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 March 31, 1997
Commission file number 1-7991
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 March 31, 1997: old 1,119,903
new 827,580
<PAGE>
BIG SKY TRANSPORTATION CO.
FORM 10-Q
For the Period-Ended March 31, 1997
CONTENTS
Part I Financial Information
Item 1. Condensed Financial Statements:
Balance Sheets
March 31, 1997 (unaudited) and June 30, 1996 (audited)
Flow of Equity (unaudited)
Statements of Operations
Three months-ended and Nine months-ended
March 31, 1997 and 1996 (unaudited)
Statements of Cash flows
Nine months-ended March 31, 1997 and 1996 (unaudited)
Notes to Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
<PAGE>
Part I. Financial Information, Item 1.
BIG SKY TRANSPORTATION CO.
Balance Sheets
March 31, June 30,
1997 1996
ASSETS (unaudited) (audited)
Current Assets:
Cash $ 543,035 $ 360,668
Restricted cash 514,462 426,769
Accounts receivable, net 453,604 447,793
Expendable parts/supplies 238,566 236,128
Inventory held for sale 30,000 41,604
Prepaid expenses 18,904 --
Total current assets 1,798,571 1,512,962
Property & Equipment:
Flight equipment 610,165 609,022
Capital lease facility 456,185 456,185
Other property & equipment 175,107 175,110
1,241,457 1,240,317
Accumulated depreciation (529,338) (466,013)
Net property & equipment 712,119 774,304
Excess reorganization value -- 6,841
Other assets 17,258 17,258
Total assets $ 2,527,948 $ 2,311,365
===================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Current long-term debt $ 132,500 $ 122,057
Current capital lease 13,868 16,035
Accounts payable 78,584 121,687
Accrued expenses 722,334 551,958
Traffic payable 43,582 40,095
Total current liabilities 990,868 851,832
Long-term debt, excluding current 290,501 397,110
Capital lease, excluding current 277,268 287,022
Total liabilities 1,558,637 1,535,964
Stockholders' Equity
Common stock of no par value
authorized 20,000,000 shares;
1,047,828 shares outstanding 472,926 482,711
Retained earnings 496,385 292,690
Stockholders' equity 969,311 775,401
Total liabilities & equity $ 2,527,948 $ 2,311,365
===================================
See notes to financial statements.
<PAGE>
BIG SKY TRANSPORTATION CO.
Flow of Equity
(unaudited)
Retained Earnings Stockholder Equity
Balance at June 30, 1996 $ 292,690 $ 775,401
Net Income 137,496 137,496
Pre-Freshstart tax
benefits realized 66,199 66,199
Effect of reverse stock split
and stock dividend (9,785)
Balance at March 31, 1997 $ 496,385 $ 969,311
See notes to financial statements
<PAGE>
BIG SKY TRANSPORTATION CO.
Statements of Operations
Three months-ended Nine months-ended
March 31, March 31,
1997 1996 1997 1996
(unaudited)(unaudited) (unaudited)(unaudited)
Operating Revenues:
Passenger $ 400,828 $ 428,891 $1,188,589 $1,281,115
Charter -- -- 5,900 7,130
Cargo 25,364 26,677 72,628 81,462
Public service 785,552 742,407 2,311,197 2,454,424
Other 13,925 7,495 52,999 21,854
Total $1,225,669 $1,205,470 $3,631,313 $3,845,985
Operating Expenses:
Flying 378,182 453,655 1,167,141 1,427,931
Maintenance 276,281 312,137 809,825 871,268
Passenger service 187,969 294,516 733,760 910,171
Sales 127,704 54,549 216,144 162,382
General/Admin. 129,231 143,686 378,676 435,617
Depreciation 20,206 21,600 61,056 64,186
Total $1,119,573 $1,280,143 $3,366,602 $3,871,555
Operating Income (Loss) 106,096 (74,673) 264,711 (25,570)
Other Income/(expenses):
Interest, net (8,009) (13,556) (27,378) (38,747)
Gain (loss) equipment 2,655 289 (10,625) 731
Total (5,354) (13,267) (38,003) (38,016)
Income (loss) before taxes 100,742 (87,940) 226,708 (63,586)
Income Tax Expense:
Current 6,686 (5,976) 16,169 --
Charge in lieu of taxes 30,201 (26,996) 73,040 --
Total 36,887 (32,972) 89,209 --
Income (loss) before
extraordinary items 63,855 (54,968) 137,499 (63,586)
Extraordinary item
Debt extinguishment -- -- -- (899)
Net Income (loss): $ 63,855 $ (54,968) $ 137,499 $ (64,485)
=============================================
Per share data:
Income per common and
common equivalent share .06 -- .13 --
Weighted average number
of common & common
equivalent shares
outstanding 1,047,828 1,043,772 1,047,828 1,043,772
See notes to financial statements.
