<HTML>
<HEAD>
<TITLE> ABF EXHIBIT 13
</TITLE>
</HEAD>
<BODY BGCOLOR="#FFFFFF">

<h3 ALIGN="CENTER">
                                EXHIBIT 13
</h3>
<HR NOSHADE>
<B>
COMMON STOCK AND DIVIDEND INFORMATION
</B>
<P>
The Company's common stock is traded on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol ABF.  The following is a summary of
the cash dividends paid and the quarterly trading price ranges of Airborne
common stock on the New York Stock Exchange for 1999 and 1998:
<PRE>

Quarter                      High        Low       Dividend
-------                      ----        ---       --------
1999:
Fourth                     $25.375     $20.000     $ .0400
Third                       28.875      21.063       .0400
Second                      36.625      24.688       .0400
First                       41.625      28.625       .0400

1998:
Fourth                     $35.781     $14.750     $ .0400
Third                       35.625      17.438       .0400
Second                      42.375      32.094       .0400
First                       42.156      30.688       .0375

</PRE>
<HR NOSHADE>
<p> 

<TABLE WIDTH="98%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<tr>
<TH WIDTH="98%" COLSPAN=17><font size="2"><b>AIRBORNE FREIGHT CORPORATION AND
  SUBSIDIARIES<br>
  SELECTED CONSOLIDATED FINANCIAL DATA</b></font><font size="3"><br>
  <br>
  </font></TH>
</tr>

<TR VALIGN=BOTTOM>
<TH WIDTH="36%" ALIGN=CENTER><FONT SIZE=2> <BR></FONT>
<FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="10%" COLSPAN=2><font size="1" color="#0000FF"><b>1999</b></font><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>1998</b></font><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>1997</b></font><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>1996</b></font><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>1995</b></font><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
</TR>

<TR VALIGN=TOP>
<TH WIDTH="36%"></TH>
<TH WIDTH="49%" COLSPAN=16><font size="1">(In thousands except per share data)<br>
   </font></TH>

</TR>

<tr>
<TD WIDTH="36%"><font size="2">OPERATING RESULTS:<br>
     Revenues</font></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
</tr>

<TR VALIGN=TOP>
<TD WIDTH="36%"><font size="2">      Domestic</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">2,772,782</font></TD>
<TD WIDTH="1%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,712,344</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,514,737</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,108,670</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">1,871,163</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>

<TR VALIGN=TOP>
<TD WIDTH="36%"><font size="2">      International</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">367,444</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">362,181</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">397,672</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">375,636</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">368,188</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>

<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>

<tr>
<TD WIDTH="36%"><font size="2">        
  Total</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">3,140,226</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">3,074,525</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,912,409</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,484,306</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,239,351</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>

<tr>
<TD WIDTH="36%"><font size="2">   Operating Expenses</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">2,980,179</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,840,058</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,687,154</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,405,125</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2,170,370</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">      Earnings From
  Operations</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">160,047</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">234,467</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">225,255</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">79,181</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">68,981</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Other, Net</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">12,659</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">12,882</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">27,790</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">33,236</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">29,347</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">      Earnings
  Before Income Taxes</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">147,388</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">221,585</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">197,465</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">45,945</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">39,634</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Income Taxes</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">56,187</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">84,300</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">77,393</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">18,500</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">15,814</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">      Net Earnings</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">91,201</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">137,285</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">120,072</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">27,445</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">23,820</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Preferred Stock Dividends</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2 color="#0000FF">--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">271</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">276</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Net Earnings Available to Common
  Shareholders</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">91,201</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">137,285</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">120,072</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">27,174</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">23,544</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>

<tr>
<TD WIDTH="36%"><font size="2">   Net Earnings Per Common Share<br>
        Basic</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"><br>
  $</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF"><br>
  1.88</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><br>
  $</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2"><br>
  2.77</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><br>
  $</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2"><br>
  2.68</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><br>
  $</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2"><br>
  .64</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2><br>
  $</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2"><br>
  .56</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>

<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">      Diluted</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">1.85</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2.72</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">2.44</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">.64</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">.55</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Dividends Per Common Share</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">.16</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">.16</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">.15</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">.15</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">.15</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Diluted Average Shares Outstanding</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">49,269</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">50,561</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">50,339</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">42,573</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">42,433</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">FINANCIAL STRUCTURE:</font></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Working Capital</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">180,228</font></TD>
<TD WIDTH="1%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">102,531</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">96,485</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">141,457</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">91,599</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Property and Equipment</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">1,126,981</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">1,021,885</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">916,331</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">866,627</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">842,703</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Total Assets</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">1,643,250</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">1,501,577</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">1,365,973</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">1,307,422</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">1,217,384</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Long-term Debt</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">314,707</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">249,149</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">250,559</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">409,440</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">364,621</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Subordinated Debt</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2 color="#0000FF">--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">115,000</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">115,000</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Redeemable Preferred Stock</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2 color="#0000FF">--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">3,948</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Shareholders' Equity</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">858,207</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">769,152</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">670,915</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">431,830</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">406,315</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><br>
  <font size="2">NUMBER OF SHIPMENTS:</font></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="8%" ALIGN=RIGHT></TD>
<TD WIDTH="1%"></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   Domestic</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">316,391</font></TD>
<TD WIDTH="1%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">316,590</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">297,032</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">254,234</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">225,553</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">   International</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">7,038</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">6,451</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">5,699</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">5,036</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">4,592</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><font size="2">      Total</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2" color="#0000FF">323,429</font></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">323,041</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">302,731</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">259,270</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="8%" ALIGN=RIGHT><font size="2">230,145</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TH WIDTH="98%" COLSPAN=17></TH>
</tr>

</TABLE>

<HR NOSHADE>

<Center><B>
<P>

               AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES<BR>
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS<BR>
                   OF OPERATIONS AND FINANCIAL CONDITION<BR>
</Center></B></P>
<B><P>
RESULTS OF OPERATIONS:
</B>
<BR>
    The Company's operating performance in 1999 resulted in operating
income and net earnings substantially below that of 1998.  The Company
experienced flat domestic shipment growth for the year.  With no domestic
shipment growth the Company did not experience productivity gains to offset
cost increases.  While the yield on domestic shipments continued to
improve, the average operating cost per shipment increased at a faster rate
than the average revenue per shipment.
<BR>
    Net earnings in 1999 were $91.2 million, or $1.85 per share on a
diluted basis, which included a gain equal to $.06 per share from the sale
of securities in the fourth quarter, compared to $137.3 million, or $2.72
per share in 1998.
<P>
     The following table is an overview of the Company's shipments, revenue
and weight trends for the last three years:
<PRE>

                                       1999         1998         1997
                                       ----         ----         ----
Number of Shipments (in thousands):
  Domestic
    Overnight                        186,346      186,321      172,782
    Next Afternoon Service            56,201       58,186       53,773
    Second Day Service                73,556       71,724       70,138
    100 lbs. and Over                    288          359          339
                                     -------      -------      -------
      Total Domestic                 316,391      316,590      297,032
                                     -------      -------      -------
  International
    Express                            6,639        6,017        5,223
    Freight                              399          434          476
                                     -------      -------      -------
      Total International              7,038        6,451        5,699
                                     -------      -------      -------

  Total Shipments                    323,429      323,041      302,731
                                     =======      =======      =======

Average Pounds Per Shipment:
  Domestic                              4.2           4.3          4.5
  International                        44.2          42.6         51.2

Average Revenue Per Pound:
  Domestic                           $ 2.03        $ 1.96       $ 1.89
  International                      $ 1.17        $ 1.31       $ 1.35

Average Revenue Per Shipment:
  Domestic                           $ 8.76        $ 8.56       $ 8.45
  International                      $52.21        $56.14       $69.78
</PRE>
<P>
    Total revenues increased 2.1% in 1999 to $3.14 billion compared to
growth of 5.6% in 1998 and 17.2% in 1997.  Shipment volume was 323.4
million units in 1999, increasing 0.1% compared to an increase of 6.7% in
1998 and 16.8% in 1997. The United Parcel Service strike in the second half
of 1997, and a fuel surcharge in the first half of 1997 are estimated to
have added $55 million and $15 million to domestic revenues, respectively,
and increased diluted earnings per share by a total of $.45 per share.
Domestic shipment and revenue comparisons over 1997 are less meaningful due
to these factors.
<BR>
    Domestic revenue increased 2.2% in 1999, however, domestic shipments
were flat posting a decline of 0.1%.  This compares to revenue growth of
7.9% in 1998 and 19.3% in 1997, and shipment growth of 6.6% and 16.8% in
1998 and 1997, respectively.  Despite the lack of domestic shipment growth,
domestic revenue growth for 1999 continued to be positively impacted by the
continued focus on yield enhancement and a stable pricing environment.  The
average revenue per domestic shipment increased to $8.76 for 1999 compared
to $8.56 for 1998 and $8.45 for 1997.  During 1999, each sequential quarter
experienced an increase in the average revenue per domestic shipment.
<BR>
    Higher yielding overnight shipments accounted for 58.9% of total
domestic shipments in 1999. On a combined basis the Next Afternoon
Service(NAS)and Second Day Service(SDS)products accounted for 41.0% of
domestic volume, with a small shift in product mix occurring away from NAS
shipments to SDS shipments.
<BR>
    The Company began a pilot program in July 1999 to test a new product
to service the residential delivery market.  This new service, referred to
as airborne@home, offers shippers a competitive combination of delivery
service and pricing, while providing the Company an efficient way to
accomplish residential deliveries.  This product is intended to capture
business from some of the fastest growing segments of e-commerce by
targeting new business from Internet retailers and catalog fulfillment
providers. Final delivery with this service will be accomplished through an
arrangement with the U.S. Postal Service which became available as a result
of recent changes in USPS regulations. The airborne@home product underwent
testing in the last half of 1999 and will be fully implemented in 2000.

