<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-Q
------------------
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 0-22526
TOWER AIR, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-2621046
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
HANGAR NO. 17
J.F.K. INTERNATIONAL AIRPORT
JAMAICA, N.Y. 11430
(Address of principal executive offices) (Zip Code)
(718) 553-4300
(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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No___
---
As of April 30, 1996, there were 15,290,006 shares of Common Stock, par
value $.01 per share, outstanding.
Page 1 of 14 pages
<PAGE>
TOWER AIR, INC.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
INDEX
<S> <C> <C>
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of March 31, 1996
and December 31, 1995.......................................... 3
Statements of Operations for the three months
ended March 31, 1996 and 1995.................................. 4
Statements of Cash Flows for the three months
ended March 31, 1996 and 1995.................................. 5
Notes to Financial Statements.................................. 6
Selected Operating Data........................................ 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 9
PART II. OTHER INFORMATION.............................................. 13
SIGNATURES 14
</TABLE>
2
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TOWER AIR, INC.
BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited)
------------------ --------------
ASSETS
- ------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 5,418 $ 3,521
Certificates of deposit, at cost,
which approximates market 700 700
Trade receivables, net 24,770 27,931
Insurance proceeds receivable - 25,000
Prepaid expenses and other current assets 5,658 4,861
----------------- -----------
Total current assets 36,546 62,013
Property and Equipment, at cost:
Flight equipment 271,612 216,756
Ground property and equipment 30,092 29,504
----------------- -----------
301,704 246,260
Less accumulated depreciation and amortization 107,435 99,058
----------------- -----------
194,269 147,202
Other Assets 2,104 1,332
----------------- -----------
$ 232,919 $ 210,547
================= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------
Current Liabilities:
Accounts payable $ 19,443 $ 23,006
Accrued liabilities 25,574 33,503
Air traffic liability 19,751 19,878
Current maturities of long-term debt (Note 2) 34,200 14,370
----------------- -----------
Total current liabilities 98,968 90,757
Long-Term Debt (Note 2) 53,011 23,594
Deferred Income Taxes 12,054 18,654
Deferred Rent 1,598 1,508
Stockholders' Equity (Note 3):
Preferred stock, $.01 par value;
5,000,000 shares authorized; none issued - -
Common stock, $.01 par value;
35,000,000 shares authorized;
15,500,006 issued 155 155
Additional paid-in capital 43,885 43,885
Retained earnings 24,759 33,505
Less treasury stock, at cost (210,000 shares) 1,511 1,511
----------------- -----------
Total stockholders' equity 67,288 76,034
----------------- -----------
$ 232,919 $ 210,547
================= ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
TOWER AIR, INC.
STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1996 1995
--------- ---------
<S> <C> <C>
OPERATING REVENUES:
Scheduled Passenger Service $ 55,540 $ 47,681
Commercial Charter Service 8,332 11,021
Military Charter Service 15,794 15,636
Cargo Service 4,356 5,822
Other 1,802 1,933
--------- --------
Total operating revenues 85,824 82,093
OPERATING EXPENSES:
Fuel 18,003 16,612
Flight equipment rentals and insurance 5,110 4,473
Maintenance 10,395 9,951
Crew costs and other 6,858 5,884
Aircraft and traffic servicing 20,248 16,043
Passenger servicing 11,612 9,289
Promotion, sales and commissions 13,094 15,065
General and administrative 5,188 4,384
Depreciation and amortization 8,455 7,041
--------- --------
Total operating expenses 98,963 88,742
--------- --------
OPERATING LOSS (13,139) (6,649)
OTHER EXPENSES (INCOME):
Interest and other income 272 (583)
Interest expense 1,323 969
--------- --------
Total other expenses 1,595 386
--------- --------
LOSS BEFORE INCOME TAXES (14,734) (7,035)
Income Tax Benefit (6,600) (3,454)
--------- --------
NET LOSS $ (8,134) $ (3,581)
========= ========
NET LOSS PER SHARE $ (.53) $ (.23)
========= ========
WEIGHTED AVERAGE SHARES OUTSTANDING 15,290 15,290
========= ========
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
TOWER AIR, INC.
STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (8,134) $ (3,581)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,455 7,041
Provision for doubtful accounts - 150
Deferred income taxes (6,600) (3,454)
Deferred liabilities 90 82
Loss (gain) on disposal of property and equipment - (356)
Changes in operating assets and liabilities:
Trade receivables 3,161 979
Insurance proceeds receivable 25,000 -
Prepaid expenses and other assets (984) (1,234)
Accounts payable and accrued liabilities (11,055) (2,084)
Air traffic liability (127) 2,399
-------- --------
Net cash provided by (used in) operating activities 9,806 (58)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of flight equipment (18,693) (9,343)
Purchase of ground property and equipment (588) (1,028)
Proceeds from sale of property and equipment - 525
Decrease in certificates of deposit - 80
-------- --------
Net cash used in investing activities (19,281) (9,766)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 22,625 12,000
Principal payments on borrowings (9,978) (2,746)
Payment of cash dividends (612) (611)
Purchase of treasury stock - (132)
Other (663) -
-------- --------
Net cash provided by financing activities 11,372 8,511
-------- --------
Net increase (decrease) in cash and cash equivalents 1,897 (1,313)
Cash and cash equivalents at beginning of period 3,521 $ 14,824
-------- -------
Cash and cash equivalents at end of period $ 5,418 $ 13,511
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 1,203 $ 967
Cash (refunded) paid during the period for income taxes, net $ (1,210) $ 170
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Purchase of flight equipment accrued but not paid $ 5,167 $ -
Purchase of flight equipment financed through debt $ 36,600 $ -
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by Tower
Air, Inc. (the Company) in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, these financial statements contain all adjustments, consisting
of normal recurring accruals, necessary to present fairly the financial
position, results of operations and cash flows for the periods indicated.
These interim financial statements and related notes should be read in
conjunction with the financial statements and notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the full
year.
2. LONG-TERM DEBT
In January 1996, the Company prepaid the entire $7.1 million outstanding
balance of one of the 10.4% Notes. Also in January 1996, the Company
converted the remaining 10.4% Note outstanding to a floating interest rate
of LIBOR plus 1.75% with the option to fix the interest rate for one, three
or six-month periods.
Also in January 1996, the Company purchased two Boeing 747 aircraft for an
aggregate purchase price of $24.5 million. In connection with this
purchase, the Company issued a $20.0 million promissory note to a
commercial finance company. This loan bears interest at 9.39% and requires
monthly installments of principal and interest of approximately $0.4
million through January 2001.
In February 1996, the Company purchased three Boeing 747 aircraft for an
aggregate purchase price of $10.0 million. In connection with this
purchase, the Company paid $2.0 million and issued an $8.0 million
promissory note to the seller, a financial institution. This loan bears
interest at prime plus 1% and requires monthly principal installments of
approximately $0.3 million through July 1996 and a balloon payment of $6.3
million in August 1996.
Also in February 1996, the Company purchased four engines for an aggregate
purchase price of $9.1 million (including $0.3 million of imputed
interest). In connection with this purchase, the Company paid $0.5 million
and issued an $8.6 million promissory note to the seller. The promissory
note requires monthly payments of $0.5 million in March and April, $1.1
million in May, $0.5 million in June and a final payment of $6.0 million in
July 1996.
In March 1996, the Company refinanced the outstanding balance of Notes
bearing interest at prime plus 2% due in monthly installments through
October 1996, Notes bearing interest at prime plus 2.25% due in monthly
installments through August 1996, and Notes bearing interest at prime plus
2.0% due in February 1997, in addition to the $20.0 million note issued in
January 1996, with the same financial institution. In addition, the
Company borrowed an additional $17.0 million which is secured by the two
Boeing 747 aircraft purchased in January 1996. The new loan balance, which
6
<PAGE>
aggregates $50.2 million, bears interest at 10.12% and requires monthly
installments of principal and interest of approximately $1.1 million
through March 2001.
