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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: January 31, 1997
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 of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2121 Airline Highway, Suite 400
P. O. Box 578
Metairie, Louisiana 70001-5979
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (504)828-3323
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X No
-- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
Issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at March 3, 1997
----- ----------------------------
Voting Common Stock 2,797,786
Non-Voting Common Stock 2,293,545
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PART 1 - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands January 31, April 30,
(Current period unaudited) 1997 1996 (1)
__________ __________
ASSETS
Current assets:
Cash and cash equivalents $ 2,152 $ 1,899
Accounts receivable - net of allowance 34,877 28,725
Refundable income taxes - 737
Inventory 30,263 25,947
Prepaid expenses 1,531 1,159
Notes receivable - investee companies 1,169 1,166
------- -------
Total current assets 69,992 59,633
------- -------
Notes receivable 22 358
Investments 5,345 4,890
Property and equipment:
Cost 241,498 212,801
Less accumulated depreciation (123,340) (116,469)
------- -------
118,158 96,332
------- -------
Other 229 102
------- -------
$ 193,746 $ 161,315
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 17,966 $ 19,467
Accrued vacation pay 4,707 4,813
Income taxes payable 1,782 -
Current portion of long-term debt 8,853 8,810
------- -------
Total current liabilities 33,308 33,090
------- -------
Long-term debt 55,317 28,522
Deferred income taxes 14,666 14,966
Other long-term liabilities 3,636 3,336
Shareholders' equity:
Voting common stock 280 280
Non-voting common stock 228 227
Additional paid-in capital 10,528 10,220
Retained earnings 75,783 70,674
------- -------
86,819 81,401
------- -------
$ 193,746 $ 161,315
======= =======
(1) The balance sheet at April 30, 1996 is condensed from the audited
financial statements at that date. See accompanying notes to
condensed consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
In thousands, except per Three Months Ended Nine Months Ended
January 31, January 31,
share amounts 1997 1996 1997 1996
(unaudited) ---- ---- ---- ----
REVENUES:
Operating revenues $ 53,269 $45,444 $158,670 $ 139,724
Gain on equipment
disposals 43 43 93 791
Equity in net earnings (loss)
of investee companies (744) 225 (544) 325
------ ------ ------- -------
52,568 45,712 158,219 140,840
EXPENSES:
Direct expenses 46,032 39,800 135,521 122,367
Selling, general and
administrative expenses 3,102 3,038 9,669 8,402
Interest expense 1,181 777 3,200 2,312
------ ------ ------- -------
50,315 43,615 148,390 133,081
------ ------ ------- -------
Earnings before income taxes 2,253 2,097 9,829 7,759
Income taxes 939 758 3,952 3,095
------ ------ ------- -------
Net earnings $ 1,314 $ 1,339 $ 5,877 $ 4,664
====== ====== ======= =======
Net earnings per share $ 0.26 $ 0.26 $ 1.16 $ 0.92
====== ====== ======= =======
Weighted average common
shares outstanding 5,078 5,066 5,077 5,066
====== ====== ======= =======
Dividends declared per common
share $ 0.05 $ 0.05 $ 0.15 $ 0.12
====== ====== ======= =======
See accompanying notes to condensed consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands Nine Months Ended January 31,
(unaudited) 1997 1996
---- ----
OPERATING ACTIVITIES:
Net earnings $ 5,877 $ 4,664
Depreciation 7,277 6,137
Gain on equipment disposals (93) (791)
Equity in net (earnings) loss
of investee companies 544 (325)
Changes in operating assets
and liabilities (10,159) (189)
Other 254 241
------ ------
Net cash provided by operating activities 3,700 9,737
------ ------
INVESTING ACTIVITIES:
Investments (957) (3,003)
Purchases of property and equipment (30,657) (17,561)
Proceeds from asset dispositions 2,065 2,141
------ ------
Net cash used in investing activities (29,549) (18,423)
------ ------
FINANCING ACTIVITIES:
Proceeds from long-term debt 38,425 23,803
Payments on long-term debt (11,587) (13,980)
Dividends paid (762) (608)
Other, net 26 -
------ ------
Net cash provided by
financing activities 26,102 9,215
------ ------
Increase in cash and cash equivalents 253 529
Cash and cash equivalents
at beginning of period 1,899 2,506
------ ------
Cash and cash equivalents
at end of period $ 2,152 $ 3,035
====== ======
See accompanying notes to condensed consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1997 AND 1996
(UNAUDITED)
A. These financial statements, except for the April 30,1996 condensed
consolidated balance sheet, have been prepared without audit as
permitted by the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in the financial statements have been condensed
or omitted pursuant to such rules and regulations; however, the
Company believes that this information is fairly presented. These
condensed consolidated financial statements should be read in
conjunction with the financial statements contained in the Company's
Annual Report on Form 10-K for the year ended April 30,1996 and the
accompanying notes and Management's Discussion and
Analysis of Financial Condition and Results of Operations.
B. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting
of only normal, recurring adjustments, necessary to fairly present the
financial results for the interim period presented.
C. The Company's financial results, particularly as it relates to its
domestic oil and gas operations, are influenced by seasonal fluctuations.
During the winter, there are more days of adverse weather conditions
and fewer hours of daylight than the other months of the year.
Consequently, flight hours are generally lower during the Company's
third fiscal quarter than at other times of the year. This produces a
seasonal aspect to the Company's business and typically results in
reduced revenues from operations during those months. Therefore, the
results of operations for interim periods are not necessarily
indicative of the operating results that may be expected for the full
fiscal year.
D. Primary earnings per share are computed based on the weighted average
number of shares and dilutive equivalent shares of common stock
(stock options) outstanding during each year using the treasury stock
method.
E. Certain reclassifications have been made to the prior year's financial
statements in order to conform with the classifications adopted for
reporting in fiscal 1997.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is engaged in providing helicopter transportation and
related services. The predominant portion of its revenue is derived from
transporting offshore oil and gas production and drilling workers on a
worldwide basis. The Company also performs helicopter transportation
services for a variety of hospital and medical programs and aircraft
maintenance to outside parties.
RESULTS OF OPERATIONS
The following is a comparison of the third quarter and
the first nine months of the fiscal year ending April 30,
1997 with the comparable period of the prior fiscal year.
Third Quarter Fiscal 1997 to Third Quarter Fiscal 1996
Revenues
The Company generates revenues from both ongoing service
contracts with established customers and non-contract flights
referred to as Specials. Domestic Oil and Gas contracts are
generally on a month to month basis and consist of a fixed
fee plus an hourly charge for actual flight time. Specials are
customer flights, primarily domestic oil and gas, provided on an
as needed basis that are not provided pursuant to ongoing contracts
and which generally carry higher rates.
International and aeromedical contracts also provide for
fixed and hourly charges, but are generally for longer terms.
These contracts impose early cancellation fees to encourage
customers to fulfill the contract term and cover the
Company's additional upfront costs in the event of early
termination.
The following table summarizes and compares the
Company's revenues by certain market segment for the quarters
ended January 31, 1997 and 1996:
(Thousands of dollars, except Revenues for the Quarter Ended January 31,
percentages and flight hours) -----------------------------------------
Increase
--------
1997 1996 $ %
---- ---- - -
Domestic Oil and Gas $36,031 $32,376 $3,655 11
Aeromedical Services 7,321 6,761 560 8
International, Technical 9,917 6,307 3,610 57
Services and Other ------ ------ ----- --
Total Operating Revenues $53,269 $45,444 $7,825 17
====== ====== ===== ==
Total Flight Hours 55,837 51,995 3,842 7
====== ====== ===== ==
Domestic Oil and Gas
Domestic Oil and Gas revenues increased $ 3.7 million, or
11%, to $ 36 million for the quarter. The Company attributes
this increase to better economic conditions in the Gulf of
Mexico. As of January 31, 1997, the Company had twenty-six
more aircraft under contract than last year at January 31,
1996. Domestic flight hours increased 4%, to 40,834, from
39,401 hours, as compared to the quarter ended January 31,
1996.
Aeromedical Services
Aeromedical revenues increased to $ 7.3 million, or 8%,
from $ 6.8 million. This increase is due primarily to the
addition of three new programs which utilize three additional
aircraft. Flight hours increased to 3,289 hours, or 11%,
from 2,961 hours.
International, Technical Services and Other
International Oil and Gas revenues increased $ 2.7
million, or 73%, to $ 6.4 million. International flight
hours increased 37% to 7,190 hours from 5,244 hours. The
increase in revenue and flight hours is due primarily to the
addition of one new contract which utilizes four aircraft and
the utilization of four additional aircraft on an existing
contract. This new contract is seasonal in nature with
operations limited to October through February.
Technical services and other revenues increased $ 0.9
million from $ 2.6 million to $ 3.5 million.
Direct Expenses
Direct expenses increased $ 6.2 million, or 16%, to $ 46
million primarily as a result of increased activity levels.
Direct expenses as a percentage of operating revenues
declined slightly which improved the Company's operating
margin to 14% from 12% in the prior year's comparable
quarter.
Human resources costs, including employee benefit costs,
increased $1.9 million, or 12%. This increase is due
primarily to the increase in employees and employee overtime
which were needed to support higher levels of flight
activity.
