-----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, FtQDAXrftzzzQ2ZBdlwmgpnTMFlM6GKGF330/6WGBWi8EcR8QhDpUiCrybtRUFeI TBbmnPgn3EVcgBb1RDvdzQ== /in/edgar/work/0000350403-00-000014/0000350403-00-000014.txt : 20001115 0000350403-00-000014.hdr.sgml : 20001115 ACCESSION NUMBER: 0000350403-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETROLEUM HELICOPTERS INC CENTRAL INDEX KEY: 0000350403 STANDARD INDUSTRIAL CLASSIFICATION: [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: 767936 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 0001.txt 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: September 30, 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 incorporation or organization) Identification No.) 2121 Airline Drive Suite 400 P.O. Box 578, Metairie, Louisiana 70001-5979 (Address of principal executive (Zip Code) offices) 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 October 31, 2000 ----- ------------------------------- Voting Common Stock 2,793,386 shares Non-Voting Common Stock 2,384,715 shares PETROLEUM HELICOPTERS, INC. Index - Form 10-Q Part I - Financial Information Item 1. Financial Statements - Unaudited Consolidated Balance Sheets - September 30, 2000 and December 31, 1999 3 Consolidated Statements of Operations - Three Months and Nine Months Ended September 30, 2000 and 1999 4 Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2000 and 1999 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures about Market Risk 15 Part II - Other Information Item 1. Legal Proceedings 15 Item 6. Exhibits and Reports on Form 8-K 16 Signature 17 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands of dollars, except share data) (Unaudited) September 30, December 31, 2000 1999 ------------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 122 $ 1,663 Accounts receivable -- net of allowance: Trade 40,772 36,917 Other 1,619 3,558 Inventory 41,250 37,277 Prepaid expenses 1,570 2,987 Refundable income taxes 2,850 3,922 -------- -------- Total current assets 88,183 86,324 Property and equipment, net 124,864 135,047 Other 2,942 1,685 -------- -------- Total Assets $215,989 $223,056 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $ 28,284 $ 20,013 Accrued vacation payable 6,163 6,020 Current maturities of long-term debt 7,323 5,592 -------- -------- Total current liabilities 41,770 31,625 -------- -------- Long-term debt, net of current maturities 57,123 72,048 Deferred income taxes 17,391 17,776 Other long-term liabilities 8,571 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; 237 237 authorized shares of 12,500,000 Additional paid-in capital 12,024 11,729 Retained earnings 78,594 81,378 -------- -------- Total shareholders' equity 91,134 93,623 -------- -------- Total Liabilities and Shareholders' Equity $215,989 $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 (In thousands, except per share data) (Unaudited) Quarter Ended Nine Months Ended September 30, September 30, -------------------- ---------------------- 2000 1999 2000 1999 --------- --------- ---------- ---------- REVENUES AND OTHER INCOME: Operating revenues $ 60,894 $ 54,944 $ 168,658 $ 166,830 Other income (loss), net (358) 2,193 2,189 5,840 --------- --------- ---------- ---------- 60,536 57,137 170,847 172,670 --------- --------- ---------- ---------- EXPENSES: Direct expenses 55,724 52,792 157,743 156,244 Selling, general, and administrative expenses 4,412 4,604 12,479 13,564 Special charges -- -- -- 4,846 Interest expense 1,329 1,449 4,312 4,306 --------- --------- ---------- ---------- 61,465 58,845 174,534 178,960 --------- --------- ---------- ---------- Loss before income taxes (929) (1,708) (3,687) (6,290) Income taxes 82 (631) (922) (2,520) --------- --------- ---------- ---------- Net loss $ (1,011) $ (1,077) $ (2,765) $ (3,770) ========= ========= ========== ========== Weighted average common shares outstanding: Basic 5,165 5,160 5,163 5,163 Diluted 5,165 5,160 5,163 5,163 Net loss per common share: Basic $ (0.20) $ (0.21) $ (0.54) $ (0.73) Diluted $ (0.20) $ (0.21) $ (0.54) $ (0.73) Dividends declared per common share $ -- $ 0.05 $ -- $ 0.15 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) Nine Months Ended September 30, ------------------------- 2000 1999 ---------- ---------- Cash flows from operating activities: Net loss $ (2,765) $ (3,770) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 10,088 11,627 Deferred income taxes (385) 726 Gain on asset dispositions (2,855) (5,903) Equity in net losses of investee companies, net of distributions 439 182 Special charges -- 3,720 Other 575 638 Changes in operating assets and liabilities 4,414 2,005 --------- --------- Net cash provided by operating activities 9,511 9,225 --------- --------- Cash flows from investing activities: Investments in and advances to affiliates (1,266) (160) Proceeds from notes receivable 198 -- Purchase of property and equipment (12,745) (19,221) Proceeds from asset dispositions 15,955 14,447 --------- --------- Net cash provided by (used in) investing activities 2,142 (4,934) --------- --------- Cash flows from financing activities: Proceeds from long-term debt 9,000 12,000 Payments on long-term debt (22,194) (15,395) Dividends paid -- (778) Other -- (128) --------- --------- Net cash used in financing activities (13,194) (4,301) --------- --------- Decrease in cash and cash equivalents (1,541) (10) --------- --------- Cash and cash equivalents, beginning of period 1,663 205 --------- --------- Cash and cash equivalents, end of period $ 122 $ 195 ========= ========= 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 include the accounts of Petroleum Helicopters, Inc. and subsidiaries ("PHI" or the "Company"). Effective December 31, 1999, the Company changed its fiscal year end from April 30 of each year to December 31 of each year. 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. 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 as discussed in the Company's Transition Report on Form 10-K for the eight-month transition period ended December 31, 1999. 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. Special Charges In April 1999, in connection with expense reduction efforts and management's decision to recognize the impairment of assets as a result of decreased activity, the Company recorded Special Charges of $4.8 million. The Special Charges included impairment of certain foreign based joint ventures amounting to $2.5 million, severance costs of $1.3 million, impairment of property and equipment of $0.4 million, and other charges of $0.6 million. 3. Segment Information The Company has identified three principal 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 Oil and Gas Aviation Services segment also includes certain other helicopter services related to non-oil and gas activities including forest fire-fighting and scientific research. 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, the Technical Services segment was in the Oil and Gas Aviation Services segment. All periods presented below include Technical Services as a separate reporting segment. Segment operating income is operating revenues less direct expenses, selling, general, and administrative costs, and special charges, as well as interest expense applicable to the operating segment. Unallocated overhead consists primarily of corporate selling, general, and administrative costs that the Company does not allocate to the operating segments. Summarized financial information concerning the Company's reportable operating segments for the quarters and nine months ended September 30, 2000 and 1999 is as follows (in thousands): Quarter Ended Nine Months Ended September 30, September 30, -------------------- --------------------- 2000 1999 2000 1999 --------- --------- --------- --------- Segment operating revenues, excluding other income: Oil and Gas Aviation Services $ 45,199 $ 40,163 $ 123,981 $ 118,930 Aeromedical Services 10,928 11,274 33,041 33,914 Technical Services 4,767 3,507 11,636 13,986 --------- --------- ---------- ---------- Total operating revenues, excluding other income $ 60,894 $ 54,944 $ 168,658 $ 166,830 ========= ========= ========== ========== Segment operating income (loss), excluding other income: Oil and Gas Aviation Services $ 1,990 $ 34 $ 1,846 $ (4,405)(1) Aeromedical Services (98) (714) 28 231 Technical Services 968 486 1,838 2,431 --------- --------- ---------- ---------- Total segment operating income (loss) excluding other income 2,860 (194) 3,712 (1,743) Other income, net (358) 2,193 2,189 5,840 Unallocated overhead (3,431) (3,707) (9,588) (10,387) --------- --------- ---------- ---------- Loss before income taxes $ (929) $ (1,708) $ (3,687) $ (6,290) ========= ========= ========== ========== (1) Includes special charges of $4.8 million as discussed in Note 2 of the unaudited condensed consolidated financial statements. 4. Other Assets Other assets principally includes investments in and advances to an affiliate. The Company has a 50% ownership interest in Clintondale Aviation, Inc. ("Clintondale"), a New York corporation that operates helicopters and fixed-wing aircraft primarily in the Commonwealth of Independent States. PHI leases four aircraft to Clintondale. In May 2000, PHI obtained a $1.3 million note receivable from Clintondale in exchange for conversion of $0.8 million of amounts due from Clintondale and $0.5 million cash. The note is payable through June 2005 in equal monthly principal installments plus interest at 7.81% per annum and is secured by a pledge of the shares not owned by PHI. At September 30, 2000, the note's principal balance was $1.2 million. The Company also holds a note receivable from Clintondale with a $0.4 million principal balance at September 30, 2000. The note is payable through May 2001 in equal monthly principal and interest payments at 13.00% per annum. 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 September 30, 2000 was $3.0 million, which the Company believes is adequate for probable and estimable environmental costs. The Company recorded no provisions in the quarter or nine months ended September 30, 2000. The Company will make additional provisions in future periods to the extent appropriate as further information regarding these costs becomes available. In this connection, the Company will conduct environmental site surveys in the fourth quarter at its Lafayette facility, which will be vacated in 2001 when the Company moves to its new facility. The Company will also conduct environmental site surveys at certain other facilities during the fourth quarter of 2000 and the first quarter of 2001. The results of these surveys could require additional provisions. Legal Matters -- The Company is named as a defendant in various legal actions that have arisen in the ordinary course of its business and have 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 that it believes adequately provide for the resolution 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 is subject to certain financial covenants under its loan agreement with its principal lending group, as amended on June 30, 2000, and was in compliance with those covenants on September 30, 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. The loan 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. On November 30, 2000, the revolving credit facility portion of the loan 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, which may involve certain other changes to the credit agreement, or to refinance its debt. New Principal Operating Facility -- The Company is leasing a new principal operating facility for 20 years effective September 2001. Under the terms of the lease, there is a commitment by the Company to fund, under certain circumstances, $4.0 million of construction costs. Any such amounts funded by PHI will amortize over 10 years at 7% per annum and the resulting monthly amortization amounts will reduce PHI's monthly lease payments for the first 10 years of the lease. 