UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
Commission File Number: 0-20360
RENO AIR, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0259913
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
220 Edison Way
Reno, Nevada 89502
(Address of principal executive offices)
(702) 686-3835
(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 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 / /
Number of shares of common stock, $.01 par value, of registrant outstanding at
March 31, 1996: 10,125,834
<PAGE>
RENO AIR, INC.
------------------------------------------------------------------------
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1996 and
December 31, 1995 3
Statements of Operations -
Three Months Ended
March 31, 1996 and 1995 4
Statements of Cash Flows -
Three Months Ended
March 31, 1996 and 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RENO AIR, INC.
BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
<CAPTION>
March 31, December 31,
1996 1995
(unaudited)
------------- -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................................. $ 33,206,346 $ 34,985,808
Short-term investments ................................................ -- 2,944,188
Accounts receivable, net .............................................. 25,587,463 18,237,295
Inventories and operating supplies .................................... 1,794,975 1,298,894
Prepaid expenses and other ............................................ 14,845,147 14,597,564
------------- -------------
Total current assets ........................................ 75,433,931 72,063,749
------------- -------------
PROPERTY AND EQUIPMENT:
Flight equipment ...................................................... 27,974,640 11,061,841
Ground property and equipment ......................................... 4,759,183 4,839,542
Less - Accumulated depreciation ....................................... (6,193,932) (5,212,862)
------------- -------------
26,539,891 10,688,521
RESTRICTED CASH AND INVESTMENT ............................................. 3,589,402 2,150,327
DEPOSITS AND OTHER ......................................................... 16,331,708 14,581,326
------------- -------------
$ 121,894,932 $ 99,483,923
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ...................................................... $ 18,179,907 $ 17,245,930
Accrued liabilities ................................................... 13,946,062 14,419,993
Fuel purchase agreement ............................................... 1,141,761 1,841,226
Air traffic liability ................................................. 29,082,276 18,924,676
Current maturities of long-term debt .................................. 923,647 342,061
Current portion of deferred lease payable ............................. 1,737,533 1,027,858
------------- -------------
Total current liabilities ................................... 65,011,186 53,801,744
------------- -------------
Long-term debt ............................................................. 38,322,901 28,755,019
------------- -------------
Non-current liabilities .................................................... 8,865,660 8,024,021
------------- -------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 30,000,000 shares authorized,
10,125,834 and 9,974,800 shares issued and outstanding at
March 31, 1996 and December 31, 1995, respectively .................... 101,258 99,748
Additional paid - in capital .......................................... 31,929,055 31,413,623
Accumulated deficit ................................................... (22,335,128) (22,610,232)
------------- -------------
Total stockholders' equity .................................. 9,695,185 8,903,139
------------- -------------
$ 121,894,932 $ 99,483,923
============= =============
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
RENO AIR, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
<CAPTION>
Three months ended
March 31
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATING REVENUES:
Passenger ......................................... $ 68,685,556 $ 51,838,417
Other ............................................. 4,134,305 3,142,656
------------ ------------
Total operating revenues ................ 72,819,861 54,981,073
------------ ------------
OPERATING EXPENSES:
Salaries, wages and benefits ...................... 11,475,598 9,512,962
Aircraft fuel and oil ............................. 12,781,811 9,754,363
Aircraft leases ................................... 12,919,381 11,875,040
Maintenance ....................................... 5,818,767 3,990,468
Handling, landing and airport fees ................ 7,370,430 5,731,386
Advertising, marketing and sales .................. 6,771,889 4,232,196
Commissions ....................................... 4,173,147 3,563,773
Facility leases ................................... 2,559,413 2,238,956
Insurance ......................................... 1,921,668 1,533,560
Communications .................................... 994,647 840,489
Depreciation and amortization ..................... 981,069 555,042
Other ............................................. 4,608,030 4,004,014
------------ ------------
Total operating expenses ................ 72,375,850 57,832,249
------------ ------------
OPERATING INCOME (LOSS) ................................ 444,011 (2,851,176)
