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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ Annual report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended April 30, 1998
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 No. 0-9827
PETROLEUM HELICOPTERS, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-0395707
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2121 Airline Highway Suite 400 70001-5979
P.O. Box 578, Metairie, Louisiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(504) 828-3323
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Voting Common Stock
Non-Voting Common Stock
(Title of Each Class)
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
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein and will not be contained, to the best of
registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /X/
State the aggregate market value of the voting stock
held by non-affiliates of the registrant.
Date Amount
------------ ------------
July 8, 1998 $ 26,165,014
Indicate the number of shares outstanding of each of
the registrant's classes of common stock, as of the latest
practicable date.
Voting Common Stock 2,800,886 shares outstanding as of July 8, 1998.
Non-Voting Common Stock 2,358,935 shares outstanding as of July 8, 1998.
Documents Incorporated by Reference
Portions of the registrant's definitive proxy statement
to be used in connection with its 1998 Annual Meeting of
Shareholders will be, upon filing with the Commission,
incorporated by reference into Part III of this Form 10-K.
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<PAGE>
PETROLEUM HELICOPTERS, INC.
INDEX - FORM 10-K
PART I
Item 1.Business 1
General 1
Risks and Uncertainties 1
Weather and Seasonal Aspects 2
Safety and Insurance 2
Government Regulation 2
Competition 3
Employees 3
Customers 3
Environmental Matters 4
Item 2.Properties 4
Item 3.Legal Proceedings 6
Item 4.Submission of Matters to a Vote of Security
Holders 6
PART II
Item 5.Market for Registrant's Common Equity and Related
Shareholder Matters 8
Item 6.Selected Financial Data 8
Item 7.Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 8.Financial Statements and Supplementary Data 15
Petroleum Helicopters, Inc. and Consolidated
Subsidiaries:
Independent Auditors' Report 15
Consolidated Balance Sheets-April 30, 1998 and 1997 16
Consolidated Statements of Earnings
-Three years ended April 30,1998 18
Consolidated Statements of Shareholders' Equity
-Three years ended April 30, 1998 19
Consolidated Statements of Cash Flows
-Three years ended April 30, 1998 20
Notes to Consolidated Financial Statements 21
Item 9.Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 32
PART III
Item 10.Directors and Executive Officers of the Registrant 32
Item 11.Executive Compensation 32
Item 12.Security Ownership of Certain Beneficial Owners
and Management 32
Item 13.Certain Relationships and Related Transactions 32
PART IV
Item 14.Exhibits, Financial Statement Schedules and
Reports on Form 8-K 33
Signatures 36
<PAGE>
PART I
Item 1. Business
- -----------------
General
Petroleum Helicopters, Inc. (the "Company" or "PHI")
was incorporated as a Delaware corporation in 1949 and was
reincorporated as a Louisiana corporation in 1994. Since
its inception, the Company's primary business has been to
transport personnel and to a lesser extent parts and
equipment, to, from and among offshore platforms for
customers engaged in the oil and gas exploration,
development and production industry. Today, the Company
maintains its position as the largest provider of helicopter
transportation services in the Gulf of Mexico ("the Gulf"),
providing approximately 51% of all the contracted aircraft
in the Gulf. The Company has 222 aircraft dedicated to this
market. Additionally, the Company is the fastest growing
provider of aeromedical services in the U.S. On December
31, 1997, PHI purchased the assets of Samaritan AirEvac for
approximately $ 8.8 million. The purchase included all of
the operating net assets and business of Samaritan AirEvac,
an aeromedical services division of Samaritan Health System
based in Arizona and a customer of PHI's since June 12,
1993. The net assets were acquired by a new wholly-owned
subsidiary of PHI, Air Evac Services Inc. ("Air Evac"), and
included one Lear Jet and five Cessna 441's equipped for
medical transportation. International initiatives for
serving the global oil and gas industry have shown steady
growth. The Company currently operates 307 aircraft
worldwide and has 2,135 employees. During fiscal 1998, the
Company recorded the highest revenues in its history at
$ 238.8 million, surpassing fiscal 1997 by $ 26.4 million.
During fiscal 1998, 1997 and 1996, approximately 84%,
85% and 85%, respectively, of the Company's operating
revenues were generated by Oil and Gas Aviation Services.
Domestically, these revenues are earned in federal and state
waters offshore of the States of Louisiana, Texas, Alabama,
Mississippi, New Jersey and California and by aircraft
maintenance services provided to outside parties.
Internationally, the Company operates in several countries
which are described under Item 2. "Facilities."
The Company's aeromedical transportation services for
hospitals and medical programs ("Aeromedical Services
Programs") accounted for 15%, 14% and 14% of operating
revenues in fiscal 1998, 1997 and 1996, respectively.
Demand for the Company's oil and gas aviation services
are strongly influenced by oil and gas exploration,
development and production activities. These activities are
greatly affected by federal leasing policies and regulations
and by oil and gas prices. The Company's aeromedical
services are influenced by certain U. S. Government medical
reimbursement policies which are subject to some degree of
change. The Company's helicopters provide a safe, reliable,
efficient and fast method of transportation under a broad
range of operational and environmental conditions,
especially offshore and in remote areas. All of the
Company's twenty-one principal types of aircraft are
available under a variety of contractual arrangements.
The Company maintains master operating agreements with
each of its major domestic and international oil and gas
industry customers, which set forth general rights and
duties of the Company and the customer. Although the
Company is a party to a number of oil and gas industry
contracts with a term of one year or more, services are
generally provided pursuant to monthly extensions of these
operating agreements, and prices are fixed for each contract
extension. Aeromedical contracts are generally entered into
for longer terms.
Charges under operating agreements are generally based
on fixed monthly fees and additional hourly charges for
actual flight time. Because the Company is compensated in
part by flight hours, prolonged adverse weather conditions
that result in reduced flight hours can adversely affect
results of operations. See "Weather and Seasonal Aspects."
Risks and Uncertainties
Operations in foreign countries generally are subject
to various risks attendant to doing business outside the
United States. This may include risks of war, general
strikes, civil disturbances, guerilla activity, currency
fluctuations and devaluations and governmental activities
that may limit or disrupt markets, restrict payments or the
movement of funds or result in the deprivation of contract
rights or the taking of property without fair compensation.
No prediction can be made as to what foreign governmental
regulations may be enacted in the future that could be
applicable to helicopter operations.
1
<PAGE>
Weather and Seasonal Aspects
Poor visibility, high winds and heavy precipitation can
affect the safe use of helicopters and result in a reduced
number of flight hours. A significant portion of the
Company's operating revenues are dependent on actual flight
hours (43%) and a substantial portion of the Company's
direct costs are fixed (60%) for fiscal year 1998. Thus,
prolonged periods of adverse weather can materially and
adversely affect the Company's operating revenues and net
earnings.
In the Gulf, the months of December through February
have more days of adverse weather conditions and fewer hours
of daylight than the other months of the year.
Consequently, flight hours are generally lower at these
times, which typically results in a reduction in operating
revenues during those months.
The Company currently operates eighty-three aircraft
equipped to fly pursuant to instrument flight rules ("IFR")
in the Gulf, which enables these aircraft, when manned by
IFR rated pilots and co-pilots, to operate at times when
poor visibility prevents flights by aircraft that can fly
only by visual flight rules ("VFR"). Poor visibility is the
most common of the adverse weather conditions that affects
the Company's operations.
Safety and Insurance
The operation of helicopters inherently involves a
degree of risk. Hazards, such as aircraft accidents,
collisions, fire and adverse weather, are inherent in the
business of providing helicopter services and may result in
losses of equipment and revenues. The Company's safety
record is very favorable in comparison to the record for all
United States operators as reflected in industry
publications.
The Company is subject to the federal Occupational
Safety and Health Act ("OSHA") and similar state statutes.
The Company has an extensive safety and health program and
employs a safety staff, including a certified safety
professional in the field of comprehensive practice, who is
also a registered environmental manager, a certified
environmental auditor and a certified environmental quality
administrator. The primary functions of the safety staff
are to develop Company policies that meet or exceed the
safety standards set by OSHA, train Company personnel and
make daily inspections of safety procedures to insure their
compliance with Company policies on safety. All personnel
are required to attend safety training meetings at which the
importance of full compliance with safety procedures is
emphasized. The Company believes that it meets or exceeds
all OSHA requirements and that its operations do not expose
its employees to unusual health hazards.
The Company maintains hull and liability insurance on
its aircraft, which generally insures the Company against
physical loss of, or damage to, its helicopters and against
certain legal liabilities to others. In addition, the
Company carries war risk, expropriation, confiscation and
nationalization insurance for its aircraft involved in
international operations. In some instances, the Company is
covered by indemnity agreements from oil companies,
hospitals and medical programs in lieu of, or in addition
to, its insurance. The Company's helicopters are not
insured for loss of use. While the Company believes it is
adequately covered by insurance and indemnification
arrangements, the loss, expropriation or confiscation of, or
severe damage to, a material number of its helicopters could
adversely affect revenues and profits.
Government Regulation
As a commercial operator of helicopters, the Company's
flight and maintenance operations are subject to regulation
by the Federal Aviation Administration (the "FAA") pursuant
to the Federal Aviation Act of 1958 (the "Federal Aviation
Act", as amended). The FAA has authority to exercise
jurisdiction over personnel, aircraft, ground facilities and
other aspects of the Company's business.
The Company transports personnel and property in its
helicopters pursuant to an Air Taxi Certificate granted by
the FAA under Part 135 of the Federal Aviation Regulations.
This certificate contains operating specifications that
allows the Company to conduct its present operations but are
subject to amendment, suspension and revocation in
accordance with procedures set forth in the Federal Aviation
Act. The Company is not required to file tariffs showing
rates, fares and other charges with the FAA. The FAA's
regulations, as currently in effect, also require that at
least 75% of the Company's voting securities be owned or
controlled by citizens of the United States or one of its
possessions, and that the president and at least two-thirds
of the directors of the Company are United States citizens.
The Company's president and all of its directors are United
States citizens and its organizational documents provide for
the automatic reduction in voting power of each share of
voting common stock owned or controlled by a non-United
States citizen if necessary to comply with these
regulations.
2
<PAGE>
The National Transportation Safety Board is authorized
to investigate aircraft accidents and to recommend improved
safety standards.
The Company is also subject to the Communications Act
of 1934 because of its ownership and operation of a radio
communications flight following network throughout the Gulf
and off the coast of California.
Numerous federal statutes and rules regulate the
offshore operations of the Company and the Company's
customers, pursuant to which the federal government has the
ability to suspend, curtail or modify certain or all
offshore operations. A suspension or substantial
curtailment of offshore oil and gas operations for any
prolonged period would have an immediate and materially
adverse effect on the Company. A substantial modification
of current offshore operations could adversely affect the
economics of such operations and result in reduced demand
for helicopter services.
Competition
The Company's business is highly competitive. Many of
the Company's contracts are awarded after competitive
bidding. The principal aspects of competition are price,
reliability, availability, safety and service.
The Company believes it operates one of the largest
commercial helicopter fleets in the world. At April 30,
1998, the Company operated 307 aircraft. The Company
operated 270 aircraft in the United States, of which 222
were operated domestically in the Company's Oil and Gas
Aviation Services Unit, and forty-eight were operated in the
Company's Aeromedical Services Unit. Thirty-seven aircraft
were operated internationally in the Company's Oil and Gas
Aviation Services Unit.
The Company is the largest operator of helicopters in
the Gulf and believes there are approximately four
competitors operating in the Gulf market. Certain of the
Company's customers and potential customers in the oil
industry operate their own helicopter fleets; however, oil
companies traditionally contract for most specialty services
associated with offshore operations, including helicopter
services. Internationally, the oil and gas market remains
strong and very competitive with significant growth
opportunity.
The Aeromedical market is becoming increasingly
competitive and is experiencing some hospital program
consolidations. However, the Company expects continued
growth in this market.
