¢/2ÿñH;d 1$&%*ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿñ'AIRNET SYSTEMS, INC.,ñ'CONDENSED CONSOLIDATED BALANCE SHEETS&ñ'In thousands, except share datañ'(Unaudited)ñ"MARCH 31, ñ" DECEMBER 31, ñ^2000 ñ^1999ñ'ASSETS ñ'Current assets:!ñ'Cash and cash equivalents ñ"$2,691 ñ"$1,667ñ 'Accounts receivable:ñ 'Trade, less allowances ñ "16,705 ñ "14,919/ñ 'Shareholders, affiliates, and associates ñ "230 ñ "154 ñ 'Inventory and spare parts ñ "10,679 ñ "10,426ñ 'Taxes refundable ñ "898 ñ "2,382ñ'Deferred taxes ñ"932 ñ"934ñ'Deposits and prepaids ñ"1,577 ñ"1,733ñ"-------------------ñ"------------------ñ'Total current assets ñ"33,712 ñ"32,215!ñ'Net property and equipment ñ"84,738 ñ"84,733ñ'Other assets:0ñ'Goodwill, net of accumulated amortization ñ"7,833 ñ"7,9209ñ'Other intangibles, net of accumulated amortization ñ"348 ñ"375+ñ'Investment in partnerships and other ñ"2,138 ñ"2,234ñ"-------------------ñ"------------------ñ'Total assetsñ"$128,769ñ"$127,477ñ"===================ñ"==================+ñ'LIABILITIES AND SHAREHOLDERS' EQUITYñ'Current liabilities:ñ'Accounts payable ñ"$4,656 ñ"$5,203'ñ 'Salaries and related liabilities ñ "2,930 ñ "2,792ñ!'Accrued expenses ñ!"1,596 ñ!"1,206ñ"'Deferred taxes ñ""154 ñ""196'ñ#'Current portion of notes payable ñ#"29 ñ#"29ñ$"-------------------ñ$"------------------ ñ%'Total current liabilities ñ%"9,365 ñ%"9,426*ñ''Notes payable, less current portion ñ'"34,416 ñ'"33,919ñ('Deferred tax liability ñ("9,939 ñ("10,381ñ*'Shareholders' equity::ñ+'Preferred shares, $.01 par value; 10,000,000 shares7ñ,'authorized; and no shares issued and outstandingñ,"-ñ,"-Cñ-'Common shares, $.01 par value; 40,000,000 shares authorized;6ñ.'and 12,753,000 shares issued at March 31, 2000ñ/'and December 31, 1999 ñ/"128 ñ/"128!ñ0'Additional paid-in-capital ñ0"78,112 ñ0"78,182ñ1'Retained earnings ñ1"16,582 ñ1"15,207Cñ2'Treasury shares, 1,360,000 and 1,343,000 shares held at cost<ñ3'at March 31, 2000 and December 31, 1999, respectivelyñ3"(19,773)ñ3"(19,766)ñ4"-------------------ñ4"------------------!ñ5'Total shareholders' equity ñ5"75,049 ñ5"73,751ñ7"-------------------ñ7"------------------1ñ8'Total liabilities and shareholders' equityñ8"$128,769ñ8"$127,477ñ9"===================ñ9"==================5ñ;'See notes to consolidated financial statementsñ='AIRNET SYSTEMS, INC.Bñ>'CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited*ñ?'In thousands, except per share datañA^THREE MONTHS ENDEDñA^THREE MONTHS ENDEDñB^MARCH 31,ñB^MARCH 31, ñC^2000 ñC^1999ñD" ñD" ñE'NET REVENUES,ñF'Air transportation, net of excise taxñG'Bank DeliveryñG"$25,080ñG"$24,430ñH'Express Delivery ñH"8,424 ñH"5,892&ñI'Fixed base and other operations ñI"170 ñI"200ñJ"------------------ñJ"------------------ñK'Total net revenues ñK"33,674 ñK"30,522ñM'COSTS AND EXPENSESñN'Air transportation ñN"26,509 ñN"23,003ñO'Fixed base operations ñO"280 ñO"255*ñP'Selling, general and administrative ñP"3,970 ñP"3,754ñQ"------------------ñQ"------------------ñR'Total costs and expenses ñR"30,759 ñR"27,012ñS"------------------ñS"------------------ñT'Income from operations ñT"2,915 ñT"3,510ñU'Interest expense ñU"627 ñU"622ñV"------------------ñV"------------------!