Louisiana | 72-0395707 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
2001 SE Evangeline Thruway | ||
Lafayette, Louisiana | 70508 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer: | ☐ | Accelerated filer: ☒ | Smaller reporting company: | ☐ | ||||
Non-accelerated filer: | ☐ (Do not check if a smaller reporting company) | Emerging Growth Company: | ☐ |
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Voting Common Stock | 2,905,757 shares | |
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Current Assets: Cash Short-term investments Accounts receivable – net Trade Other Inventories of spare parts – net Prepaid expenses Deferred income taxes Income taxes receivable Total current assets Property and equipment – net Restricted cash and investments Other assets Total assets Current Liabilities: Accounts payable Accrued and other current liabilities Total current liabilities Long-term debt: Revolving credit facility Senior Notes issued March 17, 2014, net of debt issuance costs of $2,441 and $2,753, respectively Deferred income taxes Other long-term liabilities Commitments and contingencies (Note 9) Shareholders’ Equity: Voting common stock – par value of $0.10; 12,500,000 shares authorized, 2,905,757 shares issued and outstanding Non-voting common stock – par value of $0.10; 25,000,000 shares authorized, 12,797,442 and 12,779,646 issued and outstanding at March 31, 2017 and December 31, 2016, respectively Additionalpaid-in capital Accumulated other comprehensive loss Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity Operating revenues, net Expenses: Direct expenses Selling, general and administrative expenses Total operating expenses Loss on disposal of assets Equity in loss (income) of unconsolidated affiliate Operating loss Interest expense Other income – net Loss before income taxes Income tax (benefit) expense Net loss Weighted average shares outstanding: Basic Diluted Net loss per share: Basic Diluted Net loss Unrealized gain on short-term investments Changes in pension plan assets and benefit obligations Tax effect of the above-listed adjustments Total comprehensive loss Balance at December 31, 2015 Net loss Unrealized gain on short-term investments Changes in pension plan assets and benefit obligations Amortization of unearned stock-based compensation Issuance ofnon-voting common stock (upon vesting of restricted stock units) Cancellation of restrictednon-voting stock units for tax withholdings on vested shares Retirement of treasury stock Balance at March 31, 2016 Balance at December 31, 2016 Net loss Unrealized gain on short-term investments Changes in pension plan assets and benefit obligations Amortization of unearned stock-based compensation Issuance ofnon-voting common stock (upon vesting of restricted stock units) Cancellation of restrictednon-voting stock units for tax withholdings on vested shares Cumulative effect adjustment of unrecognized tax benefits Balance at March 31, 2017 Operating activities: Net loss Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization Deferred income taxes Loss on asset dispositions Equity in loss of unconsolidated affiliate Inventory valuation reserves Changes in operating assets and liabilities Net cash used in operating activities Investing activities: Purchase of property and equipment Proceeds from asset dispositions Purchase of short-term investments Proceeds from sale of short-term investments Payment of deposits on aircraft Net cash provided by (used in) investing activities Financing activities: Proceeds from line of credit Payments on line of credit Repurchase of common stock Net cash provided by financing activities Increase in cash Cash, beginning of period Cash, end of period Supplemental Disclosures Cash Flow Information Cash paid during the period for: Interest Income taxes Noncash investing activities: Other current liabilities and accrued payables related to purchase of property and equipment 2016. period. 2018 utilizing the modified retrospective method. September 30, 2017. We plan to adopt this standard beginning January 1, 2019. We plan to adopt this standard beginning January 1, 2018. We plan to adopt this standard beginning January 1, 2018. Investments: Money market mutual funds Commercial paper U.S. Government agencies Corporate bonds and notes Subtotal Deferred compensation plan assets included in other assets Total Investments: Money market mutual funds Commercial paper U.S. government agencies Corporate bonds and notes Subtotal Deferred compensation plan assets included in other assets Total Due in one year or less Due within two years Total Commercial paper U.S. Government agencies Corporate bonds and notes Commercial paper U.S. Government agencies Corporate bonds and notes Total Corporate bonds and notes Total 2016, respectively. Allowance for Contractual Discounts Allowance for Uncompensated Care Investments: Money market mutual funds Commercial paper U.S. Government agencies Corporate bonds and notes Deferred compensation plan assets Total Investments: Money market mutual funds Commercial paper U.S. government agencies Corporate bonds and notes Deferred compensation plan assets Total Senior Notes issued March 17, 2014, interest only payable semi-annually at 5.25%, maturing March 15, 2019 Revolving Credit Facility due October 1, 2018 with a group of commercial banks, interest payable at variable rates Total long-term debt Weighted average outstanding shares of common stock, basic Dilutive effect of unvested restricted stock units Weighted average outstanding shares of common stock, diluted March 31, December 31, 2017 2016 ASSETS $ 3,680 $ 2,596 276,818 289,806 117,386 128,662 8,884 9,603 73,033 70,402 10,330 9,259 10,798 10,798 323 540 501,252 521,666 896,565 903,977 13,038 13,038 8,873 9,759 $ 1,419,728 $ 1,448,440 LIABILITIES AND SHAREHOLDERS’ EQUITY $ 22,054 $ 28,704 27,500 28,346 49,554 57,050 135,500 134,000 497,559 497,247 142,870 151,713 8,131 8,652 291 291 1,279 1,278 304,698 304,246 (375 ) (478 ) 280,221 294,441 586,114 599,778 $ 1,419,728 $ 1,448,440 September 30,
2017 December 31, 2016 ASSETS Current Assets: Cash $ 2,991 $ 2,596 Short-term investments 204,036 289,806 Accounts receivable – net Trade 140,434 128,662 Other 12,303 9,603 Inventories of spare parts – net 79,245 70,402 Prepaid expenses 12,006 9,259 Deferred income taxes 10,798 10,798 Income taxes receivable 509 540 Total current assets 462,322 521,666 Property and equipment – net 910,327 903,977 Restricted cash and investments 12,396 13,038 Other assets 9,032 9,759 Total assets $ 1,394,077 $ 1,448,440 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 30,607 $ 28,704 Accrued and other current liabilities 33,703 28,346 Total current liabilities 64,310 57,050 Long-term debt: Revolving credit facility 100,000 134,000 Senior Notes issued March 17, 2014, net of debt issuance costs of $1,818 and $2,753, respectively 498,182 497,247 Deferred income taxes 141,420 151,713 Other long-term liabilities 8,104 8,652 Commitments and contingencies (Note 9) Shareholders’ Equity: Voting common stock – par value of $0.10; 12,500,000 shares authorized, 2,905,757 shares issued and outstanding 291 291 Non-voting common stock – par value of $0.10; 37,500,000 shares authorized, 12,893,895 and 12,779,646 issued and outstanding at September 30, 2017 and December 31, 2016, respectively 1,289 1,278 Additional paid-in capital 307,054 304,246 Accumulated other comprehensive loss (244 ) (478 ) Retained earnings 273,671 294,441 Total shareholders’ equity 582,061 599,778 Total liabilities and shareholders’ equity $ 1,394,077 $ 1,448,440 Quarter Ended
March 31, 2017 2016 $ 134,618 $ 164,016 136,513 152,554 13,044 11,673 149,557 164,227 — 359 1,003 — (15,942 ) (570 ) 8,195 7,533 (1,064 ) (615 ) 7,131 6,918 (23,073 ) (7,488 ) (7,825 ) 1,444 $ (15,248 ) $ (8,932 ) 15,689 15,600 15,689 15,600 $ (0.97 ) $ (0.57 ) $ (0.97 ) $ (0.57 ) Quarter Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Operating revenues, net $ 150,167 $ 158,093 $ 431,209 $ 489,245 Expenses: Direct expenses 136,786 144,938 400,250 449,909 Selling, general and administrative expenses 11,401 13,381 38,691 36,832 Total operating expenses 148,187 158,319 438,941 486,741 Gain (loss) on disposal of assets (4 ) 85 3 (3,854 ) Equity in (earnings) loss of unconsolidated affiliates, net (438 ) 198 1,556 274 Operating income (loss) 2,422 (509 ) (9,291 ) 6,084 Interest expense 8,027 7,719 24,305 22,792 Other income – net (706 ) (462 ) (2,474 ) (1,571 ) 7,321 7,257 21,831 21,221 Loss before income taxes (4,899 ) (7,766 ) (31,122 ) (15,137 ) Income tax benefit (1,622 ) (2,799 ) (9,324 ) (5,515 ) Net loss $ (3,277 ) $ (4,967 ) $ (21,798 ) $ (9,622 ) Weighted average shares outstanding: Basic 15,799 15,683 15,750 15,655 Diluted 15,799 15,683 15,750 15,655 Net loss per share: Basic $ (0.21 ) $ (0.32 ) $ (1.38 ) $ (0.61 ) Diluted $ (0.21 ) $ (0.32 ) $ (1.38 ) $ (0.61 ) Quarter Ended
March 31, 2017 2016 $ (15,248 ) $ (8,932 ) 162 807 (1 ) 1 (58 ) (332 ) $ (15,145 ) $ (8,456 ) Quarter Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Net (loss) earnings $ (3,277 ) $ (4,967 ) $ (21,798 ) $ (9,622 ) Unrealized gain (loss) on short-term investments 41 (494 ) 370 523 Changes in pension plan assets and benefit obligations (24 ) 1 (2 ) 3 Tax effect of the above-listed adjustments (8 ) 178 (134 ) (229 ) Total comprehensive (loss) income $ (3,268 ) $ (5,282 ) $ (21,564 ) $ (9,325 ) Voting Non-Voting Additional Accumulated Total Common Stock Common Stock Paid-in Other Comprehensive Retained ShareHolders’ Shares Amount Shares Amount Capital (Loss)Income Earnings Equity 2,906 $ 291 12,685 $ 1,269 $ 304,884 $ (567 ) $ 321,121 $ 626,998 — — — — — — (8,932 ) (8,932 ) — — — — — 476 — 476 — — — — — 1 — 1 — — — — 1,485 — — 1,485 — — 121 12 — — — 12 — — (27 ) (3 ) (500 ) — — (503 ) — — (8 ) — — — — — 2,906 $ 291 12,771 $ 1,278 $ 305,869 $ (90 ) $ 312,189 $ 619,537 Voting Non-Voting Additional Accumulated Total Common Stock Common Stock Paid-in Other Comprehensive Retained ShareHolders’ Shares Amount Shares Amount Capital (Loss)Income Earnings Equity 2,906 $ 291 12,779 $ 1,278 $ 304,246 $ (478 ) $ 294,441 $ 599,778 — — — — — — (15,248 ) (15,248 ) — — — — — 104 — 104 — — — — — (1 ) — (1 ) — — — — 552 — — 552 — — 27 2 — — — 2 — — (9 ) (1 ) (100 ) — — (101 ) — — — — — — 1,028 1,028 2,906 $ 291 12,797 $ 1,279 $ 304,698 $ (375 ) $ 280,221 $ 586,114 Shares Amount Shares Amount Retained Earnings ShareHolders' Equity Balance at December 31, 2015 2,906 $ 291 12,685 $ 1,269 $ 304,884 $ (567 ) $ 321,121 $ 626,998 Net loss — — — — — — (9,622 ) (9,622 ) Unrealized gain on short-term investments — — — — — 294 — 294 Changes in pension plan assets and benefit obligations — — — — — 2 — 2 Amortization of unearned stock-based compensation — — — — 4,334 — — 4,334 Issuance of non-voting common stock (upon vesting of restricted stock units) — — 128 12 — — — 12 Cancellation of restricted non-voting stock units for tax withholdings on vested shares — — (28 ) (3 ) (528 ) — — (531 ) Retirement of treasury stock — — (8 ) — — — — — Balance at September 30, 2016 2,906 $ 291 12,777 $ 1,278 $ 308,690 $ (271 ) $ 311,499 $ 621,487 Shares Amount Shares Amount Retained Earnings ShareHolders' Equity Balance at December 31, 2016 2,906 $ 291 12,779 $ 1,278 $ 304,246 $ (478 ) $ 294,441 $ 599,778 Net loss — — — — — — (21,798 ) (21,798 ) Unrealized gain on short-term investments — — — — — 235 — 235 Changes in pension plan assets and benefit obligations — — — — — (1 ) — (1 ) Amortization of unearned stock-based compensation — — — — 3,074 — — 3,074 Issuance of non-voting common stock (upon vesting of restricted stock units) — — 136 13 (10 ) — — 3 Cancellation of restricted non-voting stock units for tax withholdings on vested shares — — (22 ) (2 ) (256 ) — — (258 ) Cumulative effect adjustment of unrecognized tax benefits — — — — — — 1,028 1,028 Balance at September 30, 2017 2,906 $ 291 12,893 $ 1,289 $ 307,054 $ (244 ) $ 273,671 $ 582,061 Quarter Ended March 31, 2017 2016 $ (15,248 ) $ (8,932 ) 16,845 16,973 (7,883 ) 955 — 359 1,003 — (1,293 ) 2,435 (1,677 ) (28,133 ) (8,253 ) (16,343 ) (4,789 ) (8,519 ) — 850 (54,867 ) (77,677 ) 67,659 76,184 (66 ) (66 ) 7,937 (9,228 ) 37,300 83,500 (35,800 ) (53,300 ) (100 ) (500 ) 1,400 29,700 1,084 4,129 2,596 2,407 $ 3,680 $ 6,536 $ 14,114 $ 13,691 $ — $ — $ 348 $ 29,302 Nine Months Ended
September 30, 2017 2016 Operating activities: Net loss $ (21,798 ) $ (9,622 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 50,593 53,054 Deferred income taxes (9,416 ) (6,775 ) Loss (gain) on asset dispositions 3 (3,854 ) Equity in loss of unconsolidated affiliate, net 1,556 274 Inventory valuation reserves (3 ) 3,766 Changes in operating assets and liabilities (22,803 ) (43,991 ) Net cash (used in) provided by operating activities (1,868 ) (7,148 ) Investing activities: Purchase of property and equipment (49,227 ) (74,950 ) Proceeds from asset dispositions 21 13,233 Purchase of short-term investments (268,525 ) (263,204 ) Proceeds from sale of short-term investments 354,250 259,322 Payment of deposits on aircraft — (197 ) Loan to unconsolidated affiliate — (1,200 ) Net cash provided by (used in) investing activities 36,519 (66,996 ) Financing activities: Proceeds from line of credit 99,150 213,900 Payments on line of credit (133,150 ) (139,000 ) Repurchase of common stock (256 ) (524 ) Net cash (used in) provided by financing activities (34,256 ) 74,376 Decrease in cash 395 232 Cash, beginning of period 2,596 2,407 Cash, end of period $ 2,991 $ 2,639 Supplemental Disclosures Cash Flow Information Cash paid during the period for: Interest $ 29,536 $ 28,258 Income taxes $ 1,213 $ 2,856 Noncash investing activities: Other current liabilities and accrued payables related to purchase of property and equipment $ 21 $ 3,717 2016 and the accompanying notes.ASUAccounting Standards Update (“ASU”) 2016-09, 2016-09,Compensation –- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. TheAccounting, which was issued by the Financial Accounting Standards Board (“FASB”) in March 2016. This new standard requires that excess tax benefits and deficiencies resulting from stock-based compensation awards vesting and exercises be recognized in the income statement. Previously, these amounts were recognized in additionalpaid-in capital. As a result, during the first quarter of 2017 we recorded a cumulative-effect adjustment of $1.0 million increasing retained earnings and decreasing deferred tax liability on our balance sheet dated March 31,September 30, 2017. Accordingly, we recorded income tax expense of $0.5$1.6 million in our consolidated statement of income for the threenine months ended March 31,September 30, 2017, in recognition of excess tax deficiencies related to equity compensation. Under this new standard, the corresponding cash flows are now reflected in cash provided by operating activities instead of financing activities, as was previously required.periodFinancial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”)ASU 