2018
| 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: | ☐ | |||||
Class | Outstanding at | |
| Voting Common Stock | 2,905,757 shares | |
| Non-Voting Common Stock | ||
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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 2017. 2017 balances, all deferred taxes were classified as non-current. Periods prior to December 31, 2017 were not retrospectively adjusted. statements. 2019. 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 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 2017: operations with maturities beyond one year. 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 2017. 2017. 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 December 31, 2017: For information about other recent amendments or waivers relating to our revolving credit facility, see "Management Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." 2017. contract. 2017. 15. 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 March 31,
2018 December 31, 2017 ASSETS Current Assets: Cash $ 7,431 $ 8,770 Short-term investments 61,988 64,237 Accounts receivable – net Trade 157,363 168,153 Other 29,223 17,826 Inventories of spare parts – net 77,011 80,881 Prepaid expenses 11,509 11,475 Income taxes receivable 831 1,271 Total current assets 345,356 352,613 Property and equipment – net 936,323 946,765 Restricted cash and investments 12,396 12,396 Other assets 8,803 8,741 Deferred income taxes 3,211 3,309 Goodwill 61,299 61,299 Intangibles 16,334 16,723 Total assets $ 1,383,722 $ 1,401,846 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Revolving credit facility $ 121,750 $ — Senior Notes issued March 17, 2014, net of debt issuance costs of $1,285 498,715 — Accounts payable 37,166 37,186 Accrued and other current liabilities 42,042 41,850 Total current liabilities 699,673 79,036 Long-term debt: Revolving credit facility — 117,500 Senior Notes issued March 17, 2014, net of debt issuance costs of $1,506 — 498,494 Deferred income taxes 80,866 86,005 Other long-term liabilities 5,448 8,157 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 at March 31, 2018 and December 31, 2017, respectively 291 291 Non-voting common stock – par value of $0.10; 37,500,000 shares authorized, 12,904,799 and 12,897,614 issued and outstanding at March 31, 2018 and December 31, 2017, respectively 1,290 1,289 Additional paid-in capital 309,672 308,353 Accumulated other comprehensive income (loss) 464 (280 ) Retained earnings 286,018 303,001 Total shareholders’ equity 597,735 612,654 Total liabilities and shareholders’ equity $ 1,383,722 $ 1,401,846 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
March 31, 2018 2017 Operating revenues, net $ 160,370 $ 134,618 Expenses: Direct expenses 156,226 136,513 Selling, general and administrative expenses 15,459 13,044 Total operating expenses 171,685 149,557 Loss on disposal of assets 879 — Equity in loss of unconsolidated affiliate, net 37 1,003 Operating (loss) income (12,231 ) (15,942 ) Interest expense 8,197 8,195 Other loss (income) – net 1,045 (1,064 ) 9,242 7,131 Loss before income taxes (21,473 ) (23,073 ) Income tax benefit (4,490 ) (7,825 ) Net loss $ (16,983 ) $ (15,248 ) Weighted average shares outstanding: Basic 15,806 15,689 Diluted 15,806 15,689 Net loss per share: Basic $ (1.07 ) $ (0.97 ) Diluted $ (1.07 ) $ (0.97 ) Quarter Ended
March 31, 2017 2016 $ (15,248 ) $ (8,932 ) 162 807 (1 ) 1 (58 ) (332 ) $ (15,145 ) $ (8,456 ) Quarter Ended
March 31, 2018 2017 Net loss $ (16,983 ) $ (15,248 ) Unrealized gain on short-term investments 471 162 Currency translations adjustment 467 — Changes in pension plan assets and benefit obligations (9 ) (1 ) Tax effect of the above-listed adjustments (185 ) (58 ) Total comprehensive loss $ (16,239 ) $ (15,145 ) 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, 2016 2,906 $ 291 12,779 $ 1,278 $ 304,246 $ (478 ) $ 294,441 $ 599,778 Net loss — — — — — — (15,248 ) (15,248 ) Unrealized gain on short-term investments — — — — — 104 — 104 Changes in pension plan assets and benefit obligations — — — — — (1 ) — (1 ) Amortization of unearned stock-based compensation — — — — 552 — — 552 Issuance of non-voting common stock (upon vesting of restricted stock units) — — 27 2 — — — 2 Cancellation of restricted non-voting stock units for tax withholdings on vested shares — — (9 ) (1 ) (100 ) — — (101 ) Retirement of treasury stock — — — — — — 1,028 1,028 Balance at March 31, 2017 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, 2017 2,906 $ 291 12,897 $ 1,289 $ 308,353 $ (280 ) $ 303,001 $ 612,654 Net loss — — — — — — (16,983 ) (16,983 ) Unrealized gain on short-term investments — — — — — 282 — 282 Changes in pension plan assets and benefit obligations — — — — — (5 ) — (5 ) Amortization of unearned stock-based compensation — — — — 1,319 — — 1,319 Currency translation adjustment — — — — — 467 — 467 Issuance of non-voting common stock (upon vesting of restricted stock units) — — 11 1 — — — 1 Cancellation of restricted non-voting stock units for tax withholdings on vested shares — — (3 ) — — — — — Balance at March 31, 2018 2,906 $ 291 12,905 $ 1,290 $ 309,672 $ 464 $ 286,018 $ 597,735 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 Quarter Ended
March 31, 2018 2017 Operating activities: Net loss $ (16,983 ) $ (15,248 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 19,467 16,845 Deferred income taxes (5,113 ) (7,883 ) Loss (gain) on asset dispositions 879 — Equity in loss of unconsolidated affiliate, net 37 1,003 Inventory valuation reserves 1,042 (1,293 ) Changes in operating assets and liabilities (761 ) (1,677 ) Net cash used in operating activities (1,432 ) (8,253 ) Investing activities: Purchase of property and equipment (6,665 ) (4,789 ) Proceeds from asset dispositions 842 — Purchase of short-term investments (134,319 ) (54,867 ) Proceeds from sale of short-term investments 136,259 67,659 Payment of deposits on aircraft — (66 ) Loan to unconsolidated affiliate (274 ) — Net cash (used in) provided by investing activities (4,157 ) 7,937 Financing activities: Proceeds from line of credit 33,750 37,300 Payments on line of credit (29,500 ) (35,800 ) Repurchase of common stock — (100 ) Net cash provided by financing activities 4,250 1,400 Increase (decrease) in cash (1,339 ) 1,084 Cash, beginning of period 8,770 2,596 Cash, end of period $ 7,431 $ 3,680 Supplemental Disclosures Cash Flow Information Cash paid during the period for: Interest $ 14,328 $ 14,114 Income taxes $ 320 $ — Noncash investing activities: Other current liabilities and accrued payables related to purchase of property and equipment $ 82 $ 348 2016 and the accompanying notes.2016.2017. For this and other reasons, the results of operations for interim periods are not necessarily indicative of the operating results that may be expected for a full fiscal year. -Effective January 1, 2017, we adopted ASU2016-09,Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The 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, 2017. Accordingly, we recorded income tax expense of $0.5 million in our consolidated statement of income for the three months ended March 31, 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.ASU2016-09 also allows an employer with a statutory income tax withholding obligation to withhold shares with a fair value up to the amount of tax owed using the maximum statutory tax rate in the employee’s applicable jurisdiction. We have elected to continue to withhold the minimum statutory withholding obligation for outstanding awards. We have also elected to continue to estimate equity award forfeitures expected to occur to determine the amount of compensation cost to be recognized in each periodNew Accounting Pronouncements -May 2014, the Financial Accounting StandardsStandard Board (“FASB”("the FASB") issued Accounting Standards Update (“ASU”)2014-09,ASC 606, Revenue from Contracts with Customers (“ASC 606”), which providesreplacing the existing accounting standard and industry specific guidance for revenue recognition with a single comprehensivefive-step model for entities to use in accounting forrecognizing and measuring revenue arising from contracts with customers. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment asThe underlying principle of the date of adoption. Thenew standard is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 became effective for us beginningon January 1, 2018 with early adoption permittedand the Company adopted it using the modified retrospective method applied to open contracts and only to the version of the contracts in effect as of January 1, 2017.2018. Prior period amounts have not been adjusted and continue to be reflected in accordance with the Company’s historical accounting. There was no impact on the condensed consolidated financial statements and no cumulative effect adjustment was recognized.Air MedicalGas segment hospitalrevenue is derived from providing services on an "ad-hoc" basis. Our fixed-term contracts typically have original terms of one year to seven years (subject to provisions permitting early termination by the customers), with payment in U.S. dollars. The Company accounts for services rendered separately if they are primarily comprised ofdistinct and the service is separately identifiable from other items provided to a customer and if a customer can benefit from the services rendered on its own or with other resources that are readily available to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Within this contract type for helicopter services, we determined that each contract has a single distinct performance obligation. These services include a fixed monthly feerate for a particular model of aircraft, plus aand flight hour services, which represents the variable component of a typical contract with a customer. Rates for these services vary depending on the type of services provided and can be based on a per flight time.hour, per day, or per month basis. We also provide services to clients on an “ad hoc” basis, which usually entails a shorter contract notice period and duration. The charges for ad hoc services are based on an hourly rate or a daily or monthly fixed fee plus additional fees for each hour flown. The nature of our variable charges within our flight services contracts are not effective until a customer-initiated flight order and the actual hours flown are determined, therefore, the associated flight revenue generally cannot be reasonably and reliably estimated before hand. A contract’s standalone selling prices are determined based upon the prices that the Company charges for its services rendered. The majority of the Company’s revenue is recognized as performance obligations are satisfied over time, by measuring progress towards satisfying the contracted services in a manner that best depicts the transfer of services to the customer, which is generally represented by a period of 30 days or less. The Company’s payment terms vary by the type of services offered. The Company typically invoices customers on a monthly basis with the term between invoicing and when the payment is due is typically between 30 and 60 days.programsmodel, we measure the performance obligation from the moment the patient is loaded into the aircraft until it reaches its destination. Under this model, we have no fixed revenue stream and compete for transport referrals on a daily basis with other independent operators in the area. As an independent provider, we bill for our services on the basis of our Air Medical segment, our revenues are based on a flat rate plus a variable charge per patient-loaded mile, regardless of aircraft model, and are typically compensated by private insurance, Medicaid or Medicare, or directly by transported patients who self-pay. Under the traditional provider model, we contract directly with the customer to provide their transportation services, with the contracts typically awarded or renewed through competitive bidding. As a traditional provider, we typically bill a fixed monthly rate for aircraft availability and an hourly rate for flight time. For each of these types of helicopter services, we have determined that each has a single distinct performance obligation. We recognize revenues for performance obligations satisfied at a point in time, which generally relate to patients receiving helicopter services under the independent provider model when: (1) services are provided; and (2) we do not believe the patient requires additional services. Traditional provider models services include fixed monthly rate for a particular model of aircraft, and flight hour services, which represents the variable component of a typical contract with customer. Rates for these services vary depending on the type of services provided and can be based on a per flight hour, per day, or per month basis. The variable charges within the contracts are not effective until customer-initiated flight order and the actual hours flown are determined, therefore, the associated revenue generally cannot be reasonably and reliably estimated beforehand. For the traditional provider model, we determine the transaction price based upon standard charges for goods and services provided. For independent provider model we determine the transaction price based upon gross charges for services provided reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients in accordance with Company policy, and/or implicit price concessions provided to uninsured patients. We determine estimates of contractual adjustments and discounts based upon contractual agreements, our discount policy, and historical experience. We determine our estimate of implicit price concessions based upon our historical collection experience with these classes of patients using a portfolio approach as a practical expedient to account for patient contracts as collective groups, rather than individually. The financial statement effects of using this practical expedient are not materially different from an individual contract approach.allowances. We also generateallowances under agreements with third party payors and estimated uncompensated care at the time the services are provided. Contractual allowances and uncompensated care are estimated based on historical collection experience by payor category (consisting mainly of private insurance, Medicaid, Medicare, and self-pay). The allowance percentages calculated are applied to the payor categories, and theon a cost-plus basis in ourallowance. Agreements with third-party payors typically provide for payments at amounts less than established charges.segment. We are continuingsegment were $2.5 million and $4.8 million, respectively. Contract assets and contract liabilities were immaterial as of March 31, 2018.assess the effects of this standard on each revenue streamnature of our business, we do not have significant backlog. Total backlog was $57.6 million at March 31, 2018, we expect to recognize this full backlog as revenue over the next 12 months. Our contracts typically include unilateral termination clauses that allow both parties to terminate existing contracts with a 30 to 180 day notice period. The amounts above include performance obligations up to the point where the contracting parties can cancel existing contracts. As such, our