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, 1997
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.
2,650,653 Common Shares, par value of $.25 per share were
outstanding as of August 11, 1997.
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, 1997 and 1996 (Unaudited) ............................... 3
Consolidated Balance sheets at
June 30, 1997 (Unaudited)
and March 31, 1997 ............................................ 4
Consolidated Statements of Cash
Flows for the three-month periods
ended June 30, 1997 and 1996 (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
<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<CAPTION>
Three Months Ended
June 30,
1997 1996
<S> <C> <C>
Operating Revenues:
Cargo $ 4,374,209 4,373,682
Maintenance 3,139,421 3,040,939
Aircraft services and other 645,450 644,069
8,159,080 8,058,690
Operating Expenses:
Flight operations 3,015,056 2,888,850
Maintenance 3,429,576 3,440,989
General and administrative 1,016,867 1,024,742
Depreciation and amortization 107,013 117,764
Facility start-up and merger expense 125,764 42,212
7,694,276 7,514,557
Operating Income 464,804 544,133
Non-operating (Income) Expense:
Investment income (79,507) (64,917)
Deferred retirement obligation 420,083 -
Gain on asset sale & other - (1,643)
340,576 (66,560)
Earnings Before Income Taxes 124,228 610,693
Provision For Income Taxes 29,731 205,334
Net Earnings $ 94,497 405,359
Weighted Average Shares 2,790,938 2,812,639
Net Earnings Per Common Share $ 0.03 0.14
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, 1997 March 31,1997
<S> <C> <C>
ASSETS (Unaudited)
Current Assets:
Cash and equivalents $ 2,548,328 2,377,898
Short term investments 2,133,045 2,229,708
Accounts receivable, net 2,385,923 3,310,810
Expendable parts and supplies 1,106,483 1,069,206
Prepaid expense and other 67,998 119,828
Deferred tax asset, net 344,980 344,980
Total Current Assets 8,586,757 9,452,430
Property and Equipment 3,506,136 3,398,636
Less accumulated depreciation (2,038,033) (1,943,020)
1,468,103 1,455,616
Other 222,601 210,365
Total Assets $ 10,277,461 11,118,411
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 356,110 809,245
Accrued liabilities 1,123,395 1,665,046
Income taxes 268,667 389,916
Total Current Liabilities 1,748,172 2,864,207
Deferred Retirement Obligation 445,779 -
Stockholders' Equity:
Preferred stock, $1 par value, authorized
10,000,000 shares, none issued - -
Common stock, par value $.25; authorized
4,000,000 shares; 2,651,421 and
2,651,433 shares issued 662,855 662,858
Additional paid in capital 7,126,249 7,126,294
Retained Earnings 294,406 465,052
8,083,510 8,254,204
Total Liabilities & Stockholders' Equity $ 10,277,461 11,118,411
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Three Months Ended
June 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 94,497 405,359
Adjustments to reconcile net earnings to
net cash provided by operations:
Depreciation and amortization 107,013 117,765
Change in deferred tax asset - 34,311
Charge in lieu of income taxes - 15,837
Asset and liability changes which
provided (used) cash:
Accounts receivable 924,887 505,037
Parts and supplies (37,277) 26,023
Prepaid expense and other 39,594 10,395
Accounts payable (453,135) (685,710)
Accrued expenses (541,651) (481,299)
Deferred retirement obligation 445,779 -
Income taxes payable (121,249) 85,732
Total adjustments 363,961 (371,909)
Net cash provided by
operating activities 458,458 33,450
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (119,500) (63,694)
Purchase of short term investments (19,783) (928,448)
Sale of short term investments 116,446 -
Net proceeds from disposal of equipment - 1,643
Net cash used in investing activities (22,837) (990,499)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of cash dividend (265,143) (218 435)
Repurchase of common stock (48) (466,965)
Proceeds from exercise of stock options - 5,000
Net cash used in financing activities (265,191) (680,400)
NET INCREASE (DECREASE) IN CASH & EQUIVALENTS 170,430 (1,637,449)
CASH & EQUIVALENTS AT BEGINNING OF PERIOD 2,377,898 2,213,841
CASH & EQUIVALENTS AT END OF PERIOD $ 2,548,328 576,392
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 45 281
Income/Franchise taxes 160,425 72,855
<FN>
See notes to consolidated financial statements.
