<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
====== Exchange Act of 1934
For the quarterly period ended June 30, 1996 or
--------------------
Transition report pursuant to Section 13 or 15(d) of the
====== Securities Exchange Act of 1934
For the transition period from to
-------------- --------------
Commission file number 1-10140
------------------------------------------------
AMERICA WEST AIRLINES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 86-0418245
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4000 EAST SKY HARBOR BLVD, PHOENIX, ARIZONA 85034
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 693-0800
- ------------------------------------------------------------------------------
N/A
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 XX No
----- -----
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes XX No (Not Applicable)
----- ----- ----------------
The Company has 1,200,000 shares of Class A Common Stock and 43,179,903 shares
of Class B Common Stock, after deducting 1,382,000 shares of treasury stock
outstanding as of July 31, 1996.
<PAGE> 2
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICA WEST AIRLINES, INC.
Condensed Balance Sheets
(in thousands except share data)
<TABLE>
<CAPTION>
ASSETS June 30, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . $ 180,473 $ 224,367
Short-term investments . . . . . . . . . . . . . . . . 21,545 --
Accounts receivable, less allowance for doubtful
accounts of $3,099 in 1996 and $2,515 in 1995 . . . 84,934 69,094
Expendable spare parts and supplies, less allowance
for obsolescence of $2,801 in 1996 and $2,115 in
1995 . . . . . . . . . . . . . . . . . . . . . . . . 26,948 28,643
Prepaid expenses . . . . . . . . . . . . . . . . . . . 48,108 43,315
---------- ----------
Total current assets . . . . . . . . . . . . . . 362,008 365,419
---------- ----------
Property and equipment:
Flight equipment . . . . . . . . . . . . . . . . . . . 612,538 546,591
Other property and equipment . . . . . . . . . . . . . 114,641 104,106
Equipment purchase deposits . . . . . . . . . . . . . 35,367 27,489
---------- ----------
762,546 678,186
Less accumulated depreciation and amortization . . . . 117,504 76,123
---------- ----------
Total property and equipment . . . . . . . . . . 645,042 602,063
---------- ----------
Other assets:
Restricted cash . . . . . . . . . . . . . . . . . . . 24,799 31,694
Reorganization value in excess of amounts allocable
to identifiable assets, net . . . . . . . . . . . . 441,945 489,045
Deferred income taxes . . . . . . . . . . . . . . . . 74,700 74,700
Other assets, net . . . . . . . . . . . . . . . . . . 28,439 25,788
---------- ----------
Total other assets . . . . . . . . . . . . . . . 569,883 621,227
---------- ----------
$1,576,933 $1,588,709
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE> 3
AMERICA WEST AIRLINES, INC.
Condensed Balance Sheets
(in thousands except share data)
<TABLE>
<CAPTION>
June 30, December 31,
Liabilities and Stockholders' Equity 1996 1995
- ------------------------------------ ------------ ------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt . . . . . . . . . $ 47,286 $ 54,157
Accounts payable . . . . . . . . . . . . . . . . . . . 120,912 89,157
Air traffic liability . . . . . . . . . . . . . . . . . 221,962 191,744
Accrued compensation and vacation benefits . . . . . . 23,935 41,616
Accrued taxes . . . . . . . . . . . . . . . . . . . . . 20,621 34,359
Other accrued liabilities . . . . . . . . . . . . . . . 27,094 24,802
---------- ----------
Total current liabilities . . . . . . . . . . . . . 461,810 435,835
---------- ----------
Long-term debt, less current maturities . . . . . . . . . 334,820 373,964
Deferred credits and other liabilities . . . . . . . . . . 118,355 129,438
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 48,800,000
shares; no shares issued . . . . . . . . . . . . . . . -- --
Class A common stock, $.01 par value. Authorized
1,200,000 shares; issued and outstanding 1,200,000
shares . . . . . . . . . . . . . . . . . . . . . . . . 12 12
Class B common stock, $.01 par value. Authorized
100,000,000 shares; issued and outstanding 44,560,162
shares at June 30, 1996 and 44,141,330 shares at
December 31, 1995 . . . . . . . . . . . . . . . . . . 445 441
Additional paid-in capital . . . . . . . . . . . . . . . 575,446 588,927
Retained earnings . . . . . . . . . . . . . . . . . . . 103,776 61,632
---------- ----------
679,679 651,012
Less treasury stock at cost, 882,000 shares at June 30,
1996 and 112,000 shares at December 31, 1995 of
Class B common stock . . . . . . . . . . . . . . . . . 17,731 1,540
---------- ----------
Total stockholders' equity . . . . . . . . . . . 661,948 649,472
---------- ----------
$1,576,933 $1,588,709
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 4
AMERICA WEST AIRLINES, INC.
