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Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant To Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended: March 31, 2000
OR
[ ] Transition Report Pursuant To Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-9827
PETROLEUM HELICOPTERS, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-0395707
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 1, 2000
Voting Common Stock 2,793,386 shares
Non-Voting Common Stock 2,384,168 shares
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except share data)
(Unaudited)
March 31, December 31,
2000 1999
---------- ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 2,055 $ 1,663
Accounts receivable - net of allowance:
Trade 36,466 36,917
Other 4,280 3,558
Inventory 38,451 37,277
Prepaid expenses 1,824 2,987
Refundable income taxes 2,733 3,922
----------- ----------
Total current assets 85,809 86,324
----------- ----------
Investments in affiliates and other 1,654 1,685
Property and equipment, at cost:
Flight equipment 215,758 214,638
Other 43,319 42,231
---------- ----------
259,077 256,869
Less accumulated depreciation (123,177) (121,822)
---------- ----------
135,900 135,047
---------- ----------
Total Assets $ 223,363 $ 223,056
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 20,979 $ 20,013
Accrued vacation payable 6,218 6,020
Current maturities of long-term debt 5,604 5,592
---------- ----------
Total current liabilities 32,801 31,625
---------- ----------
Long-term debt, net of current maturities 72,142 72,048
Deferred income taxes 17,391 17,776
Other long-term liabilities 8,834 7,984
Commitments and Contingencies (Note 5)
Shareholders' Equity
Voting common stock - par value of $ 0.10;
authorized shares of 12,500,000 279 279
Non-voting common stock - par value of $ 0.10;
authorized shares of 12,500,000 237 237
Additional paid-in capital 11,729 11,729
Retained earnings 79,950 81,378
---------- ----------
Total shareholders' equity 92,195 93,623
Total Liabilities and ---------- ----------
Shareholders' Equity $ 223,363 $ 223,056
========== ==========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of dollars, except per share data)
(Unaudited)
Three Months Ended
March 31,
-----------------------
2000 1999
---------- ---------
REVENUES:
Operating revenues $ 52,659 $ 59,087
Other income, net 147 2,043
--------- --------
52,806 61,130
-------- --------
EXPENSES:
Direct expenses 49,514 53,856
Selling, general and administrative 4,021 4,598
Interest expense 1,510 1,428
-------- --------
55,045 59,882
-------- --------
Earnings (loss) before income taxes (2,239) 1,248
Income taxes (811) 516
-------- --------
Net earnings (loss) $(1,428) $ 732
======== ========
Basic earnings per common share $ (.28) $ .14
======== ========
Diluted earnings per common share $ (.28) $ .14
======== ========
Weighted average common shares outstanding 5,161 5,169
Incremental common shares - 52
-------- --------
Weighted average common shares and equivalents 5,161 5,221
======== =======
Dividends declared per common share $ - $ .10
======== ========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
Three Months Ended
March 31,
--------------------
2000 1999
-------- --------
Cash flows from operating activities:
Net earnings (loss) $(1,428) $ 732
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation 3,195 4,221
Deferred income taxes (385) -
Gain on asset dispositions (162) (2,169)
Equity in net earnings of investee companies,
net of distributions - 146
Changes in operating assets and liabilities 2,230 7,662
-------- --------
Net cash provided by operating activities 3,450 10,592
-------- --------
Cash flows from investing activities:
Investments in affiliates 7 (80)
Purchase of property and equipment (6,874) (8,627)
Proceeds from asset dispositions 3,703 8,117
-------- --------
Net cash used in investing activities (3,164) (590)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt 6,000 -
Payments on long-term debt (5,894) (7,461)
Dividends paid - (260)
-------- --------
Net cash provided by (used in)
financing activities 106 (7,721)
-------- --------
Increase in cash and cash equivalents 392 2,281
Cash and cash equivalents, beginning of period 1,663 205
-------- --------
Cash and cash equivalents, end of period $ 2,055 $ 2,486
======== ========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with Form 10-Q instructions of the Securities
and Exchange Commission ("SEC") from the books and records of Petroleum
Helicopters, Inc. and Subsidiaries ("PHI" or the "Company"). In the
opinion of management, these financial statements reflect all adjustments,
consisting of only normal, recurring adjustments, necessary to present
fairly the financial results for the interim periods presented. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to rules and regulations
of the SEC; however, the Company believes that this information is fairly
presented. These condensed consolidated financial statements should be read
in conjunction with the financial statements contained in the Company's
Transition Report on Form 10-K for the eight-month transition period
ended December 31, 1999 and the accompanying notes and Management's
Discussion and Analysis of Financial Condition and Results of Operations.
