<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ___________ to ___________
Commission file number 0-10639
METRO AIRLINES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 74-2211124
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
POST OFFICE BOX 612626
DFW AIRPORT, TX 75261-2626
(Address of principal executive offices)
(214) 929-5117
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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
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Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes X No
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As of January 31, 1996, there were outstanding 23,034,415 shares of New
Common Stock of the Registrant.
Transitional small business disclosure format (check one): Yes No X
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
METRO AIRLINES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
<TABLE>
<CAPTION>
JANUARY 31, APRIL 30,
1996 1995
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(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 488 $ 327
Accounts receivable and other 168 470
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Total assets $ 656 $ 797
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities - accounts payable and other accrued liabilities $ 1 $ 11
Payable to Predecessor Company stockholders 655 786
Stockholders' equity:
New common stock, $.01 par value. Authorized 32,000,000
shares; issued and outstanding 23,034,415 shares 230 230
Additional paid-in capital (230) (230)
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Total stockholders' equity - -
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Total liabilities and stockholders' equity $ 656 $ 797
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</TABLE>
See accompanying notes to consolidated financial statements.
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METRO AIRLINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JANUARY 31, NINE MONTHS ENDED JANUARY 31,
------------------------------ -----------------------------
1996 1995 1996 1995
------ ------ ------ ------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Operating revenues $ - $ - $ - $ -
Operating expenses -
general and administrative expenses 53 54 150 250
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Operating loss (53) (54) (150) (250)
Other income:
Interest income 4 6 19 18
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Total other income 4 6 19 18
Loss before income taxes (49) (48) (131) (232)
Provision for income taxes - - - -
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Net loss $ (49) $ (48) $ (131) $ (232)
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Loss per common share $ - $ - $ (.01) $ (.01)
------ ------ ------ ------
------ ------ ------ ------
Weighted average number of
common shares outstanding 23,034 23,034 23,034 23,034
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
METRO AIRLINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JANUARY 31,
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1996 1995
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(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Loss from operations $(131) $(232)
Adjustments to reconcile loss to net cash
provided (used) by operating activities:
Changes in assets and liabilities:
Accounts receivable and other assets 302 (19)
Accounts payable and other accrued liabilities (10) (65)
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Net cash provided (used) by operating activities 161 (316)
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Cash flows from investing activities - -
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Cash flows from financing activities - -
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Net increase (decrease) in cash and cash equivalents 161 (316)
Cash and cash equivalents at beginning of period 327 725
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Cash and cash equivalents at end of period $ 488 $ 409
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</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
METRO AIRLINES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) GENERAL INFORMATION
The consolidated financial statements include the accounts of
Metro Airlines, Inc. ("Metro") and its wholly owned subsidiaries, Metroflight,
Inc. ("Metroflight") and Metro Leasing, Inc. ("Metro Leasing"). As used herein,
the term "Company" refers to Metro and its subsidiaries.
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosure normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations. Although the Company believes that the
disclosure is adequate to prevent the information presented from being
misleading, it is suggested that the consolidated financial statements be read
in conjunction with the audited financial statements and notes thereto included
in the Company's latest Annual Report on Form 10-KSB.
(2) CHAPTER 11 REORGANIZATION
The Company's Joint Plan of Reorganization, as Amended and
Modified, (the "Plan"), was confirmed by the United States Bankruptcy Court for
the Northern District of Texas, Dallas Division (the "Bankruptcy Court") on
December 16, 1993 and the Plan became effective on December 28, 1993 (the
"Effective Date").
The Plan called for the payment of approximately $4.5 million in
cash, including interest from March 22, 1993 to the date of payment, in
satisfaction of unsecured claims against Metroflight. The Plan also provided
for the cancellation of approximately $22.8 million in unsecured claims against
Metro in exchange for the issuance of approximately 99% of the common stock of
the Reorganized Company to the holders of such claims. The remaining 1% of the
common stock of the Reorganized Company was issued to the holders of the
Predecessor Company's common stock on December 28, 1993. As used herein, the
term "Predecessor Company" refers to the Company prior to December 28, 1993.
The stockholders of the Predecessor Company are also entitled to
receive a special payment of 27 cents per share of the Predecessor Company's
stock (the "Settlement Payment Right"), payable after all senior claims are
paid. The Plan calls for partial payment of the Settlement Payment Right to be
made at such time as the Reorganized Company has sufficient cash, after
deducting certain reserves, to pay at least 50%, or approximately $775,000, of
the total Settlement Payment Right, which is approximately $1,550,000. The
Company currently
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does not have sufficient resources to require such a payment.
However, in February 1996, the Company made an interim partial payment of $.06
per share of the Settlement Payment Right. The total distributed was
approximately $345,000. For purposes of establishing the liability associated
with the Settlement Payment Right, the Company recorded a payable to Predecessor
Company stockholders with a corresponding charge to the Predecessor Company
stockholders' accounts in an amount equal to the net assets of the Reorganized
Company as of the Effective Date. The payable is adjusted as subsequent income
or losses are incurred since such income or losses increase or reduce the net
assets available for payment of the Settlement Payment Right. Since the
Effective Date, this payable has been reduced by the net cumulative loss
incurred from the Effective Date through January 31, 1996. The payable has not
been reduced by reserves for future administrative expenses or costs of
litigation.
