SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 0-17846
CCAIR, Inc.
Incorporated under the laws of Delaware 56-1428192
(I.R.S. Employer ID No.)
4700 Yorkmont Road, Second Floor
Charlotte, North Carolina 28208
(704) 359-8990
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November, 8, 1996
----- --------------------------------
Common stock, $0.01 par value 7,740,695
<PAGE>
CCAIR, Inc.
FORM 10-Q QUARTERLY REPORT FOR
FISCAL QUARTER ENDED SEPTEMBER 30, 1996
TABLE OF CONTENTS
PAGE NO.
PART I - FINANCIAL INFORMATION:
ITEM 1. Financial Statements: 3
Condensed Balance Sheets as of
September 30, 1996 and June 30, 1996. 3
Condensed Statements of Income for
the Three Months ended
September 30, 1996 and 1995. 4
Condensed Statements of Cash Flows
for Three Months ended September 30,
1996 and 1995. 5
Notes to Condensed Financial Statements. 6
ITEM 2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations. 6
PART II - OTHER INFORMATION:
ITEM 1. Legal Proceedings. 8
ITEM 2. Changes in Securities. 9
ITEM 3. Defaults Upon Senior Securities. 9
ITEM 4. Submission of Matters to a Vote
of Security Holders. 9
ITEM 5. Other Information. 9
ITEM 6. Exhibits and Reports on Form 8-K. 9
SIGNATURES 9
EXHIBIT INDEX E-1
2
<PAGE>
CCAIR, Inc.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONDENSED BALANCE SHEETS
(Unaudited)
-----------
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
--------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,888,442 $ 5,059,665
Receivables, net 5,381,766 5,937,222
Inventories, less allowance for
obsolescence of $466,000 1,866,317 1,758,453
Prepaid expenses and deposits 1,565,073 1,410,113
----------- -----------
Total current assets 13,701,598 14,165,453
----------- -----------
PROPERTY AND EQUIPMENT:
Flight equipment and aircraft 20,799,052 20,700,870
Ground and other equipment and
leasehold improvements 4,206,138 4,135,574
----------- -----------
25,005,190 24,836,444
Less accumulated depreciation
and amortization (12,950,768) (12,504,463)
----------- -----------
12,054,422 12,331,981
----------- -----------
OTHER ASSETS 632,300 632,244
----------- -----------
Total assets $26,388,320 $27,129,678
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current
maturities of long-term debt $ 812,050 $ 854,438
Short-term borrowings 3,250,000 3,310,000
Current obligations under capital leases 379,035 373,266
Accounts payable 4,840,461 5,546,146
Accrued expenses 5,455,673 5,441,201
----------- -----------
Total current liabilities 14,737,219 15,525,051
Long-term debt, less current maturities 1,315,832 1,371,328
Capital lease obligations, less
current obligations 2,542,086 2,638,967
Deferred credits, net 1,635,525 1,757,436
----------- -----------
Total liabilities 20,230,662 21,292,782
----------- -----------
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 10,000,000 shares
authorized, 7,740,695 issued
and outstanding at September 30,
1996 and June 30, 1996 77,407 77,407
Additional paid-in-capital 17,725,184 17,725,184
Accumulated deficit (11,644,933) (11,965,695)
----------- -----------
Total shareholders' equity 6,157,658 5,836,896
----------- -----------
Total liabilities and
shareholders' equity $26,388,320 $27,129,678
=========== ===========
</TABLE>
See notes to condensed financial statements.