<BR>    International revenue increased 1.5% in 1999 on shipment growth of
9.1%.  While shipment growth was 13.2% in both 1998 and 1997, international
revenue declined 8.9% and grew 5.9% in 1998 and 1997, respectively.
International revenue per shipment and weight per shipment decreased in
1999 compared to last year as a result of the continued decrease in higher
yielding freight shipments.  This product has been negatively impacted over
the past three years primarily from slower global economic conditions,
especially in parts of Asia. The Company has continued to experience strong
growth in its international express product mitigating some of the weakness
in freight volumes.  International express shipments increased 10.3% in
1999 compared to increases of 15.2% in 1998 and 16.1% in 1997.  The
international segment contribution to earnings from operations was $1.1
million in 1999 compared to $1.5 million in 1998 and $3.8 million in 1997.

<P>    OPERATING EXPENSES are affected by shipment volume, productivity
improvements, costs incurred to increase capacity and expand service, fuel
price volatility and discretionary items such as the level of marketing
expenditures.  Operating expenses as a percentage of revenues were 94.9% in
1999 compared to 92.4% in 1998 and 92.3% in 1997.  Measuring cost
performance on a per shipment basis, total operating expenses per shipment
increased 4.8% in 1999 to $9.21, compared to $8.79 in 1998 and $8.88 in
1997.  Flat shipment growth had a negative impact on productivity.  The
Company experienced a decline of 2.5% in productivity for 1999, as measured
by shipments handled per paid employee hour, compared to productivity
improvements of 1.4% in 1998 and 10.2% in 1997.  Additionally, the Company
incurred additional operating expenses as a result of the higher cost of
jet fuel, particularly in the third and fourth quarters.  The decline in
productivity, combined with average operating costs per shipment increasing
at a faster rate than average revenue per shipment, were significant
factors having a negative impact on 1999 operating results.  Comparisons of
operating expense components are discussed below.

<BR>    Transportation purchased as a percentage of revenues was 30.8% in 1999
compared to 30.7% in 1998 and 31.7% in 1997.  This expense category
consists primarily of commercial airline costs, cartage costs related to
contracted pickup and delivery and trucking costs.  An increase in
contracted cartage costs in 1999 was primarily offset by lower commercial
airline costs as a result of the continued decline in international freight
shipments.

<BR>    Station and ground expense as a percentage of revenues was 31.1% in
1999 compared to 29.8% in 1998 and 29.5% in 1997.  The increase in this
category as a percentage of revenues in 1999 compared to 1998 was primarily
the result of a decline in productivity, the effect of increased wages and
costs incurred to maintain service integrity.

<BR>    Flight operations and maintenance expense as a percentage of revenues
were 16.3% in 1999 compared to 15.5% in 1998 and 14.8% in 1997.  This
category of expense was impacted during 1999 by higher aircraft maintenance
and fuel costs.  Costs associated with periodic aircraft maintenance
increased as a result of more maintenance checks performed for DC-8
aircraft in 1999 compared to 1998, and in 1998 compared to 1997. The
average aviation fuel price, exclusive of fuel hedge settlements, was $.64
per gallon in 1999, compared to $.57 per gallon in 1998 and $.73 per gallon
in 1997.  Aviation fuel consumption decreased .9% to 180.8 million gallons
in 1999 compared to a 7.5% increase in consumption in 1998 over 1997.  The
Company placed five additional Boeing 767 aircraft into service in 1999,
thereby allowing less fuel efficient DC-8 aircraft to be moved to shorter
lane segments or into backup status.  This had a positive impact on fuel
consumption and accounts for the decrease in gallons used in 1999 compared
to 1998.  The Company had fuel hedge contracts in place through November
1999 to limit its exposure to volatility in jet fuel prices.  These
contracts were entered into during 1998.  Fuel price volatility during 1999
hampered the Company's efforts to enter into fuel contracts for subsequent
periods at acceptable price levels.  Therefore, there were no outstanding
fuel contracts at December 31, 1999.  As a result of fuel hedging
contracts, the Company incurred settlement expense equivalent to
approximately $.01 per gallon in 1999 and $.04 in 1998 compared to
settlement benefits realized of approximately $.01 per gallon in 1997.

<BR>    The Company announced in January 2000, that it would implement a
temporary 3% fuel surcharge effective February 7, 2000, on all domestic,
Canadian and international express shipments, to help offset the higher
cost of jet fuel.

<BR>    General and administrative expense as a percentage of revenues
decreased to 7.6% in 1999 compared to 8.0% in 1998 and 1997.  The decrease
in this category of expense in 1999 was primarily due to lower management
incentive compensation and profit sharing retirement costs resulting from
the decline in operating results.

<BR>    Sales and marketing costs were 2.5% of revenues in 1999 compared to
2.3% in 1998 and 2.4% in 1997.  The decline in overall productivity due to
flat volume growth had a negative impact on this category of expense.
Discretionary cost control alone was not sufficient in offsetting the
effect of increased costs incurred.

<BR>    Depreciation and amortization expense as a percentage of revenues
increased to 6.7% in 1999 compared to 6.0% in 1998 and 5.8% in 1997.  The
increase in depreciation and amortization expense in 1999 is due in large
part to the increased number of 767 aircraft placed into service during
1999.

<P>    INTEREST EXPENSE increased in 1999 compared to 1998, primarily as the
result of the higher level of average outstanding borrowings during 1999
and to the lower level of capitalized interest.  This was partially offset
by a lower average interest rate incurred in 1999 compared to 1998.  Of the
three comparative years in the 1997-1999 time frame, 1998 had the lowest
level of net interest expense, primarily due to the relatively low level of
average outstanding borrowings.  The strong cumulative free cashflow during
1997 and 1998 allowed the Company to pay down outstanding borrowings to
historically low levels in 1998.  Interest capitalized in 1999 of $4.0
million was primarily related to the acquisition and modification of 767
aircraft and compares to capitalized interest of $5.9 million in 1998 and
$1.9 million in 1997.  The Company anticipates the level of capitalized
interest in 2000 to be comparable to the 1999 amount.

<P>    GAIN ON SALE OF SECURITIES includes a $4.6 million gain on the sale of
34% of the Company's investment in Equant N.V., an international data
network services company.  The Company acquired its interest in Equant
through its membership in SITA, a cooperative of major airline companies,
who primarily provides data communication services to the air transport
industry.

<P>    INCOME TAXES for 1999 resulted in an effective tax rate of 38.1%
compared to 38.0% in 1998 and 39.2% in 1997.  The lower tax rates in 1999
and 1998 compared to 1997 were primarily due to a lower effective state tax
rate.  The Company anticipates that the tax rate for 2000 will be in the
38.5% to 39.0% range.

<P>    Looking ahead, it is difficult at this point to project a trend for
all of 2000 regarding volume growth, but we are anticipating modest
shipment growth.  The Company's focus will continue to be on managing
yields and lowering cost per shipment to improve margins.  The strength of
the U.S. and global economies will have an impact on the results of
operations in 2000 and beyond.
<P><B>
YEAR 2000 ISSUE:
</B>
<BR>    The Company implemented a compliance program to address the challenges
Year 2000 issues might present to its business.  The Company did not
experience any disruptions in systems and applications operated by the
Company, by third parties, or customers and vendors, with which it conducts
business, with respect to any year 2000 dating issues.  Management
estimates the total cost of the year 2000 compliance program to have been
approximately $3.7 million.
<P><B>
FINANCIAL CONDITION:
</B>
<BR>    CAPITAL EXPENDITURES and financing associated with those expenditures
have been the primary factors affecting the financial condition of the
Company over the last three years.  Total capital expenditures net of
dispositions were $293 million in 1999 compared to $283 million in 1998 and
$207 million in 1997.  A significant portion of these expenditures has been
related to the acquisition and modification of aircraft and related flight
equipment.

<BR>    The Company acquired four used Boeing 767-200 aircraft and two
McDonnell Douglas DC-9 aircraft in 1999.  During the year, seven Company-
owned aircraft were placed into service, made up of five 767s and two DC-
9s, while at the end of the year, four DC-8s were taken out of service.  At
the end of 1999, there were 113 aircraft in service, consisting of eight
767s, 32 DC-8s and 73 DC-9s.  In addition, there were two 767 aircraft in
modification status.  Other capital expenditures in 1999 included vehicles
for expansion and replacement, facilities and package handling equipment,
leasehold improvements for new or expanded facilities and computer
equipment.

<BR>    Capital expenditures will continue to be a significant factor
affecting financial condition in 2000.  The Company anticipates 2000
capital expenditures of approximately $380 million.  A significant portion
of this capital investment is for the acquisition of nine additional 767
aircraft, the modification of aircraft to be placed in service, the
continued expansion of the central airport and sort facilities, and
information systems development. The retrofitting of aircraft with Stage
III hush kits was completed in 1999. A total of nine 767s are expected to
be placed in service in 2000.  The Company anticipates removing five
additional DC-8s from service, reducing the DC-8 fleet to 27 aircraft by
the end of 2000.  This represents a total decrease of nine DC-8s removed
from service from a high of 36 DC-8s in service at the end of 1998.  As the
Company places additional 767 aircraft into service over the next few
years, it will continue to remove additional DC-8's from service, depending
on overall capacity requirements.

<BR>    The Company intends to acquire a total of 30 767 aircraft including
the ten aircraft owned and the nine aircraft which will be delivered in
2000.  The remaining 767 aircraft are to be delivered between the years
2001 and 2003.
<P>
LIQUIDITY AND CAPITAL RESOURCES:
<BR>    Liquidity for financing capital expenditures in the past three years
came primarily from internally generated cash provided by operations.  Cash
provided by operations net of changes in working capital was approximately
$259 million in 1999 compared to $345 million in 1998 and 1997.  Additional
liquidity during 1999 was provided by the revolving bank credit facility.

<BR>    Over the past three years, the Company's strong operating cash flow
became the major source of liquidity, whereas the Company's $250 million
unsecured revolving bank credit facility had traditionally been used as the
major source of liquidity for periods between other financing transactions.
The Company also has available $40 million under unsecured, uncommitted
money market lines of credit with several banks, used in conjunction with
the revolving credit agreement to facilitate settlement and accommodate
short-term borrowing fluctuations.  Reliance on the bank facilities
increased during 1999 as the result of the decision to accelerate the
acquisition of 767 aircraft into 1999.  At December 31, 1999, a total of
$95.0 million was owed under the revolving bank credit and money market
agreements compared to $29.0 million outstanding at December 31, 1998.

