-----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, IuPbsSUOjHp4IQn2MGjX7vDDmrrI2H8lnZRGFyVTCP2PXeygHJ1g8e32W07MVNWI aVS0ZjsfyNGNv2HAq0bIjg== 0000350403-96-000003.txt : 19960308 0000350403-96-000003.hdr.sgml : 19960308 ACCESSION NUMBER: 0000350403-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960307 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETROLEUM HELICOPTERS INC CENTRAL INDEX KEY: 0000350403 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, NONSCHEDULED [4522] IRS NUMBER: 720395707 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11581 FILM NUMBER: 96532302 BUSINESS ADDRESS: STREET 1: 113 BORMAN DRIVE STREET 2: P O BOX 23502 CITY: LAFAYETTE STATE: LA ZIP: 70508 BUSINESS PHONE: 5047336790 MAIL ADDRESS: STREET 1: 113 BORMAN DRIVE CITY: LAFAYETTE STATE: LA ZIP: 70508 10-Q 1 United States SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: January 31, 1996 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 0-9827 PETROLEUM HELICOPTERS, INC. (Exact name of registrant as specified in its charter) Louisiana 72-0395707 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2121 Airline Highway, Suite 400 Metairie, Louisiana 70001-5979 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (504) 828-3323 Indicate by 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 APPLICABLE ONLY TO CORPORATE ISSUERS: 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 March 1, 1996 Voting Common Stock 2,789,761 Non-Voting Common Stock 2,276,093 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS In thousands January 31, April 30, (Current period unaudited) 1996 1995 (1) ASSETS Current assets: Cash and cash equivalents $ 3,035 $ 2,506 Accounts receivable - net of allowance 31,229 30,493 Inventory 26,383 25,560 Prepaid expenses 1,141 989 Notes receivable 1,244 - Assets held for sale - 215 ------ ------ Total current assets 63,032 59,763 ------ ------ Investments 4,348 1,002 Property and equipment: Cost 211,723 199,816 Less accumulated depreciation (115,660) (113,568) ------- ------- 96,063 86,248 ------- ------- Other 98 95 ------- ------- $ 163,541 $ 147,108 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 16,766 $ 15,224 Accrued vacation pay 4,804 4,897 Income taxes payable 1,541 331 Current portion of long-term debt 6,796 8,755 Other 177 747 ------ ------ Total current liabilities 30,084 29,954 ------ ------ Long-term debt 38,842 27,060 Deferred income taxes 12,066 12,066 Other long-term liabilities 2,771 2,321 Shareholders' equity: Voting common stock 279 286 Non-voting common stock 227 220 Additional paid-in capital 10,121 10,118 Retained earnings 69,151 65,083 ------ ------ 79,778 75,707 ------- ------- $ 163,541 $ 147,108 ======= ======= (1)The balance sheet at April 30, 1995 is condensed from the audited financial statements at that date. See notes to condensed consolidated financial statements. PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Three Months Nine Months In thousands, except per Ended January 31, Ended January 31, share amounts 1996 1995 1996 1995 (unaudited) REVENUES: Operating revenues $ 45,444 $ 42,095 $ 139,724 $130,493 Gain (loss) on equipment disposals 43 (183) 791 773 Equity in net earnings (loss) of investee companies 225 (9) 325 72 ------ ------- ------- ------- 45,712 41,903 140,840 131,338 ------ ------- ------- ------- EXPENSES: Direct expenses 39,800 36,964 122,367 115,481 Selling, general and administrative expenses 3,038 2,700 8,402 7,774 Interest expense 777 812 2,312 2,300 ------ ------- ------- ------ 43,615 40,476 133,081 125,555 ------ ------- ------- ------- Earnings before income taxes 2,097 1,427 7,759 5,783 Income taxes 758 617 3,095 2,357 ------ ------ ------ ------ Net earnings $ 1,339 $ 810 $ 4,664 $ 3,426 ====== ====== ====== ====== Net earnings per share $ 0.26 $ 0.15 $ 0.92 $ 0.63 ====== ====== ====== ====== Weighted average common shares outstanding 5,066 5,478 5,066 5,478 ====== ====== ====== ====== Dividends paid per common share $ 0.05 $ 0.02 $ 0.12 $ 0.04 ====== ====== ====== ====== See notes to condensed consolidated financial statements. PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS In thousands Nine Months Ended January 31, (unaudited) 1996 1995 OPERATING ACTIVITIES: Net earnings $ 4,664 $ 3,426 Depreciation 6,137 6,335 Gain on equipment disposals (791) (773) Equity in net earnings of investee companies (325) (72) Changes in operating assets and liabilities (189) (1,261) Other 241 16 ------ ------ Net cash provided by operating activities 9,737 7,671 ------ ------ INVESTING ACTIVITIES: Investments (3,003) - Purchases of property and equipment (17,561) (16,357) Proceeds from equipment disposals 2,141 9,354 ------ ------ Net cash used by investing activities (18,423) (7,003) ------ ----- FINANCING ACTIVITIES: Proceeds from long-term debt 23,803 9,250 Payments on long-term debt (13,980) (13,807) Dividends paid (608) (219) ------- ------- Net cash provided (used) by financing activities 9,215 (4,776) ------ ------ Increase (decrease) in cash and cash equivalents 529 (4,108) Cash and cash equivalents at beginning of period 2,506 5,570 ------ ------ Cash and cash equivalents at end of period $ 3,035 $ 1,462 ====== ====== See notes to condensed consolidated financial statements. PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED JANUARY 31, 1996 AND 1995 (UNAUDITED) A. These financial statements, except for the April 30, 1995 condensed consolidated balance sheet, have been prepared without audit as permitted by the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that this information is fairly presented. These condensed consolidated financial statements should be read in conjunction with the financial statements contained in the Company's Annual Report on Form 10-K for the year ended April 30, 1995 and the accompanying notes and Management's Discussion and Analysis of Financial Condition and Results of Operations. B. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal, recurring adjustments, necessary to fairly present the financial results for the interim periods presented. C. The Company's financial results, particularly as it relates to its domestic oil and gas operations, are influenced by seasonal fluctuations. During the winter, there are more days of adverse weather conditions and fewer hours of daylight than the other months of the year. Consequently, flight hours are generally lower during the Company's third fiscal quarter than at other times of the year. This produces a seasonal aspect to the Company's business and typically results in reduced revenues from operations during those months. Therefore, the results of operations for interim periods are not necessarily indicative of the operating results that may be expected for the full fiscal year. D. Primary earnings per share are computed based on the weighted average number of shares and dilutive equivalent shares of common stock (stock options) outstanding during each year using the treasury stock method. E. Certain reclassifications have been made to the prior year's financial statements in order to conform with the classifications adopted for reporting in fiscal 1996 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company is engaged in providing helicopter transportation and related services. The predominant portion of its revenue is derived from transporting offshore oil and gas production and drilling workers on a worldwide basis. The Company also provides helicopter transportation services to a variety of hospital and medical programs and aircraft maintenance to outside parties. RESULTS OF OPERATIONS The following is a comparison of the third quarter and the first nine months of the fiscal year ending April 30, 1996 with the comparable periods of the prior fiscal year. Third Quarter Fiscal 1996 to Fiscal 1995 Revenues The Company generates revenues from both ongoing service contracts with established customers and non-contract flights referred to as Specials. Domestic Oil and Gas contracts are generally on a month to month basis and consist of a fixed fee plus an hourly charge for actual flight time. Specials are customer flights, primarily domestic oil and gas, provided on an as needed basis that are not provided pursuant to ongoing contracts and which generally carry higher rates. International and aeromedical contracts also provide for fixed and hourly charges, but are generally for longer terms. These contracts impose early cancellation fees to encourage customers to fulfill the contract term and cover the Company's additional start- up costs in the event of early termination. The following table summarizes and compares the Company's revenues by certain markets served for the quarters ended January 31, 1996 and 1995: Revenues for the (In thousands, except Quarter Ended January 31, percentages and flight hours) Incr (Decr) 1996 1995 $ % Domestic Oil and Gas $32,018 $ 29,186 $ 2,832 10 Aeromedical Services 6,758 5,999 759 13 International and Technical Services 6,668 6,910 (242) (4) Total Operating Revenues $45,444 $ 42,095 $ 3,349 8 Total Flight Hours 51,995 47,974 4,021 8 Domestic Oil and Gas Domestic Oil and Gas revenues increased $2.8 million or 10% to $32 million for the quarter and domestic flight hours increased by 7% to 39,401. The Company attributes these increases to increased flight activity due primarily to better economic conditions in the Gulf of Mexico. As of January 31, 1996 the Company had thirteen more aircraft under contract and six more contracts than at January 31, 1995. Aeromedical Services The Company operates 13 programs and a total of 33 aircraft in the Emergency Medical Service industry. Aeromedical Services revenue increased $0.8 million or 13% to $6.8 million. Aeromedical flight hours increased slightly to 2,961, or 2% for the quarter. The increase in revenue is due primarily to three more aircraft under contract and one more contract than at January 31, 1995. The Company was recently awarded one new contract which is expected to commence operations in May of 1996. International and Technical Services International Oil and Gas revenues remained constant at $3.7 million. International flight hours increased 12%,or 565 hours, to 5,244 hours. The increase in flight hours is due primarily to increased oil and gas exploration activity. The flight hour increase was produced primarily by existing contracts which utilize smaller aircraft with moderate hourly rates. This increase in hourly revenue was offset by the termination of a contract which utilized aircraft with high fixed and variable rates. Technical Services revenues decreased slightly $0.1 million, or 4%, to $1.9 million. Direct Expenses Direct expenses increased $2.8 million or 8% to $39.8 million, primarily as a result of the increased activity levels in the Company's Domestic Oil and Gas Programs. Expenses at helicopter bases rose $1.3 million or 9% to $15.5 million for the quarter. Of this increase, $0.9 million is due to an increase in personnel and overtime to support increased flight activity. In addition, the Company increased its environmental expense reserve by $0.3 million which is more fully described under Liquidity and Capital Resources, below. Helicopter expenses rose $1.4 million or 8% to $18.5 million for the quarter. Helicopter expenses related to flight activity including spare parts usage, repairs and maintenance, helicopter rent, and fuel increased a combined $1.6 million, or 13% , from $12.3 million to $13.9 million. This amount was partially offset by a decrease in insurance and helicopter depreciation in the amount of $0.2 million. These increases were consistent with the increase in operating revenues and Domestic Oil and Gas activity levels. Selling, General, and Administrative Expenses Selling, general, and administrative expenses increased by $0.3 million to $3 million for the quarter. This increase was due primarily to an increase in consulting fees associated with an information systems project which is expected to continue for several years. First Nine Months Fiscal 1996 to First Nine Months Fiscal 1995 The following table summarizes and compares the Company's revenues by certain markets served for the nine months ended January 31, 1996 and 1995: Revenues Revenues for the (In thousands, except Nine Months Ended January 31, percentages and flight hours) Incr (Decr) 1996 1995 $ % Domestic Oil and Gas $ 98,164 $ 88,355 $ 9,809 11 Aeromedical Services 19,634 18,885 749 4 International and Technical Services 21,926 23,253 (1,327) (6) Total Operating Revenues $139,724 $ 130,493 $ 9,231 7 Total Flight Hours 163,752 152,867 10,885 7 Domestic Oil and Gas Domestic Oil and Gas revenues for the first nine months of fiscal 1996 increased 11% to $98.2 million as compared to the same period in fiscal 1995. Domestic flight hours increased 9% to 125,836 in the current period. These increases are due primarily to increased oil and gas activity and several hurricane evacuations. The improved economic conditions in the Gulf of Mexico were the result of stable oil prices, higher natural gas prices, and the termination of operations by one of the Company's competitors. Aeromedical Services Aeromedical services revenue increased $0.7 million or 4% to $19.6 million in fiscal 1996, despite a decline in flight hours of 6% to 9,479 hours. During the current fiscal year three additional aircraft under contract were added as well as one new EMS contract. These increases along with a slight upward adjustment in contract rates contributed to the increase in revenues in fiscal 1996 as compared