Western Air Express Annual Report 1936

W escern Air Express Corporation
and Subsidiary
ANNUAL REPORT
1936
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WESTERN AIR EXPRESS CORPORATION
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- .....
'\
OFFICERS
President ,. :-- ,. ,. ... ,. ,. A:r.NIN P. ADAMS
Vice..-President-
Operations ...... ,. ... ALLAN A. BARRIE
Vice--President-
Traffic ,. ,. ,. ,. ,. ,. ,. ,. Tims. \iVoLFE
Secretary and
Treasurer ,. ... ,. ,. ,. L. H. DwERLKOTTE
Ass't. Secretary ,. ,. ,. ,. ,. E. H. BROWN
DIRECTORS
ALVIN P. ADAMS
ALLAN A. BARRIE
w. G. BURHENN
L. H. DwERLKOTTE
HAROLD p. FABIAN
THOS. WOLFE
RALPH WAYCOTT
REGISTRAR
Citizens National Trust & Savings Bank, Los Angeles, California
STOCK TRANSFER AGENT
Security--First National Bank of Los Angeles, California
AUDITORS
Peat, Marwick, Mitchell & Co.
GENERAL OFFICES
Union Air' Terminal, Burbank, California
To the Stockholders: March 19, 1937.
There is submitted herewith Consolidated Profit and Loss Statement of your Company for
the calendar year 1936, together with a Consolidated Balance Sheet of the company and its sub-
sidiary as of December 31, 1936, to which is appended the report of Messrs. Peat, Marwick,
Mitchell & Company, the accountants for your Company.
Operations for the year resulted in a net profit of $50,697.44, after all taxes and charges,
including provision for depreciation amounting to $95,638.69. The net profit is equivalent to
22.8c per share on the outstanding 222,645 shares of the capital stock of the Company. In com-
parison, 1935 operations resulted in a net loss of $8,188.41, after all charges including depreciation
provisions of $71,108.82. The Profit and Loss Statement, in both 1936 and 1935, reflect absorp~
tion of substantial non-recurring charges.
The improved operating statement lai:gely reflects a substantial increase in passenger revenue
and a careful control of operating costs. It will be noted that the passenger revenue amounted
to $363,554.87, .an increase of $94,187.36 over the previous year. This is a gain of 34.97%. This
was the second successive year that record revenues were derived from this source.
Air mail revenue increased in 1936 a total of $40,434.86 or 13.95%. This largely reflects a
full year's operation under the new rates of pay which went into effect March 1, 1935, together
with authorization on March 15, 1936 by the Post Office Department for pay on our second air
mail schedule on Sundays and holidays.
Air express moving over the lines of your Company was the greatest in its history. Revenues
from this source totaled $37,038.35, an increase of $18,103.71 or 95.61%, over the $18,934.64 in
1935.
As the result of the above revenue increases, gross revenue for the Company was $740,984.00
an increase of $153,995.38 or 26.23% over the $586,988.63 reported in 1935.
It is interesting to note that in spite of an increase of $153,995.38 or 26.23% in gross rev-
enue, operating costs rose only $85,912.09 or 15.17%. The increase in costs largely reflects an
increase of 26.38% in revenue miles flown in 1936 over 1935.
It will be seen that the increase of 320,082 revenue miles flown was' performed at a total
cost of $85,912.00 or 26.8c per mile. The total operating costs for the year amounted to 42.54c
per revenue mile as compared with 46.76c per revenue mile during the year 1935. The following
operating figures reflect the improvement in business and operations of the Company in 1936
over the previous two years:
Passenger Revenue_----
Mail Revenue ... --: .. ___ ..... _
..... .
Express-------------------
Other Revenue--------
GROSS REVE~E ...... ----
Operating & Gen. Exp.enses-----
Depreciation_-------
TOTAL OPER: EXPENSE ..
Net Operating Income-----
Misc. Charges and Income---
Net Income before Federal
Income Tax---------
Revenue Miles Flown---------
Revenue Passengers Carried--- 1
Revenue Seat Miles----~
----
Mail Poundage_------------
Express Poundage_------ ..... -
)-Denotes Re~ Figures.
1936
$363,555
330,198
37,038
10,193
740,984
556,677
95,639
652,316
88,668
30,370
$58,298
1,533,356
20,242 .
7,473,774
506,448
475,274
1935
$269,368
289,763
18,935
8,923
586,989
495,295
71,109
566,404
20,585
28,773
(8,188)
1,213,274
13,736
4.915,129
298,287
198,389
1934
$182,777
172,007
13,789
10,636
379,209
468,444
62,349
530,793
(151,584)
( 1,926)
(153,510)
974,432
7,401
3,336,738
208,197
73,158
% Gain
1936 over
1935
34.97%
13.95%
95.61%
14.23%
26.23%
12.39<'/o
34.50%
15.17%
26.38%
47.36%
52.06%
70.46%
139.57%
% Gain
1935 over
1934
47.37%
68.46%
37.32%
(16.10%)
54.79%
5.73%
14.05%
6.71%
24.51%
85.60%
47.30%
43.27%
171.18%
In the fall of 1936 your Company contracted to purchase two Douglas sle~per type air-
planes, which it is expected will be used in conjunction with the fleet of new Douglas planes
recently ~cquired by United Air Lines to materially improve the service over the Los Angeles-
New York mid-continent airway. It is belieyed that this new equipment, which should be in
oper.ation within the next two or three months, should increase traffic and improve service
materially.
Respectfully yours,
AL VIN P. ADAMS, President.