Employees
As of April 30, 1998, the Company employed a total of
2,135 people, including 209 of which are employed by the
Company's newly acquired subsidiary, Air Evac. The Company
believes its employee relations to be satisfactory, and it
has never experienced a work stoppage. Currently, none of
the Company's employees are covered by union contracts.
On Monday, June 2, 1997, the Company was notified by
the National Mediation Board ("NMB") that the Office and
Professional Employees International Union ("OPEIU") filed
an application to represent flight deck crew members
(helicopter pilots) of PHI. On September 4, 1997, the NMB
reported that the Company's helicopter pilots voted to
reject union representation. The OPEIU filed objections
with the NMB seeking a new election. This reelection
request was granted on January 30, 1998. On March 31, 1998,
the NMB reported that the Company's helicopter pilots voted
to again reject union representation. On April 2, 1998, the
OPEIU filed objections with the NMB to set aside the results
of the rerun election. The rerun election is currently
being evaluated for propriety by the NMB. Should the
Company's domestic pilots elect to be represented by a
union, the Company believes that this would place the
Company at a competitive disadvantage which could have an
adverse effect on the Company's revenues and results of
operations.
Customers
The Company's principal customers are major oil
companies. The Company also serves independent exploration
and production concerns, oil and gas service companies,
hospitals and medical programs and government agencies. The
Company's largest customer, Shell Oil Company, accounted for
16%, 15% and 14% of the Company's operating revenues in
fiscal 1998, 1997 and 1996, respectively. The Company's
five largest customers accounted for 32%, 32% and 34% of
operating revenues in fiscal 1998, 1997 and 1996,
respectively.
3
<PAGE>
Division managers of customer oil companies, who are
responsible for a majority of contract services in
connection with offshore oil activities, generally contract
for helicopter services. Many oil companies also employ
directors of aviation to evaluate the capabilities and
safety performance of companies providing helicopter
services and make recommendations to division managers.
Company management and operations specialists are in regular
contact with division managers and directors of aviation in
connection with both existing service contracts and
potential new business.
Environmental Matters
The Company is subject to federal, state and local
environmental laws and regulations that impose limitations
on the discharge of pollutants into the environment and
establish standards for the treatment, storage and disposal
of toxic and hazardous wastes.
The Company believes that compliance with federal,
state and local environmental laws and regulations will not
have a material effect upon the results of operations of the
Company. The Company has established reserves for
environmental costs, which are discussed under Item 7.
Management's Discussion and Analysis of Financial Condition
and Results of Operations - Environmental Matters.
Item 2. Properties
- -------------------
Fleet Utilization
As of April 30, 1998, 83% of the Company's aircraft
were actively assigned as compared with 84% and 86% as of
April 30, 1997 and 1996, respectively.
Equipment
Certain information as of April 30, 1998 regarding the
Company's owned and leased fleet is set forth in the
following table:
Number
in Cruise Appr.
Manufacturer Type Fleet Engine Passengers Speed Rang
- ------------ ---- ----- ------ ---------- ----- -----
(mph) (miles)
Bell 206B-III 18 Turbine 4 120 300
206L-I, III, IV 122 Turbine 6 130 310
407 19 Turbine 6 144 420
212(1) 11 Twin Turbine 13 115 300
214ST(1) 6 Twin Turbine 18 155 450
230(1) 1 Twin Turbine 8 160 370
222 1 Twin Turbine 8 160 370
412(1) 25 Twin Turbine 13 135 335
Boelkow BK-117 11 Twin Turbine 6 135 255
BO-105 36 Twin Turbine 4 135 270
Aerospatiale AS350 B2 10 Turbine 5 140 385
Sikorsky S-76(1) 14 Twin Turbine 12 150 400
McDonnell-
Douglas MD900 2 Twin Turbine 6 155 336
MIL Design MIL-8 MTV(1) 2 Twin Turbine 28 140 310
---
Total Helicopters 278
---
Beechcraft King Air 200(1) 4 Turboprop 8 300 1,380
Hawker
Sidley HS125-700(1) 1 Twin Turbo Jet 8 483 2,185
LET L410(1) 2 Turboprop 15 215 620
Conquest Cessna 441(1) 5 Turboprop 3 330 1,000
Lear Jet 35A(1) 1 Twin Turbo Jet 4 505 2,100
---
Total Fixed Wing 13
---
Total Aircraft 291
===
___________________________________________
(1) Equipped to fly under instrument flight rules ("IFR").
All other types listed can only fly under visual flight
rules ("VFR"). See Item 1. "Business - Weather and
Seasonal Aspects."
4
<PAGE>
The following tables set forth additional information
regarding the aircraft owned and leased by the Company (in
thousands, except the number of helicopters):
Company Owned
Aircraft Cost Net Book Value
-------- ---------- --------------
200 $206,309(2) $108,054(1)
Company Leased Total Rents Over Remaining
Aircraft Life of Lease Rents
-------------- --------------- ---------
91 $119,612 $82,892
______________________________________
(1) Information regarding the Company's depreciation
policy is set forth under Item 8. "Financial Statements
and Supplementary Data - Notes to Consolidated Financial
Statements, Note 1."
(2) Includes cost of leased aircraft improvements.
The Company operates sixteen aircraft that are owned or
leased by customers which are not reflected in the foregoing
tables.
As of April 30, 1998, the Company's commitment for
principal payments and lease payments for its present
helicopter fleet averages $ 17.7 million each year for the
next five years and an aggregate of $ 62.2 million
thereafter.
Under most leases the Company is responsible for all
insurance, taxes and maintenance expenses associated with
the helicopters, and within certain limitations, the Company
can either substitute equipment or terminate the leases in
the event the leased equipment becomes obsolete or is no
longer suited for the Company's needs. All of the Company's
leases are considered operating leases for accounting and
tax purposes.
The Company also maintains an inventory of fuel and an
inventory of spare parts and components for use in the
repair and maintenance of the Company's fleet. This
inventory had a book value of approximately $ 34.0 million
on April 30, 1998. The Company is a distributor or dealer
for many of these parts and components, thereby allowing it
to realize significant cost savings on its purchases.
Equipment on Order
Subsequent to year end, the Company purchased five
helicopters for an aggregate of $ 6.8 million. The Company
plans to purchase an additional two helicopters in fiscal
1999 for a total purchase price of approximately $ 2.9
million. These plans may be modified depending upon actual
customer commitments.
Equipment Sales
The Company sells aircraft whenever they (i) become
obsolete, (ii) do not fit into future fleet plans, or (iii)
are surplus to the Company's needs.
The Company typically sells its aircraft for more than
their book value. The Company cannot predict, however,
whether these results will continue or whether such prices
would be realized if the Company were to sell a large number
of helicopters in a short period of time.
Facilities
The Company currently leases its executive office space
in Metairie, Louisiana (Metropolitan New Orleans). The
lease covers approximately 8,107 square feet and expires on
July 31, 2000.
The Company's principal operating facility is located
on property leased from The Lafayette Airport Commission at
the Lafayette Regional Airport in Lafayette, Louisiana. The
lease covers approximately twenty-eight acres and seventeen
buildings, with an aggregate of approximately 135,000 square
feet, housing the Company's main operational and
administrative offices and the main repair and maintenance
facility. The Company has extended this lease until 2006.
The Company is planning to move into a new 246,000 square
foot facility on the airport grounds in 2001. This move
will not have a material effect on operating costs.
5
<PAGE>
The Company also leases property for seventeen
additional bases to service the oil and gas industry
throughout the Gulf and one base in California. Those bases
that represent a significant investment by the Company in
leasehold improvements or which are particularly important
to the Company's operations are:
A. Morgan City Base (Louisiana) - containing
approximately fifty-three acres, is under a lease
that expires June 30, 2003 with options to extend
through June 30, 2013. The Company has built a
variety of operational and maintenance facilities
on this property, including landing pads for forty-
six helicopters. The Company believes that this
facility is the largest commercial heliport in the
world.
B. Intracoastal City Base (Louisiana) -
containing approximately twenty-three acres under
several leases in Vermilion Parish, all with
options to extend through July 31, 2001. The
Company has built a variety of operational and
maintenance facilities on this property, including
landing pads for forty-five helicopters.
C. Houma-Terrebonne Airport (Louisiana) -
containing approximately fourteen acres and certain
buildings leased under four leases from the
Houma-Terrebonne Airport Commission, which have
options allowing extension of the leases through
1999. The Company plans to renegotiate the leases
prior to their expiration. The Company has landing
pads for thirty helicopters on this property.
D. Sabine Pass (Texas) - containing approximately
thirty-six acres under two leases, one of which,
for two acres, renews monthly, and the other of
which, for thirty-four acres, will expire October
31, 1998 with an option to extend through October
31, 2011. The Company has built a variety of
operational and maintenance facilities on this
property, including landing pads for twenty-four
helicopters.
E. New Orleans (Louisiana) - containing
approximately two acres, is under a lease through
April 30, 2004. The Company has made significant
leasehold improvements on this property, including
landing pads for fourteen helicopters.
F. Venice (Louisiana) - containing approximately eight
acres, was under a lease that expired March 30,1 998.
The lease is currently being renegotiated. The
original lease was executed April 1, 1973 for one
year and has been extended annually since that time.
The location has landing pads for twenty-seven
helicopters.
G. Fourchon (Louisiana) - containing
approximately eight acres, is under original lease
expiring April 30, 2006. The property has ten
landing pads.
The Company's other operations related bases in the
United States are located along the Gulf in Louisiana at
Cameron and Lake Charles; in Texas at Brazoria, Corpus
Christi, Galveston, Port O'Connor and Rockport; in
Mississippi at Pascagoula; in Alabama at Theodore; in New
Jersey at Edison; and in California at Santa Barbara.
The Company operates from offshore platforms which are
provided without charge by the owners of the platforms,
although in certain instances the Company is required to
indemnify the owners against loss in connection with the
Company's use thereof.
Bases of operations for the Company's foreign and
aeromedical operations are generally furnished by the
customer. The Company's international operations are
currently conducted in Angola, Antarctica, Bolivia,
Colombia, Equador, Kazakhstan, Philippines, Thailand,
Venezuela and Zaire. Aeromedical operations are currently
conducted in Arizona, Arkansas, California, Florida,
Illinois, Kentucky, Louisiana, Mississippi, North Dakota,
Ohio and Wisconsin.
Item 3. Legal Proceedings
- --------------------------
The Company is not a party to, and its property is not
the subject of, any material pending legal proceedings,
other than ordinary routine litigation incidental to its
business.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
No matters were submitted to a vote of security holders
during the fourth quarter of the fiscal year ended April 30,
1998.
6
<PAGE>
Item 4. (a) Executive officers of the registrant and
- -----------------------------------------------------------
certain significant employees
-----------------------------
Certain information about the executive officers of PHI
and certain significant employees is set forth in the
following table and accompanying text:
Name Age Position
- -------------------- --- ------------------------------
Carroll W. Suggs (1) 59 Chairman of the Board of
Directors, President and Chief
Executive Officer
Ben Schrick(2) 57 Chief Operating Officer
Robert D. Cummiskey(3) 56 Director of Risk Management
and Corporate Secretary
John H. Untereker(4) 48 Chief Financial Officer and
Treasurer
William P. Sorenson(5) 48 General Manager - Aeromedical
Services
R. J. Wallace(6) 47 Director Maintenance / FAR145
Kenneth Alan Townsend(7) 59 General Manager - Domestic Oil
and Gas Aviation Services
Geoffrey C. Stanford (8) 31 Controller
(1) Mrs. Suggs became Chairman of the Board in March
1990, Chief Executive Officer in July 1992, and President in
October 1994.
(2) Mr. Schrick has served as Chief Operating Officer since
September 1994, as the Company's General Manager since
January 1993 and as Vice President of Maintenance since
1989. Mr. Schrick joined the Company in 1964.
(3) Mr. Cummiskey has served as Secretary since June 1992
and Director of Risk Management since October 1991.