2014-09, 2014-09,Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The new standard iswill be effective for usthe Company beginning on January 1, 2018, with early adoption permitted as of January 1, 2017.2018. Revenues from our Oil and Gas segment and Air Medical segment hospital contracts are primarily comprised of a fixed monthly fee for a particular model of aircraft, plus a variable component based on flight time. Under the independent provider programs of our Air Medical segment, our revenues are based on a flat rate plus a variable charge per patient-loaded mile, and are recorded net of contractual allowances. We also generate revenue on a cost-plus basis in our Technical Services segment. Based on our initial assessment, we do not expect the adoption of this ASU to have a material impact on our condensed consolidated financial statements. Remaining implementation matters include establishing new policies, procedures, and controls and quantifying any adoption date adjustments. We are continuingplan to assess the effects ofadopt this standard on each revenue stream of our business and the overall effect on our financial position, results of operations and cash flows and have not yet selected a method of adoption. We intend to adopt the standard beginning January 1, 2018.2016-02,LeasesLeases, which replaces the existing guidance on leasing transactions in ASC 840 to require recognition of the assets and liabilities for the rights and obligations created by those leases on the balance sheet. We plan to adopt this standard no later than January 1, 2019. We are currently evaluating the effects of this standard, and expect the adoption of this standard will result in a material change to our consolidated assets and liabilities based on our lease portfolio as of December 31, 2016.2016-16,Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory, which will require an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The ASU 2016-16 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The effects of this standard on our financial position, results of operations, and cash flows are not yet known.2017-01,Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU2017-01 clarifies the definition of a business and requires that an entity apply certain criteria in order to determine when a set of assets and activities qualifies as a business. The adoption of this standard is expected to result in fewer acquisitions of properties qualifying as acquisitions of businesses and, accordingly, acquisition costs for those acquisitions that do not qualify as businesses will be capitalized rather than expensed. This standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and should be applied on a prospective basis. Early adoption is permitted. The effects of this standard on our financial position, results of operations, and cash flows are not yet known.2017-04,Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU2017-04 simplifies the currenttwo-step goodwill impairment test by eliminating Step 2the second step of the test. The new standard requires aone-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. This standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect this ASU to have a material impact on our consolidated financial statements.gain (loss),loss, which is a separate component of shareholders’ equity in our Condensed Consolidated Balance Sheets. These unrealized gains and losses are also reflected in our Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Shareholders’ Equity. We determine cost, gains, and losses using the specific identification method.March 31,September 30, 2017: Unrealized Unrealized Fair Cost Basis Gains Losses Value (Thousands of dollars) $ 10,597 $ — $ — $ 10,597 27,935 — (26 ) 27,909 15,305 — (20 ) 15,285 236,525 4 (479 ) 236,050 290,362 4 (525 ) 289,841 2,500 — — 2,500 $ 292,862 $ 4 $ (525 ) $ 292,341 Cost Basis Unrealized
Gains Unrealized
Losses Fair
Value (Thousands of dollars) Investments: Money market mutual funds $ 5,278 $ — $ — $ 5,278 Commercial paper 9,423 — (10 ) 9,413 U.S. Government agencies 13,505 — (14 ) 13,491 Corporate bonds and notes 188,515 3 (283 ) 188,235 Subtotal 216,721 3 (307 ) 216,417 Deferred compensation plan assets included in other assets 2,630 — — 2,630 Total $ 219,351 $ 3 $ (307 ) $ 219,047 Unrealized Unrealized Fair Cost Basis Gains Losses Value (Thousands of dollars) $ 18,118 $ — $ — $ 18,118 27,906 — (39 ) 27,867 13,295 — (32 ) 13,263 244,202 2 (622 ) 243,582 303,521 2 (693 ) 302,830 2,394 — — 2,394 $ 305,915 $ 2 $ (693 ) $ 305,224 Cost Basis (Thousands of dollars) Investments: Money market mutual funds $ 18,118 $ — $ — $ 18,118 Commercial paper 27,906 — (39 ) 27,867 U.S. government agencies 13,295 — (32 ) 13,263 Corporate bonds and notes 244,202 2 (622 ) 243,582 Subtotal 303,521 2 (693 ) 302,830 Deferred compensation plan assets included in other assets 2,394 — — 2,394 Total $ 305,915 $ 2 $ (693 ) $ 305,224 March 31,September 30, 2017 and December 31, 2016, we classified $12.4 million and $13.0 million respectively, of our aggregate investments as long-term investments and recorded them in our Condensed Consolidated Balance Sheets as Restricted cash and investments, as they are securing outstanding letters of credit with maturities beyond one year and a bond relating to foreign operations. March 31, 2017 December 31, 2016 Amortized Fair Amortized Fair Costs Value Costs Value (Thousands of dollars) $ 200,195 $ 199,906 $ 184,587 $ 184,334 79,570 79,338 100,816 100,378 $ 279,765 $ 279,244 $ 285,403 $ 284,712 September 30, 2017 December 31, 2016 Amortized
Costs Fair
Value Amortized
Costs Fair
Value (Thousands of dollars) Due in one year or less $ 133,633 $ 133,481 $ 184,587 $ 184,334 Due within two years 77,810 77,658 100,816 100,378 Total $ 211,443 $ 211,139 $ 285,403 $ 284,712 March 31, 2017 December 31, 2016 Average Average Average Average Coupon Days To Coupon Days To Rate (%) Maturity Rate (%) Maturity 1.035 140 1.001 184 1.056 355 0.970 400 1.731 287 1.745 318 September 30, 2017 December 31, 2016 Average
Coupon
Rate (%) Average
Days To
Maturity Average
Coupon
Rate (%) Average
Days To
MaturityCommercial paper 1.236 228 1.001 184 U.S. Government agencies 1.213 325 0.970 400 Corporate bonds and notes 1.715 295 1.745 318 March 31, 2017 December 31, 2016 Unrealized Unrealized Fair Value Losses Fair Value Losses (Thousands of dollars) $ 27,909 $ (26 ) $ 27,867 $ (39 ) 14,285 (20 ) 13,263 (32 ) 207,512 (460 ) 210,836 (602 ) $ 249,706 $ (506 ) $ 251,966 $ (673 ) September 30, 2017 December 31, 2016 Fair Value Unrealized
Losses Fair Value Unrealized
Losses (Thousands of dollars) Commercial paper $ 9,413 $ (10 ) $ 27,867 $ (39 ) U.S. Government agencies 9,495 (10 ) 13,263 (32 ) Corporate bonds and notes 102,767 (173 ) 210,836 (602 ) Total $ 121,675 $ (193 ) $ 251,966 $ (673 ) March 31, 2017 December 31, 2016 Unrealized Unrealized Fair Value Losses Fair Value Losses (Thousands of dollars) $ 20,116 $ (19 ) $ 24,196 $ (20 ) $ 20,116 $ (19 ) $ 24,196 $ (20 ) September 30, 2017 December 31, 2016 Fair Value Unrealized
Losses Fair Value Unrealized
Losses (Thousands of dollars) U.S. Government agencies $ 3,996 $ (4 ) $ — $ — Corporate bonds and notes 77,187 (110 ) 24,196 (20 ) Total $ 81,183 $ (114 ) $ 24,196 $ (20 ) March 31,September 30, 2017 or December 31, 2016. We have also determined that we did not have any other than temporary impairments relating to credit losses on debt securities for the quarter ended March 31,September 30, 2017. For additional information regarding our criteria for making these assessments, see Note 2 to the financial statements included in our Annual Report on Form10-K for the year ended December 31, 2016.at March 31, 2017, and $6.0 million at September 30, 2017, and December 31, 2016.$107.6$129.2 million and $111.9 million as of March 31,September 30, 2017 and December 31, 2016, respectively. The allowance for uncompensated care was $48.0$47.7 million and $46.3 million as of March 31,September 30, 2017 and December 31, 2016, respectively.$2.5$1.3 million and $2.2 million for the quarters ended March 31,September 30, 2017 and 2016, respectively. The value of these services was $5.7 million and $6.9 million for the nine months ended September 30, 2017 and 2016, respectively. The estimated cost of providing charity services was $0.3 million for the quarter ended September 30, 2017 and $0.5 million for the quarter ended September 30, 2016. The estimated cost of providing charity services was $0.6$1.3 million and $1.8 million for the quartersnine months ended March 31,September 30, 2017 and 2016.2016, respectively. The estimated costs of providing charity services are based on a calculation that applies a ratio of costs to the charges for uncompensated charity care. The ratio of costs to charges is based on our Air Medical segment’s total expenses divided by gross patient service revenue. As of March 31,
2017 December 31,
2016 56 % 56 % 25 % 23 % September 30, 2017 December 31, 2016 Allowance for Contractual Discounts 58 % 56 % Allowance for Uncompensated Care 21 % 23 % $17.7$18.4 million and $17.3 million at March 31,September 30, 2017 and December 31, 2016, respectively. March 31, 2017 Total (Level 1) (Level 2) (Thousands of dollars) $ 10,597 $ 10,597 $ — 27,909 — 27,909 15,285 — 15,285 236,050 — 236,050 289,841 10,597 279,244 2,500 2,500 — $ 292,341 $ 13,097 $ 279,244 December 31, 2016 Total (Level 1) (Level 2) (Thousands of dollars) $ 18,118 $ 18,118 $ — 27,867 — 27,867 13,263 — 13,263 243,582 — 243,582 302,830 18,118 284,712 2,394 2,394 — $ 305,224 $ 20,512 $ 284,712 September 30, 2017 Total (Level 1) (Level 2) (Thousands of dollars) Investments: Money market mutual funds $ 5,278 $ 5,278 $ — Commercial paper 9,413 — 9,413 U.S. Government agencies 13,491 — 13,491 Corporate bonds and notes 188,235 — 188,235 216,417 5,278 211,139 Deferred compensation plan assets 2,630 2,630 — Total $ 219,047 $ 7,908 $ 211,139 December 31, 2016 Total (Level 1) (Level 2) (Thousands of dollars) Investments: Money market mutual funds $ 18,118 $ 18,118 $ — Commercial paper 27,867 — 27,867 U.S. government agencies 13,263 — 13,263 Corporate bonds and notes 243,582 — 243,582 302,830 18,118 284,712 Deferred compensation plan assets 2,394 2,394 — Total $ 305,224 $ 20,512 $ 284,712 shares ofinvestments in these funds are based on observable market prices, and therefore, have been categorized in Level 1 in the fair value hierarchy. Level 2 inputs reflect quoted prices for identical assets or liabilities that are not actively traded. These items may not be traded daily; examples include commercial paper, corporate bonds and U.S. government agencies debt. There have been no reclassifications of assets between Level 1 and Level 2 investments during the periods covered by the financial statements included in this report. We hold no Level 3 investments. Investments reflected on our balance sheets as Other assets,Assets, which we hold to fund liabilities under our Officers’ Deferred Compensation Plan, consist mainly of multiple investment funds that are highly liquid and diversified.March 31,September 30, 2017 and December 31, 2016. Our determination of the estimated fair value of our 5.25% Senior Notes due 2019 and our revolving credit facility debt is derived using Level 2 inputs, including quoted market indications of similar publicly-traded debt. The fair value of our 5.25% Senior Notes due 2019, based on quoted market prices, was $473.8$489.2 million and $474.4 million at March 31,September 30, 2017 and December 31, 2016, respectively. March 31, 2017 December 31, 2016 Unamortized Unamortized Debt Debt Issuance Issuance Principal Debt Cost Principal Debt Cost (Thousands of dollars) $ 500,000 $ 2,441 $ 500,000 $ 2,753 135,500 — 134,000 — $ 635,500 $ 2,441 $ 634,000 $ 2,753 September 30, 2017 December 31, 2016 Principal Unamortized
Debt
Issuance
Debt Cost Principal Unamortized
Debt
Issuance
Debt Cost (Thousands of dollars) Senior Notes issued March 17, 2014, interest only payable semi-annually at 5.25%, maturing March 15, 2019 $ 500,000 $ 1,818 $ 500,000 $ 2,753 Revolving Credit Facility due October 1, 2018 with a group of commercial banks, interest payable at variable rates 100,000 — 134,000 — Total long-term debt $ 600,000 $ 1,818 $ 634,000 $ 2,753 PHI’sPHI, Inc.’s wholly-owned domestic subsidiaries, and are the general, unsecured obligations of PHI, Inc. and the guarantors. Interest is payable semi-annually on March 15 and September 15 of each year. PHI has the option to redeem some or all of the 2019 Notes at any time on or after March 15, 2016 at specified redemption prices. The indenture governing the 2019 Notes (the “2019 Indenture”) contains, among other things, certain restrictive covenants, including limitations on incurring indebtedness, creating liens, selling assets and entering into certain transactions with affiliates. The covenants also limit PHI’s ability to, among other things, pay cash dividends on common stock, repurchase or redeem common or preferred equity, prepay subordinated debt and make certain investments. Upon the occurrence of a “Change in Control Repurchase Event” (as defined in the 2019 Indenture), PHI will be required, unless it has previously elected to redeem the 2019 Notes as described above, to make an offer to purchase the 2019 Notes for a cash price equal to 101% of their principal amount.March 31,September 30, 2017, we believe we were in compliance with these covenants.Cash paid to fund interest expense was $14.1 million for the quarter ended March 31, 2017 and $13.7 million for the quarter ended March 31, 2016.March 31,September 30, 2017 and December 31, 2016.2016 respectively. We have letters of credit securing our workers compensation policies, a traditional provider contract, and a bond relating to foreign operations.$7.6$7.8 million issued under our $150.0 million credit facility that reduces the amount we can borrow under that facility. The letter of credit was issued to guaranty our performance under an international contract that was awarded in late 2016.March 31,September 30, 2017 and 2016 are as follows: Quarter Ended March 31, 2017 2016 (Thousands of dollars) 15,689 15,600 — — 15,689 15,600 Quarter Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 (Thousands of dollars) Weighted average outstanding shares of common stock, basic 15,799 15,683 15,750 15,655 Dilutive effect of unvested restricted stock units — — — — 15,799 15,683 15,750 15,655 (1)(1) For the three months ended March 31,September 30, 2017 58,119and 2016, 0 and 52,126 unvested restricted stock units were excluded from the weighted average outstanding shares of common stock, diluted, respectively as they were anti-dilutive to earnings per share. For the nine months ended September 30, 2017 and 2016, 0 and 22,221 unvested restricted stock units were excluded from the weighted average outstanding shares of common stock, diluted, respectively as they were anti-dilutive to earnings per share.
