SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
|_| Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period _____ to _____
Commission File Number 0-5232
OFFSHORE LOGISTICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 72-0679819
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
224 RUE DE JEAN
P. O. BOX 5C, LAFAYETTE, LOUISIANA 70505
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (337) 233-1221
-------------------------------------------------------------------------
(Former name,former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate the number shares outstanding of each of the issuer's classes of
Common Stock, as of June 30, 2000.
21,105,921 shares of Common Stock, $.01 par value
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-----------------------
2000 1999
---------- ----------
<S> <C> <C>
GROSS REVENUE
Operating revenue................................................. $ 110,579 $ 106,418
Gain on disposal of assets........................................ 670 962
---------- ---------
111,249 107,380
---------- ---------
OPERATING EXPENSES
Direct cost....................................................... 86,708 84,884
Depreciation and amortization..................................... 8,829 8,184
General and administrative........................................ 6,839 6,810
---------- --- -----
102,376 99,878
---------- ---------
OPERATING INCOME.................................................. 8,873 7,502
Earnings from unconsolidated entities............................. 1,019 1,102
Interest income................................................... 739 1,004
Interest expense.................................................. 4,334 4,670
---------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST............................................. 6,297 4,938
Provision for income taxes........................................ 1,953 1,531
Minority interest................................................. (347) (322)
---------- ---------
NET INCOME........................................................ $ 3,997 $ 3,085
========== =========
Net income per common share:
Basic............................................................. $ 0.19 $ 0.15
========== =========
Diluted........................................................... $ 0.19 $ 0.15
========== =========
</TABLE>
2
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
2000 2000
---------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.......................................$ 20,833 $ 37,935
Accounts receivable............................................. 108,431 96,387
Inventories..................................................... 78,602 80,435
Prepaid expenses................................................ 6,841 5,725
---------- ---------
Total current assets......................................... 214,707 220,482
Investments in unconsolidated entities............................. 16,065 14,093
Property and equipment - at cost:
Land and buildings.............................................. 9,463 11,005
Aircraft and equipment.......................................... 606,605 605,949
---------- -------
616,068 616,954
Less: accumulated depreciation and amortization................... (153,891) (142,931)
---------- --------
462,177 474,023
Other assets....................................................... 29,435 34,576
---------- ---------
$ 722,384 $ 743,174
========== =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable................................................$ 26,898 $ 30,749
Accrued liabilities............................................. 54,972 52,082
Deferred taxes.................................................. 17,577 18,443
Current maturities of long-term debt............................ 16,528 16,540
---------- ----------
Total current liabilities.................................... 115,975 117,814
Long-term debt, less current maturities............................ 216,090 224,738
Other liabilities and deferred credits............................. 4,071 2,932
Deferred taxes..................................................... 94,719 96,739
Minority interest.................................................. 11,662 11,911
Stockholders' Investment:
Common Stock, $.01 par value, authorized 35,000,000
shares; outstanding 21,105,921 at June 30 and March 31
(exclusive of 1,281,050 treasury shares)..................... 211 211
Additional paid-in capital...................................... 116,074 116,074
Retained earnings............................................... 186,001 182,004
Accumulated other comprehensive income (loss)................... (22,419) (9,249)
---------- ---------
279,867 289,040
---------- ---------
$ 722,384 $ 743,174
========== =========
</TABLE>
3
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
---------------------
2000 1999
----------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................$ 3,997 $ 3,085
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization................................... 8,829 8,184
Increase (decrease) in deferred taxes........................... 592 (50)
(Gain) loss on asset dispositions............................... (670) (962)
Equity in earnings from unconsolidated entities
(over) under dividends received.............................. (833) (605)
Minority interest in earnings................................... 347 322
(Increase) decrease in accounts receivable...................... (16,653) (2,866)
(Increase) decrease in inventories.............................. (265) 1,943
(Increase) decrease in prepaid expenses and other............... 3,712 505
Increase (decrease) in accounts payable......................... (2,575) 6,828
Increase (decrease) in accrued liabilities...................... 4,393 (3,341)
Increase (decrease) in other liabilities and deferred credits... 1,140 1,251
---------- ---------
Net cash provided by operating activities.......................... 2,014 14,294
---------- ---------
Cash flows from investing activities:
Capital expenditures............................................ (12,204) (1,421)
Proceeds from asset dispositions................................ 2,024 3,957
Investments..................................................... (1,200) --
---------- ---------
Net cash provided by (used in) investing activities................ (11,380) 2,536
---------- ---------
Cash flows from financing activities:
Repayment of debt............................................... (6,937) (3,231)
---------- ---------
Net cash used in financing activities.............................. (6,937) (3,231)
---------- ---------
Effect of exchange rate changes in cash............................ (799) (391)
Net increase (decrease) in cash and cash equivalents............... (17,102) 13,208
Cash and cash equivalents at beginning of period................... 37,935 70,594
---------- ---------
Cash and cash equivalents at end of period.........................$ 20,833 $ 83,802
=========== =========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest........................................................$ 3,651 $ 4,139
Income taxes....................................................$ 340 $ 789
</TABLE>
4
<PAGE>
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, any adjustments
considered necessary for a fair presentation have been included. Operating
results for the three months ended June 30, 2000, are not necessarily indicative
of the results that may be expected for the year ending March 31, 2001. For
further information, refer to the consolidated financial statements and
footnotes included in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2000.
