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 December 31, 1996
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 December 31, 1996: 1,047,864
<PAGE>
BIG SKY TRANSPORTATION CO.
FORM 10-Q
For the Period-Ended December 31, 1996
CONTENTS
Part I Financial Information
Item 1. Condensed Financial Statements:
Balance Sheets
December 31, 1996 (unaudited) and June 30, 1996 (audited)
Flow of Equity (unaudited)
Statements of Operations
Three months-ended and Six months-ended
December 31, 1996 and 1995 (unaudited)
Statements of Cash flows
Six months-ended December 31, 1996 and 1995 (unaudited)
Notes to 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 Sheet
December 31, June 30,
1996 1996
ASSETS (unaudited) (audited)
Current Assets:
Cash $ 443,420 $ 360,668
Restricted cash 514,452 426,769
Accounts receivable, net 409,139 447,793
Expendable parts/supplies 244,376 236,128
Inventory held for sale 30,000 41,604
Prepaid expenses 21,461 --
Total current assets 1,662,848 1,512,962
Property & Equipment:
Flight equipment 612,905 609,022
Capital lease facility 456,185 456,185
Other property & equipment 175,110 175,110
1,244,200 1,240,317
Accumulated depreciation (509,093) (466,013)
Net property & equipment 735,107 774,304
Excess reorganization value -- 6,841
Other assets 17,258 17,258
Total assets $ 2,415,213 $ 2,311,365
===================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Current long-term debt $ 128,398 $ 122,057
Current capital lease 16,035 16,035
Accounts payable 117,486 121,687
Accrued expenses 635,385 551,958
Traffic payable 42,699 40,095
Total current liabilities 940,003 851,832
Long-term debt, excluding current 320,710 397,110
Capital lease, excluding current 279,242 287,022
Total liabilities 1,539,955 1,535,964
Stockholders' Equity
Common stock of no par value
authorized 20,000,000 shares;
1,047,864 shares outstanding 472,926 482,711
Retained earnings 402,332 292,690
Stockholders' equity 875,258 775,401
Total liabilities & equity $ 2,415,213 $ 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 73,644 73,644
Pre-Freshstart tax
benedits realized 35,998 35,998
Effect of reverse stock split
and stock dividend (9,785)
Balance at December 31, 1996 $ 402,332 $ 875,258
see notes to finanacial statements
<PAGE>
BIG SKY TRANSPORTATION CO.
Statement of Operations
Three months-ended Six months-ended
December 31, December 31,
1996 1995 1996 1995
(unaudited)(unaudited) (unaudited)(unaudited)
Operating Revenues:
Passenger $ 392,689 $ 438,104 $ 787,761 $ 852,224
Charter -- 7,130 5,900 7,130
Cargo 25,281 27,260 47,264 54,785
Public service 772,053 813,380 1,525,645 1,712,017
Other 15,341 3,926 39,074 14,359
Total $1,205,364 $1,289,800 $2,405,644 $2,640,515
Operating Expenses:
Flying 394,531 500,864 788,959 974,276
Maintenance 280,179 284,024 533,544 559,131
Passenger service 275,225 306,438 545,791 615,655
Sales 45,021 53,616 88,440 107,833
General/Admin. 121,707 172,820 249,445 291,931
Depreciation 20,200 21,241 40,850 42,586
Total $1,136,863 $1,339,003 $2,247,029 $2,591,412
Operating Income (Loss) 68,501 (49,203) 158,615 49,103
Other Income/(expenses):
Interest, net (9,910) (12,988) (19,369) (25,191)
Gain (loss) equipment (12,327) 270 (13,280) 442
Total (22,237) (12,718) (32,649) (24,749)
Income before taxes 46,264 (61,921) 125,966 24,354
Income (loss) Tax Expense:
Current 3,610 -- 9,483 5,976
Charge in lieu of taxes 16,309 -- 42,839 26,996
Total 19,919 -- 52,322 32,972
Income (loss) before
extraordinary item 26,345 (61,921) 73,644 (8,618)
Extraordinary item
Debt extinguishment -- -- -- (899)
Net Income (loss): $ 26,345 $ (61,921) $ 73,644 $ (9,517)
============================================
Per share data:
Income per common and
common equivalent share .03 -- .07 --
Weighted average number
of common & common
equivalent shares
outstanding 1,047,864 1,043,772 1,047,864 1,043,772
See notes to financial statements.
<PAGE>
BIG SKY TRANSPORTATION CO.
Statements of Cash Flows
Six months-ended
December 31,
1996 1995
(unaudited) (unaudited)
From operating activities:
Net income $ 73,644 $ (9,517)
Depreciation 40,850 45,439
(Gain) loss on equipment 12,327 442
Excess reorganization value
amortization and charges
in lieu of taxes 42,839 26,996
Changes in assets/liabilities:
Restricted cash (87,683) (85,447)
Accounts receivable 38,654 (97,788)
Expendable parts (8,248) (8,333)
Prepaid expenses (21,461) (44,656)
Accounts Payable (4,201) 168,995
Accrued expenses 83,427 34,934
Traffic payable 2,604 3,065
Net cash provided by operations 172,752 34,130
From investing activities:
Proceeds from equipment 359 2,150
Property & equipment (12,520) 858
Net cash (used) provided
by investing (12,161) 3,008
From financing activities:
Payments on long-term debt (70,059) (84,783)
Payments on capital lease (7,780) (7,018)
Net cash used by financing (77,839) (91,801)
Net cash increase (decrease) 82,752 (54,663)
Cash at beginning of period 360,668 408,457
Cash at end of period $ 443,420 $ 353,794
==================================
see notes to financial statements
<PAGE>
BIG SKY TRANSPORTATION CO.
