UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q

|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended ~~September 30,~~December 31, 2003

|_| Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period _____ to _____

Commission File Number 0-5232

Offshore Logistics, Inc.

(Exact name of registrant as specified in its charter)


Delaware	72-0679819
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification Number)
224 Rue de Jean
Lafayette, Louisiana	70508
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:(337) 233-1221

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or of 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_|

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of ~~November 3, 2003.~~February 2, 2004.

~~22,520,921~~ 22,586,421 shares of Common Stock, $.01 par value

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Three Months Ended
September 30,
Six Months Ended
September 30,
2003
2002
2003
2002
(in thousands, except per share amounts)
Gross revenue:
     Operating revenue $ 139,429 $ 143,576 $ 273,322 $ 278,645
     Gain on disposal of assets 1,374 1,966 2,231 2,253
140,803 145,542 275,553 280,898
Operating expense:
     Direct cost 102,847 105,886 202,673 206,557
     Depreciation and amortization 9,195 9,344 19,299 18,285
     General and administrative 8,740 8,734 17,087 17,057
120,782 123,964 239,059 241,899
         Operating income 20,021 21,578 36,494 38,999
Earnings from unconsolidated affiliates, net 3,047 1,668 4,950 3,451
Interest income 644 309 1,048 647
Interest expense 4,990 3,602 8,955 7,278
Loss on extinguishment of debt (6,205 ) -- (6,205 ) --
Other income (expense), net 380 (1,485 ) (1,894 ) (3,229 )
         Income before provision for income taxes
         and minority interest 12,897 18,468 25,438 32,590
Provision for income taxes 3,868 5,540 7,631 9,777
Minority interest (529 ) (445 ) (1,039 ) (848 )
         Net income $ 8,500 $ 12,483 $ 16,768 $ 21,965
Net income per common share:
Basic $ 0.38 $ 0.56 $ 0.74 $ 0.98
Diluted $ 0.37 $ 0.51 $ 0.74 $ 0.90

	Three Months Ended December 31,						Nine Months Ended December 31,
	2003			2002			2003			2002
	(in thousands, except per share amounts)
Gross revenue:
Operating revenue	$	138,715		$	140,187		$	412,037		$	418,832
Gain (loss) on disposal of assets		357			(946	)		2,588			1,307

		139,072			139,241			414,625			420,139
Operating expense:
Direct cost		107,551			101,555			310,224			308,112
Depreciation and amortization		9,778			9,575			29,077			27,860
General and administrative		10,973			9,170			28,060			26,227

		128,302			120,300			367,361			362,199

Operating income		10,770			18,941			47,264			57,940
Earnings from unconsolidated affiliates, net		1,930			3,277			6,880			6,728
Interest income		280			474			1,328			1,121
Interest expense		3,818			3,615			12,773			10,893
Loss on extinguishment of debt		--			--			(6,205	)		--
Other income (expense), net		(4,352	)		(1,244	)		(6,246	)		(4,473	)

Income before provision for income taxes
and minority interest		4,810			17,833			30,248			50,423
Provision for income taxes		1,444			5,350			9,075			15,127
Minority interest		(576	)		(465	)		(1,615	)		(1,313	)

Net income	$	2,790		$	12,018		$	19,558		$	33,983

Net income per common share:
Basic	$	0.12		$	0.53		$	0.87		$	1.52

Diluted	$	0.12		$	0.49		$	0.86		$	1.39

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
September 30,
2003
March 31,
2003
(in thousands)
ASSETS
Current Assets:
    Cash and cash equivalents $ 72,902 $ 56,800
    Accounts receivable 121,895 119,012
    Inventories 122,541 118,846
    Prepaid expenses and other 10,254 8,443
       Total current assets 327,592 303,101
Investments in unconsolidated affiliates 35,170 27,928
Property and equipment - at cost:
    Land and buildings 17,199 16,671
    Aircraft and equipment 757,165 703,111
774,364 719,782
Less: accumulated depreciation and amortization (214,437 ) (193,555 )
559,927 526,227
Other assets 48,160 48,775
$ 970,849 $ 906,031

LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
    Accounts payable $ 27,751 $ 29,666
    Accrued liabilities 60,583 64,181
    Deferred taxes 636 33
    Current maturities of long-term debt 5,681 96,684
       Total current liabilities 94,651 190,564
Long-term debt, less current maturities 251,637 136,134
Other liabilities and deferred credits 127,189 120,035
Deferred taxes 88,167 81,082
Minority interest 18,481 16,555
Stockholders' Investment:
    Common Stock, $.01 par value, authorized 35,000,000 shares;
       outstanding 22,514,921 and 22,510,921 at September 30 and
       March 31, respectively (exclusive of 1,281,050 treasury shares) 225 225
    Additional paid-in capital 139,109 139,046
    Retained earnings 316,266 299,498
    Accumulated other comprehensive income (loss) (64,876 ) (77,108 )
390,724 361,661
$ 970,849 $ 906,031

	December 31, 2003			March 31, 2003
	(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	79,225		$	56,800
Accounts receivable		125,265			119,012
Inventories		131,535			118,846
Prepaid expenses and other		8,841			8,443

Total current assets		344,866			303,101
Investments in unconsolidated affiliates		37,772			27,928
Property and equipment - at cost:
Land and buildings		25,802			16,671
Aircraft and equipment		778,282			703,111

		804,084			719,782
Less: accumulated depreciation and amortization		(227,434	)		(193,555	)

		576,650			526,227
Other assets		46,238			48,775

	$	1,005,526		$	906,031

LIABILITIES AND STOCKHOLDERS’ INVESTMENT


Current Liabilities:
Accounts payable	$	29,153		$	29,666
Accrued liabilities		69,293			64,181
Deferred taxes		1,025			33
Current maturities of long-term debt		995			96,684

Total current liabilities		100,466			190,564
Long-term debt, less current maturities		251,383			136,134
Other liabilities and deferred credits		136,494			120,035
Deferred taxes		84,084			81,082
Minority interest		20,438			16,555
Stockholders' Investment:
Common Stock, $.01 par value, authorized 35,000,000 shares;
outstanding 22,583,921 and 22,510,921 at December 31 and
March 31, respectively (exclusive of 1,281,050 treasury shares)		226			225
Additional paid-in capital		140,383			139,046
Retained earnings		319,056			299,498
Accumulated other comprehensive income (loss)		(47,004	)		(77,108	)

		412,661			361,661

	$	1,005,526		$	906,031

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended
September 30,
2003
2002
(in thousands)
Cash flows from operating activities:
    Net income $   16,768 $ 21,965
Adjustments to reconcile net income to cash
provided by operating activities:
    Depreciation and amortization 19,299 18,285
    Increase (decrease) in deferred taxes 7,242 4,983
    (Gain) Loss on asset dispositions (2,231 ) (2,253 )
    Loss on debt extinguishment 6,205 --
    Equity in earnings from unconsolidated affiliates
       (over) under dividends received (3,487 ) (1,896 )
    Minority interest in earnings 1,039 848
    (Increase) decrease in accounts receivable 1,957 (10,146 )
    (Increase) decrease in inventories (885 ) (3,658 )
    (Increase) decrease in prepaid expenses and other 3,320 (322 )
    Increase (decrease) in accounts payable (3,856 ) (2,600 )
    Increase (decrease) in accrued liabilities (5,240 ) 5,461
    Increase (decrease) in other liabilities and deferred credits (3 ) (1,516 )
Net cash provided by (used in) operating activities 40,128 29,151
Cash flows from investing activities:
    Capital expenditures (42,553 ) (11,684 )
    Assets purchased on behalf of affiliate (35,394 ) (26,019 )
    Proceeds from sale of assets to affiliate 35,394 --
    Proceeds from asset dispositions 3,350 7,126
    Acquisitions, net of cash received -- (15,953 )
    Investments (1,729 ) --
Net cash provided by (used in) investing activities (40,932 ) (46,530 )
Cash flows from financing activities:
    Proceeds from borrowings 242,981 26,019
    Proceeds from borrowings under credit facilities -- 14,000
    Repayment of debt and payment of debt redemption premiums (228,391 ) (16,645 )
    Issuance of common stock 50 2,757
Net cash provided by (used in) financing activities 14,640 26,131
Effect of exchange rate changes in cash 2,266 703
Net increase (decrease) in cash and cash equivalents 16,102 9,455
Cash and cash equivalents at beginning of period 56,800 42,670
Cash and cash equivalents at end of period $   72,902 $ 52,125
Supplemental disclosure of cash flow information
Cash paid during the period for:
    Interest, net of interest capitalized $    7,859 $ 7,138
    Income taxes $       561 $ 4,122

	Nine Months Ended December 31,
	2003			2002
	(in thousands)
Cash flows from operating activities:
Net income	$	19,558		$	33,983
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		29,077			27,860
Increase (decrease) in deferred taxes		2,778			8,482
Gain on asset dispositions		(2,588	)		(1,307	)
Loss on extinguishment of debt		6,205			--
Equity in earnings from unconsolidated affiliates
over (under) dividends received		(4,459	)		(3,575	)
Minority interest in earnings		1,615			1,313
(Increase) decrease in accounts receivable		4,782			(17,591	)
(Increase) decrease in inventories		(5,484	)		(7,483	)
(Increase) decrease in prepaid expenses and other		7,438			571
Increase (decrease) in accounts payable		(4,353	)		1,903
Increase (decrease) in accrued liabilities		1,844			8,207
Increase (decrease) in other liabilities and deferred credits		311			(2,031	)

Net cash provided by (used in) operating activities		56,724			50,332

Cash flows from investing activities:
Capital expenditures		(53,806	)		(41,454	)
Assets purchased on behalf of affiliate		(35,394	)		(26,019	)
Proceeds from sale of assets to affiliate		35,394			26,019
Proceeds from asset dispositions		4,758			17,575
Acquisitions, net of cash received		--			(15,953	)
Investments		(1,729	)		--

Net cash provided by (used in) investing activities		(50,777	)		(39,832	)

Cash flows from financing activities:
Proceeds from borrowings		242,981			45,286
Repayment of debt and payment of debt redemption premiums		(233,384	)		(48,391	)
Issuance of common stock		1,147			2,926

Net cash provided by (used in) financing activities		10,744			(179	)

Effect of exchange rate changes in cash		5,734			2,312

Net increase (decrease) in cash and cash equivalents		22,425			12,633
Cash and cash equivalents at beginning of period		56,800			42,670

Cash and cash equivalents at end of period	$	79,225		$	55,303

Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest, net of interest capitalized	$	14,794		$	10,076
Income taxes	$	6,929		$	6,733

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30,December 31, 2003

NOTE A — Basis of Presentation and Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. In the opinion of management, any adjustments considered necessary for a fair presentation have been included. Operating results for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2003, are not necessarily indicative of the results that may be expected for the year ending March 31, 2004. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2003.

NOTE B — Earnings per Share

Basic earnings per common share were computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share for the three and ~~six~~nine months ended ~~September 30, 2003~~December 31, 2002 excluded ~~381,076~~217,500 and ~~256,372~~244,167 stock options, respectively, at a weighted average exercise price of ~~$21.26 and $21.31, respectively,~~$21.34 which were outstanding during the period but were anti-dilutive. Diluted earnings per share for the three and six months ended September 30, 2002 excluded 424,000 and 257,500 stock options, respectively, at a weighted average exercise price of $20.46 and $21.34, respectively, which were outstanding during the periodperiods but were anti-dilutive. The following table sets forth the computation of basic and diluted net income per share:

	Three Months Ended September 30,				Six Months Ended September 30,								Three Months Ended December 31,
	2003		2002		2003		2002		2003		2002		2003⁽¹⁾		2002
Net income (thousands of dollars):
Income available to common stockholders	$	8,500	$	12,483	$	16,768	$	21,965	$	2,790	$	12,018	$	19,558	$	33,983
Interest and redemption premium on convertible debt,
net of taxes(1)		--		955		1,809		1,909
Interest on convertible debt, net of taxes														--		955	--	2,864

Income available to common stockholders,
plus assumed conversions	$	8,500	$	13,438	$	18,577	$	23,874	$	2,790	$	12,973	$	19,558	$	36,847

Shares:
Weighted average number of common
shares outstanding		22,514,628		22,398,223		22,512,825		22,356,507		22,555,042		22,498,903		22,526,949		22,404,145
Options		158,316		127,989		145,240		167,850		253,210		164,144		170,065		165,775
Convertible debt		--		3,976,928		2,586,090		3,976,928		--		3,976,928		--		3,976,928

Weighted average number of common
shares outstanding, plus assumed conversions		22,672,944		26,503,140		25,244,155		26,501,285		22,808,252		26,639,975		22,697,014		26,546,848

Net income per share:
Basic	$	0.38	$	0.56	$	0.74	$	0.98	$	0.12	$	0.53	$	0.87	$	1.52

Diluted	$	0.37	$	0.51	$	0.74	$	0.90	$	0.12	$	0.49	$	0.86	$	1.39

(1) The assumed conversion of the convertible debt redeemed in July 2003 is anti-dilutive for the ~~three~~nine months ended ~~September 30,~~December 31, 2003.

The Company accounts for its stock-based employee compensation under the principles prescribed by the Accounting Principles Board’s Opinion No. 25, Accounting for Stock Issued to Employees (Opinion No. 25). SFAS No. 123, “Accounting for Stock-Based Compensation” permits the continued use of the intrinsic-value based method prescribed by Opinion No. 25 but requires additional disclosures, including pro forma calculations of earnings and net earnings per share as if the fair value method of accounting prescribed by SFAS No. 123 had been applied. No stock-based compensation costs are reflected in net income, as all options granted under the plans had an exercise price equal to the market value of the underlying common stock on the date of grant. As required by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” which amended SFAS No. 123, the following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation. The pro forma data presented below is not representative of the effects on reported amounts for future years.

	Three Months Ended September 30,						Six Months Ended September 30,						Three Months Ended December 31,						Nine Months Ended December 31,
	2003			2002			2003			2002			2003			2002			2003			2002
Net income, as reported:		$ 8,500		$	12,483		$	16,768		$	21,965			2,790			12,018			19,558			33,983
Stock-based employee compensation expense,
net of tax		(237	)		(77	)		(359	)		(534	)		(428	)		(163	)		(788	)		(179	)

Pro forma net income		8,263			12,406			16,409			21,431			2,362			11,855			18,770			33,804

Basic earnings per share:
Earnings per share, as reported	$	0.38		$	0.56		$	0.74		$	0.98		$	0.12		$	0.53		$	0.87		$	1.52
Stock-based employee compensation expense,
net of tax		(0.01	)		(0.01	)		(0.01	)		(0.02	)		(0.02)			(0.01)			(0.03)			(0.01)

Pro forma basic earnings per share	$	0.37		$	0.55		$	0.73		$	0.96		$	0.10		$	0.52		$	0.84		$	1.51

Diluted earnings per share:
Earnings per share, as reported	$	0.37		$	0.51		$	0.74		$	0.90		$	0.12		$	0.49		$	0.86		$	1.39
Stock-based employee compensation expense,
net of tax		(0.01	)		(0.01	)		(0.02	)		(0.02	)		(0.02)			(0.01)			(0.03)			(0.01)

Pro forma diluted earnings per share	$	0.36		$	0.50		$	0.72		$	0.88		$	0.10		$	0.48		$	0.83		$	1.38

NOTE C — Commitments and Contingencies

The Company employs approximately 260 pilots in its North American Operations who are represented by the Office and Professional Employees International Union (“OPEIU”) under a collective bargaining agreement. Because this agreement became amendable in May 2003, the Company began negotiations with union representatives in March 2003. After approximately eight weeks of discussions, an agreement could not be reached on several keys areas, most notably compensation levels. Both management and the union representatives agreed to seek assistance from the National Mediation Board, or NMB, in appointing an independent mediator to assist with the negotiations. A mediator was assigned by the NMB and sessions have continued to date with some progress being made. ~~Additional sessions are planned for November~~In January 2004, the Company made its last offer to the union which was termed not acceptable, citing primarily issues associated with pay and ~~December. Future sessions will continue as long as~~benefits. It appears the parties may have reached an impasse and the mediator ~~believes progress is being made.~~has scheduled no additional negotiating sessions. If the mediator and the NMB should determine that no further progress can be made toward resolution, then the ~~mediator~~NMB can declare a 30-day “cooling-off period.” Negotiations may continue during the “cooling-off period.” If the dispute remains unresolved after the “cooling-off period,” then both parties would be released from negotiations and could seek “self help”. When “self help” is available ~~then~~ the pilots could then engage in a work action that could take a variety of forms including a work stoppage. The Company has contingency plans in place to respond to possible work actions by the pilots.

