-----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, DvwgewBPe5oDzyQP0KqjnPrkJuW4LfVGgHIJ8K15WeFJMMjovMy7zZVdRNR6Qxnr oGllsxBwoEiyCerP0owRQQ== 0000350403-00-000008.txt : 20000517 0000350403-00-000008.hdr.sgml : 20000517 ACCESSION NUMBER: 0000350403-00-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09827 FILM NUMBER: 636807 BUSINESS ADDRESS: STREET 1: 2121 AIRLINE DRIVE SUITE 400 STREET 2: P O BOX 578 CITY: METAIRIE STATE: LA ZIP: 70001-5979 BUSINESS PHONE: 5048283323 MAIL ADDRESS: STREET 1: 113 BORMAN DRIVE CITY: LAFAYETTE STATE: LA ZIP: 70508 10-Q 1 =========================================================================== 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: March 31, 2000 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 Identification No.) incorporation or organization) 2121 Airline Drive Suite 400 P.O. Box 578, 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 May 1, 2000 Voting Common Stock 2,793,386 shares Non-Voting Common Stock 2,384,168 shares =========================================================================== PART I - FINANCIAL INFORMATION Item 1. Financial Statements PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands of dollars, except share data) (Unaudited) March 31, December 31, 2000 1999 ---------- ------------ ASSETS Current Assets: Cash and cash equivalents $ 2,055 $ 1,663 Accounts receivable - net of allowance: Trade 36,466 36,917 Other 4,280 3,558 Inventory 38,451 37,277 Prepaid expenses 1,824 2,987 Refundable income taxes 2,733 3,922 ----------- ---------- Total current assets 85,809 86,324 ----------- ---------- Investments in affiliates and other 1,654 1,685 Property and equipment, at cost: Flight equipment 215,758 214,638 Other 43,319 42,231 ---------- ---------- 259,077 256,869 Less accumulated depreciation (123,177) (121,822) ---------- ---------- 135,900 135,047 ---------- ---------- Total Assets $ 223,363 $ 223,056 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $ 20,979 $ 20,013 Accrued vacation payable 6,218 6,020 Current maturities of long-term debt 5,604 5,592 ---------- ---------- Total current liabilities 32,801 31,625 ---------- ---------- Long-term debt, net of current maturities 72,142 72,048 Deferred income taxes 17,391 17,776 Other long-term liabilities 8,834 7,984 Commitments and Contingencies (Note 5) Shareholders' Equity Voting common stock - par value of $ 0.10; authorized shares of 12,500,000 279 279 Non-voting common stock - par value of $ 0.10; authorized shares of 12,500,000 237 237 Additional paid-in capital 11,729 11,729 Retained earnings 79,950 81,378 ---------- ---------- Total shareholders' equity 92,195 93,623 Total Liabilities and ---------- ---------- Shareholders' Equity $ 223,363 $ 223,056 ========== ========== The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Thousands of dollars, except per share data) (Unaudited) Three Months Ended March 31, ----------------------- 2000 1999 ---------- --------- REVENUES: Operating revenues $ 52,659 $ 59,087 Other income, net 147 2,043 --------- -------- 52,806 61,130 -------- -------- EXPENSES: Direct expenses 49,514 53,856 Selling, general and administrative 4,021 4,598 Interest expense 1,510 1,428 -------- -------- 55,045 59,882 -------- -------- Earnings (loss) before income taxes (2,239) 1,248 Income taxes (811) 516 -------- -------- Net earnings (loss) $(1,428) $ 732 ======== ======== Basic earnings per common share $ (.28) $ .14 ======== ======== Diluted earnings per common share $ (.28) $ .14 ======== ======== Weighted average common shares outstanding 5,161 5,169 Incremental common shares - 52 -------- -------- Weighted average common shares and equivalents 5,161 5,221 ======== ======= Dividends declared per common share $ - $ .10 ======== ======== The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands of dollars) (Unaudited) Three Months Ended March 31, -------------------- 2000 1999 -------- -------- Cash flows from operating activities: Net earnings (loss) $(1,428) $ 732 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation 3,195 4,221 Deferred income taxes (385) - Gain on asset dispositions (162) (2,169) Equity in net earnings of investee companies, net of distributions - 146 Changes in operating assets and liabilities 2,230 7,662 -------- -------- Net cash provided by operating activities 3,450 10,592 -------- -------- Cash flows from investing activities: Investments in affiliates 7 (80) Purchase of property and equipment (6,874) (8,627) Proceeds from asset dispositions 3,703 8,117 -------- -------- Net cash used in investing activities (3,164) (590) -------- -------- Cash flows from financing activities: Proceeds from long-term debt 6,000 - Payments on long-term debt (5,894) (7,461) Dividends paid - (260) -------- -------- Net cash provided by (used in) financing activities 106 (7,721) -------- -------- Increase in cash and cash equivalents 392 2,281 Cash and cash equivalents, beginning of period 1,663 205 -------- -------- Cash and cash equivalents, end of period $ 2,055 $ 2,486 ======== ======== The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. General The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions of the Securities and Exchange Commission ("SEC") from the books and records of Petroleum Helicopters, Inc. and Subsidiaries ("PHI" or the "Company"). In the opinion of management, these