SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
|_| Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period _____ to _____
Commission File Number 0-5232
Offshore Logistics, Inc.
(Exact name of registrant as specified in its charter)
Delaware 72-0679819
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
224 Rue de Jean
P. O. Box 5C, Lafayette, Louisiana 70505
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (318) 233-1221
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate the number shares outstanding of each of the issuer's classes of
Common Stock, as of June 30, 1998.
21,856,921 shares of Common Stock, $.01 par value
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Statement of Income
(thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------
1998 1997
-------- --------
<S> <C> <C>
GROSS REVENUE
Operating revenue...................................... $117,273 $100,211
Gain (loss) on disposal of equipment................... 280 (230)
-------- --------
117,553 99,981
OPERATING EXPENSES
Direct cost............................................ 89,969 72,455
Depreciation and amortization.......................... 8,478 8,029
General and administrative............................. 6,284 6,542
-------- --------
104,731 87,026
OPERATING INCOME....................................... 12,822 12,955
Earnings from unconsolidated entities.................. 1,100 1,001
Interest income........................................ 889 878
Interest expense....................................... 5,013 5,070
-------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES...................... 9,798 9,764
Provision for income taxes............................. 2,939 2,929
Minority interest...................................... (306) (242)
-------- --------
INCOME FROM CONTINUING OPERATIONS...................... 6,553 6,593
Discontinued operations:
Income (Loss) from CPS operations................... -- (15)
-------- --------
NET INCOME............................................. $ 6,553 $ 6,578
======== ========
BASIC:
Income per common share:
Continuing operations............................... $ 0.30 $ 0.31
Discontinued operations............................. -- --
-------- --------
Net income per common share............................ $ 0.30 $ 0.31
======== ========
DILUTED:
Income per common share:
Continuing operations............................... $ 0.29 $ 0.29
Discontinued operations............................. -- --
-------- --------
Net income per common share............................ $ 0.29 $ 0.29
======== ========
</TABLE>
2
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
(thousands of dollars)
<TABLE>
<CAPTION>
June 30, March 31,
1998 1998
--------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................$ 49,061 $ 56,076
Accounts receivable.................................. 90,450 85,543
Inventories.......................................... 79,368 76,139
Prepaid expenses..................................... 4,167 5,542
--------- --------
Total current assets............................... 223,046 223,300
Investments in unconsolidated entities.................. 11,284 7,866
Property and equipment - at cost:
Land and buildings................................... 12,782 13,088
Aircraft and equipment............................... 567,158 556,318
--------- --------
579,940 569,406
Less: accumulated depreciation and amortization........ (105,819) (98,267)
--------- --------
474,121 471,139
Other assets............................................ 33,299 33,706
--------- --------
$ 741,750 $736,011
========= ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable.....................................$ 30,639 $ 31,024
Accrued liabilities.................................. 44,118 42,612
Deferred taxes....................................... 18,294 18,335
Current maturities of long-term debt................. 9,491 8,693
--------- --------
Total current liabilities.......................... 102,542 100,664
Long-term debt, less current maturities................. 247,392 251,560
Deferred credits........................................ 2,000 594
Deferred taxes.......................................... 93,799 93,455
Minority interest....................................... 10,128 9,853
Stockholders' Investment:
Common Stock, $.01 par value, authorized
35,000,000 shares; outstanding 21,856,921 and
21,854,921 at June 30 and March 31, respectively
(exclusive of 517,550 treasury shares)............. 219 219
Additional paid-in capital........................... 123,100 123,061
Retained earnings.................................... 158,747 152,194
Cumulative translation adjustment.................... 3,823 4,411
--------- --------
285,889 279,885
--------- --------
$ 741,750 $736,011
========= ========
</TABLE>
3
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------
1998 1997
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income...........................................$ 6,553 $ 6,578
Adjustments to reconcile net income to cash
provided by used in operating activities:
Depreciation and amortization........................ 8,479 8,028
