$w/2ÿñHCd 1$&%*ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿñ'AIRNET SYSTEMS, INC.,ñ'CONDENSED CONSOLIDATED BALANCE SHEETS&ñ'In thousands, except share datañ^September 30,ñ^December 31, ñ^2001 ñ^2000 ñ'ASSETSñ^(Unaudited)ñ'Current assets: ñ'Cash and cash equivalentsñ"$ 3,488ñ"$ 1,118ñ'Accounts receivable:ñ'Trade, less allowances ñ"19,068 ñ"16,279/ñ 'Shareholders, affiliates, and associates ñ "45 ñ "99 ñ 'Inventory and spare parts ñ "7,449 ñ "6,618ñ 'Taxes receivableñ "- ñ "283ñ 'Deferred taxes ñ "314 ñ "314ñ 'Deposits and prepaids ñ "1,683 ñ "1,473ñ'Total current assets ñ"32,047 ñ"26,184!ñ'Net property and equipment ñ"89,258 ñ"86,600ñ'Other assets:0ñ'Goodwill, net of accumulated amortization ñ"7,166 ñ"7,7059ñ'Other intangibles, net of accumulated amortization ñ"93 ñ"233 ñ'Other ñ"589 ñ"1,811ñ'Total assetsñ"$ 129,153ñ"$ 122,533+ñ'LIABILITIES AND SHAREHOLDERS' EQUITYñ'Current liabilities:ñ'Accounts payableñ"$ 4,834ñ"$ 4,456'ñ'Salaries and related liabilities ñ"4,794 ñ"3,271ñ'Accrued expenses ñ"2,479 ñ"1,873ñ'Taxes payable ñ"1,421ñ"-'ñ'Current portion of notes payable ñ"33 ñ"33 ñ'Total current liabilities ñ"13,561 ñ"9,633ñ'Other liabilities ñ"366ñ"-*ñ'Notes payable, less current portion ñ"27,210 ñ"22,686ñ'Deferred tax liability ñ"11,220 ñ"11,369ñ 'Shareholders' equity:^ñ!'Preferred shares, $.01 par value; 10,000,000 sharesauthorized; and no shares issued andñ!"-ñ!"-ñ"'outstanding_ñ#'Common shares, $.01 par value; 40,000,000 shares authorized;and 12,753,000 shares issued ñ#"128 ñ#"1281ñ$'at September 30, 2001and December 31, 2000!ñ%'Additional paid-in-capital ñ%"77,440 ñ%"77,702ñ&'Retained earnings ñ&"25,529 ñ&"22,462+ñ''Accumulated other comprehensive lossñ'"(217 )ñ'"-]ñ('Treasury shares, 2,634,000 and 1,840,000 shares held at cost at September 30, 2001 andñ("(26,084 )ñ("(21,447 )&ñ)'December 31, 2000, respectively!ñ*'Total shareholders' equity ñ*"76,796 ñ*"78,8451ñ+'Total liabilities and shareholders' equityñ+"$ 129,153ñ+"$ 122,533?ñ,'See notes to condensed consolidated financial statementsñ.'AIRNET SYSTEMS, INC.Añ/'CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS- Unaudited*ñ0'In thousands, except per share datañ2^Three Months Endedñ2^Three Months Endedñ2^Nine Months Endedñ2^Nine Months Endedñ3^September 30,ñ3^September 30,ñ3^September 30,ñ3^September 30, ñ4^2001 ñ4^2000 ñ4^2001 ñ4^2000ñ5'NET REVENUES,ñ6'Air transportation, net of excise taxñ7'Bank servicesñ7"$ 26,646ñ7"$ 24,809ñ7"$ 79,402ñ7"$ 75,714ñ8'Express services ñ8"8,137 ñ8"8,794 ñ8"24,342 ñ8"26,095-ñ9'Aviation services and other operations ñ9"544 ñ9"172 ñ9"1,264 ñ9"556ñ:'Total net revenues ñ:"35,327 ñ:"33,775ñ:"105,008ñ:"102,365ñ;'COSTS AND EXPENSESñ<'Air transportationñ='Wages and benefits ñ="4,831 ñ="4,238 ñ="14,490 ñ="13,897ñ>'Aircraft fuel ñ>"3,314 ñ>"2,874 ñ>"9,549 ñ>"8,825ñ?'Aircraft