<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended December 31, 1994
[_] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period ________ to ________
Commission File Number 0-5232
Offshore Logistics, Inc.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 72-0679819
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
224 Rue de Jean
P.O. Box 5C, Lafayette, LA 70505
- - ------------------------------- ------------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (318) 233-1221
----------------------------
- - -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of December 31, 1994.
19,405,459 shares of Common Stock, $.01 par value
- - -------------------------------------------------------------------------------
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Statement of Income
(thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------ -----------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
GROSS REVENUE
Operating revenue $ 41,519 $ 22,699 $ 67,741 $ 44,663
Gain on disposal of equipment 176 333 179 345
-------------------------------------------------------
41,695 23,032 67,920 45,008
OPERATING EXPENSES
Direct Cost 30,962 14,575 47,467 27,569
Depreciation and amortization 2,606 1,800 4,635 3,630
General and administration 2,872 1,715 4,620 3,450
-------------------------------------------------------
36,440 18,090 56,722 34,649
-------------------------------------------------------
OPERATING INCOME 5,255 4,942 11,198 10,359
Earnings from unconsolidated
entities 1,775 507 2,400 1,007
Interest income 609 444 1,308 905
Interest expense 268 302 445 618
-------------------------------------------------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 7,371 5,591 14,461 11,653
Provision for income taxes 2,138 1,491 4,210 3,126
Minority interest in income of
consolidated subsidiaries (13) - (13) -
-------------------------------------------------------
NET INCOME $ 5,220 $ 4,100 $ 10,238 $ 8,527
=======================================================
Earnings per common share and
common equivalent share $ 0.27 $ 0.23 $ 0.54 $ 0.47
=======================================================
Common shares and common
equivalent shares outstanding 19,644,684 18,042,218 18,927,082 18,004,314
=======================================================
</TABLE>
2
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
(thousands of dollars)
<TABLE>
<CAPTION>
December 31, June 30,
1994 1994
-----------------------
<S> <C> <C>
ASSETS
- - ------
CURRENT ASSETS:
Cash and cash equivalents $ 32,685 $ 27,225
Investment in marketable securities 19,964 19,950
Accounts receivable 28,000 17,681
Inventories 25,706 21,907
Prepaid expenses 1,286 500
-----------------------
Total current assets 107,641 87,263
Investments in unconsolidated entities 8,829 12,917
Property and equipment - at cost:
Land and buildings 2,849 2,772
Aircraft and equipment 126,297 122,759
-----------------------
129,146 125,531
Less: accumulated depreciation and amoritization (55,347) (51,614)
-----------------------
73,799 73,917
Other assets, primarily goodwill 26,817 148
-----------------------
$ 217,086 $ 174,245
=======================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- - ----------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 4,220 $ 1,957
Accrued liabilities 7,842 5,210
Current maturities of long-term debt 2,011 3,031
-----------------------
Total current liabilities 14,073 10,198
Long-term debt - less current maturities 6,600 2,000
Deferred taxes 18,939 17,980
Deferred credits 1,250 2,500
Minority interest in consolidated subsidiaries 1,513 --
STOCKHOLDERS' INVESTMENT:
Common Stock, $.01 par value, authorized
35,000,000 shares; outstanding 19,405,459 and
17,602,379 at December 31 and June 30,
respectively (exclusive of 517,550 treasury
shares) 193 176
Paid in capital 94,452 71,563
Retained earnings 80,066 69,828
-----------------------
174,711 141,567
-----------------------
$ 217,086 $ 174,245
=======================
</TABLE>
3
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
----------------
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,238 $ 8,527
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,635 3,630
Increase in deferred taxes 959 670
Gain on asset dispositions (179) (345)
Equity in earnings from unconsolidated entities
(over) under dividends received (41) (83)
Minority interest in earnings 13 -
Decrease (Increase) in accounts receivable 2,653 (1,537)
Increase in inventories (140) (1,362)
Increase in prepaid expenses and other (70) (93)
Increase in accounts payable 861 729
Increase (Decrease) in accrued liabilities (1,857) 2
Decrease in deferred credits (1,250) (1,013)
-----------------------
Net cash provided by operating activities 15,822 9,125
-----------------------
Cash flows from investing activities:
Capital expenditures (1,038) (9,805)
Proceeds from asset dispositions 277 472
Additional advances to GPM - (750)
GPM acquisition costs, net of cash received (567) -
Acquisition of CPS, net of cash received (7,586) -
-----------------------
Net cash used in investing activities (8,914) (10,083)
