $7,000,000 secured long-term revolving credit line.  In August 2013, the expiration date of the credit line was extended from August 31, 2014 to August 31, 2015.  The revolving credit line contains customary events of default, a subjective acceleration clause and a fixed charge coverage requirement, with which the Company was in compliance at December 31, 2013.  There is no requirement for the Company to maintain a lock-box arrangement under this agreement.  The amount of credit available to the Company under the agreement at any given time is determined by an availability calculation, based
 
 
8
 

 
on the eligible borrowing base, as defined in the credit agreement, which includes the Company’s outstanding receivables, inventories and equipment, with certain exclusions.  At December 31, 2013, $7,000,000 was available under the terms of the credit facility and no amounts were outstanding.  Amounts advanced under the credit facility bear interest at the 30-day “LIBOR” rate (.17% at December 31, 2013) plus 150 basis points.
 
The Company assumes various financial obligations and commitments in the normal course of its operations and financing activities.  Financial obligations are considered to represent known future cash payments that the Company is required to make under existing contractual arrangements such as debt and lease agreements.
 
  
7.  
Segment Information
The Company operates in three business segments.  The overnight air cargo segment, comprised of the Company’s Mountain Air Cargo, Inc. (“MAC”) and CSA Air, Inc. (“CSA”) subsidiaries, operates in the air express delivery services industry.  The ground equipment sales segment, comprised of the Company’s Global Ground Support, LLC (“GGS”) subsidiary, manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the U.S. military and industrial customers.  The ground support services segment, comprised of the Company’s Global Aviation Services, LLC (“GAS”) subsidiary, provides ground support equipment maintenance and facilities maintenance services to domestic airlines and aviation service providers.  Each business segment has separate management teams and infrastructures that offer different products and services.  The Company evaluates the performance of its operating segments based on operating income.
 
Segment data is summarized as follows:

   
Three Months Ended December 31,
   
Nine Months Ended December 31,
 
   
2013
   
2012
   
2013
   
2012
 
Operating Revenues:
                       
Overnight Air Cargo
  $ 14,475,404     $ 12,416,819     $ 39,004,768     $ 35,201,746  
Ground Equipment Sales:
                               
   Domestic
    8,180,669       7,802,351       20,554,855       21,353,676  
   International
    2,870,507       3,142,912       3,640,217       6,420,764  
Total Ground Equipment Sales
    11,051,176       10,945,263       24,195,072       27,774,440  
Ground Support Services
    4,308,020       3,341,186       12,104,906       9,377,307  
Total
  $ 29,834,600     $ 26,703,268     $ 75,304,746     $ 72,353,493  
                                 
Operating Income (Loss):
                               
Overnight Air Cargo
  $ 497,552       707,561     $ 1,734,768     $ 2,326,295  
Ground Equipment Sales
    1,208,623       441,346       1,667,536       582,089  
Ground Support Services
    253,834       407,954       811,449       630,244  
Corporate
    (1,164,339 )     (570,319 )     (2,445,133 )     (1,547,482 )
Total
  $ 795,670     $ 986,542     $ 1,768,620     $ 1,991,146  
                                 
Capital Expenditures:
                               
Overnight Air Cargo
  $ 37,769     $ 36,156     $ 50,005     $ 85,651  
Ground Equipment Sales
    10,451       16,508       28,555       128,159  
Ground Support Services
    57,748       15,335       159,568       31,373  
Corporate
    17,280       3,908       29,395       47,330  
Total
  $ 123,248     $ 71,907     $ 267,523     $ 292,513  
                                 
Depreciation and Amortization:
                         
Overnight Air Cargo
  $ 42,478     $ 38,815     $ 127,310     $ 114,705  
Ground Equipment Sales
    127,191       51,617       274,725       122,546  
Ground Support Services
    31,929       32,820       98,223       99,737  
Corporate
    13,038       12,994       40,032       42,505  
Total
  $ 214,636     $ 136,246     $ 540,290     $ 379,493  
                                 


8.  
Subsequent Events

Management has evaluated all events or transactions through the date of this filing.  During this period, the Company did not have any material subsequent events that impacted its consolidated financial statements.
 

