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, 1996
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 5C, 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 Warrants
Preferred Share Purchase Rights
(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 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, 1996 was $242,684,025.
The number shares outstanding of the registrant's Common Stock
as of August 31, 1996 was 19,498,922.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on December 5, 1996 are incorporated by
reference into Part III hereof.
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 ........................ 13
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, 1996 and 1995 ... 16
Consolidated Statements of Income - Three years
ended June 30, 1996 .................................. 17
Consolidated Statements of Stockholders' Investment
- Three years ended June 30, 1996 .................... 18
Consolidated Statements of Cash Flows - Three years
ended June 30, 1996 .................................. 19
Notes to Consolidated Financial Statements ............. 20
Item 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure ..................................... 30
PART III
Item 10. Directors and Executive Officers of the Registrant ........... 30
Item 11. Executive Compensation ....................................... 30
Item 12. Security Ownership of Certain Beneficial Owners
and Management ............................................... 30
Item 13. Certain Relationships and Related Transactions ............... 30
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K .................................................. 31
Exhibit 21 - Subsidiaries of the Registrant .................. 34
Signatures ............................................................. 35
</TABLE>
i
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, 1996, the
Company's operations included 186 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.
On March 27, 1996, the Company announced that it entered into
a letter of intent to purchase up to fifty percent of the capital
stock of Bristow Helicopter Group Limited ("Bristow"). The seller
of the Bristow capital stock is a syndicate of investors led by
Morgan Grenfell Development Capital Limited of London. On September
27, 1996, the Company announced that it has also reached an
agreement in principle with Caledonia Investments plc ("Caledonia"),
the other major shareholder of Bristow. According to the terms of
the transaction, Caledonia will reduce its economic interest in
Bristow while assuming voting control, and will become a significant
shareholder in the Company. 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.
The British Civil Aviation Authority ("CAA") has approved the transaction
subject to final review of definitive documentation. The
transaction, which values Bristow at approximately $300 million, is
also subject to final documentation, completion of a due diligence
investigation by the Company, and approval by the respective Boards
of Directors. The Company will finance the transaction, with a
combination of cash, debt, and common stock.
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, 1996.
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) 1996 1995 1994
---- --------- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Sikorsky S-76 12 160 18 18 17
Bell 206B Jet Ranger 4 115 25 30 30
Bell 206L-I 6 125 43 45 45
Bell 206L-III 6 125 20 20 21
Bell 206L-IV 6 125 7 5 5
Bell 212 12 115 11 12 11
Bell 412 12 140 6 6 6
Bell 214ST 18 150 2 2 2
Boelkow 105 4 125 17 12 12
Aerospatiale Twinstar 5 135 8 9 11
Fixed Wing 2 2 2
----- ----- -----
159 161 162
===== ===== =====
</TABLE>
The Company owns 158 of the 159 aircraft that it operates.
The following table sets forth certain information concerning
these aircraft:
<TABLE>
<CAPTION>
June 30, 1996
Net
Type Number Book Value
- ---- ------ -------------
<S> <C> <C>
Sikorsky S-76 17 $11,068
Bell 206B Jet Ranger 25 1,434
Bell 206L-I 43 4,722
Bell 206L-III 20 10,530
Bell 206L-IV 7 6,328
Bell 212 11 7,213
Bell 412 6 9,153
Bell 412ST 2 5,504
Boelkow 105 17 9,047
Aerospatiale Twinstar 8 1,427
------ --------
156 66,426
Fixed Wing 2 893
------ --------
Total 158 $67,319
====== ========
</TABLE>
In addition to the foregoing 158 aircraft, the Company
operates one aircraft pursuant to an operating lease arrangement at
June 30, 1996. The Company also provides services and technical
support to entities that operate 22 helicopters of various types and
five 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, 1996, the Company operated 130 aircraft in that area.
The Company also operates 13 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, 1996, the Company operated 16
of its helicopters in international locations, including 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, 1996, four of the
Company's helicopters were being leased to its Mexican affiliate for
operations in that country.
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 1996 and 1995, 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.
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
Certificate granted by the Federal Aviation Administration ("FAA").
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 de-registration under the
Federal Aviation Act and loss of the privilege of operating within
the United States. At June 30, 1996, the Company had approximately
494,000 common shares held by persons with foreign addresses
representing approximately 2.5% of the 19,498,398 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.
Operations
GPM's production management services are conducted primarily
from production facilities in the Gulf of Mexico. As of June 30,
1996, GPM managed or had personnel assigned to 160 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.
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 out-
source 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 1996
and 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, workers' 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.
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 ten district office
locations as follows: Billings, Montana; Carson, California;
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.
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 workers'
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. Management believes 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.
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, 1996 and 1995, the Company employed 1,295 and
1,347 persons, respectively, who are or were involved in the
following operations:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Helicopter Services - Domestic 553 552
- International 19 22
Production Management Services 506 544
Cathodic Protection Services 193 205
Executive and Administrative 24 24
----- -----
1,295 1,347
===== =====
</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.
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, 1996, are as follows:
<TABLE>
<CAPTION>
Name Age Position Held with Registrant
---- --- -----------------------------
<S> <C> <C>
James B. Clement 51 Chairman, President, Chief Executive
Officer, and Director
George M. Small 51 Vice President, Chief Financial Officer,
Treasurer, Secretary, and Director
Ralph B. Murphy 68 Vice President - Corporate Sales
Gene Graves 47 Vice President - Domestic Aviation
Hans J. Albert 54 Vice President - International Aviation
Drury A. Milke 38 Vice President - Business Development
Patricia M. Como 35 Controller and Assistant Secretary
E. H. Underwood III 39 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-six 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-one 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.
