U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
CHANGE ACT
for the transition period _________ to _______________
Commission file number 1-7991
BIG SKY TRANSPORTATION CO.
(exact name of small business issuer 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)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the
past 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 [ ]
State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
CLASS: Common Stock, no par value
SHARES OUTSTANDING: at November 7, 1997: 1,062,419
BIG SKY TRANSPORTATION CO.
FORM 10-QSB
For the Period-Ended September 30, 1997
CONTENTS
Part I Financial Information
Item 1. Condensed Financial Statements:
Balance Sheets
September 30, 1997 (unaudited) and
June 30, 1997 (audited)
Statements of Operations
Three months-ended September 30, 1997 and
1996 (unaudited)
Statements of Cash flows
Three months-ended September 30, 1997
and 1996 (unaudited)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis or
Plan of Operation
Part II Other Information
Item 6. Exhibits and reports on Form 8-K
Part I. Financial Information, Item 1.
BIG SKY TRANSPORTATION CO.
Balance Sheets
September 30, June 30,
1997 1997
(unaudited) (audited)
ASSETS
Current Assets:
Cash $ 601,765 $ 544,706
Restricted cash 366,961 600,151
Accounts receivable, net 601,120 416,192
Expendable parts/supplies 263,918 254,282
Inventory held for sale 30,000 30,000
Prepaid expenses 32,278 --
Total current assets 1,896,042 1,845,331
Property & Equipment:
Flight equipment 244,839 612,108
Capital lease facility 456,185 456,185
Other property & equipment 188,347 187,497
889,371 1,255,790
Accumulated depreciation (244,893) (554,916)
Net property & equipment 644,478 700,874
Deposits 93,009 17,258
Total assets $ 2,633,529 $ 2,563,463
===================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Current long-term debt $ 138,990 $ 132,674
Current capital lease 9,342 11,639
Accounts payable 87,879 64,213
Accrued expenses 734,847 701,034
Traffic payable 55,338 43,155
Total current liabilities 1,026,396 952,715
Long-term debt, excluding current 209,369 263,765
Capital lease, excluding current 273,450 275,379
Total liabilities 1,509,215 1,491,859
Stockholders' Equity
Common stock at no par value
authorized 2,000,000 shares;
1,062,419 shares outstanding 478,297 471,207
Additional Paid-in Capital 125,839 110,159
Retained earnings 520,178 490,238
Stockholders' equity 1,124,314 1,071,604
Total liability &
stockholders' equity $ 2,633,529 $ 2,563,463
===================================
See notes to financial statements.
BIG SKY TRANSPORTATION CO.
Statements of Operations
Three months-ended
September 30,
1997 1996
(unaudited) (unaudited)
Operating Revenues:
Passenger $ 385,684 $ 401,786
Cargo 18,545 21,170
Public service 798,070 753,592
Other 15,584 23,733
Total 1,217,883 1,200,281
Operating Expenses:
Flying 501,218 394,428
Maintenance 281,705 253,365
Passenger service 315,466 270,566
Sales 40,958 43,419
General/Administrative 153,522 127,738
Depreciation 19,902 20,650
Total 1,312,771 1,110,166
Operating Income (94,888) 90,115
Other Income/(expenses):
Interest, net (7,524) (9,459)
Gain (loss) equipment 151,504 (953)
Total 143,980 (10,412)
Income before taxes 49,092 79,703
Income Tax Expense:
Current 3,470 5,873
Charge in lieu of taxes 15,680 26,530
Total 19,150 32,403
Net Income: $ 29,942 $ 47,300
====================================
Per share data:
Income per common and
common equivalent share $.03 $.04
Weighted average number
of common & common
equivalent shares
outstanding 1,062,419 1,049,520
See notes to financial statements.
BIG SKY TRANSPORTATION CO.