financial statements reflect all adjustments, consisting of only normal, recurring adjustments, necessary to present fairly the financial results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to rules and regulations of the SEC; 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 Transition Report on Form 10-K for the eight-month transition period ended December 31, 1999 and the accompanying notes and Management's Discussion and Analysis of Financial Condition and Results of Operations. The Company's financial results, particularly as they relate to the Company's 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 first 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 a full fiscal year. 2. Change in Fiscal Year The Company changed its fiscal year end from April 30 to a fiscal year ending December 31. The Company filed a Transition Report on Form 10-K for the transition period ended December 31, 1999. The Company is commencing reporting on a calendar year basis with the filing of this Form 10-Q for the quarter ended March 31, 2000. 3. Earnings per Share Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in the same manner as basic earnings per share except that the denominator is increased to include the number of additional common shares that could have been outstanding assuming the exercise of stock options and the potential shares that would have a dilutive effect on earnings per share. The diluted share base for the three months ended March 31, 2000 excludes incremental shares of 34,229 related to employee stock options and restricted stock awards. These shares are excluded due to their antidilutive effect as a result of the Company's net loss for the three months ended March 31, 2000. 4. Segment Information The Company has adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information," which requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and measuring their performance. The Company operates principally in three segments: Oil and Gas Aviation Services, Aeromedical Services and Technical Services. The Oil and Gas Aviation Services segment includes domestic and international helicopter services provided to oil and gas customers. The Aeromedical Services segment includes all services provided to the Company's air medical customers, including hospitals and medical programs. The Technical Services segment provides aircraft maintenance and repair services to outside parties. As of January 1, 2000, the Company has changed its basis of segmentation to present Technical Services as a separate segment. Previously, Technical Services was included in the Oil and Gas Aviation Services segment. All periods presented below include Technical Services as a separate reporting segment. Segment operating income is based on operating revenues less direct expenses and selling, general and administrative costs as well as interest expense applicable to the operating segment. Segment assets are those assets used exclusively in the operation of each operating segment or which are allocated when used jointly. Corporate assets are principally cash and cash equivalents, short term investments, other current assets, and certain property, plant and equipment. Corporate overhead, consisting primarily of non-allocable selling, general and administrative costs, is not allocated to the operating segments. Summarized financial information concerning the Company's operating segments for the three month periods ended March 31, 2000 and 1999 is as follows (in thousands): Three Months Ended March 31, ---------------------- 2000 1999 -------- --------- Segment operating revenues, excluding other income, net: Oil and Gas Aviation Services $ 39,220 $ 41,046 Aeromedical Services 11,054 11,179 Technical Services 2,385 6,862 --------- --------- Total operating revenues, excluding other income, net $ 52,659 $ 59,087 ========= ========= Segment operating income(loss), excluding other income, net: Oil and Gas Aviation Services $ 726 $ 843 Aeromedical Services 35 366 Technical Services (31) 1,218 --------- --------- Total segment operating income(loss), excluding other income, net 730 2,427 Other income, net 147 2,043 Unallocated corporate overhead (3,116) (3,222) --------- --------- Earnings (loss) before income taxes $ (2,239) $ 1,248 ========= ========= March 31, December 31, 2000 1999 ------------ -------------- Segment Assets: Oil and Gas Aviation Services $ 190,697 $ 189,883 Aeromedical Services 25,299 25,541 Technical Services 1,937 1,997 Corporate 5,430 5,635 --------- --------- Total 223,363 223,056 ========= ========= 5. Commitments and Contingencies Environmental Matters - The Company continues to review selected domestic bases for possible fuel contamination resulting from routine flight operations. The aggregate estimated liability recorded for environmental related costs at March 31, 2000 is $ 3.0 million which the Company believes is adequate for probable and estimable environmental costs. The Company will make additional provisions in future periods to the extent appropriate as further information regarding these costs becomes available. No provisions were recorded in the quarter ended March 31, 2000. Legal Matters - The Company is named as a defendant in various legal actions which have arisen in the ordinary course of its business and not been finally adjudicated. The