to the same period in fiscal 1995. Flight time requirements declined primarily due to inclement winter weather. International and Technical Services International Oil and Gas revenues decreased by $0.9 million or 7% to $11.7 million. The decrease in revenue is due primarily to a temporary contract which included six dedicated aircraft in the prior year. International flight hours increased slightly to 15,567, up 462 hours or 3%. Technical Services revenues increased slightly to $7 million, an increase of $0.1 million or 2%. Direct Expenses Direct expenses increased $6.9 million or 6% to $122.4 million, primarily attributable to the increased activity levels in the Company's Domestic Oil and Gas Programs. Expenses at helicopter bases rose $3.3 million or 8% to $46.3 million. Of this increase, $2.3 million is due to an increase in personnel and overtime to support increased flight activity. In addition, the Company increased its environmental expense reserve by $1 million which is more fully described under Liquidity and Capital Resources, below. Helicopter expenses rose $4.3 million or 8% to $56.8 million. Helicopter expenses related to flight activity including spare parts usage, repairs and maintenance, helicopter rent, and fuel increased a combined $4.4 million, or 11%. This amount was partially offset by a decrease in helicopter insurance and depreciation in the amount of $0.5 million. These increases were consistent with the increase in operating revenues and Domestic Oil and Gas activity levels. Selling, General, and Administrative Expenses Selling, general, and administrative expenses increased by $0.6 million to $8.4 million. Human resources and other expenses increased $0.4 and $1 million respectively. These increases are due to a slight increase in administrative pay and an increase in outside consulting fees of $0.7 million . These costs were partially offset by a decrease in legal and audit fees, bad debt expense, and depreciation expense totaling $0.9 million. LIQUIDITY AND CAPITAL RESOURCES The following is comparison of the first nine months of the fiscal year ending April 30, 1996 with the period ending April 30, 1995. The Company's cash position as of January 31, 1996 was $3 million compared to $2.5 million at April 30, 1995, the Company's fiscal year end. Working capital increased $3.1 million from $29.8 million at fiscal year end to $32.9 million. The increase was primarily related to an increase in notes receivable from affiliates of $1.2 million, $0.8 million in refundable insurance premiums relating to workers compensation, and an increase in inventory of $0.8 million offset by an decrease in accounts receivable of $0.3 million. Total long-term debt increased $9.8 million to $45.6 million. The Company's current debt obligation totals $6.8 million due in equal quarterly installments, which the Company intends to pay with cash flow from operations. On January 25, 1996 the Company prepaid $2 million of term debt which was due and payable April 30, 1996. The next installment is not due until July 31, 1996. At January 31, 1996, the Company had $14.8 million and $5.2 million of credit capacity available under its term and revolving credit facilities, respectively. The Company is in compliance with the provisions of its loan agreement. Cash generated from operating activities and financing activities was $9.7 million and $9.2 million, respectively. The Company utilized its cash flow from operating activities and financing activities to fund $18.4 million in investing activities. Investing activities included the purchase of 14 aircraft for $12.2 million, $2.8 million in aircraft capital improvements, and $3 million for the purchase of a 49% interest in Irish Helicopters Limited. The Company has paid dividends totalling $0.6 million or $0.12 per share In the first quarter of fiscal 1996 the Company began an environmental review at selected domestic bases. Based on this review, known or suspected fuel contamination has been identified at seven of its bases. Management now believes it is possible that similar fuel contamination will be found at additional bases. During the prior quarter, initial assessments of the costs to remediate this contamination were commenced and a preliminary estimate of the costs expected to be incurred at one of the Company's bases was received. The Company is seeking additional information regarding this preliminary estimate, and further assessments are planned at all other bases at which known or suspected fuel contamination has been identified. Depending in part upon the results of these assessments, the Company also anticipates that it will conduct additional studies at its other bases. Based on the information currently available to management, an additional provision of $250,000 has been made in the current quarter. The Company has expensed $331,000 and $1.2 million, including the reserve provisions, for environmental costs for the three and nine month periods, respectively. The aggregate reserve for environmental related costs is $1.2 million, including a $1 million provision for the nine month period. The Company will make additional provisions in future periods to the extent appropriate as further information regarding these costs becomes available. RESULTS AT A GLANCE (Unaudited) The following table provides a summary of critical operating and financial statistics (thousands of dollars, except per share amounts, financial ratios, flight hours and general statistics): Nine Months Ended January 31, Operations 1996 1995 Operating revenues $ 139,724 $ 130,493 Net earnings 4,664 3,426 Net earnings per share .92 .63 Annualized return on shareholders' equity 8% 5.9% Total flight hours 163,752 152,867 Financial Summary January 31, 1996 April 30, 1995 Net working capital $ 32,948 $ 29,809 Net book value of property and equipment 96,063 86,248 Long-term debt 38,842 27,060 General Statistics Helicopters Operated 258 254 Employees 1,669 1,649 Part II - OTHER INFORMATION Item 6.EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1 (i)Articles of Incorporation of the Company (incorporated by reference to Exhibit No. 3.1(i) to PHI's Report on Form 10-Q for the quarterly period ended October 31, 1994.) (ii)By-laws of the Company. 27 Financial Data Schedule. (b) Reports on Form 8-K No reports were filed on Form 8-K for the quarter ending January 31, 1996. SIGNATURES 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. Petroleum Helicopters, Inc. March 5, 1996 By: Carroll W. Suggs /s/ Carroll W. Suggs Chairman of the Board, President and Chief Executive Officer (duly authorized officer) March 5, 1996 By: John H. Untereker /s/ John H. Untereker Vice President and Chief Financial Officer (principal financial officer) EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JANUARY 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS APR-30-1996 JAN-31-1996 3,035 0 31,229 0 26,383 63,032 211,723 115,660 163,541 30,084 0 506 0 0 79,272 163,541 139,724 140,840 122,367 133,081 0 0 2,312 7,759 3,095 4,664 0 0 0 4,664 0.66 0.66
