Wisconsin Central Airlines Annual Report 1947

WISCONSIN CENTRAL AIRLINES, INC.
FOR THE YEAR ENDED
DECEMBER 31, 1947
CHICAGO
GREEN BAV
LACROSS,;;
ALEXANDER GRANT & COMPANY
~n;:vrH 1
,;1ts AMERICAN INSTITU TE OF ACCOllNTAKTS
C l<:RTIFIJi;D PUBLIC ACCOUNTANTS
30:l BELLIN BUILDING
GREEN BAY, WISCONSIN
To the Stockholders and Directors
Wisconsin Central Airlines, Inc.
Clintonville, Wisconsin.
We have examined the balance sheet of WISCONSIN CENTRAL AIRLINES,
INC. (a Wisconsin corporation) as of December 31, 1947, have reviewed the system
of internal control and the accounting procedures of the company and, without making
a detailed audit of the transactions, have examined or tested accounting records and
o:ther supporting evidence, by methods and :to :the ex:ten:t we deemed appropriate. Our
examination was made in accordance with generally accepted auditing standards
applicable in :the circumstances and included all procedures which we considered
necessary.
During :the period from May 15, 1944 (da:te of incorporation) to December 31,
1947, the company's activities consisted of the organization and development of :the
enterprise and included obtaining from the Civil Aeronautics Board a certificate of
public convenience and necessity for interstate scheduled flight operations and carry-
ing on experimental flights to determine the feasibility of the requested routes. The
net expenses incurred in connection with these activities amounted :to $140,547.34 and
have been capitalized as a deferred charge to be amortized over :the remaining period
of the certificate af:ter commencement of scheduled flight operations. A certificate of
public convenience and necessity for a period of three years was issued on October 3,
1947. We are informed by the management that scheduled flight operations will
commence on or about February l, 1948.
In our opinion, the accompanying balance sheet presents fairly the financial
position of Wisconsin Central Airlines, Inc. at December 3 L 194 7, in conformity with
generally accepted accounting principles applied on a basis consistent wi:th that of
the preceding year.
Green Bay, Wisconsin
January 22, 1948
Alexander Grant & Company
ASSETS
CURRENT ASSETS
C~sh __________ __________ _______ ___ _ --- ______________ $314,223.30
Accounts receivable ___ _________ __ ___ __ _____ _____ __ __ _ 1,099.46
Inventories of gasoline, oil and miscellaneous
supplies - at cost _________ ___ _________ _______ __ __ _ _
Prepaid insurance
Refunds receiable, deposits and sundry items ________ _ _
OPERATING PROPERTY AND EQUIPMENT - AT COST
Flight equipmeni ($64,917.27 pledged as security for
767.12
12,165.32
1,487.67
notes payable - contra) _____ __________ ___________ __ 115,536.43
Ground equipment ______ __ ___ _____ __ _____ ____ ______ __ 3,714.53
Hangar and office building ______ _________ ___ _________ 41,940.71
Improvements to leased property ___ ___ ___ ______ __ ____ 420.15
Furniture and fixtures __ ____________ :._____ ______ ___ ___ 3,673.72
165,285.54
Less reserves for depreciation (note 2) ________________ 10,786.00
DEFERRED CHARGES
Experimental flying and other developmental
expense - net (note 1)
Organization and capital stock expense _______________ _
140,547.34
65,846.54
The accompanying notes are an integral part of this balance sheet.
$329,742.87
154,499.54
206,393.88
$690,636.29
WISCONSIN CENTRAL AIRLINES, INC.
BALANCE SHEET
December 31, 194 7
LIABILITJ.ES
CURRENT LIABILITIES
Notes payable - equipment (secured by
chattel mortgage on $64,917.27 flight
equipment - contra) (note 3) __________ _
Accounts payable _____________________ _
Accrued liabilities
Pay roll _______________ ___ ___________ $
Taxes
Interest
Insurance -------------------- - -------
CAP IT AL STOCK AND SURPLUS
Capital stock - common; authorized, 300,000
shares of $1.00 par vaiue; issued, 155,000
shares -------------- - ----------------
Paid-in surplus - excess of issue price over
par value of common stock ________ ___ _
4,993.43
722.35
87.62
741.74
$ 33,000.00
26,091.15
6,545.14
155,000.00
465,000.00
The accompanying notes are an integral part of this balance sheet.
$ 70,636.29
620,000.00
$690,636.29
WISCONSIN CENTRAL AIRLINES, INC.
NOTES TO BALANCE SHEET
December 31, 1947
I. Experimental flying and other develcpmental expense net
The net expense of experimental flying and other development from May 15,
1944 to December 31, 1947, in the amount of $140,547.34, has been deferred
as preoperational expense as related to the development of the enterprise.
