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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark one)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended December 31, 2020
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 001-35476
Air T, Inc.
(Exact name of registrant as specified in its charter)
Delaware52-1206400
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
5930 Balsom Ridge Road, Denver, North Carolina 28037
(Address of principal executive offices, including zip code)
(828) 464 – 8741
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockAIRTNASDAQ Global Market
Alpha Income Preferred Securities (also referred to as 8% Cumulative Capital Securities) (“AIP”)AIRTPNASDAQ Global Market
Warrant to purchase AIPAIRTWNASDAQ Global Market

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 x                    No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, 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 x                    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 the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.






Large accelerated filerAccelerated 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 x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Common StockCommon Shares, par value of $.25 per share
Outstanding Shares at January 29, 20212,881,853







EXPLANATORY NOTE

This Amendment to the Form 10-Q (this “Amendment”) amends the Quarterly Report on Form 10-Q of Air T, Inc. for the period ended December 31, 2020 filed on February 12, 2021 (the “Form 10-Q”) for the sole purpose of filing Exhibit 101 (financial information from the Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Stockholders Equity, and (v) the Notes to the Condensed Consolidated Financial Statements).

No other changes have been made to the Form 10-Q. This Amendment does not reflect events that may have occurred subsequent to the original Form 10-Q, and does not modify or update in any way the disclosures made in the original Form 10-Q.






AIR T, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
PART I
Condensed Consolidated Balance Sheets (Unaudited) as of December 31, 2020 and March 31, 2020
Item 5.
Exhibit Index
Certifications
Interactive Data Files

4





Item 1.    Financial Statements
AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in thousands, except (loss) income per share number)Three Months Ended
December 31,
Nine Months Ended
December 31,
2020201920202019
Operating Revenues:
Overnight air cargo$16,322 $18,706 $49,789 $56,771 
Ground equipment sales20,769 15,94948,656 40,939 
Commercial jet engines and parts18,078 38,53628,886 72,665 
Corporate and other6501091,063 806 
55,819 73,300128,394 171,181 
Operating Expenses:
Overnight air cargo14,505 16,806 43,906 51,031 
Ground equipment sales14,966 12,960 36,923 33,049 
Commercial jet engines and parts16,086 29,308 22,861 48,644 
General and administrative8,303 9,550 24,276 28,670 
Depreciation and amortization886 975 2,644 4,610 
Write-down on inventory  535  
Asset impairment 4 129 18 
Loss (Gain) on sale of property and equipment5 (23)1 (26)
54,751 69,580 131,275 165,996 
Operating Income (Loss) from continuing operations1,068 3,720 (2,881)5,185 
Non-operating Income (Expense):
Other-than-temporary impairment loss on investments (1,095) (2,305)
Interest expense(1,172)(1,227)(3,413)(4,298)
Gain on settlement of bankruptcy   4,527 
Gain (Loss) from equity method investments510 (282)(546)(636)
Other1,039 81 2,125 (75)
377 (2,523)(1,834)(2,787)
Income (Loss) from continuing operations before income taxes1,445 1,197 (4,715)2,398 
Income Taxes (Benefit) Expense(318)616 (2,165)(52)
Net Income (Loss) from continuing operations1,763 581 (2,550)2,450 
Loss from discontinued operations, net of tax   (70)
(Loss) Gain on sale of discontinued operations, net of tax (222)4 8,137 
Net Income (Loss)1,763 359 (2,546)10,517 
Net Loss (Income) Attributable to Non-controlling Interests$335 $(789)$884 $(3,449)
Net Income (Loss) Attributable to Air T, Inc. Stockholders$2,098 $(430)$(1,662)$7,068 
Income (Loss) from continuing operations per share (Note 6)
Basic$0.73 $(0.07)$(0.58)$(0.36)
Diluted$0.73 $(0.07)$(0.58)$(0.36)
(Loss) Income from discontinued operations per share (Note 6)
Basic$ $(0.07)$ $2.93 
Diluted$ $(0.07)$ $2.93 
Income (Loss) per share (Note 6)
Basic$0.73 $(0.14)$(0.58)$2.57 
Diluted$0.73 $(0.14)$(0.58)$2.57 
Weighted Average Shares Outstanding:
Basic2,882 2,973 2,882 2,752 
Diluted2,887 2,973 2,882 2,756 
See notes to condensed consolidated financial statements.
5





AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

Three Months Ended
December 31,
Nine Months Ended
December 31,
(In Thousands)2020201920202019
Net Income (Loss)$1,763 $359 $(2,546)$10,517 
Foreign currency translation loss(22)(53)(157)(29)
Unrealized gain (loss) on interest rate swaps, net of tax 71 94 100 (170)
Reclassification of interest rate swaps into earnings(1) (17) 
Total Other Comprehensive Income (Loss)48 41 (74)(199)
Total Comprehensive Income (Loss)1,811 400 (2,620)10,318 
Comprehensive Loss (Income) Attributable to Non-controlling Interests335 (789)884 (3,464)
Comprehensive Income (Loss) Attributable to Air T, Inc. Stockholders$2,146 $(389)$(1,736)$6,854 
See notes to condensed consolidated financial statements.
6





AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share amounts)December 31, 2020March 31, 2020
ASSETS
Current Assets:
Cash and cash equivalents $43,352 $5,952 
Marketable securities2,234 1,677 
Restricted cash5,473 9,619 
Restricted investments736 1,085 
Accounts receivable, net of allowance for doubtful accounts of $1,093 and $680
19,448 13,077 
Income tax receivable3,451 1,174 
Inventories, net67,671 60,623 
Other current assets5,344 5,279 
Total Current Assets147,709 98,486 
Assets on lease or held for lease, net of accumulated depreciation of $1,295 and $6,526
10,225 27,945 
Property and equipment, net of accumulated depreciation of $4,785 and $4,319
7,588 5,272 
Right-of-use assets7,895 8,116 
Equity method investments4,443 5,208 
Goodwill4,227 4,227 
Other assets3,151 2,173 
Total Assets$185,238 $151,427 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable$7,950 10,864 
Accrued expenses and other (Note 4)11,968 13,024 
Current portion of long-term debt42,388 42,684 
Short-term lease liability1,357 1,174 
Total Current Liabilities63,663 67,746 
Long-term debt85,019 43,136 
Deferred income tax liabilities, net609 579 
Long-term lease liability7,176 7,473 
Other non-current liabilities 1,289 1,402 
Total Liabilities157,756 120,336 
Redeemable non-controlling interest5,554 6,080 
Commitments and contingencies (Note 15)
Equity:
Air T, Inc. Stockholders' Equity:
Preferred stock, $1.00 par value, 50,000 shares authorized
  
Common stock, $.25 par value; 4,000,000 shares authorized, 3,022,745 shares issued, 2,881,853 shares outstanding
756 756 
Treasury stock, 140,892 shares at $18.58
(2,617)(2,617)
Additional paid-in capital1,287 2,636 
Retained earnings22,105 23,768 
Accumulated other comprehensive loss(594)(537)
Total Air T, Inc. Stockholders' Equity20,937 24,006 
Non-controlling Interests991 1,005 
Total Equity21,928 25,011 
Total Liabilities and Equity$185,238 $151,427 

See notes to condensed consolidated financial statements.
7





AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands)Nine Months Ended
December 31,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income$(2,546)$10,517 
Loss from discontinued operations, net of income tax 70 
Gain on sale of discontinued operations, net of income tax(4)(8,137)
Net (loss) income from continuing operations(2,550)2,450 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization2,644 4,640 
Impairment of investment 2,305 
Profit from sale of assets on lease(26)(3,846)
Gain on settlement of bankruptcy (4,527)
Other694 726 
Change in operating assets and liabilities:
Accounts receivable(6,784)(4,708)
Inventories6,118 (7,866)
Accounts payable(2,913)1,753 
Accrued expenses(1,056)1,106 
Other(2,788)(2,925)
Net cash used in operating activities - continuing operations(6,661)(10,892)
Net cash provided by operating activities - discontinued operations4 1,201 
Net cash used in operating activities(6,657)(9,691)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities(659)(1,103)
Sale of marketable securities2,445 631 
Proceeds from sale of assets on lease1,900 16,956 
Acquisition of businesses, net of cash acquired (500)
Investment in unconsolidated entities (2,811)
Capital expenditures related to property & equipment(3,415)(1,017)
Capital expenditures related to assets on lease or held for lease(124)(39,885)
Other(455)157 
Net cash used in investing activities - continuing operations(308)(27,572)
Net cash provided by investing activities - discontinued operations 20,174 
Net cash used in investing activities(308)(7,398)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit47,886 133,068 
Payments on lines of credit(54,738)(100,884)
Proceeds from term loan59,277 27,449 
Payments on term loan(18,176)(36,187)
Proceeds from Payroll Protection Program loan ("PPP loan")8,215  
Proceeds received from issuance of Trust Preferred Securities ("TruPs")1 6,041 
Other(2,082)(3,323)
Net cash provided by financing activities - continuing operations40,383 26,164 
Effect of foreign currency exchange rates on cash and cash equivalents(164)(10)
NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH33,254 9,065 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD15,571 12,540 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD$48,825 $21,605 
See notes to condensed consolidated financial statements.
8





