-----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, Ojflw7CM7rthKCH2hGSknhpFqXFQrnznW9cW9t+zB25g1pHmOe8ErZ+yR0QeVfkS TeSTNvVJY3F2D2ZX42W06A== 0000073887-98-000010.txt : 19980813 0000073887-98-000010.hdr.sgml : 19980813 ACCESSION NUMBER: 0000073887-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OFFSHORE LOGISTICS INC CENTRAL INDEX KEY: 0000073887 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, NONSCHEDULED [4522] IRS NUMBER: 720679819 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05232 FILM NUMBER: 98684206 BUSINESS ADDRESS: STREET 1: 224 RUE DE JEAN STREET 2: PO BOX 5C CITY: LAFAYETTE STATE: LA ZIP: 70505 BUSINESS PHONE: 3182331221 MAIL ADDRESS: STREET 1: 224 RUE DE JEAN 70508 STREET 2: PO BOX 5C CITY: LAFAYETTE STATE: LA ZIP: 70505 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 June 30, 1998 |_| Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period _____ to _____ Commission File Number 0-5232 Offshore Logistics, Inc. (Exact name of registrant as specified in its charter) Delaware 72-0679819 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 224 Rue de Jean P. O. Box 5C, Lafayette, Louisiana 70505 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (318) 233-1221 (Former name, former address and former fiscal year, if changed since last report) 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, and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate the number shares outstanding of each of the issuer's classes of Common Stock, as of June 30, 1998. 21,856,921 shares of Common Stock, $.01 par value OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES Consolidated Statement of Income (thousands of dollars, except per share amounts)
Three Months Ended June 30, ------------------- 1998 1997 -------- -------- GROSS REVENUE Operating revenue...................................... $117,273 $100,211 Gain (loss) on disposal of equipment................... 280 (230) -------- -------- 117,553 99,981 OPERATING EXPENSES Direct cost............................................ 89,969 72,455 Depreciation and amortization.......................... 8,478 8,029 General and administrative............................. 6,284 6,542 -------- -------- 104,731 87,026 OPERATING INCOME....................................... 12,822 12,955 Earnings from unconsolidated entities.................. 1,100 1,001 Interest income........................................ 889 878 Interest expense....................................... 5,013 5,070 -------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES...................... 9,798 9,764 Provision for income taxes............................. 2,939 2,929 Minority interest...................................... (306) (242) -------- -------- INCOME FROM CONTINUING OPERATIONS...................... 6,553 6,593 Discontinued operations: Income (Loss) from CPS operations................... -- (15) -------- -------- NET INCOME............................................. $ 6,553 $ 6,578 ======== ======== BASIC: Income per common share: Continuing operations............................... $ 0.30 $ 0.31 Discontinued operations............................. -- -- -------- -------- Net income per common share............................ $ 0.30 $ 0.31 ======== ======== DILUTED: Income per common share: Continuing operations............................... $ 0.29 $ 0.29 Discontinued operations............................. -- -- -------- -------- Net income per common share............................ $ 0.29 $ 0.29 ======== ========
2 OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES Consolidated Balance Sheet (thousands of dollars)
June 30, March 31, 1998 1998 --------- -------- ASSETS Current Assets: Cash and cash equivalents............................$ 49,061 $ 56,076 Accounts receivable.................................. 90,450 85,543 Inventories.......................................... 79,368 76,139 Prepaid expenses..................................... 4,167 5,542 --------- -------- Total current assets............................... 223,046 223,300 Investments in unconsolidated entities.................. 11,284 7,866 Property and equipment - at cost: Land and buildings................................... 12,782 13,088 Aircraft and equipment............................... 567,158 556,318 --------- -------- 579,940 569,406 Less: accumulated depreciation and amortization........ (105,819) (98,267) --------- -------- 474,121 471,139 Other assets............................................ 33,299 33,706 --------- -------- $ 741,750 $736,011 ========= ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Accounts payable.....................................