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Previous: JANUS INVESTMENT FUND, 485BPOS, 1996-05-28 |
Next: TRUST FOR UNITED STATES TREASURY OBLIGATIONS, N-30D, 1996-05-28 |
<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A NO. 1
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-7815
TRANS WORLD AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1145889
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One City Centre
515 N. 6th Street
St. Louis, Missouri 63101
(Address of principal executive offices, including zip code)
(314) 589-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding as of
Class May 1, 1996
------------------------ -----------------
Common Stock, par value 36,945,398
$0.01 per share
In addition, as of May 1, 1996 there were 6,425,118 shares of Employee Preferred
Stock outstanding.
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<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Trans World Airlines, Inc. and Subsidiaries
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
For the Three Months Ended March 31, 1996 and 1995
(Amounts in Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
1996 1995
Reorganized Predecessor
Company Company
----------- -----------
<S> <C> <C>
Operating revenues:
Passenger $ 677,932 $ 595,429
Freight and mail 35,904 35,240
All other 68,597 61,651
----------- -----------
Total 782,433 692,320
----------- -----------
Operating expenses:
Salaries, wages and benefits 296,323 281,707
Earned stock compensation 4,984 -
Aircraft fuel and oil 129,396 101,790
Passenger sales commissions 63,940 59,629
Aircraft maintenance materials and repairs 47,758 35,511
Depreciation and amortization 39,613 41,666
Operating lease rentals 70,305 69,503
Passenger food and beverages 25,541 23,335
All other 158,764 155,440
----------- -----------
Total 836,624 768,581
----------- -----------
Operating loss (54,191) (76,261)
----------- -----------
Other charges (credits):
Interest expense 33,547 51,937
Interest and investment income (6,086) (3,144)
Disposition of assets, gains and losses - net 214 271
Other charges and credits - net (7,588) (2,572)
----------- -----------
Total 20,087 46,492
----------- -----------
Loss before income taxes (74,278) (122,753)
Provision (credit) for income taxes (37,171) 42
----------- -----------
Net loss (37,107) (122,795)
Preferred stock dividend requirements 23,998 3,750
----------- -----------
Loss applicable to common shares $ (61,105) $ (126,545)
=========== ===========
Per share amounts:
Loss before special preferred stock
dividend requirements $ (.98)
Special preferred stock dividend requirement
- redemption of 12% Preferred Stock (.48)
-----------
Net loss $ (1.46)
===========
</TABLE>
See notes to condensed consolidated financial statements
1
<PAGE> 3
Trans World Airlines, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Amounts in Thousands)
ASSETS
<TABLE>
<CAPTION>
Reorganized Company
----------------------------------
March 31, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 374,715 $ 304,340
Receivables, less allowance for doubtful accounts,
$14,057 in 1996 and $13,517 in 1995 299,911 226,451
Spare parts, materials and supplies, less
allowance for obsolescence, $3,664 in 1996
and $2,201 in 1995 133,692 143,374
Prepaid expenses and other 87,790 54,358
----------- -----------
Total 896,108 728,523
----------- -----------
Property:
Property owned:
Flight equipment 321,608 303,248
Prepayments on flight equipment 24,791 -
Land, buildings and improvements 55,904 54,722
Other property and equipment 41,909 39,032
----------- -----------
Total owned property 444,212 397,002
Less accumulated depreciation 31,088 18,769
----------- -----------
Property owned - net 413,124 378,233
----------- -----------
Property held under capital leases:
Flight equipment 172,812 172,812
Land, buildings and improvements 54,761 54,761
Other property and equipment 6,838 6,862
----------- -----------
Total property held under capital leases 234,411 234,435
Less accumulated amortization 22,015 12,602
----------- -----------
Property held under capital leases - net 212,396 221,833
----------- -----------
Total property - net 625,520 600,066
----------- -----------
Investments and other assets:
Investments in affiliated companies 99,677 98,156
Investments, receivables, and other 193,705 165,471
Routes, gates and slots - net 445,267 450,916
Reorganization value in excess of amounts allocable
to identifiable assets - net 814,592 825,079
----------- -----------
Total 1,553,241 1,539,622
----------- -----------
Total $3,074,869 $2,868,211
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE> 4
Trans World Airlines, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Amounts in Thousands Except Share Amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
Reorganized Company
-----------------------------------