Quarter Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
(Thousands of dollars) | ||||||||
Stock-based compensation expense: | ||||||||
Time-based restricted stock units | $ | 553 | $ | 619 | ||||
Performance-based restricted stock units | — | 871 | ||||||
|
|
|
| |||||
Total stock-based compensation expense | $ | 553 | $ | 1,490 | ||||
|
|
|
|
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(Thousands of dollars) | ||||||||||||||||
Stock-based compensation expense: | ||||||||||||||||
Time-based restricted stock units | $ | 582 | $ | 631 | $ | 1,678 | $ | 1,847 | ||||||||
Performance-based restricted stock units | 689 | 823 | 1,396 | 2,502 | ||||||||||||
Total stock-based compensation expense | $ | 1,271 | $ | 1,454 | $ | 3,074 | $ | 4,349 |
employees, respectively.
There were
commitments.
Report for both parcels was submitted in 2003 (and updated in 2006) to the Louisiana Department of Environmental Quality (LDEQ) and the Louisiana Department of Natural Resources (LDNR). Approvals for the Assessment Report were received from the LDEQ and LDNR in 2010 and 2011, respectively. Since that time, PHI has performed groundwater sampling of the required groundwater monitor well installations at both former PHI facility parcels and submitted these sampling reports to the LDEQ. Pursuant to an agreement with the LDEQ, PHI provided groundwater sample results semi-annually to the LDEQ for both former PHI facility parcels from 2005 to 2015. LDEQ approved a reduction in the sampling program from semi-annual to annual groundwater monitoring in 2015. Based on PHI’s working relationship and agreements with the LDEQ, and the results of ongoing former facility parcel monitoring, PHI believes that ultimate remediation costs for the subject parcels will not be material to PHI’s consolidated financial position, operations or cash flows.
For the nine months ended September 30, 2017 and 2016, approximately 45% of our total operating revenues were generated by our Air Medical segment.
Revenue | ||||||||
Quarter Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Gross Air Medical segment billings | 100 | % | 100 | % | ||||
Provision for contractual discounts | 70 | % | 71 | % | ||||
Provision for uncompensated care | 4 | % | 3 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Provision for contractual discounts | 65 | % | 65 | % | 66 | % | 67 | % | ||||
Provision for uncompensated care | 6 | % | 9 | % | 7 | % | 6 | % |
Quarter Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Insurance | 70 | % | 66 | % | ||||
Medicare | 20 | % | 19 | % | ||||
Medicaid | 10 | % | 15 | % | ||||
Self-Pay | 0 | % | 0 | % |
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Insurance | 73 | % | 75 | % | 72 | % | 72 | % | ||||
Medicare | 17 | % | 17 | % | 18 | % | 18 | % | ||||
Medicaid | 9 | % | 8 | % | 9 | % | 9 | % | ||||
Self-Pay | 1 | % | — | % | 1 | % | 1 | % |
For the nine months ended September 30, 2017 and 2016, these contracts generated approximately 17% and 29% of the segment's revenues, respectively.
For the nine months ended September 30, 2017 and 2016, approximately 4%, respectively, of our total operating revenues were generated by our Technical Services segment.
Quarter Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
(Thousands of dollars) | ||||||||
Segment operating revenues | ||||||||
Oil and Gas | $ | 71,731 | $ | 88,437 | ||||
Air Medical | 55,338 | 70,060 | ||||||
Technical Services | 7,549 | 5,519 | ||||||
|
|
|
| |||||
Total operating revenues | 134,618 | 164,016 | ||||||
|
|
|
| |||||
Segment direct expenses(1) | ||||||||
Oil and Gas(2) | 81,728 | 91,916 | ||||||
Air Medical | 50,842 | 57,044 | ||||||
Technical Services | 4,946 | 3,594 | ||||||
|
|
|
| |||||
Total segment direct expenses | 137,516 | 152,554 | ||||||
Segment selling, general and administrative expenses | ||||||||
Oil and Gas | 1,720 | 1,528 | ||||||
Air Medical | 2,881 | 2,595 | ||||||
Technical Services | 338 | 224 | ||||||
|
|
|
| |||||
Total selling, general and administrative expenses | 4,939 | 4,347 | ||||||
|
|
|
| |||||
Total direct and selling, general and administrative expenses | 142,455 | 156,901 | ||||||
|
|
|
| |||||
Net segment (loss) profit | ||||||||
Oil and Gas | (11,717 | ) | (5,007 | ) | ||||
Air Medical | 1,615 | 10,421 | ||||||
Technical Services | 2,265 | 1,701 | ||||||
|
|
|
| |||||
Total net segment (loss) profit | (7,837 | ) | 7,115 | |||||
Other, net(3) | 1,064 | 256 | ||||||
Unallocated selling, general and administrative costs(1) | (8,105 | ) | (7,326 | ) | ||||
Interest expense | (8,195 | ) | (7,533 | ) | ||||
|
|
|
| |||||
Loss before income taxes | $ | (23,073 | ) | $ | (7,488 | ) | ||
|
|
|
|
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(Thousands of dollars) | ||||||||||||||||
Segment operating revenues, net | ||||||||||||||||
Oil and Gas | $ | 75,700 | $ | 77,551 | $ | 222,098 | $ | 249,173 | ||||||||
Air Medical | 70,280 | 74,482 | 192,840 | 220,089 | ||||||||||||
Technical Services | 4,187 | 6,060 | 16,271 | 19,983 | ||||||||||||
Total operating revenues, net | 150,167 | 158,093 | 431,209 | 489,245 | ||||||||||||
Segment direct expenses (1) | ||||||||||||||||
Oil and Gas (2) | 81,467 | 82,832 | 236,878 | 262,148 | ||||||||||||
Air Medical | 51,120 | 56,562 | 152,363 | 172,603 | ||||||||||||
Technical Services | 3,761 | 5,742 | 12,565 | 15,432 | ||||||||||||
Total segment direct expenses | 136,348 | 145,136 | 401,806 | 450,183 | ||||||||||||
Segment selling, general and administrative expenses | ||||||||||||||||
Oil and Gas | 1,148 | 1,705 | 4,501 | 4,838 | ||||||||||||
Air Medical | 3,136 | 3,056 | 9,280 | 8,293 | ||||||||||||
Technical Services | 338 | 266 | 1,032 | 763 | ||||||||||||
Total segment selling, general and administrative expenses | 4,622 | 5,027 | 14,813 | 13,894 | ||||||||||||
Total segment expenses | 140,970 | 150,163 | 416,619 | 464,077 | ||||||||||||
Net segment (loss) profit | ||||||||||||||||
Oil and Gas | (6,915 | ) | (6,986 | ) | (19,281 | ) | (17,813 | ) | ||||||||
Air Medical | 16,024 | 14,864 | 31,197 | 39,193 | ||||||||||||
Technical Services | 88 | 52 | 2,674 | 3,788 | ||||||||||||
Total net segment profit | 9,197 | 7,930 | 14,590 | 25,168 | ||||||||||||
Other, net (3) | 710 | 377 | 2,471 | 5,425 | ||||||||||||
Unallocated selling, general and administrative costs (1) | (6,779 | ) | (8,354 | ) | (23,878 | ) | (22,938 | ) | ||||||||
Interest expense | (8,027 | ) | (7,719 | ) | (24,305 | ) | (22,792 | ) | ||||||||
(Loss) earnings before income taxes | $ | (4,899 | ) | $ | (7,766 | ) | $ | (31,122 | ) | $ | (15,137 | ) |
(1) | Included in |
Depreciation and Amortization Expense | ||||||||
Quarter Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
(Thousands of dollars) | ||||||||
Segment Direct Expense: | ||||||||
Oil and Gas | $ | 9,862 | $ | 9,918 | ||||
Air Medical | 5,477 | 4,256 | ||||||
Technical Services | 146 | 128 | ||||||
|
|
|
| |||||
Total | $ | 15,485 | $ | 14,302 | ||||
|
|
|
| |||||
Unallocated SG&A | $ | 1,360 | $ | 2,671 | ||||
|
|
|
|
Depreciation and Amortization Expense | ||||||||||||||||
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(Thousands of dollars) | ||||||||||||||||
Segment Direct Expense: | ||||||||||||||||
Oil and Gas | $ | 9,615 | $ | 10,616 | $ | 29,301 | $ | 30,558 | ||||||||
Air Medical | 4,885 | 5,267 | 15,581 | 14,654 | ||||||||||||
Technical Services | 146 | 141 | 440 | 426 | ||||||||||||
Total | $ | 14,646 | $ | 16,024 | $ | 45,322 | $ | 45,638 | ||||||||
Unallocated SG&A | $ | 1,936 | $ | 2,269 | $ | 5,271 | $ | 7,416 |
(2) | Includes Equity in |
(3) | Consists of |
AND OTHER INVESTMENTS AND AFFILIATES
March 31, 2017 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
ASSETS | ||||||||||||||||
Current Assets: | ||||||||||||||||
Cash | $ | 51 | $ | 3,629 | $ | — | $ | 3,680 | ||||||||
Short-term investments | 276,818 | — | — | 276,818 | ||||||||||||
Accounts receivable – net | 65,044 | 61,226 | — | 126,270 | ||||||||||||
Intercompany receivable | — | 69,862 | (69,862 | ) | — | |||||||||||
Inventories of spare parts – net | 64,698 | 8,335 | — | 73,033 | ||||||||||||
Prepaid expenses | 8,144 | 2,186 | — | 10,330 | ||||||||||||
Deferred income taxes | 10,798 | — | — | 10,798 | ||||||||||||
Income taxes receivable | 341 | (18 | ) | — | 323 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current assets | 425,894 | 145,220 | (69,862 | ) | 501,252 | |||||||||||
Investment in subsidiaries | 361,420 | — | (361,420 | ) | — | |||||||||||
Property and equipment – net | 581,990 | 314,575 | — | 896,565 | ||||||||||||
Restricted cash and investments | 13,023 | 15 | — | 13,038 | ||||||||||||
Other assets | 7,819 | 1,054 | — | 8,873 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 1,390,146 | $ | 460,864 | $ | (431,282 | ) | $ | 1,419,728 | |||||||
|
|
|
|
|
|
|
| |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current Liabilities: | ||||||||||||||||
Accounts payable | $ | 18,007 | $ | 4,047 | $ | — | $ | 22,054 | ||||||||
Accrued and other current liabilities | 18,034 | 9,466 | — | 27,500 | ||||||||||||
Intercompany payable | 69,862 | — | (69,862 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current liabilities | 105,903 | 13,513 | (69,862 | ) | 49,554 | |||||||||||
Long-term debt | 633,059 | — | — | 633,059 | ||||||||||||
Deferred income taxes and other long-term liabilities | 65,070 | 85,931 | — | 151,001 | ||||||||||||
Shareholders’ Equity: | ||||||||||||||||
Common stock andpaid-in capital | 306,268 | 79,326 | (79,326 | ) | 306,268 | |||||||||||
Accumulated other comprehensive loss | (375 | ) | — | — | (375 | ) | ||||||||||
Retained earnings | 280,221 | 282,094 | (282,094 | ) | 280,221 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total shareholders’ equity | 586,114 | 361,420 | (361,062 | ) | 586,114 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities and shareholders’ equity | $ | 1,390,146 | $ | 460,864 | $ | (431,282 | ) | $ | 1,419,728 | |||||||
|
|
|
|
|
|
|
|
September 30, 2017 | ||||||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash | $ | 50 | $ | 1,071 | $ | 1,870 | $ | — | $ | 2,991 | ||||||||||
Short-term investments | 204,036 | — | — | — | 204,036 | |||||||||||||||
Accounts receivable – net | 77,061 | 71,727 | 14,721 | (10,772 | ) | 152,737 | ||||||||||||||
Intercompany receivable | — | 120,376 | — | (120,376 | ) | — | ||||||||||||||
Inventories of spare parts – net | 70,617 | 8,628 | — | — | 79,245 | |||||||||||||||
Prepaid expenses | 9,916 | 1,948 | 142 | — | 12,006 | |||||||||||||||
Deferred income taxes | 10,798 | — | — | — | 10,798 | |||||||||||||||
Income taxes receivable | 500 | 9 | — | — | 509 | |||||||||||||||
Total current assets | 372,978 | 203,759 | 16,733 | (131,148 | ) | 462,322 | ||||||||||||||
Investment in subsidiaries | 390,840 | — | — | (390,840 | ) | — | ||||||||||||||
Property and equipment – net | 621,885 | 287,841 | 601 | — | 910,327 | |||||||||||||||
Restricted cash and investments | 12,381 | — | 15 | — | 12,396 | |||||||||||||||
Other assets | 8,076 | 956 | — | — | 9,032 | |||||||||||||||
Total assets | $ | 1,406,160 | $ | 492,556 | $ | 17,349 | $ | (521,988 | ) | $ | 1,394,077 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||
Accounts payable | $ | 26,587 | $ | 3,557 | $ | 11,235 | $ | (10,772 | ) | $ | 30,607 | |||||||||
Accrued and other current liabilities | 22,198 | 9,961 | 1,544 | — | 33,703 | |||||||||||||||
Intercompany payable | 112,015 | — | 8,361 | (120,376 | ) | — | ||||||||||||||
Total current liabilities | 160,800 | 13,518 | 21,140 | (131,148 | ) | 64,310 | ||||||||||||||
Long-term debt | 598,182 | — | — | — | 598,182 | |||||||||||||||
