SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the period-ended September 30, 1996
Commission file number 0-9267
BIG SKY TRANSPORTATION CO.
(exact name of registrant as specified in its charter)
MONTANA 81-0387503
(state of other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1601 Aviation place
Billings Logan Int'l Airport
Billings MT 59105
(406) 245-9449
(address of registrant's principal executive offices)
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
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 xx NO
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 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 XX NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
CLASS: Common Stock, no par value
SHARES OUTSTANDING: at November 7, 1996: 1,049,520
<PAGE>
BIG SKY TRANSPORTATION CO.
FORM 10-Q
For the Period-Ended September 30, 1996
CONTENTS
Part I Financial Information
Item 1. Condensed Financial Statements:
Balance Sheets
September 30, 1996 (unaudited) and June 30, 1996 (audited)
Statements of Operations
Three months-ended September 30, 1996 and 1995 (unaudited)
Statements of Cash flows
Three months-ended September 30, 1996 and 1995 (unaudited)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II Other Information
Item 2. Changes in Securities
Item 4. Submission of Matters to a Vote of Security Holders
<PAGE>
Part I. Financial Information, Item 1.
BIG SKY TRANSPORTATION CO.
Balance Sheets
September 30, June 30,
1996 1996
ASSETS (unaudited) (audited)
Current Assets:
Cash $ 430,393 $ 360,668
Restricted cash 472,989 426,769
Accounts receivable, net 369,075 447,793
Expendable parts/supplies 243,625 236,128
Inventory held for sale 41,604 41,604
Prepaid expenses 20,538 --
Total current assets 1,578,224 1,512,962
Property & Equipment:
Flight equipment 610,269 609,022
Capital lease facility 456,185 456,185
Other property & equipment 175,109 175,110
1,241,563 1,240,317
Accumulated depreciation (487,457) (466,013)
Net property & equipment 754,106 774,304
Excess reorganization value -- 6,841
Deposits 17,258 17,258
Total assets $ 2,349,588 $ 2,311,365
===================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Current long-term debt $ 126,012 $ 122,057
Current capital lease 16,455 16,035
Accounts payable 58,265 121,687
Accrued expenses 632,253 551,958
Traffic payable 42,748 40,095
Total current liabilities 875,733 851,832
Long-term debt, excluding current 348,670 397,110
Capital lease, excluding current 282,795 287,022
Total liabilities 1,507,198 1,535,964
Stockholders' Equity
Common stock at no par value
authorized 2,000,000 shares;
1,049,520 shares outstanding 482,711 482,711
Retained earnings 359,679 292,690
Stockholders' equity 842,390 775,401
Total liability &
stockholders' equity $ 2,349,588 $ 2,311,365
===================================
See notes to financial statements.
<PAGE>
BIG SKY TRANSPORTATION CO.
FLOW OF EQUITY
September 30, 1996
(unaudited)
Net Income $ 47,300
Retained earnings,
beginning of period $ 292,690
Fresh-Start charges $ 19,689
Retained earnings,
end of period $ 359,679
See note to financial statements
<PAGE>
BIG SKY TRANSPORTATION CO.
Statements of Operations
Three months-ended
September 30,
1996 1995
(unaudited) (unaudited)
Operating Revenues:
Passenger $ 401,786 $ 414,120
Cargo 21,170 27,525
Public service 753,592 898,637
Other 23,733 10,433
Total 1,200,281 1,350,715
Operating Expenses:
Flying 394,428 473,412
Maintenance 253,365 275,107
Passenger service 270,566 309,217
Sales 43,419 54,217
General/Administrative 127,738 119,111
Depreciation 20,650 21,345
Total 1,110,166 1,252,409
Operating Income 90,115 98,306
Other Income/(expenses):
Interest, net (9,459) (12,203)
Gain (loss) equipment (953) 172
Total (10,412) (12,031)
Income before taxes 79,703 86,275
Income Tax Expense:
Current 5,873 5,976
Charge in lieu of taxes 26,530 26,996
Total 32,403 32,972
Extraordinary item
Debt extinguishment -- (899)
Net Income: $ 47,300 $ 52,404
====================================
Per share data:
Income per common and
common equivalent share $.04 $.05
Weighted average number
of common & common
equivalent shares
outstanding 1,049,520 1,043,772
See notes to financial statements.