NOTE D – Comprehensive Income

Comprehensive income is as follows:

	Three Months Ended September 30,				Six Months Ended September 30,								Three Months Ended December 31,
	2003		2002		2003		2002		2003		2002		2003		2002
	(in thousands)														(in thousands)
Net Income	$	8,500	$	12,483	$	16,768	$	21,965	$	2,790	$	12,018	$	19,558	$	33,983
Other Comprehensive Income:
Currency translation adjustment		1,568		7,308		12,232		24,289
Other Comprehensive Income (Loss):
Currency translation adjustment and other														17,872		9,929	30,104	34,218

Comprehensive Income	$	10,068	$	19,791	$	29,000	$	46,254	$	20,662	$	21,947	$	49,662	$	68,201

NOTE E – Subsequent Events
In October 2003, the Company announced that it had begun a restructuring of its North Sea Operations. The restructuring is designed to reduce costs and promote operational and managerial efficiencies to enable the Company to remain competitive in the North Sea offshore helicopter market.
As part of the restructuring program, the Company will reduce staffing levels by approximately 75 positions, or 11%, of its United Kingdom workforce over a six-month period. The Company will incur approximately $5.2 million in severance and other restructuring costs. In addition, the Company is considering changes to its defined benefit pension plan to limit future service accruals through the use of a defined contribution arrangement and is currently consulting with employees regarding this matter.
NOTE F – Property and Equipment

In conjunction with the Company’s previously announced fleet and facilities renewal and refurbishment program, the Company changed the estimated residual value of certain aircraft from 30% to 50% and changed the useful lives of certain aircraft from 7-10 years to 15 years, effective July 1, 2003. The Company believes the revised amounts reflect their historical experience and more appropriately matches costs over the estimated useful lives and salvage values of these assets. The effect of this change for the quarter ~~and six months~~ ended ~~September 30,~~December 31, 2003, was a reduction in depreciation expense of $1.1 million, $0.8 million after tax. The effect of this change for the nine months ended December 31, 2003, was a reduction in depreciation expense of $2.2 million, $1.5 million after tax. The reduction in depreciation expense increased the Company’s net income for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2003 by $0.03 and $0.07 per diluted ~~share.~~share, respectively.

NOTE GF – Long-Term Debt

On June 20, 2003, the Company completed a private placement of $230.0 million 6 1/8% Senior Notes due 2013. These notes are unsecured senior obligations and rank effectively junior in right of payment to all the Company’s existing and future secured indebtedness, rank equally in right of payment with the Company’s existing and future senior unsecured indebtedness and rank senior in right of payment to any of the Company’s existing and future subordinated indebtedness. A portion of the net proceeds from the issuance and sale of these notes was used to redeem all of the Company’s outstanding 7 7/8% Senior Notes due 2008 and all of the Company’s outstanding 6% Convertible Subordinated Notes due 2003. The remaining net proceeds from the private placement were used for general corporate purposes. At the end of June 2003 the Company notified the trustees of the full redemption of its $100.0 million 7 7/8% Senior Notes due 2008 at a redemption price equal to 103.938% of the principal amount plus accrued interest of $0.3 million for a total price of $104.2 million and the full redemption of its $90.9 million 6% Convertible Subordinated Notes due 2003 at a redemption price equal to 100.86% of the principal amount plus accrued interest of $0.7 million for a total price of $92.4 million. The above redemptions took place on July 29, 2003. The Company recorded a loss on the extinguishment of debt of $6.2 million in July 2003. Approximately $4.7 million of the loss pertains to redemption premiums and $1.5 million pertains to unamortized debt issuance costs relating to the redeemed debt.

The Company filed a registration statement on July 18, 2003, with respect to an offer to exchange the notes for a new issue of equivalent notes registered under the Securities Act. The registration statement was declared effective on August 4, 2003 and the exchange of notes was concluded on September 4, 2003.

NOTE HG – Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” effective for fiscal years beginning after June 15, 2002. This statement ~~will require~~requires the Company to record the fair value of liabilities related to future asset retirement obligations in the period the obligation is incurred. The Company adopted SFAS No. 143 on April 1, 2003. The adoption of SFAS No. 143 did not have an impact on the Company’s financial statements.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 eliminates SFAS No. 4 and as a result, gains and losses from extinguishments of debt should be classified as extraordinary items only if they meet the criteria in APB Opinion No. 30. SFAS No. 145 amends SFAS No. 13, “Accounting for Leases,” to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also updates and amends existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The Company implemented SFAS No. 145 on April 1, 2003, and determined that it had no impact on prior quarter financial statements. On July 29, 2003, the Company redeemed all of the then outstanding principal amount of its 7 7/8% Senior Notes due 2008 and its 6% Convertible Subordinated Notes due 2003 which resulted in a loss on extinguishment of debt of $6.2 million comprised of unamortized debt issuance costs and a premium payment. In accordance with SFAS No. 145 the loss on extinguishment of debt was recognized as a component of income from continuing operations.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” which is effective for fiscal periods after December 31, 2002. SFAS No. 146 requires companies to recognize costs associated with restructurings, discontinued operations, plant closings, or other exit or disposal activities, when incurred rather than at the date a plan is committed to. The Company has implemented the provisions of this statement on a prospective basis for exit or disposal activities initiated after December 31, 2002.

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 expands existing accounting guidance and disclosure requirements for certain guarantees and requires recognition, at the inception of a guarantee, of a liability for the fair value of an obligation undertaken in connection with issuing a guarantee. The disclosure requirements of FIN 45 were effective for the Company’s March 31, 2003 financial statements and the remaining provisions of FIN 45 apply to guarantees issued or modified after December 31, 2002. ~~During the current quarter,~~In July 2003, the Company sold six aircraft, at cost, to a newly formed limited liability company, Rotorwing Leasing Resources, L.L.C. or RLR. The capital stock of RLR is owned 49% by the Company and 51% by the same principal with whom the Company has other jointly owned businesses operating in Mexico. RLR financed 90% of the purchase price of these aircraft through a five year term loan (the RLR Note)~~. The RLR Note is~~ secured by the six aircraft. The Company has guaranteed 49% of the RLR Note ($15.6 million) and the other shareholder has guaranteed the remaining 51% of the RLR Note ($16.2 million). In addition, the Company has given the Bank a put option which the bank may exercise if the aircraft are not returned to the United States within 30 days of a default on the RLR Note. Any such exercise would require the Company to purchase the RLR Note from the bank. The Company and the other RLR shareholder simultaneously entered into a similar agreement which requires that, in event of exercise by the bank of its put option to the Company, the other shareholder will be required to purchase 51% of the RLR Note from the Company. As of ~~September 30,~~December 31, 2003 a liability of ~~$1.1~~$1.0 million representing the fair value of this guarantee is reflected in the balance sheet in other liabilities and deferred credits.

~~In January 2003,~~ The fair value of the ~~FASB issued Interpretation No. 46, “Consolidation~~guarantee is being amortized over the term of Variable Interest Entities” (“FIN 46”). In general, a variable interest entity (formerly referred to as a Special Purpose Entity or SPE) is a corporation, partnership, trust or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46 requires consolidation of a variable interest entity by a company if that company is subject to the majority of risk of loss or residual return from the variable interest entity’s activities. FIN 46 is effective immediately for variable interest entities created after January 31, 2003. The consolidation requirements for variable interest entities created before February 1, 2003, begins no later than the first fiscal year or interim period beginning after December 15, 2003. The adoption of FIN 46 did not have a material impact on the Company’s consolidated financial statements.RLR Note.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” effective for contracts entered into or modified after June 30, 2003. This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The adoption of SFAS 149 did not have an impact on the Company’s financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 affects the issuer’s accounting for three types of freestanding financial instruments. One type is mandatory redeemable shares, which the issuing company is obligated to buy back in exchange for cash or other assets. A second type, which includes put options and forward purchase contracts, involves instruments that do or may require the issuer to buy back some of its shares in exchange for cash or other assets. The third type of ~~instruments~~instrument that are liabilities under this Statement is obligations that can be settled with shares, the monetary value of which is fixed, tied solely or ~~predominately~~predominantly to a variable such as a market index, or varies inversely with the value of the issuers’ shares. SFAS No. 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. Most of the guidance in SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have an impact on the Company’s financial statements.

In December 2003, the FASB published a revision to Interpretation 46 (“FIN 46R”) to clarify certain provisions of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” and to exempt certain entities from its requirements. FIN 46R requires a company to consolidate a variable interest entity (VIE), as defined, when the company will absorb a majority of the variable interest entity’s expected losses, receive a majority of the variable interest entity’s expected residual returns, or both. FIN 46R also requires consolidation of existing, non-controlled affiliates if the VIE is unable to finance its operations without investor support, or where the other investors do not have exposure to the significant risks and rewards of ownership. FIN 46R is effective by the end of the first reporting period beginning after December 15, 2003. The Company does not expect the adoption of FIN 46R to have a material impact on the Company’s consolidated financial statements.

NOTE IH – Segment Information

The Company operates principally in two business segments: Helicopter Activities and Production Management Services. The following shows reportable segment information for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2003 and 2002, reconciled to consolidated totals, and prepared on the same basis as the Company’s consolidated financial statements:

	Three Months Ended September 30,						Six Months Ended September 30,												Three Months Ended December 31,
	2003			2002			2003			2002			2003			2002			2003			2002
	(in thousands)																					(in thousands)
Segment operating revenue from external customers:
Helicopter Activities:
Helicopter activities:
North American Operations	$	38,800		$	34,303		$	72,936		$	70,569		$	35,107		$	34,369		$	108,044		$	104,938
North Sea Operations		40,103			48,777			80,910			90,331			38,277			43,928			119,187			134,259
International Operations		41,634			40,934			83,129			78,178			45,908			42,347			129,037			120,525
Technical Services		6,491			7,538			12,032			15,386			6,585			7,546			18,618			22,932

Total Helicopter Activities		127,028			131,552			249,007			254,464			125,877			128,190			374,886			382,654
Production Management Services		12,001			11,914			23,656			23,909			12,597			11,820			36,253			35,729

Total segment operating revenue	$	139,029		$	143,466		$	272,663		$	278,373		$	138,474		$	140,010		$	411,139		$	418,383

Intersegment operating revenue:
Helicopter activities:
North American Operations	$	3,884		$	3,349		$	7,573		$	6,256		$	4,309		$	3,792		$	11,881		$	10,048
North Sea Operations		3,665			4,199			7,841			8,528			4,806			3,935			12,647			12,463
International Operations		229			677			468			1,353			230			675			698			2,028
Technical Services		2,776			1,629			4,048			5,211			8,021			2,161			12,068			7,372

Total Helicopter Activities		10,554			9,854			19,930			21,348			17,366			10,563			37,294			31,911
Production Management Services		17			15			35			30			14			17			49			47

Total intersegment operating revenue	$	10,571		$	9,869		$	19,965		$	21,378		$	17,380		$	10,580		$	37,343		$	31,958

Consolidated operating revenue reconciliation:
Helicopter activities:
North American Operations	$	42,684		$	37,652		$	80,509		$	76,825		$	39,416		$	38,161		$	119,925		$	114,986
North Sea Operations		43,768			52,976			88,751			98,859			43,083			47,863			131,834			146,722
International Operations		41,863			41,611			83,597			79,531			46,138			43,022			129,735			122,553
Technical Services		9,267			9,167			16,080			20,597			14,606			9,707			30,686			30,304

Total Helicopter Activities		137,582			141,406			268,937			275,812			143,243			138,753			412,180			414,565
Production Management Services		12,018			11,929			23,691			23,939			12,611			11,837			36,302			35,776
Corporate		3,068			2,837			5,951			5,886			2,925			2,904			8,877			8,790
Intersegment eliminations		(13,239	)		(12,596	)		(25,257	)		(26,992	)		(20,064	)		(13,307	)		(45,322	)		(40,299	)

Total consolidated operating revenue	$	139,429		$	143,576		$	273,322		$	278,645		$	138,715		$	140,187		$	412,037		$	418,832

Consolidated operating income reconciliation:
Helicopter activities:
North American Operations	$	9,754		$	4,970		$	13,559		$	8,954		$	7,070		$	5,727		$	20,628		$	14,681
North Sea Operations		3,319			7,202			8,698			12,741			(437	)		6,783			8,261			19,524
International Operations		5,351			7,181			11,751			13,980			4,907			6,436			16,656			20,416
Technical Services		128			529			272			1,273			1,023			1,237			1,296			2,510

Total Helicopter Activities		18,552			19,882			34,280			36,948			12,563			20,183			46,841			57,131
Production Management Services		780			898			1,403			1,793			540			686			1,942			2,479
Gain on disposal of assets		1,374			1,966			2,231			2,253
Gain (loss) on disposal of assets																				357			(946	)	2,588	1,307
Corporate		(685	)		(1,168	)		(1,420	)		(1,995	)		(2,690	)		(982	)		(4,107	)		(2,977	)

Total consolidated operating income	$	20,021		$	21,578		$	36,494		$	38,999		$	10,770		$	18,941		$	47,264		$	57,940

NOTE I – Restructuring Charges

In October 2003, the Company announced that it had begun a restructuring of its United Kingdom based operations. The restructuring is designed to reduce costs and promote operational and managerial efficiencies to enable the Company to remain competitive in the North Sea offshore helicopter market.

As part of the restructuring program, the Company will reduce staffing levels by approximately 100 positions, or 11% of its United Kingdom workforce over a nine-month period. The Company will ultimately incur approximately £1.9 million ($3.3 million) in severance costs and approximately £0.4 million ($0.7 million) in other restructuring costs. For the three and nine months ended December 31, 2003, the Company has incurred to date approximately £1.3 million ($2.4 million) in severance costs and approximately £0.3 million ($0.6 million) in other restructuring costs. Approximately £0.5 million ($1.0 million) of costs incurred to date are included in Direct Cost in the consolidated income statement and have been allocated to the Helicopter Activities segment, specifically the North Sea business unit, while the remaining £1.1 million ($2.0 million) are included in General and Administrative costs in the consolidated income statement and were allocated to Corporate.

The balance of the accrued restructuring charges recorded in connection with the restructuring of the Company’s United Kingdom based operations at December 31, 2003 was as follows:

	Employee Severance And Other Related Benefits			Other Restructuring Costs			Total
	(in thousands)
Restructuring Costs, incurred to date	$	2,404		$	602		$	3,006
Cash payments		(196	)		(176	)		(372	)

Accrual balance at December 31, 2003	$	2,208		$	426		$	2,634

The accrual balance at December 31, 2003 is expected to be paid in the next three quarters.

NOTE J —– Subsequent Events

During January 2004, the Company amended its only defined benefit pension plans covering certain United Kingdom and other overseas employees. The amendment, which is effective February 1, 2004, essentially removes the defined benefit feature for a participant’s future services and replaces it with a defined contribution arrangement. Under the new defined contribution feature, the Company will contribute 5% of a participant’s non-variable salary to a defined contribution section of the plans. The participant will be required to contribute a minimum of 5% of non-variable salary. Participants were also given the option to transfer out of the plans. In accordance with SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits”, the above change to the plans constitutes a “curtailment” of benefits and accordingly, all previously deferred service gains or losses are immediately recognized in the statement of income. At the date of the amendment the Company had a deferred prior service benefit in the range of £11.6 million to £12.3 million ($20.7 million to $22.0 million) related to prior plan amendments. This amount will be recorded as a gain in the Company’s fourth fiscal quarter.

NOTE K – Supplemental Condensed Consolidating Financial Information

In connection with the sale of the Company’s $230 million 6 ~~1/8%~~¹/₈% Senior Notes due 2013, certain of the Company’s subsidiaries (the “Guarantor Subsidiaries”) jointly, severally and unconditionally guaranteed the payment obligations under the Notes. The following supplemental financial information sets forth, on a consolidating basis, the balance sheet, statement of income and cash flow information for Offshore Logistics, Inc. (“Parent Company Only”), for the Guarantor Subsidiaries and for Offshore Logistics, Inc.‘s other subsidiaries (the “Non-Guarantor Subsidiaries”). The Company has not presented separate financial statements and other disclosures concerning the Guarantor Subsidiaries because management has determined that such information is not material to investors.

The supplemental condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include all disclosures included in annual financial statements, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Certain reclassifications were made to conform all of the financial information to the financial presentation on a consolidated basis. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenues and expenses.

The allocation of the consolidated income tax provision was made using the with and without allocation method.