Deferred income taxes and other long-term liabilities | 65,117 | 83,891 | 516 | — | 149,524 | |||||||||||||||
Shareholders’ Equity: | ||||||||||||||||||||
Common stock and paid-in capital | 308,634 | 77,951 | 1,375 | (79,326 | ) | 308,634 | ||||||||||||||
Accumulated other comprehensive loss | (244 | ) | — | — | — | (244 | ) | |||||||||||||
Retained earnings | 273,671 | 317,196 | (5,682 | ) | (311,514 | ) | 273,671 | |||||||||||||
Total shareholders’ equity | 582,061 | 395,147 | (4,307 | ) | (390,840 | ) | 582,061 | |||||||||||||
Total liabilities and shareholders’ equity | $ | 1,406,160 | $ | 492,556 | $ | 17,349 | $ | (521,988 | ) | $ | 1,394,077 |
December 31, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
ASSETS | ||||||||||||||||
Current Assets: | ||||||||||||||||
Cash | $ | 36 | $ | 2,560 | $ | — | $ | 2,596 | ||||||||
Short-term investments | 289,806 | — | — | 289,806 | ||||||||||||
Accounts receivable – net | 71,458 | 66,807 | — | 138,265 | ||||||||||||
Intercompany receivable | — | 57,904 | (57,904 | ) | — | |||||||||||
Inventories of spare parts – net | 61,834 | 8,568 | — | 70,402 | ||||||||||||
Prepaid expenses | 6,990 | 2,269 | — | 9,259 | ||||||||||||
Deferred income taxes | 10,798 | — | — | 10,798 | ||||||||||||
Income taxes receivable | 558 | (18 | ) | — | 540 | |||||||||||
Total current assets | 441,480 | 138,090 | (57,904 | ) | 521,666 | |||||||||||
Investment in subsidiaries and others | 353,160 | — | (353,160 | ) | — | |||||||||||
Property and equipment – net | 589,104 | 314,873 | — | 903,977 | ||||||||||||
Restricted investments | 13,023 | 15 | — | 13,038 | ||||||||||||
Other assets | 8,660 | 1,099 | — | 9,759 | ||||||||||||
Total assets | $ | 1,405,427 | $ | 454,077 | $ | (411,064 | ) | $ | 1,448,440 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current Liabilities: | ||||||||||||||||
Accounts payable | $ | 22,744 | $ | 5,960 | $ | — | $ | 28,704 | ||||||||
Accrued and other current liabilities | 18,725 | 9,621 | — | 28,346 | ||||||||||||
Intercompany payable | 57,904 | — | (57,904 | ) | — | |||||||||||
Total current liabilities | 99,373 | 15,581 | (57,904 | ) | 57,050 | |||||||||||
Long-term debt | 631,247 | — | — | 631,247 | ||||||||||||
Deferred income taxes and other long-term liabilities | 75,029 | 85,336 | — | 160,365 | ||||||||||||
Shareholders’ Equity: | ||||||||||||||||
Common stock and paid-in capital | 305,815 | 79,191 | (79,191 | ) | 305,815 | |||||||||||
Accumulated other comprehensive loss | (478 | ) | — | — | (478 | ) | ||||||||||
Retained earnings | 294,441 | 273,969 | (273,969 | ) | 294,441 | |||||||||||
Total shareholders’ equity | 599,778 | 353,160 | (353,160 | ) | 599,778 | |||||||||||
Total liabilities and shareholders’ equity | $ | 1,405,427 | $ | 454,077 | $ | (411,064 | ) | $ | 1,448,440 |
(1) | Foreign subsidiaries represent minor subsidiaries and are included in the |
STATEMENTS OF OPERATIONS
December 31, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
ASSETS | ||||||||||||||||
Current Assets: | ||||||||||||||||
Cash | $ | 36 | $ | 2,560 | $ | — | $ | 2,596 | ||||||||
Short-term investments | 289,806 | — | — | 289,806 | ||||||||||||
Accounts receivable – net | 71,458 | 66,807 | — | 138,265 | ||||||||||||
Intercompany receivable | — | 57,904 | (57,904 | ) | — | |||||||||||
Inventories of spare parts – net | 61,834 | 8,568 | — | 70,402 | ||||||||||||
Prepaid expenses | 6,990 | 2,269 | — | 9,259 | ||||||||||||
Deferred income taxes | 10,798 | — | — | 10,798 | ||||||||||||
Income taxes receivable | 558 | (18 | ) | — | 540 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current assets | 441,480 | 138,090 | (57,904 | ) | 521,666 | |||||||||||
Investment in subsidiaries and others | 353,160 | — | (353,160 | ) | — | |||||||||||
Property and equipment – net | 589,104 | 314,873 | — | 903,977 | ||||||||||||
Restricted investments | 13,023 | 15 | — | 13,038 | ||||||||||||
Other assets | 8,660 | 1,099 | — | 9,759 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 1,405,427 | $ | 454,077 | $ | (411,064 | ) | $ | 1,448,440 | |||||||
|
|
|
|
|
|
|
| |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current Liabilities: | ||||||||||||||||
Accounts payable | $ | 22,744 | $ | 5,960 | $ | — | $ | 28,704 | ||||||||
Accrued and other current liabilities | 18,725 | 9,621 | — | 28,346 | ||||||||||||
Intercompany payable | 57,904 | — | (57,904 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current liabilities | 99,373 | 15,581 | (57,904 | ) | 57,050 | |||||||||||
Long-term debt | 631,247 | — | — | 631,247 | ||||||||||||
Deferred income taxes and other long-term liabilities | 75,029 | 85,336 | — | 160,365 | ||||||||||||
Shareholders’ Equity: | ||||||||||||||||
Common stock andpaid-in capital | 305,815 | 79,191 | (79,191 | ) | 305,815 | |||||||||||
Accumulated other comprehensive loss | (478 | ) | — | — | (478 | ) | ||||||||||
Retained earnings | 294,441 | 273,969 | (273,969 | ) | 294,441 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total shareholders’ equity | 599,778 | 353,160 | (353,160 | ) | 599,778 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities and shareholders’ equity | $ | 1,405,427 | $ | 454,077 | $ | (411,064 | ) | $ | 1,448,440 | |||||||
|
|
|
|
|
|
|
|
For the Quarter Ended September 30, 2017 | ||||||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Operating revenues, net | $ | 79,644 | $ | 70,692 | $ | 7,784 | $ | (7,953 | ) | $ | 150,167 | |||||||||
Expenses: | ||||||||||||||||||||
Direct expenses | 83,727 | 51,247 | 9,765 | (7,953 | ) | 136,786 | ||||||||||||||
Selling, general and administrative expenses | 8,240 | 3,141 | 24 | (4 | ) | 11,401 | ||||||||||||||
Total operating expenses | 91,967 | 54,388 | 9,789 | (7,957 | ) | 148,187 | ||||||||||||||
(Gain) Loss on disposal of assets, net | (4 | ) | — | — | — | (4 | ) | |||||||||||||
Equity in (income) loss of unconsolidated affiliates, net | 112 | — | (550 | ) | — | (438 | ) | |||||||||||||
Operating (loss) income | (12,431 | ) | 16,304 | (1,455 | ) | 4 | 2,422 | |||||||||||||
Equity in net income of consolidated subsidiaries | (14,850 | ) | — | — | 14,850 | — | ||||||||||||||
Interest expense | 8,027 | — | — | — | 8,027 | |||||||||||||||
Other income, net | (709 | ) | (1 | ) | — | 4 | (706 | ) | ||||||||||||
(7,532 | ) | (1 | ) | — | 14,854 | 7,321 | ||||||||||||||
(Loss) earnings before income taxes | (4,899 | ) | 16,305 | (1,455 | ) | (14,850 | ) | (4,899 | ) | |||||||||||
Income tax (benefit) expense | (1,622 | ) | — | — | — | (1,622 | ) | |||||||||||||
Net (loss) earnings | $ | (3,277 | ) | $ | 16,305 | $ | (1,455 | ) | $ | (14,850 | ) | $ | (3,277 | ) |
For the Quarter Ended September 30, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Operating revenues, net | $ | 79,532 | $ | 78,561 | $ | — | $ | 158,093 | ||||||||
Expenses: | ||||||||||||||||
Direct expenses | 83,188 | 61,750 | — | 144,938 | ||||||||||||
Selling, general and administrative expenses | 10,639 | 3,092 | (350 | ) | 13,381 | |||||||||||
Total operating expenses | 93,827 | 64,842 | (350 | ) | 158,319 | |||||||||||
Loss on disposal of assets, net | 85 | — | — | 85 | ||||||||||||
Equity in loss of consolidated affiliate | 198 | — | — | 198 | ||||||||||||
Operating (loss) income | (14,578 | ) | 13,719 | 350 | (509 | ) | ||||||||||
Equity in net income of consolidated subsidiaries | (8,372 | ) | — | 8,372 | — | |||||||||||
Interest expense | 7,716 | 3 | — | 7,719 | ||||||||||||
Other income, net | (812 | ) | — | 350 | (462 | ) | ||||||||||
(1,468 | ) | 3 | 8,722 | 7,257 | ||||||||||||
(Loss) earnings before income taxes | (13,110 | ) | 13,716 | (8,372 | ) | (7,766 | ) | |||||||||
Income tax (benefit) expense | (8,143 | ) | 5,344 | — | (2,799 | ) | ||||||||||
Net (loss) earnings | $ | (4,967 | ) | $ | 8,372 | $ | (8,372 | ) | $ | (4,967 | ) |
(1) | Foreign subsidiaries represent minor subsidiaries and are included in the |
PHI, INC. AND SUBSIDIARIES
For the quarter ended March 31, 2017 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Operating revenues, net | $ | 74,284 | $ | 60,334 | $ | — | $ | 134,618 | ||||||||
Expenses: | ||||||||||||||||
Direct expenses | 82,344 | 54,169 | — | 136,513 | ||||||||||||
Selling, general and administrative expenses | 10,108 | 2,940 | (4 | ) | 13,044 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | 92,452 | 57,109 | (4 | ) | 149,557 | |||||||||||
Equity in loss of unconsolidated affiliate | 1,003 | — | — | 1,003 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating (loss) income | (19,171 | ) | 3,225 | 4 | (15,942 | ) | ||||||||||
Equity in net income of consolidated subsidiaries | (2,631 | ) | — | 2,631 | — | |||||||||||
Interest expense | 8,174 | 21 | — | 8,195 | ||||||||||||
Other income, net | (1,067 | ) | (1 | ) | 4 | (1,064 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
4,476 | 20 | 2,635 | 7,131 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
(Loss) earnings before income taxes | (23,647 | ) | 3,205 | (2,631 | ) | (23,073 | ) | |||||||||
Income tax (benefit) expense | (8,399 | ) | 574 | — | (7,825 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net (loss) earnings | $ | (15,248 | ) | $ | 2,631 | $ | (2,631 | ) | $ | (15,248 | ) | |||||
|
|
|
|
|
|
|
| |||||||||
For the quarter ended March 31, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Operating revenues, net | $ | 91,869 | $ | 72,147 | $ | — | $ | 164,016 | ||||||||
Expenses: | ||||||||||||||||
Direct expenses | 92,037 | 60,517 | — | 152,554 | ||||||||||||
Selling, general and administrative expenses | 9,044 | 2,802 | (173 | ) | 11,673 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | 101,081 | 63,319 | (173 | ) | 164,227 | |||||||||||
Loss on disposal of assets, net | 359 | — | — | 359 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating (loss) income | (9,571 | ) | 8,828 | 173 | (570 | ) | ||||||||||
Equity in net income of consolidated subsidiaries | (5,054 | ) | — | 5,054 | — | |||||||||||
Interest expense | 7,513 | 20 | — | 7,533 | ||||||||||||
Other income, net | (786 | ) | (2 | ) | 173 | (615 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
1,673 | 18 | 5,227 | 6,918 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
(Loss) earnings before income taxes | (11,244 | ) | 8,810 | (5,054 | ) | (7,488 | ) | |||||||||
Income tax (benefit) expense | (2,312 | ) | 3,756 | — | 1,444 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net (loss) earnings | $ | (8,932 | ) | $ | 5,054 | $ | (5,054 | ) | $ | (8,932 | ) | |||||
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Operating revenues, net | $ | 228,973 | $ | 197,022 | $ | 15,987 | $ | (10,773 | ) | $ | 431,209 | |||||||||
Expenses: | ||||||||||||||||||||
Direct expenses | 238,669 | 155,434 | 16,920 | (10,773 | ) | 400,250 | ||||||||||||||
Selling, general and administrative expenses | 29,265 | 9,296 | 144 | (14 | ) | 38,691 | ||||||||||||||
Total operating expenses | 267,934 | 164,730 | 17,064 | (10,787 | ) | 438,941 | ||||||||||||||
Loss (gain) on disposal of assets, net | 4 | (1 | ) | — | — | 3 | ||||||||||||||
Equity in loss (income) of unconsolidated affiliates, net | 1,040 | — | 516 | — | 1,556 | |||||||||||||||
Operating (loss) income | (40,005 | ) | 32,293 | (1,593 | ) | 14 | (9,291 | ) | ||||||||||||
Equity in net income of consolidated subsidiaries | (32,093 | ) | — | — | 32,093 | — | ||||||||||||||
Interest expense | 24,283 | 22 | — | — | 24,305 | |||||||||||||||
Other income, net | (2,486 | ) | (2 | ) | — | 14 | (2,474 | ) | ||||||||||||
(10,296 | ) | 20 | — | 32,107 | 21,831 | |||||||||||||||
(Loss) earnings before income taxes | (29,709 | ) | 32,273 | (1,593 | ) | (32,093 | ) | (31,122 | ) | |||||||||||
