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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NO. 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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
2121 AIRLINE DRIVE, SUITE 400
P.O. BOX 578, METAIRIE, LOUISIANA 70001-5979
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (504) 828-3323
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
VOTING COMMON STOCK
NON-VOTING COMMON STOCK
(TITLE OF EACH 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. [ ]
The aggregate market value of the voting and non-voting common stock
held by non-affiliates of the registrant as of March 16, 2001 was $50,431,494
based upon the last sales price of the Common Stock on March 16, 2001, as
reported on NASDAQ.
The number of shares outstanding of each of the registrant's classes of
common stock, as of February 28, 2001 was:
Voting Common Stock..................................2,793,386 shares.
Non-Voting Common Stock..............................2,384,715 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement for the 2001
Annual Meeting of Shareholders are incorporated by reference into Part III of
this Form 10-K.
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PETROLEUM HELICOPTERS, INC.
INDEX - FORM 10-K
PART I
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
Item 4.A. Executive Officers of the Registrant..........................................................8
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters........................................................................9
Item 6. Selected Financial Data......................................................................10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................................10
Item 7.A. Quantitative and Qualitative Disclosures about Market Risk...................................19
Item 8. Financial Statements and Supplementary Data..................................................20
Petroleum Helicopters, Inc. and Consolidated Subsidiaries:
Independent Auditors' Reports..........................................................20
Consolidated Balance Sheets
- December 31, 2000, December 31, 1999, and April 30, 1999..........................22
Consolidated Statements of Operations
- Year ended December 31, 2000, Eight months ended December 31, 1999, and
Years ended April 30, 1999 and 1998..........................................23
Consolidated Statements of Shareholders' Equity
- Year ended December 31, 2000, Eight months ended December 31, 1999, and
Years ended April 30, 1999 and 1998..........................................24
Consolidated Statements of Cash Flows
- Year ended December 31, 2000, Eight months ended December 31, 1999, and
Years ended April 30, 1999 and 1998..........................................25
Notes to Consolidated Financial Statements.............................................26
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures.................................................................42
PART III
Item 10. Directors and Executive Officers of the Registrant...........................................43
Item 11. Executive Compensation.......................................................................43
Item 12. Security Ownership of Certain Beneficial Owners and Management...............................43
Item 13. Certain Relationships and Related Transactions...............................................43
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..............................43
Signatures...................................................................................47
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PART I
FORWARD-LOOKING STATEMENTS
All statements other than statements of historical fact contained in this Form
10-K and other periodic reports filed by the Company under the Securities
Exchange Act of 1934 and other written or oral statements made by it or on its
behalf, are forward-looking statements. When used herein, the words
"anticipates", "expects", "believes", "goals", "intends", "plans", or "projects"
and similar expressions are intended to identify forward-looking statements. It
is important to note that forward-looking statements are based on a number of
assumptions about future events and are subject to various risks, uncertainties,
and other factors that may cause the Company's actual results to differ
materially from the views, beliefs, and estimates expressed or implied in such
forward-looking statements. Although the Company believes that the assumptions
reflected in forward-looking statements are reasonable, no assurance can be
given that such assumptions will prove correct. Factors that could cause the
Company's results to differ materially from the results discussed in such
forward-looking statements include but are not limited to the following: flight
variances from expectations, volatility of oil and gas prices, the substantial
capital expenditures and commitments required to acquire aircraft, environmental
risks, competition, government regulation, unionization, operating hazards,
risks related to international operations, the ability to obtain insurance, and
the ability of the Company to implement its business strategy. All
forward-looking statements in this document are expressly qualified in their
entirety by the cautionary statements in this paragraph. PHI undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise.
ITEM 1. BUSINESS
GENERAL
Petroleum Helicopters, Inc. (the "Company" or "PHI"), a Louisiana corporation,
was incorporated as a Delaware corporation in 1949. Since its inception, the
Company's primary business has been to transport personnel and, to a lesser
extent, parts and equipment, to, from, and among offshore platforms for
customers engaged in the oil and gas exploration, development, and production
industry. Today, the Company maintains its position as the largest provider of
helicopter transportation services in the Gulf of Mexico ("the Gulf"), providing
approximately 47% of all the contracted aircraft in the Gulf. PHI also provides
helicopter services internationally and to non-oil and gas customers such as
emergency medical service providers and governmental agencies. The Company's
Technical Services Unit provides maintenance and repair services to helicopter
airframes and engines and sells helicopter repair parts. The Company currently
operates 279 aircraft domestically and internationally.
On March 10, 2000, the Company's pilots voted to become organized under the
Office and Professional Employees International Union (OPEIU). On February 21,
2001, the National Mediation Board (NMB) declared that all practical methods for
adjusting the dispute between PHI and the OPEIU have been exhausted without
effecting a settlement. See "Employees" within this "Item 1. Business" and
"Union Job Action" within "Item 7. Management's Decision and Analysis of
Financial Condition and Results of Operations".
Beginning in late 2000, certain actions were taken in an effort to restore the
profitability of the Company. Included in those actions were a reduction in the
work force announced in December 2000, and implemented in February 2001, which
primarily affected Lafayette support operations; and closure of operations in
Thailand and China, as well as fixed wing operations in Lafayette, which
consisted of four fixed wing aircraft. The Company also initiated discussions to
exit its ownership position in Clintondale Aviation, Inc. with operations
primarily in Kazakhstan. Further, the Company is in the process of restructuring
its maintenance operations at its main facility in Lafayette, Louisiana. The
Company anticipates that it will take several months for the cost structure to
reflect these actions. The Company also sold several of its nonessential
aircraft subsequent to year end and has executed contracts for the sale of
certain other aircraft. The Company also has plans for sales of other identified
aircraft over the next several months.
DESCRIPTION OF OPERATIONS
PHI is a leading provider of helicopter services to the offshore oil and gas
industry and to other customers such as emergency medical providers and
governmental agencies. The Company operates under a variety of contractual
arrangements to perform services that include transporting passengers and
equipment, operating customer-owned aircraft, leasing aircraft to certain
customers, consulting, and the repair and maintenance of helicopters.
Domestically, oil and gas aviation revenues are earned in
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federal and state waters offshore of the States of Louisiana, Texas, Alabama,
Mississippi, and California. The Company's international operations are
currently conducted in Angola, Antarctica, Brazil, China, Kazakhstan, Mexico,
Russia (Sakhalin Island), Saudi Arabia, Taiwan, and Democratic Republic of
Congo. Aeromedical operations are currently conducted in Arizona, Arkansas,
California, Colorado, Florida, Illinois, Kentucky, Louisiana, Michigan,
Mississippi, North Dakota, Ohio, South Carolina, and Wisconsin. For financial
information regarding the Company's operating segments and the geographic areas
in which they operate, see Note 10 of the Notes to Consolidated Financial
Statements included elsewhere in this Annual Report.
DOMESTIC OIL AND GAS AND OTHER. PHI operates approximately 200 aircraft related
to its Domestic Oil and Gas operations from several bases or heliports in the
Gulf of Mexico region and one base in California. Operating revenues from the
Domestic Oil and Gas and Other segment accounted for 64%, 62%, 64%, and 69% of
consolidated operating revenues during the year ended December 31, 2000, the
eight months ended December 31, 1999, and the years ended April 30, 1999 and
April 30, 1998, respectively.
PHI's Oil and Gas operations primarily transport its customers' workers and
equipment to platforms and other offshore locations. Oil and gas exploration and
production companies and other offshore oil service companies use PHI's services
for routine offshore transportation and also to evacuate personnel during
medical and safety emergencies and during the threat of hurricanes and other
adverse weather conditions. Most of the aircraft are available for hire by any
customer. However, some are dedicated to individual customers. The Company
operates helicopters that have flying ranges of up to 450 miles and thus, are
capable of servicing many of the deepwater oil and gas operations that are 50 to
250 miles offshore.
The Domestic Oil and Gas and Other segment also includes certain non-oil and gas
related operations including activities related to forest fire-fighting for
certain government agencies.
While routine and minor maintenance and repairs are performed at the various
Domestic Oil and Gas base locations, certain major overhauls and maintenance and
repairs of a larger scope are performed at PHI's Lafayette, Louisiana facility.
In 2001, the Company will move to a new leased facility in Lafayette enabling
the Company to consolidate its Lafayette operations.
INTERNATIONAL. PHI also provides helicopter services in Latin America, Africa,
Eastern Europe, Asia, and Antarctica. The Company operates approximately 30
aircraft internationally. Each aircraft operating internationally is typically
dedicated to one customer. The Company's international customers are mostly oil
and gas customers, including some that are national oil companies and some that
are based in the U. S. However, some international services are also provided to
certain foreign governmental entities and certain U. S. governmental agencies.
Operating revenues from the Company's International segment accounted for 9% of
consolidated operating revenues during the year ended December 31, 2000, and 10%
during each of the eight months ended December 31, 1999, and the years ended
April 30, 1999 and April 30, 1998.
AEROMEDICAL. The Company also provides air medical transportation services for
hospitals and medical programs in several states and currently operates
approximately 45 aircraft within its Aeromedical segment. The aircraft dedicated
to this segment are specially outfitted to accommodate emergency patients and
related emergency medical equipment. The Aeromedical segment's operating
revenues accounted for 19%, 21%, 19%, and 15% of consolidated operating revenues
during the year ended December 31, 2000, the eight months ended December 31,
1999, and the years ended April 30, 1999 and April 30, 1998, respectively.
The Company's Air Evac Services, Inc. subsidiary operates 10 aircraft in Arizona
and offers its aeromedical services to many hospitals and medical programs. Each
of the other aircraft operated by the Aeromedical segment are typically
dedicated to one hospital or medical program.
TECHNICAL SERVICES. PHI performs maintenance and repair services at its
Lafayette facility for a variety of helicopter owners. The Technical Services
segment's capabilities include the maintenance and overhaul of helicopter
airframes, engines, and components. This segment also sells repair parts. The
Technical Services segment has an experienced staff that performs a range of
maintenance tasks under an FAA-approved repair station license. The license
includes authority to repair airframes, powerplants, accessories, radios, and
instruments and to perform specialized services. PHI Technical Services is also
an authorized service center for Bell Helicopter Textron, Inc., American
Eurocopter Corporation, and Turbomeca Engine Corporation, and has extensive
experience and capabilities in Sikorsky Aircraft Corporation S-76 maintenance
and repair. Operating revenues from the Technical Services segment accounted for
7% of consolidated operating revenues during each of the year ended December 31,
2000, the eight months ended December 31, 1999, and the year ended April 30,
1999 and 6% for the year ended April 30, 1998.
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WEATHER AND SEASONAL ASPECTS
Poor visibility, high winds, and heavy precipitation can affect the safe use of
helicopters and result in a reduced number of flight hours. A significant
portion of the Company's operating revenues is dependent on actual flight hours
and a substantial portion of the Company's direct costs is fixed. Thus,
prolonged periods of adverse weather can materially and adversely affect the
Company's operating revenues and net earnings. In the Gulf of Mexico, the months
of December through February have more days of adverse weather conditions than
the other months of the year. Also in the Gulf of Mexico, June through November
is tropical storm season. When a tropical storm is about to enter the Gulf of
Mexico or begins developing, flight activity may increase because of evacuations
of offshore workers. However, during tropical storms, PHI is unable to operate
offshore.
Additionally, the fall and winter months have fewer hours of daylight.
Consequently, flight hours are generally lower at these times, which typically
result in a reduction in operating revenues during those months. The Company
currently operates seventy-nine aircraft equipped to fly pursuant to instrument
flight rules ("IFR") in the Gulf, which enables these aircraft, when manned by
IFR rated pilots and co-pilots, to operate at times when poor visibility
prevents flights by aircraft that can fly only by visual flight rules ("VFR").
Poor visibility is the most common of the adverse weather conditions that
affects the Company's operations.
INVENTORY
For aircraft maintenance and repair related to PHI helicopters and those
repaired by the Technical Services segment, the Company carries an inventory of
aircraft parts. Many of these inventory items are parts that have been removed
from an aircraft, reworked to a useable condition, and returned to inventory.
The Company uses systematic valuation procedures to estimate the costs of these
used parts. As a result, the costs and carrying values of inventory reported in
the Company's financial statements are impacted by these estimates.
RISKS AND UNCERTAINTIES OF FOREIGN OPERATIONS
Operations in foreign countries generally are subject to various risks attendant
to doing business outside the United States. This may include risks of war,
general strikes, civil disturbances, currency fluctuations and devaluations and
governmental activities that may limit or disrupt markets, restrict payments or
the movement of funds, or result in the deprivation of contract rights or the
taking of property without fair compensation. No prediction can be made as to
what foreign governmental regulations may be enacted in the future that could be
applicable to helicopter operations.
SAFETY AND INSURANCE
The operation of helicopters inherently involves a degree of risk. Hazards, such
as aircraft accidents, collisions, fire, and adverse weather, are inherent in
the business of providing helicopter services and may result in losses of
equipment and revenues. The Company's safety record is very favorable in
comparison to the record for all United States operators as reflected in
industry publications.
The Company is subject to the federal Occupational Safety and Health Act
("OSHA") and similar state statutes. The Company has an extensive safety and
health program. The primary functions of the safety staff are to develop Company
policies that meet or exceed the safety standards set by OSHA, train Company
personnel, and make daily inspections of safety procedures to ensure their
compliance with Company policies on safety. Personnel are required to attend
safety training meetings at which the importance of full compliance with safety
procedures is emphasized. The Company believes that it meets or exceeds all OSHA
requirements and that its operations do not expose its employees to unusual
health hazards.
The Company maintains hull and liability insurance on its aircraft, which
generally insures the Company against physical loss of, or damage to, its
aircraft and against certain legal liabilities to others. In addition, the
Company carries war risk, expropriation, confiscation, and nationalization
insurance for its aircraft involved in international operations. In some
instances, the Company is covered by indemnity agreements from oil companies,
hospitals, and medical programs in lieu of, or in addition to, its insurance.
The Company's aircraft are not insured for loss of use. While the Company
believes it is adequately covered by insurance and indemnification arrangements,
the loss, expropriation or confiscation of, or severe damage to, a material
number of its helicopters could adversely affect revenues and profits.
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GOVERNMENT REGULATION
As a commercial operator of helicopters, the Company's flight and maintenance
operations are subject to regulation by the Federal Aviation Administration (the
"FAA") pursuant to the Federal Aviation Act of 1958 (the "Federal Aviation Act",
as amended). The FAA has authority to exercise jurisdiction over personnel,
aircraft, ground facilities, and other aspects of the Company's business.
The Company transports personnel and property in its helicopters pursuant to an
Air Taxi Certificate granted by the FAA under Part 135 of the Federal Aviation
Regulations. This certificate contains operating specifications that allow the
Company to conduct its present operations but is subject to amendment,
suspension, and revocation in accordance with procedures set forth in the
Federal Aviation Act. The Company is not required to file tariffs showing rates,
fares, and other charges with the FAA. The FAA's regulations, as currently in
effect, also require that at least 75% of the Company's voting securities be
owned or controlled by citizens of the United States or one of its possessions,
and that the president and at least two-thirds of the directors of the Company
be United States citizens. The Company's president and all of its directors are
United States citizens, and its organizational documents provide for the
automatic reduction in voting power of each share of voting common stock owned
or controlled by a non-United States citizen if necessary to comply with these
regulations.
The National Transportation Safety Board (the "NTSB") is authorized to
investigate aircraft accidents and to recommend improved safety standards.
The Company is also subject to the Communications Act of 1934 because of its
ownership and operation of a radio communications flight following network
throughout the Gulf of Mexico and off the coast of California.
Numerous federal statutes and rules regulate the offshore operations of the
Company and the Company's customers, pursuant to which the federal government
has the ability to suspend, curtail, or modify certain or all offshore
operations. A suspension or substantial curtailment of offshore oil and gas
operations for any prolonged period would have an immediate and materially
adverse effect on the Company. A substantial modification of current offshore
operations could adversely affect the economics of such operations and result in
reduced demand for helicopter services.
COMPETITION
The Company's business is highly competitive in each of its markets. Many of the
Company's contracts are awarded after competitive bidding. The principal aspects
of competition are safety, price, reliability, availability, and service.
The Company is the largest operator of helicopters in the Gulf of Mexico. There
are two major and several small competitors operating in the Gulf market.
Certain of the Company's customers and potential customers in the oil industry
operate their own helicopter fleets; however, oil companies traditionally
contract for most specialty services associated with offshore operations,
including helicopter services. Competition in the air medical market continues
to increase.
The Technical Services segment competes regionally and nationally against
various small and large repair centers in the United States and Canada.
Competition has intensified with aggressive pricing and acquisition moves by
several service providers and original equipment manufacturers and their
subsidiaries.
