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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 March 31, 1999
|_| 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 5-C, 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:
Title of each Class: None Name of each exchange on which registered: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.01 par value)
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 is 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 May 29, 1999 was $223,252,436.
The number of shares outstanding of the registrant's Common Stock as of May
29, 1999 was 21,103,421.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on September 20, 1999, are incorporated by reference
into Part III hereof.
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<PAGE>
OFFSHORE LOGISTICS, INC.
INDEX--FORM 10-K
PART I
Page
Item 1. Business ..........................................................1
Item 2. Properties.........................................................6
Item 3. Legal Proceedings..................................................7
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............................................... 9
Item 6. Selected Financial Data ...........................................9
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................10
Item 7a.Quantitative and Qualitative Disclosures about Market Risk........16
Item 8. Consolidated Financial Statements and Supplementary Data..........17
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure..............................................49
PART III
Item 10. Directors and Executive Officers of the Registrant ..............49
Item 11. Executive Compensation ..........................................49
Item 12. Security Ownership of Certain Beneficial Owners and Management...49
Item 13. Certain Relationships and Related Transactions ..................49
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..50
Signatures................................................................54
i
<PAGE>
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., ("OLOG") and its majority-owned entities and non-majority owned
entities. 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.
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. See Note C in "Notes to Consolidated Financial Statements" for
discussion of the Company's investment in Bristow. At March 31, 1999, Air Log's
and Bristow's operations included 373 aircraft (including 78 aircraft operated
through unconsolidated entities).
Through a series of transactions in 1993 and 1994, the Company expanded its
operations to include production management services. In September 1994, Grasso
Production Management, Inc. ("GPM") became a wholly-owned subsidiary of the
Company.
See Note K 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 years ended March 31,
1999 and 1998 and the nine month period ended March 31, 1997.
FISCAL YEAR CHANGE
On May 1, 1997, the Board of Directors approved a change in the Company's
fiscal year end from June 30 to March 31, effective for the nine month period
ended March 31, 1997. As a result of this change in year end, this report
includes the fiscal years ended March 31, 1999 and 1998 and the nine month
fiscal transition period from July 1, 1996 through March 31, 1997.
FORWARD LOOKING STATEMENTS
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. Such forward-looking statements include, without limitation, the
statements herein regarding the timing of future events regarding the Company's
operations, the statements under "Helicopter Activities -- United States
Operations" regarding the ability of the Company to better manage its helicopter
fleet, under "Production Management Services -- Customers" and "Production
Management Services -- Competition" regarding outsourcing and cost structure and
the market for production management operations, under "General -- Union
Activities" regarding the effect of the Company's pilots electing to be
represented by a union, under "Legal Proceedings" regarding the Company's
potential liability on environmental claims, under "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- General" and
"Helicopter Activities" regarding, respectively, concentration and globalization
of the helicopter industry, restructuring of the oil and gas industry, decreased
levels of activity and their effects on the Company's future prospects, the
estimated compensation increases resulting from the union contract with the
Company's pilots, and the estimation of annual revenue from a contract not yet
fully phased-in and the effect of such contract and under "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" and "Year 2000 Matters" regarding,
respectively, the Company's anticipated future financial position and cash
requirements and the impact of Year 2000 compliance.
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 by the Company's customers, currency fluctuations,
international political conditions, the ability to achieve reduced operating
expenses 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.
1
<PAGE>
HELICOPTER ACTIVITIES
Air Log and Bristow charter their 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 activities are seasonal in nature and
influenced by weather conditions, length of daylight hours, and level of
offshore production, exploration, and construction activity.
The following table sets forth the number and type of aircraft operated by
Air Log and Bristow at the end of the past three fiscal years.
<TABLE>
<CAPTION>
Passenger Speed March 31, March 31, March 31,
Type Capacity (MPH) 1999 1998 1997
- ------------------------- --------- ----- -------- --------- --------
<S> <C> <C> <C> <C> <C>
AS332L Super Puma........ 18 160 33 30 29
Sikorsky S-61............ 19 135 17 17 17
Bell 214ST............... 18 150 6 6 5
Puma SA 330J............. 16 150 2 2 2
Sikorsky S-76............ 12 160 41 41 36
Bell 212................. 12 115 42 42 44
Bell 412................. 12 140 6 6 6
Bo - 105................. 4 125 19 21 22
AS335 Twinstar........... 5 135 9 10 10
Bell 407................. 6 130 19 16 3
Bell 206L Series......... 6 125 66 68 71
Bell 206B Jet Ranger..... 4 115 21 24 26
Other.................... 14 18 17
--- --- ---
295 301 288
=== === ===
</TABLE>
At March 31, 1999, Air Log and Bristow owned or employed pursuant to a
capital lease arrangement 291 of the 295 aircraft that are operated. The
following table sets forth certain information concerning the 291 aircraft.
<TABLE>
<CAPTION>
As of
March 31, 1999
--------------------------
Net
Type Number Book Value
- ------------------------------------------- ------ ----------
(000's)
<S> <C> <C>
AS332L Super Puma.......................... 31 $ 211,863
Sikorsky S-61.............................. 17 38,283
Bell 214ST................................. 6 12,786
Puma SA 330J............................... 2 2,678
Sikorsky S-76.............................. 39 47,995
Bell 212................................... 42 38,329
Bell 412................................... 6 6,497
Bo - 105................................... 19 5,799
AS335 Twinstar............................. 9 2,528
Bell 407................................... 19 23,513
Bell 206L Series........................... 66 17,558
Bell 206B Jet Ranger....................... 21 1,547
Other...................................... 7 10,092
--- ---------
284 419,468
Fixed Wing................................. 7 1,544
--- ---------
291 $ 421,012
=== =========
</TABLE>
In addition to the foregoing 291 aircraft, at March 31, 1999, Air Log and
Bristow operated 4 aircraft pursuant to operating lease arrangements. Bristow
provides engineering and administrative support to 47 aircraft operated in an
unconsolidated entity involved in military training. Air Log and Bristow also
provide services and technical support to other unconsolidated entities that
operate 26 helicopters of various types and 5 fixed wing aircraft.
2
<PAGE>
United States Operations
The United States ("U.S.") helicopter activities are conducted primarily
from operating facilities along the Gulf of Mexico. As of March 31, 1999, Air
Log operated 143 aircraft in that area. Air Log also operates 12 aircraft in
Alaska. Although the Company's business is primarily dependent upon activity
levels in the offshore oil and gas industry, the existence of other markets for
helicopter services distinguishes the Company's business from other segments of
the oil service industry. Other markets for helicopters include emergency
medical transportation, agricultural and forestry support and general aviation
activities. These other markets enable the Company to better manage its
helicopter fleet by providing both a source of additional aircraft during times
of high demand and potential purchasers for excess Company aircraft during times
of reduced demand.
United Kingdom/Europe Operations
During 1997, the Company expanded its presence in the United Kingdom and
Europe through its investment in Bristow. As of March 31, 1999, 66 aircraft were
being operated by Bristow in the United Kingdom and Europe, mainly in the North
Sea offshore market. These activities are primarily dependent upon activity
levels in the offshore oil and gas production, exploration and construction
industries and search and rescue needs in that area.
Bristow also has a 50% interest in an unconsolidated entity that has a 15
year contract to provide pilot training and maintenance services to the British
military. This entity purchased and specially modified 47 aircraft and maintains
a staff of approximately 600 employees dedicated to conducting these training
activities which began in May 1997.
Other 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 March 31, 1999, Air Log and Bristow operated 74 of
their aircraft in locations outside the United States and Europe. Air Log
operated 17 helicopters in Brazil, Colombia, Egypt and Mexico. Bristow operated
23 aircraft in Africa and 34 aircraft elsewhere throughout the world.
In addition to its direct operations in international areas, Air Log has
service agreements with, and equity interests in, entities that operate 31
aircraft in Egypt and Mexico. Air Log provides services and technical support to
these entities and, from time to time, leases aircraft to these entities as
additional support for these operations.
Customers
The principal customers for the Company's helicopter activities are
national and international petroleum and offshore construction companies. During
1999, 1998, and 1997, no one customer accounted for more than 10% of the
Company's consolidated operating revenues.
Competition
The helicopter transportation business is highly competitive on a worldwide
basis. Chartering of helicopters is usually done on the basis of competitive
bidding among those having the necessary experience, equipment and resources.
The technical requirements of operating helicopters offshore have increased as
oil and gas activities have moved into deeper water requiring more sophisticated
aircraft to service the market. As it is difficult to maintain an adequate
shorebased and offshore infrastructure and provide the working capital required
to conduct such operations, the number of new entrants into the Gulf of Mexico
market has been few. One of Air Log's competitors has substantially more
helicopters in service in the Gulf of Mexico. The harsh conditions in the North
Sea demand larger, more sophisticated helicopters to conduct operations. Bristow
has two significant competitors in the North Sea.
Industry Hazards and Insurance
Hazards, such as adverse weather and marine conditions, crashes, collisions
and fire are inherent in the offshore transportation industry, and may result in
losses of equipment, revenues or death of personnel.
Air Log and Bristow maintain Hull and Liability insurance, which generally
insures them against certain legal liabilities to others, as well as damage to
their aircraft. It is also their policy to carry insurance for or require their
customers to provide indemnification against expropriation, war risk and
confiscation of their helicopters employed in international operations. There is
no assurance that in the future they will be able to maintain their existing
coverage or that the related premiums will not increase substantially.
3
<PAGE>
Government Regulation
United States. As a commercial operator of small aircraft, Air Log is
subject to regulations pursuant to the Federal Aviation Act of 1958, as
amended, and other statutes. Air Log carries persons and property in its
helicopters pursuant to an Air Taxi Certificate granted by the Federal
Aviation Administration ("FAA").
The FAA regulates the flight operations of Air Log, and in this respect,
exercises jurisdiction over personnel, aircraft, ground facilities and certain
technical aspects of its operations. The National Transportation Safety Board is
authorized to investigate aircraft accidents and to recommend improved safety
standards. Air Log 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 are 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 Air Log's aircraft may be subject
to deregistration under the Federal Aviation Act and loss of the privilege of
operating within the United States. At March 31, 1999, the Company had
approximately 1,350,346 common shares held by persons with foreign addresses
representing approximately 6.4% of the 21,103,421 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.
United Kingdom. As a commercial operator of aircraft, Bristow is subject to
the Licensing of Air Carriers Regulations 1992, and Regulations made under the
Civil Aviation Act 1982 and other statutes. Bristow carries persons and property
in its helicopters pursuant to an operating license issued by the Civil Aviation
Authority ("CAA").
The CAA regulates the flight operations of Bristow, and in this respect,
exercises jurisdiction over personnel, aircraft, ground facilities and certain
technical aspects of Bristow's operations. Accident investigations are carried
out by the Air Accident Investigation Branch of the Department of the
Environment, Transport and the Regions. The CAA often imposes improved safety
standards on the basis of a report of the Inspector.
Under the Licensing of Air Carriers Regulations 1992, it is unlawful to
operate certain aircraft for hire within the United Kingdom unless such aircraft
are approved by the CAA. The holder of an operating license must meet the
ownership and control requirements of Council Regulation 2407/92 (i.e. the
entity that operates under the license must be owned directly or through
majority ownership by United Kingdom or European Economic Area nationals and
must at all times be effectively controlled by them).
Bristow's operations are subject to 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 Bristow'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 may in turn have an
adverse affect on the Company.
International. Operations other than in the United States and the United
Kingdom are subject to local governmental regulations and to uncertainties of
economic and political conditions in those areas. Because of the impact of local
laws, these operations are conducted primarily through entities (including joint
ventures) in which local citizens own interests and Air Log or Bristow 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.
4
<PAGE>
Currency Fluctuations
Most of Bristow's revenues and expenses are denominated in British Pounds
Sterling ("pound"). For the year ended March 31, 1999, approximately 51% of
consolidated operating revenues were translated from pounds into the United
States Dollar. In addition, a portion of Bristow's revenues are denominated in
other currencies (including Australian Dollars, French Francs, Nigerian Naira
and Trinidad and Tobago Dollars) to cover expenses in the areas and/or
currencies in which such expenses are incurred. To the extent operating revenues
are denominated in the same currency as operating expenses, the Company can
reduce its vulnerability to exchange rate fluctuations. Because the Company
maintains its financial statements in United States Dollars, it is vulnerable to
fluctuations in the exchange rate between the pound and the United States
Dollar.
PRODUCTION MANAGEMENT SERVICES
The Company's wholly owned subsidiary, GPM is the leading independent
contract 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 provide 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, engineering, 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 for certain of its customers.
Operations
GPM's production management services are conducted primarily from
production facilities in the Gulf of Mexico. As of March 31, 1999, GPM managed
or had personnel assigned to 217 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 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 customers to focus their efforts on their
core activities, which is the exploration for and development of oil and gas
reserves. During 1999, 1998 and 1997, 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 a number of competitors
that are 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 quality of personnel, training
programs, safety record 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 services will occur.
5
<PAGE>
Industry Hazards and Insurance
GPM's operations are subject to the normal risks associated with working on
oil and gas production facilities. 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, worker's compensation, automobile
liability and property and casualty insurance coverages.
Government Regulation
The Mineral Management Service ("MMS") regulates the production operations
of GPM's customers 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.
GENERAL
Employees
As of March 31, 1999 Air Log, Bristow and GPM employed 659, 2,067 and 546
employees worldwide, respectively. The Company's corporate staff consisted of 23
employees.
Union Activities
On August 6, 1997, the U.S. 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 on
April 15, 1999 announced that it had reached a tentative agreement with pilot
representatives on the contract's provisions. The contract calls for a four year
term beginning May 18, 1999. The contract provides the pilots with scheduled
increases in base pay and other fringe benefit enhancements and provides the
Company with strike protection and certain other rights to allow it to continue
to manage its business. The contract was ratified on May 18, 1999 by a 96%
affirmative vote of the pilot employees and on May 26, 1999, by a unanimous
affirmative vote of the Company's Board of Directors.
In January 1998, the OPEIU petitioned the National Mediation Board ("NMB")
to organize the Company's domestic mechanics and ground support personnel.
Certain objections to this petition were filed and the NMB dismissed the OPEIU
application on May 12, 1998. Under the Federal labor law rules, the union is
prohibited from petitioning the NMB for one year from date of dismissal. To
date, no subsequent petitions have been filed with the NMB.
The Company does not believe that the terms of the pilots' contract or
other potential organizing efforts will place it at a disadvantage with its
competitors as management believes that pay scales and work rules will continue
to be similar throughout the industry.
ITEM 2. Properties
See "Business -- Helicopter Activities" for a discussion of the number and
types of aircraft operated by Air Log and Bristow.
Air Log leases approximately 8 acres of land at the Acadiana Regional
Airport in New Iberia, Louisiana under a lease expiring in 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 14,440 square feet in a building in
Lafayette, Louisiana under a lease expiring in 2000. 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.
6
<PAGE>
Bristow leases land and facilities at Redhill Aerodrome near London, England
under a lease expiring in 2075. Leases of various hangars, offices and aviation
fuel facilities at Redhill Aerodrome expire during 2003.
Bristow leases a helicopter terminal, offices and hangar facilities at
Aberdeen Airport, Scotland under a lease expiring in 2013 with an option to
extend to 2023. Additional hangar and office facilities at Aberdeen Airport are
maintained under a lease expiring in 2030.
Bristow leases various hangars and terminal access at North Denes Airport
near Great Yarmouth, England under a lease expiring in 2014.
Bristow leases office space and hangar facilities at Sumburgh Airport in
Sumburgh, Shetland under a lease expiring in 1999 with renewal options through
2019, and at Unst in Shetland under a lease expiring in 1999 with a renewal
option to 2004.
Bristow owns and leases numerous residential locations near its operating
bases in the United Kingdom, Australia, China, Nigeria, and in the Caribbean
primarily for housing pilots and staff supporting those areas of operation.
GPM's Corporate offices occupy 6,000 square feet in a building in Houston,
Texas, under a lease expiring in 2002. 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.
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 Gulf Coast Vacuum Services Site, which is near Abbeville, Louisiana. The
Company is among over 300 PRPs identified with respect to this site. The EPA
alleged that the Company was a generator or transporter of hazardous substances
found at the two 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. During 1997, the
Company executed a consent decree with the EPA and settlement documents with the
Performing Parties with respect to the Company's previous exposure at the D.L.
Mudd site. Costs incurred were nominal.
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
Louisiana site. 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.
7
<PAGE>
ITEM 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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 June 29, 1999,
were as follows:
Name Age Position Held with Registrant
- ------------------- --- --------------------------------------------
George M. Small.......54 President and Director
Drury A. Milke........41 Vice President, Chief Financial Officer and Secretary
Gene Graves...........50 Vice President -- Marketing
Hans J. Albert........57 Vice President -- International Aviation
Neill Osborne.........50 Vice President -- Domestic Aviation
Patricia M. Como......38 Corporate Treasurer
E. H. Underwood III...42 General Counsel
H. Eddy Dupuis........34 Corporate Controller and Assistant Secretary
Mr. Small joined the Company in 1977 as Controller and was elected Vice
President -- Treasurer in 1979, Chief Financial Officer and Secretary in 1986
and President during the fiscal year ended March 31, 1998.
Mr. Milke joined the Company in 1988 as Director of Planning and
Development and was elected Vice President in 1990 and Chief Financial Officer
and Secretary during the fiscal year ended March 31, 1998. He is a CPA.
Mr. Graves joined the Company in 1993 as Vice President -- Aviation
Marketing and was elected Vice President -- Domestic Aviation in 1994 and Vice
President -- Marketing in 1998. 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-three years of experience in the aviation industry.
Mr. Osborne joined the Company in 1993 as Director of Operations for Air
Logistics and was elected Vice President -- Domestic Aviation in 1998. Prior to
joining the Company, Mr. Osborne had 24 years of aviation experience as a pilot
and a manager. Mr. Osborne is the immediate past Chairman of the Helicopter
Association International and the current Vice Chairman of the International
Federation of Helicopter Associations.
Mrs. Como joined the Company in 1990 as Controller and was elected
Treasurer during 1998. 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.
Mr. Dupuis joined the Company in 1998 as Controller. Prior to joining the
Company, Mr. Dupuis was a Manager with Arthur Andersen LLP.
8
<PAGE>
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.
March 31, 1999 March 31, 1998
------------------ ---------------
High Low High Low
-------- ------ ------ ------
First Quarter..................... 25 13/16 17 21 5/8 14 3/4
Second Quarter.................... 18 5/8 8 3/4 21 5/8 16 1/4
Third Quarter..................... 18 9 5/8 25 1/4 17 1/2
Fourth Quarter.................... 13 8 1/2 21 7/8 16
The approximate number of holders of record of Common Stock as of May 29,
1999 was 2,000.
On January 27, 1998, the Company issued $100 million of 7 7/8% Senior Notes
due 2008. The terms of the Senior Notes restrict payment of cash dividends to
shareholders. The Company has not paid dividends on its Common Stock since
January 1984.
ITEM 6. Selected Financial Data
The following table sets forth certain selected historical consolidated
financial data of the Company and should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements and Notes thereto included
elsewhere herein. The information presented reflects Cathodic Protection
Services Company ("CPS") as a discontinued operation. See Note E in "Notes to
Consolidated Financial Statements."
<TABLE>
<CAPTION>
Year Ended March 31, Nine Months Year Ended June 30,
--------------------------- Ended March 31, ------------------------
1999 1998 1997 (2) 1996 1995 (1)
------------- ----------- ----------- ----------- -----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Operating revenues...................... $ 466,440 $ 426,893 $ 167,128 $ 117,289 $ 118,336
============= =========== =========== =========== ===========
Income from continuing operations....... $ 20,920 $ 31,254 $ 17,625 $ 15,024 $ 18,962
============= =========== =========== =========== ===========
Net income.............................. $ 20,920 $ 31,408 $ 17,232 $ 15,276 $ 18,450
============= =========== =========== =========== ===========
Basic earnings per common share: (3)
Income from continuing operations.... $ 0.97 $ 1.45 $ 0.88 $ 0.77 $ 1.00
============= =========== =========== =========== ===========
Net income........................... $ 0.97 $ 1.46 $ 0.86 $ 0.78 $ 0.97
============= =========== =========== =========== ===========
Diluted earnings per common share: (3)
Income from continuing operations.... $ 0.97 $ 1.35 $ 0.85 $ 0.76 $ 0.98
============= =========== =========== =========== ===========
Net Income........................... $ 0.97 $ 1.36 $ 0.83 $ 0.77 $ 0.96
============= =========== =========== =========== ===========
Balance Sheet Data:
Total assets......................... $ 732,030 $ 736,011 $ 674,213 $ 230,741 $ 217,983
============= =========== =========== =========== ===========
Long-term obligations:
Long-term debt....................... $ 233,615 $ 251,560 $ 199,631 $ -- $ --
============= =========== =========== =========== ===========
Cash dividends declared per
common share......................... $ -- $ -- $ -- $ -- $ --
============= =========== =========== =========== ===========
</TABLE>
(1) Includes financial data for GPM after the effective date of the investment
on September 16, 1994.
(2) Includes financial data for Bristow after the effective date of the
investment on December 19, 1996 (See Note C in "Notes to Consolidated
Financial Statements").
(3) Earnings per share amounts for the nine months ended March 31, 1997 and
for the years ended June 30, 1996 and 1995 have been restated for the
adoption of Statement of Financial Accounting Standards No. 128 "Earnings
per share."
9
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The Company is a major supplier of helicopter transportation services to
the worldwide offshore oil and gas industry. In December 1996, the Company
expanded its aviation services and related operations through its investment in
Bristow Aviation Holdings Limited ("Bristow") (see Note C in the "Notes to the
Consolidated Financial Statements" for a complete discussion of this
investment). The investment in Bristow was influenced by the Company's belief
that the globalization of helicopter operators had begun with the then recent
acquisitions and consolidations completed by two of its major international
competitors. The Company believes that this trend will continue and accelerate
as helicopter operators seek to broaden their exposure to international markets
in order to better serve their customers and increase their access and influence
with financial markets, insurance markets and other suppliers. The combined
helicopter activities of the Company's Air Logistics subsidiaries (Air Log) and
that of Bristow, together with its investment in unconsolidated entities,
results in an operating fleet of 373 aircraft servicing the major oil and gas
markets of the world.
The Company also provides production management services to the domestic
offshore oil and gas industry through its wholly owned subsidiary, Grasso
Production Management, Inc. (GPM). GPM's services include furnishing personnel,
engineering, production operating services, paramedic services and the provision
of boat and helicopter transportation of personnel and supplies between onshore
bases and offshore facilities. The Company's investment in GPM was influenced by
its belief that a restructuring in the United States oil and gas industry was
taking place, and is continuing, creating opportunities to provide production
management services to both independent and major oil companies as they either
grow, contract or re-focus their activities accordingly.
The level of worldwide offshore oil and gas exploration, development and
production activity has traditionally influenced demand for the Company's
services. This was clearly evident during fiscal year 1999 when the oil and gas
industry experienced a significant downturn. A market over-supply of oil caused
prices to decline to their lowest level in over 12 years. This protracted
decline in commodity prices resulted in oil companies' canceling or deferring a
significant portion of their current and planned exploration and development
activities, and, accordingly, reduced demand for helicopter services in certain
markets and increased rate pressure from customers in other markets.
Additionally, oil companies sought to lower their internal and external
production costs through initiatives to reduce excess costs and make more
efficient use of contracted third party services. Another factor affecting
exploration, development and production activity is the merger activity among
both major and independent oil companies, as these organizations attempt to
increase their efficiencies. Generally, only the most promising exploration and
development projects from each merged entity will be pursued, resulting in
overall lower post merger exploration and development budgets.
The Company has no way of predicting the activity levels of either the oil
and gas industry in general or that of its specific customers. However,
management does believe that it may take some period of higher sustained
commodity prices before the industry commits resources for new exploration and
development activities, and, consequently, helicopter transportation services.
10
<PAGE>
Results of Operations
Operating results and other income statement information for the years
ended March 31, 1999 and 1998 and the nine month period ended March 31, 1997
follows (in thousands of dollars):
<TABLE>
<CAPTION>
Year Ended Nine Months
March 31, Ended
---------------------- March 31,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Operating revenues........................ $ 466,440 $ 426,893 $ 167,128
Gain (loss) on disposal of equipment....... 2,400 (238) 1,222
--------- --------- ---------
468,840 426,655 168,350
--------- --------- ---------
Direct cost................................ 363,272 311,641 119,106
Depreciation and amortization.............. 32,742 32,240 12,624
General and administrative................. 29,847 26,310 11,406
--------- --------- ---------
425,861 370,191 143,136
--------- --------- ---------
Operating income.......................... 42,979 56,464 25,214
Earnings from unconsolidated entities..... 5,104 7,205 2,602
Interest income (expense), net............ (16,351) (17,555) (2,228)
--------- ---------- -----------
Income before provision for income taxes.. 31,732 46,114 25,588
Provision for income taxes................ 9,509 13,833 7,675
Minority interest......................... (1,303) (1,027) (288)
Discontinued operations................... -- 154 (393)
--------- --------- ---------
Net income................................ $ 20,920 $ 31,408 $ 17,232
========= ========= =========
</TABLE>
11
<PAGE>
Consistent with the presentation of segment information in Note K in the
"Notes to Consolidated Financial Statements", the following table sets forth
certain operating information which will form the basis for discussion of each
of the two identified segments, Helicopter Activities and Production Management
and Related Services. In order to ease comparison of current and prior year
information, the table includes information for the twelve months ended March
31, 1997. Also shown, as presented in the prior year, is the nine months ended
March 31, 1997. See "Business - Fiscal Year Change" for a discussion of the
change in the Company's fiscal year.
<TABLE>
<CAPTION>
Nine
Twelve Months Ended March 31, Months Ended
-------------------------------------- March 31,
1999 1998 1997(1) 1997(1)
---------- ---------- ---------- ---------
(in thousands, except flight hours and gross margin percentages)
<S> <C> <C> <C> <C>
Flight hours (excludes unconsolidated entities):
Helicopter Activities:
Air Log..................................... 120,888 137,495 115,747 86,638
Bristow..................................... 107,301 95,987 25,683 25,683
---------- --------- --------- ---------
Total................................... 228,189 233,482 141,430 112,321
========== ========= ========= =========
Operating revenues:
Helicopter Activities:
Air Log..................................... $ 123,399 $ 123,544 $ 101,182 $ 77,185
Bristow..................................... 305,408 264,612 68,654 68,654
Less: Intercompany......................... (716) (587) (23) --
---------- --------- --------- ---------
Total................................... 428,091 387,569 169,813 145,839
Production management and related services...... 41,236 42,829 30,748 23,492
Corporate....................................... 5,580 4,069 52 43
Less: Intercompany ............................ (8,467) (7,574) (2,994) (2,246)
---------- --------- --------- ---------
Consolidated total................. $ 466,440 $ 426,893 $ 197,619 $ 167,128
---------- --------- --------- ---------
Operating expenses:
Helicopter Activities:
Air Log..................................... $ 99,575 $ 95,034 $ 77,394 $ 58,323
Bristow..................................... 289,582 236,378 61,514 61,514
Less: Intercompany.......................... (716) (587) (23) --
---------- --------- --------- ---------
Total.................................. 388,441 330,825 138,885 119,837
Production management and related services...... 39,035 39,755 29,652 22,310
Corporate....................................... 6,852 7,185 4,152 3,235
Less: Intercompany............................. (8,467) (7,574) (2,994) (2,246)
---------- --------- --------- ---------
Consolidated total................. $ 425,861 $ 370,191 $ 169,695 $ 143,136
---------- --------- --------- ---------
Operating income, excluding gain or loss on disposal of equipment:
Helicopter Activities:
Air Log..................................... $ 23,824 $ 28,510 $ 23,788 $ 18,862
Bristow..................................... 15,826 28,234 7,140 7,140
---------- --------- --------- ---------
Total.................................. 39,650 56,744 30,928 26,002
Production management and related services...... 2,201 3,074 1,096 1,182
Corporate....................................... (1,272) (3,116) (4,100) (3,192)
---------- --------- --------- ---------
Consolidated total................. $ 40,579 $ 56,702 $ 27,924 $ 23,992
========== ========= ========= =========
Gross margin, excluding gain or loss on disposal of equipment:
Helicopter Activities:
Air Log..................................... 19.3% 23.1% 23.5% 24.4%
Bristow ................................... 5.2% 10.7% 10.4% 10.4%
Total.................................. 9.3% 14.6% 18.2% 17.8%
Production management and related services...... 5.4% 7.2% 3.6% 5.0%
Consolidated total................. 8.7% 13.3% 14.1% 14.4%
</TABLE>
(1) Includes data for Bristow after the effective date of the investment on
December 19, 1996.
12
<PAGE>
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 services to 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, Brunei, China, Colombia, Mexico, Nigeria and Trinidad). These
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 Air Log, Bristow and unconsolidated entities:
March 31, March 31, March 31,
1999 1998 1997
-------- -------- --------
Number of aircraft operated (excludes unconsolidated entities):
United States - Air Log.................. 155 154 141
United Kingdom/Europe - Bristow.......... 66 73 75
International - both Airlog and Bristow.. 74 74 72
--- --- ---
Total....................................... 295 301 288
=== === ===
Number of aircraft operated by
unconsolidated entities..................... 78 78 42
=== === ===
The Company experienced mixed results from its Helicopter Activities during
fiscal 1999 as it saw revenues increase and operating income decrease. This is
in contrast to the increases experienced during 1998 and 1997 fiscal periods
primarily as a result of the Company's investment in Bristow and improved market
conditions in the Gulf of Mexico.
Air Log's flight activity decreased during fiscal 1999 by 12% from 1998
levels. This decrease is due primarily to the overall decrease in demand for
helicopter services from the oil and gas industry. Despite the decrease in
flight activity, Air Log's operating revenues remained unchanged from fiscal
1998 to 1999. Several factors, including rate increases (approximating 10%)
obtained in the third quarter of fiscal 1998 and the continued high percentage
of aircraft under contract between the two fiscal years, served to prevent an
otherwise expected decline in revenue. Flight hours and related revenue
generated per flight hour began trending downward from the first quarter of
fiscal 1999 onward as customers began scaling back operations without releasing
aircraft from fixed monthly leases until December 1998. While this situation had
a positive effect on revenues, it had an opposite effect on operating costs as
Air Log was required to keep these aircraft maintained and crewed ready for
flight, which contributed to Air Log's overall operating income decline of 16%
in fiscal 1999 from 1998. To protect the erosion of its margins, in July 1998
Air Log instituted stricter review and authorization procedures for maintenance
expenditures, put a hiring freeze in effect, and in February 1999 reduced its
workforce by 50 employees. Other factors contributing to Air Log's decline in
profitability in 1999 include the provisions of additional reserve for bad debts
of $.8 million for one significant customer which filed Chapter 11 bankruptcy
and $1.1 million for another significant customer experiencing financial
difficulties due to the devaluation of the Brazilian currency, and the accrual
of $1.3 million for changes in Air Log's compensated absences policies. Unlike
Air Log's other foreign operations, its customer in Brazil is exposed to
currency exchange risk as it earns all of its revenue in the Brazilian currency,
but incurs a majority of its expenses (including Air Log's leases) in United
States Dollars. Air Log's revenue from this Brazilian customer was $5.0 million
in fiscal 1999.
Air Log's activity levels in the Gulf of Mexico were strong during fiscal
1998 and 1997. Increases in helicopter rates in fiscal 1998 and 1997 had a
positive impact on operating revenues in the Gulf of Mexico during 1998 and
1997. Gulf of Mexico flight hours and operating revenues for 1998 increased 22%
and 24%, respectively, over the similar twelve month period in 1997. Gulf of
Mexico operating income increased $3.9 million for 1998, a 25% increase over
the similar period in 1997. Alaska's operations in 1998 were relatively
unchanged from the prior year. International flight activity from Air Log
continued to improve during the year ended March 31, 1998 and the nine months
ended March 31, 1997. International flight hours and operating revenues from Air
Log for 1998 increased over 4.3% and 10.7%, respectively, from the similar
twelve month period in 1997. International operating income increased $.9
million in 1998, a 15% increase over the similar period in 1997.
Beginning in fiscal 2000, Air Log's domestic pilots will be compensated in
accordance with the terms of a negotiated contract between the Company and the
union representing the pilot group. The contract calls for a four year term,
effective May 18, 1999. The contract provides the pilots with scheduled
increases in base pay and other fringe benefit enhancements and provides the
Company with strike protection and certain other rights to allow it to continue
to manage its
13
<PAGE>
business. The Company has extended the fringe benefit enhancements to Air Log's
non-union employee group as well. Based on current employment levels, Air Log's
compensation costs are projected to increase by $3.0 million in fiscal 2000 to
$27.8 million, a 12% increase, as a result of the union contract. The contract
also schedules three additional base pay increases of 3% each at varying
intervals of 12 to 15 months through the remainder of the contract term.
Bristow's flight activity increased during fiscal 1999 by 12% from 1998
levels resulting in a corresponding increase in operating revenue of 15%. These
increases are primarily attributed to the start up of the Shell Expro contract
on July 1, 1998, which accounted for 13,696 flight hours and $33.6 million in
revenue. Apart from Shell Expro activity, Bristow's fiscal 1999 North Sea flight
activity and revenue declined 6% and 4% respectively from 1998. These declines
in the North Sea were caused by a lack of available aircraft to perform ad hoc
work in early fiscal 1999 (due to full utilization of aircraft as a result of
the Shell Expro contract) and the general downturn in the oil and gas industry
in the last half of fiscal 1999. Bristow's operating income decreased by 44%
during fiscal 1999 from fiscal 1998, and it saw its gross margins deteriorate
from 10.7% in 1998 to 5.2% in 1999. Several factors contributed to this decline
in profitability, including the reduction of higher margin ad hoc flight
activity, the provision of additional reserve for bad debts of $.8 million and
higher maintenance and repair expenditures. In February 1999, Bristow instituted
procedures, similar to those of Air Log, to closely review all significant
maintenance and repair expenditures and to better utilize existing spare parts
and fleet capacity in order to manage its operating expense.
Bristow's flight hours were 95,987 and 25,683 for the year ended March 31,
1998 and for the period from investment (December 19, 1996) to March 31, 1997,
respectively. Operating revenues were $264.6 million and $68.7 million for the
year ended March 31, 1998 and for the period from investment to March 31, 1997,
respectively. Operating income and gross margin percentages attributable to
Bristow were $28.2 million and 10.7% for the year ended March 31, 1998. Gross
margin percentages for Bristow are lower than Air Log's, primarily due to
different market environments, size of equipment and the cost to operate that
equipment. As a result the consolidated gross margin from helicopter activities
for the 1998 fiscal year was lower than the prior year.
During fiscal 2000, two of Bristow's helicopter contracts which terminate
on July 31, 1999 will not be renewed. These contracts accounted for $43.4
million in revenue in fiscal 1999, or 24% of revenue from the North Sea. The
Aberdeen, Scotland base, from where these contracts are serviced, employs
approximately 600 staff. Management is currently developing a plan to adjust its
cost structure to adapt to the reduced volume of business. Management believes
that the impact of the above decrease in revenue will be partially offset by a
new contract which is being phased-in from January 1, 1999 to January 1, 2000
and that management believes should generate revenues of approximately $21
million per annum when fully operational.
Production Management and Related Services
GPM was also affected by the changing industry fundamentals during fiscal
1999. The reported 4% decline in revenues in 1999 from 1998 does not highlight
the significant level of customer turnover which is inherent in its business due
to mergers, business failures, and rate shopping by customers. Management was
successful in replacing most of the work lost during 1999. Gross margin declined
to 5% in 1999 from 7% in 1998, due primarily to an increase in the provision for
bad debts of $.5 million attributable to two customers in bankruptcy.
Additionally, some of the customer turnover discussed above was replaced with
lower margin work, contributing to the decline in margins.
GPM's production management activities and results experienced significant
improvements in 1998 with increases of 39% in revenues and 180% in operating
income over the same period from the prior year. Gross margins were 7.2% for the
year ended March 31, 1998, up from 3.2% from the same period in 1997. Operating
revenues were $41.2 million, $42.8 million and $23.5 million for the years ended
March 31, 1999 and 1998 and the nine months ended March 31, 1997, respectively.
Operating expenses for GPM were $39.0 million, $39.8 million and $22.3 million,
respectively for those periods. GPM's operating income was $2.2 million, $3.1
million and $1.2 million for the 1999, 1998 and 1997 fiscal periods,
respectively.