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.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fiscal year ended June 30, 1996
First Quarter 14 1/2 12 3/4
Second Quarter 13 3/4 10 7/8
Third Quarter 13 3/4 11 3/4
Fourth Quarter 15 5/8 12 3/8
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
</TABLE>
The approximate number of holders of record of Common Stock as
of August 31, 1996 was 1,500.
The Company has not paid dividends on its Common Stock since
January 1984.
ITEM 6. Selected Financial Data
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------
1996 1995(2) 1994 1993 1992
---- ------- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Operating revenues $156,766 $143,645 $ 91,666 $ 80,201 $ 81,872
======== ======== ======== ======== ========
Income before
extraordinary item $ 15,276 $ 18,450 $ 17,247 $ 16,043 $ 17,549
======== ======== ======== ======== ========
Net income (1) $ 15,276 $ 18,450 $ 17,247 $ 17,055 $ 17,549
======== ======== ======== ======== ========
Earnings per common
equivalent share:
Income before
extraordinary item $ 0.77 $ 0.96 $ 0.96 $ 0.90 $ 1.00
======== ======== ======== ======== ========
Net income (1) $ 0.77 $ 0.96 $ 0.96 $ 0.96 $ 1.00
======== ======== ======== ======== ========
Total assets $241,510 $229,351 $174,245 $164,231 $144,945
======== ======== ======== ======== ========
Long-term obligations:
Long-term debt $ 750 $ 5,600 $ 2,000 $ 9,322 $ 10,056
======== ======== ======== ======== ========
Cash dividends declared
per common share $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
</TABLE>
1. Includes an extraordinary gain of $1,012,000 in 1993. There
were no extraordinary items in 1996, 1995, 1994, or 1992.
2. 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 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.
On March 27, 1996, the Company announced that it entered into
a letter of intent to purchase up to fifty percent of the capital
stock of Bristow Helicopter Group Limited ("Bristow"). The seller
of the Bristow capital stock is a syndicate of investors led by
Morgan Grenfell Development Capital Limited of London. On September
27, 1996, the Company announced that it has also reached an
agreement in principle with Caledonia Investments plc ("Caledonia"),
the other major shareholder of Bristow. According to the terms of
the transaction, Caledonia will reduce its economic interest in
Bristow while assuming voting control, and will become a significant
shareholder in the Company. 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.
The British Civil Aviation Authority ("CAA") has approved the
transaction subject to final review of definitive documentation.
The transaction, which values Bristow at approximately $300 million,
is also subject to final documentation, completion of a due
diligence investigation by the Company, and approval by the
respective Boards of Directors. The Company will finance the
transaction, with a combination of cash, debt, and common stock.
Results of Operations
Operating results and other income statement information for
the three years ended June 30, 1996 follows (in thousands of dollars):
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Operating revenues $156,766 $143,645 $91,666
Gain (loss) on disposal
of equipment (537) 586 3,018
-------- -------- -------
156,229 144,231 94,684
Direct cost 120,594 104,588 59,617
Depreciation and amortization 9,230 9,670 7,519
General and administrative 12,278 10,696 6,576
-------- -------- -------
142,102 124,954 73,712
-------- -------- -------
Operating income 14,127 19,277 20,972
Earnings from
unconsolidated entities 4,056 4,050 2,020
Interest income, net 3,276 2,069 633
-------- -------- -------
Income before provision
for income taxes 21,459 25,396 23,625
Provision for income taxes 6,219 7,361 6,378
Minority interest 36 415 --
-------- -------- -------
Net income $ 15,276 $ 18,450 $17,247
======== ======== =======
</TABLE>
Helicopter Services
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's
Alaskan activity is primarily related to providing helicopter
services to the Alyeska Pipeline. 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, and Mexico). 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>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Number of aircraft operated by the Company:
Domestic 143 150 148
International 16 11 14
---- ---- ----
Total 159 161 162
==== ==== ====
Total flight hours
(Company operated aircraft) 108,330 112,000 115,539
Number of aircraft operated by
unconsolidated entities 27 27 29
</TABLE>
Operating revenues for helicopter services were $89.8 million,
$89.5 million, and $91.7 million for 1996, 1995, and 1994,
respectively. Operating expenses for helicopter services were $72.2
million, $66.7 million, and $70.1 million for 1996, 1995, and 1994,
respectively. Gross margin percentages for helicopter services,
excluding gain or loss on disposal of equipment, were 20%, 25%, and
24% for 1996, 1995, and 1994, respectively. The decrease in
consolidated flight hours from 1995 to 1996 contrasted by a small
increase in operating revenues reflects a change in the mix of
aircraft operating. The Company had a decrease in flight activity
for single engine aircraft; primarily the result of lost work for
production management companies which compete with GPM. On the
other hand, strong drilling activity in the Gulf of Mexico increased
the demand for the Company's larger crew change aircraft which
normally work at higher revenue rates. High demand for certain
aircraft enabled the Company to obtain some price increases, the
first since 1990. Management believes that the improved activity
levels in the Gulf of Mexico and this small improvement in
helicopter rates during late 1996 will have a positive impact on the
Company's flight activity and operating revenues in the coming year.
Operations in Alaska were down in 1996 compared to 1995 resulting
from decreased activity from the Company's major Alaskan customer.