3
<PAGE>
CCAIR, Inc.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
-----------
3 Months ended September 30,
1996 1995
----------- -------
OPERATING REVENUES:
Passenger $17,130,339 $15,736,956
Public service ---- 187,070
Other 239,991 306,181
----------- -----------
Total 17,370,330 16,230,207
----------- -----------
OPERATING EXPENSES:
Flight operations 5,893,612 5,854,485
Fuel and oil 1,824,902 1,388,708
Maintenance 3,091,683 3,042,704
Ground operations 2,124,194 1,773,688
Advertising, promotions
and commissions 2,462,771 2,213,406
General and administration 1,002,679 986,202
Depreciation and amortization 459,484 431,758
----------- -----------
Total 16,859,325 15,690,951
----------- -----------
OPERATING INCOME 511,005 539,256
Interest expense ( 192,643) ( 170,860)
Other income (expense), net 2,400 10,298
----------- -----------
Net income $ 320,762 $ 378,694
=========== ===========
EARNINGS PER COMMON SHARE $ .04 $ .05
=========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,958,539 7,807,892
=========== ===========
See notes to condensed financial statements.
4
<PAGE>
CCAIR, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
-----------
<TABLE>
<CAPTION>
Three Months Ended September 30,
1996 1995
------------ --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 320,762 $ 378,694
Adjustments to reconcile net income to
net cash provided by operating activities:
Note discount amortization 26,595 73,533
Depreciation and amortization 1,365,962 1,507,450
Gain on disposal of assets ( 2,400) ( 10,500)
Rental expense in excess
of (less than) payments ( 116,048) 209,036
Changes in certain assets and liabilities:
Accounts receivable 555,456 459,991
Inventories ( 107,864) ( 79,141)
Accounts payable ( 705,685) (1,167,575)
Accrued expenses 14,472 131,492
Prepaid expenses and deposits ( 155,016) ( 238,230)
Other changes, net ( 15,863) ( 55,335)
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,180,371 1,209,415
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,078,403) (1,038,192)
Proceeds from sale of assets 2,400 10,500
----------- -----------
NET CASH USED BY
INVESTING ACTIVITIES (1,076,003) (1,027,692)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale-leaseback transaction ---- 1,000,000
Issuance of common stock ---- 17,813
Issuance of notes and long-term debt 110,000 90,000
Short-term borrowings (payments), net ( 60,000) ----
Reductions of notes and long-term debt ( 325,591) ( 640,431)
----------- -----------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES ( 275,591) 467,382
----------- -----------
Net increase (decrease) in cash ( 171,223) 649,105
Cash, beginning of period 5,059,665 56,995
----------- -----------
CASH, END OF PERIOD $ 4,888,442 $ 706,100
=========== ===========
</TABLE>
See notes to condensed financial statements.
5
<PAGE>
CCAIR, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
-----------
1. Basis of Presentation:
The condensed financial statements included herein have been prepared
by CCAIR, Inc. (the "Company"), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. These
condensed financial statements reflect all adjustments which are, in
the opinion of management, necessary for a fair statement of results
for the interim period. These adjustments consist solely of normal
recurring adjustments. Certain information and footnote disclosures
normally included in the 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 disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's annual
report for fiscal year ended June 30, 1996.
2. Earnings Per Common Share:
The computation of earnings per common share is based on the weighted
average number of common shares outstanding for each period, after
considering the effect of common stock equivalents.
3. Commitments and Contingencies:
The Company is subject to the regulatory authority, among others, of
the Federal Aviation Administration and the Department of
Transportation. These agencies require compliance with their standards
and conduct safety and compliance audits. Violations, if any, of these
regulations subject the Company to fines or sanctions. The Company is
also subject to other claims arising in the ordinary course of
business. In the opinion of management, the outcome of these matters
would not have a material adverse impact on the Company's financial
condition or results of operations.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
In the three-month period ended September 30, 1996, the Company
recorded net income of $320,762, or $.04 per share, versus a net income of
$378,694, or $.05 per share in the comparable period of fiscal 1996. Although
the Company generated significant revenue increases of 7.0% in the quarter ended
September 30, 1996 as compared to the quarter ended September 30, 1995, this
improvement was offset by increased fuel expense and increased fees for ground
operations and commissions.
Results of Operations
The following table sets forth selected operating comparisons for the
three-month period ended September 30, 1996 and 1995:
6
<PAGE>
CCAIR, Inc.
