<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 September 30, 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)
Registrant's telephone number, including area code (318)233-1221
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number shares outstanding of each of the issuer's classes of Common
Stock, as of September 30, 1995.
19,482,260 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
September 30,
--------------------------
1995 1994
----------- ------------
<S> <C> <C>
GROSS REVENUE
Operating revenue $ 38,991 $ 26,222
Gain (loss) on disposal of equipment (224) 3
----------- -----------
38,767 26,225
OPERATING EXPENSES
Direct cost 29,872 16,505
Depreciation and amortization 2,153 2,029
General and administration 3,100 1,748
----------- -----------
35,125 20,282
----------- -----------
OPERATING INCOME 3,642 5,943
Earnings from unconsolidated entities 625 625
Interest income 1,001 699
Interest expense 208 177
----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 5,060 7,090
Provision for income taxes 1,472 2,072
(Income) loss of minority interest 71 --
----------- -----------
NET INCOME $ 3,659 $ 5,018
=========== ===========
Earnings per common share and common
equivalent share $ 0.19 $ 0.28
=========== ===========
Common shares and common equivalent shares
outstanding 19,766,027 18,209,481
=========== ===========
</TABLE>
2
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(thousands of dollars)
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 51,608 $ 47,973
Investment in marketable securities 19,972 19,978
Accounts receivable 29,725 29,756
Inventories 27,477 26,710
Prepaid expenses 1,207 524
-------- --------
Total current assets 129,989 124,941
Investments in unconsolidated entities 8,823 8,829
Property and equipment--at cost:
Land and buildings 2,977 2,868
Aircraft and equipment 125,133 125,393
-------- --------
128,110 128,261
Less: accumulated depreciation and amortization (59,560) (58,558)
-------- --------
68,550 69,703
Other assets, primarily goodwill 25,689 25,878
-------- --------
$233,051 $229,351
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 5,568 $ 4,647
Accrued liabilities 11,013 11,633
Current maturities of long-term debt 2,000 2,000
-------- --------
Total current liabilities 18,581 18,280
Long-term debt--less current maturities 5,750 5,600
Deferred credits 1,875 2,500
Deferred taxes 18,132 18,030
Minority interest 1,019 1,090
STOCKHOLDERS' INVESTMENT:
Common Stock, $.01 par value, authorized
35,000,000 shares; outstanding 19,482,260
and 19,442,114 at September 30 and June 30,
respectively (exclusive of 517,550 treasury
shares) 195 194
Paid in capital 95,562 95,379
Retained earnings 91,937 88,278
-------- --------
187,694 183,851
-------- --------
$233,051 $229,351
======== ========
</TABLE>
3
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------------
1995 1994
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,659 $ 5,018
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,153 2,029
Increase in deferred taxes 102 169
(Gain) loss on asset dispositions 224 (3)
Minority interest in earnings (71) --
Decrease in accounts receivable 31 271
(Increase) Decrease in inventories (361) 487
Increase in prepaid expenses and other (828) (310)
Increase in accounts payable 921 222
Increase (Decrease) in accrued liabilities (620) 684
Decrease in deferred credits (625) (625)
-------- --------
Net cash provided by operating activities 4,585 7,942
-------- --------
Cash flows from investing activities:
Capital expenditures (1,349) (175)
Proceeds from asset dispositions 65 6
Acquisitions, net of cash received -- (497)
-------- --------
Net cash used in investing activities (1,284) (666)
-------- --------
Cash flows from financing activities:
Repayment of debt -- (11)
Proceeds from borrowings 150 --
Issuance of common stock 184 1,692
-------- --------
Net cash provided by financing activities 334 1,681
Net increase in cash 3,635 8,957
Cash and cash equivalents at beginning of year 47,973 27,225
-------- --------
Cash and cash equivalents at end of quarter $ 51,608 $ 36,182
======== ========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 138 $ 170
Income taxes 1,047 26
</TABLE>
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 three months ended September 30, 1995, are not necessarily
indicative of the results that may be expected for the year ending June 30,
1996. 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, 1995.
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 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.
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.
The following summarized 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, 1994:
<TABLE>
<CAPTION>
Proforma Results for the
Three Months Ended September 30, 1994
--------------------------------------
<S> <C>
Gross revenue $34,860
=======
Net income $ 4,546
=======
Earnings per common share and common equivalent share $ .23
=======
</TABLE>
5
<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
September 30,
------------------
1995 1994
------- ------
<S> <C> <C>
Gross revenue $38,767 $26,225
Operating expenses 35,125 20,282
------- -------
Operating income 3,642 5,943
Earnings from unconsolidated entities 625 625
Interest income 1,001 699
Interest expense 208 177
------- -------
Income before provision for income taxes 5,060 7,090
Provision form income taxes 1,472 2,072
(Income) loss of minority interest 71 --
------- -------
Net income $ 3,659 $ 5,018
======= =======
</TABLE>
6
<PAGE>
RESULTS OF OPERATIONS
CONSOLIDATED
Consolidated operating revenues for the three months ended September 30, 1995
were $39.0 million compared to $26.2 million for the prior year. Consolidated
operating expenses for the three months ended September 30, 1995 and 1994 were
$35.1 million and $20.3 million, respectively. These increases are primarily
attributable to the acquisition of GPM and CPS during the fiscal year ended June
30, 1995.