actual remaining performance obligation revenue is expected to be greater than what is reflected above. In addition, the remaining performance obligation disclosure does not include expected consideration related to performance obligations of a variable nature (i.e. flight services) as they cannot be reasonably and reliably estimated.overall effect onvalue to the customer of the entity's performance completed to date and may recognize revenue in the amount to which the entity has a right to invoice. We have elected to use the invoice practical expedient for revenue recognized when performance obligations are satisfied over time. In addition, payment for goods and services rendered is typically due in the subsequent month following satisfaction of the Company’s performance obligation.financial position, results of operationsOil and cash flows and have not yet selectedGas customers. Revenues are recognized when performance obligations are satisfied in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered. For these helicopter services, we determined that each has a method of adoption. We intend to adoptsingle distinct performance obligation.standard beginningCompany’s revenues by segment disaggregated by type (in thousands): For the Quarter Ended March 31, 2018 2017 Service Revenue Oil & Gas $ 95,640 $ 71,731 Air Medical 56,988 55,338 Technical Services 7,742 7,549 Total Services $ 160,370 $ 134,618 Air Medical Revenue Traditional provider model $ 11,106 $ 10,596 Independent provider model 45,882 44,742 Total Air Medicals Revenues $ 56,988 $ 55,338 1, 2018.In February 2016,26, 2017, the FASB issued ASU No. 2017-04, 2016-02,Intangibles - Goodwill and Other (Topic 350)Leases: Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 removes the requirement to compare the implied fair value of goodwill with the carrying amount as part of Step 2 of the goodwill impairment test. Under the new standard, the goodwill impairment loss will be measured as the excess of a reporting unit's carrying amount over its fair value, not exceeding the total amount of goodwill allocated to that reporting unit, which may increase the frequency of goodwill impairment charges if a future goodwill impairment test does not pass the Step 1 evaluation. ASU 2017-04 is effective prospectively for periods beginning on or after December 15, 2019, with early adoption permitted. The Company adopted ASU 2017-04 effective January 1, 2018. The Company will perform goodwill impairment testing under the new standard annually as of October 1 or when events or changes in circumstances indicate that a potential impairment exist.replaces the existing guidance on leasing transactions in ASC 840 to require recognition of therequires that deferred tax assets and liabilities for the rights and obligations created by those leases on thebe classified as noncurrent in a classified balance sheet. We plan to adoptPHI, Inc. adopted this standard no later than January 1, 2019. We are currently evaluatingASU in the effectsfourth quarter of this standard, and expect2017 on a prospective basis. Beginning with 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.effects of this standard on ourCompany adopted ASU 2016-16 effective January 1, 2018 with no material impact to the condensed consolidated 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. EarlyThe Company adopted ASU 2017-01 effective January 1, 2018 with no material impact to the condensed consolidated financial statements.is permitted. The effectsof this guidance will have on the Company’s financial statements, which includes monitoring industry specific developments including recent exposure drafts issued by the FASB. Based on our lease portfolio as of March 31, 2018, we expect the adoption of this standard onwill result in a material change to our financial position, results of operations,consolidated assets and cash flows are not yet known.In January 2017, the FASB issued ASU2017-04,Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU2017-04 simplifies the currenttwo-step goodwill impairment test by eliminating Step 2 of the test. The newliabilities. We plan to adopt this 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.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 $ 74,370 $ — $ — $ 74,370 Deferred compensation plan assets included in other assets 831 — — 831 Total $ 75,201 $ — $ — $ 75,201 2016: 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 $ 5,601 $ — $ — $ 5,601 U.S. government agencies 7,501 — (34 ) 7,467 Corporate bonds and notes 63,880 — (330 ) 63,550 Subtotal 76,982 — (364 ) 76,618 Deferred compensation plan assets included in other assets 2,685 — — 2,685 Total $ 79,667 $ — $ (364 ) $ 79,303 20172018 and December 31, 2016,2017, we classified $13.0$12.4 million, of our aggregate investments as long-term investments and recorded them in our Condensed Consolidated Balance Sheets as Restrictedrestricted 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 March 31, 2018 December 31, 2017 Amortized
Costs Fair
Value Amortized
Costs Fair
Value (Thousands of dollars) Due in one year or less $ — $ — $ 31,348 $ 31,254 Due within two years — — 40,032 39,763 Total $ — $ — $ 71,380 $ 71,017 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 March 31, 2018 December 31, 2017 Average
Coupon
Rate (%) Average
Days To
Maturity Average
Coupon
Rate (%) Average
Days To
MaturityU.S. Government agencies — 0 1.370 370 Corporate bonds and notes — 0 1.766 392 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 ) March 31, 2018 December 31, 2017 Fair Value Unrealized
Losses Fair Value Unrealized
Losses (Thousands of dollars) U.S. Government agencies $ — $ — $ 5,472 $ (28 ) Corporate bonds and notes — — 44,069 (271 ) Total $ — $ — $ 49,541 $ (299 ) 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 ) March 31, 2018 December 31, 2017 Fair Value Unrealized
Losses Fair Value Unrealized
Losses (Thousands of dollars) U.S. Government agencies $ — $ — $ 1,994 $ (6 ) Corporate bonds and notes — — 19,482 (59 ) Total $ — $ — $ 21,476 $ (65 ) 20172018 or December 31, 2016.2017. 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, 2017.2018. 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. REVENUE RECOGNITION AND VALUATION ACCOUNTS$6.1$7.2 million at March 31, 2017,2018, and $6.0 million at December 31, 2016.$107.6$104.5 million and $111.9$117.8 million as of March 31, 20172018 and December 31, 2016,2017, respectively. The allowance for uncompensated care was $48.0$54.9 million and $46.3$52.5 million as of March 31, 20172018 and December 31, 2016,2017, respectively.and 2016.respectively. The estimated cost of providing charity services was $0.4 million for the quarter ended March 31, 2018 and $0.6 million for the quartersquarter ended March 31, 2017 and 2016.2017. 