Income tax (benefit) expense | (7,911 | ) | (1,413 | ) | — | — | (9,324 | ) | ||||||||||||
Net (loss) earnings | $ | (21,798 | ) | $ | 33,686 | $ | (1,593 | ) | $ | (32,093 | ) | $ | (21,798 | ) |
For the Nine Months Ended September 30, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Operating revenues, net | $ | 260,766 | $ | 228,479 | $ | — | $ | 489,245 | ||||||||
Expenses: | ||||||||||||||||
Direct expenses | 264,761 | 185,148 | — | 449,909 | ||||||||||||
Selling, general and administrative expenses | 28,914 | 8,766 | (848 | ) | 36,832 | |||||||||||
Total operating expenses | 293,675 | 193,914 | (848 | ) | 486,741 | |||||||||||
Gain on disposal of assets, net | (3,854 | ) | — | — | (3,854 | ) | ||||||||||
Equity in loss of unconsolidated affiliate | 274 | — | — | 274 | ||||||||||||
Operating (loss) income | (29,329 | ) | 34,565 | 848 | 6,084 | |||||||||||
Equity in net income of consolidated subsidiaries | (20,462 | ) | — | 20,462 | — | |||||||||||
Interest expense | 22,762 | 30 | — | 22,792 | ||||||||||||
Other income, net | (2,415 | ) | (4 | ) | 848 | (1,571 | ) | |||||||||
(115 | ) | 26 | 21,310 | 21,221 | ||||||||||||
(Loss) earnings before income taxes | (29,214 | ) | 34,539 | (20,462 | ) | (15,137 | ) | |||||||||
Income tax (benefit) expense | (19,592 | ) | 14,077 | — | (5,515 | ) | ||||||||||
Net (loss) earnings | $ | (9,622 | ) | $ | 20,462 | $ | (20,462 | ) | $ | (9,622 | ) |
(1) | Foreign subsidiaries represent minor subsidiaries and are included in the |
For the quarter ended March 31, 2017 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Net (loss) earnings | $ | (15,248 | ) | $ | 2,631 | $ | (2,631 | ) | $ | (15,248 | ) | |||||
Unrealized gain on short-term investments | 162 | — | — | 162 | ||||||||||||
Changes in pension plan asset and benefit obligation | (1 | ) | — | — | (1 | ) | ||||||||||
Tax effect of preceding gains, losses or changes | (58 | ) | — | — | (58 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Comprehensive (loss) income | $ | (15,145 | ) | $ | 2,631 | $ | (2,631 | ) | $ | (15,145 | ) | |||||
|
|
|
|
|
|
|
| |||||||||
For the quarter ended March 31, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Net (loss) earnings | $ | (8,932 | ) | $ | 5,054 | $ | (5,054 | ) | $ | (8,932 | ) | |||||
Unrealized gain on short-term investments | 807 | — | — | 807 | ||||||||||||
Changes in pension plan asset and benefit obligations | 1 | — | — | 1 | ||||||||||||
Tax effect of preceding gains, losses or changes | (332 | ) | — | — | (332 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Comprehensive (loss) income | $ | (8,456 | ) | $ | 5,054 | $ | (5,054 | ) | $ | (8,456 | ) | |||||
|
|
|
|
|
|
|
|
For the Quarter Ended September 30, 2017 | ||||||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net (loss) earnings | $ | (3,277 | ) | $ | 16,305 | $ | (1,455 | ) | $ | (14,850 | ) | $ | (3,277 | ) | ||||||
Unrealized gain on short-term investments | 41 | — | — | — | 41 | |||||||||||||||
Changes in pension plan asset and benefit obligation | (24 | ) | — | — | — | (24 | ) | |||||||||||||
Tax effect of the above-listed adjustments | (8 | ) | — | — | — | (8 | ) | |||||||||||||
Total comprehensive (loss) income | $ | (3,268 | ) | $ | 16,305 | $ | (1,455 | ) | $ | (14,850 | ) | $ | (3,268 | ) |
COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the three months ended March 31, 2017 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Net cash (used in) provided by operating activities | $ | (19,332 | ) | $ | 11,079 | $ | — | $ | (8,253 | ) | ||||||
Investing activities: | ||||||||||||||||
Purchase of property and equipment | (4,738 | ) | (51 | ) | — | (4,789 | ) | |||||||||
Purchase of short-term investments | (54,867 | ) | — | — | (54,867 | ) | ||||||||||
Proceeds from sale of short-term investments | 67,659 | — | — | 67,659 | ||||||||||||
Payments of deposits on aircraft | (66 | ) | — | — | (66 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash provided by (used in) investing activities | 7,988 | (51 | ) | — | 7,937 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Financing activities: | ||||||||||||||||
Proceeds from line of credit | 37,300 | — | — | 37,300 | ||||||||||||
Payments on line of credit | (35,800 | ) | — | — | (35,800 | ) | ||||||||||
Repurchase of common stock | (100 | ) | (100 | ) | ||||||||||||
Due to/from affiliate, net | 9,959 | (9,959 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash provided by (used in) financing activities | 11,359 | (9,959 | ) | — | 1,400 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Increase in cash | 15 | 1,069 | — | 1,084 | ||||||||||||
Cash, beginning of period | 36 | 2,560 | — | 2,596 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash, end of period | $ | 51 | $ | 3,629 | $ | — | $ | 3,680 | ||||||||
|
|
|
|
|
|
|
| |||||||||
For the three months ended March 31, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Net cash used in operating activities | $ | (13,795 | ) | $ | (2,548 | ) | $ | — | $ | (16,343 | ) | |||||
Investing activities: | ||||||||||||||||
Purchase of property and equipment | (8,519 | ) | — | — | (8,519 | ) | ||||||||||
Proceeds from asset dispositions | 850 | — | — | 850 | ||||||||||||
Purchase of short-term investments | (77,677 | ) | — | — | (77,677 | ) | ||||||||||
Proceeds from sale of short-term investments | 76,184 | — | — | 76,184 | ||||||||||||
Payments of deposits on aircraft | (66 | ) | — | — | (66 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash used in investing activities | (9,228 | ) | — | — | (9,228 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Financing activities: | ||||||||||||||||
Proceeds from line of credit | 83,500 | — | — | 83,500 | ||||||||||||
Payments on line of credit | (53,300 | ) | — | — | (53,300 | ) | ||||||||||
Repurchase of common stock | (500 | ) | — | — | (500 | ) | ||||||||||
Due to/from affiliate, net | (6,600 | ) | 6,600 | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash provided by financing activities | 23,100 | 6,600 | — | 29,700 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Increase in cash | 77 | 4,052 | — | 4,129 | ||||||||||||
Cash, beginning of period | 46 | 2,361 | — | 2,407 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash, end of period | $ | 123 | $ | 6,413 | $ | — | $ | 6,536 | ||||||||
|
|
|
|
|
|
|
|
For the Quarter Ended September 30, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Net (loss) earnings | $ | (4,967 | ) | $ | 8,372 | $ | (8,372 | ) | $ | (4,967 | ) | |||||
Unrealized gain on short-term investments | (494 | ) | — | — | (494 | ) | ||||||||||
Changes in pension plan asset and benefit obligations | 1 | — | — | 1 | ||||||||||||
Tax effect of the above-listed adjustments | 178 | — | — | 178 | ||||||||||||
Total comprehensive (loss) income | $ | (5,282 | ) | $ | 8,372 | $ | (8,372 | ) | $ | (5,282 | ) |
(1) | Foreign subsidiaries represent minor subsidiaries and are included in the |
For the Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net (loss) earnings | $ | (21,798 | ) | $ | 33,686 | $ | (1,593 | ) | $ | (32,093 | ) | $ | (21,798 | ) | ||||||
Unrealized gain on short-term investments | 370 | — | — | — | 370 | |||||||||||||||
Changes in pension plan asset and benefit obligation | (2 | ) | — | — | — | (2 | ) | |||||||||||||
Tax effect of the above-listed adjustments | (134 | ) | — | — | — | (134 | ) | |||||||||||||
Total comprehensive (loss) income | $ | (21,564 | ) | $ | 33,686 | $ | (1,593 | ) | $ | (32,093 | ) | $ | (21,564 | ) |
For the Quarter Ended September 30, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Net (loss) earnings | $ | (9,622 | ) | $ | 20,462 | $ | (20,462 | ) | $ | (9,622 | ) | |||||
Unrealized gain on short-term investments | 523 | — | — | 523 | ||||||||||||
Changes in pension plan asset and benefit obligations | 3 | — | — | 3 | ||||||||||||
Tax effect of the above-listed adjustments | (229 | ) | — | — | (229 | ) | ||||||||||
Total comprehensive (loss) income | $ | (9,325 | ) | $ | 20,462 | $ | (20,462 | ) | $ | (9,325 | ) |
(1) | Foreign subsidiaries represent minor subsidiaries and are included in the guarantors’ subsidiaries amounts. |
For the Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net cash (used in) provided by operating activities | $ | (43,328 | ) | $ | 33,670 | $ | 7,790 | $ | — | $ | (1,868 | ) | ||||||||
Investing activities: | ||||||||||||||||||||
Purchase of property and equipment | (49,227 | ) | — | — | — | (49,227 | ) | |||||||||||||
Proceeds from asset dispositions | 21 | — | — | — | 21 | |||||||||||||||
Purchase of short-term investments | (268,525 | ) | — | — | — | (268,525 | ) | |||||||||||||
Proceeds from sale of short-term investments | 354,250 | — | — | — | 354,250 | |||||||||||||||
Net cash provided by (used in) investing activities | 36,519 | — | — | — | 36,519 | |||||||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from line of credit | 99,150 | — | — | — | 99,150 | |||||||||||||||
Payments on line of credit | (133,150 | ) | — | — | — | (133,150 | ) | |||||||||||||
Repurchase of common stock | (256 | ) | — | — | — | (256 | ) | |||||||||||||
Due to/from affiliate, net | 41,079 | (34,699 | ) | (6,380 | ) | — | — | |||||||||||||
Net cash provided by (used in) financing activities | 6,823 | (34,699 | ) | (6,380 | ) | — | (34,256 | ) | ||||||||||||
Increase (decrease) in cash | 14 | (1,029 | ) | 1,410 | — | 395 | ||||||||||||||
Cash, beginning of period | 36 | 2,100 | 460 | — | 2,596 | |||||||||||||||
Cash, end of period | $ | 50 | $ | 1,071 | $ | 1,870 | $ | — | $ | 2,991 |
For the Nine Months Ended September 30, 2016 | ||||||||||||||||
Parent Company Only (issuer) | Guarantor Subsidiaries (1) | Eliminations | Consolidated | |||||||||||||
Net cash (used in) provided by operating activities | $ | (32,467 | ) | $ | 25,319 | $ | — | $ | (7,148 | ) | ||||||
Investing activities: | ||||||||||||||||
Purchase of property and equipment | (74,647 | ) | (303 | ) | — | (74,950 | ) | |||||||||
Proceeds from asset dispositions | 13,233 | — | — | 13,233 | ||||||||||||
Purchase of short-term investments | (263,204 | ) | — | — | (263,204 | ) | ||||||||||
Proceeds from sale of short-term investments | 259,322 | — | — | 259,322 | ||||||||||||
Payments of deposits on aircraft | (197 | ) | — | — | (197 | ) | ||||||||||
Loan to unconsolidated affiliate | (1,200 | ) | — | — | (1,200 | ) | ||||||||||
Net cash used in investing activities | (66,693 | ) | (303 | ) | — | (66,996 | ) | |||||||||
Financing activities: | ||||||||||||||||
Proceeds from line of credit | 213,900 | — | — | 213,900 | ||||||||||||
Payments on line of credit | (139,000 | ) | — | — | (139,000 | ) | ||||||||||
Repurchase of common stock | (524 | ) | — | — | (524 | ) | ||||||||||
Due to/from affiliate, net | 24,774 | (24,774 | ) | — | — | |||||||||||
Net cash provided by (used in) financing activities | 99,150 | (24,774 | ) | — | 74,376 | |||||||||||
(Decrease) increase in cash | (10 | ) | 242 | — | 232 | |||||||||||
Cash, beginning of period | 46 | 2,361 | — | 2,407 | ||||||||||||
Cash, end of period | $ | 36 | $ | 2,603 | $ | — | $ | 2,639 |
(1) | Foreign subsidiaries represent minor subsidiaries and are included in the guarantors’ subsidiaries amounts. |
prices. Although we can neither control nor predict with any reasonable degree of certainty the length or impact of current weak market conditions, we currently expect further reductions in the operating revenues and net profit of our Oil and Gas segment in 2017.future. These reductions could be quite substantial. For information on the impact of the market downturn on our liquidity, see “- Liquidity and Capital Resources –- Cash Flow –- Liquidity” below.
