FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] 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 1-13934
MIDWEST EXPRESS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1828757
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6744 South Howell Avenue
Oak Creek, Wisconsin 53154
(Address of Principal executive offices)
(Zip code)
414-570-4000
(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 (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
As of April 29, 1997, there were 6,330,863 shares of Common Stock, $.01
par value, of the Registrant outstanding. On April 23, 1997, the Company
announced that its board of directors had approved a plan to split its
stock 3-for-2 in the form of a 50% stock dividend. The effect of the
stock dividend has been reflected in the accompanying financial statements
and had the dividend been outstanding as of April 29, 1997, there would
have been 9,496,245 shares of Common Stock outstanding.
<PAGE>
MIDWEST EXPRESS HOLDINGS, INC.
FORM 10-Q/A
For the period ended March 31, 1997
INDEX
PART I - FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements (unaudited)
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Unaudited Notes to Consolidated Financial 6
Statements
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
<PAGE>
Items 1, 2 and 6 for the Form 10-Q are amended and restated in their
entirety as follows:
Part I Item 1 - Financial Statements
MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
1997 1996
Operating revenues:
Passenger service $ 71,428 $ 60,915
Cargo 2,593 2,598
Other 5,899 3,095
------- -------
Total operating revenues 79,920 66,608
------- -------
Operating expenses:
Salaries, wages and benefits 21,409 17,868
Aircraft fuel and oil 13,402 10,302
Commissions 7,119 5,730
Dining services 3,825 3,477
Station rental, landing and other
fees 6,616 5,344
Aircraft maintenance materials and
repairs 5,910 5,273
Depreciation and amortization 2,101 1,889
Aircraft rentals 4,262 4,076
Other 8,803 8,233
------- -------
Total operating expenses 73,447 62,192
------- -------
Operating income 6,473 4,416
------- -------
Other income (expense):
Interest income 300 267
Other (4) (11)
------- -------
Total other income (expense) 296 256
------- -------
Income before income taxes 6,769 4,672
Provision for income taxes 2,538 1,836
------- -------
Net income $ 4,231 $ 2,836
======= =======
Net income per common share $ 0.45 $ 0.29
====== ======
Weighted average shares outstanding 9,495,623 9,642,857
========= =========
See notes to consolidated financial statements.
<PAGE>
Part I Item 1 - Financial Statements
MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
1997 1996
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 25,541 $ 27,589
Accounts receivable:
Traffic, less allowance for
doubtful accounts of $265 and
$207 at March 31, 1997 and
December 31, 1996, respectively 4,720 4,639
Other receivables 397 592
------- -------
Total accounts receivable 5,117 5,231
Inventories 3,002 3,122
Prepaid expenses 6,051 4,247
Deferred income taxes 3,324 3,334
Aircraft and modifications intended
to be financed by sale and
leaseback transactions 14,108 9,046
------- -------
Total current assets 57,143 52,569
------- -------
Property and equipment, at cost 135,831 130,792
Less accumulated depreciation 62,546 59,889
------- -------
Net property and equipment 73,285 70,903
Landing slots and leasehold rights,
net 5,146 5,228
Other assets 652 435
------- -------
Total assets $136,226 $129,135
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,634 $ 3,684
Income taxes payable 914 -
Air traffic liability 29,885 22,043
Accrued liabilities:
Scheduled maintenance expense 5,686 5,961
Profit sharing 964 5,345
Vacation pay 2,959 2,957
Frequent Flyer awards 2,925 2,869
Other 14,244 15,504
------- -------
Total current liabilities 61,211 58,363
------- -------
Deferred income taxes 9,930 9,894
Noncurrent scheduled maintenance
expense 7,206 7,771
Accrued pension and other
postretirement benefits 6,733 6,138
Other noncurrent liabilities 6,542 6,628
------- -------
Total liabilities 91,622 88,794
------- -------
Shareholders' equity:
Preferred stock, without par value,
5,000,000 shares authorized, no
shares issued or outstanding - -
Common stock, $.01 par value,
25,000,000 shares authorized,
9,642,857 shares issued 96 96
Additional paid-in capital 9,515 9,513
Treasury stock, at cost (2,642) (2,672)
Retained earnings 37,635 33,404
------- -------
Total shareholders' equity 44,604 40,341
------- -------
Total liabilities and shareholders'
equity $136,226 $129,135
======= =======
See notes to consolidated financial statements.
