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 June 30, 1996
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.
2,614,433 Common Shares, par value of $.25 per share were outstanding as
of August 11, 1996.
This filing contains 15 pages.
The exhibit index is on page 14.
<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings
for the three-month periods ended
June 30, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets at
June 30, 1996 (Unaudited)
and March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash
Flows for the three-month periods
ended June 30, 1996 and 1995 (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. . . . . . . . . . . . . 11-13
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Exhibits . . . . . . . . . . . . . . . . . . . . . . . 15
2<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<CAPTION>
Three Months Ended
June 30,
1996 1995
<S> <C> <C>
Operating Revenues:
Cargo $ 4,373,682 4,552,417
Maintenance and other 3,749,925 3,361,365
8,123,607 7,913,782
Operating Expenses:
Flight operations 2,888,850 2,882,515
Maintenance 3,440,989 3,396,410
General and administrative 1,066,954 960,021
Depreciation and amortization 117,764 125,745
7,514,557 7,364,691
Operating Income 609,050 549,091
Non-operating (Income) Expense:
(Gain) loss on sale of asset & other (1,643) (262,922)
Earnings Before Income Taxes 610,693 812,013
Provision For Income Taxes 205,334 292,464
Net Earnings $ 405,359 519,549
Weighted Average Shares 2,812,639 3,100,749
Net Earnings Per Common Share $ 0.14 0.17
<FN>
See notes to consolidated financial statements.
</TABLE>
3<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION> June 30, 1996 March 31, 1996
<S> <C> <C>
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents $ 576,392 2,213,841
Short term investments 2,818,267 1,889,819
Accounts receivable, net 2,628,633 3,133,670
Expendable parts and supplies 699,480 725,503
Prepaid expense and other 39,193 61,325
Deferred tax asset, net 433,527 440,000
Total Current Assets 7,195,492 8,464,158
Property and Equipment 3,296,919 3,248,834
Less accumulated depreciation (1,764,778) (1,678,980)
1,532,141 1,569,854
Excess Cost of Subsidiary - 33,834
Deferred Tax Asset, net - 27,838
Other 136,124 124,387
$ 8,863,757 10,220,071
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 100,399 1,003,081
Accrued liabilities 1,073,986 1,555,284
Income taxes 323,845 238,113
Current maturities of long-term debt 6,062 5,976
Total Current Liabilities 1,504,292 2,802,454
Long-Term Debt, Less Current Maturities 2,100 3,649
Stockholders' Equity:
Preferred stock, $1 par value, authorized
10,000,000 shares, none issued - -
Common stock, par value $.25; authorized
4,000,000 shares; 2,614,433 and
2,725,433 shares issued 653,608 681,358
Additional paid in capital 7,156,548 7,299,045
Deficit ( 452,791) ( 566,435)
7,357,365 7,413,968
$ 8,863,757 10,220,071
<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> Three Months Ended
June 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 405,359 $ 519,549
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization 117,765 125,745
Change in deferred tax asset 34,311 40,187
Charge in lieu of income taxes 15,837 120,560
Asset and liability changes which
provided (used) cash:
Accounts receivable 505,037 822,073
Parts and supplies 26,023 (9,904)
Prepaid expense and other 10,395 9,189
Accounts payable (684,247) (1,474,735)
Accrued expenses (481,299) (281,940)
Income taxes payable 85,732 117,552
Total adjustments (370,446) (531,273)
Net cash provided by (used in)
operating activities 34,913 (11,724)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (63,694) (68,450)
Short term investments (928,448) (575,000)
Net proceeds from disposal of equipment 1,643 263,157
Net cash used in investing activities (990,499) (380,293)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (1,463) ( 387)
Repurchase of common stock (466,965) (245,563)
Exercise of stock options 5,000 4,000
Dividend (218,435) (200,615)
Net cash used in financing activities (681,863) (442,565)
NET DECREASE IN CASH & CASH EQUIVALENTS (1,637,449) (834,582)
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,213,841 3,380,885
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 576,392 $ 2,546,303
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 281 $ 235
Income/Franchise taxes 72,855 9,070
<FN>
See notes to consolidated financial statements.
</TABLE>
5<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. Financial Statements
The Consolidated Balance Sheet as of June 30, 1996, the Consolidated
Statements of Earnings for the three-month periods ended June 30, 1996 and
1995 and the Consolidated Statements of Cash Flows for the three-month periods
ended June 30, 1996 and 1995 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 June 30, 1996, 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, 1996. The results of
operations for the period ended June 30 are not necessarily indicative of the
operating results for the full year.
B. Income Taxes
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 June 30, 1996
and March 31, 1996 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 $44,000 and
$25,000, respectively, during the three-months ended June 30, 1996 and 1995.