EMPLOYEES
As of December 31, 2000, the Company employed a total of 1,939 people. As of
March 14, 2001, the Company reduced the number of its employees to 1,784 as part
of its restructuring as discussed in Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations.
On March 10, 2000, the Company's pilots voted to become represented by the
Office and Professional Employees International Union. On February 21, 2001, the
National Mediation Board declared that all practical methods for adjusting the
dispute between PHI and the OPEIU have been exhausted without affecting a
settlement. The NMB released both parties from the mediation process, thereby
starting a 30-day cooling off period, which ended at 11:01 p.m. CST March 23,
2001. At this point, the union is free to engage in job actions, including work
stoppages, and the Company is free to do whatever is reasonable necessary to
continue safe operations. As of March 29, 2001, the Company is unable to predict
with any certainty what will happen after this cooling-off period.
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AIRCRAFT MAINTENANCE & REPAIR
Because of safety concerns and federal regulations, the Company is required to
perform regular inspections and perform maintenance, overhauls, and repairs to
its aircraft in accordance with strict guidelines imposed by FAA, NTSB, and the
Company itself. The Company incurs significant costs to perform these
maintenance, overhauls, and repairs.
CUSTOMERS
The Company's principal customers are major and independent exploration and
production companies. The Company also serves oil and gas service companies,
hospitals and medical programs, government agencies, and other aircraft owners
and operators. The Company's largest customer, a Domestic Oil and Gas customer,
accounted for 12%, 13%, 17%, and 16% of operating revenues for the year ended
December 31, 2000, the eight months ended December 31, 1999, and the years ended
April 30, 1999, and 1998, respectively. The Company's five largest customers
accounted for approximately 35% of operating revenues in each of the last four
fiscal periods.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local environmental laws and
regulations that impose limitations on the discharge of pollutants into the
environment and establish standards for the treatment, storage, recycling, and
disposal of toxic and hazardous wastes. The Company has established reserves for
environmental costs, which are described under Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Environmental
Matters"; and expects to record additions to such reserves in the future
periods, to the extent appropriate, as environmental reviews and assessments are
conducted during 2001 and estimates of the environmental remediation costs
become available.
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ITEM 2. PROPERTIES
AIRCRAFT
As of December 31, 2000, 80% of the Company's aircraft were actively assigned as
compared with 77% and 78% as of December 31, 1999 and April 30, 1999,
respectively. During 2000, demand for flight services began to increase in the
Company's Domestic Oil and Gas and Other segment while demand for flight
services in the Company's International and Aeromedical segments declined.
Certain information regarding the Company's owned and leased fleet as of
December 31, 2000 is set forth in the following table:
CRUISE APPR.
NUMBER SPEED RANGE
MANUFACTURER TYPE IN FLEET ENGINE PASSENGERS (MPH) (MILES)
- ------------ ---------------- -------- ------------- ---------- ------ ------
Bell 206B-III 12 Turbine 4 120 300
206L-I, III, IV 87 Turbine 6 130 310
407 36 Turbine 6 144 420
212(1) 10 Twin Turbine 13 115 300
214ST(1) 6 Twin Turbine 18 155 450
222 1 Twin Turbine 8 160 370
412(1) 25 Twin Turbine 13 135 335
Boelkow BK-117 6 Twin Turbine 6 135 255
BO-105 31 Twin Turbine 4 135 270
Aerospatiale AS350 B2 12 Turbine 5 140 385
AS350 B3 4 Turbine 5 140 337
Sikorsky S-76(1) 18 Twin Turbine 12 150 400
Kaman K-Max K-1200 1 Turbine 1 100 225
MIL Design MIL-8 MTV(1) 2 Twin Turbine 28 140 310
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Total Helicopters 251
-----
Beechcraft King Air 200(1) 5 Turboprop 8 300 1,380
LET L410(1) 2 Turboprop 15 215 620
Conquest Cessna 441(1) 3 Turboprop 3 330 1,000
-----
Total Fixed Wing 10
-----
Total Aircraft 261
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(1) Equipped to fly under instrument flight rules ("IFR"). All other types
listed can only fly under visual flight rules ("VFR"). See Item 1.
"Business - Weather and Seasonal Aspects."
Of the 261 aircraft listed, the Company owns 142 and leases 119. Additionally,
the Company operates 18 aircraft that are owned or leased by customers that are
not reflected in the foregoing tables. Most of the owned aircraft collateralize
the Company's long-term debt.
The Company sells aircraft whenever they (i) become obsolescent, (ii) do not fit
into future fleet plans, or (iii) are surplus to the Company's needs. The
Company often sells its aircraft for more than their book value. However, the
Company may not be able to realize more than book value if it were to sell a
large number of aircraft in a short period of time.
FACILITIES
The Company currently leases its executive office space in Metairie, Louisiana
(Metropolitan New Orleans). The lease covers approximately 8,107 square feet and
expires on July 31, 2005.
The Company's principal operating facility is located on property leased from
The Lafayette Airport Commission at the Lafayette Regional Airport in Lafayette,
Louisiana. The lease covers approximately twenty-eight acres and seventeen
buildings, with an aggregate of approximately 135,000 square feet, housing the
Company's main operational and administrative offices and the main repair and
maintenance facility. The Company has extended this lease until completion of a
new facility to be leased from The Lafayette Airport Commission at the Lafayette
Regional Airport. The lease term for this new facility is for 20
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years including three five-year renewal options. The new 253,000 square foot
facility is scheduled for completion in September 2001. This move will not have
a material effect on operating costs. Under the terms of this lease, there is a
commitment by the Company to fund $4 million of construction costs, in which
case the monthly lease payments for the first ten years of the lease will be
reduced by the amortization of $4 million over ten years at 7% per annum. The
Company expects that it will have to fund the $4 million.
The Company owns its Boothville, Louisiana operating facility. The property has
a 23,000 square foot building, a 7,000 square foot hangar, and landing pads for
35 helicopters.
The Company also leases property for 12 additional bases to service the oil and
gas industry throughout the Gulf and one base in California. Those bases that
represent a significant investment by the Company in leasehold improvements or
which are particularly important to the Company's operations are:
A. Morgan City Base (Louisiana) - containing approximately
fifty-three acres, is under a lease that expires June 30,
2003, with options to extend through June 30, 2013. The
Company has built a variety of operational and maintenance
facilities on this property, including landing pads for
forty-six helicopters. The Company believes that this facility
is the largest commercial heliport in the world.
B. Intracoastal City Base (Louisiana) - containing approximately
twenty-three acres under several leases in Vermilion Parish,
all with options to extend through July 31, 2001. The Company
has built a variety of operational and maintenance facilities
on this property, including landing pads for forty-five
helicopters.
C. Houma-Terrebonne Airport (Louisiana) - containing
approximately fourteen acres and certain buildings leased
under four leases from the Houma-Terrebonne Airport
Commission, which expire on August 31, 2001. The Company has
landing pads for thirty helicopters on this property.
D. Galveston (Texas) - containing approximately four acres under
a lease that expires May 1, 2001. The Company has operations
and maintenance facilities totaling 7,200 square feet and
landing pads for 30 helicopters.
F. Fourchon (Louisiana) - containing approximately eight acres,
is under original lease expiring April 30, 2006. The Company
has landing pads for ten helicopters on this property.
The Company's other operations related bases in the United States are located
along the Gulf in Louisiana at New Orleans, Cameron and Lake Charles; in Texas
at Sabine Pass, Port O'Connor, and Rockport; in Alabama at Theodore; and in
California at Santa Barbara.
The Company operates also from offshore platforms that are provided without
charge by the owners of the platforms, although in certain instances the Company
is required to indemnify the owners against loss in connection with the
Company's use thereof.
Bases for the Company's international and air medical operations are generally
furnished by the customer.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to, and its property is not the subject of, any
material pending legal proceedings, other than ordinary routine litigation
incidental to its business.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 4.A. EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information about the executive officers of PHI is set forth in the
following table and accompanying text:
Name Age Position
---- --- --------
Carroll W. Suggs 62 Chairman of the Board of Directors and Chief Executive Officer
Lance F. Bospflug 46 President
Michael J. McCann 53 Chief Financial Officer and Treasurer
Richard A. Rovinelli 52 Chief Administrative Officer and Director of Human Resources
William P. Sorenson 51 Director of International, Aeromedical, and Technical Services
Robert D. Cummiskey 58 Director of Risk Management and Secretary
Carlin N. Craig 53 Director of Operations and General Manager - Oil and Gas Aviation Services
Glendon R. Cornett 57 Director of Maintenance and FAR 145 Maintenance
Robert Bouillion 35 Director of Safety, Health, and Environment
Michael Hurst 53 Chief Pilot
Mrs. Suggs became Chairman of the Board in 1990 and Chief Executive Officer in
1992. She also held the office of President from 1994 until September 2000.
Mr. Bospflug joined PHI in September 2000 as President. He previously was
President and Chief Executive Officer of T. L. James and Company from 1999 to
2000. Prior to that, he was Executive Vice President and Chief Financial
Officer. Mr. Bospflug holds a Masters of Business Administration from the
University of South Dakota and is a Chartered Financial Analyst.
Mr. McCann has served as Chief Financial Officer ("CFO") and Treasurer since
November 1998. From January 1998 to October 1998, he was the CFO for Global
Industries Ltd. and Chief Administrative Officer ("CAO") from July 1996. Prior
to that, he was CFO for Sub Sea International, Inc. Mr. McCann is a Certified
Public Accountant and holds a Masters of Business Administration from Loyola
University.
Mr. Rovinelli joined the Company in February 1999 as Director of Human
Resources. From January 1996 to February 1999, he was self-employed. Prior to
that, he was Manager, Human Resources for Arco Alaska, Inc., Headquarters Staff
Manager, Human Resource Services, Arco Oil and Gas Company, as well as numerous
other positions within Arco. Mr. Rovinelli holds a Bachelor of Science Degree in
Industrial Psychology from the University of Houston.
Mr. Sorenson became Director of International, Aeromedical, and Technical
Services in January 2001. Previously, he was Director of Corporate Marketing/New
Business since 1999 after serving as General Manager of Aeromedical Services
since November 1995.
Mr. Cummiskey has served as Secretary since 1992 and Director of Risk Management
since 1991.
Mr. Craig became Director of Operations in January 2001 and was also named
General Manager of Oil and Gas Aviation Services in February 2001. He has been
with PHI since 1977 and held the title of Regional Manager of the Eastern Gulf
of Mexico from 1992 until his recent appointment.
Mr. Cornett became Director of Maintenance and FAR 145 Maintenance in January
2001. He has served PHI in various positions since 1964 and from 1991 to 2000
was Director of FAR135 Maintenance.
Mr. Bouillion became Director of Safety, Health, and Environment in January
2001. Previously, he was Director of Safety from 1999 to 2000, Assistant
Director of Safety from 1998 to 1999, and Director of Industrial Safety from
1995 to 1998.
Mr. Hurst has served as Chief Pilot since 1994.
8
11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's voting and non-voting common stock trades on The NASDAQ Stock
Market, Small Cap Issuers ("NASDAQ") under the symbols PHEL and PHELK,
respectively. The following table sets forth the range of high and low per share
bid prices, as reported by NASDAQ, and dividend information for the Company's
voting and non-voting common stock for the fiscal quarters indicated. Effective
December 31, 1999, the Company changed its fiscal year end from April 30 to
December 31 of each year.
VOTING NON-VOTING
------------------- ------------------- DIVIDENDS
PERIOD HIGH LOW HIGH LOW PER SHARE
------ ---- --- ---- --- ---------
January 1, 2000 to March 31, 2000 12.438 9.500 12.000 9.750 --
April 1, 2000 to June 30, 2000 11.875 8.250 11.125 8.000 --
July 1, 2000 to September 30, 2000 17.000 10.125 15.750 9.688 --
October 1, 2000 to December 31, 2000 13.375 11.250 15.000 10.750 --
May 1, 1999 to July 31, 1999 15.000 11.250 15.000 10.750 0.05
August 1, 1999 to October 31, 1999 13.750 9.000 12.500 9.375 --
November 1, 1999 to December 31, 1999 9.875 9.000 9.875 8.750 --
May 1, 1998 to July 31, 1998 23.000 16.500 21.500 17.875 0.05
August 1, 1998 to October 31, 1998 18.875 14.000 19.000 14.500 0.05
November 1, 1998 to January 31, 1999 18.000 15.500 18.875 15.500 0.05
February 1, 1999 to April 30, 1999 16.000 12.000 16.000 12.000 0.05
The declaration and payment of dividends is at the discretion of the Board of
Directors. Future dividends are dependent upon, among other things, the
Company's results of operations, financial condition, cash requirements, future
prospects and other factors deemed relevant by the Board. On October 29, 1999,
the Board of Directors voted to suspend PHI's quarterly cash dividend payments.
A credit agreement to which the Company is a party generally restricts the
declaration or payment of dividends to 20% of net earnings for the previous four
fiscal quarters. See Item 8. "Financial Statements and Supplementary Data -
Notes to Consolidated Financial Statements, Note 4."
As of March 13, 2001, there were approximately 1,055 holders of record of the
Company's voting common stock and 104 holders of record of the Company's
non-voting common stock.
9
12
ITEM 6. SELECTED FINANCIAL DATA
Year Ended Eight Months Ended
December 31, December 31, Year Ended April 30,
-------------------- ---------------------- ----------------------------------------------
2000 1999(3) 1999 1998(3) 1999 1998(4) 1997 1996
-------- -------- -------- -------- -------- -------- -------- --------
Income Statement Data (Thousands of Dollars, except per share data)
Operating revenues $232,074 $223,112 $146,380 $170,607 $247,339 $236,582 $211,663 $185,865
Net earnings (loss) (12,294)(1) (5,019)(1) (2,699) 5,194(1) 2,988(1) 7,417 6,470 6,466
Net earnings (loss) per share
Basic (2.38) (0.97) (0.52) 1.01 0.58 1.45 1.27 1.28
Diluted (2.38) (0.97) (0.52) 0.99 0.57 1.43 1.25 1.27
Cash dividends declared per
share -- 0.15 0.05 0.10 0.20 0.20 0.20 0.17
Balance Sheet Data(2)
Total assets $222,755 $223,056 $223,056 $238,011 $231,575 $227,021 $196,631 $161,315
Total debt 74,819 77,640 77,640 81,836 80,296 72,619 62,460 37,332
Working capital 41,547 54,699 54,699 52,486 51,030 47,971 41,247 26,543
Shareholders' equity 81,622 93,623 93,623 99,440 96,581 94,705 87,416 81,401
- -------------
(1) See Item 8. "Financial Statements and Supplementary Data - Notes to
Consolidated Financial Statements, Note 1 - Summary of Significant
Accounting Policies (Fiscal Year Change)" and "Note 2 - Special Charges."
(2) As of the end of the period.
(3) Information for the year ended December 31, 1999 and the eight months ended
December 31, 1998 is derived from unaudited financial information and
presented for comparison purposes only.
(4) On December 31, 1997, PHI purchased the net assets of Samaritan AirEvac.
The results of that acquisition are consolidated with the Company's results
effective January 1, 1998. See Item 8. "Financial Statements and
Supplementary Data - Notes to Consolidated Financial Statements, Note 12 -
AirEvac acquisition."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") should be read in conjunction with the Company's
Consolidated Financial Statements for the year ended December 31, 2000, the
eight months ended December 31, 1999, and the years ended April 30, 1999, and
1998 and the related Notes to Consolidated Financial Statements.
OVERVIEW
Despite increased oil and gas prices during 2000 when compared to 1999, activity
and revenues of the Company in the Gulf of Mexico, its primary market, although
higher than in 1999, remain below the levels achieved in 1998. Additionally, the
Company's costs have not yet been fully aligned with revenues, and in the
Company's other segments, revenues declined as compared to 1999.
The Company's efforts to effect cost reductions and efficiency measures in
several areas have, for the most part, been offset by increased costs in other
areas, and its efforts to expand its areas of operation have been disappointing.
In late 2000, the Board of Directors approved a plan to restore profitability
that included further cost reductions, rate increases for helicopter services,
reductions in the work force, divestiture or discontinuance of marginal or
unprofitable business efforts, and disposition of redundant aircraft. As a
result of actions implemented to date, the Company recorded significant charges
in its results for 2000. In addition, a review of inventory produced a
significant writedown to record inventory at its estimated net realizable value.
The Company announced an increase in its published rates for helicopter service,
effective May 1, 2001 or upon expiration of existing customer contracts. This
increase followed an earlier increase announced by the Company, which was
effective January 1, 2001. Revenue may decrease as a result of the loss of some
customers unwilling to accept the Company's increased rates, which was
considered in announcing this latest rate increase.
As the management, the Board of Directors, and employees of PHI continue their
efforts to restore profitability, the Company expects that it may have to take
additional charges in 2001, and it will face other challenges to its progress.