The Company's financial results, particularly as they relate to the
Company's domestic oil and gas operations, are influenced by seasonal
fluctuations. During the winter, there are more days of adverse weather
conditions and fewer hours of daylight than the other months of the year.
Consequently, flight hours are generally lower during the Company's first
fiscal quarter than at other times of the year. This produces a seasonal
aspect to the Company's business and typically results in reduced revenues
from operations during those months. Therefore, the results of operations
for interim periods are not necessarily indicative of the operating results
that may be expected for a full fiscal year.
2. Change in Fiscal Year
The Company changed its fiscal year end from April 30 to a fiscal year
ending December 31. The Company filed a Transition Report on Form 10-K for
the transition period ended December 31, 1999. The Company is commencing
reporting on a calendar year basis with the filing of this Form 10-Q for
the quarter ended March 31, 2000.
3. Earnings per Share
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding
during the period. Diluted earnings per share is computed in the same
manner as basic earnings per share except that the denominator is increased
to include the number of additional common shares that could have been
outstanding assuming the exercise of stock options and the potential shares
that would have a dilutive effect on earnings per share. The diluted share
base for the three months ended March 31, 2000 excludes incremental shares
of 34,229 related to employee stock options and restricted stock awards.
These shares are excluded due to their antidilutive effect as a result of
the Company's net loss for the three months ended March 31, 2000.
4. Segment Information
The Company has adopted Statement of Financial Accounting Standards 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 three segments: Oil and Gas Aviation
Services, Aeromedical Services and Technical Services. The Oil and Gas
Aviation Services segment includes domestic and international helicopter
services provided to oil and gas customers. The Aeromedical Services
segment includes all services provided to the Company's air medical
customers, including hospitals and medical programs. The Technical
Services segment provides aircraft maintenance and repair services to
outside parties. As of January 1, 2000, the Company has changed its basis
of segmentation to present Technical Services as a separate segment.
Previously, Technical Services was included in the Oil and Gas Aviation
Services segment. All periods presented below include Technical Services
as a separate reporting segment.
Segment operating income is based on operating revenues less direct
expenses and selling, general and administrative costs as well as interest
expense applicable to the operating segment. Segment assets are those
assets used exclusively in the operation 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, is not allocated
to the operating segments.
Summarized financial information concerning the Company's operating
segments for the three month periods ended March 31, 2000 and 1999 is as
follows (in thousands):
Three Months Ended
March 31,
----------------------
2000 1999
-------- ---------
Segment operating revenues, excluding other
income, net:
Oil and Gas Aviation Services $ 39,220 $ 41,046
Aeromedical Services 11,054 11,179
Technical Services 2,385 6,862
--------- ---------
Total operating revenues, excluding other
income, net $ 52,659 $ 59,087
========= =========
Segment operating income(loss), excluding other
income, net:
Oil and Gas Aviation Services $ 726 $ 843
Aeromedical Services 35 366
Technical Services (31) 1,218
--------- ---------
Total segment operating income(loss),
excluding other income, net 730 2,427
Other income, net 147 2,043
Unallocated corporate overhead (3,116) (3,222)
--------- ---------
Earnings (loss) before income taxes $ (2,239) $ 1,248
========= =========
March 31, December 31,
2000 1999
------------ --------------
Segment Assets:
Oil and Gas Aviation Services $ 190,697 $ 189,883
Aeromedical Services 25,299 25,541
Technical Services 1,937 1,997
Corporate 5,430 5,635
--------- ---------
Total 223,363 223,056
========= =========
5. Commitments and Contingencies
Environmental Matters - The Company continues to review selected domestic
bases for possible fuel contamination resulting from routine flight
operations. The aggregate estimated liability recorded for environmental
related costs at March 31, 2000 is $ 3.0 million which the Company believes
is adequate for probable and estimable environmental costs. The Company
will make additional provisions in future periods to the extent appropriate
as further information regarding these costs becomes available. No
provisions were recorded in the quarter ended March 31, 2000.
Legal Matters - The Company is named as a defendant in various legal actions
which have arisen in the ordinary course of its business and 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.
Long-Term Debt - The Company's loan agreement with its principal lending
group is subject to certain financial covenants with which the Company was
in compliance or had received appropriate waivers at March 31, 2000. These
covenants include maintaining certain levels of cash flow, working capital
and shareholders' equity and contain other provisions some of which
restrict purchases of the Company's stock, capital expenditures and payment
of dividends. The declaration or payment of dividends is restricted to 20%
of net earnings for the previous four fiscal quarters. Such agreement also
limits the creation, incurrence or assumption of Funded Debt (as defined,
which includes long-term debt) and the acquisition of investments in
unconsolidated subsidiaries.
6. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS No. 133
establishes new accounting and reporting standards for derivative financial
instruments and for hedging activities. SFAS No. 133 requires the Company
to measure all derivatives at fair value and to recognize them in the
balance sheet as an asset or liability, depending on the Company's
rights or obligations under the applicable derivative contract. In
June 1999, the FASB issued SFAS No. 137, which deferred the effective
date of adoption of SFAS No. 133 for one year. The Company will adopt
SFAS No. 133 no later than the first quarter of fiscal year 2001. The
Company has considered the implications of adopting the new method of
accounting for derivatives and hedging activities and has concluded
that its implementation will not have a material impact on the Company's
consolidated financial statements.
Item 2. 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 accompanying
unaudited consolidated financial statements and the notes to the unaudited
consolidated financial statements as well as the Company's Transition
Report on Form 10-K for the eight month transition period ended
December 31, 1999.
Forward-Looking Statements
All statements other than statements of historical fact contained in this
Form 10-Q, other periodic reports filed by the Company under the Securities
Exchange Act of 1934 and other written or oral statements made by it or on
its behalf, are forward-looking statements. When used herein, the words
"anticipates", "expects", "believes", "intends", "plans", or "projects"
and similar expressions are intended to identify forward-looking statements.
It is important to note that forward-looking statements are based on
a number of assumptions about future events and are subject to various
risks, uncertainties and other factors that may cause the Company's
actual results to differ materially from the views, beliefs and estimates
expressed or implied in such forward-looking statements. Although the
Company believes that the assumptions reflected in forward-looking
statements are reasonable, no assurance can be given that such assumptions
will prove correct. Factors that could cause the Company's results to
differ materially from the results discussed in such forward-looking
statements include but are not limited to the following: flight
variances from expectations, volatility of oil and gas prices, the
substantial capital expenditures required to fund its operations,
environmental risks, competition, government regulation, unionization, and
the ability of the Company to implement its business strategy. All forward-
looking statements in this document are expressly qualified in their
entirety by the cautionary statements in this paragraph. The Company
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
Overview
The Company is engaged primarily in providing helicopter transportation and
related services. The predominant portion of its revenue is derived from
transporting offshore oil and gas production and drilling workers on a
worldwide basis. The Company also performs helicopter transportation
services for a variety of hospital and medical programs and aircraft
maintenance to outside parties.
The Company generates flight revenues from both ongoing service contracts
with established customers and non-contract flights referred to as
"Specials". Oil and Gas Aviation Services contracts, both domestic and
international, are generally on a month-to-month basis and consist of a
fixed fee plus an hourly charge for actual flight time. Specials are
customer flights, primarily domestic oil and gas, provided on an as needed
basis that are not provided pursuant to ongoing contracts and which
generally carry higher rates.
Aeromedical Services contracts also provide for fixed and hourly charges,
but are generally for longer terms and impose early cancellation fees to
encourage customers to fulfill the contract term and cover the Company's
additional up-front costs in the event of early termination. Air Evac
Services, Inc. ("Air Evac"), a separately incorporated company within the
Company's Aeromedical Services operating segment, operates in Arizona and
primarily derives its revenues from third party payors based on per hour or
per seat charges. These contracts are predominantly short-term in nature.
Technical Services 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. Technical Services 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. The Company's
Technical Services contracts are generally provided on an actual cost plus
negotiated mark-up basis.
