UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from . . . . . . to . . . . . .
Commission file number 1-8957
ALASKA AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Alaska 92-0009235
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19300 Pacific Highway South, Seattle, Washington 98188
(Address of principal executive offices)
Registrant's telephone number, including area code: (206) 431-7079
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 CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The registrant has 500 common shares, par value $1.00, outstanding at
September 30, 1998.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Attached are the following Alaska Airlines, Inc. (the Company or Alaska)
unaudited financial statements: (i) balance sheets as of September 30, 1998
and December 31, 1997; (ii) statements of income for the quarters and nine
months ended September 30, 1998 and 1997; (iii) statement of shareholder's
equity for the nine months ended September 30, 1998; and, (iv) statements
of cash flows for the nine months ended September 30, 1998 and 1997. Also
attached are the accompanying notes to the Company's financial statements
that have changed significantly during the nine months ended September 30,
1998. These statements, which should be read in conjunction with the
financial statements in the Company's annual report on Form 10-K for the
year ended December 31, 1997, include all adjustments that are, in the
opinion of management, necessary for a fair presentation of the results for
the interim periods. The adjustments made were of a normal recurring
nature.
The Company is a wholly owned subsidiary of Alaska Air Group, Inc. (Air
Group) whose principal subsidiaries are Alaska Airlines, Inc. and Horizon
Air Industries, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
Third Quarter 1998 Compared with Third Quarter 1997
Net income for the third quarter of 1998 was $40.6 million compared with a
net income of $40.2 million in 1997. The 1998 third quarter includes an
after-tax charge of $10.1 million for settlement of the MarkAir litigation.
Operating income for the third quarter of 1998 was $79.3 million compared
with $69.3 million for 1997. Lower fuel prices accounted for $9.4 million
of the $10.0 million improvement in operating income. Airline financial and
statistical data is shown following the financial statements. A discussion
of this data follows.
Operating income increased 14.4% to $79.3 million, resulting in a 17.8%
operating margin as compared to a 16.5% margin in 1997. Operating revenue
per available seat mile (ASM) decreased 4.3% to 9.62 cents while operating
expenses per ASM decreased 5.8% to 7.92 cents. The decrease in revenue per
ASM was due to a 1.2 point decrease in system passenger load factor
combined with a 2.2% decrease in system passenger yield. The lower load
factors and yields are largely due to an 11.0% increase in capacity in
1998. Approximately half of the yield decline is due to the Canadian
market, which is still in the development stage.
Freight and mail revenues decreased 0.9% due to lower freight volumes,
resulting from increased competition in the Seattle-Anchorage market.
Other-net revenues increased 4.1% due to increased revenue from travel
partners in Alaska's frequent flyer program.
The table below shows the major operating expense elements on a cost per
ASM basis for Alaska for the third quarters of 1997 and 1998.
<TABLE>
<CAPTION>
Alaska Airlines Operating Expenses Per ASM (In Cents)
1997 1998 Change % Change
<S> <C> <C> <C> <C>
Wages and benefits 2.67 2.66 (.01) --
Employee profit sharing .16 .17 .01 6
Contracted services .26 .26 -- --
Aircraft fuel 1.18 .96 (.22) (19)
Aircraft maintenance .43 .42 (.01) (2)
Aircraft rent .90 .91 .01 1
Food and beverage service .31 .29 (.02) (7)
Commissions .72 .57 (.15) (21)
Other selling expenses .49 .44 (.05) (10)
Depreciation and amortization .35 .34 (.01) (3)
Gain on sale of assets (.01) -- .01 NM
Landing fees and other rentals .34 .34 -- --
Other .60 .56 (.04) (7)
Alaska Airlines Total 8.40 7.92 (.48) (6)
NM = Not Meaningful
</TABLE>
Alaska's lower unit costs were primarily due to lower fuel prices and lower
travel agent commission rates. Significant unit cost changes are discussed
below.
Fuel expense per ASM decreased 19%, due to a 19% decrease in the price of
fuel.
Commission expense per ASM decreased 21%, because the commission rate paid
to travel agents decreased from 10% to 8% for sales made October 1, 1997
and thereafter. As a percentage of passenger revenue, commissions expense
decreased 18%, from 7.9% to 6.5%.
Nonoperating Income (Expense) Nonoperating expense was significantly
affected by the $16.5 million charge for settling the MarkAir litigation
(see Legal Proceedings). This charge was partly offset by $2.1 million
less interest expense incurred and by a $3.2 million increase in interest
income earned on higher cash balances, resulting in a $10.7 million
increase in net nonoperating expense.