It must make further increases in pilot and mechanic compensation necessary for
it to maintain competitive compensation. Also, as discussed
10
13
below, the Company expects to incur environmental charges in 2001, and must deal
with the uncertainty of possible union job action.
RESULTS OF OPERATIONS
The following tables present segment operating revenues and segment operating
profit before tax, along with certain non-financial operational statistics, for
the years ended December 31, 2000 and 1999, the eight months ended December 31,
1999 and 1998, and the years ended April 30, 1999 and 1998:
Year Ended Eight Months Ended
December 31, December 31, Year Ended April 30,
----------------------- ----------------------- -----------------------
2000 1999(1) 1999(2) 1998(1) 1999(2) 1998(2)(5)
--------- --------- --------- ---------- --------- ---------
Thousands of Dollars, except aircraft statistics
Segment operating revenues
Domestic Oil and Gas and Other
segment $ 149,062 $ 137,087 $ 91,004 $ 113,221 $ 159,335 $ 163,911
International segment 21,703 22,336 14,676 16,484 24,112 22,801
Aeromedical segment 44,282 45,104 30,249 31,982 46,838 35,879
Technical Services segment 17,027 18,585 10,451 8,920 17,054 13,991
--------- --------- --------- ---------- --------- ---------
Total $ 232,074 $ 223,112 $ 146,380 $ 170,607 $ 247,339 $ 236,582
========= ========= ========= ========== ========= =========
Segment operating profit(3)(4)
Domestic Oil and Gas and Other
segment $ (2,201) $ (3,052) $ (2,285) $ 13,188 $ 12,678 $ 19,287
International segment (714) (2,014) 1,120 (849) (3,983) (3)
Aeromedical segment (1,454) 489 (488) 1,831 2,864 2,859
Technical Services segment (550) 2,965 1,533 1,190 2,661 2,779
--------- --------- --------- ---------- --------- ---------
Total $ (4,919) $ (1,612) $ (120) $ 15,360 $ 14,220 $ 24,922
========= ========= ========= ========== ========= =========
Flight hours
Domestic Oil and Gas and Other
segment 158,094 150,785 100,966 128,560 178,549 204,124
International segment 22,338 23,529 15,586 17,412 25,355 28,966
Aeromedical segment 21,490 21,845 14,466 15,111 22,320 18,783
Other 545 581 374 291 498 392
--------- --------- --------- ---------- --------- ---------
Total 202,467 196,740 131,392 161,374 226,722 252,265
========= ========= ========= ========== ========= =========
Aircraft operated at period end
Domestic Oil and Gas and Other
segment 204 200 200 226 207 224
International segment 29 27 27 35 34 35
Aeromedical segment 46 50 50 48 49 48
--------- --------- --------- ---------- --------- ---------
Total 279 277 277 309 290 307
========= ========= ========= ========== ========= =========
(1) Information for the year ended December 31, 1999 and the eight months ended
December 31, 1998 is derived from unaudited financial information and
presented for comparison purposes only.
(2) During 2000, the Company modified its segment disclosure by segregating its
previously reported Oil and Gas segment into three separate segments. The
Company now identifies four segments that meet the requirements of SFAS 131
for disclosure. The reportable segments are Domestic Oil and Gas and Other,
International, Aeromedical, and Technical Services. The Company also
modified its methodology for allocating certain of its operating overhead
costs. See Note 10 of the Consolidated Financial Statements.
(3) Segment operating profit is profit before tax and excludes unallocated
corporate selling, general, and administrative costs and other income, net.
(4) Includes special charges. See Note 2 of the Consolidated Financial
Statements.
(5) On December 31, 1997, PHI purchased the net assets of Samaritan AirEvac.
The results of that acquisition are reflected in the Aeromedical segment
results effective January 1, 1998. See Item 8. "Financial Statements and
Supplementary Data - Notes to Consolidated Financial Statements, Note 12 -
AirEvac acquisition.
11
14
YEAR ENDED DECEMBER 31, 2000 COMPARED WITH YEAR ENDED DECEMBER 31, 1999 (see
Note 1 of the Notes to Consolidated Financial Statements included elsewhere in
this annual report)
For the years ended December 31, 2000 and 1999, the Company recorded significant
and special charges that resulted from a reduction in work force, asset
writedowns, increases in pilot compensation, and decisions to exit certain
operations. Where appropriate, the charges are allocated to the Company's
business segments and are included in the respective discussion of each segment.
Domestic Oil and Gas and Other
The Domestic Oil & Gas and Other segment revenues increased 8.7% to $149.1
million for 2000 compared to $137.1 million for the same period in 1999.
Increased domestic activity that resulted from increased oil and gas exploration
and production activities in the Gulf of Mexico, increased forest fire-fighting
activity, and rate increases implemented in January 2000 contributed to the
increase.
The segment had a $2.2 million operating loss in 2000 compared to a $3.1 million
operating loss for the same period in 1999. The 2000 loss included a $2.4
million charge for the write-down of inventory, $0.9 million for a retroactive
pay adjustment for pilots, and $0.8 million for severance costs that were
included in special charges. The operating loss in 1999 included $1.3 million of
special charges (see Special Charges within this discussion), $1.5 million in
charges for environmental remediation, and $1.7 million for the disposition of
slow-moving inventory. Operating margin of (1.5)% for 2000 compares to (2.2)%
for the same period last year. The decrease in operating loss was primarily due
to increased revenues, lower aircraft depreciation, and rate increases in
January 2000. Increases in pilot compensation, aircraft repairs and maintenance,
fuel, insurance, helicopter rent, and pilot training costs partially offset the
decrease in operating loss. The increased fuel costs were the result of both
increased flight activity and increased fuel prices.
International
The International segment's revenues decreased 2.8% to $21.7 million for 2000
compared to $22.3 million for the same period in 1999. Decreased revenues that
resulted from the closure of certain operations in South America were primarily
responsible for the decrease. Increased revenue of certain other foreign
locations partially offset the decrease.
The International segment had a $0.7 million operating loss for 2000 compared to
a $2.0 million operating loss for the same period in 1999. Operating margin of
(3.3)% for 2000 compares to (9.0)% for the same period last year. The operating
loss in 2000 included a $0.3 million charge for the write-down of inventory,
$0.1 million for a retroactive pay adjustment for pilots, and $0.1 million for
severance costs that were included in special charges. The operating loss in
1999 included $3.5 million of special charges (see Special Charges within this
discussion). In 2000, increased repairs, maintenance, and insurance, and the
decreased revenues also negatively impacted operating profit.
Aeromedical
The Aeromedical segment's revenue decreased 1.8% to $44.3 million for 2000
compared to $45.1 million during the same period in the prior year. The decrease
in revenues is primarily attributable to decreased revenue and activity in the
Company's AirEvac operations in Arizona. In November 1999, the Company
restructured its Arizona operations and reduced the number of its aircraft in
that operation.
The Aeromedical segment had an operating loss of $1.5 million for 2000 compared
to operating income of $0.5 million for the same period in 1999. The operating
loss in 2000 included a $0.7 million charge for the write-down of inventory and
$0.2 million for a retroactive pay adjustment for pilots. Operating margin was
(3.3)% for the year ended December 31, 2000 and compares to 1.1% for the same
period in 1999. In addition to the inventory write-down and the increased pilot
pay, increased repairs and maintenance, fuel, helicopter rental, and pilot
training costs, and the decreased revenues contributed to the lower operating
profit. Lower labor costs that were primarily attributable to AirEvac's
restructuring partially offset the decrease in operating profit.
Technical Services
Technical Services segment operating revenues for 2000 were $17.0 million
compared to $18.6 million in the prior year, a decrease of 8.4%. The decrease in
operating revenues was primarily attributable to work performed on two large
contracts for the refurbishment and overhaul of two helicopters and a large
parts sale, all occurring during the year ended December 31,
12
15
1999. An ongoing contract to provide maintenance to certain military aircraft
commenced in the second quarter of 2000, which partially offset the decrease.
Technical Services operating profit decreased to a $0.6 million operating loss
for the year compared to $3.0 million operating profit for 1999. The operating
loss in 2000 included a $0.9 million charge for the write-down of inventory and
$0.2 million for severance costs that were recorded in Special Charges. The
operating margin was (3.2)% in the year ended December 31, 2000 and 16.0% in the
year ended December 31, 1999.
OTHER INCOME, NET
Other income, net, was $3.2 million for 2000 as compared to $7.9 million for the
prior year. The other income, net, for 2000 included $4.0 million of net gains
on aircraft sales and other asset dispositions offset by $0.7 million equity in
net losses of investee companies. The net gains on aircraft sales and other
asset dispositions during 1999 were $8.7 million, offset by $0.8 million in
equity in net losses of investee companies.
DIRECT EXPENSES
Direct expenses for 2000 increased by $15.8 million, or 7.5%, to $225.6 million
compared to $209.8 million in the prior year. The direct expenses in 2000
included a $4.3 million charge for the write-down of inventory and $1.2 million
for a retroactive pay adjustment for pilots. In 1999, there were $1.5 million in
charges for environmental remediation and a $1.7 million charge for the
disposition of slow-moving inventory. The increase in 2000 was also due to the
increase in flight activity and higher repairs and maintenance, fuel, insurance,
helicopter rental, and pilot training costs.
Depreciation expense included in direct expenses for 2000 was $12.5 million
compared to $14.1 million in the prior year. Total depreciation expense was
$13.7 million and $15.3 million for the same two periods, respectively. The
decrease was attributable to a reduction in the number of owned aircraft and to
the change in estimated useful lives and residual values implemented in May
1999. (See Note 1 of the Notes to Consolidated Financial Statements included
elsewhere in this annual report).
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses for the year ended December 31,
2000 decreased by 1.6% to $18.2 million compared to $18.5 million in the same
period in the prior year. Selling, general, and administrative expense in 1999
included severance costs totaling $1.1 million. Adjusting for such severance
costs, selling, general, and administrative expense increased $0.8 million in
2000, which was mostly the result of higher bad debt provisions. The Company is
in the process of a thorough review of these expenses to attempt to reduce them
or retard further increases.
SPECIAL CHARGES
In the fourth quarter of 2000, in connection with the plan to restore
profitability, the Company recorded Special Charges of $3.6 million that
included severance costs of $1.1 million, impairment of an investment in and
receivables from a joint venture totaling $1.7 million, and impairment of
property and equipment of $0.8 million.
In April 1999, in connection with expense reduction efforts and management's
decision to recognize the impairment of assets as a result of decreased
activity, the Company recorded Special Charges of $4.8 million. The Special
Charges included impairment of certain foreign based joint ventures amounting to
$2.5 million, severance costs of $1.3 million, impairment of property and
equipment of $0.4 million, and other charges of $0.6 million.
INTEREST EXPENSE
Interest expense was $5.8 million for the year ended December 31, 2000 and $5.9
million for the year ended December 31, 1999. Lower debt levels during 2000,
compared to the debt levels in 1999, offset the effect of increased interest
rates in 2000.
13
16
INCOME TAXES
Income tax benefit for the year ended December 31, 2000 increased $2.6 million
to $5.5 million. The effective tax rates were 30.9% and 36.6% for the years
ended December 31, 2000 and 1999, respectively. The lower effective rate for the
year ended December 31, 2000 is the result of permanent differences between book
income and tax income and the effect of state income taxes.
EIGHT MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH EIGHT MONTHS ENDED DECEMBER
31, 1998 (see Note 1 of the Notes to Consolidated Financial Statements included
elsewhere in this annual report)
For the eight months ended December 31, 1999 and 1998, the Company recorded
significant and special charges that resulted from restructuring, changes in
market conditions, and decisions by the Company to exit certain operations.
Where applicable, the charges are appropriately allocated to the Company's
business segments and are included in the respective discussion of each segment.
Domestic Oil and Gas and Other
The Domestic Oil & Gas and Other segment revenues decreased 19.6% to $91.0
million for the eight months ended December 31, 1999 compared to $113.2 million
during the same period in the prior year. The decrease was the result of the
decreased oil and gas exploration activities in the Gulf of Mexico.
The Domestic Oil & Gas and Other segment had a $2.3 million operating loss for
the eight months ended December 31, 1999 compared to $13.2 million operating
profit for the same period in 1998. The operating loss for the eight months
ended December 31, 1999 included $1.5 million in charges for environmental
remediation (see Environmental Matters within the Management's Discussion and
Analysis of Financial Condition and Results of Operations). Operating margin of
(2.5)% for the eight months ended December 31, 1999 compares to 11.6% for the
same period in 1998. The decreased operating profit was primarily due to the
significant decline in operating revenues and activities and to the $1.5 million
environmental costs recorded in the eight months ended December 31, 1999. Also,
as a percent of revenue, repairs and maintenance and labor costs were higher for
the eight months ended December 31, 1999. Lower aircraft depreciation,
insurance, and rent partially offset the decrease in operating profit.
International
The International segment revenues decreased 11.0% to $14.7 million for the
eight months ended December 31, 1999 compared to $16.5 million during the same
period in the prior year. The decreased revenues were primarily the result of
decreased activities for oil and gas customers in South America and Angola.
The International segment had $1.1 million of operating profit for the eight
months ended December 31, 1999 compared to a $0.8 million operating loss for the
same period in 1998. The operating loss for the eight months ended December 31,
1998 included $2.5 million of special charges (see Special Charges within this
discussion). The lower revenues along with increased maintenance and repair
costs negatively impacted operating profit for the eight months ended December
31, 1999.
Aeromedical
The Aeromedical segment revenues decreased 5.4% to $30.2 million for the eight
months ended December 31, 1999 compared to $32.0 million during the same period
in the prior year. The decrease in revenues is primarily attributable to
decreased revenue and activity in the Company's AirEvac operations in Arizona.
The Aeromedical segment had an operating loss of $0.5 million for the eight
months ended December 31, 1999 compared to operating profit of $1.8 million for
the same period in 1998. Operating margin was (1.6)% for the eight months ended
December 31, 1999 and compares to 5.7% for the same period in 1998. Increased
repairs and maintenance and the decreased revenues contributed to the lower
operating income.
Technical Services
Technical Services segment operating revenues for the eight months ended
December 31, 1999 were $10.5 million compared to $8.9 million in the prior year,
an increase of 17.2%. Technical Services operating profit increased to $1.5
million for the eight months ended December 31, 1999 compared to $1.2 million
for 1999. The operating margin was 14.7% in the eight months
14
17
ended December 31, 1999 and 13.3% in the eight months ended December 31, 1998.
The increase in operating revenues and operating margin was primarily
attributable to work performed on two large contracts for the refurbishment and
overhaul of two helicopters and a large parts sale, all occurring during the
eight months ended December 31, 1999.
OTHER INCOME, NET
Other income, net, was $5.9 million for the eight months ended December 31, 1999
as compared to $1.5 million for the same period in 1998. The other income, net,
for the eight months ended December 31, 1999 included $6.6 million of net gains
on aircraft sales and other asset dispositions. The net gains on aircraft sales
and other asset dispositions during the eight months ended December 31, 1998
were $1.4 million. Also, the eight months ended December 31, 1999 included $0.7
million equity in net losses of investee companies, which compares to $0.1
million equity in net income of investee companies recorded in the eight months
ended December 31, 1998.
DIRECT EXPENSES
Direct expenses for the eight months ended December 31, 1999 decreased by 3.4%
to $139.9 million compared to $144.9 million in the same period in 1998. The
decrease was due to the significant overall decline in operating activities and
lower aircraft depreciation, insurance, and rent expenses. The $1.5 million of
environmental remediation (see Environmental Matters within the MD&A) recorded
in the eight months ended December 31, 1999 and the Technical Services segment's
increase in cost of sales partially offset the decrease in direct expenses.
Also, as a percentage of revenue, repairs and maintenance and labor costs were
higher for the eight months ended December 31, 1999.
Depreciation expense included in direct expenses for the eight months ended
December 31, 1999 was $8.8 million compared to $10.0 million in the prior year.
Total depreciation expense was $9.7 million and $11.4 million for the same two
periods, respectively. The decrease was attributable to a reduction in the
number of owned aircraft and to the change in estimated useful lives and
residual values implemented in May 1999. (See Note 1 of the Notes to
Consolidated Financial Statements included elsewhere in this annual report).
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses for the eight months ended
December 31, 1999 increased by 3.7% to $12.4 million compared to $11.9 million
in the same period in the prior year. The increase was primarily due to an
increase in Y2K compliance and certain other computer programming costs, general
salary increases for administrative employees, and the reassignment of certain
employees to administrative positions. During the eight months ended December
31, 1999, the Company also recorded severance costs totaling $1.1 million in
selling, general, and administrative expenses related to a reduction in its
number of employees.
SPECIAL CHARGES
During the eight months ended December 31, 1998, in connection with management's
decision to recognize the impairment of assets as a result of decreased
activity, the Company recorded Special Charges of $2.5 million. The Special
Charges included impairment of certain foreign based joint ventures amounting to
$1.4 million and impairment of property and equipment of $1.1 million.