International flight activity was strong during 1996, logging over
25% more hours than in 1995. The increase in operating expenses of
approximately 8% from 1995 to 1996 is primarily related to increases
in maintenance and repair expenditures. Gross margin percentages
for 1996 were below the prior year due to the increase in
expenditures.
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 was
relatively unchanged from 1994 to 1995. 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 gross
margin percentages from 1994 to 1995 is due to the improved cost
controls in the Gulf of Mexico operations.
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 for GPM were $31.2 million and $32.8
million for 1996 and for the period from consolidation through June
30, 1995, respectively. Operating expenses for GPM were $31.4
million and $32.6 million for 1996 and for the period from
consolidation through June 30, 1995, respectively. Overall, GPM
operations were approximately breakeven for 1996 and for the period
from consolidation through June 30, 1995, with operating income
(loss) of approximately $(0.2) million and $0.2 million, respectively.
Cathodic Protection Services
Operating revenues for CPS were $39.5 million and $25.3
million for 1996 and for the period from consolidation through June
30, 1995. Operating expenses were $39.1 million and $26.6 million
for 1996 and for the period from consolidation through June 30,
1995, respectively. CPS generated $0.4 million in operating income
and a $1.3 million operating loss in 1996 and 1995, respectively.
Amounts for 1995 contain operating results for only nine months.
During 1996, management increased the sales efforts and took
measures to reduce overhead costs and its international operations.
These measures had a positive impact on CPS's operations during
fiscal 1996. In addition, the Company benefited from a stronger
market for its magnesium and anode business during 1996.
Consolidated
Net income for 1996 was $15.3 million, compared to net income
of $18.5 million and $17.2 million for 1995 and 1994, respectively.
Liquidity and Capital Resources
Cash and cash equivalents and marketable securities were $77.0
million as of June 30, 1996, a $9.1 million increase from 1995.
Total debt was $5.6 million as of June 30, 1996, all related to CPS
and non-recourse to the Company.
Cash flows provided by operating activities were $22.9
million, $30.8 million, and $18.2 million in 1996, 1995, and 1994,
respectively.
Cash flows used in investing activities were $12.3 million,
$8.4 million, and $9.5 million for 1996, 1995, and 1994,
respectively. Capital expenditures during 1996 of $12.5 million
included two new Bell 206L-IV's, four used MBB Boelkow 105's and
seven Sikorsky S-76's previously under an operating lease agreement.
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.
Cash flows used in financing activities were $1.4 million,
$1.7 million, and $8.7 million in 1996, 1995, and 1994,
respectively. Financing activities during 1996 and 1994 were
primarily for the repayment of debt. 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.
CPS maintains a revolving credit facility with a maximum
borrowing limit of $7.5 million. Borrowings are based on eligible
receivables, inventory, and equipment of CPS. The facility expires
on December 1, 1996 and is recourse to CPS only.
As of June 30, 1996, the Company had a $10 million unsecured
working capital line of credit with a bank that expires on January
31, 1997. 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%, 29%, and 27% for 1996, 1995, and 1994, 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 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 Standards
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.
In October 1995, the SFAS No. 123 - "Accounting for Stock-
Based Compensation" was issued and required to be adopted by the
Company no later than the fiscal year ended June 30, 1997. SFAS No.
123 encourages, but does not require, the adoption of a fair value
based method of accounting for employee stock options. Entities
electing to continue to measure compensation costs using the
intrinsic value based method of accounting prescribed by APB Opinion
25 - "Accounting for Stock Issued to Employees" must make pro forma
disclosures of net income and earnings per share as if the fair
value based method of accounting had been applied. The Company
plans to continue to account for its employee stock options in
accordance with the provisions of APB Opinion 25 and will provide
the necessary pro forma disclosures.
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, 1996 and 1995, and the related
consolidated statements of income, stockholders' investment, and
cash flows for each of the three years in the period ended June 30,
1996. 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, 1996 and
1995, and the results of their operations and their cash flows for
each of the three years in the period ended June 30, 1996 in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
August 15, 1996
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
---- ----
(thousands of dollars)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 57,072 $ 47,973
Investment in marketable securities 19,967 19,978
Accounts receivable 29,743 29,756
Inventories 26,724 26,710
Prepaid expenses 694 524
-------- --------
Total Current Assets 134,200 124,941
Investments in Unconsolidated Entities 8,792 8,829
Property and Equipment -- at cost
Land and buildings 2,977 2,868
Aircraft and equipment 135,613 125,393
-------- --------
138,590 128,261
Less--Accumulated depreciation
and amortization (64,401) (58,558)
-------- --------
74,189 69,703
Other assets, primarily goodwill 24,329 25,878
-------- --------
$241,510 $229,351
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities
Accounts payable $ 4,872 $ 4,647
Accrued liabilities 8,542 11,633
Current maturities of long-term debt 4,850 2,000
-------- --------
Total Current Liabilities 18,264 18,280
Long-term debt, less current maturities 750 5,600
Deferred Credits 2,487 2,500
Deferred Taxes 19,271 18,030
Minority Interest 1,055 1,090
Commitments -- --
Stockholders' Investment
Common stock, $.01 par value, authorized
35,000,000 shares; outstanding 19,498,398
