SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the period-ended December 31, 1995
Commission file number 0-9267
BIG SKY TRANSPORTATION CO.
(exact name of registrant as specified in its charter)
MONTANA 81-0387503
(state of other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1601 Aviation place
Billings Logan Int'l Airport
Billings MT 59105
(406) 245-9449
(address of registrant's principal executive offices)
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 shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES XX NO
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
YES xx NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS: Common Stock, $.10 par value
SHARES OUTSTANDING: at December 31, 1995: 5,307,314
BIG SKY TRANSPORTATION CO.
FORM 10-Q
For the Period-Ended December 31, 1995
CONTENTS
Part I Financial Information
Item 1. Condensed Financial Statements:
Balance Sheets
December 31, 1995 (unaudited) and June 30, 1995 (audited)
Statement of Operations
Three months-ended and Six months-ended
December 31, 1995 and 1994 (unaudited)
Statement of Cash flows
Six months-ended December 31, 1995 and 1994 (unaudited)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part I. Financial Information, Item 1.
BIG SKY TRANSPORTATION CO.
Balance Sheet
December 31, June 30,
1995 1995
ASSETS (unaudited) (audited)
Current Assets:
Cash $ 353,794 $ 408,457
Restricted cash 454,456 369,009
Accounts receivable, net 555,724 457,936
Expendable parts/supplies 250,277 241,944
Prepaid expenses 49,641 4,985
Total current assets 1,663,892 1,482,331
Property & Equipment:
Flight equipment 600,035 601,867
Capital lease facility 456,185 456,185
Other property & equipment 175,108 176,725
1,231,328 1,234,777
Accumulated depreciation (384,855) (339,416)
Net property & equipment 846,473 895,361
Excess reorganization value -- 10,108
Other assets 26,758 26,758
Total assets $ 2,537,123 $ 2,414,558
===================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Current long-term debt $ 121,393 $ 136,930
Current capital lease 15,116 14,406
Accounts payable 249,242 80,247
Accrued expenses 597,417 562,483
Traffic payable 33,445 30,380
Total current liabilities 1,016,613 824,446
Long-term debt, excluding current 449,655 518,901
Capital lease, excluding current 295,329 303,057
Stockholders' Equity
Common stock of $.10 par value
authorized 20,000,000 shares;
5,307,314 shares outstanding 530,731 530,731
Paid-in capital (34,882) (51,770)
Retained earnings 279,677 289,193
Stockholders' equity 775,526 768,154
Total liability & equity $ 2,537,123 $ 2,414,558
===================================
See notes to financial statements.
BIG SKY TRANSPORTATION CO.
Statement of Operations
Three months-ended Six months-ended
December 31, December 31,
1995 1994 1995 1994
(unaudited)(unaudited) (unaudited)(unaudited)
Operating Revenues:
Passenger $ 438,104 $ 350,753 $ 852,224 $ 712,557
Charter 7,130 62,845 7,130 83,928
Cargo 27,260 22,825 54,785 49,332
Public service 813,380 885,951 1,712,017 1,781,021
Other 3,926 2,429 14,359 6,001
Total $1,289,800 $1,324,803 $2,640,515 $2,632,839
Operating Expenses:
Flying 500,864 514,245 974,276 945,396
Maintenance 284,024 318,903 559,131 606,640
Passenger service 306,438 268,535 615,655 524,765
Sales 53,616 47,994 107,833 94,720
General/Admin. 172,820 137,248 291,931 275,717
Depreciation 21,241 30,004 42,586 51,740
Total $1,339,003 $1,316,929 $2,591,412 $2,498,978
Operating Income (Loss) (49,203) 7,874 49,103 133,861
Other Income/(expenses):
Interest, net (12,988) (12,815) (25,191) (22,964)
Gain (loss) equipment 270 450 442 944
Total (12,718) (12,365) (24,749) (22,020)
Income before taxes (61,921) (4,491) 24,354 111,841
Income Tax Expense:
Current -- 1,555 5,976 9,698
Charge in lieu of taxes -- 7,024 26,996 43,808
Total -- 8,579 32,972 53,506
Income before extra-
ordinary item (61,921) (13,070) (8,618) 58,335
Extraordinary item
Debt extinguishment -- 26,705 (899) 26,705
Net Income: $ (61,921) $ 13,635 $ (9,517) $ 85,040
============================================
Per share data:
Income per common and
common equivalent share -- -- -- $.01
Weighted average number
of common & common
equivalent shares
outstanding 5,307,314 5,307,314 5,307,314 5,307,314
See notes to financial statements.
BIG SKY TRANSPORTATION CO.