<PAGE>
Part I Item 1 - Financial Statements
MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31
1997 1996
Operating activities:
Net income $ 4,231 $ 2,836
Items not involving the use of cash:
Depreciation and amortization 2,101 1,889
Deferred income taxes 46 (756)
Other 1,062 729
Changes in operating assets
and liabilities:
Accounts receivable 114 1,438
Inventories 120 456
Prepaid expenses (1,804) 666
Accounts payable (50) (709)
Income taxes payable 914 1,481
Accrued liabilities (5,858) 4,186
Air traffic liability 7,842 432
------- -------
Net cash provided by operating
activities 8,718 12,648
------- -------
Investing activities:
Capital expenditures (5,468) (4,954)
Aircraft acquisitions and
modifications financed by or
intended to be financed by
sale and leaseback transactions (5,063) (3,449)
Proceeds from sale of property
and equipment 4 -
Other (215) (32)
------- -------
Net cash used in investing
activities (10,742) (8,435)
------- -------
Financing activities:
Other (24) 1,458
------- -------
Net cash (used in) provided
by financing activities (24) 1,458
------- -------
Net (decrease) increase in cash
and cash equivalents (2,048) 5,671
Cash and cash equivalents,
beginning of period 27,589 14,626
------- -------
Cash and cash equivalents,
end of period $ 25,541 $ 20,297
======= =======
See notes to consolidated financial statements.
<PAGE>
Midwest Express Holdings, Inc.
Unaudited Notes to Consolidated Financial Statements
1. Business and Basis of Presentation
Basis of Presentation
The consolidated financial statements for the three-month period ended
March 31, 1997 are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) that are, in the opinion of
management, necessary for a fair presentation of the financial
position and operating results for the interim period. The
consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto, together with
management's discussion and analysis of financial condition and
results of operations, contained in the Company's Annual Report to
Shareholders and incorporated by reference in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. The results
of operations for the three-month period ended March 31, 1997 are not
necessarily indicative of the results for the entire fiscal year
ending December 31, 1997.
Stock Split
On April 23, 1997, the Company announced that its board of directors
had approved a plan to split its stock 3-for-2 in the form of a 50%
stock dividend. The new shares will be issued May 28 to shareholders
of record as of May 12. The financial and share information presented
herein for all periods has been adjusted to reflect the effect of the
stock dividend.
Part I Item 2.
Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of Operations
Overview
The Company's 1997 first quarter operating income was $6.5 million, an
increase of $2.1 million from the first quarter 1996. Net income
increased by $1.4 million, or 49.2%, to $4.2 million. Year-to-date
earnings per share were $.45, a $.16 or 52.3% increase over 1996 results.
The Company's total revenue in the first quarter increased $13.3 million,
or 20.0%, relative to the first quarter 1996, while operating costs
increased by $11.2 million, or 18.1%. The favorable change in revenue in
the quarter was primarily the result of improvements in passenger revenue
yield; increased passenger volume resulting from service expansions during
1996 and early 1997 and improved weather; and an increase in supplemental
revenue from the Midwest Express credit card program and charter services.
The cost increases in the first quarter were the result of higher fuel,
labor, commission and airport costs and expenses associated with service
expansions since the first quarter 1996.
An increase in revenue yield was an important factor in the improved
financial results. For the first quarter, Midwest Express revenue yield
increased 11.8% from 17.9 cents in 1996 to 20.0 cents in 1997. Skyway
yield increased 6.3%. The yield gains were broad based, with almost every
market, excluding the West Coast, realizing improvement. The temporary
suspension of the 10 percent federal excise tax from January 1 to March 7
had a favorable, but not quantifiable, impact on yield during the first
quarter 1997.
Service expansions since the first quarter 1996 significantly contributed
to the increase in revenue in the first quarter 1997. The first quarter
benefited from the service expansion in May 1996 when one DC-9 aircraft
was placed in service and September 1996 when another DC-9 aircraft was
placed in service. Traffic also benefited from improved weather in the
first quarter 1997. Weather-related cancellations decreased from 2.7% of
operations in the first quarter 1996 to 1.5% in 1997.
Midwest Express' credit card and charter programs also favorably impacted
financial results in the 1997 first quarter. The credit card program,
which was implemented in October 1995, generated $.6 million more revenue
in the first quarter 1997 than in the first quarter 1996. In addition,
Midwest Express dedicated one aircraft to charter programs beginning in
the second quarter 1996, resulting in charter revenue increasing $1.5
million in 1997 over 1996.
Negatively impacting operating income was an 18.1% increase in operating
expenses. Significant increases occurred in fuel, labor, commissions and
airport costs, which are explained in the subsequent sections.
Operating Statistics
The following table provides selected operating statistics for Midwest
Express and Skyway.
Three Months Ended
March 31, %
1997 1996 Change
Midwest Express Operations
Origin & Destination Passengers 340,379 317,8897 .1%
Revenue Passenger Miles (000s) 313,416 292,2587 .2%
Scheduled Service Available Seat
Miles (000s) 520,437 461,634 12.7%
Total Available Seat Miles
(000s) 536,718 470,961 14.0%
Load Factor (%) 60.2% 63.3% -3.1 pts
Revenue Yield $0.200 $0.179 11.8%
Cost per total ASM $0.121 $0.116 4.2%
Average Passenger Trip Length 920.8 919.4 0.2%
Number of Flights 9,144 8,278 10.5%
Into-plane Fuel Cost per Gallon $0.804 $0.703 14.4%
Full-time equivalent Employees
at End of Period 1,730 1,447 19.6%
Aircraft in Service at End of
Period 22 19 15.8%
Skyway Airlines Operations
Origin & Destination Passengers 68,782 72,932 -5.7%
Revenue Passenger Miles (000s) 15,823 16,613 -4.8%
Scheduled Service Available
Seat Miles (000s) 38,665 39,113 -1.1%
Total Available Seat Miles (000s) 38,741 39,175 -1.1%
Load Factor (%) 40.9% 42.5% -1.6 pts
Revenue Yield $0.555 $0.522 6.3%
Cost per total ASM $0.245 $0.214 14.1%
Average Passenger Trip Length 230.0 227.8 1.0%
Number of Flights 10,073 10,396 -3.1%
Into-plane Fuel Cost per Gallon $0.858 $0.774 10.9%
Full-time equivalent Employees
at End of Period 247 218 13.3%
Aircraft in Service at End of
Period 15 15 -
Note: With the exception of total available seat miles, cost per total
ASM, into-plane fuel cost, number of employees and aircraft in
service, statistics exclude charter operations. Aircraft
acquired but not yet placed into service are excluded from the
aircraft in service statistics.