FISCAL QUARTER ENDED SEPTEMBER 30, 1996
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations, continued
<TABLE>
<CAPTION>
Airline Operating Statistics
For the Three Months
Ended September 30,
%
1996 1995 Change
----------- ----------- ------
<S> <C> <C> <C>
Operating revenue $17,370,330 $16,230,207 7.0
Operating expense $16,859,325 $15,690,951 7.4
Revenue passengers carried 208,580 195,895 6.5
Revenue passenger miles (1) 38,691,241 34,722,302 11.4
Available seat miles (2) 82,390,739 80,044,434 2.9
Passenger load factor (3) 47.0% 43.4% 8.3
Passenger breakeven load factor 46.1% 42.4% 8.7
Yield per revenue passenger
mile (4) 44.3(cent) 45.3(cent) ( 2.2)
Operating cost per available
seat mile 20.5(cent) 19.6(cent) 4.6
Average passenger trip (miles) 185.5 177.2 4.7
Average daily aircraft utilization
per plane (block hours) 8.1 8.1 ---
Average passenger fare $82.13 $80.33 2.2
Average monthly completion factor 96.0% 96.1% ( .1)
</TABLE>
(1) One revenue passenger transported one mile.
(2) The product of the number of aircraft miles and the number of available
seats on each stage, representing the total passenger capacity offered.
(3) The ratio of revenue passenger miles to available seat miles,
representing the percentage of seats occupied by revenue passengers.
(4) The passenger revenue per revenue passenger mile.
For the Three Months Ended September 30, 1996 Compared to Three Months
Ended September 30, 1995
For the quarter ended September 30, 1996, the Company experienced an
improvement in operating revenue as a 6.5% increase in passengers and a 4.7%
increase in the average passenger trip resulted in a 11.4% increase in revenue
passenger miles ("RPMs"). Available seat miles ("ASMs") increased 2.9% in the
first quarter of fiscal 1997 over the comparable period in fiscal 1996. This ASM
increase was primarily the result of one additional Jetstream 31 aircraft added
in the second quarter of fiscal 1996. As a result of the increased RPMs, the
Company's load factor increased from 43.4% in the first quarter of fiscal 1996
to 47.0% in the first quarter of fiscal 1997.
Although the Company experienced a small 2.2% decline in yield,
primarily due to aggressive fare discounting during the July 4th and Labor Day
holidays, passenger revenues were up 8.9%. Public service revenue was $187,070
in fiscal 1996, but the Company ceased service to Danville, Virginia in October,
1995 and ceased to receive subsidized compensation in Shenandoah Valley
effective July, 1996 and thus anticipates receiving no public service revenue
during fiscal 1997. Other revenue (freight and mail) decreased $66,190.
7
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, continued
Results of Operations, continued
Operating costs per ASM increased 4.6% from 19.6(cent) in the quarter
ended September 30, 1995 to 20.5(cent) in the quarter ended September 30, 1996.
The following table compares components of operating cost per ASM for the three
months ended September 30, 1996 and 1995.
Cost per ASM -
Quarter Ended
September 30,
(in cents)
1996 1995
Flight operations 7.2 7.3
Fuel and oil 2.2 1.7
Maintenance 3.8 3.8
Ground operations 2.6 2.3
Advertising, promotions, commissions 3.0 2.8
General and administration 1.2 1.2
Depreciation and amortization 0.5 0.5
----- -----
20.5 19.6
==== ====
Flight operations expenses per ASM decreased 0.1(cent) in the current quarter as
compared to the prior year, as pilots' salaries and related cost increases were
offset be reduced Jetstream 31 lease expense. Fuel costs increased 0.5(cent) per
ASM in the first quarter of fiscal 1997 as compared to the first quarter of
fiscal 1996, as the cost per gallon of fuel increased from 66.8(cent) to
83.4(cent). Maintenance, general and administrative expenses and depreciation
remained constant on a unit basis. Ground operations expense increased 0.3(cent)
per ASM and advertising and commissions increased 0.2(cent) per ASM due to the
increased number of passengers and increased handling and service fees charged
by USAir.