Nine Months 1998 Compared with Nine Months 1997
Net income for the nine months ended September 30, 1998 was $91.7 million,
compared with a net income of $61.5 million in 1997. Operating income for
the first nine months of 1998 was $159.4 million compared to $109.9 million
for 1997. Lower fuel prices, adjusted for profit sharing, accounted for
$35.4 million of the $49.5 million improvement in operating income.
Operating income increased 45.0% to $159.4 million, resulting in a 13.4%
operating margin as compared to a 10.0% margin in 1997. Operating revenue
per ASM remained even at 9.47 cents while operating expenses per ASM
decreased 3.7% to 8.21 cents. A 1.3% increase in system passenger yield
was offset by a 0.4 point decrease in the system passenger load factor.
Unit costs decreased 3.7% due to lower fuel prices and commission rates,
partly offset by higher maintenance and profit sharing costs.
Liquidity and Capital Resources
The table below presents the major indicators of financial condition and
liquidity.
<TABLE>
<CAPTION>
Dec. 31, 1997 Sep. 30, 1998 Change
(In millions, except debt-to-equity)
<S> <C> <C> <C>
Cash and marketable securities $212.4 $406.9 $194.5
Working capital (deficit) (151.4) (48.4) 103.0
Long-term debt and
capital lease obligations 215.3 181.1 (34.2)
Shareholders' equity 433.0 524.7 91.7
Debt-to-equity 33%:67% 26%:74% NA
</TABLE>
The Company's cash and marketable securities portfolio decreased by $195
million during the first nine months of 1998. Operating activities
provided $288 million of cash during this period. Additional cash was
provided by the sale and leaseback of nine B737-400 aircraft ($288
million). Cash was used for $345 million of capital expenditures,
including the purchase of nine new B737-400 aircraft, flight equipment
deposits and airframe and engine overhauls and the repayment of debt ($35
million).
Commitments During May 1998, Alaska ordered one Boeing 737-400 and two
Boeing 737-700 aircraft to be delivered in 1999, and three more B737-700s
to be delivered in 2000. At September 30, 1998, the Company had firm
orders for 23 aircraft with a total cost of approximately $756 million as
set forth below.
<TABLE>
<CAPTION>
Delivery Period - Firm Orders
<S> <C> <C> <C> <C> <S>
Aircraft 1999 2000 2001 2002 Total
Boeing B737-400 3 -- -- -- 3
Boeing B737-700 5 5 -- -- 10
Boeing B737-900 -- -- 5 5 10
Total 8 5 5 5 23
Cost (Millions) $251 $155 $175 $175 $756
</TABLE>
Year 2000 Computer Issue The Company uses a significant number of computer
software programs and embedded operating systems that were not originally
designed to process dates beyond 1999. The Company has implemented a
project to ensure that the Company's systems will function properly in the
year 2000 and thereafter. The Company anticipates completing this project
for substantially all key systems in early 1999 and believes that, with
modifications to its existing software and systems and/or conversions to
new software, the year 2000 issue will not pose significant operational
problems. Most of the Company's information technology projects in the
last several years have made the affected systems Year 2000 compliant. The
direct costs of projects solely intended to correct year 2000 problems are
currently estimated at less than $2 million. Additional systems currently
under review may require further resources. The Company does not expect
any cost increases to have a material effect on its results of operations.
The Company is also in contact with its significant suppliers and vendors
with which its systems interface and exchange data or upon which its
business depends. These efforts are designed to minimize the extent to
which its business will be vulnerable to their failure to remediate their
own year 2000 issues. The Company's business is also dependent upon
certain governmental organizations or entities such as the Federal Aviation
Administration (FAA) that provide essential aviation industry
infrastructure. The Company is working with the Airline Transport
Association to monitor the FAA's progress in making its systems year 2000
compliant. There can be no assurance that such third parties on which the
Company's business relies will successfully remediate their systems on a
timely basis. The Company's business, financial condition or results of
operations could be materially adversely affected by the failure of its
systems or those operated by other parties to operate properly beyond 1999.
Areas that could be adversely affected include flight operations,
maintenance, planning, reservations, sales, accounting and the frequent
flyer program. The Company already has in place certain disaster
contingency plans anticipating the potential loss of essential services
such as electricity and financial accounting systems. The Company will
leverage its Year 2000 contingency planning off these existing plans. In
addition, the Company is developing and executing additional contingency
plans designed to allow continued operation in the event of failure of
third party systems or products.