$ 30,639 $ 31,024 Accrued liabilities.................................. 44,118 42,612 Deferred taxes....................................... 18,294 18,335 Current maturities of long-term debt................. 9,491 8,693 --------- -------- Total current liabilities.......................... 102,542 100,664 Long-term debt, less current maturities................. 247,392 251,560 Deferred credits........................................ 2,000 594 Deferred taxes.......................................... 93,799 93,455 Minority interest....................................... 10,128 9,853 Stockholders' Investment: Common Stock, $.01 par value, authorized 35,000,000 shares; outstanding 21,856,921 and 21,854,921 at June 30 and March 31, respectively (exclusive of 517,550 treasury shares)............. 219 219 Additional paid-in capital........................... 123,100 123,061 Retained earnings.................................... 158,747 152,194 Cumulative translation adjustment.................... 3,823 4,411 --------- -------- 285,889 279,885 --------- -------- $ 741,750 $736,011 ========= ========
3 OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES Consolidated Statement of Cash Flows (thousands of dollars)
Three Months Ended June 30, ------------------- 1998 1997 --------- -------- Cash flows from operating activities: Net income...........................................$ 6,553 $ 6,578 Adjustments to reconcile net income to cash provided by used in operating activities: Depreciation and amortization........................ 8,479 8,028 Increase in deferred taxes........................... 505 1,976 (Gain) loss on asset dispositions.................... (280) 230 Equity in earnings from unconsolidated entities (over) under dividends received.................... (503) 40 Minority interest in earnings........................ 306 242 Discontinued operations.............................. -- 15 Increase in accounts receivable...................... (4,990) (21,797) Increase in inventories.............................. (3,330) (1,754) Increase in prepaid expenses and other............... (1,518) (182) Increase (decrease) in accounts payable.............. (324) 1,828 Increase (decrease) in accrued liabilities........... 1,799 (2,685) Increase in deferred credits......................... 1,406 1,753 --------- -------- Net cash provided by (used in) operating activities..... 8,103 (5,728) --------- -------- Cash flows from investing activities: Capital expenditures................................. (12,586) (37,839) Proceeds from asset dispositions..................... 788 527 --------- -------- Net cash used in investing activities................... (11,798) (37,312) --------- -------- Cash flows from financing activities: Proceeds from borrowings............................. -- 27,746 Repayment of debt.................................... (3,012) (506) Issuance of common stock............................. 39 1,357 --------- -------- Net cash provided by (used in) financing activities..... (2,973) 28,597 --------- -------- Effect of exchange rate changes in cash................. (347) 16 --------- -------- Net decrease in cash and cash equivalents............... (7,015) (14,427) Cash and cash equivalents at beginning of period........ 56,076 29,829 --------- -------- Cash and cash equivalents at end of quarter.............$ 49,061 $ 15,402 ========= ======== Supplemental disclosure of cash flow information Cash paid during the period for: Interest.............................................$ 5,339 $ 6,159 Income taxes......................................... 676 193
4 OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1998 NOTE A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. In the opinion of management, any adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 1998, are not necessarily indicative of the results that may be expected for the year ending March 31, 1999. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the fiscal year period March 31, 1998. NOTE B - Earnings per Share In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". SFAS No. 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Basic earnings per common share were computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share for the three months ended June 30, 1998 and 1997 were determined on the assumptions that the convertible debt was converted on April 1, 1997. The Company adopted SFAS No. 128, "Earnings per Share," effective December 15, 1997. All income per share amounts for all periods have been presented, and where necessary, restated to conform to the requirements of SFAS No. 128. The following table sets forth the computation of basic and diluted income from continuing operations per share:
