=========================================================================
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, 1999
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 of (I.R.S. Employer
incorporation or organization) Identification No.)
2121 Airline Drive, Suite 400
P.O. Box 578, Metairie, Louisiana 70001-5979
(Address of principal executive offices) (Zip Code)
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/
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of June 30, 1999 was $17,548,762.
The number of shares outstanding of each of the registrant's classes
of common stock, as of June 30, 1999 was:
Voting Common Stock 2,793,386 shares.
Non-Voting Common Stock 2,366,175 shares.
Documents Incorporated by Reference
Portions of the registrant's definitive proxy statement to be used in
connection with its 1999 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 of Foreign Operations 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
Item 4.A. Executive Officers of the Registrant 7
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 9
Item 7.A. Quantitative and Qualitative Disclosures
about Market Risk 14
Item 8. Financial Statements and Supplementary Data 15
Petroleum Helicopters,Inc. and Consolidated
Subsidiaries:
Independent Auditors' Report 15
Consolidated Balance Sheets
-April 30, 1999 and 1998 16
Consolidated Statements of Earnings
-Three years ended April 30,1999 17
Consolidated Statements of Shareholders' Equity
-Three years ended April 30, 1999 18
Consolidated Statements of Cash Flows
-Three years ended April 30, 1999 19
Notes to Consolidated Financial Statements 20
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 33
i
<PAGE>
PART III
Item 10. Directors and Executive Officers of the
Registrant 33
Item 11. Executive Compensation 33
Item 12. Security Ownership of Certain Beneficial Owners
and Management 33
Item 13. Certain Relationships and Related Transactions 33
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 34
Signatures 38
ii
<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 48% of all the contracted aircraft in the Gulf. The Company
has 207 aircraft dedicated to this market. The Company also operates in
other areas of the world as described under Item 2 and has eighty-three
aircraft outside of the Gulf. The Company currently operates 290 aircraft
worldwide and has over 2,000 employees. See Item 8. "Financial Statements
and Supplementary Data - Notes to Consolidated Financial Statements, Note
9" for information on the Company's operating revenue, operating profit and
assets by industry segment and geographical distribution for the years
ended April 30, 1999, 1998 and 1997.
During fiscal 1999, 1998 and 1997, approximately 81%, 84% and 85%,
respectively, of the Company's operating revenues were generated by Oil and
Gas Aviation Services, domestically and internationally and by aircraft
maintenance services provided to outside parties. Domestically, these
revenues are earned in federal and state waters offshore of the States of
Louisiana, Texas, Alabama, Mississippi, and California.
The Company also provides air medical transportation services for hospitals
and medical programs which accounted for 19%, 15% and 14% of operating
revenues in fiscal 1999, 1998 and 1997, respectively. 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 air medical services division of
Samaritan Health System based in Arizona and a customer of PHI's since June
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.
Demand for the Company's oil and gas aviation services is 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 air
medical 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
seventeen 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 of Foreign Operations
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, 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 (47%, 46% and 44%, respectively, in fiscal 1999, 1998
and 1997) and a substantial portion of the Company's direct costs are fixed
(62%, 60% and 60% respectively in fiscal 1999, 1998 and 1997). 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 result in a reduction in operating revenues
during those months.
The Company currently operates eighty-six 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 systems manager. 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 of Mexico 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 operates one of the largest commercial helicopter fleets in the
world. At April 30, 1999, the Company operated 290 aircraft. The Company
operates 256 aircraft in the United States; 207 in the Company's Oil and
Gas Aviation Services Unit, and forty-nine in the Company's Aeromedical
Services Unit. Thirty-four aircraft are operated internationally in the
Company's Oil and Gas Aviation Services Unit.
The Company is the largest operator of helicopters in the Gulf of Mexico
and believes there are approximately two major and several small
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.
The air medical market is becoming increasingly competitive and is
experiencing some hospital program consolidations.
Employees
As of April 30, 1999, the Company employed a total of 2,051 people. The
Company believes its employee relations to be satisfactory, and it has
never experienced a work stoppage. Currently, none of the Company's
employees are covered by union contracts.
On 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. On October 28,
1998, the NMB dismissed the OPEIU's objections and certified the March 31,
1998 election.
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 (Oil and Gas Aviation Services unit)
accounted for 14%, 16% and 15% of the Company's operating revenues in
fiscal 1999, 1998 and 1997, respectively. The Company's five largest
customers accounted for 30%, 32% and 32% of operating revenues in fiscal
1999, 1998 and 1997, respectively.
3
<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 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's environmental staff includes a registered environmental
manager who is also a certified environmental auditor and a certified
environmental systems manager. 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, 1999, 78% of the Company's aircraft were actively assigned
as compared with 83% and 84% as of April 30, 1998 and 1997, respectively.
Demand for the Company's domestic oil and gas aircraft has slowed due to
the activity decline in the Gulf of Mexico.
Equipment
Certain information regarding the Company's owned and leased fleet as of
April 30, 1999 is set forth in the following table:
<TABLE>
<CAPTION>
Cruise Appr.
Number in Speed Range
Manufacturer Type Fleet Engine Passengers (mph) (miles)
- ------------ ---------------- --------- ------------- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Bell 206B-III 14 Turbine 4 120 300
206L-I, III, IV 105 Turbine 6 130 310
407 25 Turbine 6 144 420
212(1) 11 Twin Turbine 13 115 300
214ST(1) 6 Twin Turbine 18 155 450
222 1 Twin Turbine 8 160 370
412(1) 26 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 9 Turbine 5 140 385
Sikorsky S-76(1) 15 Twin Turbine 12 150 400
MIL Design MIL-8 MTV (1) 2 Twin Turbine 28 140 310
---
Total Helicopters 261
---
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 274
===
</TABLE>
(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
---------------------- ---------- --------------
180 $231,300(2) $123,751(1)
Total Rents Over
Company Leased Aircraft Life of Lease Remaining Rents
----------------------- ---------------- ---------------
94 $112,196 $82,763
(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, 1999, the Company's commitment for principal payments and
lease payments for its present helicopter fleet averages $ 17.2 million
each year for the next five years and an aggregate of $ 77.3 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 $ 34.9 million on
April 30, 1999. 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 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 completion of the new facility. The Company is planning to
move into a new 246,000 square foot facility on the airport grounds in
fiscal 2001. This move will not have a material effect on operating costs.
The Company also leases property for fourteen 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:
5
<PAGE>
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 expire on July 31,
1999. The Company is in the process of renegotiating these leases.
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, 2001, with options 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, 1998. The lease is currently on
a month to month basis pending the completion of a new facility in
Boothville, Louisiana. The Company-owned new facility will have
landing pads for thirty-seven helicopters as well as a variety of
operational and maintenance facilities on approximately thirty-two
acres.
G. Fourchon (Louisiana) - containing approximately eight acres, is
under original lease expiring April 30, 2006. The Company has
landing pads for ten helicopters on this property.
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 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 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, China, Colombia, Kazakhstan,
Philippines, Thailand, and Zaire. Aeromedical operations are currently
conducted in Arizona, Arkansas, California, Florida, Illinois, Kentucky,
Louisiana, Michigan, Mississippi, North Dakota, Ohio, South Carolina, 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, 1999.
6
<PAGE>
ITEM 4.A. EXECUTIVE OFFICERS OF THE REGISTRANT
______________________________________________
Certain information about the executive officers of PHI is set forth in the
following table and accompanying text:
<TABLE>
<CAPTION>
Name Age Position
------------------------- --- -------------------------------------------------------------------------
<S> <C> <C>
Carroll W. Suggs (1) 60 Chairman of the Board of Directors, President and Chief Executive Officer
Ben Schrick(2) 58 Chief Operating Officer
Robert D. Cummiskey (3) 57 Director of Risk Management and Corporate Secretary
Michael J. McCann (4) 51 Chief Financial Officer and Treasurer
Richard A. Rovinelli (5) 51 Director of Human Resources
William P. Sorenson (6) 50 Director of Corporate Marketing / New Business
R. J. Wallace (7) 48 Director Maintenance / FAR145
Kenneth Alan Townsend (8) 60 General Manager - Domestic Oil and Gas Aviation Services
Geoffrey C. Stanford (9) 32 Corporate Controller, Assistant Treasurer, and Assistant Secretary
</TABLE>
(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. McCann has served as Chief Financial Officer ("CFO") and
Treasurer since November 1998. Prior to this time, he was the CFO for
Global Industries Ltd. and prior to that the CFO for Sub Sea
International, Inc. Mr. McCann is a Certified Public Accountant and
holds a Masters of Business Administration from Loyola University.
(5) Mr. Rovinelli joined the Company in February 1999 as Director of
Human Resources. Prior to this time, he was Manager, Human Resources for
ARCO Alaska, Inc., Headquarters Staff Manager, Human Resource Services,
Arco Oil and Gas Company, as well as numerous other positions within
ARCO. Mr. Rovinelli holds a Bachelor of Science Degree in Industrial
Psychology from the University of Houston.
(6) Mr. Sorenson became Director of Corporate Marketing/New Business
in March 1999 after serving as General Manager of Aeromedical Services
since November 1995. Mr. Sorenson joined the Company in 1976.
(7) 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.
(8) 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.
(9) Mr. Stanford joined the Company in August 1993 and has served as
Corporate 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, Small Cap Issuers ("NASDAQ") 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
--------------------- ---------------- ---------------- ---------
1998-99 1st Quarter 23 16 1/2 21 1/2 17 7/8 .05
2nd Quarter 18 7/8 14 19 14 1/2 .05
3rd Quarter 18 15 1/2 18 7/8 15 1/2 .05
4th Quarter 16 12 16 12 .05
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
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 3."
As of May 6, 1999, there were approximately 1,075 holders of record of the
Company's voting common stock and 116 holders of record of the Company's
non-voting common stock.
ITEM 6. SELECTED FINANCIAL DATA
_______________________________
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
--------- -------- -------- -------- --------
(Thousands of Dollars, except per share data)
<S> <C> <C> <C> <C> <C>
Year Ended April 30:
Operating revenues $247,339 $236,582 $211,663 $185,865 $174,397
Net earnings (1) 2,988 7,417 6,470 6,466 5,182
Net earnings
per share (basic) 0.58 1.45 1.27 1.28 0.96
Net earnings
per share (diluted) 0.57 1.43 1.25 1.27 0.96
Cash dividends
declared per share 0.20 0.20 0.20 0.17 0.06
At April 30:
Total assets $231,575 $227,021 $196,631 $161,315 $147,108
Total debt 80,296 72,619 62,460 37,332 35,815
Working capital 51,030 47,971 41,247 26,543 29,809
Shareholders' equity 96,581 94,705 87,416 81,401 75,707
</TABLE>
(1) See Item 8. "Financial Statements and Supplementary Data - Notes to
Consolidated Financial Statements, Note 2 - Special Charges."
