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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
for the transition period
---------------- to ---------------
Commission file number 1-7991
BIG SKY TRANSPORTATION CO.
--------------------------
(exact name of small business issuer as specified in its charter)
MONTANA 81-0387503
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(state of other jurisdiction of incorporation (I.R.S. employer
or organization) identification no.)
1601 AVIATION PLACE
BILLINGS LOGAN INTERNATIONAL AIRPORT
BILLINGS, MT 59105
(406) 247-3910
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(address of registrant's principal executive offices)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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[ ]
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
CLASS: 1996 Series Common Stock, no par value
SHARES OUTSTANDING: At September 30, 2000: 1,248,102
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BIG SKY TRANSPORTATION CO.
FORM 10-QSB
For the Period-Ended September 30, 2000
CONTENTS
<TABLE>
<S> <C>
Part I Financial Information
Item 1. Financial Statements (condensed format):
Balance Sheets
September 30, 2000 and
June 30, 2000..............................................................3
Income Statements
Three months ended
September 30, 1999 and 2000................................................4
Cash Flow Statements
Three months ended September 30, 1999 and 2000.............................5
Item 2. Management's Discussion and Analysis or Plan of Operation.......................6-9
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K.................................................10
</TABLE>
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PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIG SKY TRANSPORTATION CO.
Balance Sheets
<TABLE>
<CAPTION> September 30,
2000 June 30, 2000
(unaudited) (audited)
------------------- -------------------
<S> <C> <C>
Assets
Current Assets
Restricted Cash $ 138,672 $ 137,500
Accounts Receivable, net 2,062,076 2,327,573
Expendable parts & supplies, at cost 594,093 507,875
Prepaid expenses 274,396 240,694
Assets held for liquidation 78,765 108,765
Deferred income taxes & other 215,630 69,000
-------------------- -------------------
Total Current Assets 3,363,632 3,391,407
Property and Equipment, net 2,982,035 3,002,376
Deferred Income Taxes & Other 342,689 444,954
Total Assets $ 6,688,356 $ 6,838,737
==================== ===================
Liabilities & Stockholders' Equity
Current Liabilities
Current maturities of long-term debt $ 195,441 $ 209,769
Notes payable 872,227 1,225,638
Accounts payable 1,661,791 1,301,677
Accrued expenses 759,326 825,887
Traffic balances & unused tickets 832,771 918,987
-------------------- -------------------
Total Current Liabilities 4,321,556 4,481,958
Long-Term Debt, Excluding Current Installments 1,518,817 1,553,080
Stockholders' Equity
Common stock of no par value;
(20,000,000 shares authorized 1,248,102 shares issued &
outstanding) 815,404 815,375
Additional paid-in capital 242,034 242,034
Accumulated deficit (185,602) (229,857)
Less treasury stock (20,000 shares, at cost) (23,853) (23,853)
-------------------- -------------------
Stockholders' Equity 847,983 803,699
-------------------- -------------------
Total Liabilities & Stockholder's Equity $ 6,688,356 $ 6,838,737
==================== ===================
</TABLE>
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BIG SKY TRANSPORTATION CO.
Income Statements
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
-------------- --------------
<S> <C> <C>
Operating Revenues:
Passenger $3,178,968 $2,492,977
Cargo 48,209 63,247
Public service 2,731,035 2,517,617
Other 30,916 24,518
-------------- --------------
Total 5,989,128 5,098,359
Operating Expenses:
Flying 2,353,556 2,192,089
Maintenance 1,340,800 1,191,357
Traffic 1,317,721 1,174,961
Marketing 440,415 381,611
General/Administrative 305,010 308,938
Depreciation 87,085 79,983
-------------- --------------
Total 5,844,587 5,328,939
Operating income (loss) 144,541 (230,580)
Other Income (Expense)
Interest, net (49,398) (55,414)
Capital gain 250 200
-------------- --------------
Total (49,148) (55,214)
Income (loss) before taxes 95,393 (285,794)
Income tax provision (benefit) 51,138 (99,429)
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Net income (loss) $44,255 $(186,365)
============== ==============
Per share data:
Basic earnings (loss) per
common share $ .04 $ (.15)
============== ==============
Diluted earnings (loss) per common
share $ .04 $ (.14)
============== ==============
</TABLE>
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BIG SKY TRANSPORTATION CO.
Cash Flow Statements
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
------------------- -----------------
<S> <C> <C>
Net cash provided (used):
By operations $ (294,576) $ 552,607
By investing activities (107,426) (185,678)
By financing activities 402,002 51,994
------------------- -----------------
Increase in cash - 418,923
Cash at beginning of period - 220,294
------------------- -----------------
Cash at end of period $ - $ 639,217
=================== =================
</TABLE>
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PART I. FINANCIAL INFORMATION, ITEM 2.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis or
Plan of Operation
Summary of Airline Operating Statistics:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
------------------------------
<S> <C> <C>
Passengers carried 36,410 31,793
Average passenger trip (miles) 304 267
Revenue passenger miles 11,078,387 8,479,132
Available seat miles 26,881,770 25,768,465
Passenger load factor (%) 41.21 32.91
Aircraft miles 1,414,830 1,356,235
Yield per revenue passenger mile (cents) 28.70 29.40
Freight pounds enplaned 49,275 82,023
Operating cost per available seat mile (cents) 21.74 20.68
Operating break-even load factor (%) 40.22 34.39
</TABLE>
6
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Analysis of Results for the Three Months Ended
September 30, 1999 and 2000:
Over the past two quarters Big Sky Transportation Co. ("Big Sky") has
significantly improved its operating results. A combination of increased
passenger revenues along with better management of maintenance expenses and
decreased pilot turnover resulted in operating incomes of $279,713 and $144,541
in the fourth quarter of 2000 and the first quarter of 2001, respectively.