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. In June 2000, the FASB issued SFAS No. 138 to address a limited number of issues causing implementation difficulties, including a provision to provide an exception for "Normal" purchases and sales. The Company will adopt SFAS No. 133, as amended, 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. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements". SAB No. 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. SAB No. 101, as amended, is effective beginning in the fourth quarter of fiscal year 2000. The Company believes that this new accounting pronouncement will not have a material affect on its consolidated financial statements. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto 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 and commitments required to acquire aircraft, 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 Despite increased oil and gas prices during the first nine months of 2000 when compared to 1999, oil and gas exploration and production activities in the Gulf of Mexico, the Company's principal market, did not begin to increase significantly until the latter part of the second quarter of 2000. It was then that PHI began to realize improvements in its Gulf of Mexico services activities. However, activity and revenues remain below the levels achieved in 1998. The Company also realized a significant increase in activity and revenues related to forest fire-fighting. Overall international oil and gas service activities have experienced decreased activity due to closure of certain operations in South America. Aeromedical Services activities have decreased due to restructure of operations in Arizona in late 1999. The Company's technical services activity increased in the second and third quarters of 2000 as the result of the start of new contracts to provide maintenance to certain military aircraft. The new contracts are one year contracts that are renewable annually. As part of the preparation of its 2001 business plan, management has initiated a comprehensive review of operations, including joint ventures and other investments, inventories, environmental and other matters. It is anticipated that this review will be completed by year end. Results of Operations The following tables present certain non-financial operational statistics for the quarter and nine months ended September 30, 2000 and 1999: Quarter Ended Nine Months Ended September 30, September 30, ------------------- ------------------ 2000 1999 2000 1999 ------- ------- ------- ------- Flight hours: Oil and Gas Aviation Services: Domestic 43,762 39,581 118,663 114,661 International 5,078 5,353 16,107 17,029 ------- ------- ------- ------- Sub-total 48,840 44,934 134,770 131,690 Aeromedical Services 5,639 6,344 16,552 17,537 Other 91 153 459 444 ------- ------- ------- ------- Total 54,570 51,431 151,781 149,671 ======= ======= ======= ======= September 30, ----------------- 2000 1999 ------ ------ Aircraft operated at period end: Oil and Gas Aviation Services: Domestic 200 199 International 31 26 ---- ---- Sub-total 231 225 Aeromedical Services 46 49 ---- ---- Total 277 274 ==== ==== Quarter Ended September 30, 2000 compared with Quarter Ended September 30, 1999 Oil and Gas Aviation Services Oil & Gas Aviation Services revenue increased 12.5% to $45.2 million for the quarter ended September 30, 2000 compared to $40.2 million during the same period in the prior year. Increased domestic activity, including increased forest fire-fighting activity, and rate increases implemented in January 2000 contributed to the increase. Decreased revenues and activity that resulted from the closure of certain operations in South America partially offset the increase. Oil and Gas Aviation Services had $2.0 million operating income for the quarter compared to less than $0.1 million operating income for the same period in 1999. Operating margin of 4.4% for the third quarter compares to less than 0.1% for the same quarter in the prior year. Increased flight activity and rate increases implemented in January 2000 helped increase the margins. Increased repairs and maintenance, insurance, employee benefits, and fuel costs, and the decreased international revenues partially offset the margin increase. Aeromedical Services Aeromedical Services revenues decreased 3.1% to $10.9 million for the quarter ended September 30, 2000 compared to $11.3 million during the same period in the prior year. The decrease in revenues is primarily attributable to decreased revenue and activity in the Company's AirEvac operations in Arizona. In November 1999, the Company restructured its Arizona operations and reduced the number of its operating aircraft there. Aeromedical Services operating income was a $0.1 million loss for the quarter compared to a $0.7 million loss for the same period in 1999. Operating margin was (0.1)% for the quarter and compares to (6.3)% for the same quarter in 1999. Lower labor and other costs that were attributable to AirEvac's restructuring were partially offset by increased repairs and maintenance and employee benefit costs. Technical Services Technical Services operating revenues for the quarter ended September 30, 2000 were $4.8 million compared to $3.5 million in the prior year, an increase of 35.9%. Technical Services operating income improved to $1.0 million for the quarter compared to $0.5 million for the same quarter in 1999. The operating margin was 20.3% in the current year quarter and 13.9% in the prior year quarter. The increases in operating revenues and operating income were primarily attributable to the start of ongoing contracts in 2000 to provide maintenance to certain military aircraft. Other Income (Loss), net Other losses, net, were $0.4 million for the quarter ended September 30, 2000 as compared to other income, net, of $2.2 million for the prior year quarter. The other income, net, for the third quarter of 1999 included $2.1 million of net gains on aircraft sales and other asset dispositions. There were no aircraft sales in the third quarter of 2000 and net gains on asset dispositions were $0.1 million. Also, the third quarter of 2000 includes $0.5 million equity in net losses of investee companies, which compares to $0.1 million equity in net losses of investee companies recorded in the third quarter of 1999. Direct Expenses Direct expenses for the quarter ended September 30, 2000 increased by 5.6% to $55.7 million compared to $52.8 million in the same period in the prior year. Higher repairs and maintenance, fuel, aircraft rent, and insurance costs, and the cost related to increased Technical Services revenue were the primary reasons for the increase. Lower labor costs attributable to AirEvac's restructuring, partially offset the increase in direct expenses. Selling, General, and Administrative Expenses Selling, general, and administrative expenses for the quarter ended September 30, 2000 were $4.4 million and compare to $4.6 million in the same period in 1999. During the quarter ended September 30, 1999, the Company reduced its number of employees and recorded related severance costs totaling $0.8 million in selling, general, and administrative expenses. Higher bad debt provisions, general salary increases for administrative employees, and the reassignment of certain employees to administrative positions partially offset the decrease. Interest Expense Interest expense for the quarter ended September 30, 2000 decreased $0.1 million to $1.3 million. The decrease is due primarily to lower debt levels in the current quarter compared to the same quarter in the prior year. Increases in interest rates for the period mostly offset the decrease. Income Taxes Income tax expense for the quarter ended September 30, 2000 was $0.1 million compared to a $0.6 million benefit for the quarter ended September 30, 1999. The effective tax rates were (8.8)% and 36.9% for the September 30, 2000 and 1999 quarters, respectively. The lower effective rate in the current quarter is the result of higher equity in net losses of investee companies and other permanent differences between book income and tax income. Nine Months Ended September 30, 2000 compared with Nine Months Ended September 30, 1999 Oil and Gas Aviation Services Oil & Gas Aviation Services revenues increased 4.2% to $124.0 million for the nine months ended September 30, 2000 compared to $118.9 million during the same period in the prior year. Increased domestic activity, including increased forest fire-fighting activity, and rate increases implemented in January 2000 contributed to the increase. Decreased revenues that resulted from the closure of certain operations in South America partially offset the increase. Oil and Gas Aviation Services had $1.8 million operating income for the nine months ended September 30, 2000 compared to a $4.4 million operating loss for the same period in 1999. The operating loss in 1999 included $4.8 million of special charges (see Special Charges within this discussion). Operating margin of 1.5% for the nine months compares to (3.7)% for the same period last year. The increase in margin is primarily due to the special charges recorded in 1999, increased revenues, lower aircraft depreciation, and rate increases in January 2000. Increased repairs and maintenance, fuel, helicopter rental, and employee benefit expenses and the decreased international revenues partially offset the increase in margin. Aeromedical Services Aeromedical Services revenue decreased 2.6% to $33.0 million for the nine months ended September 30, 2000 compared to $33.9 million during the same period in the prior year. The decrease in revenues is primarily attributable to decreased revenue and activity in the Company's AirEvac operations in Arizona. In November 1999, the Company restructured its Arizona operations and reduced the number of its operating aircraft there. Aeromedical Services operating income decreased to less than $0.1 million for the nine months ended September 30, 2000 compared to $0.2 million for the same period in 1999. Operating margin was less than 0.1% for the nine months ended September 30, 2000 and compares to 0.7% for the same period in 1999. Increased repairs and maintenance, fuel, helicopter rental, and employee benefit expenses and the decreased revenues contributed to the lower operating income. Lower labor costs that were primarily attributable to AirEvac's restructuring partially offset the decrease in operating income. Technical Services Technical Services operating revenues for the nine months ended September 30, 2000 were $11.6 million compared to $14.0 million in the prior year, a decrease of 16.8%. Technical Services operating income decreased to $1.8 million for the nine months compared to $2.4 million for the same nine months in 1999. The operating margin was 15.8% in the nine months ended September 30, 2000 and 17.4% in the nine months ended September 30, 1999. 