 
9
 

 
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The Company operates in three business segments.  The overnight air cargo segment, comprised of the Company’s Mountain Air Cargo, Inc. (“MAC”) and CSA Air, Inc. (“CSA”) subsidiaries, operates in the air express delivery services industry.  The ground equipment sales segment, comprised of the Company’s Global Ground Support, LLC (“GGS”) subsidiary, manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the U.S. military and industrial customers.  The ground support services segment, comprised of the Company’s Global Aviation Services, LLC (“GAS”) subsidiary, provides ground support equipment maintenance and facilities maintenance services to domestic airlines and aviation service providers.  Each business segment has separate management teams and infrastructures that offer different products and services.  The Company evaluates the performance of its operating segments based on operating income.
 
Following is a table detailing revenues by segment and by major customer category:


(In thousands)
 
 
                                           
   
Three Months Ended December 31,
   
Nine Months Ended December 31,
 
   
2013
   
2012
   
2013
   
2012
 
                                                 
Overnight Air Cargo Segment:
                                               
    FedEx
  $ 14,476       49 %   $ 12,417       46 %   $ 39,005       52 %   $ 35,202       49 %
Ground Equipment Sales Segment:
                                                               
    Military
    315       1 %     3,943       15 %     1,091       1 %     8,783       12 %
    Commercial - Domestic
    7,866       26 %     3,859       14 %     19,464       26 %     12,570       17 %
    Commercial - International
    2,870       10 %     3,143       12 %     3,640       5 %     6,421       9 %
      11,051       37 %     10,945       41 %     24,195       32 %     27,774       38 %
                                                                 
Ground Support Services Segment
    4,308       14 %     3,341       13 %     12,105       16 %     9,377       13 %
    $ 29,835       100 %   $ 26,703       100 %   $ 75,305       100 %   $ 72,353       100 %
                                                                 

MAC and CSA provide small package overnight airfreight delivery services on a contract basis throughout the eastern half of the United States and the Caribbean.  MAC and CSA’s revenues are derived principally pursuant to “dry-lease” service contracts with FedEx.  Under the dry-lease service contracts, FedEx leases its aircraft to MAC and CSA for a nominal amount and pays a monthly administrative fee to MAC and CSA to operate the aircraft.  Under these contracts, all direct costs related to the operation of the aircraft (including fuel, outside maintenance, landing fees and pilot costs) are passed through to FedEx without markup.  These pass through costs totaled $9,389,000 and $7,517,000 for the three-months ended December 31, 2013 and 2012 and $24,301,000 and $20,967,000 for the nine-month periods ended December 31, 2013 and 2012, respectively.  These agreements are renewable on two to five-year terms and may be terminated by FedEx at any time upon 30 days’ notice.  The Company believes that the short term and other provisions of its agreements with FedEx are standard within the airfreight contract delivery service industry.  FedEx has been a customer of the Company since 1980.  Loss of its contracts with FedEx would have a material adverse effect on the Company.  As reported in our Form 10-K for the year ended March 31, 2013, we had been in the process of negotiating replacement agreements with FedEx, but the contract negotiations had been put on hold.  We expect the contract negotiations to resume in the near future and the terms of the replacement agreements may differ from the terms of our current agreements, which may affect our results going forward.
 
As of December 31, 2013, MAC and CSA had an aggregate of 80 aircraft under agreement with FedEx.  Separate agreements cover the three types of aircraft operated by MAC and CSA for FedEx -- Cessna Caravan, ATR-42 and ATR-72.  Pursuant to such agreements, FedEx determines the schedule of routes to be flown by MAC and CSA.  Included within the 80 aircraft are three Cessna Caravan aircraft that are considered soft-parked.  These aircraft remain covered under our agreements with FedEx although at a reduced administrative fee compared to aircraft currently in operation.  MAC and CSA continue to perform maintenance on the aircraft, but they are not crewed and are not currently operating the aircraft on scheduled routes.  During the third quarter, FedEx transferred one soft-parked Cessna Caravan aircraft to another feeder operator to meet scheduling needs.