Condensed Statements of Income
(in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenues:
Passenger . . . . . . . . . . . . . . . . . . . $ 439,800 $ 374,979 $ 827,602 $ 698,438
Cargo . . . . . . . . . . . . . . . . . . . . . 10,991 10,935 21,748 22,311
Other . . . . . . . . . . . . . . . . . . . . . 13,158 14,002 27,749 24,957
--------- --------- --------- ---------
Total operating revenues . . . . . . . . . . . 463,949 399,916 877,099 745,706
--------- --------- --------- ---------
Operating expenses:
Salaries and related costs . . . . . . . . . . . 97,620 95,871 192,322 185,051
Aircraft rents . . . . . . . . . . . . . . . . . 49,866 43,039 97,138 84,485
Other rents and landing fees . . . . . . . . . . 27,264 26,650 53,831 53,458
Aircraft fuel . . . . . . . . . . . . . . . . . 56,143 42,787 105,319 82,481
Agency commissions . . . . . . . . . . . . . . . 34,607 31,360 67,206 60,325
Aircraft maintenance materials and repairs . . . 29,206 14,115 56,231 26,879
Depreciation and amortization . . . . . . . . . 13,488 11,994 26,720 23,914
Amortization of reorganization value in excess
of amounts allocable to identifiable assets . 6,551 8,208 13,100 16,416
Other . . . . . . . . . . . . . . . . . . . . . 87,121 72,935 168,831 134,845
--------- --------- --------- ---------
Total operating expenses . . . . . . . . . . . 401,866 346,959 780,698 667,854
--------- --------- --------- ---------
Operating income . . . . . . . . . . . . . . . 62,083 52,957 96,401 77,852
--------- --------- --------- ---------
Nonoperating income (expenses):
Interest income . . . . . . . . . . . . . . . . 3,361 4,085 6,531 6,959
Interest expense . . . . . . . . . . . . . . . . (11,709) (15,579) (23,977) (31,458)
Gain (loss) on disposition of property
and equipment . . . . . . . . . . . . . . . . 223 (302) 401 (1,225)
Other, net . . . . . . . . . . . . . . . . . . . (168) 36 (146) 37
--------- --------- --------- ---------
Total nonoperating expenses, net . . . . . . . . . (8,293) (11,760) (17,191) (25,687)
--------- --------- --------- ---------
Income before income taxes and extraordinary item 53,790 41,197 79,210 52,165
--------- --------- --------- ---------
Income taxes . . . . . . . . . . . . . . . . . . . 24,268 20,324 35,961 26,082
--------- --------- --------- ---------
Extraordinary item, net of taxes . . . . . . . . . (1,105) -- (1,105) --
--------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . . . . . . $ 28,417 $ 20,873 $ 42,144 $ 26,083
========= ========= ========= =========
Earnings per share:
Primary:
Income before extraordinary item . . . . . . . $ 0.60 $ 0.46 $ 0.87 $ 0.58
Extraordinary item . . . . . . . . . . . . . . (0.02) -- (0.02) --
--------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . . . $ 0.58 $ 0.46 $ 0.85 $ 0.58
========= ========= ========= =========
Fully diluted:
Income before extraordinary item . . . . . . . $ 0.60 $ 0.45 $ 0.86 $ 0.58
Extraordinary item . . . . . . . . . . . . . . (0.02) -- (0.02) --
--------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . . . $ 0.58 $ 0.45 $ 0.84 $ 0.58
========= ========= ========= =========
Shares used for computation:
Primary . . . . . . . . . . . . . . . . . . . . 49,231 45,167 49,470 45,166
========= ========= ========= =========
Fully diluted . . . . . . . . . . . . . . . . . 49,520 48,085 50,089 48,019
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE> 5
AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1996 1995
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . $ 42,144 $ 26,083
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . 26,720 23,914
Amortization of reorganization value in excess
of amounts allocable to identifiable assets . 13,100 16,416
Amortization of deferred overhauls . . . . . . . 15,255 2,784
Amortization of deferred credits . . . . . . . . (5,876) (5,350)
Loss (gain) on disposition of property and
equipment . . . . . . . . . . . . . . . . . . (401) 1,225
Extraordinary loss on extinguishment of debt,
net of taxes . . . . . . . . . . . . . . . . . 1,105 --
Other . . . . . . . . . . . . . . . . . . . . . 1,216 1,675
Changes in operating assets and liabilities:
Increase in short-term investments . . . . . . . (21,545) --
Increase in accounts receivable, net . . . . . . (15,840) (21,942)
Decrease (increase) in spare parts and
supplies, net . . . . . . . . . . . . . . . . 1,695 (3,027)
Increase in prepaid expenses, net . . . . . . . (4,793) (13,220)
Decrease in other assets . . . . . . . . . . . . 39,994 16,025
Increase in accounts payable . . . . . . . . . . 31,755 11,859
Increase in air traffic liability . . . . . . . 30,218 90,545
Increase (decrease) in accrued compensation
and vacation benefits . . . . . . . . . . . . (17,681) 5,837
Increase (decrease) in accrued taxes . . . . . . (13,738) 27,598
Increase (decrease) in other accrued
liabilities . . . . . . . . . . . . . . . . . 4,074 (451)
Decrease in other liabilities . . . . . . . . . (6,341) (113)
--------- ---------
Net cash provided by operating activities . . 121,061 179,858
Cash flows from investing activities:
Purchases of property and equipment . . . . . . . (76,767) (50,707)
Other . . . . . . . . . . . . . . . . . . . . . . (1,722) (1,267)
--------- ---------
Net cash used in investing activities . . . . (78,489) (51,974)
Cash flows from financing activities:
Repayment of debt . . . . . . . . . . . . . . . . (55,016) (31,074)
Exercise of stock options and warrants . . . . . . 2,882 1
Acquisition of treasury stock . . . . . . . . . . (16,191) --
Acquisition of warrants . . . . . . . . . . . . . (18,141) --
--------- ---------
Net cash used in financing activities . . . . (86,466) (31,073)
--------- ---------
Net increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . . (43,894) 96,811
--------- ---------
Cash and cash equivalents at beginning of period . . 224,367 182,581
--------- ---------
Cash and cash equivalents at end of period . . . . . $ 180,473 $ 279,392
========= =========
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE> 6
AMERICA WEST AIRLINES, INC.
Notes To Condensed Financial Statements
June 30, 1996
1. BASIS OF PRESENTATION
The unaudited condensed financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission but do not include all information and
footnotes required by generally accepted accounting principles. In the
opinion of management, the condensed financial statements reflect all
adjustments, which are of a normal recurring nature, necessary for a fair
presentation. Certain prior year amounts have been reclassified to conform
with the current year presentation. The accompanying condensed financial
statements should be read in conjunction with the financial statements and
related notes thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
2. SHORT-TERM INVESTMENTS
Short-term investments consist of cash invested in certain debt securities
with maturities greater than 90 days. The debt securities are classified as
held-to-maturity and are carried at amortized cost which approximates fair
value.
