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US Airways Group Inc, et al. – ‘8-K’ for 8/26/05 – EX-99

On:  Friday, 8/26/05, at 3:57pm ET   ·   For:  8/26/05   ·   Accession #:  701345-5-66   ·   File #s:  1-08442, 1-08444

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  As Of                Filer                Filing    For·On·As Docs:Size

 8/26/05  US Airways Group Inc              8-K:7,9     8/26/05    2:90K
          US Airways Inc

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     14K 
 2: EX-99       Miscellaneous Exhibit                               HTML     75K 


EX-99   —   Miscellaneous Exhibit


This exhibit is an HTML Document rendered as filed.  [ Alternative Formats ]



UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION


In Re:                                                                                                                 Chapter 11
US Airways, Inc., et al.                                                                                    Case Number: 04-13819
Debtors                                                                                                            Jointly Administered
                                                                                                                        Hon. Stephen S. Mitchell



MONTHLY OPERATING REPORT FOR THE PERIOD
JULY 1, 2005 THROUGH JULY 31, 2005


DEBTORS' ADDRESS:

US Airways, Inc., et al.
2345 Crystal Dr.
Arlington, VA 22227

DEBTORS' ATTORNEYS:

Brian P. Leitch, Esq.
Daniel M. Lewis, Esq.
Michael J. Canning, Esq.
ARNOLD & PORTER LLP
370 Seventeenth Street, Suite 4500
Denver, Colorado 80202
(303) 863-1000

Lawrence E. Rifken, Esq. (VSB No. 29037)
Douglas M. Foley, Esq. (VSB No. 34364)
McGUIREWOODS LLP
1750 Tysons Boulevard, Suite 1800
McLean, VA 22102-4215
(703) 712-5000

REPORT PREPARER:

US Airways, Inc., et al.


I declare under penalty of perjury that the information contained in this monthly operating report (including attached schedules) is true and correct to the best of my knowledge, information and belief.
 

Dated: August 26, 2005                                                   DEBTOR-IN-POSSESSION

 

Name/Title: Anita P. Beier                              By:       /s/ Anita P. Beier                                      
Senior Vice President-Finance and Controller
Address: 2345 Crystal Drive
Arlington, VA 22227
Phone: 703-872-7000

Table of Contents

 

I.       Monthly Operating Report Cover Page

II.       Unaudited Consolidated Financial Statements

A.     US Airways Group, Inc. Condensed Consolidated Statement of Operations
B.     US Airways Group, Inc. Condensed Consolidated Balance Sheet
C.     US Airways Group, Inc. Condensed Consolidated Statement of Cash Flows

III.     Additional Schedules

A.     Accounts Receivable Schedule, Accounts Payables Schedule, and Cash Balance
B.     Description of Tax Trusts
C.     Insurance Policies
D.     Payments to Professionals
E.     Banking Accounts and Financial Institution Relationships
F.     Sales of Deminimis Assets
G.     Certifications

IV.     Questionnaire

1.

Accounting Basis:       Cash           Accrual    X     

2.

Preparer: State the name, address, telephone number and position of the person(s) who actually compiled the information contained in this report.

Anita P. Beier
Senior Vice President-Finance and Controller
US Airways Group, Inc.
2345 Crystal Dr.
Arlington, VA 22227
703-872-7000

3.

Number of Employees:       26,890          
Represents Debtors' total full time equivalents as of July 31, 2005.

4.

Have there been any changes in the nature of your business since the last reporting period?

Yes ______ No    X       Explain:

5.

Are all Business Licenses current?

Yes    X      No_____ Not applicable ______

6.

Total Accounts Receivable:

See Exhibit III-A

7.

Post-Petition Accounts Payable:

See Exhibit III-A

8.

Taxes: Are all taxes being paid to the proper taxing authorities when due?

Yes    X      No _____.

See Exhibits III-B

9.

Escrow Account: Are you utilizing your tax account only for deposits and payment of payroll and sales taxes?

Yes ______ No    X      Explain:

See Exhibits III-B

10.

Are all books and records of the debtors being maintained monthly and are all current:

Yes    X      No ______ Explain:

11.

Insurance Policies:

See Exhibits III-C and III-G

12.