The following table provides operating revenues and expenses for the
Company expressed as cents per total ASM, including charter operations,
and as a percentage of total revenues.
Three Months Ended March 31,
1997 1996
Per Total % of Per Total % of
ASM Revenue ASM Revenue
Operating revenues:
Passenger service $0.124 89.4% $0.120 91.6%
Cargo 0.005 3.2% 0.005 3.8%
Other 0.010 7.4% 0.006 4.6%
------- ------ ------- ------
Total operating revenues 0.139 100.0% 0.131 100.0%
Operating expenses:
Salaries, wages and
benefits 0.038 26.8% 0.035 26.7%
Aircraft fuel and oil 0.023 16.8% 0.020 15.3%
Commissions 0.012 8.9% 0.011 8.4%
Dining services 0.007 4.8% 0.007 5.3%
Station rental, landing
and other fees 0.012 8.3% 0.011 8.4%
Aircraft maintenance
materials and repairs 0.010 7.4% 0.010 7.6%
Depreciation and
amortization 0.004 2.6% 0.004 3.1%
Aircraft rentals 0.008 5.3% 0.008 6.1%
Other 0.015 11.0% 0.016 12.2%
------- ------ -------- ------
Total operating expenses $0.128 91.9% $0.122 93.1%
======= ====== ======== ======
Total ASMs (000s) 575,459 510,135
Note: Numbers in this table cannot be recalculated due to rounding.
Three Months Ended March 31, 1997 Compared to
Three Months Ended March 31, 1996
Operating Revenues
Company operating revenues totalled $79.9 million in the first quarter
1997, a $13.3 million or 20.0% increase over the first quarter 1996.
Passenger revenues accounted for 89.4% of total revenues and increased
$10.5 million, or 17.3%, from 1996 to $71.4 million. The increase is
attributable to a 6.6% increase in passenger volume, as measured by
revenue passenger miles, and a 10.0% increase in revenue yield.
Midwest Express passenger revenue increased by $10.4 million, or 19.9%,
from 1996 to $62.6 million. This increase was caused by a 7.1% increase
in origin and destination passengers and an 11.8% increase in revenue
yield. Total capacity, as measured by scheduled service ASMs, increased
12.7% because of the addition of aircraft in May and September 1996. Load
factor decreased from 63.3% in 1996 to 60.2% in 1997. The yield
improvement was generally the result of an improved pricing environment in
the industry and the temporary suspension of the 10% passenger ticket tax
from January 1 to March 7, 1997.
Skyway passenger revenue increased by $.1 million, or 1.3%, from 1996 to
$8.8 million. This increase was caused by a 6.3% increase in revenue
yield, offset by a 5.7% decrease in origin and destination passengers.
Average passenger trip length increased 1.0%. Total capacity decreased by
1.1%. Load factor decreased from 42.5% in 1996 to 40.9% in 1997.
Skyway's results were negatively impacted by schedule changes and
increased competition in selected markets.
Revenue from cargo, charter and other services increased $2.8 million in
the first quarter 1997. Charter revenue increased $1.5 million because
Midwest Express had one aircraft dedicated to charter operations during
the first quarter 1997 and did not have a dedicated aircraft in the first
quarter 1996. Revenue from the Midwest Express MasterCard program
increased $.6 million.
Operating Expenses
1997 operating expenses increased by $11.3 million, or 18.1%, from 1996.
The increase was primarily the result of higher costs associated with
fuel, labor, commissions, airport costs and the service expansions since
the first quarter 1996. Cost per total ASM increased 4.7%, from 12.2
cents in 1996 to 12.8 cents in 1997.