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 nine months ended September 30, 1999. An ongoing contract to provide maintenance to certain military aircraft started in the second quarter of 2000 and partially offset the decrease. Other Income, net Other income, net, was $2.2 million for the nine months ended September 30, 2000 as compared to $5.8 million for the prior year nine months. The other income, net, for the nine months ended September 30, 2000 included $2.7 million of net gains on aircraft sales and other asset dispositions. The net gains on aircraft sales and other asset dispositions during the nine months ended September 30, 1999 were $5.9 million. Also, the nine months ended September 30, 2000 includes $0.6 million equity in net losses of investee companies, which compares to $0.1 million equity in net losses of investee companies recorded in the nine months ended September 30, 1999. Direct Expenses Direct expenses for the nine months ended September 30, 2000 increased by 1.0% to $157.7 million compared to $156.2 million in same period in the prior year. The increase was due to higher repairs and maintenance, fuel, helicopter rental, and employee benefit expenses. The Technical Services segment's decrease in cost of sales, lower aircraft depreciation, and lower labor costs that were attributable to AirEvac's restructuring mostly offset the increase in direct expenses. Selling, General, and Administrative Expenses Selling, general, and administrative expenses for the nine months ended September 30, 2000 decreased by 8.0% to $12.5 million compared to $13.6 million in the same period in the prior year. The decrease was primarily due to a decrease in Y2K compliance and certain other computer programming costs. During the nine months ended September 30, 1999, the Company also recorded severance costs totaling $0.8 million in selling, general, and administrative expenses related to a reduction in its number of employees. Higher bad debt provisions, general salary increases for administrative employees, and the reassignment of certain employees to administrative positions partially offset the decrease. Special Charges In April 1999, in connection with expense reduction efforts and management's decision to recognize the impairment of assets as a result of decreased activity, the Company recorded Special Charges of $4.8 million. The Special Charges included impairment of certain foreign based joint ventures amounting to $2.5 million, severance costs of $1.3 million, impairment of property and equipment of $0.4 million, and other charges of $0.6 million. Interest Expense Interest expense for the nine months ended September 30, 2000 and September 30, 1999 was $4.3 million. Lower debt levels in the current nine-month period, compared to the debt levels in the same nine months in the prior year, offset the effect of increased interest rates for the period. Income Taxes Income tax benefit for the nine months ended September 30, 2000 decreased $1.6 million to $0.9 million. The effective tax rates were 25.0% and 40.1% for the nine months ended September 30, 2000 and 1999, respectively. The lower effective rate for the nine months ended September 30, 2000 is the result of higher equity in net losses of investee companies and other permanent differences between book income and tax income. Liquidity and Capital Resources The Company's cash position as of September 30, 2000 was $0.1 million compared to $1.7 million at December 31, 1999. Working capital decreased $8.3 million from $54.7 million at December 31, 1999 to $46.4 million. Net cash provided by operating activities during the nine months ended September 30, 2000 was $9.5 million. Net cash provided by operating activities along with $16.0 million of aircraft sales funded payments of long-term debt, purchases of property and equipment, and advances to affiliates. Total long-term debt decreased $13.2 million since December 31, 1999 to $64.4 million at September 30, 2000. The current portion of the long-term debt was $7.3 million at September 30, 2000, which the Company intends to pay with cash flow from operations and planned aircraft sales. At October 31, 2000, the Company had $11.5 million of credit capacity available under its credit facilities. On November 30, 2000, 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, which may involve certain other changes to the credit agreement, or to refinance its debt. The amount expended for the purchase and completion of aircraft improvements and engines and other property and equipment was $12.7 million for the nine months ended September 30, 2000, compared to $19.2 million in the first nine months of 1999. The decrease in capital expenditures when compared to 1999 reflects the Company's reduced fleet and efforts to conserve cash. The Company believes its cash flow from operations in conjunction with its credit capacity and proceeds from planned asset sales is sufficient to meet its planned expenditure requirements for the next twelve months. 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 September 30, 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. In this connection, the Company will conduct environmental site surveys in the fourth quarter at its Lafayette facility, which will be vacated in 2001 when the Company moves to its new facility. The Company will also conduct environmental site surveys at certain other facilities during the fourth quarter of 2000 and the first quarter of 2001. The results of these surveys could require additional provisions. Employees On March 10, 2000, the Company's pilots voted to become organized under the Office and Professional Employees International Union and the Company is currently negotiating a contract with the union. While the ultimate outcome of these negotiations cannot be predicted with certainty, the Company's position is that the terms of any pilots' contract should not place it at a disadvantage with its competitors. 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. In June 2000, the FASB issued SFAS No. 138 to address a limited number of issues causing implementation difficulties, including a provision to provide an exception for "Normal" purchases and sales. The Company will adopt SFAS No. 133, as amended, 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. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. SAB No. 101, as amended, is effective beginning in the fourth quarter of fiscal year 2000. The Company believes that this new accounting pronouncement will not have a material affect on its 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 1. LEGAL PROCEEDINGS The Company is involved in various legal proceedings primarily involving claims for personal injury. The Company believes that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on its consolidated financial statements. 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 (incorporated by reference to Exhibit No. 3.1 (iii) to PHI's Report on Form 10-Q for the quarterly period ended March 31, 2000). (iv) Amendment dated September 15, 2000 to Section 3.1 of the By-laws of the Company. (v) Amendment dated September 15, 2000 to Section 5 of the By-laws of the Company. 10.23 Supplemental Executive Retirement Plan adopted by PHI's Board effective September 14, 2000. 27 Financial Data Schedule (b) Reports on Form 8-K No reports were filed on Form 8-K during the quarter ended September 30, 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. November 14, 2000 By: /s/ Carroll W. Suggs --------------------------------- Carroll W. Suggs Chairman of the Board, President and Chief Executive Officer November 14, 2000 By: /s/ Michael J. McCann --------------------------------- Michael J. McCann Chief Financial Officer and Treasurer EX-3 2 0002.txt Exhibit 3.1 (iv) RESOLVED, that Section 3.1 of the by-laws be and is hereby amended to increase the number of authorized directors to eight (8). Exhibit 3.1 (v) RESOLVED, that Section 5 of the By-laws is hereby amended to renumber Paragraph 5.4 as Paragraph 5.6, and to add thereto new Paragraphs 5.4 and 5.5 to read as follows: 5.4 Finance Committee. The Finance Committee shall consist of three or more directors as the Board of Directors shall designate. The Committee during intervals between meetings of the Board of Directors shall have all the powers of the Board of Directors (except with respect to matters within the powers of the Audit Committee or the Compensation Committee) concerning the determination of financial policies of the Company and the management of its financial affairs, not inconsistent, however, with law or with such specific directions as to the conduct of affairs as shall have been given by the Board of Directors. The Committee also shall perform such other functions and exercise such other powers as may be delegated to it from time to time by the Board of Directors. During intervals between meetings of the Committee, the Chairman of the Committee shall have and may exercise such of the powers of the Committee as from time to time shall be conferred upon them by resolution of the Board of Directors or of the Finance Committee. 5.5 Executive Advisory Committee. The Executive Advisory Committee shall consist of three or more directors as the Chairman of the Board of Directors shall designate. The Committee shall meet on the call of the Chairman for advice and assistance, but is not authorized to exercise any of the powers of the Board of Directors. EX-10 3 0003.txt Exhibit 10.23 PETROLEUM HELICOPTERS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN 1. Purpose. The purpose of this Petroleum Helicopters, Inc. Supplemental Executive Retirement Plan (the "Plan") is to provide certain employees of Petroleum Helicopters, Inc. and its subsidiaries and affiliates (hereinafter collectively referred to as "PHI") designated by the Compensation Committee (the "Committee") of the Board of Directors of Petroleum Helicopters, Inc. (the "Board") with retirement, disability, and death benefits to supplement other retirement benefits of said employees. 2. Effective Date and Term of Plan and Effect on Other Plans. The effective date of this Plan shall be September 14, 2000 and the Plan shall remain in effect until terminated by the Board. This Plan shall supersede and replace those certain supplemental executive retirement plans listed on Schedule A, attached hereto and made a part hereof, which plans have been terminated by the Board and, pursuant to such terminations, are null and void and of no further force and effect as of the effective date of this Plan. 3. Plan Administration. The Plan shall be administered by the Committee. The Committee shall have full and final authority to interpret the Plan; adopt, amend and rescind rules and regulations relating to the Plan; determine the rights of employee(s) and beneficiaries to benefits under the Plan; and make all other determinations and take all other actions necessary and advisable for the administration of the Plan. The Committee may, in its sole and absolute discretion, delegate to other persons any portion of its duties under the Plan and employ advisors to provide professional services (including, but not limited to, investment advisors, attorneys and accountants). 