3. RESTRICTED STOCK AND STOCK OPTIONS
Under the America West Airlines, Inc. 1994 Incentive Equity Plan
("Incentive Plan"), up to 3,500,000 shares of Class B Common Stock may be
issued to cover awards under the Incentive Plan, of which no more than
1,500,000 will be issued as restricted stock or bonus stock. As of June 30,
1996, 199,334 shares of restricted stock and options to purchase 2,318,666
shares of Class B Common Stock at the fair market value on the date of
grant (which range from $8.75 to $23.00) had been granted pursuant to the
Incentive Plan. Also, options to purchase 117,000 shares of Class B Common
Stock at the fair market value on the date of grant (which range from $8.00
to $19.625) were issued to members of the Board of Directors who are not
employees of the Company. As of June 30, 1996, 60,722 shares of restricted
stock were vested and 613,000 options to purchase shares of Class B Common
Stock were exercisable.
4. COMMON STOCK AND WARRANTS
In September 1995, the Board of Directors authorized the purchase of up to
2.5 million shares of Class B Common Stock and all of its publicly traded
Warrants on the open market, as opportunity permits, over a two-year
period. During the second quarter of 1996, the Company repurchased 770,000
shares of Class B Common Stock on the open market at per share prices
ranging from $19.75 to $21.88. In July 1996, the Company purchased an
additional 500,000 shares of Class B Common Stock at per share prices
ranging from $14.50 to $16.63. The repurchased shares are held as treasury
shares by the Company. In May 1996, the Company repurchased 2.2 million
warrants from two warrant holders. The cost, which approximated $18
million, was charged to additional paid-in capital.
5. INCOME TAXES
The Company recorded income tax expense (exclusive of extraordinary item)
as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
(in thousands)
Current taxes:
Federal $ 698 $ 594 $ 1,062 $ 604
State 624 1,132 950 1,150
------- ------- ------- -------
1,322 1,726 2,012 1,754
Deferred taxes -- -- -- --
Income tax expense attributable
to reorganization items and other 22,946 18,598 33,949 24,328
------- ------- ------- -------
Income tax expense $24,268 $20,324 $35,961 $26,082
======= ======= ======= =======
</TABLE>
As reflected in the above table, income tax expense pertains both to income
before extraordinary item as well as certain fresh start adjustments to the
Company's financial statements stemming from the Company's reorganization
in 1994. The Company's reorganization gave rise to significant
6
<PAGE> 7
items of expense for financial reporting purposes that are not deductible
for income tax purposes. In large measure, it is these nondeductible (for
income tax purposes) expenses that result in income tax expense (for
financial reporting purposes) significantly greater than taxes computed at
the current U.S. corporate statutory rate of 35 percent. Nevertheless, the
Company's actual cash income tax liability (i.e., income taxes payable) is
considerably lower than income tax expense shown for financial reporting
purposes.
6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
Cash paid for interest and income taxes was as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1996 1995
-------- --------
(in thousands)
<S> <C> <C>
Interest (net of amounts capitalized
of $1,480 in 1996 and $1,043 in 1995) $ 20,508 $ 26,848
Income taxes 329 19
</TABLE>
In addition, the Company had the following non-cash financing activities:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1996 1995
-------- --------
(in thousands)
<S> <C> <C>
Notes payable $ 7,814 $ 1,415
Accrued interest reclassified to
long-term debt - 65
</TABLE>
7. EXTRAORDINARY ITEM
In the second quarter of 1996, the Company incurred an extraordinary charge
of $1.1 million, net of income tax benefit of $918,000, relating to the
prepayment of $25 million in principal of its 10 3/4% Senior Unsecured
Notes.
8. COMMITMENTS AND CONTINGENCIES
(a) Leases
In May 1996, the Company entered into agreements to lease two A320
aircraft. The two A320 aircraft each have a lease term of two years with
rents payable monthly.
In June 1996, the Company entered into an agreement to lease one A320
aircraft under a Put Agreement with GPA Group, plc. ("GPA"). The lease has
a term of nine years with rents payable monthly.
(b) Contingent Legal Obligations
Certain administrative and priority tax claims are pending against the
Company which, if ultimately allowed by the bankruptcy court, would
represent general obligations of the Company. Such claims include claims of
various state and local tax authorities and certain potential contractual
indemnification obligations. The Company is also a defendant in various
lawsuits. Management cannot reasonably predict the outcome of the pending
lawsuits and administrative and priority tax claims. However, management
believes, after considering a number of factors, including the advice of
outside counsel, the nature of the contingencies to which the Company is
subject and its prior experience, that although the outcome of those
matters could adversely affect future operating results, the resolution of
these actions will not have a material adverse effect on the Company's
financial condition.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General Factors Affecting Company Results
The Company's operating results are significantly affected by general economic
conditions as well as competitive factors and other conditions affecting the
airline industry. In recent periods, airlines have achieved generally improved
operating results as a result of more favorable economic conditions and as a
result of focusing on their areas of relative strength, eliminating service to
under-performing markets and rationalizing operations, route systems and pricing
strategies.
America West began to achieve positive results beginning in 1993 due to an
operational restructuring, combined with a gradually improving economic climate
and a more rational pricing environment. As a result, the Company has achieved
14 consecutive quarters of profitability beginning with the first quarter of
1993.
The Company operates with one of the lowest cost structures among the major
airlines in the United States. To the extent that other carriers are successful
in reducing their operating costs, the advantage which the Company enjoys as a
result of its low cost structure would be reduced. For this reason, maintaining
a low cost structure is one of the Company's strategic imperatives. In May 1995,
a five-year collective bargaining agreement with the Company's pilots became
effective. The terms of this contract are consistent with the Company's goal of
maintaining its low unit cost structure. Specifically, the agreement provides
for a salary level increase at a compound annual rate of approximately 5.7% and
includes provisions relating to pilot productivity which management estimates
will result in productivity increases of approximately 2% per year. A
significant portion of such salary level increase was effected in May 1995 in
order to provide the pilots with a pay and benefits package competitive with
other low cost carriers. Salary level increases after the May 1995 increase will
occur through April 2000 and will increase at a compound annual rate of
approximately 2.5%.