NOTE B - EARNINGS PER SHARE
Basic earnings per common share were computed by dividing net income by the
weighted average number of shares of common stock outstanding during the year.
Diluted earnings per share for the three months ended June 30, 2000 excluded
3,976,928 shares related to the convertible debt and 319,500 stock options, at a
weighted average exercise price of $19.06, which were outstanding during the
period but were anti-dilutive. Diluted earnings per share for the three months
ended June 30, 1999 excluded 3,976,928 shares related to the convertible debt
and 868,500 stock options, at a weighted average exercise price of $15.05, which
were outstanding during the period but were anti-dilutive. The following table
sets forth the computation of basic and diluted net income per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
---------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net income (thousands of dollars):
Income available to common stockholders................... $ 3,997 $ 3,085
Interest on convertible debt, net of taxes................ -- --
----------- ----------
Income available to common stockholders,
plus assumed conversions............................. $ 3,997 $ 3,085
=========== ==========
Shares:
Weighted average number of common shares outstanding...... 21,105,921 21,103,421
Options................................................... 211,894 14,580
Convertible debt.......................................... -- --
Weighted average number of common shares outstanding, ---------- ----------
plus assumed conversions............................. 21,317,815 21,118,001
========== ==========
Net income per share:
Basic..................................................... $ 0.19 $ 0.15
=========== ===========
Diluted................................................... $ 0.19 $ 0.15
=========== ===========
</TABLE>
5
<PAGE>
NOTE C - COMMITMENTS AND CONTINGENCIES
On November 16, 1999, the Office and Professional Employees International
Union ("OPEIU") petitioned the National Mediation Board ("NMB") to conduct an
election among the mechanics and related personnel employed by Air Logistics,
LLC and Air Logistics of Alaska, Inc. The election for Air Logistics, L.L.C. was
held on March 13, 2000 with the mechanics voting in favor of the Company. The
NMB dismissed the matter with respect to the Alaska-based group on January 24,
2000, but due to extraordinary circumstances, the NMB did accept another
representation application covering the Air Logistics of Alaska, Inc. mechanics
and related employees. The Alaska election was held on July 21, 2000 with the
mechanics voting in favor of the International Union of Operating Engineers. The
Company does not believe that current organizing efforts will place it at a
disadvantage with its competitors and management believes that pay scales,
benefits, and work rules will continue to be similar throughout the industry.
NOTE D - COMPREHENSIVE INCOME
In 1998, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income". SFAS No. 130 requires an entity to report and
display comprehensive income and its components. Comprehensive income is as
follows (thousands of dollars):
THREE MONTHS ENDED
JUNE 30,
--------------------
2000 1999
--------- ---------
Net Income....................................... $ 3,997 $ 3,085
Other Comprehensive Income:
Currency translation adjustments.............. (13,170) (6,491)
--------- ---------
Comprehensive Income (Loss)...................... $ (9,173) $ (3,406)
========= =========
NOTE E - DERIVATIVE FINANCIAL INSTRUMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which establishes accounting and reporting
standards for derivative instruments and for hedging activities. It requires
that entities 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, as amended by SFAS No. 137, no later than April 1, 2001.
The Company has not yet quantified the impact to 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 is not expected to materially
affect the Company's financial position or results of operations. The new
statement could however cause volatility in the components of other
comprehensive income.
