United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 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: January 31, 1996
OR
[ ] 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 0-9827
PETROLEUM HELICOPTERS, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-0395707
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2121 Airline Highway, Suite 400
Metairie, Louisiana 70001-5979
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 828-3323
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at March 1, 1996
Voting Common Stock 2,789,761
Non-Voting Common Stock 2,276,093
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands January 31, April 30,
(Current period unaudited) 1996 1995 (1)
ASSETS
Current assets:
Cash and cash equivalents $ 3,035 $ 2,506
Accounts receivable - net
of allowance 31,229 30,493
Inventory 26,383 25,560
Prepaid expenses 1,141 989
Notes receivable 1,244 -
Assets held for sale - 215
------ ------
Total current assets 63,032 59,763
------ ------
Investments 4,348 1,002
Property and equipment:
Cost 211,723 199,816
Less accumulated depreciation (115,660) (113,568)
------- -------
96,063 86,248
------- -------
Other 98 95
------- -------
$ 163,541 $ 147,108
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued expenses $ 16,766 $ 15,224
Accrued vacation pay 4,804 4,897
Income taxes payable 1,541 331
Current portion of long-term debt 6,796 8,755
Other 177 747
------ ------
Total current liabilities 30,084 29,954
------ ------
Long-term debt 38,842 27,060
Deferred income taxes 12,066 12,066
Other long-term liabilities 2,771 2,321
Shareholders' equity:
Voting common stock 279 286
Non-voting common stock 227 220
Additional paid-in capital 10,121 10,118
Retained earnings 69,151 65,083
------ ------
79,778 75,707
------- -------
$ 163,541 $ 147,108
======= =======
(1)The balance sheet at April 30, 1995 is condensed from
the audited financial statements at that date.
See notes to condensed consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Nine Months
In thousands, except per Ended January 31, Ended January 31,
share amounts 1996 1995 1996 1995
(unaudited)
REVENUES:
Operating revenues $ 45,444 $ 42,095 $ 139,724 $130,493
Gain (loss) on equipment
disposals 43 (183) 791 773
Equity in net earnings (loss)
of investee companies 225 (9) 325 72
------ ------- ------- -------
45,712 41,903 140,840 131,338
------ ------- ------- -------
EXPENSES:
Direct expenses 39,800 36,964 122,367 115,481
Selling, general and
administrative expenses 3,038 2,700 8,402 7,774
Interest expense 777 812 2,312 2,300
------ ------- ------- ------
43,615 40,476 133,081 125,555
------ ------- ------- -------
Earnings before income
taxes 2,097 1,427 7,759 5,783
Income taxes 758 617 3,095 2,357
------ ------ ------ ------
Net earnings $ 1,339 $ 810 $ 4,664 $ 3,426
====== ====== ====== ======
Net earnings per share $ 0.26 $ 0.15 $ 0.92 $ 0.63
====== ====== ====== ======
Weighted average common
shares outstanding 5,066 5,478 5,066 5,478
====== ====== ====== ======
Dividends paid per common
share $ 0.05 $ 0.02 $ 0.12 $ 0.04
====== ====== ====== ======
See notes to condensed consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands Nine Months Ended January 31,
(unaudited) 1996 1995
OPERATING ACTIVITIES:
Net earnings $ 4,664 $ 3,426
Depreciation 6,137 6,335
Gain on equipment disposals (791) (773)
Equity in net earnings
of investee companies (325) (72)
Changes in operating assets
and liabilities (189) (1,261)
Other 241 16
------ ------
Net cash provided by operating
activities 9,737 7,671
------ ------
INVESTING ACTIVITIES:
Investments (3,003) -
Purchases of property and
equipment (17,561) (16,357)
Proceeds from equipment disposals 2,141 9,354
------ ------
Net cash used by
investing activities (18,423) (7,003)
------ -----
FINANCING ACTIVITIES:
Proceeds from long-term debt 23,803 9,250
Payments on long-term debt (13,980) (13,807)
Dividends paid (608) (219)
------- -------
Net cash provided (used) by
financing activities 9,215 (4,776)
------ ------
Increase (decrease) in cash
and cash equivalents 529 (4,108)
Cash and cash equivalents
at beginning of period 2,506 5,570
------ ------
Cash and cash equivalents
at end of period $ 3,035 $ 1,462
====== ======
See notes to condensed consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1996 AND 1995
(UNAUDITED)
A. These financial statements, except for the April 30, 1995
condensed consolidated balance sheet, have been prepared
without audit as permitted by the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to such
rules and regulations; however, the Company believes that this
information is fairly presented. These condensed consolidated
financial statements should be read in conjunction with the
financial statements contained in the Company's Annual Report
on Form 10-K for the year ended April 30, 1995 and the
accompanying notes and Management's Discussion and Analysis of
Financial Condition and Results of Operations.
B. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all
adjustments, consisting of only normal, recurring adjustments,
necessary to fairly present the financial results for the
interim periods presented.
C. The Company's financial results, particularly as it relates to
its domestic oil and gas operations, are influenced by
seasonal fluctuations. During the winter, there are more days
of adverse weather conditions and fewer hours of daylight than
the other months of the year. Consequently, flight hours are
generally lower during the Company's third fiscal quarter than
at other times of the year. This produces a seasonal aspect
to the Company's business and typically results in
reduced revenues from operations during those months.
Therefore, the results of operations for interim periods are
not necessarily indicative of the operating results that may
be expected for the full fiscal year.
D. Primary earnings per share are computed based on the weighted
average number of shares and dilutive equivalent shares of
common stock (stock options) outstanding during each year
using the treasury stock method.
E. Certain reclassifications have been made to the prior year's
financial statements in order to conform with the
classifications adopted for reporting in fiscal 1996
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is engaged in providing helicopter transportation
and related services. The predominant portion of its revenue is
derived from transporting offshore oil and gas production and
drilling workers on a worldwide basis. The Company also provides
helicopter transportation services to a variety of hospital and
medical programs and aircraft maintenance to outside parties.
RESULTS OF OPERATIONS
The following is a comparison of the third quarter and the
first nine months of the fiscal year ending April 30, 1996 with the
comparable periods of the prior fiscal year.
Third Quarter Fiscal 1996 to Fiscal 1995
Revenues
The Company generates revenues from both ongoing service
contracts with established customers and non-contract flights
referred to as Specials. Domestic Oil and Gas contracts are
generally on a month to month basis and consist of a fixed fee plus
an hourly charge for actual flight time. Specials are customer
flights, primarily domestic oil and gas, provided on an as needed
basis that are not provided pursuant to ongoing contracts and which
generally carry higher rates.
International and aeromedical contracts also provide for fixed
and hourly charges, but are generally for longer terms. These
contracts impose early cancellation fees to encourage customers to
fulfill the contract term and cover the Company's additional start-
up costs in the event of early termination.
The following table summarizes and compares the Company's
revenues by certain markets served for the quarters ended January
31, 1996 and 1995:
Revenues for the
(In thousands, except Quarter Ended January 31,
percentages and flight hours)
Incr (Decr)
1996 1995 $ %
Domestic Oil and Gas $32,018 $ 29,186 $ 2,832 10
Aeromedical Services 6,758 5,999 759 13
International and Technical
Services 6,668 6,910 (242) (4)
Total Operating Revenues $45,444 $ 42,095 $ 3,349 8
Total Flight Hours 51,995 47,974 4,021 8
Domestic Oil and Gas
Domestic Oil and Gas revenues increased $2.8 million or 10% to
$32 million for the quarter and domestic flight hours increased by
7% to 39,401. The Company attributes these increases to increased
flight activity due primarily to better economic conditions in the
Gulf of Mexico. As of January 31, 1996 the Company had thirteen
more aircraft under contract and six more contracts than at
January 31, 1995.
Aeromedical Services
The Company operates 13 programs and a total of 33 aircraft
in the Emergency Medical Service industry. Aeromedical Services
revenue increased $0.8 million or 13% to $6.8 million.
Aeromedical flight hours increased slightly to 2,961, or 2% for the
quarter. The increase in revenue is due primarily to three more
aircraft under contract and one more contract than at January 31,
1995. The Company was recently awarded one new contract which is
expected to commence operations in May of 1996.
International and Technical Services
International Oil and Gas revenues remained constant at $3.7
million. International flight hours increased 12%,or 565 hours, to
5,244 hours. The increase in flight hours is due primarily to
increased oil and gas exploration activity. The flight hour
increase was produced primarily by existing contracts which utilize
smaller aircraft with moderate hourly rates. This increase in
hourly revenue was offset by the termination of a contract which
utilized aircraft with high fixed and variable rates.
