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COLONIAL AIRLINES. INC.
BALANCE SHEET AT DECEMBER 31, 1917
ASSETS
CURRENT ASSETS:
Cash in banks and on hand ............................................
Accounts receivable (including $303,499 for mail carried, due from U. S. Post Office
Department - Note 1) ............................................
Consumable supplies, gasoline, oil, etc., at or below cost (on first-in first-out basis) ....
$ 846,202
536,235
222,727
---------
$1,605,164
Total Current Assets ............................................
55,398
INVESTMENTS AND SPECIAL FUNDS, AT COST ............................................
PROPERTY AND EQUIPMENT, AT COST:
Flying equipment ........................
Less: Reserve for obsolescence and
depreciation ............................
$2,447,219
1,092,441
-----------
$1,354,778
Radio ground stations, office, and other
equipment................................
Less: Reserve for obsolescence and
depreciation.............................
$275,602
103,149
---------
172,453
29,691 1,556,922
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DEFERRED CHARGES:
Unamortized preoperational expenses (Note
2) ......................................
Prepaid insurance .......................
Other prepaid and deferred charges
.........................................
$ 78,365
41,083
19,213 138,661
--------- -------
$3,356,145
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NOTES TO FINANCIAL STATEMENTS
Note 1: The financial statements reflect compensation for mail carried, other than over the Bermuda route, on the basis of a temporary rate of twenty cents per airplane mile, which became effective on April 15, 1946. the Civil Aeronautics Board has issued an order on March 4, 1946 increasing the temporary rate to thirty-five cents per airplane mile, effective January 1, 1948. The increased temporary rate is less than that requested by the Company in its petitions. It is impossible, at this time, to determine what the permanent rate, retroactive to April 15, 1946, will be when it is established.
Revenue for mail carried on the Bermuda Route has been include in income and accounts receivable in the amount of $233,931 on the basis of a ate effective for the initial development period from August 1, 1947 (date of inauguration of services over this route). Such rate was established in order of the Civil Aeronautics Board issued in 1948 under which order the rates for periods subsequent to February 28, 1948 will be on a sliding scale.
Note 2: Preoperational expenses represent expenses incurred with respect to new routes between dates of certification by the Civil Aeronautics Board and the dates of inauguration of revenue operations over such routes. the Company has continued the policy of amortizing such expenses over a period of twelve months from dates of inauguration of the individual new routes.
Note 3: The 2 3/4 % notes payable to banks are unsecured. Under the provisions of the loan agreement, however, the banks may demand collateral should the net current assets at any time be less that $500,000 . Upon such demand, the Company shall issue a chattel mortgage on aircraft having a value of one and one-third times the unpaid principal amount of the notes.
In the event that the net current assets at any time are less that $400,000 or the total indebtedness (exclusive of instalment of notes maturing after one year) exceeds $1,300,000, and shall so continue for thirty days after notice to the Company by the banks, the banks may declare the notes immediately due and payable.
Note 4: Under the requirements of the Civil Aeronautics Administration,major overhauls of aircraft and engines must be performed after a number of prescribed flying hours. DC-4 equipment purchased and placed in operation on the Bermuda Route during the year has not undergone any of these major overhauls subsequent to having been placed in operation since sufficient flying hours had not elapsed. In view of the fact that such overhauls will occur throughout 1948,and that 1947 operations had not borne any part of the cost of major overhauls,the Board of Directors resolved that a charge be made against 1947 operations,for the accrued portion of such estimated expenses based on the number of hours that DC-4 aircraft and engines had flown in 1947. Had the reserve not been provided on DC-4 aircraft and engines,the loss for the year would have been decreased by$38,472. The policy,established in 1946,of charging all major overhauls on DC-3 equipment to operations as incurred has been continued and no reserve has been provided.
Note 5: Prior to December 31, 1946,the Company followed the policy of amortizing extension and development expenses applicable to routes for which Certificates of Public Convenience and Necessity had been granted over a period of five years,beginning with the date of inauguration of services over the new routes.Such expenses applicable to pending applications for new routes were deferred until a final decision was rendered by the Civil Aeronautics Board.The Board of Directors resolved that as of January 1,1947,such expenses from that date should be charged to operations as incurred.In accordance with the resolution,the unamortized balance of expenses applicable to routes granted and deferred expenses applicable to routes pending at December 31,1946 were charged to earned surplus (deficit) and all expenses incurred during the year have been charged off. Had this change not been made the loss for the year would have increased by $58,910.
Note 6: Options are outstanding for the purchase of capital stock,as follows:
To Official-Expiring November 9,1949-5,000shares at $12,50 per share
To Underwriters-Expiring February 26,1950-30,0000 shares at 12.25 per share.Transcription Notes:
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