<BR>    In August 1998, the Board of Directors authorized a stock repurchase
program for up to 2 million shares of the Company's common stock.  The
Company accomplished the repurchase of the 2 million shares by the end of
September 1998 for approximately $38.8 million.  These shares were added to
the Company's treasury stock.

<BR>    In November 1998, the Board of Directors authorized a second stock
repurchase program for up to 4 million shares of the Company's common
stock. All shares may be acquired, at management's discretion, over time on
the open market. Shares repurchased will not be retired or canceled, but
will be held as treasury stock.  The Company has not repurchased any shares
under this program.

<BR>    The Company's ratio of total long-term debt to total capitalization
was 24.7% at December 31, 1999, compared to 22.5% at December 31, 1998. The
debt-to-capitalization ratio is not expected to change significantly during
2000 as anticipated cash flow from operations should provide the majority
of the liquidity for projected 2000 capital expenditures.

<BR>    In management's opinion, the available capacity under the bank credit
agreements coupled with anticipated internally generated cash flow from
2000 operations should provide adequate flexibility for financing future
growth.
<P>
INFLATION:
<BR>    The rate of inflation has been relatively constant over the past
several years, and so has the impact of inflation on the Company's results
of operations and financial condition.  The effects of inflation have been
considered in management's discussion where considered pertinent.
<P>
FORWARD LOOKING STATEMENTS:
<BR>    Statements contained herein, and in other parts of this annual report
which are not historical facts are considered forward-looking statements
(as such term is defined in the Private Securities Litigation Reform Act of
1995).  Such statements relating to future events involve risks and
uncertainties which are inherently difficult to predict, including
statements regarding future shipment growth and product acceptance,
capacity requirements, capital expenditure levels and the adequacy of
available financing capacity.  Actual results, however, may vary because of
competitor pricing initiatives, customer demand for time-defined services,
economic and regulatory conditions, fuel price volatility and labor
disputes.
<HR NOSHADE>
<P><CENTER><B>
                       INDEPENDENT AUDITORS' REPORT
</CENTER></B>
<P>
Board of Directors
Airborne Freight Corporation
Seattle, Washington
<P>
    We have audited the accompanying consolidated balance sheets of
Airborne Freight Corporation and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of net earnings, cash flows
and shareholders' equity for each of the three years in the period ended
December 31, 1999.  These financial statements are the responsibility of
the Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

<BR>    We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

<BR>    In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of the Company as of
December 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with generally accepted accounting principles.
<P><U>
/s/ Deloitte & Touche LLP</U><BR>
DELOITTE & TOUCHE LLP<BR>
February 10, 2000<BR>
Seattle, Washington
<HR NOSHADE>
<p> 

<TABLE WIDTH="82%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN=TOP>
<TD WIDTH="102%" ALIGN=CENTER colspan="11"><FONT SIZE=2><BR>
  <b>AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES<br>
  CONSOLIDATED STATEMENTS OF NET EARNINGS<br>
  <br>
 <br>
  </b>
</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="49%" ALIGN=CENTER>
  <p align="left"><FONT SIZE=2> <BR></FONT>
  <font size="1"><i>Year Ended December 31</i></font></p>
</TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B> <BR>
  <font color="#0000FF">
1999</font></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B> <BR>
  1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B> <BR>
  1997</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
</TR>
<tr>
<TD WIDTH="55%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="37%" colspan="9">
  <p align="center"><font size="1"><i>(In thousands except per share data)</i></font></TD>
</tr>
<tr>
<TD WIDTH="49%"><FONT SIZE=2>REVENUES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   Domestic</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">2,772,782</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2,712,344</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2,514,737</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   International</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">367,444</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">362,181</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">397,672</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">3,140,226</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">3,074,525</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2,912,409</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>

<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2>OPERATING EXPENSES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>

<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   Transportation purchased</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">965,722</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">944,357</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">922,885</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   Station and ground operations</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">975,669</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">914,919</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">858,238</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="49%"><font size="2">   Flight operations and maintenance</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">513,337</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">477,799</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">431,474</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2>   General and administrative</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">238,865</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">247,103</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">234,366</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   Sales and marketing</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">77,196</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">71,354</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">70,346</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   Depreciation and amortization</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">209,390</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">184,526</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">169,845</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">2,980,179</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2,840,058</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2,687,154</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2>   EARNINGS
  FROM OPERATIONS</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">160,047</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">234,467</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">225,255</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<tr>
<TD WIDTH="49%"><FONT SIZE=2> <BR>OTHER INCOME (EXPENSE):</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="49%"><font size="2">   Interest, net</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">(17,262</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF">)</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(12,882</font></TD>
<TD WIDTH="2%"><font size="2">)</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(27,790</font></TD>
<TD WIDTH="1%"><font size="2">)</font></TD>
</tr>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   Gain on sale of securites</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">4,603</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2>   EARNINGS BEFORE
  INCOME TAXES</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">147,388</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">221,585</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">197,465</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2"> <BR>INCOME TAXES</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF"><BR>56,187</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2"><BR>84,300</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2"><BR>77,393</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   NET EARNINGS</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$ </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">91,201</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">137,285</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">120,072</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="49%"><font size="2">NET EARNINGS PER SHARE:<br>
     Basic</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"><br>
  $</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF"><br>
  1.88</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2><br>
  $</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2"><br>
  2.77</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2><br>
  $</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2"><br>
  2.68</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</tr>
<tr>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="49%"><FONT SIZE=2>   Diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">1.85</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2.72</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2.44</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</tr>
<tr>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR VALIGN=TOP>
<TD WIDTH="49%"><font size="2">DIVIDENDS PER SHARE</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2" color="#0000FF">.16</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">.16</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">.15</font></TD>
<TD WIDTH="1%"><font size="2">  </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>

<TR VALIGN=TOP>
<TD WIDTH="90%" COLSPAN=11 ALIGN=CENTER><FONT SIZE=2>
See notes to consolidated financial statements. 
</FONT></TD>
</TR>

</TABLE>
<HR NOSHADE>
<p> 

<TABLE WIDTH="85%" BORDER=0 CELLSPACING=0 CELLPADDING=0 height="66">
<TR VALIGN=TOP>
<TD WIDTH="102%" ALIGN=CENTER colspan="8"><FONT SIZE=2><BR>
<b>AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES<br>
CONSOLIDATED BALANCE SHEETS<br>
<br>
  </b>
</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="67%" ALIGN=LEFT><FONT SIZE=2><I>December 31</I></FONT></TH>
<TH WIDTH="2%"></TH>
<TH WIDTH="13%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1 color="#0000FF"><B>
1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"></TH>
<TH WIDTH="13%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B><BR>
1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="67%" ALIGN=LEFT><FONT SIZE=1> </FONT></TH>
<TD WIDTH="25%" colspan="7">
  <p align="center"><font size="1"><i>(In thousands)</i></font></TD>
</TR>

<TR VALIGN=BOTTOM>
<TD WIDTH="97%" COLSPAN=7 ALIGN=left>
  <FONT SIZE=2><B>ASSETS</B></FONT>
</TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>

<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2> CURRENT ASSETS:</FONT></TD>
<TD WIDTH="2%"> </TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%"><font color="#0000FF"> </font></TD>
<TD WIDTH="2%"> </TD>
<TD WIDTH="2%"> </TD>
<TD WIDTH="11%"> </TD>
<TD WIDTH="1%"> </TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2>   Cash</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">28,678</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">18,679</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">   Trade accounts
  receivable, <br>
        less allowance of $9,640,000 and $10,140,000</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">339,044</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">323,178</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">   Spare parts and
  fuel inventory</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">44,263</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">39,726</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="67%"><font size="2">   Deferred income tax
  assets</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">31,950</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">28,508</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2>   Prepaid expenses and
  other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">26,135</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">25,697</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2>     
  TOTAL CURRENT ASSETS</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">470,070</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">435,788</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2> <BR>
  PROPERTY AND EQUIPMENT, NET</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> <BR> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><FONT SIZE=2 color="#0000FF"> <BR>
  1,126,981</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><FONT SIZE=2> <BR>
  1,021,885</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">EQUIPMENT DEPOSITS
  and OTHER ASSETS</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">46,199</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">43,904</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">TOTAL ASSETS</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">1,643,250</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">1,501,577</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>


<TR VALIGN=BOTTOM>
<TD WIDTH="97%" COLSPAN=8 ALIGN=LEFT>
  <FONT SIZE=2><B>LIABILITIES AND
  SHAREHOLDERS' EQUITY</B></FONT>
</TD>

</TR>

<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2>CURRENT LIABILITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2>   Accounts payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">142,087</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">153,000</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="67%"><font size="2">   Salaries, wages and
  related taxes</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">65,276</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">77,030</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2>   Accrued expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">78,755</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">93,997</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">   Income taxes
  payable</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">3,282</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">8,820</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">   Current portion of
  debt</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">442</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">410</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">     
  TOTAL CURRENT LIABILITIES</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">289,842</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">333,257</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><font color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">LONG-TERM DEBT</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">314,707</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">249,149</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">DEFERRED INCOME TAX
  LIABILITIES</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">99,169</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">88,838</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">OTHER LIABILITIES</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">81,325</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">61,181</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="67%"><font size="2">COMMITMENTS AND CONTINGENCIES (Note
  G)</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2>
  SHAREHOLDERS' EQUITY:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="67%"><font size="2">   Preferred Stock,
  without par value - <br>
        Authorized 5,200,000 shares, no shares issued</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2"> </font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="67%"><font size="2">   Common Stock, par value $1 per share -<br>
        Authorized 120,000,000 shares<br>
        Issued 51,176,018 and 50,818,493</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF"><br>
  <br>
  51,176</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2"><br>
  <br>
  50,819</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2>   Additional paid-in capital</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">298,742</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">293,629</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">   Retained earnings</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">546,962</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">463,539</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<tr>
<TD WIDTH="67%"><FONT SIZE=2>   Accumulated other comprehensive income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">918</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">766</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="67%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="67%"> </TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">897,798</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">808,753</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><font size="2">   Treasury stock, 2,491,078 and
  2,497,078 shares, at cost</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">(39,591</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">(39,601</font></TD>
<TD WIDTH="1%"><font size="2">)</font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"> </TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">858,207</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">769,152</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TD WIDTH="67%"><FONT SIZE=2>TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2" color="#0000FF">1,643,250</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN=RIGHT><font size="2">1,501,577</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>