March 31, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Obligation for 12% Preferred Stock called for
redemption (Note 4) $ 83,929 $ -
Current maturities of long-term debt 70,621 67,566
Current obligations under capital leases 41,167 42,835
Advance ticket sales 304,348 209,936
Accounts payable, trade and other 148,216 145,318
Accrued expenses:
Employee compensation and benefits 115,015 119,353
Interest on debt and capital leases 30,253 44,710
Taxes 24,544 16,995
Other accrued expenses 198,806 193,380
----------- -----------
Total accrued expenses 368,618 374,438
----------- -----------
Total 1,016,899 840,093
----------- -----------
Long-term liabilities and deferred credits:
Long-term debt, less current maturities 740,129 764,031
Obligations under capital leases,
less current obligations 250,388 259,630
Postretirement benefits other than pensions 454,059 461,346
Noncurrent pension liabilities 21,130 21,253
Other noncurrent liabilities and deferred credits 146,631 157,573
----------- -----------
Total 1,612,337 1,663,833
----------- -----------
Mandatorily redeemable 12% preferred stock,
(aggregate liquidation preference of $111,179 in 1995) - 61,430
----------- -----------
Shareholders' equity (deficiency):
8% cumulative convertible exchangeable preferred stock,
$50 liquidation preference; 3,869 shares issued and
outstanding 39 -
Employee preferred stock, $0.01 liquidation preference;
special voting rights; 5,301 shares issued and
outstanding 53 53
Common stock, $0.01 par value, shares issued and
outstanding: 1996 - 36,943; 1995 - 35,129 369 351
Additional paid-in capital 512,417 332,589
Accumulated deficit (67,245) (30,138)
----------- -----------
Total 445,633 302,855
----------- -----------
Total $3,074,869 $2,868,211
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE> 5
Trans World Airlines, Inc. and Subsidiaries
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1996 1995
Reorganized Predecessor
Company Company
Cash flows from operating activities: ----------- ------------
<S> <C> <C>
Net loss $ (37,107) $(122,795)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 39,613 41,666
Amortization of discount and expense on debt 2,405 5,959
Interest paid in common stock 11,332 -
Equity in undistributed earnings of affiliates
not consolidated (1,521) (795)
Net losses on disposition of property
and noncurrent investment assets 214 271
Employee earned stock compensation 4,984 -
Change in operating assets and liabilities;
Decrease (increase) in:
Receivables (73,460) (38,072)
Inventories 8,528 6,763
Prepaid expenses and other current assets (33,432) 202
Other assets (7,197) 5,817
Increase (decrease) in:
Accounts payable and accrued expenses (3,151) 110,320
Advance ticket sales 94,412 44,321
Benefits, other noncurrent liabilities and deferred
credits (17,918) (5,084)
---------- ----------
Net cash provided (used) (12,298) 48,573
---------- ----------
Cash flows from investing activities:
Proceeds from sale of property 324 942
Capital expenditures (46,687) (7,547)
Net decrease (increase) in investments,
receivables, and other (21,737) (16,894)
---------- ----------
Net cash used (68,100) (23,499)
---------- ----------
Cash flows from financing activities:
Repayment of long-term debt and capital
lease obligations (35,865) (10,753)
Net proceeds from sale of preferred stock 186,163 -
Increase (decrease) in bank overdrafts and other 475 (1,840)
----------- ----------
Net cash provided (used) 150,773 (12,593)
----------- ----------
Net increase in cash and cash equivalents 70,375 12,481
Cash and cash equivalents at beginning of period 304,340 138,531
----------- ----------
Cash and cash equivalents at end of period $ 374,715 $ 151,012
=========== ==========
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE> 6
Trans World Airlines, Inc. and Subsidiaries
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
(Amounts in Thousands)
SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1996 1995
Reorganized Predecessor
Company Company
------------ -----------
<S> <C> <C>
Cash paid during the period for:
Interest $ 33,116 $ 10,879
=========== ===========
Income taxes $ 35 $ 30
=========== ===========
Noncash operating, investing
and financing activities:
Promissory note issued to finance aircraft
predelivery payments $ 1,523 $ -
=========== ===========
Common Stock issued in lieu of cash dividends $ 3,255 $ -
=========== ===========
Property acquired and obligations recorded
under new capital transactions $ - $ 9,928
=========== ===========
</TABLE>
Accounting policy
For purposes of the Statements of Consolidated Cash Flows, TWA considers
all highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
See notes to condensed consolidated financial statements
5
<PAGE> 7
TRANS WORLD AIRLINES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
During the period from 1992 through 1995, Trans World Airlines, Inc.