Also in March 1996, the Company received the remaining $0.6 million balance
from the Port Authority of New York and New Jersey of the $5.5 million
five-year financing for the terminal facility expansion project at John F.
Kennedy International Airport, which had been completed in 1995 at a total
cost of approximately $10.0 million. This loan bears interest at a fixed
rate of 8.5%.
The Company has an unsecured $15.0 million line of credit, subject to the
execution and delivery of certain documentation and the negotiation of
certain terms, with a domestic commercial bank. The bank, at its
discretion, may issue standby letters of credit on behalf of the Company
and advance working capital loans on terms to be negotiated. In February
1996, the Company borrowed $5.0 million under this line of credit agreement
which bears interest at prime rate and is due in May 1996. The Company
expects that the due date of this advance will be extended to June 30,
1996. The line is available through June 30, 1996, however, the Company is
currently involved in negotiations to renew this line of credit for an
additional year. No borrowings were outstanding under this line at March
31, 1995. At March 31, 1996, the Company was contingently liable for
approximately $4.5 million of letters of credit, of which $0.3 million were
collateralized by certificates of deposit amounting to $0.4 million.
3. STOCKHOLDERS' EQUITY
The Company paid a cash dividend of four cents per share of Common Stock
for the first quarter of 1996 on March 15, 1996.
4. INCOME TAXES
Income taxes are calculated at the estimated annual effective tax rate,
which differs from the federal statutory rate of 35%, primarily due to the
effect of state income taxes and certain nondeductible items.
5. SUBSEQUENT EVENT
In May 1996, the Company purchased one Boeing 747 aircraft for an aggregate
purchase price of $21.0 million. In connection with this purchase, the
Company issued a $21.0 million note to a commercial finance company. This
loan bears inter est at 10.27% and requires monthly installments of
principal and interest of approximately $0.4 million through May 2001.
7
<PAGE>
<TABLE>
<CAPTION>
TOWER AIR, INC.
SELECTED OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
-----------------------
1996 1995
---------- ---------
<S> <C> <C>
Scheduled Passenger Service:
Revenue passengers carried
(in thousands) 286 218
Revenue passenger miles
(in thousands) (RPMs) (1) 775,762 657,054
Available seat miles
(in thousands) (ASMs) (2) 1,080,465 929,267
Passenger load factor (3) 71.80% 70.71%
Yield per RPM (4) $ .0716 $ .0726
Block hours flown (5) 5,215 4,269
Operating expense per ASM (6) $ .0553 $ .0479
Revenue per block hour (8) $ 10,650 $ 11,169
Variable expense per block hour (7) $ 10,071 $ 10,052
Commercial Charter Service:
Block hours flown (5) 1,304 1,217
Revenue per block hour (8) $ 6,390 $ 9,056
Variable expense per block hour (7) $ 5,086 $ 7,555
Military Charter Service:
Block hours flown (5) 1,470 1,575
Revenue per block hour (8) $ 10,744 $ 9,928
Variable expense per block hour (7) $ 8,351 $ 7,207
Cargo Service:
Block hours flown (5) 1,027 1,232
Revenue per block hour (8) $ 4,241 $ 4,726
Variable expense per block hour (7) $ 2,067 $ 2,973
Total:
Block hours flown (5) 9,016 8,293
Revenue per block hour (8) $ 9,319 $ 9,666
Variable expense per block hour (7) $ 8,158 $ 8,094
Average hours of daily utilization (9) 7.5 7.7
Employees (at period-end) 1,677 1,440
Number of aircraft in service (at period-end) 17 17
</TABLE>
- -----------------------------------------------
(1) "Revenue passenger miles" or "RPMs" represent the number of miles flown by
revenue passengers.
(2) "Available seat miles" or "ASMs" represent the number of seats available
for passengers multiplied by the number of miles those seats are flown.
(3) "Passenger load factor" represents revenue passenger miles divided by
available seat miles.
(4) "Yield per RPM" represents total revenue from scheduled passenger service
divided by revenue passenger miles.