INTEREST EXPENSE
Interest expense was $4.0 million for the eight months ended December 31, 1999
and $4.1 million for the eight months ended December 31, 1998. The decrease was
primarily due to slightly lower debt levels during the eight months ended
December 31, 1999, compared to the debt levels in same period in 1998.
INCOME TAXES
Income tax benefit for the eight months ended December 31, 1999 was $1.3 million
and the income tax expense for the eight months ended December 31, 1998 was $3.6
million. The effective tax rates were 31.7% and 41.0% for the two periods,
respectively. The lower effective rate for the eight months ended December 31,
1999 is the result of permanent differences between book income and tax income.
15
18
YEAR ENDED APRIL 30, 1999 COMPARED WITH THE YEAR ENDED APRIL 30, 1998
For the year ended April 30, 1999, the Company recorded significant and special
charges that resulted from restructuring, changes in market conditions, and
decisions by the Company to exit certain operations. Where applicable, the
charges are appropriately allocated to the Company's business segments and are
included in the respective discussions of each segment.
Domestic Oil and Gas and Other
The Domestic Oil & Gas and Other segment revenues decreased 2.8% to $159.3
million for the year ended April 30, 1999 compared to $163.9 million during the
same period ended April 30, 1998. The decrease was the result of the decreased
oil and gas exploration activities in the Gulf of Mexico.
The Domestic Oil & Gas and Other segment had $12.7 million operating profit for
the year ended April 30, 1999 compared to $19.3 million operating profit for the
same period ended April 30, 1998. The operating profit for the year ended April
30, 1999 included $1.3 million of special charges (see Special Charges within
this discussion) and $1.7 million for the disposition of slow-moving inventory.
Operating margin of 8.0% for the year ended April 30, 1999 compares to 11.8% for
the same period in 1998. The decreased operating profit was primarily due to the
decline in operating revenues and activities, the inventory provision and
special charges, and higher depreciation expense and labor costs recorded in the
year ended April 30, 1999.
International
The International segment revenues increased 5.7% to $24.1 million for the year
ended April 30, 1999 compared to $22.8 million during the same period ended
April 30, 1998. The increased revenues were primarily the result of increased
activities in Angola.
The International segment had a $4.0 million operating loss for the year ended
April 30, 1999 compared to less than a $0.1 million operating loss for the same
period ended April 30, 1998. The operating loss for the year ended April 30,
1999 included $6.0 million of special charges (see Special Charges within this
discussion).
Aeromedical
The Aeromedical segment revenues increased 30.5% to $46.8 million for the year
ended April 30, 1999 compared to $35.9 million during the same period ended
April 30, 1998. The increase in revenues was attributable to the benefit of a
full year of results of the Company's AirEvac operations in Arizona. The Company
acquired AirEvac in December 1997.
The Aeromedical segment had operating profits of $2.9 million for each of the
years ended April 30, 1999 and 1998. Operating margin was 6.1% for the eight
months ended December 31, 1999 and compares to 8.0% for the same period in 1998.
Increased overhead as a result of the AirEvac acquisition contributed to the
lower operating profit as a percent of revenue.
Technical Services
The Technical Services segment operating revenues for the year ended April 30,
1999 were $17.1 million compared to $14.0 million in the same period ended April
30, 1998, an increase of 21.9%. Technical Services operating profit decreased to
$2.7 million for the year ended April 30, 1999 compared to $2.8 million for the
year ended April 30, 1998. The operating margin was 15.6% in the year ended
April 30, 1999 and 19.9% in the year ended April 30, 1998. The increase in
operating revenues was primarily attributable to work performed on two large
contracts for the refurbishment and overhaul of two helicopters and a large
parts sale, all occurring during the year ended April 30, 1999.
OTHER INCOME, NET
Other income, net, was $3.5 million for the year ended April 30, 1999 as
compared to $2.3 million for the same period ended April 30, 1998. The other
income, net, for the year ended April 30, 1999 included $3.6 million of net
gains on aircraft sales and other asset dispositions. The net gains on aircraft
sales and other asset dispositions during the year ended April 30, 1998 were
$3.2 million. Also, the year ended April 30, 1998 included a $1.0 million charge
related to the discontinuance of a joint venture in South America.
16
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DIRECT EXPENSES
Direct expenses for the year ended April 30, 1999 increased by 5.5% to $214.5
million compared to $203.4 million in the same period ended April 30, 1998. The
increase was due to the $1.7 million charge for the disposition of slow-moving
inventory, the Technical Services segment's increase in cost of sales, increased
aircraft depreciation, and the full year of AirEvac's expenses recorded for the
year ended April 30, 1999.
Depreciation expense included in direct expenses for the year ended April 30,
1999 was $15.3 million compared to $11.8 million in the prior year. Total
depreciation expense was $16.2 million and $12.5 million for the same two
periods, respectively. The increase was attributable to the acquisition of
additional aircraft and to the acquired AirEvac assets.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses for the year ended April 30, 1999
increased by 1.2% to $18.0 million compared to $17.8 million in the same period
ended April 30, 1998. The increase was primarily due to the full year of
AirEvac's expenses recorded for the year ended April 30, 1999. The increase was
partially offset by a decline in computer software costs.
SPECIAL CHARGES
During the year ended April 30, 1999, in connection with expense reduction
efforts and management's decision to recognize the impairment of assets as a
result of decreased activity, the Company recorded Special Charges of $7.3
million. The Special Charges included impairment of certain foreign based joint
ventures amounting to $3.8 million, severance costs of $1.3 million, impairment
of property and equipment of $1.6 million, and other charges of $0.6 million.
INTEREST EXPENSE
Interest expense was $6.0 million for the year ended April 30, 1999 and $5.1
million for the year ended April 30, 1998. The increase was primarily due to
higher debt levels that resulted from the Company's AirEvac acquisition.
INCOME TAXES
Income tax expense for the year ended April 30, 1999 was $2.0 million and the
income tax expense for the year ended April 30, 1998 was $5.1 million resulting
in effective tax rates of 40.6% and 40.7% respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position as of December 31, 2000 was $0.9 million compared to
$1.7 million at December 31, 1999. Working capital decreased $13.2 million from
$54.7 million at December 31, 1999 to $41.5 million at December 31, 2000. Net
cash provided by operating activities during the year ended December 31, 2000
was $9.4 million. Net cash provided by operating activities and $24.1 million of
aircraft sales funded payments of long-term debt and purchases of property and
equipment.
Total long-term debt including capital lease commitments decreased $2.8 million
from December 31, 1999 to $74.9 million at December 31, 2000. The current
portion of the long-term debt was $9.7 million at December 31, 2000. On January
31, 2001, the revolving credit facility portion of the Company's credit
agreement converted to a term loan, thereby increasing total annual principal
payments on long term debt to approximately $13 million. As a result of its
losses, PHI was not in compliance with certain of its loan covenants in 2000,
but did obtain appropriate waivers from its lenders, as well as amendments to
certain covenant requirements during 2001, in return for additional collateral.
The Company is in discussions with its bank group to restructure its credit
agreement to include an extension of the conversion date of its revolving credit
facility and make other changes to the credit agreement's terms and conditions.
The Company's primary credit facility consists of a $45.0 million revolving
credit facility that converted to a term loan on January 31, 2001 (the "term
loan") and a capital loan facility of $30 million (the "capital loan"). There is
no additional capacity for borrowing under these facilities, nor is other
borrowing permitted. The capital loan is payable in fixed quarterly principal
payments of $1.0 million until maturity on November 10, 2005 and the term loan
is payable in quarterly installments of principal of approximately $2.25
million. The current interest rate on these facilities is LIBOR plus 3%, an
effective rate of 8.61% at March 15, 2001. As a result of its operating losses,
the Company was not in compliance with certain of its debt
17
20
covenants at December 31, 2000, but did obtain from its lenders appropriate
waivers, as well as amendments to certain covenant requirements during 2001 in
return for additional collateral.
The amount spent for the purchase and completion of aircraft improvements and
engines and other property and equipment was $28.2 million for 2000, compared to
$22.3 million for the twelve months ended December 31, 1999. At December 31,
2000, the Company had purchase commitments to purchase property and equipment
for approximately $11.2 million.
The Company will lease a new principal operating facility for twenty years,
effective September 2001. Under the terms of the new facility lease, the Company
has committed to fund $4.0 million of construction costs. Any such amounts
funded by PHI will amortize over 10 years at 7% per annum and the resulting
monthly amortization amounts will reduce PHI's monthly lease payments for the
first 10 years of the lease.
The Company believes that the combination of cash flow from operations and
aircraft sales will fund required debt principal and interest payments and
necessary capital expenditures during 2001. Capital expenditures, including
expenditures for aircraft fleet upgrade, will be limited and will continue to be
so until the Company is able to reverse its losses and generate an acceptable
cash flow from operations.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 was subsequently amended by
SFAS 137 in June 1999 and SFAS 138 in September 2000. SFAS No. 133 as amended,
establishes accounting and reporting standards for derivative instruments and
hedging activities and requires, among other things, that an entity recognize
all derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. The Company will adopt the accounting standard
effective for its fiscal year beginning January 1, 2001, as required. Management
does not expect the adoption of SFAS 133 to have a significant impact on the
financial position, results of operations, or cash flows of the Company.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB No.
101 summarizes certain of the SEC's views in applying generally accepted
accounting principles to revenue recognition in financial statements. SAB No.
101, as amended, was effective beginning in the fourth quarter of fiscal year
2000. Management has concluded that its existing revenue recognition policies
comply in all material respects with the guidance in SAB No. 101.
ENVIRONMENTAL MATTERS
Since 1996, the Company has conducted environmental reviews and assessments at
selected domestic bases and currently has recorded an aggregate estimated
liability of $3.0 million for environmental remediation costs that were probable
and estimable at December 31, 2000. The Company recorded no significant
additional provisions for the year ended December 31, 2000. However, the Company
began conducting environmental site surveys at its Lafayette facility in late
2000, and the Company anticipates that it will also conduct environmental site
surveys at certain other facilities during 2001. As a result of information
available to date, it is expected that the results of these surveys will require
additional provisions for environmental remediation costs in 2001, but the
Company is currently unable to estimate the amount of additional provisions that
may be necessary.
UNION JOB ACTION
As a result of unsuccessful attempts to negotiate a bargaining agreement with
the union elected to represent its pilots, on March 23, 2001, the union and the
Company were in a position to take so called "self-help" measures to strengthen
their positions. The union has indicated that it plans to conduct a campaign of
selected work stoppages and other disruptive actions. The Company has developed
contingency plans to cope with these actions but is unable at this time to
predict the effect of any union actions on its revenues and earnings.
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21
ITEM 7.A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks associated with interest rates. The
Company makes limited use of derivative financial instruments to manage risks
associated with existing or anticipated transactions. All derivatives used for
risk management are closely monitored by the Company's senior management. The
Company does not hold derivatives for trading purposes and it does not use
derivatives with leveraged or complex features. Derivative instruments are
traded either with creditworthy major financial institutions or over national
exchanges.
At December 31, 2000, the Company was a party to interest rate swaps with
notional amounts totaling $40.0 million that were designed to convert a similar
amount of variable-rate debt to fixed rates. The swaps mature in 2003. The swaps
require the Company to pay an average interest rate of 5.78% on the notional
amount and, in turn, receive LIBOR interest rates. The variable interest rate
received by the Company under each swap contract is repriced quarterly. The
Company considers these swaps to be a hedge against potentially higher future
interest rates. As described in Note 8 to the consolidated financial statements,
the estimated fair value of these interest rate swaps was less than $0.1 million
at December 31, 2000.
At December 31, 2000, $72.5 million of the Company's long-term debt had variable
interest rates of which $40.0 million was effectively converted to fixed
interest rates through the interest rate swaps. Based on debt outstanding and
interest rate swap agreements in place at December 31, 2000, a 100 basis point
increase in variable interest rates would increase the Company's interest
expense in the year ending 2001 by $0.7 million.
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22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report
To the Board of Directors and Shareholders of
Petroleum Helicopters, Inc.
We have audited the accompanying consolidated balance sheets of Petroleum
Helicopters, Inc. and subsidiaries as of December 31, 2000 and 1999 and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the year ended December 31, 2000 and the eight months ended December
31, 1999. Our audits also included the financial statement schedule for the year
ended December 31, 2000 and the eight months ended December 31, 1999 listed in
the Index at Item 14. These financial statements and the financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Petroleum Helicopters, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the results of its operations
and its cash flows for the year ended December 31, 2000 and the eight months
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the related
financial statement schedule for the year ended December 31, 2000 and the eight
months ended December 31, 1999, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New Orleans, Louisiana
March 29, 2001
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23
Independent Auditors' Report
The Board of Directors and Shareholders
Petroleum Helicopters, Inc.
We have audited the accompanying consolidated balance sheet of Petroleum
Helicopters, Inc. and subsidiaries as of April 30, 1999, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the years in the two-year period ended April 30, 1999. In connection
with our audits of the consolidated financial statements, we also have audited
the accompanying financial statement schedule, "Valuation and Qualifying
Accounts," for the two-year period ended April 30, 1999. These consolidated
financial statements and financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Petroleum
Helicopters, Inc. and subsidiaries as of April 30, 1999, and the results of
their operations and their cash flows for each of the years in the two-year
period ended April 30, 1999, in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
As discussed in Note 1 to the consolidated financial statements, in fiscal 1999
the Company adopted the method of accounting for computer software costs
prescribed by Statement of Position 98-1.
/s/ KPMG LLP
KPMG LLP
New Orleans, Louisiana
June 11, 1999
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24
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
DECEMBER 31, DECEMBER 31, APRIL 30,
2000 1999 1999
------------ ------------ ---------
ASSETS
Current Assets:
Cash and cash equivalents $ 863 $ 1,663 $ 3,025
Accounts receivable - net of allowance:
Trade 39,399 36,917 39,724
Other 3,490 3,558 2,511
Inventory 35,175 37,277 34,902
Other current assets 5,112 2,987 1,658
Refundable income taxes 3,852 3,922 3,368
-------- -------- --------
Total current assets 87,891 86,324 85,188
-------- -------- --------
Other 3,008 1,685 1,827
Property and equipment, net 131,856 135,047 144,560
-------- -------- --------
Total Assets $222,755 $223,056 $231,575
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 30,047 $ 20,013 $ 22,210
Accrued vacation payable 6,553 6,020 6,057
Current maturities of long-term debt and capital
lease obligations 9,744 5,592 5,891
-------- -------- --------
Total current liabilities 46,344 31,625 34,158
-------- -------- --------
Long-term debt and capital lease obligations, net of
current maturities 65,075 72,048 74,405
Deferred income taxes 17,600 17,776 19,411
Other long-term liabilities 12,114 7,984 7,020
Commitments and contingencies (Note 9)
Shareholders' Equity:
Voting common stock - par value of $0.10;
authorized shares of 12,500,000 279 279 279
Non-voting common stock - par value of $0.10;
authorized shares of 12,500,000 237 237 237
Additional paid-in capital 12,045 11,729 11,717
Retained earnings 69,061 81,378 84,348
-------- -------- --------
Total shareholders' equity 81,622 93,623 96,581
-------- -------- --------
Total Liabilities and Shareholders' Equity $222,755 $223,056 $231,575
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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25
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS AND SHARES, EXCEPT PER SHARE DATA)
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 30,
2000 1999 1999 1998
------------ ------------- --------- ---------
Revenues:
Operating revenues $ 232,074 $ 146,380 $ 247,339 $ 236,582
Other income, net 3,247 5,909 3,543 2,264
--------- --------- --------- ---------
235,321 152,289 250,882 238,846
Expenses:
Direct expenses 225,567 139,902 214,516 203,421
Selling, general and administrative 18,165 12,359 18,017 17,798
Special charges 3,571 -- 7,298 --
Interest expense 5,813 3,978 6,017 5,118
--------- --------- --------- ---------
253,116 156,239 245,848 226,337
--------- --------- --------- ---------
Earnings (loss) before income taxes (17,795) (3,950) 5,034 12,509
Income taxes (5,501) (1,251) 2,046 5,092
--------- --------- --------- ---------
Net earnings (loss) $ (12,294) $ (2,699) $ 2,988 $ 7,417
========= ========= ========= =========
Earnings (loss) per common share:
Basic $ (2.38) $ (0.52) $ 0.58 $ 1.45
Diluted $ (2.38) $ (0.52) $ 0.57 $ 1.43
Weighted average common shares
outstanding 5,164 5,160 5,167 5,115
Incremental common shares -- -- 60 81
--------- --------- --------- ---------
Weighted average common shares
and common share equivalents 5,164 5,160 5,227 5,196
========= ========= ========= =========
Dividends declared per common share $ -- $ 0.05 $ 0.20 $ 0.20
The accompanying notes are an integral part of these consolidated financial
statements.