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
_________________________________________________________
CONDITION AND RESULTS OF OPERATIONS
___________________________________
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") should be read in conjunction with the Company's
Consolidated Financial Statements for the years ended April 30, 1999, 1998,
and 1997 and the related Notes to Consolidated Financial Statements.
Forward-Looking Statements
All statements other than statements of historical fact contained in this
Form 10-K and 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.
Results of Operations
Revenues
The following table reflects the distribution of the Company's operating
revenues by business unit:
Years Ended April 30
(in 000's, except %'s)
1999 1998 1997
------------- ------------- ------------
$ % $ % $ %
------- --- ------- --- ------- ---
Oil and Gas Aviation Unit 199,846 81 198,875 84 180,121 85
Aeromedical Services Unit 46,838 19 35,879 15 30,302 14
Other 655 * 1,828 1 1,240 1
------- --- ------- --- ------- ---
247,339 100 236,582 100 211,663 100
___________________
* less than 1%
Oil and Gas Aviation Unit
United States Aviation Operations. Demand for the Company's domestic Oil
and Gas Aviation Services is directly 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
decline in oil and gas prices has resulted in a reduction in exploration
and production activities. These conditions have adversely impacted
helicopter transportation operations. The Company expects these trends to
continue for the first half of fiscal 2000.
During fiscal 1998 and 1997, improved economic conditions in the Gulf of
Mexico resulted in substantial increases in oil and gas activity. However,
in January 1998, oil prices began to decline, causing a decrease in oil and
gas activity. This decline did not materially impact the results of fiscal
1998. However, fiscal 1999 was adversely affected as flight hours declined
substantially during the third and fourth quarters.
9
<PAGE>
Fiscal 1999 compared to fiscal 1998. Fiscal 1999 operating revenues
were $ 158.5 million compared to $ 162.3 million for fiscal 1998, a
decrease of $ 3.8 million. In fiscal 1999, flight hours declined 15% to
160,102 compared to 187,930 for fiscal 1998. The decrease in flight
hours accounted for approximately $ 11.1 million of the revenue
decrease. A rate increase which went into effect in the third quarter
of fiscal 1998 offset the decline in flight hour revenue by
approximately $ 7.3 million.
Fiscal 1998 compared to fiscal 1997. Operating revenues increased 12%
from fiscal 1997 to fiscal 1998. In fiscal 1998, flight hours increased
5% to 187,930 from the fiscal 1997 amount of 178,262.
International Operations. In fiscal 1999, international operating revenues
increased 6% to $ 24.1 million from $ 22.8 million in fiscal 1998. This
increase was due to activity in West Africa. Revenues remained relatively
constant from fiscal 1997 to fiscal 1998.
Technical Services Operations. Technical Services Operations is an
airframe and component maintenance and repair facility whose experienced
staff performs a range of maintenance tasks under an FAA-approved repair
station. The repair station ratings include airframe, powerplant,
accessories, radio, instrument and specialized service. PHI Technical
Services Operations is also an authorized service center for Bell
Helicopter Textron, Inc., American Eurocopter Corporation and Turbomeca
Engine Corporation, and has extensive experience and capabilities in
Sikorsky Aircraft Corporation S-76 maintenance and repair.
Fiscal 1999 compared to fiscal 1998. Technical Services operating
revenues were $ 17.2 million in fiscal 1999 compared to $ 13.8 million
in fiscal 1998, an increase of $ 3.4 million. This increase was related
to one contract for the refurbishment and upgrade of two helicopters.
Fiscal 1998 compared to fiscal 1997. Technical Services operating
revenues increased 6%, or $0.8 million, from $13.0 million in fiscal
1997.
Aeromedical Services Unit
Fiscal 1999 compared to fiscal 1998. Aeromedical revenues increased
$ 10.9 million to $ 46.8 million, compared to 1998 revenues of $ 35.9
million. Flight hours increased 21% from 16,063 in 1998 to 19,496 in
1999. The increase in aeromedical revenue is due to an increase in
activity and the effect of the acquisition of Air Evac. The increase in
Air Evac revenue is due primarily to twelve months of operation in
fiscal 1999 versus four months of operation in fiscal 1998.
Fiscal 1998 compared to fiscal 1997. Aeromedical revenues increased
$ 5.6 million, or 18%, to $ 35.9 million in fiscal 1998 as compared to
fiscal 1997. 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 $ 5.7 million and flight hours of
1,450 for the four months ended April 30, 1998. (See Item 8.
"Financial Statements and Supplementary Data - Notes to Consolidated
Financial Statements, Note 11" for a more detailed discussion of this
transaction.)
Direct Expenses
The following table highlights certain critical operating factors which are
helpful in analyzing direct expense relationships:
1999 1998 1997
----- ------ -----
Number of aircraft owned/leased/
operated at year end 290 307 314
Fleet utilization 78% 83% 84%
Number of employees at year end 2,051 2,135(1) 1,851
(1) Air Evac acquisition added 196 employees effective
December 31, 1997.
10
<PAGE>
Fiscal 1999 compared to fiscal 1998. Direct expenses were $ 214.5
million in fiscal 1999 compared to $ 203.4 million in fiscal 1998, an
increase of $ 11.1 million. Included in fiscal 1999 direct expense is a
charge of $ 1.7 million related to inventory as discussed in Notes to
the Consolidated Financial Statements, Note 2 - "Special Charges." Air
Evac was purchased on December 31, 1997; four months of operating
results are included in fiscal 1998 compared to twelve months of
operating results in fiscal 1999, which resulted in an increase in
direct expenses (including increases in depreciation expense, human
resource costs and other aircraft costs) of $ 6.8 million.
Aircraft depreciation increased by $ 2.8 million due to the acquisition
of additional aircraft during fiscal 1998.
Aircraft rental expense decreased $ 0.4 million primarily as a result of
the restructure of thirteen aircraft leases in the first quarter of
fiscal 1999.
Fiscal 1998 compared to fiscal 1997. Direct expenses increased $ 19.0
million, or 10%, to $ 203.4 million primarily as a result of increased
flight activity levels. Included in the above increase is the direct
expense (including depreciation expense, human resource costs and other
aircraft costs) of Air Evac of $ 3.8 million for the four months of
fiscal 1998. Excluding the Air Evac acquisition activity, the increase
in direct expense is related to increased flight activity.
Aircraft depreciation increased by $ 1.7 million to $ 10.7 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.
Aircraft rental expense increased by $ 2.4 million to $ 14.8 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.
Selling, General and Administrative Expenses
Fiscal 1999 compared to fiscal 1998. Selling, general and
administrative expenses for fiscal 1999 increased $ 0.2 million to
$ 18.0 million. The increase in selling, general and administrative
expenses in fiscal 1999 was due to Air Evac selling, general and
administrative expenses for twelve months compared to four months in
fiscal 1998, an increase of $ 1.8 million. This was offset by a decline
in computer software costs. During fiscal 1999, the Company implemented
SOP 98-1 resulting in approximately $ 1.2 million of costs being
capitalized during fiscal 1999 that would have been expensed under the
Company's previous accounting method for such costs. There was a
reduction in bad debt expense of $ 0.3 million in fiscal 1999 compared
to fiscal 1998.
Fiscal 1998 compared to fiscal 1997. Selling, general and
administrative expenses for fiscal 1998 increased $ 5.0 million to
$ 17.8 million. This increase was primarily due to legal and professional
fees increasing and the associated selling, general and administrative
costs of Air Evac.
Interest Expense
Interest expense increased $ 0.9 million from fiscal 1998 to fiscal 1999
and $ 0.8 million from fiscal 1997 to fiscal 1998. This is a result of
increased debt levels due to the Company's acquisition of the assets of
Samaritan AirEvac and the purchase of aircraft during fiscal 1999 and
fiscal 1998.
Taxes
PHI's effective tax rate was 41%, 41% and 40%, respectively, in 1999, 1998
and 1997. See Item 8. "Financial Statements and Supplementary Data -
Notes to Consolidated Financial Statements, Note 4."
Earnings
Fiscal 1999 compared to fiscal 1998. Diluted earnings per share for the
fiscal year ended April 30, 1999 was $ 0.57 compared to $ 1.43 in fiscal
1998. The decrease was primarily due to Special Charges of $ 7.3
million and an inventory charge of $ 1.7 million. (See Item 8.
"Financial Statements and Supplementary Data - Notes to Consolidated
Financial Statements, Note 2 - Special Charges" for a more detailed
discussion of these transactions.) There was a decrease in earnings
related to the decrease in flight activity offset in part by the rate
increase discussed previously.
11
<PAGE>
Fiscal 1998 compared to fiscal 1997. Diluted earnings per share for the
fiscal year ended April 30, 1998 increased 14% compared to the prior
year. The increase was primarily due to increased activity.
Liquidity and Capital Resources
The Company's 1999 year end cash position was $ 3.0 million compared to
$ 2.8 million at fiscal year end 1998.
Working capital in fiscal 1999 was $ 51.0 million compared to $ 48.0
million in 1998, an increase of $ 3.0 million. Long-term debt increased
$ 7.6 million in fiscal 1999 to $ 74.4 million at year end. The Company's
current debt obligations for fiscal 2000 total $ 5.9 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 $ 45.0 million
revolving credit facility available through October 31, 2005 (the
"revolving loan") and a capital loan facility of up to $ 46.25 million
(subject to compliance with certain collateral coverage ratios) (the "term
loan"). The term loan is payable in fixed quarterly principal payments of
$ 1.2 million until maturity on November 10, 2005. The term and revolving
loan agreements permit 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 June 30, 1999, the Company had $ 12.5 million of credit capacity
available under its credit facilities. There are no plans to purchase
additional aircraft in fiscal 2000. At April 30, 1999, 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 1999 was $ 16.5 million
compared to $ 10.5 million and $ 8.5 million in fiscal 1998 and 1997,
respectively. The $ 6.0 million increase in fiscal 1999 is primarily
attributable to the decrease in accounts receivable as compared to the
significant increase in fiscal 1998, offset by a decrease in accounts
payable and accrued liabilities.