NOTE JK – Supplemental Condensed Consolidating Financial Statements – Continued

Supplemental Condensed Consolidating Balance Sheet
September 30,December 31, 2003
Parent
Company
Only
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
(in thousands)
ASSETS
Current assets:
    Cash and cash equivalents $   11,453 $ 2,797 $ 58,652 $ -- $ 72,902
    Accounts receivable 968 42,348 83,273 (4,694 ) 121,895
    Inventories -- 68,418 53,974 149 122,541
    Prepaid expenses and other 410 3,829 6,015 -- 10,254
      Total current assets 12,831 117,392 201,914 (4,545 ) 327,592
  Intercompany investment 271,257 -- -- (271,257 ) --
  Investments in unconsolidated affiliates 1,052 -- 34,118 -- 35,170
  Intercompany note receivables 457,458 -- 11,792 (469,250 ) --
  Property and equipment--at cost:
    Land and buildings 135 8,686 8,378 -- 17,199
    Aircraft and equipment 1,483 292,836 462,846 -- 757,165
1,618 301,522 471,224 -- 774,364
  Less: Accumulated depreciation
      and amortization (1,351 ) (93,645 ) (119,441 ) -- (214,437 )
267 207,877 351,783 -- 559,927
  Other assets 14,343 13,974 19,732 111 48,160
$ 757,208 $ 339,243 $ 619,339 $ (744,941 ) $ 970,849

	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	14,548		$	5,951		$	58,726		$	--		$	79,225
Accounts receivable		4,504			40,766			87,300			(7,305	)		125,265
Inventories		--			69,102			62,284			149			131,535
Prepaid expenses and other		220			2,166			6,455			--			8,841

Total current assets		19,272			117,985			214,765			(7,156	)		344,866
Intercompany investment		260,792			--			--			(260,792	)		--
Investments in unconsolidated affiliates		947			--			36,825			--			37,772
Intercompany note receivables		488,440			--			12,001			(500,441	)		--
Property and equipment--at cost:
Land and buildings		135			17,140			8,527			--			25,802
Aircraft and equipment		1,464			287,884			488,934			--			778,282

		1,599			305,024			497,461			--			804,084
Less: accumulated depreciation
and amortization		(1,376	)		(94,240	)		(131,818	)		--			(227,434	)

		223			210,784			365,643			--			576,650
Other assets		14,959			13,970			17,198			111			46,238

	$	784,633		$	342,739		$	646,432		$	(768,278)		$	1,005,526

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
  Accounts payable $          98 $ 6,111 $ 26,236 $ (4,694 ) $ 27,751
  Accrued liabilities 457 13,188 33,506 13,432 60,583
  Deferred taxes 1,079 110 12,452 (13,005 ) 636
  Current maturities of long-term debt -- -- 5,681 -- 5,681
    Total current liabilities 1,634 19,409 77,875 (4,267 ) 94,651
Long-term debt, less current maturities 230,000 -- 21,637 -- 251,637
Intercompany notes payable 10,657 96,232 362,361 (469,250 ) --
Other liabilities and deferred credits 1,338 2,781 123,070 -- 127,189
Deferred taxes 29,549 52,629 6,415 (426 ) 88,167
Minority interest 18,481 -- -- -- 18,481
Stockholders' investment:
  Common stock 225 4,062 15,010 (19,072 ) 225
  Additional paid in capital 139,109 51,168 8,015 (59,183 ) 139,109
  Retained earnings 316,118 112,962 82,282 (195,096 ) 316,266
  Accumulated other comprehensive
    income (loss) 10,097 -- (77,326 ) 2,353 (64,876 )
465,549 168,192 27,981 (270,998 ) 390,724
$ 757,208 $ 339,243 $ 619,339 $ (744,941 ) $ 970,849

LIABILITIES AND STOCKHOLDERS’ INVESTMENT


Current liabilities:
Accounts payable	$	247	$	6,078	$	26,358		$	(3,530	)	$	29,153
Accrued liabilities		3,073		13,984		39,506			12,730			69,293
Deferred taxes		649		--		13,381			(13,005	)		1,025
Current maturities of long-term debt		--		--		995			--			995

Total current liabilities		3,969		20,062		80,240			(3,805	)		100,466
Long-term debt, less current maturities		230,000		--		21,383			--			251,383
Intercompany notes payable		10,871		90,780		398,790			(500,441	)		--
Other liabilities and deferred credits		1,297		3,136		132,061			--			136,494
Deferred taxes		30,660		54,846		2,076			(3,498	)		84,084
Minority interest		20,438		--		--			--			20,438
Stockholders' investment:
Common stock		226		4,062		19,856			(23,918	)		226
Additional paid in capital		140,383		51,168		7,323			(58,491	)		140,383
Retained earnings		318,908		118,685		74,354			(192,891	)		319,056
Accumulated other comprehensive
income (loss)		27,881		--		(89,651	)		14,766			(47,004	)

		487,398		173,915		11,882			(260,534	)		412,661

	$	784,633	$	342,739	$	646,432		$	(768,278	)	$	1,005,526

NOTE J – Supplemental Condensed Consolidating Financial Statements – Continued
Supplemental Condensed Consolidating Statement of Income
Six Months Ended September 30, 2003
Parent
Company
Only
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
(in thousands)
Gross revenue:
    Operating revenue $              396 $ 96,593 $ 176,333 $ -- $ 273,322
    Intercompany revenue -- 5,621 1,004 (6,625 ) --
    Gain on disposal of assets -- 229 2,002 -- 2,231
396 102,443 179,339 (6,625 ) 275,553
Operating expenses:
    Direct cost -- 74,921 127,752 -- 202,673
    Intercompany expense 8 996 5,140 (6,144 ) --
    Depreciation and amortization 118 6,300 12,881 -- 19,299
    General and administrative 3,215 4,907 9,446 (481 ) 17,087
3,341 87,124 155,219 (6,625 ) 239,059
         Operating income (2,945 ) 15,319 24,120 -- 36,494
Earnings from unconsolidated affiliates, net 15,976 -- 4,950 (15,976 ) 4,950
Interest income 20,651 7 940 (20,550 ) 1,048
Interest expense 8,580 -- 20,925 (20,550 ) 8,955
Loss on extinguishment of debt (6,205 ) -- -- -- (6,205 )
Other income (expense), net (306 ) (7 ) (1,581 ) -- (1,894 )
         Income before provision for income
           taxes and minority interest 18,591 15,319 7,504 (15,976 ) 25,438
Allocation of consolidated income taxes 784 4,595 2,252 -- 7,631
Minority interest (1,039 ) -- -- -- (1,039 )
         Net income $         16,768 $ 10,724 $ 5,252 $ (15,976 ) $ 16,768
NOTE J – Supplemental Condensed Consolidating Financial Statements – Continued
Supplemental Condensed Consolidating Statement of Cash Flows
Six Months Ended September 30, 2003
Parent
Company
Only
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
(in thousands)
Net cash provided by (used in)
  operating activities $    (16,062 ) $ 40,425 $ 19,493 $ (3,728 ) $ 40,128
Cash flows from investing activities:
  Capital expenditures (9 ) (40,363 ) (2,181 ) -- (42,553 )
  Proceeds from asset dispositions -- 522 2,828 -- 3,350
  Assets purchased on behalf of affiliates (17,869 ) (6,217 ) (11,308 ) -- (35,394 )
  Proceeds from sale of assets to affiliates 17,869 6,217 11,308 -- 35,394
  Investments -- -- (1,729 ) -- (1,729 )
Net cash provided by (used in)
  investing activities (9 ) (39,841 ) (1,082 ) -- (40,932 )
Cash flows from financing activities:
  Proceeds from borrowings 242,981 -- 50 (50 ) 242,981
  Repayment of debt and payment of debt
    redemption premiums (231,289 ) -- (880 ) 3,778 (228,391 )
  Issuance of common stock 50 -- -- -- 50
Net cash provided by (used in) financing
  activities 11,742 -- (830 ) 3,728 14,640
Effect of exchange rate changes in cash -- -- 2,266 -- 2,266
Net increase (decrease) in cash and
  cash equivalents (4,329 ) 584 19,847 -- 16,102
Cash and cash equivalents
  at beginning of period 15,782 2,213 38,805 -- 56,800
Cash and cash equivalents
   at end of period $    11,453 $ 2,797 $ 58,652 $ -- $ 72,902
NOTE JK – Supplemental Condensed Consolidating Financial Statements — Continued

Supplemental Condensed Consolidating Balance SheetStatement of Income
MarchNine Months Ended December 31, 2003
Parent
Company
Only
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
(in thousands)
ASSETS
    Current assets:
      Cash and cash equivalents $ 15,782 $ 2,213 $ 38,805 $ -- $ 56,800
      Accounts receivable 1,860 35,442 86,414 (4,704 ) 119,012
      Inventories -- 66,278 52,575 (7 ) 118,846
      Prepaid expenses and other 305 2,999 5,139 -- 8,443
          Total current assets 17,947 106,932 182,933 (4,711 ) 303,101
    Intercompany investment 264,498 -- -- (264,498 ) --
    Investments in unconsolidated affiliates -- -- 27,928 -- 27,928
    Intercompany notes receivable 409,544 -- 13,883 (423,427 ) --
    Property and equipment--at cost:
      Land and buildings 135 8,517 8,019 -- 16,671
      Aircraft and equipment 1,474 253,458 448,179 -- 703,111
1,609 261,975 456,198 -- 719,782
      Less: Accumulated depreciation
           and amortization (1,238 ) (87,876 ) (104,441 ) -- (193,555 )
371 174,099 351,757 -- 526,227
    Other assets 10,080 13,985 24,599 111 48,775
$ 702,440 $ 295,016 $ 601,100 $ (692,525 ) $ 906,031

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
  Accounts payable $ 540 $ 7,306 $ 26,524 $ (4,704 ) $ 29,666
  Accrued liabilities 4,175 14,488 45,518 -- 64,181
  Deferred taxes 33 -- -- -- 33
  Current maturities of long-term debt 90,921 -- 5,763 -- 96,684
     Total current liabilities 95,669 21,794 77,805 (4,704 ) 190,564
Long-term debt, less current maturities 114,000 -- 22,134 -- 136,134
Intercompany notes payable 14,078 63,485 345,864 (423,427 ) --
Other liabilities and deferred credits 285 2,785 116,965 -- 120,035
Deferred taxes 24,429 49,482 7,171 -- 81,082
Minority interest 16,555 -- -- -- 16,555
Stockholders' investment:
  Common stock 225 4,062 12,117 (16,179 ) 225
  Additional paid in capital 139,046 51,168 8,015 (59,183 ) 139,046
  Retained earnings 299,505 102,240 80,881 (183,128 ) 299,498
  Accumulated other comprehensive
       income (loss) (1,352 ) -- (69,852 ) (5,904 ) (77,108 )
437,424 157,470 31,161 (264,394 ) 361,661
$ 702,440 $ 295,016 $ 601,100 $ (692,525 ) $ 906,031

	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Gross revenue:
Operating revenue	$	631		$	144,620		$	266,786		$	--		$	412,037
Intercompany revenue		--			9,107			1,333			(10,440	)		--
Gain on disposal of assets		--			610			1,978			--			2,588

		631			154,337			270,097			(10,440	)		414,625
Operating expenses:
Direct cost		--			112,530			197,694			--			310,224
Intercompany expense		8			1,324			8,386			(9,718	)		--
Depreciation and amortization		162			9,444			19,471			--			29,077
General and administrative		5,146			7,543			16,093			(722	)		28,060

		5,316			130,841			241,644			(10,440	)		367,361

Operating income		(4,685	)		23,496			28,453			--			47,264
Earnings from unconsolidated affiliates, net		15,822			--			6,985			(15,927	)		6,880
Interest income		31,435			14			1,401			(31,522	)		1,328
Interest expense		12,178			2			32,115			(31,522	)		12,773
Loss on extinguishment of debt		(6,205	)		--			--			--			(6,205	)
Other income (expense), net		(767	)		(15	)		(5,464	)		--			(6,246	)

Income before provision for income
taxes and minority interest		23,422			23,493			(740	)		(15,927	)		30,248
Allocation of consolidated income taxes		2,249			7,048			(222	)		--			9,075
Minority interest		(1,615	)		--			--			--			(1,615	)

Net income (loss)	$	19,558		$	16,445		$	(518	)	$	(15,927	)	$	19,558

NOTE JK – Supplemental Condensed Consolidating Financial Statements — Continued

Supplemental Condensed Consolidating Statement of IncomeCash Flows
SixNine Months Ended September 30, 2002December 31, 2003
Parent
Company
Only
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
(in thousands)
Gross revenue:
    Operating revenue $ 273 $ 94,540 $ 183,832 $ -- $ 278,645
    Intercompany revenue -- 3,924 1,332 (5,256 ) --
    Gain on disposal of assets 8 826 1,419 -- 2,253
281 99,290 186,583 (5,256 ) 280,898
Operating expenses:
    Direct cost -- 75,670 130,887 -- 206,557
    Intercompany expense 19 1,312 3,444 (4,775 ) --
    Depreciation and amortization 273 5,718 12,294 -- 18,285
    General and administrative 2,960 4,721 9,857 (481 ) 17,057
3,252 87,421 156,482 (5,256 ) 241,899
         Operating income (2,971 ) 11,869 30,101 -- 38,999
Earnings from unconsolidated affiliates, net 17,997 -- 3,451 (17,997 ) 3,451
Interest income 17,470 20 375 (17,218 ) 647
Interest expense 7,246 -- 17,250 (17,218 ) 7,278
Other income (expense), net (373 ) 61 (2,917 ) -- (3,229 )
         Income before provision for income
           taxes and minority interest 24,877 11,950 13,760 (17,997 ) 32,590
Allocation of consolidated income taxes 2,064 3,585 4,128 -- 9,777
Minority interest (848 ) -- -- -- (848 )
         Net income $ 21,965 $ 8,365 $ 9,632 $ (17,997 ) $ 21,965

	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net cash provided by (used in)
operating activities	$	(14,068	)	$	49,566		$	24,954		$	(3,728	)	$	56,724

Cash flows from investing activities:
Capital expenditures		(9	)		(47,652	)		(6,145	)		--			(53,806	)
Proceeds from asset dispositions		4			1,824			2,930			--			4,758
Assets purchased on behalf of affiliates .		(17,869	)		(6,217	)		(11,308	)		--			(35,394	)
Proceeds from sale of assets to affiliate		17,869			6,217			11,308			--			35,394
Investments		--			--			(1,729	)		--			(1,729	)

Net cash provided by (used in)
investing activities		(5	)		(45,828	)		(4,944	)		--			(50,777	)

Cash flows from financing activities:
Proceeds from borrowings		242,981			--			50			(50	)		242,981
Repayment of debt and payment of debt
redemption premiums		(231,289	)		--			(5,873	)		3,778			(233,384	)
Issuance of common stock		1,147			--			--			--			1,147

Net cash provided by (used in) financing
activities		12,839			--			(5,823	)		3,728			10,744

Effect of exchange rate changes in cash		--			--			5,734			--			5,734

Net increase (decrease) in cash and
cash equivalents		(1,234	)		3,738			19,921			--			22,425
Cash and cash equivalents
at beginning of period		15,782			2,213			38,805			--			56,800

Cash and cash equivalents
at end of period	$	14,548		$	5,951		$	58,726		$	--		$	79,225

NOTE JK – Supplemental Condensed Consolidating Financial Statements — Continued

Supplemental Condensed Consolidating Balance Sheet
March 31, 2003

Parent
Company
Only
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
(in thousands)
ASSETS
Current assets:
  Cash and cash equivalents $ 15,782 $ 2,213 $ 38,805 $ -- $ 56,800
  Accounts receivable 1,860 35,442 86,414 (4,704 ) 119,012
  Inventories -- 66,278 52,575 (7 ) 118,846
  Prepaid expenses and other 305 2,999 5,139 -- 8,443
      Total current assets 17,947 106,932 182,933 (4,711 ) 303,101
Intercompany investment 264,498 -- -- (264,498 ) --
Investments in unconsolidated affiliates -- -- 27,928 -- 27,928
Intercompany notes receivable 409,544 -- 13,883 (423,427 ) --
Property and equipment--at cost:
  Land and buildings 135 8,517 8,019 -- 16,671
  Aircraft and equipment 1,474 253,458 448,179 -- 703,111
1,609 261,975 456,198 -- 719,782
  Less: Accumulated depreciation
       and amortization (1,238 ) (87,876 ) (104,441 ) -- (193,555 )
371 174,099 351,757 -- 526,227
Other assets 10,080 13,985 24,599 111 48,775
$ 702,440 $ 295,016 $ 601,100 $ (692,525 ) $ 906,031
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
      Accounts payable $ 540 $ 7,306 $ 26,524 $ (4,704 ) $ 29,666
      Accrued liabilities 4,175 14,488 45,518 -- 64,181
      Deferred taxes 33 -- -- -- 33
      Current maturities of long-term debt 90,921 -- 5,763 -- 96,684
         Total current liabilities 95,669 21,794 77,805 (4,704 ) 190,564
    Long-term debt, less current maturities 114,000 -- 22,134 -- 136,134
    Intercompany notes payable 14,078 63,485 345,864 (423,427 ) --
    Other liabilities and deferred credits 285 2,785 116,965 -- 120,035
    Deferred taxes 24,429 49,482 7,171 -- 81,082
    Minority interest 16,555 -- -- -- 16,555
    Stockholders' investment:
      Common stock 225 4,062 12,117 (16,179 ) 225
      Additional paid in capital 139,046 51,168 8,015 (59,183 ) 139,046
      Retained earnings 299,505 102,240 80,881 (183,128 ) 299,498
      Accumulated other comprehensive
           income (loss) (1,352 ) -- (69,852 ) (5,904 ) (77,108 )
437,424 157,470 31,161 (264,394 ) 361,661
$ 702,440 $ 295,016 $ 601,100 $ (692,525 ) $ 906,031
NOTE K – Supplemental Condensed Consolidating Financial Statements — Continued
Supplemental Condensed Consolidating Statement of Income
Nine Months Ended December 31, 2002
Parent
Company
Only
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
(in thousands)
Gross revenue:
    Operating revenue $        428 $140,725 $ 277,679 $          -- $ 418,832
    Intercompany revenue -- 7,041 1,989 (9,030 ) --
    Gain on disposal of assets 11 707 589 -- 1,307
439 148,473 280,257 (9,030 ) 420,139
Operating expenses:
    Direct cost -- 111,933 196,179 -- 308,112
    Intercompany expense 20 1,969 6,319 (8,308 ) --
    Depreciation and amortization 408 8,816 18,636 -- 27,860
    General and administrative 4,390 7,349 15,210 (722 ) 26,227
4,818 130,067 236,344 (9,030 ) 362,199
         Operating income (4,379 ) 18,406 43,913 -- 57,940
Earnings from unconsolidated affiliates, net 27,569 -- 6,728 (27,569 ) 6,728
Interest income 27,000 29 700 (26,608 ) 1,121
Interest expense 10,944 -- 26,557 (26,608 ) 10,893
Other income (expense), net (638 ) 73 (3,908 ) -- (4,473 )
         Income before provision for income
           tax and minority interest 38,608 18,508 20,876 (27,569 ) 50,423
Allocation of consolidated income taxes 3,312 5,552 6,263 -- 15,127
Minority interest (1,313 ) -- -- -- (1,313 )
         Net income $   33,983 $  12,956 $   14,613 $(27,569 ) $   33,983
NOTE K – Supplemental Condensed Consolidating Financial Statements — Continued