(4) Mr. Untereker has served as Chief Financial Officer and
Treasurer since July 1992.
(5) Mr. Sorenson has served as General Manager of
Aeromedical Services since November 1995, after serving as
Director of Aeromedical Services since August 1994.
Mr. Sorenson joined the Company in 1976.
(6) Mr. Wallace joined the Company in August 1997 and was
appointed Director of Maintenance and FAR145. Prior to this
time, Mr. Wallace was a Colonel in the U. S. Marine Corps
for twenty-five years serving as an aircraft maintenance
officer for several squadrons, a program officer and an
engineering officer. Mr. Wallace also served on The Joint
Chiefs of Staff, The Pentagon.
(7) Mr. Townsend has served as General Manager - Domestic
Oil and Gas Aviation Services since February 1998 and
Director of the Oil and Gas Division since August 1997.
During his thirty-two year career with PHI, he has served
as area manager, offshore supervisor and sector manager.
(8) Mr. Stanford joined the Company in August 1993 and has
served as Controller since June 1997. Mr. Stanford
previously worked for Coopers and Lybrand, LLC. Mr. Stanford
is a Certified Public Accountant.
7
<PAGE>
Part II
Item 5. Market for Registrant's Common Equity and Related
- ------------------------------------------------------------
Shareholder Matters
-------------------
The Company's voting and non-voting common stock trades
on The NASDAQ Stock Market ("NASDAQ Small Cap Issuers")
under the symbols PHEL and PHELK, respectively. The
following table sets forth the range of high and low per
share bid prices, as reported by NASDAQ, and dividend
information for the Company's voting and non-voting common
stock for the fiscal quarters indicated.
Voting Non-Voting
Common Stock Common Stock Dividends
------------------ -------------------- ---------
Fiscal Quarter High Low High Low Per Share
- -------------- ---- --- ---- --- ---------
1997-98
1st Quarter 18 3/4 14 1/2 17 1/2 14 .05
2nd Quarter 30 1/2 14 29 13 7/8 .05
3rd Quarter 25 1/2 20 24 1/4 19 1/2 .05
4th Quarter 24 1/16 19 24 1/2 19 1/4 .05
1996-97
1st Quarter 17 13 3/4 16 13 1/2 .05
2nd Quarter 18 1/8 15 17 1/2 14 3/4 .05
3rd Quarter 19 17 17 3/4 15 3/4 .05
4th Quarter 20 17 1/4 18 1/4 16 .05
The declaration and payment of dividends is at the
discretion of the Board of Directors, which evaluates the
Company's dividend policy quarterly. Future dividends are
dependent upon, among other things, the Company's results of
operations, financial condition, cash requirements, future
prospects and other factors deemed relevant by the Board. A
credit agreement to which the Company is a party generally
restricts the declaration or payment of dividends to 20% of
net earnings for the previous four fiscal quarters. See
Item 8. "Financial Statements and Supplementary Data -
Notes to Consolidated Financial Statements, Note 2."
As of July 6, 1998, there were approximately 1,095
holders of record of the Company's voting common stock and
106 holders of record of the Company's non-voting common
stock.
Item 6. Selected Financial Data
- --------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(Thousands of Dollars, except per share data)
<S> <C> <C> <C> <C> <C>
Year Ended April 30:
Operating revenues $ 236,582 $ 211,663 $ 185,865 $ 174,397 $ 178,697
Net earnings 7,417 6,470 6,466 5,182 3,333
Net earnings per share (basic) 1.45 1.27 1.28 .96 .61
Net earnings per share (diluted) 1.43 1.25 1.27 .96 .61
Cash dividends declared per share .20 .20 .17 .06 -
At April 30:
Total assets $ 227,021 $ 196,631 $ 161,315 $ 147,108 $ 146,312
Total debt 72,619 62,460 37,332 35,815 40,553
Working capital 47,971 41,247 26,543 29,809 31,601
Shareholders' equity 94,705 87,416 81,401 75,707 75,309
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
- ----------------------------------------------------------
Condition and Results of Operations
-----------------------------------
The following discussion of the Company's Results of
Operations and Analysis of Financial Condition should be
read in conjunction with the Company's description of
business and consolidated financial statements and the notes
thereto included elsewhere in this Form 10-K.
8
<PAGE>
Results of Operations
Revenues
The Company generates revenues from both ongoing
service contracts with established customers and non-
contract flights referred to as Specials. Oil and Gas
Aviation Services Unit contracts, both domestic and
international, are generally on a month to month basis and
consist of a fixed fee plus an hourly charge for actual
flight time. Specials are customer flights, primarily
domestic oil and gas, provided on an as needed basis that
are not provided pursuant to ongoing contracts and which
generally carry higher rates. The Company's technical
service contracts are generally provided on an actual cost
plus negotiated mark-up basis.
Aeromedical contracts also provide for fixed and hourly
charges, but are generally for longer terms and impose early
cancellation fees to encourage customers to fulfill the
contract term and cover the Company's additional upfront
costs in the event of early termination.
The following table reflects the distribution of the
Company's external operating revenues by unit:
Years Ended April 30
--------------------
(in millions, except %'s)
1998 1997 1996
---- ---- ----
$ % $ % $ %
----- ---- ----- ---- ----- ----
Oil and Gas Aviation Services Unit 199.2 84 180.5 85 158.5 85
Aeromedical Services Unit 35.9 15 30.3 14 26.7 14
Oil and Gas Aviation Services Unit
United States Operations
------------------------
Demand for the Company's domestic Oil and Gas Aviation
Services is influenced by offshore oil and gas exploration,
development and production activities in the areas in which
it operates, which in turn is affected primarily by oil and
gas prices. The following table reflects the three year
trend in the offshore drilling rig count compared to the
Company's domestic oil and gas revenues:
April April April
1998 1997 1996
---- ---- ----
Active Rigs in U.S. Gulf of Mexico 179 200 135
Domestic Oil and Gas Aviation
Services revenues (millions) $ 176.4 $ 157.9 $ 142.2
Better economic conditions in the Gulf of Mexico
resulted in substantial increases in oil and gas activity
during fiscal 1998 and 1997. In January 1998 oil prices
substantially declined, causing a drop in the rig count.
This decline did not impact the results of fiscal 1998,
however, the decline in oil prices could adversely affect
domestic flight hours and revenues in future fiscal years.
During fiscal 1998, revenues increased 12% to $ 176.4
million versus $ 157.9 million for fiscal 1997 and 11% from
the fiscal 1996 amount of $ 142.2 million. Oil and gas
revenue flight hours rose 5% to 187,930 versus 178,262 for
fiscal 1997 and 10% from the fiscal 1996 amount of 162,377.
The increases resulted from better conditions in the Gulf
coupled with rate increases in the third and fourth quarters
of fiscal 1998. The Company's domestic market share
increased to 51% from 49% in the prior year. The Company's
domestic market share had decreased to 49% in fiscal 1997
from 51% in 1996 due primarily to a contract which ended
during the fourth quarter of fiscal 1997, which aggregated
$ 5.4 million in revenues during the initial nine months of
the year. The Company redeployed the assets and personnel
related to this contract in other activities thereby
minimizing the impact on operations and regaining market
share in 1998.
9
<PAGE>
In addition, the Company performs various third party
maintenance work referred to as "Technical Services."
Technical services revenues were $ 14.1, $ 13.4 and $ 11.6
million in fiscal years 1998, 1997 and 1996, respectively.
These amounts are included in Domestic Oil and Gas Aviation
Services revenues as discussed in the above table.
International Operations
------------------------
In fiscal 1998, international revenues remain
unchanged. Revenues increased 39% to $ 22.6 million in
fiscal 1997 from $ 16.3 million in fiscal 1996. Flight
hours increased 5% to 28,734 in 1998 and 28% to 27,323 in
1997. The flight hour increase in 1997 was produced
primarily by the addition of one new contract which utilizes
four aircraft and the utilization of four additional
aircraft on existing contracts. The new contract is
seasonal in nature with operations limited to October
through February.
Aeromedical Services Unit
Fiscal 1998 also saw positive trends in the Company's
Aeromedical Services Unit. Aeromedical revenues rose $ 5.6
million, or 18%, to $ 35.9 million. Flight hours increased
8% to 16,063 in 1998. The fiscal 1998 increases resulted
primarily from the acquisition of Air Evac which generated
revenues of approximately $ 7.9 million and flight hours of
1,450 for the four months ended April 30, 1998. (See Item 8.
"Financial Statements and Supplemental Data - Notes to
Consolidated Financial Statements, Note 9" for a more
detailed discussion of this transaction.) As of April 30,
1998, total aeromedical contracts and aircraft were fifteen
and forty-eight, respectively.
Fiscal 1997 experienced increases in the Company's
Aeromedical Services Unit. Aeromedical revenues rose $ 3.6
million, or 13%, to $ 30.3 million. Flight hours increased
16% to 14,805. These increases resulted from the addition
of new hospital programs which utilize four aircraft and
the utilization of three additional aircraft for existing
contracts, bringing the total aeromedical contracts and
aircraft to sixteen and forty-one, respectively, as of April
30, 1997.
Direct Expenses
The following table highlights certain critical
operating factors which are helpful in analyzing direct
expense relationships:
1998 1997 1996
---- ---- ----
Number of aircraft owned/leased/operated at year end 307 314 266
Fleet utilization 83% 84% 86%
Number of employees at year end 2,135 1,851 1,677
Operating margin 14% 13% 13%
1998 compared to 1997
- ---------------------
Direct expenses increased $ 19.7 million, or 11%, to
$ 204.1 million primarily as a result of increased activity
levels. However, direct expenses as a percentage of
operating revenues decreased slightly with the Company's
operating margin increasing to 14% from 13% in fiscal 1997.
The Company does not anticipate further improvements in the
Company's operating margin as the Company will incur an
increase in human resource costs as discussed below. The
acquisition of Air Evac resulted in an increase of $ 6.0
million in direct expenses for the four months ended April
30, 1998.
Human resource costs, including salaries and benefits,
increased $ 8.2 million, or 11%, to $ 82.6 million. Salary
expense increased by $ 5.8 million due to additional
employees needed to support increased flight activity, the
addition of 209 employees with the purchase of Air Evac
($ 1.8 million) and a general wage increase for all
employees. All employees received a 4% wage increase
effective January 1, 1998. Due to the continued pressure
to attract and retain qualified personnel, a new pay plan
was also implemented in February 1998 which is expected to
increase salary expense by an additional $ 2.2 million over
fiscal 1998. Employee benefit costs increased $ 2.4 million,
including an increase in the Company's medical costs of
$0.9 million, $ 0.4 million related to Air Evac and $ 0.7
million related to the Company's gain sharing program
contribution. Under this program, the Company expensed
$ 2.2 million in 1998 as compared to $ 1.5 million in 1997.
The gain sharing program enables all employees to earn up to
three weeks additional pay based on the Company's
performance against a pre-tax income target.
10
<PAGE>
Spare parts usage and repair and maintenance costs
increased $ 5.0 million, or 11%, to $ 48.6 million; $ 0.3
million related to Air Evac. The Company is incurring
higher than expected maintenance costs due to fleet
expansion over the past two years. In order to meet current
aircraft utilization requirements, the Company significantly
increased the amount of outside repair work which was more
costly than performing the work in-house. The Company is in
the process of developing plans with the objective of
restoring these costs to their historical relationships.
During the fourth quarter of fiscal 1998, these costs did
trend toward historical relationships.
Aircraft depreciation increased by $ 2.1 million, or
22%, to $ 11.8 million as PHI's owned fleet size expanded in
1998. The Company incurred $ 25.5 million in capital
expenditures in fiscal 1998, which included seven additional
aircraft. The Air Evac acquisition also added six
additional aircraft which resulted in an additional $ 0.2
million in depreciation for four months of fiscal 1998.
Aircraft rental expense increased by $ 2.8 million, or
23%, to $ 15.1 million due to the addition of newly leased
aircraft. There were ninety-one leased aircraft as of April
30, 1998 as compared to seventy-four at April 30, 1997.