("TWA" or the "Company") underwent two separate Chapter 11 reorganizations, the
first in 1992-93 (the "'93 Reorganization") and the second in 1995 (the "'95
Reorganization"). For a detailed discussion of the Company's reorganizations,
refer to the Company's Annual Report on Form 10-K for the year ended December
31, 1995. In connection with the '95 Reorganization TWA has applied fresh start
reporting in accordance with generally accepted accounting principles resulting
in the Company's assets and liabilities being adjusted to reflect fair values.
Because of the application of fresh start reporting, the consolidated financial
statements for periods after the '95 Reorganization are not comparable in all
respects to the consolidated financial statements of the Predecessor Company for
periods prior to the reorganization. For accounting purposes the inception date
of the Reorganized Company is deemed to be September 1, 1995. A vertical black
line is shown in the consolidated financial statements to separate the
Reorganized Company from the Predecessor Company since they are not comparable.
1. BASIS OF PRESENTATION:
The consolidated financial statements include the accounts of
TWA and its subsidiaries. The results of Worldspan, L.P.
("Worldspan"), a 25% owned affiliate, are recorded under the equity
method and are included in the Statements of Consolidated Operations
in Other Charges (Credits).
The unaudited condensed consolidated financial statements
included herein have been prepared by the Company pursuant
to the rules and regulations of the Securities and Exchange
Commission but do not include all information and footnotes required
by generally accepted accounting principles pursuant to such rules
and regulations. The condensed consolidated financial
6
<PAGE> 8
statements include all adjustments, which are of a normal recurring
nature and are necessary, in the opinion of management, for a fair
statement of the results for these interim periods. These consolidated
financial statements and related notes should be read in conjunction
with the consolidated financial statements and related notes contained
in the Company's Annual Report on Form 10-K for the year ended December
31, 1995. The consolidated balance sheet at December 31, 1995 has
been derived from the audited consolidated financial statements at
that date. Certain amounts previously reported have been reclassified
to conform with the current presentation.
The airline industry generally, and TWA specifically, has
historically experienced seasonal changes between quarterly periods,
with the second and third quarters usually out-performing the first
and fourth. Accordingly, the results for the three months ended March
31 should not be read as an indicator of future results for the full
year.
2. CONTINGENCIES:
There has not been any significant change in the status of the
contingencies reflected in the Notes to Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, which, among other matters,
described various contingencies and other legal actions against TWA,
except as discussed in Part I. Financial Information -- Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations and Part II. Other Information -- Item 1. Legal
Proceedings.