Corporate and Other
Corporate operating revenues are primarily generated from the intercompany
leasing of aircraft to the operating segments, which in consolidation is
eliminated. Corporate operating expenses in fiscal 1999 did not change
materially from 1998 levels. Consolidated general and administrative expenses
increased by $3.5 million during 1999 due primarily to the provisions for bad
debts discussed above for Air Log, Bristow and GPM. Earnings from unconsolidated
entities decreased in 1999 by $2.1 million due primarily to decreases in
dividends received ($2.9 million in 1999 compared to $4.7 million in 1998) from
equity investees accounted for under the cost method of accounting (See Note D
in the "Notes to Consolidated Financial Statements"). The decline in dividends
paid by these entities is directly attributable to the impact the oil industry
downturn has had on their respective operations. The effective income tax rates
from continuing operations were 30% for 1999, 1998, and 1997. The variance
between the Federal statutory rate and the effective rate for these peri-
14
<PAGE>
ods is due primarily to non-taxable foreign source income and foreign tax
credits available to reduce domestic taxable income. The Company's effective tax
rate is impacted by the amount of foreign source income generated by the Company
and its ability to realize foreign tax credits. Changes in the Company's
operations and operating location in the future could impact the Company's
effective tax rate.
Liquidity and Capital Resources
Cash and cash equivalents were $70.6 million as of March 31, 1999, a $14.5
million increase from March 31, 1998. Working capital as of March 31, 1999 was
$142.9 million, a $20.2 million increase from March 31, 1998. Total debt was
$243.7 million as of March 31, 1999, a $16.6 million decrease from March 31,
1998.
Cash flows provided by operating activities were $49.7 million, $68.9
million and $16.0 million in 1999, 1998 and 1997, respectively. The decrease in
cash flows provided by operating activities from 1998 to 1999 was due primarily
to the erosion in the oil and gas industry market conditions. During 1998, cash
flows provided by operating activity increased to $68.9 million from $16.0
million primarily due to improved market conditions in the Gulf of Mexico and
having twelve months of Bristow operations in 1998 compared to approximately
three months in 1997.
Cash flows used in investing activities were $13.0 million, $54.2 million
and $141.2 million for 1999, 1998 and 1997, respectively. Capital expenditures
during 1999 of $19.2 million included one AS332L-Super Puma and three Bell
407's. The Company used existing cash to purchase these aircraft. Deposits on
two new AS332L-Super Pumas made during the third quarter of 1999 were refunded
to the Company during the fourth quarter of 1999 after the Company decided to
lease rather than purchase these aircraft (see Note G in the "Notes to
Consolidated Financial Statements").
During 1998, the Company acquired five aircraft (including four
AS332L-Super Pumas, which had previously been leased by Bristow under short-term
operating leases) for $32.3 million. The Company used existing cash and incurred
an additional $20.0 million of 7.9% fixed rate financing, that amortizes
over five years, to complete this transaction. In addition to the financed
aircraft, the Company used existing cash to purchase 13 Bell 407's, four
Sikorsky S-76's and one Bell 214ST in 1998. During 1997, the Company utilized
$155.5 million for the investment in Bristow, including the issuance of the 6%
Convertible Subordinated Notes due 2003 ("6% Notes"). Capital expenditures
during 1997 of $10.1 million included three new Bell 407's, one used Sikorsky
S-76, three used Bo-105's, and one fixed wing.
Cash flows provided by (used in) financing activities were $(22.0) million,
$10.7 million and $98.1 million in 1999, 1998 and 1997, respectively. In July
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. During the fiscal year ended March 31, 1999,
the Company repurchased 763,500 shares of Common Stock and $7.1 million face
value of 6% Notes in the open market for a total purchase price of $13.2
million. In October 1997, the Company repaid (pound)11.6 million ($18.7 million)
of Bristow debt with its existing cash. In January 1998, the Company issued $100
million of 7 7/8% Senior Notes due 2008 discounted to yield 7.915%, which
resulted in net proceeds to the Company of $97.2 million. The proceeds were used
to repay certain indebtedness of Bristow of (pound)40.7 million ($66.6 million)
and to replace general corporate funds used to repay certain indebtedness of
Bristow in October 1997. The Company received $88.4 million from the issuance of
the 6% Notes during fiscal 1997.
As of March 31, 1999, Bristow had a (pound)15 million ($24 million)
revolving credit facility with a syndicate of United Kingdom banks that matures
on December 31, 2000. Bristow had no amounts drawn under this facility as of
March 31, 1999. As of March 31, 1999, 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, lines of credit and available
financing will provide sufficient working capital and cash flow to meet debt
service in the foreseeable future.
Legal Matters
The Company has received notices from the EPA that it is one of
approximately 160 PRPs at one Superfund site in Texas, one of over 300 PRPs at a
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. See
Item 3 -- "Legal Proceedings" for additional information regarding EPA notices.
15
<PAGE>
Year 2000 Matters
The Company is addressing its year 2000 exposure. The scope of management's
efforts includes both information technology (IT) systems, such as accounting
and financial ledgers and aircraft and pilot records, and non-IT systems (which
incorporate embedded technology), such as onboard navigational, communication
and safety systems. The Company is currently in the replacement and remediation
phase of its efforts and expects (based on management's best estimates) to have
year 2000 compliant IT and non-IT systems operating by July, 1999. There can be
no guarantee however, that this estimated timetable will be achieved. Management
is also investigating the year 2000 exposure posed by its significant vendors
and customers. Currently, the Company does not have any IT or non-IT systems
which directly interface with either its vendors' or customers' systems.
Accordingly, the Company's exposure will result from its significant vendors'
and customers' potential inability to achieve year 2000 compliance. Were this to
occur, the Company could experience a disruption in the supply of needed parts
and repair services and/or diminished demand for the Company's aircraft, either
of which could have a material impact on the Company's business. Management is
contacting its significant vendors and customers to ascertain their state of
readiness and expects to conclude this process by July, 1999. No assurances can
be given that the Company's significant vendors and customers will not cause
disruption to the Company's operations. To date, the Company has spent $.3
million on its replacement and remediation efforts and expects to incur an
additional $.1 million before its efforts are complete. The Company does not
separately account for the internal costs incurred for its year 2000 compliance
efforts. Such costs consist primarily of salaries and benefits for the Company's
IT personnel. The Company is developing a contingency plan for the prospect that
it or any of its significant vendors and customers may be unable to achieve year
2000 compliance, and expects to have a plan completed by September 1999.
Recent Accounting Pronouncements
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 statements 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 will be required to adopt SFAS No. 133 no later than April 1,
2001. The company has not yet quantified the impact on its financial statements
that may result from adoption of SFAS No. 133, however, the Company does not use
derivative instruments or hedging activities extensively in its business and
therefore the adoption of this new statement should not materially affect the
Company's financial positions or results of operations. The new statement could
however cause volatility in the components of other comprehensive income.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.
The Company has $243.7 million of debt outstanding, of which $34.5 million
carries a variable rate of interest. The Company uses an interest rate swap to
hedge a portion of the interest rate exposure on this variable rate debt.
Management does not believe that this swap, or the remaining level of variable
rate debt expose it to a material amount of interest rate market risk. However,
the market value of the Company's fixed rate debt fluctuates with changes in
interest rates. The Company does not have any significant maturities of fixed
rate debt occurring before fiscal 2004. The Company's ability to refinance this
fixed rate debt varies in response to significant changes in interest rates,
among other factors.
The Company currently does not use any off-balance sheet hedging
instruments to manage its risks associated with its operating activities
conducted in foreign currencies. In limited circumstances and when considered
appropriate, the Company will utilize forward exchange contracts to hedge
anticipated transactions. The Company has historically used these instruments
primarily in the buying and selling of certain spare parts and equipment. The
Company attempts to minimize its exposure to foreign currency fluctuations by
matching its revenues and expenses in the same currency for its contracts. As of
March 31, 1999, the Company does not have any outstanding forward exchange
contracts. Management does not believe that its limited use of forward exchange
contracts expose it to a material amount of foreign currency exchange risk. Most
of Bristow's revenues and expenses are denominated in British Pounds Sterling
("pound").
16
<PAGE>
ITEM 8. Consolidated 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 March 31, 1999
and 1998, and the related consolidated statements of income, stockholders'
investment and cash flows for the twelve months ended March 31, 1999 and 1998
and the nine month period ended March 31, 1997. 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 March 31, 1999 and 1998, and the results of their operations
and their cash flows for the twelve months ended March 31, 1999 and 1998 and the
nine month period ended March 31, 1997 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
May 18, 1999
17
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
--------- ---------
(thousands of dollars)
<S> <C> <C>
Current assets:
Cash and cash equivalents..........................$ 70,594 $ 56,076
Accounts receivable................................ 89,077 85,543
Inventories........................................ 82,853 76,139
Prepaid expenses................................... 5,999 5,542
-------- --------
Total current assets.................................. 248,523 223,300
Investments in unconsolidated entities................ 9,998 7,866
Property and equipment -- at cost
Land and buildings................................. 10,860 13,088
Aircraft and equipment............................. 554,852 556,318
-------- --------
565,712 569,406
Less - Accumulated depreciation and amortization...(122,796) (98,267)
-------- --------
442,916 471,139
Other assets.......................................... 30,593 33,706
-------- --------
$732,030 $736,011
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable...................................$ 35,534 $ 31,024
Accrued liabilities................................ 42,395 42,612
Deferred taxes..................................... 17,697 18,335
Current maturities of long-term debt............... 10,037 8,693
-------- --------
Total current liabilities............................. 105,663 100,664
Long-term debt, less current maturities............... 233,615 251,560
Other liabilities and deferred credits................ 3,000 594
Deferred taxes........................................ 94,908 93,455
Minority interest..................................... 10,716 9,853
Commitments and contingencies......................... -- --
Stockholders' investment:
Common stock, $.01 par value, authorized 35,000,000
shares; outstanding 21,103,421 in 1999 and
21,854,921 in 1998 (exclusive of 1,281,050 and
517,550 treasury shares, respectively)............. 211 219
Additional paid in capital............................ 116,053 123,061
Retained earnings..................................... 173,114 152,194
Accumulated other comprehensive income (loss)......... (5,250) 4,411
-------- --------
284,128 279,885
-------- --------
$732,030 $736,011
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Twelve
Months Ended Nine
March 31, Months Ended
------------------- March 31,
1999 1998 1997
-------- -------- --------
(thousands of dollars,
except per share amounts)
<S> <C> <C> <C>
Gross revenue:
Operating revenue......................... $466,440 $426,893 $167,128
Gain (loss) on disposal of equipment...... 2,400 (238) 1,222
------- ------- -------
468,840 426,655 168,350
------- ------- -------
Operating expenses:
Direct cost............................... 363,272 311,641 119,106
Depreciation and amortization............. 32,742 32,240 12,624
General and administrative................ 29,847 26,310 11,406
------- ------- -------
425,861 370,191 143,136
Operating income............................. 42,979 56,464 25,214
Earnings from unconsolidated entities........ 5,104 7,205 2,602
Interest income.............................. 3,460 2,981 3,300
Interest expense............................. 19,811 20,536 5,528
------- ------- -------
Income from continuing operations before
provision for income taxes................ 31,732 46,114 25,588
Provision for income taxes................... 9,509 13,833 7,675
Minority interest............................ (1,303) (1,027) (288)
------- ------- -------
Income from continuing operations............ 20,920 31,254 17,625
Discontinued operations:
Loss from CPS operations.................. -- (230) (393)
Gain on sale of CPS....................... -- 384 --
------- ------- -------
-- 154 (393)
------- ------- -------
Net income................................... $ 20,920 $ 31,408 $ 17,232
======= ======= =======
BASIC:
Income per common share:
Continuing operations..................... $ 0.97 $ 1.45 $ 0.88
Discontinued operations................... -- 0.01 (0.02)
------- ------- -------
Net income per common share ................. $ 0.97 $ 1.46 $ 0.86
======= ======= =======
DILUTED:
Income per common share:
Continuing operations..................... $ 0.97 $ 1.35 $ 0.85
Discontinued operations................... -- 0.01 (0.02)
------- ------- -------
Net income per common share ................. $ 0.97 $ 1.36 $ 0.83
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
Accumulated
Other
Common Stock Additional Comprehensive Total
-------------------- Paid in Income Retained Stockholders'
Shares Amount Capital (Loss) Earnings Investment
------------- ----- ----------- ----------- ----------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
BALANCE - June 30, 1996............ 19,498,398 $ 195 $ 95,934 $ -- $ 103,554 $ 199,683
Comprehensive Income:
Net income................. -- -- -- -- 17,232 17,232
Translation adjustments.... -- -- -- (1,437) -- (1,437)
---------
Total Comprehensive Income..... 15,795
Stock options exercised........ 114,000 1 883 -- -- 884
GPM warrants exercised......... 94,040 1 1,015 -- -- 1,016
Restricted stock issued........ 306 -- 4 -- -- 4
Stock issued for Bristow
investment................. 1,374,389 14 17,510 -- -- 17,524
----------- ----- ----------- ----------- ----------- ----------
BALANCE - March 31, 1997........... 21,081,133 211 115,346 (1,437) 120,786 234,906
Comprehensive Income:
Net income................. -- -- -- -- 31,408 31,408
Translation adjustments.... -- -- -- 5,848 -- 5,848
----------
Total Comprehensive Income..... 37,256
Stock options exercised........ 745,500 8 7,335 -- -- 7,343
Restricted stock issued........ 28,288 -- 380 -- -- 380
----------- ----- ----------- ----------- ----------- ----------
BALANCE - March 31, 1998........... 21,854,921 219 123,061 4,411 152,194 279,885
Comprehensive Income:
Net income................. -- -- -- -- 20,920 20,920
Translation adjustments.... -- -- -- (9,661) -- (9,661)
----------
Total Comprehensive Income..... 11,259
Stock options exercised........ 12,000 -- 113 -- -- 113
Stock repurchased.............. (763,500) (8) (7,121) -- -- (7,129)
----------- ----- ----------- ----------- ----------- ----------
BALANCE - March 31, 1999........... 21,103,421 $ 211 $ 116,053 $ (5,250) $ 173,114 $ 284,128
=========== ===== =========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
20
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Twelve
Months Ended Nine Months
March 31, Ended
------------------------- March 31,
1999 1998 1997
--------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income .....................................................$ 20,920 $ 31,408 $ 17,232
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................... 32,742 32,240 13,196
Increase in deferred taxes...................................... 3,724 10,826 1,059
(Gain) Loss on asset dispositions............................... (2,400) 238 (1,212)
Equity in earnings from unconsolidated entities
over dividends received..................................... 341 1,679 145
Minority interest in earnings................................... 1,303 1,027 67
Discontinued operations......................................... -- 230 --
Change in assets and liabilities net of effects from investment in
Bristow:
(Increase) Decrease in accounts receivable...................... (5,581) 6,694 (16,736)
Increase in inventories......................................... (8,322) (4,187) (4,168)
Increase in prepaid expenses and other.......................... (1,821) (5,574) (2,381)
Increase (Decrease) in accounts payable......................... 5,565 (2,860) 5,801
Increase (Decrease) in accrued liabilities...................... 800 (2,747) 4,833
Increase (Decrease) in other liabilities and deferred credits... 2,406 (28) (1,865)
--------- ----------- -----------
Net cash provided by operating activities............................ 49,677 68,946 15,971
--------- ----------- -----------
Cash flows from investing activities:
Capital expenditures............................................ (19,219) (70,465) (10,106)
Proceeds from asset dispositions................................ 6,236 10,963 6,026
Proceeds from CPS disposal...................................... -- 5,700 --
Proceeds from sale or maturity of marketable securities......... -- -- 20,001
Bristow investment............................................. -- -- (155,451)
Acquisitions, net of cash received.............................. -- (353) (1,675)
--------- ----------- -----------
Net cash used in investing activities................................ (12,983) (54,155) (141,205)
--------- ----------- -----------
Cash flows from financing activities:
Proceeds from borrowings........................................ -- 123,538 96,636
Repayment of debt............................................... (14,948) (120,519) (434)
Repurchase of common stock...................................... (7,128) -- --
Issuance of common stock........................................ 113 7,723 1,899
--------- ----------- -----------
Net cash provided by (used in) financing activities.................. (21,963) 10,742 98,101
--------- ----------- -----------
Effect of exchange rate changes in cash.............................. (213) 714 23
Net increase (decrease) in cash and cash equivalents................. 14,518 26,247 (27,110)
Cash and cash equivalents at beginning of period..................... 56,076 29,829 56,939
--------- ----------- -----------
Cash and cash equivalents at end of period...........................$ 70,594 $ 56,076 $ 29,829
========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
21
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A -- OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations -- The Company's most significant area of operation
is supplying 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.
Basis of Presentation -- The consolidated financial statements include the
accounts of Offshore Logistics, Inc., a Delaware corporation ("OLOG") and its
majority owned entities and non-majority owned entities including Bristow
Aviation Holdings Limited ("Bristow"), collectively referred to as "the
Company", after elimination of all significant intercompany accounts and
transactions. Investments in 50% or less owned affiliates over which the Company
has the ability to exercise significant influence are accounted for using the
equity method. Investments in which the Company does not exercise significant
influence are accounted for under the cost method.
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.
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.
Accounts Receivable -- Trade and other receivables are stated at net
realizable value and the allowance for uncollectible accounts was $4,010,000 and
$850,000 at March 31, 1999 and 1998, respectively. The Company grants short-term
credit to its customers, primarily major and independent oil and gas companies.
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 $4,045,000 and $4,049,000 at March 31, 1999
and 1998. There were no related charges to operations in 1999, 1998, or 1997.
Other Assets -- In 1999, $17,171,000 of goodwill, net of accumulated
amortization of $5,111,000, 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. 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.
Also included in other assets is restricted cash of (pound)4.8 million
($7.7 million) and debt issuance costs of $3.9 million, being amortized over the
life of the related debt.
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 ranges
from 30% to 50% of cost.
Maintenance and repairs are expensed as incurred; betterments and
improvements are capitalized. The costs and related accumulated depreciation 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 Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes". Under this statement, deferred income taxes are
provided for by the asset and liability method.
22
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Foreign Currency Translation -- Bristow maintains its accounting records in
its local currency (British Pounds Sterling). Foreign currencies are converted
to United States Dollars with the effect of the foreign currency translation
reflected as a component of shareholders' investment in accordance with SFAS No.
52, "Foreign Currency Translation." Foreign currency transaction gains or losses
are credited or charged to income and such amounts are insignificant for the
periods presented.
Derivative Financial Instruments -- The Company enters into forward
exchange contracts from time to time to hedge known transactional exposures
denominated in currencies other than the functional currency of the business.
Foreign currency positions mature at the anticipated currency requirement date
and rarely exceed three months. The purpose of the Company's foreign currency
hedging activities is to protect the Company from the risk that foreign currency
outflows resulting from payments for services and parts to foreign suppliers
will be adversely affected by changes in exchange rates.
Financial instruments are designated as a hedge at inception where there is
a direct relationship to the price risk associated with the service and parts.
Hedges of transactions are accounted for under the deferral method with gains
and losses recognized in revenues when the hedged transaction occurs. If the
direct relationship to price risk ceases to exist, the difference in the
carrying value and fair value of a forward contract is recognized as a gain or
loss in revenues in the period the relationship ceases to exist.
The Company uses an interest rate swap to manage a portion of its interest
rate exposure. Revenues or expenses on interest rate swaps are recognized over
the lives of the agreements as adjustments to interest expense of the liability
being hedged. Any interest rate swap not qualifying for deferred accounting is
recorded at fair value.
Stock Compensation -- The Company uses the intrinsic value method of
accounting for stock-based compensation prescribed by Accounting Principles
Board ("APB") Opinion No. 25 "Accounting for Stock Issued to Employees" (APB No.
25) and, accordingly, adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123).
Fiscal-Year Change -- On May 1, 1997, the Board of Directors approved a
change in the Company's fiscal year end from June 30 to March 31, effective for
the nine month period ended March 31, 1997. As a result of this change in year
end, these financial statements include the fiscal years ended March 31, 1999
and 1998 and the nine month fiscal transition period from July 1, 1996 through
March 31, 1997.
Comprehensive Income -- During 1999, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income," which requires an entity to report and display
comprehensive income and its components.
Effect of Recent Accounting Pronouncements -- During fiscal 1999, the
Financial Accounting Standards Board ("FASB") 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 will be required to adopt SFAS No. 133 no later that April 1,
2001. The company has not yet quantified the impact on its financial statements
that may result from adoption of SFAS No. 133, however, the Company does not use
derivative instruments or hedging activities extensively in its business.
23
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
B -- LONG-TERM DEBT
Long-term debt at March 31, 1999 and 1998 consisted of the following
(thousands of dollars):
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
-------- --------
<S> <C> <C>
7 7/8% Senior Notes due 2008....................... $ 100,000 $ 100,000
6% Convertible Subordinated Notes due 2003 ........ 90,922 98,000
Term Loan with a syndicate of United Kingdom banks. 29,061 33,456
Term Loan with a United Kingdom bank............... 15,439 18,009
Capital Lease Obligation........................... 5,391 6,248
Management Fee Debt (see Note C)................... 2,839 4,307
Other.............................................. -- 233
------- -------
Total debt ..................................... 243,652 260,253
Less current maturities......................... 10,037 8,693
------- -------
Total long-term debt............................ $ 233,615 $ 251,560
======= =======
</TABLE>
On January 27, 1998, the Company issued $100 million aggregate principal
amount of 7 7/8% Senior Notes ("Senior Notes") due 2008 discounted to yield
7.915%. Proceeds of $97.2 million, after debt issuance costs of $2.8 million,
were used to repay approximately (pound)40.7 million ($66.6 million) of Bristow
debt and to replace general corporate funds used to repay certain indebtedness
of Bristow in October 1997. The weighted average of the stated rates of interest
on the indebtedness retired was 16.6%, but had been adjusted to 8.5% as a result
of purchase accounting for the Company's investment in Bristow. The Senior Notes
are guaranteed by certain of the Company's subsidiaries (see Note M).
On December 17, 1996, the Company issued $98 million of 6% Convertible
Subordinated Notes ("6% Notes") due 2003. The 6% Notes are convertible at any
time into the Company's Common Stock at a conversion price of $22.86 per share
(equivalent to a conversion rate of approximately 43.74 shares per $1,000
principal amount of 6% Notes). The 6% Notes are redeemable at the option of the
Company beginning December 1999. The Company issued $7.5 million of the 6% Notes
to Caledonia (See Note C) in conjunction with the investment in Bristow.
Proceeds of $88.4 million, after debt issuance costs of $2.1 million, were also
used to finance the investment in Bristow. During 1999, the Company repurchased
$7.1 million face value of the 6% Notes in the open market at a gain to the
Company, which was not material.
Bristow renewed a term loan with a syndicate of United Kingdom banks on
January 26, 1998, that is repayable in semi-annual installments varying from
$1.6 to $4.8 million ((pound)1.0 to (pound)3.0 million) through December 31,
2002. The term loan bears interest at 0.8% above LIBOR rates. The average
interest rate for the term loan during the year ended March 31, 1999 and during
the period from renewal to March 31, 1998 was 8.214% and 8.425%, respectively.
The term loan is guaranteed by certain United Kingdom subsidiaries of Bristow
and is secured by a negative pledge on all Bristow assets. The Company entered
into an interest rate swap agreement to reduce the impact of change in interest
rates on this floating rate long-term debt. At March 31, 1999, the outstanding
notional amount of the swap was (pound)33.0 million ($53.3 million). The
agreement matures on December 31, 2001. At March 31, 1999, the fair value of the
swap was (pound)1.6 million ($2.6 million) and the fair value of the notional
amount of the swap in excess of the outstanding principal amount of the term
loan was (pound).5 million ($.8 million) which is included in Accrued
liabilities in the accompanying balance sheet.
In May 1997, the Company acquired five aircraft (including four AS332L
Super Pumas, which had previously been leased by Bristow under short-term
operating leases) for $32.3 million. The Company used existing cash and incurred
an additional $20.0 million of 7.9% fixed rate financing, that amortizes over
five years, to complete this transaction.
24
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The obligation under capital lease bears interest at a rate tied to LIBOR and
requires monthly payments. The lease is secured by the aircraft and the
guarantee of Bristow.
Bristow has a revolving credit facility, with the same syndicate of United
Kingdom banks, as with the term loan, which matures December 31, 2000, and is
available for working capital requirements and general corporate purposes.
Availability under the revolving credit facility is subject to certain
limitations based on the value of certain qualifying helicopters. All advances
under the revolving credit facility bear interest at 0.6% above one, three, or
six month LIBOR rates. The revolving credit facility is guaranteed by certain
United Kingdom subsidiaries of Bristow and is secured by helicopter mortgages
and a negative pledge of all Bristow assets. The availability under the
revolving credit facility is (pound)15 million ($24 million). There were no
borrowings under this revolving credit facility as of March 31, 1999. The
facility requires Bristow to pay a quarterly commitment fee at an average annual
rate of .367% on the unused portion of the line.
At March 31, 1999, the Company had a $20 million unsecured line of credit
with a U.S. bank that expires on September 30, 1999. There were no borrowings
under this line as of March 31, 1999. The rate of interest payable under the
line of credit is, at the Company's option, prime rate or LIBOR rate plus 1.25%.
The agreement requires the Company to pay a quarterly commitment fee at an
annual rate of .25% on the average unused portion of the line.
Aggregate annual maturities for all long-term debt, including the
capitalized lease, for the next five years are as follows: 2000 -- $10,037,000;
2001 -- $11,318,000; 2002 -- $15,290,000; 2003 -- $16,085,000; and 2004 --
$90,922,000.
Interest paid during the year was $19,881,000, $21,673,000 and $3,620,000 for
1999, 1998, and 1997, respectively.
The estimated fair value of the Company's total debt at March 31, 1999 and
1998 was $229.4 million and $269.3 million, respectively based on quoted market
prices for the publicly listed 6% Notes and the Senior Notes and the current
rates offered to the Company on other outstanding obligations.
C -- INVESTMENT IN BRISTOW
On December 19, 1996, OLOG acquired 49% of the common stock and a
significant amount of Bristow subordinated debt as detailed below. Bristow is
incorporated in England and holds all of the outstanding shares in Bristow
Helicopter Group Limited ("BHGL"). Bristow provides helicopter transportation
services to the North Sea oil and gas industry. Services consist of short and
long range crew change flights, offshore-based and inter-platform shuttle
operations and search and rescue missions. Bristow also operates aircraft in
Australia, Brunei, Cambodia, China, Nigeria, South America, Trinidad and Vietnam
among others.
Bristow is organized with three different classes of ordinary shares (common
stock) having disproportionate voting rights. The Company, Caledonia Investments
plc and its subsidiary, Caledonia Industrial & Services Limited (collectively,
"Caledonia") and a Norwegian investor (the "E.U. Investor"), own 49%, 49% and
2%, respectively, of Bristow's total outstanding ordinary shares.
The Company paid (pound)80.2 million (approximately $132 million) in cash
(funded from existing cash balances and the proceeds of the 6% Notes), issued
$7.5 million of the 6% Notes to Caledonia and issued 1,374,389 shares of common
stock on December 19, 1996. In addition, the Company acquired (pound)5.0 million
($8.4 million) principal amount of BHGL's subordinated debt for cash of
approximately (pound)5.4 million ($8.9 million) including accrued interest.
Caledonia received 1,300,000 shares of the common stock and BHGL's management
received 74,389 shares.
In addition to its ownership of 49% of Bristow's outstanding ordinary shares
and (pound)5.0 million principal amount of Bristow's subordinated debt, the
Company acquired (pound)91.0 million (approximately $150 million) principal
amount of subordinated unsecured loan stock (debt) of Bristow bearing interest
at an annual rate of 13.5% and payable semi-annually. Bristow has the right to
defer payment of interest on such debt until January 31, 2002. Any such deferred
interest would also accrue interest at an annual rate of 13.5%.
25
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The Company, Caledonia, the E.U. Investor and Bristow entered into a
shareholders' agreement respecting, among other things, the composition of the
board of directors of Bristow. On matters coming before Bristow's board,
Caledonia's appointees have a total of five votes and the four other directors
have one vote each. So long as Caledonia has a significant interest in the
shares of Common Stock issued to it pursuant to the transaction or maintains its
voting control of Bristow, Caledonia will have the right to nominate two persons
to the board of directors of the Company and to replace any such directors so
nominated.
Caledonia, the Company and the E.U. Investor also entered into a Put/Call
Agreement whereunder, upon giving specified prior notice, the Company has the
right to buy all the Bristow shares held by Caledonia and the E.U. Investor,
who, in turn, each has the right to sell such shares to the Company. Under
current United Kingdom law, the Company would be required, in order for Bristow
to retain its operating license, to find a qualified European investor to own
any Bristow shares it has the right to acquire under the Put/Call Agreement. Any
put or call of the Bristow shares will be subject to the approval of the Civil
Aviation Authority ("CAA"). Caledonia will receive management fees from Bristow
that will be payable semi-annually in advance ranging from (pound)500,000 to
(pound)900,000 annually for the next five years.
The investment was accounted for by the purchase method of accounting under
Accounting Principals Board Opinion No. 16, as amended, and accordingly, the
results of operations of Bristow for the period from December 19, 1996 forward
are included in the accompanying consolidated financial statements. The total
consideration has been allocated to Bristow's assets and liabilities based on
the estimated fair market value as of December 19, 1996.
The following unaudited pro forma financial information for the Company
gives effect to the Bristow investment as if it had occurred on July 1, 1996.
These pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of the results of operations which actually would
have resulted had the acquisitions occurred on the date indicated, or which may
result in the future. The pro forma results follow (in thousands, except per
share data):
Nine
Months Ended
March 31,
1997
(unaudited)
------------
Gross revenue................................... $ 296,094
==========
Income from continuing operations............... $ 19,348
==========
Earnings per common share
Income from continuing operations:
Basic..................................... $ 0.92
==========
Diluted................................... $ 0.87
==========
26
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
D -- 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 and one principal unconsolidated entity which it accounts
for under the equity method. Each of these three investments is described in
further detail below.
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 March 31, 1999 and 1998. During 1999, 1998 and 1997, $857,000,
$2,292,000 and $1,539,000 respectively, in dividends were received from HHII.
The Company has a 25% investment in an Egyptian helicopter venture. The
Company's investment in the venture was $5,986,000 at March 31, 1999 and 1998.
During 1999, 1998, and 1997, $1,997,000; $2,430,000 and $1,827,000,
respectively, in dividends were received from the venture. During 1999, the
venture's Board of Directors approved a cash dividend, of which the Company's
share applicable to fiscal year 2000 is approximately $1.5 million.
Bristow has a 50% investment (33% at March 31, 1998) in FBS Limited (FBS)
which was formed in 1996 and was awarded a contract to provide pilot training
and maintenance services to the Defence Helicopter Flying School ("DHFS"), a
newly established training school for all branches of the British military,
under a fifteen year contract valued at approximately (pound)500 million over
the full term. FBS purchased and specially modified 47 aircraft and maintains a
staff of approximately 600 employees dedicated to conducting these training
activities which began in May 1997. Prior to FBS, Bristow had provided similar
pilot training and maintenance services to the British Army Air Corps since
1963. Bristow's partners in FBS had similar experience in providing training
services to other branches of the British military. Bristow and its partners
have given joint and several guarantees related to the performance of this
contract. To date, FBS has not paid any cash dividends, although certain income
tax benefits have been distributed to Bristow. In the following unaudited table,
FBS represents $127,135,000 and $132,472,000 of the assets and $(3,221,000) and
$(3,372,000) of equity (deficit) at March 31, 1999 and 1998, respectively. FBS
also represents $54,863,000 and $54,577,000 of revenue and $3,381,000 and
$2,477,000 of net income for the years ended March 31, 1999 and 1998,
respectively.
A summary of unaudited financial information of these principal
unconsolidated entities is set forth below (thousands of dollars):
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
--------- ---------
(unaudited) (unaudited)
<S> <C> <C>
Current assets............................ $ 72,789 $ 75,737
Non-current assets........................ 139,003 147,415
------- -------
Total assets........................... $211,792 $223,152
======= =======
Current liabilities....................... $ 25,135 $ 22,030
Non-current liabilities................... 120,846 131,470
Equity ................................... 65,811 69,652
------- -------
Total liabilities and equity........... $211,792 $223,152
======= =======
</TABLE>
27
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
<TABLE>
<CAPTION>
Twelve
Months Ended Nine
March 31, Months Ended
------------------------ March 31,
1999 1998 1997
-------- --------- -------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Revenues........................$109,879 $ 112,119 $41,026
======== ========= =======
Gross profit....................$ 30,240 $ 32,638 $14,122
======== ========= =======
Net income......................$ 13,768 $ 16,322 $ 9,918
======== ========= =======
</TABLE>
During 1999, 1998 and 1997, respectively, revenues of $15,984,000;
$21,261,000 and $4,673,000 were recognized for services provided to these
affiliates by the Company.
E -- DISCONTINUED OPERATIONS
In May 1997, the Company adopted a plan to discontinue its investment 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, oil and gas well casings,
hydrocarbon processing plants and other metal structures. As a result of the
Company's adoption of the plan, the consolidated financial statements of the
Company and the related Notes to Consolidated Financial Statements and
supplemental data have been adjusted and restated to reflect the results of
operations and net assets of CPS as a discontinued operation in accordance with
generally accepted accounting principles.
F -- INVESTMENT IN MARKETABLE SECURITIES
Under the provisions of SFAS No. 115 "Accounting for Certain Investments in
Debt and Equity Securities", 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 March 31, 1999 and 1998, the Company had
(pound)4.8 million ($7.7 million and $8.0 million, respectively) of UK
government securities classified as available-for-sale included in other assets.
There were $12,001,000 sales of investments in U.S. Treasury investments during
the nine month period ended March 31, 1997. The proceeds approximated the
carrying cost of the investments.
G -- COMMITMENTS AND CONTINGENCIES
The Company has noncancelable operating leases in connection with the lease
of certain equipment, land and facilities. Rental expense incurred under these
leases was $2,150,000 in 1999; $1,872,000 in 1998 and $1,925,000 in 1997. On
March 29, 1999, the Company entered into an eight year operating lease for a new
aircraft under which it provided the lessor with a residual value guarantee of
up to 15% ($1,972,000) of the aircraft's original cost. The Company has
committed to enter into a similar lease for a second aircraft of comparable
value expected to be delivered during the next fiscal year. As of March 31,
1999, aggregate future payments under noncancelable operating leases are as
follows: 2000 -- $3,172,000; 2001 -- $2,961,000; 2002 -- $2,924,000; 2003 --
$2,793,000 and 2004 -- $2,519,000.
On August 6, 1997, the United States 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
on April 15, 1999 announced that it had reached a tentative agreement with pilot
representatives on the contract's provisions. The contract was ratified on May
18, 1999 by the pilot employees and management believes that the contract terms
will be approved by the Company's Board of Directors. In January 1998, the OPEIU
petitioned the National Mediation Board ("NMB") to organize the Company's
domestic mechanics and ground support personnel. Certain objections to this
petition were filed and the NMB dismissed the OPEIU application on May 12, 1998.
Under the Federal labor law rules, the union is prohibited from petitioning the
NMB for one-year from date of dismissal. To date, no subsequent petitions have
been filed with the NMB. The Company does not believe that the terms of the
pilots' contract or other potential organizing efforts will place it at a
disadvantage with its competitors as management believes that pay scales and
work rules will continue to be similar throughout the industry.
28
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
H -- INCOME TAXES
The components of deferred tax assets and liabilities are as follows
(thousands of dollars):
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
-------- --------
<S> <C> <C>
Deferred Tax Assets:
Foreign tax credits.................... $ 108,843 $ 112,117
Other.................................. 11,672 10,390
Valuation allowance.................... (43,795) (50,308)
-------- --------
Total deferred tax assets.......... $ 76,720 $ 72,199
-------- --------
Deferred Tax Liabilities:
Property and equipment................. (152,663) (153,716)
Inventories............................ (10,970) (10,901)
Accrual for repairs and maintenance.... (6,408) (6,859)
Other.................................. (19,284) (12,513)
-------- --------
Total deferred tax liabilities..... (189,325) (183,989)
-------- --------
Net deferred tax liabilities................ $ (112,605) $ (111,790)
======== ========
</TABLE>
The valuation allowance was established for the deferred tax asset related
to foreign tax credits. Companies may use foreign tax credits to offset the
United States income taxes due on income earned from foreign sources. However,
the credit is limited by the total income on the United States income tax return
as well as by the ratio of foreign source income in each statutory category to
total income. Excess foreign tax credits may be carried back two years and
forward five years. As of March 31, 1999 and 1998, the Company did not believe
it was more likely than not that it would generate sufficient foreign sourced
income within the appropriate period to utilize all the foreign tax credits.