Three Months Ended June 30, -------------------- 1998 1997 Income from Continuing Operations (thousands of dollars): Income available to common stockholders......... $ 6,553 $ 6,593 Interest on convertible debt, net of taxes...... 1,029 1,029 ---------- --------- Income available to common stockholders, plus assumed conversions..................... $ 7,582 $ 7,622 ========== ========= Shares: Weighted average number of common shares outstanding............................ 21,856,459 21,102,611 Options......................................... 173,016 433,902 Convertible debt................................ 4,286,520 4,286,520 ---------- ----------- Weighted average number of common shares outstanding, plus assumed conversions......... 26,315,995 25,823,033 ========== =========== Income from Continuing Operations: Basic earnings per share........................ $ 0.30 $ 0.31 ========== =========== Diluted earnings per share...................... $ 0.29 $ 0.29 ========== ===========
5 NOTE C - Commitments and Contingencies On August 6, 1997, the domestic pilots at the Company voted to become members of the Office and Professional Employees International Union ("OPEIU"). The Company commenced contract negotiations with the OPEIU on April 1, 1998 and it is not certain how long this process may take. During the three months ended June 30, 1998, $28.7 million of operating revenues were from the Company's domestic helicopter operations. The Company does not believe that the result of these organizing efforts will place it at a competitive disadvantage with its competitors as management believes that pay scales and work rules will continue to be similar throughout the industry. NOTE D - Comprehensive Income In 1998, the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income". SFAS No. 130 requires an entity to report and display comprehensive income and its components. Comprehensive income is as follows (thousands of dollars):
Three Months Ended June 30, ------------------ 1998 1997 ------- ------ Net Income............................................... $ 6,553 $6,578 Other Comprehensive Income: Currency translation adjustment....................... (588) 2,725 ------- ------ Comprehensive Income..................................... $ 5,965 $9,303 ======= ======
NOTE E - Derivative Financial Instruments In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". The Statement establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Changes in a derivative's fair value are to be recognized currently in earnings unless specific hedge accounting criteria are met. The company has not yet quantified the impacts on its financial statements that may result from adoption of SFAS No. 133, which is required no later than April 1, 2000. 6 NOTE F - Supplemental Condensed Consolidating Financial Information On January 27, 1998, the Company completed the sale of $100 million 7 7/8% Senior Notes due 2008, which were discounted to yield 7.915%. The net proceeds to the Company were $97.2 million. In connection with the sale of the Senior Notes, certain of the Company's subsidiaries (the "Guarantor Subsidiaries") jointly, severally and unconditionally guaranteed the payment obligations under the Senior Notes. The following supplemental financial information sets forth, on an unconsolidated basis, the balance sheet, statement of income and cash flow information for Offshore Logistics, Inc. ("Parent Company Only"), for the Guarantor Subsidiaries and for Offshore Logistics, Inc.'s other subsidiaries (the "Non-Guarantor Subsidiaries"). The supplemental condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include all disclosures included in annual financial statements, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Certain reclassifications were made to conform all of the financial information to the financial presentation on a consolidated basis. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenues and expenses. During fiscal 1998, the Company formed a new wholly owned subsidiary and contributed the Company's operating assets, separate from its investment in its subsidiaries, to the newly formed subsidiary. The subsidiary is a Guarantor Subsidiary. For purposes of the historical supplemental financial information, the Company has presented the aforementioned operating assets and related operating results together with the operating assets and results of other Guarantor Subsidiaries. The allocation of the consolidated income tax provision was made using the with and without allocation method. 7 Supplemental Condensed Consolidating Balance Sheet June 30, 1998