Statement of Cash Flows
Six months-ended
December 31,
1995 1994
(unaudited) (unaudited)
From operating activities:
Net income $ (9,517) $ 85,040
Depreciation 45,439 61,115
(Gain) loss on equipment 422 (944)
Gain on debt extinguishment -- (26,705)
Excess reorganization value
amortization and charges
in lieu of taxes 26,996 44,884
Changes in assets/liabilities:
Restricted cash (85,447) 7,776
Accounts receivable (97,788) 3,248
Expendable parts (8,333) (62,402)
Prepaid expenses (44,656) (28,714)
Other assets -- (17,603)
Accounts Payable 168,995 66,101
Accrued expenses 34,934 (127,368)
Traffic payable 3,065 5,129
Net cash provided by operations 34,110 9,557
From investing activities:
Proceeds from equipment 2,150 2,501
Property & equipment 878 (83,581)
Facility expenditures -- (47,768)
Net cash used by investing 3,028 (128,848)
From financing activities:
Proceeds from borrowing -- 60,050
Payments on long-term debt (84,783) (104,072)
Payments on capital lease ( 7,018) (952)
Net cash used by financing (91,801) (44,974)
Net cash increase (decrease) (54,663) (164,265)
Cash at beginning of period 408,457 570,030
Cash at end of period $ 353,794 $ 405,765
==================================
see notes to financial statements
BIG SKY TRANSPORTATION CO.
Statement of Cash Flows
Six months-ended
December 31,
1995 1994
(unaudited) (unaudited)
Supplement disclosures of
cash flow information:
Cash paid during the period for:
Interest $ 42,660 $ 57,034
Income taxes -- 14,550
BIG SKY TRANSPORTATION CO.
Notes to Financial Statements
NOTE A. The accompanying unaudited condensed financial statements have been
prepared by the Company in accordance with its understanding of the
rules and regulations of the Securities and Exchange Commission.
These financial statements reflect, in the opinion of management,
all adjustments (consisting only of recurring accruals) for fair
presentation of the results of operations for the interim periods
presented. However, these financial statements have been prepared
in accordance with instructions to Form 10-Q and therefore, do not
include all information and footnotes necessary for a fair
presentation of financial position, statement of operations and cash
flows in conformity with generally-accepted accounting principles.
It is recommended that these interim financial statements be read in
conjunction with the financial statements and notes thereto,
included in the Company's latest annual report on Form 10-K.
NOTE B. Earnings per share is based on the weighted average number of
common and common equivalent shares outstanding. The effect of
common stock equivalents is anti-dilutive and therefore not
presented.
NOTE C. Results of operations for the three months-ended and the six months-
ended December 31, 1995 and 1994 are not necessarily indicative of
the results to be expected for the full year.
NOTE D. The Company filed its Chapter 11 Reorganization Petition March 14,
1989 in the United States Bankruptcy Court for the District of
Montana. The Plan of Reorganization was confirmed by order issued
July 16, 1991.
NOTE E. In the September 1991 quarter, the Company adopted AICPA Statement of
Position 90-7, financial reporting by entities in reorganization under
the bankruptcy code. Based on specific elements of the plan, the SOP
required that the financial statements be prepared on the basis that a
new reporting entity was created and that assets and liabilities be
recorded at their fair values. This reporting is referred to as
"Fresh Start" reporting.
PART I. Financial Information, Item 2.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Summary of Airline Operating Statistics:
Three months-ended Six months-ended
December 31, December 31,
% change %change
1995 1994 +/(-) 1995 1994 +/(-)
Passengers carried 7,892 5,713 38.1 14,686 10,955 34.1
Average passenger
trip (miles) 196 199 (1.5) 197 200 (1.5)
Revenue passenger
miles 1,547,744 1,134,493 36.4 2,894,160 2,193,527 31.9
Available seat
miles (scheduled) 4,500,584 4,066,764 10.7 9,299,300 8,214,921 13.2
Available seat
miles (charter) -- 342,855 (100) -- 423,075 (100)
Total available
seat miles 4,500,584 4,409,619 2.1 9,299,300 8,637,996 7.7
Passenger load
factor (%) 34.39 27.90 23.3 31.12 26.70 16.6
Aircraft miles 308,389 273,149 12.9 630,801 552,959 14.1
Operating breakeven
load factor (%) 35.70 27.73 28.7 30.54 25.34 20.5
Yield per revenue
passenger mile (cents) 28.31 30.92 (8.5) 29.45 32.48 (9.3)
Operating cost per
available seat mile
(cents) 28.66 29.86 (4.0) 28.39 28.93 (1.9)
Freight pounds
enplaned 29,830 14,676 103.3 56,673 33,184 70.8
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results for the three months-ended December 31, 1995 and 1994:
Total operating revenues in the second quarter of fiscal year 1996 were $1.29
million, compared with $1.32 millon in the same quarter last year. Passenger
revenues increased $87,351 or 24.9% to total $438,104, while public service
revenues decreased $72,571 or 8.2% to total $813,380. Available seat miles
for scheduled service increased 10.7% to total 4,500,584 and revenue
passenger miles increased 36.4% to total 1,547,744, resulting in a 23.3% load
factor improvement from 27.90% to 34.39%. Total available seat miles
increased 2.1 percent. Yield per passenger mile decreased 8.5% to total 28.31
cents for the December 1995 quarter.