4. Participation. The Committee shall, in its sole and absolute discretion, determine which employees of PHI shall be participants in the Plan (such employees being hereinafter referred to collectively as "Participants" and singularly as "Participant"). 5. Calculation of Plan Benefits. 5.1 Base Annual Salary. The benefits payable to a Participant under this Plan shall be based on said Participant's annual salary in the year that he becomes a Participant hereunder (the "Base Annual Salary"); provided, however, that the Base Annual Salary of a Participant under this Plan who was a participant under any other PHI supplemental executive retirement plan in effect prior to this Plan (a "Prior Participant"), which plan was terminated and superseded and replaced by this Plan (the "Old Plan(s)") shall be equal to the dollar amount set forth in Schedule B. 5.2 Base Annual Benefit. A base annual benefit shall first be calculated (the "Base Annual Benefit"). The Base Annual Benefit shall equal one-third (a) of the Participant's Base Annual Salary up to two hundred thousand dollars ($200,000), plus one-half (2) of the Participant's Base Annual Salary in excess of two hundred thousand dollars ($200,000); provided, however, that the Base Annual Benefit of a Prior Participant or a Participant who was not covered by an Old Plan shall be equal to the dollar amount set forth in Schedule B. 5.3 Vesting of Base Annual Benefit. A Participant shall be vested in the portion of his Base Annual Benefit in accordance with the following vesting schedule if such Participant's employment with PHI terminates for any reason other than death, Disability (as hereinafter defined) or a Change in Control (as hereinafter defined): Vested Percentage at Age at Required Termination of Employment in Termina- Years tion of Service - -------- -------- ---------------------------------------------- 2001 2002 2003 2004 2005 or later ---- ---- ---- ---- ------- 60 12 10% 20% 30% 40% 50% 61 11 15% 25% 35% 45% 55% 62 10 20% 30% 40% 50% 60% 63 9 25% 35% 45% 55% 65% 64 8 35% 45% 55% 65% 75% 65 5 100% 100% 100% 100% 100% The vested portion of a Participant's Base Annual Benefit, whether determined in accordance with the vesting schedule set forth in this paragraph 5.3, or determined without regard to such schedule (in the case of the death of a Participant or a Change in Control) is the amount payable in each year of the fifteen (15) year payment period established in paragraph 7 of this Plan, and is hereinafter referred to as the "Annual Benefit." For purposes of the foregoing vesting schedule, a "Year of Service" shall equal twelve (12) months of employment with PHI. In determining whether a Participant has completed twelve (12) months of employment, all nonsuccessive periods of employment with PHI, whether or not consecutive, shall be aggregated, and a month of employment shall be deemed to be thirty (30) days in the case of the aggregation of fractional months. 5.4 Payment of Annual Benefit. The Annual Benefit shall be paid to a Participant or to his designated beneficiary or to any other person entitled to said Annual Benefit at the times and in the manner and in accordance with the terms and conditions set forth in paragraph 7 of this Plan. 5.5 Amendment, Modification and Termination of Benefits. The benefits determined under this paragraph 5 are subject to amendment, modification and termination as provided in paragraph 16 hereof. 6. Unfunded Plan. This Plan is an unfunded arrangement, maintained primarily to provide deferred compensation benefits to Participants who are members of a select group of management or highly compensated employees of PHI. Should PHI elect to set aside assets for any obligations under this Plan through the purchase of life insurance, mutual funds, disability policies or annuities, such assets shall not constitute funding for the Plan, shall be owned by PHI and shall be subject to the claims of PHI's creditors. PHI reserves the right in its sole and absolute discretion to sell any such assets, in whole or in part, at any time. Notwithstanding anything to the contrary contained herein, PHI shall not be required to set aside or segregate any assets of any kind to meet any obligations that it may have hereunder; and any obligation of PHI to pay benefits hereunder shall be an unsecured promise only, and a Participant's right to enforce such obligation shall be solely as a general unsecured creditor of PHI. 7. Distribution of Benefits. 7.1 Distribution Upon Retirement. a. Retirement Benefits. Upon a Participant's retirement from active service for any reason other than death, Disability or a Change in Control, the Participant shall receive his or her Annual Benefit for a period of fifteen (15) years in equal quarterly installments commencing on the first day of the first calendar quarter following the later of the date of the Participant's retirement or the date the Participant attains age 65. b. Death Prior to Receipt of All Retirement Benefits. If a Participant dies after Annual Benefits become payable under paragraph 7.1(a), PHI shall continue to pay Annual Benefits during the remainder of the fifteen (15) year period (the "Remaining Retirement Benefits") in accordance with the beneficiary designation form provided by PHI last executed by the Participant prior to the Participant's death. If no such designation has been received by PHI or if all designated beneficiaries have predeceased the Participant, the remaining benefits payable under 7.1(a) shall be paid to the estate of the Participant. c. Death Before Benefits Become Payable. If a Participant dies after termination of employment but before Annual Benefits become payable under paragraph 7.1(a), PHI shall pay the Annual Benefits otherwise payable to the Participant in accordance with the beneficiary designation form provided by PHI last executed by the Participant prior to the Participant's death. If no such designation has been received by PHI or if all designated beneficiaries have predeceased the Participant, the remaining benefits payable under 7.1(a) shall be paid to the estate of the Participant. 7.2 Distribution Upon Death While In Active Employment. If a Participant dies while employed by PHI, the Participant's benefits under this Plan shall become fully vested and the Annual Benefit shall be paid each year for a period of fifteen (15) years in quarterly installments commencing with the first day of the first calendar quarter following the date of the Participant's death. Said payments shall be made in accordance with the beneficiary designation form last executed by the Participant prior to Participant's death. If no such designation has been received by PHI from the Participant before his death or if all designated beneficiaries have predeceased the Participant, Annual Benefits shall be paid to the estate of the Participant. 7.3 Distribution Upon Disability While In Active Employment. a. Definition of "Disabled" and "Disability." A Participant shall be deemed "Disabled" or subject to a "Disability" for purposes of this Plan if the Participant is covered by and qualifies for long-term disability under PHI's group long- term disability insurance plan, if any. If PHI has no group disability insurance plan in force for the benefit of the Participant, the Participant shall be deemed "Disabled" or subject to a "Disability" if he qualifies for benefits for permanent and total disability under Federal Old Age and Survivor Insurance provided the Disability arose while the Participant was actively employed by PHI. b. Disability While Actively Employed. If while actively employed by PHI, a Participant becomes Disabled, the Base Annual Benefit shall be paid each year for a period of fifteen (15) years in equal quarterly installments commencing on the first day of the first calendar quarter following the Participant's sixty-fifth (65th) birthday, provided the Participant remains Disabled until that time. c. Cessation of Disability Prior to Benefit Commencement. If a Participant ceases to be Disabled prior to the commencement of benefits, this paragraph 7.3 shall be inapplicable unless the Participant returns to employment with PHI and again becomes Disabled. If the Participant ceases to be Disabled and does not return to employment with PHI, such person shall cease to be a Participant covered by the Plan unless he is eligible for an Annual Benefit pursuant to Section 5.3. d. Cessation of Disability and Return to PHI after Benefit Commencement. If benefit payments have began under paragraph 7.3(b) and a Participant ceases to be Disabled and returns to active employment with PHI before he is paid all of the benefits to which he would have been entitled under paragraph 7.3(b), payment of benefits under this paragraph 7.3 shall cease as of the date that he returns to employment with PHI; provided, however, that when the Participant subsequently terminates employment, he or his beneficiary as the case may be, shall be entitled to receive the Annual Benefit attributable to the remaining portion of the fifteen (15) year period and not the benefit specified in paragraph 7.1(a) or Section 7.2. If the Participant dies prior to receipt of all remaining payments, such remaining payments shall be paid to his beneficiary or estate as described in Section 7.2. e. Death Prior to Commencement of Benefits Due to Disability. If a Participant dies before the Base Annual Benefit becomes payable under paragraph 7.3(b), the benefit to which said Participant would have been entitled at age sixty-five (65) shall be paid each year for a period of fifteen (15) years in quarterly installments commencing with the first day of the first calendar quarter following the date of the Participant's death. Said payments shall be made in accordance with the beneficiary designation form provided by PHI last executed by the Participant prior to Participant's death. If no such designation has been received by PHI from the Participant before his death or if all designated beneficiaries have predeceased the Participant, benefits shall be paid to the estate of the Participant. f. Death After Commencement of Disability Benefits But Before Payment of All Base Annual Benefits Due to Disability. If a Participant dies after the Base Annual Benefit becomes payable under paragraph 7.3(b), such benefit shall continue to be paid during the remainder of the fifteen (15) year period in accordance with the beneficiary designation form provided by PHI last executed by the Participant prior to Participant's death. If no such designation has been received by PHI from the Participant before his death or if all designated beneficiaries have predeceased the Participant, remaining benefits shall be paid to the estate of the Participant. 7.4 Distribution Upon a Change in Control. If there is a Change in Control, Annual Benefits shall be paid in accordance with paragraph 12 hereof. 7.5 Only One Form of Benefit Payable. Notwithstanding anything to the contrary contained herein, benefits shall be payable under paragraph 7.1, 7.2 or 7.3, but not under more than one of said paragraphs and in no event shall the total amount paid to a Participant and his beneficiaries exceed the benefit payable to the Participant under paragraph 7.1(a). 