Supplemental Condensed Consolidating Statement of Cash Flows
SixNine Months Ended September 30,December 31, 2002
Parent
Company
Only
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
(in thousands)
Net cash provided by (used in)
  operating activities $ (15,550 ) $ 4,472 $ 24,229 $ 16,000 $ 29,151
Cash flows from investing activities:
  Capital expenditures (73 ) (6,309 ) (5,302 ) -- (11,684 )
  Assets purchased on behalf of affiliate -- -- (26,019 ) -- (26,019 )
  Proceeds from asset dispositions 14 2,114 4,998 -- 7,126
Acquisitions, net of cash received -- -- (15,953 ) -- (15,953 )
Net cash provided by (used in)
  investing activities (59 ) (4,195 ) (42,276 ) -- (46,530 )
Cash flows from financing activities:
  Proceeds from borrowings from affiliate -- -- 42,019 (16,000 ) 26,019
  Proceeds from borrowings under credit
    facilities 14,000 -- -- -- 14,000
  Repayment of debt -- -- (16,645 ) -- (16,645 )
  Issuance of common stock 2,757 -- -- -- 2,757
Net cash provided by (used in) financing
  activities 16,757 -- 25,374 (16,000 ) 26,131
Effect of exchange rate changes in cash -- -- 703 -- 703
Net increase (decrease) in cash and
  cash equivalents 1,148 277 8,030 -- 9,455
Cash and cash equivalents
  at beginning of period 10,579 2,708 29,383 -- 42,670
Cash and cash equivalents
  at end of period $ 11,727 $ 2,985 $ 37,413 $ -- $ 52,125

	Parent Company Only		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Net cash provided by (used in)
operating activities	$(28,530	)	$ 35,558		$ 17,154		$ 26,150		$ 50,332

Cash flows from investing activities:
Capital expenditures	(113	)	(34,708	)	(6,633	)	--		(41,454	)
Assets purchased on behalf of affiliate .	--		--		(26,019	)	--		(26,019	)
Proceeds from sale of assets to affiliate	--		--		26,019		--		26,019
Proceeds from asset dispositions	22		2,606		14,947		--		17,575
Acquisitions, net of cash received	--		--		(15,953	)	--		(15,953	)
Investments in subsidiaries	2,098		(2,098	)	--		--		--

Net cash provided by (used in)
investing activities	2,007		(34,200	)	(7,639	)	--		(39,832	)

Cash flows from financing activities:
Proceeds from borrowings	24,150		--		47,286		(26,150	)	45,286
Repayment of debt	--		--		(48,391	)	--		(48,391	)
Issuance of common stock	2,926		--		--		--		2,926

Net cash provided by (used in) financing
activities	27,076		--		(1,105	)	(26,150	)	(179	)

Effect of exchange rate changes in cash	--		--		2,312		--		2,312

Net increase (decrease) in cash and
cash equivalents	553		1,358		10,722		--		12,633
Cash and cash equivalents
at beginning of period	10,579		2,708		29,383		--		42,670

Cash and cash equivalents
at end of period	$ 11,132		$ 4,066		$ 40,105		$ --		$ 55,303

Independent Accountants’ Review Report

The Board of Directors and Shareholders
Offshore Logistics, Inc.:

We have reviewed the consolidated balance sheet of Offshore Logistics, Inc. and subsidiaries as of ~~September 30,~~December 31, 2003, the related consolidated statements of income for the three-month and ~~six-month~~nine-month periods ended ~~September 30,~~December 31, 2003 and 2002, and the related consolidated statements of cash flows for the ~~six-month~~nine-month periods ended ~~September 30,~~December 31, 2003 and 2002. These consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of Offshore Logistics, Inc. and subsidiaries as of March 31, 2003, and the related consolidated statements of income, stockholders’ investment, and cash flows for the year then ended (not presented herein); and in our report dated May 23, 2003, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of March 31, 2003, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ KPMG LLP

New Orleans, Louisiana
~~October 24, 2003~~January 26, 2004

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations or MD&A should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto as well as our Annual Report on Form 10-K for the fiscal year ended March 31, 2003 and the MD&A contained therein.

~~Forward-Looking Statements~~

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements about our future business, strategy, operations, capabilities and results; financial projections; plans and objectives of our management; expected actions by us and by third parties, including our customers, competitors and regulators; and other matters. Some of the forward-looking statements can be identified by the use of words such as believes, belief, expects, plans, anticipates, intends, projects, estimates, may, might, would, could or other similar words. All statements in this Form 10-Q other than statements of historical fact or historical financial results are forward-looking statements.

Our forward-looking statements reflect our views and assumptions on the date of this Form 10-Q regarding future events and operating performance. We believe that they are reasonable, but they involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Accordingly, you should not put undue reliance on any forward-looking statements. Factors that could cause our forward-looking statements to be incorrect and actual events or our actual results to differ from those that are anticipated include those Risk Factors disclosed in our Form 10-K for the year ended March 31, 2003; the level of activity in the oil and natural gas industry; production related activities becoming more sensitive to variances in commodity prices; the possibility that we are unable to achieve the cost savings and the operational and managerial efficiencies anticipated in our North Sea Operations; that the cost of the North Sea restructuring program exceeds management estimates; that we are unable to effect changes to the Bristow defined benefit pension plan which would reduce our future benefit cost; that the possible transfer of North Sea search and rescue and technical services into a joint venture does not occur or, even if it does, that we are unable to achieve a more aligned management structure and the joint venture does not experience an increase in the success rate on winning new contracts; changes in North Sea market conditions that would reverse that area’s current downward trend; unsettled political conditions, civil unrest and governmental actions, especially in higher risk countries of operations; foreign currency fluctuations; competition; unionization; unfavorable resolution of our labor mediation efforts; the ability to obtain insurance; failure to maintain an acceptable safety record; failure to attract and retain qualified personnel; weather related and seasonal fluctuations; and environmental regulations and liabilities.

All forward-looking statements in this Form 10-Q are qualified by these cautionary statements and are only made as of the date of this Form 10-Q. We do not undertake any obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

GeneralOverview

We are a leading provider of helicopter transportation services to the worldwide offshore oil and gas industry with major operations in the Gulf of Mexico and the North Sea. We also have operations, both directly and indirectly, in most of the other major offshore oil and gas producing regions of the world, including Australia, Brazil, China, Mexico, Nigeria and Trinidad. Additionally, we are a leading provider of production management services for oil and gas production facilities in the Gulf of Mexico.

We operate our business in two segments: Helicopter Activities and Production Management Services. We conduct our Helicopter Activities through the following four business units:

     •   North American Operations;
     •   North Sea Operations;
     •   International Operations; and
     •   ~~and~~   Technical Services.

For the ~~six~~nine months ended ~~September 30,~~December 31, 2003, our North American Operations, North Sea Operations, International Operations and Technical Services contributed ~~27%~~26%, ~~30%~~29%, ~~30%~~31%, and 4%5%, respectively, of our operating revenue. Our Production Management Services segment contributed the remaining 9% of our operating revenue for the ~~six~~nine months ended ~~September 30,~~December 31, 2003.

Our operating revenue depends on the demand for our services and the pricing terms of our contracts. We measure the demand for our helicopter services in flight hours. Demand for our services depends on the level of worldwide offshore oil and gas exploration, development and production activities. We believe that our customers’ exploration and development activities are influenced by actual and expected trends in commodity prices for oil and gas. Exploration and development activities generally use medium size and larger aircraft on which we typically earn higher margins. We believe our production related activities are less sensitive to variances in commodity prices, and accordingly provide a more stable activity base for our flight operations. We estimate that a majority of our operating revenue from Helicopter Activities is related to the production activities of the oil and gas companies.

Demand for our helicopter services in the North Sea in support of oil and gas production (excluding Search and Rescue and Norway) has declined in the current fiscal year as evidenced by a 14.6% decrease in flight hours for the six months ended September 30, 2003 compared to the six months ended September 30, 2002. We are not aware of any changes in market conditions that would reverse this downward trend. Therefore, the demand for our helicopter services in the North Sea in support of oil and gas production may continue to decline in the forth-coming quarters.

As part of the restructuring program, we will reduce staffing levels by approximately 75 positions, or 11%, of our United Kingdom workforce over a six-month period. We will incur approximately $5.2 million in severance and other restructuring costs. However, the reductions will generate approximately $1.0 million in savings during the remainder of fiscal 2004, increasing in fiscal 2005, to approximately $4.6 million on an annualized basis, primarily from decreased salary costs. In addition, we are considering changes to our defined benefit pension plan to limit future service accruals through the use of a defined contribution arrangement and are currently consulting with employees regarding this matter. These changes will result in a reduction of benefit costs related to future service provided by employees, the effect of which has not been considered in the savings quantified above. Finally, in order to better align core competencies and management resources and increase the chances of success on future contract opportunities, we are exploring the possible transfer of our search and rescue and technical services operations into one of our existing joint ventures.

Our helicopter contracts are generally based on a two-tier rate structure consisting of a daily or monthly fixed fee plus additional fees for each hour flown. We also provide services to customers on an “ad hoc” basis, which usually entails a shorter notice period and shorter duration. Our charges for ad hoc services are generally based on an hourly rate, or a daily or monthly fixed fee plus additional fees for each hour flown. We estimate that our ad hoc services have a higher margin than our other helicopter contracts due to supply and demand dynamics. Our rate structure is based on fuel costs remaining at or below a predetermined threshold. Fuel costs in excess of this threshold are charged to the customer.

Our helicopter contracts are for varying periods and generally permit the customer to cancel the charter before the end of the contract term. In our North American Operations, we typically enter into short term contracts for 12 months or less. In our North Sea Operations, contracts are longer term, generally between two and five years. We have one seven year contract in the North Sea with a major international oil company. In our International Operations, contract length generally ranges from three to five years. At the expiration of a contract, our customers typically negotiate renewal terms with us for the next contract period. Sometimes customers solicit new bids at the expiration of a contract. Contracts are generally awarded based on a number of factors, including price, quality of service, equipment and record of safety. An incumbent operator has a competitive advantage in the bidding process based on its relationship with the customer, its knowledge of the site characteristics and its understanding of the cost structure for the operations.

Maintenance and repair expenses, training costs, employee wages and insurance premiums represent a significant portion of our overall expenses. Our production management costs also include contracted transportation services. We expense maintenance and repair costs, including major aircraft component overhaul costs, as the costs are incurred. Certain major aircraft components, primarily engines and transmissions, are maintained by third party vendors under contractual arrangements. The maintenance costs related to these contractual arrangements are recorded ratably as the components are used to generate flight revenue. As a result, our earnings in any given period are directly impacted by the amount of our maintenance and repair expenses for that period.

In addition to our variable operating expenses, we incur fixed charges for depreciation of our property and equipment. For accounting purposes, we depreciate our helicopters on a straight-line basis over their estimated useful lives to an estimated residual value of 30% to 50% of their original cost. We generally estimate the life of a helicopter to be seven, 10 or 15 years depending on its size and condition. We estimate the residual value of our helicopters based on the type of the aircraft.

We employ approximately 260 pilots in our North American Operations who are represented by the Office and Professional Employees International Union (“OPEIU”) under a collective bargaining agreement. Because this agreement became amendable in May 2003, we began negotiations with union representatives in March 2003. After approximately eight weeks of discussions, an agreement could not be reached on several keys areas, most notably compensation levels. Both the union representatives and we agreed to seek assistance from the National Mediation Board, or NMB, in appointing an independent mediator to assist with the negotiations. A mediator was assigned by the NMB and sessions have continued to date with some progress being made. In January 2004, we made our last offer to the union which was termed not acceptable, citing primarily issues associated with pay and benefits. It appears the parties may have reached an impasse and the mediator has scheduled no additional negotiating sessions. If the mediator and the NMB should determine that no further progress can be made toward resolution, then the NMB can declare a 30-day “cooling-off period.” Negotiations may continue during the “cooling-off period.” If the dispute remains unresolved after the “cooling-off period,” then both parties would be released from negotiations and could seek “self help”. When “self help” is available the pilots could then engage in a work action that could take a variety of forms including a work stoppage. We have contingency plans in place to respond to possible work actions by the pilots and believe we will be able to continue operations with limited disruption. However, no assurances can be given that these plans will be effective.

Demand for our helicopter services in the North Sea in support of oil and gas production (excluding Search and Rescue and Norway) has declined in the current fiscal year as evidenced by a 14.0% decrease in flight hours for the nine months ended December 31, 2003 compared to the nine months ended December 31, 2002. We are not aware of any changes in market conditions that would reverse this downward trend. Therefore, the demand for our helicopter services in the North Sea in support of oil and gas production may continue to decline in the forth-coming quarters.

In October 2003, we announced that we had begun a restructuring of our North Sea Operations. The restructuring is designed to reduce costs and promote operational and managerial efficiencies to enable us to remain competitive in the North Sea offshore helicopter market. As part of the restructuring program, we will reduce staffing levels by approximately 100 positions, or 11%, of our United Kingdom workforce over a nine-month period. We will incur approximately £2.2 million ($4.0 million) in severance and other restructuring costs of which £1.7 million ($3.0 million) has been accrued at December 31, 2003, £0.3 million ($0.5 million) will be expensed in our fourth quarter and £0.3 million ($0.5 million) expected to be expensed in fiscal 2005. The reductions will generate approximately £0.4 million ($0.7 million) in savings during the remainder of fiscal 2004, increasing in fiscal 2005, to approximately £3.5 million ($6.2 million) on an annualized basis, primarily from decreased salary costs.

Also as part of the restructuring, in January 2004, we amended our only defined benefit pension plans covering certain United Kingdom and other overseas employees. The amendment, which is effective February 1, 2004, essentially removes the defined benefit feature for a participant’s future services and replaces it with a defined contribution arrangement. Under the new defined contribution feature, we will contribute 5% of a participant’s non-variable salary to a defined contribution section of the plans. The participant will be required to contribute a minimum of 5% of non-variable salary. Participants were also given the option to transfer out of the plans. We estimate that the net impact on our statement of income as a result of these changes will be a reduction in pension expense of approximately £1.4 million ($2.4 million) for our fourth fiscal quarter and a reduction of approximately £4.8 million ($8.6 million) on an annual basis thereafter. In accordance with SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits”, the above change to the plans constitutes a “curtailment” of benefits and accordingly, all previously deferred service gains or losses are immediately recognized in the statement of income. At the date of the amendment we had a deferred prior service benefit in the range of £11.6 million to £12.3 million ($20.7 million to $22.0 million), or $0.64 to $0.68 per diluted share, related to prior plan amendments. This amount will be recorded as a gain in our fourth fiscal quarter.

Finally, in order to better align core competencies and management resources and increase the chances of success on future contract opportunities, we are exploring the possible transfer of our search and rescue and technical services operations into one of our existing joint ventures.

In November 2003, our 49%-owned Mexican affiliate was unsuccessful in renewing a contract for seven aircraft contracted to PEMEX that it leases from us. The current contract with PEMEX expires September 30, 2004. We are optimistic that, given the long and constructive history between PEMEX and our affiliate and the expanding demand for helicopter services by PEMEX and other customers in Mexico, our affiliate will continue to operate most of the aircraft in the Mexican offshore market. Alternatively, we believe these aircraft can be redeployed to other international markets in a reasonable time period.

In conjunction with our previously announced fleet and facilities renewal and refurbishment program, we changed the residual value estimate of certain aircraft and the useful lives estimate of certain aircraft, effective July 1, 2003. This will more closely reflect the actual salvage values realized and useful lives experienced by us. The effect of this change was a reduction in depreciation expense of $1.1 million, $0.8 million net of tax, and $2.2 million, $1.5 million net of tax, for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2003, respectively (See Note FE to the consolidated financial statements for further discussion).

Results of Operations

A summary of operating results and other income statement information for the applicable periods is as follows:

	Three Months Ended September 30,						Six Months Ended September 30,												Three Months Ended December 31,			Nine Months Ended December 31,
	2003			2002			2003			2002			2003		2002		2003		2002
	(in thousands)																					(in thousands)
Operating revenue	$	139,429		$	143,576		$	273,322		$	278,645		$ 138,715		$ 140,187		$ 412,037		$ 418,832
Gain on disposal of assets		1,374			1,966			2,231			2,253
Gain (loss) on disposal of assets																			357		(946	)	2,588	1,307
Operating expenses		(120,782	)		(123,964	)		(239,059	)		(241,899	)	(128,302	)	(120,300	)	(367,361	)	(362,199	)

Operating income		20,021			21,578			36,494			38,999		10,770		18,941		47,264		57,940
Earnings from unconsolidated affiliates, net		3,047			1,668			4,950			3,451		1,930		3,277		6,880		6,728
Interest income (expense), net		(4,346	)		(3,293	)		(7,907	)		(6,631	)	(3,538	)	(3,141	)	(11,445	)	(9,772	)
Loss on extinguishment of debt		(6,205	)		--			(6,205	)		--		--		--		(6,205	)	--
Other income (expense), net		380			(1,485	)		(1,894	)		(3,229	)	(4,352	)	(1,244	)	(6,246	)	(4,473	)

Income before provision for income taxes
and minority interest		12,897			18,468			25,438			32,590		4,810		17,833		30,248		50,423
Provision for income taxes		3,868			5,540			7,631			9,777		1,444		5,350		9,075		15,127
Minority interest		(529	)		(445	)		(1,039	)		(848	)	(576	)	(465	)	(1,615	)	(1,313	)

Net income	$	8,500		$	12,483		$	16,768		$	21,965		$ 2,790		$ 12,018		$ 19,558		$ 33,983

The following table sets forth certain operating information, which forms the basis for discussion of ~~the Company’s~~our Helicopter Activities and Production Management Services and for the four business units comprising our Helicopter Activities segment. The table also presents certain operating information about our corporate activities which primarily relate to intercompany leasing of aircraft and are eliminated in consolidation.