Certain of the above components have changed due to changes in foreign currency
rates.
Income before provision for income taxes for the years ended March 31, 1999
and 1998 and the nine months ended March 31, 1997 was as follows (thousands of
dollars):
<TABLE>
<CAPTION>
Twelve
Months Ended Nine
March 31, Months Ended
------------------ March 31,
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Domestic............................. $10,322 $12,675 $13,774
Foreign.............................. 21,410 33,439 11,814
------ ------ ------
Total................................ $31,732 $46,114 $25,588
====== ====== ======
</TABLE>
29
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The provision for income taxes for the years ended March 31, 1999 and 1998
and the nine month period ended March 31, 1997 consisted of the following
(thousands of dollars):
<TABLE>
<CAPTION>
Twelve
Months Ended Nine
March 31, Months Ended
-------------------- March 31,
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Current:
Domestic......................... $ (66) $(2,237) $ 3,786
Foreign.......................... 6,044 7,545 1,219
------ ------ ------
5,978 5,308 5,005
------ ------ ------
Deferred:
Domestic......................... 10,526 9,035 2,671
Foreign.......................... (5,702) 2,965 (1)
------ ------ ------
4,824 12,000 2,670
------ ------ ------
Decrease in valuation allowance.... (1,293) (3,475) --
------ ------ ------
Total.............................. $ 9,509 $13,833 $ 7,675
====== ====== ======
</TABLE>
The reconciliation of Federal statutory and effective income tax rates is
shown below:
<TABLE>
<CAPTION>
Twelve
Months Ended Nine
March 31, Months Ended
---------------- March 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory rate............................. 35 % 35 % 35 %
Utilization of foreign tax credits......... (7)% (3)% (3)%
Additional taxes on foreign source income.. 9 % 8 % 5 %
Foreign source income not taxable.......... (5)% (3)% (6)%
Change in valuation allowance.............. (4)% (7)% --
State taxes provided....................... 1 % 1 % 2 %
Other, net................................. 1 % (1)% (3)%
---- ---- ----
Effective tax rate......................... 30 % 30 % 30 %
==== ==== ====
</TABLE>
The Internal Revenue Service has examined the Company's Federal income tax
returns for all years through 1996. The years have been closed through 1996,
either through settlement or expiration of the statute of limitations. The
Company believes that it has made adequate provision for income taxes that may
become payable with respect to open tax years.
Unremitted foreign earnings reinvested abroad upon which deferred income
taxes have not been provided aggregated approximately $18.8 million at March 31,
1999. 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 1999, 1998 and 1997 were $4,857,000; $4,516,000
and $8,454,000, respectively.
30
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
I -- EMPLOYEE BENEFIT PLANS
Savings and Retirement Plans
The Company currently has two qualified defined contribution plans, which
cover substantially all employees other than Bristow employees.
The Offshore Logistics, Inc. Employee Savings and Retirement Plan ("OLOG
Plan") covers corporate level and Air Log employees. Under the OLOG Plan, except
for those employees working in the state of Alaska, 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. Under the OLOG Plan, for Air Log employees working in the state of
Alaska, 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. Effective January 1, 1999, the Company began matching
each participant's contributions up to 3% of the employee's compensation, plus a
50% match of contributions up to an additional 2% of compensation. Previously,
the Company matched 25% of each participant's contributions up to 6% of the
employee's compensation.
Bristow has a defined benefit retirement plan, which covers all full-time
employees of Bristow employed on or before December 31, 1997. The plan is funded
by contributions partly from employees and partly from Bristow. Members
contribute up to 7.5% of pensionable salary (as defined) and can pay additional
voluntary contributions to provide additional benefits. The benefits are based
on the employee's annualized average last three years pensionable salaries. Plan
assets are held in separate trustee administered funds, which are primarily
invested equities and bonds in the United Kingdom. For employees hired after
December 31, 1997, Bristow contributes 4% (5% for pilots) of the employees base
salary into a defined contribution retirement plan operated by a private
insurance company.
The following table sets forth the defined benefit retirement plan's funded
status in accordance with the provisions of SFAS No. 87 "Employers' Accounting
for Pensions" (SFAS No. 87) (in thousands of dollars):
Actuarial Present Value of Benefit Obligations (thousands of dollars):
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
-------- --------
<S> <C> <C>
Projected benefit obligation.............. $245,929 $218,760
Plan assets at fair value................. 241,589 230,179
-------- --------
Plan assets (less than) in excess of
projected benefit obligation........... (4,340) 11,419
Unrecognized net loss (gain).............. 8,236 (10,048)
-------- --------
Accrued pension asset..................... $ 3,896 $ 1,371
======== ========
</TABLE>
The following tables provide a rollforward of the projected benefit
obligation and the fair value of plan assets in accordance with SFAS No. 132
"Employers' Disclosures about Pensions and Other Postretirement Benefits" (SFAS
No. 133) and a detail of the components of net periodic pension cost calculated
in accordance with SFAS No. 87 (in thousands of dollars):
31
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
<TABLE>
<CAPTION>
Twelve Months
Ended March 31, Period from
-------------------- December 19, 1996
1999 1998 to March 31, 1997
------- ------- -----------------
<S> <C> <C> <C>
Reconciliation of Projected Benefit Obligation:
Projected benefit obligation (PBO)
at beginning of period........... $218,760 $179,995 $179,546
Service cost....................... 9,218 8,394 1,885
Interest cost...................... 14,376 14,193 3,538
Member contributions............... 3,055 3,105 769
Actruarial (gain)/loss............. 15,947 15,941 (1,780)
Benefit payments and expenses...... (6,946) (7,177) (1,297)
Effect of exchange rate changes.... (8,481) 4,309 (2,666)
------- ------- -------
Projected benefit obligation (PBO)
at end of period................ $245,929 $218,760 $179,995
======= ======= =======
Reconciliation of Fair Value of Asset:
Market value of assets at beginning
of period....................... $230,179 $184,762 $179,546
Actual return on assets............ 16,474 38,543 7,189
Employer contributions............. 7,329 6,421 1,221
Member contributions............... 3,055 3,105 769
Benefit payments and expenses...... (6,946) (7,177) (1,297)
Effect of exchange rate changes.... (8,502) 4,525 (2,666)
-------- ------- -------
Market value of assets at end
of period...................... $241,589 $230,179 $184,762
======= ======= =======
Components of Net Periodic Pension Cost:
Service cost for benefits earned
during the period.............. $ 9,218 $ 8,394 $ 1,885
Interest cost on PBO............... 14,376 14,193 3,538
Expected return on assets.......... (18,902) (17,727) (4,223)
------- ------- -------
Net periodic pension cost.......... $ 4,692 $ 4,860 $ 1,200
======= ======= =======
</TABLE>
Actuarial assumptions used to develop these components were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Discount rate................................. 6.25% 6.75% 8.00%
Expected long-term rate of return on assets... 8.00% 8.25% 9.50%
Rate of compensation increase................. 4.75% 5.25% 6.25%
</TABLE>
The Company's contributions to the three plans were $8,090,000; $7,190,000
and $2,575,000 for the years ended March 31, 1999 and 1998 and the nine month
period ended March 31, 1997, respectively.
32
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Incentive and Stock Option Plans
Under the 1994 Long-Term Management Incentive Plan, as amended ("1994
Plan"), a maximum of 1,900,000 shares of Common Stock, or cash equivalents of
Common Stock, were provided 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 the date of grant. Non-qualified stock option
prices cannot be less than 50% of the fair market value at the date of grant.
The Annual Incentive Compensation Plan ("Annual Plan") provides for an
annual award of cash bonuses to key employees based primarily 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 bonuses
related to this plan were $550,000; $838,000 and $565,000 for the years ended
March 31, 1999 and 1998 and the nine month period ended March 31, 1997,
respectively. As of March 31, 1999 there were 28,288 shares of Restricted Stock
outstanding issued at a weighted average price of $19.00 per share.
The 1991 Non-qualified Stock Option Plan for Non-employee Directors ("1991
Plan") provided for a maximum of 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.
Under the Company's stock option plans there were 1,864,302 shares of Common
Stock reserved for issue at March 31, 1999 of which 951,802 shares are available
for future grants.
The Company accounts for its stock-based compensation under APB No. 25. Had
compensation cost been determined based on the fair value at the grant date
consistent with the optional provisions of SFAS No. 123, the Company's net
income and earnings per common share would have approximated the pro forma
amounts below:
<TABLE>
<CAPTION>
Twelve Months Ended March 31,
------------------------------ Nine Months Ended
1999 1998 March 31, 1997
--------- ------- ------------------
<S> <C> <C> <C>
Net Income (in thousands):
As reported............. $20,920 $31,408 $17,232
Pro forma............... $19,848 $30,109 $16,607
Basic earnings per share:
As reported............. $ 0.97 $ 1.46 $ 0.86
Pro forma............... $ 0.92 $ 1.40 $ 0.83
Diluted earnings per share:
As reported............. $ 0.97 $ 1.36 $ 0.83
Pro forma............... $ 0.92 $ 1.31 $ 0.81
</TABLE>
The effects of applying SFAS No. 123 to this pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to grants prior to
1995, and additional awards in the future are anticipated.
33
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
A summary of the Company's stock options as of March 31, 1999, 1998 and 1997
and changes during the periods ended on those dates is presented below:
<TABLE>
<CAPTION>
Weighted-Average Number
Exercise Price of Shares
---------------- ---------
<S> <C> <C>
Balance at June 30, 1996................ $ 9.78 988,500
Granted............................... 15.48 366,500
Exercised............................. 7.75 (114,000)
Expired or cancelled.................. 12.94 (10,000)
---------
Balance at March 31, 1997............... 11.64 1,231,000
Granted............................... 18.93 219,000
Exercised............................. 9.85 (745,500)
Expired or cancelled.................. 19.38 (35,000)
---------
Balance at March 31, 1998............... 15.62 669,500
Granted............................... 12.47 274,000
Exercised............................. 9.42 (12,000)
Expired or cancelled.................. 18.18 (19,000)
---------
Balance at March 31, 1999............... 14.70 912,500
=========
</TABLE>
As of March 31, 1999, 1998, and 1997, the number of options exercisable under
the stock option plans was 650,500, 349,500 and 864,500, respectively; and the
weighted average exercise price of those options was $15.59; $12.44 and $10.02,
respectively.
The weighted average fair value at date of grant for options granted during
1999, 1998 and 1997 was $4.95; $6.48 and $5.30 per option, respectively. The
fair value of options granted during the periods presented is estimated on the
date of grant using the Black-Scholes option-pricing model with the following
assumptions:
1999 1998 1997
------- -------- -------
Risk-free interest rate 5.2% 6.4% 6.4%
Expected life 4 years 3 years 3 years
Expected volatility 42% 40% 40%
Expected dividend yield 0% 0% 0%
The following table summarizes information about stock options outstanding as of
March 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------- ------------------------
Wgtd. Avg. Wgtd. Avg. Wgtd. Avg.
Range of Number Remaining Exercise Number Exercise
Exercise Prices Outstanding Contr. Life Price Exercisable Price
- ----------------- ----------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
$ 7.375 - $ 8.250 44,000 2.76 $ 7.72 44,000 $ 7.72
$11.625 - $15.875 543,500 7.62 $12.60 281,500 $12.70
$19.00 - $19.625 325,000 8.21 $19.15 325,000 $19.15
------- -------
$ 7.375 - $19.625 912,500 7.60 $14.70 650,500 $15.59
======= =======
</TABLE>
34
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
J -- EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings Per Share" (SFAS No. 128), which replaced the previously reported
primary and fully-diluted earnings per share with basic and diluted earnings per
share. The Company adopted SFAS No. 128 during the quarter ended December 31,
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.
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 twelve months ended March 31, 1999 and
1998 and for the nine months ended March 31, 1997 were determined on the
assumptions that the convertible debt was converted on April 1, 1998 and 1997
and upon issuance on December 17, 1996, respectively. The computation of diluted
earnings per common share for the twelve months ended March 31, 1999 excludes
423,625 stock options, at a weighted average exercise price of $16.51, which
were outstanding during the period but were anti-dilutive. The following table
sets forth the computation of basic and diluted income from continuing
operations per share:
<TABLE>
<CAPTION>
Twelve Months Ended Nine
March 31, Months Ended
------------------------------ March 31,
1999 1998 1997
--------- ------------ ------------
<S> <C> <C> <C>
Income from Continuing Operations (thousands of dollars):
Income available to common stockholders.................$ 20,920 $ 31,254 $ 17,625
Interest on convertible debt, net of taxes.............. 4,012 4,116 1,178
----------- ------------ ------------
Income available to common stockholders, plus
assumed conversions.................................$ 24,932 $ 35,370 $ 18,803
=========== ============ ============
Shares:
Weighted average number of common shares outstanding.... 21,581,683 21,543,198 20,095,403
Options ............................................... 65,731 269,911 357,385
Warrants ............................................... -- -- 17,120
Convertible debt........................................ 4,177,016 4,286,520 1,615,210
----------- ------------ ------------
Weighted average number of common shares outstanding,
plus assumed conversions............................ 25,824,430 26,099,629 22,085,118
=========== ============ ============
Income from Continuing Operations:
Basic earnings per share................................$ 0.97 $ 1.45 $ 0.88
=========== ============ ============
Diluted earnings per share..............................$ 0.97 $ 1.35 $ 0.85
=========== ============ ============
</TABLE>
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 10 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.
35
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
K -- SEGMENT INFORMATION
The Company has adopted SFAS No. 131, "Disclosures about Segments of An
Enterprise and Related Information", which requires that companies disclose
segment data based on how management makes decisions about allocating resources
to segments and measuring their performance. The Company operates principally in
two business segments: Helicopter activities and Production management and
related services. Air Log and Bristow are major suppliers 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. The information
presented has been restated to reflect CPS as discontinued operations.
Identifiable assets include net assets relating to CPS of $6.7 million as of
March 31, 1997. The following shows reportable segment information for the years
ended March 31, 1999 and 1998 and the nine months ended March 31, 1997 and is
prepared on the same basis as the Company's consolidated financial statements.
(in thousands):
<TABLE>
<CAPTION>
Twelve
Months Ended Nine
March 31, Months Ended
-------------------- March 31,
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Operating revenues: (1)
Helicopter activities....................... $425,204 $384,108 $143,647
Production management and related services.. 41,236 42,785 23,481
------- ------- -------
Total..................................... $466,440 $426,893 $167,128
======= ======= =======
Operating profit (loss):
Helicopter activities....................... $ 46,215 $ 59,024 $ 27,142
Production management and related services.. 2,201 3,072 1,182
------- ------- -------
Total segment operating profit............ 48,416 62,096 28,324
Corporate overhead............................ (5,437) (5,632) (3,110)
Earnings from unconsolidated entities......... 5,104 7,205 2,602
Interest income (expense), net................ (16,351) (17,555) (2,228)
------- ------- -------
Pretax income................................. $ 31,732 $ 46,114 $ 25,588
======= ======= =======
</TABLE>
(1) Net of Inter-Segment revenues of $2,896,000; $3,461,000 and $2,246,000 for
March 31, 1999, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
Capital
Expenditures
----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Helicopter activities.................... $18,939 $70,170 $ 9,835
Production management and related services 253 140 112
Corporate................................. 27 155 --
------ ------ ------
Total................................ $19,219 $70,465 $ 9,947
======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
Depreciation
and Amortization
---------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Helicopter activities..................... $31,245 $30,286 $11,531
Production management and related services 1,334 1,364 1,003
Corporate................................. 163 590 90
------ ------ ------
Total................................ $32,742 $32,240 $12,624
====== ====== ======
</TABLE>
36
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
<TABLE>
<CAPTION>
Identifiable Assets
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Helicopter activities..................... $645,727 $658,461 $607,458
Production management and related services 30,208 28,421 26,279
Corporate and other....................... 56,095 49,129 40,476
------- ------- -------
Total................................ $732,030 $736,011 $674,213
======= ======= =======
</TABLE>
The Company attributes revenue to various countries based on the location
where helicopter activities or production management services are actually
performed. Long-lived assets consist primarily of helicopters and are attributed
to various countries based on the physical location of the asset at a given
fiscal year end. Entity wide information by geographic area is as follows
(thousands of dollars):
<TABLE>
<CAPTION>
Twelve
Months Ended Nine
March 31, Months Ended
--------------------- March 31,
1999 1998 1997
-------- -------- ----------
<S> <C> <C> <C>
Operating revenue:
United States................. $141,156 $143,870 $ 83,875
United Kingdom................ 179,572 167,776 39,892
Nigeria....................... 42,397 43,658 11,381
Norway........................ 26,857 10,066 1,844
Other countries............... 76,458 61,523 30,136
------- ------- -------
$466,440 $426,893 $167,128
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
As of March 31,
------------------------
1999 1998
-------- -------
<S> <C> <C>
Long-lived assets:
United States.........................$ 71,717 $ 76,015
United Kingdom........................ 222,677 221,366
Nigeria............................... 26,557 29,987
Norway................................ 42,566 37,742
Other countries....................... 79,399 106,029
-------- --------
$442,916 $471,139
======== ========
</TABLE>
During 1999, 1998 and 1997, Air Log and Bristow conducted operations in
approximately 19 foreign countries as well as in the United States and the
United Kingdom. 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. Revenue earned from
any single customer did not exceed 10% of total revenues during 1999, 1998 or
1997.
37
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
L-- QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------------
June 30 September 30 December 31 March 31
-------- ------------ ----------- --------
(thousands of dollars, except per share amounts)
<S> <C> <C> <C> <C>
1999
Gross revenue.......................$117,553 $ 129,168 $ 116,190 $ 105,929
Gross profit........................$ 19,106 $ 25,137 $ 15,361 $ 13,222
Net income..........................$ 6,553 $ 10,016 $ 4,321 $ 30
======== ========= ========= =========
Basic earnings per share............$ 0.30 $ 0.46 $ 0.20 $ 0.00
======== ========= ========= =========
Diluted earnings per share..........$ 0.29 $ 0.43 $ 0.20 $ 0.00
======== ========= ========= =========
1998
Gross revenue.......................$ 99,981 $ 107,565 $ 112,950 $ 106,159
Gross profit........................$ 19,497 $ 21,526 $ 21,169 $ 20,582
Income from continuing operations...$ 6,593 $ 7,959 $ 7,963 $ 8,739
Income from discontinued operations. (15) 169 -- --
-------- --------- --------- ---------
Net income..........................$ 6,578 $ 8,128 $ 7,963 $ 8,739
======== ========= ========= =========
Basic earnings per share:
Income from continuing operations...$ 0.31 $ 0.37 $ 0.37 $ 0.40
Income from discontinued operations. -- 0.01 -- --
-------- --------- --------- ---------
Net Income..........................$ 0.31 $ 0.38 $ 0.37 $ 0.40
======== ========= ========= =========
Diluted earnings per share:
Income from continuing operations...$ 0.30 $ 0.35 $ 0.34 $ 0.37
Income from discontinued operations. -- 0.01 -- --
-------- --------- --------- ---------
Net Income..........................$ 0.30 $ 0.36 $ 0.34 $ 0.37
======== ========= ========= =========
1997
Gross revenue....................... N/A $ 32,872 $ 41,459 $ 94,019
Gross profit........................ N/A $ 8,690 $ 9,347 $ 18,583
Income from continuing operations... N/A $ 5,781 $ 5,522 $ 6,322
Income from discontinued operations. N/A 74 86 (553)
--------- --------- ---------
Net income.......................... N/A $ 5,855 $ 5,608 $ 5,769
========= ========= =========
Basic earnings per share:
Income from continuing operations... N/A $ 0.30 $ 0.28 $ 0.30
Income from discontinued operations. N/A -- -- (0.03)
--------- --------- ---------
Net Income.......................... N/A $ 0.30 $ 0.28 $ 0.27
========= ========= =========
Diluted earnings per share:
Income from continuing operations... N/A $ 0.30 $ 0.28 $ 0.29
Income from discontinued operations. N/A -- -- (0.02)
--------- --------- ---------
Net Income.......................... N/A $ 0.30 $ 0.28 $ 0.27
========= ========= =========
</TABLE>
38
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
M -- 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 a consolidating 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 Company has not presented separate
financial statements and other disclosures concerning the Guarantor Subsidiaries
because management has determined that such information is not material to
investors.
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 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.
39
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Supplemental Condensed Consolidating Balance Sheet
March 31, 1999
<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.............$ 34,775 $ 10,584 $ 25,235 $ -- $ 70,594
Accounts receivable................... 3,792 20,752 67,499 (2,966) 89,077
Inventories........................... -- 36,621 46,232 -- 82,853
Prepaid expenses...................... 220 577 5,202 -- 5,999
---------- --------- ---------- ----------- -----------
Total current assets.............. 38,787 68,534 144,168 (2,966) 248,523
Intercompany investment................. 220,575 -- -- (220,575) --
Investments in unconsolidated entities.. 1,108 229 8,661 -- 9,998
Intercompany note receivables........... 233,444 3,015 86 (236,545) --
Property and equipment--at cost:
Land and buildings.................... -- 3,220 7,640 -- 10,860
Aircraft and equipment................ 3,630 149,544 401,678 -- 554,852
---------- -------- ---------- ----------- ----------
3,630 152,764 409,318 -- 565,712
Less: Accumulated depreciation
and amortization................. (2,772) (72,292) (47,732) -- (122,796)
---------- --------- ---------- ----------- -----------
858 80,472 361,586 -- 442,916
Other assets............................ 12,607 18,200 (325) 111 30,593
---------- --------- ---------- ----------- -----------
$ 507,379 $ 170,450 $ 514,176 $ (459,975) $ 732,030
========== ========= ========== =========== ===========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable......................$ 148 $ 4,378 $ 33,764 $ (2,756) $ 35,534
Accrued liabilities................... 7,033 11,171 24,620 (429) 42,395
Deferred taxes........................ -- -- 17,697 -- 17,697
Current maturities of long-term debt.. -- -- 10,037 -- 10,037
---------- --------- ---------- ----------- -----------
Total current liabilities......... 7,181 15,549 86,118 (3,185) 105,663
Long-term debt, less current maturities. 190,922 -- 42,693 -- 233,615
Intercompany notes payable.............. 6,364 -- 229,962 (236,326) --
Other liabilities and deferred credits.. 4 2,364 632 -- 3,000
Deferred taxes.......................... 907 32,815 61,186 -- 94,908
Minority interest....................... 10,716 -- -- -- 10,716
Stockholders' investment:
Common stock.......................... 211 4,048 1,384 (5,432) 211
Additional paid in capital............ 116,053 58,318 16,800 (75,118) 116,053
Retained earnings..................... 173,114 57,356 78,628 (135,984) 173,114
Accumulated other comprehensive
income (loss).................... 1,907 -- (3,227) (3,930) (5,250)
---------- --------- ---------- ----------- -----------
291,285 119,722 93,585 (220,464) 284,128
---------- --------- ---------- ----------- -----------
$ 507,379 $ 170,450 $ 514,176 $ (459,975) $ 732,030
========== ========= ========== =========== ===========
</TABLE>
40
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Supplemental Condensed Consolidating Statement of Income
Twelve Months Ended March 31, 1999
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
GROSS REVENUE
Operating revenue........................... $ 10 $ 140,519 $ 325,911 $ -- $ 466,440
Intercompany revenue........................ 224 10,141 690 (11,055) --
Gain (loss) on disposal of equipment........ 11 227 2,162 -- 2,400
--------- --------- ---------- ----------- -----------
245 150,887 328,763 (11,055) 468,840
OPERATING EXPENSES
Direct cost................................. (12) 113,979 249,305 -- 363,272
Intercompany expense........................ -- 690 10,365 (11,055) --
Depreciation and amortization............... 163 10,019 22,560 -- 32,742
General and administrative.................. 5,339 6,695 17,813 -- 29,847
--------- --------- ---------- ----------- -----------
5,490 131,383 300,043 (11,055) 425,861
--------- --------- ---------- ----------- -----------
OPERATING INCOME............................ (5,245) 19,504 28,720 -- 42,979
Earnings from unconsolidated entities....... 15,488 -- 5,108 (15,492) 5,104
Interest income ............................ 28,207 494 1,128 (26,369) 3,460
Interest expense............................ 14,458 1 31,721 (26,369) 19,811
--------- --------- ---------- ------------ -----------
INCOME BEFORE PROVISION
FOR INCOME TAXES..................... 23,992 19,997 3,235 (15,492) 31,732
Allocation of consolidated income taxes..... 1,836 6,704 969 -- 9,509
Minority interest........................... (1,236) -- (67) -- (1,303)
--------- --------- ---------- ------------ -----------
NET INCOME.................................. $ 20,920 $ 13,293 $ 2,199 $ (15,492) $ 20,920
========= ========= ========== ============ ===========
</TABLE>
41
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Supplemental Condensed Consolidating Statement of Cash Flows
Twelve Months Ended March 31, 1999
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
---------- --------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities...$ 10,791 $ 10,447 $ 26,747 $ 1,692 $ 49,677
---------- --------- ---------- ------------ -----------
Cash flows from investing activities:
Capital expenditures................. -- (5,543) (13,676) -- (19,219)
Proceeds from asset dispositions..... 15 488 5,733 -- 6,236
---------- --------- ---------- ------------ -----------
Net cash provided by (used in) investing
activities........................... 15 (5,055) (7,943) -- (12,983)
---------- --------- ---------- ------------ -----------
Cash flows from financing activities:
Proceeds from borrowings............. 20 -- -- (20) --
Repayment of debt.................... (3,300) -- (9,976) (1,672) (14,948)
Repurchase of common stock........... (7,128) -- -- -- (7,128)
Issuance of common stock............. 113 -- -- 113
---------- --------- ---------- ------------ -----------
Net cash used in financing activities....... (10,295) -- (9,976) (1,692) (21,963)
---------- --------- ---------- ------------ -----------
Effect of exchange rate changes in cash..... -- -- (213) -- (213)
---------- --------- ---------- ------------ -----------
Net increase in cash and cash equivalents... 511 5,392 8,615 -- 14,518
Cash and cash equivalents at beginning of
period............................... 34,264 5,192 16,620 -- 56,076
---------- --------- ---------- ------------ -----------
Cash and cash equivalents at end of period..$ 34,775 $ 10,584 $ 25,235 $ -- $ 70,594
========== ========= ========== ============ ===========
</TABLE>
42
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
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
Accumulated other comprehensive
income (loss).................... 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>
43
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Supplemental Condensed Consolidating Statement of Income
Twelve Months Ended March 31, 1998
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
---------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
GROSS REVENUE
Operating revenue...........................$ 20 $ 141,179 $ 285,694 $ -- $ 426,893
Intercompany revenue........................ 280 10,345 308 (10,933) --
Gain (loss) on disposal of equipment........ -- (439) 201 -- (238)
---------- --------- ---------- ----------- ------------
300 151,085 286,203 (10,933) 426,655
OPERATING EXPENSES
Direct cost................................. 7 112,246 199,388 -- 311,641
Intercompany expense........................ -- 243 10,690 (10,933) --
Depreciation and amortization............... 589 8,949 22,702 -- 32,240
General and administrative.................. 5,632 5,289 15,389 -- 26,310
---------- --------- ---------- ----------- ------------
6,228 126,727 248,169 (10,933) 370,191
---------- --------- ---------- ----------- ------------
OPERATING INCOME............................ (5,928) 24,358 38,034 -- 56,464
Earnings from unconsolidated entities....... 27,185 -- 7,207 (27,187) 7,205
Interest income ............................ 20,288 282 1,314 (18,903) 2,981
Interest expense............................ 7,419 -- 32,020 (18,903) 20,536
--------- ------- --------- ------------ -------------
INCOME FROM CONTINUING
OPERATIONS BEFORE PROVISION
FOR INCOME TAXES..................... 34,126 24,640 14,535 (27,187) 46,114
Allocation of consolidated income taxes..... 1,809 8,028 3,996 -- 13,833
Minority interest........................... (1,016) -- (11) -- (1,027)
---------- --------- ---------- ----------- ------------
INCOME FROM CONTINUING
OPERATIONS........................... 31,301 16,612 10,528 (27,187) 31,254
Discontinued operations:
Income (loss) from CPS operations.... 107 -- 47 -- 154
---------- --------- ---------- ----------- ------------
NET INCOME..................................$ 31,408 $ 16,612 $ 10,575 $ (27,187) $ 31,408
========== ========== ========== ============ ============
</TABLE>
44
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Supplemental Condensed Consolidating Statement of Cash Flows
Twelve Months Ended March 31, 1998
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities...$ (93,486) $ 27,903 $ 49,389 $ 85,140 $ 68,946
---------- --------- --------- ---------- ---------
Cash flows from investing activities:
Capital expenditures................. (155) (27,706) (42,604) -- (70,465)
Proceeds from asset dispositions..... -- 1,450 9,513 -- 10,963
Cash received from CPS disposal...... -- -- 5,700 -- 5,700
Acquisitions, net of cash received... -- -- (353) -- (353)
---------- --------- ---------- ------------ -----------
Net cash used in investing activities....... (155) (26,256) (27,744) -- (54,155)
---------- --------- ---------- ------------ -----------
Cash flows from financing activities:
Proceeds from borrowings............. 98,723 -- 109,955 (85,140) 123,538
Repayment of debt.................... -- -- (120,519) -- (120,519)
Issuance of common stock............. 7,723 -- -- -- 7,723
---------- --------- ---------- ------------ -----------
Net cash provided by (used in) financing
activities........................... 106,446 -- (10,564) (85,140) 10,742
---------- --------- ---------- ------------ -----------
Effect of exchange rate changes in cash..... -- -- 714 -- 714
---------- --------- ---------- ------------ -----------
Net increase in cash and cash equivalents... 12,805 1,647 11,795 -- 26,247
Cash and cash equivalents at beginning of
period............................... 21,459 3,545 4,825 -- 29,829
---------- --------- ---------- ------------ -----------
Cash and cash equivalents at end of period..$ 34,264 $ 5,192 $ 16,620 $ -- $ 56,076
========== ========= ========== ============ ===========
</TABLE>
45
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Supplemental Condensed Consolidating Statement of Income
Nine Months Ended March 31, 1997
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
GROSS REVENUE
Operating revenue...........................$ 18 $ 83,440 $ 83,670 $ -- $ 167,128
Intercompany revenue........................ 105 7,463 3 (7,571) --
Gain (loss) on disposal of equipment........ 20 1,090 112 -- 1,222
---------- --------- ---------- ----------- -----------
143 91,993 83,785 (7,571) 168,350
OPERATING EXPENSES
Direct cost................................. (1) 65,762 53,345 -- 119,106
Intercompany expense........................ -- 3 7,568 (7,571) --
Depreciation and amortization............... 90 5,849 6,685 -- 12,624
General and administrative.................. 3,110 3,839 4,457 -- 11,406
---------- --------- ---------- ----------- -----------
3,199 75,453 72,055 (7,571) 143,136
---------- --------- ---------- ----------- -----------
OPERATING INCOME............................ (3,056) 16,540 11,730 -- 25,214
Earnings from unconsolidated entities....... 16,841 -- 2,784 (17,023) 2,602
Interest income............................. 6,025 238 1,478 (4,441) 3,300
Interest expense............................ 1,734 23 8,212 (4,441) 5,528
--------- ------- -------- --------- ----------
INCOME FROM CONTINUING
OPERATIONS BEFORE PROVISION
FOR INCOME TAXES..................... 18,076 16,755 7,780 (17,023) 25,588
Allocation of consolidated income taxes..... 170 5,404 2,101 -- 7,675
Minority interest........................... (281) -- (7) -- (288)
---------- --------- ---------- ----------- -----------
INCOME FROM CONTINUING
OPERATIONS........................... 17,625 11,351 5,672 (17,023) 17,625
Discontinued operations:
Income (loss) from CPS operations.... (393) -- (890) 890 (393)
---------- --------- ---------- ----------- -----------
NET INCOME..................................$ 17,232 $ 11,351 $ 4,782 $ (16,133) $ 17,232
========== ========= ========== ========== ==========
</TABLE>
46
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Supplemental Condensed Consolidating Statement of Cash Flows
Nine Months Ended March 31, 1997
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
---------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities...$ 9,120 $ 4,598 $ 1,319 $ 934 $ 15,971
---------- --------- ---------- ----------- ----------
Cash flows from investing activities:
Capital expenditures................. (30) (7,108) (2,968) -- (10,106)
Proceeds from asset dispositions..... 20 1,599 4,407 -- 6,026
Bristow investment................... (109,286) -- (46,165) -- (155,451)
Acquisitions, net of cash received... -- -- (1,675) -- (1,675)
Proceeds from maturity of
marketable securities............ 5,000 -- 15,001 -- 20,001
---------- --------- ---------- ----------- ----------
Net cash used in investing activities...... (104,296) (5,509) (31,400) -- (141,205)
---------- --------- ---------- ----------- ----------
Cash flows from financing activities:
Proceeds from borrowings............. 89,094 -- 8,542 (1,000) 96,636
Repayment of debt.................... -- -- (434) -- (434)
Issuance of common stock............. 1,899 -- -- -- 1,899
---------- --------- ---------- ----------- ----------
Net cash provided by (used in) financing
activities........................... 90,993 -- 8,108 (1,000) 98,101
---------- --------- ---------- ----------- ----------
Effect of exchange rate changes in cash..... -- -- 23 -- 23
---------- --------- ---------- ----------- ----------
Net decrease in cash and cash equivalents... (4,183) (911) (21,950) (66) (27,110)
Cash and cash equivalents at beginning of
period............................... 25,642 4,456 26,775 66 56,939
---------- --------- ---------- ----------- ----------
Cash and cash equivalents at end of period..$ 21,459 $ 3,545 $ 4,825 $ -- $ 29,829
========== ========= ========== =========== ==========
</TABLE>
47
<PAGE>
SCHEDULE II
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
<TABLE>
<CAPTION>
Balance at Balance at
Beginning Additions End of
Description of Period at Cost Deductions (A) Period
- -------------------------------------- ---------- --------- -------------- ---------
<S> <C> <C> <C> <C>
Year ended March 31, 1999
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $ 850 3,508 348 4,010
Year ended March 31, 1998
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $ 1,340 310 800 850
Nine months ended March 31, 1997
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $ 1,471 563 694 1,340
</TABLE>
(A) Amounts include accounts receivable considered uncollectible and removed
from accounts by reducing the allowance for doubtful accounts, and the effect of
exchange rate differences.
48
<PAGE>
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
September 20, 1999.
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
September 20, 1999.
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 September 20,
1999.
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
September 20, 1999.
49
<PAGE>
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 -- March 31, 1999 and 1998
Consolidated Statement of Income for the twelve months ended March 31,
1999 and 1998 and the nine months ended March 31, 1997
Consolidated Statement of Stockholders' Investment for the twelve months
ended March 31, 1999 and 1998 and the nine months ended March 31, 1997
Consolidated Statement of Cash Flows for the twelve months ended March 31,
1999 and 1998 and the nine months ended March 31, 1997
Notes to Consolidated Financial Statements
(a) (2) Financial Statement Schedules
Valuation and Qualifying Accounts
All other schedules have been omitted because the information required is
included in the financial statements or notes or have been omitted because they
are not applicable or not required.
Incorporated
by Reference Form
to Registration or Exhibit
(a) (3) Exhibits or File Number Report Date Number
------------------------ -------------- ------- -------- --------
(3) Articles of Incorporation and
By-laws
(1) Delaware Certificate of 0-5232 10-K June 1989 3(10)
Incorporation
(2) Agreement and Plan of 0-5232 10-K June 1989 3(11)
Merger dated December 29,
1987
(3) Certificate of Merger 0-5232 10-K June 1990 3(3)
dated December 29, 1987
(4) Certificate of Correction 0-5232 10-K June 1990 3(4)
of Certificate of Merger
dated January 20, 1988
(5) Certificate of Amendment 0-5232 10-K June 1990 3(5)
of Certificate of
Incorporation dated
November 30, 1989
(6) Certificate of Amendment 0-5232 8-K Dec. 1992 3
of Certificate of
Incorporation dated
December 9, 1992
(7) Rights Agreement and Form 0-5232 8A Feb. 1996 4
of Rights Certificate
(8) Amended and Restated 0-5232 8-K Feb. 1996 3(7)
By-laws
(9) Certificate of 0-5232 10-K June 1996 3(9)
Designation of Series A
Junior Participating
Preferred Stock
(10)First Amendment to 0-5232 8-A/A May 1997 5
Rights Agreement
(4) Instruments defining the rights
of security holders, including
indentures
(1) Indenture dated as of 0-5232 10-Q Dec. 1996 4(1)
December 15, 1996, between
Fleet National Bank and
the Company
(2) Registration Rights 0-5232 10-Q Dec. 1996 4(2)
Agreement dated December 17,
1996, between the Company
and Jefferies & Company,
Inc., Simmons & Company
International, and Johnson
Rice & Company L.L.C.