1997 compared to 1996
- ---------------------
Direct expenses increased $ 21.9 million, or 13%, to
$ 184.5 million primarily as a result of increased activity
levels. Direct expenses as a percentage of operating
revenues remained relatively constant with the Company
maintaining an operating margin of 13% in fiscal 1997 and
1996.
During the fourth quarter of fiscal 1997, direct
expenses as a percentage of operating revenues were 91%,
compared to 86% and 87% in the prior year's fourth quarter
and fiscal year 1997, respectively. The increase in the
fourth quarter of fiscal 1997, as compared to the other
periods, occurred due to higher than expected maintenance
costs. This occurred due to a significant increase in fleet
size.
Human resource costs, including salaries and benefits,
increased $ 7.9 million, or 12%, to $ 74.4 million. The
increase was primarily related to the increase in the number
of employees and employee overtime which is needed to
support increased flight activity levels. This increase was
partially offset by a decrease in the Company's gain sharing
program contribution. Under this program, the Company
expensed $ 1.5 million in 1997 as compared to $ 2.5 million
in 1996. The gain sharing program enables all employees to
earn up to three weeks additional pay based on the Company's
performance against a pre-tax income target.
Helicopter costs, including depreciation, fuel,
insurance and spare parts usage, increased by $ 9.7 million,
or 13%, to $ 83 million as PHI's fleet increased
substantially to accommodate expansion. Depreciation
expense increased $ 1.0 million as the Company incurred
$ 40.8 million in capital expenditures in fiscal 1997, which
included twenty-eight additional aircraft. Fuel costs were
$ 2.2 million higher due to an increase in the average cost
per gallon of aircraft fuel coupled with an increase in
flight hours. Helicopter insurance and spare parts usage
increased by $ 1.2 million and $ 4.9 million, respectively,
primarily as a result of the expanded fleet and an increase
in flight and flight related activity.
Other expenses and Technical Services cost of goods
sold increased $ 4.2 million and $ 1.9 million,
respectively. The $ 4.2 million increase in "other expenses"
is consistent with increased flight activity levels.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for fiscal
1998 increased $ 4.3 million, or 34%, to $ 17.1 million.
This increase was ascribable to the following: $ 0.6
million due to professional fees and an additional $ 0.4
million of depreciation related to the information system
upgrade programs, which commenced in 1996 and will continue
into fiscal 1999, $ 1.8 million due to legal and other
expenses related to defending against union organizing
activities (when this matter has been successfully resolved,
these expenses will be substantially reduced), $ 0.9 million
related to Air Evac operations (which was acquired on
January 1, 1998) and approximately $ 0.6 million due to
salary and employee benefit increases. Selling, general and
administrative expenses for fiscal 1997 increased $ 1.7
million, or 15%, over fiscal 1996 primarily ascribable to
the information system upgrade programs discussed above.
11
<PAGE>
Interest Expense
The Company's borrowing costs increased in fiscal 1998.
The weighted average interest rate paid decreased by 0.2% to
7.3% from 7.5% in 1997. However, this rate decline was
offset by higher average borrowings in fiscal 1998 as the
Company borrowed additional funds to purchased seven
aircraft during the year, and acquired six aircraft with the
purchase of Air Evac. Borrowing costs also increased in
fiscal 1997. The weighted average interest rate paid
decreased by 0.5% to 7.5% from 8.0%. However, this rate
decline was offset by higher average borrowings in fiscal
1997 as the Company borrowed additional funds to purchase
twenty-eight helicopters during the year.
Taxes
PHI's effective tax rate was 41%, 40% and 39%,
respectively, in 1998, 1997 and 1996. The Company
anticipates that its effective tax rate will not change
significantly in the foreseeable future. See Item 8.
"Financial Statements and Supplemental Data - Notes to
Consolidated Financial Statements, Note 3."
Earnings
Basic earnings per share for the fiscal year ended
April 30, 1998 increased 14% compared to the prior year.
The increase was primarily due to an improved operating
margin and an increase in other income (deductions),
reflecting gains recognized on the sale of aircraft which no
longer met the Company's fleet requirements. This was
partially offset by an increase in the Company's selling,
general and administrative costs.
Basic earnings per share for the fiscal year ended
April 30, 1997 declined slightly as compared to 1996. The
higher selling, general, administrative and interest
expenses explained above caused the Company's earnings to
remain essentially constant. In addition, during fiscal
1997 the Company sold its investment in Irish Helicopters
Limited based in Dublin, Ireland. This resulted in a $ 0.7
million charge in the third quarter of fiscal 1997.
The Company plans to continue its programs of
diversification and accountability and will continue to
search for opportunities to enhance earnings and shareholder
value.
Liquidity and Capital Resources
The Company's 1998 year-end cash position increased to
$ 2.8 million from $ 2.4 million at fiscal year end 1997.
Working capital in fiscal 1998 increased $ 6.8 million
from $ 41.2 million in 1997 to $ 48.0 million. This
increase is due primarily to an overall increase in accounts
receivable and inventory, partially offset by an increase in
accounts payable and accrued expenses. Long-term debt
increased $ 9.2 million in fiscal 1998 to $ 66.8 million at
year end. The Company's current debt obligations for fiscal
1999 total $ 5.8 million, due in equal quarterly
installments, which the Company intends to pay with cash
flow from operations.
The Company's primary credit facility consists of a
$ 40.0 million revolving credit facility available through
October 31, 1999 (the "revolving loan") and a capital loan
facility of up to $ 40.0 million (subject to compliance with
certain collateral coverage ratios) (the "term loan"). The
term loan is payable in fixed quarterly principal payments
of $ 1.0 million until maturity on October 31, 2004.
The secured term and revolving loan agreement permits both
prime rate based borrowings and London InterBank Offered
Rate ("LIBOR") borrowings plus a floating spread. The
spread for LIBOR borrowings will float up or down based on
the Company's performance as determined by a leverage ratio.
The spread can range from 1.0% to 1.5% above LIBOR.
On December 31, 1997, the Company's wholly-owned
subsidiary, Air Evac and the Company's principal lending
group ratified a loan agreement. This agreement provides
$ 5.0 million and $ 6.25 million revolver and term credit
facilities, respectively. This loan is secured by certain
assets of Air Evac and is guaranteed by the Company. The
term loan is payable in fixed quarterly principal payments
of $ 0.2 million until maturity on November 10, 2003. The
secured term and revolving loan agreement permits both prime
rate based borrowings and London InterBank Offered Rate
("LIBOR") borrowings plus a floating spread. The spread for
LIBOR borrowings will float up or down based on the
Company's performance as determined by a leverage ratio.
The spread can range from 1.0% to 1.5% above LIBOR.
12
<PAGE>
Inclusive of this new agreement, the Company at July 7,
1998 had $ 13.5 million of credit capacity available under
its credit facilities, reflecting the purchase, subsequent
to year end, of five aircraft for $ 6.8 million. In
addition, the Company plans to purchase two additional
helicopters in fiscal 1999 for a purchase price of
approximately $ 2.9 million. These planned purchases are
largely discretionary and subject to the Company obtaining
customer commitments. They can be adjusted by the Company
based on operating results or other factors. Funds
available under the Company's credit facility will be
utilized to finance these purchases. At April 30, 1998 the
Company was in compliance with the provisions of its loan
agreements. The Company believes its cash flow from
operations in conjunction with its credit capacity is
sufficient to meet its planned requirements for the
foreseeable future.
Cash generated from operating activities in fiscal 1998
was $ 10.5 million, compared to $ 8.5 million and $ 19.3
million in fiscal 1997 and 1996, respectively. The $ 10.8
million decrease in fiscal 1997 is primarily attributable to
the increase in accounts receivable of $ 6.8 million and
increased inventory of $ 4.1 million. Days sales
outstanding increased to fifty-three days in fiscal 1998
from fifty days in fiscal 1997.
Cash used in investing activities decreased to $ 20.2
million in fiscal 1998, as compared to $ 32.3 million in
fiscal 1997 and $ 21.0 million in 1996. The Company
purchased seven aircraft in fiscal 1998 for $ 6.3 million as
compared to twenty-eight aircraft for $ 24.5 million in
fiscal 1997 and nineteen aircraft for $ 15.2 million in
1996. During fiscal 1998, 1997 and 1996, the Company also
used $ 18.1 million, $ 13.5 million and $ 8.5 million
primarily for aircraft capital improvements and
approximately $ 1.1 million, $ 2.8 million and $ 0.1
million, respectively to fund the purchase of new data
processing equipment and systems. Additionally in January
1998, the Company acquired all of the operating assets of
Samaritan AirEvac from Samaritan Health System for $ 8.8
million. The purchase included one Lear Jet and five Cessna
441 fixed wing aircraft. During fiscal 1996, the Company
also used $ 3.0 million for the purchase of a 49% interest
in Irish Helicopters Limited which was subsequently disposed
of in fiscal 1997 generating proceeds of $ 2.9 million. A
portion of these expenditures were funded with proceeds from
aircraft sales.
Cash provided by financing activities primarily funded
the investing activities and $ 1.0 million in dividend
payments. In response to increased earnings during the past
four years, the Company resumed payment of quarterly
dividends beginning with the second quarter of fiscal 1995.
The Board declared dividends of $ 0.20 per share during
fiscal 1998, $ 0.20 per share in fiscal 1997 and $ 0.17 per
share in fiscal 1996. The Company anticipates that future
dividend payments will be declared provided that the current
earnings trend continues and as allowed by the Company's
agreement with its lenders.
The Company has considered the impact of Year 2000
issues on its computer systems and applications. A
compliance plan has been developed and conversion activities
are in process in conjunction with the current information
systems upgrade and is expected to be completed and tested
in 1998. The Company has committed to purchase software and
upgrade its hardware to address the year 2000 issues.
Management does not expect that this project will have a
significant effect on the Company's operations primarily due
to the significant expenditures for new information
technology systems during 1998 and 1997. Additionally, the
Company is currently evaluating its position with
significant suppliers, lenders and/or large customers to
ensure that those parties have appropriate plans to address
year 2000 issues where they may otherwise impact the
operations of the Company. The Company does not have any
significant suppliers, lenders and/or large customers that
directly interface with the Company's information technology
systems. There is no guarantee that the systems of the
Company's suppliers and customers will be year 2000
compliant and that such non-compliance will not have an
adverse effect on the Company.
New Accounting Pronouncements
On June 30, 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No.
130 ("FAS 130"), "Reporting Comprehensive Income." FAS 130
establishes standards for reporting and display of
comprehensive income and its components in a full set of
general purpose financial statements. FAS 130 is effective
for fiscal years beginning after December 15, 1997 and
requires restatement of earlier periods presented.
Management is currently evaluating the requirements of FAS
130.
On June 30, 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No.
131 ("FAS 131"), "Disclosures about Segments of an
Enterprise and Related Information." FAS 131 establishes
standards for the way that a public enterprise reports
information about operating segments in annual financial
statements and requires that those enterprises report
selected information about operating segments in interim
financial reports issued to shareholders. FAS 131 is
effective for fiscal years beginning after December 15, 1997
and requires restatement of earlier periods presented.
Management is currently evaluating the requirements of FAS
131.
13
<PAGE>
Environmental Matters
The Company is subject to federal, state and local
environmental laws and regulations that impose limitations
on the discharge of pollutants into the environment and
establish standards for the treatment, storage and disposal
of toxic and hazardous wastes.
The Company has policies and procedures in effect to
strictly monitor its compliance with environmental
regulations at its operating locations. In the first
quarter of fiscal 1996, the Company began an environmental
review at selected domestic bases. Known or suspected fuel
contamination has been identified at all the bases reviewed.
Management now believes it is likely that similar fuel
contamination will be found at additional bases.