<TR VALIGN=TOP>
<TD WIDTH="90%" COLSPAN=8 ALIGN=CENTER><FONT SIZE=2>
See notes to consolidated financial statements. 
</FONT></TD>
</TR>

</TABLE>

<HR NOSHADE>
<p> 

<TABLE WIDTH="85%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN=BOTTOM>
<TH WIDTH="95%" colspan="11">
  <FONT SIZE=2>
<b>AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES<br>
CONSOLIDATED STATEMENTS OF CASH FLOWS<br>
<br>
  </b></FONT>
</TH>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="55%" ALIGN=CENTER>
  <p align="left"><FONT SIZE=2> <BR></FONT>
<FONT SIZE=1> </FONT><BR><i><font size="2">Year Ended December 31</font></i></p>
</TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1 color="#0000FF"><B>
1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B>
1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>1997</b></font><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"></TD>
<TD WIDTH="2%"></TD>
<TD WIDTH="37%" colspan="9">
  <p align="center"><font size="1"><i>(In thousands)</i></font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>OPERATING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>   Net Earnings</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">91,201</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">137,285</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">120,072</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>   Adjustments to reconcile net
  earnings to<br>
        net cash provided by operating activities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>         Depreciation and amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">188,955</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">168,029</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">156,233</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><font size="2">         Provision for aircraft engine
  overhauls</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">20,435</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">16,497</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">13,612</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><font size="2">         Deferred income taxes</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">6,889</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">9,538</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">24,988</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><font size="2">         Other</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">15,726</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">12,256</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">13,076</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<tr>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="55%"><font size="2">      CASH PROVIDED BY
  OPERATIONS</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">323,206</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">343,605</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">327,981</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><font color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>      Change in:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>         Receivables</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(15,866</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF">)</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(629</font></TD>
<TD WIDTH="1%"><font size="2">)</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(35,034</font></TD>
<TD WIDTH="1%"><font size="2">)</font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><font size="2">         Inventories and prepaid
  expenses</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(4,975</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(1,475</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(5,069</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>         Accounts payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(10,913</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">9,034</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">4,930</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>         Accrued expenses salaries and
  taxes payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(32,534</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(5,532</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">52,444</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>      NET CASH PROVIDED BY
  OPERATING ACTIVITIES</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">258,918</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">345,033</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">345,252</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><font color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2> <BR>
 INVESTING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> <BR> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2 color="#0000FF"> <BR>
 </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>   Additions to property and equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(294,319</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(285,481</font></TD>
<TD WIDTH="1%"><font size="2">) </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(211,758</font></TD>
<TD WIDTH="1%"><font size="2">) </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><font size="2">   Dispositions of property and equipment</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">1,693</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2,598</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">4,451</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<tr>
<TD WIDTH="55%"><font size="2">   Expenditures for engine
  overhauls</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(18,735</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(22,846</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(10,614</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</tr>
<TR VALIGN=TOP>
<TD WIDTH="55%"><font size="2">   Proceeds from sales of securities</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">4,603</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>   Other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(5,453</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(4,584</font></TD>
<TD WIDTH="1%"><font size="2">)</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">17,974</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>      NET CASH USED BY
  INVESTING ACTIVITIES</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(312,211</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(310,313</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(199,947</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><font color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT> </TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2> <BR>
 FINANCING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> <BR> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2 color="#0000FF"> <BR>
 </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<tr>
<TD WIDTH="55%"><font size="2">   Proceeds (payments) on bank
  notes, net</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">66,000</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(1,000</font></TD>
<TD WIDTH="1%"><font size="2">)</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(158,500</font></TD>
<TD WIDTH="1%"><font size="2">)</font></TD>
</tr>
<tr>
<TD WIDTH="55%"><font size="2">   Principal payments on debt</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(410</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(381</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(436</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</tr>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>   Proceeds from common
  stock
  issuance</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">5,480</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">6,509</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">10,103</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><font size="2">   Dividends paid</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">(7,778</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF">)</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(7,829</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(6,763</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><font size="2">   Repurchase of common stock</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><FONT SIZE=2 color="#0000FF">--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(38,835</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>      NET CASH PROVIDED
  (USED) BY FINANCING ACTIVITIES</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">63,292</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(41,536</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(155,596</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>NET INCREASE (DECREASE) IN CASH</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">9,999</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(6,846</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">(10,291</font></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<tr>
<TD WIDTH="55%"><FONT SIZE=2>    </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>CASH AT BEGINNING OF YEAR</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">18,679</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">25,525</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">35,816</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="55%"><FONT SIZE=2>CASH AT END OF YEAR</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">28,678</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">18,679</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">25,525</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="55%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="55%"><FONT SIZE=2> <br>
  SUPPLEMENTAL CASH FLOW INFORMATION:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="55%"><FONT SIZE=2>   </FONT><font size="2">Cash paid during
  the year -</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="55%"><FONT SIZE=2>      </FONT><font size="2">Interest,
  net of amount capitalized</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF">$</FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">17,429</font></TD>
<TD WIDTH="2%"><font size="2" color="#0000FF"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">13,227</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">32,768</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</tr>
<tr>
<TD WIDTH="55%"><FONT SIZE=2>      </FONT><font size="2">Income
  taxes</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><font size="2" color="#0000FF">53,628</font></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">68,301</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">46,641</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="55%"><FONT SIZE=2>   </FONT><font size="2">Non-cash
  financing activities -</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="55%"><FONT SIZE=2>      </FONT><font size="2">Contribution
  of treasury stock to profit sharing plans</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><FONT SIZE=2 color="#0000FF">--</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">341</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">1,100</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="55%"><font size="2">      </font><font size="2">Conversion
  of subordinated debentures</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT><FONT SIZE=2 color="#0000FF">--</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2 color="#0000FF"> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">114,573</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>

<TR VALIGN=TOP>
<TD WIDTH="90%" COLSPAN=11 ALIGN=CENTER><FONT SIZE=2>
<br>
See notes to consolidated financial statements. 
</FONT></TD>
</TR>

</TABLE>
<HR NOSHADE>
<p> 
<p>

<TABLE WIDTH="98%" BORDER=0 CELLSPACING=0 CELLPADDING=0>

<tr>

<TH WIDTH="98%" COLSPAN=20><font size="2"><b>AIRBORNE FREIGHT CORPORATION AND
  SUBSIDIARIES<br>
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY</b></font><font size="3"><br>
  <br>
  </font></TH>

</tr>

<TR VALIGN=BOTTOM>

<TH WIDTH="41%" ALIGN=CENTER><FONT SIZE=2> <BR></FONT>

<FONT SIZE=1> </FONT><BR></TH>

<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>

<TH WIDTH="8%" COLSPAN=2><font size="1"><b>Common<br>

  Stock</b></font><HR NOSHADE></TH>

<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>

<TH WIDTH="9%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>Additional<br>

  Paid-In<br>

  Capital</b></font><HR NOSHADE></TH>

<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>

<TH WIDTH="9%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>Retained<br>

  Earnings</b></font><HR NOSHADE></TH>

<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>

<TH WIDTH="9%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>Accumulated<br>

  Other<br>

  Comprehensive<br>

  Income</b></font><HR NOSHADE></TH>

<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>

<TH WIDTH="9%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>Treasury<br>

  Stock</b></font><HR NOSHADE></TH>

<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>

<TH WIDTH="9%" COLSPAN=2 ALIGN=CENTER><font size="1"><b>Total</b></font><HR NOSHADE></TH>

<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>

</TR>

<TR VALIGN=TOP>

<TH WIDTH="41%"></TH>

<TH WIDTH="49%" COLSPAN=19><font size="1">(In Thousands)<br>
   </font></TH>

</TR>

<TR VALIGN=TOP>

<TD WIDTH="41%"><font size="2">BALANCE at JANUARY 1,1997</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">43,243</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">168,784</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">220,774</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><FONT SIZE=2>--</FONT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(971</font></TD>

<TD WIDTH="1%"><font size="2">)</font></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">431,830</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</TR>

<TR VALIGN=TOP>

<TD WIDTH="41%"><font size="2">Net earnings</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2"> </font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2"> </font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">120,072</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2"> </font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2"> </font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">120,072</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</TR>

<TR VALIGN=TOP>

<TD WIDTH="41%"><font size="2">Conversion of subordinated debt</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">6,474</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">108,099</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">114,573</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</TR>

<TR VALIGN=TOP>

<TD WIDTH="41%"><font size="2">Common stock dividends paid</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(6,763</font></TD>

<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(6,763</font></TD>

<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>

</TR>

<tr>

<TD WIDTH="41%"><font size="2">Exercise of stock options</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">711</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">9,349</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">43</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">10,103</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</tr>

<TR VALIGN=TOP>

<TD WIDTH="41%"><font size="2">Contribution of treasury stock<br>

     to profit sharing plans</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2"><br>
  977</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2"><br>
  123</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2"><br>
  1,100</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</TR>

<tr>

<TD WIDTH="41%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="8%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</tr>

<tr>

<TD WIDTH="41%"><font size="2">BALANCE at DECEMBER 31, 1997</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">50,428</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">287,209</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">334,083</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">--</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(805</font></TD>

<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">670,915</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</tr>

<tr>

<TD WIDTH="41%"><font size="2">Comprehensive income:</font></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

</tr>

<tr>

<TD WIDTH="41%"><font size="2">   Net earnings</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">137,285</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">137,285</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</tr>
<tr>

<TD WIDTH="41%"><FONT SIZE=2>   Other comprehensive income, net of
  tax- </FONT></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

</tr>
<tr>

<TD WIDTH="41%"><FONT SIZE=2>      Unrealized
  securities gains</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">947</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">947</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</tr>

<tr>

<TD WIDTH="41%"><FONT SIZE=2>      Foreign currency
  translation adjustments</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(181</font></TD>

<TD WIDTH="1%"><font size="2">)</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(181</font></TD>

<TD WIDTH="1%"><font size="2">)</font></TD>

</tr>

<tr>

<TD WIDTH="41%"><FONT SIZE=2>        </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="8%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</tr>

