<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 July 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 Identification No.)
incorporation or organization)
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 July 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
July 31, April 30,
1996 1996
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(unaudited)
Current assets:
Cash and cash equivalents $ 96 $ 123
Prepaid expenses and other 103 128
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Total assets $ 199 $ 251
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities - accounts payable and
other accrued liabilities $ - $ 11
Payable to Predecessor Company stockholders 199 240
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 $ 199 $ 251
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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)
Three Months Ended July 31,
---------------------------
1996 1995
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(unaudited)
Operating revenues $ - $ -
Operating expenses -
general and administrative expenses 42 43
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Operating loss (42) (43)
Other income:
Interest income 1 6
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Total other income 1 6
Loss before income taxes (41) (37)
Provision for income taxes - -
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Net loss $ (41) $ (37)
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Loss per common share $ - $ -
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Weighted average number of
common shares outstanding 23,034 23,034
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See accompanying notes to consolidated financial statements.
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METRO AIRLINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended July 31,
---------------------------
1996 1995
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(unaudited)
Cash flows from operating activities:
Loss from operations $(41) $ (37)
Adjustments to reconcile loss to net cash
provided (used) by operating activities:
Changes in assets and liabilities:
Prepaid expenses and other assets 25 353
Accounts payable and other accrued liabilities (11) (9)
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Net cash provided (used) by operating activities (27) 307
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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 (27) 307
Cash and cash equivalents at beginning of period 123 327
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Cash and cash equivalents at end of period $ 96 $ 634
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See accompanying notes to consolidated financial statements.
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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"). Metroflight and
Metro Leasing were dissolved in June 1996. 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
and the term "Reorganized Company" refers to the Company after December 28,
1993.
The stockholders of the Predecessor Company at the Effective Date 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 distribution of $.06 per
share of the Settlement Payment Right. The total distributed was
approximately $344,000. 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
July, 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.
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 July 31, 1996, the Company had cash and cash equivalents on hand of
approximately $96,000, compared to $123,000 at April 30, 1996.
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
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
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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 July 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 $344,000.
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 be liquidated after all
claims have been pursued and realized to the extent possible.
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 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
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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: September 12, 1996 METRO AIRLINES, INC.
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(Registrant)
/s/ BRIAN K. MILLER
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Brian K. Miller
President
Principal Financial Officer
/s/ MITCHELL E. GASSAWAY
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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 July 31, 1996 and the Company's
consolidated statement of operations for the three months ended July 31, 1996
contained in the Company's Form 10-QSB for the quarter ended July 31, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 96
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 199
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 199
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 230
<OTHER-SE> (230)
<TOTAL-LIABILITY-AND-EQUITY> 199
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 42
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (41)
<INCOME-TAX> 0
<INCOME-CONTINUING> (41)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