<PAGE>
BIG SKY TRANSPORTATION CO.
Statements of Cash Flows
Three months-ended
September 30,
1996 1995
(unaudited) (unaudited)
From operating activities:
Net income $ 47,300 $ 52,404
Depreciation 20,650 23,910
(Gain) loss on equipment 953 (172)
Excess reorganization value
amortization and charges
in lieu of taxes 26,530 26,996
Changes in assets/liabilities:
Restricted cash (46,220) (34,559)
Accounts receivable 78,718 19,298
Expendable parts (7,497) 14,749
Prepaid expenses (20,538) (49,087)
Accounts Payable (63,422) 16,058
Accrued expenses 80,295 68,503
Traffic payable 2,653 2,620
Net cash provided by operations 119,422 140,720
From investing activities:
Proceeds, equipment sales 359 480
Property & equipment (1,764) (1,556)
Net cash used by investing (1,405) (1,076)
From financing activities:
Payments on long-term debt (44,485) (50,716)
Payments on capital lease (3,807) (3,430)
Net cash used by financing (48,292) (54,146)
Increase in cash 69,725 85,498
Cash at beginning of period 360,668 408,457
Cash at end of period $ 430,393 $ 493,955
==================================
Supplement disclosures of
cash flow information:
Cash paid during the period for:
Interest $ 18,903 $ 21,545
Income taxes -- --
See notes to financial statements
<PAGE>
BIG SKY TRANSPORTATION CO.
Notes to Financial Statements
NOTE A. The accompanying unaudited condensed financial statements
have been prepared by the Company in accordance with its
understanding of the rules and regulations of the
Securities and Exchange Commission. These financial
statements reflect, in the opinion of management, all
adjustments (consisting only of recurring accruals) for
fair presentation of the results of operations for the
interim periods presented. However, these financial
statements have been prepared in accordance with
instructions to Form 10-Q and therefore, do not include
all information and footnotes necessary for a fair
presentation of financial position, statement of
operations and cash flows in conformity with generally-
accepted accounting principles. It is recommended that
these interim financial statements be read in conjunction
with the financial statements and notes thereto, included
in the Company's latest annual report on Form 10-K.
NOTE B. Earnings per share is based on the weighted average
number of common and common equivalent shares
outstanding. The effect of common stock equivalents is
anti-dilative and therefore not presented.
NOTE C. Results of operations for the three month-ended September
30, 1996 and 1995 are not necessarily indicative of the
results to be expected for the full year.
NOTE D. On July 18, 1996 a Plan of Recapitalization was approved
by the Company stockholders. The Plan of Recapitalization
provided a 300-for-1 reverse split of the Company's
existing stock followed by a 59-for-1 stock dividend
effective on August 23, 1996. New stock with no par
value was issued in exchange for old stock with a par
value of $.10 per share.
<PAGE>
PART I. Financial Information, Item 2.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Summary of Airline Operating Statistics:
Three months-ended
September 30,
% change
1996 1995 +/(-)
Passengers carried 6,296 6,794 (7.3)
Average passenger
trip (miles) 197 198 (.5)
Revenue passenger miles 1,240,773 1,346,416 (7.8)
Available seat miles 3,834,190 4,798,716 (20.1)
Passenger load factor (%) 32.36 28.06 15.3
Aircraft miles 263,203 322,412 (18.4)
Yield per revenue
passenger mile (cents) 31.84 30.76 3.5
Freight pounds enplaned 17,744 26,843 (33.9)
Operating cost per
available seat mile (cents) 31.30 28.15 11.2
Operating break-even load
factor (%) 29.93 26.02 15.0
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results for the three months-ended
September 30, 1996 and 1995:
Total operating revenues in the first quarter of fiscal year 1997
were $1,200,281, compared with $1,350,715 in the same quarter last
year. Total number of passengers carried during the quarter
declined, in turn passenger revenues decreased $12,334 or 3% to
total $401,786. Due to a reduction order issued by the Department
of Transportation (DOT) in November 1995 the public service
revenues decreased $145,045 or 16.1% to total $753,592. Revenue
passenger miles decreased 7.8% to total 1,240,773, resulting in a
15.3% load factor improvement from 28.06% to 32.36%. Yield per
passenger mile increased 3.5% to total 31.84 cents for the
September 1996 quarter.