Cash used in investing activities increased to $ 22.8 million in fiscal
1999, as compared to $ 20.2 million in fiscal 1998 and $ 32.3 million in
fiscal 1997. In fiscal 1999, investing activities totaling $ 42.3 million
primarily included the purchase and completion of ten aircraft, aircraft
refurbishments, and other related items. The Company sold aircraft that
no longer met the Company's requirements; the net proceeds were $19.9
million.
Investing activities in fiscal 1998 were $ 20.2 million. Cash used was
primarily attributed to the purchase of seven aircraft and expenditures
related to the Company's aircraft refurbishment program. Proceeds from the
sale and disposition of aircraft were $ 14.0 million. In addition, the
Company purchased the assets of Samaritan AirEvac in fiscal 1998 for $ 8.8
million.
Year 2000 Matters
General. To consider the impact of Year 2000 ("Y2K") issues on PHI, a
committee consisting of members of senior management from various
disciplines within the Company meets regularly to discuss, outline and
implement appropriate courses of action. In addition, the Company retained
a consulting firm to review Y2K readiness of the Company and make
recommendations for action. Its review was completed on June 30, 1999, and
PHI is in the process of implementing its recommendations.
Information Technology. The Company recently completed a major upgrade of
its information technology systems begun in fiscal 1996, an incidental
benefit of which is that most of its systems are Y2K compliant. Management
does not expect that remaining remediation activities will result in any
significant delay or cost. Remediation and testing are expected to be
completed by September 30, 1999.
12
<PAGE>
Non-Information Technology. PHI's non-information technology systems
include embedded chip technology in various equipment, aircraft systems,
communications (ground and air) and utilities. The Company has completed
an inventory of those systems and expects to remediate items that need to
be upgraded or replaced by September 30, 1999. To date, no aircraft safety
of flight or other significant issues have been identified.
The Company has been in contact with the manufacturers of its aircraft and
related equipment to determine the impact of embedded chip technology on
flight systems. A review of these communications indicates that embedded
chip technology will not cause PHI's fleet to be grounded as a result of
Y2K issues.
Third Parties. PHI is evaluating its position with significant suppliers,
lenders, customers and others to ensure that those parties have appropriate
plans to address Y2K issues where they may impact the operations of the
Company. While the Company does not have any significant suppliers,
lenders, or customers that directly interface with its information
technology systems, the failure of these third parties to address their Y2K
problems could negatively impact PHI. Based on contacts to date with third
parties identified as important, PHI does not expect the impact of any
third party problems to be material. However, there is no assurance that
the systems of any third parties will be Y2K compliant in time or that any
non-compliance will not have a material adverse effect on the Company.
PHI operates internationally in various countries in South America, Europe,
Asia and Africa. Published reports indicate that the governments of some
of the countries in which it operates may not be Y2K compliant in
activities administered or operated by them, such as communications,
utilities and aircraft landing facilities, and PHI has received no
assurances from any of such governments of its Y2K readiness. To the
extent that the failure of those governments, or of private parties
organized under the laws of such countries and doing business with PHI, are
not Y2K compliant, resulting disruptions could have a material adverse
effect on PHI's international operations.
Consequences. If all significant Y2K issues are not properly identified,
or if assessment, remediation and testing of systems of the Company and of
third parties with which it has a significant relationship are not effected
timely, the Y2K issue could potentially have an adverse impact on the
Company's operations and financial condition. The Company believes that the
most reasonably likely worst-case scenario would be that the Company would
find it necessary to revert to the use of manual accounting records for
billings, payments and collections. In addition, the inability of principal
suppliers and major customers to be Y2K compliant could result in delays in
deliveries from those suppliers and collections of accounts receivable. A
more remote possibility is that delays and disruptions caused by Y2K
problems of governments and customers could ground a significant portion of
its aircraft, a situation for which there is no apparent remedy.
Contingency Plan. Concurrent with the Company's efforts to address Y2K
issues, it is in the process of developing appropriate contingency plans,
which it expects to have completed by November 1999, to help prevent the
Company's operations from being materially impacted by or to reduce the
impact that results from a failure to correct a Y2K problem. The
contingency plans will entail finding alternative vendors and suppliers
which are Y2K compliant, purchasing additional products and inventories and
supplies in advance of December 31, 1999, and reverting to manual systems
or workarounds.
Costs. While the Company incurred significant costs to upgrade its
information technology systems, it does not associate these costs with Y2K
readiness. Its direct costs associated with its Y2K compliance efforts to
date have not exceeded $0.4 million, and the Company does not expect to
incur significant Y2K compliance costs for the remainder of calendar 1999.
Direct costs do not include management and other employee time spent on Y2K
issues, which the Company does not quantify.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("FAS 133"), "Accounting for
Derivative Instruments and Hedging Activities." FAS 133, as amended, is
effective for all fiscal quarters of fiscal years beginning after June 15,
2000 and establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. FAS 133 requires that all
derivative instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives are to be recorded each
period in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction and, if
it is, the type of hedge transaction. Earlier application of the
provisions of FAS 133 is encouraged and is permitted as of the beginning of
any fiscal quarter that begins after the issuance of FAS 133. The Company
believes that, due to its current limited use of derivative instruments,
adoption of FAS 133 will not have a material effect on the Company's
results of operations, financial position, or liquidity.
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, and known or suspected fuel contamination has
been identified at all the bases reviewed.
The Company expensed, including provisions for environmental costs, $ 0.4
million, $ 0.7 million and $ 1.3 million in 1999, 1998 and 1997,
respectively, related to remediation efforts. The Company is currently
conducting assessments at additional bases to determine the extent of
remediation required at these locations. The reasonably possible upper
range of exposure for environmental remediation matters is $ 2.1 million.
The aggregate recorded provision for environmental related costs at April
30, 1999 was $ 1.8 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.
ITEM 7.A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
____________________________________________________________________
The Company is exposed to market risks associated with interest rates. The
Company makes limited use of derivative financial instruments to manage
risks associated with existing or anticipated transactions. All
derivatives used for risk management are closely monitored by the Company's
senior management. The Company does not hold derivatives for trading
purposes and it does not use derivatives with leveraged or complex
features. Derivative instruments are traded either with creditworthy major
financial institutions or over national exchanges.
At April 30, 1999, the Company was a party to interest rate swaps with
notional amounts totaling $ 40.0 million that were designed to convert a
similar amount of variable-rate debt to fixed rates. The swaps mature in
2003. The swaps require the Company to pay an average interest rate of
5.78% plus a maximum spread of 1.5% which was the percentage at April 30,
1999 over their composite lives, and at April 30, 1999, the interest rate
to be received by the Company averaged 5.0% plus a spread of 1.5%. The
variable interest rate received by the Company under each swap contract is
repriced quarterly. The Company considers these swaps to be a hedge against
potentially higher future interest rates. As described in Note 7 to the
consolidated financial statements, the estimated fair value of these
interest rate swaps was $ (0.2) million at April 30, 1999.
At April 30, 1999, $ 75.6 million of the Company's long-term debt had
variable interest rates. Based on debt outstanding at April 30, 1999, a
10% increase in variable interest rates would increase the Company's
interest expense in fiscal 2000 by $ 0.6 million.
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, 1999 and 1998, 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,
1999. 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, 1999. 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, 1999 and 1998,
and the results of their operations and their cash flows for each of the
years in the three-year period ended April 30, 1999, 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.
As discussed in Note 1 to the consolidated financial statements, in 1999
the Company adopted the method of accounting for computer software costs
prescribed by Statement of Position 98-1.
/s/ KPMG LLP
KPMG LLP
New Orleans, Louisiana
June 11, 1999
15
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30, 1999 and 1998
(Thousands of dollars)
1999 1998
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 3,025 $ 2,753
Accounts receivable - net of allowance:
Trade 39,724 41,447
Other 2,511 8,823
Inventory 34,902 34,016
Prepaid expenses 1,658 1,478
Refundable income taxes 3,368 -
--------- ---------
Total current assets 85,188 88,517
--------- ---------
Investments in affiliates and other 1,827 3,385
Property and equipment, at cost:
Flight equipment 231,300 221,263
Other 41,030 34,779
--------- ---------
272,330 256,042
--------- ---------
Less accumulated depreciation (127,770) (120,923)
--------- ---------
144,560 135,119
--------- ---------
Total Assets $231,575 $227,021
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 22,210 $ 28,004
Accrued vacation payable 6,057 5,672
Current maturities of long-term debt 5,891 5,824
Income taxes payable - 1,046
--------- ----------
Total current liabilities 34,158 40,546
--------- ----------
Long-term debt, net of current maturities 74,405 66,795
Deferred income taxes 19,411 19,172
Other long-term liabilities 7,020 5,803
Shareholders' Equity
Voting common stock - par value of $ 0.10;
authorized 12,500,000; issued shares
of 2,800,886 in 1999 and 1998 279 280
Non-voting common stock - par value
of $ 0.10; authorized 12,500,000;
issued shares of 2,368,175 and
2,358,935 in 1999 and 1998 237 236
Additional paid-in capital 11,717 11,706
Retained earnings 84,348 82,483
--------- ----------
Total shareholders' equity 96,581 94,705
--------- ----------
Total Liabilities and
Shareholders' Equity $231,575 $227,021
========= ==========
The accompanying notes are an integral part of these consolidated financial
statements.