Parent Non- Company Guarantor Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated --------- ------------ ------------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents..........$ 25,464 $ 6,839 $ 16,758 $ -- $ 49,061 Accounts receivable................ 1,217 24,154 68,089 (3,010) 90,450 Inventories........................ -- 35,531 43,837 -- 79,368 Prepaid expenses................... 260 491 3,416 -- 4,167 ---------- ---------- ---------- ---------- ---------- Total current assets............. 26,941 67,015 132,100 (3,010) 223,046 Intercompany investment.............. 228,877 -- -- (228,877) -- Investments in unconsolidated entities.......................... 1,108 229 9,947 -- 11,284 Intercompany note receivables........ 231,307 2,523 (3,094) (230,736) -- Property and equipment--at cost: Land and buildings................. -- 3,182 9,600 -- 12,782 Aircraft and equipment............. 3,627 148,675 414,856 -- 567,158 ---------- ---------- ---------- ---------- ---------- 3,627 151,857 424,456 -- 579,940 Less: Accumulated depreciation and amortization................. (2,678) (66,918) (36,223) -- (105,819) ---------- ---------- ---------- ---------- ---------- 949 84,939 388,233 -- 474,121 Other assets......................... 13,495 19,363 330 111 33,299 ---------- ---------- ---------- ---------- ---------- $ 502,677 $ 174,069 $ 527,516 $ (462,512) $ 741,750 ========== ========== ========== ========== ========== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable...................$ 63 $ 4,406 $ 26,170 $ -- $ 30,639 Accrued liabilities................ 6,688 10,356 30,355 (3,281) 44,118 Deferred taxes..................... -- -- 18,294 -- 18,294 Current maturities of long-term debt............... -- -- 9,491 -- 9,491 ---------- ---------- ---------- ---------- ---------- Total current liabilities......... 6,751 14,762 84,310 (3,281) 102,542 Long-term debt, less current maturities........................ 198,000 -- 49,392 -- 247,392 Intercompany notes payable........... 2,500 -- 227,965 (230,465) -- Deferred credits..................... -- -- 2,000 -- 2,000 Deferred taxes....................... (2,805) 28,339 68,265 -- 93,799 Minority interest.................... 10,128 -- -- -- 10,128 Stockholders' investment: Common stock....................... 219 4,048 1,384 (5,432) 219 Additional paid in capital......... 123,100 58,318 18,923 (77,241) 123,100 Retained earnings.................. 158,748 68,602 79,194 (147,797) 158,747 Cumulative translation adjustment.. 6,036 -- (3,917) 1,704 3,823 ---------- ---------- ---------- ---------- ---------- 288,103 130,968 95,584 (228,766) 285,889 ---------- ---------- ---------- ---------- ---------- $ 502,677 $ 174,069 $ 527,516 $ (462,512) $ 741,750 ========== ========== ========== ========== ==========
8 Supplemental Condensed Consolidating Statement of Income Three Months Ended June 30, 1998
Parent Non- Company Guarantor Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated --------- ------------ ------------ ------------ ------------ GROSS REVENUE Operating revenue......................$ 3 $ 36,381 $ 80,889 $ -- $ 117,273 Intercompany revenue................... -- 2,516 51 (2,567) -- Gain on disposal of equipment.......... 3 84 193 -- 280 ---------- ----------- -------- ---------- ---------- 6 38,981 81,133 (2,567) 117,553 OPERATING EXPENSES Direct cost .......................... 2 31,048 58,919 -- 89,969 Intercompany expense................... -- 51 2,516 (2,567) -- Depreciation and amortization.......... 38 2,425 6,015 -- 8,478 General and administrative............. 1,292 1,484 3,508 -- 6,284 ---------- ----------- -------- ---------- ---------- 1,332 35,008 70,958 (2,567) 104,731 ---------- ----------- -------- ---------- ---------- OPERATING INCOME....................... (1,326) 3,973 10,175 -- 12,822 Earnings from unconsolidated entities.. 5,456 -- 1,104 (5,460) 1,100 Interest income........................ 6,895 90 292 (6,388) 889 Interest expense....................... 3,672 -- 7,729 (6,388) 5,013 ---------- ----------- -------- ---------- ---------- INCOME BEFORE PROVISION FOR INCOME TAXES.................. 7,353 4,063 3,842 (5,460) 9,798 Allocation of consolidated income taxes 506 1,369 1,064 -- 2,939 Minority interest...................... (294) -- (12) -- (306) ---------- ----------- -------- ---------- ---------- NET INCOME.............................$ 6,553 $ 2,694 $ 2,766 $ (5,460) $ 6,553 ========== =========== ======== ========== ==========