AIR T, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)


(In Thousands)Common StockTreasury StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Non-controlling
Interests
Total
Equity
SharesAmountSharesAmount
Balance, March 31, 20192,022 $506  $ $2,866 $21,191 $(205)$(1,000)$23,358 
Net income*— — — — — 1,782 — 2,034 3,816 
Repurchase of Common Stock(17)(4)— — — (122)— — (126)
Stock Split1,010 252 — — (252)— — —  
Issuance of Debt - Trust Preferred Securities— — — — — (4,000)— — (4,000)
Issuance of Warrants— — — — — (840)— — (840)
Adoption of ASC - Leasing— — — — — (41)— — (41)
Unrealized loss on interest rate swaps, net of tax— — — — — — (176)— (176)
Foreign currency translation (loss) gain— — — — — — (30)12 (18)
Adjustment to fair value of redeemable non-controlling interests— — — — (985)— — — (985)
Balance, June 30, 20193,015 $754 $ $ $1,629 $17,970 $(411)$1,046 $20,988 
Net income (loss)*— — — — — 5,715 — (17)5,698 
Repurchase of Common Stock8 2 — — — (75)— — (73)
Foreign currency translation gain— — — — — — 38 3 41 
Adjustment to fair value of redeemable non-controlling interest— — — — 781 — — — 781 
Unrealized loss on interest rate swaps, net of tax— — — — — — (88)— (88)
Balance, September 30, 20193,023 $756 $ $ $2,410 $23,610 $(461)$1,032 $27,347 
Net loss*— — — — — (430)— (19)(449)
Repurchase of Common Stock— — 110 (2,157)— — — — (2,157)
Foreign currency translation loss— — — — — — (53)— (53)
Adjustment to fair value of redeemable non-controlling interest— — — — (1,381)— — — (1,381)
Unrealized gain on interest rate swaps, net of tax— — — — — — 94 — 94 
Balance, December 31, 20193,023 $756 $110 $(2,157)$1,029 $23,180 $(420)$1,013 $23,401 



(In Thousands)Common StockTreasury StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Non-controlling
Interests
Total
Equity
SharesAmountSharesAmount
Balance, Balance, March 31, 20203,023 $756 $141 $(2,617)$2,636 $23,768 $(537)$1,005 $25,011 
Net loss*— — — — — (841)— (5)(846)
Unrealized loss on interest rate swaps, net of tax— — — — — — (26)— (26)
Foreign currency translation (loss)— — — — — — (67)— (67)
Adjustment to fair value of redeemable non-controlling interest— — — — 429 — — — 429 
Balance, June 30, 20203,023 756 141 (2,617)3,065 22,927 (630)1,000 24,501 
Net loss*— — — — — (2,920)— (8)(2,928)
Foreign currency translation (loss)— — — — — — (68)— (68)
Adjustment to fair value of redeemable non-controlling interest— — — — (890)— — — (890)
Unrealized gain on interest rate swaps, net of tax— — — — — — 55 — 55 
Balance, September 30, 20203,023 756 141 (2,617)2,175 20,007 (643)992 20,670 
Net income (loss)*— — — — — 2,098 — (1)2,097 
Foreign currency translation (loss)— — — — — — (22)— (22)
Adjustment to fair value of redeemable non-controlling interest— — — — (888)— — — (888)
Unrealized gain on interest rate swaps, net of tax— — — — — — 71 — 71 
Balance, December 31, 20203,023 $756 $141 $(2,617)$1,287 $22,105 $(594)$991 $21,928 