Commencing October 1, 1995, operating costs of the Company were affected by the
expiration of a 4.3 cents per gallon federal tax exemption for commercial
aviation fuel. The expiration of such exemption has increased the Company's
annual operating expenses by approximately $14.5 million based upon its 1996
fuel consumption levels. Debate continues in the Congress as to whether the
exemption from the federal fuels tax previously granted to the commercial
airlines should be reinstated but there can be no assurance that the jet fuel
tax will be repealed, either temporarily or permanently.
In August 1996, both houses of Congress passed H.R. 3448, the Small Business Job
Protection Act of 1996 and sent it to the President for his signature. The
President is expected sign the Act into law on or before August 20, 1996. The
Act reinstates the federal air transportation excise taxes (the 10 percent
domestic tax, the 6.25 percent air cargo tax and the $6.00 international
departure tax) effective seven days after the President signs the Act into law.
As approved by Congress, the Act provides that the reinstated federal air
transportation excise taxes expire on December 31, 1996 and it is unclear at
this time whether the taxes will be extended beyond the expiration date.
The Company's actual income tax liability (i.e., income taxes payable) is
considerably lower than income tax expense for financial reporting purposes due
in part to the utilization of net operating loss and certain tax credit
carryforwards. The amortization of the excess reorganization value is not
deductible for income tax purposes, in part giving rise to an effective tax rate
for financial reporting purposes that is significantly greater than the current
U.S. corporate statutory rate of 35 percent.
This report contains various forward-looking statements and information that are
based on management's beliefs as well as assumptions made by and information
currently available to management. Whether such forward-looking statements and
information ultimately prove to be accurate depends on various uncertainties and
future developments that cannot be predicted. For a discussion of certain of the
principal risks and uncertainties that may affect America West's business and
future operating results, please refer to the Company's Annual Report on Form
10-K for the year ended December 31, 1995, which is on file with the Securities
and Exchange Commission.
Seasonality
Due to the greater demand for air travel during the summer months, revenues in
the airline industry in the second and third quarters of the year tend to be
greater than revenues in the first and fourth quarters of the year. Other
factors that are not necessarily seasonal also significantly affect results,
including the extent and nature of price and other competition from other
airlines, changing levels of operations, domestic and international events, fuel
prices and general economic conditions.
8
<PAGE> 9
Selected Operating Data
The table below sets forth selected operating data for the Company.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- ------------------------------
Percent Percent
Change Change
1996 1995 1996-1995 1996 1995 1996-1995
-------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Available seat miles
(in millions) 5,353 4,858 10.2 10,308 9,493 8.6
Revenue passenger miles
(in millions) 3,848 3,498 10.0 7,352 6,458 13.8
Load factor (percent) 72.0 72.0 - 71.3 68.0 3.3pts
Yield per revenue passenger mile
(cents) 11.43 10.72 6.6 11.26 10.82 4.1
Revenue per available seat mile:
Passenger (cents) 8.22 7.72 6.5 8.03 7.36 9.1
Total (cents) 8.67 8.23 5.3 8.51 7.86 8.3
Passenger enplanements
(in thousands) 4,589 4,365 5.1 8,894 8,185 8.7
Average stage length (miles) 725 690 5.1 713 688 3.6
Average passenger journey (miles) 1,017 1,010 .7 993 985 .8
Aircraft (end of period) 99 89 11.2 99 89 11.2
Average daily aircraft
utilization (hours) 11.8 11.4 3.5 11.7 11.3 3.5
Full-time equivalent employees
(end of period) 9,321 9,925 (6.1) 9,321 9,925 (6.1)
Fuel price (cents per gallon) 64.89 55.13 17.7 62.59 54.56 14.7
Fuel consumption (gallons in
millions) 86.5 77.6 11.5 168.3 151.2 11.3
</TABLE>
The table below sets forth the major components of operating expense per
available seat mile ("ASM") for the Company.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- ------------------------------
Percent Percent
Change Change
1996 1995 1996-1995 1996 1995 1996-1995
-------- --------- --------- -------- --------- ---------
(in cents) (in cents)
<S> <C> <C> <C> <C> <C> <C>
Salaries and related costs 1.82 1.97 (7.6) 1.87 1.95 (4.1)
Aircraft rents .93 .88 5.7 .94 .89 5.6
Other rents and landing fees .51 .55 (7.3) .52 .56 (7.1)
Aircraft fuel 1.05 .88 19.3 1.02 .87 17.2
Agency commissions .65 .65 - .65 .64 1.6
Aircraft maintenance materials
and repairs .55 .29 89.7 .54 .28 92.9
Depreciation and amortization .25 .25 - .26 .26 -
Amortization of reorganization
value in excess of amounts
allocable to identifiable
assets .12 .17 (29.4) .13 .17 (23.5)
Other 1.63 1.50 8.7 1.64 1.42 15.5
---- ---- ----- ---- ---- -----
7.51 7.14 5.2 7.57 7.04 7.5
==== ==== ===== ==== ==== =====
</TABLE>
Results of operations
Three Months Ended June 30, 1996 and 1995
For the three months ended June 30, 1996 and 1995, the Company realized net
income before extraordinary item of $29.5 million and $20.9 million,
respectively. Net income in the 1996 period includes income tax expense for
financial reporting purposes of $24.3 million compared to $20.3 million for the
1995 period.
Total operating revenues were $463.9 million for the three months ended June 30,
1996 compared to $399.9 million in the 1995 period. Passenger revenues were
$439.8 million, an increase of 17.3
9
<PAGE> 10
percent over the prior period, and included an $8 million adjustment arising
from the reconciliation of estimated passenger revenues. Cargo and other
revenues decreased 3.2 percent to $24.1 million for the second quarter of 1996.