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 % Under a three-year contract that commenced on September 29, 2012, our Air Medical affiliate provided multiple services to a customer in the Middle East, including helicopter leasing, emergency medical helicopter flight services, aircraft maintenance, provision of spare parts, insurance coverage for the customer-owned aircraft, training services, and base construction. Each of the major services mentioned above qualified as separate units of accounting under the accounting guidance for such arrangements. The selling price for each specific service was determined based upon third-party evidence and estimates. As discussed in greater detail in our Form10-K for year ended December 2016, this contract, after being extended one year, lapsed on September 30, 2016. March 31, 2018 December 31, 2017 Allowance for Contractual Discounts 50% 53% Allowance for Uncompensated Care 26% 24% $17.7$22.2 million and $17.3$20.9 million at March 31, 20172018 and December 31, 2016,2017, 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 March 31, 2018 Total (Level 1) (Level 2) (Thousands of dollars) Investments: Money market mutual funds $ 74,370 $ 74,370 $ — Deferred compensation plan assets 831 831 — Total $ 75,201 $ 75,201 $ — December 31, 2017 Total (Level 1) (Level 2) (Thousands of dollars) Investments: Money market mutual funds $ 5,601 $ 5,601 $ — U.S. government agencies 7,467 — 7,467 Corporate bonds and notes 63,550 — 63,550 76,618 5,601 71,017 Deferred compensation plan assets 2,685 2,685 — Total $ 79,303 $ 8,286 $ 71,017 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.20172018 and December 31, 2016.2017. Our determination of the estimated fair value of our 5.25% Senior Notes and our revolving credit facility debtdue 2019 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$490.6 million and $474.4$499.2 million at March 31, 20172018 and December 31, 2016,2017, respectively.LONG-TERM DEBTThe componentsthe dates indicated below were as follows: 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 March 31, 2018 December 31, 2017 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 $ 1,285 $ 500,000 $ 1,506 Revolving Credit Facility due March 7, 2019 with a group of commercial banks, interest payable at variable rates 121,750 — 117,500 — Total indebtedness $ 621,750 $ 1,285 $ 617,500 $ 1,506 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, 20162018 at specified redemption prices.par plus accrued interest. 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. an amended and restated our revolving credit facility (our “credit“revolving credit facility”) that matures on October 1, 2018.March 7, 2019. Under this facility, we can borrow up to $150.0$130.0 million at floating interest rates based on either the London Interbank Offered Rate plus 225275 basis points or the prime rate (each as defined in our creditthis facility), at our option. Our creditThis facility includes usual and customary covenants and events of default for credit facilities of its type. Our ability to borrow under the creditthis 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$500.0 million (with all such terms or amounts as defined in or determined under this facility). Borrowings under our revolving credit facility).facility are secured on a first-priority basis by our inventory, spare parts and accounts receivable.2017, we believe2018, we were in compliance with thesethe remaining covenants.2017 and $13.7 million for the quarter ended March 31, 2016.$13.0$12.4 million in letters of credit outstanding at March 31, 20172018 and December 31, 2016.2017. We have letters of credit securing our workers compensation policies and a traditional provider contract, and a bond relating to foreign operations.$150.0$130.0 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.generally accepted accounting principles,GAAP, are eliminated in consolidation and therefore not recognized on our consolidated balance sheets. For additional information, see Note 13.20172018 and 20162017 are as follows: Quarter Ended March 31, 2017 2016 (Thousands of dollars) 15,689 15,600 — — 15,689 15,600 Quarter Ended
March 31, 2018 2017 (Thousands of dollars) Weighted average outstanding shares of common stock, basic 15,806 15,689 Dilutive effect of unvested restricted stock units — — 15,806 15,689 (1)(1) For the three months ended March 31, 2018 and 2017, 490,843 and 58,119 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 | ||||
|
|
|
| |||||
2017.
| Quarter Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| (Thousands of dollars) | ||||||||
| Stock-based compensation expense: | ||||||||
| Time-based restricted stock units | $ | 642 | $ | 553 | ||||
| Performance-based restricted stock units | 677 | — | ||||||
| Total stock-based compensation expense | $ | 1,319 | $ | 553 | ||||
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 haswe have 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, PHIwe 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’sour working relationship and agreements with the LDEQ, and the results of ongoing former facility parcel monitoring, PHI believeswe believe that ultimate remediation costs for the subject parcels will not be material to PHI’sour consolidated financial position, operations or cash flows.
| Oil & Gas | Air Medical | Technical Services | Total | ||||||||||
| Balance December 31, 2017 | $ | 61,299 | — | — | $ | 61,299 | |||||||
| Activity | — | — | — | — | |||||||||
| Balance March 31, 2018 | $ | 61,299 | — | — | $ | 61,299 | |||||||
| Estimated Useful Lives | Gross Amount at December 31, 2017 | Accumulated Amortization | Net Balance at March 31, 2018 | ||||||||||
| Customer Relationship | 15 | $ | 11,622 | $ | (194 | ) | $ | 11,428 | |||||
| Non-Compete Agreements | 5 | 900 | (45 | ) | 855 | ||||||||
| Tradenames | 7 | 4,201 | (150 | ) | 4,051 | ||||||||
| Total | $ | 16,723 | $ | (389 | ) | $ | 16,334 | ||||||
| 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 | % | ||||
follows for the periods listed below:
| Quarter Ended March 31, | ||||||
| 2018 | 2017 | |||||
| Provision for contractual discounts | 69 | % | 70 | % | ||
| Provision for uncompensated care | 6 | % | 4 | % | ||
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
Insurance | 70 | % | 66 | % | ||||
Medicare | 20 | % | 19 | % | ||||
Medicaid | 10 | % | 15 | % | ||||
Self-Pay | 0 | % | 0 | % | ||||
follows for the periods listed below:
| Quarter Ended March 31, | ||||||
| 2018 | 2017 | |||||
| Insurance | 71 | % | 70 | % | ||
| Medicare | 20 | % | 20 | % | ||
| Medicaid | 9 | % | 10 | % | ||
| Self-Pay | — | % | — | % | ||
| 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 March 31, | ||||||||
| 2018 | 2017 | |||||||
| (Thousands of dollars) | ||||||||
| Segment operating revenues | ||||||||
| Oil and Gas | $ | 95,640 | $ | 71,731 | ||||
| Air Medical | 56,988 | 55,338 | ||||||
| Technical Services | 7,742 | 7,549 | ||||||
| Total operating revenues, net | 160,370 | 134,618 | ||||||
Segment direct expenses (1) | ||||||||
Oil and Gas (2) | 96,507 | 81,728 | ||||||
| Air Medical | 53,832 | 50,842 | ||||||
| Technical Services | 5,887 | 4,946 | ||||||
| Total direct expenses | 156,226 | 137,516 | ||||||
| Segment selling, general and administrative expenses | ||||||||
| Oil and Gas | 4,921 | 1,720 | ||||||
| Air Medical | 3,167 | 2,881 | ||||||
| Technical Services | 370 | 338 | ||||||
| Total selling, general and administrative expenses | 8,458 | 4,939 | ||||||
| Total segment direct and selling, general and administrative expenses | 164,684 | 142,455 | ||||||
| Net segment (loss) profit | ||||||||
| Oil and Gas | (5,788 | ) | (11,717 | ) | ||||
| Air Medical | (11 | ) | 1,615 | |||||
| Technical Services | 1,485 | 2,265 | ||||||
| Total net segment profit | (4,314 | ) | (7,837 | ) | ||||
Other, net (3) | (1,961 | ) | 1,064 | |||||
Unallocated selling, general and administrative costs (1) | (7,001 | ) | (8,105 | ) | ||||
| Interest expense | (8,197 | ) | (8,195 | ) | ||||
| (Loss) earnings before income taxes | $ | (21,473 | ) | $ | (23,073 | ) | ||
| (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 March 31, | ||||||||
| 2018 | 2017 | |||||||
| (Thousands of dollars) | ||||||||
| Segment Direct Expense: | ||||||||
| Oil and Gas | $ | 11,783 | $ | 9,862 | ||||
| Air Medical | 5,624 | 5,477 | ||||||
| Technical Services | 145 | 146 | ||||||
| Total | $ | 17,552 | $ | 15,485 | ||||
| Unallocated SG&A | $ | 1,915 | $ | 1,360 | ||||
| (2) | Includes |
| (3) | Consists of |
11.