Salaries, wages and benefits increased by $3.5 million, or 19.8%. On a
cost per total ASM basis, these costs increased 6.2%, from 3.5 cents in
1996 to 3.7 cents in 1997. The labor cost increase reflects the addition
of approximately 312 full-time equivalent employees since March 31, 1996;
283 at Midwest Express and 29 at Skyway. Midwest Express added employees
throughout the organization to support the aircraft placed in service
during 1996 and 1997. Skyway added employees primarily in the flight
operations and maintenance functions. The labor cost increase was also
due to an adjustment in pay scales for most operations' employees at
Midwest Express effective January 1, 1997. These rate adjustments were
implemented based upon industry salary surveys and management's desire to
increase pay scales to maintain a competitive position within the
industry. Labor costs increased $.4 million because of accruals for
Midwest Express' profit sharing and management incentive programs. The
profit sharing and incentive plans, which benefit substantially all
employees, are based entirely on achieving certain levels of
profitability, are payable annually and are accrued monthly based upon
earnings to date and projected results for the remainder of the year.
Aircraft fuel and oil and associated taxes increased $3.1 million, or
30.1%, in 1996. Into-plane fuel prices increased 14.1% in 1997, averaging
80.8 cents per gallon in 1997 and 70.9 cents per gallon in 1996. Fuel
consumption increased by 14.1% in the quarter, primarily because Midwest
Express operated 15.6% more aircraft flight hours. Fuel costs in April
1997 continued to trend downward, averaging 73.7 cents per gallon.
Commissions increased by $1.4 million, or 24.2%, and 10.1% on a cost per
total ASM basis. The increase in passenger revenue of 17.3% directly
impacted commission costs, but cost per total ASM increased primarily
because of higher revenue yield.
Maintenance costs increased by $.6 million, or 12.1%, from 1996. The
increase was caused by more flight hours at Midwest Express and an
increase in the rate of engine overhaul accruals, offset by fewer
unscheduled engine overhauls and a favorable MD-88 airframe overhaul
adjustment. The cost increase for engine overhaul accruals was the result
of higher expected costs to complete future major engine maintenance. The
favorable MD-88 airframe overhaul adjustment was due to scheduled
maintenance accruals exceeding the actual costs incurred in the first
quarter 1997, as both MD-88 aircraft had scheduled major maintenance.
Station rental, landing and other fees increased by $1.3 million, or
23.8%, from 1996. The increase was caused by 10.5% more flight segments
by Midwest Express, increasing costs for and usage of deicing fluid, and
significantly higher airport costs primarily for purchased security
services and landing fees.
Depreciation and amortization increased by $.2 million, or 11.2%, from
1996. The increase was primarily the result of the depreciation
associated with capital spending and the decision to exercise purchase
options on two leased jet aircraft in October 1996, offset by two jet
aircraft becoming fully depreciated during 1996.
Aircraft rental costs increased by $.2 million in 1997 as a result of
Midwest Express leasing four additional aircraft in 1997. This increased
cost was partially offset by lower lease costs for Skyway's 15 turboprop
aircraft that were refinanced in the second and third quarter 1997 and the
decision to exercise purchase options on two leased jet aircraft in
October 1996.
Other operating expenses increased by $.6 million, or 6.9%, from 1996.
Other cost increases included increased charter costs due to additional
charter volume, higher property tax costs because of more aircraft,
additional overnight costs for flight crews associated with flight
schedule changes, and telecommunication costs. These cost increases were
partially offset by lower advertising, legal and headquarters relocation
costs in the first quarter 1997.
Provision for Income Taxes
Income tax expense for the first quarter 1997 was $2.5 million, a $.7
million increase from 1996. The effective tax rates for the first quarter
of 1997 and 1996 were 37.5% and 39.3%, respectively. For purposes of
calculating the Company's income tax expense and effective tax rate, the
Company treats amounts payable to an affiliate of Kimberly-Clark under a
tax allocation and separation agreement entered into in connection with
the Company's initial public offering as if they were payable to taxing
authorities.
Net Income
Net income for the first quarter increased $1.4 million from 1996. The
net income margin improved from 4.3% in 1996 to 5.3% in 1997.
Liquidity and Capital Resources
The Company's cash and cash equivalents totalled $25.5 million at March
31, 1997, compared to $27.6 million at December 31, 1996. Net cash
provided by operating activities totalled $8.7 million for the three
months ended March 31, 1997. Net cash used in investing activities
totalled $10.7 million, primarily due to aircraft acquisitions and related
modifications in 1997 of $5.1 million, which are intended to be financed
by sale and leaseback transactions and due to capital expenditures of $5.5
million.
As of March 31, 1997, the Company had a working capital deficit of $4.1
million versus a $5.8 million deficit on December 31, 1996. The working
capital deficit is due to the Company's air traffic liability (advance
bookings, whereby passengers have purchased tickets for future flights),
accrued scheduled maintenance expense and accrued lease payments. Because
of these items, the Company expects to operate periodically with a working
capital deficit, which is not unusual for the industry.
The Company has no debt, other than its lease commitments. As of March
31, 1997, the Company's two credit facilities, a $35.0 million revolving
bank credit facility and a $20.0 million secondary revolving credit
facility with Kimberly-Clark, have not been used except for letters of
credit totalling approximately $12.1 million that reduce the amount of
available credit. On April 30, 1997, the Company increased its revolving
bank credit facility by $20.0 million.