MAC and CSA combined contributed approximately $39,005,000 and $35,202,000 to the Company’s revenues for the nine-month periods ended December 31, 2013 and 2012, respectively, a current year increase of $3,803,000 (11%).

 
 
10
 

 
 
GGS manufactures and supports aircraft deicers and other specialized industrial equipment on a worldwide basis.  GGS manufactures five basic models of mobile deicing equipment with capacities ranging from 700 to 2,800 gallons.  GGS also provides fixed-pedestal-mounted deicers.  Each model can be customized as requested by the customer, including single operator configuration, fire suppressant equipment, open basket or enclosed cab design, a patented forced-air deicing nozzle and on-board glycol blending system to substantially reduce glycol usage, color and style of the exterior finish.  GGS also manufactures five models of scissor-lift equipment, for catering, cabin service and maintenance service of aircraft, and has developed a line of decontamination equipment, flight-line tow tractors, glycol recovery vehicles and other special purpose mobile equipment.  GGS competes primarily on the basis of the quality, performance and reliability of its products, prompt delivery, customer service and price.

On July 15, 2009, the Company announced that GGS had been awarded a new contract to supply deicing trucks to the United States Air Force (“USAF”).  The contract award was for one year with four additional one-year extension options that may be exercised by the USAF.  In June 2013, the third option period under the contract was exercised, extending the contract to July 2014.

In September 2010, GGS was awarded a contract to supply flight-line tow tractors to the USAF.  The contract award was for one year commencing September 28, 2010 with four additional one-year extension options that may be exercised by the USAF.  In August 2013, the third option period under the contract was exercised, extending the contract to September 2014.  The value of the contract, as well as the number of units to be delivered, will be determined based upon annual requirements and available funding of the USAF.

GGS contributed approximately $24,195,000 and $27,774,000 to the Company’s revenues for the nine-month periods ended December 31, 2013 and 2012, respectively, representing a $3,579,000 (13%) decrease.  At December 31, 2013, GGS’s order backlog was $10.2 million compared to $9.2 million at December 31, 2012 and $6.5 million at March 31, 2013.

GAS was formed in September 2007 to operate the aircraft ground support equipment and airport facility maintenance services business of the Company.  GAS provides aircraft ground support equipment and airport facility maintenance services to a wide variety of customers at a number of locations throughout the country.

GAS contributed approximately $12,105,000 and $9,377,000 to the Company’s revenues for the nine-month periods ended December 31, 2013 and 2012, respectively, representing a $2,728,000 (29%) increase.

Third Quarter Highlights
 
Revenues from the air cargo segment increased $2,059,000 (17%) compared to the third quarter of the prior fiscal year, while operating income decreased 30%, continuing the trend that we experienced in the first two quarters of this fiscal year.  While revenues were up primarily as a result of an increase in maintenance costs passed through to our customer at cost, operating income decreased as a result of FedEx transferring two ATR aircraft to other operators to meet scheduling needs during the past year.  In addition, MAC has experienced increased maintenance labor costs as well as increased rent and repair costs at its heavy maintenance facility.

Revenues for GGS were up 1% when compared to the third quarter of the prior fiscal year.  While revenues were essentially flat, GGS generated operating income of approximately $1,209,000 for the quarter, an increase of $767,000 (174%) compared to the prior year comparable quarter.  Gross margins improved nearly ten percentage points in the segment compared to the prior year comparable quarter as a result of continuing efforts to improve production efficiencies, a change in the product and customer mix, as well as a substantial reduction in the sale of very low margin flight-line tow tractors to the USAF.