-----------------------
Cash flows from financing activities:
Repayment of debt (3,224) (3,690)
Issue common stock 1,776 334
-----------------------
Net cash used in financing activities (1,448) (3,356)
Net increase (decrease) in cash 5,460 (4,314)
Cash and cash equivalents at beginning of year 27,225 27,180
-----------------------
Cash and cash equivalents at end of quarter $ 32,685 $ 22,866
=======================
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 282 $ 625
Income taxes 2,641 1,684
</TABLE>
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994
NOTE A - Basis of Presentation
- - ------------------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, any adjustments
considered necessary for a fair presentation have been included. Operating
results for the six months ended December 31, 1994, are not necessarily
indicative of the results that may be expected for the year ending June 30,
1995. For further information, refer to the consolidated financial statements
and footnotes included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1994.
NOTE B - Production Management Services
- - ---------------------------------------
The Company expanded its operations in July 1992 to include production
management services. During fiscal 1993 and until October 29, 1993, the Company
owned 50% of PPI-Seahawk Services, Inc. ("Seahawk"), a company which provided
platform and production management services, offshore medical support services,
and temporary personnel to the oil and gas industry. On October 29, 1993, the
Company further expanded its interest in production management services by
Seahawk merging into Grasso Corporation ("Grasso"). The Company exchanged its
50% investment in Seahawk for a 27.5% interest in Grasso.
On September 16, 1994, the Company acquired the remaining 72.5% interest in
Grasso by issuing .49 of a share of the Company's common stock for each share of
Grasso common stock owned. In addition, holders of Grasso Class B warrants are
entitled to receive similar warrants for shares of the Company's common stock.
The Merger was treated as a purchase for accounting purposes which resulted in
goodwill of approximately $22.6 million after stepping up the assets and
liabilities of Grasso. The goodwill will be amortized over a 20 year period.
The following summarized income statement data reflects the impact the Grasso
merger would have had on the Company's results of operations had the
transactions taken place on July 1, 1993:
<TABLE>
<CAPTION>
Proforma Results for the
Six Months Ended
December 31,
------------------------
1994 1993
---- ----
<S> <C> <C>
Gross revenue $76,555 $63,289
------- -------
Net income $ 9,766 $ 7,810
------- -------
Earnings per common share and common
equivalent share $ .50 $ .40
------- -------
</TABLE>
5
<PAGE>
NOTE C - Cathodic Protection Services
- - -------------------------------------
In October 1994, the Company acquired 75% of Cathodic Protection Services
Company ("CPS") for $7.5 million. CPS manufactures, installs and maintains
cathodic protection systems to arrest corrosion in oil and gas drilling and
production facilities, pipelines, oil and gas well casings, hydrocarbon
processing plants, and other metal structures. The acquisition was treated as
a purchase for accounting purposes which resulted in goodwill of approximately
$3.6 million. The goodwill will be amortized over a 20 year period. The
proforma effect of this acquisition as though it had been acquired at the
beginning of each of the periods presented is not material to the operating
results of the Company.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A summary of operating results for the applicable periods is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------ -----------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross revenue $ 41,695 $ 23,032 $ 67,920 $ 45,008
Operating expenses 36,440 18,090 56,722 34,649
--------------------------------------------
Operating income 5,255 4,942 11,198 10,359
Earnings from unconsolidated
entities 1,775 507 2,400 1,007
Interest income 609 444 1,308 905
Interest expense 268 302 445 618
--------------------------------------------
Income before provision for income
taxes 7,371 5,591 14,461 11,653
Provision for income taxes 2,138 1,491 4,210 3,126
Minority interest in income of
consolidated subsidiaries (13) - (13) _
--------------------------------------------
Net income $ 5,220 $ 4,100 $ 10,238 $ 8,527
============================================
</TABLE>
7
<PAGE>
Results of Operations
- - ---------------------
Consolidated operating revenues for the three months and six months ended
December 31, 1994 were $41.5 million and $67.7 million, respectively. Prior year
operating revenues were $22.7 million and $44.7 million, respectively. The
acquisitions of GPM and CPS had a significant impact on the Company's operating
revenues for the December 1994 quarter. Consolidated operating expenses for the
three months and six months ended December 31, 1994 were $36.4 million and $56.7
million, respectively. Prior year operating expenses were $18.1 million and
$34.6 million, respectively.