Other revenues consisted primarily of alcoholic beverage sales, contract
service sales and service charges.
Capacity, as measured by ASMs, increased 10.2 percent for the three months ended
June 30, 1996 compared to the 1995 period, primarily due to an increase in the
fleet size to 99 aircraft from 89 aircraft. Revenue passenger miles increased
10.0 percent for the three months ended June 30, 1996 compared with the 1995
period. Load factor for the 1996 period remained flat, on 10.2 percent higher
available capacity, while yield increased 6.6 percent for the three months ended
June 30, 1996 compared with the 1995 period.
Operating expense per ASM increased to 7.51 cents for the three months ended
June 30, 1996 from 7.14 cents for the 1995 period. The changes in the components
of operating expense per ASM are explained as follows:
- - Salaries and related costs per ASM decreased 7.6 percent for the three
month period ended June 30, 1996 primarily due to a 10.2 percent increase
in ASM's. The new pilot pay contract which became effective May 1, 1995
increased pilot salaries by approximately $4.3 million for the 1996 period
while the Company's outsourcing of its heavy aircraft maintenance in
December 1995 reduced salaries by approximately $3.5 million during the
same period.
- - Aircraft rents per ASM increased 5.7 percent for the three months ended
June 30, 1996 due principally to the addition of 10 aircraft to the fleet
since June 30, 1995.
- - Other rents and landing fees per ASM decreased primarily due to the 10.2
percent increase in ASMs for the three months ended June 30, 1996.
- - The average price per gallon of aircraft fuel increased 17.7 percent to
64.89 cents for the 1996 quarter from 55.13 cents for the 1995 quarter.
Also, fuel consumption was higher due to the increase in fleet size and
aircraft utilization.
- - Aircraft maintenance materials and repairs expense per ASM increased 89.7
percent or $15.1 million due primarily to an increase in capitalized
maintenance expense which increased capitalized maintenance amortization
expense for the 1996 period by $7.6 million compared with the second
quarter of 1995. The balance of capitalized maintenance expense grew from
$42.9 million at June 30, 1995 to $100.7 million at June 30, 1996. In
addition, maintenance expense per ASM increased further in the 1996 period
with the outsourcing of the Company's heavy aircraft maintenance work. That
increase was essentially a reclassification of expense and was
substantially offset by a reduction in maintenance payroll expense as
discussed above.
- - Amortization of reorganization value in excess of amounts allocable to
identifiable assets per ASM decreased due to a reduction in the unamortized
balance of excess reorganization value due to (i) utilization of tax
attributes of the pre-reorganization Company, including net operating loss
carryforwards, such reduction amounting to $50 million in 1995 and (ii)
recognition of a deferred income tax asset of $74.7 million in 1995.
- - Other operating cost per ASM increased 8.7 percent to 1.63 cents from 1.50
cents for the three months ended June 30, 1996 primarily due to a 4.3 cents
per gallon federal fuel tax for which the Company became liable commencing
October 1, 1995, and the increase in passenger traffic-related cost such as
CRS fees, catering costs, credit card discount fees, interrupted trip
expense and advertising expense.
- - The first class installation program completed in December 1995 reduced
ASMs by 2.6 percent which had the effect of increasing operating cost per
ASM for the second quarter.
Net nonoperating expenses decreased $3.5 million to $8.3 million for the three
months ended June 30, 1996. This resulted from a net decrease in interest
expense of $3.9 million for the three months ended June 30, 1996 due to reduced
levels of debt and lower interest rates.
Income tax expense for financial reporting purposes for the three month period
ended June 30, 1996, increased to $24.3 million from $20.3 million primarily due
to higher pretax income.
In the second quarter of 1996, the Company incurred an extraordinary charge of
$1.1 million net of income tax benefit of $918,000 for the prepayment of $25
million in principal of its 10 3/4 percent Senior Unsecured Notes.
10
<PAGE> 11
Six Months Ended June 30, 1996 and 1995
For the six months ended June 30, 1996 and 1995, the Company realized net income
before extraordinary item of $43.2 million and $26.1 million, respectively.
Included in net income for the six month period in 1996 and 1995 are $36 million
and $26.1 million in income taxes, respectively.
Total operating revenue was $877.1 million for the six months ended June 30,
1996, up 17.6% from the comparable period in 1995. Passenger revenues were
$827.6 million, an increase of 18.5 percent over the prior period. Cargo and
other revenues increased 4.7 percent to $49.5 million. Other revenues consisted
primarily of alcoholic beverage sales, contract service sales and service
charges.
Capacity, as measured by ASMs, increased 8.6 percent for the six months ended
June 30, 1996 compared with the 1995 period primarily due to the addition of 10
aircraft to the fleet since June 30, 1995 and increased utilization of the
fleet. Revenue passenger miles increased 13.8 percent for the six months ended
June 30, 1996 compared with the 1995 period. Load factor for the six month
period increased 3.3 points on 8.6 percent higher capacity while yield increased
4.1 percent when compared with the same period in 1995.
Operating expense per ASM increased to 7.57 cents or 7.5 percent for the six
months ended June 30, 1996 compared with the same period in 1995. The changes in
components of operating expense per ASM are explained as follows:
- - Salaries and related costs per ASM decreased 4.1 percent for the six months
ended June 30, 1996 compared to 1995 primarily due to the 8.6 percent
increase in ASMs. Salaries and related costs increased $7.3 million due in
part to the $11.4 million increase in pilot salaries which was partially
offset by a $7.3 million reductions in salaries related to the Company's
outsourcing of its heavy aircraft maintenance in December 1995.
- - Aircraft rent per ASM increased 5.6 percent for the six months ended June
30, 1996 as compared to 1995, principally due to the addition of 10
aircraft to the fleet since June 30, 1995.
- - Other rents and landing fees per ASM decreased 7.1 percent primarily due to
the 8.6 percent increase in ASMs for the six months ended June 30, 1996
compared with 1995.
