FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1995
Commission File Number 0-11720
AIR TRANSPORTATION HOLDING COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1206400
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Post Office Box 488, Denver, North Carolina 28037
(Address of principal executive offices)
(704) 377-2109
(Registrant's telephone number, including area code)
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.
2,802,933 Common Shares, par value of $.25 per share were outstanding as
of October 31, 1995.
This filing contains 15 pages.
The exhibit index is on page 13.
<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings
for the three and six-month periods ended
September 30, 1995 and 1994 (Unaudited). . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets at
September 30, 1995 (Unaudited)
and March 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash
Flows for the six-month periods
ended September 30, 1995 and 1994 (Unaudited). . . . . . . . . . . . . 5
Notes to Consolidated Financial
Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations. . . . . . . . . . . . . . . . . . . . . . . . . .8-10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 11-12
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-15
2<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<CAPTION> Three Months Ended Six Months
Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Revenues:
Cargo $ 4,760,715 4,587,865 $ 9,313,132 8,886,539
Maintenance and other 3,933,369 3,493,008 7,744,734 7,245,532
8,694,084 8,080,873 17,057,866 16,132,071
Operating Expenses:
Flight operations 3,420,820 2,913,812 5,943,335 5,789,088
Maintenance 3,733,058 3,516,919 7,939,467 7,092,199
General and admin 915,120 835,983 1,875,142 1,691,088
Depr & amortization 121,038 121,566 246,783 214,372
8,190,036 7,388,280 16,004,727 14,786,747
Operating Income 504,048 692,593 1,053,139 1,345,324
Non-operating Income:
Gain on sale of
assets & other 159 1,332 263,081 13
Earnings Before
Income Taxes 504,207 693,925 1,316,220 1,345,337
Provision For
Income Taxes 203,649 260,700 496,113 481,400
Net Earnings $ 300,558 433,225 $ 820,107 863,937
Weighted Average Shares 3,058,651 3,368,978 3,081,150 3,368,978
Net Earnings Common Share $ 0.10 0.13 $ 0.27 0.26
<FN>
See notes to consolidated financial statements.
</TABLE>
3<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, 1995 March 31, 1995
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,710,829 3,380,885
Accounts receivable, net 2,407,776 3,366,286
Expendable parts and supplies 345,849 269,653
Prepaid expense and other 17,096 41,096
Deferred tax asset, net 376,362 440,000
Total Current Assets 6,857,912 7,497,920
Property and equipment 3,203,258 3,313,664
Less accumulated depreciation (1,504,500) (1,271,750)
1,698,758 2,041,914
Excess cost of subsidiary 251,001 429,167
Deferred tax asset, net - 135,620
Other 54,861 56,435
$ 8,862,532 10,161,056
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 249,879 1,574,438
Accrued liabilities 1,067,229 1,401,275
Income taxes 48,460 41,054
Current maturities of long term debt 6,339 4,437
Total Current Liabilities 1,371,907 3,021,204
Long-Term Debt, Less Current Maturities 6,679 9,838
Stockholders' Equity:
Preferred stock, $1 par value, authorized
10,000,000 shares, none issued - -
Common stock, par value $.25; authorized
4,000,000 shares; 2,802,933 and
2,865,933 shares issued 700,733 716,483
Additional paid in capital 7,641,298 7,891,108
Deficit ( 858,085) (1,477,577)
7,483,946 7,130,014
$ 8,862,532 10,161,056
<FN>
See notes to consolidated financial statements.
</TABLE>
4<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Six Months Ended
September 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 820,107 863,937
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 246,783 214,372
Change in deferred tax asset 199,258 131,700
Charge in lieu of income taxes 142,173 160,100
Working capital changes:
Accounts receivable 958,510 913,568
Parts and supplies (76,196) (148,251)
Prepaid expense and other 25,574 (4,835)
Accounts payable (1,324,559) 258,586
Accrued expenses (334,046) (246,292)
Income taxes payable 7,406 (11,113)
Total adjustments (155,097) 1,267 835
Net cash provided by
operating activities 665,010 2,131,772
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (130,791) (768,282)
Net proceeds from disposal of equipment 263,157 23,428
Collection of officer note receivable - 280,000
Net cash provided by (used in)
investing activities 132,366 (464,854)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (1,257) (2,630)
Repurchase of common stock (269,560) -
Exercise of stock options 4,000 -
Dividend (200,615) (174,746)
Net cash used in financing activities (467,432) (177,376)
NET INCREASE IN CASH & CASH EQUIVALENTS 329,944 1,489,542
CASH & CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,380,885 1,748,259
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 3,710,829 3,237,801
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 130 481
Income/Franchise taxes 75,579 221,231
<FN>
See notes to consolidated financial statements.