Quarter Ended | Favorable | |||||||||||
March 31, | (Unfavorable) | |||||||||||
2017 | 2016 | |||||||||||
(Thousands of dollars, except flight hours, patient transports, and aircraft) | ||||||||||||
Segment operating revenues | ||||||||||||
Oil and Gas | $ | 71,731 | $ | 88,437 | $ | (16,706 | ) | |||||
Air Medical | 55,338 | 70,060 | (14,722 | ) | ||||||||
Technical Services | 7,549 | 5,519 | 2,030 | |||||||||
|
|
|
|
|
| |||||||
Total operating revenues | 134,618 | 164,016 | (29,398 | ) | ||||||||
Segment direct expenses | ||||||||||||
Oil and Gas(1) | 81,728 | 91,916 | 10,188 | |||||||||
Air Medical | 50,842 | 57,044 | 6,202 | |||||||||
Technical Services | 4,946 | 3,594 | (1,352 | ) | ||||||||
|
|
|
|
|
| |||||||
Total segment direct expenses | 137,516 | 152,554 | 15,038 | |||||||||
Segment selling, general and administrative expenses | ||||||||||||
Oil and Gas | 1,720 | 1,528 | (192 | ) | ||||||||
Air Medical | 2,881 | 2,595 | (286 | ) | ||||||||
Technical Services | 338 | 224 | (114 | ) | ||||||||
|
|
|
|
|
| |||||||
Total segment selling, general and administrative expenses | 4,939 | 4,347 | (592 | ) | ||||||||
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Total segment expenses | 142,455 | 156,901 | 14,446 | |||||||||
Net segment (loss) profit | ||||||||||||
Oil and Gas | (11,717 | ) | (5,007 | ) | (6,710 | ) | ||||||
Air Medical | 1,615 | 10,421 | (8,806 | ) | ||||||||
Technical Services | 2,265 | 1,701 | 564 | |||||||||
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Total net segment (loss) profit(2) | (7,837 | ) | 7,115 | (14,952 | ) | |||||||
Other, net(3) | 1,064 | 256 | 808 | |||||||||
Unallocated selling, general and administrative costs | (8,105 | ) | (7,326 | ) | (779 | ) | ||||||
Interest expense | (8,195 | ) | (7,533 | ) | (662 | ) | ||||||
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Loss before income taxes | (23,073 | ) | (7,488 | ) | (15,585 | ) | ||||||
Income tax (benefit) expense | (7,825 | ) | 1,444 | 9,269 | ||||||||
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Net loss | $ | (15,248 | ) | $ | (8,932 | ) | $ | (6,316 | ) | |||
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Flight hours: | ||||||||||||
Oil and Gas | 17,474 | 20,737 | (3,263 | ) | ||||||||
Air Medical(4) | 8,392 | 8,688 | (296 | ) | ||||||||
Technical Services | 511 | 523 | (12 | ) | ||||||||
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Total | 26,377 | 29,948 | (3,571 | ) | ||||||||
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Air Medical Transports(5) | 4,297 | 4,503 | (206 | ) | ||||||||
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Aircraft operated at period end: (6) | ||||||||||||
Oil and Gas | 131 | 154 | ||||||||||
Air Medical(7) | 104 | 105 | ||||||||||
Technical Services | 6 | 6 | ||||||||||
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Total | 241 | 265 | ||||||||||
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Quarter Ended September 30, | Favorable (Unfavorable) | |||||||||||
2017 | 2016 | |||||||||||
(Thousands of dollars, except flight hours, patient transports, and aircraft) | ||||||||||||
Segment operating revenues, net | ||||||||||||
Oil and Gas | $ | 75,700 | $ | 77,551 | $ | (1,851 | ) | |||||
Air Medical | 70,280 | 74,482 | (4,202 | ) | ||||||||
Technical Services | 4,187 | 6,060 | (1,873 | ) | ||||||||
Total operating revenues, net | 150,167 | 158,093 | (7,926 | ) | ||||||||
Segment direct expenses (1) | ||||||||||||
Oil and Gas (2) | 81,467 | 82,832 | 1,365 | |||||||||
Air Medical | 51,120 | 56,562 | 5,442 | |||||||||
Technical Services | 3,761 | 5,742 | 1,981 | |||||||||
Total segment direct expenses | 136,348 | 145,136 | 8,788 | |||||||||
Segment selling, general and administrative expenses | ||||||||||||
Oil and Gas | 1,148 | 1,705 | 557 | |||||||||
Air Medical | 3,136 | 3,056 | (80 | ) | ||||||||
Technical Services | 338 | 266 | (72 | ) | ||||||||
Total segment selling, general and administrative expenses | 4,622 | 5,027 | 405 | |||||||||
Total segment expenses | 140,970 | 150,163 | 9,193 | |||||||||
Net segment (loss) profit | ||||||||||||
Oil and Gas | (6,915 | ) | (6,986 | ) | 71 | |||||||
Air Medical | 16,024 | 14,864 | 1,160 | |||||||||
Technical Services | 88 | 52 | 36 | |||||||||
Total net segment profit (2) | 9,197 | 7,930 | 1,267 | |||||||||
Other, net (3) | 710 | 377 | 333 | |||||||||
Unallocated selling, general and administrative costs (4) | (6,779 | ) | (8,354 | ) | 1,575 | |||||||
Interest expense | (8,027 | ) | (7,719 | ) | (308 | ) | ||||||
(Loss) earnings before income taxes | (4,899 | ) | (7,766 | ) | 2,867 | |||||||
Income tax benefit | (1,622 | ) | (2,799 | ) | (1,177 | ) | ||||||
Net loss | $ | (3,277 | ) | $ | (4,967 | ) | $ | 1,690 | ||||
Flight hours: | ||||||||||||
Oil and Gas | 21,178 | 19,583 | 1,595 | |||||||||
Air Medical (5) | 9,743 | 9,681 | 62 | |||||||||
Technical Services | — | 14 | (14 | ) | ||||||||
Total | 30,921 | 29,278 | 1,643 | |||||||||
Air Medical Transports (6) | 5,162 | 5,156 | 6 |
(1) | Includes Equity in |
(2) |
Quarter Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Total net segment (loss) profit | $ | (7,837 | ) | $ | 7,115 | |||
Other, net | 1,064 | 256 | ||||||
Unallocated selling, general and administrative costs | (8,105 | ) | (7,326 | ) | ||||
Interest expense | (8,195 | ) | (7,533 | ) | ||||
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| |||||
Loss before income taxes | $ | (23,073 | ) | $ | (7,488 | ) | ||
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|
|
Quarter Ended September 30, | ||||||||
2017 | 2016 | |||||||
Total net segment profit | $ | 9,197 | $ | 7,930 | ||||
Other, net | 710 | 377 | ||||||
Unallocated selling, general and administrative costs | (6,779 | ) | (8,354 | ) | ||||
Interest expense | (8,027 | ) | (7,719 | ) | ||||
(Loss) before income taxes | $ | (4,899 | ) | $ | (7,766 | ) |
(3) | Consists of |
(4) | Represents corporate overhead expenses not allocable to segments. |
(5) | Flight hours include |
(6) | Represents individual patient transports for the period. |
Nine Months Ended September 30, | Favorable (Unfavorable) | |||||||||||
2017 | 2016 | |||||||||||
(Thousands of dollars, except flight hours, patient transports, and aircraft) | ||||||||||||
Segment operating revenues, net | ||||||||||||
Oil and Gas | $ | 222,098 | $ | 249,173 | $ | (27,075 | ) | |||||
Air Medical | 192,840 | 220,089 | (27,249 | ) | ||||||||
Technical Services | 16,271 | 19,983 | (3,712 | ) | ||||||||
Total operating revenues, net | 431,209 | 489,245 | (58,036 | ) | ||||||||
Segment direct expenses (1) | ||||||||||||
Oil and Gas (2) | 236,878 | 262,148 | 25,270 | |||||||||
Air Medical | 152,363 | 172,603 | 20,240 | |||||||||
Technical Services | 12,565 | 15,432 | 2,867 | |||||||||
Total segment direct expenses | 401,806 | 450,183 | 48,377 | |||||||||
Segment selling, general and administrative expenses | ||||||||||||
Oil and Gas | 4,501 | 4,838 | 337 | |||||||||
Air Medical | 9,280 | 8,293 | (987 | ) | ||||||||
Technical Services | 1,032 | 763 | (269 | ) | ||||||||
Total segment selling, general and administrative expenses | 14,813 | 13,894 | (919 | ) | ||||||||
Total segment expenses | 416,619 | 464,077 | 47,458 | |||||||||
Net segment (loss) profit | ||||||||||||
Oil and Gas | (19,281 | ) | (17,813 | ) | (1,468 | ) | ||||||
Air Medical | 31,197 | 39,193 | (7,996 | ) | ||||||||
Technical Services | 2,674 | 3,788 | (1,114 | ) | ||||||||
Total net segment profit | 14,590 | 25,168 | (10,578 | ) | ||||||||
Other, net (3) | 2,471 | 5,425 | (2,954 | ) | ||||||||
Unallocated selling, general and administrative costs (4) | (23,878 | ) | (22,938 | ) | (940 | ) | ||||||
Interest expense | (24,305 | ) | (22,792 | ) | (1,513 | ) | ||||||
(Loss) earnings before income taxes | (31,122 | ) | (15,137 | ) | (15,985 | ) | ||||||
Income tax benefit | (9,324 | ) | (5,515 | ) | 3,809 | |||||||
Net loss | $ | (21,798 | ) | $ | (9,622 | ) | $ | (12,176 | ) | |||
Flight hours: | ||||||||||||
Oil and Gas | 58,335 | 61,043 | (2,708 | ) | ||||||||
Air Medical (5) | 27,787 | 27,889 | (102 | ) | ||||||||
Technical Services | 511 | 546 | (35 | ) | ||||||||
Total | 86,633 | 89,478 | (2,845 | ) | ||||||||
Air Medical Transports (6) | 14,580 | 14,482 | 98 | |||||||||
Aircraft operated at period end: (7) | ||||||||||||
Oil and Gas | 126 | 139 | ||||||||||
Air Medical (8) | 105 | 104 | ||||||||||
Technical Services | 6 | 6 | ||||||||||
Total | 237 | 249 |
(1) | Includes Equity in loss of unconsolidated affiliates, net. |
(2) | These financial measures have not been prepared in accordance with generally accepted accounting principles (“GAAP”) and have not been audited or reviewed by our independent registered public accounting firm. These financial measures are therefore considered non-GAAP financial measures. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding our results of operations. A description of the adjustments to and reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures is as follows: |
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Total net segment profit | $ | 14,590 | $ | 25,168 | ||||
Other, net | 2,471 | 5,425 | ||||||
Unallocated selling, general and administrative costs | (23,878 | ) | (22,938 | ) | ||||
Interest expense | (24,305 | ) | (22,792 | ) | ||||
Loss before income taxes | $ | (31,122 | ) | $ | (15,137 | ) |
(3) | Consists of net (gains) losses on disposition of property and equipment, and other income. |
(4) | Represents corporate overhead expenses not allocable to segments. |
(5) | Flight hours include 6,877 flight hours associated with traditional provider contracts during the nine months ended September 30, 2017, compared to 7,279 flight hours during the |
(6) | Represents individual patient transports for the period. |
(7) | Represents the total number of aircraft available for use, not all of which were deployed in service as of the |
(8) | Includes |
net. expense. Other items decreased $0.1 million, net. less than $0.1 million. September 30, 2017. Our Australia affiliate commenced operations in April, 2017. See Note 11. Partially offsetting the decrease in revenue from our heavy and medium model types were increased revenues and flight hours from our light model types due to increased activity in the shallow waters of the Gulf of Mexico. decreased $0.2 million, net. revenues and profits from our traditional provider programs. and September 30, 2016, respectively. this effect. fourth quarter. 2016, respectively. Aircraft purchase obligations Aircraft lease obligations Other lease obligations Long-term debt(2) Senior notes interest(2) March 31,September 30, 2017 compared with Quarter Ended March 31,September 30, 2016March 31,September 30, 2017 were $134.6$150.2 million, compared to $164.0$158.1 million for the three months ended March 31,September 30, 2016, a decrease of $29.4$7.9 million. Oil and Gas segment operating revenues decreased $16.7$1.9 million for the three months ended March 31,September 30, 2017, related primarily to decreased aircraft flight revenues for all model types resultingmedium and heavy aircraft models. These decreases resulted predominately from fewer aircraft on contract, decreased flight hours for our medium aircraft models and decreased flight hours.rates for our heavy aircraft models. Air Medical segment operating revenues decreased $14.7$4.2 million due principally to decreased traditional provider program revenues resulting from the termination of our overseas operations in late 2016, and decreasedoffset by an increase in revenue from our independent provider program revenues.operations related to improve cash collections and lower allowances for doubtful accounts. Technical Services segment operating revenues increased $2.0decreased $1.9 million due primarily to an increasea decrease in technical services provided to a third party customer.March 31,September 30, 2017 were 26,37730,921 compared to 29,94829,278 for the three months ended March 31,September 30, 2016. Oil and Gas segment flight hours decreased 3,263increased 1,595 hours, due to decreasesan increase in flight hours for all model types.light and heavy aircraft models, partially offset by a decrease in flight hours for our medium aircraft model. Air Medical segment flight hours decreased 296increased 62 hours fromfor the three months ended March 31,September 30, 2017, due to decreasedincreased flight hours in our traditionalindependent provider and independent provideroperations, partially offset by the decrease in flight hours due to the termination of our overseas operations. As discussed further below, individual patient transports in the Air Medical segment were 4,2975,162 for the three months ended March 31,September 30, 2017, compared to transports of 4,5035,156 for the three months ended March 31,September 30, 2016. – -Direct operating expense was $136.5$136.3 million for the three months ended March 31,September 30, 2017, compared to $152.6$145.1 million for the three months ended March 31,September 30, 2016, a decrease of $16.1$8.8 million, or 11%6.0%. Employee compensation expense decreased $9.0$5.8 million primarily due to a reduction in employees in our Oil and Gas segment resulting from implementation of voluntary early retirement programs (“VERPs”) in the second half of 2015 and the first quarter of 2016, and a reduction in the number of employees in our Air Medical segment’s Middle East operations. Employee compensation expense represented approximately 46%44% and 