16
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended April 30, 1999, 1998 and 1997
(Thousands of dollars and shares, except per share data)
<TABLE>
<CAPTION>
1999 1998 1997
<S> -------- -------- --------
Revenues: <C> <C> <C>
Operating revenues $247,339 $236,582 $211,663
Other income, net 3,543 2,264 725
-------- -------- --------
250,882 238,846 212,388
Expenses:
Direct expenses 214,516 203,421 184,456
Selling, general and administrative 18,017 17,798 12,778
Special charges 7,298 - -
Interest expense 6,017 5,118 4,297
-------- -------- --------
245,848 226,337 201,531
-------- -------- --------
Earnings before income taxes 5,034 12,509 10,857
Income taxes 2,046 5,092 4,387
-------- -------- --------
Net earnings $ 2,988 $ 7,417 $ 6,470
======== ======== ========
Basic earnings per common share $ 0.58 $ 1.45 $ 1.27
======== ======== ========
Diluted earnings per common share $ 0.57 $ 1.43 $ 1.25
======== ======== ========
Weighted average common shares outstanding 5,167 5,115 5,080
Incremental common shares 60 81 92
-------- -------- --------
Weighted average common shares and equivalents 5,227 5,196 5,172
======== ======== ========
Dividends declared per common share $ 0.20 $ 0.20 $ 0.20
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
17
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended April 30, 1999, 1998 and 1997
(Thousands of dollars and shares)
<TABLE>
<CAPTION>
Voting Non-Voting Additional
Common Stock Common Stock Paid-in Retained
--------------- ----------------
Shares Amount Shares Amount Capital Earnings
------ ------ ------ ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
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
======= ====== ====== ===== ======== =========
Stock Options Exercised - - 9 1 78 -
Other (8) (1) (2) - (67) (67)
Net Earnings - - - - - 2,988
Dividends - - - - - (1,056)
------- ------ ------ ----- -------- ---------
BALANCE
April 30, 1999 2,793 $ 279 2,366 $ 237 $ 11,717 $ 84,348
======= ====== ====== ===== ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
18
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended April 30, 1999, 1998 and 1997
(Thousands of dollars)
<TABLE>
<CAPTION>
1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,988 $ 7,417 $ 6,470
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation 16,193 12,534 9,977
Deferred income taxes 239 933 3,273
Gain on asset dispositions (3,583) (3,313) (1,285)
Special charges 6,172 - -
Equity in net (earnings)
losses of investee companies 40 (242) 560
Changes in operating assets
and liabilities:
Decrease (increase)in accounts receivable 3,633 (12,042) (6,822)
Increase in inventory (859) (3,682) (4,088)
Decrease (increase)in refundable income taxes (3,368) 1,344 (607)
Decrease (increase)in prepaid and other (505) (127) 395
Increase (decrease)in accounts payable,
accrued liabilities and vacation payable (4,326) 5,800 1,616
Increase (decrease)in income taxes payable (1,046) 1,046 -
Increase (decrease) in other
long-term liabilities 917 840 (1,000)
-------- -------- --------
Net cash provided by operating activities 16,495 10,508 8,489
-------- -------- --------
Cash flows from investing activities:
Investments (424) (8,730) (957)
Purchase of property and equipment (42,271) (25,475) (40,835)
Proceeds from asset dispositions 19,881 13,982 6,583
Proceeds from sale of investment - - 2,935
-------- -------- --------
Net cash used in investing activities (22,814) (20,223) (32,274)
-------- -------- --------
Cash flows from financing activities:
Proceeds from long-term debt 30,000 31,150 42,425
Payments on long-term debt (22,324) (20,991) (17,295)
Proceeds from exercise of stock options
and other (50) 895 209
Dividends paid (1,035) (1,023) (1,016)
-------- -------- --------
Net cash provided by financing activities 6,591 10,031 24,323
-------- -------- --------
Increase in cash and cash equivalents 272 316 538
Cash and cash equivalents,
beginning of year 2,753 2,437 1,899
-------- -------- --------
Cash and cash equivalents,
end of year $ 3,025 $ 2,753 $ 2,437
======== ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
19
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1999, 1998 and 1997
(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 $ 2.2 million and
$ 1.9 million at April 30, 1999 and 1998, 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.
Long-lived assets and certain identifiable intangibles are 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.
20
<PAGE>
Self-Insurance
The Company maintains a self-insurance program for a portion of its
health care costs. 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 does not believe significant
credit risk exists with respect to these securities at April 30, 1999.
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. The Company's largest
customer (Oil and Gas Aviation Services business unit) accounted for
14%, 16% and 15% of the Company's operating revenues in fiscal 1999,
1998 and 1997, respectively. The Company's five largest customers
accounted for 30%, 32% and 32% of operating revenues in fiscal 1999,
1998 and 1997, respectively.
Reclassifications
Certain reclassifications have been made to the prior period financial
statements in order to conform with the classifications adopted for
reporting in fiscal year 1999.
Stock Compensation
The Company uses the intrinsic value method of accounting for stock-
based compensation prescribed by Accounting Principles Board (APB)
Opinion No. 25 and, accordingly, follows the disclosure provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation."
Accounting for Computer Software
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) No. 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use," which
establishes criteria for when these types of costs should be expensed
as incurred or capitalized. The Company has implemented SOP 98-1 on a
prospective basis as of May 1, 1998 resulting in approximately $ 1.2
million of costs being capitalized during fiscal 1999 that would have
been expensed under the Company's previous accounting method for such
costs. This increased net income by $ 0.7 million or $ 0.13 per
diluted share in fiscal 1999. Post-implementation costs will be
expensed in accordance with the SOP and capitalized costs are being
amortized over their estimated useful life.
Income Taxes
Income taxes are accounted for under the asset and liability method.
Under this method, 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 bases. 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. 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.
21
<PAGE>
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.
Derivative Financial Instruments
The Company uses interest rate swap agreements to manage its interest
rate exposure. The Company specifically designates these agreements
as hedges of debt instruments and recognizes interest differentials as
adjustments to interest expense in the period the differentials occur.
Under interest rate swap agreements, the Company agrees with other
parties to exchange, at specific intervals, the difference between
fixed-rate and variable-rate interest amounts calculated by reference
to an agreed-upon notional principal amount. The fair value of the
interest rate swap agreements is estimated using quotes from
counterparties and represents the cash requirement if the existing
agreements had been settled at year end.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("FAS 133"),
"Accounting for Derivative Instruments and Hedging Activities." FAS
133, as amended, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000 and establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities.
FAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of
derivatives are to be recorded each period in current earnings or
other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, the type of
hedge transaction. Earlier application of the provisions of FAS 133
is encouraged and is permitted as of the beginning of any fiscal
quarter that begins after the issuance of FAS 133. The Company
believes that, due to its current limited use of derivative
instruments, adoption of FAS 133 will not have a material effect on
the Company's results of operations, financial position, or liquidity.
(2) SPECIAL CHARGES
In fiscal 1999, in connection with management's plan to reduce costs
and to recognize the impairment of assets as a result of decreased
activity, the Company recorded Special Charges of $ 7.3 million ($ 4.4
million on an after tax basis or $ 0.84 per diluted share).
Additionally, a charge of $ 1.7 million was recognized in fiscal 1999
for the disposition of slow moving inventories and is included in
direct expenses. The combined effect of these two amounts is $ 9.0
million before tax.
The Special Charges are as follows:
Description (Millions of dollars)
-------------------------------------------------- --------------------
Severance and related costs $ 1.3
Impairment of property and equipment 1.6
Impairment of certain foreign based joint ventures 3.8
Other 0.6
-------
Special Charges $ 7.3
At April 30, 1999, $ 0.8 million of the restructuring charges remained
in accrued liabilities, which was comprised of $ 0.3 million for
employee severance / benefits and $ 0.5 million for other charges.
22
<PAGE>
(3) LONG-TERM DEBT
<TABLE>
<CAPTION>
April 30, 1999 April 30, 1998
-------------- --------------
(Thousands of dollars)
<S> <C> <C>
Secured term loan notes due November 10, 2005
due in quarterly installments of $ 1,223,214,
bearing interest (at rates varying between
6.4% and 7.7% on April 30, 1999) $ 44,134 $ 42,027
Secured note due October 31, 2005, under
a revolving credit facility totaling
$ 45,000,000 bearing interest (at rates varying
between 6.5% and 7.1% on April 30, 1999) 31,500 25,000
Secured 10 year promissory notes due in monthly
installments of $ 107,747 commencing
July 9, 1993 with a fixed interest rate of 7.0% 4,662 5,592
-------- --------
Total debt 80,296 72,619
Less current maturities 5,891 5,824
-------- --------
Long-term debt $ 74,405 $ 66,795
======== ========
</TABLE>
Maturities of long-term debt for the next five years are as follows:
(in 000's)
2000 2001 2002 2003 2004
----- ----- ----- ----- -----
$ 5,891 $ 5,963 $ 6,041 $ 6,124 $ 5,777
At April 30, 1999, the following assets and their related book values
are pledged as collateral on notes aggregating $ 80.3 million:
(Thousands of dollars)
Equipment, net of depreciation $ 86,435
Inventory 34,590
Accounts receivable, net 35,487
--------
$156,512
========
Term Loans and Revolving Credit Facilities
On March 31, 1997, the Company modified its credit agreement which
among other things: i) reduced the Company's effective interest rate,
ii) increased the total credit capacity to $ 80.0 million from $ 65.0
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 $ 40.0 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. On November 30, 1998, 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 new agreement
increased the Company's credit capacity by $ 7.0 million. 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.
23
<PAGE>
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, 1999. 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. The declaration or
payment of dividends is restricted to 20% of net earnings for the
previous four fiscal quarters. At April 30, 1999, the Company
received a waiver allowing the $ 9.0 million in special charges and
inventory write downs (See Notes to Consolidated Financial Statements,
Note 2) to be excluded from the dividend restriction calculation, thus
allowing the payment of dividends in May 1999. Such agreements also
limit the creation, incurrence or assumption of Funded Debt (as
defined, which includes long-term debt) and the acquisition of
investments in unconsolidated subsidiaries.
Cash paid for interest on the secured and promissory notes was $ 5.7
million, $ 4.6 million and $ 4.5 million for the years ended April 30,
1999, 1998 and 1997, respectively.