NON-OPERATING INCOME (EXPENSE):
Interest expense .................................. (795,516) (433,270)
Interest income ................................... 723,707 296,595
Other, net ........................................ (97,098) (202,929)
------------ ------------
NET INCOME (LOSS) ...................................... $ 275,104 $ (3,190,780)
============ ============
NET INCOME (LOSS) PER COMMON SHARE AND
COMMON SHARE EQUIVALENT
PRIMARY ......................... $ 0.03 $ (0.39)
============ ============
FULLY DILUTED .................... $ 0.02 $ (0.39)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING
PRIMARY ............................ 10,745,854 8,277,006
============ ============
FULLY DILUTED ....................... 11,123,058 8,277,006
============ ============
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
RENO AIR, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
<CAPTION>
(unaudited)
Three Months
Ended
March 31
----------------------------
1996 1995
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ......................................... $ 275,104 $(3,190,780)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization ........................ 981,070 555,042
Common stock issued under 401(k) Plan ................ 210,000 240,904
Accounts receivable .................................. (7,350,168) (647,736)
Inventories and operating supplies ................... (496,081) (208,455)
Prepaid expenses and other ........................... (247,583) 1,156,301
Restricted cash and investment ....................... (1,439,075) 100,000
Deposits and other ................................... (1,750,382) (526,890)
Accounts payable ..................................... 933,977 (1,052,700)
Accrued liabilities .................................. (473,931) 923,639
Fuel purchase agreement .............................. (699,465) 662,050
Air traffic liability ................................ 10,157,600 1,199,090
Deferred lease and non-current liabilities ........... 527,539 69,108
------------ -------------
Net cash provided by (used in) operating activities 628,605 (720,427)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ..................... (5,368,665) (494,857)
Proceeds from sale of short-term investments ............ 2,944,188 --
------------ -------------
Net cash used in investing activities .............. (2,424,477) (494,857)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options .......... 306,942 179,880
Payments on notes payable ............................... (290,532) (2,339,866)
------------ -------------
Net cash provided by (used in) financing activities 16,410 (2,159,986)
------------ -------------
DECREASE IN CASH AND CASH EQUIVALENTS ....................... (1,779,462) (3,375,270)
CASH AND CASH EQUIVALENTS, beginning of period .............. 34,985,808 9,103,564
------------ -------------
CASH AND CASH EQUIVALENTS, end of period .................... $ 33,206,346 $ 5,728,294
============ =============
See accompanying notes.
</TABLE>
<PAGE>
RENO AIR, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and 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, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. The results of
operations for the three month period ended March 31, 1996, are not necessarily
indicative of the results that will be realized for the full year. For further
information, refer to the financial statements and notes thereto contained in
the Form 10-K for the year ended December 31, 1995.
NOTE B - EARNINGS (LOSS) PER COMMON SHARE
Income (loss) per share is computed by dividing the net income (loss) available
for common stock by the weighted average number of shares of common stock and
common stock equivalents assumed outstanding during the period.
NOTE C - AIRCRAFT PURCHASE AND RELATED DEBT
In February 1996, the Company purchased an MD-87 aircraft that it previously
leased. This purchase was partially financed with approximately $10.4 million of
debt secured by the aircraft payable over seven years and bearing interest at
LIBOR plus 2%.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual
results could differ materially from those forward-looking statements.
Competition remains vigorous in the Company's markets. Although strong
passenger demand is generating year-over-year traffic increases, yields continue
to be lower in many of the Company's markets than nationwide averages. The
Company's yields could be adversely impacted by reintroduction of the 10%
federal excise tax on ticket sales, which could happen at any time, or by
introduction of passenger user fees as an alternative to the excise tax. Also,
fuel prices began increasing in February 1996 and currently are significantly
higher than last year.
In late March and April 1996, the Company significantly expanded its
operations through the addition of two MD-90 aircraft to its fleet and an
increase in aircraft utilization. The Company has taken delivery of two
additional MD-83 aircraft in the second quarter of 1996. Management expects the
increase in operations will result in a decline in both actual and break-even
load factors for the second quarter of 1996, as compared to the first quarter of
1996. These changes could be impacted by changes in market conditions, further
increases in the cost of fuel, or unscheduled expenditures.