Actions of Debtors: During the reporting period, did the debtors:

A.   Fail to defend or not oppose any action seeking to dispossess the debtors from control or custody of any asset of the estate:

Yes ______ No    X      If yes, explain:


B.   Maintain such stock, inventory, raw materials, insurance, employees and other resources as are necessary to preserve and maintain the going-concern value of the assets of the debtors?


Yes    X        No ______ If no, explain:

13.

Transfer or Sale of Property: Did the debtors or any person with control over any of the debtor's assets transfer, convey or abandon any of the debtors' assets to another party during the period of this report other than as set forth herein?
Yes ______  No    X       If yes, explain:

14.

Payments to Professionals (attorneys, accountants, real estate agents, auctioneers, appraisers, etc., during the reporting period):

See Schedule III-D

15.

QUARTERLY U.S. TRUSTEE FEES paid during the reporting period: $ 43,750

 

 

EXHIBIT II-A

US Airways Group, Inc.
Consolidated Statement of Operations
for the month ended July 31, 2005

(unaudited)
(in thousands)

Operating Revenues

Passenger transportation

$ 622,484

Cargo and freight

8,389

Other

47,413

Total Operating Revenues

678,286

Operating Expenses

Personnel costs

139,014

Aviation fuel

161,031

US Airways Express capacity purchases

76,006

Other rent and landing fees

43,056

Aircraft rent

42,441

Selling expenses

30,714

Aircraft maintenance

34,967

Depreciation and amortization

17,656

Other

  99,838

Total Operating Expenses

644,723

Operating Income

33,563

Other Income (Expense)

Interest income

1,631

Interest expense, net

(23,617

)

Reorganization items, net

(7,243

)

Other, net

  (1,993

)

Other Income (Expense), Net

(31,222

)

Income Before Taxes

2,341

  Income Tax Benefit

         -

Net Income

$   2,341

 

EXHIBIT II-B

US Airways Group, Inc. Consolidated Balance Sheet as of July 31, 2005

(unaudited, in thousands)

Current Assets

    Cash and cash equivalents

$

489,653

 

 

    Restricted cash

 

131,218

 

 

    Receivables, net

 

321,329

 

 

    Materials and supplies, net

 

179,589

 

 

    Prepaid expenses and other

 

   179,322

 

 

        Total Current Assets

 

1,301,111

 

 

Property and Equipment

 

 

 

 

    Flight equipment

 

2,744,258

 

 

    Ground property and equipment

 

366,523

 

 

    Less accumulated depreciation and amortization

 

(389,053

)

 

 

 

2,721,728

 

 

    Purchase deposits for flight equipment

 

  72,494

 

 

        Total Property and Equipment

 

2,794,222

 

 

Other Assets

 

 

 

 

    Goodwill

 

2,489,638

 

 

    Other intangibles, net

 

515,103

 

 

    Restricted cash

 

591,706

 

 

    Other assets, net

 

     80,678

 

 

        Total Other Assets

 

3,677,125

 

 

             Total Assets

$

7,772,458

 

 

Current Liabilities

 

 

 

 

    Current maturities of debt, capital lease obligations and debtor in possession financing

$

856,955

 

 

    Accounts payable

 

407,126

 

 

    Traffic balances payable and unused tickets

 

978,288

 

 

    Accrued aircraft rent

 

60,769

 

 

    Accrued salaries, wages and vacation

 

167,984

 

 

    Other accrued expenses

 

   334,742

 

 

        Total Current Liabilities

 

2,805,864

 

 

Noncurrent Liabilities and Deferred Credits

 

 

 

 

    Long-term debt and capital lease obligations, net of current maturities

 

75,715

 

 

    Deferred gains and credits, net

 

161,413

 

 

    Postretirement benefits other than pensions

 

1,906

 

 

    Employee benefit liabilities and other

 

   241,887

 

 

        Total Noncurrent Liabilities and Deferred Credits

 

480,921

 

 

Liabilities Subject to Compromise

5,145,517

Commitments and Contingencies

 

 

 

 

Stockholders' Deficit

 

 

 

 

    Class A Common Stock

 

50,616

 

 

    Class B Common Stock

 

5,000

 

 

    Paid-in capital

 

410,522

 

 

    Accumulated deficit

 

(1,126,177

)

 