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26
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(THOUSANDS OF DOLLARS AND SHARES)
VOTING NON-VOTING
COMMON STOCK COMMON STOCK ADDITIONAL
------------------------ ----------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS
-------- -------- -------- -------- -------- --------
Balance at April 30, 1997 2,801 $ 280 2,294 $ 229 $ 10,810 $ 76,097
Stock Options Exercised -- -- 65 7 888 --
Other -- -- -- -- 8 --
Net Earnings -- -- -- -- -- 7,417
Dividends -- -- -- -- -- (1,031)
-------- -------- -------- -------- -------- --------
Balance at April 30, 1998 2,801 280 2,359 236 11,706 82,483
Stock Options Exercised -- -- 9 1 78 --
Other (8) (1) (2) -- (67) (67)
Net Earnings -- -- -- -- -- 2,988
Dividends -- -- -- -- -- (1,056)
-------- -------- -------- -------- -------- --------
Balance at April 30, 1999 2,793 279 2,366 237 11,717 84,348
Other -- -- 1 -- 12 --
Net Loss -- -- -- -- -- (2,699)
Dividends -- -- -- -- -- (271)
-------- -------- -------- -------- -------- --------
Balance at December 31, 1999 2,793 279 2,367 237 11,729 81,378
Stock Issued to Employees -- -- 5 -- -- --
Other -- -- 1 -- 316 (23)
Net Loss -- -- -- -- -- (12,294)
-------- -------- -------- -------- -------- --------
Balance at December 31, 2000 2,793 $ 279 2,373 $ 237 $ 12,045 $ 69,061
======== ======== ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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27
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 30,
2000 1999 1999 1998
-------- -------- -------- --------
Cash flows from operating activities:
Net earnings (loss) $(12,294) $ (2,699) $ 2,988 $ 7,417
Adjustments to reconcile net earnings
(loss) to net cash provided by (used in) operating
activities:
Depreciation 13,713 9,655 16,193 12,534
Deferred income taxes (3,858) (1,635) 239 933
Gain on asset dispositions (3,967) (6,595) (3,583) (3,313)
Special charges 2,464 -- 6,172 --
Equity in net (earnings) losses of investee
companies 716 806 40 (242)
Other 655 -- -- --
Changes in operating assets and liabilities:
Accounts receivable (2,414) 1,516 3,633 (12,042)
Inventory 2,102 (2,375) (859) (3,682)
Refundable income taxes 70 (554) (3,368) 1,344
Other assets 1,602 (875) (505) (127)
Accounts payable, accrued liabilities and
vacation payable 10,567 (1,992) (4,326) 5,800
Income taxes payable -- -- (1,046) 1,046
Other long-term liabilities (5) 933 917 840
-------- -------- -------- --------
Net cash provided by (used in) operating
activities 9,351 (3,815) 16,495 10,508
-------- -------- -------- --------
Cash flows from investing activities:
Investments in and advances to affiliates (1,266) (580) (424) (8,730)
Proceeds from notes receivable 292 -- -- --
Purchase of property and equipment (28,179) (10,047) (42,271) (25,475)
Proceeds from asset dispositions 24,142 16,254 19,881 13,982
-------- -------- -------- --------
Net cash provided by (used in) investing
activities (5,011) 5,627 (22,814) (20,223)
-------- -------- -------- --------
Cash flows from financing activities:
Proceeds from long-term debt 23,500 12,000 30,000 31,150
Payments on long-term debt (28,640) (14,656) (22,324) (20,991)
Proceeds from exercise of stock options and
other -- -- (50) 895
Dividends paid -- (518) (1,035) (1,023)
-------- -------- -------- --------
Net cash provided by (used in) financing
activities (5,140) (3,174) 6,591 10,031
-------- -------- -------- --------
Increase (decrease) in cash and cash equivalents (800) (1,362) 272 316
Cash and cash equivalents, beginning of year 1,663 3,025 2,753 2,437
-------- -------- -------- --------
Cash and cash equivalents, end of year $ 863 $ 1,663 $ 3,025 $ 2,753
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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28
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations, Basis of Consolidation, and Other General
Principles
Since its inception, Petroleum Helicopters, Inc.'s primary business has
been to transport personnel and, to a lesser extent, parts and
equipment, to, from and among offshore platforms for customers engaged
in the oil and gas exploration, development, and production industry.
The Company also provides aircraft maintenance services to third
parties and air medical transportation services for hospitals and
medical programs.
The consolidated financial statements include the accounts of Petroleum
Helicopters, Inc. and its majority-owned subsidiaries ("PHI" or the
"Company") after the elimination of all significant intercompany
accounts and transactions. For its investments of 20% to 50% in
affiliates, which are primarily foreign affiliates, the Company uses
the equity method of accounting.
Current Developments
In late 2000, the Board of Directors approved a plan to restore the
profitability of the Company that included cost reductions, rate
increases for helicopter services, reductions in the work force,
divesture or discontinuance of marginal or unprofitable business
efforts, and disposition of redundant aircraft. Further, the Company is
in the process of restructuring its maintenance operations at its main
facility in Lafayette, Louisiana and a review of inventory produced a
$4.3 million writedown to record inventory at its estimated net
realizable value. The Company anticipates that it will take several
months for its operations to reflect the results of these actions.
The Company's primary credit facility consists of a $45.0 million
revolving credit facility that converted to a term loan on January 31,
2001 and a capital loan facility of $30.0 million (see Note 4 to the
Consolidated Financial Statements). There currently is no additional
capacity for borrowing under these facilities, nor is other borrowing
permitted. The capital loan is payable in fixed quarterly payments of
$1.0 million until maturity on November 10, 2005 and the converted
revolver is payable in fixed quarterly principal payments of $2.25
million. The credit facility is subject to certain financial covenants,
which include maintaining certain levels of working capital, tangible
net worth, and cash flow coverage; and contains other provisions that
restrict capital expenditures and payment of dividends. As a result of
its operating losses, the Company was not in compliance with certain of
its debt covenants as of December 31, 2000, but did obtain from its
lenders appropriate waivers as well as amendments to certain covenant
requirements during 2001 in return for additional collateral. The
Company is in discussions with its bank group to restructure its credit
agreement to include a postponement of the conversion of its revolving
credit facility and make other changes to the credit agreement's terms
and conditions. The Company believes that the combination of cash flows
from operations and aircraft sales will fund required debt principal
and interest payments and necessary capital expenditures during 2001.
On March 10, 2000, the Company's pilots voted to become organized under
the Office and Professional Employees International Union ("OPEIU"). As
a result of unsuccessful attempts to negotiate a bargaining agreement
with the OPEIU, on March 23, 2001, the union and the Company were in a
position to take so called "self-help" measures to strengthen their
positions. The union has indicated that it plans to conduct a campaign
of selected work stoppages and other disruptive actions. The Company
has developed contingency plans to cope with these actions, but is
unable at this time to predict the effect of any union action on its
revenues and earnings.
Revenue Recognition
The Company recognizes revenue related to aviation transportation
services after the services are preformed or the contractual
obligations are met. Aircraft maintenance service revenues are
generally recognized at the time the repair or service work is
completed. Revenues related to emergency flights generated by the
Company's subsidiary, Air Evac Services, Inc. ("AirEvac") are recorded
net of contractual allowances under agreements with third party payors
when the services are provided.
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29
Fiscal Year Change
Effective December 31, 1999, the Company changed its fiscal year-end to
December 31 of each year. The consolidated statements of operations,
shareholders' equity and cash flows for the period from May 1, 1999 to
December 31, 1999 represent a transition period of eight months, which
is referred to as the eight months ended December 31, 1999.
The following is a comparative summary of the operating results for
years ended December 31, 2000 and December 31, 1999 and the eight month
periods ended December 31, 1999 and December 31, 1998:
YEAR ENDED EIGHT MONTHS ENDED
----------------------------- -----------------------------
DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1999 DECEMBER 31, 1998
2000 (UNAUDITED) 1999 (UNAUDITED)
------------ ------------ ------------ ------------
(in thousands, except per share amounts)
Revenues:
Operating revenues $ 232,074 $ 223,112 $ 146,380 $ 170,607
Other income, net 3,247 7,931 5,909 1,522
--------- --------- --------- ---------
235,321 231,043 152,289 172,129
Expenses:
Direct expenses 225,567 209,769 139,902 144,852
Selling, general and administrative 18,165 18,461 12,359 11,915
Special charges 3,571 4,846 -- 2,452
Interest expense 5,813 5,889 3,978 4,105
--------- --------- --------- ---------
253,116 238,965 156,239 163,324
--------- --------- --------- ---------
Earnings (loss) before income taxes (17,795) (7,922) (3,950) 8,805
Income taxes (5,501) (2,903) (1,251) 3,611
--------- --------- --------- ---------
Net earnings (loss) $ (12,294) $ (5,019) $ (2,699) $ 5,194
========= ========= ========= =========
Earnings (loss) per common share:
Basic $ (2.38) $ (0.97) $ (0.52) $ 1.01
Diluted $ (2.38) $ (0.97) $ (0.52) $ 0.99
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements, as well
as reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash Equivalents
The Company considers cash equivalents to include demand deposits and
investments with original maturity dates of three months or less.
Inventories
The Company's inventories are stated at the lower of average cost or
market and consist primarily of spare parts and aviation fuel. Portions
of the Company's inventories are used parts that are often exchanged
with parts removed from aircraft. The Company uses systematic valuation
procedures to estimate the cost of the used parts. Valuation reserves
related to obsolescent and excess inventory were $3.7 million, $2.2
million and $2.2 million at December 31, 2000 and 1999 and April 30,
1999, respectively.
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Change in Accounting Estimate
Effective May 1, 1999, the Company changed the estimated useful lives
on its aircraft from ten years to fifteen years and also increased the
residual values from 25% to 30%. The Company believes the revised
estimated useful lives and residual values more appropriately reflect
its financial results by better matching costs over the estimated
useful lives of these assets. The effect of this change on net income
for the eight months ended December 31, 1999 was an increase of
approximately $1.1 million ($0.21 per diluted share).
Property and Equipment
The Company records its property and equipment at cost less accumulated
depreciation. For financial reporting purposes, the Company uses the
straight-line method to compute depreciation based upon estimated
useful lives of fifteen years for flight equipment and three to ten
years for other equipment. Generally, the Company uses a 30% residual
value in the calculation of depreciation for its flight equipment. The
Company uses accelerated depreciation methods for tax purposes. Upon
selling or otherwise disposing of property and equipment, the Company
removes the cost and accumulated depreciation from the accounts and
reflects any resulting gain or loss in earnings at the time of sale or
other disposition.
The Company defers any gains resulting from the sale and leaseback of
assets and amortizes the gain over the lease term. For the year ended
December 31, 2000, the eight months ended December 31, 1999, and the
years ended April 30, 1999 and 1998, the gains deferred on sale and
leaseback transactions were $2.9 million, $1.2 million, $0.6 million,
and $1.7 million, respectively.
The Company reviews its long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
The Company measures recoverability of assets to be held and used by
comparing the carrying amount of an asset to future undiscounted net
cash flows that it expects the asset to generate. When an asset is
determined to be impaired, the Company recognizes the impairment
amount, which is measured by the amount that the carrying value of the
asset exceeds its fair value. Similarly, the Company reports assets
that it expects to sell at the lower of the carrying amount or fair
value less costs to sell.
Self-Insurance
The Company maintains a self-insurance program for a portion of its
health care costs. Self-insurance costs are accrued based upon the
aggregate of the liability for reported claims and the estimated
liability for claims incurred but not reported.
The Company does not presently have any significant obligations for
post employment benefits.
Concentration of Credit Risk
Financial instruments that potentially expose the Company to
concentrations of credit risk consist primarily of cash and cash
equivalents and trade accounts receivable. The Company places its
short-term invested cash in overnight repurchase agreements with a
bank. The Company does not believe significant credit risk exists with
respect to these securities at December 31, 2000.
PHI conducts a majority of its business with major and independent oil
and gas exploration and productions companies with operations in the
Gulf of Mexico. The Company also provides services to the medical
centers, ambulance services, and U. S. and foreign governmental
agencies. The Company continually evaluates the financial strength of
its customers but generally does not require collateral to support the
customer receivables. The Company establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of specific
customers, current market conditions, and other information. The
allowance for doubtful accounts was $2.2 million, $0.8 million and $1.7
million at December 31, 2000, December 31, 1999, and April 30, 1999,
respectively. The Company's largest domestic oil and gas customer
accounted for $27.2 million, $19.7 million, $41.1 million, and $38.4
million of consolidated operating revenues for year ended December 31,
2000, the eight months ended December 31, 1999, and years ended April
30, 1999 and 1998, respectively. The Company also carried accounts
receivable from this same customer totaling 12%, 13%, and 15% of net
trade accounts receivable on December 31, 2000, December 31, 1999, and
April 30, 1999, respectively.
28
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Stock Compensation
The Company uses the intrinsic value method of accounting for employee
stock-based compensation prescribed by Accounting Principles Board
(APB) Opinion No. 25 and, accordingly, follows the disclosure-only
provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation". See Note 6.
Accounting for Computer Software
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) No. 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use," which
establishes criteria for when these types of costs should be expensed
as incurred or capitalized. The Company has implemented SOP 98-1 on a
prospective basis as of May 1, 1998 resulting in approximately $1.2
million of costs being capitalized during the year ended April 30, 1999
that would have been expensed under the Company's previous accounting
method for such costs. This increased net earnings by $0.7 million or
$0.13 per diluted share for the year ended April 30, 1999.
Post-implementation costs are being expensed in accordance with the SOP
and capitalized costs are being amortized over their estimated useful
life.
Income Taxes
The Company provides for income taxes using the asset and liability
method under which deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. The deferred tax assets and liabilities
measurement uses enacted tax rates that are expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The Company recognizes the effect
of any tax rate changes in income of the period that included the
enactment date.
Earnings per Share
The Company computes basic earnings (loss) per share by dividing income
available to common stockholders by the weighted average number of
common shares outstanding during the period. The diluted earnings
(loss) per share computation uses the weighted average number of shares
outstanding adjusted for incremental shares attributed to dilutive
outstanding options to purchase common stock and non-vested restricted
stock awards. The diluted share base for the year ended December 31,
2000 and the eight months ended December 31, 1999 excludes incremental
shares of 10,488 and 34,972, respectively, related to employee stock
options and restricted stock awards that are antidilutive as a result
of the Company's net loss for those periods.
Derivative Financial Instruments
The Company uses interest rate swap agreements to manage its interest
rate exposure. The Company specifically designates these agreements as
hedges of debt instruments and recognizes interest differentials as
adjustments to interest expense in the period the differentials occur.
Under interest rate swap agreements, the Company agrees with other
parties to exchange, at specific intervals, the difference between
fixed-rate and variable-rate interest amounts calculated by reference
to an agreed-upon notional principal amount. The Company has estimated
the fair value of the interest rate swap agreements using quotes from
counterparties. The fair value of the agreements represents the cash
effect if the Company had settled the existing agreements at December
31, 2000 and 1999 and April 30, 1999. See Note 4 and Note 8 of these
consolidated financial statements.
29
32
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 was subsequently amended by SFAS 137 in June 1999 and SFAS 138 in
September 2000. SFAS No. 133, as amended, establishes accounting and
reporting standards for derivative instruments and hedging activities
and requires, among other things, that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and
measure those instruments at fair value. The Company will adopt the
accounting standard effective for its fiscal year beginning January 1,
2001, as required. Management does not expect the adoption of SFAS 133
to have a significant impact on the financial position, results of
operations, or cash flows of the Company.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarizes certain of the SEC's views in
applying generally accepted accounting principles to revenue
recognition in financial statements. SAB No. 101, as amended, was
effective beginning in the fourth quarter of fiscal year 2000.
Management has concluded that its existing revenue recognition policies
comply in all material respects with the guidance in SAB No. 101.
(2) SPECIAL CHARGES
Special Charges recorded consisted of the following:
Year Ended
-----------------------
December 31, April 30,
Description 2000 1999
- ----------- ------------ ----------
(Thousands of dollars)
Severance and related costs (Approximately
(120 and 37 employees, respectively) $1,106 $1,345
Impairment of property and equipment 782 1,548
Impairment of certain foreign based joint ventures 1,683 3,801
Other -- 604
------ ------
Total $3,571 $7,298
====== ======
During the year ended December 31, 2000, in connection with
management's decision to reduce costs and to recognize the impairment
of certain assets, the Company recorded Special Charges of $3.6 million
($2.5 million on an after tax basis or $0.48 per diluted share).