8. Noncompetition and Nondisclosure Agreement. In consideration of the benefits provided and payments to be made under this Plan, each Participant shall enter into a noncompetition and nondisclosure agreement substantially in the form attached hereto as Exhibit 1. 9. No Right to Continue as an Employee. Neither the Plan nor any action taken pursuant to the Plan shall constitute evidence of any agreement or understanding, express or implied, that PHI will retain or rehire a Participant as an employee for any period of time or at any particular rate of compensation. 10. Claim Procedure and Arbitration. 10.1 Claim for Benefits, Denial of Claim and Initial Review of Claim. In the event that a Participant (or his beneficiary) believes that he is entitled to receive benefits under this Plan, then a written claim must be made to the Committee. The Committee shall review the written claim and, if the claim is denied in whole or in part, the Committee shall provide, in writing and within ninety (90) days of receipt of such claim, its specific reasons for such denial and references to the provisions of this Plan upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by the claimant if a further review of the claim denial is desired. A claim shall be deemed denied if the Committee fails to take any action within the aforementioned ninety (90) day period. 10.2 Second Review of Claim for Benefits. If a claimant desires to appeal the denial of a benefit, he shall notify the Committee in writing within sixty (60) days of the claim denial. A claimant may review the Plan or any documents relating thereto and submit written issues and comments that he believes are appropriate. The Committee shall then review the claim and provide a written decision within sixty (60) days of receipt of such claim. 11. No Trust. Except as provided in paragraph 12 of this Plan, nothing contained herein and no action taken pursuant to the provisions hereof shall create or be construed to create a trust of any kind for the benefit of any Participant or any other person entitled to or claiming benefits hereunder. 12. Change in Control 12.1 Benefits Upon a Change in Control. Notwithstanding anything to the contrary contained herein, a. If a Participant is actively employed or Disabled when a Change in Control occurs, the Annual Benefits to which a Participant would be entitled had he continued working for PHI until he reached age sixty-five (65) shall immediately become vested in such Participant and shall be paid in accordance with paragraph 7.1(a). For purposes of this paragraph, a Participant who would have less than five Years of Service at age 65 is deemed to have five Years of Service. b. If a Participant to whom paragraph 12.1(a) applies dies after a Change in Control, the benefits otherwise payable under paragraph 12.1(a) shall be payable under 7.2 as if the Participant were actively employed by PHI at the time of death. c. Any Participant or beneficiary who is receiving benefits under paragraph 7 when a Change in Control occurs shall continue to be entitled to payment of those benefits following the Change in Control in accordance with the terms of the Plan. 12.2 Trust Upon Change in Control. PHI shall, on or before the date of the Change in Control, enter into a trust agreement (the "Trust Agreement") with the Whitney National Bank as trustee (the "Trustee") pursuant to which PHI shall contribute to a trust (the "Trust") either (i) fully paid annuity contract(s) issued by a company rated AA" or higher by A.M. Best & Co. to guarantee the benefits payable under the Plan; or (ii) cash which shall be equal to the present value of the benefits to which all Participants are entitled hereunder. The present value of such benefits shall be determined by an enrolled actuary selected by the members of the Committee prior to the Change in Control. 12.3 Form of Trust. The Trust Agreement shall be in the form of the model trust agreement set forth in Internal Revenue Service Revenue Procedure 92-64 or any successor to or replacement of such Revenue Procedure, and may be substantially in the form of Exhibit 2, attached hereto and made a part hereof, to the extent that said Exhibit 2 conforms to said Internal Revenue Service model trust agreement. 12.4 Trust Assets Subject to PHI's Creditors. All of the assets of the Trust shall be subject to the creditors of PHI in the event of insolvency. Any assets of the Trust remaining after all obligations with respect to the Participants have been satisfied shall be paid to PHI (or its successor, if PHI no longer exists as a legal entity). 12.5 Definition of "Change in Control." For purpose of this Plan, the term "Change in Control" means: a. the purchase or other acquisition by any person, entity or group of persons of beneficial ownership of forty-five percent (45%) or more of either (i) PHI's outstanding shares of common stock; or (ii) the combined voting power of PHI's then outstanding securities entitled to vote generally; or b the approval by the shareholders of PHI of a reorganization, merger or consolidation with respect to which persons or entities who were shareholders of PHI immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote; or c. the liquidation or dissolution of PHI or the sale of all or substantially all of PHI's assets. 12.6 Successors Included. For purposes of this paragraph 12, any reference to PHI includes any successor to PHI that results from a Change in Control. 13. Recovery of Mistaken or Incorrect Payments. Notwithstanding anything to the contrary contained herein, a Participant or any other person receiving payments under this Plan is entitled only to those benefits provided by this Plan and shall be obligated to promptly return any payment not payable under the Plan. PHI may, in its sole and absolute discretion, (i) offset any future benefits of a Participant or any other person who refuses or neglects to return an erroneous payment of benefits; or (ii) pursue any other remedies provided by law. 14. Breaches by Participant. In the event of any breach by a Participant of any obligations under this Plan or under the noncompetition and nondisclosure agreement referred to in paragraph 8, the Committee shall direct that any unpaid balance of any payments to such Participant be suspended and shall notify the Participant in writing of such suspension. If the Committee determines, in its sole and absolute discretion, that the Participant's breach has continued following notification of such suspension, all rights of Participant and his beneficiary or any other person under this Plan, including rights to further (or any) payments hereunder, shall thereupon terminate. 15. Nonalienation of Benefits. Neither the Participant, nor his designated beneficiary, nor any other beneficiary hereunder shall have any power or right to transfer, assign, anticipate, pledge, hypothecate or otherwise encumber all or any part of any Annual Benefit or any right to any other payment or benefit hereunder, which benefits and rights are expressly declared to be nonassignable and nontransferable. 16. Amendment, Modification, and Termination. The Board may at any time amend, modify or terminate the Plan; provided, however, that no such amendment, modification or termination shall deprive a Participant or his beneficiary or any other person entitled to benefits hereunder of any vested rights accrued to such persons under this Plan prior to such amendment, modification or termination. Any amendment, modification or termination of this Plan shall be in writing and shall be effective on the date specified therein. 17. Gender. Whenever used in this Plan, the masculine gender includes the feminine and the feminine gender includes the masculine. 18. Notice. Unless otherwise expressly provided by applicable federal law, any notice, consent or demand required or permitted to be given under the provisions of this Plan shall be in writing and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed, it shall be sent by United States certified mail, postage prepaid. If the intended recipient is a Participant or his designated beneficiary or any other beneficiary under this Plan, such notice, consent or demand shall be addressed to such person at such person's last known address as shown on PHI's records. If the intended recipient is PHI, such notice, consent or demand shall be addressed to PHI at its principal place of business at the time of the mailing of such notice, consent or demand. Unless otherwise expressly provided by applicable federal law, the date of such mailing shall be deemed the date of such notice, consent or demand. 19. Choice of Law. The laws of the State of Louisiana shall govern the Plan, to the extent not preempted by federal law. IN WITNESS WHEREOF, PHI has executed this Plan on the 12th day of October, 2000. WITNESSES: PETROLEUM HELICOPTERS, INC.: /s/ Michael J. McCann By:/s/ Carroll W. Suggs Carroll W. Suggs Chairman of the Board and /s/ Richard Rovinelli Chief Executive Officer ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF LAFAYETTE BE IT KNOWN, that on this 12th day of October, 2000, before me, the undersigned Notary Public, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared Carroll C. Suggs, to me known to be the duly authorized Chairman of the Board and Chief Executive Officer of Petroleum Helicopters, Inc., who executed the above and foregoing instrument, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that she executed the above and foregoing instrument of her own free will, as her own act and deed, for the uses, purposes and benefits therein expressed on behalf of Petroleum Helicopters, Inc., and in the capacity therein stated. WITNESSES: PETROLEUM HELICOPTERS, INC. /s/ Michael J. McCann BY:/s/ Carroll W. Suggs Carroll W. Suggs, Chairman of the Board and Chief Executive /s/ Richard Rovinelli Officer /s/ Cindy L. Lasseigne ____________________________________ NOTARY PUBLIC EXHIBIT 1 NONCOMPETITION AND NONDISCLOSURE AGREEMENT THIS NONCOMPETITION AND NONDISCLOSURE AGREEMENT (the "Agreement"), entered into this ____ day of __________, 2000 by and between Petroleum Helicopters, Inc., a corporation organized under the laws of the State of Louisiana ("PHI") with its principal place of business at 113 Borman Drive, Lafayette, Louisiana 70508 (the "Corporation"), and _____________________, a person of the full age of majority and a resident of __________________ (the "Employee"). WITNESSETH: WHEREAS, the Corporation is engaged in the businesses of transporting personnel and equipment to, from and among offshore platforms, providing aeromedical transportation services for hospitals and medical programs and providing aircraft maintenance services (the "Business"); and WHEREAS, Employee is an employee of Corporation who is a member of a select group of management or highly compensated employees of Corporation; and, WHEREAS, Employee has had access to certain highly sensitive, special, unique information of the Corporation that is confidential or proprietary; and WHEREAS, Corporation wishes to induce Employee to remain in its employ by providing to Employee the opportunity to receive certain benefits and incentives, all as set forth in that certain Petroleum Helicopters, Inc. Supplemental Executive Retirement Plan dated September 14, 2000 (the "Benefits") and Employee wishes to agree not to compete with Corporation and not to disclose Corporation's confidential or proprietary information as additional consideration for Corporation providing Employee the opportunity to receive the Benefits. NOW THEREFORE, in consideration of the foregoing and of the mutual promises of the parties hereinafter contained, and of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is mutually agreed by and between the parties as follows: 1. Restriction on Actions. Employee hereby agrees to restrict his actions as provided in this Agreement and acknowledges that such restrictions are reasonable in light of the Business and the Corporation providing Employee the opportunity to receive the Benefits. 