<TABLE>
Selected Operating Statistics
<CAPTION>
Quarter Quarter Quarter
Ended Ended Ended
March 31, March 31, Percent December 31, Percent
1996 1995 Change(1) 1995 Change(2)
---------- ---------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Revenue passengers .................... 1,097,964 876,875 25% 962,151 14%
Revenue Passenger Miles (RPM) (000) ... 645,205 434,839 48% 521,439 24%
Available Seat Miles (ASM) (000) ...... 947,347 756,752 25% 828,673 14%
Passenger load factor (percent) ....... 68.1 57.5 18% 63.0 8%
Breakeven load factor (percent) ....... 67.8 61.0 11% 62.7 8%
Revenue per passenger mile (cents) .... 10.6 11.9 -11% 11.9 -11%
Operating revenues per ASM (cents) .... 7.7 7.3 5% 7.9 -3%
Operating expenses per ASM (cents) .... 7.6 7.6 0% 7.9 -4%
Aircraft in service at end of period .. 24 20 20% 23 4%
Total block hours ..................... 20,758 16,987 22% 18,513 12%
Average aircraft length of haul (miles) 562 483 16% 509 10%
Average cost of fuel (cents per gallon) $0.69 $0.59(3) 17% $0.71(3) -3%
(1) Percent change from quarter ended March 31, 1995 to quarter ended March 31, 1996.
(2) Percent change from quarter ended December 31, 1995 to quarter ended March 31, 1996.
(3) Adjusted to exclude into-plane service fees in order to conform to current presentation.
</TABLE>
<PAGE>
Results of Operations
Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995
The Company realized net income of $275,000, or $.03 per share of
common stock for the three months ended March 31, 1996, as compared to a net
loss of $3.2 million, or ($.39) per share of common stock, for the three months
ended March 31, 1995. The dramatic turnaround in financial results is primarily
attributable to an approximately 5% year-over-year increase in revenue per
available seat mile.
The Company's level of operations, as measured by available seat
miles, increased approximately 25% during the first three months of 1996 as
compared to the first three months of 1995, due to the addition of aircraft to
the Company's fleet and increased average aircraft length of haul. As of March
31, 1996, the Company operated 24 aircraft (not including two MD-90 aircraft
which commenced scheduled service on April 4, 1996), as compared to 20 aircraft
as of March 31, 1995.
Operating Revenues
The Company's operating revenues increased 32% in the first three
months of 1996 as compared to the same period in 1995, due to the 25% increased
scope of the Company's operations (as measured by available seat miles), and the
approximately 5% increase in revenue per available seat mile ("RASM"). The
increase in RASM is attributable to a 10.6 percentage point increase in load
factor, partly offset by an 11% drop in yield. Management believes passenger
loads increased year over year primarily due to increased customer awareness of
and preference for the Company's product, a stimulation of passenger demand by
fare discounting, and a general increase in passenger demand resulting from a
stronger economy. The Company's yields declined year-over-year primarily because
of an approximately 16% increase in the Company's average passenger length of
haul and the impact of discounted fares.
The factors contributing to a decline in yields were partly offset by
the expiration of the federal 10% excise tax on ticket sales. The Company
retained many of its advertised (gross) fares unchanged upon expiration of the
tax, resulting in an increase in its net fares. The impact of the expiration of
the tax increased over the course of the quarter, since the Company had paid the
tax with regard to tickets sold before December 31, 1995, even though travel
occurred after such date. Management cannot predict if or when the excise tax
will be reimposed, or whether an alternative tax such as a user fee may be
imposed. Management believes that a user fee measured by number of departures
would likely have a greater net cost to the Company than re-imposition of the
10% excise tax on the price of tickets, because the Company has lower average
fares and a shorter average aircraft length of haul (and thus more departures
per flight hour) than industry average.
By the end of the 1996 first quarter, the Company had three aircraft
devoted to track charter programs, as opposed to one aircraft in the first
quarter of 1995. The year over year increase in track charter flying contributed
to the increase in average passenger length of haul, the decline in yields, and
the increase in passenger load factor.
Operating Expenses
The Company's operating expenses increased approximately 25% in the
first three months of 1996 as compared to the first three months of 1995,
resulting in the Company's average cost per available seat mile remaining steady
for the first three months of 1996 (as compared to the prior year's quarter) at
approximately 7.6 cents. Increases in the cost of fuel (including, effective
October 1, 1995, of a 4.3 cents per gallon excise tax), and year-over-year
increases in advertising and maintenance expense were offset by cost
efficiencies resulting primarily from an approximately 16% increase in average
aircraft length of haul.