WESTERN AIR EXPRESS CORPORATION AND SUBSIDIARY
ASSETS
Current Assets:
CONSOLIDATED BALANCE SHEET
As at December 31, 1936
LIABILITIES
Current Liabilities:
Cash in Banks and on Hand...................................................... $180,292.71
Accounts Receivable:
q
ll Accounts Payable........................................................................ $ 40,331.08
United States Post Office Department under
Air Mail Contract........................................ $ 40,873.73
Insurance Claims.............................................. 29,836.17
Sundry Accounts, less Reserve of $5,098.17 .. 46,965.89 117,675.79
Total Current Assets ................................................. . 297,968.50
Inventory of Parts and Supplies, less Reserve of $4,591.88 ........... . 15,385.80
Advance Payment on Airplane Purchases ( See Note) ................... . 1,000.00
Prepaid Expenses ............................................................................... . 9,070.87
United States Government Treasury Notes ( Par Value
$11,000.00) deposited with United States Post Office
Department ................................................................................. . 11,127.13
Miscellaneous Stocks and Bonds ....................................................... . 1,687.42
Properties and Equipment-at Cost:
Land ................................................................... . 13,256.95
Hangars, Buildings, Airplanes, Engines and
Other Equipment.............................................. 303,974.62
317,231.57
Less Reserve for Depreciation............................ 189,294.23
127,937.34
Unimproved Real Estate.................................... 147,876.85
Airport Leases and Rights not used in
Operations ..................................................... . 32,675.00
Other Property not used in Operations (Net) .. 7,814.77 316,303.96
Total ............................................................................ $652,543.68
I
,J
Accrued Expenses ....................................................................... .
Reserve for Federal Income Taxes ........................................... .
Total Current Liabilities ............................................. .
Capital Stock:
Authorized, 500,000 Shares of $1.00 each
Issued, 222,645 Shares........................................ $222,645.00
Capital Surplus............................................................ 413,887.12
636,532.12
10,035.04
7,600.00
57,966.12
Operating Deficit ....................................................... . 41,954.56 594,577.56
Contingent Liabilities:
Proposed Additional Assessment of
Federal Income Tax for the Tax--
able Year, 1933, including Interest $21,500.00
Total ............................................................................ $652,543.68
Notei-The Corporation has contracted to purchase three airplanes at a total cost of $236,202.26, said airp~anes to be delivered on or before April 15, 1937.
WESTERN AIR EXPRESS CORPORATION AND SUBSIDIARY
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the Year ended December 31 , 1936
Gross Revenue:
Mail ............................................................................................. .
Passenger ................................................................................... .
Express and Freight ................................................................... .
Other Airplane Earnings ........................................................... .
Sales of Parts, Supplies, etc ...................................................... .
Gross Revenue ........................................................... .
Operating and General Expenses.............................. $556,677.42
Depreciation ................................................................ 95,638.69
Net Operating Income ............................................... .
Miscellaneous Charges:
Loss and Expenses in connection with
Airplane Accidents ......................................... .
Amortization of Airport Leases and Rights ..... .
Sundry ............................................................... .
Less Miscellaneous Income ............................... .
24,832.41
3,300.00
4,315.68
32,448.09
2,077.63
Miscellaneous Charges (Net) ................................... .
Net Income, before Provision for
Federal Income Tax ............................................... .
Provision for Federal Income Tax ................................................... .
Net Income ............. -
CONSOLIDATED OPERATING DEFICIT ACCOUNT
$330,198.31
363,554.87
37,038.35
4,015.39
6,177.09
740,984.01
652,316.11
88,667.90
30,370.46
58,297.44
7,600.00
$ 50,697.44
Balance as at December 31, 1935...................................................... $ 44,490.75
Deduct:
Net Income for the Year ended
December 31, 1936.......................................... $ 50,697.44
Excessive Accrual for Legal Expenses
Applicable to the Year 1935 ......................... . 7,500.00
58,197.44
Less Cash Dividend Paid- $.25 per Share........ 55,661.25 2,536.19
Balance as at December 31, 1936...................................................... $ 41,954.56
To the Board of Directors of
WESTERN AIR EXPRESS CORPORATION
We have made an examination of the Consolidated Balance
Sheet of Western Air Express Corporation and its Subsidiary as
at December 31, 1936, and of the Consolidated Profit and Loss
and Operating Deficit Accounts for the year 1936. In connection
therewith, we examined or tested accounting records of the Com ....
panies and other supporting evidence and obtained information and
explanations from officers and employees of the Companies; we
also made a general review of the accounting methods and of the
operating and income accounts for the year, but we did not make a
detailed audit of the transactions.
Western Air Express, Inc . a wholly owned subsidiary, was
non .... operating during the year under review and is to be dissolved
subsequent to December 31. 1936.
During the year under review the Company reduced the per--
centage rates used in providing for depreciation of airplane engines
and certain of its airplanes, and as a result thereof the provision
for depreciation for the year 1936 was $22,718.75 less than would
have been the case had the rates used in previous years been
applied.
In our opinion, based upon such examination, and subject to
the foregoing comment with reference to the change in depreciation
provisions, the accompanying Consolidated Balance Sheet and
related Consolidated Profit and Loss and Operating Deficit Ac ....
counts fairly present, in accordance with accepted principles of
accounting consistently maintained by the Companies during the
year under review, their consolidated position at December 31,
1936, and the results of their operations for the year.
Los Angeles, California,
March 3, 1937.
PEAT, MARWICK, MITCHELL & Co.