*Excludes amount attributable to redeemable non-controlling interest in Contrail.
See notes to condensed consolidated financial statements.
9





AIR T, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    Financial Statement Presentation
The condensed consolidated financial statements of Air T, Inc. (“Air T”, the “Company”, “we”, “us” or “our”) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results for the periods presented have been made.
These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 2020. The results of operations for the period ended December 31, 2020 are not necessarily indicative of the operating results for the full year.
Certain reclassifications have been made to the prior period amounts to conform to the current presentation.
Discontinued Operations
On September 30, 2019, the Company completed the sale of Global Aviation Services, LLC ("GAS"). The results of operations of GAS are reported as discontinued operations in the condensed consolidated statements of operations for the three and nine months ended December 31, 2020 and 2019. Refer to Footnote 3 - "Discontinued Operations" for additional information. Unless otherwise indicated, the disclosures accompanying the condensed consolidated financial statements reflect the Company's continuing operations.
Liquidity
Contrail Aviation Support, LLC ("Contrail") is a subsidiary of the Company in the Commercial Jet Engines and Parts segment. The Contrail Credit Agreement contains affirmative and negative covenants, including covenants that restrict the ability of Contrail and its subsidiaries to, among other things, incur or guarantee indebtedness, incur liens, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, make changes in the nature of its business, and engage in transactions with affiliates. The Contrail Credit Agreement also contains quarterly financial covenants applicable to Contrail and its subsidiaries, including a minimum debt service coverage ratio of 1.25 to 1.0 and a minimum tangible net worth of $15 million.
On September 25, 2020, Contrail entered into a Third Amendment to Supplement #2 to Master Loan Agreement dated June 24, 2019 with Old National Bank ("ONB"). The material changes within the Third Amendment are: (a) to extend the date for compliance with the provision where Contrail is required to pay down the total outstanding principal balance of its revolver to zero for at least thirty consecutive days to September 5, 2021; and (b) to extend the date for compliance with the required quarterly debt service coverage ratio covenant such that Contrail shall commence compliance with the covenant commencing on March 31, 2022 and on the last day of each fiscal quarter thereafter.

On November 24, 2020, Contrail and ONB entered into Supplement #8 to Master Loan Agreement and related documentation for a loan in the aggregate amount of $43.6 million (the “Contrail Main Street Loan”) for which ONB served as lender pursuant to the Main Street Priority Loan Facility as established by the U.S. Federal Reserve (the "Fed"). The Contrail Main Street Loan was approved by the Fed and completed by December 8, 2020. The loan proceeds are to be used as working capital to support the operations of Contrail in the ordinary course of business, which includes the acquisition from time to time of aircraft and engines. The proceeds will also be used to pay down the Contrail Revolver. The indebtedness incurred is subject to the terms and provisions of the Master Loan Agreement.

The principal terms of the Contrail Main Street Loan ("Term Note G") are: (a) interest on the loan accrues at a floating rate of LIBOR plus 3.00% and interest is payable commencing November 24, 2021; (b) 15% principal payments plus 15% of the amount of capitalized interest are due on November 24, 2023 and 2024, with the remainder due on the loan maturity date – November 24, 2025; (c) the loan is not guaranteed; and, (d) a 2% origination fee was paid on funding of the loan. The loan contains affirmative covenants as to cash flow coverage and tangible net worth. The terms of the loan provide for customary events of default, including, among others, those relating to a failure to make payment, breaches of representations and covenants, and the occurrence of certain events. The loan is secured by a security interest in the assets of Contrail.

AirCo 1, LLC ("AirCo 1") is a wholly-owned subsidiary of AirCo, LLC, which is a wholly-owned subsidiary of Stratus Aero Partners LLC, which is a wholly-owned subsidiary of the Company in the Commercial Jet Engines and Parts segment. On December 11, 2020, AirCo 1 and Park State Bank (“PSB”), entered into a loan in the aggregate amount of $6.2 million (the “AirCo 1 Main Street Loan”) for which PSB served as lender pursuant to the Main Street Priority Loan Facility as established by the Fed. The AirCo 1 Main Street Loan was approved by the Fed and completed by December 22, 2020. The loan proceeds were used to pay off the AirCo 1 revolving line of credit with Minnesota Bank & Trust ("MBT").