Capital expenditures totalled $5.5 million for the three months ended
March 31, 1997, not including aircraft acquisitions. Capital expenditures
primarily consisted of the completion of Midwest Express' hangar
expansion, the acquisition of an office building for Skyway, capitalized
engine overhauls, capitalized aircraft major maintenance and one spare
aircraft engine.
Aircraft acquisitions and modifications intended to be financed by sale
and leaseback transactions totalled $5.1 million during the three months
ended March 31, 1997. Modifications to aircraft not yet in service
include maintenance inspection and modification, hush kit installation and
complete interior refurbishment. During the remainder of 1997, the
Company intends to finalize sale and leaseback transactions on four DC-9-
30 aircraft acquired in 1996, in which case the Company would be
reimbursed for approximately $14.1 million of related aircraft acquisition
and modification costs incurred to March 31, 1997.
As of March 31, 1997, leases relating to three of Midwest Express' jet
aircraft are guaranteed by Kimberly-Clark in return for a guarantee fee
paid by the Company. Kimberly-Clark will continue to guarantee these
leases until the end of the current lease terms. None of these jet
aircraft leases expires before 2001.
In December 1995, the Company announced a $5.0 million share repurchase
program to be executed from time to time in the open market or in
privately negotiated transactions. As of March 31, 1997, the Company has
purchased 103,700 shares at a cost of $2.8 million. It anticipates
completing this share repurchase program during the remainder of 1997.
The Company believes its cash flow from operations, funds available from
credit facilities and available long-term financing for the acquisition of
jet aircraft and turboprop aircraft will be adequate to provide for
working capital needs and capital expenditures through 1997.
Pending Developments
New Aircraft - Four DC-9 aircraft acquired during 1996 will be placed into
service during 1997 after maintenance inspection and modification, hush
kit installation and complete interior refurbishment. The first aircraft
enables Midwest Express to provide year-round service to Orlando, Florida.
The second aircraft allows Midwest Express to initiate service between
Kansas City and New York/LaGuardia. The third aircraft will be placed
into service late in the third quarter and plans for this aircraft have
not been announced. The fourth aircraft will initially be used as a
maintenance spare.
Stock Split - On April 23, 1997, the Company announced that its board of
directors had approved a plan to split its stock 3-for-2 in the form of a
50% stock dividend. The new shares will be issued May 28 to shareholders
of record as of May 12. Fractional shares will be paid to shareholders in
cash. The financial and share information presented in Management's
Discussion and Analysis of Results of Operations and Financial Condition
for all periods has been adjusted to reflect the effect of the stock
dividend.
Other Issues - The Company's annual report for the year ended December 31,
1996, disclosed certain issues relating to the White House Commission on
Aviation Safety and Security, labor relations and sales taxes. These
issues remain pending.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits filed herewith or incorporated by reference are
set forth on the attached Exhibit Index.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this amendment to report to be signed on
its behalf by the undersigned thereunto duly authorized.
Midwest Express Holdings, Inc.
Date: June 15, 1997 By /s/ Timothy E. Hoeksema
Timothy E. Hoeksema
Chairman of the Board, President
and Chief Executive Officer
Date: June 15, 1997 By /s/ Robert S. Bahlman
Robert S. Bahlman
Vice President, Chief Financial
Officer, Treasurer and Controller
<PAGE>
EXHIBIT INDEX
Number Description
(4.1) Second Amendment to Credit Agreement, dated as of April 30,1997,
amending the Credit Agreement dated September 27, 1995, as
amended to date, among Midwest Express Holdings, Inc., Firstar
Bank Milwaukee, N.A., M&I Marshall & Ilsley Bank, and Bank One,
Milwaukee, N.A. *
(10.1) Amendment No. 3, dated November 6, 1996, to Lease Agreement
between Milwaukee County and Midwest Express, dated May 12,
1988.*
(10.2) Amendment No. 9, dated March 6, 1996, to Airline Lease, as
amended, between Milwaukee County and Midwest Express, dated
October 1, 1984.*
(10.3) Amendment No. 1, dated October 5, 1995, to Lease Agreement
between Milwaukee County and Midwest Express, dated May 12, 1988.
(10.4) Amendment No. 2, dated January 8, 1996, to Lease Agreement
between Milwaukee County and Midwest Express, dated May 12, 1988.
(27.1) Financial Data Schedule for the quarter ended March 31, 1997.
(27.2) Financial Data Schedule for the year ended December 31, 1996.
(27.3) Financial Data Schedule for the nine months ended September 30,
1996.
(27.4) Financial Data Schedule for the six months ended June 30, 1996.
(27.5) Financial Data Schedule for the quarter ended March 31, 1996.
______________
* Previously filed.
Amendment No. 1
to
Airport Agreement No. AC-965
THIS CONTRACT OF LEASE is made and entered into as of the 5th day
of October, 1995, by and between MILWAUKEE COUNTY, a municipal corporation,
organized and existing as one of the counties in Wisconsin (hereinafter
referred to as "Lessor" or "County"), and MIDWEST EXPRESS AIRLINES, INC.,
a corporation organized and existing under the laws of the State of
Delaware (hereinafter referred to as "Lessee" or "Midwest Express").
