<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1995
/ / 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 0-5232
Offshore Logistics, Inc.
(Exact name of registrant as specified in its Charter)
DELAWARE 72-0679819
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
224 Rue de Jean
P. O. Box 5-C, Lafayette, Louisiana 70505
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (318) 233-1221
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each Class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.01 par value)
Class B Warrant
(Title of 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 August 31, 1995 was $266,181,987.
The number of shares outstanding of the registrant's Common Stock as of
August 31, 1995 was 19,444,614.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on December 6, 1995 are incorporated by reference into
Part III hereof.
<PAGE>
OFFSHORE LOGISTICS, INC.
INDEX--FORM 10-K
PART I
<TABLE>
<S> <C> <C>
Item 1. Business........................................... 1
Helicopter Services................................ 1
Production Management Services..................... 4
Cathodic Protection Services....................... 5
General............................................ 7
Item 2. Properties......................................... 7
Item 3. Legal Proceedings.................................. 8
Item 4. Submission of Matters to a Vote of
Security Holders.................................. 8
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters....................... 10
Item 6. Selected Financial Data............................ 10
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
General............................................ 11
Results of Operations.............................. 12
Helicopter Services................................ 12
Production Management Services..................... 13
Cathodic Protection Services....................... 13
Consolidated....................................... 13
Liquidity and Capital Resources.................... 14
Item 8. Financial Statements and Supplementary Data........ 15
Offshore Logistics, Inc. and Consolidated
Subsidiaries:
Report of Independent Public Accountants......... 15
Consolidated Balance Sheets--
June 30, 1995 and 1994.......................... 16
Consolidated Statements of Income--
Three years ended June 30, 1995................. 17
Consolidated Statements of Stockholders'
Investment--Three years ended June 30, 1995..... 18
Consolidated Statements of Cash Flows--
Three years ended June 30, 1995................. 19
Notes to Consolidated Financial Statements....... 20
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure............... 31
PART III
Item 10. Directors and Executive Officers
of the Registrant................................. 31
Item 11. Executive Compensation............................. 31
Item 12. Security Ownership of Certain Beneficial
Owners and Management............................. 31
Item 13. Certain Relationships and Related Transactions..... 32
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.............................. 32
Exhibit 21--Subsidiaries of the Registrant........ 35
Signatures................................................... 36
</TABLE>
i
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PART I
ITEM 1. Business
Offshore Logistics, Inc. was incorporated in Louisiana in 1969 and its
state of incorporation was changed to Delaware in 1988. Unless the context
herein indicates otherwise, all references to the "Company" refer to Offshore
Logistics, Inc. and subsidiaries. The Company's executive offices are located at
224 Rue de Jean, Post Office Box 5-C, Lafayette, Louisiana 70505, and its
telephone number is (318) 233-1221.
Offshore Logistics, Inc., through its Air Logistics division, is a major
supplier of helicopter transportation services to the worldwide offshore oil and
gas industry. At June 30, 1995, the Company's operations included 188 aircraft
(including 27 aircraft operated through unconsolidated entities). The Company's
operations until 1991 also included a Marine Division, wherein the Company owned
vessels that supplied marine transportation services to the international oil
and gas industry. During 1991, the Company sold substantially all of the
remaining assets in its Marine Division and ceased its marine operations.
During 1993, the Company expanded its operations to include production
management services by acquiring a 50% interest in Seahawk Services Ltd.
("Seahawk") in a transaction in which Seahawk acquired all of the business of
PPI-Seahawk Services, Inc., a company engaged in the production management
services business. In October 1993, the Company exchanged its interest in
Seahawk for a 27.5% interest in Grasso Corporation whose wholly-owned
subsidiary, Grasso Production Management, Inc. ("GPM"), also was engaged in the
production management services business. In September 1994, GPM became a
wholly-owned subsidiary of the Company through a merger of Grasso Corporation
into the Company.
During October 1994, the Company acquired a 75% interest in Cathodic
Protection Services Company ("CPS"). CPS manufactures, installs, and maintains
cathodic protection systems to arrest corrosion in oil and gas drilling and
production facilities, pipelines, and other metal structures.
See Note I in "Notes to Consolidated Financial Statements" for information
on the Company's operating revenue, operating profit, and identifiable assets by
industry segment and geographical distribution for the three years ended June
30, 1995.
HELICOPTER SERVICES
The Company charters its helicopters to customers for use in transporting
personnel and time-sensitive equipment from onshore bases to offshore drilling
rigs, platforms, and other installations. The helicopter charters are for
varying periods and, in some cases, may contain provisions for cancellation
prior to completion of the contract. Charges under these charter agreements are
generally based on either a daily or monthly fixed fee plus additional hourly
charges. Helicopter services are seasonal in nature and influenced by weather
conditions and level of offshore construction activity.
The following table sets forth the number and type of aircraft operated by
the Company at the end of the year for the past three fiscal years.
<TABLE>
<CAPTION>
Passenger Speed
Type Capacity (MPH) 1995 1994 1993
- ---- --------- ------ ---- ---- ----
<S> <C> <C> <C> <C> <C>
Sikorsky S-76 12 160 18 17 16
Bell 206B Jet Ranger 4 115 30 30 32
Bell 206L-1 6 125 45 45 45
Bell 206L-III 6 125 20 21 21
Bell 206L-IV 6 125 5 5 0
Bell 212 12 125 12 11 13
Bell 412 12 140 6 6 6
Bell 214 ST 18 160 2 2 1
Boelkow 105 4 120 12 12 12
Aerospatiale Twinstar 5 130 9 11 9
Fixed Wing 2 2 2
-----------------
161 162 157
=================
</TABLE>
1
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The Company owns 151 of the 161 aircraft that it operates. The following
table sets forth certain information concerning these aircraft:
<TABLE>
<CAPTION>
June 30, 1995
-------------------
Net
Type Number Book Value
- ---- ------ ----------
<S> <C> <C>
Sikorsky S-76 10 $ 4,153
Bell 206B Jet Ranger 30 1,974
Bell 206L-I 45 5,048
Bell 206L-III 20 11,283
Bell 206L-IV 5 4,573
Bell 212 11 8,236
Bell 412 6 10,019
Bell 214ST 2 6,014
Boelkow 105 11 8,187
Aerospatiale Twinstar 9 1,645
----------------
149 61,132
Fixed Wing 2 998
----------------
Total 151 $62,130
================
</TABLE>
In addition to the foregoing 151 aircraft, the Company operates 10 aircraft
pursuant to various types of operating lease arrangements at June 30, 1995. The
Company also provides services and technical support to entities that operate 22
helicopters of various types and 5 fixed wing aircraft.
Domestic Operations
The Company's domestic helicopter services are conducted primarily from
operating facilities along the Gulf of Mexico. As of June 30, 1995, the Company
operated 139 aircraft in that area. The Company also operates 11 aircraft in
Alaska. Although the Company's business is primarily dependent upon activity
levels in the offshore oil and gas industry, the existence of a secondary market
for helicopters distinguishes the helicopter business from other segments of the
oil service industry. Other uses for which helicopters are employed, include
emergency medical transportation, agricultural and forestry support, and general
aviation activities. These additional uses enable the Company to scale down
operations through the sale of excess equipment to companies in the
aforementioned industries. Because of this ability to react to market
conditions, management believes the helicopter segment of the oil service
industry is less affected by downturns in offshore oil and gas activities.
International Operations
Utilization of helicopters in international service is dependent on the
worldwide level of oil and gas exploration and development offshore and in
remote areas. This, in turn, is dependent on the funds available to the major
oil companies to conduct such activities and upon the number and location of new
foreign concessions. As of June 30, 1995, the Company operated 11 of its
helicopters in international locations, including Bolivia, Brazil, Colombia, and
Mexico.
In addition to its direct operations in international areas, the Company
has service agreements with, and equity interests in, entities that operate 27
aircraft in Egypt and Mexico. The Company provides services and technical
support to these entities and, from time to time, leases aircraft to these
entities as additional support for these operations. As of June 30, 1995, three
of the Company's helicopters were being leased to its Mexican affiliate for
operations in that country.
2
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Customers
The principal customers for the Company's helicopter services are national
and international petroleum and offshore construction companies. During 1994,
one customer accounted for approximately 13% of the Company's operating
revenues. During 1995 and 1993, no one customer accounted for more than 10% of
the Company's consolidated operating revenues.
Competition
The Company's business is highly competitive. Chartering of helicopters is
usually done on the basis of competitive bidding among those having the
necessary equipment and resources. The technical requirements of operating
helicopters offshore have increased over the past several years as oil and gas
activities moved into deeper water and more sophisticated aircraft were required
to service the market. The number of small helicopter operators in the Gulf of
Mexico has declined over the past several years, as it has become increasingly
difficult to maintain an adequate shorebased infrastructure and provide the
working capital required to conduct such operations, especially when the
associated costs must be spread over a relatively small number of helicopters.
One of the Company's competitors has substantially more helicopters in service
in the Gulf of Mexico and there are at least four companies internationally that
operate more helicopters than the Company. Certain of the Company's competitors
have substantially greater resources than the Company.
Industry Hazards and Insurance
Hazards, such as adverse weather and marine conditions, crashes,
collisions, and fire are inherent in the offshore oil and gas industry and in
the related transportation and supply of such industry, and may result in losses
of equipment and revenues. On August 26, 1992, Hurricane Andrew struck the Gulf
Coast of Louisiana. There was no material loss to the Company's aircraft or
facilities as a result of the hurricane.
The Company maintains Hull and Liability Insurance which generally insures
the Company against certain legal liabilities to others, as well as damage to
the aircraft. It is also the Company's policy to carry insurance for, or
require its customers to provide indemnification against, expropriation, war
risk, and confiscation of its helicopters employed in international operations.
There is no assurance that in the future the Company will be able to maintain
its existing coverage or that the premiums therefrom will not increase
substantially.
Government Regulation
Domestic. As a commercial operator of small aircraft, the Company is
subject to regulations pursuant to the Federal Aviation Act of 1958, as amended,
and other statutes. The Company carries persons and property in its helicopters
pursuant to an Air Taxi or Commercial Operator of Small Aircraft Certificate
granted by the Civil Aeronautics Board ("CAB"). Unlike an air carrier, the
Company is not required to file with the CAB tariffs showing rates, fares, and
other charges.
The Federal Aviation Administration ("FAA") regulates the flight operations
of the Company, and in this respect, exercises jurisdiction over personnel,
aircraft, ground facilities, and certain technical aspects of the Company's
operations. 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 the use of
radio facilities in its operations.
Under the Federal Aviation Act, it is unlawful to operate certain aircraft
for hire within the United States unless such aircraft are registered with the
FAA and the operator of such aircraft has been issued an operating certificate
by the FAA. As a general rule, aircraft may be registered under the Federal
Aviation Act only if the aircraft is owned or controlled by one or more citizens
of the United States, and an operating certificate may be granted only to a
citizen of the United States. For the purposes of these requirements, a
corporation is deemed to be a citizen of the United States only if, among other
things, at least 75% of the voting interest therein is owned or controlled by
United States citizens. In the event that persons other than United States
citizens should come to own or control more than 25% of the voting interest in
the Company, the Company has been advised that the Company's aircraft may be
subject to deregistration under the Federal Aviation Act and loss of the
privilege of operating within the United
3
<PAGE>
States. At June 30, 1995, the Company had approximately 713,000 common shares
held by persons with foreign addresses representing approximately 3.7% of the
19,442,114 common shares outstanding.
The Company's operations are subject to federal, state, and local laws and
regulations controlling the discharge of materials into the environment or
otherwise relating to the protection of the environment. To date, such laws and
regulations have not had a material adverse effect on the Company's business or
financial condition. Increased public awareness and concern over the
environment, however, may result in future changes in the regulation of the oil
and gas industry, which in turn could adversely affect the Company.
International. The Company's international operations are subject to local
governmental regulations and to uncertainties of economic and political
conditions in those areas. Because of the impact of local laws, the Company's
international operations are conducted primarily through entities (including
joint ventures) in which local citizens own interests and the Company holds only
a minority interest, or pursuant to arrangements under which the Company
operates assets or conducts operations under contracts with local entities.
There can be no assurance that there will not be changes in local laws,
regulations or administrative requirements, or the interpretation thereof, any
of which could have a material adverse effect on the business or financial
condition of the Company or on its ability to continue operations in certain
regions.
