/2H9  d 1$&%*'AIRNET SYSTEMS, INC."'CONSOLIDATED BALANCE SHEETS*'In thousands, except per share data^December 31,^December 31, ^2001 ^2000 'ASSETS'Current assets: 'Cash and cash equivalents"$ 377"$ 1,118'Accounts receivable:1 'Trade, less allowances of $661 and $601 at  "16,769  "16,2790 ' December 31, 2001 and 2000, respectively 'Other  "34  "99 'Inventory and spare parts  "6,704  "6,618 'Taxes receivable "4  "283'Deferred taxes "729 "314'Deposits and prepaids "1,703 "1,473'Total current assets "26,320 "26,184!'Net property and equipment "98,872 "86,600'Other assets:;'Goodwill, net of accumulated amortization of $1,383 ='and $1,041 at December 31, 2001 and 2000, respectively "7,080 "7,705@'Other intangibles, net of accumulated amortization of $93<' and $489 at December 31, 2001 and 2000, respectively "56 "233 'Other "751 "1,811'Total assets"$ 133,079"$ 122,533+'LIABILITIES AND SHAREHOLDERS' EQUITY'Current liabilities:'Accounts payable"$ 4,521"$ 4,456''Salaries and related liabilities "4,849 "3,271'Accrued expenses "2,137 "1,873''Current portion of notes payable "33 "33 'Total current liabilities "11,540 "9,633 'Other liabilities  "326  "--*!'Notes payable, less current portion !"28,202 !"22,686"'Deferred tax liability ""14,065 ""11,369#'Shareholders' equity:B$'Preferred shares, $.01 par value; 10,000 shares authorized; %' and no shares issued and&'outstanding &"-- &"--@''Common shares, $.01 par value; 40,000 shares authorized; '('12,753 shares issued at December)'31, 2001 and 2000 )"128 )"128!*'Additional paid-in-capital *"77,440 *"77,702+'Retained earnings +"27,656 +"22,462+,'Accumulated other comprehensive loss ,"(194 ) ,"--.-'Treasury shares, 2,629 and 1,840 shares3.' held at cost at December 31, 2001 and 2000,/'respectively/"(26,084 )/"(21,447 )!0'Total shareholders' equity 0"78,946 0"78,84511'Total liabilities and shareholders' equity1"$ 133,0791"$ 122,53353'See notes to consolidated financial statements5'AIRNET SYSTEMS, INC.,6'CONSOLIDATED STATEMENTS OF OPERATIONS*7'In thousands, except per share data7^Year Ended 7^Year Ended 7^Year Ended 8^December 31,8^December 31,8^December 31, 9^2001 9^2000 9^1999:'NET REVENUESX;'Air transportation, net of excise tax of $3,636, $4,216, and $3,592 for the years=<'ended December 31, 2001, 2000, and 1999, respectively:='Bank services="$ 104,778="$ 100,070="$ 98,950>'Express services >"33,870 >"34,465 >"28,773-?'Aviation services and other operations ?"1,850 ?"754 ?"975@'Total net revenues@"140,498@"135,289@"128,698A'COSTS AND EXPENSESB'Wages and benefits B"19,379 B"18,166 B"16,424C'Aircraft fuel C"12,594 C"11,502 C"11,307D'Aircraft maintenance D"10,961 D"8,825 D"7,625E'Contracted air costs E"15,868 E"16,635 E"15,004F'Ground courier F"22,960 F"25,434 F"23,803G'Depreciation G"14,760 G"13,810 G"11,525 H'Other H"11,191 H"10,215 H"12,178*I'Selling, general and administrative I"19,376 I"16,203 I"17,775J'Total costs and expensesJ"127,089J"120,790J"115,641K'Income from operations K"13,409 K"14,499 K"13,057L'Impairment on investment L"1,744 L"-- L"--M'Interest expense M"1,668 M"2,283 M"2,477!N'Income before income taxes N"9,997 N"12,216 N"10,580!O'Provision for income taxes O"4,803 O"4,961 O"4,308;P'Income before cumulative effect of accounting change P"5,194 P"7,255 P"6,272HQ'Cumulative effect of accounting change, net of $1,735 tax benefit Q"-- Q"--Q"(2,488 )R'Net incomeR"$ 5,194R"$ 7,255R"$ 3,784=S'Income per common share -- basic and assuming dilution;T'Income before cumulative effect of accounting change T"$0.49 T"$0.66 T"$0.559U'Cumulative effect of accounting change, net of tax U"-- U"--U"(0.22 )V'Net income V"$0.49 V"$0.66 V"$0.335X'See notes to consolidated financial