<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period to
-------- --------
Commission File Number 0-5232
Offshore Logistics, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 72-0679819
- ---------------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
224 Rue de Jean
P. O. Box 5C, Lafayette, LA 70505
- ---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code (318) 233-1221
------------------------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No
------- -------
Indicate the number shares outstanding of each of the issuer's classes of Common
Stock, as of March 31, 1995.
19,444,103 shares of Common Stock, $.01 par value
- --------------------------------------------------------------------------------
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
GROSS REVENUE
Operating revenue $ 36,352 $ 23,134 $ 104,093 $ 67,797
Gain on disposal of equipment 162 2,660 341 3,005
----------------------------------------------
36,514 25,794 104,434 70,802
OPERATING EXPENSES
Direct Cost 27,359 16,284 74,826 43,853
Depreciation and amortization 2,734 1,983 7,369 5,613
General and administration 2,859 1,601 7,479 5,051
----------------------------------------------
32,952 19,868 89,674 54,517
----------------------------------------------
OPERATING INCOME 3,562 5,926 14,760 16,285
Earnings from unconsolidated
entities 1,025 507 3,425 1,514
Interest income 727 430 2,035 1,335
Interest expense 205 258 650 876
----------------------------------------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 5,109 6,605 19,570 18,258
Provision for income taxes 1,480 1,800 5,690 4,926
Minority interest in (income)
loss of consolidated
subsidiaries 251 _ 238 _
----------------------------------------------
NET INCOME $ 3,880 $ 4,805 $ 14,118 $ 13,332
==============================================
Earnings per common share and
common equivalent share $ 0.20 $ 0.27 $ 0.74 $ 0.74
==============================================
Common shares and common
equivalent shares
outstanding 19,722,682 17,996,805 19,187,309 18,001,811
==============================================
</TABLE>
2
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(thousands of dollars)
<TABLE>
<CAPTION>
March 31, June 30,
1995 1994
--------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 38,812 $ 27,225
Investment in marketable securities 19,971 19,950
Accounts receivable 27,194 17,681
Inventories 26,298 21,907
Prepaid expenses 939 500
--------------------
Total current assets 113,214 87,263
Investments in unconsolidated entities 8,829 12,917
Property and equipment - at cost:
Land and buildings 2,846 2,772
Aircraft and equipment 126,064 122,759
--------------------
128,910 125,531
Less: accumulated depreciation and amortization (57,026) (51,614)
--------------------
71,884 73,917
Other assets, primarily goodwill 26,561 148
--------------------
$220,488 $174,245
====================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 3,808 $ 1,957
Accrued liabilities 9,377 5,210
Current maturities of long-term debt 2,005 3,031
--------------------
Total current liabilities 15,190 10,198
Long-term debt - less current maturities 6,100 2,000
Deferred taxes 18,470 17,980
Deferred credits 625 2,500
Minority interest in consolidated subsidiaries 1,262 -
STOCKHOLDERS' INVESTMENT:
Common Stock, $.01 par value, authorized
35,000,000 shares; outstanding 19,444,103 and
17,602,379 at March 31 and June 30,
respectively (exclusive of 517,550 treasury shares) 194 176
Paid in capital 94,701 71,563
Retained earnings 83,946 69,828
--------------------
178,841 141,567
--------------------
$220,488 $174,245
====================
</TABLE>
3
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-----------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 14,118 $ 13,332
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,369 5,613
Increase in deferred taxes 490 2,282
Gain on asset dispositions (341) (3,005)
Equity in earnings from unconsolidated entities
(over) under dividends received (41) (13)
Minority interest in earnings (238) -
Decrease (Increase) in accounts receivable 3,459 (1,459)
Increase in inventories (732) (2,196)
Increase in prepaid expenses and other 47 (348)
Increase in accounts payable 449 510
Increase (Decrease) in accrued liabilities (323) (1,108)
Decrease in deferred credits (1,875) (1,520)
-------- --------
Net cash provided by operating activities 22,382 12,088
-------- --------
Cash flows from investing activities:
Capital expenditures (3,076) (10,956)
Proceeds from asset dispositions 2,216 3,475
Additional advances to GPM _ (1,292)
GPM acquisition costs, net of cash received (602) -
Acquisition of CPS, net of cash received (7,629) -
-------- --------
Net cash used in investing activities (9,091) (8,773)
-------- --------
Cash flows from financing activities:
Repayment of debt (3,730) (4,062)
Issue common stock 2,026 401
-------- --------
Net cash used in financing activities (1,704) (3,661)
Net increase (decrease) in cash 11,587 (346)
Cash and cash equivalents at beginning of year 27,225 27,180
-------- --------
Cash and cash equivalents at end of quarter $ 38,812 $ 26,834
======== ========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 611 $ 883
Income taxes 3,453 1,771
</TABLE>
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, any adjustments
considered necessary for a fair presentation have been included. Operating
results for the nine months ended March 31, 1995, are not necessarily indicative
of the results that may be expected for the year ending June 30, 1995. For
further information, refer to the consolidated financial statements and
footnotes included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1994.