PRODUCTION MANAGEMENT SERVICES
Beginning in 1993, through Seahawk and, subsequent thereto, through a 27.5%
equity ownership interest in Grasso Corporation and its wholly-owned subsidiary,
GPM, the Company began providing oil and gas production management services. On
September 16, 1994, GPM became a wholly-owned subsidiary of the Company through
the merger of Grasso Corporation into the Company.
GPM is the leading independent operator of oil and gas production
facilities in the Gulf of Mexico. In addition, GPM also provides services for
certain onshore facilities. In providing these services, GPM operates oil and
gas production facilities for major and smaller independent oil and gas
companies. Typical project assignments may involve full or limited management
of operations of oil and gas production facilities located offshore,
particularly in the Gulf of Mexico. The work involves placing experienced
crews, employed by GPM, to operate the facilities and providing all necessary
services and products for the offshore operations. When servicing offshore oil
and gas production facilities, GPM's employees normally live on the facility for
a seven day rotation. GPM's services include furnishing personnel, production
operating services, paramedic services and the provision of boat and helicopter
transportation of personnel and supplies between onshore bases and offshore
facilities. GPM also handles regulatory and production reporting, joint
interest accounting and royalty and working interest revenue disbursement
services for certain of its customers.
Domestic Operations
GPM's domestic production management services are conducted primarily from
production facilities in the Gulf of Mexico. As of June 30, 1995, GPM managed
or had personnel assigned to 195 production facilities in the Gulf of Mexico.
Although GPM's business is primarily dependent upon activity levels in the
offshore oil and gas industry, 90% of GPM's production management costs
consist of labor and contracted transportation services. This enables GPM to
scale down operations rapidly should the market conditions change. Because of
this ability to react to market conditions, management believes the production
management segment of the oil service industry is less affected by downturns in
offshore oil and gas activities.
International Operations
To date, GPM's international activities have been limited primarily to
consulting and paramedic assignments. As of June 30, 1995, the Company's
production management division had a total of three personnel providing
services in Singapore, Chad, and Russia.
4
<PAGE>
Customers
GPM's customers are primarily major and small independent oil and gas
companies that own oil and gas production facilities in the Gulf of Mexico.
These companies are increasingly inclined to outsource services provided by
companies such as GPM which are able to operate more efficiently and with a
lower cost structure. This allows the customer to focus their efforts on their
core activities, which is the exploration and production of oil and gas. During
1995, no single GPM customer accounted for more than 10% of the Company's
consolidated operating revenues.
Competition
GPM's business is highly competitive. There are five to six direct
competitors that are substantially smaller than GPM but maintain a Gulf wide
presence. In addition, there are many smaller operators that compete on a local
basis or for single projects or jobs. Management of the Company anticipates
that the market for oil and gas production management operations will continue
to increase over the next few years as oil and gas producing companies continue
to reduce the size of field personnel and further utilize outside contractors as
efforts to reduce their operating costs continue. Typically, GPM will be
requested to bid on one or more production facilities owned by an oil and gas
producer. The two key elements in the pricing of the bid are personnel and
transportation costs. In addition to price, an additional consideration is the
competence and stability of the operator since this can greatly affect the
revenue flow to the producer and reduce the risk of possible damage to the
production facility. There are no assurances that an increase in the market for
production management will occur.
Industry Hazards and Insurance
GPM's operations are subject to the normal risks associated of working on
an oil and gas production facility. These risks could result in damage to or
loss of property and injury to or death of personnel. GPM carries normal
business insurance including general liability, worker's compensation,
automobile liability and property and casualty insurance coverages. Management
believes GPM is adequately protected from most business risks normally subject
to insurance.
Government Regulation
The Mineral Management Service ("MMS") regulates the production operations
of GPM, and in this respect, exercises jurisdiction over personnel, production
facilities, and certain technical aspects of GPM's operations.
GPM's operations are subject to federal, state, and local laws and
regulations controlling the discharge of materials into the environment or
otherwise relating to the protection of the environment. To date, such laws and
regulations have not had a material adverse effect on GPM's business or
financial condition. Increased public awareness and concern over the
environment, however, may result in future changes in the regulation of the oil
and gas industry, which in turn could adversely affect the Company.
CATHODIC PROTECTION SERVICES
Cathodic Protection Services Company was established in 1946 in Houston,
Texas, as the first commercial engineering firm in the United States solely
devoted to corrosion control by cathodic protection. CPS specializes in
providing cathodic protection systems and services for the purpose of arresting
corrosion in steel structures such as pipelines, oil and gas well casings,
offshore facilities, hydrocarbon processing plants, water tanks, oil and gas
storage tanks, and other metal structures. CPS revenues have traditionally been
derived from three major activities: the construction and installation of
cathodic protection systems; the sale of materials for cathodic protection
systems; and the engineering, evaluation, and other ancillary services provided
for cathodic protection systems. The majority of CPS's revenues are derived
from single project contracts and material orders; however, CPS is a party to
certain maintenance contracts varying in duration from one to five years and
certain "blanket" material contracts that are normally agreed to for one year at
a time.
5
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In May 1995, CPS formed an 80% owned subsidiary, CPS Technologies, for the
purpose of pursuing various opportunities relating to the remote monitoring of
cathodic protection systems by means of low orbital satellite, cellular
telephones or other communication media. Management views this subsidiary as a
development stage business and, although optimistic as to opportunities, has no
assurances as to its ultimate profitability.
CPS provides materials and services to the cathodic protection market in
the domestic United States through eleven district office locations as follows:
Billings, Montana; Carson, California; Denver, Colorado; Farmington, New Mexico;
Houston, Texas; Liberal, Kansas; Lombard, Illinois; Metairie, Louisiana;
Midland, Texas; Sand Springs (Tulsa), Oklahoma; and Springfield, New Jersey. The
Springfield, New Jersey office, in addition to providing normal customer
services, specializes in servicing the water tank needs of municipalities
throughout the U.S. The Company also has a manufacturing facility in Sand
Springs, Oklahoma that assembles various types of cathodic protection anodes and
a corporate office in Houston, Texas. CPS is the major customer, under a tolling
agreement, with an aluminum anode foundry located in McAllen, Texas.
Competition
CPS is the second largest provider of cathodic protection services and
materials in the United States. The largest provider of cathodic protection
services is the primary competitor of CPS on a nationwide basis. CPS also
competes with numerous regional and local cathodic protection companies with
respect to engineering, construction and installation, and related services.
Many of the regional and local competitors are not able to provide cathodic
protection materials to customers without purchasing them from CPS or other
manufacturers/suppliers.
Suppliers
Certain of the cathodic protection materials provided by CPS, for example,
magnesium anodes and aluminum anodes, depend largely on the supply of the
associated base metals. For metals such as magnesium and aluminum there are a
limited number of suppliers and, at times, shortages of supply. These factors
also cause price volatility for these metals. CPS has developed and maintained
relationships with all potential suppliers and protects itself from price risks
by passing this risk to customers on virtually all contracts and contract bids.
Although shortages of supply can have an impact on the revenues of CPS by
delaying sales of materials of this type, it is management's belief that CPS is
not placed at a competitive disadvantage in its markets as a result of shortages
since all suppliers of cathodic protection materials face the same shortages at
the same time.
Industry Hazards and Insurance
The construction and installation of cathodic protection systems and the
providing of materials for such systems are subject to seasonality based upon
weather conditions. This seasonality can be slightly offset by the providing of
engineering services which are not as dependent upon weather conditions. Since
the energy industry, including pipelines, refineries and tank farms, is the
primary user of cathodic protection systems, the business of CPS is also subject
to cyclical downturns caused by oil and gas prices, regulations, and other
factors affecting the energy industry. The impact of these factors is slightly
offset by sales to other industries such as the marine industry and state and
local governments.
CPS carries normal business insurance including worker's compensation,
general liability, automobile liability, and property coverage. CPS does not
carry professional liability insurance since, in the opinion of management and
consistent with traditional industry practices, the engineering services
provided by CPS do not involve detail design work. In the belief of
management, CPS is adequately protected from most business risks normally
protected by insurance.
Government Regulation
CPS believes that its historical and current operations including its use
of property, plant, and equipment, conform in all material respects with all
applicable laws and regulations. Periodically, the Company is subject to
various inspections or reviews by regulatory agencies; however, the Company has
not experienced nor does it anticipate, any material claim in connection with
environmental, safety, or other regulations.
6
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The business of CPS can be directly impacted by the issuance of government
regulations. The recent trends toward increased federal, state, and local
involvement in environmental and safety matters should result in an increased
emphasis on cathodic protection systems. Many CPS customers must comply with
regulations issued by the United States Environmental Protection Agency, the
United States Department of Transportation - Office of Pipeline Safety, and
other such federal, state, and local agencies. CPS continually monitors the
pronouncements of these agencies, and, in the opinion of management, believes
that such regulations will have a positive impact rather than a negative impact
on the Company's business.
GENERAL
Employees
As of June 30, 1995 and 1994, the Company employed 1,347 and 619 persons,
respectively, who are or were involved in the following operations:
<TABLE>
<CAPTION>
1995 1994
----- ----
<S> <C> <C>
Helicopter Services --Domestic 552 567
--International 22 29
Production Management Services 544 0
Cathodic Protection Services 205 0
Executive and Administrative 24 23
-----------
1,347 619
===========
</TABLE>
The Company's employees are not represented by unions. In 1983, the
Company was petitioned by the Oil, Chemical, and Atomic Workers Union ("OCAW")
for representation of the Company's helicopter pilots. The OCAW effort was
defeated by election results in February 1984.
In 1975, the Company was petitioned by the Teamsters Union for an election.
However, the Union decided not to seek an election after several months of union
solicitation. Union campaigns at a major helicopter competitor in 1970, 1974,
and 1980 also failed. If the Company's helicopter pilots were to elect to be
represented by a union, the Company would, it believes, be the only unionized
company in the domestic helicopter service industry. The Company believes that,
in light of current market conditions, being a unionized company in a non-union
industry could place the Company at a competitive disadvantage in the industry.
This could have a material adverse effect on its revenues from helicopter
operations in the Gulf of Mexico and on its results of operations.
ITEM 2. Properties
See Business--Helicopter Services for a discussion of the number and types
of aircraft operated by the Company.
The Company leases approximately 11 acres of land in the vicinity of Morgan
City, Louisiana, under a lease expiring in 2000, with a renewal option for an
additional ten year period. The Company has constructed a heliport, hangar, and
office facility on the site. The Company is subleasing approximately 50% of the
land to Gulf Offshore Marine, a subsidiary of GulfMark International, Inc., who
acquired the Company's Marine Division.
The Company leases approximately 8 1/3 acres of land at the Acadiana
Regional Airport in New Iberia, Louisiana, under a lease expiring in fiscal year
ending 2030. The Company has constructed office and helicopter maintenance
facilities on the site containing approximately 44,000 square feet of floor
space. The property has access to the airport facilities, as well as a major
highway.
The Company's Corporate offices occupy 8,300 square feet in a building in
Lafayette, Louisiana, under a lease expiring in 1998. Other office and
operating facilities in the United States and abroad, including most of the
operating facilities along the Gulf of Mexico, are held under leases, the rental
obligations under which are not material in the aggregate.
7
<PAGE>
Some of the property owned by the Company and used in domestic operations
are subject to security interests in favor of the Company's creditors (see Note
B in "Notes to Consolidated Financial Statements").
GPM's Corporate offices occupy 24,000 square feet in a building in Houston,
Texas, under a lease expiring in December 1998. Other office and operating
facilities along the Gulf of Mexico are held under leases, the rental
obligations under which are not material in the aggregate.
CPS's Corporate offices occupy 16,000 square feet in a building in
Houston, Texas, under a lease expiring in December 1999. Other office and
operating facilities throughout the United States and abroad are held under
leases, the rental obligations under which are not material in the aggregate.
ITEM 3. Legal Proceedings
In January 1989, the Company received notice from the United States
Environmental Protection Agency ("EPA") that it is a potentially responsible
party ("PRP") for clean up and other response costs at the Sheridan Disposal
Services Superfund Site in Waller County, Texas. The Company is among
approximately 160 PRPs identified with respect to the site. The EPA has
estimated that the cost of remedial activities at the site will be approximately
$30 million. In August 1989, the Company received a similar notice with respect
to the D.L. Mud Services Site and the Gulf Coast Vacuum Services Site, both of
which are near Abbeville, Louisiana. The Company is among over 300 PRPs
identified with respect to each site. The EPA alleged that the Company is a
generator or transporter of hazardous substances found at the three sites. In
February 1991, the Company received a request for information from the EPA
relating to the Western Sand and Gravel Superfund Site in Rhode Island, as to
which the Company had been named a PRP after an earlier request for information
from the EPA issued in 1983 - 1984.