Results of Operations
A summary of operating results and other income statement information for
the three-month periods ended March 31, 2000 and 1999 is as follows (in
thousands):
Three Months
Ended March 31,
----------------------
2000 1999
-------- ---------
Revenues:
Operating revenues $ 52,659 $ 59,087
Other income, net 147 2,043
--------- --------
52,806 61,130
--------- --------
Expenses:
Direct expenses 49,514 53,856
Selling, general and administrative 4,021 4,598
Interest expense 1,510 1,428
--------- --------
55,045 59,882
--------- --------
Earnings (loss) before income taxes (2,239) 1,248
Income taxes (811) 516
--------- --------
Net earnings (loss) $ (1,428) $ 732
========= ========
Consistent with the presentation of segment information in Note 4 in the
"Notes to Unaudited Condensed Consolidated Financial Statements", the
following table sets forth certain operating information which will form
the basis for discussion of each of the Company's three identified
segments, Oil and Gas Aviation Services, Aeromedical Services and Technical
Services:
Three Months
Ended March 31,
-----------------------
2000 1999
--------- ---------
(in thousands, except
flight hours)
Segment operating revenues, excluding
other income, net:
Oil and Gas Aviation Services:
Domestic $ 33,499 $ 35,014
International 5,721 6,032
--------- ---------
Sub-total 39,220 41,046
Aeromedical Services 11,054 11,179
Technical Services 2,385 6,862
--------- ---------
Total $ 52,659 $ 59,087
========= =========
Segment operating income (loss), excluding
other income, net:
Oil and Gas Aviation Services $ 726 $ 843
Aeromedical Services 35 366
Technical Services (31) 1,218
--------- ---------
Total $ 730 $ 2,427
========= =========
Segment operating margins, excluding other income,
net:
Oil and Gas Aviation Services 1.85% 2.05%
Aeromedical Services .32% 3.27%
Technical Services (1.30%) 17.75%
========= =========
Combined 1.39% 4.11%
========= =========
Flight hours:
Oil and Gas Aviation Services:
Domestic 35,282 37,305
International 6,187 6,120
--------- ---------
Sub-total 41,469 43,425
Aeromedical Services 5,339 5,458
Other 85 193
--------- ---------
Total 46,893 49,076
========= =========
March 31,
----------------------
2000 1999
-------- ---------
Aircraft operated:
Oil and Gas Aviation Services:
Domestic 204 215
International 30 33
-------- --------
Sub-total 234 248
Aeromedical Services 45 43
-------- --------
Total 279 291
======== ========
Fleet Utilization 77% 80%
======== ========
Number of employees 1,847 2,060
======== ========
Three Months Ended March 31, 2000 compared with Three Months Ended
March 31, 1999
Oil and Gas Aviation Services
Domestic flight hours for the three-month period ended March 31, 2000
decreased by 5.4% compared with the same period in the prior year. The
decrease is due primarily to the overall decrease in demand for helicopter
services from the oil and gas industry. Despite the recent improvements in
oil and gas prices, activity in the Gulf of Mexico continues to be
depressed as oil and gas companies continue to focus on their costs. As a
result, operating revenues decreased $ 1.5 million or 4.3%, to $ 33.5
million for the quarter ended March 31, 2000 as compared to $ 35.0 million
in the prior year quarter. The inconsistent change in revenue (4.3%
decrease) as compared with flight activity (5.4% decrease) for the current
quarter is due primarily to a shift in the mix of aircraft generating
revenues and a rate increase for services which was implemented January 1,
2000, effective upon renewal of customer contracts.
International flight hours for the three-month period ended March 31, 2000
increased by 1.1% compared with the same period in the prior year.
Although flight activity increased slightly, revenues declined due to the
conclusion of a Bell 412 contract in Venezuela which required fixed
payments not withstanding the lack of flight activity. As a result,
operating revenues decreased $ 0.3 million or 5.2%, to $5.7 million for the
quarter ended March 31, 2000 as compared to $ 6.0 million in the prior year
quarter.
Total Oil and Gas Aviation Services' operating margin of 1.9% for the
quarter compares to 2.1% for the similar quarter in the prior year. The
decrease in margin is due primarily to decreased activity levels. Although
the Company had previously reduced its cost structure, it is continuing to
review all elements of cost and intends to make further reductions during
the year.
Aeromedical Services
Aeromedical Services flight hours for the three-month period ended March
31, 2000 decreased by 2.2% compared with the same period in the prior year.
The decrease in fight activity is due to decreased activity in the
Company's Arizona operations which caused the Company to restructure this
operation in November, 1999 and to demobilize and sell several aircraft.
Operating margin in the Arizona operation has increased as a result of the
restructuring.
The Company allocates costs to its industry segments primarily on the basis
of flight activity. The lower level of activity in the Oil and Gas
Aviation Services segment resulted in a greater proportion of maintenance
costs being allocated to the Aeromedical Services segment. This resulted
in the decrease in the operating margin from 3.3% to .3%.
Technical Services
Technical Services operating revenues for the quarter ended March 31, 2000
were $ 2.4 million compared to $ 6.9 million in the prior year, a decrease
of $ 4.5 million. Technical Services' operating margin was (1.3%) in the
current quarter compared to 17.8% for the prior year quarter. The decrease
in operating revenues and operating margin was primarily attributable to
work performed on two large contracts for the refurbishment and overhaul of
two helicopters and a large parts sale, all occurring during the quarter
ended March 31, 1999.
Other Income, net
Other income, net, includes gains recorded relating to the sale of aircraft
of $ 0.2 million for the quarter ended March 31, 2000 as compared to a gain
of $ 2.2 million on aircraft sales for the prior year quarter.
Direct Expenses
Direct expenses for the three-month period ended March 31, 2000 decreased
by 8.1% compared with the same period in the prior year, primarily due to a
decrease in cost of sales in Technical Services attributable to two major
contracts for refurbishment and overhaul of two helicopters completed in
the three-month period ended March 31, 1999.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three-month period
ended March 31, 2000 decreased by 12.5% compared with the same period in
the prior year, primarily due to a decrease in Y2K compliance and computer
programming costs.