Increase in deferred taxes........................... 505 1,976
(Gain) loss on asset dispositions.................... (280) 230
Equity in earnings from unconsolidated entities
(over) under dividends received.................... (503) 40
Minority interest in earnings........................ 306 242
Discontinued operations.............................. -- 15
Increase in accounts receivable...................... (4,990) (21,797)
Increase in inventories.............................. (3,330) (1,754)
Increase in prepaid expenses and other............... (1,518) (182)
Increase (decrease) in accounts payable.............. (324) 1,828
Increase (decrease) in accrued liabilities........... 1,799 (2,685)
Increase in deferred credits......................... 1,406 1,753
--------- --------
Net cash provided by (used in) operating activities..... 8,103 (5,728)
--------- --------
Cash flows from investing activities:
Capital expenditures................................. (12,586) (37,839)
Proceeds from asset dispositions..................... 788 527
--------- --------
Net cash used in investing activities................... (11,798) (37,312)
--------- --------
Cash flows from financing activities:
Proceeds from borrowings............................. -- 27,746
Repayment of debt.................................... (3,012) (506)
Issuance of common stock............................. 39 1,357
--------- --------
Net cash provided by (used in) financing activities..... (2,973) 28,597
--------- --------
Effect of exchange rate changes in cash................. (347) 16
--------- --------
Net decrease in cash and cash equivalents............... (7,015) (14,427)
Cash and cash equivalents at beginning of period........ 56,076 29,829
--------- --------
Cash and cash equivalents at end of quarter.............$ 49,061 $ 15,402
========= ========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest.............................................$ 5,339 $ 6,159
Income taxes......................................... 676 193
</TABLE>
4
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
NOTE A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, any adjustments
considered necessary for a fair presentation have been included. Operating
results for the three months ended June 30, 1998, are not necessarily indicative
of the results that may be expected for the year ending March 31, 1999. For
further information, refer to the consolidated financial statements and
footnotes included in the Company's Annual Report on Form 10-K for the fiscal
year period March 31, 1998.
NOTE B - Earnings per Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". SFAS
No. 128 replaced the previously reported primary and fully diluted earnings
per share with basic and diluted earnings per share.
Basic earnings per common share were computed by dividing net income by
the weighted average number of shares of common stock outstanding during the
year. Diluted earnings per common share for the three months ended June 30, 1998
and 1997 were determined on the assumptions that the convertible debt was
converted on April 1, 1997. The Company adopted SFAS No. 128, "Earnings per
Share," effective December 15, 1997. All income per share amounts for all
periods have been presented, and where necessary, restated to conform to the
requirements of SFAS No. 128. The following table sets forth the computation of
basic and diluted income from continuing operations per share:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------
1998 1997
<S> <C> <C>
Income from Continuing Operations
(thousands of dollars):
Income available to common stockholders......... $ 6,553 $ 6,593
Interest on convertible debt, net of taxes...... 1,029 1,029
---------- ---------
Income available to common stockholders,
plus assumed conversions..................... $ 7,582 $ 7,622
========== =========
Shares:
Weighted average number of common
shares outstanding............................ 21,856,459 21,102,611
Options......................................... 173,016 433,902
Convertible debt................................ 4,286,520 4,286,520
---------- -----------
Weighted average number of common shares
outstanding, plus assumed conversions......... 26,315,995 25,823,033
========== ===========
Income from Continuing Operations:
Basic earnings per share........................ $ 0.30 $ 0.31
========== ===========
Diluted earnings per share...................... $ 0.29 $ 0.29
========== ===========
</TABLE>
5
<PAGE>
NOTE C - Commitments and Contingencies
On August 6, 1997, the domestic pilots at the Company voted to become
members of the Office and Professional Employees International Union ("OPEIU").
The Company commenced contract negotiations with the OPEIU on April 1, 1998 and
it is not certain how long this process may take. During the three months ended
June 30, 1998, $28.7 million of operating revenues were from the Company's
domestic helicopter operations. The Company does not believe that the result of
these organizing efforts will place it at a competitive disadvantage with its
competitors as management believes that pay scales and work rules will continue
to be similar throughout the industry.