Based on presently available information, the Company believes that it
generated only a small portion, if any, of the substances found at the above
described sites. In addition, many of the other PRPs at all of the
aforementioned sites are large companies with substantial resources. As a
result, the Company believes 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.
In addition to notification of PRP responsibility, the EPA notices to the
Company also contained information requests regarding the Company's connection
with the various sites. The responses to the information requests were due in
early March 1989 for the Sheridan site and in early September 1989 for the two
Louisiana sites. Through oversight, the Company did not respond to the requests
until April and May 1990. The EPA is authorized to seek civil penalties for
failure to respond to its information requests in a timely manner in an amount
up to a maximum of $25,000 per day for each day of continued non-compliance;
however, to date, no such penalties have been sought. While it is not possible
to predict whether any civil penalties might be assessed against the Company for
the delays in responding to the EPA requests, the Company believes the amount of
such penalties, if any, will not have a material adverse effect on its business
or financial condition.
The Company is not a party to any other litigation which, in the opinion of
management, will have a material adverse effect on the Company's business or
financial condition.
ITEM 4. Submission of Matters to a Vote of Security Holders
No voting matters were submitted to security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the current
fiscal year.
Executive Officers of the Registrant
All executive officers hereunder are, in accordance with the By-laws,
elected annually and hold office until a successor has been duly elected and
qualified. There are no family relationships among any of the Company's
executive officers. The executive officers of the Company as of September 27,
1995, are as follows:
8
<PAGE>
<TABLE>
<CAPTION>
Name Age Position Held with Registrant
---- --- -----------------------------
<S> <C> <C>
James B. Clement 50 Chairman, President, Chief Executive Officer,
and Director
George M. Small 50 Vice President, Chief Financial Officer,
Treasurer, Secretary, and Director
Ralph B. Murphy 67 Vice President -- Corporate Sales
Gene Graves 46 Vice President -- Domestic Aviation
Hans J. Albert 53 Vice President -- International Aviation
Drury A. Milke 37 Vice President -- Business Development
Patricia M. Como 34 Controller and Assistant Secretary
E. H. Underwood III 38 General Counsel
</TABLE>
Mr. Clement joined the Company in 1976 as Controller and served in various
financial capacities until 1981 when he was appointed the General Manager --
Marine Division. Mr. Clement was elected President and Chief Operating Officer
of the Company in May 1986, Chief Executive Officer in November 1987 and
Chairman of the Board of Directors in June 1995.
Mr. Small joined the Company in 1977 as Controller and was elected Vice
President -- Treasurer in 1979, and Chief Financial Officer and Secretary in
1986. He is a CPA.
Mr. Murphy joined the Company in 1984 as Vice President -- Corporate Sales.
He received a Bachelor of Science degree from Rice University in 1950. He has
forty-five years of experience in the oil service industry.
Mr. Graves joined the Company in 1993 as Vice President -- Aviation
Marketing and was appointed Vice President -- Domestic Aviation in 1994. Prior
to joining the Company, Mr. Graves had 26 years experience in the commercial
helicopter service business in the Gulf of Mexico as Vice President -- Marketing
and several operating positions.
Mr. Albert joined the Company in 1972 as a pilot and served in several
operating capacities before being appointed Director of International Aviation
Operations in 1980. He was elected Vice President in 1987. Mr. Albert has thirty
years of experience in the aviation industry.
Mr. Milke joined the Company in 1988 as Director of Planning and
Development and was elected Vice President in 1990. Prior to joining the
Company, Mr. Milke was a Manager with Arthur Andersen LLP.
Mrs. Como joined the Company in 1990 as Controller. Prior to joining the
Company, Mrs. Como was a Manager with Arthur Andersen LLP. She is a CPA.
Mr. Underwood joined the Company in 1995 as General Counsel. He received a
Juris Doctorate from Loyola University in 1987 and has a degree in risk
management from the University of Georgia. Prior to joining the Company, Mr.
Underwood was General Counsel for another oilfield service company.
9
<PAGE>
PART II
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Common Stock of the Company is traded in the over-the-counter market
and is reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") under the symbol "OLOG". The Company's Common Stock
has been quoted on the NASDAQ National Market System since 1984. Prices listed
below represent actual closing prices.
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal year ended June 30, 1995
First Quarter.................... 15 1/8 11 5/8
Second Quarter................... 14 11 3/4
Third Quarter.................... 14 1/8 12 1/4
Fourth Quarter................... 15 1/8 12 7/8
Fiscal year ended June 30, 1994
First Quarter.................... 17 1/4 12 3/8
Second Quarter................... 19 1/4 12
Third Quarter.................... 16 1/8 13 1/4
Fourth Quarter................... 14 3/4 12 15/16
</TABLE>
The approximate number of holders of record of Common Stock as of August
31, 1995 was 1,500.
The Company has not paid dividends on its Common Stock since January 1984.
Certain of the Company's financing agreements contain limitations on the payment
of dividends. See Note B in "Notes to Consolidated Financial Statements".
ITEM 6. Selected Financial Data
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------------
1995(3) 1994 1993 1992 1991
-------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
(in thousands, except per share data)
Operating revenues.......................... $143,645 $ 91,666 $ 80,201 $ 81,872 $ 95,208
=================================================
Income from continuing operations........... $ 18,450 $ 17,247 $ 16,043 $ 17,549 $ 17,001
=================================================
Net income(1)(2)............................ $ 18,450 $ 17,247 $ 17,055 $ 17,549 $ 22,523
=================================================
Earnings per common equivalent share:
Income from continuing operations......... $ 0.96 $ 0.96 $ 0.90 $ 1.00 $ 0.97
=================================================
Net income(1)(2).......................... $ 0.96 $ 0.96 $ 0.96 $ 1.00 $ 1.28
=================================================
Total assets................................ $229,351 $174,245 $164,231 $144,945 $138,469
=================================================
Long-term obligations:
Long-term debt............................ $ 5,600 $ 2,000 $ 9,322 $ 10,056 $ 16,910
Capitalized leases........................ -- -- -- -- 2,140
-------------------------------------------------
$ 5,600 $ 2,000 $ 9,322 $ 10,056 $ 19,050
=================================================
Cash dividends declared per common share.... $ -- $ -- $ -- $ -- $ --
=================================================
</TABLE>
(1) Includes an extraordinary gain of $1,012,000 in 1993. There were no
extraordinary items in 1995, 1994, 1992, or 1991.
(2) Includes income from discontinued operations of $5,522,000 in 1991. There
were no discontinued operations in 1995, 1994, 1993, or 1992. The
discontinued operations relate to the Company's Marine Division which was
sold during the year ended June 30, 1991.
10
<PAGE>
(3) Includes financial data for GPM and CPS after effective dates of their
consolidation (See Note E in Notes to Consolidated Financial Statements).
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Demand for the Company's services has traditionally been influenced by the
level of worldwide offshore oil and gas production and drilling activity. During
the 1970's and early 1980's, the helicopter and marine services provided by the
Company expanded rapidly in response to the growth of the oil and gas industry.
The decline in oil and gas prices that began in 1982 and the resulting decline
in drilling activity led to excess capacity and increased competition in the
offshore oil service industry. In response to these adverse conditions,
management took several steps, including restructuring substantially all of its
long-term obligations, discontinuing its domestic marine services, and adopting
cost reduction measures. Beginning in 1987, the market for helicopter services
began to improve, and accordingly, the Company commenced an expansion of its
helicopter fleet. At that time, the focus of the Company's operations shifted
from predominately marine services to helicopter services. As the Company's
helicopter services expanded, the Company's Marine Division became a smaller
segment of the Company's total business and during the year ended June 30, 1991,
the Company made the decision to dispose of the Marine Division.
During 1992, the Company was engaged exclusively in aviation services and
related operations. During 1993, the Company expanded its operations to include
production management services through an acquisition of a 50% interest in
Seahawk Services Ltd. ("Seahawk"), which acquired all of the business of PPI-
Seahawk Services, Inc. Seahawk provided platform and production management
services, offshore medical support services, and temporary personnel to the oil
and gas industry.
During 1994, the Company exchanged its 50% interest in Seahawk for a 27.5%
interest in Grasso Corporation whose wholly-owned subsidiary, Grasso Production
Management, Inc. ("GPM"), also was engaged in the production management services
business. On September 16, 1994, GPM became a wholly-owned subsidiary of the
Company in a merger in which the Company acquired the remaining 72.5% interest
in Grasso Corporation by issuing .49 of a share of the Company's Common Stock
for each share of Grasso Corporation Common Stock owned. See Note E in "Notes
to Consolidated Financial Statements."
In determining to acquire 100% of GPM, the Company's management was
influenced by its belief that a restructuring in the United States oil and gas
industry is taking place, resulting in part from the instability of oil prices
over the last several years. As part of this restructuring, major oil companies
have been reducing the size of their field organizations and concentrating more
on foreign exploration and production. Management believes that this
restructuring is creating opportunities, first, for smaller, independent oil
companies as the major oil companies have been selling properties in the Gulf of
Mexico, and, second, for companies providing production management services to
smaller, independent oil companies, which frequently lack the personnel to
operate these properties. Although there can be no assurances, the Company's
management believes that, through its acquisition of GPM, the Company will have
the opportunity to take advantage of any increase in the market for oil and gas
production management services that may occur over the next few years.
Management also believes that the addition of the production management services
business may permit the Company, by providing helicopter services through the
production management services business to smaller, independent companies, to
enhance its market share for its helicopter transportation services in the very
competitive and rapidly changing Gulf of Mexico environment.
Cathodic Protection Services Company ("CPS") manufactures, installs, and
maintains cathodic protection systems to arrest corrosion in oil and gas
drilling and production facilities, pipelines, and other metal structures. In
October 1994, the Company acquired 75% of CPS. The minority interest owner may
increase their ownership at the end of five years if certain financial goals are
met. At that time, the Company has the election to retain a majority ownership
in CPS.
11
<PAGE>
Results of Operations
Operating results and other income statement information for the three
years ended June 30, 1995 follows (in thousands of dollars):
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Operating revenues..................... $143,645 $91,666 $80,201
Gain on disposal of equipment.......... 586 3,018 1,675
-------------------------------
144,231 94,684 81,876
-------------------------------
Direct cost............................ 104,588 59,617 50,610
Depreciation and amortization.......... 9,670 7,519 6,542
General and administrative............. 10,696 6,576 5,461
-------------------------------
124,954 73,712 62,613
-------------------------------
Operating income....................... 19,277 20,972 19,263
Earnings from unconsolidated entities.. 4,050 2,020 2,247
Interest income (expense), net......... 2,069 633 (58)
-------------------------------
Income before provision for income
taxes and extraordinary item.......... 25,396 23,625 21,452
Provision for income taxes............. 7,361 6,378 5,409
Minority interest...................... 415 -- --
Extraordinary item..................... -- -- 1,012
-------------------------------
Net income............................. $ 18,450 $17,247 $17,055
===============================
</TABLE>
Helicopter Services
Demand for the Company's helicopter services increased until the latter
part of fiscal 1991. At that time, construction activity and the rig count in
the Gulf of Mexico declined to its lowest level in four years and remained at
low levels throughout 1992 causing a reduction in domestic flight hours.
Management implemented stringent cost controls over its domestic operations and
increased international activities to combat the negative effect of reduced
flight hours. The Gulf of Mexico rig count improved during fiscal 1993 leading
to increased flight activity by the end of fiscal 1993 and during 1994 and 1995.
Operating revenues for helicopter services were $89.5 million, $91.7
million, and $80.2 million for 1995, 1994, and 1993, respectively. The decrease
in operating revenues of approximately 2% from 1994 to 1995 is primarily due to
a decrease in International and Alaskan operations. Gulf of Mexico helicopter
activity has remained relatively unchanged from 1994 to 1995. The increase in
operating revenues of approximately 14% from 1993 to 1994 is primarily due to
the increased market share of the Company in the Gulf of Mexico and from Heli-
Lift, Inc., the Company's Alaskan helicopter subsidiary acquired during 1993.
Operating revenues from Heli-Lift were $8.4 million, $9.6 million, and $4.5
million for 1995, 1994, and 1993, respectively (1993 includes only six months of
operations).