in 1996 and 19,442,114 in 1995 (exclusive
of 517,550 treasury shares) 195 194
Additional paid-in capital 95,934 95,379
Retained earnings 103,554 88,278
-------- --------
199,683 183,851
-------- --------
$241,510 $229,351
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------
1996 1995 1994
---- ---- ----
(thousands of dollars,
except per share amounts)
<S> <C> <C> <C>
Gross Revenue:
Operating revenue $156,766 $143,645 $ 91,666
Gain (loss) on disposal of
equipment (537) 586 3,018
-------- -------- --------
156,229 144,231 94,684
-------- -------- --------
Operating Expenses:
Direct cost 120,594 104,588 59,617
Depreciation and
amortization 9,230 9,670 7,519
General and administrative 12,278 10,696 6,576
-------- -------- --------
142,102 124,954 73,712
-------- -------- --------
Operating Income 14,127 19,277 20,972
Earnings from unconsolidated
entities 4,056 4,050 2,020
Interest income 4,055 2,961 1,771
Interest expense 779 892 1,138
-------- -------- --------
Income Before Provision for
Income Taxes 21,459 25,396 23,625
Provision for income taxes 6,219 7,361 6,378
(Income) Loss of minority
interest 36 415 --
-------- -------- --------
Net Income $ 15,276 $ 18,450 $ 17,247
======== ======== ========
Earnings per common share and
common equivalent share $ 0.77 $ 0.96 $ 0.96
======== ======== ========
Dividends per common share $ -- $ -- $ --
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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
-------- ------ --------- -------- ------------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
BALANCE-June 30, 199 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
Net income -- -- -- 15,276 15,276
Stock options 24,460 -- 197 -- 197
GPM warrants exercised 26,553 1 286 -- 287
Restricted stock issued 5,271 -- 72 -- 72
---------- ---- ------- -------- --------
BALANCE-June 30, 1996 19,498,398 $195 $95,934 $103,554 $199,683
========== ==== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------
1996 1995 1994
------ ------ ------
(thousands of dollars)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $15,276 $18,450 $ 17,247
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 9,230 9,670 7,519
Increase in deferred taxes 1,241 1,121 4,915
(Gain) Loss on asset dispositions 537 (586) (3,018)
Equity in earnings from unconsolidated
entities over dividends received -- (41) (13)
Minority interest in earnings (36) (415) --
Change in assets and liabilities
net of effects from acquisitions:
(Increase) Decrease in accounts
receivable 12 897 (2,662)
Increase in inventories (558) (1,145) (2,654)
(Increase) Decrease in prepaid
expenses and other (2) 299 326
Increase in accounts payable 225 1,288 14
Increase (Decrease) in accrued
liabilities (3,055) 1,309 (3,939)
Increase (Decrease) in deferred credits (13) -- 473
------- ------- -------
Net cash provided by operating activities 22,857 30,847 18,208
------- ------- -------
Cash flows from investing activities:
Capital expenditures (12,535) (3,208) (11,510)
Proceeds from asset dispositions 185 3,046 3,524
Investment in marketable securities (11,952) -- (15,933)
Proceeds from sale or maturity
of marketable securities 11,988 -- 15,744
Additional advances to GPM -- -- (1,292)
Acquisitions, net of cash received -- (8,234) --
------- ------- -------
Net cash used in investing activities (12,314) (8,396) (9,467)
------- ------- -------
Cash flows from financing activities:
Repayment of debt (2,000) (4,235) (9,097)
Issuance of common stock 556 2,532 401
------- ------- -------
Net cash used in financing activities (1,444) (1,703) (8,696)
------- ------- -------
Net increase in cash and cash equivalents 9,099 20,748 45
Cash and cash equivalents at
beginning of year 47,973 27,225 27,180
------- ------- -------
Cash and cash equivalents at end of year $57,072 $47,973 $27,225
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A - SIGNIFICANT ACCOUNTING POLICIES
Nature 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.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
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 $1,777,000 and $1,568,000 at June 30, 1996 and 1995, respectively.
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 $4,326,000 and
$4,324,000 at June 30, 1996 and 1995. There were no related charges
to operations in 1996, 1995, or 1994.
Other Assets - In 1996, $23,711,000 of goodwill, net of
accumulated amortization of $2,731,000, 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
undiscounted future cash flows of acquired companies and their
contribution to the overall operations of the Company.
In March 1995, the SFAS 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 fiscal year ended June 30, 1997. The Company will
adopt SFAS No. 121 in 1997 and believes the adoption will have no
material effect on the Company's results of operations or financial
position.
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.
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 (19,767,039 in 1996;
19,313,276 in 1995; and 17,997,207 in 1994) computed on the treasury
stock method.
The Company adopted a stockholder rights plan on February 9,
1996, designed to assure that the Company's stockholders receive
fair and equal treatment in the event of any proposed takeover of
the Company and to guard against partial tender offers, squeeze-
outs, open market accumulations, and other abusive tactics to gain
control without paying all stockholders a fair price. The rights
plan was not adopted in response to any specific takeover proposal.
Under the rights plan, the Company declared a dividend of one right
("Right") on each share of the Company's common stock. Each Right
will entitle the holder to purchase one one-hundredth of a share of
a new Series A Junior Participating Preferred Stock, par value
$1.00 per share, at an exercise price of $50.00. Each Right will
entitle its holder to purchase a number of common shares of the
Company having a market value of twice the exercise price. The
Rights are not currently exercisable and will become exercisable
only in the event a person or group acquires beneficial ownership
of 20 percent or more of the Company's Common Stock. The dividend
distribution was made on February 29, 1996 to stockholders of record
on that date. The Rights will expire on February 26, 2006.