- - The average price per gallon of aircraft fuel increased 14.7 percent to
62.59 cents for the six months ended June 30, 1996 compared with 1995. In
addition, aircraft fuel consumption was higher due to the increase in fleet
size and in aircraft utilization.
- - Agency commission expense per ASM increased 1.6 percent primarily due to a
9.1 percent increase in revenue per available seat mile ("RASM") for the
six months ended June 30, 1996 compared with 1995.
Aircraft maintenance materials and repairs expense per ASM increased 92.9
percent or $29.4 million due primarily to an increase in capitalized
maintenance expense which has increased capitalized maintenance
amortization expense by $14 million for the six months ended June 30, 1996
compared with 1995. The balance of capitalized maintenance expense grew
from $42.9 million at June 30, 1995 to $100.7 million at June 30, 1996. In
addition, maintenance expense per ASM increased further in the 1996 period
with the outsourcing of the Company's heavy aircraft maintenance work. That
increase was essentially a reclassification of expense and was
substantially offset by a reduction in maintenance salary expense as
discussed above.
- - Amortization of reorganization in excess of amounts allocable to
identifiable assets per ASM decreased 23.5 percent due to a reduction in
the unamortized balance of excess reorganization value due to, (i)
utilization of tax attributes of the pre-reorganization Company, including
net operating loss carryforwards, such reduction amounting to $50 million
in 1995 and (ii) recognition of a deferred income tax asset of $74.7
million in 1995.
- - Other operating cost per ASM increased 15.5 percent to 1.64 cents for the
six months ended June 30, 1996 compared with 1995. The increase in cost for
the 1996 period is primarily attributed to a 4.3 cents per gallon federal
fuel tax for which the Company became liable commencing October 1, 1995,
and an increase in passenger traffic-related costs such as CRS fees,
catering costs, credit card discount fees, interrupted trip and advertising
expense.
- - The first class installation program completed in December 1995 reduced
ASMs by 2.6 percent which had the effect of increasing operating cost per
ASM for the six month period.
Net nonoperating expenses decreased $8.5 million to $17.2 million for the six
month period ended June 30, 1996 compared with 1995. The 33.1 percent decrease
in cost resulted primarily from a net
11
<PAGE> 12
decrease in interest expense of $7.5 million due to reduced levels of debt and
lower interest rates for the six months ended June 30, 1996 as compared with
1995.
Income tax expense for financial reporting purposes for the six months ended
June 30, 1996 and 1995 increased to $36 million from $26.1 million primarily due
to higher pretax income.
For the six months ended June 30, 1996, the Company incurred an extraordinary
charge of $1.1 million net of income tax benefit of $918,000 for the prepayment
of $25 million of its $75 million 10 3/4 percent Unsecured Senior Notes.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Unrestricted cash and cash equivalents and short-term investments decreased to
$202.0 million at June 30, 1996 from $224.4 million at December 31, 1995
primarily due to the prepayment of debt and the repurchase of Class B Common
Stock and Warrants. Net cash provided from operating activities decreased to
$121.1 million for the six months ended June 30, 1996 from $179.9 million for
the six months ended June 30, 1995, a decrease of $58.8 million. The decrease
was primarily due to the distribution in the 1996 first quarter of performance
bonuses (AWArd Pay) to employees for achieving 1995 operating income targets,
and the reinvestment of certain cash equivalents into certain income producing
short-term investments with maturities greater than 90 days. Net cash used in
investing activities increased to $78.5 million for the six months ended June
30, 1996 from $52 million for the 1995 period, an increase of $26.5 million
primarily related to increased expenditures for capitalized overhauls. Net cash
used in financing activities increased to $86.5 million for the six months ended
June 30, 1996, an increase of $55.4 million due principally to the prepayment of
$25 million in principal of the Company's 10 3/4 percent Senior Unsecured Notes
and the repurchase of Class B Common Stock and Warrants.
The Company has a working capital deficiency which increased to $99.8 million at
June 30, 1996 from $70.4 million at December 31, 1995. Operating with a working
capital deficiency is typical in the airline industry as tickets sold for
transportation which has not yet been provided are classified as a current
liability while the related income producing assets, the aircraft, are
classified as non-current. Despite the working capital deficiency, the Company
expects to meet all of its obligations as they become due.
The Company's long-term debt maturities through 1998 consist primarily of
principal amortization of notes payable secured by certain of the Company's
aircraft. Such maturities are $23.9 million, $45.7 million and $42.8 million,
respectively, for the remainder of 1996, 1997 and 1998. Management expects to
fund these requirements with cash from operations.
At June 30, 1996, the Company had net operating loss carryforwards ("NOL") and
general business tax credit carryforwards of approximately $480.8 million and
$12.7 million, respectively. In addition, the Company has alternative minimum
tax credit carryforwards of approximately $1.1 million. Under Section 382 of the
Internal Revenue Code of 1986, as amended, if a loss corporation has an
"ownership change" within a designated testing period, its ability to use its
NOL and business tax credit carryforwards is subject to certain limitations. The
Company is a loss corporation within the meaning of Section 382. The issuance of
certain common stock by the Company pursuant to the plan of reorganization
resulted in an ownership change within the meaning of Section 382. This
ownership change has resulted in an annual limitation (the "Section 382
Limitation") upon the Company's ability to offset any post-change taxable income
with pre-change NOL. Should the Company generate insufficient taxable income in
any post-change taxable year to fully utilize the Section 382 Limitation of that
year, any excess limitation will be carried forward for use in subsequent tax
years, provided the pre-change NOL has not been exhausted nor has the
carryforward period expired. The alternative minimum tax credit may be carried
forward indefinitely and is available to reduce future income tax payable.