<tr>

<TD WIDTH="41%"><font size="2">   Total comprehensive income</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">--</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">--</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">137,285</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">766</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">--</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">138,051</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">Common stock dividends paid</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(7,829</font></TD>

<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(7,829</font></TD>

<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">Repurchase of common stock</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(38,835</font></TD>

<TD WIDTH="1%"><font size="2">)</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(38,835</font></TD>

<TD WIDTH="1%"><font size="2">)</font></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">Exercise of stock options</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">391</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">6,093</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">25</font></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">6,509</font></TD>

<TD WIDTH="1%"></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">Contribution of treasury stock<br>

     to profit sharing plans</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2"><br>
  327</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2"><br>
  14</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2"><br>
  341</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</tr>
<tr>

<TD WIDTH="41%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="8%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">BALANCE at DECEMBER 31, 1998</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">50,819</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">293,629</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">463,539</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">766</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(39,601</font></TD>

<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">769,152</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">Comprehensive income:</font></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">   Net earnings</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">91,201</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">91,201</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</tr>
<tr>

<TD WIDTH="41%"><FONT SIZE=2>   Other comprehensive income, net of
  tax- </FONT></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

</tr>
<tr>

<TD WIDTH="41%"><FONT SIZE=2>      Unrealized
  securities gains</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">29</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">29</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</tr>
<tr>

<TD WIDTH="41%"><FONT SIZE=2>      Foreign currency
  translation adjustments</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">123</font></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">123</font></TD>

<TD WIDTH="1%"></TD>

</tr>
<tr>

<TD WIDTH="41%"><FONT SIZE=2>        </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="8%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">   Total comprehensive income</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">--</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">--</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">91,201</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">152</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">--</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">91,353</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">Common stock dividends paid</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"></TD>

<TD WIDTH="2%"></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(7,778</font></TD>

<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(7,778</font></TD>

<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>

</tr>
<tr>

<TD WIDTH="41%"><font size="2">Exercise of stock options</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">357</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">5,113</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">10</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">5,480</font></TD>

<TD WIDTH="1%"><font size="2"> </font></TD>

</tr>

<tr>

<TD WIDTH="41%"><FONT SIZE=2>        </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="8%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</tr>

<tr>

<TD WIDTH="41%"><font size="2">BALANCE at DECEMBER 31, 1999</font></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="6%" ALIGN=RIGHT><font size="2">51,176</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">298,742</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">546,962</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">918</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">(39,591</font></TD>

<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>

<TD WIDTH="7%" ALIGN=RIGHT><font size="2">858,207</font></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</tr>

<tr>

<TD WIDTH="41%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="8%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

<TD WIDTH="9%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>

<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>

</tr>
<tr>

<TH WIDTH="98%" COLSPAN=20></TH>

</tr>
<TR VALIGN=TOP>
<TD WIDTH="98%" COLSPAN=20 ALIGN=CENTER><FONT SIZE=2>
 <BR>See notes to consolidated financial statements. 
</FONT></TD>
</TR>
</TABLE>


<HR NOSHADE>
<p> 

<P><B><CENTER>
               AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES<BR>
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</B></CENTER>
<P><I>
Three Years Ended December 31, 1999
</I><B><P>
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
</B>
<BR>
NATURE OF OPERATIONS
<BR>    The Company's revenues are derived from domestic and international
transportation of shipments.  The Company provides door-to-door express
delivery of small packages and documents throughout the United States and
to most foreign countries.  The Company also acts as an international and
domestic freight forwarder for shipments of any size.  Most domestic
shipments are transported on the Company's own airline and a fleet of
ground transportation vehicles through its Company-owned airport and
central sorting facilities, or one of nine regional hubs.  International
shipments are transported utilizing a combination of the Company's domestic
network, commercial airline lift capacity, and through a network of
offshore Company offices and independent agents.

<BR>    As of December 31, 1999, the Company had approximately 10,700
employees (46% of total employees), including approximately 800 pilots,
employed under collective bargaining agreements with various locals of the
International Brotherhood of Teamsters and Warehousemen.  The pilots are
covered by an agreement which becomes amendable on July 31, 2001.  Most
labor agreements covering the Company's ground personnel expire in either
2003 or 2004.  The Company has not experienced any significant disruptions
from labor disputes in the past.
<P>
PRINCIPLES OF CONSOLIDATION
<BR>    The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries.  Intercompany balances and
transactions are eliminated in consolidation.
<P>
USE OF ESTIMATES
<BR>    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the consolidated financial
statements.  Changes in these estimates and assumptions may have a material
impact on the financial statements.
<P>
CASH
<BR>    The Company has a cash management system under which a cash overdraft
exists for uncleared checks in the Company's primary disbursement accounts.
The cash amount in the accompanying financial statements represents
balances in other accounts prior to being transferred to the primary
disbursement accounts.  Uncleared checks of $43,246,000 and $47,063,000 are
included in accounts payable at December 31, 1999 and 1998, respectively.
<P>
SPARE PARTS AND FUEL INVENTORY
<BR>    Spare parts are stated at average cost and fuel inventory is stated at
cost on a first-in, first-out basis.
<P>
PROPERTY AND EQUIPMENT
<BR>    Property and equipment is stated at cost.  The cost and accumulated
depreciation of property and equipment disposed of are removed from the
accounts with any related gain or loss reflected in earnings from
operations.
<P>
For financial reporting purposes, depreciation of property and equipment is
provided on a straight-line basis over the asset's useful life or lease
term as follows:
<PRE>
Flight equipment                                    5 to 18 years
Buildings, runways, and leasehold improvements      5 to 40 years
Package handling and ground support equipment       3 to 10 years
Vehicles and other equipment                        3 to  8 years
</PRE>
<P>
    DC-8 and DC-9 aircraft generally carry residual values of 10% and 15%
of asset cost, respectively.  Beginning in 1999, once an aircraft has been
depreciated to its residual value, the residual value will be depreciated
over 7 years for DC-8 aircraft and 10 years for DC-9 aircraft.  All other
property and equipment have no assigned residual values.

<BR>    Major engine overhauls for DC-9 aircraft are accrued in advance of the
next scheduled overhaul based upon engine usage and estimates of overhaul
costs.  Provision for engine overhauls is included in depreciation and
amortization expense.  Major engine overhauls as well as ordinary engine
maintenance and repairs for DC-8 and 767 aircraft are performed by third-
party service providers under long-term contracts.  Service costs under the
contracts are based upon hourly rates for engine usage and are charged to
expense in the period utilization occurs.
<P>
CAPITALIZED INTEREST
<BR>    Interest incurred during the construction period of certain facilities
and on aircraft purchase and modification costs are capitalized as an
additional cost of the asset until the date the asset is placed in service.
Capitalized interest was $3,969,000, $5,850,000 and $1,869,000 for 1999,
1998 and 1997, respectively.
<P>
INCOME TAXES
<BR>    The Company uses the asset and liability method of accounting for
income taxes.  Deferred income taxes are provided for temporary differences
between the timing of reporting certain revenues and expenses for financial
versus tax purposes.  Deferred taxes are measured using provisions of
currently enacted tax laws.  Tax credits are accounted for as a reduction
of income taxes in the year in which the credit originates.
<P>
FUEL CONTRACTS
<BR>    The Company had no outstanding fuel contracts at December 31, 1999.
The Company has in the past utilized contracts with financial institutions
to limit its exposure to volatility in jet fuel prices.  Under terms of the
contracts, the Company either makes or receives payments if the market
price of heating oil, as determined by an index of the monthly NYMEX
Heating Oil futures contracts, is lower than or exceeds certain prices
agreed to between the Company and the financial institutions.  The
contracts, which have no cost basis, are accounted for as hedges since
there has historically existed a high correlation between the changes in
the NYMEX index and the price of jet fuel.  Settlements are made in cash
and are recorded in the period of settlement as either an increase or
decrease to fuel expense.

<BR>    In 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  As amended by SFAS No. 137, this
statement will be effective for fiscal year 2001. SFAS No. 133 requires an
entity to recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value.

<BR>    Under the cash flow hedge provisions of SFAS No. 133, the Company will
be required to record all outstanding fuel contracts at fair value, with
corresponding changes in fair value recorded as a component of Other
Comprehensive Income if the hedges are determined to be effective.  The
Company has not adopted the provisions of SFAS No. 133 as of December 31,
1999, and is currently evaluating the future impact of this pronouncement
on the financial statements and related disclosures.
<P>
COMPREHENSIVE INCOME
<BR>    Comprehensive income includes net income and "other comprehensive
income" which includes changes in equity arising during the period from
holding investments in marketable securities and foreign joint ventures.
Prior to adoption of the SFAS No. 130 in 1998, management did not consider
comprehensive income items to be material to shareholders' equity, and
accordingly, no amounts had been recorded previously.
<P>
REVENUE RECOGNITION
<BR>    Domestic revenues and most domestic operating expenses are recognized
when shipments are picked up from the customer.  International revenues and
direct air carrier expenses are recognized in the period when shipments are
tendered to a carrier for transport to a foreign destination.  Domestic and
international delivery costs are recognized in the period incurred.  The
net revenue resulting from existing recognition policies does not
materially differ from that which would be recognized on a delivery date
basis.
<P>
RECLASSIFICATIONS
<BR>    Certain amounts for prior years have been reclassified in the
consolidated financial statements to conform to the classification used in
1999.
<B><P>
NOTE B - FAIR VALUE INFORMATION
</B>
<BR>The carrying amounts and related fair values of the Company's
financial instruments are as follows (in thousands):
<PRE>
December 31                             1999                  1998
-----------                             ----                  ----
                                Carrying      Fair    Carrying      Fair
                                  Amount     Value      Amount     Value
                                  ------     -----      ------     -----
Marketable securities           $ 19,619  $ 19,619    $ 16,087  $ 16,087
Long-term debt                   315,149   314,804     249,149   260,707
Off-balance-sheet derivative:
  Fuel contracts                      --        --          --    (4,169)
</PRE>
    Marketable securities consist primarily of commingled investments
funds which may be used for funding nonqualified pension plan obligations.
These securities are considered available-for-sale securities for financial
reporting purposes and are classified with Equipment Deposits and Other
Assets on the Consolidated Balance Sheets.  Fair value for these
investments is based on quoted market prices for the securities underlying
the investment funds or the same securities.  Unrealized holding gains on
these securities, which are included in Other Comprehensive Income, were
$47,000 and $1,540,000 for 1999 and 1998, respectively.  Realized gains
recognized in 1999 and 1998 were $1,268,000 and $1,531,000, respectively.