HELICOPTER SERVICES
Flight hours and operating revenues for helicopter services during the three
months ended September 30, 1995 were 27,600, and $21.7 million, respectively, a
12% decrease compared to the same period in the prior year. Operating expenses
for helicopter services were $17.1 million during the three months ended
September 30, 1995, a 4% decrease from the prior year. Gross margin for total
helicopter services was 21% for the three months ended September 30, 1995. The
decrease in gross margin from the prior year of 28% is primarily related to Gulf
of Mexico operations discussed below.
Gulf of Mexico flight activity was down 3,300 hours and operating revenues were
down $1.8 million compared to the same period in the prior year. Reduced
activity levels during the first quarter 1996 by several large customers was the
primary factor in reduced flight hours. Operating expenses for the Gulf of
Mexico were $15.5 during the three months ended September 30, 1995, relatively
unchanged from the prior year.
Alaska flight activity, revenues, and expenses are down approximately 30%
compared to the prior year as a result of decreased activity from Alaska's major
customer. Operating income from Alaska operations were relatively unchanged.
International flight hours were approximately 3,700 and operating revenues were
$3.3 million. The overall change in International activity was not significant
compared to the prior year. Several new International contracts started late
during the September quarter and early in the December quarter which should
have a positive impact on future International operations.
PRODUCTION MANAGEMENT SERVICES
Operating revenues and operating expenses from GPM were approximately $8.7
million and $8.4 million, respectively, for the three months ended September 30,
1995. Prior year operating revenues and operating expenses from GPM, for the
period from acquisition (September 16, 1994) to September 30, 1994, were $1.9
million and $1.9 million, respectively. Gross margin for GPM was 3% for the
three months ended September 30, 1995, which reflects improvement over prior
year breakeven operations.
CATHODIC PROTECTION SERVICES
In October 1994, the Company acquired 75% of CPS, as such there were no
operations for the first quarter in the prior year. The proforma effect of this
acquisition as though it had been acquired at the beginning of fiscal year ended
1995 was not material to the operating results of the Company.
7
<PAGE>
Operating revenues and operating expenses from CPS were approximately $9.8
million and $9.9 million, respectively for the three months ended September 30,
1995. CPS generated a $0.1 million operating loss during the quarter. The
operating loss related primarily to CPS's international operations. Domestic
operations were profitable during the three months ended September 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents (including marketable securities) were $71.6 million
as of September 30, 1995, a $3.6 million increase from fiscal year end 1995.
Total debt was $7.8 million as of September 30, 1995.
As of September 30, 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% for the three
months ended September 30, 1995 and 1994, and is based on the Company's
projected effective tax rate for the fiscal year then ended.
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.
8
<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
Exhibit 27
Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended September 30,
1995.
9
<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: November 14, 1995
BY: /s/ George M. Small
---------------------------
GEORGE M. SMALL
Vice President
Chief Financial Officer
DATE: November 14, 1995
10
<PAGE>
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------------
1995 1994
----------- ------------
<S> <C> <C>
PRIMARY:
Weighted average shares outstanding 19,450,726 17,832,348
Net effect of dilutive stock warrants based
on the Treasury Stock method using average
market price 29,024 82,971
Net effect of dilutive stock options based on
the Treasury Stock method using average
market price 286,277 294,162
----------- -----------
19,766,027 18,209,481
=========== ===========
FULLY DILUTED:
Weighted average shares outstanding 19,450,726 17,832,348
Net effect of dilutive stock warrants based on
the Treasury Stock method using end of period
market price 31,024 84,614
Net effect of dilutive stock options based on
the Treasury Stock method using end of period
market price 298,476 299,741
----------- -----------
19,780,226 18,216,703
============ ===========
(thousands of dollars
except per share data)
Net income $ 3,659 $ 5,018
============ ===========
Per share amount--Primary $ 0.19 $ 0.28
============ ===========
Per share amount--Fully diluted $ 0.19 $ 0.28
============ ===========
</TABLE>
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 51,608
<SECURITIES> 19,972
<RECEIVABLES> 29,725
<ALLOWANCES> 0
<INVENTORY> 27,477
<CURRENT-ASSETS> 129,989
<PP&E> 128,110
<DEPRECIATION> 59,560
<TOTAL-ASSETS> 233,051
<CURRENT-LIABILITIES> 18,581
<BONDS> 5,750
<COMMON> 195
0
0
<OTHER-SE> 187,499
<TOTAL-LIABILITY-AND-EQUITY> 233,051
<SALES> 38,991
<TOTAL-REVENUES> 38,767
<CGS> 29,872
<TOTAL-COSTS> 35,125
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208
<INCOME-PRETAX> 5,060
<INCOME-TAX> 1,472
<INCOME-CONTINUING> 3,659
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,659
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