Total operating expenses decreased $142,243 or 11.4% for the three
months-ended September 30, 1996, as compared to the three months-
ended September 30, 1995. Capacity (ASMs) for the same period
decreased 20.1% while operating cost per available seat mile (ASM)
increased 11.2% from 28.15 cents to 31.30 cents.
The following table summarizes and compares major components of
cost per ASM:
For three months-ended
September 30,
1996 1995
Payroll-related costs $.1020 $.0948
Other .0770 .0645
Maintenance .0471 .0409
Aircraft lease costs .0294 .0325
Fuel and oil .0336 .0278
$.2891 $.2605
=================
Payroll-related expenses decreased $63,605 or 13.97% in the
September 1996 quarter, as compared to the September 1995 quarter.
The average full-time equivalent employees for the three months-
ended September 30, 1996 and 1995 were 61 and 66, respectively.
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results (continued):
Other expenses decreased $13,988 or 4.5% in the quarter-ended
September 30, 1996 as compared to the same quarter for the prior
year. Reductions were experienced in many expenses, the largest
being travel agencies and credit card commissions along with
equipment rentals and customer reservation system fees.
Maintenance expenditures this quarter decreased by $21,742 or 7.9%,
primarily in the outside services area. The aircraft fleet at
September 1996 was one aircraft less than September 1995. A change
in the flight schedule reduced the need for a fourth metroliner.
Fuel and oil costs decreased $3.7% or $5,085. This small reduction
is the net result of fewer revenue passenger miles and the increase
of fuel prices experienced during the quarter.
Aircraft ownership/lease and insurance costs decreased $43,406 or
27.8%. With one less aircraft in the fleet, reductions were
experienced in lease costs and insurance expense.
Net non-operating expenses were $42,815 for the September 1996
quarter and $45,902 for the September 1995 quarter. Pursuant to
Chapter 11 Reorganization "Fresh Start" reporting, charges in lieu
of taxes of $26,530 and $26,996 were recorded in the September 1996
and 1995 quarters, respectively.
The September 1996 quarter generated operating income of $90,115
and net income of $47,300 including "Fresh Start" charges. By
comparison, the same quarter in 1995 produced $98,306 in operating
income and net income of $52,404, also including "Fresh Start"
charges.
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources:
At September 30, 1996, the Company had a current ratio of 1.80:1
and positive working capital of $702,491 compared to a current
ratio of 1.8:1 and positive working capital of $661,130 at June 30,
1996. The Company generated cash from operations of $119,422 and
$140,720 for the quarters ended September 30, 1996 and 1995,
respectively. Total long-term debt (including current
installments) at September 30, 1996 was $773,932 (including capital
lease obligations) compared to $822,224 at June 30, 1996. In
September 1996 the Company made its fifth annual scheduled payment
to the unsecured creditors. The Company is current on all of its
debt service obligations. Stockholders' equity was $842,390 at
September 30, 1996, a 8.6% increase over the balance of $775,401 at
June 30, 1996, primarily attributable to the positive net income
and $19,689 for Fresh-Start.
Big Sky currently is operating under DOT Order 94-10-4, as amended
by order 95-11-28. The latter order reduced the rate from $3.54
million to an annual rate of $3.1 million through November 30,
1996. The Company has submitted a proposal for a new Essential Air
Service (EAS) contract to be in effect through November 30, 1998.
The Company is investigating available business opportunities in
order to reduce dependence upon the Federal Government Essential
Air Service Program. As part of these efforts, a non-subsidized
route to Great Falls, Montana was implemented in May 1995.
The Company occupies a custom built maintenance hangar/general
office facility at the Billings Airport, which is leased from a
member of the Board of Directors and is recorded as a capital
lease. The interest rate on the capital lease is 8.5% with
principal due on a 20 year amortization with a five-year balloon
payment. It is the intent of the building owner and Big Sky to
refinance the debt after five years, hopefully on similar terms.