9 Supplemental Condensed Consolidating Statement of Cash Flows Three Months Ended June 30, 1998
Parent Non- Company Guarantor Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated --------- ------------ ------------ ------------ ------------ Net cash provided by (used in) operating activities...............$ (8,847) $ 4,799 $ 12,151 $ -- $ 8,103 ---------- --------- -------- --------- --------- Cash flows from investing activities: Capital expenditures............... -- (3,295) (9,291) -- (12,586) Proceeds from asset dispositions... 8 143 637 -- 788 ---------- --------- -------- --------- --------- Net cash provided by (used in) investing activities............... 8 (3,152) (8,654) -- (11,798) ---------- --------- -------- --------- --------- Cash flows from financing activities: Repayment of debt.................. -- -- (3,012) -- (3,012) Issuance of common stock........... 39 -- -- -- 39 ---------- --------- -------- --------- --------- Net cash provided by (used in) financing activities............... 39 -- (3,012) -- (2,973) ---------- --------- -------- --------- --------- Effect of exchange rate changes in cash. -- -- (347) -- (347) ---------- --------- -------- --------- --------- Net increase (decrease) in cash and cash equivalents................... (8,800) 1,647 138 -- (7,015) Cash and cash equivalents at beginning of period............. 34,264 5,192 16,620 -- 56,076 ---------- --------- -------- --------- --------- Cash and cash equivalents at end of period..................$ 25,464 $ 6,839 $ 16,758 $ -- $ 49,061 ========== ========= ======== ========= =========
10 Supplemental Condensed Consolidating Balance Sheet March 31, 1998
Parent Non- Company Guarantor Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated --------- ------------ ------------ ------------ ------------ ASSETS Current assets: Cash and cash equivalents..........$ 34,264 $ 5,192 $ 16,620 $ -- $ 56,076 Accounts receivable................ 599 23,908 63,065 (2,029) 85,543 Inventories........................ -- 31,998 44,141 -- 76,139 Prepaid expenses................... 304 663 4,575 -- 5,542 ---------- ---------- ---------- ---------- ---------- Total current assets............. 35,167 61,761 128,401 (2,029) 223,300 Intercompany investment.............. 218,143 -- -- (218,143) -- Investments in unconsolidated entities 1,108 229 6,529 -- 7,866 Intercompany note receivables........ 221,130 2,674 1,441 (225,245) -- Property and equipment--at cost: Land and buildings................. -- 3,174 9,914 -- 13,088 Aircraft and equipment............. 3,642 145,648 407,028 -- 556,318 ---------- ---------- ---------- ---------- ---------- 3,642 148,822 416,942 -- 569,406 Less: Accumulated depreciation and amortization................. (2,657) (65,050) (30,560) -- (98,267) ---------- ---------- ---------- ---------- ---------- 985 83,772 386,382 -- 471,139 Other assets......................... 13,447 19,781 368 110 33,706 ---------- ---------- ---------- ---------- ---------- $ 489,980 $ 168,217 $ 523,121 $ (445,307) $ 736,011 ========== ========== ========== ========== ========== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable...................$ 46 $ 4,389 $ 26,589 $ -- $ 31,024 Accrued liabilities................ 6,027 8,818 30,037 (2,270) 42,612 Deferred taxes..................... -- -- 18,335 -- 18,335 Current maturities of long-term debt............... 2,569 -- 6,124 -- 8,693 ---------- ---------- ---------- ---------- ---------- Total current liabilities......... 8,642 13,207 81,085 (2,270) 100,664 Long-term debt, less current maturities........................ 195,374 -- 56,186 -- 251,560 Intercompany notes payable........... 2,500 -- 222,505 (225,005) -- Deferred credits..................... -- -- 594 -- 594 Deferred taxes....................... (4,077) 27,730 69,802 -- 93,455 Minority interest.................... 9,853 -- -- -- 9,853 Stockholders' investment: Common stock....................... 219 4,048 1,384 (5,432) 219 Additional paid in capital......... 123,061 58,318 19,071 (77,389) 123,061 Retained earnings.................. 152,194 64,914 72,394 (137,308) 152,194 Cumulative translation adjustment.. 2,214 -- 100 2,097 4,411 ---------- ---------- ---------- ---------- ---------- 277,688 127,280 92,949 (218,032) 279,885 ---------- ---------- ---------- ---------- ---------- $ 489,980 $ 168,217 $ 523,121 $ (445,307) $ 736,011 ========== ========== ========== ========== ==========
11 Supplemental Condensed Consolidating Statement of Income Three Months Ended June 30, 1997