maintenance ñ?"2,600 ñ?"2,372 ñ?"8,475 ñ?"6,905ñ@'Contracted air costs ñ@"4,003 ñ@"4,248 ñ@"12,022 ñ@"12,355ñA'Ground courier ñA"5,537 ñA"6,513 ñA"17,002 ñA"19,374ñB'Depreciation ñB"3,557 ñB"3,398 ñB"10,799 ñB"10,349 ñC'Other ñC"2,845 ñC"2,565 ñC"8,294 ñC"7,838*ñD'Selling, general and administrative ñD"4,660 ñD"3,720 ñD"14,954 ñD"12,195ñE'Total costs and expenses ñE"31,347 ñE"29,928 ñE"95,585 ñE"91,738ñF'Income from operations ñF"3,980 ñF"3,847 ñF"9,423 ñF"10,627ñG'Impairment on investmentñG"-ñG"- ñG"1,744ñG"-ñH'Interest expense ñH"438 ñH"563 ñH"1,304 ñH"1,779!ñI'Income before income taxes ñI"3,542 ñI"3,284 ñI"6,375 ñI"8,848!ñJ'Provision for income taxes ñJ"1,441 ñJ"1,313 ñJ"3,308 ñJ"3,536ñK'Net incomeñK"$ 2,101ñK"$ 1,971ñK"$ 3,067ñK"$ 5,312"ñL'Net income per common share$ñM'- basic and assuming dilutionñM"$ 0.20ñM"$ 0.18ñM"$ 0.29ñM"$ 0.48?ñN'See notes to condensed consolidated financial statementsñP'AIRNET SYSTEMS, INC.AñQ'CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS- UnauditedñS^Nine Months EndedñS^Nine Months EndedñT'In thousandsñT^September 30,ñT^September 30, ñU^2001 ñU^2000ñV'Operating activities:ñW'Net incomeñW"$ 3,067ñW"$ 5,3120ñX'Non-cash charge for investment impairment ñX"1,744ñX"-XñY'Adjustments to reconcile net income to net cash provided by operating activities:ñZ'Depreciation ñZ"10,799 ñZ"10,349"ñ['Amortization of intangibles ñ["397 ñ["394ñ\'Deferred taxesñ\"- ñ\"3942ñ]'Provision for losses on accounts receivable ñ]"374 ñ]"127$ñ^'Loss on disposition of assets ñ^"40 ñ^"83Cñ_'Cash provided by (used in) operating assets and liabilities:ñ`'Accounts receivableñ`"(3,109 )ñ`"(2,225 ) ña'Inventory and spare partsña"(831 ) ña"883ñb'Prepaid expensesñb"(210 ) ñb"(49 )ñc'Accounts payable ñc"378 ñc"(27 )ñd'Accrued expenses ñd"606 ñd"1,262ñe'Taxes payable ñe"1,704 ñe"1,768'ñf'Salaries and related liabilities ñf"1,523 ñf"514ñg'Other, netñg"(239 ) ñg"3110ñh'Net cash provided by operating activities ñh"16,243 ñh"19,096ñi'Investing activities:*ñj'Purchases of property and equipmentñj"(13,772 )ñj"(9,288 ),ñk'Payments for covenants not to competeñk"- ñk"(15 )4ñl'Proceeds from sales of property and equipment ñl"274 ñl"382,ñm'Net cash used in investing activitiesñm"(13,498 )ñm"(8,921 )ñn'Financing activities:7ño'Proceeds from 1996 Incentive Stock Plan programs ño"83 ño"162Fñp'Net borrowings (repayments) under the revolving credit facility ñp"4,549ñp"(6,500 )"ñq'Repayment of long-term debt ñq"(24 ) ñq"(22 )4ñr'Purchase of treasury shares, net of issuancesñr"(4,983 )ñr"(2,418 ),ñs'Net cash used in financing activitiesñs"(375 )ñs"(8,778 )ñt'Net increase in cash ñt"2,370 ñt"1,3977ñu'Cash and cash equivalents at beginning of period ñu"1,118 ñu"1,6671ñv'Cash and cash equivalents at end of periodñv"$ 3,488ñv"$ 3,064?ñw'See notes to condensed consolidated financial statements