(5) "Block hours" represent the period of time between the aircraft's
departure from the place where it is parked to its arrival at its
destination.
(6) "Operating expense per ASM" represents certain direct variable costs for
scheduled passenger service, which include passenger liability insurance,
catering, crew costs, fuel, landing and handling fees, maintenance,
navigation fees, "power by the hour" rent, plus marketing and
reservations, and an allocation of other fixed costs based on block hours,
divided by total scheduled passenger service ASMs.
(7) "Variable expense per block hour" represents total direct variable costs,
which include passenger liability insurance, catering, crew costs,
commissions, fuel, landing and handling fees, maintenance, navigation
fees and insurance and "power by the hour" rent, divided by block hours.
(8) "Revenue per block hour" represents total revenue from scheduled passenger
service, commercial charter service, military charter service and cargo
service divided by total block hours flown.
(9) "Average hours of daily utilization" represents the actual number of block
hours per aircraft per operating day.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
For the three-month period ended March 31, 1996 (the 1996 First Quarter), the
Company recorded a net loss of $8.1 million compared with a net loss of $3.6
million for the three-month period ended March 31, 1995 (the 1995 First
Quarter). The $4.6 million increase in net loss was principally due to the
decreased yields in the Tel Aviv market which was impacted by recent terrorist
activity in Israel, costs associated with the cessation of scheduled service to
India on March 10, 1996, extreme weather conditions in the Northeast which
resulted in significant de-icing costs and re-scheduling related expenses, the
grounding of one of the Company's two cargo aircraft to comply with newly
restrictive Airworthiness Directive (AD) requirements which impacted cargo
revenues in February and March 1996 and an increase in fuel prices. In addition,
certain pre-operating costs were incurred in the first quarter for the 1996 Hadj
pilgrimage which commenced on March 20, 1996. Historically, the Company has
experienced its strongest operating results for its scheduled passenger and
charter services during the summer months.
OPERATING REVENUES. The Company's operating revenues for the 1996 First Quarter
increased $3.7 million, or 4.5%, to $85.8 million from $82.1 million for the
1995 First Quarter. The growth in operating revenues was attributable to
continued growth in scheduled passenger services, offset in part by the decrease
in demand for commercial charter services.
Scheduled passenger service revenues for the 1996 First Quarter increased $7.9
million, or 16.5%, to $55.5 million from $47.7 million for the 1995 First
Quarter. The revenue increase was attributable primarily to an 18.1% increase
in passenger traffic (as measured in revenue passenger miles) on increased
capacity (as measured in available seat miles) of 16.3%, which resulted in a
load factor of 71.8% compared to 70.7% for the same period in 1995. Results
from the scheduled passenger service operation in domestic markets were strong,
while results in international markets lagged behind the comparable 1995 period.
Commercial charter service revenues for the 1996 First Quarter decreased $2.7
million, or 24.4%, to $8.3 million from $11.0 million for the 1995 First
Quarter. The decrease in commercial charter service revenues was primarily due
to the decrease in charter activity with the United Nations and, with respect to
Brazil, the substitution of commercial charter service with scheduled service in
1996, offset partially by the 1996 Hadj.
Military charter service revenues for the 1996 First Quarter increased $0.2
million, or 1.0%, to $15.8 million from $15.6 million for the 1995 First
Quarter. Consistent with the prior year, the Company has acquired UAL's
military entitlement for the U.S. Government fiscal year commencing October 1,
1995. Because the military charter business depends in large part upon the
deployment or repatriation of troops, revenues from this market segment are
subject to significant fluctuation.
Cargo service revenues for the 1996 First Quarter decreased $1.5 million, or
25.2%, to $4.4 million from $5.8 million. The decrease in cargo service revenues
was primarily due to the grounding of one of the Company's two cargo aircraft in
February 1996 to comply with newly restrictive AD requirements. The Company
expects the aircraft to undergo modifications necessary for its return to
service by July 1996.