Total operating expenses increased $22,074 or 1.6% for the three months-ended
December 31, 1995, as compared to the three months-ended December 31, 1994.
Operating cost per available seat mile (ASM) for the same period decreased
4.0%, from 29.86 cents to 28.66 cents.
The following table summarizes and compares major components of cost per ASM:
For three months-ended
December 31,
1995 1994
Payroll-related costs $.1048 $.1085
Other .0768 .0628
Maintenance .0448 .0531
Aircraft lease costs .0381 .0437
Fuel and oil .0325 .0305
$.2970 $.2986
=================
Payroll-related expenses decreased $6,473 or 1.4% in the December 1995
quarter, as compared to the December 1994 quarter. The average full-time
equivalent employees (FTE) for the three months-ended December 31, 1995
and 1994 were 67 and 67, respectively.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results for three months-ended December 1995 & 1994 (continued):
Other expenses increased $68,918 or 24.9% in the quarter-ended December 31,
1995 as compared to the same quarter for the prior year. Increases were
experienced in legal fees and tariff/schedules, costs associated with the
change in our current subsidy contract with the Department of Transportation.
Maintenance decreased 31,899 or 13.6%. Increases were seen in outside
services/repairs, whereas decreases were experienced in maintenance materials.
Fuel and oil costs increased $12,325 or 9.2%. Average jet fuel prices per
gallon increased approximately 8.0% along with Metroliner block hours
increasing in the December 1995 quarter as compared to the December 1994
quarter. The increase in block hours is due to enhanced Billings/Great Falls
service, offering weekend flights.
Aircraft ownership/lease and insurance costs (aircraft rentals, depreciation,
hull insurance and property taxes) decreased $20,796 or 10.8%. An increase
was experienced in aircraft insurance. Also November and December had
property tax entries higher than normal to true-up the liability. The fleet
at December 31, 1995 was one Metroliner less than December 31, 1994.
Net non-operating expenses were $20,845 for the December 1995 quarter and
$5,761 (income) for the December 1994 quarter. Pursuant to Chapter 11
Reorganization "Fresh Start" reporting, no charge in lieu of tax was recorded
in the December 1995, compared to $7,024 for the December 1994 quarter.
The December 1995 quarter generated operating loss of $49,203 and net loss of
$61,921. By comparison, the same quarter in 1994 produced $7,874 in operating
income and net income of $13,635 including "Fresh Start" charges.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results for the six months-ended December 31, 1995 and 1994:
Total operating revenues increased $7,676 or .3% from $2.63 million for the
six months-ended December 31, 1994 to $2.64 million for six months-ended
December 31, 1995. Passenger revenues increased $139,667 or 19.6% from
$712,557 to $852,224. Public service revenues decreased $69,004 or 3.9% to
total $1.71 million. Available seat miles for scheduled service increased
13.2% and revenue passenger miles increased 31.9%, including charter
operations, resulting in a 16.6% load factor improvement from 26.70% to
31.1%. Total available seat miles, including charter operations, increased
7.7 percent. Yield per passenger mile decreased 9.3% to 29.45 for the six
months ended December 31, 1995.
Operating costs per ASM decreased 1.9% from 28.93 cents to 28.39 cents. Total
operating expenses for the six months-ended December 31, 1995 were 2.6
million compared to 2.5 million for the same period one year earlier; an
increase of $92,434 or 3.7%.
The following table summarizes and compares major components of cost per ASM:
For Six Months-Ended
December 31,
1995 1994
Payroll-related costs $.0997 $.1056
Other .0705 .0650
Maintenance .0429 .0502
Aircraft lease costs .0353 .0404
Fuel and oil .0302 .0281
$.2786 $.2893
=================
Payroll-related expenses increased $15,066 or 1.7% in the six months-ended
December 31, 1995 as compared to the same period one year earlier. Regularly
scheduled wage increases are attributable to the majority of this increase.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Results for six months-ended December 1995 & 1994 (continued):
Other expenses increased $94,172 or 14.4% for the six months-ended December
31, 1995. Increases were in areas relating to the Great Falls service such
as ground handling, landing fees, space rental and airport security costs.