Interest Expense
Interest expense for the quarter ended March 31, 2000 increased $ 0.1
million or 5.7% to $ 1.5 million. The increase is due primarily to
increases in interest rates for the period, compared to the same quarter in
the prior year.
Income Taxes
Income tax expense for the quarter ended March 31, 2000 decreased $ 1.3
million to $ (0.8) million. The decrease was attributable to a
corresponding decrease in earnings.
Liquidity and Capital Resources
The Company's cash position as of March 31, 2000 was $ 2.1 million compared
to $ 1.7 million at December 31, 1999. Working capital decreased $ 1.7
million from $ 54.7 million at December 31, 1999 to $ 53.0 million. Net
cash provided by operating activities during the three months ended March
31, 2000 was $ 3.5 million.
Total long-term debt increased $ 0.1 million to $ 77.7 million, of which
the current portion is $ 5.6 million, payable in equal quarterly
installments, which the Company intends to pay with cash flow from aircraft
sales and operations. At May 1, 2000, the Company had $ 9.5 million of
credit capacity available under its credit facilities. The Company
believes its cash flow from operations in conjunction with its credit
capacity and proceeds from asset sales is sufficient to meet its planned
expenditure requirements for the foreseeable future.
Net cash used in investing activities during the three months ended
March 31, 2000 was $ 3.2 million. Investing activities included the
purchase and completion of aircraft improvements and engines and other
property, plant and equipment for $ 6.9 million, which were primarily
funded through $ 3.7 million in proceeds from asset dispositions.
During 2001 the revolving credit facility portion of the credit agreement
converts to a term loan, thereby increasing total annual principal debt
payments to approximately $ 12 million. The Company intends to obtain an
extension of the conversion requirement, or to refinance its debt.
Environmental Matters
The Company continues to review selected domestic bases for possible fuel
contamination resulting from routine flight operations. The aggregate
liability recorded for environmental related costs at March 31, 2000 is
$ 3.0 million which the Company believes is adequate for probable and
estimable environmental costs. The Company will make additional provisions
in future periods to the extent appropriate as further information
regarding these costs becomes available.
Employees
As of March 31, 2000, the Company employed a total of 1,847 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. However, on March 10, 2000, the
Company's pilots voted to become organized under the Office and
Professional Employees International Union. The Company does not believe
that the terms of any pilots' contract will place it at a disadvantage with
its competitors as management believes that pay scales and work rules will
continue to be similar throughout the industry.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS No. 133
establishes new accounting and reporting standards for derivative financial
instruments and for hedging activities. SFAS No. 133 requires the Company
to measure all derivatives at fair value and to recognize them in the
balance sheet as an asset or liability, depending on the Company's rights
or obligations under the applicable derivative contract. In June 1999, the
FASB issued SFAS No. 137, which deferred the effective date of adoption of
SFAS No. 133 for one year. The Company will adopt SFAS No. 133 no later
than the first quarter of fiscal year 2001. The Company has considered the
implications of adopting the new method of accounting for derivatives and
hedging activities and has concluded that its implementation will not have
a material impact on the Company's consolidated financial statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes to the Company's disclosures regarding
derivatives in its Form 10-K for the eight-month transition period ended
December 31, 1999.
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 (i) Articles of Incorporation of the Company (incorporated by
reference to Exhibit No. 3.1 (i) to PHI's Report on Form 10-Q
for the quarterly period ended October 31, 1994).
(ii) By-laws of the Company (incorporated by reference to Exhibit No.
3.1 (ii) to PHI's Report on Form 10-Q for the quarterly period
ended July 31, 1996).
(iii) Amendment dated March 17, 2000 to Section 2.2 of the By-laws of
the Company.
10.21 Third Amendment (dated June 30, 1999) 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 Bank of America, N.A., as agent.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter ended March 31,
2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Petroleum Helicopters, Inc.
May 15, 2000 By: /s/ Carroll W. Suggs
------------------------------------
Carroll W. Suggs
Chairman of the Board, President and
Chief Executive Officer
May 15, 2000 By: /s/ Michael J. McCann
------------------------------------
Michael J. McCann
Chief Financial Officer and Treasurer
Exhibit 3.1 (iii)
B. BY-LAW AMENDMENT
RESOLVED, that Section 2.2 of the By-Laws are hereby
amended so as to read as follows:
2.2 Annual Meetings. Notice Thereof. An annual meeting
of the shareholders shall be held at such date at such time as
may be specified by the board of Directors in the call of the
meeting, for the purpose of electing directors and for the
transaction of such other business as may be properly brought
before the meeting. If no annual shareholders' meeting is held
for a period of eighteen months, any shareholder may call such
meeting to be held at the registered office of the Corporation as
shown on the records of the Secretary of State of Louisiana."