New Accounting Standards During June 1998, the Financial Accounting
Standards Board issued FAS 133, Accounting for Derivative Instruments and
Hedging Activities The new standard requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
value. Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative
and whether it qualifies for hedge accounting. Due to the Company's
minimal use of derivatives, the new standard is expected to have no
material impact on its financial position or results of operations. FAS
133 will be effective for the Company's fiscal year beginning January 1,
2000.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
In July 1998, the Company announced that it had reached an agreement in
principle with the trustee for creditors of the defunct MarkAir, Inc.
regarding a breach of contract lawsuit. Subsequently, a formal settlement
agreement was approved by the bankruptcy court.. The $16.5 million
settlement resulted in an after-tax charge of $10.1 million in the third
quarter of 1998.
ITEM 5. Other Information
During the first quarter of 1998, Alaska's mechanics, inspectors, cleaners,
janitors and fleet service employees voted to be represented by the
Aircraft Mechanics Fraternal Association (AMFA) rather than the
International Association of Machinists (IAM). The negotiation of an
initial contract began in July 1998. The IAM will continue to represent
Alaska's stock clerks and ramp service employees, whose contract became
amendable August 31, 1997. The Company and the IAM are continuing
negotiations of a new contract with the assistance of a federal mediator.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial data schedule.
(b) No reports on Form 8-K were filed during the third quarter of 1998.
Signatures
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ALASKA AIRLINES, INC.
Registrant
Date: October 28, 1998
/s/ John F. Kelly
John F. Kelly
Chairman, President and Chief Executive Officer
/s/ Harry G. Lehr
Harry G. Lehr
Senior Vice President/Finance
(Principal Financial Officer)
<PAGE>
<TABLE>
BALANCE SHEET
Alaska Airlines, Inc.
<CAPTION>
ASSETS
December 31, September 30,
(In Millions) 1997 1998
<S> <C> <C>
Current Assets
Cash and cash equivalents $102.3 $192.0
Marketable securities 110.1 214.9
Receivables from related companies 4.3 4.4
Receivables - net 65.5 87.3
Inventories and supplies 26.5 25.3
Prepaid expenses and other assets 86.6 82.1
Total Current Assets 395.3 606.0
Property and Equipment
Flight equipment 886.4 901.3
Other property and equipment 222.8 244.8
Deposits for future flight equipment 80.0 99.1
1,189.2 1,245.2
Less accumulated depreciation and amortization 324.6 362.9
864.6 882.3
Capital leases:
Flight and other equipment 44.4 44.4
Less accumulated amortization 27.6 29.1
16.8 15.3
Total Property and Equipment - Net 881.4 897.6
Intangible Assets - Subsidiaries 14.5 14.1
Other Assets 79.5 78.5
Total Assets $1,370.7 $1,596.2
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
BALANCE SHEET
Alaska Airlines, Inc.
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31, September 30,
(In Millions) 1997 1998
<S> <C> <C>
Current Liabilities
Accounts payable $55.9 $70.0
Payables to related companies 50.8 104.6
Accrued aircraft rent 47.7 55.0
Accrued wages, vacation and payroll taxes 60.5 66.6
Other accrued liabilities 83.0 137.6
Air traffic liability 166.1 193.0
Note payable to related company 54.0 -
Current portion of long-term debt and
capital lease obligations 28.7 27.6
Total Current Liabilities 546.7 654.4
Long-Term Debt and Capital Lease Obligations 215.3 181.1
Other Liabilities and Credits
Deferred income taxes 72.2 103.0
Deferred income 15.4 37.1
Other liabilities 88.1 95.9
175.7 236.0
Shareholder's Equity 0.0 0.0
Common stock, $1 par value 0.0 0.0
Authorized: 1,000 shares
Issued: 1997 and 1998 - 500 shares - -
Capital in excess of par value 225.8 225.8
Retained earnings 207.2 298.8
433.0 524.7
Total Liabilities and Shareholder's Equity $1,370.7 $1,596.2
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF INCOME
Alaska Airlines, Inc.