As of June 30, 1996, all of the valuation allowance of approximately $109,000
relates to potential benefits from post-acquisition carryforwards. Benefits
derived from pre-acquisiion carryforwards, amounting to $16,000 and
$121,000, respectively, during the three-months ended June 30, 1996 and 1995,
have been credited directly to goodwill.
6<PAGE>
B. Income Taxes (cont'd)
The income tax provisions for the three-months ended June 30, 1996 and
1995 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 $350,000, all of which expire in 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, resulted in a reduction of goodwill,
until goodwill was reduced to zero in the quarter ended June 30, 1996.
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 June
30, 1996 and 1995.
D. Reclassifications
Certain reclassifications have been made in the 1995 financial
statements to conform with the 1996 presentation.
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 primarily 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 contracts for a
major express delivery company out of 78 cities, principally located in 30
states in the eastern half of the United States and in Puerto Rico, Canada and
the Virgin Islands. In 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.
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 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 $210,000 (2.7%) to $8,124,000 for the
three- month period ended June 30, 1996 compared to its equivalent 1995
period. The change in revenue primarily resulted from an increase in air
freight service revenue.
Operating expenses increased $150,000 (2.0%) to $7,515,000 for the three-
month period ended June 30, 1996 compared to its equivalent 1995 period. The
increase in operating expenses consisted of the following changes: cost of
flight operations increased 6,000 (.2%); maintenance expense increased $45,000
(1.3%), primarily as a result of increased wages; depreciation decreased
$8,000 (6.3%) as a result of decreased depreciation related to the sale of
aircraft in 1995; general and administrative expense increased $107,000
(11.1%) as a result of increased staffing, cost associated with the Company's
relocation of maintenance operations and increased insurance, employee
benefits, salary and wage rates.
8<PAGE>
Results of Operations (cont'd)
The $261,000 decrease in non-operating income reflects gain on sale and
insurance proceeds from damage to Company-owned aircraft in fiscal 1995.
Pretax earnings decreased $201,000 for the three-month period ended June
30, 1996 compared to 1995. The decrease was due to the above gain on disposal
of Company-owned aircraft in 1995.
The provision for income taxes for the three-month period ended June 30,
1996 decreased $87,000 (29.8%) compared to the 1995 period due to decreased
taxable income.
Liquidity and Capital Resources
As of June 30, 1996 the Company's working capital amounted to $5,691,000,
an increase of $29,000 compared to March 31, 1996. The net increase primarily
resulted from profitable operations, as well as a $1,384,000 decrease in
accounts payable and accrued liabilities, partially offset by a $505,000
decrease in accounts receivable and a $709,000 decrease in cash and short term
investments.
The Company's accounts receivable and inventory financing line provides
credit in the aggregate of up to $2,250,000 to September 1996. The Company
anticipates renewing the line of credit in 1996. Loans under the line of
credit bear interest at the lender's prime rate.
Substantially all of the Company's assets, excluding aircraft, have been
pledged as collateral under this financing arrangement. As of June 30, 1996
the Company was in a net investment position against its credit line.
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 three-month periods ended June 30, 1996 and 1995 resulted
in the following changes in cash flow: operating activities provided $35,000
and used $12,000, investing activities used $990,000 and $380,000 and
financing activities used $682,000 and $443,000. Net cash decreased
$1,637,000 and $834,582 for the respective three-month periods ended June 30,
1996 and 1995.
9<PAGE>
Liquidity and Capital Resources (cont'd)
Cash used in operating activities was $47,000 less for the three-months
ended June 30, 1996 compared to the similar 1995 period. Cash used in
investing activities for the three-months ended June 30, 1996 was
approximately $610,000 more than the comparable period in 1995, principally
due to purchase of short term investments. Cash used in financing activities
was $239,000 more in the 1996 three-month period due the repurchase of common
stock.
During the quarter ended June 30, 1996 the Company repurchased 115,000
shares of its common stock at a total cost of $467,000. Pursuant to its
previously announced stock repurchase program, $354,000 remains available for
repurchase of common stock.
The Company's relocation of its aircraft maintenance and repair
operations to Kinston, North Carolina was primarily completed in early August
1996. Costs associated with the relocation are projected to reduce the
Company's cash flow by approximately $500,000 in fiscal 1997. Other than the
above relocation, there are currently no commitments for significant capital
expenditures and none are anticipated during the current fiscal year. The
Company paid a $.08 per share cash dividend in April 1996; 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 through 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
3.1 Certificate of Incorporation, as amended, incorporated by
reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1994
3.2 By-laws of the Company, incorporated by reference to Exhibit 3.2
of the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996.