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
(unaudited) (unaudited) Change %
---------------- ------------------ -------------- -------
<S> <C> <C> <C> <C>
Operating Revenues:
Passenger $ 3,178,968 $ 2,492,977 $ 685,991 28
Cargo 48,209 63,247 (15,038) (24)
Public service 2,731,035 2,517,617 213,418 8
Other 30,916 24,518 6,398 26
---------------- ------------------- ---------------
Total $ 5,989,128 $ 5,098,359 $ 890,769 17
================ =================== ===============
</TABLE>
The increase in passenger revenues is primarily attributable to new service to
Denver and higher load factors. The increase in public service revenue is due to
an increase in subsidy rates, effective December 1, 1999, for Big Sky's southern
route system (see discussion below). Also contributing the to increase in public
service revenue is a higher flight completion factor in 2001 compared to 2000.
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
(unaudited) (unaudited) Change %
------------------ ----------------- ------------------- -------
<S> <C> <C> <C> <C>
Operating Expenses:
Flying $ 2,353,556 $ 2,192,089 $ 161,467 7
Maintenance 1,340,800 1,191,357 149,443 13
Traffic 1,317,721 1,174,961 142,760 12
Marketing 440,415 381,611 58,804 15
General/Admin. 305,010 308,938 (3,928) (1)
Depreciation 87,085 79,983 7,102 9
------------------ ----------------- -------------------
Total $5,844,587 $ 5,328,939 $ 515,648 10
================== ================= ===================
</TABLE>
The increase in flight operations is primarily attributable to higher fuel
expenses and pilot payroll costs offset by lower crew training expenses.
Aviation fuel prices have increased approximately 35% on a year-over-year basis.
7
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The increase in maintenance expense is due to increased engine rentals and
engine reserve expenses offset by reduced engine and airframe repairs. The
increase in engine rentals is due to the timing of scheduled and unscheduled
engine maintenance which required additional engine rentals in order to maintain
Big Sky's flight schedule. Engine reserve expenses increased due to additional
flight hours. Beginning with the fourth quarter of 2000, Big Sky began a program
of managing the majority of its engine hot-end inspections in-house rather than
with third party vendors. This initiative has resulted in better control of its
scheduled engine maintenance expenses.
The increase in traffic servicing expense is due primarily to new service,
beginning February 2000, to Denver that connected Big Sky's northern and
southern route systems. An overall increase in passenger traffic also
contributed to the increase in traffic servicing expense.
The increase in marketing expense is consistent with the above increases in
passenger traffic.
Liquidity and Capital Resources:
A review of current liquidity and capital resources are as follows:
<TABLE>
<CAPTION>
Working Capital Current Ratio
--------------- -------------
<S> <C> <C>
Year-end June 30, 2000 $ (1,090,551) 0.76:1
Period-ending September 30, 2000 $ (957,924) 0.78:1
<CAPTION>
Long-term Debt Stockholder's
(excluding current portion) Equity
--------------------------- -------------
<S> <C> <C>
Year-end June 30, 2000 $1,553,080 $803,699
Period-ending September 30, 2000 $1,518,817 $847,984
</TABLE>
Cash used in operations and for investing activities for the three months ended
September 30, 2000 was $294,576 and $107,426, respectively. Cash provided by
financing activities was $402,002 during the period.
Big Sky has established a line of credit through First Interstate Bank and Trust
Co. of Billings for an amount of up to $1,500,000. Big Sky uses the line to
supplement timing differences in cash flows. The maximum amount drawn on the
line of credit during the quarter was $1,453,369 compared to a low of $198,698.
The large losses over the past two years have required Big Sky to increase the
use of the line of credit. Management believes that these losses were caused by
an abnormal number of problems, and therefore believes that the line of credit
is adequate for Big Sky's current needs. Management is evaluating options to
increase Big Sky's capitalization to reduce its reliance on the line of credit.
8
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A new two-year Essential Air Service ("EAS") contract for Big Sky's southern
operations became effective December 1, 1999. The contract increases Big Sky's
annual subsidy for this operation by approximately 5% per year over the previous
contract. Big Sky's EAS contract that covers seven eastern and central Montana
communities expires on November 30, 2000. Management has negotiated a subsidy
rate agreement with the Department of Transportation (DOT) for an additional two
years beginning December 1, 2000. This agreement, subject to a Show Cause Order
by the DOT, provides for Big Sky's tentative selection as carrier to provide
essential air service to the above Montana communities. This agreement increases
Big Sky's annual subsidy for this operation by approximately 5% per year over
the previous contract.
9
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PART II. OTHER INFORMATION
BIG SKY TRANSPORTATION CO.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) Reports on Form 8-K
No reports on Form 8-K were filed during the September 30, 2000
quarter.
C) Item 27 Financial Data Schedule
(Only for filings via EDGAR)
10
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BIG SKY TRANSPORTATION CO.
Signature
The Registrant, by the undersigned, has signed this report in accordance with
the requirements of the Securities Exchange Act of 1934.
BIG SKY TRANSPORTATION CO.
Registrant
By: /s/ Kim B. Champney
-------------------
President & CEO
November 10, 2000