Operating expenses for helicopter services were $66.7 million, $70.1
million, and $59.2 million for 1995, 1994, and 1993, respectively. The decrease
in operating expenses of approximately 5% from 1994 to 1995 is due to a decrease
in International and Alaskan operations, as well as continued cost controls over
Gulf of Mexico operations. The increase in operating expenses of approximately
16% from 1993 to 1994 is primarily due to the increased market share of the
Company in the Gulf of Mexico and from Heli-Lift, Inc., as well as increases in
the price of helicopter parts. Operating expenses from Heli-Lift were $6.1
million, $6.6 million, and $3.1 million for 1995, 1994, and 1993, respectively.
Gross margin percentages for helicopter services, excluding gain on
disposal of equipment, were 25%, 24%, and 26% for 1995, 1994, and 1993,
respectively. The increase in gross margin percentages from 1994 to 1995 is due
to the improved cost controls in the Gulf of Mexico operations. The decrease
12
<PAGE>
in gross margin percentages from 1993 to 1994 was due to the inability of the
Company to increase helicopter rates in the Gulf of Mexico market since 1990
despite the increase in the price of helicopter parts and other costs during
that period.
The Company's helicopter services are conducted principally in the Gulf of
Mexico, where the Company provides helicopter services to support the production
and exploration activities of oil and gas companies. The Company also charters
helicopters to offshore construction companies and governmental entities
involved in offshore oil and gas operations in the Gulf of Mexico. The Company
has service agreements with, and equity interests in, entities that operate
aircraft in Egypt and Mexico ("unconsolidated entities"). The Company also
operated in various other international areas (including Bolivia, Brazil,
Colombia, El Salvador, Kuwait, Taiwan, Mexico, Papua New Guinea, and Trinidad
and Tobago). The Company's international operations are subject to local
governmental regulations and to uncertainties of economic and political
conditions in those areas. The following table sets forth certain information
regarding aircraft operated by the Company and unconsolidated entities.
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
-----------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Number of aircraft operated by the Company:
Domestic.................................. 150 148 137
International............................. 11 14 20
------------------------------
Total................................... 161 162 157
==============================
Total flight hours (Company operated
aircraft).................................. 112,000 115,539 99,966
Number of aircraft operated by
unconsolidated entities.................... 27 29 28
</TABLE>
During 1994, the Company's helicopter joint venture in Brazil was
terminated. Costs associated with this termination of approximately $2.7 million
were charged against previously established accruals. The three helicopters
involved were redeployed into the Company's other operations. The termination
of the venture did not have a material effect on the Company's operations.
Production Management Services
Operating revenues from GPM were approximately $32.8 million for the period
from consolidation through June 30, 1995. Approximately 70% of GPM's revenues
are from production management. The other 30% of revenues are from contract
personnel and medic systems.
Operating expenses for GPM were $32.6 million for 1995. Gross margin
percentages for production management was approximately 6% and gross margin
percentages for contract personnel and medic systems was approximately 20%.
Overall, GPM operations were breakeven for 1995 with operating income of
approximately $0.2 million.
Cathodic Protection Services
Operating revenues and operating expenses from CPS were approximately $25.3
million and $26.6 million, respectively, for the period from consolidation
through June 30, 1995. CPS generated a $1.3 million operating loss for 1995.
Certain overhead costs were higher than anticipated and attempts to expand the
business internationally resulted in higher than anticipated operating costs.
Management has taken measures to reduce overhead costs and its international
operations. Although there can be no assurance of improved results, management
believes that these measures will have a positive impact on CPS's operations
during fiscal 1996.
Consolidated
Net income for 1995 was $18.5 million, compared to net income of $17.2
million and $17.1 million for 1994 and 1993, respectively after gains from
restructuring debt of $1.0 million for 1993 (see Note B in "Notes to
Consolidated Financial Statements").
13
<PAGE>
Liquidity and Capital Resources
Cash and cash equivalents (including marketable securities) were $68.0
million as of June 30, 1995, a $20.8 million increase from 1994. Long-term debt
was $5.6 million as of June 30, 1995, all related to CPS and non-recourse to the
Company.
Cash flows provided by operating activities were $30.8 million, $18.2
million, and $19.4 million in 1995, 1994, and 1993, respectively. The increase
in cash flows from operating activities in 1995 compared to the prior years is
primarily due to the change in the Company's net working capital.
Cash flows used in investing activities were $8.4 million, $9.5 million,
and $23.9 million for 1995, 1994, and 1993, respectively. During 1995, the
Company utilized $8.2 million for the acquisitions of GPM and CPS, net of cash
on hand for the two subsidiaries. Capital expenditures during 1995 of $3.2
million included the purchase of one new Bell 206L-IV and two used MBB Boelkow
105's previously under a lease arrangement.
Capital expenditures during 1994 of $11.5 million included the purchase of
six new helicopters, five Bell 206L-IV's and one Bell 214ST, and one used
Sikorsky S-76. Proceeds from asset dispositions during 1994 of $3.5 million was
primarily from the sale of two Bell 212's.
The Company implemented a new cash management policy in 1993 whereby $19.8
million was invested in U.S. Treasury Notes with maturities less than three
years. Capital expenditures during 1993 totalled $4.3 million and related
primarily to seven helicopters purchased from Hemisco Helicopters International,
Inc.
Cash flows used in financing activities were $1.7 million, $8.7 million,
and $9.1 million in 1995, 1994, and 1993, respectively. During 1995, repayment
of debt was $4.2 million and the Company received $2.5 million from common stock
issued, primarily from the exercise of warrants for 200,000 shares of common
stock. Financing activities during 1994 and 1993 were primarily for the
repayment of debt.
During February 1993, the Company made a cash payment of $1.6 million to
the Maritime Administration ("MARAD") to repay all of its outstanding debt to
MARAD. The Company realized an extraordinary net gain from the early retirement
of debt of approximately $ 1.0 million, after the income tax effect of the
transaction.
During 1995, the Company executed a $10 million unsecured working capital
line of credit with a bank that expires on January 31, 1996. 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%, 27%,
and 25% for 1995, 1994, and 1993, respectively. The variance between the
Federal statutory rate and the effective rate for these periods is due primarily
to the utilization of foreign net operating losses, the utilization of
investment tax credits available to offset deferred taxes for financial
reporting purposes, and foreign tax credits available to reduce domestic taxable
income.
The Company has received notices from the EPA that it is one of
approximately 160 PRPs at one Superfund site in Texas and one of over 300 PRPs
at two sites in Louisiana, and a PRP at one 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. See Item 3 -- Legal Proceedings for additional information regarding
EPA notices.
In March 1995, the Statement of Financial Accounting Standard No. 121 --
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" was issued and required to be adopted by the Company no later
than the fiscal year ended June 30, 1997. Management believes that such
adoption will not have a material effect on the Company's financial statements
taken as a whole.
14
<PAGE>
ITEM 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Offshore Logistics, Inc.:
We have audited the accompanying consolidated balance sheets of Offshore
Logistics, Inc. (a Delaware corporation) and subsidiaries as of June 30, 1995
and 1994, and the related consolidated statements of income, stockholders'
investment, and cash flows for each of the three years in the period ended June
30, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements 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 financial statements referred to above present fairly,
in all material respects, the financial position of Offshore Logistics, Inc. and
subsidiaries as of June 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1995 in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
August 14, 1995
15
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1995 and 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
---- ----
(thousands of dollars)
<S> <C> <C>
Current Assets
Cash and cash equivalents.................. $ 47,973 $ 27,225
Investment in marketable securities........ 19,978 19,950
Accounts receivable........................ 29,756 17,681
Inventories................................ 26,710 21,907
Prepaid expenses........................... 524 500
-------- --------
Total Current Assets..................... 124,941 87,263
Investments in Unconsolidated Entities....... 8,829 12,917
Property and Equipment -- at cost
Land and buildings......................... 2,868 2,772
Aircraft and equipment..................... 125,393 122,759
-------- --------
128,261 125,531
Less -- Accumulated depreciation and
amortization.............................. (58,558) (51,614)
-------- --------
69,703 73,917
Other assets, primarily goodwill............. 25,878 148
-------- --------
$229,351 $174,245
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities
Accounts payable........................... $ 4,647 $ 1,957
Accrued liabilities........................ 11,633 5,210
Current maturities of long-term debt....... 2,000 3,031
-------- --------
Total Current Liabilities................ 18,280 10,198
Long-term debt, less current maturities...... 5,600 2,000
Deferred Credits............................. 2,500 2,500
Deferred Taxes............................... 18,030 17,980
Minority Interest............................ 1,090 --
Commitments.................................. -- --
Stockholders' Investment
Common stock, $.01 par value, authorized
35,000,000 shares; outstanding 19,442,114
in 1995 and 17,602,379 in 1994 (exclusive
of 517,550 treasury shares)............... 194 176
Additional paid in capital................. 95,379 71,563
Retained earnings.......................... 88,278 69,828
-------- --------
183,851 141,567
-------- --------
$229,351 $174,245
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
16
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------
1995 1994 1993
---- ---- ----
(thousands of dollars,
except per share amounts)
<S> <C> <C> <C>
Gross Revenue:
Operating revenue........................ $143,645 $91,666 $80,201
Gain on disposal of equipment............ 586 3,018 1,675
-------- ------- -------
144,231 94,684 81,876
-------- ------- -------
Operating Expenses:
Direct cost.............................. 104,588 59,617 50,610
Depreciation and amortization............ 9,670 7,519 6,542
General and administrative............... 10,696 6,576 5,461
-------- ------- -------
124,954 73,712 62,613
-------- ------- -------
Operating Income........................... 19,277 20,972 19,263
Earnings from unconsolidated entities...... 4,050 2,020 2,247
Interest income............................ 2,961 1,771 1,443
Interest expense........................... 892 1,138 1,501
-------- ------- -------
Income Before Provision for Income Taxes
and Extraordinary Item................... 25,396 23,625 21,452
Provision for income taxes................. 7,361 6,378 5,409
(Income) loss of minority interest......... 415 -- --
-------- ------- -------
Income Before Extraordinary Item........... 18,450 17,247 16,043
Extraordinary Item -- Gain on Debt
Retirement, Net of Income Taxes........... -- -- 1,012
-------- ------- -------
Net Income................................. $ 18,450 $17,247 $17,055
======== ======= =======
Earnings per common share and common
equivalent share
Income before extraordinary item......... $ 0.96 $ 0.96 $ 0.90
Extraordinary item....................... -- -- 0.06
-------- ------- -------
Net income............................... $ 0.96 $ 0.96 $ 0.96
======== ======= =======
Dividends per common share................. $ -- $ -- $ --
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
17
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
Common Stock Additional Total
------------ Paid-In Retained Stockholders'
Shares Amount Capital Earnings Investment
------ ------ ------- -------- ----------
<S> <C> <C> <C> <C> <C>
(thousands of dollars)
BALANCE -- June 30, 1992........ 17,484,806 $175 $70,814 $35,526 $106,515
Net income.................... -- -- -- 17,055 17,055
Stock options................. 67,573 1 348 -- 349
---------- ---- ------- ------- --------
BALANCE -- June 30, 1993........ 17,552,379 176 71,162 52,581 123,919
Net income.................... -- -- -- 17,247 17,247
Stock options................. 50,000 -- 401 -- 401
---------- ---- ------- ------- --------
BALANCE -- June 30, 1994........ 17,602,379 176 71,563 69,828 141,567
Net income.................... -- -- -- 18,450 18,450
Stock options................. 83,031 1 414 -- 415
Warrants exercised............ 200,000 2 1,635 -- 1,637
Stock issued for GPM.......... 1,498,906 15 21,114 -- 21,129
GPM warrants exercised........ 44,466 -- 480 -- 480
Restricted stock issued....... 13,332 -- 173 -- 173
---------- ---- ------- ------- --------
BALANCE -- June 30, 1995........ 19,442,114 $194 $95,379 $88,278 $183,851
========== ==== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------
1995 1994 1993
---- ---- ----
(thousands of dollars)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................................................... $18,450 $ 17,247 $ 17,055
Adjustments to reconcile net income to net cash provided by
operating activities:
Extraordinary item................................................. -- -- (1,012)
Depreciation and amortization...................................... 9,670 7,519 6,542
Increase in deferred taxes......................................... 1,121 4,915 4,703
Gain on asset dispositions......................................... (586) (3,018) (1,675)
Equity in earnings from unconsolidated entities (over) under
dividends received................................................ (41) (13) 253
Minority interest in earnings...................................... (415) -- --
Change in assets and liabilities net of effects from acquisitions:
(Increase) Decrease in accounts receivable......................... 897 (2,662) (1,134)
Increase in inventories............................................ (1,145) (2,654) (535)
Decrease in prepaid expenses and other............................. 299 326 51
Increase in accounts payable....................................... 1,288 14 262
Increase (Decrease) in accrued liabilities......................... 1,309 (3,939) (4,623)
Increase (Decrease) in deferred credits............................ -- 473 (473)
------- -------- --------
Net cash provided by operating activities............................ 30,847 18,208 19,414
------- -------- --------
Cash flows from investing activities:
Capital expenditures............................................... (3,208) (11,510) (4,291)
Proceeds from asset dispositions................................... 3,046 3,524 2,225
Investment in marketable securities................................ -- (15,933) (19,761)
Proceeds from sale of marketable securities........................ -- 15,744 --
Additional advances to GPM......................................... -- (1,292) --
Acquisitions, net of cash received................................. (8,234) -- (2,042)
------- -------- --------
Net cash used in investing activities................................ (8,396) (9,467) (23,869)
------- -------- --------
Cash flows from financing activities:
Repayment of debt.................................................. (4,235) (9,097) (9,426)
Issuance of common stock........................................... 2,532 401 349
------- -------- --------
Net cash used in financing activities................................ (1,703) (8,696) (9,077)
------- -------- --------
Net increase (decrease) in cash and cash equivalents................. 20,748 45 (13,532)
Cash and cash equivalents at beginning of year....................... 27,225 27,180 40,712
------- -------- --------
Cash and cash equivalents at end of year............................. $47,973 $ 27,225 $ 27,180
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A--SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation--The consolidated financial statements include
the accounts of the Company and its subsidiaries after elimination of all
significant intercompany accounts and transactions.