12.
13.
| 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 | |||||||
|
|
|
|
|
|
|
| |||||||||
| March 31, 2018 | ||||||||||||||||||||
| Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||
| Cash | $ | 54 | $ | 979 | $ | 6,398 | $ | — | $ | 7,431 | ||||||||||
| Short-term investments | 61,988 | — | — | — | 61,988 | |||||||||||||||
| Accounts receivable – net | 76,539 | 74,580 | 36,627 | (1,160 | ) | 186,586 | ||||||||||||||
| Intercompany receivable | — | 128,702 | — | (128,702 | ) | — | ||||||||||||||
| Inventories of spare parts – net | 64,695 | 9,330 | 2,986 | — | 77,011 | |||||||||||||||
| Prepaid expenses | 7,773 | 2,668 | 1,068 | — | 11,509 | |||||||||||||||
| Income taxes receivable | 295 | 511 | 25 | — | 831 | |||||||||||||||
| Total current assets | 211,344 | 216,770 | 47,104 | (129,862 | ) | 345,356 | ||||||||||||||
| Investment in subsidiaries | 399,555 | — | — | (399,555 | ) | — | ||||||||||||||
| Property and equipment – net | 607,960 | 285,080 | 43,283 | — | 936,323 | |||||||||||||||
| Restricted cash and investments | 12,382 | — | 14 | — | 12,396 | |||||||||||||||
| Other assets | 139,515 | 851 | (131,563 | ) | — | 8,803 | ||||||||||||||
| Deferred income tax | — | — | 3,211 | — | 3,211 | |||||||||||||||
| Goodwill | — | — | 61,299 | — | 61,299 | |||||||||||||||
| Intangible assets | — | — | 16,334 | — | 16,334 | |||||||||||||||
| Total assets | $ | 1,370,756 | $ | 502,701 | $ | 39,682 | $ | (529,417 | ) | $ | 1,383,722 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||
| Revolving Credit facility | $ | 121,750 | $ | — | $ | — | $ | — | $ | 121,750 | ||||||||||
| Senior notes issued March 17, 2014, net of debt issuance costs of $1,285 | 498,715 | — | — | — | 498,715 | |||||||||||||||
| Accounts payable | 27,027 | 4,664 | 6,635 | (1,160 | ) | 37,166 | ||||||||||||||
| Accrued and other current liabilities | 20,722 | 13,531 | 7,789 | — | 42,042 | |||||||||||||||
| Intercompany payable | 107,122 | — | 21,580 | (128,702 | ) | — | ||||||||||||||
| Total current liabilities | 775,336 | 18,195 | 36,004 | (129,862 | ) | 699,673 | ||||||||||||||
| Deferred income taxes and other long-term liabilities | (1,848 | ) | 84,670 | 3,492 | — | 86,314 | ||||||||||||||
| Shareholders’ Equity: | ||||||||||||||||||||
| Common stock and paid-in capital | 311,253 | 77,951 | 1,511 | (79,462 | ) | 311,253 | ||||||||||||||
| Accumulated other comprehensive loss | (3 | ) | — | 467 | — | 464 | ||||||||||||||
| Retained earnings | 286,018 | 321,885 | (1,792 | ) | (320,093 | ) | 286,018 | |||||||||||||
| Total shareholders’ equity | 597,268 | 399,836 | 186 | (399,555 | ) | 597,735 | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,370,756 | $ | 502,701 | $ | 39,682 | $ | (529,417 | ) | $ | 1,383,722 | |||||||||
| 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 | |||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2017 | ||||||||||||||||||||
| Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||
| Cash | $ | 47 | $ | 1,072 | $ | 7,651 | $ | — | $ | 8,770 | ||||||||||
| Short-term investments | 64,237 | — | — | — | 64,237 | |||||||||||||||
| Accounts receivable – net | 90,077 | 74,886 | 38,020 | (17,004 | ) | 185,979 | ||||||||||||||
| Intercompany receivable | — | 126,366 | — | (126,366 | ) | — | ||||||||||||||
| Inventories of spare parts – net | 68,737 | 9,049 | 3,095 | — | 80,881 | |||||||||||||||
| Prepaid expenses | 8,348 | 1,898 | 1,229 | — | 11,475 | |||||||||||||||
| Income taxes receivable | 345 | 9 | 917 | — | 1,271 | |||||||||||||||
| Total current assets | 231,791 | 213,280 | 50,912 | (143,370 | ) | 352,613 | ||||||||||||||
| Investment in subsidiaries and others | 397,301 | — | — | (397,301 | ) | — | ||||||||||||||
| Property and equipment – net | 617,488 | 284,984 | 44,293 | — | 946,765 | |||||||||||||||
| Restricted investments | 12,382 | — | 14 | — | 12,396 | |||||||||||||||
| Other assets | 139,754 | 908 | (131,921 | ) | — | 8,741 | ||||||||||||||
| Deferred income tax | — | — | 3,309 | — | 3,309 | |||||||||||||||
| Goodwill | — | — | 61,299 | — | 61,299 | |||||||||||||||
| Intangible assets | — | — | 16,723 | — | 16,723 | |||||||||||||||
| Total assets | $ | 1,398,716 | $ | 499,172 | $ | 44,629 | $ | (540,671 | ) | $ | 1,401,846 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||
| Accounts payable | $ | 28,130 | $ | 4,636 | $ | 21,425 | $ | (17,005 | ) | $ | 37,186 | |||||||||
| Accrued and other current liabilities | 23,147 | 10,577 | 8,126 | — | 41,850 | |||||||||||||||
| Intercompany payable | 113,387 | — | 12,978 | (126,365 | ) | — | ||||||||||||||
| Total current liabilities | 164,664 | 15,213 | 42,529 | (143,370 | ) | 79,036 | ||||||||||||||
| Long-term debt | 615,994 | — | — | — | 615,994 | |||||||||||||||
| Deferred income taxes and other long-term liabilities | 5,404 | 84,300 | 4,458 | — | 94,162 | |||||||||||||||
| Shareholders’ Equity: | ||||||||||||||||||||
| Common stock and paid-in capital | 309,933 | 77,951 | 1,375 | (79,326 | ) | 309,933 | ||||||||||||||
| Accumulated other comprehensive loss | (280 | ) | — | — | — | (280 | ) | |||||||||||||
| Retained earnings | 303,001 | 321,708 | (3,733 | ) | (317,975 | ) | 303,001 | |||||||||||||
| Total shareholders’ equity | 612,654 | 399,659 | (2,358 | ) | (397,301 | ) | 612,654 | |||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,398,716 | $ | 499,172 | $ | 44,629 | $ | (540,671 | ) | $ | 1,401,846 | |||||||||
| 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 Quarter Ended March 31, 2018 | ||||||||||||||||||||
| Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Operating revenues, net | $ | 78,092 | $ | 58,709 | $ | 49,502 | $ | (25,933 | ) | $ | 160,370 | |||||||||
| Expenses: | ||||||||||||||||||||
| Direct expenses | 83,997 | 55,364 | 42,779 | (25,914 | ) | 156,226 | ||||||||||||||
| Selling, general and administrative expenses | 8,747 | 3,167 | 3,549 | (4 | ) | 15,459 | ||||||||||||||
| Total operating expenses | 92,744 | 58,531 | 46,328 | (25,918 | ) | 171,685 | ||||||||||||||
| (Gain) Loss on disposal of assets, net | 879 | — | — | — | 879 | |||||||||||||||
| Equity in (income) loss of unconsolidated affiliates, net | 37 | — | — | — | 37 | |||||||||||||||
| Operating (loss) income | (15,568 | ) | 178 | 3,174 | (15 | ) | (12,231 | ) | ||||||||||||
| Equity in net income of consolidated subsidiaries | (2,099 | ) | — | — | 2,099 | — | ||||||||||||||
| Interest expense | 8,195 | 1 | 543 | (542 | ) | 8,197 | ||||||||||||||
| Other income, net | 305 | — | 213 | 527 | 1,045 | |||||||||||||||
| 6,401 | 1 | 756 | 2,084 | 9,242 | ||||||||||||||||
| (Loss) earnings before income taxes | (21,969 | ) | 177 | 2,418 | (2,099 | ) | (21,473 | ) | ||||||||||||
| Income tax (benefit) expense | (4,986 | ) | — | 496 | — | (4,490 | ) | |||||||||||||
| Net (loss) earnings | $ | (16,983 | ) | $ | 177 | $ | 1,922 | $ | (2,099 | ) | $ | (16,983 | ) | |||||||
| For the Quarter Ended March 31, 2017 | ||||||||||||||||||||
| Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Operating revenues, net | $ | 74,284 | $ | 57,473 | $ | 2,861 | $ | — | $ | 134,618 | ||||||||||
| Expenses: | ||||||||||||||||||||
| Direct expenses | 82,344 | 52,381 | 1,788 | — | 136,513 | |||||||||||||||
| Selling, general and administrative expenses | 10,108 | 2,887 | 53 | (4 | ) | 13,044 | ||||||||||||||
| Total operating expenses | 92,452 | 55,268 | 1,841 | (4 | ) | 149,557 | ||||||||||||||
| Equity in loss of consolidated affiliate | 1,003 | — | — | — | 1,003 | |||||||||||||||
| Operating (loss) income | (19,171 | ) | 2,205 | 1,020 | 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 | ) | 2,185 | 1,020 | (2,631 | ) | (23,073 | ) | ||||||||||||
| Income tax (benefit) expense | (8,399 | ) | 574 | — | — | (7,825 | ) | |||||||||||||
| Net (loss) earnings | $ | (15,248 | ) | $ | 1,611 | $ | 1,020 | $ | (2,631 | ) | $ | (15,248 | ) | |||||||
| 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 March 31, 2018 | ||||||||||||||||||||
| Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Net (loss) earnings | $ | (16,983 | ) | $ | 177 | $ | 1,922 | $ | (2,099 | ) | $ | (16,983 | ) | |||||||
| Unrealized gain on short-term investments | 471 | — | — | — | 471 | |||||||||||||||
| Currency translation adjustments | — | — | 467 | — | 467 | |||||||||||||||
| Changes in pension plan asset and benefit obligation | (9 | ) | — | — | — | (9 | ) | |||||||||||||
| Tax effect of the above-listed adjustments | (185 | ) | — | — | — | (185 | ) | |||||||||||||
| Total comprehensive (loss) income | $ | (16,706 | ) | $ | 177 | $ | 2,389 | $ | (2,099 | ) | $ | (16,239 | ) | |||||||
| For the Quarter Ended March 31, 2017 | ||||||||||||||||||||
| Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Net (loss) earnings | $ | (15,248 | ) | $ | 1,611 | $ | 1,020 | $ | (2,631 | ) | $ | (15,248 | ) | |||||||
| Unrealized gain on short-term investments | 162 | — | — | — | 162 | |||||||||||||||
| Changes in pension plan asset and benefit obligations | (1 | ) | — | — | — | (1 | ) | |||||||||||||
| Tax effect of the above-listed adjustments | (58 | ) | — | — | — | (58 | ) | |||||||||||||
| Total comprehensive (loss) income | $ | (15,145 | ) | $ | 1,611 | $ | 1,020 | $ | (2,631 | ) | $ | (15,145 | ) | |||||||
| 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 March 31, 2018 | ||||||||||||||||||||
| Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (9,764 | ) | $ | 6,141 | $ | 2,191 | $ | — | $ | (1,432 | ) | ||||||||
| Investing activities: | ||||||||||||||||||||
| Purchase of property and equipment | (5,459 | ) | — | (1,206 | ) | — | (6,665 | ) | ||||||||||||
| Proceeds from asset dispositions | 842 | — | — | — | 842 | |||||||||||||||
| Purchase of short-term investments | (134,319 | ) | — | — | — | (134,319 | ) | |||||||||||||
| Proceeds from sale of short-term investments | 136,259 | — | — | — | 136,259 | |||||||||||||||
| Loan | (274 | ) | — | — | — | (274 | ) | |||||||||||||
| Net cash provided by (used in) investing activities | (2,951 | ) | — | (1,206 | ) | — | (4,157 | ) | ||||||||||||
| Financing activities: | ||||||||||||||||||||
| Proceeds from line of credit | 33,750 | — | — | — | 33,750 | |||||||||||||||
| Payments on line of credit | (29,500 | ) | — | — | — | (29,500 | ) | |||||||||||||
| Due to/from affiliate, net | 8,472 | (6,234 | ) | (2,238 | ) | — | — | |||||||||||||
| Net cash provided by (used in) financing activities | 12,722 | (6,234 | ) | (2,238 | ) | — | 4,250 | |||||||||||||
| Increase (decrease) in cash | 7 | (93 | ) | (1,253 | ) | — | (1,339 | ) | ||||||||||||
| Cash, beginning of period | 47 | 1,072 | 7,651 | — | 8,770 | |||||||||||||||
| Cash, end of period | $ | 54 | $ | 979 | $ | 6,398 | $ | — | $ | 7,431 | ||||||||||
| For the Quarter Ended March 31, 2017 | ||||||||||||||||||||
| Parent Company Only (issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (19,332 | ) | $ | 10,678 | $ | 401 | $ | — | $ | (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 | (10,703 | ) | 744 | — | — | ||||||||||||||
| Net cash provided by (used in) financing activities | 11,359 | (10,703 | ) | 744 | — | 1,400 | ||||||||||||||
| Increase in cash | 15 | (25 | ) | 1,094 | — | 1,084 | ||||||||||||||