NOTE D - Comprehensive Income
In 1998, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income". SFAS No. 130 requires an entity to report
and display comprehensive income and its components. Comprehensive income
is as follows (thousands of dollars):
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------
1998 1997
------- ------
<S> <C> <C>
Net Income............................................... $ 6,553 $6,578
Other Comprehensive Income:
Currency translation adjustment....................... (588) 2,725
------- ------
Comprehensive Income..................................... $ 5,965 $9,303
======= ======
</TABLE>
NOTE E - Derivative Financial Instruments
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". The
Statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Changes in a derivative's
fair value are to be recognized currently in earnings unless specific hedge
accounting criteria are met. The company has not yet quantified the impacts on
its financial statements that may result from adoption of SFAS No. 133, which is
required no later than April 1, 2000.
6
<PAGE>
NOTE F - Supplemental Condensed Consolidating Financial Information
On January 27, 1998, the Company completed the sale of $100 million 7 7/8%
Senior Notes due 2008, which were discounted to yield 7.915%. The net proceeds
to the Company were $97.2 million. In connection with the sale of the Senior
Notes, certain of the Company's subsidiaries (the "Guarantor Subsidiaries")
jointly, severally and unconditionally guaranteed the payment obligations under
the Senior Notes. The following supplemental financial information sets forth,
on an unconsolidated basis, the balance sheet, statement of income and cash flow
information for Offshore Logistics, Inc. ("Parent Company Only"), for the
Guarantor Subsidiaries and for Offshore Logistics, Inc.'s other subsidiaries
(the "Non-Guarantor Subsidiaries").
The supplemental condensed consolidating financial information has been
prepared pursuant to the rules and regulations for condensed financial
information and does not include all disclosures included in annual financial
statements, although the Company believes that the disclosures made are adequate
to make the information presented not misleading. Certain reclassifications were
made to conform all of the financial information to the financial presentation
on a consolidated basis. The principal eliminating entries eliminate investments
in subsidiaries, intercompany balances and intercompany revenues and expenses.
During fiscal 1998, the Company formed a new wholly owned subsidiary and
contributed the Company's operating assets, separate from its investment in its
subsidiaries, to the newly formed subsidiary. The subsidiary is a Guarantor
Subsidiary. For purposes of the historical supplemental financial information,
the Company has presented the aforementioned operating assets and related
operating results together with the operating assets and results of other
Guarantor Subsidiaries.
The allocation of the consolidated income tax provision was made using the
with and without allocation method.
7
<PAGE>
Supplemental Condensed Consolidating Balance Sheet
June 30, 1998
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..........$ 25,464 $ 6,839 $ 16,758 $ -- $ 49,061
Accounts receivable................ 1,217 24,154 68,089 (3,010) 90,450
Inventories........................ -- 35,531 43,837 -- 79,368
Prepaid expenses................... 260 491 3,416 -- 4,167
---------- ---------- ---------- ---------- ----------
Total current assets............. 26,941 67,015 132,100 (3,010) 223,046
Intercompany investment.............. 228,877 -- -- (228,877) --
Investments in unconsolidated
entities.......................... 1,108 229 9,947 -- 11,284
Intercompany note receivables........ 231,307 2,523 (3,094) (230,736) --
Property and equipment--at cost:
Land and buildings................. -- 3,182 9,600 -- 12,782
Aircraft and equipment............. 3,627 148,675 414,856 -- 567,158
---------- ---------- ---------- ---------- ----------
3,627 151,857 424,456 -- 579,940