</TABLE>
5<PAGE>
AIR TRANSPORTATION HOLDING COM
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. Financial Statements
The Consolidated Balance Sheet as of September 30, 1995, the Consolidated
Statements of Earnings for the three and six-month periods ended September 30,
1995 and 1994 and the Consolidated Statements of Cash Flows for the three-
month periods ended September 30, 1995 and 1994 have been prepared by Air
Transportation Holding Company, Inc. (the Company) without audit. In the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows as of September 30, 1995, and for prior periods
presented, have been made.
It is suggested that these financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended March 31, 1995. The results of
operations for the period ended September 30 are not necessarily indicative of
the operating results for the full year.
B. Income Taxes
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes", as of the beginning of fiscal 1994.
The tax effect of temporary differences and net operating loss carryforwards
that gave rise to the Company's deferred tax asset is broken down between
current and noncurrent amounts in the accompanying September 30, 1995 and
March 31, 1995 consolidated balance sheets.
The Company has recorded a valuation allowance in order to reduce its
deferred tax asset to an amount which is more likely than not to be realized.
Changes in the valuation allowance, related to future utilization of net
operating losses, reduced the provision for income taxes by $43,000 and
$58,000, respectively, during the six months ended September 30, 1995 and
1994. Of the valuation allowance of approximately $377,000, approximately
$365,000 relates to potential benefits from pre-acquisition carryforwards.
Benefits derived from these carryforwards, amounting to $189,000 and $160,000,
respectively, during the six months ended September 30, 1995 and 1994, have
been credited directly to goodwill.
6<PAGE>
B. Income Taxes (cont'd)
The income tax provisions for the three and six months ended September
30, 1995 and 1994 differ from the federal statutory rate primarily as a result
of state income taxes and reductions in the valuation allowance.
The Company has federal net operating loss carryforwards available for
tax return purposes of approximately $1,300,000. These carryforwards expire
in varying amounts from 1996 to 1997. The potential utilization of certain of
these carryforwards is subject to the separate return limitation rules
pursuant to Treasury regulations. These carryforwards, to the extent
realized, will result in a reduction of goodwill, until goodwill is reduced to
zero.
C. Net Earnings Per Share
Primary earnings per share has been compiled by dividing net earnings by
weighted average number of common shares outstanding during each period.
There was no difference between primary and fully diluted earnings per share.
Shares issuable under employee stock options are considered common share
equivalents and were included in the weighted average common shares as of
September 30, 1995 and 1994.
7<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
The Company's revenue is generated through its air cargo subsidiaries,
Mountain Air Cargo, Inc. (MAC) and CSA Air, Inc. (CSA), which are short-haul
express air freight carriers flying nightly under contracts with a major
express delivery company out of 60 cities, principally located in 28 states in
the eastern half of the United States, Puerto Rico, Canada and the Virgin
Islands. On October 1, 1993, the Company organized Mountain Aircraft
Services, LLC (MAS) to engage in the sale of commercial aircraft parts and
provide aircraft engine overhaul management and component repair services.
Revenues from this operation contributed approximately $1,749,000 and
$477,000, respectively, to the Company's revenues for the six months ended
September 30, 1995 and 1994.
Under the terms of its dry-lease service contracts (which currently
cover approximately 97% of the revenue aircraft operated), the Company passes
through to its customer certain cost components of its air freight operations
without markup. The cost of fuel, landing fees, outside maintenance, aircraft
certification and conversion, parts and certain other direct operating costs
are included in operating expenses and billed to the customer, as cargo and
maintenance revenue.
Consolidated revenue increased $926,000 (5.7%) to $17,058,000 for the
six-month period ended September 30, 1995 and $613,000 (7.6%) for the three-
month period ended September 30, 1995 compared to their equivalent 1994
periods. The change in revenue primarily resulted from increases in cargo
revenue generated by Company-owned aircraft and other revenue related to the
expansion of MAS, partially offset by decreases in cargo maintenance billing.