6
<PAGE>
NOTE F - SEGMENT INFORMATION
SFAS No. 131, "Disclosures about Segments of An Enterprise and Related
Information", 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. The
following shows reportable segment information for the three months ended June
30, 2000 and 1999, reconciled to consolidated totals, and prepared on the same
basis as the Company's consolidated financial statements (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-----------------------
2000 1999
--------- ---------
<S> <C> <C>
Segment operating revenue from external customers:
Helicopter activities................................... $ 99,456 $ 96,762
Production management and related services.............. 11,022 9,498
--------- ---------
Total segment operating revenue..................... $ 110,478 $ 106,260
========= =========
Intersegment operating revenue:
Helicopter activities................................... $ 1,072 $ 654
Production management and related services.............. -- --
--------- ---------
Total intersegment operating revenue................ $ 1,072 $ 654
========= =========
Consolidated operating revenue reconciliation:
Helicopter activities................................... $ 100,528 $ 97,416
Production management and related services.............. 11,022 9,498
Corporate............................................... 2,463 2,052
Intersegment eliminations............................... (3,434) (2,548)
--------- ---------
Total consolidated operating revenue................ $ 110,579 $ 106,418
========= =========
Consolidated operating income reconciliation:
Helicopter activities................................... $ 7,819 $ 6,064
Production management and related services.............. 666 567
--------- ---------
Total segment operating income...................... 8,485 6,631
Gain on disposal of assets.............................. 670 962
Corporate............................................... (282) (91)
--------- ---------
Total consolidated operating income................. $ 8,873 $ 7,502
========= =========
</TABLE>
NOTE G - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
In connection with the sale of the company's $100 million 7 7/8% Senior
Notes due 2008, certain of the Company's subsidiaries (the "Guarantor
Subsidiaries") jointly, severally and unconditionally guaranteed the payment
obligations under the Senior Notes. The following supplemental financial
information sets forth, on a consolidating basis, the balance sheet, statement
of income and cash flow information for Offshore Logistics, Inc. ("Parent
Company Only"), for the Guarantor Subsidiaries and for Offshore Logistics,
Inc.'s other subsidiaries (the "Non-Guarantor Subsidiaries"). The Company has
not presented separate financial statements and other disclosures concerning the
Guarantor Subsidiaries because management has determined that such information
is not material to investors.
7
<PAGE>
The supplemental condensed consolidating financial information has been
prepared pursuant to the rules and regulations for condensed financial
information and does not include all disclosures included in annual financial
statements, although the Company believes that the disclosures made are adequate
to make the information presented not misleading. Certain reclassifications were
made to conform all of the financial information to the financial presentation
on a consolidated basis. The principal eliminating entries eliminate investments
in subsidiaries, intercompany balances and intercompany revenues and expenses.
The allocation of the consolidated income tax provision was made using
the with and without allocation method.
8
<PAGE>
NOTE G - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2000
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................$ 5,719 $ 2,390 $ 12,724 $ -- $ 20,833
Accounts receivable...................... 449 24,674 85,797 (2,489) 108,431
Inventories.............................. -- 38,629 39,973 -- 78,602
Prepaid expenses......................... 201 1,302 5,338 -- 6,841
------------ ------------ ------------ ------------ ------------
Total current assets.................. 6,369 66,995 143,832 (2,489) 214,707
Intercompany investment.................... 204,811 -- -- (204,811) --
Investments in unconsolidated entities..... 1,108 229 14,728 -- 16,065
Intercompany note receivables.............. 287,060 -- -- (287,060) --
Property and equipment--at cost:
Land and buildings....................... -- 3,207 6,256 -- 9,463
Aircraft and equipment................... 4,520 159,317 442,768 -- 606,605
------------ ------------ ------------ ------------ ------------
4,520 162,524 449,024 -- 616,068