    Common stock held in treasury, at cost

 

(2,815

)

 

    Deferred compensation

 

(5,819

)

 

    Accumulated other comprehensive income

 

8,829

 

 

        Total Stockholders' Deficit

 

(659,844

)

 

             Total Liabilities and Stockholders' Equity

$

7,772,458

 

 

EXHIBIT II-C

US Airways Group, Inc.
Condensed Consolidated Statement of Cash Flows
for the month ended July 31, 2005

(unaudited)
(in thousands)

 

 

 

 

Net cash used for operating activities before reorganization items

$

(135,961

)

Reorganization items, net

 

(10,530

)

             Net cash used for operating activities

 

(146,491

)

 

 

 

 

Cash flows from investing activities

 

 

 

   Capital expenditures and purchase deposits for flight equipment, net

 

(2,844

)

   Proceeds from dispositions of property

 

654

 

   Increase in restricted cash

 

70,080

 

             Net cash provided by investing activities

 

67,890

 

 

 

 

 

Cash flows from financing activities

 

 

 

   Proceeds from debt

 

21,118

 

   Principal payments on debt and capital lease obligations

 

(9,484

)

             Net cash used for financing activities

 

  11,634

 

Net decrease in cash and cash equivalents

 

(66,967

)

Cash and cash equivalents at beginning of period

 

556,620

 

Cash and cash equivalents at end of period

$

489,653

 

 

 

 

 

EXHIBIT III-A

Consolidated Accounts Receivable Aging

Days Past Due

7/31/05

0-30 Days

$ 232,848,090

31-60 Days

14,264,140

61-90 Days

3,941,474

91+ Days

19,851,597

Other (1)

  76,056,285

Total Accounts Receivable

346,961,586

Amount Considered Uncollectible

  (25,632,161)

Accounts Receivable, Net (2)

$ 321,329,425

 

 

 

 

 

 

 





Notes:

(1)  Other accounts receivable represents such items as accrued receivables, interline receivables and other immaterial receivables that historically are not aged by the Debtors.

(2)  Does not include intercompany accounts receivable.


Consolidated Post-Petition Accounts Payable Aging

 

Days Past Due

7/31/05

 

 

Current

$ 25,259,395

 

 

1-7 Days

7,563,630

 

 

8-30 Days

4,919,704

 

 

31-60 Days

2,566,410

 

 

61-90 Days

5,743,401

 

 

91+ Days (1)

  (9,139,878)

 

 

Total Accounts Payable (2)

$ 36,912,662

 

 

Notes:
(1)  A debit balance exists for the period 91+ days due to outstanding credits that have not been applied to specific invoices or collected.

(2)  The post-petition accounts payable balances above were obtained from the Debtors' accounts payable systems. In the event that a liability is estimated for financial reporting purposes, but no invoice was received as of July 31, 2005, the accounts payable balance will differ from that reported in the financial statements. These estimated items include, but are not limited to tax obligations, rent and lease obligations and other accrued expenses. In addition, intercompany accounts payable balances are not included in the balances presented above.

 

Consolidated Cash and Cash Equivalents Balance

Total Consolidated Cash and Cash Equivalents Balance              $ 489,653,000



EXHIBIT III-B

Tax Trusts

The Debtors have created trust fund accounts to ensure that adequate funds are available to pay outstanding fiduciary tax obligations owed to the federal government as well as state and local jurisdictions in the event that the Debtors cease operations. The continued use of the trust funds has been approved by the Bankruptcy Court and are described below.

With the exception of Trust Fund 1, which is funded on a daily basis and from which payments are made, all other trust funds have only received an initial funding of the estimated maximum tax liability for US Airways, Inc., Allegheny Airlines, Inc., PSA Airlines, Inc. and Piedmont Airlines, Inc. No subsequent funding or payments are made from these trust accounts.

Trust Fund 1 & 5
This trust was established on May 15, 2002 with an initial funding of $149.9 million on May 16, 2002. In May 2003, Trust Fund 5 was established and several components originally funded through Trust Fund 1 were moved to Trust Fund 5. Since the date of funding, all payments associated with each Trust's components have been paid through the trusts and daily funding has occurred based on the estimated daily obligation.

