cover
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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☐ |
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: 001-16545
Atlas Air Worldwide Holdings, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
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13-4146982 |
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(State or other jurisdiction of incorporation) |
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(IRS Employer Identification No.) |
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2000 Westchester Avenue, Purchase, New York |
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10577 |
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(Address of principal executive offices) |
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(Zip Code) |
(914) 701-8000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by 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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 25, 2019, there were
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Common Stock, $0.01 Par Value |
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The NASDAQ Global Select Market |
TABLE OF CONTENTS
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Item 1. |
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3 |
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Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018 (unaudited) |
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3 |
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Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018 (unaudited) |
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4 |
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Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2019 and 2018 (unaudited) |
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5 |
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Consolidated Statements of Cash Flows for the Three Months ended March 31, 2019 and 2018 (unaudited) |
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6 |
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Consolidated Statements of Stockholders’ Equity as of and for the Three Months ended March 31, 2019 and 2018 (unaudited) |
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7 |
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8 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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22 |
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Item 3. |
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30 |
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Item 4. |
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31 |
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Item 1. |
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32 |
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Item 1A. |
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32 |
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Item 6. |
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32 |
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33 |
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34 |
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PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Atlas Air Worldwide Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
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March 31, 2019 |
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December 31, 2018 |
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Assets |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Restricted cash |
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Accounts receivable, net of allowance of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and Equipment |
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Flight equipment |
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Ground equipment |
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Less: accumulated depreciation |
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( |
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Flight equipment modifications in progress |
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Property and equipment, net |
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Other Assets |
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Operating lease right-of-use assets |
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Deferred costs and other assets |
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Intangible assets, net and goodwill |
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Total Assets |
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$ |
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$ |
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Liabilities and Equity |
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Current Liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Current portion of long-term debt and finance lease |
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Current portion of long-term operating leases |
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Total current liabilities |
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Other Liabilities |
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Long-term debt and finance lease |
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Long-term operating leases |
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Deferred taxes |
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Financial instruments and other liabilities |
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Total other liabilities |
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Commitments and contingencies |
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Equity |
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Stockholders’ Equity |
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Preferred stock, $ |
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Common stock, $ shares outstanding (net of treasury stock), as of March 31, 2019 and December 31, 2018, respectively |
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Additional paid-in-capital |
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Treasury stock, at cost; |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Retained earnings |
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Total stockholders’ equity |
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Total Liabilities and Equity |
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$ |
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$ |
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See accompanying Notes to Unaudited Consolidated Financial Statements
3
Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
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For the Three Months Ended |
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March 31, 2019 |
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March 31, 2018 |
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Operating Revenue |
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$ |
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$ |
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Operating Expenses |
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Salaries, wages and benefits |
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Aircraft fuel |
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Maintenance, materials and repairs |
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Depreciation and amortization |
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Travel |
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Aircraft rent |
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Navigation fees, landing fees and other rent |
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Passenger and ground handling services |
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Transaction-related expenses |
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Other |
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Total Operating Expenses |
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Operating Income |
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Non-operating Expenses (Income) |
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Interest income |
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( |
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Interest expense |
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Capitalized interest |
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( |
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Loss on early extinguishment of debt |
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Unrealized loss on financial instruments |
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Other income, net |
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( |
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( |
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Total Non-operating Expenses (Income) |
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Income (loss) from continuing operations before income taxes |
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( |
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Income tax expense |
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Income (loss) from continuing operations, net of taxes |
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( |
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Loss from discontinued operations, net of taxes |
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( |
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Net Income (Loss) |
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$ |
( |
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$ |
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Earnings (loss) per share from continuing operations: |
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Basic |
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$ |
( |
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$ |
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Diluted |
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$ |
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$ |
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Loss per share from discontinued operations: |
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Basic |
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$ |
- |
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$ |
( |
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Diluted |
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$ |
- |
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$ |
( |
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Earnings (loss) per share: |
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Basic |
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$ |
( |
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$ |
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Diluted |
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$ |
( |
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$ |
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Weighted average shares: |
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Basic |
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Diluted |
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See accompanying Notes to Unaudited Consolidated Financial Statements
4
Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(Unaudited)
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For the Three Months Ended |
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March 31, 2019 |