amount, if any, of ultimate liability with respect to such matters cannot be determined; however, after consulting with legal counsel, the Company has established accruals which it believes adequately provide for the settlement of such litigation. In the opinion of management, the amount of the ultimate liability with respect to these actions will not have a material adverse effect on results of operations, cash flow or financial position of the Company. Long-Term Debt - The Company's loan agreement with its principal lending group is subject to certain financial covenants with which the Company was in compliance or had received appropriate waivers at March 31, 2000. These covenants include maintaining certain levels of cash flow, working capital and shareholders' equity and contain other provisions some of which restrict purchases of the Company's stock, capital expenditures and payment of dividends. The declaration or payment of dividends is restricted to 20% of net earnings for the previous four fiscal quarters. Such agreement also limits the creation, incurrence or assumption of Funded Debt (as defined, which includes long-term debt) and the acquisition of investments in unconsolidated subsidiaries. 6. New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS No. 133 establishes new accounting and reporting standards for derivative financial instruments and for hedging activities. SFAS No. 133 requires the Company to measure all derivatives at fair value and to recognize them in the balance sheet as an asset or liability, depending on the Company's rights or obligations under the applicable derivative contract. In June 1999, the FASB issued SFAS No. 137, which deferred the effective date of adoption of SFAS No. 133 for one year. The Company will adopt SFAS No. 133 no later than the first quarter of fiscal year 2001. The Company has considered the implications of adopting the new method of accounting for derivatives and hedging activities and has concluded that its implementation will not have a material impact on the Company's consolidated financial statements. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the accompanying unaudited consolidated financial statements and the notes to the unaudited consolidated financial statements as well as the Company's Transition Report on Form 10-K for the eight month transition period ended December 31, 1999. Forward-Looking Statements All statements other than statements of historical fact contained in this Form 10-Q, other periodic reports filed by the Company under the Securities Exchange Act of 1934 and other written or oral statements made by it or on its behalf, are forward-looking statements. When used herein, the words "anticipates", "expects", "believes", "intends", "plans", or "projects" and similar expressions are intended to identify forward-looking statements. It is important to note that forward-looking statements are based on a number of assumptions about future events and are subject to various risks, uncertainties and other factors that may cause the Company's actual results to differ materially from the views, beliefs and estimates expressed or implied in such forward-looking statements. Although the Company believes that the assumptions reflected in forward-looking statements are reasonable, no assurance can be given that such assumptions will prove correct. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements include but are not limited to the following: flight variances from expectations, volatility of oil and gas prices, the substantial capital expenditures required to fund its operations, environmental risks, competition, government regulation, unionization, and the ability of the Company to implement its business strategy. All forward- looking statements in this document are expressly qualified in their entirety by the cautionary statements in this paragraph. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Overview The Company is engaged primarily 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 performs helicopter transportation services for a variety of hospital and medical programs and aircraft maintenance to outside parties. The Company generates flight revenues from both ongoing service contracts with established customers and non-contract flights referred to as "Specials". Oil and Gas Aviation Services contracts, both domestic and international, 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. Aeromedical Services contracts also provide for fixed and hourly charges, but are generally for longer terms and impose early cancellation fees to encourage customers to fulfill the contract term and cover the Company's additional up-front costs in the event of early termination. Air Evac Services, Inc. ("Air Evac"), a separately incorporated company within the Company's Aeromedical Services operating segment, operates in Arizona and primarily derives its revenues from third party payors based on per hour or per seat charges. These contracts are predominantly short-term in nature. Technical Services is an airframe and component maintenance and repair facility whose experienced staff performs a range of maintenance tasks under an FAA-approved repair station. The repair station ratings include airframe, powerplant, accessories, radio, instrument and specialized service. Technical Services is also an