Exhibit 10.21
LIMITED WAIVER AND THIRD AMENDMENT TO AMENDED AND
RESTATED LOAN AGREEMENT
This LIMITED WAIVER AND THIRD AMENDMENT TO AMENDED AND
RESTATED LOAN AGREEMENT (this "Waiver and Amendment") is being
entered into as of June 30, 1999, by and among PETROLEUM
HELICOPTERS, INC., a Louisiana corporation (the "Company"), BANK
OF AMERICA, N.A., a national banking association (f/k/a Bank of
America National Trust and Savings Association, successor by
merger to Bank of America, N.A., f/k/a NationsBank, N.A.,
successor by merger to NationsBank of Texas, N.A. ("NationsBank")
("Bank of America"), WHITNEY NATIONAL BANK, a national banking
association ("Whitney"), BANK ONE, LOUISIANA, N.A., a national
banking association ("Bank One" (as successor by merger to First
National Bank of Commerce, a national banking association
("FNBC")) and together with NationsBank and Whitney, being
hereinafter referred to collectively as the "Banks", and Bank of
America as agent for the Banks (in such capacity, the "Agent").
PRELIMINARY STATEMENTS
(1) The Company, NationsBank, Whitney, FNBC and the
Agent have entered into that certain Loan Agreement, originally
dated as of January 31, 1986, as amended and restated in its
entirety as of March 31, 1997, and as amended by that certain
First Amendment to Amended and Restated Loan Agreement, dated as
of December 31, 1997 and that certain Second Amendment to Amended
and Restated Loan Agreement, dated as of November 30, 1998 (such
Loan Agreement, as so amended and restated and as the same may be
further amended from time to time, being hereinafter referred to
as the "Loan Agreement"). Terms used herein, unless otherwise
defined herein, shall have the meanings set forth in the Loan
Agreement.
(2)
(3) FNBC has merged with and into Bank One.
(4)
(5) NationsBank has merged with and into NationsBank,
N.A., which then changed its name to Bank of America, N.A., which
then merged with and into Bank of America National Trust and
Savings Association, which then changed its name to Bank of
America, N.A.
(6)
(7) The Company plans to change its fiscal year end
from April 30 to December 31, effective December 31, 1999, with
the effect that the current fiscal year shall be an eight-month
fiscal year ending December 31, 1999 and that the last fiscal
quarter of such fiscal year shall be a two-month fiscal quarter
ending December 31, 1999.
(8)
(9) The Company recorded a restructuring charge of
$6,585,000 for the fiscal quarter ending April 30, 1999. (the
"Restructuring Charge").
(10)
(11) The deduction of the Restructuring Charge from
Consolidated Net Income when calculating the amount of cash
dividends permitted to be paid or declared by the Company
pursuant to clause (a) of Section 8.02 of the Loan Agreement
(such amount of cash dividends is herein referred to as the
"Authorized Dividends Payments") and Modified Cash Flow Coverage
would cause the Company to violate the restrictions of Sections
8.02 and 8.04, respectively, of the Loan Agreement.
(12)
(13) The Company has notified the Banks of an increase
in the amount of the Indebtedness for Money Borrowed listed on
Schedule III to the Loan Agreement pertaining to operating leases
for aircraft and such increase would violate the restrictions of
Section 8.06 of the Loan Agreement.
(14)
(15) The Company has requested that the Banks waive,
and the Banks now wish to waive subject to the terms and
conditions specified herein, (a) the restrictions of Sections
8.02 and 8.04 and any other provisions of the Loan Agreement to
the extent that Sections 8.02 and 8.04 and such other provisions
of the Loan Agreement would require the deductions of the
Restructuring Charge from Consolidated Net Income when
calculating Authorized Dividend Payments and Modified Cash Flow
Coverage for purposes of Sections 8.02 and 8.04, respectively, of
the Loan Agreement, and (b) compliance with the restrictions of
Section 8.06 of the Loan Agreement through June 30, 2000 to the
extent that the restrictions of Section 8.06 of the Loan
Agreement were violated by the increase in the amount of the
Indebtedness for Money Borrowed listed on Schedule III to the
Loan Agreement pertaining to operating leases for aircraft. The
Company and the Banks further wish to provide for certain
acknowledgments and agreements regarding the change of the
Company's fiscal year end.