(4) INCOME TAXES
Income tax expense for each of the three years ended April 30 is
composed of the following:
1999 1998 1997
------ ------- -------
(Thousands of dollars)
Current:
Federal $ 544 $ 3,264 $ 765
State 271 644 296
Foreign 992 251 53
Deferred -
principally Federal 239 933 3,273
----- ------- -------
$2,046 $ 5,092 $ 4,387
====== ======= =======
Deferred income tax expense (benefit) results from the following:
1999 1998 1997
-------- -------- --------
(Thousands of dollars)
Accelerated depreciation $ 2,797 $ 2,023 $ 2,911
Accrued expenses and
other liabilities (1,352) (1,090) 407
Effect of tax credits (1,206) - (45)
-------- -------- --------
$ 239 $ 933 $ 3,273
======== ======== ========
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
------------------------------------------
1999 1998 1997
------------ ------------ -----------
(Thousands of dollars, except percentages)
Amount % Amount % Amount %
------- -- ------- -- ------- --
<S> <C> <C> <C> <C> <C> <C>
Income taxes at statutory rate $ 1,712 34 $ 4,253 34 $ 3,691 34
Increase (decrease) in taxes
resulting from:
Effect of state income taxes 179 4 514 4 195 2
Other items - net 155 3 325 3 501 4
------- -- ------- -- ------- --
$ 2,046 41 $ 5,092 41 $ 4,387 40
======= == ======= == ======= ==
</TABLE>
24
<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, 1999 and 1998 are presented below:
1999 1998
-------- ---------
(Thousands of dollars)
Deferred tax assets:
Tax credits $ 1,896 $ 690
Vacation accrual 2,134 1,919
Inventory valuation 880 696
Workman's compensation reserve 448 396
Allowance for uncollectible accounts 620 723
Deferred gains 1,253 -
Other 3,458 3,521
-------- --------
Total deferred tax assets 10,689 7,945
-------- ---------
Deferred tax liabilities:
Tax depreciation in excess
of book depreciation 28,571 25,774
Other 1,529 1,343
-------- --------
Total deferred tax liabilities 30,100 27,117
-------- --------
Net deferred tax liabilities $ 19,411 $ 19,172
======== ========
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 $ 4.9 million, $ 3.5 million and
$ 2.4 million for the years ended April 30, 1999, 1998 and 1997,
respectively. Of the $ 4.9 million paid in 1999, $ 3.4 million is
recorded as a tax refund based on the tax liability for fiscal 1999.
(5) 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 $ 2.1 million, $1.7 million and $1.6
million for the years ended April 30, 1999, 1998 and 1997,
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 $ 284,000,
$ 326,000 and $ 275,000 for 1999, 1998 and 1997, 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.
25
<PAGE>
Stock Option Plans
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. The exercise price
of the stock option grants is equal to the fair market value of the
underlying stock at the date of grant. During fiscal 1999, 13,084
non-voting restricted shares and 19,000 non-voting stock options were
granted under the 1995 Plan. The restricted shares will become
unrestricted on July 31, 2000. The non-voting options, in the event
they become vested, are exercisable over the next five years, expiring
in 2007 and 2008. During fiscal 1997, 24,000 non-voting restricted
shares and 23,200 non-voting stock options were granted under the
1995 Plan. The restricted shares and the options granted during fiscal
1997 vested on July 31, 1997 and the restricted shares will become
unrestricted on July 31, 2000. One half of the non-voting options,
which vested on July 31, 1997, became exercisable on July 31, 1997
and one-half became exercisable on July 31, 1998. These options
expire on July 30, 2006. The Company recorded no compensation
expense related to the 1995 Plan during fiscal 1999 and fiscal 1998
and $ 0.4 million during fiscal 1997.
On October 30, 1998, the shareholders of PHI adopted the Directors
Stock Compensation Plan (the "Plan") to (i) substitute for the annual
cash retainer to non-employee directors ("Directors") an annual award
of PHI's non-voting common stock ("Common Stock"), and (ii) provide
for the automatic annual grant to Directors of options to purchase
2,000 shares of Common Stock. The Plan also provides for the
voluntary deferral of all or a portion of the stock awards or fees
otherwise payable annually to each Director. All non-employee members
of the Board of Directors of PHI participate in the Plan. Up to
150,000 shares of Common Stock may be issued under the Plan, subject
to adjustment in the event of any recapitalization, stock dividend,
stock split, combination of shares or other change in the Common
Stock.
26
<PAGE>
A summary of the Plans' activities for the years ended April 30, 1999,
1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1992 Plan
Options Other Options 1995 Plan Options
Non-Voting Voting Non-Voting Voting Non-Voting Total
---------- ------ ---------- ------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance outstanding
at April 30, 1996 75,000 5,000 - 23,200 116,000 219,200
Options granted at $14.88
(non-voting) - - - - 23,200 23,200
Options lapsed/cancelled - - - (2,720) (21,304) (24,024)
Options exercised (16,500) (5,000) - - (2,527) (24,027)
--------- ------- ------- ------- -------- --------
Balance outstanding
at April 30, 1997 58,500 - - 20,480 115,369 194,349
========= ======= ======= ======= ======== ========
Options granted - - - - - -
Options lapsed/cancelled (9,000) - - - (23,550) (32,550)
Options exercised (49,500) - - - (12,369) (61,869)
--------- ------- ------- ------- --------- --------
Balance outstanding
at April 30, 1998 - - - 20,480 79,450 99,930
========= ======= ======= ======= ========= ========
Options granted at a price
range of $16.25 to $16.75 - - 6,000 - 19,000 25,000
Options lapsed/cancelled - - - - (5,493) (5,493)
Options exercised - - - - (9,240) (9,240)
========= ======= ======= ======= ======== ========
Balance outstanding
at April 30, 1999 - - 6,000 20,480 83,717 110,197
========= ======= ======= ======= ======== ========
Shares exercisable
at April 30, 1997 at a price
range of $8.50 to $15.50 58,500 - - 10,240 44,821 113,561
========= ======= ======= ======= ======== ========
Shares exercisable
at April 30, 1998 at a price
range of $8.50 to $15.50 - - - 20,480 77,130 97,610
========= ======= ======= ======= ======== ========
Shares exercisable
at April 30, 1999 at a price
range of $8.50 to $16.31 - - - 20,480 66,717 87,197
========= ======= ======= ======= ======== ========
Shares available for future
grant at April 30, 1999 13,000 - 144,000 151,800 129,716 438,516
========= ======= ======= ======= ======== ========
</TABLE>
27
<PAGE>
The following table summarizes information about stock options
outstanding as of April 30, 1999:
Options Outstanding Options Exercisable
-----------------------------------------------------------
Weighted-Avg.
Remaining Weighted-Avg. Weighted-Avg.
Range of As of Contractual Exercise As of Exercise
Exercise Prices 04/30/99 Life-Yrs. Price 04/30/99 Price
-----------------------------------------------------------------------------
$8.50 - $9.75 81,197 6.00 $ 8.77 81,197 $ 8.77
$14.88 4,000 7.00 14.88 4,000 14.88
$16.25 - $16.75 25,000 8.84 16.38 2,000 16.31
------- ------
110,197 6.68 $10.72 87,197 $ 9.15
======= ======
The Company's 1995 Incentive Plan also authorizes the granting of
restricted stock awards. Under this plan during 1999 and 1997, 12,138
shares and 5,809 shares, respectively 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 $ 97,000, $ 21,000 and $ 89,000 in 1999, 1998 and 1997,
respectively.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," (SFAS No. 123), 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.
1999 1998 1997
------- ------- -------
Net income - as reported $ 2,988 $ 7,417 $ 6,470
Net income - pro forma 2,967 7,516 6,366
Diluted earnings per share
- as reported 0.57 1.43 1.25
Diluted earnings per share
- pro forma 0.57 1.45 1.25
Average fair value of
grants during the year 5.87 N/A 7.45
1999 1998 1997
------- ------- -------
Black-Sholes option pricing
model assumptions:
Risk-free interest rate 6.5% N/A 6.5%
Expected life (years) 4 N/A 4
Volatility 27% N/A 12%
Dividend yield 1.39% N/A 1.11%
(6) SUPPLEMENTAL CASH FLOW INFORMATION AND FINANCING ACTIVITIES
In 1999, the Company recorded proceeds from equipment sales of $ 19.9
million. The original cost and accumulated depreciation associated
with these transactions were $ 27.0 million and $ 10.2 million,
respectively. Gains of $ 0.6 million recognized on sale-leaseback
transactions were deferred and are being credited to income over the
lease terms. The book values of the equipment totaling $ 2.2 million
were removed from the balance sheet.
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 recognized 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.
28
<PAGE>
(7) FINANCIAL INSTRUMENTS
DERIVATIVE INSTRUMENTS - As discussed in Note 1, the Company utilizes
derivative instruments on a limited basis to manage risks related to
interest rates. At April 30, 1999 and 1998, the Company had interest
rate swap agreements with notional amounts totaling $ 40.0 million and
$ 20.0 million, respectively, that serve to convert an equal amount of
variable rate long-term debt to fixed rates. The swaps mature in
2003. The swaps require the Company to pay a weighted-average
interest rate of 5.78% (plus the maximum spread of 1.5% at April 30,
1999) over their composite lives and to receive a variable rate, which
averaged 5% (plus the maximum spread of 1.5% at April 30, 1999) at
April 30, 1999. Based upon the current spread, the effect of these
agreements is to limit interest rate exposure to 7.08% on $ 20.0
million of the Company's revolving credit facility, 7.69% on $10.0
million and 7.27% on $ 10.0 million of the Company's term loan. Using
the accrual/settlement method of accounting, the Company records the
net amount to be received or paid under the swap agreements as part of
"Interest Expense" in the Consolidated Statements of Earnings. As a
result of these swap agreements, interest expense was increased by
$ 0.2 million in 1999 and $ 28,000 in 1998.
FAIR VALUE - The following table presents the carrying amounts and
estimated fair values of financial instruments held by the Company at
April 30, 1999 and 1998. The fair value of a financial instrument is
the amount at which the instrument could be exchanged in a current
transaction between willing parties. The table excludes cash and cash
equivalents, accounts receivable, accounts payable, and accrued
liabilities, all of which had fair values approximating carrying
amounts.
1999 1999 1998 1998
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
-------- ---------- -------- ----------
Financial Liabilities
Current and long-term debt $ 80.3 $ 80.3 $ 72.6 $ 72.6
Off-Balance-Sheet Exposures
Interest rate swaps - $ (0.2) - $ (0.1)
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments shown in the table.
Current and long-term debt: the fair value is estimated based on
current rates offered the Company for debt of the same maturities.
Interest rate swaps: the fair value is an estimate of the amounts,
based on quotes from counterparties, that the Company would pay at the
reporting date to cancel the contracts.
(8) 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.
29
<PAGE>
Aggregate rental commitments to lease aircraft under noncancellable
operating leases are due in years subsequent to April 30, 1999, as
follows:
(Thousands of dollars)
2000 $ 12,670
2001 12,220
2002 11,508
2003 10,404
2004 9,203
Thereafter 26,758
--------
$ 82,763
========
Rental expense incurred under these leases consisted of the following:
(Thousands of dollars)
(Years ended April 30)
----------------------
1999 1998 1997
-------- -------- --------
Aircraft $ 14,522 $ 15,080 $ 12,328
Other 2,064 1,836 1,730
-------- -------- --------
$ 16,586 $ 16,916 $ 14,058
======== ======== ========
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, and known or
suspected fuel contamination has been identified at all the bases
reviewed.