Three Months Ended
September 30,
Six Months Ended
September 30,
2003
2002
2003
2002
(in thousands, except flight hours)
Flight hours (excludes unconsolidated affiliates):
   Helicopter Activities:
      North American Operations 34,147 31,905 65,025 67,020
      North Sea Operations 11,742 13,143 23,143 25,609
      International Operations 22,311 21,766 43,218 41,411
      Technical Services 544 319 757 717
         Total 68,744 67,133 132,143 134,757
Operating revenue:
   Helicopter Activities:
       North American Operations $ 42,684 $ 37,652 $ 80,509 $ 76,825
       North Sea Operations 43,768 52,976 88,751 98,859
       International Operations 41,863 41,611 83,597 79,531
       Technical Services 9,267 9,167 16,080 20,597
       Less: Intercompany (8,858 ) (8,369 ) (16,493 ) (18,299 )
         Total 128,724 133,037 252,444 257,513
   Production Management Services 12,018 11,929 23,691 23,939
         Corporate 3,068 2,837 5,951 5,886
   Less: Intersegment (4,381 ) (4,227 ) (8,764 ) (8,693 )
         Consolidated total $ 139,429 $ 143,576 $ 273,322 $ 278,645
Operating income:
   Helicopter Activities:
       North American Operations $ 9,754 $ 4,970 $ 13,559 $ 8,954
       North Sea Operations 3,319 7,202 8,698 12,741
       International Operations 5,351 7,181 11,751 13,980
       Technical Services 128 529 272 1,273
         Total 18,552 19,882 34,280 36,948
   Production Management Services 780 898 1,403 1,793
   Corporate (685 ) (1,168 ) (1,420 ) (1,995 )
   Gain on disposal of assets 1,374 1,966 2,231 2,253
         Consolidated total $ 20,021 $ 21,578 $ 36,494 $ 38,999
Operating margin:
   Helicopter Activities:
       North American Operations 22 .9% 13 .2% 16 .8% 11 .7%
       North Sea Operations 7 .6% 13 .6% 9 .8% 12 .9%
       International Operations 12 .8% 17 .3% 14 .1% 17 .6%
       Technical Services 1 .4% 5 .8% 1 .7% 6 .2%
         Total 14 .4% 14 .9% 13 .6% 14 .3%
   Production Management Services 6 .5% 7 .5% 5 .9% 7 .5%
         Consolidated total 14 .4% 15 .0% 13 .4% 14 .0%

	Three Months Ended December 31,			Nine Months Ended December 31,
	2003		2002		2003		2002
	(in thousands, except flight hours)
Flight hours (excludes unconsolidated affiliates):
Helicopter Activities:
North American Operations	29,369		29,859		94,394		96,879
North Sea Operations	10,399		12,226		33,542		37,835
International Operations	22,589		22,438		65,807		63,849
Technical Services	548		310		1,305		1,027

Total	62,905		64,833		195,048		199,590

Operating revenue:
Helicopter Activities:
North American Operations	$ 39,416		$ 38,161		$ 119,925		$ 114,986
North Sea Operations	43,083		47,863		131,834		146,722
International Operations	46,138		43,022		129,735		122,553
Technical Services	14,606		9,707		30,686		30,304
Less: Intercompany	(15,646	)	(9,047	)	(32,140	)	(27,346	)

Total	127,597		129,706		380,040		387,219
Production Management Services	12,611		11,837		36,302		35,776
Corporate	2,925		2,904		8,877		8,790
Less: Intersegment	(4,418	)	(4,260	)	(13,182	)	(12,953	)

Consolidated total	$ 138,715		$ 140,187		$ 412,037		$ 418,832

Operating income:
Helicopter Activities:
North American Operations	$ 7,070		$ 5,727		$ 20,628		$ 14,681
North Sea Operations	(437	)	6,783		8,261		19,524
International Operations	4,907		6,436		16,656		20,416
Technical Services	1,023		1,237		1,296		2,510

Total	12,563		20,183		46,841		57,131
Production Management Services	540		686		1,942		2,479
Corporate	(2,690	)	(982	)	(4,107	)	(2,977	)
Gain (loss) on disposal of assets	357		(946	)	2,588		1,307

Consolidated total	$ 10,770		$ 18,941		$ 47,264		$ 57,940

Operating margin:
Helicopter Activities:
North American Operations	17.9	%	15.0	%	17.2	%	12.8	%
North Sea Operations	(1.0	%)	14.2	%	6.3	%	13.3	%
International Operations	10.6	%	15.0	%	12.8	%	16.7	%
Technical Services	7.0	%	12.7	%	4.2	%	8.3	%
Total	9.8	%	15.6	%	12.3	%	14.8	%
Production Management Services	4.3	%	5.8	%	5.3	%	6.9	%
Consolidated total	7.8	%	13.5	%	11.5	%	13.8	%

Quarter ended September 30,December 31, 2003 compared to Quarter ended September 30,December 31, 2002

Consolidated Results

During the quarter ended ~~September 30,~~December 31, 2003, our operating revenue decreased to ~~$139.4~~$138.7 million from ~~$143.6~~$140.2 million for the quarter ended ~~September 30,~~December 31, 2002. The decrease in operating revenue was primarily due to decreased activity in our North Sea Operations partially offset by an increase in our North American and International Operations. Our operating expense for the quarter ended ~~September 30,~~December 31, 2003 ~~decreased~~increased to ~~$120.8~~$128.3 million from ~~$124.0~~$120.3 million for the comparable prior year quarter. The ~~decrease was primarily a result of a~~increase in operating expense is due partially to the $3.0 million in restructuring costs further discussed in Note I to the consolidated financial statements and the increase in activity in our Technical Services business unit discussed below. Operating expenses were partially offset by the $1.1 million reduction in depreciation costs due to the change in salvage value and useful lives on certain aircraft ~~types (see~~types. (See Note FE to the consolidated financial ~~statements~~statement for further discussion) ~~and a reduction in costs related to the assets in Italy disposed of in November 2002.~~. As a result of the above our operating income and operating margin for the quarter ended ~~September 30,~~December 31, 2003 decreased to ~~$20.0~~$10.8 million and ~~14.4%~~7.8%, respectively, compared to ~~$21.6~~$18.9 million and ~~15.0%~~13.5%, respectively for the quarter ended ~~September 30,~~December 31, 2002.

Net income for the quarter ended ~~September 30,~~December 31, 2003 ~~of $8.5~~decreased to $2.8 million ~~represents a 31.9% decline~~ from $12.0 million in the prior year comparable quarter. This decrease primarily resulted from ~~the loss on debt extinguishments~~restructuring costs of ~~$6.2~~$3.0 million further discussed in Note GI to the consolidated financial ~~statements.~~statements and the $3.1 million increase in our foreign exchange losses. Set forth below is a discussion of the results of our segments and business units.