The Company has expensed, including provisions for
environmental costs, $ 0.7 million, $ 1.3 million and $ 1.8
million in 1998, 1997 and 1996 respectively, related to
remediation efforts at five bases. The Company is currently
conducting assessments at three additional bases to
determine the extent of remediation required at these
locations. The reasonably possible upper range of exposure
for environmental matters is $ 2.7 million. The aggregate
liability for environmental related costs, at April 30, 1998,
is $ 1.7 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.
Forward Looking Statements
All statements other than statements of historical fact
contained in this Form 10-K, 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", "goals",
"intends", "plans", or "projects" and similar expressions
are intended to identify forward looking statements. It is
important to note that forward looking statements are based
on a number of assumptions about future events and are
subject to various risks, uncertainties and other factors
that may cause the Company's actual results to differ
materially from the views, beliefs and estimates expressed
or implied in such forward looking statements. Although the
Company believes that the assumptions reflected in forward
looking statements are reasonable, no assurance can be given
that such assumptions will prove correct. Factors that
could cause the Company's results to differ materially from
the results discussed in such forward looking statements
include but are not limited to the following: flight
variances from expectations, volatility of oil and gas
prices, the substantial capital expenditures required to
fund its operations, environmental risks, competition,
government regulation 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.
PHI undertakes no obligation to update publicly any forward
looking statements, whether as a result of new information,
future events or otherwise.
14
<PAGE>
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
Independent Auditors' Report
----------------------------
The Board of Directors and Shareholders
Petroleum Helicopters, Inc.:
We have audited the accompanying consolidated balance sheets
of Petroleum Helicopters, Inc. and subsidiaries as of April
30, 1998 and 1997, and the related consolidated statements
of earnings, shareholders' equity, and cash flows for each
of the years in the three-year period ended April 30, 1998.
In connection with our audits of the consolidated financial
statements, we also have audited the accompanying financial
statement schedule, "Valuation and Qualifying Accounts," for
the three-year period ended April 30, 1998. These
consolidated financial statements and financial statement
schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these
consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of Petroleum Helicopters, Inc. and
subsidiaries as of April 30, 1998 and 1997, and the results
of their operations and their cash flows for each of the
years in the three-year period ended April 30, 1998, in
conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth
therein.
/S/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
June 12, 1998
15
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30, 1998 and 1997
(Thousands of dollars)
ASSETS 1998 1997
- ------ ---- ----
Current assets:
Cash and cash equivalents $ 2,753 $ 2,437
Accounts receivable - net of allowance:
Trade 41,447 31,201
Investee companies 1,792 2,080
Other 5,880 2,266
Inventory 34,016 30,202
Prepaid expenses 1,478 1,115
Refundable income taxes - 1,344
Notes receivable - investee companies 1,151 1,313
------- -------
Total current assets 88,517 71,958
------- -------
Investments 2,705 2,480
Property and equipment, at cost:
Flight equipment 221,263 215,414
Other 34,779 28,633
------- -------
256,042 244,047
Less accumulated depreciation (120,923) (122,220)
------- -------
135,119 121,827
------- -------
Other 680 366
------- -------
$ 227,021 $ 196,631
======= =======
16
<PAGE>
(Continued)
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, continued
April 30, 1998 and 1997
(Thousands of dollars, except share data)
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
- ------------------------------------ ---- ----
Current liabilities:
Accounts payable - trade $ 8,874 $ 8,246
Accrued expenses 19,130 12,440
Accrued vacation pay 5,672 4,784
Current maturities of long-term debt 5,824 4,868
Other 1,046 373
------- -------
Total current liabilities 40,546 30,711
------- -------
Long-term debt, net of current maturities 66,795 57,592
Deferred income taxes 19,172 18,239
Other long-term liabilities 5,803 2,673
Shareholders' equity
Voting common stock - par value of
$ 0.10; authhorized 12,500,000;
issued shares of 2,800,886
in 1998 and 1997 280 280
Non-voting common stock - par value
of $ 0.10; authorized 12,500,000;
issued shares of 2,358,935 and
2,294,066 in 1998 and 1997 236 229
Additional paid-in capital 11,706 10,810
Retained earnings 82,483 76,097
------- -------
Total shareholders' equity 94,705 87,416
------- -------
$ 227,021 $ 196,631
======= =======
The accompanying notes are an integral part of these
consolidated financial statements.
17
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended April 30, 1998, 1997 and 1996
(Thousands of dollars and shares, except share data)
1998 1997 1996
---- ---- ----
Revenues:
Operating revenues $ 236,582 $ 211,663 $ 185,865
Other income (deductions) 2,264 725 1,464
------- ------- -------
238,846 212,388 187,329
------- ------- -------
Expenses:
Direct expenses 204,109 184,456 162,599
Selling,general and administrative 17,110 12,778 11,079
Interest expense 5,118 4,297 3,098
------- ------- -------
226,337 201,531 176,776
------- ------- -------
Earnings before income taxes 12,509 10,857 10,553
Income taxes 5,092 4,387 4,087
------- ------- -------
Net earnings $ 7,417 $ 6,470 $ 6,466
======= ======= =======
Basic earnings per common share $ 1.45 $ 1.27 $ 1.28
======= ======= =======
Diluted earnings per common share $ 1.43 $ 1.25 $ 1.27
======= ======= =======
Weighted average common shares
outstanding 5,115 5,080 5,066
Incremental common shares from
stock options 81 92 43
------- ------- -------
Weighted average common shares
and equivalents 5,196 5,172 5,109
======= ======= =======
Dividends declared per common
share $ 0.20 $ 0.20 $ 0.17
======= ======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
18
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended April 30, 1998, 1997 and 1996
(Thousands of dollars and shares)
<TABLE>
<CAPTION>
Voting Non-Voting
------ ----------
Common Stock Common Stock Additional
------------ ------------ Paid-in Retained
Shares Amount Shares Amount Capital Earnings
------ ------ ------ ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE
April 30, 1995 2,865 $ 286 2,201 $ 220 $ 10,118 $ 65,083
Stock Options Exercised 10 1 - - 99 -
Other (75) (7) 75 7 3 (13)
Net Earnings - - - - - 6,466
Dividends - - - - - (862)
------ ----- ------ ----- ------ ------
BALANCE
April 30, 1996 2,800 $ 280 2,276 $ 227 $ 10,220 $ 70,674
====== ===== ====== ===== ====== ======
Stock Options Exercised 5 - 16 2 405 -
Other (4) - 2 - 185 (31)
Net Earnings - - - - - 6,470
Dividends - - - - - (1,016)
------ ----- ------ ----- ------ ------
BALANCE
April 30, 1997 2,801 $ 280 2,294 $ 229 $ 10,810 $ 76,097
====== ===== ====== ===== ====== ======
Stock Options Exercised - - 65 7 888 -
Other - - - - 8 -
Net Earnings - - - - - 7,417
Dividends - - - - - (1,031)
------ ----- ------ ----- ------ ------
BALANCE
April 30, 1998 2,801 $ 280 2,359 $ 236 $ 11,706 $ 82,483
====== ===== ====== ===== ====== ======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
19
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended April 30, 1998, 1997 and 1996
(Thousands of dollars)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 7,417 $ 6,470 $ 6,466
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation 12,534 9,977 8,344
Deferred income taxes 933 3,273 2,901
Gain on equipment disposals (3,313) (1,285) (1,067)
Equity in net (earnings)losses
of investee companies (242) 560 (397)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (12,042) (6,822) 1,217
Increase in inventory (3,682) (4,088) (387)
Decrease (increase) in prepaid expenses,
refundable income taxes, and notes receivable 1,452 (475) (2,080)
Increase in accounts payable -
trade and other accrued expenses 5,800 1,645 2,646
Increase (decrease) in income taxes payable 1,046 - (325)
Increase (decrease) in other liabilities 339 (1,481) 1,330
Other 266 715 701
------- ------- -------
Net cash provided by operating activities 10,508 8,489 19,349
------- ------- -------
Cash flows from investing activities:
Investments (8,730) (957) (3,303)
Purchase of property and equipment (25,475) (40,835) (23,808)
Proceeds from asset dispositions 13,982 6,583 6,147
Proceeds from sale of investment - 2,935 -
------- ------- -------
Net cash used in investing activities (20,223) (32,274) (20,964)
------- ------- -------
Cash flows from financing activities:
Proceeds from long-term debt 31,150 42,425 23,303
Payments on long-term debt (20,991) (17,295) (21,787)
Issuance of common stock - - 100
Proceeds from exercise of stock options 919 282 -
Dividends paid (1,023) (1,016) (608)
Other, net (24) (73) -
------- ------- -------
Net cash provided by financing activities 10,031 24,323 1,008
------- ------- -------
Increase (decrease) in cash and cash equivalents 316 538 (607)
Cash and cash equivalents at beginning of year 2,437 1,899 2,506
------- ------- -------
Cash and cash equivalents at end of year $ 2,753 $ 2,437 $ 1,899
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
20
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1998, 1997 and 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation and Other General Principles
---------------------------------------------------
The consolidated financial statements include the
accounts of Petroleum Helicopters, Inc. and its wholly-
owned subsidiaries ("PHI" or the "Company") after the
elimination of all significant intercompany accounts
and transactions. Investments in twenty to fifty
percent owned affiliates are accounted for by the
equity method and consist primarily of investments in
foreign affiliates.
The Company recognizes revenue on the accrual basis,
generally during the month in which the services are
rendered. Revenues related to emergency flights
generated by the Company's subsidiary, Air Evac are
recorded net of contractual allowances under agreements
with third party payors.
Foreign currency transactions are not material.
Use of Estimates
----------------
In preparing the Company's financial statements
management makes informed estimates and assumptions
that affect the amounts reported in the financial
statements and related disclosures. Actual results may
differ from these estimates.
Cash Equivalents
----------------
The Company considers cash equivalents to include
demand deposits and investments with original maturity
dates of three months or less.
Inventories
-----------
Inventories are stated at the lower of average cost or
market and consist primarily of spare parts and
aviation fuel. The valuation reserve related to
obsolete and excess inventory was $ 1.9 million and
$ 2.4 million at April 30, 1998 and 1997, respectively.
Property and Equipment
----------------------
Property and equipment are recorded at cost less
accumulated depreciation. For financial reporting
purposes, depreciation is computed using the straight-
line method based upon estimated useful lives of ten
years for flight equipment and three to ten years for
other equipment. Accelerated methods are used for tax
purposes. A residual value of 25% of cost is used in
the calculation of depreciation of flight equipment and
other equipment. When property and equipment is sold
or otherwise disposed of, the cost and accumulated
depreciation are removed from the accounts and any
resulting gain or loss is reflected in earnings at the
time of sale or other disposition.
The Company assesses impairment of long-lived assets in
accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." This Statement requires
that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable.
Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an
asset to future net cash flows expected to be generated
by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the asset
exceeds its fair value. Assets to be disposed of are
reported at the lower of the carrying amount or fair
value less costs to sell.
21
<PAGE>
Income Taxes
------------
A consolidated federal income tax return is filed by
the Company and its subsidiaries. Income taxes have
not been provided on the undistributed net earnings of
the investee companies since, among other things, the
amount of taxes involved is not significant.
Income taxes are accounted for in accordance with the
provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes."
Under the asset and liability method of Statement 109,
deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences
between the financial statement carrying amounts of
existing assets and liabilities and their respective
tax basis. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary
differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized
in income in the period that included the enactment
date.
Self-Insurance
--------------
The Company maintains a self-insurance program for a
portion of its health care costs. The Company is
liable for claims up to $ 0.2 million per covered
individual annually, and aggregate claims up to $ 4.9
million for calendar year 1998. Self-insurance costs
are accrued based upon the aggregate of the liability
for reported claims and the estimated liability for
claims incurred but not reported.
The Company does not presently have any significant
obligations for post employment benefits.
Concentration of Credit Risk
----------------------------
The Company's financial instruments that are exposed to
concentrations of credit risk consist primarily of cash
and cash equivalents and trade accounts receivable.