<PAGE>
BIG SKY TRANSPORTATION CO.
Statements of Cash Flows
Nine months-ended
March 31,
1997 1996
(unaudited) (unaudited)
From operating activities:
Net income (loss) $ 137,499 $ (64,485)
Depreciation 61,056 69,714
(Gain) loss on equipment 10,625 731
Excess reorganization value
amortization and charges
in lieu of taxes 73,040 --
Changes in assets/liabilities:
Restricted cash (87,693) (122,619)
Accounts receivable (5,811) (54,086)
Expendable parts (2,438) (12,382)
Prepaid expenses (18,904) (52,829)
Accounts Payable (43,103) 63,353
Accrued expenses 170,376 35,894
Traffic payable 3,487 (863)
Net cash provided by operations 298,134 (137,572)
From investing activities:
Proceeds from equipment 359 3,565
Property & equipment (8,039) (6,813)
Net cash(used) provided
by investing (7,680) (3,248)
From financing activities:
Payments on long-term debt (96,166) (112,469)
Payments on capital lease (11,921) (10,698)
Net cash used by financing (108,087) (123,167)
Net cash increase (decrease) 182,367 (263,987)
Cash at beginning of period 360,668 408,457
Cash at end of period $ 543,035 $ 144,470
==================================
Supplement disclosures of
cash flow information:
Cash paid during the period for:
Interest $ 54,007 $ 63,039
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-dilutive and therefore not
presented.
NOTE C. Results of operations for the three months-ended and the nine
months-ended March 31, 1997 and 1996 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.
NOTE E. Certain reclassifications have been made to the 1996 numbers to
conform to the 1997 presentations.
<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 Nine months-ended
March 31, March 31,
% change %change
1997 1996 +/(-) 1997 1996 +/(-)
Passengers carried 5,912 6,954 (15.0) 19,156 21,640 (11.5)
Average passenger
trip (miles) 195 195 0 196 187 4.8
Revenue passenger
miles 1,153,651 1,354,426 (14.8) 3,745,628 4,248,586 (11.8)
Available seat
miles (scheduled) 3,682,824 3,995,697 (7.8) 11,297,360 13,294,997 (15.0)
Available seat
miles (charter) -- -- -- 9,825 -- 100.0
Total available
seat miles 3,682,824 3,995,697 (7.8) 11,307,185 13,294,997 (15.0)
Passenger load
factor (%) 31.3 33.9 (7.7) 33.1 31.9 3.7
Aircraft miles 251,522 275,519 (8.7) 770,844 906,320 (15.0)
Operating breakeven
load factor (%) 28.6 36.0 (20.6) 30.7 32.2 (4.7)
Yield per revenue
passenger mile (cents) 34.74 31.67 9.7 31.73 30.15 5.2
Operating cost per
available seat mile
(cents) 33.28 30.17 10.3 32.12 28.93 11.0
Freight pounds
enplaned 23,253 29,830 (22.1) 58,230 78,045 (25.4)
<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 March 31, 1997 and 1996:
Total operating revenues in the third quarter of fiscal year 1997 were $1.23
million, compared with $1.21 millon in the same quarter last year. Passenger
revenues decreased $28,891 or 6.5% to total $400,828, while public service
revenues increased $43,145 or 5.8% to total $785,552. Available seat miles
for scheduled service decreased 7.8% to total 3,682,824 also revenue
passenger miles decreased 14.8% to total 1,153,651 resulting in a 7.7% load
factor decrease from 33.9% to 31.3%. Yield per passenger mile increased 9.7%
to total 34.74 cents for March 1997 quarter.