NOTE B - PRODUCTION MANAGEMENT SERVICES
The Company expanded its operations in July 1992 to include production
management services. During fiscal 1993 and until October 29, 1993, the Company
owned 50% of PPI-Seahawk Services, Inc. ("Seahawk"), a company which provided
platform and production management services, offshore medical support services,
and temporary personnel to the oil and gas industry. On October 29, 1993, the
Company further expanded its interest in production management services by
Seahawk merging into Grasso Corporation ("Grasso"). The Company exchanged its
50% investment in Seahawk for a 27.5% interest in Grasso.
On September 16, 1994, the Company acquired the remaining 72.5% interest in
Grasso by issuing .49 of a share of the Company's common stock for each share of
Grasso common stock owned. In addition, holders of Grasso Class B warrants are
entitled to receive similar warrants for shares of the Company's common stock.
The Merger was treated as a purchase for accounting purposes which resulted in
goodwill of approximately $22.6 million after stepping up the assets and
liabilities of Grasso. The goodwill will be amortized over a 20 year period.
The following summarized income statement data reflects the impact the Grasso
merger would have had on the Company's results of operations had the
transactions taken place on July 1, 1993:
<TABLE>
<CAPTION>
Proforma Results for the
Nine Months Ended
March 31,
------------------------
1995 1994
-------- -------
<S> <C> <C>
Gross revenue $113,069 $98,427
======== =======
Net income $ 13,646 $11,869
======== =======
Earnings per common share and common
equivalent share $ .69 $ .61
======== =======
</TABLE>
5
<PAGE>
NOTE C - CATHODIC PROTECTION SERVICES
In October 1994, the Company acquired 75% of Cathodic Protection Services
Company ("CPS") for $7.5 million. CPS manufactures, installs and maintains
cathodic protection systems to arrest corrosion in oil and gas drilling and
production facilities, pipelines, oil and gas well casings, hydrocarbon
processing plants, and other metal structures. The acquisition was treated as a
purchase for accounting purposes which resulted in goodwill of approximately
$3.6 million. The goodwill will be amortized over a 20 year period. The
proforma effect of this acquisition as though it had been acquired at the
beginning of each of the periods presented is not material to the operating
results of the Company.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A summary of operating results for the applicable periods is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------ -------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross revenue $ 36,514 $ 25,794 $104,434 $ 70,802
Operating expenses 32,952 19,868 89,674 54,517
-----------------------------------------
Operating income 3,562 5,926 14,760 16,285
Earnings from unconsolidated
entities 1,025 507 3,425 1,514
Interest income 727 430 2,035 1,335
Interest expense 205 258 650 876
-----------------------------------------
Income before provision for
income taxes 5,109 6,605 19,570 18,258
Provision for income taxes 1,480 1,800 5,690 4,926
Minority interest in (income) loss
of consolidated subsidiaries 251 - 238 -
-----------------------------------------
Net income $ 3,880 $ 4,805 $ 14,118 $ 13,332
=========================================
</TABLE>
7
<PAGE>
RESULTS OF OPERATIONS
CONSOLIDATED
Consolidated revenues for the three months and nine months ended March 31, 1995
were $36.5 million and $104.4 million, respectively. This represents over a
40% increase from prior year operating revenues of $25.8 million and $70.8
million, respectively, primarily attributable to the consolidation of GPM and
CPS. Prior year revenues included $2.7 million of non-recurring gains on
disposal of equipment. Consolidated operating expenses for the three months and
nine months ended March 31, 1995 were $33.0 million and $89.7 million,
respectively. Prior year operating expenses were $19.9 million and $54.5
million, respectively
AIR DIVISION
Flight hours during the three months ended March 31, 1995 were approximately
25,500, a 10% decrease compared to the same period in the prior year. Nine
month flight hours were approximately 85,400, basically even compared to the
prior year. The 10% decrease in flight hours for the three months ended March
31, 1995 is primarily due to a reduction in Alaska and International operations.
Gulf of Mexico operations were stable compared with prior year. Operating
revenues for the Air Division were $20.8 million and $68.5 million for the three
months and nine months ended March 31, 1995, a 10% decrease and a 1% increase
compared to the prior year. Operating expenses for the Air Division were $16.0
million and $50.8 million for the three and nine months ended March 31, 1995,
respectively, a 15% and 2% decrease from the prior year. Gross margins
(excluding gains on disposals) for the Air Division were 24% and 26% for the
three and nine months ended March 31, 1995, respectively.