</TABLE>
<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, 1997, the Consolidated
Statements of Earnings for the three-month periods ended June 30, 1997
and 1996 and the Consolidated Statements of Cash Flows for the three-
month periods ended June 30, 1997 and 1996 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, 1997, 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,
1997. 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 gave rise to the Company's
deferred tax asset in the accompanying June 30, 1997 and March 31, 1997
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 $45,000, respectively, during the three-months ended
June 30, 1997 and 1996.
<PAGE>
B. Income Taxes (cont'd)
The income tax provisions for the three-months ended June 30, 1997
and 1996 differ from the federal statutory rate primarily as a result of
state income taxes and reductions in the valuation allowance.
The Company completed the utilization of all federal net operating
loss carryforwards available for tax return purposes during the second
quarter of fiscal 1997. These carryforwards, to the extent realized,
resulted in a reduction of goodwill, until goodwill was reduced to zero
in the quarter ended June 30, 1997.
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, 1997 and 1996.
The Financial Accounting Standards Board has issued SFAS No. 128,
"Earnings Per Share", which will revise the method for calculating
earnings per share. This new standard will be effective for the
Company's March 31, 1998 annual financial statements. Had the Company
calculated earnings per share for the three months ended June 30, 1997
based on the provisions of this standard, basic earnings per share would
have been $.04 and diluted earnings per share would have been $.03.
D. Reclassifications
Certain reclassifications have been made in the 1996 amounts to
conform with the 1997 presentation.
<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 81 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 98% 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 $100,000 (1.2%) to $8,159,000 for the
three-month period ended June 30, 1997 compared to its equivalent 1996
period. The change in revenue primarily resulted from an increase in
maintenance service revenue.
Operating expenses increased $180,000 (2.4%) to $7,694,000 for the
three- month period ended June 30, 1997 compared to its equivalent 1996
period. The increase in operating expenses consisted of the following
changes: cost of flight operations increased $126,000 (4.4%) primarily
as a result of additional costs associated with airport fees; maintenance
expense decreased $11,000 (.3%); depreciation decreased $11,000 (9.1%) as
a result of decreased depreciation related to the sale of aircraft in
fiscal 1997; general and administrative expense decreased $8,000 (.8%)
due to personnel changes and reduced profit sharing provision offsetting
increased staffing; facility start-up and merger expense increased
$84,000 (198.0%) due to costs associated with MAS's new FAA certified 145
repair shop and cost associated with merger discussions terminated in May
1997.
<PAGE>
Results of Operations (cont'd)
The $407,000 increase in non-operating expense was principally due
to a $420,000 provision to fulfill contractual benefits related to the
death of the Company's Chairman and CEO.
Pretax earnings decreased $486,000 for the three-month period ended
June 30, 1997 compared to 1996. Approximately $66,000 of the decrease
was due to costs related to the start-up of MAS's component repair shop
and $420,000 to the above mentioned death benefit provision.
The provision for income taxes for the three-month period ended June
30, 1997 decreased $176,000 compared to the 1996 period, primarily due to
decreased taxable income.
Liquidity and Capital Resources
As of June 30, 1997 the Company's working capital amounted to
$6,839,000, an increase of $250,000 compared to March 31, 1997. The net
increase primarily resulted from profitable operations, as well as a
$925,000 decrease in accounts receivable, offset by a $1,116,000 decrease
in accounts payable, accrued liabilities and income taxes.