(3) Registration Rights 0-5232 10-Q Dec. 1996 4(3)
Agreement dated December
19, 1996, between the
Company and Caledonia
Industrial and Services
Limited
50
<PAGE>
Incorporated
by Reference Form
to Registration or Exhibit
(a) (3) Exhibits or File Number Report Date Number
------------------------ -------------- ------- -------- --------
(4)(4) Indenture, dated as of 333-48803 S-4 March 1998 4.1
January 27, 1998, among
the Company, the
Guarantors and State
Street Bank and Trust
Company
(5) Registration Rights 333-48803 S-4 March 1998 4.2
Agreement, dated as of
January 22, 1998, among
the Company, the
Guarantors and Jefferies
& Company, Inc.
(10) Material Contracts
(1) Employee Incentive 0-5232 10-K June 1981 10(5)
Award Plan *
(2) Executive Welfare 33-9596 S-4 Dec. 1986 10(ww)
Benefit Agreement,
similar agreement
omitted pursuant to
Instruction 2 to Item
601 of Regulation S-K*
(3) Executive Welfare 33-9596 S-4 Dec. 1986 10(xx)
Benefit Agreement,
similar agreements
are omitted pursuant
to Instruction 2 to
Item 601 of
Regulation S-K *
(4) Offshore Logistics, 0-5232 10-K June 1990 (28)
Inc. 1989 Incentive
Plan *
(5) Offshore Logistics, Inc. 33-50946 S-8 Aug. 1992 4.1
1991 Non-qualified Stock
Option Plan for Non-
employee Directors *
(6) Agreement and Plan of 33-79968 S-4 Aug. 1994 2(1)
Merger dated as of June
1, 1994, as amended
(7) Shareholders 33-79968 S-4 Aug. 1994 2(2)
Agreement dated as of
June 1, 1994
(8) Proposed Form of 33-79968 S-4 Aug. 1994 2(3)
Non-competition
Agreement with
Individual
Shareholders
(9) Proposed Form of Joint 33-79968 S-4 Aug. 1994 2(4)
Venture Agreement
(10) Offshore 33-87450 S-8 Dec. 1994 84
Logistics, Inc. 1994
Long-Term Management
Incentive Plan *
(11) Offshore 0-5232 10-K June 1995 10(20)
Logistics, Inc.
Annual Incentive
Compensation Plan *
(12) Indemnity 0-5232 10-K March 1997 10(14)
Agreement, similar
agreements with other
directors of the
Company are omitted
pursuant to
Instruction 2 to Item
601 of Regulation S-K.
(13) Master Agreement 0-5232 8-K Dec. 1996 2(1)
dated December 12,
1996
(14) Change of Control 0-5232 10-Q Sept. 1997 10(1)
Agreement between the
Company and George M.
Small. Substantially
identical contracts
with five other
officers are omitted
pursuant to Item 601
of Regulation S-K
Instructions. *
51
<PAGE>
(a) (3) Exhibits
(10) (15) Offshore Logistics,
Inc. 1994 Long-Term
Management Incentive
Plan, as amended *
(16) Agreement between Pilots
Represented by Office and
Professional Employees
International Union,
AFL-CIO and Offshore
Logistics, Inc.
* 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
There were no Form 8-K filings during the quarter ended March 31, 1999.
52
<PAGE>
EXHIBIT 21
OFFSHORE LOGISTICS, INC.
Subsidiaries of the Registrant at March 31, 1999
<TABLE>
<CAPTION>
Percentage
Place of of Voting
Company Incorporation Stock Owned
- ------------------------------------------- ------------------ -----------
<S> <C> <C>
Air Logistics of Alaska, Inc............... Alaska 100%
Air Logistics, L.L.C....................... Louisiana 100%
Aircopter Maintenance International, Inc... Panama 49%
Airlog International, Inc.................. Panama 100%
Airlog Part Sales, Inc..................... Louisiana 100%
Brilog Leasing Limited..................... Cayman Islands 100%
Bristow Aviation Holdings Limited.......... England 49%
Bristow Helicopters Australia Pty. Ltd..... Australia 49% *
Bristow Helicopters International Limited.. England 49%
Bristow Helicopters Limited................ England 49%
Bristow Helicopters Nigeria Limited........ Nigeria 40% *
Bristow Helicopter Group Limited........... England 49%
FBS Limited................................ England 50% *
Grasso Corporation......................... Delaware 100%
Grasso Production Management............... Texas 100%
Guaranty Financial International, N.A...... Netherlands Antilles 49%
Heliflight Services, Inc................... Texas 49%
Heliservicio Campeche S.A. de C.V. ....... Mexico 49%
Hemisco Helicopters International, Inc.... Panama 49%
Medic Systems International, Inc........... Panama 100%
Medic Systems, Inc......................... Delaware 100%
Norsk Helikopter AS........................ Norway 49% *
Offshore Logistics International, Inc...... Panama 100%
Offshore Logistics Management Services, Inc. Louisiana 100%
Petroleum Air Services..................... Egypt 25%
</TABLE>
* percentage owned by Bristow Helicopters Limited
53
<PAGE>
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/ Drury A. Milke
------------------------------
Drury A. Milke
Vice President-- Chief Financial Officer
(Principal Financial and Accounting Officer)
June 29, 1999
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.
/s/ P. N. Buckley
- --------------------------------
Peter N. Buckley Director June 29, 1999
/s/ J. H. Cartwright
- --------------------------------
Jonathan H. Cartwright Director June 29, 1999
/s/ Louis F. Crane
- --------------------------------
Louis F. Crane Chairman of the Board and June 29, 1999
Director
- ---------------------------------
David M. Johnson Director June 29, 1999
/s/ Kenneth M. Jones
- ---------------------------------
Kenneth M. Jones Director June 29, 1999
/s/ Harry C. Sager
- ---------------------------------
Harry C. Sager Director June 29, 1999
/s/ George M. Small
- ---------------------------------
George M. Small President and Director June 29, 1999
- ---------------------------------
Howard Wolf Director June 29, 1999
54
Exhibit (10)(15)
OFFSHORE LOGISTICS, INC.
1994 LONG-TERM MANAGEMENT INCENTIVE PLAN
(as amended)
ARTICLE I
GENERAL
SECTION 1.1 Purpose. The purpose of the Plan is to enable the Company to
attract, retain and motivate officers and employees and to provide the Company,
its Affiliates and its subsidiaries with the ability to provide incentives more
directly linked to the profitability of the Company, its businesses and
increases in stockholder value.
SECTION 1.2 Definitions. For purposes of the Plan, the following terms
are defined as set forth below:
(a) "Affiliate" means a corporation or other entity controlled by the
Company and designated by the Committee as such.
(b) "Agreement" means the written agreement governing an Award under the
Plan, in a form approved by the Committee, which shall contain terms and
conditions not inconsistent with the Plan and which shall incorporate the Plan
by reference.
(c) "Award" means a Stock Appreciation Right, Stock Option, Restricted
Stock, Deferred Stock, Other Stock-Based Award or a combination of any of these.
(d) "Board" means the Board of Directors of the Company.
(e) "Cash Plan" means the Offshore Logistics, Inc. Annual Incentive
Compensation Plan, as adopted by the Board effective December 31, 1993, subject
to approval of the Stockholders of the Company at the 1994 Annual Meeting.
(f) "Cause" has the meaning set forth in Section 2.3(f).
(g) "Change in Control" and "Change in Control Price" have the meanings set
forth in Sections 6.2 and 6.3, respectively.
(h) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, including any successor thereto.
(i) "Commission" means the Securities and Exchange Commission or any
successor agency.
(j) "Committee" means the Committee referred to in Section 1.3.
(k) "Company" means Offshore Logistics, Inc., a Delaware corporation.
(l) "Date of Award" means the date of the Award of the Stock Option, Stock
Appreciation Right, Restricted Stock, Deferred Stock and/or Other Stock-Based
Award as set forth in the applicable Agreement.
A-1
<PAGE>
(m) "Deferred Stock" means an Award granted under Article IV.
(n) "Disability" shall have the same meaning as such term or a similar term
has in the long-term disability policy maintained by the Company, an Affiliate
or a subsidiary thereof, for the Participant and in effect on the date of the
onset of the Participant's Disability, unless the Committee determines
otherwise, in its discretion, and sets forth an alternative definition or other
means of determining when a Disability shall be deemed to occur in the
applicable Agreement.
(o) "Disinterested Person" means a member of the Board who qualifies as a
disinterested person as defined in Rule 16b-3, as promulgated by the Commission
under the Exchange Act, or any successor definition adopted by the Commission.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
(q) "Fair Market Value" means, except as provided in Sections 2.3(g) and
(h) and 2.4 (b)(iv)(2), as of any given date, the mean between the highest and
lowest reported sales prices of the Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any other national
securities exchange on which the Stock is listed or on NASDAQ, or, in the event
that the Stock is not quoted on any such system, the average of the closing bid
prices per share of the Stock as furnished by a professional marketmaker making
a market in the Stock designated by the Committee. If there is no regular public
trading market for the Stock, the Fair Market Value of the Stock shall be
determined by the Committee in good faith.
(r) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(s) "Non-Employee Director" means a member of the Board who qualifies as a
Non-Employee Director as defined in Rule 16b-3(b)(3), as promulgated by the
Commission under the Exchange Act, or any successor definition adopted by the
Commission.
(t) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(u) "Other Stock-Based Award" means an Award under Article V that is valued
in whole or in part by reference to, or is otherwise based on, Stock.
(v) "Outstanding Stock Option" means a Stock Option granted to a
Participant which has not yet been exercised and which has not yet expired or
been cancelled or forfeited in accordance with its terms.
(w) "Participant" means any employee who has met the eligibility
requirements set forth in Section 1.4 and to whom an outstanding Award has been
made under the Plan.
(x) "Plan" means the Offshore Logistics, Inc. 1994 Long-Term Management
Incentive Plan, as set forth herein and as hereafter amended from time to time.
(y) "Restricted Stock" means an Award granted under Article III.
(z) "Retirement" shall mean the resignation or Termination of Employment
after attainment of age 60, unless the Committee determines otherwise in its
discretion and sets forth an alternative definition or other means of
determining when Retirement shall be deemed to occur.
A-2
<PAGE>
(aa) "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, and as amended from time to time.
(bb) "Stock" means common stock, par value $.01 per share, of the Company.
(cc) "Stock Appreciation Right" means a right awarded under Section 2.4.
(dd) "Stock Option" means an option awarded under Article II.
(ee) "Termination of Employment" means the termination of the Participant's
employment with the Company and any subsidiary or Affiliate. A Participant
employed by a subsidiary or an Affiliate shall also be deemed to incur a
Termination of Employment if the subsidiary or Affiliate ceases to be such a
subsidiary or Affiliate, as the case may be, and the Participant does not
immediately thereafter become an employee of the Company or another subsidiary
or Affiliate.
In addition, certain other terms used in the Plan have definitions given to
them in the first place in which they are used.
SECTION 1.3 Administration of the Plan. The Plan shall be administered by
the Long-Term Incentive Plan Committee of the Board or such other committee or
subcommittee of the Board, composed of not fewer than two Non-Employee
Directors, each of whom shall be appointed by and serve at the pleasure of the
Board.
The Committee shall have plenary authority to make Awards pursuant to the
terms of the Plan to officers and employees of the Company and its subsidiaries
and Affiliates.
Among other things, the Committee shall have the authority, subject to the
terms of the Plan:
(a) to select from among the class of eligible persons specified in Section
1.4 below the officers and employees to whom Awards may from time to time be
granted;
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Deferred Stock and Other Stock-Based Awards or any combination thereof are to be
granted under the Plan;
(c) to determine the number of shares of Stock to be covered by each Award;
(d) to determine the terms and conditions of any Award, including, but not
limited to, the Stock Option exercise price (subject to Section 2.2), any
vesting restriction or limitation and any vesting acceleration or forfeiture
waiver regarding any Award and the shares of Stock relating thereto, based on
such factors as the Committee shall determine;
(e) to modify, amend or adjust the terms and conditions of any Award, at
any time or from time to time, including, but not limited to, with respect to
performance goals and measurements applicable to performance-based Awards
pursuant to the terms of the Plan;
(f) to determine to what extent and under what circumstances Stock and
other amounts payable with respect to an Award shall be deferred; and
(g) to determine under what circumstances a Stock Option may be settled in
cash or Stock under Section 2.3(g).
A-3
<PAGE>
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may (i) delegate to any officer of the Company
the authority to make decisions pursuant to Section 2.3(a), (c), (f), Section
3.3, Section 3.4, Section 4.2 (provided that no such delegation may be made that
would cause Awards or other transactions under the Plan to cease to comply with
the conditions for exemption from Section 16(b) of the Exchange Act and Rule
16b-3 thereunder) and (ii) authorize any one or more of their number or any
officer of the Company to execute and deliver documents on behalf of the
Committee.
Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the Committee or such delegate at the time of the
Award or, unless in contravention of any express term of the Plan, at any time
thereafter. All decisions made by the Committee or any appropriately delegated
officer pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and Plan Participants.
Any authority granted to the Committee may also be exercised by the full
Board, except to the extent that the grant or exercise of such authority would
cause any Award or transaction to become subject to (or lose an exemption under)
the short-swing profit recovery provisions of Section 16 of the Exchange Act. To
the extent that any permitted action taken by the Board conflicts with action
taken by the Committee, the Board action shall control.
SECTION 1.4 Eligible Persons. Officers and employees of the Company, its
subsidiaries and Affiliates who are responsible for or contribute to the
management, growth and profitability of the business of the Company, its
subsidiaries and Affiliates are eligible for Awards under the Plan; however, no
Award shall be made to a director who is not an officer or a salaried employee
of the Company or one of its subsidiaries or Affiliates.
SECTION 1.5 Stock Subject to the Plan. The total aggregate number of shares
of Stock that may be distributed under the Plan (whether reserved for issuance
upon grant of Stock Options or Stock Appreciation Rights or granted as
Restricted Stock, Deferred Stock or an Other Stock-Based Award) shall be
1,900,000, subject to adjustment pursuant to the terms of Section 6.4 of the
Plan. In addition to the limitation set forth above, no more than 800,000 shares
of Stock shall be cumulatively available for the grant of Incentive Stock
Options over the entire term of the Plan. The shares of Stock shall be made
available from authorized but unissued shares or shares issued and held in the
treasury of the Company. The delivery of shares of Stock upon exercise of a
Stock Option, Stock Appreciation Right or Other Stock-Based Award in any manner
and the vesting of shares of Restricted Stock or Deferred Stock shall result in
a decrease in the number of shares that thereafter may be issued for purposes of
this Plan, by the net number of shares as to which the Stock Option, Stock
Appreciation Right or Other Stock-Based Award is exercised or by the number of
shares of Restricted Stock or Deferred Stock that vest. Shares of Restricted
Stock or Deferred Stock that are forfeited and shares of Stock with respect to
which Stock Options (and related Stock Appreciation Rights, if any) expire, are
cancelled without being exercised or otherwise terminate without being
exercised, or Stock Appreciation Rights exercised for cash, shall not be deemed
awarded for purposes of this Section and shall again be available for
distribution in connection with Awards under the Plan. To the extent not
specified above, the Committee shall have the discretion to determine the manner
in which shares shall be counted for purposes of calculating the number of
shares available for distribution in connection with Awards under the Plan.
SECTION 1.6 Agreements. Each Agreement (a) shall state the Date of Award
and the name of the Participant, (b) shall specify the terms of the Award, (c)
shall be signed by the Participant and a person designated by the Committee, (d)
shall incorporate the Plan by reference and (e) shall be delivered to the
Participant. The Agreement shall contain such other terms and conditions as are
required by the Plan and, in addition, such other terms not inconsistent with
the Plan as the Committee may deem advisable.
A-4
<PAGE>
SECTION 1.7 Limit on Annual Grants to Participants. The maximum aggregate
number of shares of Stock that may be awarded under the Plan to any Participant
(whether reserved for issuance upon grant of Stock Options or Stock Appreciation
Rights or granted as Restricted Stock, Deferred Stock or other Award) during any
fiscal year is 100,000.
ARTICLE II
PROVISIONS APPLICABLE TO STOCK OPTIONS
SECTION 2.1 Grants of Stock Options. Stock Options may be granted alone or
in addition to other Awards under the Plan and may be of two types: Incentive
Stock Options and Non-Qualified Stock Options. Any Stock Option granted under
the Plan shall be in such form as the Committee may from time to time approve.
The Committee shall have the authority to grant Incentive Stock Options,
Non-Qualified Stock Options or both types of Stock Options (in each case with or
without Stock Appreciation Rights). Incentive Stock Options may be granted only
to employees of the Company and its subsidiaries (within the meaning of Section
424(f) of the Code). To the extent that any Stock Option is not designated as an
Incentive Stock Option or even if so designated does not qualify as an Incentive
Stock Option, it shall constitute a Non-Qualified Stock Option.
Each Stock Option shall be evidenced by an Agreement, the terms and
provisions of which may differ. The Agreement shall specify the number of Stock
Options granted, the exercise price of such Stock Options, whether such Stock
Options are intended to be Incentive Stock Options or Non-Qualified Stock
Options and the period during which such Stock Options may be exercised and
shall contain such other provisions as the Committee may determine. The Company
shall notify a Participant of any Award of a Stock Option, and a written option
Agreement or Agreements shall be duly executed and delivered by the Company and
the Participant. Such Agreement or Agreements shall become effective upon
execution by the Participant.
Stock options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable.
SECTION 2.2 Exercise Price. At the time the Stock Option is granted, the
Committee shall establish the per share exercise price for each Stock Option
granted, except that the exercise price with respect to Non-Qualified Stock
Options shall not be less than 50% of the Fair Market Value of a share of Stock
on the Date of Award and except that, with respect to an Incentive Stock Option,
the exercise price shall not be less than 100% of the Fair Market Value of a
share of Stock on the Date of Award. The exercise price will be subject to
adjustment in accordance with the provisions of Section 6 of the Plan.
SECTION 2.3 Exercise of Stock Options.
(a) Exercisability. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may at
any time waive such installment exercise provisions, in whole or in part, based
on such factors as the Committee may determine. In addition, the committee may
at any time, in whole or in part, accelerate the exercisability of any Stock
Option.
(b) Option Period. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than 10 years after the
Date of Award of the Stock Option.
(c) Method of Exercise. Subject to the provisions of this Section, Stock
Options may be exercised, in whole or in part, at any time during the option
term by giving written notice of exercise to the Company specifying the number
of shares of Stock subject to the Stock Option to be purchased. The option price
of Stock to
A-5
<PAGE>
be purchased upon exercise of any Option shall be paid in full in cash (by
certified or bank check or such other instrument as the Company may accept) or,
if and to the extent set forth in the option Agreement, may also be paid by one
or more of the following: (i) in the form of unrestricted Stock already owned by
the optionee (and, in the case of the exercise of a Non-Qualified Stock Option,
Restricted Stock subject to an Award hereunder) based in any such instance on
the Fair Market Value of the Stock on the date the Stock Option is exercised;
provided, that such stock has been held by the optionee for at least six months,
and provided, further, that, in the case of an Incentive Stock Option, the right
to make a payment in the form of already owned shares of Stock may be authorized
only at the time the Stock Option is granted; (ii) by requesting the Company to
withhold from the number of shares of Stock otherwise issuable upon exercise of
the Stock Option that number of shares having an aggregate fair market value on
the date of exercise equal to the exercise price for all of the shares of Stock
subject to such exercise; or (iii) by a combination thereof, in each case in the
manner provided in the option Agreement. If payment of the option exercise price
of a Non-Qualified Stock Option is made in whole or in part in the form of
Restricted Stock, the number of shares of Stock to be received upon such
exercise shall equal the number of shares of Restricted Stock used for payment
of the option exercise price and shall be subject to the same forfeiture
restrictions to which such Restricted Stock was subject, unless otherwise
determined by the Committee.
In the discretion of the Committee, payment for any shares subject to a
Stock Option may also be made in such other manner as may be authorized from
time to time by the Committee, including without limitation (i) payment in the
form of an installment note or (ii) payment made by delivering a properly
executed exercise notice to the Company, together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds to pay the purchase price. To facilitate the foregoing, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms.
No shares of Stock shall be issued until full payment therefor has been
made and a Participant shall have no rights as a stockholder of the Company with
respect to Stock subject to such option before the issuance of the shares of
Stock upon the exercise of the option.
(d) Limited Transferability of Stock Options. No Stock Option shall be
transferable by the optionee other than (i) by will or by the laws of descent
and distribution; or (ii) in the case of a Non-Qualified Stock Option, as
otherwise expressly permitted under the applicable option agreement including,
if so permitted, pursuant to a gift to such optionee's spouse, children, or
other family members, whether directly or indirectly or by means of a trust or
partnership or otherwise. All Stock Options shall be exercisable, subject to the
terms of this Plan, only by the optionee, the guardian or legal representative
of the optionee, or any person to whom such option is transferred pursuant to
the preceding sentence, it being understood that the term "holder" and
"optionee" include such guardian, legal representative and other transferee.
(e) Forfeiture of Options Upon Termination of Employment for Cause. If a
Participant's employment ends because of a Termination of Employment for Cause,
then unless the Committee, in its discretion, determines otherwise, all
Outstanding Stock Options, whether or not then vested, shall terminate effective
as of the date of such Termination of Employment.
(f) Exercise in the Event of Termination of Employment, Retirement, Death
or Permanent Disability. If (i) there occurs a Termination of Employment by
reason of the voluntary termination by the Participant or the termination by the
Company or any of its Affiliates or subsidiaries (other than for Cause) the
Participant's Outstanding Stock Options may be exercised to the extent then
exercisable or on such accelerated basis as the Committee may determine, until
the earlier of three months after the date of such termination (or such longer
period as may be determined by the Committee in its discretion before the
expiration of such three-month period) or the expiration of such Stock Options,
(ii) a Participant dies during a period during which his Stock Options could
have been exercised by him, his Outstanding Stock Options may be exercised to
the extent exercisable at the date of death or on such accelerated basis as the
Committee may determine, by the person who acquired the right to exercise such
Stock Options by will or the laws of descent and distribution until the earlier
of one year after such death (or such
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longer period as may be determined by the Committee, in its discretion,
before the expiration of such one-year period) or the expiration of such Stock
Options and (iii) the Disability or Retirement of the Participant occurs, then
the Participant may exercise his Outstanding Stock Options to the extent
exercisable upon date of the onset of such Disability or Retirement or on such
accelerated basis as the Committee may determine, until the earlier of one year
after such date (or such longer period as may be determined by the Committee in
its discretion before the expiration of such one-year period) or the expiration
of such Stock Options. Unless otherwise determined by the Committee, for the
purposes of the Plan "Cause" shall mean cause as such term or a similar term is
defined in any employment agreement applicable to the Participant, or if there
is no such employment agreement or if such employment agreement contains no such
term, (i) a failure or refusal by a Participant to substantially perform a
material duty of such Participant's employment or (ii) the commission by the
Participant of a felony or the perpetration by the Participant of a dishonest
act or common law fraud against the Company or any Affiliate or subsidiary
thereof. Upon the occurrence of an event described in clauses (i), (ii) or (iii)
of this Section 2.3(f), unless the Committee accelerates vesting, all rights
with respect to Stock Options that are not vested as of such event will be
relinquished. Anything in this Section 2.3(f) to the contrary notwithstanding,
no Stock Option shall be exercisable after the earlier to occur of (i) the
expiration of the option period set forth in the applicable Agreement or (ii)
the tenth anniversary of the Date of Award thereof. If the optionee's employment
terminates due to death, Disability or Retirement, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(g) Buy Out of Stock Option. On or before receipt of written notice of
exercise, the Committee may elect to buy out all or part of the portion of the
shares of Stock for which a Stock Option is being exercised by paying the
optionee an amount, in cash or Stock, equal to the excess of the Fair Market
Value of the Stock over the option price times the number of shares of Stock for
which to the option is being exercised on the effective date of such buy out.
(h) Change in Control Cash Out. Notwithstanding any other provision of the
Plan, during the 60-day period from and after a Change in Control (the "Exercise
Period"), unless the Committee shall determine otherwise at the time of Award,
an optionee shall have the right (whether or not the Stock Option is fully
exercisable and in lieu of the payment of the exercise price for the shares of
Stock being purchased under the Stock Option) by giving notice to the Company,
to elect (within the Exercise Period) to surrender all or part of the Stock
Option to the Company and to receive cash, within 30 days of such notice, in an
amount equal to the amount by which the Change in Control Price per share of
Stock on the date of such election shall exceed the option exercise price (the
"Spread") multiplied by the number of shares of Stock granted under the Stock
Option as to which the right granted under this Section 2.3(h) shall have been
exercised. Notwithstanding the foregoing, if any right granted pursuant to this
Section 2.3(h) would make a Change in Control transaction ineligible for
pooling-of-interests accounting under APB No. 16 that but for the nature of such
grant would otherwise be eligible for such accounting treatment, the Committee
shall have the ability to substitute for the cash payable pursuant to such right
Stock with a Fair Market Value equal to the cash that would otherwise be payable
hereunder.
(i) Replacement Options. The Committee may provide either at the time of
Award or subsequently that a Stock Option includes the right to acquire a
replacement option. A Stock Option which provides for the Award of a replacement
option shall entitle the Participant, upon exercise of the Stock Option (in
whole or in part) before the Termination of Employment of the Participant and
satisfaction of the option exercise price in shares of Stock held by the
Participant, to receive a replacement option. In addition to any other terms and
conditions the Committee deems appropriate, the replacement option shall be
subject to the following terms: the number of shares of Stock shall not exceed
the number of whole shares used to satisfy the exercise price of the original
Stock option and the number of whole shares, if any, withheld by the Company as
payment for withholding taxes, the Date of Award of the replacement option will
be the date of the exercise of the original Stock Option, the replacement option
exercise price per share shall be the Fair Market Value on the Date of Award of
the replacement option, the replacement option shall be exercisable no earlier
than six months after the Date of Award of the replacement option, the term of
the replacement option will terminate on the same date that the original Stock
Option would have
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terminated had it not been exercised and the replacement option shall be a
Non- Qualified Stock Option and shall otherwise meet all conditions of the Plan.
SECTION 2.4 Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be awarded in
conjunction with all or part of any Stock Option awarded under the Plan or
separately and without reference to any related Stock Option. In the case of a
Non-Qualified Stock Option, such rights may be awarded either at or after the
award of the Stock Option. In the case of an Incentive Stock Option, such rights
may be awarded only at the time of award of the Stock Option. A Stock
Appreciation Right or applicable portion thereof awarded with respect to a Stock
Option shall terminate and no longer be exercisable upon the termination or
exercise of the related Stock Option, subject to such provisions as the
Committee may specify where a Stock Appreciation Right is awarded with respect
to fewer than the full number of shares covered by a related Stock Option. A
Stock Appreciation Right may be exercised by an optionee in accordance with this
Section by surrendering the applicable portion of the related Stock Option in
accordance with procedures established by the Committee. Upon such exercise and
surrender, the optionee shall be entitled to receive an amount determined in the
manner prescribed in Section 2.4(b). Stock Options relating to exercised Stock
Appreciation Rights shall no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the Plan, as shall be
determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only in accordance with
the provisions of Section 2.3 and this Section 2.4 and, if awarded in tandem
with Stock Options, only at the times and to the extent that the Stock Options
to which they relate are exercisable.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be
entitled to receive an amount in cash, shares of Stock or both, equal in
aggregate value to the excess of the Fair Market Value of one share of Stock
over the option exercise price per share specified in the related Stock Option
multiplied by the number of shares in respect of which the Stock Appreciation
Right shall have been exercised, with the Committee having the right to
determine the form of payment. When payment is to be made in shares of Stock,
the number of shares to be paid shall be calculated on the basis of the Fair
Market Value of the shares on the date of exercise.
(iii) Stock Appreciation Rights shall be transferable only if granted in
tandem with Stock Options and then only to permitted transferees of the
underlying Stock Option in accordance with Section 2.3(d).
(c) In its discretion, the Committee may award "Limited" Stock Appreciation
Rights under this Section (i.e., Stock Appreciation Rights that become
exercisable only if a Change in Control occurs), subject to such terms and
conditions as the Committee may specify at the time of the Award. Such Limited
Stock Appreciation Rights shall be settled solely in cash. The Committee may
also, in its discretion, provide that the amount to be paid upon the exercise of
a Stock Appreciation Right or Limited Stock Appreciation Right shall be based on
the Change in Control Price, subject to such terms and conditions as the
Committee may specify at the time of the Award.
ARTICLE III
PROVISIONS APPLICABLE TO RESTRICTED STOCK
SECTION 3.1 Awards of Restricted Stock. The Committee may condition the
Award of Restricted Stock upon the attainment of specified performance goals of
the Participant or of the Company or Affiliate, subsidiary,
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division or department of the Company for or within which the Participant
is primarily employed or upon such other factors or criteria as the Committee
shall determine. The provisions of Restricted Stock Awards need not be the same
with respect to each recipient.
SECTION 3.2 Awards and Certificates. Shares of Restricted Stock shall be
evidenced in such manner as the Committee may deem appropriate, including
book-entry registration or issuance of one or more stock certificates. Any
certificate issued in respect of shares of Restricted Stock shall be registered
in the name of such Participant and shall bear an appropriate legend referring
to the terms, conditions and restrictions applicable to such Award,
substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) of the 1994 Long-Term Management Incentive
Plan and a Restricted Stock Agreement. Copies of such Plan and
Agreement are on file at the offices of Offshore Logistics, Inc.,
224 Rue de Jean, P.O. Box 56, Lafayette, Louisiana 70505."
The Committee may require that the certificates evidencing such shares be
held in custody by the Company until the restrictions thereon shall have lapsed
and that, as a condition of any Award of Restricted Stock, the Participant shall
have delivered a stock power, endorsed in blank, relating to the Stock covered
by such Award.
SECTION 3.3 Terms, Conditions and Restrictions. Shares of Restricted Stock
shall be subject to the following terms, conditions and restrictions:
(a) Subject to the provisions of the Plan and the Restricted Stock
Agreement referred to below in Section 3.3(f), during a period set by the
Committee, commencing with the Date of Award (the "Restriction Period"), the
Participant shall not be permitted to sell, assign, transfer, pledge or
otherwise dispose of or encumber shares of Restricted Stock. The Committee may
provide for the lapse of such restrictions in installments or otherwise and may
accelerate or waive such restrictions, in whole or in part, in each case based
on period of service, performance of the Participant or of the Company or the
Affiliate, subsidiary, division or department for which the Participant is
employed or based on such other factors or criteria as the Committee may
determine, in its discretion.
(b) Except to the extent otherwise provided in the applicable Restricted
Stock Agreement, upon the Participant's Termination of Employment due to the
Participant's death, Disability or Retirement, all remaining restrictions with
respect to all of the Participant's shares of Restricted Stock shall lapse, and
all of the Participant's shares of Restricted Stock shall become free of all
restrictions and become fully vested and freely transferable to the full extent
of the original grant.
(c) Except to the extent otherwise provided in the applicable Restricted
Stock Agreement or Sections 3.3, 3.4 and 6.1, upon a Participant's Termination
of Employment for any reason during the Restriction Period other than due to the
Participant's death, Disability or Retirement, all shares of Restricted Stock
still subject to the Restriction Period shall be forfeited by the Participant;
provided, however, that except to the extent otherwise provided in Section 6.1,
in the event of Termination of Employment of a Participant for any other reason,
the Committee shall have the discretion to waive in whole or in part any or all
of such remaining restrictions with respect to any or all of such Participant's
shares of Restricted Stock.
(d) Except as provided in this Article III or in the Restricted Stock
Agreement, the Participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a stockholder of the Company holding the class or
series of Stock that is the subject of the Restricted Stock, including, if
applicable, the right to vote the shares and the right to receive any cash
dividends. If so determined by the Committee in the applicable Restricted Stock
Agreement and subject to Section 7.8 of the Plan, (i) cash dividends on the
shares of Stock that are the subject
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of the Restricted Stock Award shall be automatically deferred and
reinvested in additional shares of Restricted Stock, and (ii) dividends payable
in Stock shall be paid in the form of Restricted Stock.
(e) If and when the Restriction Period expires without a prior forfeiture
of the Restricted Stock subject to such Restriction Period, unlegended
certificates for such shares shall be delivered to the Participant.
(f) Each Award shall be confirmed by, and be subject to the terms of, a
Restricted Stock Agreement.
SECTION 3.4 Restricted Stock Awards to Cash Plan Participants in Lieu of
Annual Incentive Award.
(a) Eligibility. All of the participants in the Cash Plan are eligible to
be granted Restricted Stock Awards under this section of the Plan in accordance
with this Restricted Stock Feature, which is to be used in conjunction with the
Cash Plan.
(b) Petition to Receive Annual Incentive in Restricted Stock in Lieu of
Cash Payment. Except as may be otherwise determined by the Committee in its
discretion from time to time, participants in the Cash Plan may make a request
to the Committee to receive all or any portion of their Annual Incentive Award
(as defined in the Cash Plan) in the form of shares of Restricted Stock. Once
made with respect to a particular fiscal year, the request is irrevocable. The
Committee shall have the absolute authority in its discretion to grant or deny
each such request.
(c) Timing of Request. Except as may be otherwise provided by the Committee
in its discretion, the Request must be made in writing on a form to be provided
by the Committee and must be received by the Company at its offices before the
beginning of the fiscal year with respect to which the Annual Incentive Award
pertains.
(d) Premium. For each request granted by the Committee, the Participant
will receive the applicable portion of the Annual Incentive Award in the form of
shares of Restricted Stock (the "Base Shares of Restricted Stock"), plus a
premium of 20% additional shares of Restricted Stock ("Premium Shares of
Restricted Stock"), calculated as follows:
Amount of Incentive Award To Be
Cancelled and Converted to X 1.20 = Number of Shares
Shares of Restricted Stock Restricted Stock
--------------------------------- (rounded to nearest
30 Day Trailing Average higher even share)
Closing Stock Price At
June 30 of Preceding
Fiscal Year
provided that for the fiscal year ended 1994, the number of shares of
Restricted Stock to be awarded shall be calculated based on the 30 day trailing
average closing stock price at December 31, 1993 (i.e., the 30 day period
preceding the effective date of the Cash Plan).
(e) Except as may be otherwise provided by the Committee and set forth in
the Restricted Stock Agreement and subject to the provisions of the Plan, the
Restriction Period shall be three years from the Date of Award for Awards made
with respect to the fiscal year ended 1994, and 30 months for Awards made with
respect to subsequent fiscal years.
(f) Modified Forfeiture Restrictions. In lieu of the restrictions set forth
above in Section 3.3, except as otherwise set forth in Section 6.1 and unless
otherwise provided in the Restricted Stock Agreement and/or unless waived by the
Committee, (i) upon the Participant's Termination of Employment due to death,
Disability or
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Retirement, all remaining restrictions with respect to the Participant's
Base Shares of Restricted Stock and the Participant's Premium Shares of
Restricted Stock shall lapse and all of such shares shall become fully vested,
free of all restrictions and freely transferable to the full extent of the
original Award, (ii) if the Participant incurs a Termination of Employment for
"Cause" or by reason of the Participant's voluntary resignation, all Base Shares
of Restricted Stock as well as all Premium Shares of Restricted Stock still
subject to the Restriction Period shall be forfeited by the Participant, and
(iii) if the Participant incurs a Termination of Employment other than by reason
of death, Disability or Retirement and other than for "Cause" or by reason of
the Participant's voluntary resignation, all Base Shares of Restricted Stock
shall be free of all restrictions, fully vested and freely transferable to the
full extent of the original Award, but all Premium Shares of Restricted Stock
still subject to the Restriction Period shall be forfeited by the Participant.
ARTICLE IV
PROVISIONS APPLICABLE TO DEFERRED STOCK
SECTION 4.1 Awards of Deferred Stock. Awards of Deferred Stock may be made
either alone, in addition to or in tandem with other Awards granted under the
Plan and/or cash awards made outside of the Plan. The Committee shall determine
the eligible Participants to whom and the time or times at which Deferred Stock
shall be awarded, the number of shares of Deferred Stock to be awarded to any
person, the duration of the period (the "Deferral Period") during which, and the
conditions under which, receipt of the Stock will be deferred and the other
terms and conditions of the award in addition to those set forth in Section 4.2.