Statement of Cash Flows
Six months-ended
December 31,
1996 1995
(unaudited) (unaudited)
Supplement disclosures of
cash flow information:
Cash paid during the period for:
Interest $ 36,879 $ 42,660
Income taxes -- --
<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 six months-
ended December 31, 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.
NOTE E. Certain reclassifications have been made to the 1995 numbers to
conform to the 1996 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 Six months-ended
December 31, December 31,
% change %change
1996 1995 +/(-) 1996 1995 +/(-)
Passengers carried 6,948 7,892 (11.9) 13,244 14,686 (9.8)
Average passenger
trip (miles) 194 196 (.8) 196 197 (.7)
Revenue passenger
miles 1,351,204 1,547,744 (12.7) 2,591,977 2,894,160 (10.4)
Available seat
miles (scheduled) 3,780,346 4,500,584 (16.0) 7,614,536 9,299,300 (18.1)
Available seat
miles (charter) -- -- -- 9,825 -- 100.0
Total available
seat miles 3,780,346 4,500,584 (16.0) 7,624,361 9,299,300 (18.0)
Passenger load
factor (%) 35.7 34.4 3.9 34.0 31.1 9.2
Aircraft miles 256,119 308,389 (16.9) 519,322 630,801 (17.7)
Operating breakeven
load factor (%) 33.7 35.7 (5.6) 31.8 30.5 4.0
Yield per revenue
passenger mile (cents) 29.06 28.31 2.7 30.39 29.45 3.2
Operating cost per
available seat mile
(cents) 31.89 28.66 11.3 31.55 28.39 11.1
Freight pounds
enplaned 17,233 29,830 (42.2) 34,977 56,673 (38.3)
<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 December 31, 1996 and 1995:
Total operating revenues in the second quarter of fiscal year 1997 were $1.21
million, compared with $1.29 millon in the same quarter last year. Passenger
revenues decreased $45,415 or 10.4% to total $392,689, in addition public
service revenues decreased $41,327 or 5.1% to total $772,053. Available seat
miles for scheduled service decreased 16% to total 3,780,346 also revenue
passenger miles decreased 12.7% to total 1,351,204, resulting in a 3.9% load
factor improvement from 34.4% to 35.7%. Total available seat miles
decreased 16%. However, the yield per passenger mile increased 2.7% to total
29.06 cents for the December 1996 quarter.
Total operating expenses decreased $202,140 or 15.1% for the three months-ended
December 31, 1996, as compared to the three months-ended December 31, 1995.
Operating cost per available seat mile (ASM) for the same period increased
11.3%, from 28.66 cents to 31.89 cents.
The following table summarizes and compares major components of cost per ASM:
For three months-ended
December 31,
1996 1995
Payroll-related costs $.1115 $.1048
Other .0697 .0768
Maintenance .0536 .0448
Aircraft lease costs .0291 .0381
Fuel and oil .0364 .0325
$.3003 $.2970
=================
Payroll-related expenses decreased $50,306 or 10.7% in the December 1996
quarter, as compared to the December 1995 quarter. The average full-time
equivalent employees (FTE) for the three months-ended December 31, 1996
and 1995 were 63 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 December 1996 & 1995 (continued):
Other expenses decreased $82,166 or 23.7% in the quarter-ended December 31,
1996 as compared to the same quarter for the prior year. The greatest
reductions were experienced in the following areas: legal, printing, supplies
and forms, while there were increases in utilities, memberships and
subscriptions.
Maintenance decreased 3,845 or 1.4%. An increase in maintenance materials
was offset by decreases in outside services, shop and servicing supplies.
Fuel and oil costs decreased $8,918 or 6.1%. Fuel costs for the three months
ended December 31, 1996 decreased slightly compared to the same three months
in 1995. Block hours decreased by 12%, monthly averages of 497 hours for
December 1996 and 564 hours during December 1995 quarters.
Marketing related costs decreased by $8,595 or 16%. The largest decreases were
in the travel and credit card commissions, followed by equipment rentals and
customer reservations charges, a result of 11.9% fewer passengers carried.
Aircraft ownership/lease and insurance costs (aircraft rentals, depreciation,
hull insurance and property taxes) decreased $61,399 or 35.7%. A modest
decrease was accomplished in the aircraft hull insurance for fiscal year 1997.
The largest change in comparing three months ended December 1996 to three
months ended December 1995 is due to the property tax liability true-up
entries made in 1995.