On October 3, 1947 the Civil Aeronautics Board issued a certificate of public
convenience and necessity authorizing the company to engage in scheduled
air transportation for a period of three years.
The management intends to amortize developmental expense over the remaining
period of the certificate from date of commencement of scheduled flight
operations.
2. Depreciation
Depreciation on property and equipment in use has been provided on a "straight-
line" basis at the following annual rates:
Flight equipment __ ___ __ __ __ _______ __ _ 33- V3 %
Ground equipment ____________________ 10-20 %
Hangar and office building ___ ____ _____ 3- V3%
Furniture and fixtures _____________ ___ 10 %
Pending the commencement of scheduled flight operations, depreciation has
been capitalized as "Experimental flying and other developmental ex-
pense - net." Total depreciation charges of $11,834.32 to December 31, 194 7
include $1,063.84 on operated aircraft sold.
3. Notes payable - equipment
Notes payable - equipment, at December 31, 194 7, are as follows:
Note to Pioneer Air Lines, Inc. in the amount of $25,000.00, due on or before
February 15, 1948, with interest at 5% per annum from July 24, 1947. This
note is secured by a chattel mortgage on two Lockheed Electra aircraft, en-
gines, propellers and radio equipment purchased with them.
Note to John H. Spengler in the amount of $13,000.00, due on or before Febru-
ary L 1948, with interest at 3 % per annum from October 10, 194 7. This note
is secured by a chattel mortgage on one Lockheed Electra aircraft, engines,
propellers and radio equipment purchased with it.
4. Transactions subsequent to December 31, 194 7
The company expects to start scheduled flight operations on or about February
L 1948. During the month of January, 1948, additional preoperating ex-
penses will be incurred and capitalized.
SUPPLEMENT AL STATEMENT
WISCONSIN CENTRAL AIRLINES, INC.
STATEMENT OF EXPERIMENTAL FLYING AND OTHER
DEVELOPMENTAL EXPENSE - NET
May 15, 1944 to December 31, 1947
COST OF EXPERIMENT AL FL YING OPERATIONS
Flying operations __ ____ __________________ ______ __ ___ __ $ 40,535.67
Ground operations --- - - --- - -------- - - -- ------------- - -
Flight equipment maintenance - direct __ __ ____ ____ ____ _
Ground equipment maintenance - direct _____ ____ _____ _
Equipment maintenance - indirect ___ ____________ _____ _
Passenger service --------------- - -- - ---------------- - -
Traffic and sales ---- - -- - ---------------- - - -----------
Advertising and publicity -------------------------- ---
Depreciation
Flight equipment - - - ---- - ------- - --- - - - -- - - - -- - - - -- -
Ground property and equipment ____ _____ ___________ _
12,539.44
17,507.82
7,335.46
6,090.11
1,597.72
9,331.34
7,268.92
10,549.36
1,284.96
Total __ _____ ____ ____ ____ _____ _______ __ ____ ___ __ $114,040.80
Less revenue derived from experimental flying operations 31,708.21
ADMINISTRATIVE OPERATIONS
Legal fees and expenses - - ------ -----------------------
Special professional and technical fees ________________ _
Administrative and office salaries and wages ___ ________ _
Travel ------- ----------- ----------- ------------------
Telephone and telegraph - - ---- - ------------ - - ------- -
Office supplies and expenses ---- - -- - --------- - ---- - ---
Taxes
General --------- - ---------- - - -- - --- - ---- - -- -- ------
Pay roll ------------ - - --------- --------------------
Directors' fees and expenses ______ ________ ____ _____ __ _
Interest expense - - ----------- ------ - ---- - -------------
15,955.68
6,623.46
22,001.63
9,744.16
2,598.27
2,174.92
924.09
2,329.42
4,836.97
1,189.22
Miscellaneous expenses ------ --- - - --------------------- 2,796.92
Total - - - - -- -------- - ------ - -------- - - - -------
LESS INCOME DERIVED FROM INCIDENT AL OPERA TIO NS
AND NONOPERA TING INCOME
Net profit of aircraft sales agency ____ _____ __ _______ _
Incidental service sales - - ------- - - - ------------ - ----
Gain on sale of operated aircraft __ _________________ _
Miscellaneous ------- - - --------------------- -- - - ----
EXPERIMENT AL FL YING AND OTHER
DEVELOPMENT AL EXPENSE - NET ________ _
187.77
7,156.38
2,562.51
3,053.33
$ 82,332.59
71,174.74
$153,507.33
12,959.99
$140,547.34