Additionally, the Company recorded a $4.3 million charge for the write
down of inventory, included in direct expenses, as a result of an
analysis of its overhaul and maintenance operations including
requirements for its fleet. At December 31, 2000, the Company carried a
liability for the $1.1 million of severance and related costs shown
above, of which substantially all was paid in the first quarter of
2001.
During the year ended April 30, 1999, in connection with management's
decision to reduce costs and to recognize the impairment of assets as a
result of decreased activity, the Company recorded Special Charges of
$7.3 million ($4.4 million on an after tax basis or $0.84 per diluted
share). Additionally, a charge of $1.7 million was recognized during
the year-ended April 30, 1999 for the disposition of slow moving
inventories and is included in direct expenses. At April 30, 1999, $0.8
million of these charges remained in accrued liabilities, which was
comprised of $0.3 million for employee severance / benefits and $0.5
million for other charges; substantially all of which was paid by
December 31, 1999.
(3) PROPERTY AND EQUIPMENT
The following table summarizes the Company's property and equipment at
December 31, 2000, December 31, 1999, and April 30, 1999.
30
33
DECEMBER 31, DECEMBER 31, APRIL 30,
2000 1999 1999
------------ ------------ ---------
(Thousands of dollars)
Flight equipment $ 212,492 $ 214,638 $ 231,300
Other 42,448 42,231 41,030
--------- --------- ---------
254,940 256,869 272,330
Less accumulated depreciation (123,084) (121,822) (127,770)
--------- --------- ---------
Property and equipment, net 131,856 135,047 144,560
========= ========= =========
Property and equipment at December 31, 2000 includes aircraft with a
net book value of $3.1 million that is held for sale.
(4) LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations at December 31, 2000,
December 31, 1999, and April 30, 1999 consisted of the following:
DECEMBER 31, DECEMBER 31, APRIL 30,
2000 1999 1999
------------ ------------ ----------
(Thousands of dollars)
Secured term loan notes due November 10, 2005,
due in quarterly installments of $1,000,000
bearing interest (9.76% on December 31, 2000) $ 30,000 $ 40,465 $ 44,134
Secured notes due October 31, 2005 and November
10, 2005, under revolving credit facilities totaling
$45,000,000 bearing interest (at rates varying
between 9.55% and 10.50% on
December 31, 2000) 42,500 34,500 31,500
Secured 10 year promissory notes due in monthly
installments of $72,000 commencing July 9,
1993 with a fixed interest rate of 7.0% -- 2,675 4,662
Capitalized lease obligations payable in 72 monthly
installments of $27,561, including imputed
interest of 9.36%, commencing January 29, 2001,
with a final payment of $1,418,945 due
January 29, 2007 2,319 -- --
--------- ---------- ---------
Total debt 74,819 77,640 80,296
Less current maturities 9,744 5,592 5,891
--------- ---------- ---------
Long-term debt $ 65,075 $ 72,048 $ 74,405
========= ========== =========
Maturities of long-term debt and capital lease obligations are as
follows:
(Thousands
of dollars)
-----------
2001 $ 9,744
2002 12,630
2003 12,643
2004 12,657
2005 25,547
Thereafter 1,598
-------
Total $74,819
=======
At December 31, 2000, the following assets and their related net book
values are pledged as collateral on long-term debt and capital lease
obligations aggregating $74.8 million:
(Thousands
of dollars)
-----------
Equipment, net of depreciation $ 49,216
Inventory 30,880
Accounts receivable, net 37,794
--------
Total $117,890
========
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34
On November 30, 1998, the Company and its principal lending group
entered into a loan agreement that amended and restated its original
loan agreement dated January 1, 1986. This amended and restated
agreement was further amended subsequent to November 30, 1998. The most
recent amendment occurred on March 29, 2001. The agreement provides a
$40.0 million revolving credit facility and a $40.0 million term credit
facility. The loan is secured by substantially all of the Company's
assets. The secured term and revolving loan agreement permits both
prime rate based borrowings and "LIBOR" borrowings plus a spread. The
spread for LIBOR borrowings is 3.0%. The term credit facility is
payable in fixed quarterly principal payments of $1.0 million until
maturity on November 10, 2005. At December 31, 2000, December 31, 1999,
and April 30, 1999, $30.0 million, $36.0 million and $39.0 million,
respectively, was outstanding on the term credit facility. On January
31, 2001, the revolving credit facility converted to a term loan. At
December 31, 2000, December 31, 1999, and April 30, 1999, $37.5
million, $29.5 million, and $26.5 million, respectively, was
outstanding on the revolving credit facility. The Company paid a 0.38%
commitment fee on the unused portion of the revolving credit facility.
The commitment fee was less than $0.1 million for each of the year
ended December 31, 2000, the eight months ended December 31, 1999, and
the years ended April 30, 1999 and 1998. Under the converted term loan,
quarterly installments of $1.9 million, beginning April 30, 2001, are
due through its October 31, 2005 maturity.
On January 29, 1999, the Company's wholly-owned subsidiary, AirEvac and
the Company's principal lending group amended its original loan
agreement dated December 31, 1997. This agreement provides $5.0 million
and $6.25 million revolver and term credit facilities, respectively.
This loan is secured by certain assets of AirEvac and is guaranteed by
the Company. The loan agreement permits both prime rate based
borrowings and LIBOR borrowings plus a spread. The spread is 3.0%.
During 2000, the Company prepaid all remaining balances on its term
credit facility. At December 31, 1999 and April 30, 1999, $4.5 million
and $5.1 million, respectively, was outstanding on the term notes. On
November 10, 2000, the revolver credit facility converted to a term
loan. Under the converted term loan, twenty quarterly installments of
$0.3 million, beginning February 10, 2001, are due until its November
10, 2005 maturity. At each of December 31, 2000, December 31, 1999 and
April 30, 1999, $5.0 million was outstanding on the revolving credit
facility.
The loan agreement with the principal lending group requires that the
Company either prepay the term loans with proceeds from the sale of
collateralized equipment or pledge additional equipment as collateral
to replace the sold equipment. The credit facility is subject to
certain financial covenants, which include maintaining certain levels
of working capital, tangible net worth, and cash flow coverage; and
contains other provisions that restrict capital expenditures and
payment of dividends. The declaration or payment of dividends is
restricted to 20% of net earnings for the previous four fiscal
quarters. As a result of its operating losses, the Company was not in
compliance with certain of its debt covenants at December 31, 2000, but
did obtain from its lenders appropriate waivers as well as amendments
to certain covenant requirements during 2001 in return for additional
collateral with a net book value of $11.5 million. Such agreements also
limit the creation, incurrence, or assumption of Funded Debt (as
defined, which includes long-term debt) and the acquisition of
investments in unconsolidated subsidiaries. At April 30, 1999, the
Company received a waiver allowing the $9.0 million in special charges
and inventory writedowns (see Notes to Consolidated Financial
Statements, Note 2) to be excluded from the dividend restriction
calculation, thus allowing the payment of dividends in May 1999.
During 2000, the Company entered into a capital lease for two aircraft.
Under the capital lease, the Company will begin making 72 monthly lease
payments of less than $0.1 million on January 29, 2001 with a final
payment of $1.4 million due on January 29, 2007. The implied interest
rate on the capital lease is 9.36%. As a result of this transaction,
the Company recorded $2.3 million in property, plant, and equipment and
a related capital lease obligation for the same amount.
As discussed in Note 1, the Company uses derivative instruments on a
limited basis to manage risks related to interest rates. At each of
December 31, 2000, December 31, 1999, and April 30, 1999, the Company
had interest rate swap agreements with notional amounts totaling $40.0
million that serve to convert an equal amount of variable rate
long-term debt to fixed rates. The swaps mature in 2003 and require the
Company to pay a weighted-average interest rate of 5.78% over their
composite lives and to receive a variable rate, which was 6.76% at
December 31, 2000. Based upon the current spread, the effect of these
agreements is to limit interest rate exposure to 7.08% on $20.0 million
of the Company's revolving credit facility, 7.69% on $10.0 million and
7.27% on $10.0 million of the Company's term loan. Using the
accrual/settlement method of accounting, the Company records the net
amount to be received or paid under the swap agreements as part of
interest expense in the Consolidated Statements of Operations. The
interest rate
32
35
swap agreements had the effect of reducing interest expense by $0.3
million for the year ended December 31, 2000 and increasing interest
expense by $0.1 million, $0.2 million and less than $0.1 million for
the eight months ended December 31, 1999 and for the years ended April
30, 1999 and 1998, respectively.
Cash paid for interest, net of amounts paid or received in connection
with the interest rate swaps was $5.8 million, $3.0 million $5.7
million and $4.6 million for the year ended December 31, 2000, the
eight months ended December 31, 1999, and the years ended April 30,
1999 and 1998, respectively.
(5) INCOME TAXES
Income tax expense (benefit) is composed of the following:
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 30,
2000 1999 1999 1998
------------ ------------- ---------- -----------
(Thousands of dollars)
Current:
Federal $(2,013) $ (185) $ 544 $ 3,264
State (447) (8) 271 644
Foreign 817 577 992 251
Deferred - principally Federal (3,858) (1,635) 239 933
------- ------- ------- -------
Total (5,501) $(1,251) $ 2,046 $ 5,092
======= ======= ======= =======
Income tax expense (benefit) as a percentage of pre-tax earnings varies
from the effective Federal statutory rate of 34% as a result of the
following:
YEAR ENDED EIGHT MONTHS ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 2000 DECEMBER 31, 1999 APRIL 30, 1999 APRIL 30, 1998
-------------------- -------------------- ------------------- -------------------
(Thousands of dollars, except percentage amounts)
Amount % Amount % Amount % Amount %
------- ------- ------- ------- ------- ------- ------- -------
Income taxes at statutory rate $(6,050) (34) $(1,343) (34) $ 1,712 34 $ 4,253 34
Increase (decrease) in taxes
resulting from:
Effect of state income taxes (356) (2) (158) (4) 179 4 514 4
Other items - net 905 5 250 6 155 3 325 3
------- ------- ------- ------- ------- ------- ------- -------
Total $(5,501) (31) $(1,251) (32) $ 2,046 41 $ 5,092 41
======= ======= ======= ======= ======= ======= ======= =======
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 2000, December 31, 1999, and April 30, 1999 are presented
below:
DECEMBER 31, DECEMBER 31, APRIL 30,
2000 1999 1999
------------ ------------ ---------
(Thousands of dollars)
Deferred tax assets:
Tax credits $ 3,229 $ 1,874 $ 1,896
Vacation accrual 2,276 2,088 2,134
Inventory valuation 907 657 880
Workman's compensation reserve 243 313 448
Allowance for uncollectible accounts 1,246 293 620
Deferred gains 2,349 971 1,253
Other 2,878 4,121 3,458
Net operating loss 1,860 1,524 --
------- ------- -------
Total deferred tax assets $14,988 $11,841 $10,689
------- ------- -------
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36
DECEMBER 31, DECEMBER 31, APRIL 30,
2000 1999 1999
------------ ------------ ---------
(Thousands of dollars)
Deferred tax liabilities:
Tax depreciation in excess of book depreciation $28,159 $28,616 $28,571
Other 747 1,001 1,529
------- ------- -------
Total deferred tax liabilities 28,906 29,617 30,100
------- ------- -------
Net deferred tax liabilities $13,918 $17,776 $19,411
======= ======= =======
No valuation allowance was recorded against the deferred tax assets
because management believes that the deferred tax assets will more than
likely be realized in full through future operating results and the
reversal of taxable temporary differences. At December 31, 2000, other
current assets includes $3.7 million of deferred tax assets.
For Federal income tax purposes, the Company has net operating loss
carryforwards ("NOLs") of approximately $4.4 million that, if not used
will expire in 2021. In addition, the Company has foreign tax credits
of approximately $2.4 million, which expire in 2004 through 2006. The
Company also has approximately $0.8 million of alternative minimum tax
credit carryforwards, which are not subject to expiration and are
available to offset future regular income taxes subject to certain
limitations. Additionally, for state income tax purposes, the Company
has NOLs of approximately $8.0 million available to reduce future state
taxable income. These NOLs expire in varying amounts beginning in 2012
through 2021.
Income taxes paid were approximately $0.6 million, $4.9 million, and
$3.5 million for the eight months ended December 31, 1999 and the years
ended April 30, 1999 and 1998, respectively. The Company received
income tax refunds of approximately $2.2 million during the year ended
December 31, 2000.
(6) EMPLOYEE BENEFIT PLANS
Savings and Retirement Plans
The Company maintains an Employee Savings Plan under Section 401(k) of
the Internal Revenue Code. Effective July 1999, the plan provides that
the Company match 200% of up to 3% of employee contributions.
Previously, the Company matched 100% of the first 3% of their
contributions. The Company's contribution was $4.1 million, $2.4
million, $2.1 million, and $1.7 million for the year ended December 31,
2000, the eight months ended December 31, 1999, and the years ended
April 30, 1999, and 1998, respectively.
The Company maintains a Supplemental Executive Retirement Plan
("SERP"). The nonqualified and unfunded plan provides certain senior
management with supplemental retirement and death benefits at age 65.
The SERP plan provides supplemental retirement benefits that are based
on each participant's salary at the time of entrance into the plan.
Occasionally, the Company's board of directors may increase certain
individuals' benefits. The benefit is one-third of each participant's
annual salary of $200,000 or less, plus one-half of each participant's
annual salary that is in excess of $200,000, if applicable. The plan
does not provide for automatic benefit increases. During 2000, the
Company's board of directors amended the plan to provide for partial
vesting. The assumed discount rate was 6.85% for the year ended
December 31, 2000 and 7.50% for the eight months ended December 31,
1999 and the years ended April 30, 1999 and 1998. The Company recorded
plan costs of $0.4 million for the year ended December 31, 2000 and
$0.3 million for each of the eight months ended December 31, 1999 and
the years ended April 30, 1999 and 1998.
The SERP plan is an unfunded plan. However, the Company has purchased
life insurance contracts in anticipation of using the life insurance's
cash values and death benefits to help fulfill the obligations of the
plan. The Company may sell or redeem the contracts at any time without
any obligation to the plan participants.
The Company maintains an Officer Deferred Compensation Plan and a
Director Deferred Compensation Plan. The plans permit key officers and
all directors to defer a portion of their compensation. The plans are
nonqualified and unfunded.
Stock Based Compensation and Other Compensation Plans
Under PHI's 1992 Non-Qualified Stock Option and Stock Appreciation
Rights Plan (the "Plan"), the Company may grant non-qualified stock
options and stock appreciation rights to selected employees for up to
100,000 shares of the
34
37
Company's non-voting common stock. Options issued under the plan may be
exercisable at a price of not less than 25% of the related stock's fair
market value at the date of grant. The options may be exercised any
time after one year from the date of grant until their expiration at
five years from such date. At December 31, 2000, there were no options
or stock appreciation rights outstanding under the Plan and grants were
available for 34,000 shares. The Company does not expect to issue any
additional options or rights under the Plan.
Under the PHI 1995 Incentive Plan (the "1995 Plan"), the Company is
authorized to issue up to 175,000 shares of voting common stock and
575,000 shares of non-voting common stock. In May 2000, the Company's
Board of Directors increased the number of non-voting common stock
available under the plan from 325,000 shares to 575,000 shares. The
Compensation Committee of the Board of Directors is authorized under
the 1995 Plan to grant stock options, restricted stock, stock
appreciation rights, performance shares, stock awards, and cash awards.
The exercise price of the stock option grants is equal to the fair
market value of the underlying stock at the date of grant.
During the years ended December 31, 2000 and April 30, 1998, the
Company did not issue any shares, options, or rights under the 1995
Plan. During the eight months ended December 31, 1999, the Company
granted 30,000 voting stock options and 142,000 non-voting stock
options under the 1995 Plan. The voting and non-voting stock options
vest 25% on each of the first, second, third, and fourth anniversary
date of the issues and expire on July 14, 2009. During the year ended
April 30, 1999, the Company granted 11,691 non-voting restricted shares
(net of forfeitures), 4,000 voting stock options, and 15,000 non-voting
stock options under the 1995 Plan. The restricted shares had a fair
value of $20.00 per share on the date of issue and will become
unrestricted on July 31, 2001. The voting stock options are 100% vested
and expire on July 30, 2007. The non-voting stock options vest 20% on
each of the first through fifth anniversary date of the issue and
expire on October 31, 2008.
At December 31, 2000, there were 116,520 voting shares and 336,016
non-voting shares available for issuance under the 1995 Plan. The
Company has recorded $0.1 million of compensation expense related to
the 1995 Plan in each of the year ended December 31, 2000, the eight
months ended December 31, 1999, and the year ended April 30, 1999 and
less than $0.1 million for the year ended April 30, 1998. The balance
of unearned stock compensation expense to be amortized over future
periods was less than $0.1 million at December 31, 2000.