Helicopter Activities
        Operating revenue from Helicopter Activities decreased to ~~$128.7~~$127.6 million during the three months ended ~~September 30,~~December 31, 2003 from ~~$133.0~~$129.7 million for the prior year comparable quarter while operating expenses ~~decreased~~increased to ~~$110.2~~$115.0 million from ~~$113.2~~$109.5 million. This resulted in an operating margin of ~~14.4%~~9.8% for the quarter ended ~~September 30,~~December 31, 2003 as compared to ~~14.9%~~15.6% in the similar quarter in the prior year. Helicopter Activities results are further explained below by business unit.
North American Operations. Operating revenue from our North American Operations increased by ~~13.4%~~3.3% during the current quarter from the similar quarter in the prior year primarily as a result of ~~a 7.0% increase in flight activity from the prior year quarter. Operating revenue increased at a higher rate than flight hours due in part to~~ the 7% rate increase for the Gulf of Mexico that went into effect March 2003 and is being phased-in through our fourth quarter of fiscal 2004. The rate increase offset a 1.6% decline in flight activity for the three months ended December 31, 2003 from the three months ended December 31, 2002.
        Operating expenses from our North American Operations ~~increased to $32.9~~remained constant at $32.4 million ~~for~~between the three months ended ~~September 30,~~December 31, 2003 ~~from $32.7 million for~~and the three months ended ~~September 30,~~December 31, 2002. Excluding the effect on depreciation expense of the change in salvage value and useful lives on certain aircraft types, operating expenses for the current fiscal quarter would have been ~~$33.8~~$33.2 million. ~~Operating expenses increased~~This increase is principally due to higher labor and insurance costs in the current fiscal quarter.
        The operating margin in our North American Operations increased to ~~22.9%~~17.9% for the three months ended ~~September 30,~~December 31, 2003 compared to the margin of ~~13.2%~~15.0% for the three months ended ~~September 30,~~December 31, 2002 primarily due to higher operating ~~revenue from increased activity offsetting the slightly higher operating expenses.~~revenue. Additionally, the reduction in depreciation expense due to the change in salvage value and useful lives on certain aircraft had a favorable impact on the operating margin for the current quarter.
North Sea ~~Operations.~~Operations. Operating revenue from our North Sea Operations decreased for the three months ended ~~September 30,~~December 31, 2003 to ~~$43.8~~$43.1 million, or ~~17.4%~~10.0%, from ~~$53.0~~$47.9 million for the three months ended ~~September 30,~~December 31, 2002. Excluding foreign exchange effects and revenue related to the assets in Italy disposed of in November 2002, revenue from this operation decreased by ~~9.0%~~13.3%. This decrease relates to reduced ~~activity as reflected by the reduction in~~ flight hours of ~~10.7%~~14.9% between the current fiscal quarter and the prior year fiscal quarter.
        Operating expenses from our North Sea Operations, excluding foreign exchange effects and costs related to the assets in Italy disposed of in November 2002, increased by ~~1.0%~~2.9%. AnThe increase in ~~salary~~operating expenses is primarily due to the $1.0 million in restructuring costs ~~was offset by lower maintenance costs.~~further discussed in Note I to the consolidated financial statements. The lower operating revenue and higher operating expenses resulted in a decrease in the operating margin in our North Sea Operations to ~~7.6%~~(1.0)% for the three months ended ~~September 30,~~December 31, 2003 from ~~13.6%~~14.2% for the three months ended ~~September 30,~~December 31, 2002.
International ~~Operations.~~Operations. Operating revenue from International Operations increased in the quarter ended ~~September 30,~~December 31, 2003 to ~~$41.9~~$46.1 million from ~~$41.6~~$43.0 million in the quarter ended ~~September 30,~~December 31, 2002 partially due to a ~~2.5%~~1.0% increase in flight activity from the prior quarter. ~~Increases were primarily noted in Brazil and Mexico.~~
        In Brazil, flight activity and operating revenue for the quarter ended ~~September 30,~~December 31, 2003 increased by ~~45.3%~~22.1% and ~~52.0%~~32.2% from the prior year comparable quarter. The increase in flight activity and operating revenue was primarily due to three additional aircraft sent to the area during the fourth quarter of fiscal 2003 due to increased drilling activity.
        In Mexico, operating revenue ~~was up 1.0%~~declined by 1.5% and flight activity increased by ~~4.7%~~6.4% for the current quarter over the prior year comparable quarter. The increase in flight activity was primarily due to the addition of two aircraft in the ~~current quarter.~~quarter ended September 30, 2003. Operating revenue was positively impacted by the addition of the two aircraft and a favorable change in the mix of aircraft. However, during July 2003, six older aircraft which we directly leased into Mexico were replaced with six newer aircraft owned by an unconsolidated affiliate. Accordingly, the revenue from these aircraft is no longer consolidated in our results. Instead, we record the 49% equity from the unconsolidated affiliate in the earnings from unconsolidated affiliates, which for the quarter ended ~~September 30,~~December 31, 2003, was ~~$0.7~~$0.5 million.
        In Nigeria, customer flight hours decreased while operating revenue increased for the three months ended ~~September 30,~~December 31, 2003 by ~~3.1%~~8.9% and ~~10.5%~~3.4%, respectively over the same period last year. This results from the decrease in flight activity with one customer that furnishes its own aircraft (not reflected in hours), offset by an increase in hours on other contracts. ~~Operating margins were virtually unchanged.~~
        Operating expenses for our International Operations increased in the quarter ended ~~September 30,~~December 31, 2003 to ~~$36.5~~$41.2 million, or ~~6.0%~~12.7%, from ~~$34.4~~$36.6 million in the quarter ended ~~September 30,~~December 31, 2002. The increase was primarily due to higher salary costs and maintenance ~~costs from~~costs. The increase in salaries is primarily attributed to our Nigerian operations. Management is taking action to address these increased ~~operations in our international areas.~~costs. The operating margin in our International Operations decreased to ~~12.8%~~10.6% in the current quarter from ~~17.3%~~15.0% in the prior year quarter primarily due to the increase in operating expenses discussed above.
Technical Services.Operating revenue for Technical Services increased ~~marginally~~ to ~~$9.3~~$14.6 million during the current quarter from ~~$9.2~~$9.7 million for the similar quarter in the prior ~~year. Operating~~year due to an increase in work performed for the other business units. Due to the increased activity, operating expenses increased from ~~$8.6~~$8.5 million for the quarter ended ~~September 30,~~December 31, 2002 to ~~$9.1~~$13.6 million for the quarter ended ~~September 30,~~December 31, 2003. ~~The increase in operating expense was due to higher labor costs.~~ Our operating margin for Technical Services decreased to ~~1.4%~~7.0% in the current quarter from ~~5.8%~~12.7% in the prior year comparable quarter.
         Production Management Services
        Operating revenue from our Production Management segment ~~remained constant at $12.0~~increased to $12.6 million ~~between~~for the three months ended ~~September 30,~~December 31, 2003 ~~and~~from $11.8 million for the ~~similar period in the prior year.~~three months ended December 31, 2002. Operating expenses increased by ~~1.9%~~8.3% for the quarter ended ~~September 30,~~December 31, 2003 as compared to the quarter ended ~~September 30,~~December 31, 2002 primarily due to higher transportation costs. The increase in operating expenses caused a decline in our operating margin to ~~6.5%~~4.3% from ~~7.5%~~5.8% in the similar quarter in the prior year.
         Corporate and Other
        Earnings from unconsolidated affiliates ~~increased~~decreased to ~~$3.0~~$1.9 million for the three months ended ~~September 30,~~December 31, 2003 from ~~$1.7~~$3.3 million for the three months ended ~~September 30,~~December 31, 2002 primarily due to ~~improvements~~a reduction in ~~the earnings~~dividends from unconsolidated affiliates accounted for under the ~~equity~~cost method. Consolidated net interest expense increased during the current quarter due to the interest expense on the $230.0 million Senior Notes for the current quarter ~~and~~compared to interest expense on the ~~6% Convertible Subordinated Notes and on~~$190 million debt redeemed in July 2003 in the ~~7 7/8% Senior Notes for one month of the current~~prior year comparable quarter. ~~See Note G to the consolidated financial statements for further discussion.~~ This interest was offset by $0.3 million of interest capitalized in the current quarter related to progress payments for our fleet and facilities renewal and refurbishment ~~program and $0.3 million of interest income~~program. Other expense primarily represents foreign currency transaction losses. These losses arise from the ~~investment~~consolidation of our United Kingdom operations, whose functional currency is the Great Britain Pound sterling, yet contracts for a portion of its revenue and expense in United States Dollars and other currencies. The weakening of the ~~proceeds of~~United States Dollar against the ~~Senior Notes~~Great Britain Pound sterling since March 31, 2003 is the primary reason for ~~approximately one month. A loss on extinguishment of debt of $6.2 million was recognized related~~these losses being recorded. The average exchange rate for the U.S. Dollar to the ~~redemption on July 29,~~U.K. Pound sterling for the three months ended December 31, 2003 ~~of our 6% Convertible Subordinated Notes and our 7 7/8% Senior Notes. Approximately $4.7 million of~~was 1.71 as compared to 1.57 for the loss pertains to redemption premiums and $1.5 million pertains to unamortized debt issuance costs relating to the 6% Convertible Subordinated Notes and 7 7/8% Senior Notes. Other income increased in the current quarter in comparison to the same period in the prior year primarily due to lower foreign exchange losses.three months ended December 31, 2002. The effective income tax rate was approximately 30% for the three months ended ~~September 30,~~December 31, 2003 and ~~September 30,~~December 31, 2002.
~~Six~~Nine months ended ~~September 30,~~December 31, 2003 compared to ~~Six~~Nine months ended ~~September 30,~~December 31, 2002
   Consolidated Results
        During the ~~six~~nine months ended ~~September 30,~~December 31, 2003, our operating revenue decreased to ~~$273.3~~$412.0 million from ~~$278.6~~$418.8 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2002. The decrease in operating revenue was primarily due to decreased activity in our North Sea ~~Operations and Technical Services business unit.~~Operations. Our operating expense for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 ~~decreased~~increased to ~~$239.1~~$367.4 million from ~~$241.9~~$362.2 million for the comparable prior year period. This resulted in a decrease in our operating income and operating margin for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 to ~~$36.5~~$47.3 million and ~~13.4%~~11.5%, respectively, from ~~$39.0~~$57.9 million and ~~14.0%~~13.8%, respectively for the ~~six~~nine months ended ~~September 30,~~December 31, 2002.
        Net income for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 decreased to ~~$16.8~~$19.6 million from ~~$22.0~~$34.0 million in the prior year comparable period. This decrease primarily resulted from our reduced operating income and from the loss on extinguishment of debt of $6.2 million further discussed in Note GF to the consolidated financial statements. Set forth below is a discussion of the results of our segments and business units.
   Helicopter Activities
        Operating revenue from Helicopter Activities decreased to ~~$252.4~~$380.0 million during the ~~six~~nine months ended ~~September 30,~~December 31, 2003 from ~~$257.5~~$387.2 million for the prior year comparable period while operating expenses ~~decreased~~increased to ~~$218.2~~$333.2 million from ~~$220.6~~$330.1 million. This resulted in an operating margin of ~~13.6%~~12.3% as compared to ~~14.3%~~14.8% in the similar period in the prior year. Helicopter Activities results are further explained below by business unit.
North American Operations. Operating revenue from our North American Operations increased by ~~4.8%~~4.3% during the ~~six~~nine months ended ~~September 30,~~December 31, 2003 from the similar period in the prior year while flight activity decreased by ~~3.0%~~2.6% from the prior year period. The increase in operating revenue with a decline in flight hours is due in part to the 7% rate increase for the Gulf of Mexico that went into effect March 2003 and is being phased-in through our fourth quarter of fiscal 2004.
        Operating expenses from our North American Operations decreased to ~~$67.0~~$99.3 million for the current period from ~~$67.9~~$100.3 million for the prior year period. Excluding the effect of the change in salvage value and useful lives on certain aircraft types on depreciation expense, operating expenses for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 would have been ~~$67.8~~$101.0 million.
        The result of our higher revenue and lower operating expenses was an increase in our operating margin in our North American Operations to ~~16.8%~~17.2% for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 from ~~11.7%~~12.8% for the ~~six~~nine months ended ~~September 30,~~December 31, 2002.
North Sea ~~Operations.~~Operations. Operating revenue from our North Sea Operations decreased for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 to ~~$88.8~~$131.8 million, or ~~10.2%~~10.1%, from ~~$98.9~~$146.7 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2002. Excluding foreign exchange effects and revenue related to the assets in Italy disposed of in November 2002, revenue from this operation decreased by ~~6.2%~~8.5%. This decrease relates to reduced activity as reflected by the reduction in flight hours of ~~9.6%~~11.3% between the current period and the prior year period.
        Operating expenses from our North Sea Operations, excluding foreign exchange effects and costs related to the assets in Italy disposed of in November 2002, ~~remained constant~~increased 1.0% between the ~~six~~nine months ended ~~September 30,~~December 31, 2003 and the prior year comparable period. The increase in operating expenses is primarily due to the $1.0 million restructuring costs further discussed in Note I to the consolidated financial statements. The operating margin in our North Sea Operations decreased to ~~9.8%~~6.3% for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 compared to ~~12.9%~~13.3% for the ~~six~~nine months ended ~~September 30,~~December 31, 2003.
International ~~Operations.~~Operations. Operating revenue from International Operations increased for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 to ~~$83.6~~$129.7 million, or ~~5.1%~~5.9%, from ~~$79.5~~$122.6 million in the ~~six~~nine months ended ~~September 30,~~December 31, 2002 primarily as a result of a ~~4.4%~~3.1% increase in flight activity from the prior period. ~~Increases were primarily noted in Brazil, Mexico and Nigeria.~~
        In Brazil, flight activity and operating revenue for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 increased by ~~27.7%~~25.6% and ~~37.2%~~35.4% from the prior year comparable period. The increase in flight activity and operating revenue was primarily due to three additional aircraft sent to the area during the fourth quarter of fiscal 2003 due to increased drilling activity.
        In Mexico, operating revenue was up ~~2.6%~~1.2% and flight activity increased by ~~5.1%~~5.6% for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 over the ~~six~~nine months ended ~~September 30,~~December 31, 2002. The increase in flight activity was primarily due to the addition of two aircraft in the second quarter of fiscal 2004. Operating revenue was positively impacted by the addition of the two aircraft and a favorable change in the mix of aircraft. However, during July 2003, six older aircraft which we directly leased into Mexico were replaced with six newer aircraft owned by an unconsolidated affiliate. Accordingly, the revenue from these aircraft is no longer consolidated in our results. Instead, we record the 49% equity from the unconsolidated affiliate in earnings from unconsolidated affiliates, which for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 was ~~$0.7~~$1.2 million.
        In Nigeria, customer flight hours and operating revenue increased for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 by ~~17.6%~~2.0% and ~~24.1%~~4.1%, respectively over the same period last year. This increase resulted primarily from the acquisition of a controlling interest in a West African operating company in July 2002, when we began to provide services to a major oil company under a five year contract. Excluding ~~this~~the activity and revenue related to this contract, customer flight hours ~~decreased while~~and operating revenue ~~increased~~decreased for the ~~six month end September 30,~~nine months ended December 31, 2003 by ~~17.6%~~24.8% and ~~3.5%~~1.0%, respectively over the same period last year. This results from the decrease in flight activity with one customer that furnishes its own aircraft (not reflected in hours), offset by an increase in hours on other contracts. Operating margins were virtually unchanged.
        Operating expenses for our International Operations increased in the ~~six~~nine months ended ~~September 30,~~December 31, 2003 to ~~$71.8~~$113.1 million, or ~~9.6%~~10.7%, from ~~$65.6~~$102.1 million in the ~~six~~nine months ended ~~September 30,~~December 31, 2002. The increase was primarily due to higher salary costs and maintenance costs from increased operations in our international areas. The operating margin in our International Operations decreased to ~~14.1%~~12.8% in the current period from ~~17.6%~~16.7% in the prior period.
Technical Services.Operating revenue for Technical Services ~~decreased~~increased marginally to ~~$16.1~~$30.7 million during the ~~six~~nine months ended ~~September 30,~~December 31, 2003 from ~~$20.6~~$30.3 million for the ~~six~~nine months ended ~~September 30, 2002 primarily due to a reduction in refurbishment and engineering/design work for external customers.~~December 31, 2002. Operating expenses ~~decreased~~increased from ~~$19.3~~$27.8 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2002 to ~~$15.8~~$29.4 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2003. ~~The decrease in operating expense was due to the reduction in work discussed above.~~ Our operating margin for Technical Services decreased to ~~1.7%~~4.2% in the current period from ~~6.2%~~8.3% in the prior year comparable period.
         Production Management Services
        Operating revenue from our Production Management segment ~~decreased~~increased by ~~1.0%~~1.5% during the ~~six~~nine months ended ~~September 30,~~December 31, 2003, as compared to the similar period in the prior ~~year primarily due to a reduction in contract personnel revenue.~~year. Operating expenses increased ~~slightly~~ to ~~$22.3~~$34.4 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 compared to ~~$22.1~~$33.3 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2002. Our operating margin decreased to ~~5.9%~~5.3% for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 from ~~7.5%~~6.9% in the similar period in the prior year.
         Corporate and Other
        Earnings from unconsolidated affiliates increased to ~~$5.0~~$6.9 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 from ~~$3.5~~$6.7 million for the ~~six~~nine months ended ~~September 30, 2002 primarily due to improvements in the earnings from unconsolidated affiliates accounted for under the equity method.~~December 31, 2002. Consolidated net interest expense increased for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 due to the ~~interest expense on the $230.0 million Senior Notes~~debt refinancing transaction that took place in June and ~~interest expense on the 6% Convertible Subordinated Notes and on the 7 7/8% Senior Notes.~~July 2003. See Note GF to the consolidated financial statements for further discussion. This interest was offset by ~~$0.8~~$1.1 million of interest capitalized in the current period related to progress payments for our fleet and facilities renewal and refurbishment program and $0.3 million of interest income from the investment of the proceeds of the ~~Senior Notes~~debt refinancing for approximately one month. A loss on extinguishment of debt of $6.2 million was recognized related to the redemption on July 29, 2003 of our 6% Convertible Subordinated Notes and our 7 7/8% Senior Notes. Approximately $4.7 million of the loss pertains to redemption premiums and $1.5 million pertains to unamortized debt issuance costs relating to the 6% Convertible Subordinated Notes and 7 7/8% Senior Notes. Other expense ~~decreased~~primarily represents foreign currency transaction losses. These losses arise from the consolidation of our United Kingdom operations, whose functional currency is the Great Britain Pound sterling, yet contracts for a portion of its revenues and expense in United States Dollars and other currencies. The weakening of the United States Dollar against the Great Britain Pound sterling since March 31, 2003 is the primary reason for these losses being recorded. The average exchange rate for the ~~six~~U.S. Dollar to the U.K. Pound sterling for the nine months ended ~~September 30,~~December 31, 2003 was 1.65 as compared to 1.53 for the ~~same period in the prior year primarily due to lower foreign exchange losses.~~nine months ended December 31, 2002. The effective income tax rate was approximately 30% for the ~~six~~nine months ended ~~September 30,~~December 31, 2003 and ~~September 30,~~December 31, 2002.
Liquidity and Capital Resources
        Cash and cash equivalents were ~~$72.9~~$79.2 million as of ~~September 30,~~December 31, 2003, a ~~$16.1~~$22.4 million increase from March 31, 2003. Working capital as of ~~September 30,~~December 31, 2003 was ~~$232.9~~$244.4 million, a ~~$120.4~~$131.9 million increase from March 31, 2003. Total debt was ~~$257.3~~$252.4 million as of ~~September 30,~~December 31, 2003.
        As of ~~September 30,~~December 31, 2003, we had a £12 million ($~~19.9~~21.4 million) revolving credit facility of which £6.0 million ($~~10.0~~10.7 million) is only available for letters of credit, with a United Kingdom bank that is payable on demand and matures on ~~December 31, 2003.~~June 30, 2004. We had no amounts drawn under this facility as of ~~September 30,~~December 31, 2003, but did have ~~£3.2~~£3.1 million ($~~5.3~~5.5 million) of letters of credit utilized which reduced availability under the line. Management is in the process of renewing the line of credit and expects it to be finalized before ~~December 31, 2003.~~June 30, 2004. As of ~~September 30,~~December 31, 2003, we had a ~~$30~~$30.0 million ~~unsecured working capital~~ line of credit with a U.S. bank that expires on August 31, 2005. The line of credit is subject to a sublimit of $10.0 million for the issuance of letters of credit. As of ~~September 30,~~December 31, 2003, we had no amounts drawn under this facility but did have ~~$5.9~~$3.3 million of letters of credit utilized which ~~reduced availability under the line. Subsequent to September 30, 2003, we issued an additional letter of credit in the amount of $0.7 million which further~~ reduced availability under the line. Management believes that its normal operations, lines of credit and available financing will provide sufficient working capital and cash flow to meet operating requirements and debt service needs for the foreseeable future.
        ~~Included in deferred taxes on~~During January 2004, we reached a settlement with the ~~consolidated balance sheet, we have an accrual of $14.0 million relating to tax exposures resulting from our~~United Kingdom Inland Revenue regarding the tax treatment offor certain aircraft maintenance ~~expenditures.~~expenditures by our primary United Kingdom operating company. These expenditures are contractual cash payments made to certain repair and maintenance service providers in advance of the actual repair requirement. We have historically deducted these expenditures for tax purposes as the payments were made, but will now treat these expenditures as prepayments, for United Kingdom income tax purposes to be deducted when the repair or maintenance service actually occurs. This change in treatment will be made effective April 1, 2002, and will result in a cash payment for taxes and interest of £8.9 million ($15.9 million) by the first quarter of fiscal 2005. The UKpayment of these taxes will not affect total tax ~~authorities have argued that this amount relates~~expense on our income statement but will instead be treated as a deferred tax asset to ~~prior~~be deducted in the future when the repair and maintenance services are provided.
        In February 2004, we agreed to a schedule of contributions for our defined benefit pension plan in order to comply with the minimum funding rules of the United Kingdom. Those rules require us to make scheduled contributions in amounts sufficient to bring the plan up to 90% funded (as defined by United Kingdom legislation) within three years and ~~is currently due. Although~~100% funded within ten years. In recognition of participants’ concerns regarding the under-funded portion of the plan as well as other changes we are ~~disputing this, it is possible that~~making to the ~~whole or a significant part~~plan (as more fully described under “Management’s Discussion and Analysis of ~~this amount will become payable in fiscal 2004.~~Financial Condition”), on February 1, 2004, we contributed £5.2 million ($9.3 million) to the plan to reach the 90% funded level, and agreed to monthly contributions of £0.2 million ($0.4 million) for the next ten years to comply with the 100% funding requirement. The £5.2 million ($9.3 million) contribution was made from existing cash balances and does not materially impact our working capital position.
        In November 2002, our Board of Directors approved a fleet and facilities renewal and refurbishment program. Under the program, we expect to incur approximately $150.0 million of capital expenditures over the next five to seven years to replace certain of our aircraft and upgrade strategic base facilities. During the ~~six~~nine months ended ~~September 30,~~December 31, 2003, we expended ~~$29.2~~$34.0 million as deposits and progress payments under this program. Subsequent to ~~September 30,~~December 31, 2003, we made additional payments under this program of ~~$0.7~~$0.4 million. Sales and trade-ins of older aircraft will reduce the projected expenditures discussed above. We plan to use internally generated funds and available financing, if needed, to meet our obligations under the program.
        In May 2003, we entered into a purchase agreement with Bell Helicopter Textron Canada, Ltd. for five new medium sized aircraft. The total purchase price of the five aircraft was $30.1 million. We funded $12.2 million of the purchase price from available cash and the balance of $17.9 million was financed by the manufacturer for 90 days with interest payable at 3-month LIBOR plus 2.95%. In addition, we purchased a sixth Bell 412 for $5.3 million. These aircraft were purchased to meet the contract renewal requirements of an existing customer of our unconsolidated affiliate in Mexico, and replaced older aircraft currently being used on the contract.
        On July 11, 2003, we sold these six aircraft, at our cost, to a newly formed limited liability company, Rotorwing Leasing Resources, L.L.C. or RLR. The capital stock of RLR is owned 49% by us and 51% by the same principal with whom we have other jointly owned businesses operating in Mexico. RLR financed 90% of the purchase price of these aircraft through a five year term loan with a bank requiring monthly principal and interest payments of $346,047 and a balloon payment of $18.3 million due July 11, 2008 (the RLR Note). The RLR Note is secured by the six aircraft. We have guaranteed 49% of the RLR Note ($15.6 million) and the other shareholder has guaranteed the remaining 51% of the RLR Note ($16.2 million). In addition, we have given the Bank a put option which the bank may exercise if the aircraft are not returned to the United States within 30 days of a default on the RLR Note. Any such exercise would require us to purchase the RLR Note from the bank. ~~The other RLR shareholder and us~~We simultaneously entered into a similar agreement with the other RLR shareholder which requires that, in event of exercise by the bank of its put option to us, the other shareholder will be required to purchase 51% of the RLR Note from us. As of ~~September 30,~~December 31, 2003, a liability of ~~$1.1~~$1.0 million representing the fair value of this guarantee is reflected in the balance sheet in other liabilities and deferred credits. The fair value of the guarantee is being amortized over the term of the RLR Note.
        We used the proceeds received from the sale of the aircraft to RLR to repay the $17.9 million short-term note to the manufacturer in July 2003. No gain or loss was recognized on the sale.
        In addition, during the ~~six~~nine months ended ~~September 30,~~December 31, 2003, ~~the Company~~we received proceeds of ~~$3.4~~$4.8 million primarily from the disposition of ~~four~~ten aircraft and purchased one medium aircraft for $6.1 million and one small aircraft for $1.0 million. These aircraft acquisitions were made to fulfill customer requirements. During the ~~six~~nine months ended ~~September 30,~~December 31, 2002, ~~the Company~~we received proceeds of ~~$7.1~~$17.6 million primarily from the disposition of ~~nine~~twelve aircraft and proceeds from the sale of our assets in Italy. We purchased ~~two~~seven small aircraft for ~~$2.1~~$8.6 million and ~~one~~three medium aircraft for ~~$2.5~~$6.5 million. ~~These aircraft acquisitions were made with existing cash and were made to fulfill customer contract requirements.~~
        We have the following contractual obligations and commercial commitments as of ~~September 30,~~December 31, 2003:
Payments Due by Period
Total
Less than
1 year
1-3 years
4-5 years
After
5 years
(in thousands)
Contractual Obligations:
Long-Term Debt $252,378 $     995 $21,383 $     -- $230,000
Operating Leases 29,106 1,604 14,424 3,442 9,636
Unconditional Purchase
  Obligations 80,395 34,379 46,016 -- --
Total Contractual Cash Obligations $361,879 $36,978 $81,823 $3,442 $239,636

Payments Due by Period
Total
Less than
1 year
1-3 years
4-5 years
After
5 years
(in thousands)
Contractual Obligations:
Long-Term Debt $ 257,318 $ 5,681 $ 21,637 $ -- $ 230,000
Operating Leases 28,938 2,696 13,986 3,243 9,013
Unconditional Purchase
  Obligations 78,631 31,288 47,343 -- --
Total Contractual Cash Obligations $ 364,887 $ 39,665 $ 82,966 $ 3,243 $ 239,013