The components of Trust Funds 1 and 5 are as follows:
       Trust 1

*   Federal payroll withholding taxes, FICA (employee and employer portion), and Medicare;
*   Federal unemployment taxes; and
*   Federal jet fuel taxes


Trust 5

*   Federal air transportation excise taxes;
*   Federal security charges;
*   Federal Animal and Plan Health Inspection Service of the U.S. Department of Agriculture ("APHIS");
*   Federal Immigration and Naturalization Service (INS) fees;
*   Federal customs taxes; and
*   Passenger facility fees and charges (PFCs) (moved from Trust Fund 3)

As a result of changes to Federal law concerning airlines that file for bankruptcy protection, US Airways is required to segregate all PFCs into a separate account. Effective for payments due on and after November 30, 2004, a separate account within Trust 5 was established to pay airports and/or sponsor agencies amounts owed under the PFC legislation.


Trust Fund 2

This trust was established on May 30, 2002, with an initial funding of $5.6 million occurring on May 31, 2002. The Company has not made any additional contributions to Trust Fund 2 since the initial funding on May 31, 2002. The monthly activity in Trust 2 consists of the payment of monthly administrative fees and the investment of monthly dividends.

The components of Trust Fund 2 are as follows:

*   State and local income tax withholding;
*   Employment taxes and related charges;
*   State unemployment and supplemental unemployment;
*   Disability taxes; and
*   Workers' compensation charges


Trust Fund 3

This trust was established on May 30, 2002, with an initial funding of $23.0 million occurring on May 31, 2002. The only component of Trust Fund 3 was the passenger facility fees and charges (PFCs). In May 2003, the funding of PFCs was moved to Trust Fund 5, such that all monies in Trust Fund 3 were utilized to pay PFCs from May 2003 to July 2003. Trust Fund 3 is still open, although inactive, since July 2003. The Trustee has the power to terminate the Trust.

Trust Fund 4

This trust was established on June 21, 2002 with the initial funding of $33.6 million occurring on the same day. The Company has not made any additional contributions to Trust Fund 4 since the initial funding on June 21, 2002.

The components of Trust Fund 4 are as follows:

*   Non-statutory payroll deductions, including employee payments/contributions

*   Federal-related and federal security tax-instituted trust fund taxes and charges (note that no Federal related charges are currently included in the initial funding estimates for Trust Fund 4. All Federal charges are accounted for in Trust Fund 1.)

 

 

EXHIBIT III-C


Insurance Policies

The table below reflects changes during the period July 1 - July 31, 2005 to the insurance policies and coverage previously disclosed in the Debtor's Monthly Operating Reports for the periods September 12, 2004 to June 30, 2005. Policies included in the Monthly Operating Reports for the periods September 12, 2004 through June 30, 2005 are still subject to the same terms unless noted below.


US Airways Group, Inc.

Media & Advertising Liability Policy

National Casualty Company

LS 030283

7/18/05 - 7/18/06

 

EXHIBIT III-D


Payments to Professionals

Name

Date of Court Authorizing Payment

Amount Approved

Amount Paid

Total Paid to Date

Total Incurred and Unpaid
(1)

1.

Alvarez & Marsal, LLC

$   49,665

$     665,635

$        12,635

2.

American Appraisal Associates, Inc.

-

8,821

23,214

3.

Arnold & Porter LLP

935,106

7,057,770

1,866,594

4.

Curtis, Mallet-Prevost, Colt & Mosle LLP

-

-

356,413

5.

Donlin, Recano & Company, Inc.

13,971

776,447

90,977

6.

FTI Consulting, Inc.

526,349

3,643,794

1,222,931

7.

Giuliani Partners LLC / Ernst & Young

38,534

1,533,106

740,596

8.

KPMG LLP

298,032

1,544,448

296,990

9.

Lazard Freres & Co. LLC

260,147

2,571,471

271,029

10.

LECG, Inc.

-

281,607

38,994

11.

McGuireWoods LLP

200,761

2,668,672

615,783

12.

McKenna Long & Aldridge LLP

61,085

383,314

151,318

13.

MergeGlobal, Inc.

23,660

547,064

249,763

14.

Moore & Van Allen PLLC

38,286

652,790

52,644

15.

O'Melveny & Myers LLP

51,601

1,742,657

269,660

16.

