-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EH0mhmydELCPSQLLA8xkfHDD+eLIWF6DB48b5uDT/Am+X1wo3mgpZzlpHAU8ZmQw 7ZM7NBckPcAI9ufwI+HbVw== 0000950149-97-001563.txt : 19970815 0000950149-97-001563.hdr.sgml : 19970815 ACCESSION NUMBER: 0000950149-97-001563 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SKYWEST INC CENTRAL INDEX KEY: 0000793733 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 870292166 STATE OF INCORPORATION: UT FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14719 FILM NUMBER: 97660702 BUSINESS ADDRESS: STREET 1: 444 S RIVER RD CITY: ST GEORGE STATE: UT ZIP: 84790 BUSINESS PHONE: 8016343000 MAIL ADDRESS: STREET 1: 444 SOUTH RIVER ROAD CITY: ST GEORGE STATE: UT ZIP: 84790 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1997 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ___________ Commission file number 0-14719 SKYWEST, INC. Incorporated under the laws of Utah 87-0292166 (I.R.S. Employer ID No.) 444 South River Road St. George, Utah 84790 (801) 634-3000 Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at August 6, 1997 ----- ----------------------------- Common stock, no par value 10,178,140 2 SKYWEST, INC. TABLE OF CONTENTS Part I - Financial Information Item 1. Financial Statements: Condensed Consolidated Balance Sheets As of June 30, 1997 and March 31, 1997 3 Condensed Consolidated Statements of Income For the Three Months Ended June 30, 1997 and 1996 5 Condensed Consolidated Statements of Cash Flows For the Three Months Ended June 30, 1997 and 1996 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II - Other Information Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 2 3 PART I. FINANCIAL INFORMATION SKYWEST, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited) ASSETS
June 30, March 31, 1997 1997 -------- --------- CURRENT ASSETS: Cash and cash equivalents $ 48,631 $ 37,786 Available-for-sale securities 17,953 17,970 Receivables, net 8,609 10,851 Inventories 10,891 9,987 Prepaid aircraft rents 6,476 8,612 Other current assets 4,465 5,089 -------- -------- Total current assets 97,025 90,295 -------- -------- PROPERTY AND EQUIPMENT: Aircraft and rotable spares 184,071 171,239 Buildings and ground equipment 45,258 43,508 Rental vehicles 4,092 3,291 -------- -------- 233,421 218,038 Less-accumulated depreciation and amortization (85,544) (80,295) -------- -------- 147,877 137,743 -------- -------- OTHER ASSETS 4,724 4,860 -------- -------- $249,626 $232,898 ======== ========
See notes to condensed consolidated financial statements. 3 4 SKYWEST, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) (Dollars in Thousands) (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, March 31, 1997 1997 -------- -------- CURRENT LIABILITIES: Current maturities of long-term debt $ 7,287 $ 6,399 Trade accounts payable 30,644 29,213 Accrued salaries, wages and benefits 5,456 6,095 Taxes other than income taxes 1,841 1,537 Air traffic liability 1,769 1,488 Income taxes payable 1,043 - Fleet restructuring accrual - 290 -------- -------- Total current liabilities 48,040 45,022 -------- -------- LONG-TERM DEBT, less current maturities 56,030 47,337 -------- -------- DEFERRED INCOME TAXES PAYABLE 16,840 15,987 -------- -------- STOCKHOLDERS' EQUITY: Common stock 89,474 89,146 Retained earnings 59,527 55,691 Treasury stock (20,285) (20,285) -------- -------- Total stockholders' equity 128,716 124,552 -------- -------- $249,626 $232,898 ======== ========
See notes to condensed consolidated financial statements. 4 5 SKYWEST, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands, Except Per Share Amounts) (Unaudited)
For The Three Months Ended June 30, ----------------------- 1997 1996 --------- --------- OPERATING REVENUES: Passenger $ 61,411 $ 59,661 Freight 1,253 1,010 Public service and other 289 310 Nonairline 9,162 9,588 --------- --------- 72,115 70,569 --------- --------- OPERATING EXPENSES: Flying operations 26,303 23,185 Aircraft, traffic and passenger service 8,876 8,591 Maintenance 6,810 7,742 Promotion and sales 7,305 7,323 General and administrative 3,315 3,439 Depreciation and amortization 4,640 4,379 Nonairline 8,163 8,232 --------- --------- 65,412 62,891 --------- --------- OPERATING INCOME 6,703 7,678 --------- --------- OTHER INCOME AND (EXPENSE): Interest expense (520) (530) Interest income 708 501 Gain on sales of property and equipment 123 203 --------- --------- 311 174 --------- --------- INCOME BEFORE PROVISION FOR INCOME TAXES 7,014 7,852 PROVISION FOR INCOME TAXES 2,669 3,018 -------- -------- NET INCOME $ 4,345 $ 4,834 ======== ======== NET INCOME PER COMMON SHARE $ .43 $ .48 ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING 10,150,517 10,047,208 ========== ==========