Cash and Cash Equivalents--The Company's cash equivalents includes funds
invested in highly liquid debt instruments with original maturities of 90 days
or less.
Investment in Marketable Securities--The Company invests in U.S. Treasury
Notes with maturities not exceeding three years. Effective July 1, 1994, the
Company adopted the provisions of the Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". The effect of the adoption of SFAS No. 115 was not material
to the Company's consolidated financial statements and there was no cumulative
effect of an accounting change as a result of the adoption.
Accounts Receivable--Trade and other receivables are stated at net
realizable value and the allowance for uncollectible accounts was $1,568,000 and
$1,454,000 at June 30, 1995 and 1994, respectively. The Company's primary
business is a supplier of helicopter transportation services to the worldwide
offshore oil and gas industry. In addition, the Company, through its GPM and
CPS subsidiaries, provides oil and gas production management services to major
and smaller independent oil and gas companies and provides cathodic protection
services throughout the United States. The Company grants credit to its
customers, primarily major and independent oil and gas companies operating in
the Gulf of Mexico, on a short-term basis.
Inventories--Inventories are stated at the lower of average cost or market
and consist primarily of spare parts. The valuation reserve related to obsolete
and excess inventory was $4,324,000 and $4,204,000 at June 30, 1995 and 1994.
There were no related charges to operations in 1995, 1994, or 1993.
Other Assets--In 1995, $25,046,000 of goodwill, net of accumulated
amortization of $1,340,000, was included in other assets. Goodwill is amortized
using the straight-line method over a period of 20 years. Goodwill is
recognized for the excess of the purchase price over the value of the
identifiable net assets. See Note E. Realization of goodwill is periodically
assessed by management based on the expected future profitability and cash flows
of acquired companies and their contribution to the overall operations of the
Company.
Depreciation and Amortization--Depreciation and amortization are provided
on the straight-line method over the estimated useful lives of the assets.
Estimated residual value used in calculating depreciation of aircraft is 30% of
cost.
Maintenance and repairs are expensed as incurred; betterments and
improvements are capitalized. The costs and related reserves of assets sold or
otherwise disposed of are removed from the accounts and resultant gains or
losses included in income.
Interest, based on rates applicable to specific and general corporate funds
required to finance major construction projects, is capitalized to reflect the
full economic cost of the asset. There was no interest capitalized during 1995,
1994, or 1993.
Income Taxes--Income taxes are accounted for in accordance with the
provisions of the SFAS No. 109 "Accounting for Income Taxes". Under this
statement, deferred income taxes are provided for by the asset and liability
method.
Earnings per Common Share--Earnings per common share is based on the
weighted average number of shares of common stock and common stock equivalents
outstanding during the years (19,313,276 in 1995; 17,997,207 in 1994; and
17,815,439 in 1993) computed on the treasury stock method.
20
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Reference is made to the footnotes entitled "Operating Leases" and
"Investments in Unconsolidated Entities" for applicable accounting policies.
B--LONG-TERM DEBT
In February 1993, the Company made a cash payment of $1.6 million to repay
all of its outstanding debt to MARAD which had been previously restructured. The
Company realized an extraordinary gain on the early retirement of debt of
$1,012,000, after the related income tax effect of approximately $537,000.
Long-term debt at June 30,1995 and 1994, consisted of (thousands of
dollars):
<TABLE>
<CAPTION>
June 30, June 30,
1995 1994
-------- --------
<S> <C> <C>
Notes payable to insurance companies;
interest payable quarterly at 11.85%;
collateralized by aircraft with an
approximate net book value of $3,896 $2,000 $4,000
as of June 30, 1995. Principal
payment of $2,000 due on June 30, 1996.
Revolving credit facility, expiring
December 1, 1996; collateralized by
eligible receivables, inventory and 4,850 -
equipment of CPS (non-recourse to the
Company).
Subordinated term note payable to
minority interest owner of CPS;
payable upon redemption of certain
shares of CPS common and preferred 750 -
stock; interest payable at 5% on
maturity; unsecured (non-recourse to
the Company).
Note payable to a joint venture
affiliate; annual payments of $1,000 - 1,000
through January, 1995; interest
payable quarterly at 5%; unsecured.
Other installment notes payable. - 31
--------------------
Total Debt 7,600 5,031
Less current maturities 2,000 3,031
--------------------
Total Long-term Debt $5,600 $2,000
====================
</TABLE>
As of June 30, 1995, the Company had a $10 million unsecured line of credit
with a bank that expires on January 31, 1996. There were no amounts outstanding
during the year ended June 30, 1995.
The revolving credit facility is for CPS, a subsidiary of the Company and
is non-recourse to the Company. The maximum borrowing level is limited to a
borrowing base of eligible receivables, inventory, and equipment not to exceed
$7.5 million.
Certain of the Company's debt obligations contain covenants related to
certain financial ratios, minimum capital levels, and limitations on the payment
of dividends.
Interest paid during the year was $827,000; $1,138,000; and $1,532,000 for
1995, 1994, and 1993, respectively.
In the Company's opinion, based on the borrowing rates currently available
to the Company and its subsidiaries for loans with similar terms and maturities,
the fair value of total debt was $7,672,000 at June 30,1995.
21
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following is a summary of scheduled debt maturities by year (thousands
of dollars):
<TABLE>
<S> <C>
1996....................... $2,000
1997....................... 4,850
1998....................... --
1999....................... --
2000....................... --
Thereafter................. 750
------
Total.................... $7,600
======
</TABLE>
C--INVESTMENTS IN UNCONSOLIDATED ENTITIES
The Company has two principal unconsolidated entities that are accounted
for on the cost method as the Company is unable to exert significant influence
over the operations.
The Company has a 49% investment in Hemisco Helicopters International, Inc.
("HHII") and related venture companies. The Company's investment in HHII was
$2,637,000 and $2,596,000 at June 30, 1995 and 1994, respectively, which is less
than the estimated fair value of the Company's share of unencumbered assets. In
the following unaudited table, HHII represents $4,727,000 and $9,630,000 of the
assets and $2,984,000 and $6,371,000 of the equity for June 30, 1995 and 1994,
respectively. HHII also represents $13,685,000; $19,777,000; and $8,311,000 of
revenues and $(305,000); $2,478,000; and $(188,000) of net income for the years
1995, 1994, and 1993, respectively. During 1995, $1,550,000 in dividends were
received from HHII. No material dividends were received from HHII during 1994
or 1993.
The Company has a 25% investment in an Egyptian helicopter venture. The
Company's investment in the venture was $5,986,000 at June 30, 1995 and 1994.
During 1995, 1994, and 1993, $2,500,000; $2,027,000; and $2,500,000,
respectively, in dividends were received from the venture. During 1995, the
venture's Board of Directors approved a cash dividend, of which the Company's
share applicable to fiscal year 1996 is approximately $2,500,000.
A summary of unaudited financial information of these principal
unconsolidated entities is set forth below (thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Current assets......................... $48,307 $51,552
Non-current assets..................... 34,212 39,349
---------------------
Total assets......................... $82,519 $90,901
=====================
Current liabilities.................... $ 8,868 $ 9,803
Non-current liabilities................ 5,064 8,958
Equity................................. 68,587 72,140
---------------------
Total liabilities and equity......... $82,519 $90,901
=====================
</TABLE>
22
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Revenues............................... $54,180 $60,172 $51,069
===============================
Gross profit........................... $18,859 $22,235 $22,900
===============================
Net income............................. $11,135 $13,133 $12,843
===============================
</TABLE>
During 1995, 1994, and 1993, respectively, revenues of $5,295,000;
$6,269,000; and $1,768,000 were recognized for services provided to these
affiliates by the Company.
During 1994, the Company's helicopter joint venture in Brazil was
terminated. Costs associated with this termination of approximately $2.7 million
were charged against previously established accruals. The three helicopters
involved were redeployed into the Company's other operations. The termination
of the venture did not have a material effect on the Company's operations.
D--INVESTMENT IN MARKETABLE SECURITIES
Under the provision of SFAS No. 115, investments in debt and equity
securities are required to be classified in one of three categories: held-to-
maturity, available-for-sale, or trading. As of June 30, 1995, the Company
classified all of its U.S. Treasury investments, with original maturities of
more than 90 days, as available-for-sale. These investments are carried at cost
which approximates market value. Approximately $11,971,000 of the U.S. Treasury
investments mature within one year and approximately $8,007,000 mature from one
to three years. There were no sales of investments in U.S. Treasury investments
for the year ended June 30, 1995.
E--ACQUISITIONS
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 Seahawk Services Ltd. ("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 when the
Company exchanged its 50% investment in Seahawk for a 27.5% interest in Grasso
Corporation whose wholly-owned subsidiary, Grasso Production Management, Inc.
("GPM"), also was engaged in the production management services business. The
Company's investment in Grasso Corporation was approximately $4,128,000 at June
30, 1994. Revenues of approximately $1,556,000 and $6,232,000 were recognized
for helicopter services provided to GPM and Seahawk during 1995, prior to
consolidation, and 1994, respectively, and revenues of $1,530,000 were
recognized for helicopter services provided to Seahawk during 1993. The
Company's share of net income related to production management services was not
material.
On September 16, 1994, GPM became a wholly-owned subsidiary of the Company
in a merger in which the Company acquired the remaining 72.5% interest in Grasso
Corporation by issuing .49 of a share of the Company's Common Stock for each
share of Grasso Corporation Common Stock owned. In addition, holders of Grasso
Corporation Class B Warrants received 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 $22.3 million after
stepping up the assets and liabilities of Grasso Corporation. The goodwill is
being amortized over a 20 year period.
23
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following summarized unaudited income statement data reflects the
impact the GPM merger would have had on the Company's results of operations had
the transaction taken place on July 1, 1993:
<TABLE>
<CAPTION>
Proforma Results for the
Year Ended June 30,
------------------------
1995 1994
------ ------
(unaudited)
<S> <C> <C>
Gross revenue.................................... $152,866 $132,247
======================
Income from continuing operations................ $ 17,924 $ 15,589
======================
Earnings per common share and common equivalent
share:
Income from continuing operations.............. $ 0.91 $ 0.80
======================
</TABLE>
Cathodic Protection Services
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. In October 1994, the Company acquired 75% of CPS. The acquisition
was treated as a purchase for accounting purposes which resulted in goodwill of
approximately $3.8 million. The goodwill is being amortized over a 20 year
period. The minority interest owner may increase their ownership at the end of
five years if certain financial goals are met. At that time, the Company has
the election to retain a majority ownership in CPS. The operating results from
CPS have been included in the consolidated operating results since the date of
acquisition. 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.