<BR>    Discussion regarding the fair value of the Company's long-term debt
and fuel contracts is disclosed in the respective notes to the consolidated
financial statements.  Carrying amounts for cash, trade accounts receivable
and current liabilities approximate fair value.
<B><P>
NOTE C - PROPERTY AND EQUIPMENT</B>
<BR>Property and equipment consists of the following (in thousands):
<PRE>
December 31                                           1999         1998
-----------                                           ----         ----
Flight equipment                                   $1,595,358   $1,430,880
Land, buildings and leasehold improvements            246,004      232,669
Package handling and ground support equipment         175,081      153,921
Vehicles and other equipment                          268,161      256,930
                                                   ----------   ----------
                                                    2,284,604    2,074,400
Accumulated depreciation and amortization          (1,157,623)  (1,052,515)
                                                   ----------   ----------
                                                   $1,126,981   $1,021,885
                                                   ==========   ==========
</PRE><B>
NOTE D - ACCRUED EXPENSES</B>
<BR>Accrued expenses consist of the following (in thousands):
<PRE>
December 31                                       1999       1998
-----------                                       ----       ----
Insurance                                      $28,377    $27,289
Unearned revenues                               15,781     15,514
Profit sharing retirement plan                  10,747     20,407
Property and other taxes                         8,815      8,978
Other retirement plans                           3,584      4,302
Aircraft lease payments                          2,796      7,780
Interest                                         2,762      2,508
Other                                            5,893      7,219
                                               -------    -------
                                               $78,755    $93,997
                                               =======    =======
</PRE><B>
NOTE E - INCOME TAXES</B><BR>
Deferred income tax assets and liabilities consist of the following
(in thousands):
<PRE>
December 31                                           1999         1998
-----------                                           ----         ----
Employee benefits                                  $ 19,025     $ 14,586
Insurance                                             9,466        9,299
Bad debts, sales reserves and other                   3,459        4,623
                                                   --------     --------
Current net deferred income tax assets               31,950       28,508
                                                   --------     --------
Depreciation                                        122,974      109,129
Insurance                                           (11,788)     (10,161)
Aircraft engine overhaul accrual                     (7,202)      (6,566)
Employee benefits and other                          (4,815)      (3,564)
                                                   --------     --------
Noncurrent net deferred income tax liabilities       99,169       88,838
                                                   --------     --------
Net deferred income tax liabilities                $ 67,219     $ 60,330
                                                   ========     ========

Income taxes consist of the following (in thousands):

Year Ended December 31                     1999        1998         1997
----------------------                     ----        ----         ----
Current:
   Federal                               $44,215     $66,372      $41,463
   State                                   4,920       7,800       10,443
   Foreign                                   163         590          499
                                         -------     -------      -------
                                          49,298      74,762       52,405
Deferred:
   Depreciation                           13,845      11,425        7,303
   Employee benefits                      (7,230)     (6,240)      (2,449)
   Insurance accruals                     (1,794)     (2,178)      (3,342)
   Aircraft engine overhaul accrual         (637)      2,180       (1,634)
   Alternative Minimum Tax credit             --      11,761       21,417
   Union pension benefits                     --      (8,225)       1,990
   Other                                   2,705         815        1,703
                                         -------     -------      -------
                                           6,889       9,538       24,988
                                         -------     -------      -------
                                         $56,187     $84,300      $77,393
                                         =======     =======      =======

The following table summarizes the major differences between theactual
income tax provision and taxes computed at the Federal statutory rate
(in thousands):

Year Ended December 31                      1999        1998        1997
----------------------                      ----        ----        ----
Taxes computed at statutory rate of 35%   $51,585     $77,555     $69,113
State and foreign income taxes,
    net of Federal benefit                  3,198       5,070       6,788
Tax effect of nondeductible expenses        1,616       1,647       1,549
Other                                        (212)         28         (57)
                                          -------     -------     -------
                                          $56,187     $84,300     $77,393
                                          =======     =======     =======
</PRE><B>
NOTE F - LONG-TERM DEBT
</B><BR>
Long-term debt consists of the following:
<PRE>
December 31                                           1999         1998
-----------                                           ----         ----
                                                        (In thousands)
Revolving credit notes payable to banks, effective
 rate of 6.6% on December 31, 1999                  $ 95,000     $     --
Money market lines of credit                              --       29,000
Senior notes, 8.875%, due December, 2002             100,000      100,000
Senior notes, 7.35%, due September, 2005             100,000      100,000
Refunding revenue bonds, effective rate of 5.5% on
December 31, 1999, due June 2011                      13,200       13,200
Other                                                  6,949        7,359
                                                    --------     --------
                                                     315,149      249,559
  Less current portion                                   442          410
                                                    --------     --------
                                                    $314,707     $249,149
                                                    ========     ========
</PRE>
    The Company has a revolving bank credit agreement providing for a
total commitment of $250,000,000.  Interest rates for borrowings
outstanding are generally determined by maturities selected and prevailing
market conditions.  The agreement expires May 31, 2001. The Company was in
compliance with covenants of the revolving credit agreement during 1999,
1998 and 1997, including net worth restrictions which limit the payment of
dividends ($481,123,000 of retained earnings was not restricted at
December 31, 1999).

<BR>    The Company has available $40,000,000 of financing under uncommitted
money market lines of credit with several banks.  These facilities bear
interest at rates that vary with the banks' cost of funds and are typically
less than the prevailing bank prime rate.  The average interest rate on
these borrowings was 5.4% for 1999.  These credit lines are used in
conjunction with the revolving credit agreement to facilitate settlement
and accommodate short-term borrowing fluctuations.

<BR>    The Company classified the borrowings outstanding under the money
market lines of credit as long-term as of December 31, 1998.  The Company
had the intent and ability at that date to refinance these borrowings under
the revolving credit agreement.

<BR>    The Company's tax-exempt airport facilities refunding bonds carry no
sinking fund requirements and bear interest at weekly adjustable rates.
The average interest rate on these borrowings was 3.3% during 1999.
Payment of principal and interest is secured by an irrevocable bank letter
of credit that is collateralized by a mortgage on certain airport
properties which have a net carrying value of $50,121,000 at December 31,
1999.

<BR>    In 1997, the Company called for the redemption of its 6.75%
convertible subordinated debentures due in 2001.  This transaction resulted
in the issuance of approximately 6,474,000 shares of common stock as
substantially all debenture holders elected conversion rather than
redemption.

<BR>    The scheduled annual principal payments on long-term debt for the next
five years are $442,000, $95,476,000, $100,513,000, $553,000 and $596,000
for 2000 through 2004, respectively.

<BR>    The fair value information shown in Note B reflects values for the
Company's senior notes based on quoted market prices for the same issues.
The carrying value of the Company's remaining long-term financial debt
instruments approximate fair value primarily because of the repricing
frequency of the instruments.

<P><B>
NOTE G - COMMITMENTS AND CONTINGENCIES
</B><BR>
OPERATING LEASES
<BR>    The Company is obligated under various long-term operating lease
agreements for certain equipment and for a substantial portion of its
facilities.  These leases expire at various dates through 2016.  Rental
expense for 1999, 1998 and 1997 was $110,204,000, $117,862,000 and
$115,350,000, respectively.
<P>
Rental commitments under long-term operating leases at December 31, 1999
total $402,018,000 and are payable as follows (in thousands):
<PRE>
                                Facilities    Equipment
                                ----------    ---------
2000                             $ 70,988     $  5,259
2001                               68,269        4,398
2002                               59,362        1,961
2003                               49,164          905
2004                               40,054          137
2005 and beyond                   101,517            4
</PRE>
COMMITMENTS
<BR>    The Company has entered into firm agreements to purchase 20 used
Boeing 767s and related freighter conversion kits at various dates through
2003. At December 31, 1999, cash deposits of $13,651,000 had been made
toward these purchases. Additionally, the Company has exercised options to
purchase in 2000 three DC-8 and two DC-9 aircraft it currently leases and
operates. Additional deposits and payments for all aircraft acquisitions
will approximate $195,377,000, $90,656,000, $64,297,000 and $75,400,000 for
2000 through 2003, respectively.

<BR>    As of December 31, 1999 all jet fuel contracts had expired.
Settlement payments related to these contracts of $1,886,000 and $7,915,000
were made during 1999 and 1998, respectively, and settlement payments of
$1,682,000 were received during 1997. The Company may enter into fuel
contracts in future periods depending on pricing and market conditions.
<BR>
CONTINGENCIES
<BR>    In the normal course of business, the Company has various legal claims
and other contingent matters outstanding.  Management believes that any
ultimate liability arising from these actions would not have a material
adverse effect on the Company's financial condition or results of
operations as of and for the year ended December 31, 1999.
<P><B>
NOTE H - PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
</B>
<BR>    The Company sponsors defined benefit and defined contribution pension
plans and postretirement healthcare plans.  These plans are generally
provided to employees who are not covered by multi-employer plans to which
the Company contributes under terms of various collective bargaining
agreements.
<P>
Information regarding the Company's qualified defined benefit pension plans
and postretirement healthcare plans is as follows (in thousands):
<PRE>
                                                                  Postretirement
                                            Pension Plans        Healthcare Plans
                                            -------------        ----------------
Year Ended December 31                      1999      1998        1999       1998
----------------------                      ----      ----       ----        ----
Reconciliation of benefit obligation:
   Obligation as of January 1             $111,635   $ 98,462    $ 9,234   $ 7,189
   Service cost                             11,218      9,774        935       954
   Interest cost                             7,578      6,403        540       529
   Benefits paid                              (999)      (885)      (246)     (199)
   Actuarial loss                          (17,762)    (2,297)    (2,089)      761
   Plan transfers                              232        178         --        --
                                          --------   --------    -------   -------
   Obligation as of December 31           $111,902   $111,635    $ 8,374   $ 9,234
                                          ========   ========    =======   =======
Reconciliation of fair value of plan
assets:
   Plan assets as of January 1            $ 78,237   $ 60,889    $    --   $    --
   Actual return on plan assets             13,309      8,810         --        --
   Employer contributions                    3,732      9,245        246       199
   Benefits paid                              (999)      (885)      (246)     (199)
   Plan transfers                              232        178         --        --
                                          --------   --------    -------   -------
   Plan assets as of December 31          $ 94,511   $ 78,237    $    --   $    --
                                          ========   ========    =======   =======
Funded status:
   Funded status as of December 31        $(17,391)  $(33,398)   $(8,374)  $(9,234)
   Unrecognized prior service cost          (1,625)    (1,854)      (668)       --
   Unrecognized net actuarial loss          (7,153)    18,842         28     1,377
   Unrecognized transition amount               30         59         --        --
                                          --------   --------    -------   -------
   Accrued benefit liabilities            $(26,139)  $(16,351)   $(9,014)  $(7,857)
                                          ========   ========    =======   =======
</PRE>
<BR>    Accrued expenses on the Consolidated Balance Sheets include accrued
qualified defined benefit pension plan liabilities of $3,584,000 and $4,303,000
as of December 31, 1999 and 1998, respectively.  Other Liabilities include
postretirement healthcare and remaining qualified defined benefit pension plan
liabilities of $31,569,000 and $19,905,000 as of December 31, 1999 and 1998,
respectively, which do not require funding in the next year.