Parent Non- Company Guarantor Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated --------- ------------ ------------ ------------ ------------ GROSS REVENUE Operating revenue......................$ 5 $ 33,712 $ 66,494 $ -- $ 100,211 Intercompany revenue................... -- 2,467 142 (2,609) -- Gain (loss) on disposal of equipment... -- (176) (54) -- (230) ---------- ----------- -------- ---------- ---------- 5 36,003 66,582 (2,609) 99,981 OPERATING EXPENSES Direct cost .......................... 2 25,072 47,381 -- 72,455 Intercompany expense................... -- 51 2,558 (2,609) -- Depreciation and amortization.......... 126 2,200 5,703 -- 8,029 General and administrative............. 1,305 1,247 3,990 -- 6,542 ---------- ----------- -------- ---------- ---------- 1,433 28,570 59,632 (2,609) 87,026 ---------- ----------- -------- ---------- ---------- OPERATING INCOME....................... (1,428) 7,433 6,950 -- 12,955 Earnings from unconsolidated entities.. 5,747 -- 994 (5,740) 1,001 Interest income........................ 4,426 59 468 (4,075) 878 Interest expense....................... 1,519 -- 7,626 (4,075) 5,070 ---------- ----------- -------- ---------- ---------- INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES.................. 7,226 7,492 786 (5,740) 9,764 Allocation of consolidated income taxes 381 2,394 154 -- 2,929 Minority interest...................... (252) -- 10 -- (242) ---------- ----------- -------- ---------- ---------- INCOME FROM CONTINUING OPERATIONS........................ 6,593 5,098 642 (5,740) 6,593 Discontinued operations: Income (loss) from CPS operations. 91 -- (218) 112 (15) ---------- ----------- -------- ---------- ---------- NET INCOME............................$ 6,684 $ 5,098 $ 424 $ (5,628) $ 6,578 ========== =========== ========== ========== ===========
12 Supplemental Condensed Consolidating Statement of Cash Flows Three Months Ended June 30, 1997
Parent Non- Company Guarantor Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated --------- ------------ ------------ ------------ ------------ Net cash provided by (used in) operating activities............. $ (17,914) $ 3,786 $ 8,377 $ 23 $ (5,728) ---------- --------- -------- --------- --------- Cash flows from investing activities: Capital expenditures............. -- (3,215) (34,624) -- (37,839) Proceeds from asset dispositions. -- -- 527 -- 527 ---------- --------- -------- --------- --------- Net cash used in investing activities. -- (3,215) (34,097) -- (37,312) ---------- --------- -------- --------- --------- Cash flows from financing activities: Proceeds from borrowings......... -- -- 27,746 -- 27,746 Repayment of debt................ -- -- (506) -- (506) Issuance of common stock......... 1,357 -- -- -- 1,357 ---------- --------- -------- --------- --------- Net cash provided by financing activities....................... 1,357 -- 27,240 -- 28,597 ---------- --------- -------- --------- --------- Effect of exchange rate changes in cash -- -- 16 -- 16 ---------- --------- -------- --------- --------- Net increase (decrease) in cash and cash equivalents........ (16,557) 571 1,536 23 (14,427) Cash and cash equivalents at beginning of period........... 21,459 3,545 4,825 -- 29,829 ---------- --------- -------- --------- --------- Cash and cash equivalents at end of period................ $ 4,902 $ 4,116 $ 6,361 $ 23 $ 15,402 ========== ========= ======== ========= =========
13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company, through its Air Logistics' subsidiaries ("Air Log") and with its investment in Bristow Aviation Holdings Limited ("Bristow"), is a major supplier of helicopter transportation services to the worldwide offshore oil and gas industry. The Company also provides production personnel and medical support services to the worldwide oil and gas industry. A summary of operating results for the applicable periods is as follows (in thousands of dollars):
Three Months Ended June 30, -------------------- 1998 1997 -------- -------- Gross revenue...................................... $117,553 $ 99,981 Operating expenses................................. 104,731 87,026 -------- --------- Operating income................................... 12,822 12,955 Earnings from unconsolidated entities.............. 1,100 1,001 Interest income (expense), net..................... (4,124) (4,192) -------- --------- Income before provision for income taxes........... 9,798 9,764 Provision for income taxes......................... 2,939 2,929 Minority interest.................................. (306) (242) Discontinued operations............................ -- (15) -------- --------- Net income......................................... $ 6,553 $ 6,578 ======== =========