The Committee may condition the grant of Deferred Stock upon the attainment of
specified performance goals or such other factors or criteria as the Committee
shall determine, in its sole discretion. The provisions of Deferred Stock awards
need not be the same with respect to each recipient.
SECTION 4.2 Terms and Conditions. The shares of Deferred Stock awarded
pursuant to this Article IV shall be subject to the following terms and
conditions:
(a) Subject to the provisions of this Plan and except as may be otherwise
provided in the Award Agreement referred to in Section 4.2(e) below, Deferred
Stock Awards may not be sold, assigned, transferred, pledged or otherwise
disposed of or encumbered during the Deferral Period. At the expiration of the
Deferral Period, where applicable), share certificates shall be delivered to the
Participant, or his legal representative, in a number equal to the shares
covered by the Deferred Stock Award.
(b) Unless otherwise determined by the Committee at the time the Award is
made, amounts equal to any dividends declared during the Deferral Period with
respect to the number of shares covered by a Deferred Stock Award will be paid
to the Participant currently, or deferred and deemed to be reinvested in
additional Deferred Stock, or otherwise reinvested, all as determined at or
after the time of the Award by the Committee, in its sole discretion.
(c) Subject to the provisions of the Award Agreement and this Article
IV, if the Participant incurs a Termination of Employment for any reason during
the Deferral Period for a given Award, the Deferred Stock in question will vest,
or be forfeited, in accordance with the terms and conditions established by the
Committee at or after the Award is made.
(d) Based on service, performance and/or such other factors or criteria as
the Committee may determine, the Committee may, at or after making the Award,
accelerate the vesting of all or any part of any Deferred Stock Award and/or
waive the deferral limitations for all or any part of such Award.
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(e) Each Award shall be confirmed by, and subject to the terms of, a
Deferred Stock Agreement executed by the Company and the Participant.
SECTION 4.3 Minimum Value Provisions. In order to better ensure that Award
payments actually reflect the performance of the Company and service of the
Participant, the Committee may provide, in its sole discretion, for a tandem
performance based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a Deferred Stock Award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
ARTICLE V
OTHER STOCK-BASED AWARDS
SECTION 5.1 Administration. Other Awards of Stock and other awards that are
valued in whole or in part by reference to, or are otherwise based on, Stock
("Other Stock-Based Awards"), including, without limitation, performance shares,
convertible preferred stock, convertible debentures, exchangeable securities and
Stock awards or options valued by reference to book value or Affiliate or
subsidiary performance, may be granted either alone or in addition to or in
tandem with Stock Options, Stock Appreciation Rights, Restricted Stock or
Deferred Stock granted under the Plan and/or cash awards made outside of the
Plan. The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient. Subject to the provisions of the Plan, the Committee
shall have authority to determine the persons to whom and the time or times at
which such Awards shall be made, the number of shares of Stock to be awarded
pursuant to such Awards and all other conditions of the Awards. The Committee
may also provide for the Award of Stock upon the completion of a specified
performance period.
SECTION 5.2 Terms and Conditions. Other Stock-Based Awards made pursuant to
this Article V shall be subject to the following terms and conditions:
(a) Subject to the provisions of this Plan and the Award Agreement referred
to in Section 5.2(e) below, shares of Stock subject to Awards made under this
Article V may not be sold, assigned, transferred, pledged or otherwise
encumbered before the date on which the shares are issued, or, if later, the
date on which any applicable restriction, performance or deferral period lapses.
(b) Subject to the provisions of this Plan and the Award Agreement and
unless otherwise determined by the Committee at the time it makes the Award, the
recipient of an Award under this Article V shall be entitled to receive,
currently or on a deferred or restricted basis, interest or dividend equivalents
with respect to the number of shares of Stock covered by the Award, as
determined at the time of the Award by the Committee, in its sole discretion,
and the Committee may provide that such amounts (if any) shall be deemed to have
been reinvested in additional Stock or otherwise reinvested.
(c) Any Award under this Article V and any Stock covered by any such Award
shall vest or be forfeited to the extent so provided in the Award Agreement, as
determined by the Committee, in its sole discretion.
(d) In the event of the Participant's Retirement, Disability or death, or
in cases of special circumstances, the Committee may, in its sole discretion,
waive in whole or in part any or all of the remaining limitations and
restrictions imposed hereunder (if any) with respect to any or all of an Award
under this Article V.
(e) Each Award under this Article V shall be confirmed by, and subject to
the terms of, an Agreement by the Company and by the Participant.
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(f) Stock (including securities convertible into Stock) issued on a bonus
basis under this Article V may be issued for no cash consideration; Stock
(including securities convertible into Stock) to be purchased pursuant to a
purchase right awarded under this Article V shall be priced at least 50% of the
Fair Market Value of the Stock on the Date of Award.
ARTICLE VI
EFFECT OF CERTAIN CORPORATE CHANGES AND CHANGES IN CONTROL
SECTION 6.1 Impact of Event. Notwithstanding any other provision of the
Plan to the contrary but subject to the limitations of Section 7.10 of this
Plan, in the event of a Change in Control:
(a) Any Stock Options and Stock Appreciation Rights outstanding as of the
date such Change in Control is determined to have occurred and not then
exercisable and vested shall become fully exercisable and vested to the full
extent of the original grant.
(b) The restrictions and deferral limitations applicable to any still
outstanding Restricted Stock, Deferred Stock and Other Stock-Based Awards (in
each case to the extent not already vested under the Plan) shall lapse, and such
shares and Awards shall become free of all restrictions and become fully vested
and transferable to the full extent of the original Award.
SECTION 6.2 Definition of Change in Control. For purposes of the Plan, a
"Change in Control" shall mean the happening of any of the following events:
(a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control; (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company or
(iv) any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section 6.2; or
(b) Individuals who, as of the Effective Date of the Plan, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(c) Approval by the stockholders of the Company of a reorganization, merger
or consolidation or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another corporation (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50.1%
of, respectively, the then outstanding shares
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of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
SECTION 6.3 Change in Control Price. For purposes of the Plan, "Change in
Control Price" means the higher of (a) the highest reported sales price, regular
way, of a share of Stock in any transaction reported on the New York Stock
Exchange Composite Tape or other national securities exchange on which such
shares are listed or on NASDAQ, as applicable, during the 60-day period prior to
and including the date of a Change in Control and (b) if the Change in Control
is the result of a tender or exchange offer or a Corporate Transaction, the
highest price per share of Stock paid in such tender or exchange offer or
Corporate Transaction; provided, however, that in the case of Incentive Stock
Options and Stock Appreciation Rights relating to Incentive Stock Options, the
Change in Control Price shall be in all cases the Fair Market Value of the Stock
on the date such Incentive Stock Option or Stock Appreciation Right is
exercised. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other non-cash
consideration, the value of such securities or other non-cash consideration
shall be determined in the sole discretion of the Board.
SECTION 6.4 Dilution and Other Adjustments. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, stock split,
issuance or repurchase of stock or securities convertible into or exchangeable
for shares of Stock, grants of options, warrants or rights to purchase Stock
(other than pursuant to the Plan), extraordinary distribution with respect to
the Stock or other change in corporate structure affecting the Stock, the
Committee may make such substitution or adjustments in the aggregate number and
kind of shares reserved for issuance under the Plan, in the number, kind and
option price of shares subject to outstanding Stock Options and Stock
Appreciation Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other substitution or
adjustments in the consideration receivable upon exercise, or take such other
action, as it may determine to be appropriate in its sole discretion; provided,
however, that the number of shares subject to any Award shall always be a whole
number. Such adjusted option price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right
associated with any Stock Option.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 No Rights to Awards or Continued Employment. No employee shall
have any claim or right to receive Awards under the Plan. Neither the adoption
of the Plan nor any action taken pursuant to the Plan shall confer upon any
employee any right to continued employment nor shall it interfere in any way
with the right of the Company or any subsidiary or Affiliate to terminate the
employment of any employee at any time.
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<PAGE>
SECTION 7.2 Restriction on Transfer and Additional Conditions.
(a) All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock transfer orders and other
restrictions as the Committee in its sole discretion may deem advisable,
including without limitation, restrictions under the rules, regulations and
other requirements of the Commission, any stock exchange upon which the Stock is
then listed and any applicable federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to any such restrictions. Before making any transfer
or disposition of Stock issued pursuant to the Plan, the Committee may require a
Participant to provide written notice to the Company describing the manner of
such proposed disposition or transfer and such other information as shall be
necessary for counsel to the Company to determine whether registration of any
such Stock is required. Such proposed disposition or transfer, in the absence of
an effective registration statement covering such Stock or an opinion of counsel
to the Company that such registration is not required, shall not be permitted.
Each Participant shall agree to indemnify and hold harmless the Company from and
against all liability, cost and expense (including attorneys' fees) suffered and
incurred by the Company as a result of any disposition or transfer of the shares
in violation of any federal or state securities or blue sky law or any other
law, rule or regulation.
(b) Anything in the Plan to the contrary notwithstanding (a) the Committee
may, if it determines it is necessary or desirable for any reason, at the time
of any Award the issuance of any shares of Stock pursuant thereto, require a
Participant as a condition of receipt thereof or receipt of shares of Stock
issued pursuant to the terms of the Award, to deliver to the Company a written
representation of present intention to acquire the Award or the shares of the
Stock issuable pursuant to the Award for the Participant's own account for
investment and not for distribution, (b) the Company shall have no obligation to
issue shares of Stock except in accordance with applicable law and (c) if at any
time the Company further determines, in its sole discretion, that the listing,
registration or qualification (or any updating of any such document) of any
Award or the shares of Stock issuable pursuant thereto is necessary on any
securities exchange or under any federal or state securities or blue sky law, or
that the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of any Award or
the issuance of shares of Stock pursuant thereto, such Award shall not be
granted or such shares of Stock shall not be issued, as the case may be, in
whole or in part, unless such listing, registration, qualification, consent or
approval is effected or obtained free of any conditions not acceptable to the
Company.
SECTION 7.3 Tax Withholding. No later than the date as of which an amount
first becomes includible in the gross income of the Participant for federal
income tax purposes with respect to any Award under the Plan, the Participant
shall pay to the Company, or make arrangements satisfactory to the Company
regarding the payment of, any federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. Unless otherwise
determined by the Committee, withholding obligations may be settled with Stock,
including Stock that is part of the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements, and the Company, its subsidiaries and its
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the Participant. The Committee may
establish such procedures as it deems appropriate, including the making of
irrevocable elections, for the settlement of withholding obligations with Stock.
SECTION 7.4 Stockholder Rights. No Award under the Plan shall entitle a
Participant or beneficiary to any rights of a holder of shares of Stock, except
as provided in Article III with respect to Restricted Stock or upon the delivery
of share certificates to a Participant upon exercise of a Stock Option or upon
the delivery of share certificates in settlement of a Stock Appreciation Right.
SECTION 7.5 No Restriction on Right of Company to Effect Corporate Changes.
The Plan shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalization,
reorganization or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of stock
or of options, warrants or rights to purchase stock or of bonds,
A-15
<PAGE>
debentures, preferred or prior preference stock whose rights are superior
to or affect the Stock or the rights thereof or which are convertible into or
exchangeable for Stock, or the dissolution or liquidation or the Company, or any
sale or transfer of all or any part of its assets or business or any other
corporate act or proceeding, whether of a similar character or otherwise.
SECTION 7.6 Unfunded Status of Plan. It is presently intended that the Plan
constitute an "unfunded" plan for incentive and deferred compensation. The
Committee may, but shall have no obligation to, authorize the creation of trusts
or other arrangements to meet the obligations created under the Plan to deliver
Stock or make payments; provided, however, that, unless the Committee otherwise
determines, the existence of such trusts or other arrangements is consistent
with the "unfunded" status of the Plan. Nothing contained in this Plan shall
create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company and a Participant or any other person.
SECTION 7.7 First Refusal Right. At the time of grant, the Committee may
provide in connection with any grant made under the Plan that the shares of
Stock received as a result of such grant shall be subject to a right of first
refusal pursuant to which the Participant shall be required to offer to the
Company any shares that the Participant wishes to sell at the then Fair Market
Value of the Stock, subject to such other terms and conditions as the Committee
may specify at the time of grant.
SECTION 7.8 Dividend Reinvestment. The reinvestment of dividends in
additional Restricted Stock at the time of any dividend payment shall only be
permissible if sufficient shares of Stock are available under Section 1.5 for
such reinvestment (taking into account then outstanding Stock Options and other
Awards).
SECTION 7.9 Beneficiaries. The Committee shall establish such procedures as
it deems appropriate for a Participant to designate a beneficiary to whom any
amounts payable in the event of the Participant's death are to be paid. If no
beneficiary is designated by the Participant or if no beneficiary designated by
the Participant is living at the time such a payment is due, payments shall be
made to the Participant's estate.
ARTICLE VIII
TERM, AMENDMENT AND TERMINATION
Unless previously terminated pursuant to this Article VIII, the Plan shall
terminate on December 9, 2004, and no further Awards may be made hereunder after
such date. The Board may at any time and from time to time alter, amend, suspend
or terminate the Plan in whole or in part. No amendment, alteration or
discontinuation shall be made that would without the recipient's consent, impair
the rights of any recipient of an Award theretofore granted, except such an
amendment made to cause the Plan to qualify for the exemption provided by Rule
16b-3. Also, the Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any recipient without the recipient's consent except such an amendment made to
cause the Plan or Award to qualify for the exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules as
well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.
A-16
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ARTICLE IX
INTERPRETATION
SECTION 9.1 Compliance with Governmental Regulations. The Plan, and all
Awards hereunder, shall be subject to and shall be administered and interpreted
in order to comply with, all applicable rules and regulations of governmental or
other authorities as amended from time to time, including without limitation
Section 16(b) of the Exchange Act and the rules and regulations promulgated
thereunder, with respect to persons subject to Section 16 of the Exchange Act.
SECTION 9.2 Headings. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of the Plan.
SECTION 9.3 Governing Law. The Plan and all Awards made and actions taken
hereunder shall be construed in accordance with and governed by the laws of the
State of Delaware.
ARTICLE X
EFFECTIVE DATE AND STOCKHOLDER APPROVAL
The Plan shall be effective as of the date it is approved by the
stockholders (the "Effective Date"), and stockholder approval shall be sought at
the first annual meeting of stockholders following the adoption of the Plan by
the Board. If stockholder approval is not obtained on or before the date of such
annual meeting, the Plan and all Awards thereunder shall be void ab initio and
of no effect. No Stock Option or Stock Appreciation Right shall be exercisable
and no Restricted Stock, Deferred Stock or other Award shall vest until the date
of such stockholder approval.
A-17
Exhibit (10)(16)
AGREEMENT
BETWEEN
PILOTS
REPRESENTED
BY
OFFICE AND PROFESSIONAL
EMPLOYEES INTERNATIONAL
UNION, AFL-CIO
AND
OFFSHORE LOGISTICS, INC.
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
ARTICLE SUBJECT PAGE
- ------- -------------------------- ----
<S> <C> <C>
1 Statement of Purpose 2
2 Recognition and Representation 3
3 Status of Agreement 5
4 Pilot Status 7
5 Seniority 8
6 Seniority Roster 10
7 Reductions in Workforce 11
8 Job Posting and Bidding 13
9 Categories of Aircraft 16
10 Schedules of Service 17
11 Leaves of Absence 18
12 Paid Days Off and Banked Days 22
13 On-the-Job Injury (OJI) Leave 26
14 Bereavement Leave 28
15 Jury Duty 29
16 Fees and Physical Examinations 30
17 Training 32
18 Facilities, Equipment and Uniforms 35
19 Severance Pay 37
20 Moving Expense 39
21 Base Pay 41
22 Supplemental Pay 42
23 Bonuses 43
24 Workover/Overtime 44
25 Travel Pay 47
26 Per Diem 48
27 Insurance Benefits 49
28 Retirement and 401(k) Plan 50
29 Safety/Accident Prevention 51
30 General and Miscellaneous 53
31 Union Bulletin Boards and Communications 56
32 Grievance Procedure 57
33 System Board of Adjustment 61
34 No Strike/No Lockout 66
35 Union Representation 67
36 Union Security 69
37 Savings Clause 75
38 Duration 76
APPENDIX A 77
</TABLE>
i
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<TABLE>
<S> <C> <C>
1 Fixed Wing Pilots 84
2 Effective Date for Paid Days Off 81
3 IFR Cadre 82
4 Pilots Hired With Prior Experience 83
5 Implementation Dates 84
6 Air Logistics of Alaska, Inc. 86
</TABLE>
ii
<PAGE>
AGREEMENT
This Agreement and Contract is made by and between OFFICE and PROFESSIONAL
EMPLOYEES INTERNATIONAL UNION hereinafter called the "Union" or the "OPEIU" and
OFFSHORE LOGISTICS INC., hereinafter called the "Company" or "Employer".
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<PAGE>
ARTICLE 1
STATEMENT OF PURPOSE
Section 1. The purpose of this Agreement is, in the mutual interest of the
Company and its pilots, to provide for the operation of the services
of the Company under methods which will further, to the fullest
extent possible, the safety of air transportation and the efficiency
of operation.
Section 2. No Pilot covered by this Agreement will be interfered with,
restrained, coerced or discriminated against by the Company, its
officers, or its agents because of membership in or lawful activity
on behalf of the Union.
Section 3. It is understood, whenever in this Agreement, Pilots or jobs are
referred to in the male gender, it shall be recognized as referring
to both male and female Pilots. The provisions of this Agreement
apply to all Pilots regardless of sex, color, race, creed, age,
religion, national origin, handicapped or veteran status or other
protected status in accordance with applicable national or state law.
2
<PAGE>
ARTICLE 2
RECOGNITION AND REPRESENTATION
Section 1. This Agreement is made and entered into in accordance with the
provisions of Title II of the Railway Labor Act, as amended, by and
between Offshore Logistics, Inc. (the "Company") and the Office and
Professional Employees International Union (the "Union") representing
employees composed of the craft or class of Pilots as certified by
the National Mediation Board in Case Number R-6517, August 6, 1997.
a. The Company hereby recognizes the Union as the sole
collective bargaining agent and authorized
representative for those employees described in
Section 1 above, to represent them and, in their
behalf, to negotiate and conclude agreements with
the Company as to hours of work, wages, and other
conditions of employment in accordance with the
provisions of the Railway Labor Act, as amended.
Section 2. The term Pilot as used in this Agreement means Pilots (PIC) and/or
Co-Pilots (SIC) covered by this Agreement and for whom the Union is
the recognized collective bargaining representative.
Section 3. This Agreement covers all revenue and all known and
recurring miscellaneous flying performed by the Company
with Pilots on its payroll. All flying covered by this
Agreement shall be performed by Pilots whose names appear
on the Air Logistics L.L.C. and Air Logistics of Alaska,
Inc. Pilot's System Seniority List.
Section 4. Pilots covered by this Agreement shall be governed by all
reasonable Company rules, regulations and orders previously or
hereafter issued by proper authorities of the Company which are not
in conflict with the terms and conditions of this Agreement, and
which have been made available to the Pilots and union prior to
becoming effective.
Section 5. If the Union considers the rule to be unreasonable, it will have
the right to file a written grievance challenging such rule prior to
the implementation by the Company. Grievances properly filed in this
respect will be subject to the normal Grievance and System Board of
Adjustment procedures as set forth in Article 32 and Article 33 of
this Agreement.
Section 6. The Company may engage in Subcontracted Revenue Flying under the
following circumstances: Subcontracted Revenue Flying may be engaged
in for periods not to exceed one hundred and eighty (180) days per
occurrence during
3
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the term of this Agreement when (i) such
Subcontracted Revenue Flying is necessary to accomplish the needs of
the service of the Company, (ii) the Company determines that it does
not have sufficient or appropriate aircraft, or sufficient or
appropriately trained Pilots, available to perform the Subcontracted
Revenue Flying, and (iii) the Company does not furlough any Pilot as
a direct result of such engagement in Subcontracted Revenue Flying.
It is understood and agreed that nothing in this paragraph will
prevent the Company from furloughing Pilots or severing the
employment relationship with Pilots for economic reasons independent
of or unrelated to its engagement in Subcontracted Revenue Flying.
Section 7. Notwithstanding Section 6 above, in the event the Company engages
in Subcontracted Revenue Flying solely due to circumstances over
which the Company does not have control, it may engage in the
Subcontracted Revenue Flying for a time not to exceed the duration of
the circumstance beyond the Company's control or twelve (12) months,
whichever is less. Circumstances beyond the Company's control shall
include: an act of nature; a strike affecting the Company's business;
grounding of a substantial number of the Company's aircraft by a
government agency or court; loss or destruction of the Company's
aircraft; war emergency; or owner's or manufacturer's delay in the
delivery of aircraft scheduled for delivery.
4
<PAGE>
ARTICLE 3
STATUS OF AGREEMENT
Section 1. It is fully understood and agreed that this Agreement supercedes
any and all Agreements now existing or previously executed between
the Company and any other Union, or individual, affecting the class
or craft of employees covered by this Agreement.
Section 2. The Company shall give notice of the existence of this Agreement,
and its full terms, to any entity which engages in a possible
transaction.
Section 3. MERGERS
a. In the event of a complete merger between the Company and another
helicopter company (i.e., the combination of all or substantially
all the assets of the two carriers) where the surviving carrier
decides to integrate the pre-merger operations, the following
procedures will apply: (1) if the Company is the surviving carrier,
the Company will integrate the two Pilot groups in accordance with
OPEIU Merger Policy if both groups are OPEIU-represented, and in
accordance with Sections 3 and 13 of the Allegheny Mohawk LPPs if
Pilots of the Company's merger partner are not represented by
OPEIU, and (2) if the Company is not the surviving carrier, the
Company will make reasonable efforts to have the surviving carrier
integrate the two Pilot groups in the same manner as stated in (1)
of this paragraph.
b.In the event the Company acquires all or substantially all of the
assets or equity of another air carrier, or another air carrier
acquires all or substantially all of the assets or equity of the
Company, the Company will meet promptly with the Union to negotiate
a possible "Fence Agreement" to be in effect during the period, if
any, the two carriers are operated separately without integration
of the Pilot work force. These discussions shall not be pursuant to
Section 6 of the Railway Labor Act, and reaching an agreement with
the Union shall not be a prerequisite for closing, or any other
aspect of the transaction or operations pursuant to the
transaction.
5
<PAGE>
Section 4. MANAGEMENT RIGHTS
a. The Union recognizes that the management of the business of the
Company and the direction of the working force are vested
exclusively with the employer, subject to the provisions of this
Agreement.
b. The management functions shall not be used for the purpose of
discrimination against any Pilot because of Union activity or
for the purpose of evading any of the provisions of this
Agreement.
c. Except as restricted by the express terms of this Agreement, the
Company shall retain all rights to manage and operate its
business and work force, including but not limited to the right
to sell or discontinue all or part of the business; to sell or
lease aircraft or facilities; to determine where and when to
operate scheduled or unscheduled flights; to determine its
marketing methods and strategies; and to enter into affiliation
or marketing agreements with other carriers; to invest
(including equity investments) in other business entities
including, without limitation, other helicopter carriers; and to
determine the type of aircraft it will utilize.
(1) The exercise of any right reserved herein to management in
a particular manner, or the non-exercise of such right,
shall not operate as a waiver of the Company's rights
hereunder, or preclude the Company from exercising the
right in a different manner.
d. The parties agree that any past practices established prior to
the date of this Agreement shall not create any contractual or
legal obligation to continue such practices following the
effective date of this Agreement.
6
<PAGE>
ARTICLE 4
PILOT STATUS
Section 1. Each newly hired Pilot shall be on probation for a period which
normally will not exceed six (6) months of cumulative service. The
probationary period will begin on the date a Pilot enters training.
During this time, a Pilot will become acquainted with his job duties,
fellow Pilots and Company facilities while being evaluated by his
supervisor. Evaluation of probationary period job performance is
based on a number of factors including attitude, attendance,
competence, and overall work performance. A supervisor who requires
additional time to evaluate a Pilot's suitability for a position may
extend the probationary period for an additional ninety (90) days of
cumulative active service.
Section 2. A newly employed Pilot shall be entitled to all the rights and
benefits of any other Pilot under the terms of this Agreement, except
that the termination of a Pilot's employment during his probationary
period, will not be subject to the grievance procedures and System
Board of Adjustment as set forth in this Agreement. After completing
the probationary period, such Pilot shall be considered a
non-probationary Pilot.
Section 3. Once each month, the Company will provide the Union office with a
listing of Pilots who have been hired, terminated, transferred and/or
granted a military leave of absence during the prior month. This
listing will include the home address of these Pilots.
7
<PAGE>
ARTICLE 5
SENIORITY
Section 1. Seniority of a Pilot shall begin on the date a Pilot enters the
Company's training program.
Section 2. There shall be two (2) types of seniority, Company seniority and
Bidding seniority.
a. Company Seniority - Company Seniority shall be
-------------------
defined as a Pilot's length of service with the
Company, regardless of location, and shall govern
pay rates, and accrual or granting of paid days off
pursuant to Article 12 of this Agreement. Company
Seniority shall be adjusted for leaves of absence
and reductions in force as provided for in Articles
7 and 11 of this Agreement.
b. Bidding Seniority - Bidding Seniority shall be
-------------------
defined as a Pilot's length of service with the
Company, adjusted for leaves of absence as provided
for in Article 5, Section 4, and Article 11 of this
Agreement. Bidding Seniority shall govern all Pilots
covered by this Agreement in bidding for job
assignments and vacancies as provided for in this
Agreement, layoffs, reemployment after layoff,
demotions due to a reduction in force, and awarding
of full week VSTO periods.
Section 3. A Pilot who is promoted to a non-flying or supervisory position
shall continue to accrue Company and bidding seniority for one (1)
year. Thereafter, such Pilot shall continue to accrue Company
Seniority and retain his Bidding Seniority. If said Pilot returns to
flying duty, it shall be in accordance with his Company and Bidding
seniority. In the event there is no vacancy, he shall be carried as
an overage until the Company adjusts its staffing levels. If a Pilot
is terminated while in a supervisory or non-flying position, such
Pilot shall have no rights under this Agreement.
Section 4. A Pilot elected or appointed to a full-time position with the
Union shall retain and accrue Company and bidding seniority in their
immediate former classification.
Section 5. A Pilot will lose his seniority rights and his name will be
removed from the seniority list under the following conditions:
a. Resignation or retirement;
b. Discharge for just cause;
8
<PAGE>
c. Absent from work for forty-eight (48) consecutive hours without
proper notification to the Director of Operations or his
designee of the reason, unless the employee is physically
incapable of providing the Company with the proper notification
of his absence;
d. Failure to return to work from an authorized leave of absence in
the time provided for by the Company, giving a false reason for
obtaining a leave of absence or accepting gainful employment
while on a leave of absence, when the employment was not
specifically authorized;
e. Failure to inform the designated Company representative in
person or by certified mail of his intention to return to work
as provided for in Article 7, Section 5(a);
f. Failure to return to work on or before a date specified in the
notice of recall from the designated Company representative
after a layoff as provided for in Article 7, Section 5.b.;
g. A Pilot who is furloughed and who is not recalled to service
with the Company within three (3) years from the date of
furlough.
Section 6. Disputes arising over seniority shall be handled in accordance
with Article 32 and Article 33 of this Agreement.
9
<PAGE>
ARTICLE 6
SENIORITY ROSTER
Section 1. The Company will post a seniority roster on bulletin boards at all
bases, listing the names of its Pilots, date of hire, station and
base as reflected by its records. Copies of the seniority roster will
be furnished to the Union.
Section 2. When two or more Pilots are employed on the same date, they shall
be placed on the seniority roster according to the last four digits
of each new-hire's social security number. If two individuals have
the same last four digits in their social security number, the digit
immediately preceding the last four digits will be used to determine
the lowest number. The Pilot with the lowest last four digits will be
awarded the most senior position in the class. The balance of the
class will be awarded seniority positions in order of their numbers,
with the highest social security number receiving the lowest
seniority.
Section 3. The Company agrees to update the seniority roster once each month,
beginning with the effective date of this Agreement with a copy to
the Union. A Pilot shall have a period of thirty (30) days after the
posting of the seniority roster to protest to the Company any
omission or incorrect posting affecting his seniority. Pilots on
vacation, leave of absence or furlough shall be permitted thirty (30)
days after their return to duty to make any protest concerning his
seniority. Once the thirty (30) day period has expired without a
protest, a Pilot's posting will be considered correct and shall not
be subject to further protest, unless the omission or incorrect
posting was the result of a clerical error on the part of the
Company.
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<PAGE>
ARTICLE 7
REDUCTIONS IN WORKFORCE
Section 1. When it becomes necessary to reduce the workforce, a Pilot's
seniority, pursuant to Article 5 of this Agreement, shall govern the
layoff. Pilots with the least seniority at a location shall be laid
off first. For the purposes of this Article, there shall be two
locations: the Gulf of Mexico operation or the Alaska operation. The
Company shall give at least fourteen (14) days notice of an impending
layoff at the affected location, or two (2) weeks pay in lieu
thereof. The Company shall notify the Union in advance of the
impending reductions.
a. The fourteen (14) day notice or pay in lieu thereof
may be waived by the Company if the reduction in
force is caused by circumstances beyond the control
of the Company. Examples of this would include a war
or foreign invasion, an act of God/natural disaster,
an official state of emergency, a strike affecting
the Company's business, a work stoppage, a
government grounding of aircraft, the revocation of
operating certificate(s), or an unannounced
cancellation of contract flying.
Section 2. Pilots will be recalled from furlough in seniority order, with the
most senior laid-off Pilot being recalled first. The Company will
make reasonable efforts to place the recalled Pilot in his former
position or one of equal status.
Section 3. Pilots shall continue to accrue Bidding Seniority while on
furlough. He shall not accrue Company Seniority while on a furlough
of more than thirty (30) days duration.
Section 4. Laid off Pilots are required to file their proper address and
telephone number(s) with the Director of Operations at the time of
the lay off and will notify the Company of any address changes
promptly.
Section 5. Laid off Pilots shall be notified of a recall by telephone,
certified mail, or telegram to the most recent telephone number and
address provided by the Pilot. Notification by telephone must be
accomplished by positive telephone contact with the Pilot and the
call must be followed up with official notification by certified
mail. The date of recall notification shall be the earlier of the
date on which the recall letter was mailed, or the date the telegram
was sent. Notices sent to the last address of record shall be
considered conclusive evidence of notice to the Pilot.
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a. Each Pilot accepting recall shall answer his recall notice no
later than five (5) days after receipt of such notice in person
or by certified mail. Pilots are strongly encouraged to notify
the Company prior to the five (5) day period of his acceptance
of the recall.
b. A laid off Pilot will not be allowed more than fifteen (15) days
after the date of recall notification to report to duty from
layoff. Nothing shall prevent the Company from beginning recall
classes prior to the end of the fifteen (15) day period if a
sufficient number of Pilots agree to return from recall early.
c. Pilots who fail to respond to a recall notice within the time
limits set forth above, Pilots who refuse recall, or Pilots who
reject a recall notice shall forfeit all recall rights and have
his name stricken from the seniority list.
d. Seniority and recall rights shall terminate if a laid off Pilot
is not recalled within thirty-six (36) months from the
commencement of his layoff.
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ARTICLE 8
JOB POSTING AND BIDDING
I. PERMANENT VACANCIES
Section 1. When a job or crew position vacancy occurs on a full-time basis,
or when a new job or crew position is created, the vacancy will be
posted at all locations within seven (7) days after the vacancy
occurs. The notice shall provide as much information as is available
regarding the vacant position, including the job, location and
closing date for bid application.
Section 2. Bidding procedures are as follows:
a. Pilots will be given fourteen (14) calendar days from the
initial posting to bid on any vacant position. The fourteen (14)
days shall commence with the time the notice is faxed to all
bases.
b. The Company will make the awards within five (5) calendar days
after the bidding has closed, not including Saturdays, Sundays,
and holidays.
c. The senior qualified Pilot, as defined in Section 2, Paragraph
f. of this Article that bids on the vacancy shall be awarded the
job. The Company reserves the right to remove a Pilot from an
awarded job based on a customer complaint. Written documentation
of reasons for the complaint shall be provided to the Pilot and
to the Union upon request.
d. A Pilot responding to more than one (1) vacancy shall indicate
his order of preference on the bid and shall be awarded his
first preference.
e. A Pilot on VSTO, SUTO or leave of absence for the entire period
that bids are posted shall have an additional seven (7) days to
bid on the vacancy.
f. DEFINITION OF QUALIFIED
Qualified: The term qualified as used in this Article and
Agreement means that a Pilot has been trained in an aircraft
model, or holds the necessary Pilot License and endorsements to
be trained by the Company in that aircraft model. Training shall
be provided in accordance with Article 17.
A Pilot will be considered qualified in an aircraft model
although he may not be "current" as per FAR 135.293(b), 135.299,
etc. If that Pilot is
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otherwise qualified and can become current
within a reasonable amount of time, the Company will provide
training.
g. In the event no bid is received on a posted vacancy and pool
Pilot(s) exist, such vacancies will be filled by the pool Pilots
in reverse seniority order. A pool Pilot is a Pilot who has not
been awarded to a contract on a full-time basis.
Section 3. After a Pilot has been assigned to a bid job, the Company will not
allow any other Pilot to temporarily perform work on that job,
provided the bid Pilot is available for work during his normal hitch.
If an immediate operational requirement exists, an available
qualified Pilot may be removed from his job, in reverse seniority
order, to fulfill such requirement for as short a period as possible,
not to exceed three (3) days. In such cases, the Pilot being removed
from his position will be pay protected until such time as he has
returned to his original job.
Section 4. A Pilot may bid on any posted position, provided that once he has
been awarded a vacancy, the Pilot shall be ineligible to bid on
another vacancy for six (6) months from the date of transfer. Date of
transfer is defined as the first date a Pilot is available for duty
at his new job and/or base. The following exceptions apply to the six
(6) month rule:
a. A Pilot is being promoted from VFR to SIC, VFR to PIC, or SIC to
PIC.
b. Once every two (2) calendar years, a Pilot may request and shall
be granted an exemption from the six (6) month rule.
Section 5. During the time necessary to select and/or train the Pilot who is
to regularly fill a new job or crew position, the Company may fill
the vacancy on a temporary basis.
Section 6. If the Company hires a Pilot with less than fifteen hundred
(1,500) hours of total helicopter time and places him in an IFR SIC
position in order to build time, he will be paid at the VFR pay
scale. Upon reaching fifteen hundred (1,500) hours total helicopter
time, he will be removed from the IFR SIC slot and that slot will be
opened to seniority bidding.
Section 7. The Company may elect, based on operational needs, to withhold a
Pilot who has successfully bid for a vacancy from entering training
for a period not to exceed ninety (90) days unless mutually agreed
otherwise by the Company and the Pilot.
a. If a Pilot is withheld, he will be compensated at the base
salary he would have been entitled to if he had completed
training and the higher base
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salary will commence when he was
originally scheduled to enter training.
II. TEMPORARY VACANCIES
Section 1. Temporary vacancies are positions created to fill needs for ninety
(90) consecutive days or less.
Section 2. Temporary vacancies shall be filled by offering the positions to
pool Pilots in seniority order. If no pool Pilot accepts the opening,
the job will be assigned to a pool Pilot in reverse seniority order.
If there are no pool Pilots, the Company shall assign a Workover. If
no Workover Pilots are available, the Company shall assign the job in
reverse seniority order.
Section 3. Pilots assigned to temporary vacancies shall be returned to their
former position, if it still exists, upon completion of the temporary
assignment.
Section 4. A Pilot assigned to a temporary vacancy with a higher salary than
his current salary will receive such pay for the duration of the
temporary assignment.
Section 5. A Pilot assigned to a temporary vacancy pursuant to Section II, 3
will be pay protected in accordance with the provisions of this
Article.
III. GENERAL
Section 1. A Pilot will not be considered qualified for an IFR PIC job unless
he has completed six (6) months as an IFR SIC with Air Logistics, is
recommended by an IFR Line Captain, and successfully completes an IFR
flight check by a Check Airman.