Liquidity and Capital Resources
The cash position of the Company remains critical at September 30, 1996. The key
element to improved operating results will be the level of the yield per revenue
passenger mile. While the yield for October, 1996 has met Company projections,
the yield could be affected by fare discounting beyond the control of the
Company. If operating cash flows and the Company's Line of Credit are
insufficient to meet obligations, the Company has these financing sources
available: issuance of stock, short-term loans from officers and directors,
extending terms with trade creditors and restructuring aircraft lease payments.
Cash and cash equivalents decreased by $171,000 during the first three months of
fiscal 1997. Cash generated from operating activities was $1,180,000. The major
sources of operating cash were net income of $321,000, depreciation and
amortization of $1,366,000 and the reduction in accounts receivable of $555,000.
The major operating cash use was the reduction in accounts payable of $706,000.
The capital expenditures of $1,078,000 during the three months ended September
30, 1996 resulted primarily from expenditures on major overhaul of engines and
on major spare parts and assemblies. Capital expenditures planned for the
remainder of the fiscal year consist of scheduled major overhaul of engines and
on major spare parts and assemblies. The Company also made scheduled debt
payments of $326,000 in the quarter ended September 30, 1996.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None to report.
8
<PAGE>
ITEM 2. Changes in Securities
None to report.
ITEM 3. Defaults Upon Senior Securities
None to report.
ITEM 4. Submission of Matters to a Vote of Security Holders
None to report.
ITEM 5. Other Information
None to report.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit
4 Specimen Common Stock Certificate. (1)
11 Computation of Earnings Per Share.
(b) Reports on Form 8-K
None.
- ----------------------
(1) Incorporated by reference to Registration Statement on
Form S-1, File No. 33-28967.
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.
November 13, 1996 CCAIR, Inc.
By: /s/ Kenneth W. Gann By: /s/ Eric W. Montgomery
--------------------------------- -------------------------
Kenneth W. Gann, President and Eric W. Montgomery
Chief Executive Officer Vice President - Finance
(Principal Executive Officer) (Principal Financial Officer)
9
<PAGE>
EXHIBIT INDEX
Exhibit Filed Sequential
No. Exhibit Herewith At Page No.
4 Specimen Common Stock
Certificate. (1)
11 Computation of Earnings Per Share E-1
- ---------------------
(1) Incorporated by reference to Registration Statement on
Form S-1, File No. 33-28967.
ITEM 6
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE (1)
Three Months ended September 30,
1996 1995
-------------- -----------
Net income $ 320,762 $ 378,694
============ ===========
Shares
Weighted average number of
shares outstanding 7,740,695 7,413,552
Assuming exercise of options 217,844 394,340
------------- -------------
Weighted average number of
shares outstanding,
as adjusted 7,958,539 7,807,892
============ ============
Earnings per share $ .04 $ .05
============= ============
- ----------------
(1) Fully diluted average number of shares outstanding, as adjusted and
earnings per share are the same as calculated for primary for the
periods presented.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from CCAIR, Inc.
condensed financial statements for the fiscal quarter ended September 30, 1996
and is qualified in its entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 4,888,442
<SECURITIES> 0
<RECEIVABLES> 5,381,766
<ALLOWANCES> 0
<INVENTORY> 1,866,317
<CURRENT-ASSETS> 13,701,598
<PP&E> 25,005,190
<DEPRECIATION> 12,950,768
<TOTAL-ASSETS> 26,388,320
<CURRENT-LIABILITIES> 14,737,219
<BONDS> 0
0
0
<COMMON> 77,407
<OTHER-SE> 6,080,251
<TOTAL-LIABILITY-AND-EQUITY> 28,388,320
<SALES> 0
<TOTAL-REVENUES> 17,370,330
<CGS> 0
<TOTAL-COSTS> 16,859,325
<OTHER-EXPENSES> (2,400)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 192,643
<INCOME-PRETAX> 320,762
<INCOME-TAX> 0
<INCOME-CONTINUING> 320,762
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320,762
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
