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, 1996
[ ] 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
incorporation or organization) Identification Number)
224 RUE DE JEAN
P. O. BOX 5C, LAFAYETTE, LOUISIANA 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, 1996.
19,499,501 shares of Common Stock, $.01 par value
<PAGE>
<TABLE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Statement of Income
(thousands of dollars, except per share amounts)
<CAPTION>
Three Months Ended
September 30,
_______________________
1996 1995
______ ______
<S> <C> <C>
GROSS REVENUE
Operating revenue $ 41,986 $ 38,991
Gain (loss) on disposal of equipment 231 (224)
---------- ----------
42,217 38,767
OPERATING EXPENSES
Direct cost 30,217 29,872
Depreciation and amortization 2,435 2,153
General and administrative 3,190 3,100
---------- ----------
35,842 35,125
---------- ----------
OPERATING INCOME 6,375 3,642
Earnings from unconsolidated entites 1,255 625
Interest income 1,102 1,001
Interest expense 139 208
---------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES 8,593 5,060
Provision for income taxes 2,750 1,472
(Income) loss of minority interest 12 71
---------- ----------
NET INCOME $ 5,855 $ 3,659
========== ==========
Earnings per common share and
common equivalent share $ 0.30 $ 0.19
========== ==========
Common shares and common
equivalent shares outstanding 19,764,582 19,766,027
========== ==========
</TABLE>
<PAGE>
<TABLE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
(thousands of dollars)
<CAPTION>
September 30, June 30,
1996 1996
____________ ________
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 69,224 $ 57,072
Investment in marketable securities 15,970 19,967
Accounts receivable 29,662 29,743
Inventories 26,896 26,724
Prepaid expenses 932 694
------------ -----------
Total current assets 142,684 134,200
Investments in unconsolidated entities 8,783 8,792
Property and equipment - at cost:
Land and buildings 2,977 2,977
Aircraft and equipment 136,755 135,613
----------- -----------
139,732 138,590
Less: accumulated depreciation and
amortization (66,334) (64,401)
----------- -----------
73,398 74,189
Other assets, primarily goodwill 24,089 24,329
----------- -----------
$ 248,954 $ 241,510
=========== ===========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable $ 3,476 $ 4,872
Accrued liabilities 10,902 8,542
Current maturities of long-term debt 4,850 4,850
----------- -----------
Total current liabilities 19,228 18,264
Long-term debt, less current maturities 750 750
Deferred credits 1,865 2,487
Deferred taxes 20,518 19,271
Minority interest 1,043 1,055
Stockholders' Investment:
Common Stock, $.01 par value, authorized
35,000,000 shares; outstanding 19,499,501
and 19,498,398 at September 30 and June
30, respectively (exclusive of 517,550
treasury shares) 195 195
Additional paid-in capital 95,946 95,934
Retained earnings 109,409 103,554
------------ -----------
205,550 199,683
------------ -----------
$ 248,954 $ 241,510
============ ===========
</TABLE>
<PAGE>
<TABLE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(thousands of dollars)
<CAPTION>
Three Months Ended
September 30,
__________________
1996 1995
____ ____
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,855 $ 3,659
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,435 2,153
Increase in deferred taxes 1,247 102
(Gain) loss on asset dispositions (231) 224
Minority interest in earnings (12) (71)
Decrease in accounts receivable 81 31
Increase in inventories (172) (361)
Increase in prepaid expenses and other (332) (828)
Increase (Decrease) in accounts payable (1,396) 921
Increase (Decrease) in accrued liabilities 2,360 (620)
Decrease in deferred credits (622) (625)
----------- -----------
Net cash provided by operating activities 9,213 4,585
----------- -----------
Cash flows from investing activities:
Capital expenditures (1,391) (1,349)
Proceeds from asset dispositions 318 65
Proceeds from maturity of marketable
securities 4,000 -
----------- -----------
Net cash provided by (used in) investing
activities 2,927 (1,284)
----------- -----------
Cash flows from financing activities:
Proceeds from borrowings - 150
Issuance of common stock 12 184
----------- -----------
Net cash provided by investing activities 12 334
----------- -----------
Net increase in cash and cash equivalents 12,152 3,635
Cash and cash equivalents at beginning of year 57,072 47,973
----------- -----------
Cash and cash equivalents at end of quarter $ 69,224 $ 51,608
=========== ===========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 134 $ 138
Income taxes 450 1,047
</TABLE>
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
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,
1996, are not necessarily indicative of the results that may be expected for
the year ending June 30, 1997. 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, 1996.