Otterbourg, Steindler, Houston and Rosen, P.C.

130,948

1,316,903

652,470

17

Seabury Aviation Advisors, Inc.

737,435

7,666,997

964,930

18.

Swidler Berlin Shereff Friedman LLP

-

142,304

5,164

19.

Thelen Reid & Priest LLP

-

605,183

18,244

20.

Vorys, Sater, Seymour and Pease LLP

22,597

290,768

76,751

21.

Watson Wyatt & Company

              -

114,057

          648

Total

$  3,388,177

$ 34,213,808

$ 7,977,748

Notes:
(1) This listing represents fees and expenses submitted by professionals for the period of September 12, 2004 through June 30, 2005 based upon fee statements submitted to the Company and approved or paid through July 31, 2005. All fee statements are subject to review and possible reduction. There are other ordinary course professionals to which fees have been paid since the inception of the Chapter 11 cases in accordance with the First Day Order entered on September 13, 2004, and are not reported herein.



EXHIBIT III-E


Banking Accounts and Financial Institution Relationships


As of July 31, 2005, the Debtors discontinued their relationship with Banco de Costa Rica. See the Monthly Operating Report for the period September 12, 2004 through October 31, 2004 for a complete list of financial institution relationships as previously updated by the Monthly Operating Report for the period June 1 - June 30, 2005.


EXHIBIT III-F


Sales of De Minimis Assets


The following information is being provided in accordance with the December 15, 2004 Order Authorizing and Approving Procedures for the Sale of De Minimis Assets Pursuant to Section 363 of the Bankruptcy Code.

Date

Asset Description

Sales Price

7/01/05

Surplus Inventory

$ 26,000

7/06/05

Surplus Inventory

40,000

7/18/05

Spare Aircraft Rotable Parts

443,925

7/18/05

Surplus Inventory

28,000

7/19/05

Surplus Inventory

36,807


Notes:
This listing represents individual sale transactions in excess of $20,000.

Exhibit III-G


Certifications

Taxes

The undersigned verifies that, to the best of my knowledge, all post-petition tax obligations, including but not limited to, payroll, real property, income, franchise, and other taxes have been paid to the proper taxing authority when due.

Insurance
The undersigned verifies that, to the best of my knowledge, all insurance premiums for the policies listed in Exhibit III-C have been paid to the proper insurance company or broker when due, and that all insurance policies are in force as of July 31, 2005.


Insider Payments

The undersigned verifies that, all payments made to insiders, as defined in 11 U.S.C Section 101 of the U.S. Bankruptcy Code, during the reporting period have been made in the ordinary course of business or in accordance with the provisions of an Order entered by the U.S. Bankruptcy Court.


Date: August 26, 2005

By:        /s/ Anita P. Beier  ____________________

Name:   Anita P. Beier  _______________________ 

Title:   Senior Vice President-Finance and Controller_

 

 

 

 

Exhibit IV

Questionnaire

Yes

No

 

 

 

 

1.

Are any post-petition receivables (accounts, notes, or loans) due from related parties?

X

 

2.

Have any payments been made on pre-petition liabilities this reporting period?

X

 

3.

Have any post-petition loans been received by the debtors from any party?

X

 

4.

Have any pre-petition taxes been paid during the reporting period?

 

X

5.

Are any wage payments past due?

 

X

 

 

 

 

 

 

 

 

 

If the answer to any of the above questions is "Yes," provide a detailed explanation of each item. Attach additional sheets if necessary.

Question 1
The Debtors, in the ordinary course of business, enter into regular business transactions with subsidiaries and affiliates, which can result in intercompany receivables. These receivables however are eliminated for reporting purposes on a consolidated basis.

Question 2
In accordance with and as authorized by the Bankruptcy Court, the Debtors have made certain payments on pre-petition liabilities.

Question 3
In accordance with an agreement with a certain creditor, the Debtors have received funds during the current reporting period on a post-petition loan.


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing    Date    Other Filings
Filed on / For Period End:8/26/05
7/31/05
7/1/05425
6/30/0510-Q,  10-Q/A,  425
12/15/04
11/30/048-K
10/31/04
9/13/044,  8-K
9/12/044
6/21/02
5/31/02
5/30/02
5/16/02
5/15/02DEF 14A
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