2. Corporation's Territory. Employee acknowledges that the Corporation's sales and operations territory and area of goodwill relating to the Business includes all of the parishes of the State of Louisiana set forth on Schedule 1 and within all of the states set forth on said Schedule 1, attached hereto and made a part hereof (the "Territory"). 3. Noncompetion During Employment. Employee agrees that for as long as he remains employed by Corporation, he will devote substantially all of his time, skill, diligence and attention to the Business. Employee further agrees that during such period of employment he will not, directly or indirectly, either: (a) make any statement or perform any act intended to advance an interest or any existing or prospective competitor of the Corporation that may or will injure Corporation in its relationship and dealing with any Customer (as hereinafter defined), or any existing or potential supplier or creditor; (b) solicit or encourage any other employee of Corporation to do any act that is disloyal to Corporation or inconsistent with Corporation's interest or in violation of Corporation's policies or of any provision of any of the plans pursuant to which the Benefits are provided; (c) solicit any other employee to participate in or assist with the formation or operations of any business intended to compete with Corporation or with respect to the possible future employment of such other employee by any such business; (d) discuss with any Customer, or any existing or potential supplier or creditor of Corporation that Employee intends to resign, or make any statement or do any act intended to cause any Customer or an existing or potential supplier or creditor of Corporation to learn of Employee's intention to resign; (e) discuss with any Customer or any existing or potential supplier or creditor of Corporation the present or future availability of services or products provided by a business that competes with or, where such services or products are competitive, with services or products that Corporation provides. 4. Noncompetion After Employment Ceases. Employee agrees that during the period beginning on the date of this Agreement and ending two (2) years from the date that Employee ceases to be employed by Corporation for any reason, he will not, directly or indirectly, either: (a) have any interest in (whether as proprietor, officer, director or otherwise),enter the employment of, act as agent, broker, licensor or distributor for or adviser or consultant to, or in any way assist (whether by solicitation of customers or employees or otherwise) any person, firm, corporation or business entity that is engaged, or which Employee reasonably knows is undertaking to become engaged, in the Territory in the Business or in a business similar thereto; (b) solicit, divert or take away, or attempt to solicit, divert or take away any Customer or the business of any Customer with respect to the products or services of the Corporation sold (or offered for sale) to such Customer; (c) attempt to seek to cause any Customer to refrain, in any respect, from maintaining or acquiring any product or service of the Corporation sold (or offered for sale) to such Customer; (d) render services to or share in the earnings of or invest in the stock, bonds or other securities of any other entity directly or indirectly engaged in the Business or in a business similar thereto within the Territory; provided, however, that Employee may own passive investments of not more than one percent (1%) of the outstanding stocks, bonds, or other securities of any similar business (but without otherwise participating in such similar business) if such stocks, bonds or other securities are registered under Section 12(b) or (g) of the Securities Exchange Act of 1934, as amended. 5. Definition of "Customer". The term "Customer," as used herein, means any actual customer of Corporation or any potential customer of the Corporation located in the Territory. 6. Trade Secrets; Confidential Information. (a) General. Employee recognizes and acknowledges that he has had access to certain highly sensitive, special, unique information of Corporation that is confidential or proprietary. Employee hereby covenants and agrees that he will not (i) as to Trade Secrets, so long as they remain Trade Secrets; and (ii) as to Confidential Information, during the period that Employee is employed by Corporation and until three (3) years after the date on which (i) Employee ceases to be employed by Corporation for any reason other than death; or (ii) is Disabled, use or disclose any Confidential Information or Trade Secrets except in connection with Employee's duties as an employee of Corporation; provided, however, that the foregoing restrictions shall not apply to items that, through no fault of Employee, have entered the public domain. (b) Definitions of "Trade Secret" and "Confidential Information". For purposes of this Agreement, the following definitions shall apply: (i) "Trade Secret" means the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique or improvement, whether in written or other form, with respect to the Business on the date of this Agreement that is valuable and secret (in the sense that it is not generally known to competitors of the Corporation). (ii) "Confidential Information" means any data or information, whether in written or other form, with respect to the Business on the date of this Agreement, other than Trade Secrets, that is material to the Corporation and not generally known by the public. To the extent consistent with the foregoing definition, Confidential Information includes without limitation: (A) pricing procedures and financing methods of the Corporation, together with any techniques utilized by the Corporation in designing, developing, manufacturing, testing or marketing its products or in performing services for Customers and accounts of the Corporation; (B) Customer lists, the special requirements of particular Customers, and the current and anticipated requirements of Customers generally for the products or services of the Corporation; (C) any contracts, working drawings, designs, product specifications, software programs, source codes or similar information of the Corporation; (D) the specifications of any new products or services under development by the Corporation; (E) the sources of supply for any integrated components and materials used for any production, assembly or packaging by the Corporation and the quality, prices, and usage of any such components and materials; and (F) the business plans and financial statements, reports and projections of the Corporation. (c) Ownership; Return. Employee acknowledges that all Trade Secrets and Confidential Information are and shall be the sole, exclusive and valuable property of Corporation, and that Employee has and shall acquire no right, title or interest therein. Any and all printed, typed, written or other material that Employee may have or obtain with respect to Trade Secrets or Confidential Information (including without limitation all copyrights therein) shall be and remain the exclusive property of Corporation, and any and all material (including any copies) shall, upon Employee's Disability or cessation of employment for any reason be promptly delivered to Corporation. 7. Remedies. Employee acknowledges that any violation of this Agreement may cause irreparable harm to Corporation and that damages are not an adequate remedy. Employee therefore agrees that Corporation shall be entitled to an injunction by an appropriate court in the appropriate jurisdiction, enjoining, prohibiting and restraining Employee from the continuance of any such violation, in addition to any monetary damages which might occur by reason of the violation of this Agreement. The remedies provided in this Agreement are cumulative and shall not exclude any other remedies to which any party to this Agreement may be entitled under this Agreement or applicable law, and the exercise of a remedy shall not be deemed an election excluding any other remedy (any such claim by the other party to this Agreement being hereby waived). 8. Modification. It is understood and agreed by the parties hereto that should any portion, provision or clause of this Agreement be deemed too broad to permit enforcement to its full extent, then it shall be enforced to the maximum extent permitted by law, and Employee hereby consents and agrees that such scope maybe judicially modified accordingly in any proceeding brought to enforce such restriction. 9. Independent. The covenants and agreements set forth in this Agreement shall be deemed, and shall be construed as, separate and independent covenants and agreements, and should any part or provision of such covenants or agreements be held invalid, void or unenforceable by any court of competent jurisdiction, such invalidity, voidness or unenforceability shall in no way render invalid, void or unenforceable any other part or provision of such covenants and agreements or any separate covenant not declared invalid, void or unenforceable; and this Agreement shall in that case be construed as if the void, invalid or unenforceable provisions were omitted. 