Technical Services revenues decreased slightly $0.1 million,
or 4%, to $1.9 million.
Direct Expenses
Direct expenses increased $2.8 million or 8% to $39.8 million,
primarily as a result of the increased activity levels in the
Company's Domestic Oil and Gas Programs.
Expenses at helicopter bases rose $1.3 million or 9% to $15.5
million for the quarter. Of this increase, $0.9 million is due to
an increase in personnel and overtime to support increased flight
activity. In addition, the Company increased its environmental
expense reserve by $0.3 million which is more fully described under
Liquidity and Capital Resources, below.
Helicopter expenses rose $1.4 million or 8% to $18.5 million
for the quarter. Helicopter expenses related to flight activity
including spare parts usage, repairs and maintenance, helicopter
rent, and fuel increased a combined $1.6 million, or 13% , from
$12.3 million to $13.9 million. This amount was partially offset
by a decrease in insurance and helicopter depreciation in the
amount of $0.2 million. These increases were consistent with the
increase in operating revenues and Domestic Oil and Gas activity
levels.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses increased by
$0.3 million to $3 million for the quarter. This increase was due
primarily to an increase in consulting fees associated with an
information systems project which is expected to continue for
several years.
First Nine Months Fiscal 1996 to First Nine Months Fiscal 1995
The following table summarizes and compares the Company's revenues
by certain markets served for the nine months ended January 31,
1996 and 1995:
Revenues
Revenues for the
(In thousands, except Nine Months Ended January 31,
percentages and flight hours)
Incr (Decr)
1996 1995 $ %
Domestic Oil and Gas $ 98,164 $ 88,355 $ 9,809 11
Aeromedical Services 19,634 18,885 749 4
International and Technical
Services 21,926 23,253 (1,327) (6)
Total Operating Revenues $139,724 $ 130,493 $ 9,231 7
Total Flight Hours 163,752 152,867 10,885 7
Domestic Oil and Gas
Domestic Oil and Gas revenues for the first nine months of
fiscal 1996 increased 11% to $98.2 million as compared to the same
period in fiscal 1995. Domestic flight hours increased 9% to
125,836 in the current period. These increases are due primarily
to increased oil and gas activity and several hurricane
evacuations. The improved economic conditions in the Gulf of
Mexico were the result of stable oil prices, higher natural gas
prices, and the termination of operations by one of the Company's
competitors.
Aeromedical Services
Aeromedical services revenue increased $0.7 million or 4% to
$19.6 million in fiscal 1996, despite a decline in flight hours of
6% to 9,479 hours. During the current fiscal year three additional
aircraft under contract were added as well as one new EMS contract.
These increases along with a slight upward adjustment in contract
rates contributed to the increase in revenues in fiscal 1996 as
compared to the same period in fiscal 1995. Flight time
requirements declined primarily due to inclement winter weather.
International and Technical Services
International Oil and Gas revenues decreased by $0.9 million
or 7% to $11.7 million. The decrease in revenue is due primarily to
a temporary contract which included six dedicated aircraft in the
prior year. International flight hours increased slightly to
15,567, up 462 hours or 3%.
Technical Services revenues increased slightly to $7 million,
an increase of $0.1 million or 2%.
Direct Expenses
Direct expenses increased $6.9 million or 6% to $122.4
million, primarily attributable to the increased activity levels
in the Company's Domestic Oil and Gas Programs.
Expenses at helicopter bases rose $3.3 million or 8% to $46.3
million. Of this increase, $2.3 million is due to an increase in
personnel and overtime to support increased flight activity. In
addition, the Company increased its environmental expense reserve
by $1 million which is more fully described under Liquidity and
Capital Resources, below.
Helicopter expenses rose $4.3 million or 8% to $56.8 million.
Helicopter expenses related to flight activity including spare
parts usage, repairs and maintenance, helicopter rent, and fuel
increased a combined $4.4 million, or 11%. This amount was
partially offset by a decrease in helicopter insurance and
depreciation in the amount of $0.5 million. These increases were
consistent with the increase in operating revenues and Domestic Oil
and Gas activity levels.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses increased by
$0.6 million to $8.4 million. Human resources and other expenses
increased $0.4 and $1 million respectively. These increases are
due to a slight increase in administrative pay and an increase in
outside consulting fees of $0.7 million . These costs were
partially offset by a decrease in legal and audit fees, bad debt
expense, and depreciation expense totaling $0.9 million.