NOTE B - Bristow Helicopters
As previously announced, the Company entered into a letter of
intent with each of the two major shareholders of Bristow Helicopter
Group Limited ("Bristow"). Upon completion of the transaction, the
Company will hold common stock of the new holding company of
Bristow, along with a substantial portion of its subordinated debt.
Caledonia Investments plc, the remaining shareholder of Bristow, will
become a significant shareholder in the Company. The transaction, which
values Bristow at approximately $300 million, including its present debt,
is subject to final documentation, review of final documentation by the
British Civil Aviation Authority ("CAA"), and approval by the respective
Boards of Directors. The Company will finance the transaction with a
combination of cash, debt, and common stock.
NOTE C - New Accounting Pronouncements
Effective July 1, 1996, the Company adopted Statement of
Accounting Standards ("SFAS") No. 121 - "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The
adoption had no impact on the Company's results of operations or
financial position.
On July 1, 1996, the Company elected to continue to account for
its employee stock options in accordance with the provisions of Accounting
Principles Board Opinion 25 and, accordingly, adopted the disclosure
provisions of SFAS No. 123 - "Accounting for Stock-Based Compensation."
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's most significant area of operation is a major
supplier of helicopter transportation services to the worldwide offshore oil
and gas industry. The Company also provides production personnel and
medical support services to the worldwide oil and gas industry and
manufacturers, installs and maintains cathodic protection systems to arrest
corrosion in oil and gas drilling and production facilities and other metal
structures.
A summary of operating results for the applicable periods is as
follows:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
___________________
1996 1995
____ ____
<S> <C> <C>
Gross revenue $ 42,217 $ 38,767
Operating expenses 35,842 35,125
--------- ---------
Operating income 6,375 3,642
Earnings from unconsolidated entities 1,255 625
Interest income, net 963 793
--------- ---------
Income before provision for income taxes 8,593 5,060
Provision for income taxes 2,750 1,472
(Income) loss of minority interest 12 71
--------- ---------
Net income $ 5,855 $ 3,659
========= =========
</TABLE>
RESULTS OF OPERATIONS
Consolidated:
Consolidated operating revenues for the three months ended
September 30, 1996, were $42.0 million compared to $39.0 million for the
prior year. The increase in revenue is primarily attributable to the
improved activity levels in helicopter activities. Consolidated operating
expenses for the three months ended September 30, 1996 and 1995, were
$35.8 million and $35.1 million, respectively. Operating income
(excluding gains on disposal of equipment) for the three months ended
September 30, 1996, was $6.1 million, close to a 60% improvement from
the prior year. Net income from continuing operations was $5.9 million,
the highest in the Company's 27 year history. The improved results in
operations is due to several positive factors, including increased
helicopter operations in the Gulf of Mexico and internationally as well
as improved results from GPM and CPS.
Helicopter Activities:
Consolidated third party flight hours for the three months ended
September 30, 1996, of 28,780 increased approximately 15% compared to
the prior year. Strong drilling activity in the Gulf of Mexico increased
the demand for the Company's larger crew change aircraft and the Company
had 18 aircraft working in international areas during the three months
ended September 30, 1996, an increase of four aircraft from the prior year.
Operating revenues for helicopter activities for the three months ended
September 30, 1996 and 1995, were $25.7 million and $21.7 million,
respectively. The 18% increase in revenues is the result of increased
flight activity coupled with a small increase in helicopter rates, the
first rate increase since 1990. Operating expenses for helicopter
activities for the three months ended September 30, 1996 and 1995, were
$19.0 million and $17.1 million, respectively, an 11% increase. Gross
margin for helicopter activities was 26% and 21% for the three months
ended September 30, 1996 and 1995, respectively.
Production Management Services:
Operating revenues from GPM were approximately $7.6 million for
the three months ended September 30, 1996, compared to prior year
revenues of $8.7 million, a 12% decrease. Operating expenses for GPM
were approximately $7.2 million for the three months ended September 30,
1996, compared to $8.4 in the prior year, a 15% decrease. During the past
year GPM focused on improving gross margins by improving its pricing
policy and implementing several cost containment measures. The result
was a decrease in operations with an improvement in gross margin. Gross
margin for GPM was 6% for the three months ended September 30, 1996,
compared to 3% for the prior year.