Aviation Services
During 1993, in conjunction with the restructuring of its investment in
HHII, the Company acquired the remaining 50% of Heli-Lift, Inc., an Alaskan
helicopter company, and consolidated the results of this company. The Company's
1993 results included revenues of approximately $4.5 million and net income
before provision for income taxes of $1.2 million related to Heli-Lift, Inc.
F--OPERATING LEASES
The Company has non-cancellable operating leases in connection with the
lease of certain equipment, land, and facilities. Rental expense incurred under
these leases was $2,195,000 in 1995; $1,741,000 in 1994; and $1,886,000 in
1993. As of June 30, 1995, aggregate future payments under non-cancellable
operating leases are as follows: 1996--$2,415,000; 1997--$1,289,000; 1998--
$1,276,000; 1999--$416,000; 2000--$185,000; and thereafter $585,000.
24
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
G--INCOME TAXES
The amounts of deferred tax assets and liabilities are as follows
(thousands of dollars):
<TABLE>
<CAPTION>
June 30, June 30,
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets......................... $ 3,241 $ 2,729
Deferred tax liabilities.................... (21,271) (20,709)
------------------------
Net, deferred tax liability................. $(18,030) $(17,980)
========================
</TABLE>
The components of and changes in the net deferred taxes are as follows
(thousands of dollars):
<TABLE>
<CAPTION>
Addition
June 30, Deferred June 30, Deferred for June 30,
1993 (Expense) 1994 (Expense) Acquisition 1995
-------- --------- -------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Deferred Tax Asset:
Excess of book expenses over
tax expenses................ $ 2,843 $ (343) $ 2,500 $ (308) $1,049 $ 3,241
Credit carryforwards......... 961 (732) 229 (229) -- --
----------------------------------------------------------------------
Deferred tax assets.......... 3,804 (1,075) 2,729 (537) 1,049 3,241
Deferred Tax Liabilities:
Excess of tax over book
depreciation................ (13,347) (2,224) (15,571) (969) 22 (16,518)
Other tax expenses in excess
of book expenses............ (3,522) (1,616) (5,138) 385 -- (4,753)
----------------------------------------------------------------------
Deferred tax liabilities..... (16,869) (3,840) (20,709) (584) 22 (21,271)
----------------------------------------------------------------------
Net deferred tax liabilities. $(13,065) $(4,915) $(17,980) $(1,121) $1,071 $(18,030)
======================================================================
</TABLE>
25
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Income before provision for income taxes for the years ended June 30 was as
follows (thousands of dollars):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Domestic............................... $15,140 $15,497 $11,342
Foreign................................ 10,256 8,128 10,110
-------------------------------
Total................................ $25,396 $23,625 $21,452
===============================
</TABLE>
The provision for income taxes for each of the three years ended June 30,
1995 consisted of the following (thousands of dollars):
<TABLE>
<CAPTION>
For the year ended June 30,
------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Current................................ $6,240 $1,463 $1,710
Deferred............................... 1,121 4,915 3,699
------------------------------
Total................................ $7,361 $6,378 $5,409
==============================
</TABLE>
A reconciliation of Federal statutory and effective income tax rates is
shown below:
<TABLE>
<CAPTION>
For the year ended June 30,
-------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Statutory rate......................... 35% 35% 34%
Utilization of investment tax credits.. 0% 0% (5)%
Utilization of foreign tax credits..... (7)% (4)% (4)%
Additional taxes on foreign source
income................................ 3% 1% 1%
Foreign source income not taxable...... (4)% 0% 0%
Utilization of foreign net operating
losses................................ 0% (5)% 0%
State taxes provided................... 3% 2% 2%
Other, net............................. (1)% (2)% (3)%
----------------------------
Effective tax rate..................... 29% 27% 25%
============================
</TABLE>
Federal Income Tax returns of the Company and subsidiaries have been
settled through 1990. In addition, Federal Income Tax returns of the Company
and subsidiaries have been examined through 1994. The Company does not expect
any significant net unfavorable adjustment as a result of this examination.
Unremitted foreign earnings reinvested abroad upon which deferred income
taxes have not been provided aggregated approximately $18.8 million at June 30,
1995. Due to the timing and circumstances of repatriation of such earnings, if
any, it is not practicable to determine the unrecognized deferred tax liability
relating to such amounts. Withholding taxes, if any, upon repatriation would
not be significant.
26
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Income taxes paid during 1995, 1994, and 1993 were $3,843,000; $3,097,000;
and $3,301,000, respectively.
H--EMPLOYEE BENEFIT PLANS
Savings and Retirement Plans--
The Company currently has four defined contribution plans which cover
substantially all employees.
The Offshore Logistics, Inc. Employee Savings and Retirement Plan ("OLOG
Plan") covers Corporate and Aviation Division employees, except for those
covered under the Alaska Plan. Under the OLOG Plan, the Company matches each
participant's contributions up to 3% of the employee's compensation. In
addition, if net income exceeds 10% of stockholders' investment at the beginning
of the year, the Company contributes funds to acquire Company Stock up to an
additional 3% of the employee's compensation, subject to a scheduled vesting
period.
The Air Logistics of Alaska, Inc. Cash or Deferred Profit Sharing Plan and
Trust ("Alaska Plan") covers Aviation Division employees working in the State of
Alaska. Under the Alaska Plan, the Company matches each participant's
contributions up to 4% of the employee's compensation.
The Grasso Production Management, Inc. Thrift & Profit Sharing Trust covers
eligible GPM employees. The Company matches 25% of each participant's
contributions up to 6% of the employee's compensation.
CPS is a participant in the Curran Companies 401(k) Plan which covers
eligible CPS employees. The Company matches 50% of each participant's
contributions up to 3% of the employee's compensation.
The Company's contributions to the four plans were $1,102,000; $952,000;
and $821,000 for the years ended June 30, 1995, 1994, and 1993, respectively.
Incentive and Stock Option Plans--
Under the 1994 Long-Term Management Incentive Plan ("1994 Plan"), a total
of 900,000 shares of Common Stock, or cash equivalents of Common Stock, are
available for awards to officers and key employees. Awards granted under the
1994 Plan may be in the form of stock options, stock appreciation rights,
restricted stock, deferred stock, other stock-based awards or any combination
thereof. Options become exercisable at such time or times as determined at the
date of grant, and expire no more than ten years after the date of grant.
Incentive stock option prices are determined by the Board and cannot be less
than fair market value at date of grant. Non-qualified stock option prices
cannot be less than 50% of the fair market value at date of grant.
The Annual Incentive Compensation Plan ("Annual Plan") provides for an
annual award of cash bonuses to key employees based on pre-established objective
measures of Company performance. Participants are permitted to receive all or
any part of their annual incentive bonus in the form of shares of Restricted
Stock in accordance with the terms of the 1994 Plan. The amount of bonuses
related to this plan were $407,000 and $518,000 for the years ended June 30,
1995 and 1994, respectively.
The 1991 Non-qualified Stock Option Plan for Non-employee Directors ("1991
Plan") provides for 200,000 shares of Common Stock to be reserved for issuance
pursuant to such plan. As of the date of each annual meeting each non-employee
director, who meets certain attendance criteria, will automatically be granted
an option to purchase 2,000 shares of the Company's Common Stock. The exercise
price of the options granted shall be equal to the fair market value of the
Common Stock on the date of grant and are exercisable not earlier than six
months after the date of grant.
27
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company also has in effect two other stock option plans under which
options to purchase the Company's Common Stock have been issued to employees.
Since approval of the 1994 Plan and the Annual Plan, no further grants or awards
under these two stock option plans can be made. Options were granted at fair
market value and expire ten years after date of grant.
A summary of stock option transactions for all of the Company's stock
option plans are as follows:
<TABLE>
<CAPTION>
Number of Option Price
Shares Per Share
--------- ------------
<S> <C> <C>
Outstanding -- June 30, 1993................ 646,500 $1.00-$11.625
Granted..................................... 125,000
Exercised................................... (50,000)
-------
Outstanding -- June 30, 1994................ 721,500 $1.00-$15.4375
Granted..................................... 244,391
Exercised................................... (83,031)
Expired or Cancelled........................ (19,900)
-------
Outstanding -- June 30, 1995................ 862,960 $1.00-$15.4375
=======
</TABLE>
As of June 30, 1995 and 1994, 699,960 and 556,500, respectively, options
were exercisable at prices ranging from $1.00 to $15.4375 per share. Under the
Company's stock option plans there were 1,796,000 shares of Common Stock
reserved for issue at June 30, 1995.
In December 1990, the SFAS No. 106 -- "Employers' Accounting for Post
Retirement Benefits Other Than Pensions" was issued and required to be adopted
by the Company no later than the fiscal year ended June 30, 1994. The Company
presently offers no post retirement benefits which would be required to be
recorded by the Statement.
In November 1992, the SFAS No. 112 -- "Accounting for Post Employment
Benefits" was issued and required to be adopted by the Company no later than the
fiscal year ended June 30, 1995. The Company presently offers no post
employment benefits which would be required to be recorded by the Statement.
28
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
I--SEGMENT INFORMATION
The Company operates principally in three business segments: Aviation
Services, GPM, and CPS. The Company's Aviation Division, Air Logistics, is a
major supplier of helicopter transportation services to the worldwide offshore
oil and gas industry. GPM provides production management services, contract
personnel, and medical support services to the domestic and international oil
and gas industry. 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 following shows industry segment information for the year
ended June 30, 1995 (in thousands):
<TABLE>
<S> <C>
Operating Revenues:(1)
Aviation Services.................... $ 85,526
GPM.................................. 32,810
CPS.................................. 25,309
--------
Total.............................. $143,645
========
Operating Profit (Loss):
Aviation Services.................... $ 24,079
GPM.................................. 223
CPS.................................. (1,330)
--------
Total segment operating profit..... $ 22,972
Corporate overhead..................... (3,695)
Earnings from unconsolidated entities.. 4,050
Interest income, net................... 2,069
--------
Pretax income.......................... $ 25,396
========
</TABLE>
<TABLE>
<CAPTION>
Depreciation
Capital and Identifiable
Expenditures Amortization Assets
------------ ------------ ------------
<S> <C> <C> <C>
Aviation Services............ $2,609 $7,357 $152,150
GPM.......................... 198 1,727 30,529
CPS.......................... 401 470 17,640
Corporate.................... -- 116 29,032
-------------------------------------------
Total...................... $3,208 $9,670 $229,351
===========================================
</TABLE>
All of the Company's operating revenues and operating profits for each of
the years ended June 30, 1994 and 1993 were from Aviation Services.
(1) Net of Inter-Segment revenues of $4,764,000.
29
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Segment information by geographic areas for the years ended June 30, 1995,
1994, and 1993 is as follows (thousands of dollars):
<TABLE>
<CAPTION>
United States Foreign Consolidated
------------- ------- ------------
<S> <C> <C> <C>
1995
Operating revenue................. $129,340 $14,305 $143,645
====================================
Operating profit.................. $ 18,551 $ 4,421 $ 22,972
Earnings from unconsolidated
entities....................... 4,050
Corporate overhead.............. (3,695)
Interest income, net............ 2,069
--------
Pre-tax income.................. $ 25,396
========
Identifiable assets at June 30.... $176,878 $52,473 $229,351
====================================
1994
Operating revenue................. $ 75,240 $16,426 $ 91,666
====================================
Operating profit.................. $ 19,383 $ 5,242 $ 24,625
Earnings from unconsolidated
entities....................... 2,020
Corporate overhead.............. (3,653)
Interest income, net............ 633
--------
Pre-tax income.................. $ 23,625
========
Identifiable assets at June 30.... $121,350 $52,895 $174,245
====================================
1993
Operating revenue................. $ 60,916 $19,285 $ 80,201
====================================
Operating profit.................. $ 15,804 $ 6,817 $ 22,621
Earnings from unconsolidated
entities....................... 2,247
Corporate overhead.............. (3,358)
Interest income (expense), net.. (58)
--------
Pre-tax income.................. $ 21,452
========
Identifiable assets at June 30.... $117,299 $46,932 $164,231
====================================
</TABLE>
During 1995, 1994, and 1993, the Company conducted operations in
approximately ten foreign countries as well as in the United States. Due to the
nature of the principal assets of the Company, they are regularly and routinely
moved between operating areas (both domestic and foreign) to meet changes in
market and operating conditions. Identifiable assets in 1995, 1994, or 1993
attributable to operations in any one foreign country or any single customer
were not "significant" as defined in SFAS No. 14. The Company earned revenues
totaling $11,964,000 from one customer in 1994. Revenue earned from any single
customer did not exceed 10% of total revenues during 1995 or 1993. United
States registered equipment is chartered to foreign subsidiaries from time to
time at rates sufficient to cover costs plus a reasonable return. These
revenues ($7,118,000 in 1995; $5,630,000 in 1994; and $7,400,000 in 1993) have
been eliminated in the amounts shown above.