Operating expenses increased $1,218,000 (8.2%) to $16,005,000 for the
six-month period ended September 30, 1995 and $802,000 (10.9%) for the three-
month period ended September 30, 1995 compared to their equivalent 1994
periods. The increase in operating expenses for the six-month period consisted
of the following changes: cost of flight operations increased $154,000
(2.7%); maintenance expense increased $847,000 (11.9%), primarily as a result
of increases in cost of sales related to aircraft parts sold by MAS;
depreciation increased $32,000 (15.1%) due to additional depreciation related
to the start-up of the MAS component repair facility, the acquisition of
computer system hardware, maintenance and office equipment; general and
administrative expense increased $184,000 (10.9%) as a result of increased
staffing at MAS, increases in stockholder-related expense, employee benefits
and wage rates.
8<PAGE>
Results of Operations (cont'd)
The $263,000 increase, for the six-month period September 30, 1995, in
non-operating income reflects gain on disposal of Company-owned aircraft.
Pretax earnings decreased $29,000 and $190,000 for the six and three-
month periods ended September 30, 1995 compared to 1994. The decreases were
due to the above mentioned increased administration and depreciation cost and
decreased cargo aircraft maintenance revenue which was partially offset by the
first quarter fiscal 1996 gain on disposal of Company-owned aircraft.
The provision for income taxes for the six-month period ended September
30, 1995 increased $15,000 and decreased $57,000 for the three-month period
ended September 30, 1995 compared to their respective fiscal 1995 periods.
Both periods experienced increased effective tax rates due to the complete
utilization of certain net operating loss carryforwards during the second
quarter of fiscal 1995. Utilization of the above NOL's in fiscal 1995
increased the effective Federal income tax rate on certain subsidiary income
in fiscal 1996 (see Note B. Income Taxes).
Liquidity and Capital Resources
As of September 30, 1995 the Company's working capital amounted to
$5,486,000, an increase of $1,009,000 compared to March 31, 1995. The net
increase, primarily resulted from profitable operations and disposal of
aircraft, as reflected by a $1,659,000 decrease in accounts payable and
accrued liabilities, partially offset by a $959,000 decrease in accounts
receivable.
In January 1995 the Company obtained an accounts receivable and inventory
financing line from a new bank lender. The line, which provides credit, at
the lender's prime rate, in the aggregate of up to $2,250,000, extends to
January 1996. Substantially all of the Company's non-aircraft assets have
been pledged as collateral under this financing and other loan arrangements.
As of September 30, 1995, the Company was in a net investment position against
its credit line and had $1,013,000 available to borrow. Management believes
that funds anticipated from operations and existing credit facilities will
provide adequate cash flow to meet the Company's future financial needs.
The respective six-month periods ended September 30, 1995 and 1994
resulted in the following changes in cash flow: operating activities provided
$665,000 and $2,132,000, investing activities provided $132,000 and used
$465,000 and financing activities used $467,000 and $177,000. Net cash
increased $330,000 and $1,490,000 for the respective six-month periods ended
September 30, 1995 and 1994.
9<PAGE>
Liquidity and Capital Resources (cont'd)
Cash provided by operating activities was $1,467,000 less for the six
months ended September 30, 1995 compared to the similar 1994 period. This was
primarily due to reductions in accounts payable. Cash provided by investing
activities for the six months ended September 30, 1995 was approximately
$597,000 more than the comparable period in 1994, principally due to the
acquisition of two aircraft in fiscal 1995 and the disposal of two aircraft in
fiscal 1996. Cash used in financing activities was $290,000 more in the 1995
six month period due to the repurchase of common stock.
During the six months ended September 30, 1995 the Company repurchased
67,000 shares of its common stock at a total cost of $269,000. Pursuant to
its previously announced stock repurchase program, $563,000 remains available
for repurchase of common stock.
There are currently no commitments for significant capital expenditures
and none are anticipated during the current fiscal year. The Company paid a
$.07 per share cash dividend in May 1995; no determination has been made
whether additional dividends will be paid in the future.