The Company places its cash and temporary cash
investments with highly creditworthy financial
institutions and currently invests primarily in U.S.
government obligations with maturities of less than
three months. The Company does not believe significant
credit risk exists with respect to these securities at
April 30, 1998.
A majority of the Company's business is conducted with
major oil and gas exploration companies with operations
in the Gulf of Mexico. The Company continually
evaluates the financial strength of its customers but
does not require collateral to support the customer
receivables. The Company establishes an allowance for
doubtful accounts based upon factors surrounding the
credit risk of specific customers, current market
conditions and other information. In each of the
statement of earnings presented, Shell Oil Company
accounted for more than 10% of the revenues.
Earnings per Share
------------------
In February 1997 the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 128 ("FAS 128"), "Earnings Per Share",
effective for the periods ending after December 15,
1997. FAS 128 changes the computation and presentation
requirements for earnings per share for entities with
publicly held common stock or potential common stock.
Under such requirements the Company is required to
present both basic and diluted earnings per share.
Basic earnings per share is computed by dividing income
available to common stockholders by the weighted
average number of common shares outstanding during the
period. Diluted earnings per share is computed in the
same manner as basic earnings per share except that the
denominator is increased to include the number of
additional common shares that could have been
outstanding assuming the exercise of stock options and
the potential shares that would have a dilutive effect
on earnings per share. The Company adopted FAS 128
effective with the quarter ended January 31, 1998 on a
retroactive basis; accordingly, earnings per common
share amounts have been restated to conform to the
requirements of FAS 128.
Reclassifications
-----------------
Certain reclassifications have been made to the prior
years financial statements in order to conform with the
classifications adopted for reporting in 1998.
22
<PAGE>
Fair Value of Financial Instruments
-----------------------------------
Fair value of cash, cash equivalents, accounts
receivable, accounts payable and debt approximates book
value at April 30, 1998 and 1997.
Stock Compensation
------------------
On May 1, 1996, the Company elected to continue to use
the intrinsic value method of accounting for stock-
based compensation prescribed by Accounting Principles
Board (APB) Opinion No. 25 and, accordingly, adopted
the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-
Based Compensation."
New Accounting Pronouncements
-----------------------------
On June 30, 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 130 ("FAS 130"), "Reporting Comprehensive
Income." FAS 130 establishes standards for reporting
and display of comprehensive income and its components
in a full set of general purpose financial statements.
FAS 130 is effective for fiscal years beginning after
December 15, 1997 and requires restatement of earlier
periods presented. Management is currently evaluating
the requirements of FAS 130.
On June 30, 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 131 ("FAS 131"), "Disclosures about
Segments of an Enterprise and Related Information."
FAS 131 establishes standards for the way that a public
enterprise reports information about operating segments
in annual financial statements and requires that those
enterprises report selected information about operating
segments in interim financial reports issued to
shareholders. FAS 131 is effective for fiscal years
beginning after December 15, 1997 and requires
restatement of earlier periods presented. Management
is currently evaluating the requirements of FAS 131.
(2) LONG-TERM DEBT
<TABLE>
<CAPTION>
April 30, 1998 April 30, 1997
-------------- --------------
(Thousands of dollars)
<S> <C> <C>
Secured term loan note due October 31, 2004,
due in quarterly installments of $ 1,000,000,
bearing interest (at rates varying between
7.2% and 7.7% at April 30, 1998) $ 36,000 $ 39,000
Secured note due October 31, 1999, under a
revolving credit facility totaling $ 40,000,000
bearing interest (at rates varying between 7.2%
and 8.5% at April 30, 1998) 25,000 17,000
Secured term loan note due November 10, 2003,
due in quarterly installments of $ 223,214,
bearing interest (at rates varying between
7.2% and 7.7% at April 30, 1998) 6,027 -
Secured 10 year promissory notes due in monthly
installments of $ 107,747 commencing July 9, 1993
with a fixed interest rate of 7.0% 5,592 6,460
------- -------
Total debt 72,619 62,460
Less current maturities 5,824 4,868
------- -------
Total long-term debt $ 66,795 $ 57,592
======= =======
</TABLE>
23
<PAGE>
Scheduled maturities of debt are as follows:
(Thousands of dollars)
1999 $ 5,824
2000 5,891
2001 5,963
2002 6,041
2003 6,124
Thereafter 42,776
-------
$ 72,619
=======
At April 30, 1998, the following assets and their
related book values are pledged as collateral on notes
aggregating $ 72.6 million:
(Thousands of dollars)
Equipment, net of depreciation $ 84,788
Inventory 33,704
Accounts receivable, net 38,597
--------
$ 157,089
========
Term Loans and Revolving Credit Facilities
------------------------------------------
On August 13, 1996, the Company and its principal
lending group entered into a loan agreement that
amended and restated its original loan agreement dated
January 1, 1986. The primary reasons for renegotiating
the debt facility were to reduce the Company's
effective interest rate and to increase the Company's
credit capacity to $ 65 million from $ 55 million. On
March 31, 1997, the Company modified the agreement
again 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 to $ 1.0 million from $ 2.0 million, and iv)
provided a fixed rate option for up to $ 40 million of
the total outstanding debt under the facility. The
primary purpose for renegotiating this agreement was to
reduce the Company's effective interest rate and to
increase the Company's credit capacity. The interest
rate reduction was effective January 1, 1997. There is
a commitment fee of 0.375% per annum on the unused
portion of the credit facility. The secured term and
revolving loan agreement permits both prime rate based
borrowings and London InterBank Offered Rate ("LIBOR")
borrowings plus a floating spread. The spread for
LIBOR borrowings will float up or down based on the
Company's performance as determined by a leverage
ratio. The spread can range from 1.0% to 1.5% above
LIBOR.
On December 31, 1997, the Company's wholly-owned
subsidiary, Air Evac and the Company's principal
lending group ratified a loan agreement. This
agreement provides $ 5.0 million and $ 6.25 million
revolver and term credit facilities, respectively.
This loan is secured by certain assets of Air Evac and
is guaranteed by the Company. The term loan is payable
in fixed quarterly principal payments of $ 0.2 million
until maturity on November 10, 2003. The secured term
and revolving loan agreement permits both prime rate
based borrowings and London InterBank Offered Rate
("LIBOR") borrowings plus a floating spread. The
spread for LIBOR borrowings will float up or down based
on the Company's performance as determined by a
leverage ratio. The spread can range from 1.0% to 1.5%
above LIBOR. At April 30, 1998, there were no
borrowings outstanding on the revolving credit facility
which matures October 31, 1999.
Both the term loans and the revolving credit facilities
are subject to certain financial covenants with which
the Company was in compliance at April 30, 1998. These
covenants include maintaining certain levels of 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. Such agreements also limit the creation,
incurrence or assumption of Funded Debt (as defined,
which includes long-term debt) and the acquisition of
investments. At April 30, 1998, the Company's working
capital exceeded the amount required by approximately
$ 14.9 million, and shareholders' equity exceeded the
required level by approximately $ 12.3 million.
Dividends are generally limited to 20% of net earnings.
The average amounts of total borrowings outstanding
during 1998 and 1997 were approximately
$ 69.8 million and $ 57.4 million, respectively. The
weighted average interest rates during 1998 and 1997
were approximately 7.3% and 7.5%, respectively, on these
borrowings.
24
<PAGE>
Cash paid for interest was $ 4.2 million, $ 4.1 million
and $ 3.4 million for the years ended April 30, 1998,
1997 and 1996, respectively.
(3) INCOME TAXES
Income tax expense for each of the three years ended
April 30 is composed of the following:
1998 1997 1996
---- ---- ----
(Thousands of dollars)
Current:
Federal $ 3,264 $ 765 $ 757
State 644 296 344
Foreign 251 53 85
Deferred - principally Federal 933 3,273 2,901
------ ------ ------
$ 5,092 $ 4,387 $ 4,087
====== ====== ======
Deferred income tax expense (benefit) results from the
following:
1998 1997 1996
---- ---- ----
(Thousands of dollars)
Accelerated depreciation $ 2,023 $ 2,911 $ 1,408
Accrued expenses and other liabilities (1,090) 407 (138)
Effect of tax credits - (45) 1,631
------ ------ ------
$ 933 $ 3,273 $ 2,901
====== ====== ======
Income tax expense as a percentage of pre-tax earnings
varies from the effective Federal statutory rate of 34%
as a result of the following:
<TABLE>
<CAPTION>
Years ended April 30
--------------------
1998 1997 1996
---- ---- ----
Amount % Amount % Amount %
------ --- ------ --- ------ ---
(Thousands of dollars, except percentages)
<S> <C> <C> <C> <C> <C> <C>
Income taxes at statutory rate $ 4,253 34 $ 3,691 34 $ 3,588 34
Increase (decrease) in taxes
resulting from:
Equity in net (earnings)
losses of investee companies (79) - (108) (1) (134) (1)
Effect of state income taxes 514 4 195 2 227 2
Other items - net 404 3 609 5 406 4
------ --- ------ --- ------ ---
$ 5,092 41 $ 4,387 40 $ 4,087 39
====== === ====== === ====== ===
</TABLE>
For income tax purposes, the Company had
approximately $ 126,000 of general business tax
credit carryforwards. These general business tax
credit carryforwards will expire in 2001. The
Company also has approximately $ 564,000 of
alternative minimum tax credit carryforwards
available to reduce future Federal regular income
taxes over an indefinite period.
25
<PAGE>
The tax effects of temporary differences which give
rise to significant portions of the deferred tax assets
and deferred tax liabilities at April 30, 1998 and 1997
are presented below:
1998 1997
---- ----
(Thousands of dollars)
Deferred tax assets:
Tax credits $ 690 $ 690
Vacation accrual 1,919 1,763
Inventory valuation 696 880
Workman's compensation reserve 396 381
Allowance for uncollectible accounts 723 427
Other 3,521 2,067
------ ------
Total deferred tax assets 7,945 6,208
------ ------
Deferred tax liabilities:
Tax depreciation in excess
of book depreciation 25,774 23,751
Discounted accounts receivable 1,117 -
Other 226 696
------ ------
Total deferred tax liabilities 27,117 24,447
------ ------
Net deferred tax liability $ 19,172 $ 18,239
====== ======
No valuation allowance was recorded against the
deferred tax assets because management believes that
the deferred tax assets will more than likely be
realized in full through future operating results and
the reversal of taxable temporary differences.
Income taxes paid were approximately $ 3,528,000,
$ 2,355,000 and $ 2,267,000 for the years ended April 30,
1998, 1997 and 1996, respectively.
(4) EMPLOYEE BENEFIT PLANS
Savings and Retirement Plans
----------------------------
The Company established, effective July 1, 1989, an
Employee Savings Plan under Section 401(k) of the
Internal Revenue Code. This plan provides that the
Company match up to 3% of employee contributions. The
Company's contribution was $ 1,680,000, $ 1,585,000 and
$ 1,616,000 for the years ended April 30, 1998, 1997
and 1996, respectively.
Effective September 1, 1994, the Company adopted a
Supplemental Executive Retirement Plan ("SERP"). The
nonqualified and unfunded plan provides senior
management with supplemental retirement and death
benefits at age 65. Life insurance policies, of which
the Company is the sole owner and beneficiary, were
purchased on the lives of each of the participants.
Supplemental retirement benefits were based on one-
third (1/3) of the participants' monthly income at the
time of adoption. Currently, there are no SERP
provisions for an increase in benefits, partial vesting
or early retirement. The assumed discount rate was
7.5%. Expenses related to the plan were $ 326,000,
$ 275,000 and $ 308,000 for 1998, 1997 and 1996,
respectively.
During fiscal 1996, the Board of Directors approved an
Officer Deferred Compensation Plan and a Director
Deferred Compensation Plan. Both plans were effective
May 31, 1995. The plans permit key officers and all
directors to defer a portion of their compensation.
The plans are nonqualified and unfunded.