ñW'Income before income taxes ñW"2,288 ñW"2,888!ñX'Provision for income taxes ñX"914 ñX"1,174ñY"------------------ñY"------------------5ñZ'Income before cumulative effect of a change inñ['accounting principle ñ["1,374 ñ["1,714Bñ]'Cumulative effect of writing off start-up costs, net of taxñ]"-ñ]"(2,488)ñ_"------------------ñ_"------------------ñ`'Net income ñ`"$1,374 ñ`"($774)ña"==================ña"==================<ñc'Income per common share - basic and assuming dilution5ñd'Income before cumulative effect of a change inñe'accounting principle ñe"$0.12 ñe"$0.15Bñf'Cumulative effect of writing off start-up costs, net of taxñf"- ñf"(0.22)ñg"------------------ñg"------------------"ñh'Net income per common share ñh"$0.12 ñh"$0.07ñi"==================ñi"==================5ñk'See notes to consolidated financial statementsñm'AIRNET SYSTEMS, INC.Bñn'CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Unauditedño'IN THOUSANDSñp^THREE MONTHS ENDEDñp^THREE MONTHS ENDEDñq^MARCH 31,ñq^MARCH 31, ñr^2000 ñr^1999ñs" ñs" ñt'Operating activities:ñu'Net income (loss) ñu"$1,374 ñu"($774)=ñv'Adjustments to reconcile net income (loss) to net cash2ñw'provided by (used in) operating activities:6ñx'Cumulative effect of writing off start-up costsñx"- ñx"2,488ñy'Depreciation ñy"3,445 ñy"2,668"ñz'Amortization of intangibles ñz"131 ñz"228ñ{'Deferred taxes ñ{"(481)ñ{"-2ñ|'Provision for losses on accounts receivable ñ|"43 ñ|"45*ñ}'Loss(gain) on disposition of assets ñ}"47 ñ}"(10)Cñ~'Cash provided by (used in) operating assets and liabilities:ñ'Accounts receivableñ"(1,905)ñ"(1,369) ñ€'Inventory and spare parts ñ€"(253)ñ€"(3,830)ñ'Prepaid expenses ñ"156 ñ"(997)ñ‚'Accounts payable ñ‚"(548) ñ‚"599ñƒ'Accrued expenses ñƒ"390ñƒ"(2,730)ñ„'Taxes payable ñ„"1,483 ñ„"1,101'ñ…'Salaries and related liabilities ñ…"138 ñ…"887ñ†'Other, net ñ†"80 ñ†"(98)ñ‡"---------------ñ‡"--------------:ñˆ'Net cash provided by (used in) operating activities ñˆ"4,100ñˆ"(1,792)ñŠ'Investing activities:*ñ‹'Purchases of property and equipmentñ‹"(3,502)ñ‹"(3,049)-ñŒ'Payments for covenants not to competeñŒ"- ñŒ"(121)4ñ'Proceeds from sales of property and equipmentñ"4 ñ"75ñŽ"---------------ñŽ"--------------,ñ'Net cash used in investing activitiesñ"(3,498)ñ"(3,095)ñ‘'Financing activities:2ñ’'Proceeds from Incentive Stock Plan programs ñ’"66 ñ’"689ñ“'Net borrowings under the revolving credit facility ñ“"500 ñ“"3,900"ñ”'Repayment of long-term debt ñ”"(2) ñ”"(6)"ñ•'Purchase of treasury shares ñ•"(142)ñ•"-ñ–"---------------ñ–"--------------0ñ—'Net cash provided by financing activities ñ—"422 ñ—"3,962ñ˜"---------------ñ˜"--------------&ñš'Net increase (decrease) in cash ñš"1,024 ñš"(925)7ñ›'Cash and cash equivalents at beginning of period ñ›"1,667 ñ›"1,142ñ"---------------ñ"--------------1ñž'Cash and cash equivalents at end of period ñž"$2,691 ñž"$217ñŸ"===============ñŸ"==============5ñ¢'See notes to consolidated financial statements