The Company expensed, including provisions for environmental costs,
$ 0.4 million, $ 0.7 million and $ 1.3 million in 1999, 1998 and 1997,
respectively, related to remediation efforts. The Company is
currently conducting assessments at additional bases to determine the
extent of remediation required at these locations. The reasonably
possible upper range of exposure for environmental matters is $ 2.1
million. The aggregate recorded provision for environmental related
costs at April 30, 1999 is $ 1.8 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.
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.
(9) BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
In 1999, the Company adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," which requires that
companies disclose segment data based on how management makes
decisions about allocating resources to segments and measuring their
performance.
The Company operates principally in two segments: Oil and Gas
Aviation Services and Aeromedical Services. The Oil and Gas Aviation
Services segment includes domestic and international helicopter
services provided to oil and gas customers including technical
services and maintenance work. The Aeromedical Services segment
includes all services provided to the Company's air medical customers
including hospitals and medical programs.
The accounting policies of the operating segments are the same as
those described in Note 1 to the Consolidated Financial Statements.
Segment operating profit is based on operating revenues less direct
expenses, selling, general and administrative costs and special
charges applicable to the operating segment. Segment assets are those
assets used exclusively in the operations of each operating segment or
which are allocated when used jointly. Corporate assets are
principally cash and cash equivalents, short term investments,
other current assets, and certain property, plant and
equipment. Corporate overhead, consisting primarily of non-allocable
selling, general and administrative costs are not allocated to the
operating segments.
30
<PAGE>
Summarized financial information concerning the Company's operating
segment as of April 30 is shown in the following tables (in
thousands):
1999 1998 1997
--------- --------- ---------
Operating revenues:
Oil and Gas $ 199,846 $ 198,875 $ 180,121
Aeromedical 46,838 35,879 30,302
Other 655 1,828 1,240
---------- ---------- ----------
Total $ 247,339 $ 236,582 $ 211,663
========== ========== ==========
Operating profit(loss):
Oil and Gas 11,081(1) 17,573 15,021
Aeromedical 2,688 2,931 2,879
---------- ---------- ----------
Total Segment
operating profit $ 13,769 $ 20,504 $ 17,900
Other income, net 3,856 3,264 725
Corporate overhead (6,574) (6,141) (3,471)
Interest Expense (6,017) (5,118) (4,297)
---------- --------- ----------
Earnings before taxes $ 5,034 $ 12,509 $ 10,857
========== ========== ==========
(1) includes special charges of $ 7.3 million as discussed in Item 8.
"Financial Statements and Supplementary Data - Notes to Consolidated
Financial Statements, Note 2 - Special Charges"
Capital Expenditures
1999 1998 1997
--------- --------- ---------
Oil and Gas $ 40,521 $ 22,469 $ 35,299
Aeromedical 203 1,937 2,762
Corporate 1,547 1,069 2,774
--------- --------- ---------
Total $ 42,271 $ 25,475 $ 40,835
========= ========= =========
Depreciation and Amortization
1999 1998 1997
--------- -------- ---------
Oil and Gas $ 11,993 $ 9,228 $ 7,354
Aeromedical 3,486 2,773 2,497
Corporate 714 533 126
--------- --------- ---------
Total $ 16,193 $ 12,534 $ 9,977
========= ========= =========
Assets
1999 1998 1997
--------- --------- ---------
Oil and Gas $ 194,461 $ 189,300 $ 164,080
Aeromedical 30,113 31,918 27,367
Corporate 7,001 5,803 5,184
--------- --------- ---------
Total $ 231,575 $ 227,021 $ 196,631
========= ========= =========
31
<PAGE>
GEOGRAPHIC INFORMATION
Operating Revenues
1999 1998 1997
--------- --------- ---------
United States $ 223,227 $ 213,781 $ 189,221
Angola 14,541 12,891 11,469
Other Foreign 9,571 9,910 10,973
--------- --------- ---------
Total $ 247,339 $ 236,582 $ 211,663
========= ========= =========
Long-lived Assets
1999 1998 1997
--------- --------- ---------
United States $ 128,541 $ 121,161 $ 109,543
Angola 5,240 2,120 2,258
Other Foreign 10,779 11,838 10,026
--------- --------- ---------
Total $ 144,560 $ 135,119 $ 121,827
========= ========= =========
(10) QUARTERLY FINANCIAL DATA (UNAUDITED)
The summarized quarterly results of operations for the years ended
April 30, 1999 and 1998 (in thousands of dollars, except per share
data) are as follows:
<TABLE>
<CAPTION>
Quarter Ended
--------------------------------------------------------------------
July 31,1998 October 31, 1998 January 31, 1999 April 30, 1999
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 62,377 $ 65,478 $ 62,276 $ 60,751
Gross profit 8,929 11,201 7,685 5,008
Net earnings 2,002 1,954 1,202 (2,170)(1)
Net earnings per
share-basic 0.39 0.38 0.23 (0.42)(1)
Net earnings per
share-diluted 0.38 0.37 0.23 (0.42)(1)
Quarter Ended
--------------------------------------------------------------------
July 31,1997 October 31, 1997 January 31, 1998 April 30, 1998
--------------------------------------------------------------------
Revenues $ 56,360 $ 57,591 $ 59,482 $ 65,413
Gross profit 7,661 7,871 8,103 9,526
Net earnings 1,775 1,554 1,820 2,268
Net earnings per
share-basic 0.35 0.30 0.36 0.44
Net earnings per
share-diluted 0.34 0.30 0.35 0.44
</TABLE>
(1) Includes the effect of special charges recognized in the fourth
quarter of $ 4.9 million ($ 2.9 million after tax or $ 0.56 per diluted
share). Also includes a charge of $ 1.7 million ($ 1.0 million after
tax or $ 0.19 per diluted share) for slow moving inventory.
(11) 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 air medical
services division of Samaritan Health System based in Arizona and a
customer of PHI's since June 12, 1993.
The cost of the acquisition was recorded under the purchase method of
accounting. The results of Air Evac's operations have been
consolidated with the Company's results effective January 1, 1998.
32
<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 changes 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 1999 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."
ITEM 11. EXECUTIVE COMPENSATION
_______________________________
Information required by this item will be included in the Company's
definitive proxy statement in connection with its 1999 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 1999 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 1999 Annual Meeting
of Shareholders and is incorporated herein by reference.
33
<PAGE>
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, 1999 and 1998
Consolidated Statements of Earnings for the three years ended
April 30, 1999
Consolidated Statements of Shareholders' Equity for the three
years ended April 30, 1999
Consolidated Statements of Cash Flows for the three years ended
April 30, 1999
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying accounts for the years
ended April 30, 1999, 1998 and 1997.
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 (incorporated by reference to Exhibit No. 10.3 to PHI's
Report on Form 10-K dated April 30, 1997).
34
<PAGE>
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).
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).
10.16 Second Amendment (dated November 30, 1998) to Amended
and Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31, 1997,
among Petroleum Helicopters, Inc., Whitney National Bank, Bank
One, Louisiana, N.A. and NationsBank of Texas, N.A., as agent
(incorporated by reference to Exhibit No. 10.1 to PHI's Report on
Form 10-Q dated January 31, 1999).
35
<PAGE>
10.17 Directors Stock and Deferred Compensation Plan
(incorporated by reference to Exhibit A to PHI's Proxy originally
filed on August 28, 1998, and amended on September 18, 1998).
10.18 Director Deferred Compensation Plan adopted by PHI's Board
effective May 31, 1995.
10.19 Officer Deferred Compensation Plan adopted by PHI's Board
effective May 31, 1995.
10.20 Supplemental Executive Retirement Plan adopted by PHI's
Board effective September 1, 1994.
21 Subsidiaries of the Registrant
23.1 Consent of KPMG 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 1999.
36
<PAGE>
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
Schedule II Valuation and Qualifying Accounts
For the Years Ended April 30, 1999, 1998 and 1997
(Thousands of dollars)
<TABLE>
<CAPTION>
Additions
------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Year Expenses Accounts Deductions of Year
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended April 30, 1999:
Allowance for doubtful accounts $ 1,962 $ 182 $ - $ 460 $ 1,684
Allowance for obsolete inventory 1,889 280 - - 2,169
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
</TABLE>
37
<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, President,
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, President July 16, 1999
- ----------------------- Chief Executive Officer and
Carroll W. Suggs Director (Principal Executive Officer)
/s/ Michael J. McCann Chief Financial Officer July 16, 1999
- ----------------------- (Principal Financial and
Michael J. McCann Accounting Officer)
/s/ Leonard M. Horner Director July 16, 1999
- -----------------------
Leonard M. Horner
/s/ James W. McFarland Director July 16, 1999
- -----------------------
James W. McFarland
/s/ Bruce N. Whitman Director July 16, 1999
- -----------------------
Bruce N. Whitman
/s/ Thomas H. Murphy Director July 16, 1999
- -----------------------
Thomas H. Murphy
38
<PAGE>
Exhibit 10.18
PETROLEUM HELICOPTERS, INC.
DIRECTOR DEFERRED COMPENSATION PLAN
1. Purpose. The purpose of the Director Deferred
Compensation Plan (the "Plan") of Petroleum Helicopters, Inc., a
Louisiana corporation ("PHI"), is to provide the directors of PHI
(the "Directors") with an opportunity to defer their director
compensation in order to assist in their individual financial
planning.
2. Effective Date and Term of Plan. The Plan shall be
effective as of May 31, 1995 and shall remain in effect until
terminated by the Board of Directors or the Compensation
Committee (the "Committee") of the Board of Directors of PHI.
3. Plan Administration. The Plan shall be administered by
the Committee. The Committee shall have full and final authority
to interpret the Plan, adopt, amend and rescind rules and
regulations relating to the Plan, and make all other
determinations and take all other actions necessary and advisable
for the administration of the Plan.
4. Deferral of Compensation.
4.1 Deferral Elections. Each Director may elect to
defer 100% of the compensation that the Director receives for
serving as a Director ("Compensation") in twenty-five percent
increments to his or her deferred compensation account. An
election to defer Compensation hereunder shall be made by means
of a Deferral Election Form in the form attached and shall be
effective only with respect to Compensation earned on or after
the date of the first annual meeting of shareholders of PHI
following the receipt of the Deferral Election form by the
Committee. "Compensation" includes the annual retainer and
meeting fees paid to Directors, but does not include any expense
reimbursement.