<PAGE>
The following chart lists the components of the Company's unit costs:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Operating expenses per Available Seat Mile (cents)
Salaries, wages and benefits 1.21 1.26
Aircraft fuel and oil 1.35 1.29
Aircraft leases 1.36 1.57
Maintenance 0.61 0.53
Handling, landing and airport fees 0.78 0.76
Advertising, marketing and sales 0.71 0.56
Commissions 0.44 0.47
Facility leases 0.27 0.30
Insurance 0.20 0.20
Communications 0.10 0.11
Depreciation and amortization 0.10 0.07
Other 0.49 0.53
-------- --------
7.62 7.65
======== ========
</TABLE>
The Company's break-even load factor increased to 67.8% in the
first three months of 1996 from 61.0% in the first three months of 1995 due
to the decrease in yields.
Liquidity and Capital Resources
As of March 31, 1996, the Company's cash, cash equivalents and
short-term investments totaled $33.2 million, which reflects a decrease of $4.7
million from December 31, 1995. Also, the Company's working capital declined to
$10.4 million at March 31, 1996, as compared to working capital of $18.3 million
at December 31, 1995. These decreases are primarily due to the use of cash to
purchase assets, including the down payment on the MD-87 purchased by the
Company and lease deposits on two MD-90 aircraft that commenced service in
April. The increase in accounts receivable from December 31, 1995 to March 31,
1996 reflects the increase in air traffic liability during the period, resulting
from the Company's larger scope of operation and increased advance ticket sales.
In the first three months of 1996, net cash provided by operating
activities totaled $629,000, compared to net cash used in operating activities
of $720,000 for the same period in 1995. Cash used in investing activities (to
purchase property and equipment) in the first three months of 1996, net of
proceeds from the sale of short-term investments, was $2.4 million, compared to
$495,000 used in investing activities in the first three months of 1995. The
difference between the periods is primarily attributable to the purchase of the
MD-87 aircraft in 1996.
Cash provided by financing activities was $16,000 in the first three
months of 1996, arising from the exercise of options, compared to cash used in
financing activities of $2.2 million (resulting from payments on notes) for the
comparable period in 1995.
The Company's leased aircraft are leased under operating leases with
remaining terms ranging from less than one to 18 years. In the first quarter of
1996, the Company purchased one MD-87 aircraft that was previously leased to it,
and leased a new MD-90 aircraft.
As of March 31, 1996, the Company had commitments to lease three
additional aircraft (two MD-83 aircraft and one MD-90 aircraft) on a long-term
basis, all of which have since been delivered. The Company's additional annual
rental payments for these leases are estimated to be approximately $7.3 million.
In February 1996, the Company purchased an MD-87 aircraft that it
previously leased. This purchase was partially financed with approximately $10.4
million of debt secured by the aircraft payable over seven years and bearing
interest at LIBOR plus 2%. In the second quarter of 1996, the Company purchased
two spare engines and associated rotable spare parts for an aggregate purchase
price of approximately $4.3 million. The Company paid the purchase price in cash
and has a proposal from a lender, subject to conditions, to finance 70% of the
purchase price for a three-year note bearing interest at LIBOR plus 2.85%. The
Company has committed, subject to certain conditions, to purchase an additional
MD-83 aircraft for approximately $18 million (including the cost of anticipated
modifications). The aircraft would be purchased in the second quarter of 1996,
and leased back to the seller until April of 1997, at which point it would be
added to the Company's fleet. Management intends to finance this acquisition,
and is in discussion with certain potential lenders. The Company has agreed to
purchase an additional spare engine from Pratt & Whitney for approximately $2.8
million for delivery in June 1996, with financing to be provided by the seller.
The Company may lease or purchase more aircraft, in connection with the return
of other aircraft in its fleet or as additions to its fleet.
Management believes the Company's cash position, together with cash
flow generated from operations, will be sufficient to meet the Company's
obligations and capital requirements for the next twelve months. Nevertheless,
airline results are highly sensitive to various factors, including the price of
fuel and the actions of competing airlines, either of which can materially and
adversely affect the Company's liquidity and cash flows. Management may seek to
raise additional funds through sales of equity or debt securities (on a secured
or unsecured basis).
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the discussion of the Adelman lawsuit contained in
Item 3 of the Company's Report on Form 10-K for the year ended December 31,
1995. On April 11, 1996, the Adelman plaintiffs appealed to the United States
Court of Appeals for the Ninth Circuit the decision by the District Court
denying their motion to vacate the summary judgment awarded to Reno Air and the
other defendants on May 9, 1995. Reno Air believes the lawsuit is without merit
and will continue to defend the lawsuit vigorously.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits Page
10.20 Reno Air, Inc. Profit Sharing Plan 14
11 Statement Re: Computation of Earnings Per Share
for the Three Months ended March 31, 1996 20
B. Reports on Form 8-K.
None.