Less: Accumulated depreciation
and amortization................. (2,678) (66,918) (36,223) -- (105,819)
---------- ---------- ---------- ---------- ----------
949 84,939 388,233 -- 474,121
Other assets......................... 13,495 19,363 330 111 33,299
---------- ---------- ---------- ---------- ----------
$ 502,677 $ 174,069 $ 527,516 $ (462,512) $ 741,750
========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable...................$ 63 $ 4,406 $ 26,170 $ -- $ 30,639
Accrued liabilities................ 6,688 10,356 30,355 (3,281) 44,118
Deferred taxes..................... -- -- 18,294 -- 18,294
Current maturities of
long-term debt............... -- -- 9,491 -- 9,491
---------- ---------- ---------- ---------- ----------
Total current liabilities......... 6,751 14,762 84,310 (3,281) 102,542
Long-term debt, less current
maturities........................ 198,000 -- 49,392 -- 247,392
Intercompany notes payable........... 2,500 -- 227,965 (230,465) --
Deferred credits..................... -- -- 2,000 -- 2,000
Deferred taxes....................... (2,805) 28,339 68,265 -- 93,799
Minority interest.................... 10,128 -- -- -- 10,128
Stockholders' investment:
Common stock....................... 219 4,048 1,384 (5,432) 219
Additional paid in capital......... 123,100 58,318 18,923 (77,241) 123,100
Retained earnings.................. 158,748 68,602 79,194 (147,797) 158,747
Cumulative translation adjustment.. 6,036 -- (3,917) 1,704 3,823
---------- ---------- ---------- ---------- ----------
288,103 130,968 95,584 (228,766) 285,889
---------- ---------- ---------- ---------- ----------
$ 502,677 $ 174,069 $ 527,516 $ (462,512) $ 741,750
========== ========== ========== ========== ==========
</TABLE>
8
<PAGE>
Supplemental Condensed Consolidating Statement of Income
Three Months Ended June 30, 1998
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
GROSS REVENUE
Operating revenue......................$ 3 $ 36,381 $ 80,889 $ -- $ 117,273
Intercompany revenue................... -- 2,516 51 (2,567) --
Gain on disposal of equipment.......... 3 84 193 -- 280
---------- ----------- -------- ---------- ----------
6 38,981 81,133 (2,567) 117,553
OPERATING EXPENSES
Direct cost .......................... 2 31,048 58,919 -- 89,969
Intercompany expense................... -- 51 2,516 (2,567) --
Depreciation and amortization.......... 38 2,425 6,015 -- 8,478
General and administrative............. 1,292 1,484 3,508 -- 6,284
---------- ----------- -------- ---------- ----------
1,332 35,008 70,958 (2,567) 104,731
---------- ----------- -------- ---------- ----------
OPERATING INCOME....................... (1,326) 3,973 10,175 -- 12,822
Earnings from unconsolidated entities.. 5,456 -- 1,104 (5,460) 1,100
Interest income........................ 6,895 90 292 (6,388) 889
Interest expense....................... 3,672 -- 7,729 (6,388) 5,013
---------- ----------- -------- ---------- ----------
INCOME BEFORE PROVISION
FOR INCOME TAXES.................. 7,353 4,063 3,842 (5,460) 9,798
Allocation of consolidated income taxes 506 1,369 1,064 -- 2,939
Minority interest...................... (294) -- (12) -- (306)
---------- ----------- -------- ---------- ----------
NET INCOME.............................$ 6,553 $ 2,694 $ 2,766 $ (5,460) $ 6,553
========== =========== ======== ========== ==========
</TABLE>
9
<PAGE>
Supplemental Condensed Consolidating Statement of Cash Flows
Three Months Ended June 30, 1998
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities...............$ (8,847) $ 4,799 $ 12,151 $ -- $ 8,103
---------- --------- -------- --------- ---------
Cash flows from investing activities:
Capital expenditures............... -- (3,295) (9,291) -- (12,586)
Proceeds from asset dispositions... 8 143 637 -- 788
---------- --------- -------- --------- ---------
Net cash provided by (used in)
investing activities............... 8 (3,152) (8,654) -- (11,798)
---------- --------- -------- --------- ---------
Cash flows from financing activities:
Repayment of debt.................. -- -- (3,012) -- (3,012)