Impact of Inflation
The Company believes the impact of inflation and changing prices on its
revenues and earnings is not material since the major cost components of its
operations, consisting principally of fuel, aircraft, crew and certain
maintenance costs are passed thru to its customer under current contract
terms.
10<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
No. Description
4.1 Specimen Common Stock Certificate, incorporated by reference to
Exhibit 4.1 of the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1994.
10.1 Domestic Aircraft Wet Lease Agreement dated April 1, 1994 between
Mountain Air Cargo, Inc. and Federal Express Corporation, Inc.,
incorporated by reference to Exhibit 10.4 to Amendment No. 1 on
form 10-Q/A to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1994.
10.2 Form of option to purchase the following amounts of Common Stock
issued by the Company to the following executive officers during
the following fiscal years ended March 31:
Number of Shares
Executive Officer 1993 1992 1991
J. Hugh Bingham 150,000 150,000 200,000
Walter Clark 100,000 100,000 100,000
John J. Gioffre 100,000 100,000 125,000
William H. Simpson 200,000 200,000 300,000
incorporated by reference to Exhibit 10.8 of the Company's
Annual Report on Form 10-K for the fiscal year ended March
31, 1993.
10.3 Aircraft Dry Lease and Service Agreement dated February 2, 1994
between Mountain Air Cargo, Inc. and Federal Corporation.,
incorporated by reference to Exhibit 10.13 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1994.
10.4 Loan Agreement among NationsBank of North Carolina, N.A. the
Company and its subsidiaries, dated January 12, 1995, incorporated
by reference to Exhibit 10.7 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended December 31, 1994.
11.1 Computation of primary and fully diluted earnings per share.
27.1 Financial Data Schedule
(b) None
11<PAGE>
SIGNATURES
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.
AIR TRANSPORTATION HOLDING COMPANY, INC.
(Registrant)
Date: November 01, 1995 ___________________________
David Clark, Chief Executive Officer
Date: November 01, 1995 ___________________________
John J. Gioffre, Vice President-Finance
12<PAGE>
SIGNATURES
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.
AIR TRANSPORTATION HOLDING COMPANY, INC.
(Registrant)
Date: November 01, 1995 /s/ David Clark
David Clark, Chief Executive Officer
Date: November 01, 1995 /s/ John Gioffre
John J. Gioffre, Vice President-Finance
12<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC.
EXHIBIT INDEX
Exhibit PAGE
11.1 Computation of Primary and Fully Diluted
Earnings Per Common Share........................... 14
27.1 Financial Data Schedule................................ 15
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
Exhibit 11.1
Computation of Primary and Fully Diluted Earnings Per Common Share
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
NET EARNINGS $ 300,558 433,225 $ 820,107 863,937
WEIGHTED AVERAGE COMMON SHARES:
Primary:
Weighted average shares
outstanding 2,804,600 2,912,433 2,825,766 2,912,433
Dilutive stock options 254,051 456,545 255,384 456,545
3,058,651 3,368,978 3,081,150 3,368,978
Fully Diluted:
Weighted average shares
outstanding 2,804,600 2,912,433 2,825,766 2,912,433
Dilutive stock options 258,278 441,556 259,611 441,556
3,062,878 3,353,989 3,085,377 3,353,989
EARNINGS PER COMMON SHARE:
Primary $ 0.10 0.13 $ 0.27 0.26
Fully Diluted $ 0.10 0.13 $ 0.27 0.26
<FN>
</TABLE>
14<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from Air
Transportation Holding Company, Inc. SEC Form 10-Q for period ended September
30, 1995 (identify specific financial statements) and is qualified in its
entirety by reference to such financial statements."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 3710829
<SECURITIES> 0
<RECEIVABLES> 2407776
<ALLOWANCES> 0
<INVENTORY> 345849
<CURRENT-ASSETS> 6857912
<PP&E> 3203258
<DEPRECIATION> 1504500
<TOTAL-ASSETS> 8862532
<CURRENT-LIABILITIES> 1371907
<BONDS> 0
<COMMON> 700733
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8862532
<SALES> 17057866
<TOTAL-REVENUES> 17057866
<CGS> 0
<TOTAL-COSTS> 16004727
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1316220
<INCOME-TAX> 496113
<INCOME-CONTINUING> 820107
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 820107
<EPS-PRIMARY> .270
<EPS-DILUTED> .270
</TABLE>