Statements of Cash Flows
Three months-ended
September 30,
1997 1996
(unaudited) (unaudited)
From operating activities:
Net income $ 29,942 $ 47,300
Depreciation 19,902 20,650
(Gain) loss on equipment (151,504) 953
Excess reorganization value
amortization and charges
in lieu of taxes 15,680 26,530
Changes in assets/liabilities:
Restricted cash 233,190 (46,220)
Accounts receivable (184,928) 78,718
Expendable parts (9,636) (7,497)
Prepaid expenses (32,278) (20,538)
Deposits (75,751) --
Accounts Payable 23,666 (63,422)
Accrued expenses 33,813 80,295
Traffic payable 12,183 2,653
Net provided (used) by operations (85,721) 119,422
From investing activities:
Proceeds, equipment sales 216,121 359
Property & equipment (28,660) (1,764)
Net provided (used) by investing 187,461 (1,405)
From financing activities:
Exercised stock options 7,625 --
Payments on long-term debt (48,080) (44,485)
Payments on capital lease (4,226) (3,807)
Net provided (used) by financing (44,681) (48,292)
Increase in cash 57,059 69,725
Cash at beginning of period 544,706 360,668
Cash at end of period $ 601,765 $ 430,393
==================================
Supplement disclosures of
cash flow information:
Cash paid during the period for:
Interest $ 16,441 $ 18,903
Income taxes -- --
See notes to financial statements
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-QSB 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-KSB.
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-dilative and therefore not presented.
NOTE C. Results of operations for the three month-ended September
30, 1997 and 1996 are not necessarily indicative of the
results to be expected for the full year.
PART I. Financial Information, Item 2.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis or
Plan of Operation
Summary of Airline Operating Statistics:
Three months-ended
September 30,
% change
1997 1996 +/(-)
Passengers carried 5,732 6,296 (9.0)
Average passenger
trip (miles) 200 197 1.5
Revenue passenger miles 1,146,148 1,240,773 (7.6)
Available seat miles 3,815,600 3,834,190 (.5)
Passenger load factor (%) 30.04 32.36 (7.2)
Aircraft miles 252,239 263,203 (4.2)
Yield per revenue
passenger mile (cents) 33.58 31.84 5.5
Freight pounds enplaned 20,186 17,744 13.8
Operating cost per
available seat mile (cents) 31.92 31.30 2.0
Operating break-even load
factor (%) 32.38 29.93 8.2
Big Sky Transportation Co.
Management's Discussion and Analysis or
Plan of Operation
Analysis of Results for the three months-ended
September 30, 1997 and 1996:
Three months-ended
September 30,
1997 1996
(unaudited) (unaudited) Change
Operating Revenues:
Passenger $ 385,684 $ 401,786 $(16,102)
Cargo 18,545 21,170 (2,625)
Public service 798,070 753,592 44,478
Other 15,584 23,733 (8,149)
Total 1,217,883 1,200,281 17,602
Total operating revenues in the first quarter of fiscal year 1998
were $1,217,883, compared with $1,200,281 in the same quarter last
year. Overall passenger revenues fell $16,102 or 4%. Passenger
revenue for the September 1996 quarter included the retention of
the federal excise tax through August 27. Eliminating the benefit
of this tax, 1996 passenger revenues were approximately $388,393
compared to 1997 at $385,684. Total number of passengers carried
during the 1997 quarter declined, however this was largely offset
by increased average fares.
Effective December 1996 Big Sky entered into a new Essential Air
Service (EAS) contract with the Department of Transportation (DOT).
The increase of $44,478 or 5.9% in public service revenue is a
result of the new contract rate. This agreement was amended by
order 97-8-14 providing an annual rate of $4.8 million for enhanced
services, for the period October 1997 through November 1998.
Enhancements restored the lost services caused by the program-wide
reduction effective November 1995. The enhancement also provided
an upgrade in aircraft.
Last year the Company performed charters in addition to the regular
scheduled service, the current period did not have charter
business. This constitutes the decrease in "other" revenue.
October 12, 1997 the Company began service to Helena and Missoula,
Montana. These markets are expected to significantly increase
system passenger and cargo revenues.