EX-3 3 Exhibit 3.1(ii) Adopted 8/25/94 Amended 9/28/94 Amended 5/31/95 effective December 6, 1994 BY-LAWS of PETROLEUM HELICOPTERS, INC. SECTION I OFFICES 1.1 Principal Office. The principal office of the Corporation shall be located at 5728 Jefferson Highway, Harahan, Louisiana 70123. 1.2 Additional offices. The Corporation may have such offices at such other places as the Corporation's Board of Directors (the "Board") may from time to time determine or the business of the Corporation may require. SECTION 2 SHAREHOLDERS MEETINGS 2.1 Place of Meetings. Unless otherwise required by law or these By-laws, all meetings of the shareholders shall be held at the principal office of the Corporation or at such other place, within or without the State of Louisiana, as may be designated by the Board. 2.2 Annual Meetings; Notice Thereof. An annual meeting of the shareholders shall be held on the second Thursday of September in each year, at 10:00 a.m., or at such other date or at such other time specified as the Board shall designate, for the purpose of electing directors and for the transaction of such other business as may be properly brought before the meeting. If no annual shareholders' meeting is held for a period of eighteen months, any shareholder may call such meeting to be held at the registered office of the Corporation as shown on the records of the Secretary of State of Louisiana. 2.3 Special Meetings. Special meetings of the share- holders, for any purpose or purposes, may be called by the Chairman of the Board, Chief Executive Officer and President (the "Chairman, CEO and President") or the Board or by the shareholders as provided in the Articles of Incorporation. 2.4 Notice of Meetings. Except as otherwise provided by law, the authorized person or persons calling a shareholders' meeting shall cause written notice of the time, place and purpose of the meeting to be given to all shareholders entitled to vote at such meeting, at least ten days and not more than sixty days prior to the day fixed for the meeting. Notice of the annual meeting need not state the purpose or purposes thereof, unless action is to be taken at the meeting as to which notice is required by law or the By-laws. Notice of a special meeting shall state the purpose or purposes thereof, and the business conducted at any special meeting shall be limited to the purpose or purposes stated in the notice. 2.5 List of Shareholders. At every meeting of shareholders, a list of shareholders entitled to vote, arranged alphabetically and certified by the Corporation's Secretary or by the agent of the Corporation having charge of transfers of shares, showing the number and class of shares held by each such shareholder on the record date for the meeting, shall be produced on the request of any shareholder. 2.6 Quorum. At all meetings of shareholders, the holders of a majority of the total voting power of the Corporation shall constitute a quorum; provided that this subsection shall not have the effect of reducing the vote required to approve or affirm any matter that may be established by law, the Articles of Incorporation or these By-laws. 2.7 Voting. When a quorum is present at any meeting, the vote of the holders of a majority of the voting power present in person or represented by proxy shall decide each question brought before such meeting, unless the question is one upon which, by express provision of law or the Articles of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Directors shall be elected by plurality vote. 2.8 Proxies-General. At any meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing executed by such shareholder and bearing a date not more than eleven months prior to the meeting, unless the instrument provides for a longer period, but in no case will an outstanding proxy be valid for longer than three years from the date of its execution. The person appointed as proxy need not be a shareholder of the Corporation. 2.9 Execution of Proxies. Any proxy must be executed by a shareholder or the shareholder's authorized officer, director, employee or agent. Any signature on a proxy may be affixed by any reasonable means, including but not limited to facsimile signature. 2.10 Electronically Transmitted Proxies. A shareholder may authorize another person or persons to act for him as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or similar agent duly authorized by the person who will be the holder of the proxy to receive such transmission; provided, however, that any such telegram, cablegram or other means of electronic transmission shall be submitted with information from which the Corporation may determine that the telegram, cablegram or other electronic transmission was authorized by the shareholder. If it is determined that such electronic transmissions are valid, the inspectors or other persons making that determination shall specify the information upon which they relied. 2.11 Validity of Copies and other Reproductions of Proxies. Any copy, facsimile, telecommunication or other reliable reproduction of the writing or transmission created pursuant hereto may be substituted or used in lieu of the original writing or transmission for all purposes for which the original writing or transmission could be used; provided, however, that such copy, facsimile telecommunication or other reliable reproduction shall be a complete reproduction of the entire original writing or transmission. 2.12 Voting Power Present or Represented. For purposes of determining the amount of voting power present or represented at any annual or special meeting of shareholders with respect to voting on a particular proposal, shares as to which the proxy holders have been instructed to abstain from voting on the proposal, and shares that have been precluded from voting (whether by law, regulations of the Securities and Exchange Commission, rules or by-laws of any self-regulatory organization or otherwise), will not be treated as present. 2.13 Adjournments. Adjournments of any annual or special meeting of shareholders may be taken without new notice being given unless a new record date is fixed for the adjourned meeting, but any meeting at which directors are to be elected shall be adjourned only from day to day until such directors shall have been elected. 