Total operating expenses decreased $160,570 or 12.5% for the three months-
ended March 31, 1997, as compared to the three months-ended March 31, 1996.
Operating cost per available seat mile (ASM) for the same period increased
10.3%, from 30.17 cents to 33.28 cents.
The following table summarizes and compares major components of cost per ASM:
For three months-ended
March 31,
1997 1996
Payroll-related costs $.1103 $.1132
Other .0665 .0814
Maintenance .0542 .0546
Aircraft lease costs .0374 .0329
Fuel and oil .0351 .0382
$.3035 $.3203
=================
Payroll-related expenses decreased $45,878 or 10.1% in the March 1997 quarter
as compared to the March 1996 quarter. The average full-time equivalent
employees for the three months-ended March 31, 1997 and 1996 were 66 and 67,
respectively.
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results for three months-ended March 31, 1997 & 1996 (continued):
Other expenses decreased $79,934 or 24.6% in the quarter-ended March 31, 1997 as
compared to the same quarter for the prior year. Advertising experienced a
large reduction. At this time, this lower level of spending is expected to
continue.
Maintenance decreased 18,410 or 8.4%. A decrease in outside maintenance
services and shop and servicing supplies made up the vast majority of the
reduction in cost. This is impart due to the fleet status in March 1997
being one aircraft less than March 1996.
Fuel and oil costs expenses remained relatively unchanged in comparing March
1997 and 1996 quarters. Which indicated the increase in cost was off set by
the decline in block hours. Monthly block hour averages were 478 hours in
the March 1997 quarter from 514 in the March 1996 quarter.
Aircraft ownership/lease and insurance costs (aircraft rentals, depreciation,
hull insurance and property taxes) decreased $14,622 or 9.6%. The fleet
operated during the March 1997 quarter consisted of one Cessna 402C (owned)
and three Metroliner II's (leased). In comparison to the same quarter in
1996 with one Cessna 402C (owned) and four Metroliner II's (leased). As a
result of the reduction of one leased metro the lease cost, insurance and
property taxes have decreased.
Net non-operating expenses were $42,241 for the March 1997 quarter and $19,705
(income) for the March 1996 quarter. Pursuant to Chapter 11 Reorganization
"Fresh Start" reporting, a charge of $30,201 in lieu of tax was recorded in
the March 1997 and no entry in the March 1996 quarter.
The March 1997 quarter generated operating profit of $106,096 and net income
of $63,855. By comparison, the same quarter in 1996 produced a $74,673
operating loss and net loss of $54,968 including "Fresh Start" charges.
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results for the nine months-ended March 31, 1997 and 1996:
Total operating revenues decreased $214,672 or 5.6% from $3.85 million for
the nine months-ended March 31, 1996 to $3.63 million for nine months-ended
March 31, 1997. Passenger revenues decreased $92,526 or 7.2% from $1.28
million to $1.19 million. Public service revenues decreased $143,227 or 5.8%
to total $2.31 million. Available seat miles for scheduled service decreased
15.0% and revenue passenger miles decreased 11.8%, resulting in a 3.7% load
factor increase. Yield per passenger mile increased 5.2 percent.
Operating costs per ASM increased 11% from 28.93 cents to 32.12 cents. Total
operating expenses for the nine months-ended March 31, 1997 were 3.37 million
compared to 3.87 million for the same period one year earlier; a decrease of
$504,953 or 13%.
The following table summarizes and compares major components of cost per ASM:
For Nine Months-Ended
March 31,
1997 1996
Payroll-related costs $.1078 $.1038
Other .0713 .0738
Maintenance .0515 .0465
Aircraft lease costs .0316 .0362
Fuel and oil .0350 .0310
$.2972 $.2913
=================
Payroll-related expenses decreased $159,790 or 11.6% in the nine months-ended
March 31, 1997 as compared to the same period one year earlier.
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results for nine months-ended March 31, 1997 & 1996 (continued):
Other expenses decreased $173,125 or 17.6% for the nine months-ended March
31, 1997. Passenger related expenses such as interrupted trip, reservation
charges and credit card commissions had decreases over the March 1996
quarter, a reflection of the decline in passengers carried.