W I T N E S S E T H :
THAT, WHEREAS, the parties hereto have heretofore entered into a
lease agreement dated May 12, 1988, relating to air cargo apron space and
the lease of land for construction of an aircraft maintenance hangar on
the premises of General Mitchell International Airport; and,
WHEREAS, Carrier has requested to lease the additional 53,015 square
foot expansion area at the western end of the apron, adjacent to the area
presently leased by Lessee; and,
WHEREAS, County's Board of Supervisors, in its meeting of November 3,
1994, has approved an amendment to Airport Agreement No. CR-965 between
Milwaukee County and Midwest Express Airlines, Inc., to add 53,015 square
feet of apron to the agreement;
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements herein contained and other valuable
considerations, it is mutually agreed between the parties hereto that the
aforesaid agreement dated May 12, 1988, be and is hereby amended in the
following particulars, to wit:
1. Effective January 1, 1995 the following subparagraphs shall be added
to Paragraph 4 to read as follows:
"4. (f) Lessee has requested, and Lessor agrees to construct and
additional aircraft parking ramp of approximately 53,015
square feet, south of the leased premises as illustrated on
Exhibit "A-1" attached hereto and made a part thereof. The
cost for the preferential use ramp is estimated at $362,207
of which $312,876 is anticipated from Federal Airport
Improvement Program funding and $49,331 is "local share" to
be provided by Lessor.
(g) Effective January 1, 1995, Lessee agrees to pay monthly
fees to Lessor sufficient to cover the principal and
interest costs of bonds issued by Lessor to fund its local
share. Calculation of said fees as shown in Exhibit B-1
attached thereto and made a part hereof is preliminary and
subject to adjustment when actual construction quantities
and costs and bond interest costs are known.
(h) Effective January 1, 1995, Lessee further agrees to pay
monthly fees for the maintenance and operation of the
expanded aircraft parking ramp, estimated at $10,000 per
year. The maintenance and operation component is subject
to annual adjustment based on review by Lessor of actual
expenses incurred in the prior year."
2. In Paragraph 4. (a), line 4, delete the words "non-exclusive" and
insert "preferential."
3. Except as specifically provided herein, the terms and conditions of
the Agreement heretofore entered into between the parties dated May
12, 1988, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused these presents to
be signed by their respective proper officers and their corporate seals
hereto affixed on the dates hereinafter set forth.
MILWAUKEE COUNTY
APPROVED: a municipal corporation
/s/__________________10/3/95 By /s/ Tyrone P. Dumas 10-5-95
Airport Director Date Tyrone P.Dumas
Director of Public Works
/s/__________________10/5/95 By /s/ Rod Lanser 10-5-95
Corporation Counsel Date Rod Lanser
County Clerk
LESSOR
MIDWEST EXPRESS AIRLINES, INC.
a Delaware corporation
By /s/ Timothy E. Hoeksema
Timothy E. Hoeksema
Title President
Date 9/22/95
By___________________________
Title________________________
Date_________________________
LESSEE
STATE OF WISCONSIN )
) ss
MILWAUKEE COUNTY )
Personally came before me this 5th day of October,
1995, the above named Tyrone P. Dumas, Director of Public Works of
Milwaukee County, to me known to be the person who executed the foregoing
instrument on behalf of Milwaukee County, and acknowledged the same to be
the free act and deed of said County made by its authority.
/s/ Connie Arnold
Notary Public, Milwaukee County, Wis.
My commission expires July 28, 1996
STATE OF WISCONSIN )
) ss
MILWAUKEE COUNTY )
Personally came before me this 5th day of October,
1995 the above named Rod Lanser, County Clerk of Milwaukee County, to
me known to be the person who executed the foregoing instrument on behalf
of Milwaukee County, and acknowledged the same to be the free act and deed
of said County made by its authority.
/s/ Mark E. Ryan
Notary Public, Milwaukee County, Wis.
My commission expires October 20, 1996
STATE OF WISCONSIN )
) ss
COUNTY OF MILWAUKEE )
Personally came before me this 22nd day of September, 1995,
Timothy E. Hoeksema, President,
______________________________________ _________________________________
(Name) (Title)
and _________________________________, _________________________________,
(Name) (Title)
of MIDWEST EXPRESS AIRLINES, INC., to me known to be the persons who
executed the foregoing instrument and to me known to be such officers of
said corporation, and acknowledged that they executed the foregoing
instrument as such officers as the deed of said corporation, by its
authority.
/s/ Linda C. Snyder
Notary Public, Linda C. Snyder
My commission expires 2/29/96
Amendment No. 2
to
Airport Agreement No. AC-965
THIS CONTRACT OF LEASE is made and entered into as of the 8th day of
January, 1996, by and between MILWAUKEE COUNTY, a municipal corporation,
organized and existing as one of the counties in Wisconsin (hereinafter
referred to as "Lessor" or "County"), and MIDWEST EXPRESS AIRLINES, INC.,
a corporation organized and existing under the laws of the State of
Delaware (hereinafter referred to as "Lessee" or "Midwest Express").