2.14 Withdrawal. If a quorum is present or represented at a duly organized meeting, such meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum as fixed in Section 2.6 of these By-laws, or the refusal of any shareholders present to vote. 2.15 Lack of Quorum. If a meeting cannot be organized because a quorum has not attended, those present may adjourn the meeting to such time and place as they may determine, subject, however, to the provisions of Section 2.15 hereof. In the case of any meeting called for the election of directors, those who attend the second of such adjourned meetings, although less than a quorum as fixed in Section 2.6 hereof, shall nevertheless constitute a quorum for the purpose of electing directors. 2.16 Presiding officer. The Chairman, CEO and President or in his or her absence, a chairman designated by the Board, shall preside at all shareholders' meetings. 2.17 Definitions of Shareholder, Voting Power and Voting Power Present. As used in these By-laws, and unless the context otherwise requires, (a) the term "shareholder" shall mean a person who is (i) the record holder of shares of the Corporation's voting stock or (ii) a registered holder of any bonds, debentures or similar obligations granted voting rights by the Corporation pursuant to La. R.S. 12:75, (b) the term "voting power" shall mean the right vested by law, these By-laws or the Articles of Incorporation in the shareholders to vote in the determination of a particular question or matter and (c) the term "total voting power" shall mean the total number of votes that the shareholders are entitled to cast in the determination of a particular question or matter. SECTION 3 DIRECTORS 3.1 Powers; Number. All of the corporate powers shall be vested in, and the business and affairs of the Corporation shall be managed by, the Board, which shall consist of four natural persons; provided that, if after proxy materials for any meeting of shareholders at which directors are to be elected are mailed to shareholders any person or persons named therein to be nominated at the direction of the Board becomes unable or unwilling to serve, the foregoing number of authorized directors shall be automatically reduced by a number equal to the number of such persons unless the Board, by a majority vote of the entire Board, selects an additional nominee; provided that in no event shall the number of directors so authorized, nominated and elected be less than the number required by law. No amendment to this Section to decrease the number of directors shall shorten the term of any incumbent director. No director need be a shareholder. 3.2 Powers. The Board may exercise all such powers of the Corporation and do all such lawful acts and things that are not by law, the Articles of Incorporation or these By-laws directed or required to be done by the shareholders. 3.3 General Election. At each annual meeting of share- holders, directors shall be elected to succeed those directors whose terms then expire. Such newly elected directors shall serve until the next succeeding annual meeting of shareholders after their election and until their successors are elected and qualified. A director elected to fill a vacancy shall hold office for a term expiring at the next annual meeting and until his successor is elected and qualified. No decrease in the number of directors constituting the Board shall shorten the term of any incumbent director. 3.4 Vacancies. Except as otherwise provided in the Articles of Incorporation or these By-laws (a) the office of a director shall become vacant if he dies, resigns or is removed from office and (b) the Board may declare vacant the office of a director if he (i) is interdicted or adjudicated an incompetent, (ii) is adjudicated a bankrupt, (iii) in the sole opinion of the Board becomes incapacitated by illness or other infirmity so that he is unable to perform his duties for a period of six months or longer, or (iv) ceases at any time to have the qualifications required by law, the Articles of Incorporation or these By-laws. 3.5 Filling Vacancies. In the event of a vacancy (includ- ing any vacancy resulting from an increase in the authorized number of directors, or from failure of the shareholders to elect the full number of authorized directors), the remaining directors, even though not constituting a quorum, may fill any vacancy on the Board for the unexpired term by a majority vote of the directors remaining in office, provided that the shareholders shall have the right, at any special meeting called for the purpose prior to such action by the Board, to fill the vacancy. 3.6 Notice of Shareholder Nominees. Only persons who are nominated in accordance with the procedures set forth in this Section 3.6 shall be eligible for election as directors. Nomina- tions of persons for election to the Board may be made at a meeting of shareholders by or at the direction of the Board or by a shareholder entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 3.6. Such nominations, other than those made by or at the direction of the Board, shall be made pursuant to timely notice in writing to the Corporation's Secretary. To be timely, a shareholder's notice must be delivered or mailed and received at the principal executive offices of the Corporation not less than 45 days nor more than 90 days prior to the meeting; provided, however, that if less than 55 days notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be received no later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such shareholder's notice shall set forth the following: (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the capital stock of the Corporation of which such person is the beneficial owner and the number of votes such person is entitled to cast at the shareholders' meeting and (iv) any other information relating to such person that would be required to be disclosed in solicitations of proxies for election of directors, or would be otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the shareholder giving the notice (i) the name and address of such shareholder and (b) the class and number of shares of the capital stock of the Corporation of which such shareholder is the beneficial owner and the number of votes such person is entitled to cast at the shareholders' meeting. If requested in writing by the Corporation's Secretary at least 15 days in advance of the meeting, such shareholder shall disclose to the Secretary, within 10 days of such request, whether such person is the sole beneficial owner of the shares held of record by him; and, if not, the name and address of each other person known by the shareholder of record to claim a beneficial interest in such shares. At the request of the Board, any person nominated by or at the direction of the Board for election as a director shall furnish to the Corporation's Secretary that information required to be set forth in a shareholder's notice of nomination that pertains to the nominee. If a shareholder seeks to nominate one or more persons as directors, the Secretary shall appoint two inspectors (the "Inspectors"), who shall not be affiliated with the Corporation, to determine whether a shareholder has complied with this Section 3.6. If the Inspectors shall determine that a shareholder has not complied with this Section 3.6, the Inspectors shall direct the chairman of the meeting to declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the Articles of Incorporation or these By-laws; and the chairman shall so declare to the meeting and the defective nomination shall be disregarded. 