<CAPTION>
Three Months Ended September 30
(In Millions) 1997 1998
<S> <C> <C>
Operating Revenues
Passenger $380.5 $406.2
Freight and mail 22.9 22.7
Other - net 16.9 17.6
Total Operating Revenues 420.3 446.5
Operating Expenses
Wages and benefits 118.5 131.3
Contracted services 11.0 12.1
Aircraft fuel 49.4 44.4
Aircraft maintenance 17.8 19.6
Aircraft rent 37.7 42.1
Food and beverage service 12.7 13.5
Commissions 30.1 26.5
Other selling expenses 20.3 20.4
Depreciation and amortization 14.4 15.6
Loss (gain) on sale of assets (0.4) 0.1
Landing fees and other rentals 14.1 15.9
Other 25.4 25.7
Total Operating Expenses 351.0 367.2
Operating Income 69.3 79.3
Nonoperating Income (Expense)
Interest income 3.3 6.5
Interest expense (6.4) (4.3)
Interest capitalized 0.8 1.0
Other - net 0.6 (15.6)
(1.7) (12.4)
Income before income tax 67.6 66.9
Income tax expense 27.4 26.3
Net Income $40.2 $40.6
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF INCOME
Alaska Airlines, Inc.
<CAPTION>
Nine Months Ended September 30
(In Millions) 1997 1998
<S> <C> <C>
Operating Revenues
Passenger $984.0 $1,076.9
Freight and mail 62.3 63.9
Other - net 51.6 52.8
Total Operating Revenues 1,097.9 1,193.6
Operating Expenses
Wages and benefits 327.4 367.1
Contracted services 30.9 36.9
Aircraft fuel 150.4 123.2
Aircraft maintenance 48.8 60.3
Aircraft rent 110.2 117.7
Food and beverage service 34.9 36.6
Commissions 77.9 71.9
Other selling expenses 52.2 56.3
Depreciation and amortization 42.1 46.0
Loss (gain) on disposition of assets (0.3) 0.3
Landing fees and other rentals 40.4 44.6
Other 73.1 73.3
Total Operating Expenses 988.0 1,034.2
Operating Income 109.9 159.4
Nonoperating Income (Expense)
Interest income 8.4 16.4
Interest expense (19.1) (13.5)
Interest capitalized 2.4 3.6
Other - net 2.1 (14.2)
(6.2) (7.7)
Income before income tax 103.7 151.7
Income tax expense 42.2 60.0
Net Income $61.5 $91.7
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF SHAREHOLDER'S EQUITY
Alaska Airlines, Inc.
<CAPTION>
Capital in
Common Excess of Retained
(In Millions) Stock Par Value Earnings Total
<S> <C> <C> <C> <C>
Balances at December 31, 1997 $ - $225.8 $207.2 $433.0
Net income for the nine months
ended September 30, 1998 91.7 91.7
Balances at September 30, 1998 $ - $225.8 $298.9 $524.7
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CASH FLOWS
Alaska Airlines, Inc.
<CAPTION>
Nine Months Ended September 30 (In Millions) 1997 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $61.5 $91.7
Adjustments to reconcile net income to cash:
Depreciation and amortization 42.1 46.0
Amortization of airframe and engine overhauls 21.6 25.5
Loss (gain) on sale of assets (0.3) 0.3
Increase in deferred income taxes 22.4 30.8
Increase in accounts receivable (1.1) (21.9)
Decrease in other current assets 20.9 5.7
Increase in air traffic liability 21.3 26.9
Increase in other current liabilities 36.4 81.9
Other-net 2.4 1.3
Net cash provided by operating activities 227.2 288.2
Cash flows from investing activities:
Proceeds from disposition of assets 0.5 0.5
Purchases of marketable securities (236.2) (158.9)
Sales and maturities of marketable securities 195.2 54.1
Restricted deposits (2.0) (1.7)
Additions to flight equipment deposits (38.9) (112.1)
Additions to property and equipment (186.2) (233.0)
Net cash used in investing activities (267.6) (451.1)
Cash flows from financing activities:
Proceeds from short-term borrowings 56.4 --
Repayment of short-term borrowings (103.4) --
Proceeds from sale and leaseback transactions 124.3 288.0
Proceeds from issuance of long-term debt 28.0 --
Long-term debt and capital lease payments (15.9) (35.4)
Net cash provided by financing activities 89.4 252.6
Net change in cash and cash equivalents 49.0 89.7
Cash and cash equivalents at beginning of period 49.2 102.3
Cash and cash equivalents at end of period $98.2 $192.0
Supplemental disclosure of cash paid during the period for:
Interest (net of amount capitalized) $16.6 $11.4
Income taxes 6.0 $28.1
Noncash investing and financing activities:
1998 - A $54.0 million note payable to Alaska Air Group was exchanged
for a non-interest bearing payable.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS THAT HAVE CHANGED SIGNIFICANTLY DURING THE
NINE MONTHS ENDED SEPTEMBER 30, 1998
Alaska Airlines, Inc.