The principal terms of the AirCo 1 Main Street Loan ("Term Loan - PSB") are: (a) interest on the loan accrues at a floating rate of LIBOR plus 3.00% and interest is payable commencing December 11, 2021; (b) 15% principal payments (including any capitalized interest accrued thereon) are due on December 11, 2023, and 2024, with the remainder due on the loan maturity date – December 11, 2025; (c) the loan is not guaranteed; and, (d) a 2% origination fee was paid on funding of the loan. The loan contains an affirmative covenant relating to collateral valuation. The terms of the loan provide for customary events of default, including, among others, those relating to a failure to make payment, breaches of representations and covenants, and the occurrence of certain events. The loan is secured by a security interest in the assets of AirCo 1 and a pledge of AirCo’s membership interest in AirCo 1.

The revolving line of credit at Air T with MBT has a due date or expires within the next twelve months. We are currently seeking to refinance this obligation prior to August 31, 2021; however, there is no assurance that we will be able to execute this refinancing or, if we are able to refinance this obligation, that the terms of such refinancing would be as favorable as the terms of our existing credit facility.

In April 2020, the Company obtained loans under the PPP, as authorized by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), of $8.2 million to help pay for payroll costs, mortgage interest, rent and utility costs. The Company will apply to MBT for forgiveness of the PPP Loan, however, forgiveness is not fully assured. The Company believes it is probable that the cash on hand (including that obtained from the PPP), net cash provided by operations from its remaining operating segments, together with its current revolving lines of credit, as amended or replaced and other recent financings, will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these financial statements are issued.
COVID-19 Pandemic
The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business. Even though the Company undertook measures to attempt to limit the effect of the pandemic and its impact on the Company, the Company continued to experience a decrease in revenues during the third fiscal quarter and the month of January. The extent to which the COVID-19 pandemic continues to impact the Company’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, including the effectiveness and rollout of vaccines and the direct and indirect economic effects of the pandemic and containment measures, among others.
Financial Instruments Designated for Trading
Except for short sales of equity securities, the Company accounts for all other financial instruments (including derivative instruments) designated for trading in accordance with ASC 815. All changes in the fair value of the financial instruments designed for trading are recognized in earnings as they occur. Further, all gains and losses on derivative instruments designated for trading are presented net on the condensed consolidated Statements of Income (Loss). The fair value of derivative instruments designated for trading in a gain position are recorded in Other Current Assets and the fair value of derivative instruments designed for trading in a loss position are recorded in Accrued Expenses and Other on the condensed consolidated Balance Sheets.

The Company accounts for short sales of equity securities in accordance with ASC 942 and ASC 860. The obligations incurred in short sales are reported in Accrued Expenses and Other on the condensed consolidated Balance Sheets. They are subsequently measured at fair value through the income statement at each reporting date with gains and losses on securities. Interest on the short positions are accrued periodically and reported as interest expense. The market value of the Company’s equity securities and cash held by the broker are used as collateral against any outstanding margin account borrowings for purposes of short selling equities. This collateral is recorded in Other Current Assets on the condensed consolidated Balance Sheets.

The Company reports all cash receipts and payments resulting from the purchases and sales of securities, loans, and other assets that are acquired specifically for resale as operating cash flows.
Recently Adopted Accounting Pronouncements
 
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard significantly changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, including trade receivables. The standard requires an entity to
estimate its lifetime “expected credit loss” for such assets at inception, and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The Company adopted this standard on April 1, 2020. As of December 31, 2020, the standard did not have a material impact on the Company's condensed consolidated financial statements and disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step Two from the goodwill impairment test. Step Two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this standard, an entity will recognize an impairment charge for the amount by which the carrying value of a reporting unit exceeds its fair value. The Company adopted this amendment on April 1, 2020. As of December 31, 2020, the amendment did not have a material impact on the Company's condensed consolidated financial statements and disclosures.