| Cash, beginning of period | 36 | 2,100 | 460 | — | 2,596 | |||||||||||||||
| Cash, end of period | $ | 51 | $ | 2,075 | $ | 1,554 | $ | — | $ | 3,680 | ||||||||||
Special Note Regarding Forward-Looking Statements
All statements other than statements of historical fact contained in this Form10-Q and other periodic reports filed by PHI, Inc. (“PHI” or the “Company” or “we,” “us” or “our”) under the Securities Exchange Act of 1934, and other written or oral statements made by it or on its behalf, are “forward-looking statements,” as defined by (and subject to the “safe harbor” protections under) the federal securities laws. When used herein, the words “anticipates,” “expects,” “believes,” “goals,” “intends,” “plans,” “projects” and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements are based on a number of judgments and assumptions about future developments and events, many of which are beyond our control. These forward-looking statements, and the assumptions on which they are based, (i) are not guarantees of future events, (ii) are inherently speculative and (iii) are subject to significant risks, uncertainties, and other factors that may cause our actual results to differ materially from the expectations, beliefs, and estimates expressed or implied in such forward-looking statements. Factors that could cause our results to differ materially from the expectations expressed or implied in such forward-looking statements include but are not limited to the following: reduction in demand for our services due to volatility of oil and gas prices and the level of domestic and overseas exploration and production activity, which depends on several factors outside of our control; our dependence on a small number of customers for a significant amount of our revenue and our significant credit exposure within the oil and gas industry; any failure to maintain our strong safety record; our ability to secure favorable customer contracts or otherwise remain able to profitably deploy our existing fleet of aircraft; our ability to receive timely delivery of ordered aircraft and parts from a limited number of suppliers, and the availability of working capital, loans or lease financing to acquire such assets; the availability of adequate insurance; adverse changes in the value of our aircraft or our ability to sell them in the secondary markets; weather conditions and seasonal factors, including tropical storms and hurricanes; the effects of competition and changes in technology; the adverse impact of customers electing to terminate or reduce our services; the impact of current or future governmental regulations, including but not limited to the impact of new and pending regulation of healthcare, aviation safety and export controls; the special risks of our air medical operations, including collections risks and potential medical malpractice claims; political, economic, payment, regulatory and other risks and uncertainties associated with our international operations; our substantial indebtedness and operating lease commitments; the hazards associated with operating in an inherently risky business, including the possibility that regulators could ground our aircraft for extended periods of time or indefinitely; our ability to develop and implement successful business strategies; changes in fuel prices; the risk of work stoppages and other labor problems; changes in our future cash requirements; environmental and litigation risks; the effects of more general factors, such as changes in interest rates, operating costs, tax rates, or general economic or geopolitical conditions; and other risks referenced in this and other annual, quarterly or current reports filed by us with the SEC. All of our above-described forward-looking statements are expressly qualified in their entirety by the cautionary statements in this paragraph and the Risk Factors disclosures in our SEC filings. Additional factors or risks that we currently deem immaterial, that are not presently known to us or that arise in the future could also cause our actual results to differ materially from our expected results. Given these uncertainties, investors are cautioned not to unduly rely upon our forward-looking statements. PHI undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Further, we may make changes to our business strategies and plans (including our capital spending plans) at any time and without notice, based on any changes in the above-listed factors, our assumptions or otherwise, any of which could or will affect our results.
prices. Although we can neither control nor predict with any reasonable degreebelieve the negative consequences of certainty the length or impactmarket downturn have crested, we cannot assure you 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. These reductions could be quite substantial.this. For information on the impact of the market downturn on our liquidity, see “- Liquidity and Capital Resources –- Cash Flow –- Liquidity” below.
For several years our Air Medical affiliate received substantive benefits under its three-year service contract with a Middle East customer dated September 29, 2012. Pursuant to contact extensions, our Air Medical affiliate continued providing services at reduced levels for another year through September 30, 2016, when the contract expired. Consequently, since September 30, 2016, our overseas air medical revenues and operating costs have declined significantly as compared to prior periods. For additional information, see Note 3.