Operating revenues for the Air Division increased 2% and 7% for the three and
six months ended December 31, 1994. Consolidated flight hours during the three
and six months ended December 31, 1994 were approximately 29,000 and 60,000
hours, respectively. This represents a 6% and 5% increase in flight hours
compared to the same periods in the prior year. This increase is primarily the
result of increased operations in the Gulf of Mexico. Operating expenses for the
Air Division were relatively unchanged and increased 7% for the three and six
months ended December 31, 1994, respectively. Gross margins for the Air Division
were approximately 26% for the three and six months ended December 31, 1994,
relatively unchanged from the prior year.
GPM, the Company's production management services subsidiary, acquired on
September 16, 1994, generated $10.8 million and $12.8 million in operating
revenues for the three months and six months ended December 31, 1994,
respectively. Operating expenses from GPM were $10.8 million and $12.7 for the
three months and six months ended December 31, 1994, respectively. GPM was
operating at nearly a break even gross margin for the three and six months ended
December 31, 1994.
CPS, the Company's 75% owned cathodic protection corrosion control company, was
acquired in October 1994. Operating revenues for the three months and six
months ended December 31, 1994 included $9.1 million from CPS. Operating
expenses from CPS for the three months and six months ended December 31, 1994
were $8.9 million. CPS gross margin for the three months ended December 31, 1994
was $0.2 million, approximately 2% of revenues.
The Company operates, through an unconsolidated subsidary, several aircraft in
Mexico. This subsidiary's major contract is denominated in Pesos. The recent
devaluation of the Peso will have an adverse affect on the subsidiary unless
such contract can be renegotiated. Such negotiations are presently underway and
the subsidiary believes that the outcome would be positive. The Company believes
that an unfavorable outcome of these negotiations would not have a material
adverse effect on the Company's business or financial position.
Liquidity and Capital Resources
- - -------------------------------
Cash and cash equivalents (including marketable securities) were $52.6 million
as of December 31, 1994, a $5.5 million increase from fiscal year end 1994.
Total debt was $8.6 million as of December 31, 1994.
8
<PAGE>
As of December 31, 1994, the Company had $10 million of credit available under
an unsecured working capital line of credit from a bank. Management believes
that normal operations will provide sufficient working capital and cash flow to
meet debt service for the foreseeable future.
The effective income tax rates from continuing operations were 29% and 27% for
the six months ended December 31, 1994 and 1993, respectively, and is based on
the Company's projected effective tax rate for the fiscal year then ended. The
increase in the effective tax rate is due primarily to amortization of goodwill
related to GPM acquisition, which is not deductible for tax purposes. As of June
30, 1994, the Company had approximately $229,000 of alternative minimum tax
credits available to reduce regular federal tax liability in future years.
The Company has received notices from the United States Environmental Protection
Agency that it is one of approximately 160 potentially responsible parties
("PRP") at one Superfund site in Texas, one of over 300 PRP's at two sites in
Louisiana, and a PRP at a site in Rhode Island. The Company believes, based on
presently available information, that its potential liability for clean-up and
other response costs in connection with these sites is not likely to have a
material adverse effect on the Company's business or financial condition.