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ARTICLE 9
CATEGORIES OF AIRCRAFT
Section 1. For the purpose of this Agreement, aircraft shall be divided into
three (3) categories as follows:
a. Single/Light Twin: Any single or multi-engine aircraft designed
to carry eight (8) passengers or less.
b. Medium Aircraft: Any aircraft designed to carry nine (9)
passengers or more; and having a maximum gross weight of less
than twelve thousand five hundred (12,500) pounds.
c. Large Aircraft: Any aircraft with a gross weight of
twelve thousand five hundred (12,500) pounds or
greater.
Section 2. For the purpose of this Agreement, "Upgrade" shall be defined as
any one or more of the following:
a. Moving into a larger category of aircraft as per Section 1.
b. Moving from a SIC seat to a PIC seat on crew-served aircraft.
c. Any aircraft or job assignment requiring a formal training
school.
d. Any change in aircraft or job assignment that involves an
increase in pay.
Section 3. When it becomes necessary to upgrade Pilots, seniority shall be
given full consideration. All upgrades will be offered on a bid basis
in accordance with Article 8 of this Agreement.
Section 4. A VFR medium twin (i.e., 212 or 412) job which is sold to the
customer as "limited by waiver to nine (9) or less passengers" and is
subject to increased passenger load at customer request will be
considered an IFR contract for purposes of the Pilot pay scale.
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ARTICLE 10
SCHEDULES OF SERVICE
Section 1. Pilots will work one of the following schedules as determined by
the needs of service provided it is consistent with applicable FARs:
a.Seven (7) consecutive duty days, followed by seven (7) consecutive
days of rest.
b.Five (5) consecutive duty days, followed by two (2) consecutive
days of rest.
c.Four (4) consecutive duty days, followed by three (3) consecutive
days of rest.
d.Alternate fourteen (14) scheduled duty days on, followed by
fourteen (14) consecutive days off duty can be worked provided the
Company, Pilots and customers are agreeable, and the applicable
FARs are followed.
Section 2. Any work schedules not provided for in this Article must be
discussed with the Union prior to implementing any changes.
Section 3. The schedule in Section 1(a) of this Article shall be considered
standard. Any other schedule shall be considered non-standard.
Nonstandard schedules shall be filled on a voluntary basis. The
Company reserves the right to fill the nonstandard job that is not
bid by hiring for the position. It is not the intention of the
Company to use this Article to dramatically change schedules from the
standard schedule.
Section 4. Break-days shall not be changed without five (5) calendar days
notice, unless caused by operational necessity.
Section 5. This Agreement requires that Pilots not engage in business
activities that are in competition with the Company and flying
activities that interfere with their service to the Company,
provided, however, that this provision shall not be construed to
prohibit Pilots from affiliating with the Armed Forces of the United
States.
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ARTICLE 11
LEAVES OF ABSENCE
I. PERSONAL LEAVE OF ABSENCE
Section 1. A Pilot who has accrued sixty (60) days of continuous active
service with the Company shall be eligible for an unpaid personal
leave of absence.
Section 2. No Pilot may begin a personal leave of absence without written
permission from the Company. The written application submitted to the
Company must specify the reasons for such leave. Requests for
personal leave and mutually agreed upon start and end dates shall be
in writing.
Section 3. Personal leaves shall not normally exceed sixty (60) days in
duration. Such leaves may be extended for additional periods, if
approved by the Company. Once a personal leave has been awarded, it
may only be cancelled prior to the end date by mutual agreement
between the Company and the Pilot.
Section 4. A Pilot who is granted a personal leave of absence to fly in the
service of the international operation shall continue to accrue his
Company Seniority, but shall only retain his Bidding Seniority.
a.A Pilot returning from such leave will not be permitted to bump
another Pilot from his job assignment. If no job assignment exists,
he will serve as a pool Pilot until a job assignment becomes
available for which he may bid.
II. UNION LEAVE OF ABSENCE
Section 1. A Pilot who accepts a temporary position with the Union (less than
three (3) months) will be permitted to return to his original
position upon release from such temporary assignment. Time under this
paragraph will be extended if requested by the Union and agreed to by
the Company up to a maximum of six (6) months.
Section 2. When requested by the Union, a Pilot who is elected or appointed
to a full-time position with the Union shall be granted an indefinite
leave of absence. A Pilot leaving full-time service of the Union, for
any reason, must return to duty within thirty (30) days or
voluntarily forfeit all seniority rights.
Section 3. A Pilot on a Union Leave of Absence shall continue to retain and
accrue Bidding and Company Seniority for the duration of the leave.
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III. FAMILY AND MEDICAL LEAVE OF ABSENCE
Section 1. Eligible Pilots shall be granted a leave specified under federal
or state law provisions of the Family and Medical Leave Act (FMLA).
All leaves granted by the Company which would qualify as FMLA will
run concurrently with the employee's FMLA entitlement.
a. Refer to the Company Administrative Procedures Manual for
specific rules and regulations with respect to the
administration of FMLA.
Section 2. Pilots on FMLA shall retain and accrue Company and Bidding
Seniority and shall receive all benefits as provided for by the FMLA
or applicable state statute.
Section 3. A Pilot on a medical leave of absence due to a serious
nonoccupational health condition of the Pilot, who does not return to
work during the twelve (12) week period provided for under the FMLA,
shall be granted an additional medical leave for the duration of the
illness or injury, not to exceed twenty-seven (27) months or the
length of his employment, whichever is less. During such leave, a
Pilot shall retain and accrue Company and Bidding Seniority and shall
be eligible for benefits pursuant to Section 5 below.
Section 4. As provided for in the FMLA, regular accrued SUTO and VSTO must be
taken during a FMLA leave of absence.
Section 5. Pilots shall retain insurance coverage, provided the premiums are
paid for at the applicable employee contribution costs for a period
not to exceed six (6) months. Once the six (6) month period has been
exhausted, the Pilot will be eligible for medical insurance under
COBRA for the applicable period of time.
Section 6. The Company will require a Pilot who requests a medical leave to
present a report to the Company from his physician that sufficiently
certifies his medical condition.
Section 7. Prior to returning to duty from medical leave, a Pilot will be
required to present a physician's statement to the Company verifying
that he is medically fit to perform all Pilot duties. In the event
there is a dispute concerning the Pilot's fitness for duty, the
procedures in Article 16 shall be utilized to resolve the dispute.
Section 8. A Pilot may choose to utilize either his disability benefits or
SUTO while on medical leave, however, he may not use both at the same
time. Once a Pilot begins to receive disability benefits or requests
and is granted an unpaid medical leave, he cannot use any additional
SUTO until he returns to active duty.
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Section 9. Pilots on an approved medical leave of absence shall have the
option of applying for a temporary "light duty" position, if any are
available, provided the Pilot meets the skill level for the position
and his personal physician certifies that he is able to perform the
job. The duration of the job is at the Company's discretion and his
performance must be acceptable to the Company. Compensation for light
duty will be at the Pilot's regular base rate of pay.
IV. MILITARY LEAVE OF ABSENCE
Section 1. Military leaves of absence and reemployment rights upon return
from such leave shall be granted in accordance with applicable local,
state, or federal law.
Section 2. All orders for military duty, including National Guard and Reserve
duty, shall be provided in writing to the Director of Operations,
within four (4) calendar days of receiving the orders. If the orders
are not provided in advance of the duty, the request for Guard or
Reserve duty may be denied. Time off for optional training and/or
course work must be approved in advance by the Director of
Operations.
Section 3. A Pilot on a military leave shall retain and accrue Company and
Bidding Seniority.
V. GENERAL
Section 1. Except as provided for in this Agreement, during any nonmedical
leave of absence, a Pilot will retain and accrue Bidding Seniority,
but will accrue Company Seniority for purposes of pay, VSTO and SUTO
for up to the first thirty (30) days of such leave. Unused or banked
SUTO cannot be used for leaves, except for FMLA leave. Earned VSTO
for the year will be paid out to the Pilot at the commencement of his
leave of absence.
Section 2. In the event of a layoff, a Pilot on a leave of absence who would
otherwise be laid off will have his leave of absence cancelled. A
Pilot will be notified that his rights under the Agreement have been
changed to those of a furloughed Pilot.
Section 3. Except as otherwise provided for in this Agreement, a Pilot
returning from a leave of absence will be restored to his former
position if the position still exists or he will be placed in any
other position where his seniority permits. Being restored to his
former position means his job at the time of his leave of absence,
his seat, aircraft type and job number.
a. Any Pilot returning from a leave of absence who requires
training prior to returning to flying will be scheduled for
required training as soon as possible at the discretion of the
Company, not to exceed one (1) week. Pay shall resume when a
Pilot commences training and shall be based on the position he
is training for.
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Section 4. All leaves of absences granted shall specify a date on which the
Pilot will return to duty unless mutually agreed otherwise or by
operation of law.
Section 5. All leaves of absence shall be without pay, unless otherwise
specified in the Agreement.
Section 6. Unless otherwise specified in the Agreement, insurance coverage
for a leave of absence will terminate at the end of the month in
which the leave commences. After this date, an employee may elect to
pay an amount equal to the group insurance premiums paid by the
Company.
Section 7. Failure of a Pilot to return to active status at the end of any
leave of absence shall be deemed a voluntary resignation from the
Company and his name will be removed from the seniority list.
Section 8. Any Pilot on a personal leave who enters the services of another
employer or who enters into a competing business of his own without
first obtaining written permission from the Company will voluntarily
forfeit his seniority rights with the Company.
Section 9. A Pilot who is granted a leave of absence during his probationary
period shall have his probationary period extended accordingly.
Section 10. A Pilot on a leave of absence will keep the Company informed of
his current address and telephone number.
Section 11. All requests for leaves of absences must be submitted in writing
through the Pilot's immediate supervisor for approval. Final approval
shall be obtained through the Director of Operations.
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ARTICLE 12
PAID DAYS OFF AND BANKED DAYS
There will be two types of Banks: a Vacation and Scheduled Time Off
Bank (VSTO) and a Sick Time/Unscheduled Time Off (SUTO) Bank. These
two banks are used to give a Pilot more flexibility and control for
his paid time off.
Section 1: VACATION AND SCHEDULED TIME OFF
The number of VSTO days earned each year is dependent on a Pilot's
years of active service with the Company.
Completed Years of Calendar
Active Year Accrual Monthly
Service As A Pilot Accrual
---------------------- ------------ -----------
1 Year through 9 Years 14 Days 1.167 days
10 Years through 20 21 Days 1.75 days
Years
21 Years and More 28 Days 2.33 days
Pilots working a five (5) on, two (2) off schedule will have three
(3) days added to each of the above blocks. Pilots working a four (4)
on, three (3) off schedule will have one (1) day added to each block.
Monthly accruals shall be adjusted to account for the additional
days.
A.In order to accrue VSTO days, a Pilot must be an active employee
on the payroll for at least fifteen (15) days in a month.
1. New hire Pilots will accrue VSTOs in a month only if they are on
the payroll prior to the fifteenth (15th) of the month.
2. New hire Pilots are not eligible to take scheduled or
unscheduled days during their probationary period. The Company
shall place three (3) days into a Pilot's Sick Time/Unscheduled
Time Off Bank upon the successful completion of his probationary
period. At the end of his first year of employment, an
additional four (4) days shall be placed in his bank.
B.VSTO is to be used for scheduled time off. A Pilot may request up
to seven (7) day-at-a-time (DAT) VSTOs per year. Approval of the
seven (7) days is based on operational needs. The request must be
submitted to the Base Manager prior to the end of a hitch for use
in the next hitch. DAT will be granted on a first-come, first-serve
basis.
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C.A Pilot may use his current year's allotment of VSTO days in
advance of time earned, but if a Pilot leaves the Company or is
terminated before it is earned, any such time will be deducted from
his final paycheck. VSTO days from the next year's VSTO allotment
may not be advanced to a Pilot for use in the current year.
D.A Pilot may bid all or part of his VSTO accrual as full weeks of
vacation. Full week VSTO days are awarded based on Bidding
Seniority. The number of Pilots permitted time off at any one time
may be limited due to operational needs.
1. Full week requests must be made at least sixty (60) days in
advance. Approvals will be given to Pilots no less than thirty
(30) days prior to the start of the vacation period.
2. A Pilot has the option of being paid for up to one-third of his
unused VSTO days at the end of each year. These unused days will
be paid out at eighty (80) percent of a Pilot's applicable daily
rate. All remaining unused days may be placed in the SUTO bank.
The election must be made in writing to the Company no later
than the last business day in the first quarter in the year of
accrual.
3. In the event a Pilot voluntarily leaves the Company, he will be
paid for his accrued VSTO days provided he has given the Company
two weeks notice of his departure.
4. Upon normal retirement from the Company (defined as reaching age
62) or when declared medically retired by the Company, a Pilot
will be paid his accrued vacation and fifty (50) percent of his
SUTO bank.
a.In the event VSTO days are canceled due to operational
necessity, the Company shall notify the affected Pilot.
Cancellations shall first be offered to volunteers in
seniority order. If an insufficient number of Pilots
voluntarily accept cancellation, remaining cancellations shall
be involuntarily cancelled and assigned in inverse seniority
order. If a vacation is involuntarily cancelled by the
Company, the Pilot shall be paid one hundred and fifty (150)
percent of his base pay.
b.When a full week's VSTO is canceled, the Pilot and the
Company shall attempt to find a mutually agreeable substitute
block during the current year. In the event a mutual agreement
is not reached, the Pilot may elect to receive compensation in
lieu of vacation. A Pilot who has been offered and has
accepted a vacation cancellation shall receive his regular
compensation. A Pilot whose vacation has been
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involuntarily cancelled shall receive the one hundred and
fifty (150) percent compensation referred to in Section
1(D.4.a.) of this Article.
c.In the event the Company cancels a Pilot's full week VSTO for
operational needs, all non-refundable vacation deposits which
the Pilot, with the assistance of the Company, is unable to
recover shall be reimbursed to the Pilot. In order to receive
reimbursement, the Pilot shall provide the Company with proof
of the deposit.
Section 2: SICK TIME/UNSCHEDULED TIME OFF (SUTO)
A.Sick Time/Unscheduled Time Off (SUTO) Days are to be used for
unscheduled absences including personal illness and injury off the
job.
B.Pilots must have at least seven (7) days in the SUTO bank at the
beginning of each calendar year prior to bidding VSTO for that
calendar year. Pilots who have less than seven (7) days in the SUTO
bank are required to set aside the appropriate number of VSTOs to
satisfy the SUTO bank minimum.
Section 3: GENERAL
A.All VSTO and SUTO days are paid at a Pilot's applicable daily
rate, except as provided for elsewhere in this Article.
B. Unscheduled absences are taken in the following order:
1. A maximum of seven (7) days can be taken as unscheduled time off
in a calendar year from the SUTO Bank.
2. Unscheduled absences due to personal illness or injury off the
job will also be taken from the SUTO Bank.
3. Once the SUTO Bank is exhausted a Pilot may use his remaining
unused VSTO days.
4. Unbid accrued VSTO days must be used for any additional
unscheduled absences.
5. A Pilot may not take an unpaid day off unless all valid accrued
VSTOs and SUTOs days have been exhausted.
C.Use of VSTO and SUTO on an FML shall be required pursuant to
Article 11, III, Section 4 of the Agreement. Use of VSTO days for
other leaves of absence will be pursuant to Article 11, V, Section
1 of the Agreement.
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D.Pilots and the Union share in the responsibility for preventing
unnecessary absences and shall assist the Company in its efforts to
minimize any abuse of excessive absenteeism.
1. A Pilot who cannot perform his duties due to a non occupational
injury or illness shall immediately report such absence and the
reason for it to his immediate supervisor. A Pilot shall
personally contact his supervisor on a daily basis during his
scheduled work hitch unless physically unable to do so and shall
advise the supervisor of his expected date of return and a
telephone number where he can be reached during his absence.
2. Upon reasonable suspicion of misuse of such leave, the Company
reserves the right to require a physician's certificate or an
examination by a Company-designated physician. To the extent any
Company-requested examination is not covered by insurance, it
shall be paid for by the Company provided the Pilot submits
receipts for reimbursement in a timely manner.
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ARTICLE 13
ON-THE-JOB INJURY (OJI) LEAVE
Section 1. Pilots are eligible for worker's compensation benefits with
respect to injuries or illnesses arising out of and in the course of
employment with the Company.
Section 2. VSTO and SUTO days will not be charged to a Pilot who is injured
on the job.
Section 3. A Pilot must report the occurrence of an OJI to his supervisor
immediately.
Section 4. A Pilot injured on the job will receive his worker's compensation
benefit in accordance with applicable state law. During the statutory
waiting period, an injured Pilot will receive his base pay.
Section 5. All insurance benefits shall continue to be available to a Pilot
on the same basis as an active employee for a maximum of twelve (12)
months, provided the Pilot continues to pay his portion of the
insurance premium. Once the twelve (12) month period has been
exhausted, the Pilot shall be eligible for medical insurance under
COBRA for the applicable period of time.
Section 6. The Company may require an injured Pilot to submit to a physical
examination in accordance with the provisions of Article 16.
Section 7. Prior to returning to duty from an OJI Leave, a Pilot shall be
required to present a physician's statement to the Company verifying
that he is medically fit to perform all Pilot duties. In the event
there is a dispute concerning the Pilot's fitness for duty, the
procedures of Article 16 shall be utilized to resolve the dispute.
Upon return from an OJI Leave, a Pilot shall be returned to his
former position if the position still exists, or to any other
position where his seniority permits.
Section 8. When a Pilot covered by this Agreement suffers a job-related
injury, the Company shall inform the Pilot of his rights under the
applicable state's Worker's Compensation statute and the
Longshoreman's Act, if applicable.
Section 9. During an OJI Leave, the Company may offer, and a Pilot may accept
light duty, provided it is consistent with his medical restrictions.
During a light duty assignment, the Pilot shall be compensated at his
applicable base pay.
Section 10. Worker's Compensation benefits made by the Company shall be
reduced (as allowed by applicable Worker's Compensation statutes) to
the extent the Pilot receives income from other sources. These shall
include, but not be limited to,
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such other outside income as social
security benefits and/or outside employment.
Section 11. If a Pilot sustains an on-the-job-injury while at work away from
his base station, the Company shall provide transportation to return
the Pilot to his base station. If a Pilot sustains an
on-the-job-injury requiring medical attention, the Company shall
provide the Pilot transportation to the extent necessary to obtain
medical attention.
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ARTICLE 14
BEREAVEMENT LEAVE
Section 1. The Company shall grant a bereavement leave commensurate with each
individual for the death of a member of the Pilot's immediate family.
Pilots on bereavement leave shall be paid for each duty day missed,
up to a maximum of seven (7) days. Pilots may use accrued VSTO and/or
SUTO days to be paid beyond the seven (7) paid duty days. Pilots
shall inform the Company which bank(s) they intend to utilize in
order to be paid beyond the seven (7) paid duty days.
Section 2. For the purposes of this Article, a Pilot's immediate family shall
include his mother, father or legal guardians, spouse, children,
brother, sister, grandparents, mother-in-law and father-in-law.
Section 3. The Gulf Coast Manager, at his sole discretion, may extend the
duration of a bereavement leave or grant bereavement leave for
persons other than the Pilot's immediate family.
Section 4. Funeral leave is not compensable when the Pilot is on days off,
leave of absence, VSTO/SUTO, layoff, or suspension.
Section 5. The Company will accept any method of reasonable proof of death
and funeral. This will include a newspaper clipping, copy of death
certificate, etc.
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ARTICLE 15
JURY DUTY
Section 1. When a Pilot is called for Jury Duty, he is required to present
proof in the form of a court summons or subpoena for jury duty to his
supervisor as soon as possible.
Section 2. A Pilot serving on Jury Duty shall receive his regular pay. The
day or days for which a Pilot will receive pay for Jury Duty must
fall within the Pilot's regularly assigned workweek (the day or days
the Pilot normally works). Paid Jury Duty will be limited to a
maximum of five (5) duty days in a twelve (12) month period. Any
monies received by a Pilot from the court for Jury Duty shall be
signed over to the Company.
Section 3. Jury pay is not applicable when a Pilot is on suspension, leave of
absence, VSTO/SUTO, layoff or day(s) off.
Section 4. In the event a Pilot is released from Jury Duty on a duty day, he
shall be required to return to his base provided the court is located
within reasonable proximity to the base and he has at least six (6)
hours remaining in his duty day.
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ARTICLE 16
FEES AND PHYSICAL EXAMINATIONS
Section 1. Should the Company require any Pilot to be bonded in the
performance of his duties, the premium involved shall be paid by the
Company.
Section 2. In the event identification badges or cards are required, the
Company shall provide identification badges or cards at no cost to
the Pilot. In the event the I.D. badge or card is lost or misplaced
by the Pilot, he shall be charged for the total cost of a replacement
badge or card and shall be required to secure such badge or card on
one of his days off.
Section 3. Pilots shall maintain a rotorcraft Helicopter Commercial License
(RCHCL) with an Instrument Rating at his expense.
Section 4.
a.It shall be the responsibility of each Pilot to pay for and arrange
his regular medical examinations by a qualified aeromedical
examiner of the Pilot's choice, as required by the Federal Aviation
Regulations. Examinations will be scheduled while the Pilot is
off-duty.
b.Any additional physical exams and/or tests required by the Company
or a customer beyond those required as provided for in Section 5(a)
of this Article shall be paid for by the Company.
Section 5.
a. When the Company believes that there are grounds to question a
Pilot's physical or mental condition to remain on flight status,
the Company may require that such Pilot be examined by a medical
examiner designated by the Company.
b. Any medical examination or tests required by the Company
pursuant to Section 5(a) of this Article shall be paid for by
the Company. Payment shall be made by the Company directly to
the medical examiner and/or test facility conducting such
examination or tests.
c. A Pilot will be provided a copy of the Company physician's
report. This report will state specifically if the Pilot is able
to perform his duties.
d. A Pilot who fails to pass a Company physical examination may
have a review of the case. Such review will proceed in the
following manner:
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1.Within fifteen (15) calendar days of the date the Pilot is
presented the report of the Company physician, the Pilot may
employ a qualified medical examiner of his own choosing and at
his own expense for the purpose of conducting a physical
examination for the same medical purpose as the examination
made by the Company's medical examiner.
2.A copy of the findings of the qualified medical examiner
chosen by the Pilot shall be submitted to the Company within
seven (7) business days of receipt by the Pilot, and will
state if he is able to perform Pilots' duties. In the event
that such findings verify the findings of the medical examiner
employed by the Company, no further medical review of the case
shall be afforded.
3.In the event that the findings of the medical examiner chosen
by the Pilot disagree with the findings of the medical
examiner employed by the Company, the Company will, at the
written request of the Pilot, ask the two (2) medical
examiners to agree upon and appoint a third qualified and
impartial medical examiner who is a specialist in the area of
the Pilot's alleged disability, for the purpose of making a
further medical examination of the Pilot. In the event the
Pilot fails to submit a written request, within fifteen (15)
calendar days after the findings, the results of the original
Company examination shall govern.
4.The decision of the impartial physician, who has been agreed
upon by the Company physician and the Pilot's physician, shall
be final and binding on all parties.
5.The expense of employing the impartial medical examiner shall
be borne equally by the Company and the Pilot. Copies of the
medical examiner's report shall be furnished to the Company
and to the Pilot.
e. When a Pilot is removed from flight status by the
Company as a result of failure to pass the Company's
physical examination, and appeals such action under
the provisions of this Section, he shall, if
subsequently found by the impartial examiner to have
been fit to perform the work at the time of removal,
be reimbursed at his regular rate of pay and medical
expenses.
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ARTICLE 17
TRAINING
I. RECURRENT TRAINING
Section 1. The Company will attempt to schedule recurrent training on days
off to minimize disruption to the operation. The Company will make
reasonable efforts to schedule training immediately before or
immediately after a Pilot's hitch. If recurrent training cannot be
scheduled immediately before or after his hitch, the Company shall
provide the Pilot with housing and per diem during the day(s) off
between his training and his hitch. Pay for recurrent training will
be in accordance with Article 21 of this Agreement.
Section 2. In the event a Pilot is unable to attend training on the day(s)
assigned, he will notify the Manager of Gulf Coast Operations as far
in advance as possible. The Manager will work with the Pilot to
arrange for alternative training dates. However, if there are no
mutually agreeable dates available, the Pilot will remain obligated
to conduct the training on the original dates assigned by the
Company.
Section 3. Each month, the Company will publish a list of recurrent training.
At the beginning of each year, the Company will also publish a list
of scheduled recurrent training classes for the year along with a
list of Pilots assigned to such training. It will be the
responsibility of the Pilot to know the dates for his scheduled
recurrent training class and whether a Pilot's recurrent training has
been rescheduled due to a change in assignments.
II. UPGRADE TRAINING
Section 1. The Company will attempt to schedule upgrade training on days off
to minimize disruption to the operation. The Company will make
reasonable efforts to schedule training immediately before or
immediately after a Pilot's hitch. If upgrade training cannot be
scheduled immediately before or after his hitch, the Company shall
provide the Pilot with housing and per diem during the day(s) off
between his training and his hitch. Pay while in upgrade will be in
accordance with Article 21 of this Agreement. A Pilot's base salary
will not increase until he has successfully completed all training
and reports for duty for the first scheduled revenue flight in the
upgraded aircraft.
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III. SPECIAL TRAINING AND NEW HIRE TRAINING
Section 1. The Company will attempt to assign any nonrecurrent special
training on a Pilot's day off to minimize disruption to the
operation. The Company will make reasonable efforts to schedule
training immediately before or immediately after a Pilot's hitch. If
special training cannot be scheduled immediately before or after his
hitch, the Company shall provide the Pilot with housing and per diem
during the day(s) off between his training and his hitch. (This
preceding sentence is not applicable for new hire training.) Pay for
special assignment training will be in accordance with Article 21 of
this Agreement.
Section 2. Training pay of new hire Pilots will be determined by the Company
and may be modified from time-to-time based on market conditions. In
no event shall Pay for new hire Pilots exceed the base salary for
Pilots in their first year of service. First year pay commences after
a Pilot has successfully completed all new hire training.
IV. TRAINING FAILURES
Section 1. It is recognized that not all Pilots reach the required level of
proficiency in the same amount of time. Therefore, when it becomes
apparent to the Company that a Pilot will require time in excess of
that usually required to reach proficiency, the Company Training
Department will, in consultation with the Pilot, determine the cause
of his inability to reach the required proficiency level and
establish a plan for correcting the problem. In the event a Pilot
fails to demonstrate the required degree of proficiency after
completion of the individual training plan, he will be handled in
accordance with the provisions outlined below.
a. Recurrent Training
1. A Pilot who fails any portion of recurrent training (written
exam, oral exam, flight check) will be removed from line duty
without pay for up to seven (7) days, commencing with the first
day of his next scheduled hitch, or until he has commenced
retraining and has been successfully retested by the Company.
2. A Pilot who fails his oral exam or flight check may request a
change in instructor or additional training prior to his retest.
3. If the Pilot fails the retest, his status with the Company will be
reviewed.
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b. Upgrade/Transition Training
1. A Pilot who fails any portion of his upgrade/transition training
after a retest (written, oral or flight check) will have the
training discontinued. The Pilot will be returned to his
previously flown aircraft if the aircraft is still being flown
by the Company, or any other available aircraft for which he is
qualified.
2. A Pilot who fails his oral exam or flight check may request a
change in instructor or additional training prior to his retest.
3. A Pilot who fails upgrade/transition training will
not be permitted to upgrade in that aircraft for a
period of six (6) months following his training
failure. A Pilot who fails upgrade/transition
training a second time will not be permitted to
upgrade for a period of twelve (12) months following
his training failure. It is understood and agreed
that the Company has the right to conduct a line
check following any training failure.
c. Flight Check/ Progress Ride
1. When a Pilot fails a flight check given as a result of an
aircraft incident or an observed departure from normal flight
procedures, his status with the Company will be reviewed.
2. If an oral exam is necessary and the Pilot fails a retest, his
status with the Company will also be reviewed.
d. Initial Training (New Hire)
1. A Pilot who fails any portion of his new hire training will be
subject to termination by the Company.
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ARTICLE 18
FACILITIES, EQUIPMENT AND UNIFORMS
Section 1. The Company shall provide Pilots with clean and comfortable rooms
near its operating bases. For the purpose of this Agreement, clean
and comfortable rooms may be either apartment units, motels or mobile
homes. These rooms will be provided under the following
circumstances:
a. When a Pilot engages in a Workover at an unassigned
base;
b. When a Pilot does not work within reasonable proximity of his
home regardless of whether he is on regular hitch or Workover;
or
c. When travel back to his home would prevent a Pilot from
receiving minimum rest in accordance with FARs.
All new mobile homes purchased by the Company will be limited to a
maximum of five (5) bedrooms. Existing mobile homes that have six (6)
bedrooms may continue to be used. However, if any Pilot in a six (6)
bedroom mobile home objects to such sleeping accommodations, the
Company will place one (1) of those Pilots into a nearby apartment
unit, motel, or another mobile home when available. No Pilot will be
asked to share his sleeping room with another. Normal furnishings
will be provided, include air-conditioning, furniture, television,
stove and/or microwave oven, and cooking and eating utensils. If not
provided in the mobile homes, washers and dryers shall be provided
near the operating bases.
Section 2. Company-provided accommodations will be cleaned at Company expense
at least once a week. It will be the responsibility of each Pilot
housed in Company-provided accommodations to treat all furnishings
and appliances with care.
Section 3. When Company-provided rooms are filled to capacity, or otherwise
not available, the Company shall provide individual motel
accommodations, when available, including transportation to and from
such facility for non-domiciled Pilots.
Section 4. The Union shall appoint a Crew Accommodations Committee to work
jointly with the Company to periodically review Company-provided
accommodations for comfort and cleanliness. In addition, the
Committee shall make recommendations to the Company for ways to
improve crew accommodations.
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Section 5. The Company shall furnish its Pilots with all necessary equipment
to perform their duties. This equipment shall not include headsets or
computers, but shall include Switlik vest style PFDs. The Company
will meet with the Union to determine an appropriate timetable for
replacement of existing PFDs with the Switlik PFDs.
Section 6. Pilots are responsible for all equipment assigned to them, and if
they lose equipment, or damage equipment through negligence, the
Pilot will be required to reimburse the Company for the cost of the
replacement. Company-provided equipment that becomes inoperative as a
result of normal wear and tear shall be repaired or replaced by the
Company.
Section 7. Pilots will be issued a set of seven (7) uniforms and a jacket
upon hire. Should a Pilot uniform show exceptional wear and tear
during a one (1) year period, the Pilot should consult with his
supervisor for replacement items. Upon request and subject to
approval by the Company, Pilots shall be entitled to four (4)
replacement items per year.
Section 8. The Company will pay to each Pilot each year, beginning thirty
(30) days after the date of signing this Agreement, an equipment
allowance of two hundred dollars ($200.00).
Section 9. The Company shall have the right to determine reasonable grooming
standards for Pilots. Such standards will be published and
distributed to all Pilots.
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ARTICLE 19
SEVERANCE PAY
Section 1. A Pilot who is laid off shall receive severance pay based on the
total amount of Company Seniority under this Agreement unless one or
more of the following conditions exist:
a. He exercises his seniority in order to remain in the employ of
the company.
b. He accepts any other employment with the Company or refuses to
accept a job or assignment within his category as "Pilot" in the
Company.
c. The layoff is caused by circumstances beyond the
control of the Company. Examples of this would
include a war or foreign invasion, an act of
God/natural disaster, an official state of
emergency, a strike affecting the Company's
business, a work stoppage, a government grounding of
aircraft, or the revocation of operating
certificate(s).
d. He is dismissed for just cause, resigns or retires.
Section 2. The amount of severance pay due to a Pilot under this Article
shall be based on the Pilot's Company Seniority with the Company and
shall be computed on the basis of the Pilot's regular base pay at the
time of layoff as follows:
Completed Years of Service Severance Allowance
------------------------------- -------------------
1 year but less than 4 years 2 weeks
4 years but less than 8 years 4 weeks
8 years but less than 12 years 6 weeks
12 years but less than 16 years 8 weeks
16 years or more 10 weeks
Section 3. Severance pay shall be paid on the dates of his regular pay
periods. At Pilot option, he may elect to receive his severance pay
in a lump sum.
Section 4. Severance pay shall continue until all severance pay has been
paid. However, if a Pilot is recalled, severance pay shall stop on
the effective date of recall.
Section 5. The Company may offer voluntary leaves of absence to offset
scheduled furloughs.
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Section 6. The Company may offer voluntary furloughs to Pilots flying a
specific aircraft and/or seat to offset scheduled involuntary
furloughs. Volunteers shall be entitled to all of the provisions of
this Article, except that severance pay will be calculated based on
the position of the most junior Pilot scheduled for involuntary
furlough. Return to active status shall occur only as a result of the
normal recall process.
Section 7. Medical, dental and life insurance for laid off Pilots and their
eligible dependents will continue on the same basis as active Pilots
until all severance pay has been paid.
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ARTICLE 20
MOVING EXPENSE
Section 1. The Company shall provide a paid move to a Pilot who is required
to move by the Company as a result of the opening of a new base(s)
that is not part of the Gulf Coast operations, provided that the
Pilot moves within fifty (50) miles of his new base. In addition, a
move will only be paid if it results in the Company not having to
provide the Pilot with Company-provided accommodations at his new
base.
Section 2. In order to receive a Company-paid move, Pilots must complete such
move within twelve (12) months from the date of notice and shall be
entitled to the following reimbursement upon presentation of
reasonable documentation.
a. Actual moving expense for normal household effects including
normal packing charges up to a maximum of twelve thousand
(12,000) pounds. Not included in the move are the transportation
of pets/animals, boats, automobiles, motorcycles, heavy shop or
hobby equipment.
Section 3. Pilots shall be allowed the following enroute expenses when
properly substantiated by receipts during the period of enroute
travel:
a. For Pilot only - $30.00/day
b. For Pilot and Spouse - $60.00/day
c. For each dependent child - $15.00/day
The period of enroute travel shall continue after arrival until the
day the household effects arrive or until the end of the fifth day,
whichever comes first.
Section 4. For the purpose of determining necessary travel time, the Company
will allow one (1) travel day for each five hundred (500) miles or
fraction thereof, to a maximum of three (3) travel days when driving
a vehicle. The Pilot is expected to move during his days off and be
prepared to work on his regular hitch. Travel time will be determined
by the most direct AAA mileage between the two (2) cities.
Section 5. In addition to moving expenses, one (1) vehicle per family may be
driven to the new location and the Pilot will be reimbursed at the
rate established by the IRS. It is agreed by the parties that as of
the date of signing of this Agreement, the
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mileage rate will be thirty-one (31) cents per mile by the most
direct AAA highway mileage. No expenses will be paid for a second
vehicle.
Section 6. To be eligible to obtain reimbursement from the Company, a Pilot
must meet the requirements of Section 1 of this Article and have:
a. completed his probationary period,
b. provided the Company with at least thirty (30) days advance
notice of the move,
c. not have had another Company-paid move in the preceding
twenty-four (24) months, and
d. use a Company contracted mover, if required to do so by the
Company.
Section 7. Pilots who voluntarily leave the Company within twenty-four (24)
months of a paid move will be required to reimburse the Company for
all moving expenses provided under this Article.
Section 8. Pilots eligible for reimbursement of moving expenses electing to
move themselves shall be reimbursed for actual moving expenses such
as truck rental, gas, oil, drop-off, and other Company-approved
expenses. Pilots must notify the Company in advance of a move,
receive prior Company approval, and follow the specified procedures
per Company policy in order to be reimbursed.
a. The actual expenses reimbursed cannot exceed the total estimated
cost of a Company-coordinated move.
b. If the actual move by the employee is less than the lowest
estimate for a Company-coordinated move, one half of the
difference will be paid to the employee. Total reimbursement
shall not exceed the reimbursement for which the employee is
eligible pursuant to Sections 2, 3 & 5 of this Article.
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ARTICLE 21
BASE PAY
Section 1. A Pilot on the seniority roster shall be paid the following salary
in accordance with his Company seniority as a Pilot with the Company.
Rates are shown in Appendix "A."
Section 2. A Pilot in recurrent, upgrade, or special training shall be paid
seventy (70) percent of his applicable base pay for all days spent in
training.
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ARTICLE 22
SUPPLEMENTAL PAY
Section 1. CHECK AIRMAN. In addition to their base pay, Company-designated
Check Airmen shall receive an override of five hundred dollars
($500.00) per month. The monthly override shall be prorated if the
Check Airman serves in that capacity for a portion of the month.
Section 2. FIELD CHECK AIRMAN. In addition to their base pay,
Company-designated Field Check Airmen shall receive an override of
two hundred dollars ($200.00) per month. The monthly override shall
be prorated if the Field Check Airmen serves in that capacity for a
portion of the month.