authorized service center for Bell Helicopter Textron, Inc., American Eurocopter Corporation and Turbomeca Engine Corporation, and has extensive experience and capabilities in Sikorsky Aircraft Corporation S-76 maintenance and repair. The Company's Technical Services contracts are generally provided on an actual cost plus negotiated mark-up basis. Results of Operations A summary of operating results and other income statement information for the three-month periods ended March 31, 2000 and 1999 is as follows (in thousands): Three Months Ended March 31, ---------------------- 2000 1999 -------- --------- Revenues: Operating revenues $ 52,659 $ 59,087 Other income, net 147 2,043 --------- -------- 52,806 61,130 --------- -------- Expenses: Direct expenses 49,514 53,856 Selling, general and administrative 4,021 4,598 Interest expense 1,510 1,428 --------- -------- 55,045 59,882 --------- -------- Earnings (loss) before income taxes (2,239) 1,248 Income taxes (811) 516 --------- -------- Net earnings (loss) $ (1,428) $ 732 ========= ======== Consistent with the presentation of segment information in Note 4 in the "Notes to Unaudited Condensed Consolidated Financial Statements", the following table sets forth certain operating information which will form the basis for discussion of each of the Company's three identified segments, Oil and Gas Aviation Services, Aeromedical Services and Technical Services: Three Months Ended March 31, ----------------------- 2000 1999 --------- --------- (in thousands, except flight hours) Segment operating revenues, excluding other income, net: Oil and Gas Aviation Services: Domestic $ 33,499 $ 35,014 International 5,721 6,032 --------- --------- Sub-total 39,220 41,046 Aeromedical Services 11,054 11,179 Technical Services 2,385 6,862 --------- --------- Total $ 52,659 $ 59,087 ========= ========= Segment operating income (loss), excluding other income, net: Oil and Gas Aviation Services $ 726 $ 843 Aeromedical Services 35 366 Technical Services (31) 1,218 --------- --------- Total $ 730 $ 2,427 ========= ========= Segment operating margins, excluding other income, net: Oil and Gas Aviation Services 1.85% 2.05% Aeromedical Services .32% 3.27% Technical Services (1.30%) 17.75% ========= ========= Combined 1.39% 4.11% ========= ========= Flight hours: Oil and Gas Aviation Services: Domestic 35,282 37,305 International 6,187 6,120 --------- --------- Sub-total 41,469 43,425 Aeromedical Services 5,339 5,458 Other 85 193 --------- --------- Total 46,893 49,076 ========= ========= March 31, ---------------------- 2000 1999 -------- --------- Aircraft operated: Oil and Gas Aviation Services: Domestic 204 215 International 30 33 -------- -------- Sub-total 234 248 Aeromedical Services 45 43 -------- -------- Total 279 291 ======== ======== Fleet Utilization 77% 80% ======== ======== Number of employees 1,847 2,060 ======== ======== Three Months Ended March 31, 2000 compared with Three Months Ended March 31, 1999 Oil and Gas Aviation Services Domestic flight hours for the three-month period ended March 31, 2000 decreased by 5.4% compared with the same period in the prior year. The decrease is due primarily to the overall decrease in demand for helicopter services from the oil and gas industry. Despite the recent improvements in oil and gas prices, activity in the Gulf of Mexico continues to be depressed as oil and gas companies continue to focus on their costs. As a result, operating revenues decreased $ 1.5 million or 4.3%, to $ 33.5 million for the quarter ended March 31, 2000 as compared to $ 35.0 million in the prior year quarter. The inconsistent change in revenue (4.3% decrease) as compared with flight activity (5.4% decrease) for the current quarter is due primarily to a shift in the mix of aircraft generating revenues and a rate increase for services which was implemented January 1, 2000, effective upon renewal of customer contracts. International flight hours for the three-month period ended March 31, 2000 increased by 1.1% compared with the same period in the prior year. Although flight activity increased slightly, revenues declined due to the conclusion of a Bell 412 contract in Venezuela which required fixed payments not withstanding the lack of flight activity. As a result, operating revenues decreased $ 0.3 million or 5.2%, to $5.7 million for the quarter ended March 31, 2000 as compared to $ 6.0 million in the prior year quarter. Total Oil and Gas Aviation Services' operating margin of 1.9% for the quarter compares to 2.1% for the similar quarter in the prior year. The decrease in margin is due primarily to decreased activity levels. Although the Company had previously reduced its cost structure, it is continuing to review all elements of cost and intends to make further reductions during the year. Aeromedical Services Aeromedical Services flight hours for the three-month period ended March 31, 2000 decreased by 2.2% compared with the same period in the prior year. The decrease in fight activity is due to decreased activity in the Company's Arizona operations which caused the Company to restructure this operation in November, 1999 and to demobilize and sell several aircraft. Operating margin in the Arizona operation has increased as a result of the restructuring. The Company allocates costs to its industry segments primarily on the basis of flight