Issuance of common stock........... 39 -- -- -- 39
---------- --------- -------- --------- ---------
Net cash provided by (used in)
financing activities............... 39 -- (3,012) -- (2,973)
---------- --------- -------- --------- ---------
Effect of exchange rate changes in cash. -- -- (347) -- (347)
---------- --------- -------- --------- ---------
Net increase (decrease) in cash and
cash equivalents................... (8,800) 1,647 138 -- (7,015)
Cash and cash equivalents
at beginning of period............. 34,264 5,192 16,620 -- 56,076
---------- --------- -------- --------- ---------
Cash and cash equivalents
at end of period..................$ 25,464 $ 6,839 $ 16,758 $ -- $ 49,061
========== ========= ======== ========= =========
</TABLE>
10
<PAGE>
Supplemental Condensed Consolidating Balance Sheet
March 31, 1998
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..........$ 34,264 $ 5,192 $ 16,620 $ -- $ 56,076
Accounts receivable................ 599 23,908 63,065 (2,029) 85,543
Inventories........................ -- 31,998 44,141 -- 76,139
Prepaid expenses................... 304 663 4,575 -- 5,542
---------- ---------- ---------- ---------- ----------
Total current assets............. 35,167 61,761 128,401 (2,029) 223,300
Intercompany investment.............. 218,143 -- -- (218,143) --
Investments in unconsolidated entities 1,108 229 6,529 -- 7,866
Intercompany note receivables........ 221,130 2,674 1,441 (225,245) --
Property and equipment--at cost:
Land and buildings................. -- 3,174 9,914 -- 13,088
Aircraft and equipment............. 3,642 145,648 407,028 -- 556,318
---------- ---------- ---------- ---------- ----------
3,642 148,822 416,942 -- 569,406
Less: Accumulated depreciation
and amortization................. (2,657) (65,050) (30,560) -- (98,267)
---------- ---------- ---------- ---------- ----------
985 83,772 386,382 -- 471,139
Other assets......................... 13,447 19,781 368 110 33,706
---------- ---------- ---------- ---------- ----------
$ 489,980 $ 168,217 $ 523,121 $ (445,307) $ 736,011
========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable...................$ 46 $ 4,389 $ 26,589 $ -- $ 31,024
Accrued liabilities................ 6,027 8,818 30,037 (2,270) 42,612
Deferred taxes..................... -- -- 18,335 -- 18,335
Current maturities of
long-term debt............... 2,569 -- 6,124 -- 8,693
---------- ---------- ---------- ---------- ----------
Total current liabilities......... 8,642 13,207 81,085 (2,270) 100,664
Long-term debt, less current
maturities........................ 195,374 -- 56,186 -- 251,560
Intercompany notes payable........... 2,500 -- 222,505 (225,005) --
Deferred credits..................... -- -- 594 -- 594
Deferred taxes....................... (4,077) 27,730 69,802 -- 93,455
Minority interest.................... 9,853 -- -- -- 9,853
Stockholders' investment:
Common stock....................... 219 4,048 1,384 (5,432) 219
Additional paid in capital......... 123,061 58,318 19,071 (77,389) 123,061
Retained earnings.................. 152,194 64,914 72,394 (137,308) 152,194
Cumulative translation adjustment.. 2,214 -- 100 2,097 4,411
---------- ---------- ---------- ---------- ----------
277,688 127,280 92,949 (218,032) 279,885
---------- ---------- ---------- ---------- ----------
$ 489,980 $ 168,217 $ 523,121 $ (445,307) $ 736,011
========== ========== ========== ========== ==========
</TABLE>
11
<PAGE>
Supplemental Condensed Consolidating Statement of Income
Three Months Ended June 30, 1997
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
GROSS REVENUE
Operating revenue......................$ 5 $ 33,712 $ 66,494 $ -- $ 100,211
Intercompany revenue................... -- 2,467 142 (2,609) --
Gain (loss) on disposal of equipment... -- (176) (54) -- (230)
---------- ----------- -------- ---------- ----------
5 36,003 66,582 (2,609) 99,981
OPERATING EXPENSES
Direct cost .......................... 2 25,072 47,381 -- 72,455
Intercompany expense................... -- 51 2,558 (2,609) --
Depreciation and amortization.......... 126 2,200 5,703 -- 8,029