(16)
(17) NOW, THEREFORE, in consideration of the premises
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the
Banks and the Agent hereby agree as follows:
(18)
2. Pursuant to Section 12.02 of the Loan Agreement,
the Banks hereby waive the restrictions of Sections 8.02 and 8.04
and any other provisions of the Loan Agreement to the extent that
Sections 8.02 and 8.04 and such other provisions of the Loan
Agreement would require the deductions of the Restructuring
Charge from Consolidated Net Income (a) when calculating
Authorized Dividend Payments for any dividends upon its common
stock paid on, or declared in respect of the fiscal quarters of
the Company ending on, any date from July 31, 1999 through and
including October 31, 1999 and (b) when calculating Modified Cash
Flow Coverage for purposes of Section 8.04 of the Loan Agreement
for any date through and including June 30, 2000.
3.
4. Pursuant to Section 12.02 of the Loan Agreement,
(a) the Banks hereby waive compliance with the restrictions of
Section 8.06 of the Loan Agreement through June 30, 2000 to the
extent that the restrictions of Section 8.06 of the Loan
Agreement were violated by the increase in the amount of the
Indebtedness for Money Borrowed listed on Schedule III to the
Loan Agreement pertaining to operating leases for aircraft and
(b) the parties hereto agree (i) that, effective as of the date
hereof, the Loan Agreement is hereby amended by (A) deleting the
date "March 31, 1997" appearing in Section 8.06 of the Loan
Agreement and replacing it with "December 31, 1999", (B) by
inserting the text ", permit to exist" immediately before the
text "or in any manner become liable" in each place it appears in
Section 8.06 of the Loan Agreement and (C) by replacing Schedule
III thereto in its entirety with a revised Schedule III (attached
hereto) reflecting Indebtedness for Money Borrowed existing on
December 31, 1999 , (ii) that, effective as of June 30, 2000, the
Company shall comply with the restrictions of Section 8.06 of the
Loan Agreement as amended hereby and (iii) that from the date
hereof through June 30, 2000 the Company will not, and will not
permit any Subsidiary to, create, assume, incur, guarantee,
permit to exist or in any manner become liable, contingently or
otherwise, in respect of any Indebtedness for Money Borrowed,
except for the Notes, Permitted Letters of Credit, and other
Indebtedness for Money Borrowed of the type listed on Schedule
III attached hereto, provided that the aggregate amount
outstanding of such other Indebtedness for Money Borrowed shall
not exceed $140,000,000.
5.
6. The parties hereto acknowledge and agree that
upon the change of the Company's fiscal year end from April 30 to
December 31, effective December 31, 1999, the current fiscal year
shall be an eight-month fiscal year ending December 31, 1999 and
the last fiscal quarter of such fiscal year shall be a two-month
fiscal quarter ending December 31, 1999. The parties hereto
further agree that, upon such change of the Company's fiscal year
end, (a) the two month period of November 1, 1999 through
December 31, 1999 and the eight month period of May 1, 1999
through December 31, 1999 shall be considered a "fiscal quarter"
and a "fiscal year", respectively, for all purposes under the
Loan Agreement, (b) that any calculation to be made pursuant to
the Loan Agreement with respect to a period of four consecutive
fiscal quarters shall be made with respect to a period of twelve
consecutive fiscal months, and (c) that any delivery of documents
or other items to be made by the Company pursuant to Section 7.01
of the Loan Agreement with respect to, or within a specified
period of time after the periods specified below (or any like
periods) as the "Existing Periods", shall, for purposes of the
current fiscal year only, be with respect to, or within such
specified period of time after the period specified below as the
"Revised Periods":
7.
Existing Periods Revised Periods
---------------- ---------------
third fiscal quarter second quarter ending
October 31, 1999
ninth month of fiscal year sixth month ending
October 31, 1999
first three fiscal quarters first two quarters ending
July 31 and October 31, 1999
twelfth month of fiscal year eighth month ending
December 31, 1999
fourth fiscal quarter two month period ending
December 31, 1999
1. Other than as specifically provided for herein,
the waivers and amendments provided for in Sections 1, 2 and 3
above shall not operate as a consent to any other action, event
or circumstance or as a waiver or amendment of any right, power
or privilege of the Banks under the Loan Agreement or the Notes
or of any other term or condition of the Loan Agreement or the
Notes nor shall the entering into this Waiver and Amendment
preclude any of the Banks from refusing to enter into any further
consents, waivers or amendments with respect to the Loan
Agreement or the Notes.
2. Each reference in the Loan Agreement to "this
Agreement", "hereunder", "herein" or words of like import shall
mean and be a reference to the Loan Agreement as amended to date.
Unless otherwise indicated, terms used in this Waiver and
Amendment have the same meanings herein as in the Loan Agreement.
3.
4. The Loan Agreement, as amended to date, is in all
respects ratified and confirmed, and all of the rights and powers
created thereby or thereunder shall be and remain in full force
and effect.