During the quarter ended December 31, 2013, revenues from our GAS subsidiary increased by $967,000 (29%) as a result of the company’s continuing growth in new customers and locations.  GAS operating income decreased by $154,000 (38%), resulting from increases in a variety of administrative costs including management salaries, workers compensation expense, travel costs, and reserves for bad debts.

In November 2013, the Company entered into a Severance Agreement and Release with Walter Clark which provided for Mr. Clark’s resignation from his employment with the Company, as President and Chief Executive Officer of the Company and from the Board of Directors of the Company.  The Company agreed to pay Mr. Clark all unpaid salary, vacation pay and expenses as of the effective date of his resignation, incentive compensation pursuant to his Employment Agreement with respect to the fiscal year ending March 31, 2014 (which will be calculated as 2% of eligible pretax earnings prorated for the fiscal year ending March 31, 2013) expected to be paid in June 2014, and a lump sum severance payment of $565,680 as provided by Mr. Clark’s Employment Agreement.  The Company also agreed to purchase all of the 93,758 shares of Company stock held by Mr. Clark at a price of $11.50 per share or $1,078,216.  In addition, the Company agreed to repurchase 50,000 stock options from Mr. Clark for $160,500.  All of these amounts were paid to Mr. Clark in November 2013 with the exception of the incentive compensation which will be computed and paid in June 2014.

 
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Critical Accounting Policies and Estimates

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates and assumptions to determine certain assets, liabilities, revenues and expenses.  Management bases these estimates and assumptions upon the best information available at the time of the estimates or assumptions.  The Company’s estimates and assumptions could change materially as conditions within and beyond our control change.  Accordingly, actual results could differ materially from estimates.  The Company believes that the following are its most significant accounting policies:
 
Allowance for Doubtful Accounts.  An allowance for doubtful accounts receivable is established based on management’s estimates of the collectability of accounts receivable.  The required allowance is determined using information such as customer credit history, industry information, credit reports, customer financial condition and the collectability of outstanding accounts receivables.  The estimates can be affected by changes in the financial strength of the aviation industry, customer credit issues or general economic conditions.

Inventories.  The Company’s inventories are valued at the lower of cost or market.  Provisions for excess and obsolete inventories are based on assessment of the marketability of slow-moving and obsolete inventories.  Historical parts usage, current period sales, estimated future demand and anticipated transactions between willing buyers and sellers provide the basis for estimates.  Estimates are subject to volatility and can be affected by reduced equipment utilization, existing supplies of used inventory available for sale, the retirement of aircraft or ground equipment and changes in the financial strength of the aviation industry.

Warranty Reserves.  The Company warranties its ground equipment products for up to a three-year period from date of sale.  Product warranty reserves are recorded at time of sale based on the historical average warranty cost and are adjusted quarterly as actual warranty cost becomes known.

Income Taxes.  Income taxes have been provided using the liability method.  Deferred income taxes reflect the net affects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes using enacted rates expected to be in effect during the year in which the basis differences reverse.

Revenue Recognition.  Cargo revenue is recognized upon completion of contract terms.  Maintenance and ground support services revenue is recognized when the service has been performed.  Revenue from product sales is recognized when contract terms are completed and ownership has passed to the customer.
 
 
Seasonality

The deicer industry that GGS operates in has historically been seasonal.  Historically, the Company has been able to reduce GGS’s seasonal fluctuation in revenues and earnings by broadening its product line to include military and international sales to increase revenues and earnings throughout the year. Although sales remain somewhat seasonal, particularly with regard to commercial deicers which typically are delivered prior to the winter season, this diversification has historically lessened the impact on the Company.  With sales to the USAF ceasing to be a significant component of GGS’s sales, seasonal patterns of revenues and earnings attributable to its commercial deicer business have resumed, with revenues and operating income for the segment being lower in the first and fourth fiscal quarters.  The overnight air cargo and ground support services segments are not susceptible to seasonal trends.