Reference is made to the footnotes entitled "Operating
Leases" and "Investments in Unconsolidated Entities" for applicable
accounting policies.
B - LONG-TERM DEBT
Long-term debt at June 30, 1996 and 1995 consisted of
(thousands of dollars):
<TABLE>
<CAPTION>
June 30, June 30,
1996 1995
-------- --------
<S> <C> <C>
Notes payable to insurance companies;
interest payable quarterly at 11.85%;
collateralized by aircraft. $ - $2,000
Revolving credit facility Note A, expiring
December 1, 1996; interest payable monthly
at the bank's base rate (8.25% at June 30,
1996); collateralized by eligible
receivables, inventory, and equipment
of CPS (recourse to CPS only). 2,350 2,350
Revolving credit facility Note B, expiring
December 1, 1996; interest payable monthly
at 9.125%; collateralized by eligible
receivables inventory of equipment of CPS
(recourse to CPS only). 2,500 2,500
Subordinated term note payable to minority
interest owner of CPS; payable upon
redemption of certain shares of CPS common
and preferred stock; interest payable at
5% on maturity; unsecured (recourse to
CPS only). 750 750
------- -------
Total Debt 5,600 7,600
Less current maturities 4,850 2,000
------- ------
Total Long-term Debt $ 750 $5,600
======= ======
</TABLE>
As of June 30, 1996, the Company had a $10 million unsecured
line of credit with a bank that expires on January 31, 1997. There
were no amounts outstanding during the year ended June 30, 1996.
The revolving credit facilities are for CPS, a subsidiary of
the Company and is recourse to CPS only. The maximum borrowing
level is limited to a borrowing base of eligible receivables,
inventory, and equipment of CPS. The base cannot exceed $7.5
million. CPS's debt obligations contain covenants related to
certain financial ratios and minimum capital levels.
Interest paid during the year was $743,000; $827,000; and
$1,138,000 for 1996, 1995, and 1994, 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, total debt at June 30, 1996
approximates the fair value of the debt.
The Company has $4,850,000 of debt maturities due in 1997 and
$750,000 due after fiscal year end 2001.
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 at June 30, 1996 and
1995, which is less than the estimated fair value of the Company's
share of unencumbered assets. In the following unaudited table,
HHII represents $3,755,000 and $4,727,000 of the assets and
$2,241,000 and $2,984,000 of the equity for June 30, 1996 and 1995,
respectively. HHII also represents $10,727,000; $13,685,000; and
$19,777,000 of revenues and $1,834,000; $(305,000); and $2,478,000
of net income for the years 1996, 1995, and 1994, respectively.
During 1996 and 1995, $1,556,000 and $1,550,000 in dividends were
received from HHII. No material dividends were received from HHII
during 1994.
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, 1996 and 1995. During 1996, 1995, and 1994, $2,500,000;
$2,500,000; and $2,027,000, respectively, in dividends were received
from the venture. During 1996, the venture's Board of Directors
approved a cash dividend, of which the Company's share applicable
to fiscal year 1997 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>
1996 1995
---- ----
<S> <C> <C>
Current assets $48,418 $48,307
Non-current assets 29,521 34,212
------- -------
Total assets $77,939 $82,519
======= =======
Current liabilities $ 8,769 $ 8,868
Non-current liabilities 3,335 5,064
Equity 65,835 68,587
------- -------
Total liabilities and equity $77,939 $82,519
======= =======
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Revenues $51,629 $54,180 $60,172
======= ======= =======
Gross profit $20,229 $18,859 $22,235
======= ======= =======
Net income $12,537 $11,135 $13,133
======= ======= =======
</TABLE>
During 1996, 1995, and 1994, respectively, revenues of
$5,169,000; $5,295,000; and $6,269,000 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, 1996, 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 $8,001,000 of the U.S.
Treasury investments mature within one year and approximately
$11,966,000 mature from one to three years. There were $3,985,000
sales of investments in U.S. Treasury investments during the year
ended June 30, 1996. The proceeds approximated the carrying cost
of the investments. 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. 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. As of June 30, 1996, 114,983 shares of the
Company's Common Stock were reserved for issue upon exercise of the
Class B Warrants. The warrants expire on December 22, 1996. 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 unaudited income statement data
reflects the impact the GPM merger would have had on the Company's
results of operations for 1995 and 1994 had the transaction taken
place on July 1, 1993:
<TABLE>
<CAPTION>
Proforma Results for the
Year Ended June 30,
------------------------
(unaudited)
1995 1994
---- ----
<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.
Bristow Helicopters
On March 27, 1996, the Company announced that it entered into
a letter of intent to purchase up to fifty percent of the capital
stock of Bristow Helicopter Group Limited ("Bristow"). The seller
of the Bristow capital stock is a syndicate of investors led by
Morgan Grenfell Development Capital Limited of London. On
September 27, 1996, the Company announced that it has also reached
an agreement in principle with Caledonia Investments plc
("Caledonia"), the other major shareholder of Bristow. According
to the terms of the transaction, Caledonia will reduce its economic
interest in Bristow while assuming voting control, and will become
a significant shareholder in the Company. 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. The British Civil Aviation Authority ("CAA") has
approved the transaction subject to final review of definitive
documentation. The transaction, which values Bristow at
approximately $300 million, is also subject to final documentation,
completion of a due diligence investigation by the Company, and
approval by the respective Boards of Directors. The Company will
finance the transaction, with a combination of Cash, debt, and
common stock.