Note 1. Commitments (See Note 6 to Financial Statements at December 31,
1997)
During the first nine months of 1998, Alaska's lease commitments increased
approximately $414 million due to the sale and leaseback of nine B737-400
aircraft under 18-year operating leases.
<PAGE>
<TABLE>
<CAPTION>
Alaska Airlines Financial and Statistical Data
Quarter Ended September 30 Nine Months Ended September 30
Financial Data (in millions): 1997 1998 % Change 1997 1998 % Change
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues:
Passenger $380.5 $406.2 6.8 $984.0 $1,076.9 9.4
Freight and mail 22.9 22.7 (0.9) 62.3 63.9 2.6
Other - net 16.9 17.6 4.1 51.6 52.8 2.3
Total Operating Revenues 420.3 446.5 6.2 1,097.9 1,193.6 8.7
Operating Expenses:
Wages and benefits 111.8 123.3 10.3 317.7 351.1 10.5
Employee profit sharing 6.7 8.0 19.4 9.7 16.0 64.9
Contracted services 11.0 12.1 10.0 30.9 36.9 19.4
Aircraft fuel 49.4 44.4 (10.1) 150.4 123.2 (18.1)
Aircraft maintenance 17.8 19.6 10.1 48.8 60.3 23.6
Aircraft rent 37.7 42.1 11.7 110.2 117.7 6.8
Food and beverage service 12.7 13.5 6.3 34.9 36.6 4.9
Commissions 30.1 26.5 (12.0) 77.9 71.9 (7.7)
Other selling expenses 20.3 20.4 0.5 52.2 56.3 7.9
Depreciation and amortization 14.4 15.6 8.3 42.1 46.0 9.3
Loss (gain) on sale of assets (0.4) 0.1 NM (0.3) 0.3 NM
Landing fees and other rentals 14.1 15.9 12.8 40.4 44.6 10.4
Other 25.4 25.7 1.2 73.1 73.3 0.3
Total Operating Expenses 351.0 367.2 4.6 988.0 1,034.2 4.7
Operating Income 69.3 79.3 14.4 109.9 159.4 45.0
Interest income 3.3 6.5 8.4 16.4
Interest expense (6.4) (4.3) (19.1) (13.5)
Interest capitalized 0.8 1.0 2.4 3.6
Other - net 0.6 (15.6) 2.1 (14.2)
(1.7) (12.4) (6.2) (7.7)
Income Before Income Tax $67.6 $66.9 $103.7 $151.7
Operating Statistics:
Revenue passengers (000) 3,441 3,661 6.4 9,325 9,845 5.6
RPMs (000,000) 2,933 3,200 9.1 7,896 8,535 8.1
ASMs (000,000) 4,179 4,639 11.0 11,589 12,603 8.8
Passenger load factor 70.2% 69.0% (1.2)pts 68.1% 67.7% (0.4)pts
Breakeven load factor 56.6% 57.3% 0.7 pts 60.5% 58.0% (2.5)pts
Yield per passenger mile 12.97c 12.69c (2.2) 12.46c 12.62c 1.3
Operating revenue per ASM 10.06c 9.62c (4.3) 9.47c 9.47c (0.0)
Operating expenses per ASM 8.40c 7.92c (5.8) 8.53c 8.21c (3.7)
Fuel cost per gallon 66.9c 54.2c (19.0) 72.8c 55.2c (24.2)
Fuel gallons (000,000) 73.9 81.9 10.8 206.4 223.1 8.1
Average number of employees 8,534 9,015 5.6 8,240 8,669 5.2
Aircraft utilization (block hours) 11.9 11.8 (0.8) 11.5 11.6 0.9
Operating fleet at period-end 78 85 9.0 78 85 9.0
NM = Not Meaningful
c = cents
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALASKA
AIRLINES INC THIRD QUARTER 1998 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 192000
<SECURITIES> 214900
<RECEIVABLES> 91700
<ALLOWANCES> 0
<INVENTORY> 25300
<CURRENT-ASSETS> 606000
<PP&E> 1289600
<DEPRECIATION> 392000
<TOTAL-ASSETS> 1596200
<CURRENT-LIABILITIES> 654400
<BONDS> 181100
0
0
<COMMON> 1
<OTHER-SE> 524699
<TOTAL-LIABILITY-AND-EQUITY> 1596200
<SALES> 1193600
<TOTAL-REVENUES> 1193600
<CGS> 1034200
<TOTAL-COSTS> 1034200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13500
<INCOME-PRETAX> 151700
<INCOME-TAX> 60000
<INCOME-CONTINUING> 91700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91700
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