The Company's reorganization and the associated implementation of fresh start
reporting gave rise to significant items of expense for financial reporting
purposes that are not deductible for income tax purposes. In large measure, it
is these nondeductible expenses that result in an effective tax rate (for
financial reporting purposes) significantly greater than the current U.S.
corporate statutory rate of 35 percent. Nevertheless, the Company's actual
income tax liability (i.e., income taxes payable) is considerably lower than
income tax expense shown for financial reporting purposes. This difference in
financial expense compared to actual income tax liability is in part
attributable to tax attributes (including NOLs, subject to certain limitations)
of the pre-reorganization Company that serve to reduce the Company's actual
income tax liability. To the extent the tax attributes of the pre-reorganization
Company reduce the Company's actual income tax liability below the amount of
expense reflected in the financial statements, that difference is applied to
reduce the carrying balance of the Company's Reorganization Value in Excess of
Amounts Allocable to Identifiable Assets.
At June 30, 1996, the Company was obligated to lease four aircraft under a put
agreement with GPA (the "GPA Put Agreement") with deliveries to start no earlier
than January 1, 1996 and end by June 30, 1999. Under the agreement, new or used
B737-300 and B757-200 aircraft, and new or "like new" A320- 200 aircraft may be
put to the Company at a rate of no more than one aircraft in 1996 and three
12
<PAGE> 13
aircraft per year, thereafter. In addition, for every new A320 aircraft put to
the Company, the Company has the right to reduce deliveries under the AVSA A320
purchase contract (discussed below) on a one-for-one basis.
At June 30, 1996, the Company had commitments to AVSA S.A.R.L., an affiliate of
Airbus Industrie ("AVSA"), to purchase a total of 24 Airbus A320-200 aircraft
with delivery dates that fall in the years 1999 through 2001. The aggregate net
cost of such aircraft is based on formulae that include certain price indices
(including indices for various aircraft components such as metal products) for
periods preceding the various delivery dates. Based on an assumed 5% escalation,
the Company estimates such aggregate net cost to be approximately $1.2 billion.
The Company has the option to cancel without cause up to four of these aircraft.
In addition, if new A320 aircraft are delivered as a result of the GPA Put
Agreement, the Company has the right to cancel on a one-for-one basis, up to a
maximum of seven non-consecutive aircraft deliveries under the AVSA agreement,
subject to certain conditions. The Company has taken delivery of three aircraft
under the GPA Put Agreement including one in June 1996. If the Company exercised
its existing rights to cancel seven aircraft under the AVSA agreement, the
aggregate net cost (based upon the assumptions described above) of commitments
under such agreement would be reduced to approximately $900 million. The Company
exercised its right to cancel one new aircraft in August 1996 which reduced the
Company's commitment to 23 aircraft.
The Company has arranged for financing from AVSA for up to one-half of the
deliveries under the AVSA agreement, although the Company intends to seek
financing on more favorable terms from other sources. Additionally, the Company
will require capital from external sources to meet the balance of its financial
commitments for aircraft and other equipment orders. The Company intends to seek
such financing in the future when and as appropriate. There can be no assurance
that the Company will be able to obtain such capital in sufficient amounts or on
terms acceptable to the Company. A default by the Company under any such
commitment could have a material adverse effect on the Company. In addition,
pursuant to the Company's growth plan, the Company expects to expand its fleet,
increase frequencies to existing cities and add destinations to its route
system. This expansion will require the lease or purchase of additional
aircraft. There can be no assurance that the Company will be able to negotiate
such leasing or purchase arrangements in sufficient quantities or on terms
acceptable to the Company.
As of June 30, 1996, the Company's fleet consisted of 99 aircraft 21 of which
meet the FAA's Stage II (but not Stage III) noise reduction requirements and
must be retired or significantly modified prior to the year 2000. Management is
currently considering its options regarding such aircraft. If the Company
determines to modify such aircraft to comply with Stage III, the required
capital expenditures for such modifications are currently estimated to be
approximately $2 million per aircraft. There can be no assurance that the
Company will be able to obtain such capital in sufficient amounts or on
favorable terms or that the Company will be able to lease or purchase substitute
aircraft in sufficient quantities or on favorable terms if the Company elected
not to carry out such modifications.
Capital expenditures for the six months ended June 30, 1996 and 1995 were
approximately $76.8 million and $50.7 million, respectively. Included in these
amounts are capitalized maintenance of approximately $47.6 million for the six
months of 1996 and $35.7 million for the six months of 1995.
As of June 30, 1996, the Company under the authorization granted by the Board of
Directors in 1995, repurchased 882,000 shares of Class B Common Stock on the
open market at per share prices ranging from $13.63 to $21.88 and 2.2 million
Warrants for approximately $18 million. In July 1996, the Company repurchased an
additional 500,000 shares of Class B Common Stock on the open market at per
share prices ranging from $14.50 to $16.63.
Certain of the Company's long-term debt agreements contain minimum cash balance
requirements, leverage ratios, coverage ratios and other financial covenants
with which the Company was in compliance at June 30, 1996.
13
<PAGE> 14
Part II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
-----------------
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDER
------------------------------------------------
The 1996 Annual Meeting of Stockholders of the Company was held on May
23, 1996. Fourteen persons were elected as proposed in the proxy
statement pursuant to Regulation 14A of the Securities Act of 1934, as
amended, to serve as directors until the next annual meeting of
Stockholders or until their successors are elected and qualified. There
were 98,828,414 votes cast in the election of directors and there were
no abstentions or broker non-votes. The voting regarding each nominee
was as follows: William A. Franke (for: 98,587,366 / withheld:
241,048); Julia Chang Bloch (for: 96,981,534 / withheld: 1,846,880);
Stephen F. Bollenbach (for: 98,698,393 / withheld: 130,021); Frederick
W. Bradley, Jr. (For: 98,697,616 / withheld: 130,798); James G. Coulter
(for: 98,700,139 / withheld: 128,275); John F. Fraser (for: 98,683,914
/ withheld: 144,500); John L. Goolsby (for: 98,699,619 / withheld:
128,795); Richard C. Kraemer (for: 98,695,948 / withheld: 132,466);
John R. Power, Jr. (for: 98,699,282 / withheld: 129,132); Larry L.