F - OPERATING LEASES
The Company has noncancelable operating leases in connection
with the lease of certain equipment, land, and facilities. Rental
expense incurred under these leases was $1,998,000 in 1996;
$2,195,000 in 1995; and $1,741,000 in 1994. As of June 30, 1996,
aggregate future payments under noncancelable operating leases are
as follows: 1997 - $1,241,000; 1998 - $1,073,000; 1999 - $600,000;
2000 - $281,000; 2001 - $119,000; and thereafter $523,000.
G - INCOME TAXES
The amounts of deferred tax assets and liabilities are as
follows (thousands of dollars):
<TABLE>
<CAPTION>
June 30, June 30,
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets $ 2,823 $ 3,241
Deferred tax liabilities (22,094) (21,271)
-------- --------
Net, deferred tax liability $(19,271) $(18,030)
======== ========
</TABLE>
The components of and changes in the net deferred taxes are as
follows (thousands of dollars):
<TABLE>
<CAPTION>
Addition
June 30, Deferred for June 30, Deferred June 30,
1994 (Expense) Acquisition 1995 (Expense) 1996
-------- --------- ----------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
DEFERRED TAX
ASSETS:
Excess of book
expenses over
tax expenses $ 2,500 $ (308) $1,049 $ 3,241 $ (418) $ 2,823
Credit carry-
forward 229 (229) -- -- -- --
-------- ------- ------ -------- ------- --------
Deferred tax
assets 2,729 (537) 1,049 3,241 (418) 2,823
DEFERRED TAX
LIABILITIES:
Excess of tax
over book
depreciation (15,571) (969) 22 (16,518) (1,000) (17,518)
Other tax
expenses in
excess of
book
expenses (5,138) 385 -- (4,753) 177 (4,576)
-------- ------- ------ -------- ------- --------
Deferred tax
liabilities (20,709) (584) 22 (21,271) (823) (22,094)
-------- ------- ------ -------- ------- --------
Net deferred
tax
liabilities $(17,980) $(1,121) $1,071 $(18,030) $(1,241) $(19,271)
======== ======= ====== ======== ======= ========
</TABLE>
Income before provision for income taxes for the years ended
June 30 was as follows (thousands of dollars):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Domestic $10,978 $15,140 $15,497
Foreign 10,481 10,256 8,128
------- ------- -------
Total $21,459 $25,396 $23,625
======= ======= =======
</TABLE>
The provision for income taxes for each of the three years
ended June 30, 1996 consisted of the following (thousands of dollars):
<TABLE>
<CAPTION>
For the year ended June 30,
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current $4,978 $6,240 $1,463
Deferred 1,241 1,121 4,915
------ ------ ------
Total $6,219 $7,361 $6,378
====== ====== ======
</TABLE>
The reconciliation of Federal statutory and effective
income tax rates is shown below:
<TABLE>
<CAPTION>
For the year ended June 30,
---------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory rate 35% 35% 35%
Utilization of foreign tax credits (5) (7) (4)
Additional taxes on foreign source income 2 3 1
Foreign source income not taxable (7) (4) 0
Utilization of Foreign net operating losses 0 0 (5)
State taxes provided 2 3 2
Other, net 2 (1) (2)
---- ---- ----
Effective tax rate 29% 29% 27%
==== ==== ====
</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, 1996. 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.
Income taxes paid during 1996, 1995, and 1994 were
$5,656,000; $3,843,000; and $3,097,000, 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 $744,000;
$1,102,000; and $952,000 for the years ended June 30, 1996, 1995,
and 1994, 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 $124,000; $407,000; and $518,000 for the
years ended June 30, 1996, 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.
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, 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
Granted 164,000
Exercised (24,460)
Expired or Cancelled (14,000)
--------
Outstanding - June 30, 1996 988,500 $1.00 -- $15.4375
========
</TABLE>
As of June 30, 1996 and 1995, 838,500 and 699,960,
respectively, options were exercisable at prices ranging from $1.00
to $15.4375 per share. Under the Company's stock option plans there
were 1,764,000 shares of Common Stock reserved for issue at June 30,
1996.
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.
In October 1995, the SFAS No. 123 - "Accounting for Stock-
Based Compensation" was issued and required to be adopted by the
Company no later than the fiscal year ended June 30, 1997. SFAS No.
123 encourages, but does not require, the adoption of a fair value
based method of accounting for employee stock options. Entities
electing to continue to measure compensation costs using the
intrinsic value based method of accounting prescribed by APB Opinion
25 - "Accounting for Stock Issued to Employees" must make pro forma
disclosures of net income and earnings per share as if the fair
value based method of accounting had been applied. The Company
plans to continue to account for its employee stock options in
accordance with the provisions of APB Opinion 25 and will provide
the necessary pro forma disclosures.
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 fiscal years
ended June 30, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Operating Revenues: (1)
Aviation Services $ 86,079 $ 85,526
GPM 31,209 32,810
CPS 39,478 25,309
-------- --------
Total $156,766 $143,645
======== ========
Operating Profit (Loss):
Aviation Services $ 17,612 $ 24,079
GPM (183) 223
CPS 311 (1,330)
------- --------
Total segment operating profit $ 17,740 $ 22,972
Corporate overhead (3,614) (3,695)
Earnings from unconsolidated entities 4,056 4,050
Interest income, net 3,277 2,069
-------- --------
Pre-tax income $ 21,459 $ 25,396
======== ========
</TABLE>
(1) Net of Inter-Segment revenues of $4,273,000 and $4,764,000
for 1996 and 1995, respectively.