Management's Discussion and Analysis or
Plan of Operation
Analysis of Results (continued):
Three months-ended
September 30,
1997 1996
(unaudited) (unaudited) Change
Operating Expenses:
Flying $ 501,218 $ 394,428 $ 106,790
Maintenance 281,705 253,365 28,340
Passenger service 315,466 270,566 44,900
Sales 40,958 43,419 (2,461)
General/Admin 153,522 127,738 25,784
Depreciation 19,902 20,650 (748)
Total 1,312,771 1,110,166 202,605
Total operating expenses increased $202,605 or 18.2%. Most expense
categories experienced increases as a result of preparing for the
new enhanced EAS and Western Montana services effective October
1997.
Flight topped the list with increases of $106,790 or 27%. The
transition from Metro II to Metro III aircraft created substantial
up-front costs, such as aircraft leases and pilot training. Once
a uniform fleet is in service, these costs are expected to
stabilize.
Maintenance showed an increase of $28,340 or 11.2%, almost entirely
due to the costs associated with exterior repainting and the
refurbishing and upholstery of the interiors for the "new" Metro
III aircraft. Additional incremental costs, such as Metro III
tooling and mechanic training will continue into next quarter.
Passenger service increased $44,900 or 16.6%. Several items
experienced increases, the largest being staffing, followed by
airport related costs such as space rental, landing fees and
security costs. Printing of new forms and manuals created higher
costs too.
General and administration increased $25,784 or 20.2%. The change
in the vacation accrual expense accounts for most of the increase.
Legal expense also increased this quarter compared to last year by
58%. This is a direct result of entering into lease agreements for
the Metro III aircraft.
Both depreciation and sales experienced slight reductions of 3.6
and 5.7%, respectively.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis or
Plan of Operation
Analysis of Results (continued):
Net non-operating results were: $124,830 income for September 1997
quarter and $42,815 expense for September 1996 quarter. September
1997 quarter generated an operating loss of $94,888 and a net
income to $29,942. By comparison the same quarter in 1996 produced
$90,115 operating income and a net income of $47,300. This
quarter's operating loss is a result of preparing for the added
service and aircraft up-grade associated with the enhanced EAS
agreement and the new routes to Helena and Missoula effective
October 1997. September 1997 quarter also included a capital gain
of $151,504 on the sale of the Company's Cessna 402C aircraft.
This back up aircraft will be replaced by a leased Metro III in the
next few months, providing a fully-standardized fleet.
Pursuant to Chapter 11 reorganization "Fresh Start" reporting,
charges in lieu of taxes of $15,680 and $26,530 were recorded in
September 1997 and 1996 quarters.
BIG SKY TRANSPORTATION CO.
Management's Discussion and Analysis or
Plan of Operation
Liquidity and Capital Resources:
A review of current liquidity and capital resources are presented
below:
Working Capital Current Ratio
Year-end 6/30/97 $892,616 1.9:1
Quarter-end 9/30/97 $869,646 1.8:1
Long-Term Debt Stockholders'
(excluding current portion) Equity
Year-end 6/30/97 $539,144 $1,071,604
Quarter-end 9/30/97 $482,819 $1,124,314
Stockholder equity at September 1997 increased 4.9% over the
balance at fiscal year-end. The Company is current on all of its
debt service obligations. In September 1997 the Company made its
sixth of eight annual scheduled payments to the unsecured creditors
from reorganization.
Cash used by operations during September 1997 quarter was $85,721.
This reflects the start-up costs associated with increased services
and fleet transition. Income provided by investing activities was
$187,461, primarily the result of an aircraft sale. Cash used by
financing was $44,681 for the payments on long term debt and
capital lease obligations.
The Company has established a line of credit through First
Interstate Bank in Billings. The line is related to projected
temporary cash flow needs through mid-1998. The Company also
received $150,000 advance on subsidy from the DOT to supplement
cash flow during start-up of enhanced EAS service. This advance
will be reimbursed over the remaining period of the DOT/EAS
contract.
Part II. Other Information
BIG SKY TRANSPORTATION CO.
Item 6. Exhibits and reports on Form 8-K
Exhibit No. Exhibit Name
27 Financial Data Schedule
(only for filings via EDGAR)
Reports on Form 8-K
No reports on form 8-K were filed during the September 1997
quarter.
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/ Craig Denney
Craig Denney
Executive Vice President
By:/s/ Karie Kane
Karie Kane
Accounting Director
November 13, 1997