3.7 Compensation of Directors. Directors as such, shall receive such compensation for their services as may be fixed by resolution of the Board and shall receive their actual expenses of attendance, if any, for each regular or special meeting of the Board; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 4 MEETINGS OF THE BOARD 4.1 Place of Meetings. The meetings of the Board may be held at such place within or without the State of Louisiana as a majority of the directors may from time to time appoint. 4.2 Initial Meetings. The first meeting of each newly elected Board shall be held immediately following the share- holders' meeting at which the Board is elected and at the same place as such meeting, and no notice of such first meeting shall be necessary for the newly elected directors in order legally to constitute the meeting. 4.3 Regular Meetings; Notice. Regular meetings of the Board may be held at such times as the Board may from time to time determine. No notice of regular meetings of the Board shall be required provided that the date, time and place of regular meetings are fixed by the Board. 4.4 Special Meetings; Notice. Special meetings of the Board may be called by the Chairman, CEO and President on reasonable notice given to each director, either personally or by telephone, mail or by telegram. Special meetings shall be called by the Chairman, CEO and President, or the Secretary in like manner and on like notice on the written request of a majority of the directors and if such officers fail or refuse, or are unable within 24 hours to call a meeting when requested, then the directors making the request may call the meeting on two days' written notice given to each director. The notice of a special meeting of directors need not state its purpose or purposes, but if the notice states a purpose or purposes and does not state a further purpose to consider such other business as may properly come before the meeting, the business to be conducted at the special meeting shall be limited to the purposes stated in the notice. 4.5 Waiver of Notice. Directors present at any regular or special meeting shall be deemed to have received due, or to have waived, notice thereof, provided that a director who participates in a meeting by telephone (as permitted by Section 4.9) shall not be deemed to have received or waived due notice if, at the beginning of the meeting, he objects to the transaction of any business because the meeting is not lawfully called. 4.6 Quorum. A majority of the Board shall be necessary to constitute a quorum for the transaction of business, and except as otherwise provided by law or the Articles of Incorporation or these By-laws, the acts of a majority of the entire Board at a meeting at which a quorum is present shall be the acts of the Board. If a quorum is not present at any meeting of the Board, the directors present may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum is present. 4.7 Withdrawal. If a quorum is present when the meeting convened, the directors present may continue to do business, taking action by vote of a majority of a quorum as fixed in Section 4.6, until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum as fixed in Section 4.6 or the refusal of any director present to vote. 4.8 Action by Consent. Any action that may be taken at a meeting of the Board or any committee thereof, may be taken by a consent in writing signed by all of the directors or by all members of the committee, as the case may be, and filed with the records of proceedings of the Board or such committee. 4.9 Meetings by Telephone or Similar Communication. Members of the Board may participate at and be present at any meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment if all persons participating in such meeting can hear and communicate with each other. Participation in a meeting pursuant to this Section 4.9 shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. SECTION 5 COMMITTEES OF THE BOARD 5.1 General. The Board may designate one or more committees, each committee to consist of two or more of the directors (and one or more directors may be named as alternate members to replace any absent or disqualified regular members), which, to the extent provided by resolution of the Board or the By-laws, shall have and may exercise the powers of the Board in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to documents, but no such committee shall have power or authority in reference to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the shareholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of dissolution, removing or indemnifying directors or amending the By-laws; and unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or authorize the issuance of stock. Such committee or committees shall have such name or names as may be stated in the By-laws, or as may be determined, from time to time, by the Board. Any vacancy occurring in any such committee shall be filled by the Board, but the Chairman of the Board, Chief Executive Officer and President may designate another director to serve on the committee pending action by the Board. Each such member of a committee shall hold office during the term of the Board constituting it, unless otherwise ordered by the Board. 5.2 Compensation Committee. The Board shall establish a Compensation Committee consisting of at least two directors each of whom shall (i) be a "disinterested person" as defined under Article 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, and (ii) not serve, and shall not have served in the past, as an officer or employee of the Corporation or any of its affiliates. The Compensation Committee shall determine the compensation to be paid to officers and key employees of the Corporation. 5.3 Audit Committee. The Board shall establish an Audit Committee consisting of at least two directors who are not officers or employees of the Corporation or any of its affiliates. The Audit Committee shall serve as a focal point for communication between noncommittee directors, the independent accountants and management. The Audit Committee shall make recommendations to the Board concerning the selection and retention of the Corporation's independent auditors, review the results of audits of the Corporation by its independent auditors, discuss audit representations with management, and report the results of its review to the Board. 