30
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
J--QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------
Sep. 30 Dec. 31 Mar. 31 June 30
------- ------- ------- -------
(thousands of dollars, except per share amounts)
<S> <C> <C> <C> <C>
1995
Revenue...................... $26,225 $41,695 $36,514 $39,797
Gross profit................. 7,691 8,127 6,421 7,734
Net income................... 5,018 5,220 3,880 4,332
Earnings per common share.... 0.28 0.27 0.20 0.22
1994
Revenue...................... $21,976 $23,032 $25,794 $23,882
Gross profit................. 7,152 6,657 7,527 6,212
Net income................... 4,427 4,100 4,805 3,915
Earnings per common share.... 0.25 0.23 0.27 0.22
1993
Revenue...................... $20,191 $19,291 $20,410 $21,984
Gross profit................. 6,337 5,824 5,201 7,362
Income before extraordinary
item........................ 4,225 3,689 3,180 4,949
Earnings per common share
before extraordinary item... 0.24 0.21 0.18 0.28
Net income................... 4,225 3,689 4,193 4,949
Earnings per common share.... 0.24 0.21 0.24 0.28
</TABLE>
ITEM 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
ITEM 10. Directors and Executive Officers of the Registrant
There is incorporated by reference herein the information under the caption
"Information Concerning Nominees" contained in the registrant's definitive proxy
statement in connection with the Annual Stockholders Meeting to be held on
December 6, 1995.
ITEM 11. Executive Compensation
There is incorporated by reference herein the information under the caption
"Executive Compensation" contained in the registrant's definitive proxy
statement in connection with the Annual Stockholders Meeting to be held on
December 6, 1995.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
There is incorporated by reference herein the information under the
captions "Security Ownership of Certain Beneficial Owners" and "Information
Concerning Nominees" contained in the registrant's definitive proxy statement in
connection with the Annual Stockholders Meeting to be held on December 6, 1995.
31
<PAGE>
ITEM 13. Certain Relationships and Related Transactions
There is incorporated by reference herein the information under the caption
"Executive Compensation" contained in the registrant's definitive proxy
statement in connection with the Annual Stockholders Meeting to be held on
December 6, 1995.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements--
Report of Independent Public Accountants
Consolidated Balance Sheet--June 30, 1995 and 1994
Consolidated Statement of Income for the three years ended June 30, 1995
Consolidated Statement of Stockholders' Investment for the three years
ended June 30, 1995
Consolidated Statement of Cash Flows for the three years ended
June 30, 1995
Notes to Consolidated Financial Statements
All schedules have been omitted since the information required is included
in the financial statements or notes or have been omitted as not applicable or
not required.
<TABLE>
<CAPTION>
Incorporated by
Reference to
Registration or Form or Exhibit
Exhibits File Number Report Date Number
-------- --------------- ------ ---- -------
<C> <S> <C> <C> <C> <C>
(3) Articles of Incorporation and By-Laws
(1) Delaware Certificate 0-5232 10-K Jun 1989 3(10)
of Incorporation
(2) Agreement and Plan of Merger 0-5232 10-K Jun 1989 3(11)
dated December 29, 1987
(3) Certificate of Merger dated 0-5232 10-K Jun 1990 3(3)
December 29, 1987
(4) Certificate of Correction of 0-5232 10-K Jun 1990 3(4)
Certificate of Merger dated
January 20, 1988
(5) Certificate of Amendment of Certificate 0-5232 10-K Jun 1990 3(5)
of Incorporation dated November 30, 1989
(6) Certificate of Amendment of 0-5232 8-K Dec 1992 3
Certificate of Incorporation dated
December 9, 1992
(7) By-Laws 0-5232 10-K Jun 1989 3(14)
(10) Material Contracts
(1) 1978 Stock Option and Stock Appreciation 33-14800 S-8 Jun 1987 4(a)
Rights Plan, as amended*
(2) Employee Incentive Award Plan* 0-5232 10-K Jun 1981 10(5)
(3) Executive Severance Agreement, similar 0-5232 10-K Jun 1989 10(12)
contract omitted pursuant to Instruction 2
to Item 601 of Regulation S-K*
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Incorporated by
Reference to
Registration or Form or Exhibit
Exhibits File Number Report Date Number
-------- --------------- ------ ---- -------
<C> <S> <C> <C> <C> <C>
(10) (4) Sales Agreement dated as of 0-5232 10-K Jun 1984 10(31)
May 30, 1984
(5) Helicopter Lease dated as of 0-5232 10-K Jun 1984 10(32)
May 30, 1984
(6) Standstill Agreement (and Exhibits), as 0-5232 10-K Jun 1987 10(35)
amended and restated
(7) Executive Welfare Benefit Agreement, 33-9596 S-4 Dec 1986 10(ww)
similar agreement omitted pursuant to
Instruction 2 to Item 601 of Regulation S-K*
(8) Executive Welfare Benefit Agreement, similar 33-9596 S-4 Dec 1986 10(xx)
agreements are omitted pursuant to Instruction
2 to Item 601 of Regulation S-K*
(9) Purchase Agreement with respect to 11.85% 0-5232 10-K Jun 1989 10(48)
Senior Secured Notes
(10) Offshore Logistics, Inc. 1989 Incentive Plan* 33-50448 S-8 Aug 1992 4.1
(11) Asset Purchase Agreement with Gulf Applied 0-5232 8-K Oct 1990 2
Technologies, Inc.
(12) Agreement with UTF-SA-1, Inc. dated 0-5232 10-K Jun 1991 10(20)
April 9, 1991
(13) Offshore Logistics, Inc. 1991 Non-qualified 33-50946 S-8 Aug 1992 4.1
Stock Option Plan for Non-employee Directors*
(14) Agreement and Plan of Merger dated as of 33-79968 S-4 Aug 1994 2(1)
June 1, 1994, as amended
(15) Shareholders Agreement dated as of June 1, 1994 33-79968 S-4 Aug 1994 2(2)
(16) Proposed Form of Non-competition Agreement with 33-79968 S-4 Aug 1994 2(3)
Individual Shareholders
(17) Proposed Form of Joint Venture Agreement 33-79968 S-4 Aug 1994 2(4)
(18) Grasso Corporation 1990 Long-Term Incentive Plan* 33-85670 S-8 Oct 1994 14
(19) Offshore Logistics, Inc. 1994 Long-Term 33-87450 S-8 Dec 1994 84
Management Incentive Plan*
(20) Offshore Logistics, Inc. Annual Incentive
Compensation Plan*
* Compensatory Plan or Arrangement
</TABLE>
33
<PAGE>
Agreements with respect to certain of the Company's long-term debt are not
filed as Exhibits hereto inasmuch as the debt authorized under any such
Agreement does not exceed 10% of the Company's total assets. The Company
agrees to furnish a copy of each such Agreement to the Securities and Exchange
Commission upon request.
(21) Subsidiaries of the registrant.
(23) Consent of Independent Public Accountants.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
fiscal year ended June 30, 1995.
34
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ George M. Small
By: _________________________________
George M. Small
Vice President -- Chief Financial Officer
(Principal Financial and Accounting Officer)
September 28, 1995
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.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ James B. Clement
_____________________ Chairman of the Board, September 28, 1995
James B. Clement President, Chief Executive
Officer, and Director
/s/ Louis F. Crane
_____________________ Director September 28, 1995
Louis F. Crane
/s/ David S. Foster
_____________________ Director September 28, 1995
David S. Foster
/s/ David M. Johnson
_____________________ Director September 28, 1995
David M. Johnson
/s/ Kenneth M. Jones
_____________________ Director September 28, 1995
Kenneth M. Jones
_____________________ Director September , 1995
Homer L. Luther, Jr.
/s/ Harry C. Sager
_____________________ Director September 28, 1995
Harry C. Sager
/s/ George M. Small
_____________________ Vice President, Chief September 28, 1995
George M. Small Financial Officer, and Director
/s/ Howard Wolf
_____________________ Director September 28, 1995
Howard Wolf
</TABLE>
35
<PAGE>
EXHIBIT (10)(20)
OFFSHORE LOGISTICS, INC.
ANNUAL INCENTIVE COMPENSATION PLAN
1. PURPOSE
The purpose of the Offshore Logistics, Inc. (the "Company") Annual
Incentive Compensation Plan is to foster the interests of the Company by
attracting and retaining employees who contribute to the success of the Company
through their ability and effort, to motivate employees to pursue common,
overall corporate results and to enable these employees to participate in the
success and growth of the Company by awarding them cash bonuses if the Company
satisfies annually established performance goals. The Plan reflects the focus of
the Company on group effort, but allows the Company to recognize significant
individual achievement as well.
2. DEFINITIONS
For purposes of this Plan, the following terms are defined as set forth
below:
2.1 "Aggregate Incentive Award" has the meaning set forth in Section 5.4.
2.2 "Aggregate Maximum Award" has the meaning set forth in Section 5.2.
2.3 "Base Salary" means the base salary earnings of a participant for the
Fiscal Year or that portion of the Fiscal Year for which the
participant is eligible, expressed as an annual amount in dollars,
excluding any bonuses or other compensation in addition to salary, as
in effect during the Fiscal Year.
2.4 "Board of Directors" means the Board of Directors of Offshore
Logistics, Inc.
2.5 "Committee" means the Compensation Committee of the Board of Directors
or such other committee or subcommittee as may be appointed by the
Board of Directors; until any other committee or subcommittee may be
appointed by the Board of Directors, the Committee shall be the
Compensation Committee.
2.6 "Company" means the amalgam of all divisions, subsidiaries and
affiliates, domestic and foreign, consolidated with Offshore
Logistics, Inc. for financial accounting and reporting purposes.
2.7 "Disability" has the same meaning as such term or a similar term has
in any long-term disability policy maintained by the Company for the
participant and in effect
<PAGE>
on the date of the participant's disability, unless the Committee in
its discretion determines that another definition shall apply.
2.8 "Earnings Per Share Growth" ("EPS Growth") means for any Fiscal Year
the Net Income per share for the Fiscal Year less the Net Income per
share for the prior Fiscal Year divided by the Net Income per share
for the prior Fiscal Year, expressed as a percentage and rounded to
the nearest tenth of one percent.
2.9 "Fiscal Year" means a financial accounting year of Offshore Logistics,
Inc. ending June 30.
2.10 "Incentive Award" means a cash award made pursuant to this Plan.
2.11 "Gross Revenues" means for any Fiscal Year the total gross revenues of
the Company for such Fiscal Year as reported to stockholders in the
Company's Annual Report to Stockholders for such Fiscal Year.
2.12 "Maximum Award" has the meaning set forth in Section 5.1.
2.13 "Net Income" means for any Fiscal Year the total net income of the
Company for such Fiscal Year (including all charges for any Incentive
Awards accrued under the Plan), as reported to stockholders in the
Company's Annual Report to Stockholders for such Fiscal Year.
2.14 "Performance Measures" mean the performance objectives established
from time to time by the Committee in its discretion for the Company
for a Fiscal Year for the purpose of determining the amount of the
Aggregate Incentive Award and the amounts of the Incentive Awards. The
initial Performance Measures shall be Return on Revenues, Return on
Equity, Earnings Per Share Growth and Revenue Growth, each weighted
equally at twenty-five percent.
2.15 "Plan" means the Offshore Logistics, Inc. Annual Incentive
Compensation Plan, as described in this document.
2.16 "Retirement" means resignation or termination from employment from the
Company after attainment of an age required for payment of an
immediate pension pursuant to the terms of any qualified retirement
plan maintained by the Company in which the participant participates,
or if none then resignation or termination on or after age 60.
2.17 "Return on Equity" means for any Fiscal Year the result of dividing
the Net Income for such Fiscal Year by the Stockholders' Equity for
such Fiscal year expressed as a percentage and rounded to the nearest
one-tenth of one percent.
2
<PAGE>
2.18 "Return on Revenues" means for any Fiscal Year the result of dividing
the Net Income for the Fiscal Year by the Gross Revenues for such
Fiscal Year, expressed as a percentage and rounded to the nearest one-
tenth of one percent.