W I T N E S S E T H :
THAT, WHEREAS, the parties hereto have heretofore entered into a
lease agreement dated May 12, 1988, known as Airport Agreement No.
AC-965, relating to air cargo apron space and the lease of land for
construction of an aircraft maintenance hangar on the premises of General
Mitchell International Airport; and,
WHEREAS, Lessee had originally been assigned 65,000 square feet of
ramp directly south of its hangar facility, and Lessee had also previously
been assigned an additional 53,015 square feet of ramp area, south of, and
adjacent to the 65,000 feet of aircraft parking area originally leased by
Lessee; and,
WHEREAS, the westward expansion of the air cargo apron in 1995
required that 48,265 square feet of the added 53,015 square feet of
Lessee's cargo apron be deleted from its leasehold to provide a common use
taxiway to the newly constructed western edge of the cargo ramp; and
WHEREAS, in exchange for this 48,265 square feet, Lessee has agreed
to amend its lease to add as replacement, an additional 49,250 square
feet, immediately west of and contiguous to Lessee's remaining ramp,
adjusting rentals accordingly; and
WHEREAS, the total amount of ramp Midwest will lease will be 119,000
square feet; and
WHEREAS, the County's Board of Supervisors in its meeting of
September 28, 1995 approved an amendment to Airport Agreement AC-965 between
Milwaukee County and Midwest Express to delete 48,265 of the 53,015 square
feet of cargo apron previously added, and to add 49,250 square feet of
ramp immediately west of the remaining apron, both actions to be effective
November 1, 1995 and adjusting the rental fees assessed to Lessee
accordingly;
NOW, THEREFORE, for and in consideration of the premises and of
the mutual covenants and agreements herein contained and other valuable
considerations, it is mutually agreed between the parties hereto that the
aforesaid agreement dated May 12, 1988 as amended, be and is hereby
further amended in the following particulars, to wit:
1. Effective November 1, 1995 the following subparagraphs shall be added
to Paragraph 4 to read as follows:
"4. (j) Lessor has requested, and Lessee has agreed to,
Lessee's relinquishment of 48,265 square feet of
Lessee's cargo apron from its leasehold to provide
a common use taxiway to the newly constructed western
edge of the cargo ramp, and add, as replacement ramp,
an additional 49,250 square feet, immediately adjacent and
contiguous to Lessee's remaining ramp, bringing the total
amount of ramp Lessee will lease to 119,000 square feet,
all as shown on Exhibit A-1 (revised November 1, 1995),
attached hereto and made part
hereof.
(k) Effective November 1, 1995, Lessee agrees to pay monthly
fees to Lessor sufficient to cover its proportionate 8.95
percent share of the costs of the remaining 4,750 square
feet of the 53,015 square feet of apron previously added to
Lessee's leasehold effective January 1, 1995 as shown on
Revised Exhibit B-1 (Revised 11/1/95) attached hereto and
made a part hereof. The maintenance and operation
component is subject to annual adjustment based on review
by Lessor of actual expenses incurred in the prior year.
(l) Effective November 1, 1995, Lessee further agrees to pay
monthly fees to cover the costs of its proportionate 19.35%
share of the common taxiway reformulated from Lessee's
relinquished 48,265 square feet of ramp as shown on Revised
Exhibit B-1 (Revised 11/1/95) attached hereto and made part
hereof. The maintenance and operation component is subject
to annual adjustment based on review by Lessor of actual
expenses incurred in the prior year."
(m) In recognition of Lessee's long-term commitment to pay the
debt service and operating costs of Lessee's preferentially
leased ramp, revenues received by the County from non-
signatory users of Lessee's preferentially leased ramp
shall be credited annually to Lessee by February 15, of the
year following the year of account. This process and
procedure shall be similar to the crediting of non-signatory
user fees in the Cargo Carrier preferential ramp leases on
the adjoining aircraft parking ramp.
2. Except as specifically provided herein, the terms and conditions of
the Agreement heretofore entered into between the parties dated May
12, 1988, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused these presents to
be signed by their respective proper officers and their corporate seals
hereto affixed on the dates hereinafter set forth.
MILWAUKEE COUNTY
APPROVED: a municipal corporation
/s/________________1/98/96 By/s/ Thomas C. Kenney
Airport Director Date (for) Tyrone P.Dumas
Director of Public Works
/s/________________12/18/95 By/s/ Rod Lanser
Corporation Counsel Date Rod Lanser
County Clerk
LESSOR
MIDWEST EXPRESS AIRLINES, INC.
a Delaware corporation
By/s/ Brenda Skelton
Brenda Skelton
Title Sr. Vice President
Date 12/21/95
By
Title
Date
LESSEE
STATE OF WISCONSIN )
) ss
MILWAUKEE COUNTY )
Personally came before me this 5th day of January, 1996, the above
named Thomas C. Kenney for Tyrone P. Dumas, Director of Public Works of
Milwaukee County, to me known to be the person who executed the foregoing
instrument on behalf of Milwaukee County, and acknowledged the same to be
the free act and deed of said County made by its authority.