5.
6. The Company hereby represents that (a) after
giving effect to the waivers and amendments contemplated herein,
the representations and warranties contained in the Loan
Agreement, the Notes, the Security Documents, and any other
documents or instruments executed in connection with the Loan
Agreement (collectively, the "Loan Documents") are true and
correct on and as of the date hereof as though made on and as of
such date, (b) upon execution of this Waiver and Amendment, the
Company will not be in default in the due performance of any
covenant on its part in the Loan Documents, and (c) no Default or
Event of Default has occurred and is continuing or is imminent.
7.
8. The Company acknowledges, confirms, and warrants
that the Security Documents and any other security instruments
executed at any time in connection with the Loan Agreement
continue to secure, inter alia, the payment of all Indebtedness
at any time created pursuant to the Loan Agreement, as amended to
date, and all obligations of the Company in respect of Swap
Agreements.
9.
10. The effectiveness of this Waiver and Amendment is
subject to (i) the Company's delivery to the Agent, for the
account of the Banks, of a counterpart of this Waiver and
Amendment executed by the Company; and (ii) the delivery to the
Agent of counterparts of this Waiver and Amendment executed by
each of the Banks.
11.
12. The Company agrees to do, execute, acknowledge,
and deliver, all and every such further acts and instruments as
the Agent may request for the better assuring and confirming unto
the Agent and the Banks all and singular the rights granted or
intended to be granted hereby or hereunder.
13.
14. The Company agrees to pay on demand all reasonable
costs and expenses of the Banks in connection with the
preparation, reproduction, execution, and delivery of this Waiver
and Amendment and the other instruments and documents to be
delivered hereunder (including the reasonable fees and out-of-
pocket expenses of counsel for the Agent, and with respect to
advising the Agent as to its rights and responsibilities under
the Loan Agreement, as hereby to date). In addition, the Company
shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution and
delivery, filing, or recording of this Waiver and Amendment and
the other instruments and documents to be delivered hereunder,
and agrees to save each Bank harmless from and against any and
all liabilities with respect to and resulting from any delay in
paying or omission to pay such taxes or fees.
15.
16. This Waiver and Amendment may be executed in any
number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
taken together shall constitute but one and the same instrument.
17.
18. This Waiver and Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and
shall be binding upon the Company, the Agent, and the Banks and
their respective successors and assigns.
19.
20. FINAL AGREEMENT. THIS WAIVER AND AMENDMENT
------------------
TOGETHER WITH THE FIRST AMENDMENT, THE SECOND AMENDMENT, THE LOAN
AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS AND ANY OTHER
DOCUMENTS OR INSTRUMENTS EXECUTED IN CONNECTION WITH THE LOAN
AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of page intentionally left blank; signature page
follows]
IN WITNESS WHEREOF, the parties hereto have caused this
Waiver and Amendment to be executed by their respective officers
thereunto duly authorized as of the date first above written.
PETROLEUM HELICOPTERS, INC.
By: /s/ Michael J. McCann
Name: Michael J. McCann
Title: Chief Financial Officer and
Treasurer
BANK OF AMERICA, N.A.,
individually and as Agent
By: /s/ Paul A. Squires
Name: Paul A. Squires
Title: Managing Director
WHITNEY NATIONAL BANK
By: /s/ Harry G. Stahel
Name: Harry G. Stahel
Title: Senior Vice President
BANK ONE, LOUISIANA, N.A.
By: /s/ J. Charles Freel, Jr.
Name: J. Charles Freel, Jr.
Title: First Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from condensed
financial statements for the period ended March 31, 2000 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 2,055 0
<SECURITIES> 0 0
<RECEIVABLES> 41,557 0
<ALLOWANCES> 811 0
<INVENTORY> 38,451 0
<CURRENT-ASSETS> 85,809 0
<PP&E> 259,077 0
<DEPRECIATION> 123,177 0
<TOTAL-ASSETS> 223,363 0
<CURRENT-LIABILITIES> 32,801 0
<BONDS> 72,142 0
0 0
0 0
<COMMON> 516 0
<OTHER-SE> 91,679 0
<TOTAL-LIABILITY-AND-EQUITY> 223,363 0
<SALES> 52,659 59,087
<TOTAL-REVENUES> 52,806 61,130
<CGS> 49,514 53,856
<TOTAL-COSTS> 49,514 53,856
<OTHER-EXPENSES> 4,021 4,598
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,510 1,428
<INCOME-PRETAX> (2,239) 1,248
<INCOME-TAX> (811) 516
<INCOME-CONTINUING> (1,428) 732
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,428) 732
<EPS-BASIC> (.28) .14
<EPS-DILUTED> (.28) .14
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