Amount of Commitment Expiration Per Period
Amount of Commitment Expiration Per Period
Total
Less than
1 year
1-3 years
4-5 years
Over
5 years
Total
Less than
1 year
1-3 years
4-5 years
Over
5 years
(in thousands) (in thousands)
Other Commercial Commitments: Other Commercial Commitments: Other Commercial Commitments:
Debt Guarantee $ 25,987 $ -- $ -- $            -- $ 25,987 $42,336 $     -- $     -- $15,565 $26,771
Letters of Credit 11,196 8,926 2,270 -- -- 8,748 4,242 1,874 2,632 --
Other 1,072 1,072 -- -- -- 1,159 1,159 -- -- --
Total Commercial Commitments $ 38,255 $ 9,998 $ 2,270 $             -- $ 25,987 $52,243 $5,401 $1,874 $18,197 $26,771
        On July 29, 2003, we redeemed all of our $100.0 million 7 7/8% Senior Notes due 2008 at a redemption price equal to 103.938% of the principal amount plus accrued interest of $0.3 million for a total price of $104.2 million and the full redemption of our $90.9 million 6% Convertible Subordinated Notes due 2003 at a redemption price equal to 100.86% of the principal amount plus accrued interest of $0.7 million for a total price of $92.4 million. The total redemption price of our 7 7/8% Senior Notes and 6% Convertible Subordinated Notes was $196.6 million. We recorded a loss on the extinguishment of debt of $6.2 million in the second quarter of fiscal year 2004. Approximately $4.7 million of the loss pertains to redemption premiums and $1.5 million pertains to unamortized debt issuance costs relating to the 7 7/8% Senior Notes and 6% Convertible Subordinated Notes.
Legal Matters
        The United States Environmental Protection Agency, also referred to as EPA, has in the past notified us that we are a potentially responsible party, or PRP, at three former disposal facilities that are on the National Priorities List of contaminated sites. Although we have not obtained a formal release of liability from the EPA with respect to any of the sites, we believe that our potential liability in connection with these sites is not likely to have a material adverse effect on our business, financial condition, or results of operations.
        We are involved from time to time in various litigation and regulatory matters arising in the ordinary course of business. The amount, if any, of our ultimate liability with respect to these matters cannot be determined, but we do not expect the resolution of any pending matters to have a material adverse effect on our business, financial condition, or results of operations.
Recent Accounting Pronouncements
        In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” effective for fiscal years beginning after June 15, 2002. This statement ~~will require~~requires us to record the fair value of liabilities related to future asset retirement obligations in the period the obligation is incurred. We adopted SFAS No. 143 on April 1, 2003. The adoption of SFAS No. 143 did not have an impact on our financial statements.
        In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 eliminates SFAS No. 4 and as a result, gains and losses from extinguishments of debt should be classified as extraordinary items only if they meet the criteria in APB Opinion No. 30. SFAS No. 145 amends SFAS No. 13, “Accounting for Leases,” to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also updates and amends existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. We implemented SFAS No. 145 on April 1, 2003, and determined that it had no impact on prior quarter financial statements. On July 29, 2003, we redeemed all of the then outstanding principal amount of our 7 7/8% Senior Notes due 2008 and our 6% Convertible Subordinated Notes due 2003 which resulted in a loss on extinguishment of debt of $6.2 million comprised of unamortized debt issuance costs and a premium payment. In accordance with SFAS No. 145 the loss on extinguishment of debt was recognized as a component of income from continuing operations.
        In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” which is effective for fiscal periods after December 31, 2002. SFAS No. 146 requires companies to recognize costs associated with restructurings, discontinued operations, plant closings, or other exit or disposal activities, when incurred rather than at the date a plan is committed to. We have implemented the provisions of this statement on a prospective basis for exit or disposal activities initiated after December 31, 2002.
        In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 expands existing accounting guidance and disclosure requirements for certain guarantees and requires recognition, at the inception of a guarantee, of a liability for the fair value of an obligation undertaken in connection with issuing a guarantee. The disclosure requirements of FIN 45 were effective for our March 31, 2003 financial statements and the remaining provisions of FIN 45 apply to guarantees issued or modified after December 31, 2002. ~~During the current quarter,~~In July 2003, we sold six aircraft, at cost, to a newly formed limited liability company, Rotorwing Leasing Resources, L.L.C. or RLR. The capital stock of RLR is owned 49% by us and 51% by the same principal with whom we have other jointly owned businesses operating in Mexico. RLR financed 90% of the purchase price of these aircraft through a five year term loan (the RLR Note). The RLR Note is secured by the six aircraft. We guaranteed 49% of the RLR Note ($15.6 million) and the other shareholder has guaranteed the remaining 51% of the RLR Note ($16.2 million). In addition, we gave the Bank a put option which the bank may exercise if the aircraft are not returned to the United States within 30 days of a default on the RLR Note. Any such exercise would require us to purchase the RLR Note from the bank. ~~The other RLR shareholder and us~~We simultaneously entered into a similar agreement with the other RLR shareholder which requires that, in event of exercise by the bank of its put option to us, the other shareholder will be required to purchase 51% of the RLR Note from the us. As of ~~September 30,~~December 31, 2003 a liability of ~~$1.1~~$1.0 million representing the fair value of this guarantee is reflected in the balance sheet in other liabilities and deferred credits.
        ~~In January 2003,~~ The fair value of the ~~FASB issued Interpretation No. 46, “Consolidation~~guarantee is being amortized over the term of Variable Interest Entities” (“FIN 46”). In general, a variable interest entity (formerly referred to as a Special Purpose Entity or SPE) is a corporation, partnership, trust or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46 requires consolidation of a variable interest entity by a company if that company is subject to the majority of risk of loss or residual return from the variable interest entity’s activities. FIN 46 is effective immediately for variable interest entities created after January 31, 2003. The consolidation requirements for variable interest entities created before February 1, 2003, begins no later than the first fiscal year or interim period beginning after December 15, 2003. The adoption of FIN 46 did not have a material impact on our consolidated financial statements.RLR Note.
        In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” effective for contracts entered into or modified after June 30, 2003. This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The adoption of SFAS 149 did not have an impact on our financial statements.
        In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 affects the issuer’s accounting for three types of freestanding financial instruments. One type is mandatory redeemable shares, which the issuing company is obligated to buy back in exchange for cash or other assets. A second type, which includes put options and forward purchase contracts, involves instruments that do or may require the issuer to buy back some of its shares in exchange for cash or other assets. The third type of ~~instruments~~instrument that are liabilities under this Statement is obligations that can be settled with shares, the monetary value of which is fixed, tied solely or ~~predominately~~predominantly to a variable such as a market index or varies inversely with the value of the issuers’ shares. SFAS No. 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. Most of the guidance in SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have an impact on our financial statements.
        In December 2003, the FASB published a revision to Interpretation 46 (“FIN 46R”) to clarify certain provisions of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” and to exempt certain entities from its requirements. FIN 46R requires a company to consolidate a variable interest entity (VIE), as defined, when the company will absorb a majority of the variable interest entity’s expected losses, receive a majority of the variable interest entity’s expected residual returns, or both. FIN 46R also requires consolidation of existing, non-controlled affiliates if the VIE is unable to finance its operations without investor support, or where the other investors do not have exposure to the significant risks and rewards of ownership. FIN 46R is effective by the end of the first reporting period beginning after December 15, 2003. We do not expect the adoption of FIN 46R to have a material impact on our consolidated financial statements.
Forward-Looking Statements
        This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements about our future business, strategy, operations, capabilities and results; financial projections; plans and objectives of our management; expected actions by us and by third parties, including our customers, competitors and regulators; and other matters. Some of the forward-looking statements can be identified by the use of words such as believes, belief, expects, plans, anticipates, intends, projects, estimates, may, might, would, could or other similar words. All statements in this Form 10-Q other than statements of historical fact or historical financial results are forward-looking statements.
        Our forward-looking statements reflect our views and assumptions on the date of this Form 10-Q regarding future events and operating performance. We believe that they are reasonable, but they involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Accordingly, you should not put undue reliance on any forward-looking statements. Factors that could cause our forward-looking statements to be incorrect and actual events or our actual results to differ from those that are anticipated include those Risk Factors disclosed in our Form 10-K for the year ended March 31, 2003; those risks cited in our Forms 10-Q and 8-K filed during the current fiscal year; the level of activity in the oil and natural gas industry; production related activities becoming more sensitive to variances in commodity prices; our ability to achieve anticipated savings from our North Sea restructuring; changes in North Sea market conditions that would reverse that area’s current downward trend; unsettled political conditions, civil unrest and governmental actions, especially in higher risk countries of operations; foreign currency fluctuations; competition; unionization; unfavorable resolution of our labor mediation efforts or the success of our contingency plans; the ability to obtain insurance; failure to maintain an acceptable safety record; failure to attract and retain qualified personnel; weather related and seasonal fluctuations; and environmental regulations and liabilities.
        All forward-looking statements in this Form 10-Q are qualified by these cautionary statements and are only made as of the date of this Form 10-Q. We do not undertake any obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
        We occasionally use off-balance sheet hedging instruments to manage our risks associated with our operating activities conducted in foreign currencies. In limited circumstances and when considered appropriate, we will utilize forward exchange contracts to hedge anticipated transactions. We have historically used these instruments primarily in the buying and selling of certain spare parts, maintenance services and equipment. We attempt to minimize our exposure to foreign currency fluctuations by matching our revenues and expenses in the same currency for our contracts. Most of our revenue and expenses from North Sea Operations are denominated in British Pounds Sterling (“pound”). As of ~~September 30,~~December 31, 2003, we did not have any ~~nominal~~ forward exchange contracts outstanding. Management does not believe that our limited exposure to foreign currency exchange risk necessitates the extensive use of forward exchange contracts.
Item 4. Controls and Procedures
    (a)        Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. As of ~~September 30,~~December 31, 2003, we carried out an evaluation, under the supervision and with the participation of the our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
    (b)        There has been no change in our internal control over financial reporting during our last fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
PART II -– OTHER INFORMATION
~~Item 5. Submission of Matters to a Vote of Security Holders.~~
~~(a)         The annual meeting of stockholders was held on September 15, 2003.~~
~~(c)        Matters voted on at the meeting included:~~
          ~~1.     For the election of directors, all nominees were approved. The results were as follows:~~
Nominee
For
Withheld
          Peter N. Buckley 19,525,338 516,886
          Stephen J. Cannon 19,712,226 329,998
          Jonathan H. Cartwright 19,500,998 541,226
          David M. Johnson 19,736,461 305,763
          Kenneth M. Jones 19,295,189 747,035
          Pierre H. Jungels, CBE 19,735,981 306,243
          George M. Small 19,524,522 517,702
          Ken C. Tamblyn 19,713,421 328,803
          Robert W. Waldrup 19,737,126 305,098
          Howard Wolf 19,499,413 542,811

      ~~2.         Proposal to approve the Offshore Logistics, Inc. 2003 Nonqualified Stock Option Plan for Non-employee Directors. The results were as follows:~~

For
Against
Abstain
18,110,351 1,895,620 36,252
Item 6.      Exhibits and Reports on Form 8-K
(a)     The following exhibits are filed as part of this quarterly report:
Exhibit Number                Description of Exhibit
3.1 Delaware Certificate of Incorporation of the Company (filed as Exhibit 3(10) to the Company’s Form 10-K for the fiscal year ended June 30, 1989), and incorporated herein by reference.

3.2 Certificate of Amendment of Certificate of Incorporation dated November 30, 1989 (filed as Exhibit 3(5) to the Company’s Form 10-K for the fiscal year ended June 30, 1990), and incorporated herein by reference.

3.3 Certificate of Amendment of Certificate of Incorporation dated December 9, 1992 (filed as Exhibit 3 to the Company’s Form 8-K filed in December 1992), and incorporated herein by reference.

3.4 Amended and Restated By-laws of the Company (filed as Exhibit 3(7) to the Company’s Form 8-K filed in February 1996), and incorporated herein by reference.

3.5 Certificate of Designation of Series A Junior Participating Preferred Stock (filed as Exhibit 3(9) to the Company’s Form 10-K for the fiscal year ended June 30, 1996), and incorporated herein by reference.

~~10.1~~ ~~Offshore Logistics, Inc. 2003 Non-qualified Stock Option Plan for Non-employee Directors. Furnished herewith.~~

15.1 Letter from KPMG LLP dated ~~November 5, 2003,~~February 11, 2004, regarding unaudited interim financial information. Furnished herewith.

31.1 Certification by President and Chief Executive Officer.

31.2 Certification by Chief Financial Officer.

32.1 Certification of the Chief Executive Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

32.2 Certification of the Chief Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

(b)     Offshore Logistics, Inc. filed the following reports on Form 8-K during the three months ended ~~September 30,~~December 31, 2003:
Date of Event Reported                    Item(s) Reported
~~August~~October 31, 2003                                Item 7 & 9*
November 6, 2003                             Item 7 & 12*
       *The information in the Form 8-K furnished pursuant to ~~Item~~Items 9 and 12 isare not considered to be “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.
SIGNATURES
        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
OFFSHORE LOGISTICS, INC.