statementsZ'AIRNET SYSTEMS, INC.,['CONSOLIDATED STATEMENTS OF CASH FLOWS\'In thousands\^Year Ended \^Year Ended \^Year Ended ]^December 31,]^December 31,]^December 31, ^^2001 ^^2000 ^^1999_'OPERATING ACTIVITIES`'Net income`"$ 5,194`"$ 7,255`"$ 3,784La'Adjustments to reconcile net income to net cash provided by operatingb'activities:0c'Non-cash charge for investment impairment c"1,744 c"-- c"---d'Cumulative effect of accounting change d"-- d"-- d"2,488e'Depreciation e"14,760 e"13,810 e"11,525"f'Amortization of intangibles f"520 f"692 f"789g'Deferred taxes g"2,413 g"1,413 g"7662h'Provision for losses on accounts receivable h"457 h"171 h"504$i'Loss on disposition of assets i"53 i"68 i"102Cj'Cash provided by (used in) operating assets and liabilities:k'Accounts receivable k"(881 )k"(1,476 )k"(2,338 ) l'Inventory and spare parts l"(87 ) l"3,808l"(1,040 )m'Prepaid expenses m"(230 ) m"260 m"1,015n'Accounts payable n"66 n"(747 ) n"(727 )o'Accrued expenses o"264 o"668o"(2,684 )p'Taxes payable p"279 p"2,099 p"3,553'q'Salaries and related liabilities q"1,579 q"479 q"1,508r'Other, net r"(404 ) r"101 r"2570s'Net cash provided by operating activities s"25,727 s"28,601 s"19,502t'INVESTING ACTIVITIES*u'Purchases of property and equipmentu"(27,395 )u"(15,825 )u"(17,639 ),v'Payments for covenants not to compete v"-- v"(15 ) v"(170 )4w'Proceeds from sales of property and equipment w"310 w"79 w"96,x'Net cash used in investing activitiesx"(27,085 )x"(15,761 )x"(17,713 )y'FINANCING ACTIVITIES7z'Proceeds from 1996 Incentive Stock Plan programs z"84 z"195 z"293F{'Net borrowings (repayments) under the revolving credit facility {"5,549{"(11,200 ){"(1,500 )"|'Repayment of long-term debt |"(33 ) |"(29 ) |"(57 )4}'Purchase of treasury shares, net of issuances}"(4,983 )}"(2,355 ) }"--:~'Net cash provided by (used in) financing activities ~"617~"(13,389 )~"(1,264 )&'Net increase (decrease) in cash "(741 ) "(549 ) "5257'Cash and cash equivalents at beginning of period "1,118 "1,667 "1,1421'Cash and cash equivalents at end of period"$ 377"$ 1,118"$ 1,6675'See notes to consolidated financial statements'AIRNET SYSTEMS, INC.5'CONSOLIDATED STATEMENTS OF SHAREHOLERS' EQUITY'in thousands^Common Shares^Common Shares^Accumulated ^Number^Additional ^Other ^of^Paid-in^Retained^Comprehensive^Treasury ^Shares ^Amount^Capital^Earnings ^Loss ^Shares ^Total 'Balance December 31, 1998 "12,753 "$ 128"$ 78,455"$ 11,423 "--"$ (20,332 )"$ 69,674'Net income "-- "-- "-- "3,784 "-- "-- "3,784%'Issuance of treasury shares --''Associate Stock Purchase Program "-- "-- "(273 ) "-- "-- "566 "293 'Balance December 31, 1999 "12,753 "128 "78,182 "15,207"0"(19,766 ) "73,751'Net income "-- "-- "-- "7,255 "-- "-- "7,255"'Purchase of treasury shares "-- "-- "-- "-- "--"(2,418 )"(2,418 )%'Issuance of treasury shares --%'Director Deferred Compensation 'Plan "-- "-- "(132 ) "-- "-- "195 "63%'Issuance of treasury shares --''Associate Stock Purchase Program "-- "-- "(348 ) "-- "-- "542 "194 'Balance December 31, 2000 "12,753 "128 "77,702 "22,462"0"(21,447 ) "78,845'Net income "-- "-- "-- "5,194 "-- "-- "5,194&'Loss on derivative instruments,'net of $90 tax benefit "-- "-- "-- "--"$ (132 ) "-- "(132 )&'Cumulative effect of accounting%'change, net of $42 tax benefit "-- "-- "-- "-- "(62 ) "-- "(62 )'Comprehensive income "5,000"'Purchase of treasury shares "-- "-- "-- "-- "--"(5,000 )"(5,000 )%'Issuance of treasury shares --''Associate Stock Purchase Program "-- "-- "(238 ) "-- "-- "329 "91'Stock option exercises "-- "-- "(24 ) "-- "-- "34 "10 'Balance December 31, 2001 "12,753 "$ 128"$ 77,440"$ 27,656"$ (194 )"$ (26,084 )"$ 78,9465'See notes to consolidated financial statements