5.4 Procedures for Committees. Each committee shall keep written minutes of its meetings and all actions taken by a committee shall be reported to the Board at its next meeting, whether regular or special. Failure to keep written minutes or to make such reports shall not affect the validity of action taken by a committee. Each committee shall adopt such rules (not inconsistent with the Articles of Incorporation, these By-laws or any regulations specified for such committee by the Board) as it shall deem necessary for the proper conduct of its functions and the performance of its responsibilities. SECTION 6 REMOVAL OF BOARD MEMBER Any director or the entire Board may be removed at any time by the affirmative vote of not less than a majority of the voting power present at a meeting of shareholders duly called for that purpose. The shareholders at such meeting may proceed to elect a successor or successors for the unexpired term of the director or directors removed. Except as provided in this Section 6, directors shall not be subject to removal. SECTION 7 NOTICES 7.1 Form of Delivery. Whenever under the provisions of law the Articles of Incorporation or these By-laws notice is required to be given to any shareholder or director, it shall not be construed to mean personal notice unless otherwise specifically provided in the Articles of Incorporation or these By-laws, but such notice may be given by mail, addressed to such shareholder or director at his address as it appears on the records of the Corporation, with postage thereon prepaid. Such notices shall be deemed to have been given at the time they are deposited in the United States mail. Notice to a director pursuant to Section 4.4 hereof may also be given personally or by telephone or telegram sent to his or her address as it appears on the Corporation's records. 7.2 Waiver. Whenever any notice is required to be given by law, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. In addition, notice shall be deemed to have been given to, or waived by, any shareholder or director who attends a meeting of shareholders or directors in person, or is represented at such meeting by proxy, without protesting at the commencement of the meeting the transaction of any business because the meeting is not lawfully called or convened. SECTION 8 OFFICERS 8.1 Designations. The Corporation's officers shall be a Chairman, CEO and President (with all such offices to be held by one person), a Secretary, a Chief Operating Officer, a Chief Financial Officer and a Treasurer. The Corporation may also have one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. Any two offices may be held by one person, provided that no person holding more than one office may sign, in more than one capacity, any certificate or other instrument required by law to be signed by two officers. 8.2 Appointment of Certain Officers. At the first meeting of each newly elected Board, or at such other time when there shall be a vacancy, the Board shall elect a Chairman, CEO and President, a Secretary, a Chief Operating Officer, a Chief Financial Officer and a Treasurer, each of whom shall serve for one year and until his or her successor is elected and has qualified. 8.3 Appointment of Other Officers. As soon as practicable after his or her election, the Chairman, CEO and President may appoint one or more Vice Presidents, Assistant Secretaries and Assistant Secretaries. The Chairman, CEO and President shall, following such appointment or appointments, cause to be filed with the minutes of the meeting of the Board an instrument specifying the officers selected. The Chairman, CEO and President may also appoint such other officers, employees and agents of the Corporation as he or she may deem necessary, or may vest the authority to appoint such other officers, employees and agents in such other of the Corporation's officers as he or she deems appropriate subject in all cases to his or her discretion. Subject to these By-laws, all of the officers, employees and agents of the Corporation shall hold their offices or positions for such terms and shall exercise such powers and perform such duties as shall be specified from time to time by the Board or the Chairman, CEO and President. 8.4 Removal. The Board or the Chairman, CEO and President may remove any officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officers, if any, with the Corporation, but the election of an officer shall not in and of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Chairman, CEO and President until the next regular or special meeting of the Board. 8.5 The Chairman, CEO and President. The Chairman, CEO and President shall have general and active responsibility for the management of the Corporation's business, shall be responsible for implementing all orders and resolutions of the Board, shall be the Corporation's chief operating officer, shall supervise the daily operations of the Corporation's business and shall preside at meetings of the Board and of the shareholders. 8.6 The Vice Presidents. The Vice Presidents in the order specified by the Chairman, CEO and President or, if not so specified, in the order of their seniority shall, in the absence or disability of the Chairman, CEO and President, perform the duties and exercise the powers of the President, and shall perform such other duties as the Chairman, CEO and President shall prescribe. 8.7 The Secretary. The Secretary shall attend all meetings of the Board and all meetings of the shareholders, record all votes and the minutes of all proceedings in a book to be kept for that purpose, give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board, and perform such other duties as may be prescribed by the Board or Chairman, CEO and President. The Secretary shall also keep in safe custody the Corporation's seal, if any, and affix the seal to any instrument requiring it. 8.8 The Chief Operating Officer. The Chief Operating Officer shall be the Corporation's principal operations officer and shall manage the Corporation's operational affairs and direct the activities of officers and other employees responsible for engineering, quality assurance and materials, oil and gas and technical services marketing, pilots, sector managers, domestic operations, field maintenance (135 maint), and overhaul and repair (145 maint). The Chief Operating Officer shall also perform such other duties as may be requested from time to time by the Board, the Chairman, CEO and President, or the By-laws. 8.9 The Chief Financial