48%46% of total direct expense for the quarters ended March 31,September 30, 2017 and 2016, respectively. We also experienced decreasesan increase in aircraft warranty costs of $1.2$2.5 million and aircraft insurance of $0.3 million (which expenses represent 7%, and 1% of total direct expense, respectively) as a result of increased flight hours for our heavy aircraft in our international operations. Costs of goods sold decreased $4.9 million due to the termination of our above-referenced Middle East operations and due to a reduction in flight hours.services for a third party technical services customer. Aircraft lease expense decreased $1.0 million, spare parts expense decreased $1.7$1.4 million and aircraft maintenance decreased $1.5 million, and component repair expense decreased $1.4increased $1.6 million. Other decreases included aircraft rent expense of $1.2items increased $0.2 million, and cost of goods sold of $2.1 million. Training costs increased $1.0 million. Other direct costs increased $0.7 million on a net basis. – -Selling, general and administrative expenses were $13.0$11.4 million for the three months ended March 31,September 30, 2017, compared to $11.7$13.4 million for the three months ended March 31,September 30, 2016. The $1.3$2.0 million increasedecrease was primarilyprincipally attributable to severance costsa $1.5 million of savings related to a reduction2016 charges for aircraft lease returns that did not recur in force at our Lafayette headquarters facility in March, 2017 and $0.6 million of legal and consulting fees related2017. The $2.0 is further attributable to a special project. Partially offsetting this increase are decreases$0.2 million decrease in bad debt reserves and a $0.2 million decrease in equity-based compensation of $0.8 million.net – There were no gains or lossesNet -The gain on asset dispositions for the three months ended March 31, 2017.September 30, 2017 was less than $0.1 million. For the three months ended March 31,September 30, 2016, we recorded a loss of $0.4 million resulting from the sale of one light aircraft. See Note 8.Affiliate – Affiliates -Equity in the loss of our unconsolidated affiliate attributable to ourmid-2011 investment in a Ghanaian entity was $1.0$0.1 million and $0.2 million for the three months ended March 31,September 30, 2017 compared to $0and 2016, respectively. We also had equity in the income of our unconsolidated Australian affiliate of $0.5 million for the three months ended March 31, 2016, resulting from increased expenses. – -Interest expense was $8.2$8.0 million for the three months ended March 31,September 30, 2017 and $7.5$7.7 million for the three months ended March 31, 2016,September 30, 2016. The $0.3 million increase is principally due to higher average outstanding debt balances.net – Net -Other income was $1.1$0.7 million for the three months ended March 31,September 30, 2017 compared to $0.6$0.5 million for the same period in 2016, and represents primarily interest income. The $0.4 million increase is primarily attributable to an increase in the amount and rate of return of our short-term investments. – - Income tax benefit for the three months ended March 31,September 30, 2017 was $7.8$1.6 million compared to income tax expensebenefit of $1.4$2.8 million for the three months ended March 31,September 30, 2016. Our $7.8$1.6 million income tax benefit for the three monthsquarter ended March 31,September 30, 2017 is attributable to our net loss from operations of $23.1$4.9 million. The $1.4 million income tax expense recorded in the three months ended March 31, 2016 is attributable to the negative impact of a valuation allowance on certain state tax benefits related to net operation loss carryforwards of $4.1 million, which was partially offset by a $2.7 million tax benefit on our loss before income taxes. Our effective tax rate was 34.0%33% and 36.2%36% for the quarter ended September 30, 2017 and September 30, 2016, respectively.March 31, 2017 and March 31, 2016, respectively.Net Loss– Net loss for the three months ended March 31,September 30, 2017 was $15.2$3.3 million compared to net loss of $8.9$5.0 million for the three months ended March 31,September 30, 2016. Loss before income taxes for the three months ended March 31,September 30, 2017 was $23.1$4.9 million compared to loss before income taxes of $7.5$7.8 million for the same period in 2016. LossesLoss per diluted share were $0.97was $0.21 for the current quarter compared to lossesloss per diluted share of $0.57$0.32 for the prior year quarter. The increasedecrease in loss before taxes for the quarter ended March 31,September 30, 2017 is attributable to a reduction in expenses in comparison to the decreased profits in the Oil and Gas and Air Medical segments, eachthird quarter of which are discussed further below.2016, mentioned above. We had 15.715.8 million, and 15.615.7 million weighted average diluted common shares outstanding duringfor the quarter ended March 31,September 30, 2017 and 2016, respectively. – -Oil and Gas segment revenues were $71.7$75.7 million for the three months ended March 31,September 30, 2017, compared to $88.4$77.6 million for the three months ended March 31,September 30, 2016, a decrease of $16.7$1.9 million. Our Oil and Gas segment revenues are primarily driven by the amount of contracted aircraft flight hours and flight hours.prevailing rates. Costs are primarily fixed based on the number of aircraft operated, with a variable portion that is driven by flight hours.17,47421,178 for the most recent quarter compared to 20,73719,583 for the same quarter in the prior year, a decreasean increase of 3,2631,595 flight hours. The decline in revenues and flight hours is attributable to fewer aircraft on contract, and lower utilization rates for all model typesmedium aircraft models and a decrease in the number of heavy aircraft on contract, in each case due to reduced oil and gas exploration and production activities in response to lower prevailing commodity prices.131127 at March 31,September 30, 2017, compared to 154139 at March 31,September 30, 2016. We have sold or disposed of elevenseven light and sevennine medium aircraft in the Oil and Gas segment since March 31,September 30, 2016. We also purchased two light aircraft in the Oil and Gas segment since September 30, 2016. Transfers between segments account for the remainder.$81.7$81.5 million for the three months ended March 31,September 30, 2017, compared to $91.9$82.8 million for the three months ended March 31,September 30, 2016, a decrease of $10.2$1.3 million. Employee compensation expense decreased $6.3$3.0 million due to a reduction in employees resulting from implementationemployees. Aircraft lease expense decreased $.8 million due to fewer aircraft on lease. Gains or losses in the equity of our VERPs. See Note 10. There were also decreasesunconsolidated affiliates improved $0.6 million due to the April commencement of our Australian operations. We experienced an increase in aircraft warranty costs of $1.2$2.2 million andas a result of increased flight hours for our heavy aircraft insurance of $0.2 million, each due to the reduction in flight hours. Other decreases included aircraft rent expense of $0.9 million, aircraft parts expense of $2.0 million, and property taxes of $0.4for our international operations. Aircraft component repairs increased $1.1 million. Other items increased, net $0.8 million.March 31, 2017September 30, 2016.$1.5Gas segment loss was $6.9 million for the three months ended March 31, 2016. The $0.2 million increase is primarily attributableSeptember 30, 2017, compared to increased legal fees.Oil and Gas segmenta loss was $11.7of $7.0 million for the three months ended March 31, 2017, comparedSeptember 30, 2016. The $0.1 million decrease in segment loss is attributable to a loss of $5.0$2.0 million decrease in expenses, partially offset by the $1.9 million decrease in revenues.March 31, 2016. The increase in segment loss was dueSeptember 30, 2017, compared to decreased revenues, which were only partially offset by decreased expenses attributable to the above-described factors.Air Medical – Air Medical segment revenues were $55.3$74.5 million for the three months ended March 31, 2017, compared to $70.1 million for the three months ended March 31,September 30, 2016. This decrease of $14.7$4.3 million is primarily attributable to decreased traditional provider program revenues resulting from the termination of our overseas operations (as discussed further below). We also experienced decreased revenues, partially offset by an increase in revenue from our independent provider programs primarily resulting from decreased patient transports due principallyoperations related to adverse weather conditions in our operating markets.improved cash collections and lower allowances for doubtful accounts. Patient transports were 4,2975,162 for the three months ended March 31,September 30, 2017, compared to 4,5035,156 for the same period in the prior year.at March 31, 2017 was 104 compared to 105 at March 31,September 30, 2017 and September 30, 2016. Since March 31,September 30, 2016 we added two light aircraft to our Air Medical segment whichhas received two light aircraft transferred from our Oil & Gas segment. These additions were offset by our sale or disposition of fourtwo medium aircraft in the Air Medical segment since such date. Changes in customer-owned aircraft and transfers between segments account for the remainder.$50.8$51.1 million for the three months ended March 31,September 30, 2017, compared to $57.0$56.6 million for the three months ended March 31,September 30, 2016, a decrease of $6.2$5.5 million. Employee compensation costs decreased $2.4$3.0 million due to a reduction in personnel primarily relating to the termination of our 2012 Middle East operations. Component repair costs also decreased $1.0 million as a result of a reduction in scheduled maintenance for certain aircraft.contract. Cost of goods sold decreased $3.3$1.4 million related to certain items that were previously billed on a cost plus basis under our former Middle East contract. Other items increased, net $0.5Helicopter rent decreased $0.1 million due to fewer aircraft on lease, aircraft parts cost decreased $0.8 million, and aircraft warranty costs decreased $0.1 million.$2.9$3.1 million for both the three months ended September 30, 2017 and the three months ended September 30, 2016.March 31, 2017, compared to $2.6 million for the three months ended March 31, 2016. The $0.3 million increase is primarily due to increased promotional and rent expense, as well as employee compensation costs.Air Medical segment profit was $1.6 million for the three months ended March 31,September 30, 2017, compared to a segment profit of $10.4$14.9 million for the three months ended March 31,September 30, 2016. The $8.8$1.1 million decreaseincrease in profit is primarily attributable to the decreased operatingincreased revenues described above,and profit from our independent provider programs, partially offset by decreased expenses. – -Technical Services segment revenues were $7.5$4.1 million for the three months ended March 31,September 30, 2017, compared to $5.5$6.1 million for the three months ended March 31,September 30, 2016. The increasedecrease in revenue is due primarily to an increasea decrease of technical services provided to a third party customer whose service requirements typically vary from period to period. Direct expenses increased $1.4decreased $2.0 million compared to the prior year three months, principally due to the increaseddecreased operations. Technical Services segment earnings was $2.3were less than $0.1 million for the three months ended March 31,September 30, 2017, compared to segment profit of $1.7 million for the three months ended March 31, 2016.