/s/ Connie Arnold
Notary Public, Milwaukee County, Wis.
My commission expires July 28, 1996
STATE OF WISCONSIN )
) ss
MILWAUKEE COUNTY )
Personally came before me this 8th day of January, 1996, the above
named Rod Lanser, County Clerk of Milwaukee County, to me known to be the
person who executed the foregoing instrument on behalf of Milwaukee
County, and acknowledged the same to be the free act and deed of said
County made by its authority.
/s/ Mark E. Ryan
Notary Public, Milwaukee County, Wis.
My commission expires October 20, 1996
STATE OF WISCONSIN )
) ss
COUNTY OF MILWAUKEE )
Personally came before me this 21st day of December, 1995,
Brenda Skelton, Sr. Vice President
(Name) (Title)
and ___________________________ , _____________________________,
(Name) (Title)
of MIDWEST EXPRESS AIRLINES, INC., to me known to be the persons who
executed the foregoing instrument and to me known to be such officers of
said corporation, and acknowledged that they executed the foregoing
instrument as such officers as the deed of said corporation, by its
authority.
/s/ Linda C. Snyder
Notary Public, Linda C. Snyder
My commission expires December 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 25,541
<SECURITIES> 0
<RECEIVABLES> 4,720
<ALLOWANCES> 265
<INVENTORY> 3,002
<CURRENT-ASSETS> 57,143
<PP&E> 135,831
<DEPRECIATION> 62,546
<TOTAL-ASSETS> 136,226
<CURRENT-LIABILITIES> 61,211
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 44,540
<TOTAL-LIABILITY-AND-EQUITY> 136,226
<SALES> 0
<TOTAL-REVENUES> 79,920
<CGS> 0
<TOTAL-COSTS> 73,447
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 59
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,769
<INCOME-TAX> 2,538
<INCOME-CONTINUING> 4,231
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,231
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.45
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 27,589
<SECURITIES> 0
<RECEIVABLES> 4,639
<ALLOWANCES> 207
<INVENTORY> 3,122
<CURRENT-ASSETS> 52,569
<PP&E> 130,792
<DEPRECIATION> 59,889
<TOTAL-ASSETS> 129,135
<CURRENT-LIABILITIES> 58,363
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 40,277
<TOTAL-LIABILITY-AND-EQUITY> 129,135
<SALES> 0
<TOTAL-REVENUES> 304,746
<CGS> 0
<TOTAL-COSTS> 270,387
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 218
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 35,232
<INCOME-TAX> 13,482
<INCOME-CONTINUING> 21,750
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,750
<EPS-PRIMARY> 2.27
<EPS-DILUTED> 2.27
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MIDWEST EXPRESS HOLDINGS, INC. AS OF AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 33,901
<SECURITIES> 0
<RECEIVABLES> 4,344
<ALLOWANCES> 312
<INVENTORY> 3,282
<CURRENT-ASSETS> 67,262
<PP&E> 114,170
<DEPRECIATION> 57,491
<TOTAL-ASSETS> 129,765
<CURRENT-LIABILITIES> 67,072
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 36,194
<TOTAL-LIABILITY-AND-EQUITY> 129,765
<SALES> 0
<TOTAL-REVENUES> 226,576
<CGS> 0
<TOTAL-COSTS> 198,234
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 16
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> 28,937
<INCOME-TAX> 11,154
<INCOME-CONTINUING> 17,783
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,783
<EPS-PRIMARY> 1.85
<EPS-DILUTED> 1.85
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF MIDWEST EXPRESS HOLDINGS, INC. AS OF AND
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 10,083
<SECURITIES> 0
<RECEIVABLES> 3,948
<ALLOWANCES> 363
<INVENTORY> 2,729
<CURRENT-ASSETS> 52,884
<PP&E> 110,807
<DEPRECIATION> 55,849
<TOTAL-ASSETS> 113,687
<CURRENT-LIABILITIES> 49,467
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 30,627
<TOTAL-LIABILITY-AND-EQUITY> 113,687
<SALES> 0
<TOTAL-REVENUES> 143,453
<CGS> 0
<TOTAL-COSTS> 128,442
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 113
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> 15,369
<INCOME-TAX> 5,943
<INCOME-CONTINUING> 9,426
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,426
<EPS-PRIMARY> .98
<EPS-DILUTED> .98
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF MIDWEST EXPRESS HOLDINGS, INC.
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 20,297
<SECURITIES> 0
<RECEIVABLES> 8,960
<ALLOWANCES> 363
<INVENTORY> 2,270
<CURRENT-ASSETS> 37,808
<PP&E> 112,755
<DEPRECIATION> 54,418
<TOTAL-ASSETS> 101,923
<CURRENT-LIABILITIES> 46,317
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 24,036
<TOTAL-LIABILITY-AND-EQUITY> 101,923
<SALES> 0
<TOTAL-REVENUES> 66,608
<CGS> 0
<TOTAL-COSTS> 62,104
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 88
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> 4,672
<INCOME-TAX> 1,836
<INCOME-CONTINUING> 2,836
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,836
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