See notes to condensed consolidated financial statements. 5 6 SKYWEST, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
For the Three Months Ended June 30, ------------------- 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,345 $ 4,834 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,640 4,379 Gain on sales of property and equipment (123) (203) Maintenance expense related to disposition of rotable spares 79 43 Increase in deferred income taxes 853 856 Amortization of deferred credits - (807) Nonairline depreciation and amortization 1,206 788 Changes in operating assets and liabilities: Decrease (increase) in receivables, net 2,242 (210) Increase in inventories (904) (286) Decrease (increase) in other current assets 2,760 (2,161) Increase in trade accounts payable 1,431 4,304 Decrease in fleet restructuring accrual (290) (966) Increase in other current liabilities 989 2,130 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 17,228 12,701 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of available-for-sale securities 17 1,130 Acquisition of property and equipment: Aircraft and rotable spares (13,196) (2,602) Buildings and ground equipment (1,750) (1,307) Rental vehicless (1,307) (1,019) Proceeds from sales of property and equipment 502 699 Increase in other assets (50) - -------- -------- NET CASH USED IN INVESTING ACTIVITIES (15,784) (3,099) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 328 - Proceeds from long-term debt 11,500 - Reduction of long-term debt (1,919) (1,681) Payment of cash dividends (508) (803) -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 9,401 (2,484) -------- -------- Increase in cash and cash equivalents 10,845 7,118 Cash and cash equivalents at beginning of period 37,786 24,529 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 48,631 $ 31,647 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 588 $ 464 Income taxes - 366
See notes to condensed consolidated financial statements. 6 7 SKYWEST, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Consolidated Financial Statements The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary to present fairly the results of operations for the interim periods presented. All adjustments are of a normal recurring nature. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. The results of operations for the three months ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending March 31, 1998. Note B - Available-for-Sale Securities Available-for-sale securities are recorded at fair market value. Note C - Income Taxes For the three months ended June 30, 1997 and 1996, the Company provided for income taxes based upon the estimated annualized effective tax rate. Under the provisions of the Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", the Company has classified the net current and noncurrent deferred tax assets and liabilities which at June 30, 1997 included a current deferred tax asset of approximately $2.1 million and a deferred tax liability of approximately $16.8 million. Note D - Net Income Per Common Share Net income per common share is calculated based upon the weighted average shares outstanding during the period. No material dilution results from common stock equivalents which are outstanding options to purchase common stock. Note E - Subsequent Event On July 23, 1997, SkyWest Airlines and United Airlines announced a marketing agreement in which SkyWest will operate as United Express in Los Angeles, Las Vegas, Phoenix and various intra-California markets. The United Express code-share arrangement will provide extensive connecting opportunities for SkyWest/United Express customers in Los Angeles where United Airlines is the largest major carrier. The new agreement will be effective October 1, 1997, and there has been no financial impact for the quarter ended June 30, 1997. At the same time, SkyWest has also re-affirmed its Delta Airlines marketing agreement with a newly signed Delta Connection contract which allows for a certain level of SkyWest flights which is consistent with the current level of Delta flights into and out of Los Angeles as well as a strengthened relationship in Salt Lake City. 7 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations: Operating Statistics
For the Three Months Ended June 30, ---------------------------------- 1997 1996 % change -------- -------- -------- Passengers carried 712,353 663,705 7.3% Revenue passenger miles (000s) 189,040 179,647 5.2% Available seat miles (000s) 372,901 344,454 8.3% Passenger load factor 50.7% 52.2% (1.5) pts Passenger breakeven load factor 46.3% 47.2% (.9) pts Yield per revenue passenger mile $ .325 $ .332 (2.1%) Cost per available seat mile $ .154 $ .160 (3.8%) Average passenger trip (miles) 265 271 (2.2%)