Results of Operations

Third Quarter Fiscal 2014 Compared to Third Quarter Fiscal 2013

Consolidated revenue increased $3,131,000 (12%) to $29,835,000 for the three-month period ended December 31, 2013 compared to its equivalent prior period.  The increase in revenues can be principally attributed to two items; the $2,059,000 (17%) increase in air cargo segment revenues primarily as a result of an increase in maintenance costs passed through to our customer at cost, and the $967,000 (29%) increase in the ground support services segment revenues as a result of the segment’s continued growth in new customers and locations.  Revenues in the ground equipment sales segment were flat quarter over quarter, with a slight increase of 1%, although there was a shift in the sales mix, with a $3.6 million decrease in USAF sales offset by a $3.7 million increase in commercial sales, primarily domestic.
 
 

 
12
 

 
Operating expenses increased $3,322,000 (13%) for the three-month period ended December 31, 2013 compared to its equivalent prior period.  The increase in total operating expenses correlated to the increase in revenues for the quarter but can also be attributed to a variety of additional factors.  Air cargo segment operating costs increased $2,236,000 (21%) for the quarter.  Of the segment’s $13,047,000 of operating costs, $9,389,000 was costs passed through to our air cargo customer without markup.  In addition, MAC has experienced increased maintenance labor costs as well as increased rent and repair costs at its main maintenance facility, resulting in the higher costs this quarter.  Finally, MAC operated two fewer ATR aircraft than in the comparable prior year quarter resulting in decreased profitability this quarter.  Ground support services segment operating costs increased $921,000 (37%) for the quarter, driven principally by the current quarter’s increase in revenues, and to a lesser extent reduced margins this quarter.  Ground equipment sales segment operating expenses decreased $728,000 (8%) for the quarter compared to the 1% increase in sales for the segment.  Gross margins improved nearly ten percentage points in the segment as a result of continuing efforts to improve production efficiencies, a change in the product and customer mix, as well as a substantial reduction in the sale of very low margin flight-line tow tractors to the USAF.  In addition, during the third quarter ended December 31, 2013, the Company discovered that accounting guidance regarding certain software development costs had been misapplied resulting in the capitalization of costs in the ground equipment sales segment that should have been expensed in prior periods beginning in fiscal 2011.  The capitalization of costs resulted in an overstatement of pre-tax income that totaled $68,000, $33,000 and $50,000 for the years ended March 31, 2011, 2012 and 2013, respectively.  Management analyzed the error to determine if any of the prior years were materially misstated and determined that they were not.  Management also determined that correcting the error in the current year would not materially misstate this year’s results.  The Company recorded the correction to the prior periods in the quarter ended December 31, 2013, through a charge to ground equipment sales segment operating costs in the amount of $301,000, which included additional costs capitalized in the first two quarters of the current fiscal year.  General and administrative expenses increased $840,000 (29%) for the three-month period ended December 31, 2013 compared to its equivalent prior period, principally due to the $565,680 severance payment to Mr. Clark, which was paid and expensed during the three-month period ended December 31, 2013.  The additional increase in general and administrative expense was incurred over a variety of categories with the principal components being salaries, health insurance, travel, advertising and bad debt expense.

Operating income for the quarter ended December 31, 2013 was $796,000, a $191,000 (19%) decrease from the same quarter of the prior year.  The ground equipment sales segment reported a $767,000 (174%) increase in its operating income for the quarter ended December 31, 2013, principally relating to the increase in gross margin percentage discussed in the prior paragraph.  The ground support services segment saw a $154,000 (38%) decrease in its operating income in the current quarter, resulting from increases in a variety of administrative costs including management salaries, workers compensation expense, travel costs, and reserves for bad debts.. The overnight air cargo segment saw a $210,000 (30%) decrease in its operating income due to the reduction in operating aircraft this past year and increased maintenance labor costs as well as increased rent and repair costs at its heavy maintenance facility.  Operating income this quarter was also significantly impacted by the $565,680 severance payment to Mr. Clark and the correction to write off previously capitalized computer software costs this quarter.