activity. The lower level of activity in the Oil and Gas Aviation Services segment resulted in a greater proportion of maintenance costs being allocated to the Aeromedical Services segment. This resulted in the decrease in the operating margin from 3.3% to .3%. Technical Services Technical Services operating revenues for the quarter ended March 31, 2000 were $ 2.4 million compared to $ 6.9 million in the prior year, a decrease of $ 4.5 million. Technical Services' operating margin was (1.3%) in the current quarter compared to 17.8% for the prior year quarter. The decrease in operating revenues and operating margin was primarily attributable to work performed on two large contracts for the refurbishment and overhaul of two helicopters and a large parts sale, all occurring during the quarter ended March 31, 1999. Other Income, net Other income, net, includes gains recorded relating to the sale of aircraft of $ 0.2 million for the quarter ended March 31, 2000 as compared to a gain of $ 2.2 million on aircraft sales for the prior year quarter. Direct Expenses Direct expenses for the three-month period ended March 31, 2000 decreased by 8.1% compared with the same period in the prior year, primarily due to a decrease in cost of sales in Technical Services attributable to two major contracts for refurbishment and overhaul of two helicopters completed in the three-month period ended March 31, 1999. Selling, General and Administrative Expenses Selling, general and administrative expenses for the three-month period ended March 31, 2000 decreased by 12.5% compared with the same period in the prior year, primarily due to a decrease in Y2K compliance and computer programming costs. Interest Expense Interest expense for the quarter ended March 31, 2000 increased $ 0.1 million or 5.7% to $ 1.5 million. The increase is due primarily to increases in interest rates for the period, compared to the same quarter in the prior year. Income Taxes Income tax expense for the quarter ended March 31, 2000 decreased $ 1.3 million to $ (0.8) million. The decrease was attributable to a corresponding decrease in earnings. Liquidity and Capital Resources The Company's cash position as of March 31, 2000 was $ 2.1 million compared to $ 1.7 million at December 31, 1999. Working capital decreased $ 1.7 million from $ 54.7 million at December 31, 1999 to $ 53.0 million. Net cash provided by operating activities during the three months ended March 31, 2000 was $ 3.5 million. Total long-term debt increased $ 0.1 million to $ 77.7 million, of which the current portion is $ 5.6 million, payable in equal quarterly installments, which the Company intends to pay with cash flow from aircraft sales and operations. At May 1, 2000, the Company had $ 9.5 million of credit capacity available under its credit facilities. The Company believes its cash flow from operations in conjunction with its credit capacity and proceeds from asset sales is sufficient to meet its planned expenditure requirements for the foreseeable future. Net cash used in investing activities during the three months ended March 31, 2000 was $ 3.2 million. Investing activities included the purchase and completion of aircraft improvements and engines and other property, plant and equipment for $ 6.9 million, which were primarily funded through $ 3.7 million in proceeds from asset dispositions. During 2001 the revolving credit facility portion of the credit agreement converts to a term loan, thereby increasing total annual principal debt payments to approximately $ 12 million. The Company intends to obtain an extension of the conversion requirement, or to refinance its debt. Environmental Matters The Company continues to review selected domestic bases for possible fuel contamination resulting from routine flight operations. The aggregate liability recorded for environmental related costs at March 31, 2000 is $ 3.0 million which the Company believes is adequate for probable and estimable environmental costs. The Company will make additional provisions in future periods to the extent appropriate as further information regarding these costs becomes available. Employees As of March 31, 2000, the Company employed a total of 1,847 people. The Company believes its employee relations to be satisfactory, and it has never experienced a work stoppage. Currently, none of the Company's employees are covered by union contracts. However, on March 10, 2000, the Company's pilots voted to become organized under the Office and Professional Employees International Union. The Company does not believe that the terms of any pilots' contract will place it at a disadvantage with its competitors as management believes that pay scales and work rules will continue to be similar throughout the industry. New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS No. 133 establishes new accounting and reporting standards for derivative financial instruments and for hedging activities. SFAS No. 133 requires the Company to measure all derivatives at fair value and to recognize them in the balance sheet as an asset or liability, depending on the Company's rights or obligations under the applicable derivative contract. In June 1999, the FASB issued SFAS No. 137, which deferred the effective date of adoption of SFAS No. 133 for one year. The Company will adopt SFAS No. 133 no later than the first quarter of fiscal year 2001. The Company has considered the implications of adopting the new method of accounting for derivatives and hedging activities and has concluded that its implementation will not have a material impact on the Company's consolidated financial statements. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There were no material changes to the Company's disclosures regarding derivatives in its Form 10-K for the eight-month transition period ended December 31, 1999. 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 (incorporated by reference to Exhibit No. 3.1 (ii) to PHI's Report on Form 10-Q for the quarterly period ended July 31, 1996). (iii) Amendment dated March 17, 2000 to Section 2.2 of the By-laws of the Company. 10.21 Third Amendment (dated June 30, 1999) to Amended and Restated Loan Agreement originally dated as of January 31, 1986, Amended and Restated in its entirety as of March 31, 1997, among Petroleum Helicopters, Inc., Whitney National Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as agent. 27 Financial Data Schedule (b) Reports on Form 8-K No reports were filed on Form 8-K during the quarter ended March 31, 2000. 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. May 15, 2000 By: /s/ Carroll W. Suggs ------------------------------------ Carroll W. Suggs Chairman of the Board, President and Chief Executive Officer May 15, 2000 By: /s/ Michael J. McCann ------------------------------------ Michael J. McCann Chief Financial Officer and Treasurer EX-3 2 Exhibit 3.1 (iii) B. BY-LAW AMENDMENT RESOLVED, that Section 2.2 of the By-Laws are hereby amended so as to read as follows: 2.2 Annual Meetings. Notice Thereof. An annual meeting of the shareholders shall be held at such date at such time as may be specified by the board of Directors in the call of the meeting, 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." EX-10 3 Exhibit 10.21 LIMITED WAIVER AND THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT This LIMITED WAIVER AND THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this "Waiver and Amendment") is being entered into as of June 30, 1999, by and among PETROLEUM HELICOPTERS, INC., a Louisiana corporation (the "Company"), BANK OF AMERICA, N.A., a national banking association (f/k/a Bank of America National Trust and Savings Association, successor by merger to Bank of America, N.A., f/k/a NationsBank, N.A., successor by merger to NationsBank of Texas, N.A. ("NationsBank") ("Bank of America"), WHITNEY NATIONAL BANK, a national banking association ("Whitney"), BANK ONE, LOUISIANA, N.A., a national banking association ("Bank One" (as successor by merger to First National Bank of Commerce, a national banking association ("FNBC")) and together with NationsBank and Whitney, being hereinafter referred to collectively as the "Banks", and Bank of America as agent for the Banks (in such capacity, the "Agent"). PRELIMINARY STATEMENTS (1) The Company, NationsBank, Whitney, FNBC and the Agent have entered into that certain Loan Agreement, originally dated as of January 31, 1986, as amended and restated in its entirety as of March 31, 1997, and as amended by that certain First Amendment to Amended and Restated Loan Agreement, dated as of December 31, 1997 and that certain Second Amendment to Amended and Restated Loan Agreement, dated as of November 30, 1998 (such Loan Agreement, as so amended and restated and as the same may be further amended from time to time, being hereinafter referred to as the "Loan Agreement"). Terms used herein, unless otherwise defined herein, shall have the meanings set forth in the Loan Agreement. (2) (3) FNBC has merged with and into Bank One. (4) (5) NationsBank has merged with and into NationsBank, N.A., which then changed its name to Bank of America, N.A., which then merged with and into Bank of America National Trust and Savings Association, which then changed its name to Bank of America, N.A. (6) (7) The Company plans to change its fiscal year end from April 30 to December 31, effective December 31, 1999, with the effect that the current fiscal year shall be an eight-month fiscal year ending December 31, 1999 and that the last fiscal quarter of such fiscal year shall be a two-month fiscal quarter ending December 31, 1999. (8) (9) The Company recorded a restructuring charge of $6,585,000 for the fiscal quarter ending April 30, 1999. (the "Restructuring Charge"). (10) (11) The deduction of the Restructuring Charge from Consolidated Net Income when calculating the amount of cash dividends permitted to be paid or declared by the Company pursuant to clause (a) of Section 8.02 of the Loan Agreement (such amount of cash dividends is herein referred to as the "Authorized Dividends Payments") and Modified Cash Flow Coverage would cause the Company to violate the restrictions of Sections 8.02 and 8.04, respectively, of the Loan Agreement. (12) (13) The Company has notified the Banks of an increase in the amount of the Indebtedness for Money Borrowed listed on Schedule III to the Loan Agreement pertaining to operating leases for aircraft and such increase would violate the restrictions of Section 8.06 of the Loan Agreement. (14) (15) The Company has requested that the Banks waive, and the Banks now wish to waive subject to the terms and conditions specified herein, (a) the restrictions of Sections 8.02 and 8.04 and any