General and administrative............. 1,305 1,247 3,990 -- 6,542
---------- ----------- -------- ---------- ----------
1,433 28,570 59,632 (2,609) 87,026
---------- ----------- -------- ---------- ----------
OPERATING INCOME....................... (1,428) 7,433 6,950 -- 12,955
Earnings from unconsolidated entities.. 5,747 -- 994 (5,740) 1,001
Interest income........................ 4,426 59 468 (4,075) 878
Interest expense....................... 1,519 -- 7,626 (4,075) 5,070
---------- ----------- -------- ---------- ----------
INCOME FROM CONTINUING
OPERATIONS BEFORE PROVISION
FOR INCOME TAXES.................. 7,226 7,492 786 (5,740) 9,764
Allocation of consolidated income taxes 381 2,394 154 -- 2,929
Minority interest...................... (252) -- 10 -- (242)
---------- ----------- -------- ---------- ----------
INCOME FROM CONTINUING
OPERATIONS........................ 6,593 5,098 642 (5,740) 6,593
Discontinued operations:
Income (loss) from CPS operations. 91 -- (218) 112 (15)
---------- ----------- -------- ---------- ----------
NET INCOME............................$ 6,684 $ 5,098 $ 424 $ (5,628) $ 6,578
========== =========== ========== ========== ===========
</TABLE>
12
<PAGE>
Supplemental Condensed Consolidating Statement of Cash Flows
Three Months Ended June 30, 1997
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities............. $ (17,914) $ 3,786 $ 8,377 $ 23 $ (5,728)
---------- --------- -------- --------- ---------
Cash flows from investing activities:
Capital expenditures............. -- (3,215) (34,624) -- (37,839)
Proceeds from asset dispositions. -- -- 527 -- 527
---------- --------- -------- --------- ---------
Net cash used in investing activities. -- (3,215) (34,097) -- (37,312)
---------- --------- -------- --------- ---------
Cash flows from financing activities:
Proceeds from borrowings......... -- -- 27,746 -- 27,746
Repayment of debt................ -- -- (506) -- (506)
Issuance of common stock......... 1,357 -- -- -- 1,357
---------- --------- -------- --------- ---------
Net cash provided by financing
activities....................... 1,357 -- 27,240 -- 28,597
---------- --------- -------- --------- ---------
Effect of exchange rate changes in cash -- -- 16 -- 16
---------- --------- -------- --------- ---------
Net increase (decrease) in
cash and cash equivalents........ (16,557) 571 1,536 23 (14,427)
Cash and cash equivalents
at beginning of period........... 21,459 3,545 4,825 -- 29,829
---------- --------- -------- --------- ---------
Cash and cash equivalents
at end of period................ $ 4,902 $ 4,116 $ 6,361 $ 23 $ 15,402
========== ========= ======== ========= =========
</TABLE>
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company, through its Air Logistics' subsidiaries ("Air Log") and with
its investment in Bristow Aviation Holdings Limited ("Bristow"), 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.
A summary of operating results for the applicable periods is as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Gross revenue...................................... $117,553 $ 99,981
Operating expenses................................. 104,731 87,026
-------- ---------
Operating income................................... 12,822 12,955
Earnings from unconsolidated entities.............. 1,100 1,001
Interest income (expense), net..................... (4,124) (4,192)
-------- ---------
Income before provision for income taxes........... 9,798 9,764
Provision for income taxes......................... 2,939 2,929
Minority interest.................................. (306) (242)
Discontinued operations............................ -- (15)
-------- ---------
Net income......................................... $ 6,553 $ 6,578
======== =========
</TABLE>
Results of Operations
Helicopter Activities
Air Log and Bristow conduct helicopter activities principally in the Gulf
of Mexico and the North Sea, respectively, where they provide support to the
production, exploration and construction activities of oil and gas companies.