Pretax earnings decreased $195,000 for the three-month period ended December 31, 2013 compared to the prior comparable period, relating to the increased operating income of the ground equipment sales segment, offset by decreases in the operating income for the ground support services and overnight air cargo segments as well as increased costs related to the severance payment to Mr. Clark, as detailed above.

During the three-month period ended December 31, 2013, the Company recorded $340,000 in income tax expense, which resulted in an estimated annual tax rate of 42.8%, compared to the rate of 36.1% for the comparable prior quarter.  The estimated annual effective tax rates for both periods differ from the U. S. federal statutory rate of 34% partially due to the effect of state income taxes.  The current period rate is higher due to increasing state tax apportionment requirements.  In addition, during the quarter ended December 31, 2013, the Company settled an open federal tax audit for the year ended March 31, 2011 and agreed to pay additional federal tax of $62,485, which increased the income tax provision for the three-month period ended December 31, 2013 by that amount.


 
 
13
 

 
 
 
First Nine Months of Fiscal 2014 Compared to First Nine Months of Fiscal 2013

Consolidated revenue increased $2,951,000 (4%) to $75,305,000 for the nine-month period ended December 31, 2013 compared to its equivalent prior-year period, relating to a variety of factors.  Revenues for the air cargo segment increased $3,803,000 (11%) compared to the prior-year equivalent period primarily as a result of an increase in maintenance costs passed through to our customer at cost. Revenues in the ground support services segment were up $2,728,000 (29%), resulting from the addition of new customers and locations over the past year, particularly several new large locations for one customer.  Revenues in the ground equipment sales segment decreased $3,579,000 (13%) comprised of a $7.7 million decrease in military sales, a $2.8 million decrease in commercial international sales partially offset by a $6.9 million increase in commercial domestic sales.

Operating expenses increased $3,174,000 (5%) to $73,536,000 for the nine-month period ended December 31, 2013 compared to its equivalent prior-year period.  Air cargo segment operating expenses increased $4,281,000 (14%), principally as a result of an increase in maintenance cost passed through to our customer at cost.  Of the segment’s $34,521,000 of operating costs, $24,301,000 constituted costs passed through to our air cargo customer without markup.   MAC is also experiencing higher maintenance labor costs as well as increased rent and repair costs at its main maintenance facility.  Ground support services segment operating expenses increased $2,146,000 (28%) primarily driven by the increase in revenues for the segment.  Ground equipment sales segment operating costs decreased $4,608,000 (19%) driven partially by the current period’s decrease in revenues.  Another key factor is that gross margins improved in the segment as a result of continuing efforts to improve production efficiencies as well as a reduction in the sale of low margin flight-line tow tractors to the USAF.  These factors were partially offset by the correction to write off previously capitalized computer software costs this quarter.  General and administrative expenses increased $1,218,000 (15%) for the nine-month period ended December 31, 2013 compared to its equivalent prior-year period.  Of the increase, $565,680 was attributed to the severance payment to Mr. Clark, which was paid and expensed during the three-month period ended December 31, 2013.   In addition, the increase was incurred over a variety of categories with the principal components of this increase being salary costs, health insurance, travel, rents, professional fees and stockholder expenses relating to the settled election contest and bad debt expense.

Operating income for the nine-month period ended December 31, 2013 was $1,769,000, a $223,000 (11%) decrease from the same period of the prior year.  The overnight air cargo segment saw a $592,000 (25%) decrease in its operating income due to the reduction in operating aircraft this past year and increased maintenance labor costs as well as increased rent and repair costs at its heavy maintenance facility.  The ground equipment sales segment experienced a $1,085,000 (186%) increase in its operating income in the nine-month period ended December 31, 2013 due to increased gross margins as a result of increasing production efficiencies and a change in product mix away from low margin flight-line tow tractors sold to the USAF.  The ground support services segment saw an $181,000 (29%) increase in its operating income for the period, principally relating to the increase in revenues, period over period.  Operating income this period was also significantly impacted by the $565,680 severance payment to Mr. Clark and the correction to write off previously capitalized computer software costs this quarter.