Net non-operating expenses were $42,156 for the December 1996 quarter and
$12,718 for the December 1995 quarter. Pursuant to Chapter 11 Reorganization
"Fresh Start" reporting, a charge of $16,309 in lieu of tax was recorded in
the December 1996, compared to none for the December 1995 quarter.
The December 1996 quarter generated operating profit of $68,501 and net income
of $26,345. By comparison, the same quarter in 1995 produced $49,203
operating loss and net loss of $61,921 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 six months-ended December 31, 1996 and 1995:
Total operating revenues decreased $234,871 or 8.9% from $2.64 million for the
six months-ended December 31, 1995 to $2.41 million for six months-ended
December 31, 1996. Passenger revenues decreased $64,463 or 7.6% from
$852,224 to $787,761. Public service revenues decreased $186,372 or 10.9% to
total $1.53 million. Available seat miles for scheduled service decreased
18.1% and revenue passenger miles decreased 10.4%, resulting in a 9.3%
load factor improvement from 31.1% to 34%. Total available seat miles,
decreased 18%. While the yield per passenger mile increased 3.2% to 30.39
cents for the six months ended December 31, 1996.
Operating costs per ASM increased 11.1% from 28.39 cents to 31.55 cents. Total
operating expenses for the six months-ended December 31, 1996 were 2.2
million compared to 2.6 million for the same period one year earlier; an
decrease of $344,383 or 13.3%.
The following table summarizes and compares major components of cost per ASM:
For Six Months-Ended
December 31,
1996 1995
Payroll-related costs $.1066 $.0997
Other .0737 .0705
Maintenance .0502 .0429
Aircraft lease costs .0288 .0353
Fuel and oil .0349 .0302
$.2942 $.2786
=================
Payroll-related expenses decreased $113,912 or 12.3% in the six months-ended
December 31, 1996 as compared to the same period one year earlier. This is
result of staff reductions in December 1996 in part due to a change in the
flight schedule.
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results for six months-ended December 31, 1996 & 1995 (continued):
Other expenses decreased $93,191 or 14.2% for the six months-ended December
31, 1996. Increases in utiliities and outside purchases were offset by
decreases in personnel expenses, legal and professional fees.
Maintenance costs decreased $25,587 or 4.6%. Outside services were reduced
along with shop and servicing supplies, while maintenance materials increased.
Fuel and oil costs decreased $14,003 or 5% in the six months-ended
December 31, 1996 as compared to the same period one year earlier. The
aircraft fleet at December 1996 consisted of one Cessna 402C and three
Metroliners in comparison to December 1995 with one Cessna 402C and four
Metroliners. Also a change in flight schedule reduced the number of monthly
block hours.
Marketing costs decreased $19,393 or 18%. This is due to reductions in travel
and credit card commissions, tariff and advertising costs.
Aircraft ownership/lease costs decreased $107,768 or 32.8%. Due to December
1996 having one less aircraft in the fleet, reductions in lease costs and
insurance were experienced.
Net non-operating results were $84,971 and $58,620 for the six months-ended
December 31, 1996 and 1995, respectively. Pursuant to Chapter 11
reorganization "Fresh Start" reporting, charges in lieu of taxes (non cash)
of $42,839 and $26,996 were recorded for the six months-ended December 31,
1996 and 1995 respectively. 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 six months of fiscal year 1997 produced operating income of $158,615 and
a net income of $73,644 whereas the same period one year earlier generated
operating income of $49,103 and net loss of $9,517.
<PAGE>
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources:
At December 31, 1996, the Company showed a current ratio of 1.77:1 and
positive working capital of $722,845 compared to a current ratio of 1.78:1
and positive working capital of $661,130 at June 30, 1996. The Company
generated cash from operations of $173,705 and $34,110 for the six months
ended December 31, 1996 and 1995, respectively. Total long-term debt
(including current installments) at December 31, 1996 was $744,385 (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 $875,258 at December 31, 1996, a 12.9% increase from the balance
of $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 November 30, 1997 and $3.08 million for the period December 1, 1997
through November 30, 1998. The Company is investigating available business
opportunities in order to reduce dependence upon the Federal Government
Essestial 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 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 ballon
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 December
31, 1996, 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 become effective.
As a result of a 5/1 reverse stock split, there now are approximately 1.04
million share of common stock outstanding and an estimated 1,000 stockholders.
Initally, 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 Accounting Manager
(Officer in charge of Accounting)
February 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 957,872
<SECURITIES> 0
<RECEIVABLES> 410,339
<ALLOWANCES> 1,200
<INVENTORY> 244,376
<CURRENT-ASSETS> 1,662,848
<PP&E> 1,244,200
<DEPRECIATION> 509,093
<TOTAL-ASSETS> 2,415,213
<CURRENT-LIABILITIES> 940,003
<BONDS> 599,952
0
0
<COMMON> 472,926
<OTHER-SE> 402,332
<TOTAL-LIABILITY-AND-EQUITY> 2,415,213
<SALES> 0
<TOTAL-REVENUES> 2,405,644
<CGS> 0
<TOTAL-COSTS> 2,247,029
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,369
<INCOME-PRETAX> 125,966
<INCOME-TAX> 52,322
<INCOME-CONTINUING> 73,644
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,644
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
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