On October 30, 1998, the shareholders of PHI adopted the Directors
Stock Compensation Plan (the "Directors Plan") to (i) allow all
non-employee directors ("Directors") to receive his or her annual
retainer in the form of PHI's non-voting common stock, and (ii) provide
for the automatic annual grant of options to Directors to purchase
2,000 shares of non-voting common stock. The Directors Plan also
provides for the voluntary deferral of all or a portion of the stock
awards or fees otherwise payable to each Director. All non-employee
members of the Board of Directors of PHI participate in the Plan. The
Company may issue up to 150,000 shares under the Directors Plan. The
Company issued 547 shares and 2,388 deferred stock awards during the
year ended December 31, 2000. The Company issued 1,277 shares and 4,908
deferred stock awards during the eight months ended December 31, 1999.
During the year ended December 31, 2000, the eight months ended
December 31, 1999, and the year ended April 30, 1999, the Company
issued 4,165, 10,000 and 6,000 options, respectively, to purchase
non-voting common stock. At December 31, 2000, 120,715 shares were
available for issue under the Directors Plan.
The following table summarizes employee stock option activities for the
year ended December 31, 2000, the eight months ended December 31, 1999,
and the years ended April 30, 1999, and 1998. All of the options were
issued with an exercised price equal to or greater than the market
price of the stock at the time of issue.
35
38
1995 Plan Options
1992 Plan Director ----------------------- Weighted
Options - Plan - Non- Average
Non-Voting Non-Voting Voting Voting Total Exercise Price
---------- ---------- -------- ------- ------- --------------
Balance outstanding at
April 30, 1997 58,500 -- 43,680 92,169 194,349 11.50
Options lapsed/canceled (9,000) -- (19,200) (4,350) (32,550) 14.20
Options exercised (49,500) -- -- (12,369) (61,869) 14.10
-------- -------- -------- ------- -------
Balance outstanding at
April 30, 1998 -- -- 24,480 75,450 99,930 9.01
Options granted -- 6,000 4,000 15,000 25,000 16.38
Options lapsed/canceled -- -- -- (5,493) (5,493) 8.50
Options exercised -- -- -- (9,240) (9,240) 8.50
-------- -------- -------- ------- -------
Balance outstanding at
April 30, 1999 -- 6,000 28,480 75,717 110,197 10.75
Options granted -- 10,000 30,000 142,000 182,000 12.67
-------- -------- -------- ------- -------
Balance outstanding at
December 31, 1999 -- 16,000 58,480 217,717 292,197 11.95
Options granted -- 4,165 -- -- 4,165 8.38
Options lapsed/canceled -- -- -- (2,000) (2,000) 12.75
-------- -------- -------- ------- -------
Balance outstanding at
December 31, 2000 -- 20,165 58,480 215,717 294,362 11.89
======== ======== ======== ======= =======
Shares exercisable at
December 31, 2000 -- 6,000 35,980 101,717 143,697 11.02
The following table summarizes information about stock options
outstanding as of December 31, 2000:
Options Outstanding Options Exercisable
--------------------------------------------- ---------------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life (Years) Price Exercisable Price
- --------------- ----------- ------------ -------- ----------- ---------
$8.38 - $ 8.50 64,882 4.7 $ 8.49 60,717 $ 8.50
$9.75 - $ 9.81 30,480 5.9 9.77 20,480 9.75
$12.75 - 13.25 170,000 8.5 12.84 42,500 12.84
$14.88 - $16.31 23,000 7.2 16.02 14,000 15.88
$16.75 6,000 7.9 16.75 6,000 16.75
------- ------
294,362 7.3 11.89 143,697 11.02
======= =======
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," (SFAS No. 123), encourages the use of a fair
value based method of accounting for compensation expense associated
with stock option and similar plans. However, SFAS No. 123 permits the
continued use of the intrinsic value based method prescribed by Opinion
No. 25 but requires additional disclosures, including pro forma
calculations of net earnings and earnings per share as if the fair
value method of accounting prescribed by SFAS No. 123 had been applied.
36
39
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 30,
2000 1999 1999 1998
------------ ------------- ----------- -----------
(Thousands of dollars and shares, except per share data)
Net earnings (loss) - as reported $(12,294) $(2,699) $2,988 $7,417
Net earnings (loss) - pro forma (12,366) (2,868) 2,967 7,516
Diluted earnings (loss) per share - as reported (2.38) (0.52) 0.57 1.43
Diluted earnings (loss) per share - pro forma (2.39) (0.56) 0.57 1.45
Average fair value of grants during the year 5.13 1.95 5.87 N/A
Black-Sholes option pricing model assumptions:
Risk-free interest rate 6.50% 6.50% 6.50% N/A
Expected life (years) 6.0 4.0 4.0 N/A
Volatility 58.07% 27.00% 27.00% N/A
Dividend yield -- 0.53% 1.39% N/A
(7) OTHER ASSETS
Other assets include investments in and advances to affiliates,
including a 50% ownership interest in Clintondale Aviation, Inc.
("Clintondale"), a New York corporation that operates helicopters and
fixed-wing aircraft primarily in Kazakhstan. PHI also leases four
aircraft to Clintondale.
In December 2000, the Company initiated discussions to exit its
ownership interest in Clintondale. In conjunction with the plan, the
Company recorded an impairment charge of $1.7 million to its investment
in and advances to Clintondale.
(8) FINANCIAL INSTRUMENTS
Fair Value - The following table presents the carrying amounts and
estimated fair values of financial instruments held by the Company at
December 2000, December 31, 1999, and April 30, 1999. The table
excludes cash and cash equivalents, accounts receivable, accounts
payable, and accrued liabilities, all of which had fair values
approximating carrying amounts.
DECEMBER 31, 2000 DECEMBER 31, 1999 APRIL 30, 1999
------------------------ ------------------------- -----------------------
Carrying Estimated Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value Amount Fair Value
-------- ---------- -------- ---------- -------- ----------
(Thousands of dollars)
Financial Liabilities:
Long-term debt and capital
lease obligations $ 74,819 $ 74,819 $ 77,640 $ 77,640 $ 80,296 $ 80,296
Off balance sheet exposures:
Interest rate swaps -- 38 -- 1,455 -- (188)
The fair value of long-term debt and capital lease obligations also
approximates its carrying amount. The fair value of the interest rate
swaps is an estimate based on quotes from counterparties and
approximates the amount that the Company would receive (pay) to cancel
the contracts on the reporting date.
(9) COMMITMENTS AND CONTINGENCIES
Leases - The Company leases certain aircraft, facilities, and equipment
used in its operations. The related lease agreements, which include
both non-cancelable and month-to-month terms, generally provide for
fixed monthly rentals and, for certain real estate leases, renewal
options. The Company generally pays all insurance, taxes, and
maintenance expenses associated with these aircraft and some of these
leases contain renewal and purchase options. Rental expense incurred
under these leases consisted of the following:
37
40
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 30,
2000 1999 1999 1998
------- ------- ------- -------
(Thousands of dollars)
Aircraft $15,773 $ 8,902 $14,522 $15,080
Other 2,548 1,383 2,064 1,836
------- ------- ------- -------
Total $18,321 $10,285 $16,586 $16,916
======= ======= ======= =======
The Company will lease a new principal operating facility for twenty
years, effective September 2001. Under the terms of the new facility
lease, there is a commitment by the Company, under certain
circumstances, to fund $4.0 million of construction costs. The Company
expects that it will have to fund the $4.0 million. Any such amounts
funded by PHI will amortize over 10 years at 7% per annum and the
resulting monthly amortization amounts will reduce PHI's monthly lease
payments for the first 10 years of the lease.
The following table presents the remaining aggregate lease commitments
under operating leases having initial non-cancelable terms in excess of
one year. The table includes projected lease payments for the new
principal operating facility.
Aircraft Other
---------- ---------
(Thousands of dollars)
2001 $ 17,619 $ 1,201
2002 17,128 882
2003 15,113 657
2004 14,373 546
2005 13,434 479
Thereafter 37,346 9,938
---------- ---------
$ 115,013 $ 13,703
========== =========
Environmental Matters - The Company has conducted environmental reviews
and assessments at certain of its operating bases. In connection with
the assessments, the Company has recorded aggregated estimated
liabilities of $3.0 million, $3.0 million, and $1.8 million for
environmental remediation costs that were probable and estimable at
December 31, 2000, December 31, 1999, and April 30, 1999. The Company
recorded no significant additional provisions for the year ended
December 31, 2000.
The Company began conducting environmental site surveys in late 2000 at
its Lafayette, Louisiana facility, which will be vacated in 2001 when
the Company moves to its new facility. Initial phases of the surveys
have identified certain contamination. However, until the surveys are
complete, the Company cannot reasonably estimate the extent of that
contamination and the associated costs of remediation. The Company
expects to complete the survey during the second quarter of 2001. The
Company anticipates that it will also conduct environmental site
surveys at certain other Gulf Coast facilities during 2001. It is
expected that the results of the surveys discussed above will require
additional provisions for environmental remediation costs in 2001, but
the Company is currently unable to estimate the amount of additional
provisions that may be necessary.
The Company expensed environmental costs, including provisions, of $0.3
million, $1.5 million, $0.4 million, and $0.7 million for year ended
December 31, 2000, the eight months ended December 31, 1999, and the
years ended April 30, 1999, and 1998, respectively, related to
remediation, monitoring, and prevention efforts.
Legal Matters - The Company is named as a defendant in various legal
actions which have arisen in the ordinary course of its business and
have not been finally adjudicated. The amount, if any, of ultimate
liability with respect to such matters cannot be determined. In the
opinion of management, the amount of the ultimate liability with
respect to
38
41
these actions will not have a material adverse effect on results of
operations, cash flow or financial position of the Company.
Purchase Commitments - At December 31, 2000, the Company had
commitments to purchase seven aircraft for approximately $11.2 million.
(10) BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
PHI is primarily a provider of helicopter services, including
helicopter maintenance and repair services. The Company has used a
combination of factors to identify its reportable segments as required
by Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information" ("SFAS 131").
The overriding determination of the Company's segments is based on how
the chief operating decision-maker of the Company evaluates the
Company's results of operations. The underlying factors include
customer bases, types of service, operational management, physical
locations, and underlying economic characteristics of the types of work
the Company performs. During 2000, the Company modified its segment
disclosure by segregating its previously reported Oil and Gas segment
into three separate segments. The Company now identifies four segments
that meet the requirements of SFAS 131 for disclosure. The reportable
segments are Domestic Oil and Gas and Other, International,
Aeromedical, and Technical Services. The Company also modified its
methodology for allocating certain of its operating overhead costs.
The Domestic Oil and Gas and Other segment provides helicopter services
to oil and gas customers operating in the Gulf of Mexico. The Domestic
Oil and Gas and Other segment also provides helicopter services to
certain domestic governmental agencies involved with forest-fire
fighting activities. The International segment provides helicopters in
various foreign countries to oil and gas customers, including national
oil companies, and certain U.S. and foreign governmental agencies. The
Aeromedical segment provides helicopter services to hospitals and
medical programs in several U.S. states. The Company's AirEvac
subsidiary is included in the Aeromedical segment. The Technical
Services segment provides helicopter repair and overhaul services for a
variety of helicopter owners and operators.
The following tables show information about the profit or loss and
assets of each of the Company's reportable segments for the year ended
December 31, 2000, the eight months ended December 31, 1999, and the
years ended April 30, 1999 and 1998. The information contains certain
allocations, including allocations of depreciation, rents, insurance,
interest, and overhead expenses that the Company deems reasonable and
appropriate for the evaluation of results of operations. The Company
does not allocate other income, net, and corporate selling, general,
and administrative costs to the segments. Where applicable, the tables
present the unallocated amounts to reconcile the totals to the
Company's consolidated financial statements. Prior year information has
been restated to reflect the Company's current Segments. Segment assets
are determined by where they are situated at period-end. Corporate
assets are principally cash and cash equivalents, short term
investments, other current assets, and certain property, plant, and
equipment.
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 30,
2000 1999 1999 1998
-------- -------- -------- --------
(Thousands of dollars)
OPERATING REVENUES:
Domestic Oil and Gas and Other $149,062 $ 91,004 $159,335 $163,911
International 21,703 14,676 24,112 22,801
Aeromedical 44,282 30,249 46,838 35,879
Technical Services 17,027 10,451 17,054 13,991
-------- -------- -------- --------
TOTAL $232,074 $146,380 $247,339 $236,582
======== ======== ======== ========
39
42
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 30,
2000 1999 1999 1998
------------ ------------- ----------- ----------
(Thousands of dollars)
OPERATING PROFIT (1):
Domestic Oil and Gas and Other $ (2,201) $ (2,285) $ 12,678 $ 19,287
International (714) 1,120 (3,983) (3)
Aeromedical (1,454) (488) 2,864 2,859
Technical Services (550) 1,533 2,661 2,779
--------- --------- --------- ---------
NET SEGMENT OPERATING
PROFIT (LOSS) (4,919) (120) 14,220 24,922
UNALLOCATED COSTS (16,123) (9,739) (12,729) (14,677)
OTHER INCOME, NET 3,247 5,909 3,543 2,264
--------- --------- --------- ---------
EARNINGS (LOSS) BEFORE TAXES $ (17,795) $ (3,950) $ 5,034 $ 12,509
========= ========= ========= =========
EXPENDITURES FOR LONG-LIVED
ASSETS
Domestic Oil and Gas and Other $ 21,879 $ 7,725 $ 38,214 $ 20,891
International 5,291 5 2,172 1,514
Aeromedical 621 1,368 203 1,937
Technical Services 190 246 135 64
Corporate 198 703 1,547 1,069
--------- --------- --------- ---------
TOTAL $ 28,179 $ 10,047 $ 42,271 $ 25,475
========= ========= ========= =========
DEPRECIATION AND
AMORTIZATION
Domestic Oil and Gas and Other $ 8,537 $ 6,077 $ 10,547 $ 8,155
International 1,262 1,117 1,801 1,579
Aeromedical 2,483 1,505 2,806 2,040
Technical Services 246 151 154 72
Corporate 1,185 805 885 688
--------- --------- --------- ---------
TOTAL $ 13,713 $ 9,655 $ 16,193 $ 12,534
========= ========= ========= =========
INTEREST EXPENSE
Domestic Oil and Gas and Other $ 3,703 $ 2,565 $ 3,825 $ 3,580
International 603 524 697 745
Aeromedical 1,299 821 1,266 734
Technical Services -- -- -- --
Corporate 208 68 229 59
--------- --------- --------- ---------
TOTAL $ 5,813 $ 3,978 $ 6,017 5,118
========= ========= ========= =========
ASSETS
Domestic Oil and Gas and Other $ 151,820 $ 160,778 $ 155,478 $ 153,010
International 27,281 20,627 28,795 28,596
Aeromedical 24,274 25,541 30,113 31,918
Technical Services 12,443 10,475 10,188 7,694
Corporate 6,937 5,635 7,001 5,803
--------- --------- --------- ---------
TOTAL $ 222,755 $ 223,056 $ 231,575 $ 227,021
========= ========= ========= =========
(1) Includes special charges as discussed in Note 2 - Special Charges
of the Consolidated Financial Statements
40
43
The following table presents the Company's revenues from external
customers attributed to operations in the United States and foreign areas
and long-lived assets in the United States and foreign areas.
EIGHT MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, APRIL 30, APRIL 30,
2000 1999 1999 1998
-------- -------- -------- --------
(Thousands of dollars)
OPERATING REVENUES:
United States $210,371 $131,704 $223,227 $213,781
Angola 14,163 9,333 14,541 12,891
Other Foreign 7,540 5,343 9,571 9,910
-------- -------- -------- --------
TOTAL $232,074 $146,380 $247,339 $236,582
======== ======== ======== ========
LONG-LIVED ASSETS:
United States $110,615 $121,583 $128,541 $121,161
Angola 3,631 4,097 5,240 2,120
Other Foreign 17,610 9,367 10,779 11,838
-------- -------- -------- --------
TOTAL $131,856 $135,047 $144,560 $135,119
======== ======== ======== ========
(11) QUARTERLY FINANCIAL DATA (UNAUDITED)
The summarized quarterly results of operations for the year ended
December 31, 2000, the eight months ended December 31, 1999, and the
year ended April 30, 1999 (in thousands of dollars, except per share
data) are as follows:
QUARTER ENDED
-----------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
2000 2000 2000 2000
-------- -------- -------- --------
(Thousands of dollars, except per share data)
Operating revenues $ 52,659 $ 55,105 $ 60,894 $ 63,416
Gross profit 3,145 2,600 5,170 (4,408)
Net earnings (loss) (1,428) (326) (1,011) (9,529)(1)
Net earnings (loss) per share
Basic (0.28) (0.06) (0.20) (1.85)(1)
Diluted (0.28) (0.06) (0.20) (1.85)(1)
QUARTER ENDED TWO MONTHS
------------------------- ENDED
JULY 31, OCTOBER 31, DECEMBER 31,
1999 1999 1999
-------- -------- --------
(Thousands of dollars, except per share data)
Operating revenues $ 53,814 $ 55,358 $ 37,208
Gross profit 2,279 2,376 1,823
Net earnings (loss) 535 (2,071) (1,163)(2)
Net earnings (loss) per share
Basic 0.10 (0.40) (0.23)(2)
Diluted 0.10 (0.40) (0.23)(2)
41
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QUARTER ENDED
-----------------------------------------------------
JULY 31, OCTOBER 31, JANUARY 31, APRIL 30,
1998 1998 1999 1999
-------- -------- -------- --------
(Thousands of dollars, except per share data)
Operating revenues $ 62,220 $ 67,009 $ 61,841 $ 56,269
Gross profit 8,929 11,201 7,685 5,008
Net earnings (loss) 2,002 1,954 1,202 (2,170)(3)
Net earnings (loss) per share
Basic 0.39 0.38 0.23 (0.42)(3)
Diluted 0.38 0.37 0.23 (0.42)(3)
(1) Includes the effect of $3.6 million ($2.5 million after tax or $0.48
per diluted share) of special charges recognized in the fourth quarter
ended December 31, 2000. Also includes a charge of $4.3 million ($3.0
million after tax or $0.58 per diluted share) for a write-down of
inventory.