Cathodic Protection Services:
Operating revenues from CPS were approximately $9.3 million for
the three months ended September 30, 1996, compared to prior year
revenues of $9.8 million, a 5% decrease. Operating expenses for CPS
were approximately $9.2 million for the three months ended September 30,
1996, compared to $9.9 in the prior year, a 7% decrease. Operating
income from CPS was $0.1 million for the three months ended September
30, 1996, compared to an operating loss of $0.1 million in the prior year.
Liquidity and Capital Resources:
Cash, cash equivalents, and marketable securities were $85.2
million as of September 30, 1996, an $8.2 million increase from fiscal year
end 1996. Total debt was $5.6 million as of September 30, 1996, all
related to CPS and recourse to CPS only. CPS maintains a revolving
credit facility with a maximum borrowing limit of $7.5 million.
As of September 30, 1996, the Company had another $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.
As previously announced, the Company entered into a letter of
intent with each of the two major shareholders of Bristow. Upon
completion of the transaction, the Company will hold common stock of the
new holding company of Bristow, along with a substantial portion of its
subordinated debt. Caledonia Investments plc, the remaining shareholder
of Bristow, will become a significant shareholder in the Company. The
transaction, which values Bristow at approximately $300 million, including
its present debt, is subject to final documentation, review of final
documentation by the CAA, and approval by the respective Boards of
Directors. The Company will finance the transaction with a combination
of cash, debt, and common stock.
The effective income tax rates were 32% and 29% for the three
months ended September 30, 1996 and 1995, and is based on the Company's
projected effective tax rate for the fiscal year then ended. The
increase in the projected tax rate for fiscal 1997 is primarily the
result of higher projected domestic income for the year.
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 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.
Forward Looking:
The Company cannot predict the future prices of crude oil or
natural gas nor the future level of drilling activity. However, if
current drilling activity levels continue in the Gulf of Mexico,
management is optimistic that the high demand for the Company's
helicopter activities will continue. In addition, management is
optimistic about the possibility of increasing the Company's worldwide
helicopter operations through its investment in Bristow. Although no
assurances can be made, management believes that this transaction will
close before December 31, 1996.
There are statements contained herein that are forward-looking and
are based on factors including, among other things, the prices of crude oil
and natural gas, the level of offshore drilling activity, and the worldwide
oil and gas market, which could cause actual results to differ materially
from such expectations.
<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, 1996.
<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
Chairman of the Board, President,
and Chief Executive Officer,
DATE: November 13, 1996
BY: /s/ George M. Small
__________________________________
GEORGE M. SMALL
Vice President and
Chief Financial Officer
DATE: November 13, 1996
<PAGE>
<TABLE>
EXHIBIT 11
Computation of Earnings Per Share
<CAPTION>
Three Months Ended
September 30,
____________________
1996 1995
____ ____
<S> <C> <C>
PRIMARY:
Weighted average shares outstanding 19,498,820 19,450,726
Net effect of dilutive stock warrants
based on the Treasury Stock method
using average market price 19,387 29,024
Net effect of dilutive stock options
based on the Treasury Stock method
using average market price 246,375 286,277
---------- ----------
19,764,582 19,766,027
========== ==========
FULLY DILUTED:
Weighted average shares outstanding 19,498,820 19,450,726
Net effect of dilutive stock warrants
based on the Treasury Stock method
using end of period market price 28,491 31,024
Net effect of dilutive stock options
based on the Treasury Stock method
using end of period market price 316,404 298,476
---------- ----------
19,843,715 19,780,226
========== ==========
(thousands of dollars,
except per share data)
Net income $ 5,855 $ 3,659
========== ==========
Per share amount - Primary $ 0.30 $ 0.19
========== ==========
Per share amount - Fully diluted $ 0.30 $ .19
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 69,224
<SECURITIES> 15,970
<RECEIVABLES> 29,662
<ALLOWANCES> 0
<INVENTORY> 26,896
<CURRENT-ASSETS> 142,684
<PP&E> 139,732
<DEPRECIATION> 66,334
<TOTAL-ASSETS> 248,954
<CURRENT-LIABILITIES> 19,228
<BONDS> 750
0
0
<COMMON> 195
<OTHER-SE> 205,355
<TOTAL-LIABILITY-AND-EQUITY> 248,954
<SALES> 41,986
<TOTAL-REVENUES> 42,217
<CGS> 30,217
<TOTAL-COSTS> 35,842
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139
<INCOME-PRETAX> 8,593
<INCOME-TAX> 2,750
<INCOME-CONTINUING> 5,855
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,855
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