<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.
RENO AIR, INC.
DATE: May 14, 1996 By: /s/ PAUL H. TATE
----------------
Paul H. Tate
as Chief Financial Officer
and on behalf of Registrant
RENO AIR, INC.
PROFIT SHARING PLAN
Reno Air, Inc., a Nevada corporation ("Reno Air"), hereby adopts this
Profit Sharing Plan.
I
PURPOSE
The purpose of this Plan is to provide incentive compensation to
employees of Reno Air by allowing these employees to participate in the success
and profitability of Reno Air.
II
DEFINITIONS
As used in this Plan, the following definitions shall apply except
where the context otherwise indicates:
"Administrator" means Reno Air or its designee.
"Annual Compensation" means each Participant's compensation for a Plan
Year, not to exceed Two Hundred Thousand Dollars ($200,000), including overtime
pay but excluding expense reimbursements and allowances, commissions, income
attributable to stock options or buddy passes, Company contributions to
retirement plans, incentive bonuses paid under this Plan and fringe benefits
received by the Participant. Compensation shall be before any pre-tax or
post-tax elective deductions from compensation (such as contributions to the
Company's 401(k) Plan.)
"Board of Directors" means the Board of Directors of the Company.
"Company" or "Reno Air" means Reno Air, Inc., a Nevada corporation, or
any successor by merger, consolidation, purchase, or otherwise.
"Effective Date" means January 1, 1995.
"Eligible Employee" means each individual employed by the Company in
the capacity of a common-law employee other than (i) non-resident aliens covered
by a separate profit sharing or bonus plan (including any government-mandated
profit sharing or bonus plan), and (ii) employees represented by a collective
bargaining representative unless the Company has agreed with the collective
bargaining representative that such employee will participate in this Plan.
"Net Profit" means the net income applicable to common stock of Company
for a particular quarter of a Plan Year or for the entire Plan Year, as the case
may be, determined in accordance with generally accepted accounting principles
and as reported in the Company's periodic reports filed with the Securities and
Exchange Commission, before any adjustments for any taxes upon or measured by
income or any incentive bonuses payable under this Plan with respect to such
period; provided that, in determining Net Profit, at the direction of the Board
of Directors there shall be disregarded gains and losses on the disposition of
assets, lines of business or operations, extraordinary gains or losses; and
non-operating and non-recurring gains or losses not arising from the Company's
usual business operations.
"Participant" means an Employee who has been admitted to Participation
in the plan under the provisions of Article III, and whose employment has not
terminated.
"Plan" means this Profit Sharing Plan.
"Plan Year" means the twelve-month period commencing on each January 1
and ending on each December 31.
III
ELIGIBILITY FOR PARTICIPATION
A. Participation. Any Eligible Employee shall become a Participant on
the first day of any fiscal quarter following the date on which the Employee
completes six consecutive months of service. Once an Employee has qualified as a
Participant under this Plan, the Employee's Participation shall continue until
such time as such Employee's Participation is terminated pursuant to paragraph B
below of this Article III.
B. Termination of Participation. A Participant shall cease to be a
Participant in the plan on the occurrence of the earliest of the following
events:
1. The date the Participant's employment with the
Company is terminated for any reason whatsoever; or
2. The date on which the Plan is terminated.
Provided, that if a Participant terminates employment due to death or a
disability, such Participant will continue to be a Participant in the plan for
the fiscal quarter and the Plan Year in which the disability occurs.
C. Reemployment. Any Employee who ceases to be a Participant and
subsequently returns to employment shall be treated as a new employee and
therefore shall again become a Participant only after satisfying the
requirements in Paragraph A above.
IV
ANNUAL PROFIT SHARING BONUSES
The Company may pay an annual profit sharing bonus to each Participant
in the Plan as of the end of any Plan Year (or who died or became disabled
during such Plan Year), determined as follows:
The aggregate annual bonus shall be equal to 10% of the Company's Net
Profit for such Plan Year, less amounts previously paid or allocated as
quarterly profit sharing bonuses during and with respect to the Plan Year.
The aggregate annual bonus shall be allocated among such Participants
pro rata based upon each Participant's Annual Compensation for the Plan Year
including for any period prior to the time such employee became a Participant.