Maintenance costs decreased $33,920 or 5.5%. An increase in maintenance
materials and hangar expenses were offset by reductions of outside
maintenance services and shop and servicing supplies.
Fuel and oil costs for the nine months ended March 31, 1997 decreased $15,727
or 3.8% over the nine months ended March 31, 1996. As previously stated a
reduction in block hours associated with the reduction of aircraft in the
fleet constitute the decline in expenses.
Aircraft ownership/lease costs decreased $122,390 or 25.5%. Due to March
1997 having one less aircraft in the fleet, reductions in lease costs and
insurance were experienced.
Net non-operating expenses were $127,212 and $38,915 for the nine months-
ended March 31, 1997 and 1996, respectively. Pursuant to Chapter 11
reorganization "Fresh Start" reporting, charges in lieu of taxes (non cash)
of $73,040 was recorded for the nine months-ended March 31, 1997. No charge
was recorded for the same nine months period in 1996. These charges in lieu
of taxes are a result of "Fresh Start" accounting and is amortization of
excess reorganizational value for taxes that would have been incurred if the
Company did not have the use of net operating tax loss carryforwards.
The nine months of fiscal year 1997 produced operating profit of $264,711 and
a net profit of $137,499 whereas the same period one year earlier generated
operating loss of $25,570 and net loss of $64,485.
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources:
At March 31, 1997, the Company showed a current ratio of 1.81 and positive
working capital of $807,703 compared to a current ratio of 1.78 and positive
working capital of $661,130 at June 30, 1996. The Company generated cash
from operations of $182,367 and used $263,987 in the nine months-ended March
31, 1997 and 1996, respectively. Total long-term debt (including current
installments) at March 31, 1997 was $714,137 (including capital lease
obligations) compared to $822,224 at June 30, 1996. The Company is current
on all of its debt service obligations. Stockholders' equity was $969,311 at
March 31, 1997 compared to $775,401 at June 30, 1996.
In mid-January 1997, Order 96-12-34 was finalized with the Department of
Transportation, awarding the Company a new two year contract to provide
Essential Air Services to seven central and eastern Montana communities. The
new compensation rates are $3.24 million for the period December 1, 1996
through September 30, 1997 and $3.08 Million for the period October 1, 1997
through November 30, 1998. New and additional funding for the EAS program
was approved by congress in 1996, which likely will cause service increases
and additional compensation starting in October 1997.
The Company continues to investigate 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 and an agreement to sublet part of its
hangar facilities in Billings was completed in June 1996.
The Company occupies a 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 the Company 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 March
31, 1997, the Company has 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.
A claim for retroactive compensation related to the DOT's Service Reduction
Order (95-11-28), detrimentally affecting results between late November 1995
and mid-April 1996, was rejected.
On August 23, 1996 the Company's Plan of Recapitalization became effective.
As a result of a 5/1 reverse stock split, assuming all old shares are
submitted for exchange, there now are approximately 1.04 million shares of
common stock outstanding and an estimated 1,000 stockholders. Initially, the
new stock traded at 1 1/4. Under the Plan's provisions, certificate
transfers may occur as late as August 22, 1998.
<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 By: /s/ Karie Kane
Craig Denney Karie Kane
Executive VP/Division Manager Director, Accounting
(officer in charge of accounting)
May 07, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,057,497
<SECURITIES> 0
<RECEIVABLES> 454,804
<ALLOWANCES> 1,200
<INVENTORY> 238,566
<CURRENT-ASSETS> 1,798,571
<PP&E> 1,241,457
<DEPRECIATION> 529,338
<TOTAL-ASSETS> 2,527,948
<CURRENT-LIABILITIES> 990,868
<BONDS> 567,769
0
0
<COMMON> 1,047,828
<OTHER-SE> 496,385
<TOTAL-LIABILITY-AND-EQUITY> 2,527,948
<SALES> 0
<TOTAL-REVENUES> 1,225,669
<CGS> 0
<TOTAL-COSTS> 1,119,573
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,009
<INCOME-PRETAX> 100,742
<INCOME-TAX> 36,887
<INCOME-CONTINUING> 63,855
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,855
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