Less: Accumulated depreciation
and amortization...................... (3,035) (78,137) (72,719) -- (153,891)
------------ ------------ ------------ ------------ ------------
1,485 84,387 376,305 -- 462,177
Other assets............................... 11,014 16,339 1,971 111 29,435
------------ ------------ ------------ ------------ ------------
$ 511,847 $ 167,950 $ 536,836 $ (494,249) $ 722,384
============ ============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable.........................$ 396 $ 3,902 $ 24,591 $ (1,991) $ 26,898
Accrued liabilities...................... 6,721 12,655 36,099 (503) 54,972
Deferred taxes........................... -- -- 17,577 -- 17,577
Current maturities of long-term debt..... -- -- 16,528 -- 16,528
------------ ------------ ------------ ------------ ------------
Total current liabilities.............. 7,117 16,557 94,795 (2,494) 115,975
Long-term debt, less current maturities.... 190,922 -- 25,168 -- 216,090
Intercompany notes payable................. 3,787 329 282,939 (287,055) --
Other liabilities and deferred credits..... 270 2,262 1,539 -- 4,071
Deferred taxes............................. 10,194 34,783 49,742 -- 94,719
Minority interest.......................... 11,662 -- -- -- 11,662
Stockholders' investment:
Common stock............................. 211 4,048 1,384 (5,432) 211
Additional paid in capital............... 116,074 52,567 12,850 (65,417) 116,074
Retained earnings........................ 186,001 54,280 65,158 (119,438) 186,001
Accumulated other comprehensive
income (loss) ....................... (11,267) -- 3,261 (14,413) (22,419)
------------ ------------ ------------ ------------ ------------
291,019 110,895 82,653 (204,700) 279,867
------------ ------------ ------------ ------------ ------------
$ 514,971 $ 164,826 $ 536,836 $ (494,249) $ 722,384
============ ============ ============ ============ ============
</TABLE>
9
<PAGE>
NOTE G - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
GROSS REVENUE
Operating revenue............................$ 102 $ 35,929 $ 74,548 $ -- $ 110,579
Intercompany revenue......................... -- 2,617 85 (2,702) --
Gain on disposal of assets................... -- -- 670 -- 670
------------ ------------- ----------- ------------ ------------
102 38,546 75,303 (2,702) 111,249
OPERATING EXPENSES
Direct cost ................................. 4 30,715 55,989 -- 86,708
Intercompany expense......................... -- 85 2,617 (2,702) --
Depreciation and amortization................ 100 2,566 6,163 -- 8,829
General and administrative................... 1,514 1,713 3,612 -- 6,839
------------ ------------- ----------- ------------ ------------
1,618 35,079 68,381 (2,702) 102,376
------------ ------------- ----------- ------------ ------------
OPERATING INCOME (LOSS)...................... (1,516) 3,467 6,922 -- 8,873
Earnings from unconsolidated entities........ 2,365 -- 1,019 (2,365) 1,019
Interest income.............................. 7,638 42 507 (7,448) 739
Interest expense............................. 3,456 9 8,317 (7,448) 4,334
------------ ------------- ----------- ------------ ------------
INCOME BEFORE PROVISION
FOR INCOME TAXES AND MINORITY INTEREST.... 5,031 3,500 131 (2,365) 6,297
Allocation of consolidated income taxes...... 687 1,226 40 -- 1,953
Minority Interest............................ (347) -- -- -- (347)
------------ ------------- ----------- ------------ ------------
NET INCOME................................... $ 3,997 $ 2,274 $ 91 $ (2,365) $ 3,997
============= ============== =========== ============= =============
</TABLE>
10
<PAGE>
NOTE G - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
---------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities.....................$ (8,632) $ 1,174 $ 2,242 $ 7,230 $ 2,014
----------- ----------- ------------ ----------- ----------
Cash flows from investing activities:
Capital expenditures..................... (186) (1,107) (10,911) -- (12,204)
Proceeds from asset dispositions......... -- -- 2,024 -- 2,024
Investments ............................. -- -- (1,200) -- (1,200)
----------- ----------- ----------- ----------- ----------
Net cash provided by (used in)
investing activities..................... (186) (1,107) (10,087) -- (11,380)
----------- ----------- ----------- ----------- ----------
Cash flows from financing activities:
Proceeds from borrowings................. -- -- 7,230 (7,230) --
Repayment of debt........................ -- -- (6,937) -- (6,937)
----------- ----------- ----------- ----------- ----------
Net cash used in financing activities.......... -- -- 293 (7,230) (6,937)
----------- ----------- ----------- ----------- ----------