2.19 "Revenue Growth" means for any Fiscal Year the Gross Revenues for the
Fiscal Year less the Gross Revenues for the prior Fiscal Year divided
by the Gross Revenues for the prior Fiscal Year, expressed as a
percentage and rounded to the nearest one-tenth of one percent.
2.20 "Stockholders' Equity" means for any Fiscal Year the excess of the
total assets of the Company as of the end of the immediately preceding
Fiscal Year over the total liabilities of the Company at such
immediately preceding Fiscal year end (including all liabilities for
any Incentive Awards accrued under the Plan), as computed in
conformity with generally accepted accounting principles and reported
to stockholders in the Company's financial statements for such
immediately preceding Fiscal Year end.
3. ADMINISTRATION
Subject to the provisions of the Plan, the Committee shall have full power
and authority to make Incentive Awards under the Plan, to review and approve the
designation of Plan participants and to adopt, alter and repeal such rules and
regulations as it deems necessary for the proper administration of the Plan, to
interpret the provisions and supervise the administration of the Plan and to
take all action in connection with the Plan as it deems necessary or advisable.
The Committee in its discretion may add or delete individuals from among the
list of designated participants at any time and from time to time, subject to
the provisions of the Plan. The Committee may act only by a majority of its
members then in office, except that the members may authorize any one or more of
their number of any officer of the Company to designate Plan participants
(subject to approval by the Committee), to execute and deliver documents on
behalf of the Committee, to determine the maximum percentage of Base Salary to
be used in fixing a participant's Maximum Award and to compute the amounts of
Incentive Awards.
4. PARTICIPATION
4.1 Eligibility. The chief executive officer of Offshore Logistics, Inc.,
all senior officers, other officers and managers, base managers, supervisors or
other key employees of the Company as defined by the Committee for Plan purposes
shall be eligible to participate in the Plan.
4.2 Designation for Participation. No person shall be entitled to any
Incentive Award under the Plan for any Fiscal Year unless he or she is
designated as a participant for that Fiscal Year. The chief executive officer of
Offshore Logistics, Inc., and such other persons as the chief executive officer
may designate, shall recommend to the Committee eligible employees
3
<PAGE>
(who may include the recommending persons) for selection by the Committee as
participants and shall recommend percentage of the employee's Base Salary to be
used in determining his or her Maximum Award. On an annual basis, the Committee
shall review and approve or disapprove Plan participants recommended by the
chief executive officer or his designee from among the eligible employees,
except that employees who are hired or who enter the eligible group during a
Fiscal Year may be designated as participants for the portion of the Fiscal Year
during which they are eligible. In this event, their Incentive Award will be
calculated pro rata based on the portion of the Fiscal Year for which the person
was designated as a participant.
4.3 Consequences of Termination of Employment. Participants who either
during the Fiscal Year or after the Fiscal Year ends but before delivery of the
Incentive Award payment for the preceding Fiscal Year: (i) leave the Company for
military service; (ii) who, with the consent of the Company, leave due to
Retirement; (iii) who die; or (iv) who are forced to leave the Company due to
Disability or job elimination, are eligible for participation in this Plan for
the Fiscal Year during which they leave because one or more of these events
occurs. A participant in one of these situations shall receive a prorated
portion of the Incentive Award for the portion of the Fiscal Year that the
participant was employed by the Company, determined and payable at the same time
Incentive Awards are paid to active participants. If a participant voluntarily
terminates employment with the Company for any other reason or is fired by
Company during the Fiscal Year no Incentive Award is payable under the Plan. If
a participant's employment terminates between the end of a Fiscal Year and the
Incentive Award payment date for that Fiscal Year for any reason other than to
accept employment with a competitor of the Company or otherwise to compete with
the Company, the full Incentive Award earned for the preceding Fiscal Year will
be paid. If a participant's employment is terminated during this latter period
because the participant accepted employment with a competitor of the Company or
because he or she left and otherwise competed with the Company, no Incentive
Award will be paid unless otherwise required by law.
4.4 Notice of Participation. As soon as is reasonably practicable, each
person who is designated a participant in the Plan for a Fiscal Year will be
notified.
5. DETERMINATION OF INCENTIVE AWARDS
5.1 Maximum Awards for Individual Participants. A participant's Maximum
Award for a Fiscal Year shall consist of a contingent right to receive a cash
amount equal to the product of (A) the maximum award percentage for the
participant for the Fiscal Year, as determined by the Committee or its designee
on or about the beginning of the Fiscal Year, multiplied by (B) the
participant's Base Salary for such Fiscal Year. The maximum award percentage
shall be a percentage of the participant's Base Salary. It is contemplated that
individual maximum award percentages will vary by Company position and
responsibility and will initially range from 5% to 75% of Base Salary. The
maximum award percentages will be set forth in an exhibit to the Plan and in any
amendments thereto made by the Committee from time to time.
4
<PAGE>
5.2 Aggregate Maximum Award. The Aggregate Maximum Award equals the sum of
the Maximum Awards for all participants in the Plan for the Fiscal Year.
5.3 Determination of Performance Measures and Standards. The Committee
shall have the authority to establish and revise the Company Performance
Measures to be used in computing the Incentive Awards and the Aggregate
Incentive Award. The Performance Measures to be used initially are Return on
Revenues, Revenue Growth, Earnings Per Share Growth and Return on Equity. For
each Performance Measure, the Committee shall establish Company performance
standard levels, including minimum and maximum standards for attainment. Unless
modified by the Committee, each Performance Measure is weighted equally. The
Company's actual performance for a Fiscal Year on each Performance Measure shall
be used to determine the amount of the Aggregate Incentive Award for that Fiscal
Year. The initial performance standard levels and funding formula for the
Aggregate Incentive Award will be set forth in an exhibit to the Plan. As the
Committee modifies the Performance Measures and/or the performance standard
levels, a new exhibit shall be substituted to reflect such changes. To be
effective for a Fiscal Year, changes to the Performance Measures or the
performance standard levels must be approved by the Committee within ninety days
after the beginning of the Fiscal Year. If no changes are timely approved for a
given Fiscal Year, the then-existing Performance Measures and performance
standard levels shall be used for the next Fiscal Year.
5.4 Aggregate Incentive Award. The Aggregate Incentive Award for a Fiscal
Year equals the product of (A) the sum of the incentive fund percent
corresponding to the Company's actual performance relative to the established
performance standard levels on each of the Performance Measures for the Fiscal
Year, multiplied by (B) the Aggregate Maximum Award for the Fiscal Year. For
example, using the initial Performance Measures of Return on Revenues, Return on
Equity, Earnings Per Share Growth and Revenue Growth, if under the funding
formula attached to the Plan as an exhibit, the Company has an Aggregate Maximum
Award of $677,000, Return on Revenues of 15%, Return on Equity of 12.1%,
Earnings Per Share Growth of 10.2% and Revenue Growth of 10.4%, the sum of the
corresponding incentive fund percentages would be 60% (15% + 15% + 15% + 15%)
and the Aggregate Incentive Award would equal $406,200 ($677,000 x .60).
5.5 Notice of Company Performance. To the extent reasonably practicable,
participants will receive quarterly updates indicating the performance of the
Company for the Fiscal Year on each of the Performance Measures.
6. ALLOCATION AND PAYMENT OF AWARDS
6.1 The Aggregate Incentive Award for a Fiscal Year shall be allocated in a
bifurcated manner as follows. Seventy-five percent of the Aggregate Incentive
Award shall be allocated by the Committee among the participants for the Fiscal
Year in proportion to the ratio of each such participant's Maximum Award for the
Fiscal Year to the Aggregate Maximum Award of all of the participants for the
Fiscal Year. For example, if for the Fiscal Year a participant had a Base Salary
of $50,000 and a maximum award percentage of 10%, his Maximum Award
5
<PAGE>
would be $5,000. If the Aggregate Maximum Award for all participants during that
Fiscal Year were $677,000 and the Aggregate Incentive Award were $406,200, then
the participant would receive a pro rata allocation of $3,046.50
($5,000/$677,000 = .01) (75% of $406,000 = $304,650) ($304,650 x .01 =
$3,046.50).
6.2 In order to take into account the individual performance of the
participants and their respective contributions to the Company's performance for
the Fiscal Year, the remaining twenty-five percent of the Aggregate Incentive
Award shall be allocated as follows. First, the Committee in its discretion
shall allocate to the Chief Executive Officer of the Company such proportion of
this discretionary twenty-five percent as it determines. Then the Chief
Executive Officer shall recommend to the Committee a discretionary allocation
for each of the other participants from the remaining funds available in the
Aggregate Incentive Award. The Committee shall approve or modify the
recommendations of the Chief Executive Officer as it, in its discretion, shall
deem appropriate.
6.3 Awards will normally be paid to eligible participants in a single sum
within ninety days following the close of the Fiscal Year, with such reduction
as the Company may deem appropriate for federal, state and other withholding
taxes.
7. LIMITATIONS
7.1 The Committee is the final authority for administering and interpreting
this Plan and each determination by the Committee shall be binding and
conclusive for all purposes.
7.2 No employee, nor any employee's personal representative, shall presume
any claim or right to be granted an Incentive Award under this Plan.
7.3 Participation in this Plan shall in no way be construed as giving to an
employee the right to be retained in the employ of the Company.
7.4 All Incentive Awards under this Plan shall be paid from the general
assets of the Company, and no participant shall have the right to require the
Company to segregate or secure any assets or property to provide for Incentive
Awards.
8. TERM OF THE PLAN
The Plan shall continue from year to year at the discretion of the Board of
Directors. In keeping with its purposes, the Committee will review the Plan
annually and will report to the Board any recommendations for changes and
improvements to assure the fulfillment of the objectives of the Plan.
6
<PAGE>
9. AMENDMENTS
At any time and from time to time, the Board of Directors may amend,
suspend or discontinue this Plan. The Committee may designate, approve and
disapprove participants under the Plan and establish and amend the Performance
Measures and Company performance standard levels, all as provided in the Plan.
10. INTERPRETATION AND GOVERNING LAW
The Plan and all Incentive Awards hereunder shall be subject to and shall
be administered and interpreted in order to comply with all applicable rules and
regulations of governmental or other authorities.
11. HEADINGS
The headings of sections and subsections in this Plan are solely for
convenience and reference and shall not affect the meaning of any of the
provisions of the Plan.
7
<PAGE>
EXHIBIT 21
OFFSHORE LOGISTICS, INC.
Subsidiaries of the Registrant at June 30, 1995
<TABLE>
<CAPTION>
Percentage of Voting
Company Place of Incorporation Stock Owned
------- ---------------------- ---------------------
<S> <C> <C>
Offshore Logistics
International, Inc. Panama 100%
Petroleum Air Services Egypt 25%
Hemisco Helicopters
International, Inc. Panama 49%
Aircopter Maintenance
International, Inc. Panama 49%
Heliflight Services, Inc. Texas 49%
Guaranty Financial
International, N.A. Netherlands Antilles 49%
Heli-Lift, Inc. Colorado 100%
Pumpkin Air, Inc. Texas 100%
Airlog International, Inc. Panama 100%
Airlog Part Sales, Inc. Louisiana 100%
Grasso Corporation Delaware 100%
Heliservicio Campeche S.A. de
C.V. Mexico 49%
Cathodic Protection Services
Company Delaware 75%
Air Logistics of Alaska, Inc. Alaska 100%
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report in this Form 10-K into the Company's previously filed Registration
Statement File No. 33-87450.
/s/ ARTHUR ANDERSEN LLP
New Orleans, Louisiana
September 28, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 47,973
<SECURITIES> 19,978
<RECEIVABLES> 29,756
<ALLOWANCES> 0
<INVENTORY> 26,710
<CURRENT-ASSETS> 124,941
<PP&E> 128,261
<DEPRECIATION> 58,558
<TOTAL-ASSETS> 229,351
<CURRENT-LIABILITIES> 18,280
<BONDS> 5,600
<COMMON> 194
0
0
<OTHER-SE> 183,657
<TOTAL-LIABILITY-AND-EQUITY> 229,351
<SALES> 143,645
<TOTAL-REVENUES> 144,231
<CGS> 104,588
<TOTAL-COSTS> 124,954
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 892
<INCOME-PRETAX> 25,396
<INCOME-TAX> 7,361
<INCOME-CONTINUING> 18,450
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,450
<EPS-PRIMARY> .96
<EPS-DILUTED> .96
</TABLE>