Subject to Section VI, the bonus shall be paid as soon as practicable
following the Company's determination of the aggregate annual bonus and the
Administrator's determination of the proper allocation of such bonus. The
Administrator shall use its best efforts to cause the bonus to be paid by May 15
of the year following each Plan Year for which an annual bonus is due.
The Board of Directors of the Company may, by appropriate action prior
to the end of any Plan Year, increase, decrease or eliminate completely the
aggregate annual bonus for such year.
V
QUARTERLY PROFIT SHARING BONUSES
The Company may pay a quarterly profit sharing bonus to each
Participant in the Plan as of the end of each of the first three fiscal quarters
of the Plan Year (i.e. the quarters ending March 31, June 30 and September 30),
in which the Company has a quarterly Net Profit of at least $500,000, determined
as follows:
The aggregate quarterly profit sharing bonus shall be equal to the
lesser of (i) 10% of the Company's Net Profit for such fiscal quarter, and (ii)
the sum of (a) $150 multiplied by the number of full time employees who are
Participants in the Plan as of the last day of such fiscal quarter (or who died
or became disabled during such quarter) and (b) $75 multiplied by the number of
part time employees of the Company who are Participants in the Plan as of the
last day of such fiscal quarter (or who died or became disabled during such
quarter).
The aggregate quarterly bonus shall be allocated among such
Participants on a per capita basis, provided that each full time employee shall
be entitled to twice the quarterly profit sharing bonus paid to each part time
employee.
In the event the Company has a quarterly Net Profit of less than
$500,000 in any quarter, the aggregate profit sharing allocation shall be rolled
over and included in the next distribution under the Profit Sharing Plan.
The bonus shall be paid as soon as practicable following the Company's
determination of the aggregate quarterly bonus and the Administrator's
determination of the proper allocation of such bonus. The Administrator shall
use its best efforts to cause the bonus to be paid within 90 days following the
end of each fiscal quarter for which a quarterly bonus is due.
The determination of whether an employee is a full time employee or a
part time employee shall be made by the Company under rules uniformly applied to
all employees.
The Board of Directors of the Company may, by appropriate action prior
to the end of any quarter, increase, decrease or eliminate the aggregate
quarterly bonus for such quarter.
VI
PAYMENT OF BONUSES
Bonuses shall be paid by check mailed to the last address of the
Participant on file with the Company, by inclusion of the bonus in a
Participant's normal paycheck, or by such other means as the Administrator deems
proper.
In the event a Participant dies during a quarter or before receipt of a
bonus to which he or she is due, the bonus shall be paid to his or her estate.
In no event shall any Participant be entitled to interest on any
quarterly or annual profit sharing bonus, regardless of the time at which the
bonus is paid.
Unless the Board of Directors by appropriate action directs otherwise,
in no event shall any annual bonus be payable in the event the aggregate amount
of the bonus, plus the aggregate amount of any bonus previously carried forward
pursuant to this paragraph and not previously paid, is less than $25 multiplied
by the number of Participants eligible to receive an allocation of such bonus.
Any bonus not payable pursuant to the foregoing sentence shall nevertheless be
allocated among Participants and carried forward to the next time a bonus is
payable, and, subject to any contrary law prohibiting such forfeiture, shall be
forfeited by any Participant to whom it has been allocated, if such Participant
ceases to be eligible for an allocation of any subsequent bonus.
VII
FORFEITURE OF BONUS
Until such time as the full amount of any quarterly or annual profit
sharing bonus has been actually paid to any Participant, his or her right to
receive such bonus shall be wholly contingent and, subject to any contrary law
prohibiting such forfeiture, shall be forfeited if the participant shall do any
act, or engage directly or indirectly (whether as owner, partner, officer,
Employee, or otherwise) in the operation or management of any business which, in
the judgment of the Company, shall be detrimental to or in competition with the
Company.
VIII
ADMINISTRATION OF THE PLAN
The Company shall determine all questions regarding interpretation,
application and administration of the Plan, and its determination of any
question shall be final, conclusive and binding upon all parties, including the
Company, the stockholders, and the Employees. The Company shall have the power
to construe the Plan, to determine all questions and make rules relating to the
administration of the plan and the eligibility of Employees to participate in
the plan, to authorize all disbursements and to engage such agents as are
necessary to carry out the provisions of this Plan.
To the maximum extent permitted by Nevada Law, no officer, director or
employee of the Company shall have any liability for any decision, action, or
omission, if done in good faith, nor for any error or miscalculation unless such
error or miscalculation is found by a court of law to constitute fraud or
deliberate disregard of any provisions of the Plan.