The Company's accounts receivable and inventory financing line
provides credit in the aggregate of up to $2,250,000 to September 1997.
The Company anticipates renewing the line of credit upon expiration.
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, 1997 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, 1997 and 1996
resulted in the following changes in cash flow: operating activities
provided $458,000 and $33,000, investing activities used $23,000 and
$990,000 and financing activities used $265,000 and $680,000. Net cash
increased $170,000 for the three-month period ended June 30, 1997 and
decreased $1,637,000 for the 1996 period.
<PAGE>
Liquidity and Capital Resources (cont'd)
Cash provided by operating activities was $425,000 more for the
three-months ended June 30, 1997 compared to the similar 1996 period
primarily due to reductions in accounts receivable. Cash used in
investing activities for the three-months ended June 30, 1997 was
approximately $968,000 less than the comparable period in 1996,
principally due to purchase of short term investments in 1996. Cash used
in financing activities was $415,000 less in the 1997 three-month period
due to the repurchase of common stock in 1996.
During the quarter ended June 30, 1997 the Company purchased 12
shares of its common stock. Pursuant to its previously announced stock
repurchase program, $271,000 remains available for repurchase of common
stock.
Cost associated with the Company's start-up of an FAA approved 145
component repair facility which opened at Kinston, N.C. in June 1997 and
professional fees related to terminated merger discussions amounted to
$126,000 in the quarter ended June 30, 1997. Other than the $420,000
deferred retirement obligation related to the death of the Company's
Chairman, there are currently no commitments for significant capital
expenditures. The Company paid a $.10 per share cash dividend in June
1997. The Company's Board of Directors on August 7, 1997 adopted the
policy to pay an annual cash dividend in the first quarter of each fiscal
year, in an amount to be determined by the Board.
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.
<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.
<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.
<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 14, 1997 ___________________________
Walter Clark, Chief Executive Officer
Date: August 14, 1997 ___________________________
John J. Gioffre, Vice President-Finance
<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 14, 1997 /s/ Walter Clark
Walter Clark, Chief Executive Officer
Date: August 14, 1997 /s/ John Gioffre
John J. Gioffre, Vice President-Finance
<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC.
EXHIBIT INDEX
Exhibit PAGE
1.11 Computation of Primary and Fully Diluted
Earnings Per Common Share........................... 15
<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
Exhibit 11.1
Computation for Primary and Fully Diluted Earnings Per Common Share
<CAPTION>
Three Months Ended
June 30
1997 1996
<S> <C> <C>
NET EARNINGS $ 94,497 $407,260
WEIGHTED AVERAGE COMMON SHARES:
Primary:
Weighted average shares outstanding 2,651,432 2,635,433
Dilutive stock options 139,506 178,406
2,790,938 2,813,839
Fully Diluted:
Weighted average shares outstanding 2,651,432 2,635,433
Dilutive stock options 140,491 178,740
2,791,923 2,814,173
NET EARNINGS PER COMMON SHARE:
Primary $0.03 $0.14
Fully Diluted $0.03 $0.14
<FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from Air
Transportation Holding Company, Inc. SEC Form 10-K for period ended June
30, 1997 (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-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 2548328
<SECURITIES> 2133045
<RECEIVABLES> 2385923
<ALLOWANCES> 0
<INVENTORY> 1106483
<CURRENT-ASSETS> 8586757
<PP&E> 3506136
<DEPRECIATION> 2038033
<TOTAL-ASSETS> 10277461
<CURRENT-LIABILITIES> 1748172
<BONDS> 0
0
0
<COMMON> 662855
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10277461
<SALES> 8159080
<TOTAL-REVENUES> 8159080
<CGS> 0
<TOTAL-COSTS> 7694276
<OTHER-EXPENSES> 340576
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 124228
<INCOME-TAX> 29731
<INCOME-CONTINUING> 94497
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<CHANGES> 0
<NET-INCOME> 94497
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