Air Log also charters helicopters to governmental entities involved in
regulating offshore oil and gas operations in the Gulf of Mexico. Bristow also
provides search and rescue work for the British Coast Guard. Air Log's Alaskan
activity is primarily related to providing helicopter services to the Alyeska
Pipeline. Air Log has service agreements with, and equity interests in, entities
that operate aircraft in Egypt and Mexico ("unconsolidated entities"). Air Log
and Bristow also operate in various other international areas (including
Australia, Brazil, China, Colombia, the Falklands, Mexico, Nigeria and
Trinidad). These international operations are subject to local governmental
regulations and to uncertainties of economic and political conditions in those
areas.
14
<PAGE>
The following table sets forth certain operating information from helicopter
activities.
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------
1998 1997
------- -------
(in thousands, except flight hours)
<S> <C> <C>
Flight hours (excludes unconsolidated entities):
Air Log..................................... 30,972 35,777
Bristow..................................... 25,965 23,581
------- -------
Total Helicopter Activities.............. 56,937 59,358
======= =======
Operating revenues:
Air Log..................................... $ 30,984 $29,853
Bristow..................................... 75,830 61,511
Eliminations................................ (132) (142)
------- -------
Total Helicopter Activities.............. $106,682 $91,222
======== =======
Operating income, excluding gain
or loss on disposal of equipment:
Air Log..................................... $ 4,849 $ 8,488
Bristow..................................... 7,389 5,390
------- -------
Total Helicopter Activities.............. $12,238 $13,878
======= =======
Gross margin, excluding gain or loss on disposal of equipment:
Air Log..................................... 15.7% 28.4%
Bristow..................................... 9.7% 8.8%
Total Helicopter Activities.............. 11.5% 15.2%
</TABLE>
Gulf of Mexico flight activity declined 15% from the same three month period in
the prior year. Despite the reduction in flight activity, operating revenues in
the Gulf of Mexico increased by 5% for the three months ended June 30, 1998
compared to the prior year, primarily the result of rate increases obtained
during fiscal 1998. Operating cost associated with Gulf of Mexico operations
increased 26% from the prior year, as the Company increased aircraft and
personnel to meet expected increased demands in fiscal 1999. This increase was
also impacted by the April 1998 pay increase to a significant portion of the
Company's personnel to meet wage levels prevailing in the market. The reduction
in flight activity occurred rapidly due to the decline in commodity prices. Air
Log has had no reduction in the number of aircraft committed from the prior
year, which has limited the Company's ability to adjust its cost structure to
meet activity levels. Operating income from Gulf of Mexico operations were $2.3
million and $6.1 million for the three months ended June 30, 1998 and 1997,
respectively. In July 1998, the Company implemented a cost containment program,
including a hiring freeze, delayed acceptance of additional aircraft and
procedures to reduce maintenance and repair expense.
Commodity prices have had no impact to date on North Sea and other Bristow
international operations. Bristow's flight hours for the three months ended June
30, 1998 were 25,965 a 10% increase from the same period in the prior year.
Operating revenues for the three months ended June 30, 1998 and 1997 were $75.8
million and $61.5 million, respectively, a 23% increase from the prior year.
Operating income attributable to Bristow was $7.4 million for the three months
ended June 30, 1998. On July 1, 1998 Bristow started the previously announced
contract with Shell UK Exploration and Production in the North Sea and expects
significant increases to flight activity and operating income in future periods.
15
<PAGE>
International operating revenues from Air Log for the three months ended
June 30, 1998 were $5.1 million, relatively unchanged from the prior year.
International operating income from Air Log for the three months ended June 30,
1998 and 1997 were $1.8 million and $1.6 million, respectively.
Production Management Services
Demand for GPM's services remains strong. Operating revenues for GPM were
$11.5 million and $10.0 million for the three months ended June 30, 1998 and
1997, respectively. Operating expenses for GPM were $10.7 million and $9.3
million for the three months ended June 30, 1998 and 1997, respectively. GPM
operating income was $0.8 million for the three months ended June 30, 1998,
compared to $0.7 million for the same period in the prior year.