LIQUIDITY AND CAPITAL RESOURCES
The following is comparison of the first nine months of the
fiscal year ending April 30, 1996 with the period ending April 30,
1995.
The Company's cash position as of January 31, 1996 was $3
million compared to $2.5 million at April 30, 1995, the Company's
fiscal year end. Working capital increased $3.1 million from $29.8
million at fiscal year end to $32.9 million. The increase was
primarily related to an increase in notes receivable from
affiliates of $1.2 million, $0.8 million in refundable insurance
premiums relating to workers compensation, and an increase in
inventory of $0.8 million offset by an decrease in accounts
receivable of $0.3 million.
Total long-term debt increased $9.8 million to $45.6 million.
The Company's current debt obligation totals $6.8 million due in
equal quarterly installments, which the Company intends to pay with
cash flow from operations. On January 25, 1996 the Company prepaid
$2 million of term debt which was due and payable April 30, 1996.
The next installment is not due until July 31, 1996. At January
31, 1996, the Company had $14.8 million and $5.2 million of credit
capacity available under its term and revolving credit facilities,
respectively. The Company is in compliance with the provisions of
its loan agreement.
Cash generated from operating activities and financing
activities was $9.7 million and $9.2 million, respectively. The
Company utilized its cash flow from operating activities and
financing activities to fund $18.4 million in investing activities.
Investing activities included the purchase of 14 aircraft for $12.2
million, $2.8 million in aircraft capital improvements, and $3
million for the purchase of a 49% interest in Irish Helicopters
Limited. The Company has paid dividends totalling $0.6 million or
$0.12 per share
In the first quarter of fiscal 1996 the Company began an
environmental review at selected domestic bases. Based on this
review, known or suspected fuel contamination has been identified
at seven of its bases. Management now believes it is possible that
similar fuel contamination will be found at additional bases.
During the prior quarter, initial assessments of the costs to
remediate this contamination were commenced and a preliminary
estimate of the costs expected to be incurred at one of the
Company's bases was received. The Company is seeking additional
information regarding this preliminary estimate, and further
assessments are planned at all other bases at which known or
suspected fuel contamination has been identified. Depending in
part upon the results of these assessments, the Company also
anticipates that it will conduct additional studies at its other
bases. Based on the information currently available to management,
an additional provision of $250,000 has been made in the
current quarter. The Company has expensed $331,000 and $1.2
million, including the reserve provisions, for environmental costs
for the three and nine month periods, respectively. The aggregate
reserve for environmental related costs is $1.2 million, including
a $1 million provision for the nine month period. The Company will
make additional provisions in future periods to the extent appropriate
as further information regarding these costs becomes available.
RESULTS AT A GLANCE (Unaudited)
The following table provides a summary of critical operating
and financial statistics (thousands of dollars, except per share
amounts, financial ratios, flight hours and general statistics):
Nine Months Ended January 31,
Operations 1996 1995
Operating revenues $ 139,724 $ 130,493
Net earnings 4,664 3,426
Net earnings per share .92 .63
Annualized return on
shareholders' equity 8% 5.9%
Total flight hours 163,752 152,867
Financial Summary January 31, 1996 April 30, 1995
Net working capital $ 32,948 $ 29,809
Net book value of
property and equipment 96,063 86,248
Long-term debt 38,842 27,060
General Statistics
Helicopters Operated 258 254
Employees 1,669 1,649
Part II - OTHER INFORMATION
Item 6.EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 (i)Articles of Incorporation of the Company (incorporated
by reference to Exhibit No. 3.1(i) to PHI's Report on
Form 10-Q for the quarterly period ended October 31,
1994.)
(ii)By-laws of the Company.
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ending
January 31, 1996.
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.
Petroleum Helicopters, Inc.
March 5, 1996 By: Carroll W. Suggs /s/
Carroll W. Suggs
Chairman of the Board,
President and Chief
Executive Officer
(duly authorized officer)
March 5, 1996 By: John H. Untereker /s/
John H. Untereker
Vice President and
Chief Financial Officer
(principal financial
officer)