Section 3. PILOT MECHANIC. In addition to their base pay, Company-designated
Pilot/Mechanics shall receive an override of five hundred dollars
($500.00) per month. The monthly override shall be paid only when the
Pilot is called upon to perform such work and shall be prorated based
on the number of days actually working in that function.
Section 4. LEAD PILOT. In addition to their base pay, Company-designated Lead
Pilots shall receive an override of three hundred dollars ($300) per
month. The monthly override shall be prorated if the Lead Pilot
serves in that capacity for a portion of the month.
Section 5. WORKOVERS. A Workover shall be paid at one and one-half
(1.5) times a Pilot's applicable daily rate. The daily
rate is equal to one-fifteenth (1/15) of the monthly base
salary.
Section 6. All supplemental pay for Workovers and temporary assignments shall
be paid at the rate of one-fifteenth (1/15) of the monthly supplement
for each day of applicable work performed.
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ARTICLE 23
BONUSES
Section 1. OFFSHORE BONUS. In addition to his base salary, a Pilot required
by the Company or customer to remain at an offshore location
overnight shall receive thirty dollars ($30) per night.
Section 2. SLING BONUS. In addition to base salary and when sling rates are
charged to customers, a Pilot required by the Company to conduct
external load operations in revenue service shall receive thirty-five
($35) per flight hour or fraction thereof.
Section 3. NIGHT FLIGHT BONUS. In addition to base pay and when night rates
are charged to customers, a Pilot required by the Company to fly in
revenue service during the hours of official sunset to official
sunrise as reported by the United States Naval Observatory shall
receive thirty-five ($35) per flight hour or fraction thereof.
Section 4. SAFETY AND SERVICE INCENTIVE PLAN (SSIP)
A. The SSIP will remain in effect for the duration of this
Agreement, provided that the program is offered to all other
eligible employees of the Company.
B. A Pilot shall be eligible for the SSIP once he has completed a
full quarter of active service with the Company. Active Service
means a Pilot on the payroll.
Section 5. SIGNING BONUS. Each Pilot on the active payroll as of the
effective date of this Agreement shall receive six hundred dollars
($600) for each completed year of service with the Company. Such
payment shall be made to an eligible Pilot within thirty (30) days
from the date of ratification.
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ARTICLE 24
WORKOVER/OVERTIME
Section 1:WORKOVER PAY
a.A Workover is defined as being scheduled for and reporting to
work on a regularly scheduled day off.
b.A Workover shall be paid at one and one-half (1.5) times the
daily rate. The daily rate is equal to one-fifteenth (1/15) of
the monthly base salary for the actual aircraft flown or for
what a Pilot was scheduled to fly on the Workover, whichever
is greater as provided for in Article 21 of this Agreement.
1. The Workover rate shall apply regardless of job assignment,
aircraft flown or hours on duty.
Section 2:WORKOVER PROCEDURES AND ASSIGNMENTS
a.It is understood that Workovers are a viable and popular
means for providing additional income and, as such, should be
assigned in a fair and equitable manner.
b.A Pilot who desires a Workover assignment will submit a
Written Workover Form, which will be provided by the Company,
to the ARA scheduling department. The request will include:
1. A Pilot's name and contact number;
2. The date(s) a Pilot is available to Workover on his off
hitch;
3. The aircraft a Pilot is able to fly;
4. The bases at which a Pilot is willing to Workover; and
5. Whether the Pilot can be contacted to perform emergency
Workovers.
c.A Pilot is responsible for ensuring that the information on
file in the scheduling department is accurate and that the
dates requested for the Workover are correct.
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d.The Company will maintain a Workover list that will be redone
each Friday. Therefore, Pilots must request Workovers and
confirm the information on the list no later than the end of
each work hitch. A Pilot who agrees to a Workover shall be
considered on hitch for the dates agreed to by the Company and
Pilot.
e.The Company shall maintain two (2) Workover lists.
1. The Emergency list will contain the names of those Pilots
who are able to report to work on two (2) hours notice.
2. The Normal Roster will be divided into two (2) groups:
those Pilots who want to perform Workovers at any base; and
those Pilots who want to perform Workovers only at a
specified base.
f.Normal Workovers will be offered in the following
order:
1. To Pilots with "off days" between training and their hitch;
2. To Pilots who fly the job on the opposite hitch;
3. To any qualified Pilot, in seniority order, regardless
of the base;
4. To supervisors.
g.Emergency Workovers will only be offered to Pilots who meet
the criteria identified in Section 2, Paragraph (e.1) of this
Article.
h. Pilots will be passed over for Workovers when:
1. A Pilot is not qualified;
2. A specific customer requests that a certain Pilot not fly
his job;
3. There is a conflict with a Pilot's regular job
(i.e., FAR limitations);
4. The dates of a Pilot's availability conflict with the
length of a job (i.e., 1-day job vs.
RON);
5. A pilot does not answer a phone call from the Company. A
daily phone record shall be maintained to verify that a
call to the Pilot has been made.
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6. A Pilot is unable to give the scheduling department a
definitive answer at the time of the call.
i.A Pilot will be allowed to use a beeper as his contact number
only for Normal Workovers. A Pilot contacted on his beeper
will have fifteen (15) minutes to respond to his page or he
will be passed over for a Workover assignment. It will be the
Pilot's responsibility to make certain that his beeper is in
working order.
j.Any Pilot who refuses two (2) Workover offers will be placed
at the bottom of the list for the remainder of the hitch.
k.When the procedures of Section 2, Paragraph f of this Article
have been exhausted, the Company may remove a Pilot from his
job at his base, in reverse seniority order, to fulfill such
requests for as short a period as possible, not to exceed
three (3) days. This is in accordance with the procedures of
Article 8, I, Section 3.
l.When assigning Workovers, base supervisors will make every
reasonable effort to follow the guidelines set forth in this
Article. Further, they will insure, to the best of their
ability, that Workovers are distributed equally to all whose
names appear on Workover rosters at their respective bases.
m.Supervisors shall not be used on revenue flights which could
be flown by Pilots on Workover status, or in any manner so as
to avoid hiring a Workover Pilot, except in the following
circumstances:
1. Medical emergencies;
2. When every reasonable effort has been made to secure a
Workover Pilot in accordance with the provisions of this
Article and such efforts were unproductive.
Section 3:COMPENSATORY TIME
a. Compensatory Time means a Pilot requests a day off from a
regularly scheduled workday in lieu of Workover pay. Such
time shall be compensated as his regular base pay.
b. The request for compensatory time must be agreed to by the
Company and the day off shall be granted by mutual
agreement. In the event mutual agreement cannot be reached,
the Pilot shall receive the applicable Workover pay.
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ARTICLE 25
TRAVEL PAY
Section 1. Mileage pay shall be paid at the applicable rate established by
the Internal Revenue Service under the following circumstances:
a. When required to relocate to another base or location other than
the Pilot's assigned base via personal vehicle. Mileage will be
calculated from the point of the Pilot's assigned base to the
location directed by the Company.
b. When mileage is in excess of thirty (30) miles for use of a
personal vehicle. When computing mileage, figures must reflect
mileage from ARA to Workover base or mileage from the Pilot's
home to Workover base, whichever is the lesser distance or if
applicable, mileage from assigned base to the Workover base.
Section 2. Mileage will not be paid in cases of Workover at the assigned
bases when such Workover immediately proceeds or follows a normal
work schedule.
Section 3. a. Additional Crew Member Agreement (ACM). As the
flight deck crewmembers covered under this
agreement reside in various locations, and are
subject to frequent changes of job assignment with
little or no notice, the Company shall make
reasonable efforts to enter into ACM Agreements
with other carriers in the Air Transportation
Industry to provide for transportation related to
commuting to and from their residence to job
assignments.
b. If requested by a Pilot, the Company shall provide a Photo
Identification Card that provides sufficient information about
each Pilot and the Company. The Photo ID System shall be
available within ninety (90) days from the effective date of
this Agreement.
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ARTICLE 26
PER DIEM
Section 1. A Pilot shall receive per diem under the following circumstances.
a. PILOT ON REGULAR WORK SCHEDULE - When required to relocate via
vehicle or aircraft after arriving at their assigned base, a
meal allowance is paid. This excludes an offshore location where
a Pilot receives an offshore bonus.
b. PILOTS ASSIGNED OFFSHORE - Pilots assigned to offshore contracts
who are required to RON onshore during a hitch may be eligible
for reimbursement of meals.
c. PILOT WORKING OVER - When a Pilot is on a
Workover, a meal allowance is paid
Section 2. Per Diem shall be paid at the rate of $5.00 per meal, to a maximum
of $15.00 per day.
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ARTICLE 27
INSURANCE BENEFITS
Section 1. The Company shall amend the following employee benefit plans as
follows:
Group Term Life/AD&D Insurance: 2 x salary to $125,000.
The Company will provide group term life/AD&D benefits on
a non-contributory basis.
Disability Insurance:
Short Term Disability: Current Company policy.
Long Term Disability: 50% of covered monthly
compensation to a maximum monthly benefit of $5,000.
The Company will work with it's insurance carriers to consider
offering buy-up options for employees.
Medical Insurance:
$250 deductible plan: Current Company policy.
Contributions will remain in effect from 8/01/99 to
12/31/00. Future adjustment to contributions will be made
on the same basis as other Company employees.
$750 deductible plan: Benefit amended to provide an
individual out-of-pocket maximum of $2,000 (including
deductible) and a family out-of-pocket maximum of $4,000
(including deductibles). Note: Plan provisions prohibit
some benefits from being reimbursed a 100%.
Contributions for the $750 deductible plan are amended as follows:
Employee only coverage: $10.00 per month.
Additional for dependent coverage: $75.00 per month.
The amended contributions will remain in effect from
8/01/99 to 12/31/00. Future adjustments to contributions
will be made on the same basis as other Company
employees.
Dental Insurance: Current Company policy.
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ARTICLE 28
RETIREMENT AND 401(K) PLAN
Section 1. The Company shall match a participating Pilot's 401(k) salary
deferral contribution dollar for dollar to a maximum of the first
three (3) percent of gross earnings, exclusive of bonuses.
Section 2. The Company shall also contribute three (3) percent of gross
earnings, exclusive of bonuses for each Pilot who is on the payroll
as of December 31 of each year. Contributions shall be made on an
annual basis. No contribution shall be required to be made by any
Pilot in order to be eligible for the three (3) percent Company
contribution.
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ARTICLE 29
SAFETY / ACCIDENT PREVENTION
Section 1. The Company shall continue to maintain safe and healthful working
conditions for its Pilots and agrees to further that important goal
by establishing a joint Company/Union Safety Committee and creating
an Accident Prevention
Policy.
Section 2. In that the Company is engaged in a vital service to our
Customers, the Company and Union have a particular obligation to
carry out this service courteously, efficiently and with due regard
for the safety of our passengers and ourselves. The Company and the
Union recognize their duty and responsibility to assist in the
maintenance of the Accident Prevention Policy. The Policy shall
consist of the following guidelines:
a. Safety is a primary concern of every operational undertaking.
b. The Company and the Union recognize that safe working
conditions, proper and adequate training, equipment and
protective devices are important elements in the workplace
setting. Required equipment shall be provided by the Company.
c. The Company will train Pilots in any new aircraft, its
components, or on any new procedures which they may be required
to utilize.
d. All Pilots must follow accident prevention measures.
e. Both the Company and the Pilots must follow all applicable
Federal Aviation Regulations.
Section 3. The Company agrees to meet and confer on a periodic basis with a
Safety Committee to receive and discuss recommendations from the
Committee. The Committee shall consist of no more than two (2)
Company representatives and two (2) Pilots appointed by the Union.
The role of the Safety Committee shall be to receive and review
complaints regarding unsafe working conditions or noncompliance with
safety rules and may make recommendations concerning such complaints.
Union members shall function in an advisory capacity.
a. The Company shall designate a management representative to be
responsible for receiving safety complaints.
b. The Company and the Union shall cooperate in seeking feasible
solutions to help reduce accident frequency and severity rates.
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c. The Company and the Union shall encourage Pilots to engage in
safe work practices and to communicate safety issues to the
designated management representative identified in Section 3(a).
Section 4. The Safety Committee will meet whenever it deems necessary, but
not less than once during every calendar quarter, or not less than
once every three (3) months.
a. Any member of the Safety Committee who attends a committee
meeting on his normal scheduled work day shall not suffer any
loss in pay.
b. All members of the Safety Committee shall receive travel pay and
per diem in accordance with the rates established in Articles 25
and 26.
Section 5. It shall be the purpose of this Committee to work closely with the
Company through the Director of Safety to insure that all possible
measures are taken to prevent accidents, promote a safe working
environment, and insure that the provisions of this Article are
enforced.
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ARTICLE 30
GENERAL AND MISCELLANEOUS
Section 1. Any deviation from this Agreement shall be made by mutual consent
between the Company and the OPEIU. Such mutual agreement must be in
writing and signed by both parties thereto.
Section 2. Any Pilot leaving the service of the Company shall, upon request
to the Human Resources Department, be provided with a letter setting
forth the Company's record of his job classification, stating his
length of service and rate of pay at the time he left the Company.
Section 3. There shall be no loss of pay when a line Pilot is displaced by a
supervisor on a revenue flight.
Section 4. All orders or notices to a Pilot covered by this Agreement
involving a transfer, promotion, demotion, layoff, or leave of
absence shall be given in writing to such Pilot with a copy to the
Union within five (5) business days.
Section 5. The pay period is currently every fourteen (14) days (bi-weekly).
If the Company wishes to change the pay period timing, it shall meet
and discuss the change with the Union prior to implementation. The
Company shall continue to offer, on a voluntary basis to its Pilots,
Electronic Funds Transfer (EFT) to the Pilot's bank of choice.
Section 6. Where there is a shortage equal to twenty-five (25) dollars or
more in the pay of a Pilot, the Pilot will be reimbursed for such
shortage as soon as possible but no later than five (5) working days
for the payroll department. If a Pilot is overpaid, he will have the
option to:
a. have a new corrected check issued on the same work
day;
b. reimburse the Company the total amount; or
c. reimburse the Company through payroll deductions spread equally
over four (4) pay periods.
Section 7. The parties agree that the intention of this Agreement is not to
inadvertently reduce a benefit or working condition heretofore
enjoyed by the Pilots.
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Section 8. The Company shall pay for the costs of printing and distributing a
copy of this Agreement to each Pilot as well as an adequate number of
additional copies needed by each side.
Section 9. If the Company decides to place into service aircraft other than
those already included in this contract, it shall notify the Union as
soon as possible. Conferences shall be initiated by either the
Company or Union upon written notice to the other party for the
purpose of establishing rates of pay, rules and working conditions
applicable to the new equipment.
a. The parties shall meet at a mutually agreed upon time, but no
later than sixty (60) calendar days before the aircraft is to be
placed into service.
b. In the event the parties fail to reach an agreement
prior to placing the new equipment into service, the
Company may place such new equipment into service.
Pilot operating that new equipment shall be
compensated at the contractual rate of pay
appropriate to his seat and pay year. Nothing
herein shall deny the Company the right to place new
equipment into service.
c. The provisions of Section 9 are not intended to hinder the
acquisition or use of new equipment.
Section 10. Pilots shall not engage in any flying or other business
activities which interfere or are in conflict with their service to
the Company, provided, however, that this provision shall not be
construed to prohibit Pilots from affiliating with Armed Forces of
the United States.
Section 11. PERSONNEL FILE
Upon request, a Pilot's personnel file shall be open for his
inspection during normal office hours in the presence of a Company
representative. Nothing of a derogatory nature will be placed in a
Pilot's file unless a copy is sent to the Pilot. Upon receipt of such
report, the Pilot shall have the option of responding by returning
his explanation or comments to be included with the report in his
file or by challenging the truth or accuracy of the report. If the
Company determines the challenge to be justified, the report will be
removed from the Pilot's file and destroyed. If the Company
determines otherwise, it shall notify the Pilot who may then avail
himself of the provisions of Article 32 to appeal this decision.
a. Customer complaints or correspondence of a derogatory nature
shall not serve as the basis for any employment action,
including discipline after twelve (12) months from the date of
issuance unless within the twelve
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(12) month period there has been a recurrence of the same or
similar nature.
b. Disciplinary records involving safety matters shall
not serve as the basis for any employment action,
including discipline after five (5) years from the
date of issuance unless within the five (5) year
period there has been a recurrence of the same or
similar nature. In addition, the Company shall not
be required to remove copies of public records or
documents which are required to be retained in
accordance with applicable law or governmental
regulations.
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ARTICLE 31
UNION BULLETIN BOARDS & COMMUNICATIONS
Section 1. The Company shall permit the Union to display an unlocked bulletin
board at each base location. The Union shall purchase the bulletin
boards and shall be responsible for its installation. The bulletin
board shall be a maximum of four (4) feet by five (5) feet. The
bulletin boards shall only be placed in areas that have been agreed
to by the Company in advance.
Section 2. The bulletin board used by the Union and Pilots covered by this
Agreement shall be for posting notices of Union social and
recreational affairs, meetings and elections.
Section 3. General distributions, posted notices and official business will
bear the seal or signature of an officer of the Union or a Pilot
representative and will not contain anything defamatory, derogative,
inflammatory, negative or of a personal nature attacking the Company
or its representatives.
Section 4. The Company may refuse to permit any posting that would violate
any of the provisions of this Agreement. Any notices posted that are
not in accordance with this Article shall be removed by the Union or
by the Company upon notice to the Union.
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ARTICLE 32
GRIEVANCE PROCEDURE
Section 1. INTRODUCTION
The procedures described in this Article shall be the mandatory and
exclusive mechanism for the resolution of all grievances concerning
an action of the company affecting a Pilot or group of Pilots,
including, without limitation, any and all grievances arising from
discipline, discharge, or the interpretation or application of the
express terms of this Agreement.
Section 2. DISCIPLINE AND DISCHARGE
a. Based on the severity of the infraction, a Pilot may be subject
to disciplinary action, up to and including discharge, for any
violation(s) or infraction(s) of Company regulations, policies
or violation of provisions contained in this Agreement.
Disciplinary action will be in accordance with the following
procedures:
1. The Company may suspend the Pilot with pay prior
to notifying the Pilot of the charge;
2.The Company will provide the affected Pilot, with a copy to
the Union, of the notice of the charge(s); and
3.Within seven (7) working days, the Company will inform the
Pilot in writing, with a copy to the Union, of its decision
regarding the charge and any discipline imposed.
b. A Pilot may be immediately removed from payroll and may be
suspended without pay if he is disciplined or discharged for
violation of the FAA drug/alcohol policy, acts of violence or
sabotage or threatening same, theft, or use of a weapon on
Company premises.
c. In the event the Pilot feels he had been unjustly
disciplined or discharged, the Pilot or the Union
may appeal in writing the Company's decision to the
Director of Operations within seven (7) calendar
days of the Company's decision. The appeal must set
forth a concise statement of the facts giving rise
to the appeal, and state the remedy or relief
requested.
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d. The Director of Operations or his designee may
elect to investigate the matter, and shall issue a
decision in writing to the Pilot, with a copy to the
Union, regarding disposition of the appeal within
seven (7) calendar days of when the appeal was
filed. In the event the decision on the appeal is
not satisfactory to the Pilot, he or the Union may
appeal to the System Board of Adjustment in
accordance with Article 33 of this Article.
Section 3. GRIEVANCE PROCEDURE
a. Disputes arising under this Agreement or between the parties
with respect to the interpretation or application of the
Agreement, excluding discipline or discharge matters subject to
Section 2 of this Article, shall be processed in the following
manner:
1.Pilot(s) shall first attempt to resolve any dispute
informally through consultation with his immediate supervisor
within seven (7) calendar days of the date on which the
affected Pilot, or any Pilot among a group of affected Pilots
know or reasonably should have known of the facts on which the
grievance is based. The supervisor shall render a decision
within seven (7) calendar days from the date of consultation.
2. If the dispute is not resolved to the satisfaction of the
Pilot(s) within this time period, the aggrieved party or the
Union shall reduce the grievance to writing on a standard form
provided by the Union, signed by an authorized representative
of the Union, and present it to the Gulf Coast Manager of the
Company. At a minimum the written grievance shall contain the
following information:
a. A reference to the provisions of the Agreement
alleged to have been breached;
b. A statement of the facts involved; and
c. The specific remedy requested by the affected Pilot(s).
3. The written grievance must be submitted to the Gulf Coast
Manager within ten (10) calendar days of the date on which
the grievance was denied or deemed to have been denied by
the
supervisor.
4. The Gulf Coast Manager shall render a decision on the
grievance in writing within ten (10) calendar days of the
date on which the
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grievance was filed. In the event the
Gulf Coast Manager's decision is unacceptable to the Union,
it may appeal the decision in writing to the Director of
Operations, with a copy to the Director of Human Resources,
within seven (7) calendar days of receipt of the decision.
The appeal must include a statement of the reason(s) why
the Union believes that the decision by the Gulf Coast
Manager was erroneous.
5. The Director of Operations shall render a decision on the
appeal in writing within fourteen (14) calendar days of the
date on which the grievance was appealed. In the event the
Director of Operations' decision is unacceptable to the
Union, it may appeal to the System Board of Adjustment in
accordance with Article 33 of this Agreement.
Section 4. The Company has the right to file a grievance over any dispute
arising under this Agreement. Company grievances shall be handled in
accordance with Section 3 of this Article, except that such
grievances shall be presented to the President of the Local 107, who
shall issue a written decision within fourteen (14) calendar days of
the date the grievance was filed. If the decision of the President of
the Local 107 is not satisfactory, the Company may appeal to the
System Board of Adjustment in accordance with Article 33 of this
Agreement.
Section 5. TIME LIMITS
a. The failure of a Company representative to issue a
decision or hold a hearing within the deadlines
prescribed by this Article shall be deemed a denial
of the grievance or appeal, and such grievance or
appeal shall be deemed to have been immediately and
automatically appealed to the next step unless the
Union indicates that it wishes to withdraw such
appeal.
b. The failure of the Pilot(s) or the Union to comply with any of
the time limits set forth in this Section shall be deemed an
immediate, automatic, and final withdrawal of the grievance or
appeal unless an extension of time has been requested within the
prescribed time limits set forth in this Article.
Section 6. GENERAL
a. Unless expressly provided otherwise, all
notification(s) or appeals required by this Article
shall be in writing, and accomplished by either hand
delivery verified by an initialed copy or by delivery
system prepaid with return receipt requested. A
notification or appeal required by this Article
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shall only be valid if it is sent to the last known address of
the party to whom the notice is directed.
b. Compliance with all time limits specified in this Article shall
be determined by the date of mailing, as established by postmark
or by date of hand delivery, as established by the initialed
copy.
c. A group grievance may be filed by the Union. Any
such grievance shall contain sufficient information
to permit the Company to identify the individual
Pilots covered by the group grievance. No remedy
awarded in a group grievance shall provide monetary
compensation for periods prior to thirty (30)
calendar days from the date on which the formal,
written grievance was filed or the date the alleged
violation, whichever is less.
d. Time limits specified in this Agreement may be waived by mutual
written consent of the parties.
e. The parties will notify one another of the persons designated to
file and answer grievances.
f. All grievances resolved at any step of the Grievance Procedure
prior to the System Board of Adjustment shall be on a
non-precedential basis unless mutually agreed otherwise.
g. If a grievant is exonerated, his personnel file shall be cleared
of all reference to the incident. Records may be kept in a
separate file but may not be used in future disciplinary actions.
A grievant who is cleared of all charges shall be made whole as
pertains to wages, seniority, longevity and benefits.
h. A Pilot shall have the right of Union representation at all
meetings with the Company. A Pilot shall be advised in advance of
the nature of the subject of any hearing or conference.
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ARTICLE 33
SYSTEM BOARD OF ADJUSTMENT
Section 1. In compliance with Section 204, Title II, of the Railway Labor
Act, as amended, there is hereby established a System Board of
Adjustment, which shall be known as the "AIR LOGISTICS PILOTS' SYSTEM
BOARD OF ADJUSTMENT" (hereinafter referred to as the Board).
Section 2. The Board shall have jurisdiction over disputes between any Pilot
and the Company with respect to discipline or discharge, and over
grievances or disputes growing out of the interpretation or
application of this Agreement. The Company and the Union intend that
procedures set forth in this Article shall be the exclusive and
mandatory forum of all such disputes.
Section 3. The Board shall not have jurisdiction over any disputes unless all
of the procedures required in Article 32 have been completely
exhausted with respect to the dispute, and the dispute has been
properly submitted to the Board pursuant to the provisions of this
Article.
Section 4. The Board shall have no jurisdiction to modify, add to, or
otherwise change the terms of this Agreement, or to establish or
change the rates of pay, rules, and working conditions covered by
this Agreement.
Section 5. The Board shall consist of four (4) members, two (2) of whom shall
be selected and appointed by the Company and two (2) of whom shall be
selected and appointed by the President of Local 107. Board members
shall have a vote in connection with all actions taken by the Board.
a. In the event the four (4)-member Board is not able to reach a
decision with respect to a particular dispute, the Board will be
reconstituted as a five (5)-member Board with the addition of a
neutral member as described in this Article.
Section 6. Except as otherwise provided herein, the Board shall meet
quarterly in the city where the general offices of the Company are
maintained (unless a different place of meeting is agreed upon by the
parties to the dispute), provided that at such time there are cases
filed with the Board for its consideration.
Section 7 Members of the Board who are employees of the Company shall suffer
no loss of pay while attending Board meetings.
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Section 8. The Board shall consider any dispute properly submitted to it by
the President of the Local 107 or a duly designated officer, or the
Company, when the dispute has not been previously settled in
accordance with Article 32, as applicable. Decisions of the Board
shall be final and binding upon the Company, the Union, and the
affected Pilot(s).
Section 9. The office of chairman shall be filled alternately by the parties.
A Union representative shall serve as Chairman and a Company
representative shall serve as Vice Chairman in even years, the vice
versa, in odd years. The Vice Chairman shall act as Chairman in his
absence.
Section 10. The party appealing a final decision under Article 32 shall
submit the dispute for consideration by the Board, including all
papers and exhibits, within fourteen (14) calendar days of that
decision. If the appeal is not made within the fourteen (14) day
period, the System Board of Adjustment does not have jurisdiction
over the dispute.
Section 11. All disputes referable to the Board shall be sent to the Director
of Human Resources, and that office shall assign a docket number
according to the order in which the dispute is received.
Section 12. The appealing party will ensure that a copy of the petition is
served on the Members of the Board.
Section 13. Each case submitted shall be addressed to the Members of the
Board, and shall state:
a. The question or questions at issue; b. A statement of the facts
with supporting documents; c. A reference to the applicable
provision(s), if any,
of the Agreement alleged to have been breached;
d. The position of the Pilot or Pilots.
e. The remedy requested; and
f. The position of the Company.
Section 14. The Company and Union shall, in good faith, attempt to make a
joint submission of their dispute to the Board. If the parties are
unable to agree on a joint submission, the appealing party shall file
a submission with the Board containing all of the information
described in Section 13 above, and the responding party may do the
same. Any party filing a submission with the Board pursuant to this
Article shall serve a copy of its submission with the other party.
Section 15. Pilots covered by this Agreement may be represented at Board
hearings by a person or persons the Union may designate, with the
approval of the Union, and
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the Company may be represented by a person
or persons it may designate. Evidence presented at Board hearings may
include sworn depositions, oral testimony, and written evidence.
Witnesses who testify at Board hearings may be required to do so
under oath if requested by either party.
Section 16. A majority vote of the Members of the Board (either four-member
or five-member board) is required to make a finding or a decision
with respect to any dispute properly before it, and such finding or
decision shall be final and binding upon the parties to such dispute.
Section 17. Decisions of the Board shall be rendered no later than thirty
(30) calendar days after the close of the hearing.
Section 18. The Board shall keep complete and accurate records of all papers
submitted to it and of all findings and decisions made. A
stenographic record of all Board hearings will be taken if mutually
requested by the parties and the cost will be equally shared. If only
one (1) party requests that a stenographic record be taken, the cost
shall be borne by the requesting party. If the other party
subsequently requests to be furnished a copy of the record, it will
be provided a copy at the same cost as if the parties had equally
shared the cost. Otherwise, the stenographic record shall be the
exclusive property of the party requesting such record.
Section 19. The Board may summon any witnesses employed by the Company who
are necessary for a proper resolution of the dispute. The number of
witnesses summoned at any one time shall not be greater than the
number that can be spared from the operation without interference to
the services of the Company. Witnesses who are employees of the
Company, whether summoned by the Company, the Union or the Board,
shall suffer no loss of pay.
Section 20. Within ten (10) calendar days after the four (4) Member Board
reaches a deadlock, either the Union or the Company may, by written
notice to the other, state its desire that the dispute be heard by a
five (5) Member Board. When it is necessary that a Neutral Member sit
with the Board, he shall be selected from the panel of neutrals set
forth herein.
Section 21. The Neutral Member shall not have authority to hear any case
except when sitting with the Company and Union Members, constituting
the five (5) Member Board.
Section 22. The Company and the Union shall by mutual agreement name seven
(7) neutrals as a panel of potential arbitrators.
Section 23. The selected neutral panel members shall serve until removed by
either or both of the parties. Both parties may remove a neutral at
any time by mutual
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agreement. Either party may remove a neutral
provided that the neutral shall have served at least one (1) year as
a member of the panel and shall have heard and decided at least one
(1) case. Once a neutral has been selected to hear a case, a single
party may not remove such neutral until such case has been heard and
decided. In the event a party determines to remove a neutral, that
party shall provide the other with thirty (30) calendar days notice
of same. In such event the parties shall immediately confer and by
mutual agreement name a replacement. If the parties are unable to
agree before the expiration of the thirty (30) calendar day period,
either party may request that the National Mediation Board provide a
panel of five (5) potential members, all of whom shall be members of
the National Academy of Arbitrators, and the replacement shall be
selected by the parties alternately striking names until only one (1)
remains.
Section 24. The neutral member shall be selected from the panel of seven (7)
arbitrators. The neutral shall be chosen by agreement of the Company
and Union or, if they do not agree, by alternatively striking names
from the panel until one remains. A coin toss shall determine who
strikes first from the panel of seven (7) arbitrators.
Section 25. As soon as possible after the selection of the Neutral Member,
the five (5) Member Board shall meet, hear and decide the case or
cases submitted to it. The date, time, and place for such hearing
shall be set by mutual agreement of the parties. Should the parties
be unable to agree upon a date, time or place, the Neutral shall set
the same.
Section 26. The Chairman and Vice Chairman, acting jointly, shall have the
authority to incur reasonable expenses as in their judgment may be
deemed necessary for the proper conduct of the business of the Board.
These expenses shall be borne one-half (1/2) by each of the parties.
Section 27. The Company and the Union will assume the travel expense and
other related expenses of the Board Members selected by them, and of
the witnesses called by them. Expenses for witnesses called by the
Board shall be borne one-half (1/2) by each of the parties.
Section 28. The expenses and reasonable compensation of the Neutral selected
as provided herein shall be borne equally by the Company and the
Union.
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Section 29. GENERAL
a. The time limits set forth in Articles 32 and 33 may be extended
in writing by mutual agreement of the Company and the Union.
b. The Union and the Company may, by mutual agreement in writing,
elect to bypass any or all of the steps in this Section and
proceed directly to the five (5) Member Board.
c. Probationary Pilots shall be subject to discharge at any time
without cause.
d. Compliance with all time limits under this Article shall be
determined by the date of mailing, as established by postmark or
by date of hand delivery, as established by the initialed copy.
e. The parties understand and agree that each and every Board member
shall be free to discharge his duty in an independent manner,
without fear that his individual relations with the Company,
Union or other Pilots may be affected in any manner by any action
taken by him in good faith in his capacity as a Board member.
f. Except as expressly provided otherwise, this Article shall not be
construed to limit, restrict or abridge the rights or privileges
accorded to the Company, the Pilots, or its and their duly
accredited representatives under the provisions of the Railway
Labor Act, as amended.
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ARTICLE 34
NO STRIKE/NO LOCKOUT
Section 1. During the term of this Agreement, it is understood and agreed
that the Company will not lock out any employee covered hereby, and
the Union will not authorize or take part in any strike or picketing
of the Company premises. Any Pilot engaging in such activity may be
subject to discipline up to and including discharge.
Section 2. It shall not be a violation of this Agreement for a Pilot to
refuse to cross a customer's picket line, provided that in cases
where a customer's place of business is being picketed and separate
gates are being provided for ingress and egress for persons not
involved with the primary labor disputes, Pilots will be required to
perform their normal duties at the customer's place of business.
Section 3. In situations where one of the Company's customers is being
picketed, and if the Company knows about the picket in advance, the
Company will notify the Pilot about the picket line before
dispatching a Pilot to that customer. Pilots who refuse to take an
assignment to cross a picket line because of safety concerns will not
be penalized. When no one is willing to cross a picket line, the
Company will be permitted to service its customers the best way
possible.
Section 4. The Company will not require Pilots to transport replacement
workers involved in any labor dispute.
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ARTICLE 35
UNION REPRESENTATION
Section 1. Upon reasonable advance notification to appropriate management
personnel, the Company agrees to admit to its stations and bases
officially designated representatives of the Union to transact
business as is necessary for the administration of the Agreement.
Such business shall be transacted in as short a time as possible and
shall not interfere with the operations of the Company. The Union
representative may be escorted by a management representative while
on Company property; in the alternative, the Company may make a
private meeting space available to the Union representative for any
Union visit.
Section 2. The Union may select elected or appointed representatives and
shall notify the Company designee, from time to time of their
appointment or removal. The Company designee shall notify the Union
of the appropriate Company representative hereunder.
Section 3. The Union shall elect or appoint Pilots to be primary job
steward(s) and alternate(s) to conduct Union business and shall
notify the Company in writing of their election, appointment or
removal.
Section 4. a. A primary or alternate steward shall be permitted
reasonable time to investigate, present and process grievances
within the scope of said steward's station or base on the
Company property without loss of pay during his/her regular
working hours.
b. A primary or alternate steward shall be permitted to present
grievances to management and attempt to resolve any alleged
grievance.
c. A primary or alternate steward shall be granted the right to
consult with Pilots under their jurisdiction for the purpose of
enforcing the provisions of this Agreement.
d. Time spent in handling grievances during the steward's regular
working hours shall be considered hours worked for all purposes.
e. The provisions of Section 4 above shall not result
in any Workovers nor cause any adverse impact on the
Company's operation. In addition, a Pilot, while
serving as a primary or alternate steward shall
remain available to assist the Base Manager with
Pilot-related tasks, if requested. This paragraph
shall not be used to keep a steward from performing
his union work when he otherwise would not be needed
by the Company.
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Section 5. Upon forty-eight (48) hours notification by the Union President,
the Company will grant a Pilot(s) unpaid time off to perform Union
business off the Company premises. In the event the Union business
shall require an absence from work in excess of one (1) week, a Union
leave of absence will be granted in accordance with Article 11. The
Union will cooperate with the Company to minimize any negative impact
on operations as a result of this Section (i.e., scheduling
meetings/union-sponsored training on Pilot's days off, limiting the
number of Pilots who can have union time off).
Section 6. The Company will notify the Union in writing of the names and hire
dates of all newly hired Pilots and transfers. Such notification will
be transmitted during the Pilot's first week on the payroll. Upon
notification from the Union, the appropriate Company manager will
allow a Union representative who is an employee of the Company access
to new hire Pilots to provide Union orientation for thirty (30)
minutes before or after the Company's new hire orientation.
Section 7. Stewards who serve their fellow Pilots at any Company station or
base shall be considered Union Representatives.
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ARTICLE 36
UNION SECURITY
Section 1. Each Pilot covered by this agreement shall become a member of the
Union within sixty (60) days after the effective date of this
Agreement, and shall be required as a condition of continued
employment by the Company to maintain his/her membership in the Union
so long as this Agreement remains in effect, to the extent of paying
an initiation (or re-initiation) fee, monthly membership dues and
assessments, which are uniformly required of Pilots covered by this
Agreement. Such Pilot shall have his/her monthly membership dues
deducted from his/her earnings by payroll deduction.
Section 2. Any Pilot hired into a classification covered by this Agreement on
or after the effective date of this Agreement shall become a member
of the Union within sixty (60) days after employment and shall be
required as a condition of continued employment by the Company to
maintain his membership in the Union so long as this Agreement
remains in effect, to the extent of paying the uniformly required
initiation (or re-initiation) fee, monthly membership dues and
assessments.