Helicopter expenses increased $ 2.1 million, or 11%, to
$20.6 million. Spare parts usage, fuel expense, and
depreciation expense increased $ 2.0 million, $ 0.3 million,
and $ 0.3 million, respectively. These increases were
primarily due to increased levels of flight activity, an
increase in the average cost per gallon of aircraft fuel
coupled with an increase in flight hours, and the purchase of
additional aircraft, respectively. These costs were offset by
a decrease in insurance costs of $ 0.5 million.
Other expenses, Technical Services cost of goods sold,
and environmental remediation expenses increased $ 1.0
million, $ 0.8 million, and $ 0.4 million, respectively. The
$ 1.0 million increase in "other expenses" is consistent with
increased flight activity levels.
Selling, General and Administrative Expenses
Selling, general, and administrative expenses increased
slightly by $ 0.1 million to $ 3.1 million for the quarter.
First Nine Months Fiscal 1997 to First Nine Months Fiscal 1996
The following table summarizes and compares the Company's
revenues by certain market segment for the nine months ended
January 31, 1997 and 1996:
Revenues
(Thousands of dollars, except Revenues for the Nine Months Ended
percentages and flight hours) January 31,
----------------------------------
Increase
1997 1996 $ %
---- ---- - -
Domestic Oil and Gas $ 109,141 $ 99,464 $ 9,677 10
Aeromedical Services 22,436 19,646 2,790 14
International, Technical 27,093 20,614 6,479 31
Services and Other ------ ------ ------ --
Total Operating Revenues $ 158,670 $ 139,724 $ 18,946 14
======= ======= ====== ==
Total Flight Hours 183,661 163,752 19,909 12
======= ======= ====== ==
Domestic Oil and Gas
For the first nine months Domestic Oil and Gas revenues
increased 10%, or $ 9.7 million, to $ 109.1 million due
primarily to increased activity in the Gulf of Mexico. The
Company attributes the increase to better economic conditions
in the Gulf of Mexico; a result of increased oil prices and
drilling activity. These factors produced an 8% increase in
Domestic Oil and Gas flight hours. The company maintained
its market share at 52% for the current and prior year
period. Subsequent to January 31, 1997, a contract was
terminated which aggregated $ 5.4 million in revenues during
the initial nine months of the fiscal year. The Company
anticipates that it will be able to redeploy the assets and
personnel related to this contract in other activities
thereby minimizing the impact on future prospects.
Aeromedical Services
Aeromedical revenues increased to $ 22.4 million, or 14%,
from $ 19.6 million. Flight hours increased 16% to 10,980
hours from 9,479 hours. These increases are due primarily to
the addition of three new programs which utilize three
aircraft, and the utilization of three additional aircraft on
existing contracts. As of January 31, 1997, the total
Aeromedical contracts and aircraft were fifteen and forty,
respectively.
International, Technical Services and Other
International Oil and Gas revenues increased
substantially to $ 17.8 million, or 50%, from
$11.9 million, due primarily to the addition of two new
contracts which utilize twelve dedicated aircraft.
International flight hours increased 40% to 21,840 hours from
15,567 hours.
Technical services and other revenues increased to $ 9.3
million from $ 8.7 million, or 7%.
Direct Expenses
Direct expenses increased $ 13.2 million, or 11%, to
$ 135.5 million primarily as a result of increased flight
activity. Direct expenses as a percentage of operating
revenues declined substantially which improved the Company's
operating margin to 15% from 12% in the prior years
comparable period.
Human resources costs increased $ 5.2 million from $ 49.2
million to $ 54.4 million. The increase was primarily
related to an increase in the number of employees and
employee overtime which were needed to support increased
flight activity levels.
Helicopter expenses increased $ 3.3 million, or 6%, to
$ 60.1 million from $ 56.8 million. Spare parts usage, fuel
expense, and depreciation expense increased $ 2.1 million,
$ 1.5 million, and $ 0.7 million, respectively. Spare parts
usage increased due to increased flight activity. Fuel costs
increased due to both an increase in flight activity and an
increase in the average cost per gallon of aircraft fuel.
Depreciation expense increased due to the purchase of
additional aircraft. These costs were partially offset by a
decrease in insurance expense of $ 1.1 million.
Other expenses, Technical Services cost of goods sold,
and environmental remediation expenses increased $ 3.3
million, $ 1.0 million, and $ 0.4 million, respectively. The
$ 3.3 million increase in "other expenses" is consistent with
increased flight activity levels.
Selling, General and Administrative Expenses
Selling, general, and administrative expenses increased
$ 1.3 million from $ 8.4 million to $ 9.7 million.
The increase was primarily a result of
consultant fees related to information systems upgrades.
LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the first nine months of
the fiscal year ending April 30, 1997 with the period ending
April 30, 1996.