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March 31, 2018 |
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Net Income (Loss) |
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$ |
( |
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$ |
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Other comprehensive income: |
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Reclassification to interest expense |
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Income tax expense |
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( |
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( |
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Other comprehensive income |
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Comprehensive Income (Loss) |
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$ |
( |
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$ |
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See accompanying Notes to Unaudited Consolidated Financial Statements
5
Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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For the Three Months Ended |
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March 31, 2019 |
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March 31, 2018 |
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Operating Activities: |
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Income (loss) from continuing operations, net of taxes |
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$ |
( |
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$ |
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Less: Loss from discontinued operations, net of taxes |
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( |
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Net Income (Loss) |
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( |
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Adjustments to reconcile Net Income (Loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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Accretion of debt securities discount |
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( |
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Provision for allowance for doubtful accounts |
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Loss on early extinguishment of debt |
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Unrealized loss on financial instruments |
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Deferred taxes |
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Stock-based compensation |
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Changes in: |
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Accounts receivable |
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( |
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Prepaid expenses, current assets and other assets |
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( |
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( |
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Accounts payable and accrued liabilities |
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( |
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( |
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Net cash provided by operating activities |
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Investing Activities: |
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Capital expenditures |
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( |
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( |
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Payments for flight equipment and modifications |
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( |
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( |
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Proceeds from insurance |
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Proceeds from investments |
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Net cash used for investing activities |
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( |
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( |
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Financing Activities: |
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Proceeds from debt issuance |
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Payment of debt issuance costs |
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( |
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( |
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Payments of debt and finance lease obligations |
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( |
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( |
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Proceeds from revolving credit facility |
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Customer maintenance reserves and deposits received |
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Purchase of treasury stock |
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( |
) |
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( |
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Net cash provided by (used for) financing activities |
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( |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
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( |
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Cash, cash equivalents and restricted cash at the beginning of period |
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Cash, cash equivalents and restricted cash at the end of period |
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$ |
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$ |
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Noncash Investing and Financing Activities: |
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Acquisition of flight equipment included in Accounts payable and accrued liabilities |
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$ |
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$ |
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|
See accompanying Notes to Unaudited Consolidated Financial Statements
6
Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Stockholders’ Equity
(in thousands, except share data)
(Unaudited)
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Accumulated |
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Additional |
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Other |
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Total |
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Common |
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Treasury |
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Paid-In |
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Comprehensive |
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Retained |
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Stockholders' |
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Stock |
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Stock |
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Capital |
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Loss |
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Earnings |
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Equity |
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Balance at December 31, 2018 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Net Income (Loss) |
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( |
) |
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( |
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Other comprehensive income |
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Stock-based compensation |
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Purchase of |
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( |
) |
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( |
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Issuance of |
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( |
) |
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Balance at March 31, 2019 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Accumulated |
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Additional |
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Other |
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Total |
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Common |
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Treasury |
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Paid-In |
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Comprehensive |
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Retained |
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Stockholders' |
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Stock |
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Stock |
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Capital |
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Loss |
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Earnings |
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Equity |
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Balance at December 31, 2017 |
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$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
Net Income |
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Other comprehensive income |
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Cumulative effect of change in accounting principle |
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|
|
( |
) |
|
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( |
) |
|
Stock-based compensation |
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Purchase of |
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( |
) |
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( |
) |
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Issuance of |
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( |
) |
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Reclassification of tax effect on other comprehensive loss |
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|
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|
|
|
|
|
|
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( |
) |
|
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Balance at March 31, 2018 |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
See accompanying Notes to Unaudited Consolidated Financial Statements
7
Atlas Air Worldwide Holdings, Inc.
Notes to Unaudited Consolidated Financial Statements
March 31, 2019
1. Basis of Presentation
Our consolidated financial statements include the accounts of the holding company, Atlas Air Worldwide Holdings, Inc. (“AAWW”), and its consolidated subsidiaries. AAWW is the parent company of Atlas Air, Inc. (“Atlas”) and Southern Air Holdings, Inc. (“Southern Air”). AAWW is also the parent company of several subsidiaries related to our dry leasing services (collectively referred to as “Titan”). AAWW has a
The terms “we,” “us,” “our,” and the “Company” mean AAWW and all entities included in its consolidated financial statements.
We provide outsourced aircraft and aviation operating services throughout the world, serving Africa, Asia, Australia, Europe, the Middle East, North America and South America through: (i) contractual service arrangements, including those through which we provide aircraft to customers and value-added services, including crew, maintenance and insurance (“ACMI”), as well as those through which we provide crew, maintenance and insurance, but not the aircraft (“CMI”); (ii) cargo and passenger charter services (“Charter”); and (iii) dry leasing aircraft and engines (“Dry Leasing” or “Dry Lease”).