/s/ H. Eddy Dupuis
——————————————
H. Eddy Dupuis
Vice President and Chief Financial Officer
(on behalf of Registrant and as Principal Financial Officer)
                                             DATE: ~~November 5, 2003~~
~~EXHIBIT 10.1~~
~~OFFSHORE LOGISTICS, INC.~~
~~2003 NONQUALIFIED STOCK OPTION PLAN~~
~~FOR NON-EMPLOYEE DIRECTORS~~
~~1. Purpose of the Plan~~
        The Offshore Logistics, Inc. 2003 Nonqualified Stock Option Plan For Non-employee Directors (the ‘Plan”) is intended to promote the interests of Offshore Logistics, Inc., a Delaware corporation (the “Company”), and its shareholders by helping to attract and retain the services of experienced and knowledgeable non-employee directors and by providing an opportunity for ownership by non-employee directors of shares of common stock of the Company, $0.01 par value (the “Common Stock”). Options granted under the Plan (collectively the “Options” and in the singular an “Option”) will be Options which do not constitute incentive stock options, within the meaning of Section 422A(b) of the Internal Revenue Code of 1986, as amended (the “Code”).
~~2. Administration of Plan~~
        The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the “Board”). Subject to the terms of the Plan, the Compensation Committee of the Board (the “Committee”) shall have the power to interpret the provisions and supervise the administration of the Plan. All decisions made by the Committee pursuant to the provisions of the Plan shall be made by a majority of its members at a duly held regular or special meeting or by written consent of all members of the Committee in lieu of any such meeting.
~~3. Option Agreements~~
        Each Option granted under the Plan shall be evidenced by an agreement (the “Option Agreement”) in such form as shall have been approved by the Committee. The Option Agreement shall be subject to the terms, provisions, and conditions of the Plan and may contain such other terms, provisions, and conditions that are not inconsistent with the Plan as the Committee shall determine.
~~4. Grant of Options~~
        As of the date of the Company’s annual meeting of stockholders in each year that the Plan remains in effect, commencing with the 2003 annual meeting of stockholders, each director of the Company who is not otherwise an employee of the Company or any of the Company’s subsidiaries, as that term is defined in Section 424(f) of the Code (each of whom is referred to herein as a “Non-employee Director”), who is elected or reelected to the Board or who otherwise continues to serve as a director of the Company as of the close of such meeting shall be granted, without the exercise of discretion on the part of any person or persons, an Option to purchase 5,000 shares of Common Stock; provided, however, that no Options shall be granted to a Non-employee Director in a particular year if such Non-employee Director missed 50% or more of the aggregate number of meetings of the Board and committees on which he served during the twelve months preceding the annual meeting for such year. If, as of such annual meeting date of any year that the Plan is in effect, there are not sufficient shares available under this Plan to allow for the grant to each Non-employee Director of Options for the number of shares provided herein, each Non-employee Director shall receive Options for his pro rata share of the total number of shares of Common Stock available under the Plan.
~~5. Shares Subject to the Plan~~
        ~~Subject to adjustments as provided in Section~~February 11, the aggregate number of shares of Common Stock reserved for issuance pursuant to the exercise of Options granted under this Plan is 250,000. Such shares may consist of authorized but unissued shares of Common Stock or previously issued shares of Common Stock reacquired by the Company. Any of such shares which remain unissued and which are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares to meet the requirements of the Plan. Should any Option hereunder expire or terminate prior to its exercise in full, the shares theretofore subject to such Option may again be subject to an Option granted under the Plan. Exercise of an Option shall result in a decrease in the number of shares of Common Stock which may thereafter be available, both for purposes of the Plan and for sale to any one individual, by the number of shares as to which the Option is exercised.
~~6. Option Price~~
        The exercise price of each Option shall be the fair market value of the Common Stock subject to such Option on the Date of Grant. For the purposes of this Plan, the following terms shall have the following meanings:
    ~~(a)        “Date of Grant” means the date of the annual meeting of stockholders on which such Option is granted.~~
    (b)        The “fair market value” of a share of Common Stock on a particular date shall be deemed to be the average of the high and low composite prices for a share of Common Stock on the New York Stock Exchange (the “Exchange”) on such day or, if no sales of the Common Stock were made on that day, the average of the high and low composite prices for a share of Common Stock on the next preceding day on which sales were made on the Exchange.
~~7. Term of Plan~~
        The Plan shall be effective as of September 15, 2003, if stockholder approval of the Plan is obtained at the 2003 annual meeting of the stockholders of the Company. Except with respect to Options then outstanding, if not sooner terminated under the provisions to Section 16 of this Plan, the Plan shall terminate upon and no further Options shall be granted after the date of the annual meeting of stockholders held in 2012.
~~8. Procedure for Exercise~~
        No option granted under this Plan may be exercised, and the shares subject to each Option may not be purchased, for a period of six (6) months after the Date of Grant of such Option. Thereafter, Options shall be exercised by written notice to the Company setting forth the number of shares with respect to which the Option is to be exercised and specifying the address to which the certificates for such shares are to be mailed. Such notice shall be accompanied by cash or certified check or bank draft payable to the order of the Company in an amount equal to the option price per share multiplied by the number of shares of Common Stock as to which the Option is then being exercised or, at the election of the Non-employee Director who holds such Option, accompanied by Common Stock held by the Non-employee Director equal in value to the full amount of the option price (or any combination of cash or such Common Stock). For purposes of determining the amount, if any, of the option price satisfied by payment in Common Stock, such Common Stock shall be valued at its fair market value on the date of exercise in accordance with Section 6(b) of this Plan. Any Common Stock delivered in satisfaction of all or a portion of the option price shall be appropriately endorsed for transfer and assigned to the Company. No fraction of a share of Common Stock shall be issued by the Company upon exercise of an Option or accepted by the Company in payment of the purchase price thereof. As promptly as practicable after receipt of such written notification and payment, the Company shall deliver to the Non-employee Director one or more certificates representing in the aggregate the number of shares with respect to which such Option was exercised, issued in the Non-employee Director’s name; provided, however, that such delivery shall be deemed to have occurred for all purposes when a stock transfer agent of the Company shall have deposited such certificates in the United States mail, addressed to the Non-employee Director, at the address specified pursuant to this Section 8.
        In addition, payment for any shares subject to an Option may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms.
        ~~Options shall expire ten years from the Date of Grant of such Option unless such Option terminates prior thereto pursuant to the provisions of the Plan or of the respective Option Agreement.~~
~~9. Assignability~~
        An Option shall not be assignable or otherwise transferable by the Non-employee Director holding such Options except by will or by the laws of descent and distribution, and may be exercised during such Non-employee Director’s lifetime only by that Non-employee Director. No transfer of an Option by a Non-employee Director by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice of the transfer and an authenticated copy of the will and such other evidence as the Board may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Option.
~~10. No Rights as Shareholder~~
        No Non-employee Director shall have any rights as a stockholder with respect to shares covered by an Option until the date of issuance of a stock certificate representing such shares. Except as provided in Section 11 of this Plan, no adjustment for dividends, or otherwise, shall be made if the record date therefore is prior to the date of issuance of such certificate.
~~11. Recapitalization or Reorganization~~
    (a)        The existence of the Plan and the Options granted hereunder shall not affect in any way the right or power of the Company or its stockholders to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of debt or equity securities ranking prior to or affecting the Common Stock or the rights attendant thereto, or the dissolution or liquidation of the Company, or any sale, lease, exchange or other disposition of all or any part of the Company’s assets or business or any other corporate act or proceeding, whether of a similar or dissimilar nature.
    (b)        The shares with respect to which options may be granted hereunder are shares of Common Stock of the Company as presently constituted. If, and whenever, prior to the delivery by the Company of all of the shares of the Common Stock which are subject to Options granted hereunder, the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, a stock split, a combination of shares, a recapitalization or other increase or reduction of the number of shares of the Common Stock outstanding without receiving consideration therefore in money, services or property, the number of shares of Common Stock available under this Plan and the number of shares of Common Stock with respect to which Options granted hereunder may thereafter be exercised shall (i) in the event of an increase in the number of outstanding shares, be proportionately increased, and the option price payable per share shall be proportionately reduced, and (ii) in the event of a reduction in the number of outstanding shares, be proportionately reduced, and the option price payable per share shall be proportionately increased.
    (c)        If the Company is reorganized, merged or consolidated or is otherwise a party to a plan of exchange with another corporation pursuant to which reorganization, merger, consolidation or plan of exchange shareholders of the Company receive any shares of Common Stock or other securities or if the Company shall distribute (“Spin Off”) securities of another corporation to its shareholders, there shall be substituted for the shares subject to the unexercised portions of outstanding Options granted hereunder an appropriate number of shares of (i) each class of stock or other securities which were distributed to the shareholders of the Company in respect of such shares in the case of a reorganization, merger, consolidation or plan of exchange, or (ii) in the case of a Spin Off, the securities distributed to shareholders of the Company together with shares of Common Stock, such number of shares or securities to be determined in accordance with the provisions of Section 425 of the Code (or other applicable provisions of the Code or regulations issued thereunder which may from time to time govern the treatment of stock options in such a transaction); provided, however, that all such Options may be canceled by the Company as of the effective date of a reorganization, merger, consolidation, plan of exchange or Spin Off, or any dissolution or liquidation of the Company, by giving notice to each Non-employee Director of the Company’s intention to do so and by permitting the purchase for a period of at least thirty days during the sixty days next preceding such effective date of all of the shares subject to such outstanding Options, without regard to the installment provisions (if any) set forth in the Option Agreements governing such Options; and provided further that in the event of a Spin Off, the Company may, in lieu of substituting securities or accelerating and canceling Options as contemplated above, elect (A) to reduce the purchase price for each share of Stock subject to an outstanding Option by an amount equal to the fair market value, as determined in accordance with the provisions of Section 6(b), of the securities distributed in respect of each outstanding share of Common Stock in the Spin Off or (B) to reduce proportionately the purchase price per share and to increase proportionately the number of shares of Common Stock subject to each Option in order to reflect the economic benefits inuring to the shareholders of the Company as a result of the Spin Off.
    (d)        Except as otherwise expressly provided in this Plan, the issuance by the Company of shares of stock of any class or securities convertible into or exchangeable for shares of stock of any class, for cash, property, labor or services, upon the direct sale, upon the exercise of rights or warrants to subscribe therefore, or upon conversion of shares or obligations of the Company convertible into or exchangeable for such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to Options theretofore granted or the exercise price per share.
~~12. Termination of Option~~
    (a)        Upon the optionee’s ceasing to be a Non-employee Director of the Company for cause (as hereinafter defined), such optionee’s Options shall terminate immediately. For purposes of this Section, “cause” shall mean a breach of such Non-employee Director’s fiduciary duty as a director of the Company or such Non-employee Director’s conviction of a felony or a crime involving moral turpitude.
    (b)        Upon an optionee’s ceasing to be a Non-employee Director as a result of retirement, disability or death, or such optionee’s becoming employed by the Company or a subsidiary of the Company, the period during which such optionee may exercise any outstanding portion of his Options shall not exceed (i) one year from the date of retirement, disability or death or (ii) three months from the date such employment begins; provided, however that should that optionee die during such three-month period, such Options shall terminate one year from the date of employment. Notwithstanding the foregoing, however, in no event shall the period during which such Options may be exercised extend beyond the expiration of the term of such Options.
    (c)        Upon an optionee’s ceasing to be a Non-employee Director for any reason other than for cause (as hereinabove defined) or as a result of retirement, disability, death or his employment by the Company or a subsidiary, the optionee shall be entitled to exercise any outstanding portion of his Options for a period of three months from the date the optionee ceases to be a Non-employee Director; provided, however, that should such optionee die during such three-month period, such Options shall terminate one year from the date such optionee ceased to be a Non-employee Director.
~~13. Compliance with Law; Purchase for Investment~~
        No shares shall be issuable upon the exercise of an Option unless the Company shall have determined that the issuance complies with applicable law. Unless the Options and shares of Common Stock subject to this Plan have been registered under the Securities Act of 1933, as amended, no shares shall be issuable upon exercise of an Option unless the Company has determined that such registration is unnecessary and, if deemed necessary by the Company, each person exercising an Option under this Plan has represented in writing that he is acquiring such shares for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. The Company may require that any certificates of shares issued upon exercise of an Option bear a legend restricting transfer thereof on such terms as the Company may determine, and the Company may instruct its transfer agent to “stop transfer” of any such shares on such terms as it deems appropriate.
~~14. Taxes~~
    (a)        The Company may make such provisions as it deems appropriate for the withholding of any taxes if the Company determines such withholding is required in connection with the grant or exercise of any Options.
    (b)        Any Non-employee Director may pay all or any portion of the taxes required to be withheld by the Company or paid by him in connection with the exercise of an Option by electing to have the Company withhold shares of Common Stock, or by delivering previously owned shares of Common Stock, having a fair market value, determined in accordance with Section 6(b), equal to the amount required to be withheld or paid. A Non-employee Director must make the foregoing election on or before the date that the amount of tax to be withheld is determined (“Tax Date”). All such elections are irrevocable and subject to disapproval by the Board and are subject to the following additional restrictions: (i) such election may not be made within six months of the grant of an Option, provided that this limitation shall not apply in the event of death or disability; and (ii) such election must be made either six months or more prior to the Tax Date or in a window period commencing on the third business day following the Company’s release of a quarterly or annual summary statement of sales and earnings and ending on the twelfth business day following such release. Where the Tax Date in respect of an Option is deferred until six months after exercise and the Non-employee Director elects share withholding, the full amount of shares of Common Stock will be issued or transferred to him upon exercise of the Option, but he shall be unconditionally obligated to tender back to the Company the number of shares necessary to discharge the Company’s withholding obligation or his estimated tax obligation on the Tax Date.
~~15. Government Regulations~~
        This Plan, the grant and exercise of Options hereunder, and the obligation of the Company to sell and deliver shares under such Options, shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any other provision of the Plan or any Option Agreement to the contrary, the Plan shall be administered and interpreted in order that the Plan, and the grant and exercise of Options under the Plan, shall comply with the provisions of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as amended from time to time.
~~16.     Amendment or Termination of the Plan~~
        The Board in its discretion may terminate the Plan at any time with respect to any shares for which Options have not theretofore been granted. The Board shall have the right to alter or amend the Plan or any part thereof from time to time; provided, that no change to any Option may be made which would impair the rights of the Non-employee Director holding that Option without the consent of that Non-employee Director; and provided, further, that the Board may not make any alteration or amendment which would materially increase the benefits accruing to participants under the Plan, increase the aggregate number of shares which may be issued pursuant to the provisions of the Plan, change the class of individuals eligible to receive Options under the Plan or extend the term of the Plan, without the approval of the stockholders of the Company.2004
EXHIBIT 15.1
Offshore Logistics, Inc.
Lafayette, Louisiana
Re: Registration Statements No. 33-87450, No. 33-50946 and No. 333-100017 on Form S-8.
With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated ~~October 24, 2003~~January 26, 2004 related to our review of interim financial information.
Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered part of a registration statement prepared or certified by an accountant, or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act.
/s/ KPMG LLP
New Orleans, Louisiana
~~November 5, 2003~~February 11, 2004
EXHIBIT 31.1
CERTIFICATION
I, George M. Small, CEO and President, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Offshore Logistics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and ~~15d-15(e)~~15d-15 (e)) for the registrant and we have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registration’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: ~~November 5, 2003~~February 11, 2004

/s/ George M. Small
——————————————
George M. Small
CEO and President

EXHIBIT 31.2
CERTIFICATION
I, H. Eddy Dupuis, CFO and Vice President, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Offshore Logistics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and ~~15d-15(e)~~15d-15 (e)) for the registrant and we have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registration’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: ~~November 5, 2003~~February 11, 2004

/s/ H. Eddy Dupuis
——————————————
H. Eddy Dupuis
CFO and Vice President

EXHIBIT 32.1
CERTIFICATION UNDER SECTION 906
OF THE
SARBANES-OXLEY ACT OF 2002
        In connection with the Quarterly Report on Form 10-Q of Offshore Logistics, Inc. (the “Company”) for the period ended ~~September 30,~~December 31, 2003, as filed with the Securities and Exchange Commission as of the date hereof, I, George M. Small, Chief Executive Officer and President of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
    (1)        the Report fully complies with the requirements of Section 13(a) or 15(d), as appropriate, of the Securities Exchange Act of 1934, as amended; and
    (2)        the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ George M. Small
——————————————
Name: George M. Small
Title:   Chief Executive Officer and President
Date:   ~~November 5, 2003~~February 11, 2004
EXHIBIT 32.2
CERTIFICATION UNDER SECTION 906

OF THE

SARBANES-OXLEY ACT OF 2002
        In connection with the Quarterly Report on Form 10-Q of Offshore Logistics, Inc. (the “Company”) for the period ended ~~September 30,~~December 31, 2003, as filed with the Securities and Exchange Commission as of the date hereof, I, H. Eddy Dupuis, Chief Financial Officer and Vice-President of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
    (1)        the Report fully complies with the requirements of Section 13(a) or 15(d), as appropriate, of the Securities Exchange Act of 1934, as amended; and
    (2)        the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ H. Eddy Dupuis
——————————————
Name:   H. Eddy Dupuis
Title:   Chief Financial Officer and Vice President
Date:   ~~November 5, 2003~~February 11, 2004

LIABILITIES AND STOCKHOLDERS' INVESTMENT

Current Liabilities:
Accounts payable	$	27,751		$	29,666
Accrued liabilities		60,583			64,181
Deferred taxes		636			33
Current maturities of long-term debt		5,681			96,684

Total current liabilities		94,651			190,564
Long-term debt, less current maturities		251,637			136,134
Other liabilities and deferred credits		127,189			120,035
Deferred taxes		88,167			81,082
Minority interest		18,481			16,555
Stockholders' Investment:
Common Stock, $.01 par value, authorized 35,000,000 shares;
outstanding 22,514,921 and 22,510,921 at September 30 and
March 31, respectively (exclusive of 1,281,050 treasury shares)		225			225
Additional paid-in capital		139,109			139,046
Retained earnings		316,266			299,498
Accumulated other comprehensive income (loss)		(64,876	)		(77,108	)

		390,724			361,661

	$	970,849		$	906,031

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable		$ 98	$	6,111	$	26,236		$	(4,694	)	$	27,751
Accrued liabilities		457		13,188		33,506			13,432			60,583
Deferred taxes		1,079		110		12,452			(13,005	)		636
Current maturities of long-term debt		--		--		5,681			--			5,681

Total current liabilities		1,634		19,409		77,875			(4,267	)		94,651
Long-term debt, less current maturities		230,000		--		21,637			--			251,637
Intercompany notes payable		10,657		96,232		362,361			(469,250	)		--
Other liabilities and deferred credits		1,338		2,781		123,070			--			127,189
Deferred taxes		29,549		52,629		6,415			(426	)		88,167
Minority interest		18,481		--		--			--			18,481
Stockholders' investment:
Common stock		225		4,062		15,010			(19,072	)		225
Additional paid in capital		139,109		51,168		8,015			(59,183	)		139,109
Retained earnings		316,118		112,962		82,282			(195,096	)		316,266
Accumulated other comprehensive
income (loss)		10,097		--		(77,326	)		2,353			(64,876	)

		465,549		168,192		27,981			(270,998	)		390,724

	$	757,208	$	339,243	$	619,339		$	(744,941	)	$	970,849

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	540		$	7,306	$	26,524		$	(4,704	)	$	29,666
Accrued liabilities		4,175			14,488		45,518			--			64,181
Deferred taxes		33			--		--			--			33
Current maturities of long-term debt		90,921			--		5,763			--			96,684

Total current liabilities		95,669			21,794		77,805			(4,704	)		190,564
Long-term debt, less current maturities		114,000			--		22,134			--			136,134
Intercompany notes payable		14,078			63,485		345,864			(423,427	)		--
Other liabilities and deferred credits		285			2,785		116,965			--			120,035
Deferred taxes		24,429			49,482		7,171			--			81,082
Minority interest		16,555			--		--			--			16,555
Stockholders' investment:
Common stock		225			4,062		12,117			(16,179	)		225
Additional paid in capital		139,046			51,168		8,015			(59,183	)		139,046
Retained earnings		299,505			102,240		80,881			(183,128	)		299,498
Accumulated other comprehensive
income (loss)		(1,352	)		--		(69,852	)		(5,904	)		(77,108	)

		437,424			157,470		31,161			(264,394	)		361,661

	$	702,440		$	295,016	$	601,100		$	(692,525	)	$	906,031

	Payments Due by Period
	Total	Less than 1 year	1-3 years	4-5 years	After 5 years
	(in thousands)
Contractual Obligations:
Long-Term Debt	$252,378	$ 995	$21,383	$ --	$230,000
Operating Leases	29,106	1,604	14,424	3,442	9,636
Unconditional Purchase
Obligations	80,395	34,379	46,016	--	--

Total Contractual Cash Obligations	$361,879	$36,978	$81,823	$3,442	$239,636

Nominee

Peter N. Buckley	19,525,338	516,886
Stephen J. Cannon	19,712,226	329,998
Jonathan H. Cartwright	19,500,998	541,226
David M. Johnson	19,736,461	305,763
Kenneth M. Jones	19,295,189	747,035
Pierre H. Jungels, CBE	19,735,981	306,243
George M. Small	19,524,522	517,702
Ken C. Tamblyn	19,713,421	328,803
Robert W. Waldrup	19,737,126	305,098
Howard Wolf	19,499,413	542,811

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

Form 10-Q

Offshore Logistics, Inc.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

LIABILITIES AND STOCKHOLDERS’ INVESTMENT

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIESNotes to Consolidated Financial StatementsSeptember 30,December 31, 2003

NOTE A — Basis of Presentation and Consolidation

NOTE B — Earnings per Share

NOTE C — Commitments and Contingencies

NOTE D – Comprehensive Income

NOTE GF – Long-Term Debt

NOTE HG – Recent Accounting Pronouncements

NOTE IH – Segment Information

NOTE I – Restructuring Charges

NOTE J —– Subsequent Events

NOTE K – Supplemental Condensed Consolidating Financial Information

NOTE JK – Supplemental Condensed Consolidating Financial Statements – Continued

LIABILITIES AND STOCKHOLDERS’ INVESTMENT

NOTE JK – Supplemental Condensed Consolidating Financial Statements — Continued

NOTE JK – Supplemental Condensed Consolidating Financial Statements — Continued

Supplemental Condensed Consolidating Balance SheetMarch 31, 2003

LIABILITIES AND STOCKHOLDERS’ INVESTMENT

NOTE K – Supplemental Condensed Consolidating Financial Statements — Continued

Supplemental Condensed Consolidating Statement of IncomeNine Months Ended December 31, 2002

NOTE K – Supplemental Condensed Consolidating Financial Statements — Continued

GeneralOverview

Results of Operations

Quarter ended September 30,December 31, 2003 compared to Quarter ended September 30,December 31, 2002

Liquidity and Capital Resources

Legal Matters

Recent Accounting Pronouncements

Forward-Looking Statements

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Item 4. Controls and Procedures

Item 6. Exhibits and Reports on Form 8-K

SIGNATURES

CERTIFICATION

CERTIFICATION

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30,December 31, 2003

Supplemental Condensed Consolidating Balance Sheet
March 31, 2003

Supplemental Condensed Consolidating Statement of Income
Nine Months Ended December 31, 2002