26
<PAGE>
Stock Option Plans
------------------
Effective May 1, 1992, the Company's Board of Directors
adopted the Petroleum Helicopters, Inc. 1992 Non-
Qualified Stock Option and Stock Appreciation Rights
Plan (the "Plan"). The Company is authorized to grant
non-qualified stock options and stock appreciation
rights to selected employees to purchase up to 100,000
shares of the Company's non-voting common stock at an
exercise price of not less than 25% of their fair
market value at the date of grant. The options may be
exercised any time after one year from the date of
grant until their expiration at five years from such
date.
Effective May, 1995 the Company's Board of Directors
adopted the PHI 1995 Incentive Plan (the "1995 Plan").
The Company is authorized to issue a total of 175,000
shares of voting common stock and 325,000 shares of
non - voting common stock under the 1995 Plan.
The Compensation Committee of the Board of Directors
is authorized under the 1995 Plan to grant stock
options, restricted stock, stock appreciation rights,
performance shares, stock awards and cash awards.
During fiscal 1997, 24,000 non-voting restricted shares
and 23,200 non-voting stock options were granted under
the 1995 Plan. The exercise price of the stock option
grants is equal to the fair market value of the
underlying stock at the date of grant. The restricted
shares and the options vest on July 31, 1997 only to
the extent certain 1997 performance targets are met.
To the extent the restricted shares become vested they
will become unrestricted on July 31, 2000. The
restricted shares expire on May 31, 2005. The non-
voting options, in the event they become vested, are
one-half exercisable on July 31, 1997 and one-half
exercisable on July 31, 1998. These options expire on
July 30, 2006. During fiscal 1996, 23,200 and 116,000
non-qualified stock options for voting and non-voting
common stock, respectively, were granted under the 1995
Plan. These options vested on July 31, 1996 to the
extent certain 1996 performance targets were met. One
half of all vested stock options became exercisable on
July 31, 1996 and one half became exercisable on
July 31, 1997. The stock options expire on May 31,
2005. The Company recorded no compensation expense
related to the 1995 Plan during fiscal 1998 and fiscal
1996 and $ 0.4 million during fiscal 1997.
27
<PAGE>
A summary of the Plans' activities for the years ended
April 30, 1998, 1997 and 1996 is as follows:
1992 Plan Other
--------- -----
Options Options 1995 Plan Options
------- ------- -----------------
Total Non-Voting Voting Voting Non-Voting
----- ---------- ------ ------ ----------
Balance outstanding at
April 30, 1995 90,000 75,000 15,000 - -
Options granted at
$ 9.75 (voting) and
$ 8.50 (non-voting) 139,200 - - 23,200 116,000
Options exercised (10,000) - (10,000) - -
------- ------- ------- ------- -------
Balance outstanding
at April 30, 1996 219,200 75,000 5,000 23,200 116,000
======= ======= ======= ======= =======
Options granted at
$ 15.50 (non-voting) 23,200 - - - 23,200
Options lapsed/
cancelled (24,024) - - (2,720) (21,304)
Options exercised (24,027) (16,500) (5,000) - (2,527)
------- ------- ------- ------- -------
Balance outstanding
at April 30, 1997 194,349 58,500 - 20,480 115,369
======= ======= ======= ======= =======
Options granted - - - - -
Options lapsed/
cancelled (32,550) (9,000) - - (23,550)
Options exercised (61,869) (49,500) - - (12,369)
------- ------- ------- ------- -------
Balance outstanding
at April 30, 1998 99,930 - - 20,480 79,450
======= ======= ======= ======= =======
Shares exercisable
at April 30, 1996 at
a price range of
$ 10.00 to $ 15.50 55,000 50,000 5,000 - -
======= ======= ======= ======= =======
Shares exercisable
at April 30, 1997 at
a price range of
$ 8.50 to $ 15.50 113,561 58,500 - 10,240 44,821
======= ======= ======= ======= =======
Shares exercisable
at April 30, 1998 at
a price range of
$ 8.50 to $ 15.50 97,610 - - 20,480 77,130
======= ======= ======= ======= =======
Shares available for
future grant at
April 30, 1998 349,350 25,000 - 128,600 195,750
======= ======= ======= ======= =======
28
<PAGE>
The following table summarizes information about stock
options outstanding as of April 30, 1998:
Options Outstanding Options Exercisable
------------------------------- ----------------------
Weighted-Avg.
Range of Remaining Weighted-Avg. Weighted-Avg.
Exercise As of Contractual Exercise As of Exercise
Prices 4/30/98 Life-Yrs. Price 04/30/98 Price
-------- ------- --------- ------- -------- -------
$8.50 - $9.75 95,290 7.00 $ 8.77 95,290 $ 8.77
$15.50 4,640 8.00 15.50 2,320 15.50
------- ---------
99,930 7.04 9.08 97,610 8.93
======= =========
The Company's 1995 Incentive Plan also authorizes the
granting of restricted stock awards. Under this plan,
5,809 shares of restricted stock were awarded to
Company executive officers and other key employees that
will vest over two years based upon the completion of
specified periods of future service with the Company.
Compensation is charged to income over the vesting
period for these awards which resulted in expense
recognition of $21,000 and $89,000 in 1998 and 1997,
respectively.
In October 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based
Compensation," (SFAS No. 123), which encourages the use
of a fair value based method of accounting for
compensation expense associated with stock option and
similar plans. However, SFAS No. 123 permits the
continued use of the intrinsic value based method
prescribed by Opinion No. 25 but requires additional
disclosures, including pro forma calculations of net
earnings and earning per share as if the fair value
method of accounting prescribed by SFAS No. 123 had
been applied.
1998 1997 1996
----- ----- -----
Net income - as reported $ 7,417 $ 6,470 $ 6,466
Net income - pro forma 7,516 6,366 6,090
Diluted earnings per share
- as reported 1.43 1.25 1.27
Diluted earnings per share
- pro forma 1.45 1.25 1.19
Average fair value of grants
during the year N/A 7.45 4.50
Black-Sholes option pricing
model assumptions: 1998 1997 1996
----- ----- -----
Risk-free interest rate N/A 6.5% 6.5%
Expected life (years) N/A 4 4
Volatility N/A 12% 19%
Dividend yield N/A 1.11% 1.24%
(5) SUPPLEMENTAL CASH FLOW INFORMATION AND FINANCING
ACTIVITIES
In 1998, the Company reported proceeds from equipment
sales of $ 14.0 million. The original cost and
accumulated depreciation associated with these
transactions were $ 19.9 million and $ 10.9 million,
respectively. Gains of $ 1.7 million on sale-leaseback
transactions were deferred. In 1997, the Company
reported proceeds from equipment sales of $ 6.6
million. The original cost and accumulated
depreciation associated with these transactions were
$ 9.6 million and $ 4.3 million, respectively. In 1996,
the Company reported proceeds from equipment sales of
$ 6.1 million. The original cost and accumulated
depreciation associated with these transactions were
$ 10.8 million and $ 5.5 million, respectively.
In 1996, the Company entered into agreements for the
sale and leaseback of two helicopters. The book values
of the equipment totaling $ 3.5 million were removed
from the balance sheet and the gains realized on the
sale transactions totaling $ 0.3 million were deferred
and are being credited to income as rent expense
adjustments over the lease term. Rentals on these
transactions average $ 0.4 million annually.
29
<PAGE>
On July 13, 1995 the Company purchased 49% of Irish
Helicopters Limited (IHL) based in Dublin Ireland for
$ 3.0 million. IHL operated five aircraft which were
engaged primarily in search and rescue missions off the
Irish Coast. In the third quarter of fiscal year 1997,
the Company recorded a $ 0.7 million writedown on this
investment. The Company sold this investment in the
fourth quarter of fiscal year 1997 and received
proceeds which approximated the initial cost.
(6) SHAREHOLDERS' EQUITY
During fiscal 1997, the Company offered its
shareholders who owned either of record or beneficially
in a single account, twenty-five or fewer shares of PHI
common stock, the opportunity to sell their common
stock through a purchase program. Approximately 3,900
shares were repurchased by the Company at a purchase
price of between $ 18.00 and $ 19.00 a share.
(7) COMMITMENTS AND CONTINGENCIES
The Company leases certain aircraft used in its
operations. The Company generally pays all insurance,
taxes and maintenance expenses associated with these
aircraft and some of these leases contain renewal and
purchase options.
Aggregate rental commitments to lease aircraft under
noncancellable operating leases are due in years
subsequent to April 30, 1998, as follows:
(Thousands of dollars)
1999 $ 12,986
2000 12,640
2001 12,172
2002 11,427
2003 9,240
Thereafter 24,427
-------
$ 82,892
=======
Rental expense incurred under these leases consisted of
the following:
(Thousands of dollars)
(Years ended April 30)
----------------------
1998 1997 1996
---- ---- ----
Aircraft $ 15,080 $ 12,328 $ 12,145
Other 1,836 1,730 1,690
------- ------- -------
$ 16,916 $ 14,058 $ 13,835
======= ======= =======
Subsequent to year end, the Company purchased five
aircraft for an aggregate of $ 6.8 million. In
addition, the Company plans to purchase two helicopters
in fiscal 1999. The total purchase price is
approximately $ 2.9 million. These purchases are
subject to obtaining customer commitments.
The Company has policies and procedures in effect to
strictly monitor its compliance with environmental
regulations at its operating locations. In the first
quarter of fiscal 1996, the Company began an
environmental review at selected domestic bases. Known
or suspected fuel contamination has been identified at
all the bases reviewed. Management now believes it is
likely that similar fuel contamination will be found at
additional bases.
The Company expensed, including provisions for
environmental costs, $ 678,000, $ 1,325,000 and
$ 1,797,000 in 1998, 1997 and 1996, respectively,
related to remediation efforts at five bases. The
Company is currently conducting assessments at three
additional bases to determine the extent of remediation
required at these locations. The reasonably possible
upper range of exposure for environmental matters is
$ 2.7 million. The aggregate liability for environmental
related costs at April 30, 1998 is $ 1.7 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.
30
<PAGE>
The Company is named as a defendant in various legal
actions which 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 which it believes adequately
provide for the settlement of such litigation. In the
opinion of management, the amount of the ultimate
liability with respect to these actions will not have a
material adverse effect on results of operations, cash
flow or financial position of the Company.
(8) QUARTERLY FINANCIAL DATA (UNAUDITED)
The summarized quarterly results of operations for the
years ended April 30, 1998 and 1997 (in thousands of
dollars, except per share data) are as follows:
Quarter Ended
---------------------------------------------------
July 31, October 31, January 31, April 30,
1997 1997 1998 1998
-------- ----------- ----------- ---------
Revenues $ 56,360 $ 57,591 $ 59,482 $ 65,413
Gross profit 7,617 7,834 7,722 9,300
Net earnings 1,775 1,554 1,820 2,268
Net earnings per
share-basic .35 .30 .36 .44
Net earnings per
share-diluted .34 .30 .35 .44
Quarter Ended
---------------------------------------------------
July 31, October 31, January 31, April 30,
1996 1996 1997 1997
-------- ----------- ----------- ---------
Revenues $ 50,273 $ 55,378 $ 52,568 $ 54,169
Gross profit 7,675 7,915 7,088 4,529
Net earnings 2,278 2,285 1,314 593
Net earnings per
share-basic .45 .45 .26 .12
Net earnings per
share-diluted .44 .44 .25 .11
(9) AIR EVAC ACQUISITION
On December 31, 1997, PHI purchased the net assets of
Samaritan AirEvac for approximately $ 8.8 million. The
purchase involved all of the operating assets and
business of Samaritan AirEvac, an aeromedical services
division of Samaritan Health System based in Arizona
and a customer of PHI's since June 12, 1993.
The net assets were acquired by a new wholly-owned
subsidiary of PHI, Air Evac, including one Lear Jet and
five Cessna 441's equipped for medical transportation.