The accompanying unaudited consolidated financial statements and related notes (the “Financial Statements”) have been prepared in accordance with the U.S. Securities and Exchange Commission (the “SEC”) requirements for quarterly reports on Form 10-Q, and consequently exclude certain disclosures normally included in audited consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Intercompany accounts and transactions have been eliminated. The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes included in the AAWW Annual Report on Form 10-K for the year ended December 31, 2018, which includes additional disclosures and a summary of our significant accounting policies. The December 31, 2018 balance sheet data was derived from that Annual Report. In our opinion, the Financial Statements contain all adjustments, consisting of normal recurring items, necessary to fairly state the financial position of AAWW and its consolidated subsidiaries as of March 31, 2019, the results of operations for the three months ended March 31, 2019 and 2018, comprehensive income (loss) for the three months ended March 31, 2019 and 2018, cash flows for the three months ended March 31, 2019 and 2018, and shareholders’ equity as of and for the three months ended March 31, 2019 and 2018.
Our quarterly results are subject to seasonal and other fluctuations, and the operating results for any quarter are therefore not necessarily indicative of results that may be otherwise expected for the entire year.
Except for per share data, all dollar amounts are in thousands unless otherwise noted.
2. Summary of Significant Accounting Policies
Warrant Liability
Common stock warrants classified as a liability are marked-to-market at the end of each reporting period with changes in fair value recorded in Unrealized (gain) loss on financial instruments. We utilize a Monte Carlo simulation approach to estimate the fair value of the warrant liability, which requires inputs such as our common stock price, the warrant strike price, estimated common stock price volatility and risk-free interest rate, among others. Our earnings are affected by changes in our common stock price due to the impact those changes have on the fair value of our warrant liability (see Note 4 to our Financial Statements).
Heavy Maintenance
Except for engines used on our 747-8F aircraft, we account for heavy maintenance costs for airframes and engines used in our ACMI and Charter segments using the direct expense method. Under this method, heavy maintenance costs are charged to expense upon induction, based on our best estimate of the costs.
We account for heavy maintenance costs for airframes and engines used in our Dry Leasing segment and engines used on our 747-8F aircraft using the deferral method. Under this method, we defer the expense recognition of scheduled heavy maintenance events, which are amortized over the estimated period until the next scheduled heavy maintenance event is required. Amortization of deferred maintenance expense included in Depreciation and amortization was $
8
|
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Deferred |
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Maintenance |
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Balance as of December 31, 2018 |
|
$ |
|
|
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Deferred maintenance costs |
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|
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Amortization of deferred maintenance |
|
|
( |
) |
|
Balance as of March 31, 2019 |
|
$ |
|
|
Recent Accounting Pronouncements Adopted in 2019
In February 2016, the Financial Accounting Standards Board (“FASB”) amended its accounting guidance for leases. Subsequently, the FASB issued several clarifications and updates. The guidance requires a lessee to recognize assets and liabilities on the balance sheet arising from leases with terms greater than 12 months. While lessor accounting guidance is relatively unchanged, certain amendments were made to conform with changes made to lessee accounting and the amended revenue recognition guidance. The new guidance continues to classify leases as either finance or operating, with classification affecting the presentation and pattern of expense and income recognition, in the statement of operations. It also requires additional quantitative and qualitative disclosures about leasing arrangements. We adopted the new guidance on January 1, 2019 using the modified retrospective approach, which was applied beginning on the adoption date. Comparative information has not been restated and continues to be reported under the accounting guidance in effect for those periods. The adoption did not have a material effect on our consolidated statements of operations or cash flows. We recognized operating lease right-of-use assets, net of pre-existing deferred rent and operating lease intangibles, and operating lease liabilities on our consolidated balance sheets of approximately $
3. Related Parties
Polar
AAWW has a
The following table summarizes our transactions with Polar:
|
|
|
For the Three Months Ended |
|
|||||
|
Revenue and Expenses: |
|
March 31, 2019 |
|
|
March 31, 2018 |
|
||
|
Revenue from Polar |
|
$ |
|
|
|
$ |
|
|
|
Ground handling and airport fees to Polar |
|
|
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Accounts receivable/payable as of: |
|
March 31, 2019 |
|
|
December 31, 2018 |
|
||
|
Receivables from Polar |
|
$ |
|
|
|
$ |
|
|
|
Payables to Polar |
|
|
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Aggregate Carrying Value of Polar Investment as of: |
|
March 31, 2019 |
|
|
December 31, 2018 |
|
||
|
Aggregate Carrying Value of Polar Investment |
|
$ |
|
|
|
$ |
|
|
In addition to the amounts in the table above, Atlas recognized revenue of $
GATS
We hold a
9