4.2 Revocation of Elections. A Director may revoke an
election made pursuant to Plan Section 4.1 with respect to
deferrals of Compensation to be earned in the future following
receipt of the written revocation by the Committee and subject to
such other rules as may be established by the Committee. If a
Director revokes an election to defer, the Director may not again
participate in the Plan in the year for which the deferral
election was revoked. A Director may modify a deferral election
for future years of service by providing the Committee with a new
Deferral Election Form to take effect on the date of the next
annual meeting of shareholders.
5. Deferred Compensation Accounts
5.1 Establishment of Accounts. A deferred
compensation account shall be established on PHI's books for each
Director who executes a Deferral Election Form. PHI has no
obligation to fund a participant's deferred compensation account.
5.2 Crediting of Deferrals. A Director's deferred
compensation account shall be credited with that portion of the
Director's Compensation that the Director has elected to defer to
his or her deferred compensation account pursuant to Plan Section
4.1 as of the date such Compensation would otherwise have been
paid to the Director.
5.3 Crediting Income. Each deferred compensation
account shall be credited with an amount of interest as of the
last day of each month determined by applying to the weighted
average balance of such account during such month an annual rate
of interest equal to the sum of (i) the representative prime rate
published in the Wall Street Journal for the nation's largest
banks on the last business day of such month plus (ii) two (2%)
percent (the "Adjusted Prime Rate"). In the event a distribution
is made from a deferred compensation account other than on the
last day of a month, interest shall be credited for such partial
month through the date of distribution by applying the Adjusted
Prime Rate on the last business day prior to the distribution to
the weighted average balance of such account during such partial
month.
5.4 Distribution of Accounts. Amounts credited to a
Director's deferred compensation account shall be distributed in
either a single lump sum or annual installments (not to exceed
twenty), as designated by the Director in his or her applicable
Deferral Election Form. Distribution of a deferred compensation
account shall be made (in the case of a lump sum payment) or
commence (in the case of installment payments) thirty days
following the date chosen by the Director, which must be at least
one year following the date of the Deferral Election Form or, if
earlier, thirty days following the date the Director ceases to be
a member of the Board of Directors, other than as a result of
death. If a Director elects to have his or her deferred
compensation account distributed in installments, the amount of
the first installment shall be a fraction of the value of the
Director's deferred compensation account, the numerator of which
is one and denominator of which is the total number of
installments elected, and the amount of each subsequent
installment shall be a fraction of the value on the date
preceding each subsequent payment, the numerator of which is one
and the denominator of which is the total number of installments
elected minus the number of installments previously paid.
5.5 Distribution Upon Death. In the event of the
death of a Director prior to the distribution of his or her
deferred compensation account in full, the value of such deferred
compensation account shall be determined as of the day
immediately following the Director's death and such amount shall
be distributed in a single lump sum payment to the Director's
estate as soon as administratively feasible thereafter.
5.6 Statement of Account. At least once per year,
each Director who has executed a Deferral Election Form shall be
provided with a statement of his or her deferred compensation
account.
5.7 Director's Rights Unsecured. The right of any
Director to receive future distributions under the provisions of
this Section 5 shall constitute an unsecured claim against the
general assets of the Company.
6. No Right to Continue as a Director. Neither the Plan
nor any action taken pursuant to the Plan, shall constitute
evidence of any agreement or understanding, express or implied,
that PHI will retain a participant as a Director for any period
of time, or at any particular rate of compensation.
7. Amendment, Modification, and Termination. The
Committee or the Board may at any time terminate, amend or modify
the Plan. No amendment, modification or termination of the Plan
shall in any manner adversely affect the rights of any
participant with respect to amounts that have been credited to a
deferred compensation account.
8. Non-alienation of Benefits. Other than with regard to
the death of a Director, no benefit shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be
void. No such benefit shall, prior to receipt by the Director,
be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the Director.
9. Choice of Law. The laws of the State of Louisiana
shall govern the Plan, to the extent not preempted by federal
law.
PETROLEUM HELICOPTERS, INC.
By: /s/ Carroll W. Suggs
__________________________
Carroll W. Suggs
Chairman of the Board, President
and Chief Executive Officer
ATTEST:
Secretary
[CORPORATE SEAL]
Exhibit 10.19
PETROLEUM HELICOPTERS, INC.
OFFICER DEFERRED COMPENSATION PLAN
1. Purpose. The purpose of the Officer Deferred
Compensation Plan (the "Plan") of Petroleum Helicopters, Inc., a
Louisiana corporation ("PHI"), is to provide certain officers of
PHI (the "Officers") designated by the Compensation Committee of
the Board of Directors of PHI (the "Committee") with an
opportunity to defer their compensation in order to assist in
their individual financial planning.
2. Effective Date and Term of Plan. The Plan shall be
effective as of May 31, 1995 and shall remain in effect until
terminated by the Board of Directors or the Committee.
3. Plan Administration. The Plan shall be administered by
the Committee. The Committee shall have full and final authority
to interpret the Plan, adopt, amend and rescind rules and
regulations relating to the Plan, and make all other
determinations and take all other actions necessary and advisable
for the administration of the Plan.
4. Deferral of Compensation.
4.1 Deferral Elections. Each Officer may elect to
defer to his or her deferred compensation account up to 25% of
salary in one percent increments and 100% of any bonus received
for services provided to the Company ("Compensation") in one
percent increments up to twenty-five percent and five percent
increments thereafter. An election to defer Compensation
hereunder shall be made by means of a Deferral Election Form in
the form attached. For calendar year 1995, an Officer may defer
Compensation to be paid to the Officer following receipt of the
Deferral Election Form by the Committee, if the Deferral Election
Form is received by the Committee on or before June 30, 1995.
Deferrals of Compensation for subsequent years will only be
effective with respect to salary if the Deferral Election Form is
received by the Committee prior to the beginning of the calendar
year for which the salary will be paid and with respect to bonus
if the Deferral Election Form is received by the Committee prior
to the beginning of the fiscal year of the Company for which the
bonus will be paid.
4.2 Revocation of Elections. An Officer may revoke an
election made pursuant to Section 4.1 with respect to deferrals
of Compensation to be earned in the future following receipt of
the written revocation by the Committee and subject to such other
rules as may be established by the Committee. If an Officer
revokes an election to defer, the Officer may not again
participate in the Plan in the year for which the deferral
election was revoked.
5. Deferred Compensation Accounts
5.1 Establishment of Accounts. A deferred
compensation account shall be established on PHI's books for each
Officer who executes a Deferral Election Form. PHI has no
obligation to fund a participant's deferred compensation account.
5.2 Crediting of Deferrals. An Officer's deferred
compensation account shall be credited with that portion of the
Officer's Compensation that the Officer has elected to defer to
his or her deferred compensation account pursuant to Section 4.1
as of the date such Compensation would otherwise have been paid
to the Officer.
5.3 Crediting Income. Each deferred compensation
account shall be credited with an amount of interest as of the
last day of each month determined by applying to the weighted
average balance of such account during such month an annual rate
of interest equal to the sum of (i) the representative prime rate
published in the Wall Street Journal for the nation's largest
banks on the last business day of such month plus (ii) two (2%)
percent (the "Adjusted Prime Rate"). In the event a distribution
is made from a deferred compensation account other than on the
last day of a month, interest shall be credited for such partial
month through the date of distribution by applying the Adjusted
Prime Rate on the last business day prior to the distribution to
the weighted average balance of such account during such partial
month.
5.4 Distribution of Accounts. Amounts credited to an
Officer's deferred compensation account shall be distributed in
either a single lump sum or annual installments (not to exceed
twenty), as designated by the Officer in his or her applicable
Deferral Election Form. Distribution of a deferred compensation
account shall be made (in the case of a lump sum payment) or
commence (in the case of installment payments) thirty days
following the date chosen by the Officer, which must be at least
one year following the date of the Deferral Election Form or, if
earlier, thirty days following the date the Officer ceases to be
employed by the Company, other than as a result of death. If an
Officer elects to have his or her deferred compensation account
distributed in installments, the amount of the first installment
shall be a fraction of the value of the Officer's deferred
compensation account, the numerator of which is one and
denominator of which is the total number of installments elected,
and the amount of each subsequent installment shall be a fraction
of the value on the date preceding each subsequent payment, the
numerator of which is one and the denominator of which is the
total number of installments elected minus the number of
installments previously paid.
5.5 Distribution Upon Death. In the event of the
death of an Officer prior to the distribution of his or her
deferred compensation account in full, the value of such deferred
compensation account shall be determined as of the day
immediately following the Officer's death and such amount shall
be distributed in a single lump sum payment to the Officer's
estate as soon as administratively feasible thereafter.
5.6 Statement of Account. At least once per year,
each Officer who has executed a Deferral Election Form shall be
provided with a statement of his or her deferred compensation
account.
5.7 Officer's Rights Unsecured. The right of any
Officer to receive future distributions under the provisions of
this Section 5 shall constitute an unsecured claim against the
general assets of the Company.
6. No Right to Continue as an Officer. Neither the Plan
nor any action taken pursuant to the Plan, shall constitute
evidence of any agreement or understanding, express or implied,
that PHI will retain a participant as an employee for any period
of time, or at any particular rate of compensation.
7. Amendment, Modification, and Termination. The
Committee or the Board may at any time terminate, amend or modify
the Plan. No amendment, modification or termination of the Plan
shall in any manner adversely affect the rights of any
participant with respect to amounts that have been credited to a
deferred compensation account.
8. Non-alienation of Benefits. Other than with regard to
the death of an Officer, no benefit shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be
void. No such benefit shall, prior to receipt by the Officer, be
in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the Officer.
9. Choice of Law. The laws of the State of Louisiana
shall govern the Plan, to the extent not preempted by federal
law.
PETROLEUM HELICOPTERS, INC.
By: /s/ Carroll W. Suggs
_________________________
Carroll W. Suggs
Chairman of the Board, President
and Chief Executive Officer
ATTEST:
Secretary
[CORPORATE SEAL]
Exhibit 10.20
PETROLEUM HELICOPTERS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1. Purpose. The purpose of the Supplemental Executive
Retirement Plan (the "Plan") of Petroleum Helicopters Inc.,
(PHI), is to provide certain
employees of PHI (the "Participants") designated by the
Compensation Committee (the "Committee") of the Board of
Directors of PHI (the "Board") with retirement, disability and
death benefits to supplement existing retirement benefits which may
or may not have been reduced by Internal Revenue Service
(the "IRS") regulations and other applicable rules and
regulations.