Section 3. Any Pilot maintaining or accruing seniority in a classification
covered by this Agreement (except as provided in Section 6) but not
employed in such classification, or any other classification covered
by this Agreement, shall not be required to maintain Union membership
during such employment but may do so at his/her option.
Should a Pilot return to a classification covered by this Agreement,
s/he shall be required to become a member of the Union within fifteen
(15) days after the date s/he returns to such classifications, and
shall, as a condition of employment in classification covered by this
Agreement, become a member of the Union and maintain membership in
the Union so long as this Agreement remains in effect to the extent
of paying an initiation (or re-initiation) fee, monthly membership
dues and assessments.
Section 4. The provisions of this Agreement shall not apply to any Pilot
covered by this Agreement to whom membership in this Union is not
available by payment of initiation (or re-initiation) fees, if
applicable, monthly dues and assessments under the same terms and
conditions as uniformly applicable to any other Pilot, or to any
other Pilot to whom membership in the Union is denied or terminated
for any reason other than the failure of the employee to pay
uniformly levied initiation (or re-initiation) fees, if applicable,
monthly dues and assessments. Nothing in this Agreement shall require
the payment of any initiation (or re-
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initiation) fee, by a Pilot if an authorized or permissible transfer
according to the Bylaws and Constitution is involved.
Section 5. If a Pilot covered by this Agreement has resigned from the Company
and is re-employed, s/he shall be governed by Section 2 of this
Article.
a. If a Pilot is laid off and is recalled from layoff s/he shall be
governed by Section 3 of this Article.
b. The seniority status and rights of Pilots granted leaves of
absence to serve in the armed forces shall not be terminated by
reason of any of the provisions of this Article but such Pilot
shall, upon resumption of employment in classification covered
by this Agreement be governed by the provisions of Section 3,
Paragraph 2 of this Article.
Section 6. The payment of dues by a member shall not be required as a
condition of employment during leave of absence without pay or during
periods of transfer or promotions to a classification not covered by
this Agreement.
Section 7. When a Pilot does not become a member of the Union by payment of
initiation (or re-initiation) fee as provided in this Article, or is
a member of the Union and becomes delinquent in the payment of
monthly dues or assessments, as provided in this paragraph, the
following procedure shall apply:
a. If a new hire Pilot has not become a member of the
Union within sixty (60) days after employment with
the Company, the Union shall notify such Pilot in
writing, certified mail, return receipt requested,
copy to the Company designee, that such Pilot must
become a member of the Union within the time limits
specified in Section 2 of this Article or be subject
to discharge as Pilot of the Company. If, upon
expiration of the period of time specified in
Section 2 of this Article, such new Pilot has not
become a member of the Union, the Union shall
certify in writing to the Company designee, copy to
the Pilot, that the Pilot has failed to become a
member of the Union as provided in this Article, and
is, therefore, to be discharged. The Company shall
then promptly notify the Pilot involved that s/he is
to be discharged from the services of the Company
and shall promptly take proper steps to so discharge
the Pilot.
1. If a Pilot, other than a new hire Pilot, who is required to become
a member of the Union as provided in this Article does not become a
member of the Union within the time limits specified in this Article
for Pilots covered by this Agreement, the Union shall notify the
Company designee with a copy to the Pilot, that the Pilot has failed
to become a member of the Union as required by this Article and is,
therefore, to be discharged. The Company shall then
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promptly notify the Pilot involved that s/he is to be discharged from
the service of the Company and shall promptly take proper steps to
discharge said Pilot.
b. If a Pilot covered by this Agreement becomes
delinquent by more than two (2) calendar months in
the payment of monthly dues including assessments,
the Union shall notify the Pilot, in writing,
certified mail, return receipt requested, copy to
the Company designee that said Pilot is delinquent
in the payment of monthly membership dues as
specified herein and, accordingly, will be subject
to discharge as a Pilot of the Company. Such letter
shall also notify the Pilot that s/he must remit
the required payment to the Secretary-Treasurer of
his/her Local Union by the twenty-second (22) day
of he month in which notice from the Union was
received or be subject to discharge. If such Pilot
still remains delinquent in the payment of dues on
the twenty-second (22 nd) day of the month in which
his/her notice from the Union was received, the
Union shall notify in writing the Company designee,
with a copy to the Pilot, that the Pilot has failed
to remit payment of the dues within the grace
period allowed herein and is, therefore, to be
discharged. The Company shall then promptly notify
the Pilot involved that s/he is to be discharged
from the service of the Company, and shall promptly
take the proper steps to so discharge the Pilot.
c. A Pilot discharged by the Company under the provisions of this
paragraph shall be deemed to have been discharged for cause.
Section 8. Any discharge under the terms of this Article shall be based
solely upon failure of the Pilot to pay or tender initiation (or
re-initiation) fee, membership dues and assessments upon the same
terms and conditions as are generally applicable to any other member
of the Union, within the time limits specified herein, and not
because of denial or termination of membership in the Union for any
other reason.
Section 9. A grievance by a Pilot who is to be discharged as a result of an
interpretation or application of the provisions of this Article shall
be subject to the following procedures:
a. A Pilot who believes the provisions of this Article
pertaining to him/her have not been properly
interpreted or applied, and who desires a review
must submit his/her request for review in writing
within five (5) business days from the date of
his/her notification by the Company as provided in
Section 7, subsection (a) 1 and 2 of this Article.
The request will be submitted to the Company
designee, with a copy to the Union. The Union may be
present at the review of the grievance to represent
the Union's interest in the case. The Company
designee will review the
71
<PAGE>
grievance and render a decision in writing with
a copy to the Union no later than ten (10)
business days following the receipt of the grievance.
b. If the decision is not satisfactory to the Union,
then it may appeal the decision through the
grievance procedure. If the decision is not
satisfactory to the Pilot, then he/she may appeal
the decision within ten (10) days from the date of
receipt directly to a neutral referee who must be
agreed upon by the Pilot and the Union within (10)
days thereafter.
c. In the event the parties fail to agree upon a neutral referee
within the specified period, either the Pilot or the union may
request the National Mediation Board to name such neutral
referee.
d.The decision of the neutral referee shall be binding on all parties
to the dispute. The fees and charges of such neutral shall be borne
equally by the Pilot and the union.
e.During the period a grievance is being handled under the provisions
of this section and until after the decision by the Company
designee or after final decision by the neutral referee, the Pilot
shall not be discharged from the Company because of noncompliance
with the terms and provisions of this Article.
Section 10. No Pilot(s) covered by this Agreement or Pilot whose employment
is terminated pursuant to the provisions of this Article or the Union
shall have any claim for loss of time, wages or any other damages
against the Company because of agreeing to this Article or because of
any alleged violation, misapplications, compliance or noncompliance
with any provision of this Article. The Union agrees to hold the
Company harmless and to indemnify the Company against any suits,
claims, liabilities, and reasonable and customary attorneys' fees
which arise out of or by reason of any action taken by the Company
pursuant to a written demand by an authorized union representative
under the terms of this Article.
Section 11. During the life of this Agreement, the Company agrees that upon
receipt of a properly executed Authorization of Payroll Deduction,
voluntarily executed by a Pilot, it will make a single monthly
deduction from the Pilot's earnings, after other deductions
authorized by the Pilot or required by law have been made, to cover
his/her current standard monthly Union dues, assessments and/or
initiation fees uniformly levied in accordance with the Constitution
and Bylaws of the Union, as set forth in the Railway Labor Act, as
amended.
.
Section 12. The Company will deduct said Pilot's dues in the month in which
the Pilot is recalled from furlough or returns from a leave of
absence. In the event the Pilot
72
<PAGE>
is recalled from furlough or returns
from a leave of absence after the dues have been deducted for a
month, the Company will make a double deduction in the following
month. The Company will pay over to the designated official of the
Union the wages withheld for such initiation fees and dues. The
amount withheld shall be reported and paid to the Union within ten
(10) business days from when deductions were made.
Section 13. Any authorizations from payroll deductions under this Article
shall be effective one (1) week following its receipt by the Company
Payroll Department and shall apply to the next paycheck from which
dues deduction is made.
Section 14. The Company remittance to the Union will be accompanied by lists
of names and Pilot numbers of the Pilots for whom the deductions have
been made in that particular period and the individual amounts
deducted.
Section 15. Collection of dues not deducted because of insufficient current
earnings, dues missed because of clerical error, or inadvertent error
in the accounting procedure, dues missed due to delay in receipt of
the Authorization for Payroll Deductions shall be the responsibility
of the Union and shall not be the subject of payroll deductions from
subsequent pay checks, and the Company shall not be responsible in
any way for such missed collections. It shall be the Union's
responsibility to verify apparent errors with the individual Union
member or Pilot prior to contacting the Company Human Resources
Department. The total or balance of unpaid dues, assessments and/or
initiation fees due and owing the Union at the time a Pilot
terminates his/her employment shall be deducted from the final
paycheck in accordance with applicable law.
Section 16. In the event the amount of the standard dues or fees uniformly
levied are changed, it shall be the sole responsibility of the Union
to notify the Company and to make any necessary adjustments as to the
amounts to be deducted from the Pilot's earnings. So far as the
Company is concerned, any such changes shall be made in accordance
with the time limits set forth in Section 13 of this Article.
Section 17. An Authorization for Payroll Deduction under this Article, once
voluntarily executed and delivered to the Payroll Department of the
Company, shall be irrevocable during the effectiveness of the
Agreement, or as long as the Union is the certified representative of
Pilots covered by this Agreement, or for a period of one (1) year,
whichever is the lesser, and shall renew itself for successive yearly
or applicable periods thereafter unless the Pilot serves written
notice by registered mail on the Payroll Department of the Company
and the Union to revoke such Authorization for Payroll Deduction
during the ten (10) days preceding any periodic renewal date. Subject
to Section 15 above, an Authorization for Payroll Deduction shall
automatically be revoked if:
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a. The Pilot transfers to a position with the Company not covered by
this Agreement.
b. The Pilot's services with the Company are terminated;
c. The Pilot is furloughed; or
d. The Pilot is on an authorized leave of absence.
Section 18. The Authorization for Payroll Deduction to be voluntarily executed
shall be signed by the Pilot. It shall stipulate the following language:
"I, (name of Pilot) do hereby authorize and direct my Employer, (circle
one) Air Logistics L.L.C. Air Logistics of Alaska, to deduct from my wages
for remittance to the authorized official or affiliate of the Office and
Professional Employees International Union, Local 107, periodic dues,
initiation fees, and/or assessments uniformly required as a condition of
acquiring or maintaining membership in accordance with the provisions of
the Union Shop Agreement between my Employer and the Union. I further
authorize and direct my Employer to deduct from my wages for remittance, as
set forth above, the total or balance of unpaid dues, assessments and/or
initiation fees due and owing the Union at the time my employment with the
above named Employer ends."
"This authorization shall not include fines and penalties. I agree that
this authorization shall be irrevocable for one (1) year from the date
hereof or until termination of the Union Shop Agreement between my Employer
and the Union, whichever occurs first. If the Union Shop Agreement is
terminated, this authorization may be revoked effective as of any
anniversary date of the signing hereof, by written notice given by me to my
Employer and the Union by registered mail, during the ten (10) days
preceding any such anniversary. All amounts to be deducted from my wages
will commence with the first regular dues deduction paycheck following
receipt by my Employer of this notice."
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<PAGE>
ARTICLE 37
SAVINGS CLAUSE
Section 1. Should any part of this Agreement be rendered or declared invalid
by reason of any existing or subsequently enacted legislation, act of
government agency, or by any decree of a court of competent
jurisdiction, such invalidation of such part or portion of this
Agreement shall not invalidate the remaining portions hereof, and
they shall remain in full force and effect.
Section 2. In the event that any provisions of this Agreement are in conflict
with or are rendered inoperative or unlawful by virtue of any duly
enacted law or regulation or any governmental agency or commission
having jurisdiction over the Company, the Union and Company will meet
and attempt to negotiate changes necessary, pertaining only to those
provisions so affected or directly related thereto.
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<PAGE>
ARTICLE 38
DURATION
The Agreement shall become effective on May 18, 1999 and shall remain in full
force and effective through May 18, 2003 and shall renew itself without change
each succeeding May 18th thereafter unless written notice of intended change is
served in accordance with Section 6, Title I of the Railway Labor Act, as
amended, by either party hereto at least sixty (60) days prior to May 18, 2003,
or any May 18th thereafter.
In witness whereof, the parties hereto have signed this Agreement on this ____
day of ____________, ______.
FOR OFFICE AND PROFESSIONAL FOR OFFSHORE LOGISTICS, INC.:
EMPLOYEES INTERNATIONAL
UNION, AFL-CIO:
/s/ Michael Goodwin /s/ George M. Small
- ------------------------------------ ------------------------------------
Michael Goodwin, President, OPEIU George M. Small, President
NEGOTIATING COMMITTEE: WITNESSES:
/s/ James J. Morgan /s/ Drury A. Milke
- ------------------------------------ ------------------------------------
James J. Morgan Dru Milke
President, OPEIU/Local 107 Chief Financial Officer
/s/ Pete Catalano /s/ Neill Osborne
- ------------------------------------ ------------------------------------
Pete Catalano Neill Osborne
Secretary-Treasurer, OPEIU/Local 107 Vice President - Aviation Services
/s/ Rickey LeBlanc /s/ Ricardo Fira
- ------------------------------------ ------------------------------------
Rickey LeBlanc, Trustee, Local 107 Ricardo Fira
Director - Human Resources
/s/ Kenneth E. Bruner /s/ Stephen T. Viljoen
- ------------------------------------ ------------------------------------
Ken Bruner Steve Viljoen
Director - Operations
/s/ Herbert G. Graddy /s/ Richard A. Dunkin
- ------------------------------------ ------------------------------------
Herb Graddy Richard A. Dunkin
Director of Finance & Administration
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<PAGE>
APPENDIX "A"
AIR LOGISTICS, L.L.C. - PILOT PAY SCALES
VFR - Single and Small
Twin
- ---------------------------
<TABLE>
<CAPTION>
Years of May 18, September 18, December 18, December 18, June 18,
Service 1999 * 2000 * 2001 * 2002 * 2003 *
- ---------- -------- ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
0- 1 $ 34,200 $ 35,226 $ 36,283 $ 37,371 $ 38,119
1- 2 34,200 35,226 36,283 37,371 38,119
2- 3 34,200 35,226 36,283 37,371 38,119
3- 4 34,200 35,226 36,283 37,371 38,119
4- 5 36,730 37,832 38,967 40,136 40,939
5- 6 39,622 40,811 42,035 43,296 44,162
6- 7 41,962 43,221 44,517 45,853 46,770
7- 8 43,747 47,804 48,760 45,059 46,411
8- 9 45,384 46,746 48,148 49,592 50,584
9-10 45,384 46,746 48,148 49,592 50,584
10-11 45,500 46,865 48,271 49,719 50,713
11-12 45,500 46,865 48,271 49,719 50,713
12-13 45,500 46,865 48,271 49,719 50,713
13-14 45,500 46,865 48,271 49,719 50,713
14-15 45,500 46,865 48,271 49,719 50,713
15-16 45,500 46,865 48,271 49,719 50,713
16-17 46,500 47,895 49,332 50,812 51,828
17-18 46,500 47,895 49,332 50,812 51,828
18-19 46,500 47,895 49,332 50,812 51,828
19-20 46,500 47,895 49,332 50,812 51,828
20-21 46,500 47,895 49,332 50,812 51,828
21-22 46,500 47,895 49,332 50,812 51,828
22-23 46,500 47,895 49,332 50,812 51,828
23-24 46,500 47,895 49,332 50,812 51,828
24-25 46,500 47,895 49,332 50,812 51,828
25-26 46,500 47,895 49,332 50,812 51,828
26-27 46,500 47,895 49,332 50,812 51,828
27-28 46,500 47,895 49,332 50,812 51,828
28-29 46,500 47,895 49,332 50,812 51,828
29-30 46,500 47,895 49,332 50,812 51,828
30+ 46,500 47,895 49,332 50,812 51,828
</TABLE>
Pilots on 4&3 and 5&2 (non-standard) schedules shall be paid the above base
salary plus the following percentages of base pay: 4&3: 25.00%; 5&2: 45.00%.
* Increases will become effective on the first pay period following these dates.
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<PAGE>
IFR-SIC
- -----------
<TABLE>
<CAPTION>
Years of May 18, September 18, December 18, December 18, June 18,
Service 1999 * 2000 * 2001 * 2002 * 2003 *
- ----------- -------- ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
0- 1 $ 35,986 $ 37,066 $ 38,178 $ 39,323 $ 40,109
1- 2 35,986 37,066 38,178 39,323 40,109
2- 3 35,986 37,066 38,178 39,323 40,109
3- 4 35,986 37,066 38,178 39,323 40,109
4- 5 38,730 39,892 41,089 42,321 43,168
5- 6 41,415 42,657 43,937 45,255 46,160
6- 7 42,408 43,680 44,991 46,340 47,267
7- 8 44,268 48,373 49,340 45,596 46,964
8- 9 46,054 47,436 48,859 50,324 51,331
9-10 47,170 48,585 50,043 51,544 52,575
10-11 48,286 49,735 51,227 52,763 53,819
11-12 49,402 50,884 52,411 53,983 55,063
12-13 49,402 50,884 52,411 53,983 55,063
13-14 49,402 50,884 52,411 53,983 55,063
14-15 49,402 50,884 52,411 53,983 55,063
15-16 50,500 52,015 53,575 55,183 56,286
16-17 51,000 52,530 54,106 55,729 56,844
17-18 51,000 52,530 54,106 55,729 56,844
18-19 51,000 52,530 54,106 55,729 56,844
19-20 51,000 52,530 54,106 55,729 56,844
20-21 51,000 52,530 54,106 55,729 56,844
21-22 51,000 52,530 54,106 55,729 56,844
22-23 51,000 52,530 54,106 55,729 56,844
23-24 51,000 52,530 54,106 55,729 56,844
24-25 51,000 52,530 54,106 55,729 56,844
25-26 51,000 52,530 54,106 55,729 56,844
26-27 51,000 52,530 54,106 55,729 56,844
27-28 51,000 52,530 54,106 55,729 56,844
28-29 51,000 52,530 54,106 55,729 56,844
29-30 51,000 52,530 54,106 55,729 56,844
30+ 51,000 52,530 54,106 55,729 56,844
</TABLE>
Pilots on 4&3 and 5&2 (non-standard) schedules shall be paid the above base
salary plus the following percentages of base pay: 4&3: 25.00%; 5&2: 45.00%.
* Increases will become effective on the first pay period following these dates.
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<PAGE>
IFR-PIC
- -----------
<TABLE>
<CAPTION>
Years of May 18, September 18, December 18, December 18, June 18,
Service 1999 * 2000 * 2001 * 2002 * 2003 *
- ----------- -------- ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
0- 1 $ 41,738 $ 42,990 $ 44,280 $ 45,608 $ 46,520
1- 2 41,738 42,990 44,280 45,608 46,520
2- 3 41,738 42,990 44,280 45,608 46,520
3- 4 41,738 42,990 44,280 45,608 46,520
4- 5 42,408 43,680 44,991 46,340 47,267
5- 6 44,194 45,520 46,885 48,292 49,258
6- 7 45,086 46,439 47,832 49,267 50,252
7- 8 46,426 47,819 49,253 50,731 51,746
8- 9 48,732 50,194 51,700 53,251 54,316
9-10 49,848 51,343 52,884 54,470 55,560
10-11 50,964 52,493 54,068 55,690 56,804
11-12 52,824 54,409 56,041 57,722 58,877
12-13 54,312 55,941 57,620 59,348 60,535
13-14 56,544 58,240 59,988 61,787 63,023
14-15 58,032 59,773 61,566 63,413 64,681
15-16 59,148 60,922 62,750 64,633 65,925
16-17 59,500 61,285 63,124 65,017 66,318
17-18 59,500 61,285 63,124 65,017 66,318
18-19 59,500 61,285 63,124 65,017 66,318
19-20 59,500 61,285 63,124 65,017 66,318
20-21 59,500 61,285 63,124 65,017 66,318
21-22 60,264 62,072 63,934 65,852 67,169
22-23 60,264 62,072 63,934 65,852 67,169
23-24 60,264 62,072 63,934 65,852 67,169
24-25 60,264 62,072 63,934 65,852 67,169
25-26 60,264 62,072 63,934 65,852 67,169
26-27 60,500 62,315 64,184 66,110 67,432
27-28 60,500 62,315 64,184 66,110 67,432
28-29 60,500 62,315 64,184 66,110 67,432
29-30 60,500 62,315 64,184 66,110 67,432
30+ 60,500 62,315 64,184 66,110 67,432
</TABLE>
Pilots on 4&3 and 5&2 (non-standard) schedules shall be paid the above base
salary plus the following percentages of base pay: 4&3: 25.00%; 5&2: 45.00%.
* Increases will become effective on the first pay period following these dates.
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Letter of Understanding #1 Re: Fixed Wing Pilots
Mr. Jim Morgan
President, Local 107
303 Elm St.
Covington, TN 38019
Dear Jim:
This letter will confirm our understanding that the Pilot(s) employed by
Offshore Logistics, Inc. operating fixed wing aircraft under FAR Part 91 will
not be covered by the collective bargaining agreement between Offshore
Logistics, Inc. and OPEIU.
If such Pilot(s) performs work operating helicopters in the service of
Offshore Logistics, Inc. under FAR Part 135, he will be subject to the terms and
conditions of the contract.
Please sign in the space provided below acknowledging your understanding
of this letter.
Sincerely,
/s/ Neill Osborne
--------------------------------
Neill Osborne
Vice-President-Aviation Services
/s/ James J. Morgan
- --------------------------------
Mr. James Morgan
President, Local 107
Office and Professional Employee
International Union, AFL-CIO
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<PAGE>
Letter of Understanding #2 Re: Effective Date for Paid Days Off
Mr. Jim Morgan
President, Local 107
303 Elm St.
Covington, TN 38019
Dear Jim:
This will confirm our understanding that the provisions of Article 12,
Paid Days Off will become effective on January 1, 2000.
The Company's current policies related to sick leave, holiday and vacation
accruals will remain in place through December 31, 1999, and unused sick leave
and vacation accruals as of December 31, 1999 shall be placed in the Sick and
Unscheduled Time Off (SUTO) Bank as of January 1, 2000.
Please sign below if you concur with this understanding.
Sincerely,
/s/ Neill Osborne
-----------------------------
Neill Osborne
Vice President - Aviation Services
/s/ James J. Morgan
- ------------------------------
Mr. James Morgan
President, Local 107
Office and Professional Employee
International Union, AFL-CIO
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<PAGE>
Letter of Understanding #3 Re: IFR Cadre
Mr. Jim Morgan
President, Local 107
303 Elm St.
Covington, TN 38019
Dear Jim:
The parties agree to meet within thirty (30) days after the date of
signing of the Agreement to discuss the possibility of developing an IFR Cadre.
An IFR Cadre would insure that the most senior, qualified Pilots retain
IFR slots, would promote professionalism and maintain skill levels and regency
of experience, and would insure that the Company would be able to maintain a
core group of IFR PICs and SICs.
Please sign below if you concur with this understanding.
Sincerely,
/s/ Neill Osborne
--------------------------------
Neill Osborne
Vice President-Aviation Services
/s/ James J. Mogan
- ---------------------------------
Mr. James Morgan
President, Local 107
Office and Professional Employee
International Union, AFL-CIO
.
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<PAGE>
Letter of Understanding #4 Re: Pilots Hired With Prior Experience
Mr. Jim Morgan
President, Local 107
303 Elm St.
Covington, TN 38019
Dear Jim:
The parties agree that a Pilot who has been hired at a step on the pay
scale based on his experience shall be frozen at his pay rate until his
longevity with the Company exceeds his step on the pay scale. For example, a
Pilot hired at the fifth (5th) year rate will remain frozen at the fifth year
rate until he begins his sixth (6th) year of longevity with the Company.
Please sign below if you concur with this understanding.
Sincerely,
/s/ Neill Osborne
---------------------------
Neill Osborne
Vice-President-Aviation Services
/s/ James J. Morgan
- ---------------------------
Mr. James Morgan
President, Local 107
Office and Professional Employee
International Union, AFL-CIO
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<PAGE>
Letter of Understanding #5: Implementation Schedule
Mr. Jim Morgan
President, Local 107
303 Elm St.
Covington, TN 38019
Dear Jim:
The following contract items will be implemented along the following
guidelines:
1. Article 8 - Job Posting and Bidding.
The new bidding and posting system as described in Article 8 will be
implemented within ninety (90) days from the date of ratification.
2. Article 18 - Facilities, Equipment and Uniforms Based on commitments made
by the vendor, new Switlik vest PFDs are expected to arrive within eight
(8) weeks from the ratification date. Should there be a delay beyond that
date due to circumstances beyond the control of the company (i.e., vendor
problems with manufacturing and/or shipping), we will inform you as soon
as the Company is aware of any delay.
3. Article 21 - Base Pay
New pay rates will be implemented on the first pay period following
ratification. That date is May 24.
4. Article 24 - Workover
The new workover system described in Article 24 will be implemented within
ninety (90) days from the date of ratification.
5. Article 27 - Insurance
In order to get open enrollment accomplished properly, the implementation
date for the insurance article will be August 1, 1999.
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<PAGE>
Sincerely,
/s/ Neill Osborne
--------------------------------
Neill Osborne
Vice-President-Aviation Services
/s/ James J. Morgan
- -----------------------------
Mr. James Morgan
President, Local 107
Office and Professional Employee
International Union, AFL-CIO
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<PAGE>
LETTER OF AGREEMENT #6
Between
OFFSHORE LOGISTICS, INC.
And
OFFICE AND PROFESSIONAL EMPLOYEES
INTERNATIONAL UNION, AFL-CIO
In the service of
AIR LOGISTICS OF ALASKA, INC.
As represented by
- ---------------------------------------------------------------------
LOCAL 107/OPEIU
This Letter of Agreement is made and entered into in accordance with the
provisions of the Railway Labor Act, as amended, by and between Offshore
Logistics, Inc. (hereinafter referred to as the "Company"), and the Office and
Professional Employees International Union, AFL-CIO, in the service of Air
Logistics of Alaska, Inc., as represented by Local 107, OPEIU (hereinafter
referred to as the "Union").
CONTRACT TERMS APPLICABLE TO PILOTS OF AIR LOGISTICS OF ALASKA, INC.
It is agreed and understood by the Union that the Air Logistics of Alaska, Inc.
operation is unique and different from the Air Logistics L.L.C. Gulf of Mexico
operation, and that terms and conditions of employment negotiated by OPEIU on
behalf of Pilots operating in the Gulf of Mexico do not have the same
applicability to the Alaskan operation. Therefore, the parties mutually agree
and understand that the following provisions of the contract between the Company
and the Union will be amended as follows:
ARTICLE 1 - STATEMENT OF PURPOSE:
Applicable to both Gulf Coast and Alaskan operations.
ARTICLE 2 - RECOGNITION AND REPRESENTATION:
Sections 1, 2, 5, 6 and 7 are applicable to both Gulf Coast and
Alaskan operations.
Section 3 will be amended to read as follows:
This Agreement covers all revenue and all known and recurring miscellaneous
flying performed by the Company with Pilots on its payroll. All flying covered
by this Agreement shall be performed by Pilots whose names appear on the Air
Logistics, L.L.C. and Air Logistics
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<PAGE>
of Alaska, Inc. Pilot's Seniority List,
except when Air Logistics of Alaska, Inc. Management and Seasonal Pilots are
needed to perform flying services as a result of operational and/or economic
requirements of the Company.
Section 4 will be amended to read as follows:
Pilots covered by this Agreement shall be governed by all reasonable Company
rules, regulations and orders previously or hereafter issued by proper
authorities of the Company. Terms and conditions of Air Logistics of Alaska,
Inc. employment may differ from those found in the basic contract between the
Company and the Union as a result of the operational needs of Air Logistics of
Alaska, Inc.
ARTICLE 3 - STATUS OF AGREEMENT:
Applicable to both Gulf Coast and Alaskan operations.
ARTICLE 4 - PILOT STATUS:
Applicable to both Gulf Coast and Alaskan operations.
ARTICLE 5 - SENIORITY:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 6 - SENIORITY ROSTER:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies. A copy of the Air
Logistics of Alaska, Inc. seniority roster will be provided to the
Union on a quarterly basis.
ARTICLE 7 - REDUCTIONS IN FORCE:
Applicable only to Gulf Coast operation. Based on the unique nature of the
Alaskan operation, Air Logistics of Alaska, Inc. will continue with existing
policies.
ARTICLE 8 - JOB POSTING AND BIDDING:
This Article will be amended for the Alaska operation as follows:
I. PERMANENT VACANCIES
Section 1. Pilots working in the Alaska operation shall not be displaced by
either active or furloughed Pilots working in the Gulf of Mexico
operation. Pilots working in the Gulf of Mexico operation will not be
displaced by either active or furloughed Pilots working in the
Alaskan operation.
Section 2. When a job or crew position becomes available on a full-time
basis, or when a new job or crew position is created that differs
from those positions described in the Temporary/Seasonal Vacancies
Section of this Article, the vacancy will be posted for review by
Pilots working in Alaska and the Gulf of Mexico. Priority
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<PAGE>
for filling of all vacancies in the Alaskan operation will be given
to Pilots employed by Air Logistics of Alaska, Inc. If the position
remains unfilled, the Company may fill the position from outside the
Company. Postings will include job qualifications and prerequisites
for the position.
a. Positions will be posted for seven (7) days in Alaska and the
Gulf of Mexico.
b. The Company will make the awards within five (5) calendar days
after the bidding has closed, not including Saturdays, Sundays,
and holidays.
c. The senior qualified Pilot within Alaska shall be awarded the
job. If no Alaskan Pilots is awarded the position, then the
senior qualified Pilot in the Gulf of Mexico will be awarded the
job. For the purpose of this Article, a qualified Pilot will be
determined by Air Logistics of Alaska, Inc. and customer
requirements.
d. A pilot responding to more than one (1) vacancy shall indicate
his order of preference on the bid and shall be awarded his
first preference, assuming he is qualified for the position.
e. In the event no bid is received from a qualified Pilot and pool
Pilot(s) exist, such vacancies will be filled by the pool Pilots
in reverse seniority order.
Section 3. The same rules outlined above related to permanent vacancies in
Alaska will also apply to permanent vacancies in the Gulf of Mexico
operations.
II. TEMPORARY OR SEASONAL VACANCIES
Section 1. Temporary vacancies are positions created to fill operational
needs for ninety (90) consecutive days or less. Seasonal vacancies
are positions created to fill the operational needs of summer flying.
Section 2. Pilots flying in the Gulf operation are eligible to work in
temporary or seasonal positions subject to the following provisions:
a. All current Air Logistics of Alaska, Inc. Pilots who work only
on temporary or seasonal jobs as of the date of signing of this
Agreement will be "grandfathered" for the purpose of filling
these summer or temporary jobs.
b. Once a grandfathered Pilot declines a temporary or seasonal job,
the position will be offered to a Gulf Coast Pilot subject to
the following conditions:
88
<PAGE>
1. The successful completion of a flight check with
and an evaluation by the Chief Pilot of the
Alaskan operation;
2.The Pilot must meet all the qualification requirements set
forth by Air Logistics of Alaska, Inc. and the customer.
3.The Pilot is responsible for his own travel to and from
Alaska. There will be no travel or mileage pay provided to the
Pilot for travel. In the event a Gulf of Mexico Pilot is
involuntarily assigned to Alaska, the Company shall pay for
his travel expenses to Alaska.
4.The Pilot will be paid in accordance with the Alaska pay
scale and will be subject to all terms and conditions of
employment of Air Logistics of Alaska, Inc.
Section 3. The same rules outlined above related to temporary or seasonal
vacancies in Alaska will also apply to temporary or seasonal
vacancies in the Gulf of Mexico operations.
ARTICLE 9 - CATEGORIES OF AIRCRAFT:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 10 - SCHEDULES OF SERVICE:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 11 - LEAVE OF ABSENCE:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies, with the exception of
the Union Leave of Absence section of this Article.
ARTICLE 12 - PAID DAYS OFF AND BANKED DAYS:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 13 - ON-THE-JOB INJURY LEAVE:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 14 - BEREAVEMENT LEAVE:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
89
<PAGE>
ARTICLE 15 - JURY DUTY:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 16 - FEES AND PHYSICAL EXAMINATIONS:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 17 - TRAINING:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 18 - FACILITIES, EQUIPMENT AND UNIFORMS:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 19 - SEVERANCE PAY:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 20 - MOVING EXPENSE:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 21 - BASE PAY:
Base pay for Pilots in the Alaskan operation will be as follows:
Co-Pilot: $2,160 per month
Captain: $2,790 - $3,370 per month
Alyeska: $2,000 - $3,520 per month
Future salary ranges will be reviewed by management for possible adjustments
around the same time as scheduled increases for Air Logistics, L.L.C. Pilots
(see Appendix "A" for specific dates). Modifications to the ranges will be based
on market conditions and other related factors. In the event Pilots in the
service of Air Logistics of Alaska, Inc. would prefer to receive preset
increases in the future pay ranges rather than leaving future adjustments to the
discretion of the Company, the Company agrees to meet and discuss these
increases with representatives of the union. These negotiations will not be
pursuant to Section 6 of the Railway Labor Act and will in no way cause the
reopening of any other provision of this Agreement.
ARTICLE 22 - SUPPLEMENTAL PAY:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
90
<PAGE>
ARTICLE 23 - BONUSES:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 24 - WORKOVER/OVERTIME:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 25 - TRAVEL PAY:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 26 - PER DIEM:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 27 - INSURANCE:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 28 - RETIREMENT AND 401(K) PLAN:
Applicable to both Gulf Coast and Alaskan operations.
ARTICLE 29 - SAFETY/ACCIDENT PREVENTION:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 30 - GENERAL AND MISCELLANEOUS:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
ARTICLE 31 - UNION BULLETIN BOARDS AND COMMUNICATIONS:
Applicable to Gulf Coast and Alaskan operations.
ARTICLE 32 - GRIEVANCE PROCEDURE:
Applicable to both Gulf Coast and Alaskan operations. However, all references to
"Gulf Coast Manager" shall be changed to "Chief Pilot," and all references to
"Director of Operations" shall be changed to "General Manager."
ARTICLE 33 - SYSTEM BOARD OF ADJUSTMENT:
Applicable to both Gulf Coast and Alaskan operations.
ARTICLE 34 - NO STRIKE/NO LOCKOUT:
Applicable to both Gulf Coast and Alaskan operations.
91
<PAGE>
ARTICLE 35 - UNION REPRESENTATION:
Applicable to both Gulf Coast and Alaskan operations.
ARTICLE 36 - UNION SECURITY:
Applicable to both Gulf Coast and Alaskan operations.
ARTICLE 37 - SAVINGS CLAUSE:
Applicable to both Gulf Coast and Alaskan operations.
ARTICLE 38 - DURATION:
Applicable to both Gulf Coast and Alaskan operations.
Letter of Understanding Re: Fixed Wing Aircraft: Applicable to both
Gulf Coast and Alaska operations.
Letter of Understanding Re: Effective Date of Paid Days Off:
Applicable only to Gulf Coast operation. Air Logistics of Alaska,
Inc. will continue with existing policies.
Letter of Understanding Re: IFR Cadre: Applicable only to Gulf
Coast operation. Air Logistics of Alaska, Inc. will continue with
existing policies.
In witness whereof, the parties hereto have signed this Agreement on this 18th
day of May, 1999.
FOR OFFICE AND PROFESSIONAL FOR OFFSHORE LOGISTICS, INC.:
EMPLOYEES INTERNATIONAL
UNION, AFL-CIO:
/s/ Michael Goodwin /s/ George M. Small
- ------------------------------------ -------------------------------
Michael Goodwin, President, OPEIU George M. Small, President
FOR OPEIU, LOCAL 107: WITNESSES:
/s/ James J. Morgan /s/ Drury A. Milke
- ------------------------------------ -------------------------------
James J. Morgan Dru Milke
President, OPEIU/Local 107 Chief Financial Officer
92
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated May 18, 1999 included in this Form 10-K, into the Company's
previously filed Registration Statement File Nos. 33-87450, 33-50946, 33-14800,
333-23355 and 33-50948.
/s/ ARTHUR ANDERSEN LLP
New Orleans, Louisiana
June 29,1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted From The March
31, 1999 Financial Statements And Is Qualified In Its Entirety By Reference To
Such Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
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0
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<COMMON> 211
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