The cost of the acquisition was allocated under the
purchase method of accounting based upon the fair value
of the assets acquired and liabilities assumed. The
results of Air Evac's operations have been consolidated
with the Company's results effective January 1, 1998.
31
<PAGE>
The following unaudited pro forma information presents
a summary of consolidated results of operations as if
the acquisition had occurred on May 1, 1996 with pro
forma adjustments to give effects to depreciation,
interest expense and certain other adjustments together
with related income tax effects (in thousands, except
per share amounts):
1998 1997
---- ----
Revenues $ 248,886 $ 227,448
Net earnings 7,849 7,118
Basic earnings per share 1.53 1.40
Diluted earnings per share 1.51 1.38
The above pro forma financial information is not
necessarily indicative of the results of operations as
they would have been had the acquisition been effected
on the assumed date.
Item 9. Changes in and Disagreements with Accountants on
- ---------------------------------------------------------
Accounting and Financial Disclosures
------------------------------------
There have been no change in and there are no
disagreements between the Company and its independent
certified public accountants on accounting and
financial disclosure matters.
Part III
Item 10. Directors and Executive Officers of the Registrant
- ------------------------------------------------------------
Information concerning Directors required by this
item will be included in the Company's definitive proxy
statement in connection with its 1998 Annual Meeting of
Shareholders and is incorporated herein by reference.
Information concerning Executive Officers is included
as Item 4.(a) "Executive officers of the registrant and
certain significant employees."
Item 11. Executive Compensation
- --------------------------------
Information required by this item will be included
in the Company's definitive proxy statement in
connection with its 1998 Annual Meeting of Shareholders
and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners
- ----------------------------------------------------------
and Management
--------------
Information required by this item will be included
in the Company's definitive proxy statement in
connection with its 1998 Annual Meeting of Shareholders
and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
Information required by this item will be included
in the Company's definitive proxy statement in
connection with its 1998 Annual Meeting of Shareholders
and is incorporated herein by reference.
32
<PART>
Part IV
Item 14. Exhibits, Financial Statement Schedules and
- ----------------------------------------------------------
Reports on Form 8-K
-------------------
(a) 1. Financial Statements
--------------------
Included in Part II of this report:
Independent Auditors' Report
Consolidated Balance Sheets - April 30, 1998 and 1997
Consolidated Statements of Earnings for the
three years ended April 30, 1998
Consolidated Statements of Shareholders' Equity
for the three years ended April 30, 1998
Consolidated Statements of Cash Flows for the
three years ended April 30, 1998
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
-----------------------------
Schedule II - Valuation and Qualifying accounts
for the years ended April 30, 1998, 1997 and
1996.
3. Exhibits
--------
3 Articles of Incorporation and By-laws
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 as amended on
August 18, 1996 (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).
10 Material Contracts
10.1 Master Helicopter Lease Agreement dated May 29, 1991
between AT&T Systems Leasing Corporation and PHI
(incorporated by reference to Exhibit No. 10.1 (2)
to PHI's Report on Form 10-K dated April 30, 1992).
10.2 Master Helicopter Lease Agreement dated February
14, 1991 between General Electric Capital
Corporation and PHI (incorporated by reference
to Exhibit No. 10.1 (1) to PHI's Report on
Form 10-K dated April 30, 1991).
10.3 Amended and Restated Loan Agreement originally
dated as of January 31, 1986 Amended and Restated
in its entirety as of March 31, 1997 among
Petroleum Helicopters, Inc., Whitney National
Bank, First National Bank of Commerce and
NationsBank of Texas, N.A., as agent.
10.4 Installment promissory note dated June 4, 1993
by PHI payable to debis Financial Services, Inc.
in the original principal amount of $ 3,122,441.56,
secured by Aircraft Security Agreement dated
June 4, 1993 between PHI and debis Financial
Services, Inc. (incorporated by reference to
Exhibit No. 10.4 to PHI's Report on Form 10-K
dated April 30, 1993).
33
<PAGE>
10.5 Installment Promissory Note dated June 4, 1993
by PHI payable to debis Financial Services, Inc.
in the original principal amount of $ 3,078,695.58,
secured by Aircraft Security Agreement dated
June 4, 1993 between PHI and debis Financial
Services, Inc. (incorporated by reference to
Exhibit No. 10.5 to PHI's Report on Form 10-K
dated April 30, 1993).
10.6 Installment Promissory Note dated June 4, 1993 by
PHI payable to debis Financial Services, Inc. in
the original principal amount of $ 3,078,695.58,
secured by Aircraft Security Agreement dated
June 4, 1993 between PHI and debis Financial
Services, Inc. (incorporated by reference to
Exhibit No. 10.6 to PHI's Report on Form 10-K
dated April 30, 1993).
10.7 The Petroleum Helicopters, Inc. 401(k) Retirement
Plan effective July 1, 1989 (incorporated by
reference to Exhibit No. 10.4 to PHI's Report on
Form 10-K dated April 30, 1990).
10.8 Petroleum Helicopters, Inc. 1992 Non-Qualified
Stock Option and Stock Appreciation Rights Plan
adopted by PHI's Board effective May 1, 1992 and
approved by the shareholders of PHI on September
30, 1992 (incorporated by reference to Exhibit
No. 10.8 to PHI's Report on Form 10-K dated
April 30, 1993).
10.9 Form of Stock Option Agreement for the Grant of
Non-Qualified Stock Options Under the Petroleum
Helicopters, Inc. 1992 Non-Qualified Stock Option
and Stock Appreciation Rights Plan dated June 2,
1993 between PHI and certain of its key employees
(incorporated by reference to Exhibit No. 10.9
to PHI's Report on Form 10-K dated April 30, 1993).
10.10 Amended and Restated Petroleum Helicopters, Inc.
1995 Incentive Compensation Plan adopted by PHI's
Board effective July 11, 1995 and approved by
the shareholders of PHI on September 22, 1995
(incorporated by reference to Exhibit No 10.12
to PHI's Report on Form 10-K dated April 30,1996).
10.11 Form of Non-Qualified Stock Option Agreement
under the Petroleum Helicopters, Inc. 1995
Incentive Compensation Plan between PHI and
certain of its key employees (incorporated by
reference to Exhibit No. 10.13 to PHI's Report on
Form 10-K dated April 30, 1996).
10.12 Form of Restricted Stock Agreement under the
Amended and Restated Petroleum Helicopters, Inc.
1995 Incentive Compensation Plan, as amended
(incorporated by reference to Exhibit No. 10.2 to
PHI's Report on Form 10-Q dated October 31, 1996).
10.13 Non-qualified Stock Option Agreement under the
Amended and Restated Petroleum Helicopters, Inc.
1995 Incentive Compensation Plan, as amended
between PHI and Carroll W. Suggs (incorporated
by reference to Exhibit 10.3 to PHI's Report
on Form 10-Q dated October 31, 1996).
10.14 Loan Agreement dated as of December 31, 1997
among Air Evac Services Inc, Whitney National
Bank, First National Bank of Commerce and
NationsBank of Texas, N.A. (incorporated by
reference to Exhibit No. 10.1 to PHI's Report on
Form 10-Q dated January 31, 1998).
10.15 Asset Purchase Agreement between Samaritan Health
System and Air Evac Services, Inc. (incorporated
by reference to Exhibit No. 10.2 to PHI's Report
on Form 10-Q dated January 31, 1998).
21 Subsidiaries of the Registrant
23.1 Consent of KPMG Peat Marwick LLP
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company
during the fourth quarter of fiscal 1998.
34
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
Schedule II Valuation and Qualifying Accounts
For the Years Ended April 30, 1998, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
Additions
----------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other At End
Description of Year Expenses Accounts Deductions of Year
- ----------- ---------- ---------- -------- ---------- -------
<S> <C> <C> <C> <C> <C>
Year ended April 30, 1998:
Allowance for doubtful accounts $ 1,160 $ 1,038 $ - $ 236 $ 1,962
Allowance for obsolete inventory 2,389 - - 500 1,889
Year ended April 30,1997:
Allowance for doubtful accounts $ 923 $ 415 $ - $ 178 $ 1,160
Allowance for obsolete inventory 2,389 - - - 2,389
Year ended April 30, 1996:
Allowance for doubtful accounts $ 788 $ 250 $ - $ 115 $ 923
Allowance for obsolete inventory 2,139 250 - - 2,389
35
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PETROLEUM HELICOPTERS, INC.
By: /s/ Carroll W. Suggs
---------------------
Carroll W. Suggs
Chairman of the Board,
Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature Title Date
/s/ Carroll W. Suggs Chairman of the Board, July 24, 1998
--------------------
Carroll W. Suggs Chief Executive Officer
and Director (Principal
Executive Officer)
/s/ John H. Untereker Chief Financial Officer July 24, 1998
---------------------
John H. Untereker (Principal Financial and
Accounting Officer)
/s/ Leonard M. Horner Director July 24, 1998
---------------------
Leonard M. Horner
/s/ Robert G. Lambert Director July 24, 1998
---------------------
Robert G. Lambert
/s/ James W. McFarland Director July 24, 1998
----------------------
James W. McFarland
/s/ Bruce N. Whitman Director July 24, 1998
--------------------
Bruce N. Whitman
36
<PAGE>
</TABLE>
EXHIBIT 21
PETROLEUM HELICOPTERS INC.
SUBSIDIARIES OF THE REGISTRANT AT APRIL 30, 1998
<TABLE>
<CAPTION>
PLACE OF % OF VOTING
COMPANY INCORPORATION STOCK OWNED
- ------- ------------- -------------
<S> <C> <C>
International Helicopter Transport, Inc. Louisiana 100%
Evangeline Airmotive, Inc. Louisiana 100%
Petroleum Helicopters De Bolivia, Inc. Delaware 100%
Heli-Tours, Inc. Louisiana 100%
Acadian Compositas, Inc. Louisiana 100%
Transnatinal Transit LTD Trinidad 20%
Asis Aircraft Overseas Phillippines Philippines 30%
Siam Aerospace Technology Thailand 30%
Clintondale Aviation New York 50%
Aeroservicios Ranger Venezuela 28%
Air Evac Services, Inc. Louisiana 100%
PHI Aeromedical Services, Inc. Louisiana 100%
</TABLE>
Exhibit 23.1
Consent of Independent Auditors
The Board of Directors
Petroleum Helicopters, Inc:
We consent to incorporation by reference in registration statement Nos.
33-51617 and 333-02025 on Form S-8 of Petroleum Helicopters, Inc of our
report dated June 12, 1998, relating to the consolidated balance sheets of
Petroleum Helicopters, Inc. and subsidiaries as of April 30 1998 and 1997,
and the related consolidated statements of earnings, shareholders' equity,
and cash flows for each of the years in the three-year period ended April
30, 1998, and the related schedule, which report appears in the April 30,
1998 annual report on Form 10-K of Petroleum Helicopters, Inc.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
New Orleans, Louisiana
July 24, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from condensed financial
statements for the period ending April 30, 1998 and is qualified in its entirety
by reference to such financials statements.
</LEGEND>
<CIK> 0000350403
<NAME> GEOFF STANFORD
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> APR-30-1998
<CASH> 2,753
<SECURITIES> 0
<RECEIVABLES> 51,081
<ALLOWANCES> 1,962
<INVENTORY> 34,016
<CURRENT-ASSETS> 88,517
<PP&E> 256,042
<DEPRECIATION> 120,923
<TOTAL-ASSETS> 227,021
<CURRENT-LIABILITIES> 40,546
<BONDS> 0
0
0
<COMMON> 516
<OTHER-SE> 94,189
<TOTAL-LIABILITY-AND-EQUITY> 227,021
<SALES> 236,582
<TOTAL-REVENUES> 238,846
<CGS> 204,109
<TOTAL-COSTS> 204,109
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,118
<INCOME-PRETAX> 12,509
<INCOME-TAX> 5,092
<INCOME-CONTINUING> 7,417
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,417
<EPS-PRIMARY> 1.45
<EPS-DILUTED> 1.43
</TABLE>