(2) Includes the effect of a $1.5 million ($1.0 million after tax or $0.20
per diluted share) environmental remediation charge recorded in the two
month period ended December 31, 1999.
(3) Includes the effect of $4.9 million ($2.9 million after tax or $0.56
per diluted share) of special charges recognized in the fourth quarter
ended April 30, 1999. Also includes a charge of $1.7 million ($1.0
million after tax or $0.19 per diluted share) for slow moving
inventory.
(12) AIREVAC ACQUISITION
On December 31, 1997, PHI purchased the net assets of Samaritan AirEvac
for approximately $8.8 million. The purchase involved all of the
operating assets and business of Samaritan AirEvac, an air medical
services division of Samaritan Health System based in Arizona and a
customer of PHI since June 12, 1993.
The cost of the acquisition was recorded under the purchase method of
accounting. The results of AirEvac's operations have been consolidated
with the Company's results effective January 1, 1998.
The following unaudited pro forma information presents a summary of
consolidated results of operations as if the acquisition had occurred
on May 1, 1997 with pro forma adjustments to give effects to
depreciation, interest expense and certain other adjustments together
with related income tax effects (in thousands, except per share
amounts):
Year Ended
April 30, 1998
--------------
Revenues $248,886
Net earnings 7,849
Basic earnings per share 1.53
Diluted earnings per share 1.51
The above pro forma financial information is not necessarily indicative
of the results of operations as they would have been had the
acquisition been effected on the assumed date.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
42
45
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Directors required by this item will be included
in the Company's definitive proxy statement in connection with its
Annual Meeting of Shareholders and is incorporated herein by reference.
Information concerning Executive Officers is included as Item 4. (a)
"Executive officers of the registrant."
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item will be included in the Company's
definitive proxy statement in connection with its 2001 Annual Meeting
of Shareholders and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this item will be included in the Company's
definitive proxy statement in connection with its 2001 Annual Meeting
of Shareholders and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item will be included in the Company's
definitive proxy statement in connection with its 2001 Annual Meeting
of Shareholders and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
Included in Part II of this report:
Independent Auditors' Reports.
Consolidated Balance Sheets - December 31, 2000, December
31, 1999, and April 30, 1999.
Consolidated Statements of Operations for the year ended
December 31, 2000, the eight months ended
December 31, 1999, and years ended April 30, 1999 and
1998.
Consolidated Statements of Shareholders' Equity for the
year ended December 31, 2000, the eight months ended
December 31, 1999, and years ended April 30, 1999 and
1998.
Consolidated Statements of Cash Flows for the year ended
December 31, 2000, the eight months ended December
31, 1999, and years ended April 30, 1999 and 1998.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying accounts for the
year ended December 31, 2000, the eight months ended
December 31, 1999, and years ended April 30, 1999 and
1998.
3. Exhibits
3 Articles of Incorporation and By-laws
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 as amended.
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46
10 Material Contracts
10.1 Master Helicopter Lease Agreement dated February 14, 1991
between General Electric Capital Corporation and PHI
(incorporated by reference to Exhibit No. 10.1 (1) to PHI's
Report on Form 10-K dated April 30, 1991).
10.2 Amended and Restated Loan Agreement originally dated as of
January 31, 1986 Amended and Restated in its entirety as of
March 31, 1997 among Petroleum Helicopters, Inc., Whitney
National Bank, First National Bank of Commerce and NationsBank
of Texas, N.A., as agent (incorporated by reference to Exhibit
No. 10.3 to PHI's Report on Form 10-K dated April 30, 1997).
10.3 The Petroleum Helicopters, Inc. 401(k) Retirement Plan
effective July 1, 1989 (incorporated by reference to Exhibit
No. 10.4 to PHI's Report on Form 10-K dated April 30, 1990).
10.4 Petroleum Helicopters, Inc. 1992 Non-Qualified Stock Option
and Stock Appreciation Rights Plan adopted by PHI's Board
effective May 1, 1992 and approved by the shareholders of PHI
on September 30, 1992 (incorporated by reference to Exhibit
No. 10.8 to PHI's Report on Form 10-K dated April 30, 1993).
10.5 Form of Stock Option Agreement for the Grant of Non-Qualified
Stock Options Under the Petroleum Helicopters, Inc. 1992
Non-Qualified Stock Option and Stock Appreciation Rights Plan
dated June 2, 1993 between PHI and certain of its key
employees (incorporated by reference to Exhibit No. 10.9 to
PHI's Report on Form 10-K dated April 30, 1993).
10.6 Amended and Restated Petroleum Helicopters, Inc. 1995
Incentive Compensation Plan adopted by PHI's Board effective
July 11, 1995 and approved by the shareholders of PHI on
September 22, 1995 (incorporated by reference to Exhibit No
10.12 to PHI's Report on Form 10-K dated April 30, 1996).
10.7 Form of Non-Qualified Stock Option Agreement under the
Petroleum Helicopters, Inc. 1995 Incentive Compensation Plan
between PHI and certain of its key employees (incorporated by
reference to Exhibit No. 10.13 to PHI's Report on Form 10-K
dated April 30, 1996).
10.8 Form of Restricted Stock Agreement under the Amended and
Restated Petroleum Helicopters, Inc. 1995 Incentive
Compensation Plan, as amended (incorporated by reference to
Exhibit No. 10.2 to PHI's Report on Form 10-Q dated October
31, 1996).
10.9 Non-qualified Stock Option Agreement under the Amended and
Restated Petroleum Helicopters, Inc. 1995 Incentive
Compensation Plan, as amended between PHI and Carroll W. Suggs
(incorporated by reference to Exhibit 10.3 to PHI's Report on
Form 10-Q dated October 31, 1996).
10.10 Loan Agreement dated as of December 31, 1997 among Air Evac
Services Inc, Whitney National Bank, First National Bank of
Commerce and NationsBank of Texas, N.A. (incorporated by
reference to Exhibit No. 10.1 to PHI's Report on Form 10-Q
dated January 31, 1998).
10.11 First Amendment (dated December 31, 1997) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
10.12 Second Amendment (dated November 30, 1998) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and NationsBank of Texas,
N.A., as agent (incorporated by reference to Exhibit No. 10.1
to PHI's Report on Form 10-Q dated January 31, 1999).
10.13 Third Amendment (dated June 30, 1999) to Amended and Restated
Loan Agreement originally dated as of January 31, 1986,
Amended and Restated in its entirety as of March 31, 1997,
among Petroleum Helicopters, Inc., Whitney National Bank, Bank
One, Louisiana, N.A. and Bank of America, N.A., as agent
(incorporated by reference to Exhibit 10.21, to PHI's Report
on Form 10-Q dated March 31, 2000).
10.14 Fourth Amendment (dated June 30, 2000) to Amended and Restated
Loan Agreement originally dated as of January 31, 1986,
Amended and Restated in its entirety as of March 31, 1997,
among Petroleum Helicopters, Inc., Whitney National Bank, Bank
One, Louisiana, N.A. and Bank of America, N.A., as agent
(incorporated by reference to Exhibit 10.21, to PHI's Report
on Form 10-Q dated June 30, 2000).
10.15 Fifth Amendment (dated October 30, 2000) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
44
47
10.16 Sixth Amendment (dated November 30, 2000) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
10.17 Seventh Amendment (dated December 29, 2000) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
10.18 Eighth Amendment (dated March 29, 2001) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
10.19 Directors Stock and Deferred Compensation Plan (incorporated
by reference to Exhibit A to PHI's Proxy Statement originally
filed on August 28, 1998, and amended on September 18, 1998).
10.20 Supplemental Executive Retirement Plan adopted by PHI's Board
effective September 14, 2000 (incorporated by reference to
Exhibit 10.23 to PHI's Report on Form 10-Q dated September 30,
2000).
10.21 Officer Deferred Compensation Plan adopted by PHI's Board
effective January 1, 2001.
21 Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of KPMG LLP
(b) Reports on Form 8-K
None.
45
48
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS OF DOLLARS)
Additions
-----------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Year Expenses Accounts Deductions of Year
----------- ---------- ---------- ---------- ---------- ----------
Year ended December 31, 2000
Allowance for doubtful accounts $ 794 $ 1,681 $ -- $ 319 $ 2,156
Allowance for obsolescent inventory 2,208 3,005 -- 1,492 3,721
Eight months ended December 31, 1999
Allowance for doubtful accounts $ 1,684 $ 110 $ -- $ 1,000 $ 794
Allowance for obsolescent inventory 2,169 527 -- 488 2,208
Year ended April 30, 1999:
Allowance for doubtful accounts $ 1,962 $ 182 $ -- $ 460 $ 1,684
Allowance for obsolescent inventory 1,889 280 -- -- 2,169
Year ended April 30, 1998:
Allowance for doubtful accounts $ 1,160 $ 1,038 $ -- $ 236 $ 1,962
Allowance for obsolescent inventory 2,389 -- -- 500 1,889
46
49
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
PETROLEUM HELICOPTERS, INC.
By: /s/ Carroll W. Suggs
------------------------------------
Carroll W. Suggs
Chairman of the Board,
Chief Executive Officer and Director
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.
Signature Title Date
--------- ----- ----
/s/ Carroll W. Suggs Chairman of the Board, March 30, 2001
- ----------------------------- Chief Executive Officer
Carroll W. Suggs and Director (Principal
Executive Officer)
/s/ Lance F. Bospflug President March 30, 2001
- -----------------------------
Lance F. Bospflug
/s/ Michael J. McCann Chief Financial Officer March 30, 2001
- ----------------------------- (Principal Financial and
Michael J. McCann Accounting Officer)
/s/ Arthur J. Breault, Jr. Director March 30, 2001
- -----------------------------
Arthur J. Breault, Jr.
/s/ Leonard M. Horner Director March 30, 2001
- -----------------------------
Leonard M. Horner
/s/ James W. McFarland Director March 30, 2001
- -----------------------------
James W. McFarland
/s/ Thomas H. Murphy Director March 30, 2001
- -----------------------------
Thomas H. Murphy
/s/ Bruce N. Whitman Director March 30, 2001
- -----------------------------
Bruce N. Whitman
/s/ James E. Livingston Director March 30, 2001
- -----------------------------
James E. Livingston
47
50
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3 Articles of Incorporation and By-laws
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 as amended.
51
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10 Material Contracts
10.1 Master Helicopter Lease Agreement dated February 14, 1991
between General Electric Capital Corporation and PHI
(incorporated by reference to Exhibit No. 10.1 (1) to PHI's
Report on Form 10-K dated April 30, 1991).
10.2 Amended and Restated Loan Agreement originally dated as of
January 31, 1986 Amended and Restated in its entirety as of
March 31, 1997 among Petroleum Helicopters, Inc., Whitney
National Bank, First National Bank of Commerce and NationsBank
of Texas, N.A., as agent (incorporated by reference to Exhibit
No. 10.3 to PHI's Report on Form 10-K dated April 30, 1997).
10.3 The Petroleum Helicopters, Inc. 401(k) Retirement Plan
effective July 1, 1989 (incorporated by reference to Exhibit
No. 10.4 to PHI's Report on Form 10-K dated April 30, 1990).
10.4 Petroleum Helicopters, Inc. 1992 Non-Qualified Stock Option
and Stock Appreciation Rights Plan adopted by PHI's Board
effective May 1, 1992 and approved by the shareholders of PHI
on September 30, 1992 (incorporated by reference to Exhibit
No. 10.8 to PHI's Report on Form 10-K dated April 30, 1993).
10.5 Form of Stock Option Agreement for the Grant of Non-Qualified
Stock Options Under the Petroleum Helicopters, Inc. 1992
Non-Qualified Stock Option and Stock Appreciation Rights Plan
dated June 2, 1993 between PHI and certain of its key
employees (incorporated by reference to Exhibit No. 10.9 to
PHI's Report on Form 10-K dated April 30, 1993).
10.6 Amended and Restated Petroleum Helicopters, Inc. 1995
Incentive Compensation Plan adopted by PHI's Board effective
July 11, 1995 and approved by the shareholders of PHI on
September 22, 1995 (incorporated by reference to Exhibit No
10.12 to PHI's Report on Form 10-K dated April 30, 1996).
10.7 Form of Non-Qualified Stock Option Agreement under the
Petroleum Helicopters, Inc. 1995 Incentive Compensation Plan
between PHI and certain of its key employees (incorporated by
reference to Exhibit No. 10.13 to PHI's Report on Form 10-K
dated April 30, 1996).
10.8 Form of Restricted Stock Agreement under the Amended and
Restated Petroleum Helicopters, Inc. 1995 Incentive
Compensation Plan, as amended (incorporated by reference to
Exhibit No. 10.2 to PHI's Report on Form 10-Q dated October
31, 1996).
10.9 Non-qualified Stock Option Agreement under the Amended and
Restated Petroleum Helicopters, Inc. 1995 Incentive
Compensation Plan, as amended between PHI and Carroll W. Suggs
(incorporated by reference to Exhibit 10.3 to PHI's Report on
Form 10-Q dated October 31, 1996).
10.10 Loan Agreement dated as of December 31, 1997 among Air Evac
Services Inc, Whitney National Bank, First National Bank of
Commerce and NationsBank of Texas, N.A. (incorporated by
reference to Exhibit No. 10.1 to PHI's Report on Form 10-Q
dated January 31, 1998).
10.11 First Amendment (dated December 31, 1997) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
10.12 Second Amendment (dated November 30, 1998) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and NationsBank of Texas,
N.A., as agent (incorporated by reference to Exhibit No. 10.1
to PHI's Report on Form 10-Q dated January 31, 1999).
10.13 Third Amendment (dated June 30, 1999) to Amended and Restated
Loan Agreement originally dated as of January 31, 1986,
Amended and Restated in its entirety as of March 31, 1997,
among Petroleum Helicopters, Inc., Whitney National Bank, Bank
One, Louisiana, N.A. and Bank of America, N.A., as agent
(incorporated by reference to Exhibit 10.21, to PHI's Report
on Form 10-Q dated March 31, 2000).
10.14 Fourth Amendment (dated June 30, 2000) to Amended and Restated
Loan Agreement originally dated as of January 31, 1986,
Amended and Restated in its entirety as of March 31, 1997,
among Petroleum Helicopters, Inc., Whitney National Bank, Bank
One, Louisiana, N.A. and Bank of America, N.A., as agent
(incorporated by reference to Exhibit 10.21, to PHI's Report
on Form 10-Q dated June 30, 2000).
10.15 Fifth Amendment (dated October 30, 2000) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
52
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.16 Sixth Amendment (dated November 30, 2000) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
10.17 Seventh Amendment (dated December 29, 2000) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
10.18 Eighth Amendment (dated March 29, 2001) to Amended and
Restated Loan Agreement originally dated as of January 31,
1986, Amended and Restated in its entirety as of March 31,
1997, among Petroleum Helicopters, Inc., Whitney National
Bank, Bank One, Louisiana, N.A. and Bank of America, N.A., as
agent.
10.19 Directors Stock and Deferred Compensation Plan (incorporated
by reference to Exhibit A to PHI's Proxy Statement originally
filed on August 28, 1998, and amended on September 18, 1998).
10.20 Supplemental Executive Retirement Plan adopted by PHI's Board
effective September 14, 2000 (incorporated by reference to
Exhibit 10.23 to PHI's Report on Form 10-Q dated September 30,
2000).
10.21 Officer Deferred Compensation Plan adopted by PHI's Board
effective January 1, 2001.
21 Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of KPMG LLP