<BR>    The Company's qualified defined benefit pension plan had plan assets in
excess of accumulated benefit obligations as of December 31, 1999.  At the end
of 1998, one plan had accumulated benefit obligations of $35,750,000 compared to
plan assets of $34,816,000.
<P>
Net periodic benefit cost consists of the following components (in thousands):
<PRE>
                                                                           Postretirement
                                            Pension Plans                 Healthcare Plans
                                            -------------                 ----------------
Year Ended December 31                1999      1998      1997        1999      1998      1997
----------------------                ----      ----      ----        ----      ----      ----
Service cost                        $11,218   $ 9,775   $ 8,844     $   935   $   954   $   751
Interest cost                       7,578       6,403     5,747         540       529       373
Expected return on plan assets      (6,390)    (5,363)   (3,851)         --        --        --
Net amortization and deferral       1,115       1,584     1,718         (73)       29       (44)
                                    -------   -------   -------     -------   -------   -------
   Net periodic benefit cost        $13,521   $12,399   $12,458     $ 1,402   $ 1,512   $ 1,080
                                    =======   =======   =======     =======   =======   =======
</PRE>
Assumptions used in determining pension and postretirement healthcare
obligations were as follows:
<PRE>
                                                                           Postretirement
                                                  Pension Plans           Healthcare Plans
                                                  -------------           ----------------
                                               1999    1998    1997      1999   1998   1997
                                               ----    ----    ----      ----   ----   ----
Discount rate                                 7.75%   6.75%   7.00%     7.75%   6.75%  7.00%
Expected return on plan assets                8.00%   8.00%   8.00%       --      --     --
Rate of compensation increase (pilots)        6.50%   6.50%   6.50%       --      --     --
Rate of compensation increase (non-pilots)    5.00%   5.00%   5.00%       --      --     --
</PRE>
    The Company also sponsors several non-qualified defined benefit pension
plans.  The accumulated benefit obligation of these plans was $13,811,000 and
$10,971,000 as of December 31, 1999 and 1998, respectively.  Other liabilities
include accruals relating to these plans of $14,611,000 and $11,167,000 as of
December 31, 1999 and 1998, respectively.  The Company has invested in certain
commingled investment funds which may be used for funding nonqualified pension
plan obligations.

<BR>    The assumed healthcare cost trend rate used in measuring
postretirement healthcare benefit costs was 7% for 1999, decreasing each
year to a 5% annual growth rate in 2000 and thereafter.  A 1% increase or
decrease in the assumed healthcare cost trend rate for each year would not
have a material effect on the accumulated postretirement benefit obligation
or cost as of or for the year ended December 31, 1999. Postretirement
healthcare plan obligations have not been funded.

<BR>    The Company maintains defined contribution capital accumulation and
profit sharing plans.  Capital accumulation plans (401K) are funded by both
voluntary employee salary deferrals of up to 16% of annual compensation and
by employer matching contributions on employee salary deferrals up to 6% of
annual compensation.  Contributions to the profit sharing plans are made at
the discretion of the Board of Directors.  However, a basic formula has
been followed for contributions of 7% of earnings before taxes up to a
specific profit level plus 14% of earnings in excess of that level.  The
profit sharing plans hold 976,438 shares of the Company's common stock at
December 31, 1999, representing 2% of outstanding shares.  Expense for
these plans is as follows (in thousands):
<PRE>
Year Ended December 31               1999       1998       1997
----------------------               ----       ----       ----
Capital accumulation plans         $ 8,009    $ 7,375    $ 5,499
Profit sharing plans                10,747     20,407     26,613
                                   -------    -------    -------
   Defined contribution plans      $18,756    $27,782    $32,112
                                   =======    =======    =======
</PRE>
    The Company contributes to multi-employer defined benefit pension
plans and health and welfare plans for substantially all employees covered
under collective bargaining agreements. Expense for these plans is as
follows (in thousands):
<PRE>
Year Ended December 31                           1999      1998      1997
----------------------                           ----      ----      ----
Multi-employer defined benefit pension plans  $41,062   $37,309   $34,106
Multi-employer health and welfare plans        44,415    41,473    38,499
                                              -------   -------   -------
Multi-employer plans                          $85,477   $78,782   $72,605
                                              =======   =======   =======
</PRE><B>
NOTE I - STOCK OPTIONS</B>
<BR>    The Company has three shareholder approved stock option plans.  Two of
these plans, approved by the shareholders in 1994 and 1998 (the "1994 Plan"
and "1998 Plan"), reserve shares of the Company's common stock for issuance
to officers and key employees.  Options granted under the 1994 Plan vest
over a three year period.  Options granted under the 1998 Plan include
options which vest over a four year period and performance options issued
to the Company's executive officers which vest upon attainment of specified
market price targets of the Company's common stock.  A specific plan for
the Company's non-employee directors provides for annual grants of 2,000
shares which vest six months from the date of grant.  Options granted under
these three plans are issued at the fair market value of the Company's
stock on the date of grant.  A total of 7,507,250 shares may be granted
under these plans.  There are 4,555,110 shares available for future grants
as of December 31, 1999.
<P>
A summary of the Company's stock option activity and related information
is as follows:
<PRE>
Year Ended December 31              1999        1998        1997
----------------------              ----        ----        ----
Outstanding at beginning of year 2,516,417   2,189,014   2,555,186
Granted                            738,410     766,280     442,580
Exercised                         (411,100)   (423,697)   (797,578)
Canceled                           (23,880)    (15,180)    (11,174)
                                 ---------   ---------   ---------
Outstanding at end of year       2,819,847   2,516,417   2,189,014
                                 =========   =========   =========
Exercisable at end of year       1,428,574   1,297,300   1,178,058
                                 =========   =========   =========

Weighted average option price information is as follows:

Year Ended December 31                1999     1998     1997
----------------------                ----     ----     ----
Outstanding at beginning of year    $19.38   $12.22   $11.61
Granted                              38.13    34.90    13.63
Exercised                            11.21    10.44    11.04
Canceled                             35.30    20.07    12.94
Outstanding at end of year           25.35    19.38    12.22
Exercisable at end of year           17.31    14.54    11.53
</PRE>
Information related to the number of options outstanding, weighted
average price per share and remaining life of significant option groups
outstanding at December 31, 1999 is as follows:
<PRE>
                       Outstanding                     Exercisable
              ----------------------------    ----------------------------
                                   Life                          Life
 Price Range      Number   Price  in Years     Number   Price   in Years
 -----------      ------   -----  --------     ------   -----   --------
$ 9.25-$11.56    465,712  $11.05    3.1       465,712  $11.05     3.1
$13.00-$18.88    874,747   14.17    5.8       672,967   14.33     5.4
$31.06-$38.13  1,479,388   36.47    8.5       289,895   34.31     8.1
</PRE>
    The Company has elected to follow APB Opinion No. 25 in accounting for
its stock option plans. No compensation expense was recorded in 1999 or
1997. In 1998, compensation expense of $1,198,000 was recognized upon
attainment of market price targets as specified under the grant provisions
of the performance options.  Had expense been measured under the fair value
provisions of SFAS No. 123, the Company's Net Earnings and Earnings Per
Share for 1999, 1998 and 1997 would have been reduced to the pro forma
amounts shown below.  In accordance with SFAS No. 123, pro forma
information does not include compensation expense attributable to options
granted prior to 1995.
<PRE>
Year Ended December 31                        1999       1998      1997
----------------------                        ----       ----      ----
Net Income
(in thousands):
     As reported                            $91,201   $137,285   $120,072
     Pro forma                               85,510    134,230    118,084