Effect of exchange rate changes in cash........ -- -- (799) -- (799)
----------- ----------- ----------- ----------- ----------
Net increase (decrease) in cash and
cash equivalents......................... (8,818) 67 (8,351) -- (17,102)
Cash and cash equivalents
at beginning of period................... 14,537 2,323 21,075 -- 37,935
----------- ----------- ----------- ----------- ----------
Cash and cash equivalents
at end of period........................$ 5,719 $ 2,390 $ 12,724 $ -- $ 20,833
=========== =========== =========== =========== ==========
</TABLE>
11
<PAGE>
NOTE G - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2000
<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................$ 14,537 $ 2,323 $ 21,075 $ -- $ 37,935
Accounts receivable...................... 280 22,822 75,116 (1,831) 96,387
Inventories.............................. -- 38,023 42,412 -- 80,435
Prepaid expenses......................... 227 558 4,940 -- 5,725
------------ ------------ ------------ ------------ ------------
Total current assets.................. 15,044 63,726 143,543 (1,831) 220,482
Intercompany investment.................... 201,410 -- -- (210,410) --
Investments in unconsolidated entities..... 1,108 229 12,756 -- 14,093
Intercompany note receivables.............. 286,388 -- 3,844 (290,232) --
Property and equipment--at cost:
Land and buildings....................... -- 3,220 7,785 -- 11,005
Aircraft and equipment................... 4,335 155,867 445,747 -- 605,949
------------ ------------ ------------ ------------ ------------
4,335 159,087 453,532 -- 616,954
Less: Accumulated depreciation
and amortization...................... (2,939) (75,943) (64,049) -- (142,931)
------------ ------------ ------------ ------------ ------------
1,396 83,144 389,483 -- 474,023
Other assets............................... 11,558 16,700 6,207 111 34,576
------------ ------------ ------------ ------------ ------------
$ 516,904 $ 163,799 $ 555,833 $ (493,362) $ 743,174
============ ============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable.........................$ 196 $ 4,931 $ 27,151 $ (1,529) $ 30,749
Accrued liabilities...................... 6,074 10,028 36,286 (306) 52,082
Deferred taxes........................... -- -- 18,443 -- 18,443
Current maturities of long-term debt..... -- -- 16,540 -- 16,540
------------ ------------ ------------ ------------ ------------
Total current liabilities.............. 6,270 14,959 98,420 (1,835) 117,814
Long-term debt, less current maturities.... 190,922 -- 33,816 -- 224,738
Intercompany notes payable................. 3,844 379 286,004 (290,227) --
Other liabilities and deferred credits..... 272 2,223 437 -- 2,932
Deferred taxes............................. 9,508 33,564 53,667 -- 96,739
Minority interest.......................... 11,911 -- -- -- 11,911
Stockholders' investment:
Common stock............................. 211 4,048 1,384 (5,432) 211
Additional paid in capital............... 116,074 52,567 15,928 (68,495) 116,074
Retained earnings........................ 182,004 56,059 65,068 (121,127) 182,004
Accumulated other comprehensive
income (loss)......................... (4,112) -- 1,109 (6,246) (9,249)
------------ ------------ ------------ ------------ ------------
294,177 112,674 83,489 (201,300) 289,040
------------ ------------ ------------ ------------ ------------
$ 516,904 $ 163,799 $ 555,833 $ (493,362) $ 743,174
============ ============ ============ ============= =============
</TABLE>
12
<PAGE>
NOTE G - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
GROSS REVENUE
Operating revenue............................$ 158 $ 30,540 $ 75,720 $ -- $ 106,418
Intercompany revenue......................... -- 1,900 97 (1,997) --
Gain on disposal of assets................... 2 741 219 -- 962
------------ ------------- ----------- ------------ ------------
160 33,181 76,036 (1,997) 107,380
OPERATING EXPENSES
Direct cost ................................. -- 25,320 59,564 -- 84,884
Intercompany expense......................... -- 97 1,900 (1,997) --
Depreciation and amortization................ 41 2,554 5,589 -- 8,184
General and administrative................... 1,410 1,434 3,966 -- 6,810
------------ ------------- ----------- ------------ ------------
1,451 29,405 71,019 (1,997) 99,878
------------ ------------- ----------- ------------ ------------
OPERATING INCOME (LOSS)...................... (1,291) 3,776 5,017 -- 7,502
Earnings from unconsolidated entities........ 1,637 -- 1,102 (1,637) 1,102
Interest income.............................. 7,261 130 409 (6,796) 1,004
Interest expense............................. 3,569 -- 7,897 (6,796) 4,670