9
<PAGE>
OPERATING EXPENSES. The Company's operating expenses for the 1996 First Quarter
increased $10.2 million, or 11.5%, to $99.0 million from $88.7 million for the
1995 First Quarter. The increase in operating expenses was primarily
attributable to: an 8.7% increase in block hours flown; extreme weather
conditions in the Northeast resulting in significant de-icing costs and re-
scheduling related expenses; and an increase in fuel price. In addition,
certain pre-operating costs were incurred in the first quarter for the 1996 Hadj
pilgrimage which commenced on March 20, 1996.
Aircraft fuel expenses for the 1996 First Quarter increased $1.4 million, or
8.4%, to $18.0 million from $16.6 million for the 1995 First Quarter. The
increase resulted primarily from a 10.8% increase in the average cost per
gallon, which includes the impact of the $.043 per gallon excise tax on domestic
fuel purchases which went into effect on October 1, 1995, offset by a 2.0%
decrease in the volume of gallons consumed.
Flight equipment rentals and insurance expenses for the 1996 First Quarter
increased $0.6 million, or 14.2%, to $5.1 million from $4.5 million for the 1995
First Quarter. The increase was attributable to charges associated with the
rental of additional engines to support the Company's fleet, partially offset by
a decrease in aircraft rentals due to the purchase of five Boeing 747 aircraft
in the 1996 First Quarter.
Maintenance costs for the 1996 First Quarter increased $0.4 million, or 4.5%, to
$10.4 million from $10.0 for the 1995 First Quarter. The increase was primarily
due to maintenance reserves associated with engine rentals required to support
the Company's fleet size, partially offset by a decrease in maintenance
reserves associated with leased aircraft due to the purchase of five Boeing 747
aircraft in the 1996 First Quarter.
Crew costs and other expenses for the 1996 First Quarter increased $1.0 million,
or 16.6%, to $6.9 million from $5.9 million for the 1995 First Quarter. The
increase is primarily due to an increase in overall block hours flown of 8.7%,
coupled with an increase in cockpit crew headcount and related training
expenses.
Aircraft and traffic servicing expenses for the 1996 First Quarter increased
$4.2 million, or 26.2%, to $20.2 million from $16.0 million for the 1995 First
Quarter. The increase is primarily due to increased international and domestic
scheduled passenger services, in addition to significant de-icing costs and re-
scheduling related expenses incurred in the 1996 First Quarter as a result of
severe weather conditions.
Passenger servicing expenses for 1996 First Quarter increased $2.3 million, or
25.0%, to $11.6 million from $9.3 million for the 1995 First Quarter. Passenger
servicing expenses were up for the period as a result of the increase in
scheduled service flight activity, increased catering costs due to upgraded meal
service on domestic routes due to the elimination of the "Beverage/Snack Only"
program, and the extreme weather conditions in the Northeast which resulted in
significant re-scheduling related expenses. In addition, passenger reprotection
costs increased in connection with the cessation of scheduled service to India
in the 1996 First Quarter.
Promotion, sales and commission expenses for the 1996 First Quarter decreased
$2.0 million, or 13.1%, to $13.1 million from $15.1 million for the 1995 First
Quarter. The decrease in promotion, sales and commission expense was primarily
due to high commission expense in the 1995 First Quarter relating to the New
Delhi and Bombay routes which were discontinued in September 1995 and March
10
<PAGE>
1996, respectively. In addition, substantial advertising expenses were incurred
in the 1995 First Quarter in accordance with the Company's strategy to increase
its scheduled passenger business.
General and administrative expenses for the 1996 First Quarter increased $0.8
million, or 18.3%, to $5.2 million from $4.4 million for the 1995 First Quarter.
The increase in general and administrative expenses was the result of the growth
in the Company's operating revenues.
Depreciation and amortization expenses for the 1996 First Quarter increased $1.4
million, or 20.1%, to $8.5 million from $7.0 million for the 1995 First Quarter.
The increase in depreciation and amortization was principally due to the
purchase of five Boeing 747 aircraft, six spare engines and rotable spare parts
in the 1996 First Quarter.