3. EARNINGS (LOSS) PER SHARE
In computing the loss applicable to common shares for the
three months ended March 31, 1996, the net loss has been increased by
dividend requirements on the Mandatorily Redeemable 12% Preferred
Stock (the "12% Preferred Stock") (including amortization of the
difference between the fair value of the 12% Preferred Stock on the
date of issuance and the redemption value plus, with respect to the
March 22, 1996 call for the redemption, a special dividend requirement
of approximately $20.0 million to reflect the excess of the early
redemption price over the carrying value of the 12% Preferred
7
<PAGE> 9
Stock), and on the 8% Cumulative Convertible Exchangeable Preferred
Stock (the "8% Preferred Stock") issued in March 1996. In computing
the related net loss per share, the loss applicable to common shares
has been divided by the average aggregate number of outstanding shares
of Common Stock (36.3 million) and Employee Preferred Stock (5.5
million; including 0.2 million shares which have been earned but not
yet allocated to employees) which, with the exception of certain
special voting rights, is the functional equivalent of Common Stock.
No effect has been given to stock options, warrants or potential
issuances of additional Common Stock or Employee Preferred Stock as the
impact would have been anti-dilutive. Earnings per share of the
Predecessor Company are not presented as the amounts are not
meaningful.
4. PREFERRED STOCK:
In March 1996, the Company completed an offering, pursuant to
Rule 144A of the Securities Act of 1933 (the "Act"), of 3,869,000
shares of its 8% Preferred Stock, with a liquidation preference of
$50 per share. Each share of the 8% Preferred Stock may be converted
at any time, at the option of the holder, unless previously redeemed
or exchanged, into shares of Common Stock at a conversion price of
$20.269 per share (equivalent to a conversion rate of approximately
2.467 shares of Common Stock for each share of 8% Preferred Stock),
subject to adjustment. The 8% Preferred Stock has not been registered
under the Act at this time; however, pursuant to the registration
rights agreement between the Company and the initial purchasers of
the 8% Preferred Stock, the Company is obligated to register resales
of the 8% Preferred Stock, the Debentures (as defined below), and
the underlying shares of Common Stock issuable upon conversion thereof
by August 19, 1996. In addition, the Company must use its best
efforts to keep the shelf registration effective until March 22, 1999.
The 8% Preferred Stock may not be redeemed prior to March 15,
1999. On or after March 15, 1999, the 8% Preferred Stock may be
redeemed, in whole or in part, at the option of the Company, at
specified redemption prices.
The 8% Preferred Stock may be exchanged, in whole but not in
part, at the option of the Company, for the Company's 8%
8
<PAGE> 10
Convertible Subordinated Debentures Due 2006 (the "Debentures") on any
dividend payment date beginning March 15, 1998 at the rate of $50
principal amount of Debentures for each share of 8% Preferred Stock
outstanding at the time of exchange; provided that all accrued and
unpaid dividends, whether or not earned or declared, on the 8%
Preferred Stock to the date of exchange have been paid or set aside
for payment and certain other conditions are met.
On March 22, 1996, the Company announced a call for redemption
on April 26, 1996 (the "Redemption Date") of all of its issued and
outstanding 12% Preferred Stock. Such shares were redeemed at a
redemption price (the "Redemption Price") per share equal to $75.00,
plus accrued dividends to and including the Redemption Date, of
$2.8667 per share. On April 26, 1996, the Company paid an aggregate
of $84.9 million in redemption of the 12% Preferred Stock.
5. ACCOUNTING FOR STOCK-BASED COMPENSATION
On January 1, 1996, TWA adopted Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("SFAS
123"). TWA elected to continue to apply the intrinsic value based
method for recognizing compensation expense for stock-based employee
compensation plans. Therefore the adoption of SFAS 123 had no impact
on the Company's results of operations or financial position.
9
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amended report to be signed on its behalf
by the undersigned thereunto duly authorized.
TRANS WORLD AIRLINES, INC.
Dated: May 24, 1996
By: /s/ Jody A. Ruth
-----------------------------------
Vice President and Corporate
Controller (duly authorized
representative of registrant)
35
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