------------ ------------- ----------- ------------ ------------
INCOME BEFORE PROVISION
FOR INCOME TAXES AND MINORITY INTEREST..... 4,038 3,906 (1,369) (1,637) 4,938
Allocation of consolidated income taxes...... 631 1,311 (411) -- 1,531
Minority interest............................ (322) -- -- -- (322)
------------ ------------- ----------- ------------ ------------
NET INCOME $ 3,085 $ 2,595 $ (958) $ (1,637) $ 3,085
============ ============== ============ ============= ============
</TABLE>
13
<PAGE>
NOTE G - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Parent Non-
Company Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities.....................$ 7,967 $ (1,095) $ 21,742 $ (14,320) $ 14,294
----------- ----------- ----------- ----------- ----------
Cash flows from investing activities:
Capital expenditures..................... (44) (215) (1,162) -- (1,421)
Proceeds from asset dispositions......... 12 1,378 2,567 -- 3,957
Investments.............................. 2,751 (2,751) -- -- --
----------- ----------- ----------- ----------- ----------
Net cash provided by (used in)
investing activities..................... 2,719 (1,588) 1,405 -- 2,536
----------- ----------- ----------- ----------- ----------
Cash flows from financing activities:
Repayment of debt........................ (14,320) -- (3,231) 14,320 (3,231)
----------- ----------- ----------- ----------- ----------
Net cash used in financing activities.......... (14,320) -- (3,231) 14,320 (3,231)
----------- ----------- ----------- ----------- ----------
Effect of exchange rate changes in cash........ -- -- (391) -- (391)
----------- ----------- ----------- ----------- ----------
Net increase (decrease) in cash and
cash equivalents......................... (3,634) (2,683) 19,525 -- 13,208
Cash and cash equivalents
at beginning of period................... 34,775 10,584 25,235 -- 70,594
----------- ----------- ----------- ----------- ----------
Cash and cash equivalents
at end of period........................$ 31,141 $ 7,901 $ 44,760 $ -- $ 83,802
=========== =========== =========== =========== ==========
</TABLE>
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company, through its Air Logistics' subsidiaries ("Air Log") and
with its investment in Bristow Aviation Holdings Limited ("Bristow"), is a major
supplier of helicopter transportation services to the worldwide offshore oil and
gas industry. The Company also provides production management services to the
domestic offshore oil and gas industry through its wholly owned subsidiary,
Grasso Production Management, Inc. ("GPM").
RESULTS OF OPERATIONS
A summary of operating results and other income statement information
for the applicable periods is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
---------------------------------
2000 1999
------------- ---------------
<S> <C> <C>
Operating revenue...................................................................... $ 110,579 $ 106,418
Gain on disposal of assets............................................................. 670 962
Operating expenses..................................................................... (102,376) (99,878)
--------------- ---------------
Operating income....................................................................... 8,873 7,502
Earnings from unconsolidated entities.................................................. 1,019 1,102
Interest income (expense), net......................................................... (3,595) (3,666)
--------------- ---------------
Income before provision for income taxes and minority interest......................... 6,297 4,938
Provision for income taxes............................................................. 1,953 1,531
Minority interest...................................................................... (347) (322)
--------------- ---------------
Net income............................................................................. $ 3,997 $ 3,085
=============== ===============
</TABLE>
The following table sets forth certain operating information, which
will form the basis for discussion of each of the Company's two identified
segments, Helicopter Activities and Production Management and Related Services.
The respective international operations of Air Log (headquartered in the United
States) and Bristow (headquartered in the United Kingdom) are managed and
reported as a separate division. The International division encompasses all
helicopter activities outside of the United States Gulf of Mexico and Alaska
(reported as "Air Log") and the United Kingdom and Europe Sectors of the North
Sea (reported as "Bristow").