9
<PAGE>
PART II
Item 4. Submission of Matters to a Vote of Security Holders
- - ------ ---------------------------------------------------
(a) The Annual meeting of Stockholders was held on December 9, 1994.
(c) Matters voted on at the meeting included:
1. For the election of directors, all nominees were approved. The
results were as follows:
NOMINEE FOR WITHHELD
------- --- --------
James B. Clement 15,749,525 68,598
Louis F. Crane 15,751,877 66,246
David S. Foster 15,745,787 72,336
David M. Johnson 15,748,677 69,446
Kenneth M. Jones 15,749,555 68,568
Homer L. Luther, Jr. 15,441,127 376,996
Harry C. Sager 15,748,012 70,111
George M. Small 15,750,277 67,846
Howard Wolf 15,749,977 68,146
2. Proposal to approve the 1994 Long-Term Management Incentive Plan
was approved. The following votes were cast:
For: 11,794,724 Against: 3,759,900 Abstained: 762,505
3. Proposal to approve the Annual Incentive Compensation Plan was
approved. The following votes were cast:
For: 14,690,449 Against: 658,443 Abstained: 769,309
Item 6. Exhibits and Reports on Form 8-K
- - ------ --------------------------------
(a) Listed below are the documents filed as exhibits to this report.
Exhibit 11
Computation of Earnings Per Share
Exhibit 27
Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended December
31, 1994
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OFFSHORE LOGISTICS, INC.
BY: /s/ JAMES B. CLEMENT
---------------------------
JAMES B. CLEMENT
President
Chief Executive Officer
DATE: February 10, 1995
BY: /s/ GEORGE M. SMALL
---------------------------
GEORGE M. SMALL
Vice President
Chief Financial Officer
DATE: February 10, 1995
11
<PAGE>
EXHIBIT 11
Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------ ------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average shares outstanding 19,316,826 17,585,401 18,574,587 17,575,792
Net effect of dilutive stock warrants
based on the Treasury Stock method
using average market price 25,946 97,505 54,458 92,330
Net effect of dilutive stock options
based on the Treasury Stock method
using average market price 301,912 359,312 298,037 336,192
--------------------------------------------------------
19,644,684 18,042,218 18,927,082 18,004,314
========================================================
FULLY DILUTED:
Weighted average shares outstanding 19,316,826 17,585,401 18,574,587 17,575,792
Net effect of dilutive stock warrants
based on the Treasury Stock method
using end of period market price 25,946 97,505 55,280 100,272
Net effect of dilutive stock options
based on the Treasury Stock method
using end of period market price 301,912 359,312 300,827 356,863
--------------------------------------------------------
19,644,684 18,042,218 18,930,694 18,032,927
========================================================
(thousands of dollars, except per share data)
Net income $ 5,220 $ 4,100 $ 10,238 $ 8,527
========================================================
Per share amount - Primary $ 0.27 $ 0.23 $ 0.54 $ 0.47
========================================================
Per share amount - Fully diluted $ 0.27 $ 0.23 $ 0.54 $ 0.47
========================================================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 32,685
<SECURITIES> 19,964
<RECEIVABLES> 28,000
<ALLOWANCES> 0
<INVENTORY> 25,706
<CURRENT-ASSETS> 107,641
<PP&E> 129,146
<DEPRECIATION> 55,347
<TOTAL-ASSETS> 217,086
<CURRENT-LIABILITIES> 14,073
<BONDS> 6,600
<COMMON> 193
0
0
<OTHER-SE> 174,518
<TOTAL-LIABILITY-AND-EQUITY> 217,086
<SALES> 67,741
<TOTAL-REVENUES> 67,920
<CGS> 47,467
<TOTAL-COSTS> 56,722
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 445
<INCOME-PRETAX> 14,461
<INCOME-TAX> 4,210
<INCOME-CONTINUING> 10,238
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,238
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