10. Miscellaneous. (a) Notice. All notices under this Agreement shall be in writing and given either in person, by express overnight service or mailed first class mail, postage prepaid, to the address of the party to this Agreement set forth below said party's signature or to such other address as a party to this Agreement may furnish to the other as provided in this sentence, and shall be deemed received on the date of personal delivery, on the first business day after sent by express overnight service; and if notice is given pursuant to the foregoing of a permitted successor or assign, then notice shall thereafter be given pursuant to the foregoing to such permitted successor or assign. (b) Assignment; Binding Effect. Employee shall not assign, transfer or delegate any rights or obligations under this Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs, devisees, legatees or other successors and assigns. (c) Gender; Captions. Whenever the context so requires, the singular number shall include the plural and the plural shall include the singular, and the gender of any pronoun shall include the other genders. Titles and captions of or in this Agreement are inserted only as a matter of convenience and for reference and in no way affect the scope of this Agreement or the intent of its provisions. (d) Severability. In the event that any court of competent jurisdiction shall determine that any provision of this Agreement is invalid, such determination shall not affect the validity of any other provision of this Agreement, which shall remain in full force and effect and which shall be construed as to be valid under applicable law. (e) Certain Definitions. The parties agree that 'applicable law" means all provisions of any constitution, statute, law, rule, regulation, decision, order, decree, judgment, release, license, permit, stipulation or other official pronouncement enacted, promulgated or issued by any governmental authority or arbitrator or arbitration panel; that "governmental authority" means any legislative, executive, judicial, quasijudicial or other public authority, agency, department, bureau, division, unit, court or other public body, person or entity; and that "including" and other words or phrases of inclusion, if any, shall not be construed as terms of limitation, so that references to "included" matters shall be regarded as non-exclusive, non-characterizing illustrations. (f) Entire Agreement. This Agreement constitutes the entire agreement of the parties to this Agreement with respect to its subject matter hereof, supersedes all prior agreements, if any, of the parties to this Agreement with respect to its subject matter, and may not be amended except in writing signed by the party to this Agreement against whom the change is being asserted. (g) No Waiver. The failure of any party to this Agreement at any time or times to require the performance of any provisions of this Agreement shall in no manner affect the right to enforce the same; and no waiver by any party to this Agreement of any provision (or of a breach of any provision) of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed or construed either as a further or continuing waiver of any such provision or breach or as a waiver of any other provision (or of a breach of any other provision) of this Agreement. (h) Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Louisiana, without regard to its conflicts of laws provisions. (i) Counterparts. This Agreement may be executed in two or more copies, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement or its terms to produce or account for more than one of such copies. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on ____ day of ______________, 2000. WITNESSES: PETROLEUM HELICOPTERS, INC.: ___________________________________ By:______________________________ Carroll W. Suggs Chairman of the Board and ___________________________________ Chief Executive Officer Address: 113 Borman Drive Lafayette, Louisiana 70508 EMPLOYEE: ___________________________________ ____________________________________ ___________________________________ Address: ________________________ ________________________ ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ____________________ BE IT KNOWN, that on this _____ day of _________________, __________, before me, the undersigned Notary Public, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared Carroll C. Suggs, to me known to be the duly authorized Chairman of the Board and Chief Executive Officer of Petroleum Helicopters, Inc., who executed the above and foregoing instrument, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that she executed the above and foregoing instrument of her own free will, as her own act and deed, for the uses, purposes and benefits therein expressed on behalf of Petroleum Helicopters, Inc., and in the capacity therein stated. WITNESSES: PETROLEUM HELICOPTERS, INC. __________________________________ BY:________________________________ Carroll W. Suggs, Chairman of the Board and Chief Executive __________________________________ Officer __________________________________ NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ________________ BE IT KNOWN, that on this _____ day of _________________, _______, before me, the undersigned Notary Public, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared _____________________________, to me known to be the identical person who executed the above and foregoing instrument, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the above and foregoing instrument of his own free will, as his own act and deed, for the uses, purposes and benefits therein expressed. WITNESSES: EMPLOYEE: ________________________ __________________________ ________________________ ______________________________ NOTARY PUBLIC SCHEDULE 1 TERRITORY OF PHI's BUSINESS Following are the Parishes in Louisiana in which PHI carries on Business: 1. Calcasieu 2. Cameron 3. East Baton Rouge 4. Jefferson 5. Lafayette 6. Lafourche 7. Orleans 8. Plaquemines 9. Rapides 10. St. Bernard 11. St. Mary 12. Terrebonne 13. Vermillion Following are the States, other than Louisiana, in which PHI carries on Business: 1. Alabama 2. Arizona 3. California 4. Colorado 5. Florida 6. Illinois 7. Kentucky 8. Michigan 9. Mississippi 10. North Dakota 11. Ohio 12. South Carolina 13. Texas 14. Wisconsin EXHIBIT 2 TRUST UNDER CERTAIN NONQUALIFIED DEFERRED COMPENSATION PLANS OF PETROLEUM HELICOPTERS, INC. THIS AGREEMENT (the "Trust Agreement") made this _____ day of __________, __________ by and between Petroleum Helicopters, Inc., a corporation organized under the laws of the State of Louisiana,("PHI") with its principal place of business at 113 Borman Drive, Lafayette, Louisiana 70508 (the "Company") and Whitney National Bank, a______________________, with its principal place of business at ___________________, New Orleans, Louisiana ___________ (the "Trustee"); WITNESSETH: WHEREAS, Company has adopted the nonqualified deferred compensation plans listed in Appendix A, attached hereto and made a part hereof (the "Plans"); and WHEREAS, Company has incurred or expects to incur liability under the terms of such Plans with respect to the individuals participating in such Plans; and WHEREAS, Company wishes to establish a trust (hereinafter called the "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of Company's creditors in the event of Company's Insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in the Plans; and WHEREAS, it is the intention of the parties hererto that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974; and WHEREAS, it is the intention of Company to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plans; and NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: Section 1. Establishment of Trust. ----------------------- (a) Company hereby deposits with Trustee in trust __________ [insert amount deposited], which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in this Trust Agreement. (b) The Trust hereby established is revocable by Company; it shall become irrevocable upon a Change of Control, as defined herein. (c) The Trust is intended to be a grantor trust, of which Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. (d) The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of Company and shall be used exclusively for the uses and purposes of Plans participants and general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against Company. Any assets held by the Trust will be subject to the claims of Company's general creditors under federal and state law in the event of Insolvency, as defined in Section 3(a) herein. (e) Upon a Change of Control, Company shall, by not later than the date of a Change of Control, as defined herein, make an irrevocable contribution to the Trust in an amount that is sufficient to pay each Plan participant or beneficiary the benefits to which Plan participants or their beneficiaries would be entitled pursuant to the terms of the Plans as of the date on which the Change of Control occurred. To the extent that the Plans or any agreement between the participants in and/or beneficiaries of the Plans and the Company provide for a method of determining the amount to be contributed to the Trust, said method shall be employed to determine the amount that shall be contributed to the Trust pursuant to this Section 1(e). (f) Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor any Plan participant or beneficiary shall have any right to compel such additional deposits. Section 2. Payments To Plan Participants and Their Beneficiaries. ------------------------------------------------------ (a) Company shall deliver to Trustee a schedule (the "Payment Schedule") that indicates the amounts payable in respect of each Plan participant (and his or her beneficiaries), that provides a formula or other instructions acceptable to Trustee for determining the amounts so payable, the form in which such amount is to be paid (as provided for or available under the Plans), and the time of commencement for payment of such amounts. Except as otherwise provided herein, Trustee shall make payments to the Plan participants and their beneficiaries in accordance with such Payment Schedule. The Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plans and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by Company. (b) The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plans shall be determined by Company or such party as it shall designate under the Plans, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plans. (c) Company may make payment of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plans. Company shall notify Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to participants or their beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plans, Company shall make the balance of each such payment as it falls due. Trustee shall notify Company where principal and earnings are not sufficient. (d) Notwithstanding anything to the contrary contained herein or in the Plans, (a) in the event that the Service prevails in its claim that amounts contributed to and held in the Trust Fund, and/or earnings thereon, constitute taxable income to participant or his beneficiary for any taxable year of him or her, prior to the taxable year in which such contributions and/or earnings are distributed to him or her, or (b) in the event that legal counsel satisfactory to the Company, the Trustee and the applicable participant or his beneficiary renders an opinion that the Service would likely prevail in such a claim, the assets in the Trust Fund, to the extent constituting taxable income, shall be immediately distributed to the participant or his beneficiary. For purposes of this Section 2(d), the Service shall be deemed to have prevailed in a claim if such claim is upheld by a court of final jurisdiction, or if the Trustee, based upon an opinion of legal counsel satisfactory to the Company, the Trustee and the participant or his beneficiary, fails to appeal a decision of the Service, or a court of applicable jurisdiction, with respect to such claim, to an appropriate Service appeals authority or to a court of higher jurisdiction within the appropriate time period. Section 3. Trustee Responsibility Regarding Payments to Trust -------------------------------------------------- Beneficiary When Company Is Insolvent. - -------------------------------------- (a) Trustee shall cease payment of benefits to Plan participants and their beneficiaries if the Company is Insolvent. Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay its debts as they become due; or (ii) Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, as provided in Section 1(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of Company under federal and state law as set forth below. (1) The Board of Directors and Chief Executive Officer of Company shall have the duty to inform Trustee in writing of Company's Insolvency. If a person claiming to be a creditor of Company alleges in writing to Trustee that Company has become Insolvent, Trustee shall determine whether Company is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to Plan participants or their beneficiaries. (2) Unless Trustee has actual knowledge of Company's Insolvency, or has received notice from Company or a person claiming to be a creditor alleging that Company is Insolvent, Trustee shall have no duty to inquire whether Company is Insolvent. Trustee may in all events rely on such evidence concerning Company's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Company's solvency. (3) If at any time Trustee has determined that Company is Insolvent, Trustee shall discontinue payments to Plan participants or their beneficiaries and shall hold the assets of the Trustee for the benefit of Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of Company with respect to benefits due under the Plans or otherwise. (4) Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after Trustee has determined that Company is not Insolvent (or is no longer Insolvent). (c) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plans for the period of such discontinuance, less the aggregate amount of any payments made to Plan participants or their beneficiaries by Company in lieu of the payments provided for hereunder during any such period of discontinuance. Section 4. Payments to Company. -------------------- Except as provided in Section 3 hereof, after the Trust has become irrevocable, Company shall have no right or power to direct Trustee to return to Company or to divert to others any of the Trust assets before all payment of benefits have been made to Plan participants and their beneficiaries pursuant to the terms of the Plans. Section 5. Investment Authority. --------------------- In no event may Trustee invest in securities (including stock or rights to acquire stock) or obligations issued by Company, other than a de minimis amount held in common investment vehicles in which Trustee invests. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with Plan participants. Section 6. Disposition of Income. ---------------------- During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. Section 7. Accounting by Trustee. ---------------------- Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between Company and Trustee. Within _______ [insert number] days following the close of each calendar year and within _______ [insert number] days after the removal or resignation of Trustee, Trustee shall deliver to Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. Section 8. Responsibility of Trustee. -------------------------- (a) Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by Company which is contemplated by, and in conformity with, the terms of the Plans or this Trust and is given in writing by Company. In the event of a dispute between Company and a party, Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) If Trustee undertakes or defends any litigation arising in connection with this Trust, Company agrees to indemnify Trustee against Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. If Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust. (c) Trustee may consult with legal counsel (who may also be counsel for Company generally) with respect to any of its duties or obligations hereunder. (d) Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder. (e) Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. (f) Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. Section 9. Compensation and Expenses of Trustee. ------------------------------------- Company shall pay all administrative and Trustee's fees and expenses. If not so paid, the fees and expenses shall be paid from the Trust. Section 10. Resignation and Removal of Trustee. ----------------------------------- (a) Trustee may resign at any time by written notice to Company, which shall be effective _________ [insert number] days after receipt of such notice unless Company and Trustee agree otherwise. (b) Trustee may be removed by Company on _________ [insert number] days notice or upon shorter notice accepted by Trustee. (c) Upon a Change of Control, as defined herein, Trustee may not be removed by Company for _________ [insert number] year(s). (d) If Trustee resigns within _________ [insert number] year(s) after a Change of Control, as defined herein, Company shall apply to a court of competent jurisdiction for the appointment of a successor Trustee or for instructions. (e) If Trustee resigns or is removed within ________ [insert number] year(s) of a Change of Control, as defined herein, Trustee shall select a successor Trustee in accordance with the provisions of Section 11(b) hereof prior to the effective date of Trustee's resignation or removal. (f) Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within _________ [insert number] days after receipt of notice of resignation, removal or transfer, unless Company extends the time limit. (g) If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under paragraphs (a) or (b) of this section. If no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. Section 11. Appointment of Successor. ------------------------- (a) If Trustee resigns or is removed in accordance with Section 10(a) or (b) hereof, Company may appoint any third party, such as a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by Company or the successor Trustee to evidence the transfer. (b) If Trustee resigns or is removed pursuant to the provisions of Section 10(e) hereof and selects a successor Trustee, Trustee may appoint any third party such as a bank trust department or other party that may be granted corporate trustee powers under state law. The appointment of a successor Trustee shall be effective when accepted in writing by the new Trustee. The new Trustee shall have all the rights and powers of the former Trustee, including ownership rights in Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the successor Trustee to evidence the transfer. (c) The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and Company shall indemnify and defend the successor Trustee from any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor Trustee. Section 12. Amendment or Termination. ------------------------- (a) This Trust Agreement may be amended by a written instrument executed by Trustee and Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plans or shall make the Trust revocable after it has become irrevocable in accordance with Section 1(b) hereof. (b) The Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plans, unless sooner revoked or terminated in accordance with Section 1(b) or Section 12(c) hereof. Upon termination of the Trust, any assets remaining in the Trust shall be returned to Company. (c) Upon written approval of participants or beneficiaries entitled to payment of benefits pursuant to the terms of the Plans, Company may terminate this Trust prior to the time all benefit payments under the Plans have been made. All assets in the Trust at termination shall be returned to Company. Section 13. Miscellaneous. -------------- (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. (c) This Trust Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana. (d) For purposes of this Trust, Change of Control shall mean: (i) the purchase or other acquisition by any person, entity or group of persons of beneficial ownership of thirty percent (30%) or more of either (1) the outstanding shares of common stock; or (2) the combined voting power of Company's then outstanding voting securities entitled to vote generally; or (ii) the approval by the stockholders of Company of a reorganization, merger, or consolidation with respect to which persons who were stockholders of Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote; or (iii) a liquidation or dissolution of Company or of the sale of all or substantially all of Company's assets. Section 14. Effective Date. --------------- The effective date of this Trust Agreement shall be _______________, 2000. WITNESSES: TRUSTEE: ____________________________________ _______________________________ By: _________________________________ _______________________________ COMPANY: PETROLEUM HELICOPTERS, INC. _______________________________ By:________________________________ Carroll W. Suggs Chairman of the Board and _______________________________ Chief Executive Officer ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ____________________ BE IT KNOWN, that on this _____ day of _________________, __________, before me, the undersigned Notary Public, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared Carroll C. Suggs, to me known to be the duly authorized Chairman of the Board and Chief Executive Officer of Petroleum Helicopters, Inc., who executed the above and foregoing instrument, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that she executed the above and foregoing instrument of her own free will, as her own act and deed, for the uses, purposes and benefits therein expressed on behalf of Petroleum Helicopters, Inc., and in the capacity therein stated. WITNESSES: PETROLEUM HELICOPTERS, INC. __________________________________ BY:_________________________________ Carroll W. Suggs, Chairman of the Board and Chief Executive __________________________________ Officer ______________________________ NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ____________________ BE IT KNOWN, that on this _____ day of _________________, __________, before me, the undersigned Notary Public, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared _________________________________, to me known to be the duly authorized _________________________________ of Whitney Bank, who executed the above and foregoing instrument, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the above and foregoing instrument of his own free will, as his own act and deed, for the uses, purposes and benefits therein expressed on behalf of Whitney National Bank., and in the capacity therein stated. WITNESSES: WHITNEY NATIONAL BANK __________________________________ BY: _________________________________ __________________________________ _____________________________________ NOTARY PUBLIC EX-27 4 0004.txt
5 This schedule contains summary financial information extracted from Petroleum Helicopters, Inc.'s condensed consolidated financial statements for the nine months ended September 30, 2000 and the nine months ended September 30, 1999 and is qualified in its entirety by reference to such financial statements. 1000 9-MOS 9-MOS DEC-31-2000 DEC-31-1999 SEP-30-2000 SEP-30-1999 122 0 0 0 42,391 0 0 0 41,250 0 88,183 0 124,864 0 0 0 215,989 0 41,770 0 57,123 0 0 0 0 0 516 0 90,618 0 215,989 0 0 0 168,658 166,830 0 0 157,743 156,244 0 0 0 0 4,312 4,306 (3,687) (6,290) (922) (2,520) (2,765) (3,770) 0 0 0 0 0 0 (2,765) (3,770) (0.54) (0.73) (0.54) (0.73)
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