Maintenance costs decreased $33,923 or 7.8%. Decreases were experienced in
both outside repairs and maintenance materials.
Fuel and oil costs increased $38,054 or 15.7% in the six months-ended
December 31, 1995 as compared to the same period one year earlier. Both
price per gallon and block hours increased along with a new federal fuel tax
imposed effective 10-01-95.
Aircraft ownership/lease costs decreased $20,934 or 6%. The six months-ended
December 31, 1995 had a fleet of one Cessna 402C and four Metroliner
aircraft, compared to six months-ended December 31, 1994 which had five
Metroliners and one Cessna aircraft. The Cessna is primarily used to back up
the Metro flights.
Net non-operating results were $76,089 and $48,821 for the six months-ended
December 31, 1995 and 1994, respectively. Pursuant to Chapter 11
reorganization "Fresh Start" reporting, charges in lieu of taxes (non cash)
of $26,996 and $43,808 were recorded for the six months-ended December 31,
1995 and 1994 respectively. These charges in lieu of taxes are a result of
"Fresh Start" accounting and is amortization of excess reorganizational value
for taxes that would have been incurred if the Company did not have the use
of net operating tax loss carryforwards.
The six months of fiscal year 1996 produced operating income of $49,103 and
a net loss of $9,517 whereas the same period one year earlier generated
operating in come of $133,861 and net income of $85,040. The six months-
ended December 31, 1994 includes an extraordinary item, debt extinguishment
of $26,705, which was a result of payments made to the unsecured creditors
(remaining from the Chapter 11 Plan of Reorganization) who elected to receive
discounted prepayments in October and November 1994, as offered by the
Company.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources:
At December 31, 1995, the Company showed a current ratio of 1.56:1 and
positive working capital of $577,804 compared to a current ratio of 1.8 and
positive working capital of $657,885 at June 30, 1995. The Company generated
cash from operations of $34,110 and $9,557 for the six months-ended December
31, 1995 and 1994, respectively. Total long-term debt (including current
installments) at December 31, 1995 was $881,493 (including capital lease
obligations) compared to $973,294 at June 30, 1995. The Company is current
on all of its debt service obligations. Stockholders' equity was $775,526 at
December 31, 1995, a 1.6% increase from the balance of $768,154 at June 30,
1995.
The U.S. House/Senate Conference Committee approved funding for the national
Essential Air Service program in fiscal year 1996 of $22.6 million, a one-
third reduction from fiscal year 1995. Reductions were mandated in three
areas as follows: 1) elimination of all services to second designated hubs,
2) elimination of all services in excess of basic minimum of two round-trips
per day and 3) elimination of some weekend services. At the Eastern and
Central Montana Communities, two weekly round trip flights at each city were
eliminated causing an 18 percent reduction in capacity.
Big Sky currently is operating under DOT Order 95-11-28 at an annual
compensation rate of $3.02 million, under a contract extending through
November 30, 1996. The Company appealed this emergency reduction in
compensation effective November 27, 1995, resulting from the decrease in
overall funding by Congress, but in February its appeal was denied. The
Company is continuing its appeal via direct talks with the DOT. The
Company's operations have been unprofitable since the new rate became
effective, which decreased its annual compensation by approximately $500,000.
The Company continues to investigate available business opportunities in
order to reduce dependence upon the Federal Government Essential Air Service
Program. There is uncertainty about the future funding of this program. As
part of these efforts, a non-subsidized route linking Billings and Great
Falls, Montana was implemented May 15, 1995.
The Company has no formal operating line of credit, the Company does have
collateral which could be used to secure additional funding. In the past,
the Company's local bank has indicated a willingness to loan money based on
this collateral.
The Company has initiated a limited stock re-purchase program, subject to all
applicable regulations. The board's commitment at this point is to acquire
up to 200,000 shares on the open market. A public release has been made and
a Form 8-K was filed.
On February 9, 1996, the Company filed its Notice of Annual Meeting and Proxy
Statement for review by the SEC. A number of issues are being presented for
approval by stockholders. The Annual Meeting of Stockholders is planned for
March 1996.
BIG SKY TRANSPORTATION CO.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIG SKY TRANSPORTATION CO.
registrant
By: /s/ Terry D. Marshall By: /s/ Craig Denney
Terry D. Marshall Craig Denney
President/CEO and Executive VP/Division Manager
Temporary CFO Officer in charge of Accounting
March 5, 1996