For the Three Months Ended June 30, 1997 and 1996: For the quarter ended June 30, 1997, the Company experienced record levels for passenger enplanements and operating revenues. Operating revenues increased to $72.1 million for the quarter ended June 30, 1997 compared to $70.6 million for the quarter ended June 30, 1996. Net income was $4.3 million or $.43 per share for the quarter ended June 30, 1997 compared to $4.8 million or $.48 per share for the quarter ended June 30, 1996. Passenger revenues, which represented 85.2 percent of total operating revenues, increased 2.9 percent to $61.4 million for the quarter ended June 30, 1997 compared to $59.7 million or 84.5 percent of total operating revenues for the quarter ended June 30, 1996. The increase is attributable to a 5.2 percent increase in revenue passenger miles ("RPMs") which was offset by a 2.1 percent decrease in yield per RPM. The increase in RPMs is primarily the result of traffic stimulus generated from an all cabin class fleet. In addition, due to the acquisition of more Brasilia aircraft, the availability of more discount seats has generated greater passenger demand. Yield per RPM decreased 2.1 percent to $.325 for the quarter ended June 30, 1997 compared to $.332 for the quarter ended June 30, 1996. This decrease is consistent with industry wide fare discounting to stimulate passenger demand as well as the impact of the aviation excise tax. The Company's passenger load factor decreased 1.5 points to 50.7 percent for the quarter ended June 30, 1997 compared to 52.2 percent for the quarter ended June 30, 1996. Available seat mile growth of 8.3 percent was due to the completion of the transition to an all cabin class fleet whereby the Company acquired 15 new Brasilia aircraft. As a result of the decrease in yield per RPM and the addition of available seat miles ("ASMs"), revenue per ASM decreased 4.5 percent to 16.9c. for the quarter ended June 30, 1997 compared to 17.7c. for the quarter ended June 30, 1996. Although revenue per ASM decreased for the quarter ended June 30, 1997, the spread between revenue per ASM and cost per ASM remained relatively constant. Total operating expenses and interest increased 3.9 percent to $65.9 million for the quarter ended June 30, 1997 compared to $63.4 million for the quarter ended June 30, 1996. As a percentage of consolidated operating revenues, total operating expenses and interest increased to 91.4 percent for the quarter ended June 30, 1997, from 89.9 percent for the comparable quarter ended June 30, 1996. For the quarter ended June 30, 1997, total airline operating expenses and interest (excluding nonairline expenses) were 91.4 percent of airline operating revenues compared to 90.5 percent for the comparable quarter ended June 30, 1996. The decreased margin is the result of operating expenses increasing at a faster rate than operating revenues. Primarily, as a result of utilizing more Brasilia aircraft, 8 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) airline operating costs per ASM (including interest expense) decreased to 15.4 c. for the quarter ended June 30, 1997, from 16.0c. for the comparable quarter ended June 30, 1996. Factors relating to the change in operating expenses and interest are discussed below. Salaries, wages and employee benefits increased as a percentage of airline operating revenues to 24.9 percent for the quarter ended June 30, 1997, from 24.3 percent for the quarter ended June 30, 1996. The average number of full-time equivalent employees for the quarter ended June 30, 1997 was 2,170, compared to 2,128 for the quarter ended June 30, 1996. The increase in number of personnel was primarily due to hiring flight attendants for new Brasilia aircraft. Salaries, wages and employee benefits per ASM decreased to 4.2c. for the quarter ended June 30, 1997 compared to 4.3c. for the quarter ended June 30, 1996, primarily due to the ASMs generated by Brasilia aircraft which are more efficient on a unit cost basis. Aircraft costs, including aircraft rent and depreciation, increased as a percentage of airline operating revenues to 20.9 percent for the quarter ended June 30, 1997, from 18.8 percent for the quarter ended June 30, 1996. Aircraft costs per ASM increased slightly to 3.5c. for the quarter ended June 30, 1997 compared to 3.3c. for the quarter ended June 30, 1996. The increase is due to higher average rents being paid on the Brasilia aircraft compared to the previously operated Metroliner aircraft. Maintenance expense decreased as a percentage