In October 2018, the FASB updated the Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities of the Accounting Standards Codification. The amendments in this update affect reporting entities that are required to determine whether they should consolidate a legal entity under the guidance within the Variable Interest Entities Subsections of Subtopic 810-10, Consolidation—Overall. Indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. The Company adopted this amendment on April 1, 2020. As of December 31, 2020, the amendment did not have a material impact on the Company's condensed consolidated financial statements and disclosures.

In December 2019, the FASB updated the Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes of the Accounting Standards Codification. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The amendments in this Update simplify the accounting for income taxes by removing the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income), among other changes. The Company early adopted this amendment as of April 1, 2020. The amendment resulted in an immaterial impact to its condensed consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

In January 2020, the FASB updated the Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The Company is currently evaluating the impact of this amendment on its condensed consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04- Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this Update provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. Further, in accordance with the amendments in this Update, an entity may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020. The amendments are effective for all entities from the beginning of an interim period that includes the issuance date of this ASU. An entity may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of this amendment on our contracts, hedging relationships, and other transactions affected by reference rate reform.
10





2.    Revenue Recognition
Substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less. As a result, the Company has applied the practical expedient to exclude consideration of significant financing components from the determination of transaction price, to expense costs incurred to obtain a contract, and to not disclose the value of unsatisfied performance obligations.
The following is a description of the Company’s performance obligations:

Type of RevenueNature, Timing of Satisfaction of Performance Obligations, and Significant Payment Terms
Product SalesThe Company generates revenue from sales of various distinct products such as parts, aircraft equipment, printing equipment, jet engines, airframes, and scrap metal to its customers. A performance obligation is created when the Company accepts an order from a customer to provide a specified product. Each product ordered by a customer represents a performance obligation.

The Company recognizes revenue when obligations under the terms of the contract are satisfied; generally, this occurs at a point-in-time upon shipment or when control is transferred to the customer. Transaction prices are based on contracted terms, which are at fixed amounts based on standalone selling prices. While the majority of the Company's contracts do not have variable consideration, for the limited number of contracts that do, the Company records revenue based on the standalone selling price less an estimate of variable consideration (such as rebates, discounts or prompt payment discounts). The Company estimates these amounts based on the expected incentive amount to be provided to customers and reduces revenue accordingly. Performance obligations are short-term in nature and customers are typically billed upon transfer of control. The Company records all shipping and handling fees billed to customers as revenue.

The terms and conditions of the customer purchase orders or contracts are dictated by either the Company’s standard terms and conditions or by a master service agreement or by the contract.
Support ServicesThe Company provides a variety of support services such as aircraft maintenance, printer maintenance, and short-term repair services to its customers. Additionally, the Company operates certain aircraft routes on behalf of FedEx. A performance obligation is created when the Company agrees to provide a particular service to a customer. For each service, the Company recognizes revenues over time as the customer simultaneously receives the benefits provided by the Company's performance. This revenue recognition can vary from when the Company has a right to invoice to the output or input method depending on the structure of the contract and management’s analysis.

For repair-type services, the Company records revenue over-time based on an input method of costs incurred to total estimated costs. The Company believes this is appropriate as the Company is performing labor hours and installing parts to enhance an asset that the customer controls. The vast majority of repair-services are short term in nature and are typically billed upon completion of the service.

Some of the Company’s contracts contain a promise to stand ready as the Company is obligated to perform certain maintenance or administrative services. For most of these contracts, the Company applies the 'as invoiced' practical expedient as the Company has a right to consideration from the customer in an amount that corresponds directly with the value of the entity's performance completed to date. A small number of contracts are accounted for as a series and recognized equal to the amount of consideration the Company is entitled to less an estimate of variable consideration (typically rebates). These services are typically ongoing and are generally billed on a monthly basis.
In addition to the above type of revenues, the Company also has Leasing Revenue, which is in scope under Topic 842 (Leases) and out of scope under Topic 606 and Other Revenues (Freight, Management Fees, etc.) which are immaterial for disclosure under Topic 606.
11





The following table summarizes disaggregated revenues by type (in thousands):

Three Months Ended December 31,Nine Months Ended December 31,
2020201920202019
Product Sales
Air Cargo$4,970