Diluted Net Earnings Per Share:
     As reported                              $1.85     $2.72       $2.44
     Pro forma                                 1.74      2.65        2.40
</PRE>
The weighted average fair value for options granted in 1999, 1998 and
1997 computed utilizing the Black-Scholes option-pricing model, was $17.21,
$16.83 and $5.90 respectively. Significant assumptions used in the
estimation of fair value and compensation expense are as follows:
<PRE>
Year Ended December 31                 1999         1998         1997
----------------------                 ----         ----         ----
Weighted expected life (years)         6.2          7.4          6.7
Weighted risk-free interest rate       4.8%         5.5%         6.3%
Weighted volatility                   41.0%        38.8%        36.6%
Dividend yield                         0.4%         0.5%         1.1%
</PRE><P><B>
NOTE J - EARNINGS PER SHARE
</B>
<BR>Net earnings and average shares used in basic and diluted earnings per
share calculations were as follows:
<PRE>
Year Ended December 31                  1999        1998        1997
----------------------                  ----        ----        ----
                                   (In thousands except per share data)
NET EARNINGS:
   Basic net earnings                 $91,201    $137,285    $120,072
      Convertible subordinated
      debenture interest, net of tax       --          --       2,969
                                      -------    --------    --------
      Diluted net earnings
including assumed conversions         $91,201    $137,285    $123,041
                                      =======    ========    ========
SHARES:
   Basic weighted average shares
   outstanding                         48,596      49,620      44,883
      Stock options                       673         941         939
      Convertible subordinated
      debentures                           --          --       4,517
                                      -------    --------    --------
   Diluted weighted average shares
   outstanding                         49,269      50,561      50,339
                                      =======    ========    ========
NET EARNINGS PER SHARE:
   Basic                                $1.88       $2.77       $2.68
   Diluted                              $1.85       $2.72       $2.44
                                      =======    ========    ========
</PRE>
    The above calculations of diluted earnings per share for 1999 and 1998
exclude 1,361,000 and 528,000, respectively, of common shares issuable
under stock option plans because the options' exercise price was greater
than the average market price of the common shares.  No shares were
excluded for 1997.
<P><B>
NOTE K - SEGMENT INFORMATION
</B>
<BR>    The Company has organized its business into two reportable operating
segments.  The domestic segment derives its revenues from the door-to-door
delivery of small packages and documents throughout the United States,
Canada and Puerto Rico.  Domestic operations are supported principally by
Company operated aircraft and facilities.  The international segment
derives its revenues from express door-to-door delivery and a variety of
freight services.  International revenues are recognized on shipments where
the origin and/or destination is outside of locations supported by the
domestic segment.  The Company uses a variable cost approach in delivering
international services through use of existing commercial airline capacity
in connection with its domestic network and independent express and freight
agents in locations not currently served by Company-owned foreign
operations.
<P>
The following is a summary of key segment information (in thousands):
<PRE>
                                   Domestic    International     Total
                                   --------    -------------     -----
1999
----
Revenues                          $2,772,782    $  367,444     $3,140,226
Depreciation and amortization        207,902         1,488        209,390
Segment earnings from operations     158,963         1,084        160,047
Segment assets                     1,569,367        73,883      1,643,250
Expenditures for property
   and equipment                     292,130         2,189        294,319

1998
----
Revenues                          $2,712,344    $  362,181     $3,074,525
Depreciation and amortization        183,147         1,379        184,526
Segment earnings from operations     232,966         1,501        234,467
Segment assets                     1,428,956        72,621      1,501,577
Expenditures for property
   and equipment                     281,571         3,910        285,481

1997
----
Revenues                          $2,514,737    $  397,672     $2,912,409
Depreciation and amortization        168,646         1,199        169,845
Segment earnings from operations     221,473         3,782        225,255
Segment assets                     1,288,180        77,793      1,365,973
Expenditures for property
   and equipment                     209,745         2,013        211,758
</PRE>
    International operations are supported in the United States by pickup
and delivery, customer service and airline capabilities provided by the
domestic segment.  Management allocates these costs, generally on a per
shipment basis, to the international segment.

<BR>    Management considers interest expense and income taxes as corporate
expenses and, accordingly, does not allocate these costs to the operating
segments.  The accounting policies of the segments are the same as those
described in the Summary of Significant Accounting Policies.

<BR>    A substantial portion of international revenue is associated with
shipments originating within the United States ($234,087,000 in 1999,
$256,259,000 in 1998 and $279,532,000 in 1997).  Long lived assets located
within the United States and associated with the international segment were
$6,792,000, $6,274,000 and $4,694,000 as of December 31, 1999, 1998 and
1997, respectively.


<P><B>
NOTE L - GAIN ON SALE OF SECURITIES
</B>
<BR>    The Company is a participating member of SITA, a cooperative of major
airline companies, which primarily provides data communication services to
the air transport industry. Through this membership the Company holds
depository certificates in The SITA Foundation ("Foundation") whose
principal asset is an equity interest in Equant, N.V ("Equant"), an
international data network services company whose stock is traded publicly
on the New York Stock Exchange under the symbol ENT.  In December 1999, the
Foundation sold a portion of its interest in Equant through a public
offering and distributed proceeds pro rata to the certificate holders that
elected to participate in the offering.  As part of this sale, the Company
sold 34% of its interest in Equant and recognized a pre-tax gain of
approximately $4,600,000.

<BR>    The Company has remaining restricted depository certificates in the
Foundation that may, in the future, become convertible into 103,351 shares
of Equant.  As convertibility is contingent on future share offerings by
the Foundation, no amount has been recorded on the Consolidated Balance
Sheets as of December 31, 1999 and 1998.  The Company has no cost basis in
the depository certificates, although the converted fair value of the
remaining certificates was approximately $11,600,000 at December 31, 1999.
<P><B>
NOTE M - OTHER COMPREHENSIVE INCOME
</B>
<BR>Other comprehensive income includes the following transactions and tax
effects for the years ended December 31, 1999 and 1998, respectively (in
thousands):
<PRE>
                                                     Income Tax
                                                      (Expense)
                                           Before        or       Net of
                                            Tax        Benefit     Tax
                                          -------     --------    ------
1999
----
Unrealized securities gains arising
   during the period                      $ 1,315     $  (506)    $  809
Less: Reclassification adjustment for
   gains realized in net income            (1,268)        488       (780)
                                          -------     -------     ------
Net unrealized securities gains                47         (18)        29
Foreign currency translation adjustments      200         (77)       123
                                          -------     -------     ------
Other comprehensive income                $   247     $   (95)    $  152
                                          =======     =======     ======
1998
----
Unrealized securities gains arising
   during the period                      $ 3,071     $(1,182)    $1,889
Less: Reclassification adjustment for
   gains realized in net income            (1,531)        589       (942)
                                          -------     -------     ------
Net unrealized securities gains             1,540        (593)       947
Foreign currency translation adjustments     (295)        114       (181)
                                          -------     -------     ------
Other comprehensive income                $ 1,245     $  (479)    $  766
                                          =======     =======     ======
</PRE><P><B>
NOTE N - SUPPLEMENTAL GUARANTOR INFORMATION
</B>
<BR>    In connection with the issuance of $200,000,000 of Senior Notes
(Notes) certain of the Company's subsidiaries (collectively, "Guarantors")
have fully and unconditionally guaranteed, on a joint and several basis,
the Company's obligations to pay principal, premium, if any, and interest
with respect to the Notes.  The Guarantors are ABX Air Inc. (ABX) and
Airborne Forwarding Corporation (AFC), which are wholly-owned by the
Company, and Airborne FTZ Inc. (FTZ) and Wilmington Air Park Inc. (WAP),
which are wholly-owned subsidiaries of ABX.  Non-guarantor subsidiaries'
assets, liabilities, revenues and net earnings are inconsequential both
individually and on a combined basis in comparison to the Company's
consolidated financial statement totals.

<BR>    Management does not consider disclosure of separate subsidiary
financial statements for each Guarantor to be material.  Summarized
financial information of the Guarantors on a combined basis is as follows
(in thousands):
<PRE>
Balance Sheet Information:

December 31                           1999       1998
-----------                           ----       ----
Current assets                    $   72,633   $ 66,572
Property and equipment, net        1,001,513    886,801
Other noncurrent assets               20,425     22,623
Current liabilities                   78,742    100,302
Long-term debt                        19,707     20,149
Other noncurrent liabilities         116,610    105,926
Intercompany payable                 464,590    426,590

Earnings Statement Information:

Year Ended December 31                1999       1998       1997
----------------------                ----       ----       ----
Revenues - intercompany           $1,109,279   $980,322   $900,428
Revenues - third-party                70,074     77,923     72,763
Operating expenses                 1,058,285    938,925    873,213
Earnings from operations             121,068    119,320     99,978
Net earnings                          77,894     76,678     64,239
</PRE>
    ABX is a certificated air carrier which owns and operates the domestic
express cargo services for which the Company is the sole customer.  ABX
also offers air charter services on a limited basis to third-party
customers.  FTZ owns certain aircraft parts inventory which it sells
primarily to ABX, with limited sales to third-party customers.  FTZ is also
the holder of a foreign trade zone certificate at Wilmington airport
property.  WAP is the owner of the Wilmington airport property which
includes the Company's main sort facility, aircraft maintenance facilities,
runways and related airport facilities and airline administrative and
training facilities.  ABX is the only occupant and customer of WAP.  AFC,
which conducts business as Sky Courier, provides expedited courier services
and regional logistics warehousing primarily to third-party customers.

<BR>    Investment balances and revenues between Guarantors have been
eliminated for purposes of presenting the above summarized financial
information.

<BR>    Intercompany revenues and net earnings recorded by ABX, FTZ, and WAP
are controlled by the Company and are based on various discretionary
factors.  Intercompany payable amounts represent net amounts due the
Company by its Guarantors.  The Company provides the Guarantors with a
majority of the cash necessary to fund operating and capital expenditure
requirements.


<P><B>
NOTE O - QUARTERLY RESULTS (Unaudited)
</B>
<BR>The following is a summary of quarterly results of operations (in
thousands except per share data):
<PRE>
                                   1st        2nd        3rd        4th
1999                             Quarter    Quarter    Quarter    Quarter
----                             -------    -------    -------    -------
Revenues                        $769,431   $779,308   $785,598   $805,889
Earnings from Operations          44,976     48,219     39,183     27,669
Net Earnings                      25,244     27,022     21,604     17,331
Net Earnings per Share
  Basic                         $    .52   $    .56   $    .44   $    .36
  Diluted                       $    .51   $    .55   $    .44   $    .35

1998
----
Revenues                        $750,193   $764,137   $769,082   $791,113
Earnings from Operations          57,536     58,887     55,085     62,959
Net Earnings                      32,360     33,827     32,813     38,285
Net Earnings per Share
  Basic                         $    .65   $    .67   $    .66   $    .79
  Diluted                       $    .63   $    .66   $    .65   $    .78

1997
----
Revenues                        $655,522   $712,784   $788,598   $755,505
Earnings from Operations          32,321     54,970     83,911     54,053
Net Earnings                      14,374     28,287     46,619     30,792
Net Earnings per Share
  Basic                         $    .34   $    .66   $   1.05   $    .62
  Diluted                       $    .31   $    .59   $    .94   $    .60

</PRE>
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