Results of Operations Helicopter Activities Air Log and Bristow conduct helicopter activities principally in the Gulf of Mexico and the North Sea, respectively, where they provide support to the production, exploration and construction activities of oil and gas companies. Air Log also charters helicopters to governmental entities involved in regulating offshore oil and gas operations in the Gulf of Mexico. Bristow also provides search and rescue work for the British Coast Guard. Air Log's Alaskan activity is primarily related to providing helicopter services to the Alyeska Pipeline. Air Log has service agreements with, and equity interests in, entities that operate aircraft in Egypt and Mexico ("unconsolidated entities"). Air Log and Bristow also operate in various other international areas (including Australia, Brazil, China, Colombia, the Falklands, Mexico, Nigeria and Trinidad). These international operations are subject to local governmental regulations and to uncertainties of economic and political conditions in those areas. 14 The following table sets forth certain operating information from helicopter activities.
Three Months Ended June 30, ------------------ 1998 1997 ------- ------- (in thousands, except flight hours) Flight hours (excludes unconsolidated entities): Air Log..................................... 30,972 35,777 Bristow..................................... 25,965 23,581 ------- ------- Total Helicopter Activities.............. 56,937 59,358 ======= ======= Operating revenues: Air Log..................................... $ 30,984 $29,853 Bristow..................................... 75,830 61,511 Eliminations................................ (132) (142) ------- ------- Total Helicopter Activities.............. $106,682 $91,222 ======== ======= Operating income, excluding gain or loss on disposal of equipment: Air Log..................................... $ 4,849 $ 8,488 Bristow..................................... 7,389 5,390 ------- ------- Total Helicopter Activities.............. $12,238 $13,878 ======= ======= Gross margin, excluding gain or loss on disposal of equipment: Air Log..................................... 15.7% 28.4% Bristow..................................... 9.7% 8.8% Total Helicopter Activities.............. 11.5% 15.2%
Gulf of Mexico flight activity declined 15% from the same three month period in the prior year. Despite the reduction in flight activity, operating revenues in the Gulf of Mexico increased by 5% for the three months ended June 30, 1998 compared to the prior year, primarily the result of rate increases obtained during fiscal 1998. Operating cost associated with Gulf of Mexico operations increased 26% from the prior year, as the Company increased aircraft and personnel to meet expected increased demands in fiscal 1999. This increase was also impacted by the April 1998 pay increase to a significant portion of the Company's personnel to meet wage levels prevailing in the market. The reduction in flight activity occurred rapidly due to the decline in commodity prices. Air Log has had no reduction in the number of aircraft committed from the prior year, which has limited the Company's ability to adjust its cost structure to meet activity levels. Operating income from Gulf of Mexico operations were $2.3 million and $6.1 million for the three months ended June 30, 1998 and 1997, respectively. In July 1998, the Company implemented a cost containment program, including a hiring freeze, delayed acceptance of additional aircraft and procedures to reduce maintenance and repair expense. Commodity prices have had no impact to date on North Sea and other Bristow international operations. Bristow's flight hours for the three months ended June 30, 1998 were 25,965 a 10% increase from the same period in the prior year. Operating revenues for the three months ended June 30, 1998 and 1997 were $75.8 million and $61.5 million, respectively, a 23% increase from the prior year. Operating income attributable to Bristow was $7.4 million for the three months ended June 30, 1998. On July 1, 1998 Bristow started the previously announced contract with Shell UK Exploration and Production in the North Sea and expects significant increases to flight activity and operating income in future periods. 