OTHER EXPENSES AND INCOME. Interest expense for the 1996 First Quarter
increased $0.4 million, or 36.5%, to $1.3 million from $1.0 million for the 1995
First Quarter. The increase in interest expense reflects a higher average
outstanding debt balance in 1996, offset in part by lower average interest rates
on the Company's floating rate debt.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its working capital and capital
expenditure requirements with cash flow generated from operations and through
lease, debt and equity financing.
The Company's cash, cash equivalents and short-term investments at March 31,
1996 and December 31, 1995 were $6.1 million and $4.2 million, respectively.
The Company generated cash from operations in the 1996 First Quarter of $9.8
million, which included $25.0 million of insurance proceeds related to the loss
of an owned aircraft in December 1995. Cash used in operating activities
amounted to $0.1 million in the 1995 First Quarter.
Net cash used in investing activities was $19.3 million for the 1996 First
Quarter compared with $9.8 million for the 1995 First Quarter. The Company's
expenditures for flight equipment were $18.7 million for the 1996 First Quarter
compared with $9.3 million for the 1995 First Quarter. Expenditures for flight
equipment in the 1996 First Quarter included the purchase of five Boeing 747
aircraft, six spare engines, capitalized engine overhauls and the purchase of
rotable spare parts (See Note 2 of Financial Statements for additional
information regarding the financing of certain flight equipment expenditures).
As of March 31, 1996, the Company had negative working capital of $62.4 million
compared to negative working capital of $28.7 million as of December 31, 1995.
Historically, the Company has operated with a working capital deficit and, as in
the past, the Company expects to meet all of its obligations as they become due.
The Company believes that cash generated from continuing operations, in
conjunction with debt financing as required, will be sufficient to finance the
Company's working capital needs for its existing business, as well as for
planned capital expenditures and expected debt repayments in the foreseeable
future.
The Company has an unsecured $15.0 million line of credit, subject to the
execution and delivery of certain documentation and the negotiation of certain
11
<PAGE>
terms, with a domestic commercial bank. The bank, at its discretion, may issue
standby letters of credit on behalf of the Company and advance working capital
loans on terms to be negotiated. In February 1996, the Company borrowed $5.0
million under this line of credit agreement which bears interest at prime rate
and is due in May 1996. The Company expects that the due date of this advance
will be extended to June 30, 1996. The line is available through June 30, 1996,
however, the Company is currently involved in negotiations to renew this line of
credit for an additional year. No borrowings were outstanding under this line at
March 31, 1995. At March 31, 1996, the Company was contingently liable for
approximately $4.5 million of letters of credit, of which $0.3 million were
collateralized by certificates of deposit amounting to $0.4 million.
The Company paid a cash dividend of four cents per share of Common Stock for the
first quarter of 1996 on March 15, 1996.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There has been no change in legal proceedings as disclosed in the Company's
Form 10-K for the year ended December 31, 1995.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27. Financial Data Schedule
(b) None.
13
<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.
Tower Air, Inc.
(Registrant)
Date: May 15, 1996 /s/ Morris K. Nachtomi
-----------------------------------------------
Morris K. Nachtomi
President, Chief Executive Officer
and Chairman of the Board of Directors
(Principal Executive Officer)
Date: May 15, 1996 /s/ Josefina M. Essex
-------------------------------------------------
Josefina M. Essex
Chief Financial Officer and
Vice President-Finance (Principal
Financial and Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's quarterly report on Form 10-Q for the quarterly period ended March
31, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000778718
<NAME> TOWER AIR, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,418,000
<SECURITIES> 700,000
<RECEIVABLES> 24,770,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 36,546,000
<PP&E> 301,704,000
<DEPRECIATION> 107,435,000
<TOTAL-ASSETS> 232,919,000
<CURRENT-LIABILITIES> 98,968,000
<BONDS> 53,011,000
0
0
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<INCOME-PRETAX> (14,734,000)
<INCOME-TAX> (6,600,000)
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<EPS-PRIMARY> (.53)
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</TABLE>