Risley (for: 98,697,404 / withheld: 131,010); Frank B. Ryan (for:
98,698,527 / withheld: 129,887); Richard P. Schifter (for: 98,688,702 /
withheld: 139,712); John F. Tierney (for: 98,700,066 / withheld:
128,348); and Raymond S. Troubh (for: 98,605,217 / withheld:223,197).
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
------- --------------------------------
<S> <C>
*11.1 Computation of Earnings Per Share
*27 Financial Data Schedule
</TABLE>
_____
*Filed herewith
b. Reports on Form 8-K
None
14
<PAGE> 15
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.
AMERICA WEST AIRLINES, INC.
By /s/ W. Douglas Parker
----------------------------
W. Douglas Parker
Senior Vice President and
Chief Financial Officer
DATED: August 14, 1996
15
<PAGE> 1
Exhibit 11.1
AMERICA WEST AIRLINES, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(in thousands except per share amount)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Primary Earnings Per Share:
Computation for Statements of Income:
Income before extraordinary items . . . . . $ 29,522 $ 20,873 $ 43,249 $ 26,083
Extraordinary items . . . . . . . . . . . . (1,105) -- (1,105) --
------------ ------------ ------------ ------------
Net income applicable to common stock . . . $ 28,417 $ 20,873 $ 42,144 $ 26,083
============ ============ ============ ============
Weighted average number of common shares
outstanding . . . . . . . . . . . . . . . 45,234,356 45,166,676 45,407,584 45,166,317
Assumed exercise of stock options and
warrants (a) . . . . . . . . . . . . . . . 3,996,975 -- 4,062,908 --
------------ ------------ ------------ ------------
Weighted average number of common shares
outstanding as adjusted . . . . . . . . . . 49,231,331 45,166,676 49,470,492 45,166,317
============ ============ ============ ============
Primary earnings per common share:
Income before extraordinary items . . . . . $ 0.60 $ 0.46 $ 0.87 $ 0.58
Extraordinary item . . . . . . . . . . . . (0.02) -- (0.02) --
------------ ------------ ------------ ------------
Net income . . . . . . . . . . . . . . . . $ 0.58 $ 0.46 $ 0.85 $ 0.58
============ ============ ============ ============
Income before extraordinary items . . . . . $ 26,083
Extraordinary item . . . . . . . . . . . .
Adjustment for interest on debt reduction,
net of taxes . . . . . . . . . . . . . . 2,069
------------
Net income applicable to common stock . . . $ 28,152
============
Weighted average number of common shares
outstanding . . . . . . . . . . . . . . . 45,166,317
Assumed exercise of stock options and
warrants (a) . . . . . . . . . . . . . . 2,852,951
------------
Weighted average number of common shares
outstanding as adjusted . . . . . . . . . 48,019,268
============
Primary earnings per common share:
Income before extraordinary item . . . . . $ 0.59
Extraordinary item . . . . . . . . . . . . --
------------
Net income . . . . . . . . . . . . . . . . $ 0.59(b)
============
</TABLE>
<PAGE> 2
Exhibit 11.1
AMERICA WEST AIRLINES, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(in thousands except per share amount)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Fully Diluted Earnings Per Share:
Computation for Statements of Operations:
Income before extraordinary items . . . . . $ 29,522 $ 20,873 $ 43,249 $ 26,083
Extraordinary item . . . . . . . . . . . . (1,105) -- (1,105) --
Adjustment for interest on debt reduction,
net of taxes . . . . . . . . . . . . . -- 579 -- 1,676
------------ ------------ ------------ ------------
Net income applicable to common stock . . $ 28,417 $ 21,452 $ 42,144 $ 27,759
============ ============ ============ ============
Weighted average number of common shares
outstanding . . . . . . . . . . . . . . 45,234,356 45,166,676 45,407,584 45,166,317
Assumed exercise of stock options and
warrants (a) . . . . . . . . . . . . . 4,285,921 2,917,927 4,681,372 2,852,951
------------ ------------ ------------ ------------
Weighted average number of common shares
outstanding as adjusted . . . . . . . . 49,520,277 48,084,603 50,088,956 48,019,268
============ ============ ============ ============
Fully diluted earnings per common share:
Income before extraordinary item . . . . $ 0.60 $ 0.45 $ 0.86 $ 0.58
Extraordinary item . . . . . . . . . . . (0.02) -- (0.02) --
------------ ------------ ------------ ------------
Net income . . . . . . . . . . . . . . . $ 0.58 $ 0.45 $ 0.84 $ 0.58
============ ============ ============ ============
</TABLE>
(a) The stock options and warrants are included only in the periods in
which they are dilutive.
(b) The calculation is submitted in accordance with Regulation S-K Item
601 (b) (11) although it is contrary to paragraph 40 of APB Opinion
No. 15 because it produces an antidilutive result.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 180,473
<SECURITIES> 21,545
<RECEIVABLES> 88,033
<ALLOWANCES> 3,099
<INVENTORY> 26,948
<CURRENT-ASSETS> 362,008
<PP&E> 727,179
<DEPRECIATION> 35,367
<TOTAL-ASSETS> 1,576,933
<CURRENT-LIABILITIES> 461,810
<BONDS> 334,820
0
0
<COMMON> 457
<OTHER-SE> 661,491
<TOTAL-LIABILITY-AND-EQUITY> 1,576,933
<SALES> 0
<TOTAL-REVENUES> 463,949
<CGS> 0
<TOTAL-COSTS> 401,866
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 750
<INTEREST-EXPENSE> 11,709
<INCOME-PRETAX> 53,790
<INCOME-TAX> 24,268
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 1,105
<CHANGES> 0
<NET-INCOME> 28,417
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
</TABLE>