Officer. The Chief Financial Officer shall be the Corporation's principal financial officer and shall manage the Corporation's financial affairs and direct the activities of the Treasurer and other officers responsible for the Corporation's financial affairs. The Chief Financial Officer may sign, execute and deliver in the name of the Corporation contracts, bonds and other obligations, shall be responsible for all of the Corporation's internal and external financial reporting and shall perform such other duties as may be prescribed from time to time by the Board, the Chairman, CEO and President or by the By-laws. 8.10 The Treasurer. As directed by the Chief Financial Officer, the Treasurer shall have general custody of all funds and securities of the Corporation. The Treasurer may sign, with the Chairman, CEO and President, Chief Financial Officer or such other person or persons as may be designated for the purpose by the Board, all bills of exchange or promissory notes of the Corporation. The Treasurer shall perform such other duties as may be prescribed from time to time by the Chief Financial Officer or the By-laws. SECTION 9 STOCK 9.1 Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by the President or a Vice President and the Secretary or an Assistant Secretary evidencing the number and class (and series, if any) of shares owned by him, containing such information as required by law and bearing the seal of the Corporation. If any stock certificate is manually signed by a transfer agent or registrar other than the Corporation itself or an employee of the Corporation, the signa- ture of any such officer may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. 9.2 Missing Certificates. The President or any Vice President may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. As a condition precedent to the issuance of a new certificate or certificates, the officers of the Corporation shall, unless dispensed with by the President, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, (i) to advertise or give the Corporation a bond or (ii) enter into a written indemnity agreement, in each case in an amount appropriate to indemnify the Corporation against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 9.3 Transfers. Upon surrender to the Corporation or the transfer agent of the Corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. SECTION 10 DETERMINATION OF SHAREHOLDERS 10.1 Record Date. For the purpose of determining share- holders entitled to notice of and to vote at a meeting, or to receive a dividend, or to receive or exercise subscription or other rights, or to participate in a reclassification of stock, or in order to make a determination of shareholders for any other proper purpose, the Board may fix in advance a record date for determination of shareholders for such purpose, such date to be not more than sixty days and, if fixed for the purpose of determining shareholders entitled to notice of and to vote at a meeting, not less than ten days, prior to the date on which the action requiring the determination of shareholder is to be taken. 10.2 Registered Shareholders. Except as otherwise provided by law, the Corporation, and its directors, officers and agents may recognize and treat a person registered on its records as the owner of shares, as the owner in fact thereof for all purposes, and as the person exclusively entitled to have and to exercise all rights and privileges incident to the ownership of such shares, and rights under this Section 10.2 shall not be affected by any actual constructive notice that the Corporation, or any of its directors, officers or agents, may have to the contrary. SECTION 11 MISCELLANEOUS 11.1 Dividends. Except as otherwise provided by law or the Articles of Incorporation, dividends upon the stock of the Corporation may be declared by the Board at any regular or special meeting. Dividends may be paid in cash, property, or in shares of stock. 11.2 Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Chairman, CEO and President or the Board may from time to time designate. Signatures of the authorized signatories may be by facsimile. 11.3 Fiscal Year. The Board may adopt for and on behalf of the Corporation a fiscal or a calendar year. 11.4 Seal. The Board may adopt a corporate seal, which seal shall have inscribed thereon the name of the Corporation. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Failure to affix the seal shall not, however, affect the validity of any instrument. 11.5 Gender. All pronouns and variations thereof used in these By-laws shall be deemed to refer to the masculine, feminine or neuter gender, singular or plural, as the identity of the person, persons, entity or entities referred to require. SECTION 12 INDEMNIFICATION The Corporation shall indemnify to the full extent permitted by law any director, officer or employee against any expenses or costs, including attorneys' fees, actually or reasonably incurred by him or her in connection with any threatened, pending or completed claim, action, suit or proceeding, whether criminal, civil, administrative or investigative, against such person or as to which he or she is involved solely as a witness or person required to give evidence because he or she is a director, officer or employee of the Corporation or serves or served at the request of the Corporation with any other enterprise as a director, officer or employee. For purposes of this Section 12, the term "Corporation" shall include any predecessor of this Corporation and any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a consolidation or merger; the term "other enterprises" shall include any corporation, partnership, joint venture, trust or employee benefit plan; service "at the request of the Corporation" shall include service as a director, officer or employee of the Corporation that imposes duties on, or involves services by, such director, officer or employee with respect to an employee benefit plan, its participants or beneficiaries; any excise taxes assessed on a person with respect to an employee benefit plan shall be deemed to be indemnifiable expenses; and action by a person with respect to an employee benefit plan that such person reasonably believes to be in the interest of the participants and beneficiaries of such plan shall be deemed to be action not opposed to the best interests of the Corporation. SECTION 13 AMENDMENTS The Corporation's By-laws may be amended or repealed only by a majority of the Board or the affirmative vote of the holders of at least a majority of the voting power present at any regular or special meeting of shareholders, the notice of which states that the proposed amendment or repeal is to be considered at the meeting. -----END PRIVACY-ENHANCED MESSAGE-----