GPM
GPM, the Company's production management services subsidiary, acquired on
September 16, 1994, generated $10.4 million and $23.2 million in operating
revenues included in the three and nine months ended March 31, 1995,
respectively. Operating expenses from GPM were $10.4 and $23.0 million included
in the three and nine months ended March 31, 1995, respectively. Gross margins
were at a break even basis during this period.
CPS
CPS, the Company's 75% owned cathodic protection corrosion control company, was
acquired in October, 1994. Operating revenues included in the three and nine
months ended March 31, 1995 were $6.3 million and $15.5 million, respectively.
Operating expenses included in the three and nine months ended March 31, 1995
were $7.2 million and $16.2 million, respectively. A seasonal downturn in
activity at CPS during the current quarter resulted in a negative operating
contribution.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents (including marketable securities) were $58.8 million
as of March 31, 1995, a $11.6 million increase from fiscal year end 1994.
Total debt was $8.1 million as of March 31, 1995.
8
<PAGE>
As of March 31, 1995, the Company had $10 million of credit available under an
unsecured working capital line of credit from a bank. Management believes that
normal operations will provide sufficient working capital and cash flow to meet
debt service for the foreseeable future.
The effective income tax rates from continuing operations were 29% and 27% for
the nine months ended March 31, 1995 and 1994, respectively, and is based on
the Company's projected effective tax rate for the fiscal year then ended. The
increase in the effective tax rate is due primarily to amortization of goodwill
related to GPM acquisition, which is not deductible for tax purposes.
The Company has received notices from the United States Environmental
Protection Agency that it is one of approximately 160 potentially responsible
parties ("PRP") at one Superfund site in Texas, one of over 300 PRPs at two
sites in Louisiana, and a PRP at a site in Rhode Island. The Company believes,
based on presently available information, that its potential liability for
clean-up and other response costs in connection with these sites is not likely
to have a material adverse effect on the Company's business or financial
condition.
9
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Listed below are the documents filed as exhibits to this report.
Exhibit 11
Computation of Earnings Per Share
(b) No reports on Form 8-K were filed during the quarter ended March 31, 1995.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OFFSHORE LOGISTICS, INC.
BY: /s/ James B. Clement
------------------------------
JAMES B. CLEMENT
President
Chief Executive Officer
DATE: May 12, 1995
BY: /s/ George M. Small
------------------------------
GEORGE M. SMALL
Vice President
Chief Financial Officer
DATE: May 12, 1995
11
<PAGE>
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average shares
outstanding 19,417,742 17,600,957 18,855,639 17,584,180
Net effect of dilutive stock
warrants based on the Treasury
Stock method using average
market price 17,162 84,887 40,947 89,849
Net effect of dilutive stock
options based on the Treasury
Stock method using average
market price 287,778 310,961 290,723 327,782
----------------------------------------------
19,722,682 17,996,805 19,187,309 18,001,811
==============================================
FULLY DILUTED:
Weighted average shares
outstanding 19,417,742 17,600,957 18,855,639 17,584,180
Net effect of dilutive stock
warrants based on the Treasury
Stock method using end of
period market price 18,021 84,887 42,662 95,143
Net effect of dilutive stock
options based on the Treasury
Stock method using end of
period market price 292,524 310,961 297,157 341,563
----------------------------------------------
19,728,287 17,996,805 19,195,458 18,020,886
==============================================
(thousands of dollars, except per share data)
Net income $ 3,880 $ 4,805 $ 14,118 $ 13,332
==============================================
Per share amount - Primary $ 0.20 $ 0.27 $ 0.74 $ 0.74
==============================================
Per share amount - Fully diluted $ 0.20 $ 0.27 $ 0.74 $ 0.74
==============================================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 38,812
<SECURITIES> 19,971
<RECEIVABLES> 27,194
<ALLOWANCES> 0
<INVENTORY> 26,298
<CURRENT-ASSETS> 113,214
<PP&E> 128,910
<DEPRECIATION> 57,026
<TOTAL-ASSETS> 220,488
<CURRENT-LIABILITIES> 15,190
<BONDS> 6,100
<COMMON> 194
0
0
<OTHER-SE> 178,647
<TOTAL-LIABILITY-AND-EQUITY> 220,488
<SALES> 104,093
<TOTAL-REVENUES> 104,434
<CGS> 74,826
<TOTAL-COSTS> 89,674
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 650
<INCOME-PRETAX> 19,570
<INCOME-TAX> 5,690
<INCOME-CONTINUING> 14,118
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,118
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