$3.7$3.0 million at March 31,September 30, 2017, compared to $2.6 million at December 31, 2016. Short-term investments were $276.8$204.0 million at March 31,September 30, 2017, compared to $289.8 million at December 31, 2016. We also had $12.4 million and $13.0 million in restricted investments at March 31,September 30, 2017 and December 31, 2016, respectively, securing outstanding letters of credit and a bond for foreign operations.2015, and we expect further2015. These reductions in the operating revenues and net profithave caused us to use a portion of our Oilcash and Gas segment in future periods. Through March 31, 2017, these negative variances did not materially impact our financial position reportedcash equivalents (collectively, “cash assets”) to fund operations, including a 30% decrease in our consolidated balance sheets, as described in further detail below. Nonetheless, ifshort-term investments over the current weaknessfirst nine months of 2017. Moreover, we intend to use some of our cash assets to finance our obligations under the HNZ acquisition transaction summarized below under the heading “- Impact of Pending HNZ Acquisition.” After accounting for the recent and anticipated depletion of our cash assets, we nonetheless believe we will continue to hold sufficient cash assets to support operations, especially since we continue to hold no debt coming due within one year of the energy industry persists,date of this report. For these reasons, while we expect that itour liquidity will ultimately have a negative impactbe negatively impacted if the oil and gas industry further deteriorates, we expect based on our consolidated operating cash flow and liquidity.Despite our year over year cumulative losses and negative operating cash flows, we expectcurrent conditions to be able to fund operations beyondover the next year duefour quarters, although we can provide no assurances to having significant short-term investments, and we have no debt coming due within one year.activitiesActivities -Net cash used in operating activities was $8.3$1.9 million for the threenine months ended March 31,September 30, 2017, compared to net cash used of $16.3$7.1 million for the same period in 2016, a decreasean improvement of $8.0$5.2 million. Cash receipts from customers were down $16.7$73.0 million when compared to same quarterthe first nine months of the prior year, primarilylast year. This decrease in cash receipts was due to a $16.7$27.1 million decrease in revenues from our Oil and Gas segment revenues, relateddue to the downturn in the industry. Althoughindustry, and a $27.2 million decrease in revenues from our Air Medical segment revenue decreased $14.7 million compared to prior year, cash receipts decreased by only $3.7 million due to timing of payments. The decrease in revenue is primarily related to the termination of the Middle East contract in late 2016.2016, with the remaining variance attributable to timing of payments received for accounts receivable. The decrease in cash receipts was partially offset by a $21.0 million decreasereduction in cash required for payroll. This decrease isnet payroll of $18.8 million due to having one less payroll period in 2017 duepart to the timing of ourbi-weekly payroll system, a reduction in bonuses paid, a reduction in payments for retirement packages, and reduction in staff levels.staff. The remaining offset was dueof $54.2 million is attributable to a decrease in payments to vendors duerelated to the decreased scope of our operations.activitiesActivities -Net cash provided by investing activities was $7.9$36.5 million for the threenine months ended March 31,September 30, 2017, compared to cash used by investing activities of $9.2$67.0 million for the same period in 2016. Net sales of short-term investments provided $12.8$85.7 million of cash during the threenine months ended March 31,September 30, 2017, compared to $1.5$3.9 million used in the comparable prior year period. There were no grossGross proceeds from asset dispositions were less than $0.1 million during the threenine months of 2017, compared to $0.9$13.2 million for the same period in 2016. Capital expenditures were $4.8$49.2 million for the threenine months ended March 31,September 30, 2017, compared to $8.5$75.0 million for the same period in 2016. Capital expenditures for aircraft and aircraft improvements accounted for $3.4$45.1 million and $8.0$72.4 million of these totals for the threenine months ended 2017 and 2016, respectively. During the firstsecond quarter of 2017, we did not add anypurchased a heavy aircraft to the fleet.from a lessor and two medium aircraft. During the same periodsecond quarter of 2016, we purchased a heavy aircraft that we took delivery of onein the first quarter of 2016. During the third quarter of 2016, we purchased a heavy aircraft for which payment was fundedpursuant to a lease purchase option, purchased one light aircraft, and took delivery of one light aircraft that we purchased in the second quarter of 2016.activities – Activities -Financing activities during the threenine months of 2017 included net borrowingspayments of $1.5$34.0 million on our revolving credit facility and $0.1$0.3 million used to repurchase shares of ournon-voting common stock to satisfy withholding tax obligations of employees. Financing activities during the first quarternine months of 2016 included net borrowings of $30.2$74.9 million on our revolving credit facility and $0.5 million used to repurchase shares of ournon-voting common stock to satisfy withholding tax obligations of employees.March 31,September 30, 2017, we owed $635.5$600.0 million under our total long-term debt, consisting of $500.0 million principal amount of 5.25% Senior Notes due 2019 (excluding debt issuance costs) and $135.5$100.0 million borrowed under our revolving credit facility. – -We have an amended and restated revolving credit facility (our “credit facility”) that matures on October 1, 2018. Under our credit facility, we can borrow up to $150.0 million at floating interest rates based on either the London Interbank Offered Rate plus 225 basis points or the prime rate (each as defined in our credit facility), at our option. Our credit facility includes usual and customary covenants and events of default for credit facilities of its type. Our ability to borrow under the credit facility is conditioned upon our continued compliance with such covenants, including, among others, (i) covenants that restrict our ability to engage in certain asset sales, mergers or other fundamental changes, to incur liens or to engage in certain other transactions or activities and (ii) financial covenants that stipulate that PHI will maintain a consolidated working capital ratio of at least 2 to 1, a net funded debt to consolidated net worth ratio not greater than 1.5 to 1, a fixed charge coverage ratio of at least 1.1 to 1 if our short-term investments fall below $150.0 million, and consolidated net worth of at least $450.0 million (with all such terms or amounts as defined in or determined under our credit facility).March 31,September 30, 2017, we had $135.5$100.0 million in borrowings under our credit facility. At the same date in 2016, we had $87.7$132.4 million in borrowings under our credit facility. We also have outstanding a letterletters of credit for $7.6$7.8 million issued under our $150.0 million credit facility that reduces the amount we can borrow under that facility. This letter of credit was issued to guaranty the performance under an international contract awarded in late 2016. – -We maintain a separate letter of credit facility described in Note 5 that had $12.3 million and $13.0 million letters of credit outstanding at MarchSeptember 30, 2017 and December 31, 2017.March 31,September 30, 2017, related to our aircraft purchase commitments, aircraft and other operating lease obligations, revolving credit facility, and 5.25% Senior Notes due 2019. Our obligations under the operating leases are not recorded as liabilities on our balance sheets included in this report. Each contractual obligation included in the table contains various terms, conditions, and covenants that, if violated, accelerate the payment of that obligation under certain specified circumstances. We believe we were in compliance with the covenants applicable to these contractual obligations as of March 31,September 30, 2017. As of March 31,September 30, 2017, we leased 2019 aircraft included in the lease obligations data below. Payment Due by Year Beyond Total 2017(1) 2018 2019 2020 2021 2021 (Thousands of dollars) $ 17,876 $ 17,876 $ — $ — $ — $ — $ — 205,028 29,952 36,879 30,226 26,387 26,253 55,331 14,649 4,769 3,850 2,897 2,045 1,063 25 635,500 — 135,500 500,000 — — — 52,500 13,125 26,250 13,125 — — — $ 925,553 $ 65,722 $ 202,479 $ 546,248 $ 28,432 $ 27,316 $ 55,356 Payment Due by Year Total 2018 2019 2020 2021 (Thousands of dollars) Aircraft lease obligations $ 182,062 $ 9,161 $ 34,705 $ 30,226 $ 26,387 $ 26,253 $ 55,330 Other lease obligations $ 12,866 1,509 4,452 3,240 2,324 1,284 57 $ 600,000 — $ 100,000 $ 500,000 — — — 39,375 — 26,250 13,125 — — — $ 834,303 $ 10,670 $ 165,407 $ 546,591 $ 28,711 $ 27,537 $ 55,387 (1) Payments due during the last ninethree months of 2017 only.(2) “Long-term debt” reflects the principal amount of debt due under our outstanding senior notes and our revolving credit facility, whereas “senior notes interest” reflects interest accrued under our senior notes only. The actual amount of principal and interest paid in all years may differ from the amounts presented above due to the possible future payment or refinancing of outstanding debt or the issuance of new debt.
See Note 4.
During the first quarter of 2017, we withheld from employees and canceled 7,016 shares of ournon-voting common stock in connection with the vesting of their stock-based awards to satisfy the related minimum tax withholding obligation. The following table provides additional information about these transactions.
Period | Total Number of Shares Purchased | Average Price Paid per Share | ||||||
March 1, 2017 – March 31, 2017 | 7,016 | $ | 14.27 |
of the Arrangement. /s/ Al A. Gonsoulin /s/ Trudy P. McConnaughhayResultsAnnual MeetingAt PHI’s annualHNZ, and 2075568 Alberta ULC, which is a beneficially wholly-owned by Don Wall (the “Canadian Purchaser” and, together with the Company, the “Purchasers”), pursuant to which (i) the Canadian Purchaser has agreed to acquire all of the common shares and variable voting shares of HNZ (the “HNZ Acquisition”), and (ii) the Company (or a designated subsidiary thereof) has agreed to acquire the offshore helicopter services business conducted by HNZ and/or its subsidiaries in New Zealand, Australia, the Philippines and Papua New Guinea (the “International Business”) from the Canadian Purchaser immediately after the HNZ Acquisition is complete, in each case in accordance with a court-approved plan of arrangement (the “Arrangement”) under the Canada Business Corporations Act. The Boards of Directors of each of the Company and HNZ have unanimously approved the Arrangement (in the case of HNZ, with Don Wall abstaining).shareholdersthe Arrangement, or (iii) the effective time of the Arrangement does not occur on May 4, 2017, foror before February 28, 2018 (the “Outside Date”);proxies werewould result in failure of a closing condition that cannot be cured prior to the Outside Date or is not solicited, thecured within a specified cure period, or (ii) prior to receipt of HNZ shareholder approval, HNZ’s board of directors that was nominated, as described in the Company’s Information Statement filed April 12, 2017 (the “Information Statement”), was elected inchanges its entirety, with 2,060,905 votesrecommendation in favor of the Arrangement or HNZ (or any subsidiary thereof) enters into a contract with respect to a superior acquisition proposal, in each director, and zero votes withheld or abstaining. The ratificationcase in compliance with the terms of the appointmentArrangement Agreement; orDeloitte & Touche as PHI’s independent registered public accounting firm for the fiscal year ending December 31, 2017 was approved with 2,060,905 votesHNZ shareholder approval, (i) HNZ’s board changes its recommendation in favor of the Arrangement, (ii) HNZ’s board approves an alternative takeover proposal, (iii) HNZ materially breaches its non-solicitation covenants, (iv) HNZ or the other Purchaser has breached a representation, warranty or covenant which would result in failure of a closing condition that cannot be cured prior to the Outside Date or is not cured within a specified cure period, or (v) there has occurred a material adverse effect with respect to the International Business (in the case of the Company) or the Canadian Business (in the case of the Canadian Purchaser).zero votes againstan expense reimbursement fee of up to CAD$1 million to the Canadian Purchaser. Further, if either Purchaser terminates the Arrangement Agreement due to a breach by HNZ of its representations, warranties or abstaining. covenants, HNZ will be required to reimburse each Purchaser for all of its fees and expenses, up to a maximum of CAD$1.75 million to the Company and CAD$1 million to the Canadian Purchaser.amendmentparties have agreed to customary representations, warranties and covenants in the Arrangement Agreement, including, among others, covenants of our articlesHNZ with respect to the conduct of incorporation described in our Information Statement was approved with 2,060,905 votesits business during the period between the execution of the Arrangement Agreement and consummation of the Arrangement.and zero votes against or abstaining. The amendment and restatement of the PHI, Inc. Long-Term Incentive Plan described in our Information Statement was approved with 2,060,905 votesArrangement subject to the terms and conditions of such voting support agreements. Including Don Wall, holders of approximately 23.26% of HNZ's outstanding common and variable voting shares have agreed to vote their shares in favor and zero votes against or abstaining. Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Al A. Gonsoulin, Chairman and Chief Executive Officer. Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Trudy P. McConnaughhay, Chief Financial Officer. Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Al A. Gonsoulin, Chairman and Chief Executive Officer. Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Trudy P. McConnaughhay, Chief Financial Officer. 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema 101.CAL* XBRL Taxonomy Extension Calculation Linkbase 101.DEF* XBRL Taxonomy Extension Definition Linkbase 101.LAB* XBRL Taxonomy Extension Label Linkbase 101.PRE* XBRL Taxonomy Extension Presentation Linkbase *Filed herewith†Indicates management contract or compensatory plan or arrangement PHI, Inc. May 9, 2017 November 3, 2017 By: Al A. Gonsoulin Chairman and Chief Executive Officer May 9, 2017 November 3, 2017 By: Trudy P. McConnaughhay Chief Financial Officer 39