Neither the Administrator or the Company shall be required to search
for or ascertain the location of any Participant. If a Participant fails to
claim his or her profit sharing bonus within six months after the date such
bonus was generally announced, the Company may treat such bonus as having been
forfeited, subject to any contrary law prohibiting such forfeiture.
IX
AMENDMENT AND TERMINATION
The Company, by action of the Board of Directors, shall retain the
right to amend , modify, change, suspend or terminate this Plan, in whole or in
part, at any time, provided that no such amendment or termination shall affect
the right of a Participant to a profit sharing bonus for any quarter or Plan
Year ending prior to the date of such amendment or termination.
X
MISCELLANEOUS
Neither the establishment or communication of this Plan, the award or
payment of profit sharing bonuses hereunder, the determination that an employee
is an Eligible Employee or a Participant hereunder, or any other action or fact
with respect to this Plan shall (i) provide any employee any expectation or
rights of continued employment or promotional opportunity or (ii) be construed
as a statement or admission that an employee is adequately discharging his or
her job responsibilities.
No interest or expectation of an Eligible Employee or Participant under
or with respect to this Plan shall be (i) assignable, (ii) subject to any claim
of creditors, or (iii) subject to attachment or garnishment or any other legal
process.
Nothing contained in this Plan shall be deemed to create a trust of any
kind or create any fiduciary relationship. All funds, if any, set aside for
payment of the Company's obligations under this Plan, whether in cash or
invested, shall for all purposes remain part of the general assets of Company,
and no person other than Company shall, by virtue of any provision of this Plan,
have any interest in such funds. To the extent that any person acquires a right
to receive a profit sharing bonus from Company under the terms of this plan,
such rights shall be no greater than the right of any unsecured general creditor
of Company.
The validity of this Plan and the construction of its provisions shall
be governed and determined exclusively and solely in accordance with the laws of
the State of Nevada. The Plan is not intended to be subject to the Employee
Retirement Income Security Act, as amended, or other federal laws, except to the
extent required by any such law.
In witness whereof Reno Air, Inc., a Nevada corporation, has caused
this instrument to be executed by its President pursuant to authorization by its
Board of Directors.
Reno Air, Inc.
By /s/ ROBERT W. REDING
Robert W. Reding
President and Chief
Executive Officer
Attest:
By /s/ ROBERT M. ROWEN
Robert M. Rowen
Secretary
[Corporate Seal]
Dated: February 8, 1996
<TABLE>
Exhibit 11
Statement Re: Computation of Per Share Earnings (Loss)
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1996 March 31, 1995
------------------------- ---------------------------
Fully Fully
Primary Diluted Primary Diluted
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Weighted Average Shares Outstanding 10,069,584 10,069,584 8,277,006 8,277,006
Common Stock Equivalents:
Options 638,394 965,120 (1) (1)
Warrants 37,876 88,354 (1) (1)
------------ ------------ ------------- -------------
10,745,854 11,123,058 8,277,006 8,277,006
============ ============ ============= =============
Net Income (loss) Applicable to
Common Stock $ 275,104 $ 275,104 $ (3,190,780) $ (3,190,780)
============ ============ ============= =============
Per Share Earnings (Loss) $ 0.03 $ 0.02 $ (0.39) $ (0.39)
============ ============ ============= =============
- - ----------------------
(1) anti-dilutive
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Mar-31-1996
<CASH> 33,206,346
<SECURITIES> 0
<RECEIVABLES> 25,587,463
<ALLOWANCES> 0
<INVENTORY> 1,794,975
<CURRENT-ASSETS> 75,433,931
<PP&E> 32,733,823
<DEPRECIATION> 6,193,932
<TOTAL-ASSETS> 121,894,932
<CURRENT-LIABILITIES> 65,011,186
<BONDS> 38,322,901
0
0
<COMMON> 101,258
<OTHER-SE> 9,593,927
<TOTAL-LIABILITY-AND-EQUITY> 121,894,932
<SALES> 72,819,861
<TOTAL-REVENUES> 72,819,861
<CGS> 72,375,850
<TOTAL-COSTS> 72,375,850
<OTHER-EXPENSES> 97,098
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 795,516
<INCOME-PRETAX> 275,104
<INCOME-TAX> 0
<INCOME-CONTINUING> 275,104
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 275,104
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.02
</TABLE>