The Company accounted for transactions related to the
reorganization proceedings in accordance with Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code,"
issued by the American Institute of Certified Public Accountants in November
1990 ("SOP 90-7"). In connection with its emergence from bankruptcy, the
Company adopted fresh start reporting in accordance with SOP 90-7 and reflected
the effects of such adoption in its consolidated balance sheet as of December
28, 1993. The adjustments to reflect the consummation of the Plan, including
the gain on debt discharge of prepetition liabilities, have been reflected in
the accompanying consolidated financial statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATION
Until January 1991, the Company, through its wholly owned subsidiaries,
operated four separate regional passenger airlines and an air cargo carrier.
Since January 1991, the Company has sold or shut down all of its passenger
operations and its cargo operation.
The Company filed for reorganization under Chapter 11 of the Bankruptcy
Code on April 1, 1991. The Company's reorganization plan was confirmed on
December 11, 1992. On December 22, 1992, the Company sold substantially all
of the assets of Metroflight (the "Asset Sale"), its primary operating
subsidiary. The Company currently has no ongoing operations. Since the
Asset Sale, its activities have been limited to the pursuit of certain
claims and implementation of the Plan, which became effective, as modified,
on December 28, 1993.
As of January 31, 1996, the Company had cash and cash equivalents on hand
of approximately $488,000, compared to $327,000 at April 30, 1995.
Under the Plan, the stockholders of the Predecessor Company at the
Effective Date are entitled to receive a special payment of 27 cents per share
of the Predecessor Company's stock (the "Settlement Payment Right"), payable
after all senior claims are paid. The Plan calls for partial payment of the
Settlement Payment Right to be made at such time as the Reorganized Company has
sufficient cash, after deducting certain reserves, to pay at least 50%, or
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approximately $775,000, of the total Settlement Payment Right, which is
approximately $1,550,000. The Company currently does not have sufficient
resources to require such a payment. For purposes of establishing the liability
associated with the Settlement Payment Right, the Company recorded a payable to
Predecessor Company stockholders with a corresponding charge to the Predecessor
Company stockholders' accounts in an amount equal to the net assets of the
Reorganized Company at the Effective Date. The payable is adjusted as
subsequent income or losses are incurred since such income or losses increase or
reduce the net assets available for payment of the Settlement Payment Right.
Since the Effective Date, the payable has been reduced by the cumulative net
loss incurred from the Effective Date through January 31, 1996. The payable has
not been reduced by reserves for future administrative expenses or costs of
litigation.
In addition to cash on hand, the Company has certain other assets,
primarily miscellaneous receivables, that it expects to liquidate at amounts
approximating carrying value.
In February 1995, the Company reached an agreement for the settlement of
certain litigation with Aeroflight Holdings, Inc. ("AHI") and its principals,
who are also Predecessor Company stockholders. Under the terms of the
settlement, which was approved by the Bankruptcy Court, all litigation between
the parties has been dismissed and all claims of the Company and AHI against
each other have been released. In addition, the Settlement Payment Right due
the AHI principals has been reduced by 15%, or approximately $100,000. Further,
the terms of the settlement provide that the Company make an initial partial
distribution of at least $250,000 of the Settlement Payment Right. In February
1996, the Company made an interim partial payment of $.06 per share of the
Settlement Payment Right. The total distributed was approximately $345,000.
The amount and timing of future payments of the Settlement Payment Right is
uncertain.
The Company also has an allowed unsecured claim of approximately $5.4
million in the Chapter 7 bankruptcy proceedings of Metro Express, the Company's
subsidiary that is being liquidated by a trustee. Although the Company expects
to receive a cash distribution on its unsecured claim from the liquidation of
Metro Express, there can be no assurance as to the amount or timing of such
distribution. Any distribution will likely be only a small percentage of the
allowed claim. In addition, the Company's administrative claim in the Metro
Express bankruptcy was allowed in the amount of approximately $330,000, which
was received by the Company in June 1995.
The Company believes that its current cash on hand is sufficient to fund
operating expenses during the implementation of the Plan, which is expected to
last into fiscal 1997, as well as to pursue the Company's claim against Metro
Express. It is anticipated that the Company will ultimately be liquidated.
The Company has no commitments for capital expenditures or leases. The
Company currently has no available borrowing capability and it is unlikely that
it would be able to obtain outside financing. Under the terms of the Plan, the
Company is not permitted to pledge any
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assets owned as of the effective date of the Plan without approval of a
committee representing the interest of prepetition creditors. All of the
Company's available cash, after payment of administrative expenses, is
currently committed to payments to Predecessor Company stockholders.
PART 2. - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
SIGNATURE
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.
Date: FEBRUARY 15, 1996 METRO AIRLINES, INC.
------------------------------
(Registrant)
/s/ BRIAN K. MILLER
------------------------------
Brian K. Miller
President
Principal Financial Officer
/s/ MITCHELL E. GASSAWAY
------------------------------
Mitchell E. Gassaway
Controller
Principal Accounting Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AS OF JANUARY 31, 1996 AND THE COMPANY'S
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS ENDED JANUARY 31, 1996
CONTAINED IN THE COMPANY'S FORM 10-QSB FOR THE QUARTER ENDED JANUARY 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 488
<SECURITIES> 0
<RECEIVABLES> 168
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 656
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 656
<CURRENT-LIABILITIES> 1
<BONDS> 0
0
0
<COMMON> 230
<OTHER-SE> (230)
<TOTAL-LIABILITY-AND-EQUITY> 656
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 150
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (131)
<INCOME-TAX> 0
<INCOME-CONTINUING> (131)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (131)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