The Company's cash position as of January 31, 1997 was $
2.2 million compared to $ 1.9 million at April 30, 1996, the
Company's fiscal year end. Working capital increased $ 10.2
million from $ 26.5 million at fiscal year end to $ 36.7
million. The increase was primarily related to an increase
in accounts receivable of $ 6.2 million, an increase in
inventory of $ 4.3 million, and a decrease in accounts
payable of $ 1.5 million offset by an increase in income
taxes payable of $ 1.8 million.
Total long-term debt increased $ 26.8 million to $ 55.3
million. On August 13, 1996 the Company and its principal
lending group ratified a loan agreement that amended and
restated its original loan agreement dated January 1, 1986.
The new agreement increased the Company's credit capacity to
$ 65 million from $ 55 million. In addition, the new
agreement reduced the Company's effective interest rate on
its outstanding debt under this facility. The projected
interest expense reduction for the fiscal year ended April
30, 1997, using the total debt outstanding under this
facility at January 31, 1997, is $0.1 million. The Company's
current debt obligation totals $ 8.9 million, due in
equal quarterly installments, which the Company intends to
pay with cash flow from operations. At January 31, 1997, the
Company had $ 10 million credit capacity available under its
revolving credit facility. The Company is in compliance with
all provisions of its loan agreement. During February, 1997,
the Company modified its loan agreement with its principal
lending group which among other things i) reduced the
Company's effective interest rate, ii) increased the total
credit capacity to $ 80 million from $ 65 million, iii)
reduced the mandatory quarterly principal payments, and iv)
provided a fixed rate option for up to $ 40 million of the
total outstanding debt under the facility. The interest rate
reduction was effective January 1, 1997. The projected
interest expense reduction for this new agreement, for fiscal
year ended April 30, 1997, using current debt levels at
January 31, 1997, is $ 50,000.
Cash generated from operating activities and financing
activities was $ 3.7 million and
$ 26.1 million, respectively. The Company utilized its cash
flow from operating activities and financing activities to
fund $ 29.5 million in investing activities. Investing
activities primarily included the purchase of twenty-five
aircraft for $ 18.8 million, and $ 7.9 million in aircraft
capital improvements. The company paid dividends totaling $
0.8 million or $ 0.15 per share.
The Company has policies and procedures in effect to
strictly monitor its compliance with environmental
regulations at its operating locations. The Company has
identified known or suspected fuel contamination at five of
its bases. Although the full extent of contamination has not
been determined, based on this preliminary information, a
provision of $ 1.7 million was made for remediation costs
through the fiscal year ended April 30, 1996 and an
additional $ 0.8 million provision was made in the first nine
months of fiscal 1997. The Company has expensed $ 0.8
million and $ 1.6 million, including the reserve provisions,
for environmental costs for the three and nine month periods
ending January 31, 1997, respectively. The Company will make
additional provisions to the extent necessary as reliable
estimates of these costs become available.
In the first quarter of fiscal year 1996, the Company
acquired a 49% interest in Irish Helicopters Limited (IHL)
based in Dublin Ireland. IHL was notified in August 1996
that its principal service contract would not be renewed and
terminated on December 31, 1996. As a result, IHL is
reviewing a number of alternatives including the possibility
that it will not continue as a going concern. During the
third quarter of fiscal year 1997, the Company recorded a
$ 0.7 million writedown, primarily ascribable to its investment
in IHL. The Company's net investment in IHL is approximately
$ 2.9 million as of January 31, 1997.
RESULTS AT A GLANCE (Unaudited)
The following table provides a summary of critical
operating and financial statistics (thousands of dollars,
except per share amounts, financial ratios, flight hours and
general statistics):
Nine Months Ended January 31,
1997 1996
---- ----
Operations
Operating revenues $ 158,670 $ 139,724
Net earnings 5,877 4,664
Net earnings per share 1.16 .92
Annualized return on
shareholders' equity 9.3% 8%
Total flight hours 183,661 163,752
Financial Summary January 31, 1997 April 30, 1996
---------------- --------------
Net working capital $ 36,684 $ 26,543
Net book value of
property and equipment 118,158 96,332
Long-term debt 55,317 28,522
General Statistics
Helicopters Operated 302 261
Employees 1,819 1,677
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 (i) Articles of Incorporation of the Company
(incorporated by reference to Exhibit No.
3.1 (i) to PHI's Report on Form 10-Q for the
quarterly period ended October 31, 1994).
(ii) By-laws of the Company (incorporated by reference
to Exhibit No. 3.1 (ii) to PHI's Report on Form 10-Q
for the quarterly period ended July 31, 1996).
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ending
January 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Petroleum Helicopters,Inc.
March 10, 1997 By: /s/ Carroll W.Suggs
----------------
Carroll W. Suggs
Chairman of the Board, President
and Chief Executive Officer
(duly authorized officer)
March 10, 1997 By: /s/ John H. Untereker
----------------------
John H. Untereker
Vice President and Chief
Financial Officer
principal financial officer)
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