15
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
------------------------------
2000 1999
----------- ----------
(in thousands, except flight hours)
<S> <C> <C>
Flight hours (excludes unconsolidated entities):
Helicopter Activities:
Air Log.................................... 26,049 24,400
Bristow.................................... 13,355 16,226
International.............................. 17,466 12,966
---------- ----------
Total.................................. 56,870 53,592
========== ==========
Operating revenues:
Helicopter Activities:
Air Log.................................... $ 25,924 $ 21,768
Bristow.................................... 42,774 51,615
International.............................. 32,326 24,128
Less: Intercompany........................ (496) (95)
----------- ----------
Total................................... 100,528 97,416
Production management and related services...... 11,022 9,498
Corporate....................................... 2,463 2,052
Less: Intercompany............................. (3,434) (2,548)
----------- ----------
Consolidated total....................... $ 110,579 $ 106,418
=========== ==========
Operating income, excluding gain or loss on disposal of assets:
Helicopter Activities:
Air Log..................................... $ 2,871 $ 2,494
Bristow..................................... (1,241) 1,656
International............................... 6,189 1,914
----------- ----------
Total.................................... 7,819 6,064
Production management and related services....... 666 567
Corporate........................................ (282) (91)
----------- ----------
Consolidated total....................... $ 8,203 $ 6,540
=========== ==========
Gross margin, excluding gain or loss on disposal of assets:
Helicopter Activities:
Air Log...................................... 11.1% 11.5%
Bristow...................................... (2.9%) 3.2%
International................................ 19.1% 7.9%
Total..................................... 7.8% 6.2%
Production management and related services........ 6.0% 6.0%
Consolidated total........................ 7.4% 6.1%
</TABLE>
16
<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 and provides
helicopter services to the Alyeska Pipeline in Alaska. Bristow also provides
search and rescue work for the British Coast Guard. International's activities
include Air Log and Bristow's respective operations in the following countries:
Australia, Brazil, China, Colombia, Cyprus, India, Kazakhstan, Kosovo, Mexico,
Nigeria, Spain, The Maldives and Trinidad. These international operations are
subject to local governmental regulations and to uncertainties of economic and
political conditions in those areas. International also includes Air Log's
service agreements with, and equity interests in, entities that operate aircraft
in Brazil, Egypt and Mexico ("unconsolidated entities").
Operating revenues from helicopter activities increased by 3% during the
three months ended June 30, 2000 over the prior year comparable quarter, with
operating expenses increasing by only 1%. Higher levels of exploration and
development by domestic oil companies and an increase in international
contracts, offset by the loss of two major customers in the North Sea effective
August 1, 1999, led to the improvement. Flight activity began increasing during
the fourth quarter of fiscal 2000 in the Gulf of Mexico and certain
international markets, which management believes may be the reversal of a trend
of decreasing activity in these markets.
Air Log's flight hours and revenue increased during the current fiscal
quarter by 6.8% and 19.1%, respectively, from the similar quarter in the prior
year. An increase in activity was prevalent in both the Gulf of Mexico market
and Alaska. The disproportionate increase in revenue in relation to flight hours
was due to a shift in the mix of aircraft generating revenue coupled with rate
increases which went into effect beginning February 1, 2000. Flight hours and
revenue generated from larger, crew change aircraft in the Gulf of Mexico
increased 32% and 40%, respectively, from the similar quarter in the prior year,
while smaller, production related aircraft increased 2% and 7%, respectively.
Air Log's operating margin of 11.1% is comparable to the prior year quarter.
Continued increases in flight activity from late June 2000 through the date of
this filing provide a more optimistic perspective for Gulf of Mexico activities,
although there is no certainty that this trend will continue.
Bristow's flight hours and revenue decreased by 17.7% and 17.1%,
respectively, during the quarter from the similar period in the prior year. This
decrease in flight activity is the net result of a decrease in North Sea flight
hours, offset by an increase in flight hours in Norway. The decrease in North
Sea activity is primarily related to the cessation of contracts with two major
customers on August 1, 1999, reduced utilization and pricing pressures from
customers. These aforementioned contracts accounted for $9.0 million of revenue
during the quarter ended June 30, 1999. The North Sea has been more adversely
affected by low oil prices due to generally higher exploration and production
costs in that area when compared with other production areas around the world.
As such, this market is slower to rebound from improved commodity prices.
Bristow's operating margin decreased from 3.2% in the quarter ended June 30,
1999 to (2.9)% in the current quarter. This decline in margin is due primarily
to the factors discussed above coupled with employee severance cost of $1.5
million recognized during the first quarter of fiscal 2001. These severance
costs are the result of management's review of Bristow's North Sea operations
and support functions elsewhere in the U.K. Absent these charges, Bristow's
operating margin for the current quarter would have been 1.0%. The Company
expects to realize at least $5.0 million in combined annual salary savings as a
result of the work force reduction. In addition, further cost reductions are
being pursued as management works to establish a more cost-effective and
competitive organization. However, given the significant reduction in North Sea
flight activity, it is likely that Bristow's results and operating margins will
be adversely affected for sometime absent increased activity in the North Sea
market.