other provisions of the Loan Agreement to the extent that Sections 8.02 and 8.04 and such other provisions of the Loan Agreement would require the deductions of the Restructuring Charge from Consolidated Net Income when calculating Authorized Dividend Payments and Modified Cash Flow Coverage for purposes of Sections 8.02 and 8.04, respectively, of the Loan Agreement, and (b) compliance with the restrictions of Section 8.06 of the Loan Agreement through June 30, 2000 to the extent that the restrictions of Section 8.06 of the Loan Agreement were violated by the increase in the amount of the Indebtedness for Money Borrowed listed on Schedule III to the Loan Agreement pertaining to operating leases for aircraft. The Company and the Banks further wish to provide for certain acknowledgments and agreements regarding the change of the Company's fiscal year end. (16) (17) NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, the Banks and the Agent hereby agree as follows: (18) 2. Pursuant to Section 12.02 of the Loan Agreement, the Banks hereby waive the restrictions of Sections 8.02 and 8.04 and any other provisions of the Loan Agreement to the extent that Sections 8.02 and 8.04 and such other provisions of the Loan Agreement would require the deductions of the Restructuring Charge from Consolidated Net Income (a) when calculating Authorized Dividend Payments for any dividends upon its common stock paid on, or declared in respect of the fiscal quarters of the Company ending on, any date from July 31, 1999 through and including October 31, 1999 and (b) when calculating Modified Cash Flow Coverage for purposes of Section 8.04 of the Loan Agreement for any date through and including June 30, 2000. 3. 4. Pursuant to Section 12.02 of the Loan Agreement, (a) the Banks hereby waive compliance with the restrictions of Section 8.06 of the Loan Agreement through June 30, 2000 to the extent that the restrictions of Section 8.06 of the Loan Agreement were violated by the increase in the amount of the Indebtedness for Money Borrowed listed on Schedule III to the Loan Agreement pertaining to operating leases for aircraft and (b) the parties hereto agree (i) that, effective as of the date hereof, the Loan Agreement is hereby amended by (A) deleting the date "March 31, 1997" appearing in Section 8.06 of the Loan Agreement and replacing it with "December 31, 1999", (B) by inserting the text ", permit to exist" immediately before the text "or in any manner become liable" in each place it appears in Section 8.06 of the Loan Agreement and (C) by replacing Schedule III thereto in its entirety with a revised Schedule III (attached hereto) reflecting Indebtedness for Money Borrowed existing on December 31, 1999 , (ii) that, effective as of June 30, 2000, the Company shall comply with the restrictions of Section 8.06 of the Loan Agreement as amended hereby and (iii) that from the date hereof through June 30, 2000 the Company will not, and will not permit any Subsidiary to, create, assume, incur, guarantee, permit to exist or in any manner become liable, contingently or otherwise, in respect of any Indebtedness for Money Borrowed, except for the Notes, Permitted Letters of Credit, and other Indebtedness for Money Borrowed of the type listed on Schedule III attached hereto, provided that the aggregate amount outstanding of such other Indebtedness for Money Borrowed shall not exceed $140,000,000. 5. 6. The parties hereto acknowledge and agree that upon the change of the Company's fiscal year end from April 30 to December 31, effective December 31, 1999, the current fiscal year shall be an eight-month fiscal year ending December 31, 1999 and the last fiscal quarter of such fiscal year shall be a two-month fiscal quarter ending December 31, 1999. The parties hereto further agree that, upon such change of the Company's fiscal year end, (a) the two month period of November 1, 1999 through December 31, 1999 and the eight month period of May 1, 1999 through December 31, 1999 shall be considered a "fiscal quarter" and a "fiscal year", respectively, for all purposes under the Loan Agreement, (b) that any calculation to be made pursuant to the Loan Agreement with respect to a period of four consecutive fiscal quarters shall be made with respect to a period of twelve consecutive fiscal months, and (c) that any delivery of documents or other items to be made by the Company pursuant to Section 7.01 of the Loan Agreement with respect to, or within a specified period of time after the periods specified below (or any like periods) as the "Existing Periods", shall, for purposes of the current fiscal year only, be with respect to, or within such specified period of time after the period specified below as the "Revised Periods": 7. Existing Periods Revised Periods ---------------- --------------- third fiscal quarter second quarter ending October 31, 1999 ninth month of fiscal year sixth month ending October 31, 1999 first three fiscal quarters first two quarters ending July 31 and October 31, 1999 twelfth month of fiscal year eighth month ending December 31, 1999 fourth fiscal quarter two month period ending December 31, 1999 1. Other than as specifically provided for herein, the waivers and amendments provided for in Sections 1, 2 and 3 above shall not operate as a consent to any other action, event or circumstance or as a waiver or amendment of any right, power or privilege of the Banks under the Loan Agreement or the Notes or of any other term or condition of the Loan Agreement or the Notes nor shall the entering into this Waiver and Amendment preclude any of the Banks from refusing to enter into any further consents, waivers or amendments with respect to the Loan Agreement or the Notes. 