Pretax earnings decreased $216,000 for the nine-month period ended December 31, 2013 compared to the prior comparable period.

During the nine-month period ended December 31, 2013, the Company recorded $730,000 in income tax expense, which resulted in an estimated annual tax rate of 41.0%, compared to the rate of 36.0% for the comparable prior period.  The estimated annual effective tax rates for both periods differ from the U. S. federal statutory rate of 34% partially due to the effect of state income taxes. The current period rate is higher due to increasing state tax apportionment requirements.  In addition, during the quarter ended December 31, 2013, the Company settled an open federal tax audit for the year ended March 31, 2011 and agreed to pay additional federal tax of $62,485, which increased the income tax provision for the nine-month period ended December 31, 2013 by that amount.

Liquidity and Capital Resources

As of December 31, 2013 the Company's working capital amounted to $21,247,000, a decrease of $1,420,000 compared to March 31, 2013.
 
 
The Company has a $7,000,000 secured long-term revolving credit line.  In August 2013, the expiration date of the credit line was extended from August 31, 2014 to August 31, 2015.  The revolving credit line contains customary events of default, a subjective acceleration clause and a fixed charge coverage requirement, with which the Company was in compliance at December 31, 2013.  There is no requirement for the Company to maintain a lock-box arrangement under this agreement.  The amount of credit available to the Company under the agreement at any given time is determined by an availability calculation, based on the eligible borrowing base, as defined in the credit agreement, which includes the Company’s outstanding receivables, inventories and equipment, with certain exclusions. At December 31, 2013, $7,000,000 was available for borrowing under the credit line and no amounts were outstanding.
 
 
14
 

 
Amounts advanced under the credit facility bear interest at the 30-day “LIBOR” rate plus 150 basis points.  The LIBOR rate at December 31, 2013 was .17%. The Company is exposed to changes in interest rates on its line of credit with respect to any borrowings outstanding under the line of credit.  However, because the Company’s average outstanding balance under the line of credit was minimal during the quarter ended December 31, 2013, changes in the LIBOR rate during that period would have had a negligible effect on its interest expense for the quarter.

Following is a table of changes in cash flow for the respective periods ended December 31, 2013 and 2012:
 
 
   
Nine Months Ended December 31,
 
   
2013
   
2012
 
             
Net Cash Provided by (Used in) Operating Activities
  $ (87,000 )   $ 4,620,000  
Net Cash Used in Investing Activities
    (228,000 )     (284,000 )
Net Cash Used in Financing Activities
    (2,010,000 )     (612,000 )
                 
Net (Decrease) Increase in Cash and Cash Equivalents
  $ (2,325,000 )   $ 3,724,000  
                 

 
Cash provided by operating activities was $4,707,000 less for the nine-month period ended December 31, 2013 compared to the similar prior year period, resulting from a variety of offsetting factors.  The most significant factor was inventories which increased substantially during the current period reflecting the significant increase in order backlog since the beginning of the fiscal year while it had declined marginally in the prior comparable period as a result of focus on reducing inventories from substantially higher levels.  This change was somewhat offset by related movements in accounts payable related to inventories. An additional offsetting factor was accounts receivable which decreased during the current period while it decreased only marginally in the prior comparable period.
 
 
Cash used in investing activities for the nine-month period ended December 31, 2013 was $56,000 less than the comparable prior year period due primarily to the decrease in capital expenditures.

Cash used by financing activities was $1,398,000 more in the nine-month period ended December 31, 2013, than in the corresponding prior year period due to $1,078,000 paid to repurchase the former Chief Executive Officer’s common stock and $223,000 paid to repurchase stock options, a $122,000 increase in the annual cash dividend paid to shareholders, offset by $25,000 received from the exercise of stock options.