<TABLE>
<CAPTION>
Capital
Expenditures
-------------------
1996 1995
---- ----
<S> <C> <C>
Aviation Services $11,908 $2,609
GPM 99 198
CPS 528 401
------- ------
Total $12,535 $3,208
======= ======
</TABLE>
<TABLE>
<CAPTION>
Depreciation
and amortization
-------------------
1996 1995
---- ----
<S> <C> <C>
Aviation Services $7,082 $7,357
GPM 1,347 1,727
CPS 682 470
Corporate 119 116
------ ------
Total $9,230 $9,670
====== ======
</TABLE>
<TABLE>
<CAPTION>
Identifiable Assets
-------------------
1996 1995
---- ----
<S> <C> <C>
Aviation Services $164,560 $152,150
GPM 26,684 30,529
CPS 17,990 17,640
Corporate 32,276 29,032
-------- --------
Total $241,510 $229,351
======== ========
</TABLE>
All of the Company's operating revenues and operating
profits for the year ended June 30, 1994, were from Aviation
Services.
Segment information by geographic areas for the years ended
June 30, 1996, 1995, and 1994 is as follows (thousands of dollars):
<TABLE>
<CAPTION>
United
States Foreign Consolidated
------ ------- ------------
<S> <C> <C> <C>
1996
- ----
Operating revenue $140,689 $16,077 $156,766
======== ======= ========
Operating profit $ 13,480 $ 4,260 $ 17,740
Earnings from
unconsolidated entities 4,056
Corporate overhead (3,614)
Interest income, net 3,277
--------
Pre-tax income $ 21,459
========
Identifiable assets at June 30 $180,850 $60,660 $241,510
======== ======= ========
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
======== ======= ========
</TABLE>
During 1996, 1995, and 1994, 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 1996, 1995, or 1994 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 1996 or 1995. 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
($7,441,000 in 1996; $7,118,000 in 1995; and $5,630,000 in 1994)
have been eliminated in the amounts shown above.
J - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------
Sept. 30 Dec. 31 Mar. 31 June 30
-------- ------- ------- -------
(thousands of dollars,
except per share amounts)
<S> <C> <C> <C> <C>
1996
- ----
Revenue $38,767 $39,944 $37,800 $39,718
Gross profit 6,742 6,152 6,854 6,657
Net income 3,659 3,456 4,111 4,050
Earnings per common share 0.19 0.18 0.21 0.20
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
</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 5, 1996.
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 5, 1996.
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 5, 1996.
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 5, 1996.
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, 1996 and 1995
Consolidated Statement of Income for the three years
ended June 30, 1996
Consolidated Statement of Stockholders' Investment for the
three years ended June 30, 1996
Consolidated Statement of Cash Flows for the three years
ended June 30, 1996
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 No. Report Date Number
-------- ---------------- ------ ---- -------
<S> <C> <C> <C> <C>
(3) Articles of Incorporation
and By-laws
(1) Delaware Certificate
of Incorporation 0-5232 10-K Jun 1989 3(10)
(2) Agreement and Plan
of Merger dated
December 29, 1987 0-5232 10-K Jun 1989 3(11)
(3) Certificate of Merger
dated December 29, 1987 0-5232 10-K Jun 1990 3(3)
(4) Certificate of
Correction of Certificate
of Merger dated
January 20, 1988 0-5232 10-K Jun 1990 3(4)
(5) Certificate of
Amendment of
Certificate of
Incorporation
dated November 30, 1989 0-5232 10-K Jun 1990 3(5)
(6) Certificate of
Amendment of
Certificate of
Incorporation
dated December 9,1992 0-5232 8-K Dec 1992 3
(7) Rights Agreement and
Form of Rights
Certificate 0-5232 8-A Feb 1996 4
(8) Amended and Restated
By-laws 0-5232 8-K Feb 1996 3(7)
(9) Certificate of
Designation of Series
A Junior Participating
Preferred Stock
(10) Material Contracts
(1) 1978 Stock Option and
Stock Appreciation
Rights Plan, as
amended * 33-14800 S-8 Jun 1987 4(a)
(2) Employee Incentive
Award Plan * 0-5232 10-K Jun 1981 10(5)
(3) Executive Severance
Agreement, similar
contract omitted
pursuant to Instruction
2 to Item 601 of
Regulation S-K * 0-5232 10-K Jun 1989 10(12)
(4) Executive Welfare Benefit
Agreement, similar
agreement omitted
pursuant to
Instruction 2 to
Item 601 of
Regulation S-K * 33-9596 S-4 Dec 1986 10(ww)
(5) Executive Welfare Benefit
Agreement, similar
agreements are
omitted pursuant
to Instruction
2 to Item 601 of
Regulation S-K * 33-9596 S-4 Dec 1986 10(xx)
(6) Offshore Logistics, Inc.
1991 Non-qualified
Stock Option Plan
for Non-employee
Directors * 33-50946 S-8 Aug 1992 4.1
(7) Agreement and Plan of
Merger dated as of
June 1, 1994,
as amended 33-79968 S-4 Aug 1994 2(1)
(8) Shareholders
Agreement
dated as of
June 1, 1994 33-79968 S-4 Aug 1994 2(2)
(9) Proposed Form of
Non-competition
Agreement with
Individual
Shareholders 33-79968 S-4 Aug 1994 2(3)
(10) Proposed Form of
Joint Venture
Agreement 33-79968 S-4 Aug 1994 2(4)
(11) Grasso Corporation
1990 Long-Term
Incentive
Plan * 33-85670 S-8 Oct 1994 14
(12) Offshore Logistics, Inc.