The Company has purchase options at 5, 10, 15 and 20 years and a
right of first refusal upon approval by the owner of sale of his
interests to a third party. At September 30, 1996, the Company had
contributed $156,185 of equity to the building. The purchase
provisions provide a vehicle for recovering the company's full
equity in the transaction and to share in any appreciated value.
The Company has an operating line of credit in place, secured by an
owned aircraft. To date, the Company has not drawn on the line.
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources (continued):
The Company's claim for retroactive compensation related to the
DOT's Service Reduction Order (95-11-28) has been rejected by the
department director. The claim may be pursued beyond the
administrative level.
In August, the Company's recapitalization plan became effective.
As a result of a 5/1 reverse stock split, there now are
approximately 1.04 million shares of common stock outstanding and
600 stockholders. Initially, the new stock traded at 1 1/4.
The Congress has approved a bill which will provide a "permanent"
source of future funding for EAS derived from a new tax on foreign
carrier overflights. The tax is expected to generate up to $75
million annually, of which up to $50 million is to be allocated in
support EAS, starting in FY 1998. For FY 1997, the EAS program is
funded at 25.9 million, up $3 million from the prior year. The new
funding source adds stability to the program, which it has not had
in past years, and may permit service improvements in the future.
<PAGE>
Part II. Other Information
BIG SKY TRANSPORTATION CO.
Item 2. Changes in Securities
On July 18, 1996 a Plan of Recapitalization was approved by the
Company stockholders. The Plan of Recapitalization provided a 300-
for-1 reverse split of the Company's existing stock followed by a
59-for-1 stock dividend effective August 23, 1996. The New Stock
with no par value was issued in exchange for the Existing Stock
with a par value of $.10 per share. Fractional shares resulting
from the Reverse Split were purchased for cash by the Company.
There were three principal results from the Recapitalization.
A. Approximately 100,500 shares were acquired by the Company
for cash, eliminating approximately 1,100 small lot
stockholders, whose holding were inordinately expensive
for the Company to administer.
B. The remaining Stockholders now have 1/5th of the number
of shares which they previously held, thereby decreasing
the number of shares outstanding, but increasing the book
value of each remaining share. The trading value of the
remaining shares initially traded at $1.25.
C. The paid-in capital account showing a negative balance on
previous financial statements has been eliminated.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting for fiscal year 1996 was held late (July 18,
1996) due to the complexity of matters in the proxy statement and
awaiting regulatory approvals. Contained in the proxy statement
were the following business items, each properly approved by the
stockholders:
1. election of directors
2. ratification of independent auditors
3. ratification of the open market repurchase plan
4. approval of the 1996 stock bonus plan
5. approval of the organization restructure plan
6. approval of the plan of recapitalization
A detailed description of these items may be found in the company's
notice of annual meeting and proxy statement, dated June 14, 1996,
which was filed with and approved by the Securities and Exchange
Commission.
<PAGE>
BIG SKY TRANSPORTATION CO.
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BIG SKY TRANSPORTATION CO.
registrant
By: /s/ Craig Denney
Craig Denney
Executive Vice President
By: /s/ Karie Kane
Karie Kane
Accounting Manager
November 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 903,382
<SECURITIES> 0
<RECEIVABLES> 370,275
<ALLOWANCES> 1,200
<INVENTORY> 243,625
<CURRENT-ASSETS> 1,578,224
<PP&E> 1,241,563
<DEPRECIATION> 487,457
<TOTAL-ASSETS> 2,349,588
<CURRENT-LIABILITIES> 875,733
<BONDS> 631,465
0
0
<COMMON> 1,049,520
<OTHER-SE> 359,679
<TOTAL-LIABILITY-AND-EQUITY> 2,349,588
<SALES> 0
<TOTAL-REVENUES> 1,200,281
<CGS> 0
<TOTAL-COSTS> 1,110,166
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,459
<INCOME-PRETAX> 79,703
<INCOME-TAX> 32,403
<INCOME-CONTINUING> 47,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,300
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
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