There are currently no commitments for significant capital expenditures. The Company’s Board of Directors on August 7, 1998 adopted the policy to pay an annual cash dividend, based on profitability and other factors, in the first quarter of each fiscal year, in an amount to be determined by the Board.  The Company paid a $0.30 per share cash dividend in June 2013.
 
 
Impact of Inflation

The Company believes that inflation has not had a material effect on its operations, because increased costs to date have been passed on to its customers. Under the terms of its air cargo business contracts the major cost components of its operations, consisting principally of fuel, crew and other direct operating costs, and certain maintenance costs are reimbursed, without markup by its customer.  Significant increases in inflation rates or a change in air cargo contracts, shifting the risk of these cost increases to the Company, could have a material impact on future revenue and operating income.
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4.  Controls and Procedures

Our management carried out an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2013. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, including the accumulation and communication of information to the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure, were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving the stated goals under all potential future conditions, regardless of how remote.
 
 
15
 

 
 
There has not been any change in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the quarter ended December 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II -- OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds



AIR T PURCHASES OF EQUITY SECURITIES
             
   
Total Number of Shares Purchased
   
Average Price Paid per Share Purchased
   
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
   
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
 
Period
                       
October 1 to
                       
  October 31, 2013
    -     $ -       -     $ -  
 
                               
November 1 to
                               
  November 30, 2013
    93,758       11.50       -       -  
 
                               
December 1 to
                               
  December 31, 2013
    -       -       -       -  
Total
    93,758     $ 11.50       -     $ -  
                                 
 
The shares above were purchased from a former director and officer pursuant to an agreement for the separation of employment of that individual and are not part of a publicly announced stock repurchase program.


Item 6.  Exhibits
 
 
(a)
 
Exhibits
   
   
No.
 
Description
         
      3.1  
Restated Certificate of Incorporation and Certificate of Amendment to Certificate of Incorporation dated September 25, 2008 and Certificate of Designation dated March 26, 2012, incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012 (Commission file No. 0-11720)
           
      3.2  
Amended and Restated Bylaws of Air T, Inc., incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K dated November 21, 2012 (Commission file No. 0-11720)
           
      10.1  
Separation Agreement and Release, dated as of November 5, 2013, between Air T, Inc. and Walter Clark, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 5, 2013 (Commission file No. 0-11720)
           
      31.1  
Section 302 Certification of Chief Executive Officer
           
      31.2  
Section 302 Certification of Chief Financial Officer
           
      32.1  
Section 1350 Certifications
           
      101  
The following financial information from the Quarterly Report on Form 10-Q for the quarter ended December 31, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Stockholders Equity, and (v) the Notes to the Condensed Consolidated Financial Statements.
           

 
 
 
 

16 
 

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AIR T, INC.


Date:  February 10, 2014
/s/ Nick Swenson                                                                           
Nick Swenson, Chief Executive Officer
(Principal Executive Officer)



/s/ John Parry
John Parry, Chief Financial Officer
(Principal Financial and Accounting Officer)






































17 
 

 

AIR T, INC.
EXHIBIT INDEX

 
No.
 
Description
     
  3.1  
Restated Certificate of Incorporation and Certificate of Amendment to Certificate of Incorporation dated September 25, 2008 and Certificate of Designation dated March 26, 2012, incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012 (Commission file No. 0-11720)
       
  3.2  
Amended and Restated Bylaws of Air T, Inc., incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K dated November 21, 2012 (Commission file No. 0-11720)
       
  10.1  
Separation Agreement and Release, dated as of November 5, 2013, between Air T, Inc. and Walter Clark, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 5, 2013 (Commission file No. 0-11720)
       
  31.1  
Section 302 Certification of Chief Executive Officer
       
  31.2  
Section 302 Certification of Chief Financial Officer
       
  32.1  
Section 1350 Certifications
       
  101  
The following financial information from the Quarterly Report on Form 10-Q for the quarter ended December 31, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Stockholders Equity, and (v) the Notes to the Condensed Consolidated Financial Statements.
       

 
 
 
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