17
<PAGE>
Internationally, flight hours and revenue increased during the current
fiscal quarter by 35% and 34%, respectively, from the similar quarter in the
prior year. An increase in activity was prevalent in Brazil, China, Mexico and
Nigeria. In Nigeria revenues were up 7% over the prior year quarter as
exploration drilling activities in Nigeria improved during the past year. During
March 2000, the Company's 49% owned affiliate in Mexico was awarded a $75
million three year contract to provide helicopter transportation services to the
Federal Electric Commission of Mexico. Most of the aircraft needed to fulfill
the contract requirements are being leased from Air Log. The start up of the
contract was in phases over a two-month period, which began March 31, 2000. This
contract generated lease revenue of approximately $2.0 million during the
quarter. During the quarter, the Company imported a seventh aircraft to Brazil
to cover the increased ad hoc flying resulting from the international oil
companies expanding into the Brazilian market. Also during the current quarter,
the Company completed its investment, subject to approval by relevant government
authorities, in a local Brazilian operator. This investment will serve to secure
Air Log's presence in Brazil and enhance the local operator's ability to do
business with the international oil companies.
PRODUCTION MANAGEMENT AND RELATED SERVICES
Operating revenues for GPM increased by 16% during the three months ended
June 30, 2000, as compared to the similar period in the prior year. The increase
in revenue is primarily due to higher energy prices which resulted in increased
production activity in the Gulf of Mexico. GPM was also awarded two significant
contracts which resulted in higher revenue for the current quarter. GPM's
operating margin remained at 6% during the current quarter.
CORPORATE AND OTHER
Consolidated net interest expense declined slightly during the current
quarter due to lower debt outstanding offset by lower cash on hand. The
effective income tax rate was approximately 31% for the three months ended June
30, 2000 and 1999, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $20.8 million as of June 30, 2000, a $17.1
million decrease from March 31, 2000. Working capital as of June 30, 2000 was
$98.7 million, a $4.0 million decrease from March 31, 2000. Total debt was
$232.6 million as of June 30, 2000.
As of June 30, 2000, Bristow had a (pound)15 million ($22.6 million)
revolving credit facility with a syndicate of United Kingdom banks that matures
on December 31, 2002. As of June 30, 2000, OLOG had a $20 million unsecured
working capital line of credit with a bank that expires on September 30, 2001.
No funds were drawn under either of these facilities as of June 30, 2000.
Management believes that its normal operations, lines of credit and available
financing will provide sufficient working capital and cash flow to meet debt
service needs for the foreseeable future.
During the quarter ended June 30, 2000, the Company received proceeds of
$2.0 million primarily from the sale of non-aviation assets and purchased two
Bell 412s for $10.0 million to fulfill customer contract requirements. These
aircraft acquisitions were made with existing cash. The Company has no other
material capital commitments outstanding. During the quarter ended June 30,
1999, the Company received proceeds of $4.0 million from four separate sales of
excess aircraft.
18
<PAGE>
LEGAL MATTERS
The Company has received notices from the United States Environmental
Protection Agency that it is one of approximately 160 potentially responsible
parties ("PRP") at one Superfund site in Texas, one of over 300 PRPs at one site
in Louisiana and a PRP at one site in Rhode Island. The Company believes, based
on presently available information, that its potential liability for clean up
and other response costs in connection with these sites is not likely to have a
material adverse effect on the Company's business or financial condition.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which establishes accounting and reporting
standards for derivative instruments and for hedging activities. It requires
that entities 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, as amended by SFAS No. 137, no later than April 1, 2001.
The Company has not yet quantified the impact to 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 is not expected to materially
affect the Company's financial position or results of operations. The new
statement could however cause volatility in the components of other
comprehensive income.
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.
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 and the ability to achieve reduced operating
expenses. 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No material changes from the 2000 annual report disclosures.
19
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listed below are the documents filed as Exhibits to this report:
Exhibit 27- Financial Data Schedule
(b) Reports on Form 8-K:
There were no Form 8-K filings during the quarter ended June 30, 2000.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Offshore Logistics, Inc.
BY: /s/ H. Eddy Dupuis
------------------
H. Eddy Dupuis
Vice President - Chief Financial Officer
DATE: August 14, 2000
21
<PAGE>