1994 Long-Term
Management
Incentive Plan * 33-87450 S-8 Dec 1994 84
(13) Offshore Logistics, Inc.
Annual Incentive
Compensation
Plan * 0-5232 10-K Jun 1995 10(20)
</TABLE>
* Compensatory Plan or Arrangement
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
The Company filed a Form 8-K dated February 8, 1996.
Information reported was under Item 5 - Other Events
Related to the Company's Amended and Restated By-laws.
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.
By: /s/ George M. Small
----------------------------------
George M. Small
Vice President - Chief Financial Officer
(Principal Financial and Accounting Officer)
September 27, 1996
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>
<S> <C> <C>
/s/ James B. Clement Chairman of the Board, President September 27, 1996
- ----------------------- Chief Executive Officer,
James B. Clement and Director
/s/ Louis F. Crane Director September 27, 1996
- -----------------------
Louis F. Crane
/s/ David S. Foster Director September 27, 1996
- -----------------------
David S. Foster
/s/ David M. Johnson Director September 27, 1996
- -----------------------
David M. Johnson
/s/ Kenneth M. Jones Director September 27, 1996
- -----------------------
Kenneth M. Jones
/s/ Harry C. Sager Director September 27, 1996
- -----------------------
Harry C. Sager
/s/ George M. Small Vice President, Chief Financial September 27, 1996
- ----------------------- Officer, and Director
George M. Small
Director September 27, 1996
- -----------------------
Howard Wolf
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 57,072
<SECURITIES> 19,967
<RECEIVABLES> 29,743
<ALLOWANCES> 0
<INVENTORY> 26,724
<CURRENT-ASSETS> 134,200
<PP&E> 138,590
<DEPRECIATION> 64,401
<TOTAL-ASSETS> 241,510
<CURRENT-LIABILITIES> 18,264
<BONDS> 750
0
0
<COMMON> 195
<OTHER-SE> 199,488
<TOTAL-LIABILITY-AND-EQUITY> 241,510
<SALES> 156,766
<TOTAL-REVENUES> 156,229
<CGS> 120,594
<TOTAL-COSTS> 142,102
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 779
<INCOME-PRETAX> 21,459
<INCOME-TAX> 6,219
<INCOME-CONTINUING> 15,276
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,276
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
</TABLE>
EXHIBIT 3(9)
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
OFFSHORE LOGISTICS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
__________________________________________
Offshore Logistics, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware (hereinafter called the "Corporation"), hereby
certifies that the following resolution was adopted by the
Board of Directors of the Corporation as required by Section
151 of the General Corporation Law at a meeting duly called
and held on February 8, 1996:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation
(hereinafter called the "Board of Directors" or the "Board")
in accordance with the provisions of the Certificate of
Incorporation, the Board of Directors hereby creates a series
of Preferred Stock, par value $.01 per share (the "Preferred
Stock"), of the Corporation and hereby states the designation
and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. DESIGNATION AND AMOUNT. The shares of
such series shall be designated as "Series A Junior
Participating Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting the Series A
Preferred Stock shall be 1,000,000. Such number of shares may
be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number
of shares of Series A Preferred Stock to a number less than
the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible
into Series A Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or any similar
stock) ranking prior and superior to the Series A
Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the
holders of Common Stock, par value $.01 per share (the
"Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June,
September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to
the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-
cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock.
In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series
A Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided
in paragraph (A) of this Section immediately after it
declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $1 per share on the Series A
Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumula-
tive on outstanding shares of Series A Preferred Stock
from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue
is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than
the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series
A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of
Series A Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred
Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivi-
sion or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event shall
be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in any
other Certificate of Designations creating a series of
Preferred Stock or any similar stock, or by law, the
holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock
shall have no special voting rights and their consent
shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Preferred Stock
as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay dividends, or make any
other distributions, on any shares of stock ranking
on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and all
such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to
which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock
ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire
for consideration any shares of Series A Preferred
Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in ac-
cordance with a purchase offer made in writing or
by publication (as determined by the Board of
Directors) to all holders of such shares upon such
terms as the Board of Directors, after
consideration of the respective annual dividend
rates and other relative rights and preferences of
the respective series and classes, shall determine
in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series
A Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of
Designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders
of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares
of Series A Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an ag-
gregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the ag-
gregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in propor-
tion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case each share of Series A Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding im-
mediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series A
Preferred Stock shall not be redeemable.
Section 9. RANK. The Series A Preferred Stock shall
rank, with respect to the payment of dividends and the
distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.
Section 10. AMENDMENT. The Certificate of
Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares
of Series A Preferred Stock, voting together as a single
class.
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its Chairman of the
Board and attested by its Secretary this 29th day of February,
1996.
/s/ James B. Clement
----------------------------
Chairman of the Board
Attest:
/s/ George M. Small
- -------------------------------
Secretary
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included 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 27, 1996
EXHIBIT 21
OFFSHORE LOGISTICS, INC.
Subsidiaries of the Registrant at June 30, 1996
<TABLE>
<CAPTION>
Percentage
Place of of Voting
Company 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%
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%
Medic Systems, Inc. Delaware 100%
Medic Systems International, Inc. Panama 100%
Offshore Logistics Management Services, Inc. Louisiana 100%
</TABLE>