of airline operating revenues to 7.5 percent for the quarter ended June 30, 1997 compared to 9.4 percent for the quarter ended June 30, 1996. This decrease was the result of the utilization of newer Brasilia aircraft which are more efficient than Metroliner aircraft. Maintenance expense per ASM decreased to 1.3c. for the quarter ended June 30, 1997, from 1.7c. for the quarter ended June 30, 1996. Fuel costs increased as a percentage of airline operating revenues to 12.0 percent for the quarter ended June 30, 1997, from 11.2 percent for the quarter ended June 30, 1996, primarily due to ASM growth exceeding RPM growth. The average fuel price per gallon was $.87 for the quarter ended June 30, 1997 compared to $.88 for the quarter ended June 30, 1996. Fuel costs per ASM was 2.0c. for both quarters ended June 30, 1997 and 1996. Other expenses, primarily consisting of commissions, landing fees, station rentals, computer reservation system fees and hull and liability insurance, decreased as a percentage of airline operating revenues to 25.7 percent for the quarter ended June 30, 1997, from 25.8 percent for the quarter ended June 30, 1996. Nonairline revenues decreased 4.4 percent to $9.2 million for the quarter ended June 30, 1997 compared to $9.6 million for the quarter ended June 30, 1996. The slight decrease is due to selling lower priced tour packages, as part of a competitive strategy, rather than higher priced premium tour packages. Nonairline expenses remained relatively constant at $8.2 million for both quarters ended June 30, 1997 and 1996. Additionally, the average number of full-time equivalent employees was 286 for the quarter ended June 30, 1997 compared to 309 for the quarter ended June 30, 1996. Liquidity and Capital Resources The Company had working capital of $49.0 million and a current ratio of 2.0:1 at June 30, 1997 compared to working capital of $45.3 million and a current ratio of 2.0:1 at March 31, 1997. During the first quarter of fiscal 1998, the Company invested $13.2 million in flight equipment, $3.1 million in buildings, ground equipment and other fixed assets, reduced long-term debt by $1.9 million and paid cash dividends of $.5 million. The principal sources of cash during the first quarter of fiscal 1998 were $17.2 million provided by operating activities, $11.5 million from the issuance of long-term debt, and $.8 million from the sale of common stock and property and equipment. These factors resulted in a $10.8 million cash and cash equivalents increase. 9 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) At June 30, 1997, the Company's long-term debt to equity position was 30 percent debt and 70 percent equity compared to 28 percent debt and 72 percent equity at March 31, 1997. The Company has options to acquire 10 additional Brasilia aircraft at fixed prices (subject to cost escalation and delivery schedules) exercisable through fiscal 1999. Options to acquire an additional ten Canadair Regional Jets have been obtained and are exercisable at any time with no expiration. The Company has available $5.0 million in an unsecured bank line of credit with interest payable at the bank's base rate less one-quarter percent, which was 8.25 percent at June 30, 1997. Future Results This Form 10-Q contains forward-looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified based on current expectations. Readers are cautioned not to place undue reliance on any forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. 10 11 PART II. OTHER INFORMATION SKYWEST, INC. Item 5: Other Information On July 23, 1997, the Company announced a marketing agreement with United Airlines wherein SkyWest would become a United Express carrier at Los Angeles, Las Vegas, Phoenix and various intra-California markets. The agreement is effective October 1, 1997. See Note E to the Condensed Consolidated Financial Statements for other information. Item 6: Exhibits and Reports on Form 8-K a. Exhibits - Financial Data Schedule Exhibit 27. b. Reports on Form 8-K - There were no reports on Form 8-K filed during the quarter ended June 30, 1997. 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. SKYWEST, INC. August 6, 1997 BY: /s/ Bradford R. Rich ------------------------------------- Bradford R. Rich Executive Vice President - Finance, Chief Financial Officer and Treasurer 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000793733 SKYWEST, INC. 3-MOS MAR-31-1998 APR-01-1997 JUN-30-1997 48,631 17,953 8,699 90 10,891 97,025 733,421 85,544 249,626 48,040 56,030 0 0 69,189 59,527 249,626 72,115 72,115 0 65,412 0 0 520 7,014 2,669 4,345 0 0 0 4,345 .43 .43
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