2. Effective Date and Term of Plan. The plan shall be
effective as of September 1, 1994 and shall remain in effect
until terminated by the Board.
3. Plan Administration. The Plan shall be
administered by the Committee. The Committee shall have
full and final authority to interpret the Plan, adopt, amend
and rescind rules and regulations relating to the Plan, and
make all other determinations and take all other actions
necessary and advisable for the administration of the Plan.
4. Participation. The Board will determine which
employees of PHI and its subsidiaries will be Participants
in the Plan. Participants will be required to sign a non-
competition agreement with PHI in consideration for benefits
under this Plan.
5. Gender. Whenever used in this Plan document the
masculine gender includes the feminine. Also whenever used
in this plan document the feminine gender includes the
masculine.
6. Plan Benefits. The Plan provides for Participants
to receive benefits based on one-third (1/3) of the
Participants annual salary at the time of adoption, payable
as provided below
7. Plan Funding. PHI reserves the right to either
fund the obligations undertaken by this Plan or refrain from
funding the same and to determine the extent, nature and
method of funding. Should PHI elect to fund the plan
through the purchases of life insurance, mutual funds,
disability policies, or annuities, PHI reserves the right in
its sole discretion to terminate such funding at any time,
in whole or in part.
8. Distribution of Benefits
8.1 Distribution Upon Retirement At Age 65.
a. A Participant will receive annual Benefits upon
retirement from active service from PHI at age 65 or later
and those Benefits will continue for 15 years from and after
his or her retirement. Benefits will be paid in equal quarterly
installments commencing with the first day of the first
calendar quarter following his or her retirement.
b. If a Participant dies after Benefits becomes payable under
paragraph a. above, PHI shall continue
to pay Benefits during the remainder of the fifteen (15) year
period (the "Remaining Benefits") to the Participant's designated
beneficiary, in accordance with the last such designation
received by PHI from the Participant before his or her death.
If no such designation has been received by PHI from the
Participant before his or her death, Remaining Benefits shall be
paid to (i) the Participant's then living spouse, for so long as
the spouse shall live, or (ii) if the Participant is not survived
by a spouse or if the spouse shall die before all Remaining
Benefits have been paid, the then living children of the
Participant, if any, in equal shares, or (iii) if the Participant
is not survived by a spouse for the full period Remaining
Benefits are payable, or by any children, to the estate of the
Participant.
8.2 Distribution Upon Death.
a. If a Participant dies while employed by PHI, PHI shall
provide the benefit for a period of fifteen (15) years, payable
in quarterly installments,
commencing with the first day of the first calendar quarter
following the date of his death, to the Participant's
designated beneficiary in accordance with the last such
designation received by PHI from the Participant prior to
his death.
b.If no such designation has been received by PHI
from the Participant before his or her death,
Remaining Benefits shall be paid to (i) the
Participant's then living spouse for so long
as the spouse shall live, or (ii) if the
Participant is not survived by a spouse or if
the spouse shall die before all Remaining Benefits
have been paid, the then living children of
the Participant, if any, in equal shares, or (iii) if
the Participant is not survived by a spouse for the
full period Remaining Benefits are payable, or by any children,
to the estate of the Participant.
8.3 Distribution Upon Disability.
a. The terms "Disability" and "Disabled" shall have the
meaning set forth under the disability policy that is made
available to the Participant by PHI at the time of
commencement of the Disability. If no such policy is
available, Disability shall mean the total and permanent
incapacity of the Participant to engage in any substantial
gainful employment and which qualifies him for commencement
of benefits for permanent and total disability under the
Federal Old Age and Survivor Insurance.
b. If while actively employed, Participant becomes
disabled, he will receive annual benefits from PHI beginning
on his 65th birthday and those benefits will continue for 15
years from that date. Benefits will be paid in equal
quarterly installments commencing on the above date.
c. If a Participant dies after Benefits become payable under
paragraph b. above, PHI shall continue
to pay Benefits during the remainder of the fifteen (15) year
period (the "Remaining Benefits") to the Participant's
designated beneficiary, in accordance with the last such
designation received by PHI from the Participant before his or her
death. If no such designation has been received by PHI from
the Participant before his or her death, Remaining Benefits
shall be paid to (i) the Participant's then living spouse
for so long as the spouse shall live, or (ii) if the Participant
is not survived by a spouse or if the spouse shall die before
all Remaining Benefits have been paid, the then living children
of the Participant, if any, in equal shares, or (iii) if
the Participant is not survived by a spouse for the full period
Remaining Benefits are payable, or by any children, to the estate
of the Participant.
8.4 Termination of Employment Prior to Age 65. The
Participant forfeits all rights and privileges under this
plan if he terminates employment with PHI prior to attaining
age 65 for any reason other than death or disability,
including retirement, discharge, resignation, reduction in force,
or any other cause for termination.
8.5 Participant's Rights Unsecured. The right of
any Participant to receive future distributions under the
provisions of this Plan shall constitute an unsecured
claim against the general assets of PHI.
9. No Right to Continue as an Employee. Neither the
Plan nor any action taken pursuant to the Plan shall
constitute evidence of any agreement or understanding,
express or implied, that PHI will retain a Participant as an
employee for any period of time, or at any particular rate
of compensation.
10. ERISA Provisions
10.1 Name Fiduciary and Plan Administrator
The "Named Fiduciary and Plan Administrator" of this plan shall
be Richard Rovinelli until his resignation or removal by the Board
of Directors. As Named Fiduciary and Plan Administrator, Richard
Rovinelli shall be responsible for the management, control, and
administration of this Plan as established herein. He may delegate
to others certain aspects of the management and operation
responsibilities of the Plan including the employment of advisors
and the delegation of ministerial duties to qualified individuals.
10.2 Claim Procedure and Arbitration
In the event that benefits under this Plan are not paid to the
Employee (or to his beneficiary) and such claimants feel they are
entitled to receive such benefits, then a written claim must be
made to the Named Fiduciary and Plan Administrator named above
within sixty (60) days for the date payments are refused. The
Named Fiduciary and Plan Administrator and PHI shall review the
written claim and, if the claim is denied in whole or in part,
they shall provide, in writing and within ninety (90) days of
receipts of such claim, their specific reasons for such denial
and references to the provisions of this Plan upon which the denial
is based and any additional material or information necessary to
perfect the claim. Such written notice shall further indicate the
additional steps to be taken by the claimants if a further review of
the claim denial is desired. A claim shall be deemed denied if the
Plan Fiduciary and Administrator fails to take any action within the
aforementioned ninety (90) day period.
If claimant desires a second review, they shall notify the Plan
Fiduciary and Administrator in writing within sixty (60) days of
the first claim denial. Claimants may review the Plan or any
documents relating thereto and submit written issues and comments
they may feel appropriate. In its sole discretion, the Plan
Fiduciary and Administrator shall then review the second claim and
provide a written decision within sixty (60) days of receipt of
such claim.
If claimants continue to dispute the benefit denial and/the meaning
and effect of the terms and conditions of this Plan, then claimant
may submit the dispute to a Board of Arbitration for final
arbitration. Said Board shall consist of one member selected by
the claimant, one member selected by PHI, and a third member
selected by the first two members. The Board shall operate under
any generally recognized set of arbitration rules. The parties
hereto agree that they and their heirs, personal representatives,
successors, and assigns shall be bound by the decision of such
Board with respect to any controversy properly submitted to it for
determination.
11. Amendment, Modification, and Termination. The
Board may at any time terminate, amend, or modify the Plan.
12. Non Alienation of Benefits. Other than with
regard to the death of a Participant, no Benefit shall be
subject in any manner to alienation, sale,
transfer, assignment, pledge, lien encumbrance or charge, and any
attempt to do so will be void. No Benefit shall, prior
to receipt by the Participant, be in any manner liable for
or subject to the debts, contracts, liabilities, engagements
or torts of the Participants.
13. Choice of Law. The laws of the State of Louisiana
shall govern the Plan, to the extent not preempted by
federal law.
PETROLEUM HELICOPTERS, INC.
By: /s/ Carroll W. Suggs
__________________________
Carroll W. Suggs
Chairman of the Board, President
and Chief Executive Officer
ATTEST:
________________________________
Secretary
[CORPORATE SEAL]
Exhibit 21
Petroleum Helicopters Inc.
Subsidiaries of the Registrant at April 30, 1999
<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 Composites, Inc. Louisiana 100%
Transnational Transit LTD Trinidad 20%
Asia Aircraft Overseas Philippines Philippines 30%
Siam Aerospace Technology Thailand 48%
Clintondale Aviation New York 50%
Air Evac Services, Inc. Louisiana 100%
PHI Aeromedical Services, Inc. Louisiana 100%
Petroleum Helicopters International,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 statements No.
33-51617 on Form S-8 and No. 333-02025 on Form S-8 of Petroleum
Helicopters, Inc. of our report dated June 11, 1999, relating to the
consolidated balance sheets of Petroleum Helicopters, Inc. and
subsidiaries as of April 30, 1999 and 1998, 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, 1999, and the related
schedule, which report appears in the April 30, 1999 annual report on
Form 10-K of Petroleum Helicopters, Inc.
/s/ KPMG LLP
------------
KPMG LLP
New Orleans, Louisiana
July 23, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from condensed financial
statements for the period ending April 30, 1999 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0000350403
<NAME> GEOFF STANFORD
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> APR-30-1999
<CASH> 3,025
<SECURITIES> 0
<RECEIVABLES> 43,919
<ALLOWANCES> 1,684
<INVENTORY> 34,902
<CURRENT-ASSETS> 85,188
<PP&E> 272,330
<DEPRECIATION> 127,770
<TOTAL-ASSETS> 231,575
<CURRENT-LIABILITIES> 34,158
<BONDS> 0
0
0
<COMMON> 516
<OTHER-SE> 96,065
<TOTAL-LIABILITY-AND-EQUITY> 231,575
<SALES> 247,339
<TOTAL-REVENUES> 250,882
<CGS> 214,516
<TOTAL-COSTS> 214,516
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,017
<INCOME-PRETAX> 5,034
<INCOME-TAX> 2,046
<INCOME-CONTINUING> 2,988
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,988
<EPS-BASIC> 0.58
<EPS-DILUTED> 0.57
</TABLE>