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 Aircraft Dry Lease and Service Agreement dated February 2, 1994
between Mountain Air Cargo, Inc. and Federal Express Corporation,
incorporated by reference to Exhibit 10.13 to Amendment No. 1 on
Form 10-Q/A to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1993
10.2 Loan Agreement among NationsBank of North Carolina, N.A., the
Company and its subsidiaries, dated January 17, 1995, incorporated
by reference to Exhibit 10.7 to the Company's Quarterly Report on
Form 10-Q for the period ended December 31,1994
10.3 Aircraft Wet Lease Agreement dated April 1, 1994 between Mountain
Air Cargo, Inc. and Federal Express Corporation, incorporated by
reference to Exhibit 10.4 of Amendment No. 1 on Form 10-Q/Q to the
Company's
Quarterly Report on Form 10-Q for the period ended September 30,
1994
10.4 Adoption Agreement regarding the Company's Master 401(k) Plan and
Trust, incorporated by reference to Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31,
1993*
10.5 Form of options 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
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.
11<PAGE>
10.6 Premises and Facilities Lease dated November 16, 1995 between Global
TransPark Foundation, Inc. and Mountain Air Cargo, Inc., incorporated by
reference to Exhibit 10.5 to Amendment No. 1 on form 10-Q/A to the
Company's Quarterly Report on Form 10-Q for the period ended December
31, 1995,
10.7 Employment Agreement dated January 1, 1996 between the Company,
Mountain Air Cargo Inc., CSA Air Inc. and Mountain Aircraft Services,
LLC and David Clark, incorporated by reference to Exhibit 10.7 to the
Company's Annual Report Form 10-K for the fiscal year ended March 31,
1996.*
10.8 Employment Agreement dated January 1, 1996 between the Company,
Mountain Air Cargo Inc. and Mountain Aircraft Services, LLC and
William H. Simpson, incorporated by reference to Exhibit 10.8 to the
Company's Annual Report Form 10-K for the fiscal year ended March 31,
1996.*
10.9 Employment Agreement dated January 1, 1996 between the Company,
Mountain Air Cargo Inc. and Mountain Aircraft Services, LLC and John
J. Gioffre, incorporated by reference to Exhibit 10.9 to the Company's
Annual Report Form 10-K for the fiscal year ended March 31, 1996.*
10.10 Employment Agreement dated January 1, 1996 between the Company,
Mountain Air Cargo Inc. and Mountain Aircraft Services, LLC and J.
Hugh Bingham, incorporated by reference to Exhibit 10.10 to the
Company's Annual Report Form 10-K for the fiscal year ended March 31,
1996.*
11.1 Computation of Primary and Fully Diluted Earnings per Common Share
21.1 List of subsidiaries of the Company, incorporated by reference to
Exhibit 21.1 of the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1994
27.1 Financial Data Schedule (For SEC use only)
_______________________
* Management compensatory plan or arrangement required to be filed as an
exhibit to this report.
b. Reports on form 8-K
No Current Reports on Form 8-K were filed in the first quarter of the fiscal
1997.
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: August 11, 1996 /s/ David Clark
David Clark, Chief Executive Officer
Date: August 11, 1996 /s/ John Gioffre
John J. Gioffre, Vice President-Finance
13<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC.
EXHIBIT INDEX
Exhibit PAGE
1.11 Computation of Primary and Fully Diluted
Earnings Per Common Share........................... 15
14<PAGE>
<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
June 30,
1996 1995
<S> <C> <C>
NET EARNINGS $ 405,359 519,549
WEIGHTED AVERAGE COMMON SHARES:
Primary:
Weighted average shares
outstanding 2,635,433 2,846,933
Dilutive stock options 178,432 253,816
2,813,865 3,100,749
Fully Diluted:
Weighted average shares
outstanding 2,635,433 2,846,933
Dilutive stock options 178,740 253,816
2,814,173 3,100,749
EARNINGS PER COMMON SHARE:
Primary $ 0.14 0.17
Fully Diluted $ 0.14 0.17
</TABLE>
15
<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 June
30, 1996 (identify specific financial statements) and is qualified in its
entirety by reference to such financial statements."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 576392
<SECURITIES> 2818267
<RECEIVABLES> 2628633
<ALLOWANCES> 0
<INVENTORY> 699480
<CURRENT-ASSETS> 7195492
<PP&E> 3296919
<DEPRECIATION> 1764778
<TOTAL-ASSETS> 8863757
<CURRENT-LIABILITIES> 1504292
<BONDS> 0
0
0
<COMMON> 653608
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8863757
<SALES> 8123607
<TOTAL-REVENUES> 8123607
<CGS> 0
<TOTAL-COSTS> 7514557
<OTHER-EXPENSES> (1643)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 610693
<INCOME-TAX> 205334
<INCOME-CONTINUING> 405359
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 405359
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