15 International operating revenues from Air Log for the three months ended June 30, 1998 were $5.1 million, relatively unchanged from the prior year. International operating income from Air Log for the three months ended June 30, 1998 and 1997 were $1.8 million and $1.6 million, respectively. Production Management Services Demand for GPM's services remains strong. Operating revenues for GPM were $11.5 million and $10.0 million for the three months ended June 30, 1998 and 1997, respectively. Operating expenses for GPM were $10.7 million and $9.3 million for the three months ended June 30, 1998 and 1997, respectively. GPM operating income was $0.8 million for the three months ended June 30, 1998, compared to $0.7 million for the same period in the prior year. Liquidity and Capital Resources Cash and cash equivalents were $49.1 million as of June 30, 1998, a $7.0 million decrease from March 31, 1998. Working capital as of June 30, 1998 was $120.5 million, a $2.1 million decrease from March 31, 1998. Total debt was $256.9 million as of June 30, 1998. Capital expenditures during the three months ended June 30, 1998 of $12.6 million included one AS332L - Super Puma and two new Bell 407's. The Company used existing cash to purchase these aircraft. Subsequent to June 30, 1998, the Board of Directors reaffirmed its February 1996 authorization to repurchase up to 1 million shares of the Company's Common Stock in the open market or through private transactions. The authorization has no time limit and authorizes management to effect repurchases of common stock and/or debt securities, as they deem prudent. As of August 12, 1998, the Company repurchased 100,000 shares of Common Stock and $3.3 million face value of 6% Convertible Subordinated Notes in the open market. As of June 30, 1998, Bristow had a (pound)15 million ($25 million) revolving credit facility with a syndicate of United Kingdom banks that matures on December 31, 2000. Bristow had no funds drawn under this facility as of June 30, 1998. As of June 30, 1998, OLOG had a $20 million unsecured working capital line of credit with a bank that expires on September 30, 1999. Management believes that normal operations and other available financing will provide sufficient working capital and cash flow to meet debt service in the foreseeable future. The effective income tax rates from continuing operations were approximately 30% for the three months ended June 30, 1998 and 1997. The variance between the Federal statutory rate and the effective rate for these periods is due primarily to non-taxable foreign source income and foreign tax credits available to reduce domestic taxable income. The Company has received notices from the United States Environmental Protection Agency that it is one of approximately 160 potentially responsible parties ("PRP") at one Superfund site in Texas, one of over 300 PRPs at one site in Louisiana and a PRP at one site in Rhode Island. The Company believes, based on presently available information, that its potential liability for clean up and other response costs in connection with these sites is not likely to have a material adverse effect on the Company's business or financial condition. 16 Forward Looking This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements included herein other than statements of historical fact are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") may include, but are not limited to, demand for Company services, worldwide activity levels in oil and natural gas exploration, development and production, fluctuations in oil and natural gas prices, unionization and the response thereto of the Company's customers, currency fluctuations, international political conditions and ability to achieve Year 2000 compliance. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. 17 PART II Item 6. Exhibits and Reports on Form 8-K (a) Listed below are the documents filed as exhibits to this report: Exhibit 27 - Financial Data Statement (b) Reports on Form 8-K: There were no Form 8-K filings during the quarter ended June 30, 1998. 18 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. OFFSHORE LOGISTICS, INC. BY: /s/ George M. Small --------------------- GEORGE M. SMALL President DATE: August 12, 1998 BY: /s/ Drury A. Milke --------------------- DRURY A. MILKE Chief Financial Officer DATE: August 12, 1998 19 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30, 1998 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAR-31-1999 APR-1-1998 JUN-30-1998 49,061 0 90,450 0 79,368 223,046 579,940 105,819 741,750 102,542 247,392 0 0 219 285,670 741,750 117,273 117,553 89,969 104,731 0 0 5,013 9,798 2,939 6,553 0 0 0 6,553 0.30 0.29
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