/2H9d 1$&%*'AIRNET SYSTEMS, INC.,'CONDENSED CONSOLIDATED BALANCE SHEETS&'In thousands, except share data^JUNE 30,^DECEMBER 31, ^2001 ^2000 'ASSETS^(UNAUDITED)'Current assets: 'Cash and cash equivalents"$ 1,834"$ 1,118'Accounts receivable:'Trade, less allowances "16,558 "16,279/ 'Shareholders, affiliates, and associates  "75  "99 'Inventory and spare parts  "7,455  "6,618 'Taxes receivable "1  "283 'Deferred taxes  "314  "314 'Deposits and prepaids  "1,418  "1,473'Total current assets "27,655 "26,184!'Net property and equipment "88,302 "86,600'Other assets:0'Goodwill, net of accumulated amortization "7,251 "7,7059'Other intangibles, net of accumulated amortization "140 "233 'Other "583 "1,811'TOTAL ASSETS"$123,931"$122,533+'LIABILITIES AND SHAREHOLDERS' EQUITY'Current liabilities:'Accounts payable"$ 6,178"$ 4,456''Salaries and related liabilities "4,592 "3,271'Accrued expenses "1,946 "1,873' 'Current portion of notes payable  "33  "33 "'Total current liabilities ""12,749 ""9,633$'Other liabilities $"264$"-*%'Notes payable, less current portion %"19,970 %"22,686&'Deferred tax liability &"11,263 &"11,369('Shareholders' equity::)'Preferred shares, $.01 par value; 10,000,000 shares7*'authorized; and no shares issued and outstanding*"-*"-C+'Common shares, $.01 par value; 40,000,000 shares authorized;5,'and 12,753,000 shares issued at June 30, 2001-'and December 31, 2000 -"128 -"128!.'Additional paid-in-capital ."77,613 ."77,702/'Retained earnings /"23,427 /"22,462-0'Accumulated other comprehensive income 0"(157)0"-;1'Treasury shares, 1,824,000 and 1,840,000 shares held62'at cost at June 30, 2001 and December 31, 2000,3'respectively3"(21,326)3"(21,447)!5'Total shareholders' equity 5"79,685 5"78,84517'TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY7"$123,9317"$122,533?:'See notes to condensed consolidated financial statements<'AIRNET SYSTEMS, INC.B='CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited*>'In thousands, except per share data@^THREE MONTHS ENDED@^THREE MONTHS ENDED@^SIX MONTHS ENDED@^SIX MONTHS ENDEDA^JUNE 30,A^JUNE 30,A^JUNE 30,A^JUNE 30, C^2001 C^2000 C^2001 C^2000D'NET REVENUES,E'Air transportation, net of excise taxF'Bank servicesF"$26,972F"$25,825F"$52,755F"$50,905G'Express services G"8,032 G"8,876 G"16,205 G"17,301-H'Aviation services and other operations H"354 H"215 H"720 H"384J'TOTAL NET REVENUES J"35,358 J"34,916 J"69,680 J"68,590L'COSTS AND EXPENSESM'Air transportationN'Wages and benefits N"4,649 N"4,925 N"9,699 N"9,659O'Aircraft fuel O"3,171 O"2,956 O"6,235 O"5,951P'Aircraft maintenance P"3,145 P"2,027 P"5,874 P"4,533Q'Contracted air costs Q"4,090 Q"4,270 Q"8,018 Q"8,107R'Ground courier R"5,456 R"6,267 R"11,465 R"12,860S'Depreciation S"3,715 S"3,508 S"7,243 S"6,951 T'Other T"2,815 T"2,592 T"5,449 T"5,273*U'Selling, general and administrative U"5,580 U"4,506 U"10,254 U"8,476W'TOTAL COSTS AND EXPENSES W"32,621 W"31,051 W"64,237 W"61,810Y'Income from operations Y"2,737 Y"3,865 Y"5,443 Y"6,780Z'Impairment on investment Z"1,744Z"- Z"1,744Z"-['Interest expense ["392 ["590 ["866 ["1,216!]'Income before income taxes ]"601 ]"3,275 ]"2,833 ]"5,564!^'Provision for income taxes ^"955 ^"1,309 ^"1,867 ^"2,224`'NET INCOME (LOSS) `"($354) `"$1,966 `"$966 `"$3,340)b'Net income (loss) per common share$c'- basic and assuming dilutionc"($0.03) c"$0.18 c"$0.09 c"$0.30?f'See notes to condensed consolidated financial statementsh'AIRNET SYSTEMS, INC.Ci'CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited j'In Thousandsj^JUNE 30,j^JUNE 30, k^2001 k^2000l'OPERATING ACTIVITIES:m'Net incomem"$ 966 m"$3,3400n'Non-cash charge for investment impairment n"1,744n"-=o'Adjustments to reconcile net income (loss) to net cash(p'provided by operating activities:q'Depreciation q"7,243 q"6,951"r'Amortization of intangibles r"265 r"263s'Deferred taxess"- s"5162t'Provision for losses on accounts receivable t"209 t"88$u'Loss on disposition of assets u"27 u"80Cv'Cash provided by (used in) operating assets and liabilities:w'Accounts receivable w"(463)w"(1,613) x'Inventory and spare parts x"(837) x"3,368y'Prepaid expenses y"55 y"125z'Accounts payable z"1,723 z"(214){'Accrued expenses {"72 {"640|'Taxes payable |"282 |"831'}'Salaries and related liabilities }"1,320 }"1,438~'Other, net ~"(235) ~"2500'NET CASH PROVIDED BY OPERATING ACTIVITIES "12,371 "16,063'INVESTING ACTIVITIES:*'Purchases of property and equipment"(9,180)"(6,049)-'Payments for covenants not to compete"- "(15)4'Proceeds from sales of property and equipment "209 "12,'NET CASH USED IN INVESTING ACTIVITIES"(8,971)"(6,052)'FINANCING ACTIVITIES:7'Proceeds from 1996 Incentive Stock Plan programs "32 "1199'Net repayments under the revolving credit facility"(2,700)"(7,700)"'Repayment of long-term debt "(16) "(14)"'Purchase of treasury shares"-"(2,419),'NET CASH USED IN FINANCING ACTIVITIES"(2,684)"(10,014)&'Net increase (decrease) in cash "716 "(3)7'Cash and cash equivalents at beginning of period "1,118 "1,6671'CASH AND CASH EQUIVALENTS AT END OF PERIOD "$1,834 "$1,664?'See notes to condensed consolidated financial statements