2. Each reference in the Loan Agreement to "this Agreement", "hereunder", "herein" or words of like import shall mean and be a reference to the Loan Agreement as amended to date. Unless otherwise indicated, terms used in this Waiver and Amendment have the same meanings herein as in the Loan Agreement. 3. 4. The Loan Agreement, as amended to date, is in all respects ratified and confirmed, and all of the rights and powers created thereby or thereunder shall be and remain in full force and effect. 5. 6. The Company hereby represents that (a) after giving effect to the waivers and amendments contemplated herein, the representations and warranties contained in the Loan Agreement, the Notes, the Security Documents, and any other documents or instruments executed in connection with the Loan Agreement (collectively, the "Loan Documents") are true and correct on and as of the date hereof as though made on and as of such date, (b) upon execution of this Waiver and Amendment, the Company will not be in default in the due performance of any covenant on its part in the Loan Documents, and (c) no Default or Event of Default has occurred and is continuing or is imminent. 7. 8. The Company acknowledges, confirms, and warrants that the Security Documents and any other security instruments executed at any time in connection with the Loan Agreement continue to secure, inter alia, the payment of all Indebtedness at any time created pursuant to the Loan Agreement, as amended to date, and all obligations of the Company in respect of Swap Agreements. 9. 10. The effectiveness of this Waiver and Amendment is subject to (i) the Company's delivery to the Agent, for the account of the Banks, of a counterpart of this Waiver and Amendment executed by the Company; and (ii) the delivery to the Agent of counterparts of this Waiver and Amendment executed by each of the Banks. 11. 12. The Company agrees to do, execute, acknowledge, and deliver, all and every such further acts and instruments as the Agent may request for the better assuring and confirming unto the Agent and the Banks all and singular the rights granted or intended to be granted hereby or hereunder. 13. 14. The Company agrees to pay on demand all reasonable costs and expenses of the Banks in connection with the preparation, reproduction, execution, and delivery of this Waiver and Amendment and the other instruments and documents to be delivered hereunder (including the reasonable fees and out-of- pocket expenses of counsel for the Agent, and with respect to advising the Agent as to its rights and responsibilities under the Loan Agreement, as hereby to date). In addition, the Company shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution and delivery, filing, or recording of this Waiver and Amendment and the other instruments and documents to be delivered hereunder, and agrees to save each Bank harmless from and against any and all liabilities with respect to and resulting from any delay in paying or omission to pay such taxes or fees. 15. 16. This Waiver and Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. 17. 18. This Waiver and Amendment shall be governed by and construed in accordance with the laws of the State of Texas and shall be binding upon the Company, the Agent, and the Banks and their respective successors and assigns. 19. 20. FINAL AGREEMENT. THIS WAIVER AND AMENDMENT ------------------ TOGETHER WITH THE FIRST AMENDMENT, THE SECOND AMENDMENT, THE LOAN AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS AND ANY OTHER DOCUMENTS OR INSTRUMENTS EXECUTED IN CONNECTION WITH THE LOAN AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. [Remainder of page intentionally left blank; signature page follows] IN WITNESS WHEREOF, the parties hereto have caused this Waiver and Amendment to be executed by their respective officers thereunto duly authorized as of the date first above written. PETROLEUM HELICOPTERS, INC. By: /s/ Michael J. McCann Name: Michael J. McCann Title: Chief Financial Officer and Treasurer BANK OF AMERICA, N.A., individually and as Agent By: /s/ Paul A. Squires Name: Paul A. Squires Title: Managing Director WHITNEY NATIONAL BANK By: /s/ Harry G. Stahel Name: Harry G. Stahel Title: Senior Vice President BANK ONE, LOUISIANA, N.A. By: /s/ J. Charles Freel, Jr. Name: J. Charles Freel, Jr. Title: First Vice President EX-27 4
5 This schedule contains summary financial information extracted from condensed financial statements for the period ended March 31, 2000 and is qualified in its entirety by reference to such financial statements. 1000 3-MOS 3-MOS DEC-31-2000 DEC-31-1999 JAN-01-2000 JAN-01-1999 MAR-31-2000 MAR-31-1999 2,055 0 0 0 41,557 0 811 0 38,451 0 85,809 0 259,077 0 123,177 0 223,363 0 32,801 0 72,142 0 0 0 0 0 516 0 91,679 0 223,363 0 52,659 59,087 52,806 61,130 49,514 53,856 49,514 53,856 4,021 4,598 0 0 1,510 1,428 (2,239) 1,248 (811) 516 (1,428) 732 0 0 0 0 0 0 (1,428) 732 (.28) .14 (.28) .14
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