Liquidity and Capital Resources
Cash and cash equivalents were $49.1 million as of June 30, 1998, a $7.0
million decrease from March 31, 1998. Working capital as of June 30, 1998 was
$120.5 million, a $2.1 million decrease from March 31, 1998. Total debt was
$256.9 million as of June 30, 1998.
Capital expenditures during the three months ended June 30, 1998 of
$12.6 million included one AS332L - Super Puma and two new Bell 407's. The
Company used existing cash to purchase these aircraft.
Subsequent to June 30, 1998, the Board of Directors reaffirmed its February 1996
authorization to repurchase up to 1 million shares of the Company's Common Stock
in the open market or through private transactions. The authorization has no
time limit and authorizes management to effect repurchases of common stock
and/or debt securities, as they deem prudent. As of August 12, 1998, the Company
repurchased 100,000 shares of Common Stock and $3.3 million face value of 6%
Convertible Subordinated Notes in the open market.
As of June 30, 1998, Bristow had a (pound)15 million ($25 million)
revolving credit facility with a syndicate of United Kingdom banks that matures
on December 31, 2000. Bristow had no funds drawn under this facility as of June
30, 1998.
As of June 30, 1998, OLOG had a $20 million unsecured working capital line
of credit with a bank that expires on September 30, 1999. Management believes
that normal operations and other available financing will provide sufficient
working capital and cash flow to meet debt service in the foreseeable future.
The effective income tax rates from continuing operations were
approximately 30% for the three months ended June 30, 1998 and 1997. The
variance between the Federal statutory rate and the effective rate for these
periods is due primarily to non-taxable foreign source income and foreign tax
credits available to reduce domestic taxable income.
The Company has received notices from the United States Environmental
Protection Agency that it is one of approximately 160 potentially responsible
parties ("PRP") at one Superfund site in Texas, one of over 300 PRPs at one site
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.
16
<PAGE>
Forward Looking
This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements
included herein other than statements of historical fact are forward-looking
statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct. Important factors that could cause actual
results to differ materially from the Company's expectations ("Cautionary
Statements") may include, but are not limited to, demand for Company services,
worldwide activity levels in oil and natural gas exploration, development and
production, fluctuations in oil and natural gas prices, unionization and the
response thereto of the Company's customers, currency fluctuations,
international political conditions and ability to achieve Year 2000 compliance.
All subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements.
17
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Listed below are the documents filed as exhibits to this report:
Exhibit 27 - Financial Data Statement
(b) Reports on Form 8-K:
There were no Form 8-K filings during the quarter ended June 30, 1998.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OFFSHORE LOGISTICS, INC.
BY: /s/ George M. Small
---------------------
GEORGE M. SMALL
President
DATE: August 12, 1998
BY: /s/ Drury A. Milke
---------------------
DRURY A. MILKE
Chief Financial Officer
DATE: August 12, 1998
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE
30, 1998 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-1-1998
<PERIOD-END> JUN-30-1998
<CASH> 49,061
<SECURITIES> 0
<RECEIVABLES> 90,450
<ALLOWANCES> 0
<INVENTORY> 79,368
<CURRENT-ASSETS> 223,046
<PP&E> 579,940
<DEPRECIATION> 105,819
<TOTAL-ASSETS> 741,750
<CURRENT-LIABILITIES> 102,542
<BONDS> 247,392
0
0
<COMMON> 219
<OTHER-SE> 285,670
<TOTAL-LIABILITY-AND-EQUITY> 741,750
<SALES> 117,273
<TOTAL-REVENUES> 117,553
<CGS> 89,969
<TOTAL-COSTS> 104,731
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,013
<INCOME-PRETAX> 9,798
<INCOME-TAX> 2,939
<INCOME-CONTINUING> 6,553
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,553
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.29
</TABLE>