| 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 | |||||||||
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| |||||||
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 | ) | ||||||||
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|
|
|
| |||||||
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 | ) | ||||||||
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|
|
|
| |||||||
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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|
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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 | ||||||||||
|
|
|
| |||||||||
| Quarter Ended March 31, | Favorable (Unfavorable) | |||||||||||
| 2018 | 2017 | |||||||||||
(Thousands of dollars, except flight hours, patient transports, and aircraft) | ||||||||||||
| Segment operating revenues | ||||||||||||
| Oil and Gas | $ | 95,640 | $ | 71,731 | $ | 23,909 | ||||||
| Air Medical | 56,988 | 55,338 | 1,650 | |||||||||
| Technical Services | 7,742 | 7,549 | 193 | |||||||||
| Total operating revenues, net | 160,370 | 134,618 | 25,752 | |||||||||
Segment direct expenses (1) | ||||||||||||
Oil and Gas (2) | 96,507 | 81,728 | (14,779 | ) | ||||||||
| Air Medical | 53,832 | 50,842 | (2,990 | ) | ||||||||
| Technical Services | 5,887 | 4,946 | (941 | ) | ||||||||
| Total direct expenses | 156,226 | 137,516 | (18,710 | ) | ||||||||
| Segment selling, general and administrative expenses | ||||||||||||
| Oil and Gas | 4,921 | 1,720 | (3,201 | ) | ||||||||
| Air Medical | 3,167 | 2,881 | (286 | ) | ||||||||
| Technical Services | 370 | 338 | (32 | ) | ||||||||
| Total selling, general and administrative expenses | 8,458 | 4,939 | (3,519 | ) | ||||||||
| Total segment direct and selling, general and administrative expenses | 164,684 | 142,455 | (22,229 | ) | ||||||||
| Net segment (loss) profit | ||||||||||||
| Oil and Gas | (5,788 | ) | (11,717 | ) | 5,929 | |||||||
| Air Medical | (11 | ) | 1,615 | (1,626 | ) | |||||||
| Technical Services | 1,485 | 2,265 | (780 | ) | ||||||||
Total net segment profit (2) | (4,314 | ) | (7,837 | ) | 3,523 | |||||||
Other, net (3) | (1,961 | ) | 1,064 | (3,025 | ) | |||||||
Unallocated selling, general and administrative costs (4) | (7,001 | ) | (8,105 | ) | 1,104 | |||||||
| Interest expense | (8,197 | ) | (8,195 | ) | (2 | ) | ||||||
| (Loss) earnings before income taxes | (21,473 | ) | (23,073 | ) | 1,600 | |||||||
| Income tax benefit | (4,490 | ) | (7,825 | ) | (3,335 | ) | ||||||
| Net loss | $ | (16,983 | ) | $ | (15,248 | ) | $ | (1,735 | ) | |||
| Flight hours: | ||||||||||||
| Oil and Gas | 20,889 | 17,474 | 3,415 | |||||||||
Air Medical (5) | 8,831 | 8,392 | 439 | |||||||||
| Technical Services | 441 | 511 | (70 | ) | ||||||||
| Total | 30,161 | 26,377 | 3,784 | |||||||||
Air Medical Transports (6) | 4,399 | 4,297 | 102 | |||||||||
| (1) | Includes Equity in gain/loss of unconsolidated affiliate. |
| (2) | Total net segment |
| 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 March 31, | ||||||||
| 2018 | 2017 | |||||||
| Total net segment profit | $ | (4,314 | ) | $ | (7,837 | ) | ||
| Other, net | (1,961 | ) | 1,064 | |||||
| Unallocated selling, general and administrative costs | (7,001 | ) | (8,105 | ) | ||||
| Interest expense | (8,197 | ) | (8,195 | ) | ||||
| (Loss) before income taxes | $ | (21,473 | ) | $ | (23,073 | ) | ||
| (3) |
| (4) | Represents corporate overhead expenses not allocable to segments. |
| (5) | Flight hours include |
| (6) | Represents individual patient transports for the period. |
2017 $0.2 million. net. expense and a $0.3 increase in travel cost. Other items increased $0.1 million, net. no gains or losses on asset dispositions. investments were $0.6 million. Other items increased $0.1 million, net. 2017. The decrease in the effective rate for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017 is primarily the result of the reduction in the federal corporate income tax rate from 35% to 21% that became effective January 1, 2018 pursuant to the Tax Cuts and Jobs Act that was enacted in December 2017. heavy legacy aircraft. Oil and Gas segment since March 31, 2017, principally as a result of our acquisition of the HNZ Offshore Business. March 31, 2017. 2017. 12 year, which under GAAP necessitated us classifying all such indebtedness as current liabilities on our accompanying balance sheet as of such date. Consequently, as of March 31, 2018, we had (i) total current liabilities of $699.7 million, of which $620.5 million was indebtedness classified as long-term debt at December 31, 2017, and (ii) total current assets of $345.4 million. operating assets and liabilities. 2017. - Borrowings under our revolving credit facility are secured on a first-priority basis by our inventory, spare parts and accounts receivable. Aircraft purchase obligations Aircraft lease obligations Other lease obligations Long-term debt(2) Senior notes interest(2) 20172018 compared with Quarter Ended March 31, 201620172018 were $134.6$160.4 million, compared to $164.0 million for the three months ended March 31, 2016, a decrease of $29.4 million. Oil and Gas segment operating revenues decreased $16.7$134.6 million for the three months ended March 31, 2017, related primarilyan increase of $25.8 million. Oil and Gas segment operating revenues increased $23.9 million for the three months ended March 31, 2018. As discussed further below, this increase is attributable principally to decreased aircraft flightrevenue derived from our newly-acquired HNZ Offshore Business and secondarily from an increase in revenues for all model types resulting predominately from fewer aircraft on contractour legacy Oil and decreased flight hours.Gas operations. Air Medical segment operating revenues decreased $14.7increased $1.7 million due principally to decreased traditional provider programan increase in revenues resulting from the termination of our overseas operations in late 2016 and decreased independent provider program revenues.operations due to increased patient transports. Technical Services segment operating revenues increased $2.0 million due primarily to an increase in technical services provided to a third party customer.20172018 were 26,37730,161 compared to 29,94826,377 for the three months ended March 31, 2016.2017. Oil and Gas segment flight hours decreased 3,263increased 3,415 hours, due to decreasesthe HNZ Offshore Business and an increase in flight hours for all model types.legacy light and heavy aircraft models. Air Medical segment flight hours decreased 296increased 439 hours fromfor the three months ended March 31, 2017,2018, due to decreasedincreased flight hours for our independent provider program, partially offset by the decrease in ourflight hours for traditional provider and independent provider operations.programs. As discussed further below, individual patient transports in the Air Medical segment were 4,399 for the three months ended March 31, 2018, compared to transports of 4,297 for the three months ended March 31, 2017, compared to transports of 4,5032017.2016.Direct Expenses – Direct operating expense was $136.52018, compared to $137.5 million for the three months ended March 31, 2017, compared to $152.6 million for the three months ended March 31, 2016, a decreasean increase of $16.1$18.7 million, or 11%13.6%. Employee compensation expense decreased $9.0increased $7.4 million primarily due to a reduction in employees in our Oil and Gas segment resulting from implementationrecent acquisition 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.HNZ Offshore Business. Employee compensation expense represented approximately 46%45% and 48%47% of total direct expense for the quarters ended March 31, 20172018 and 2016,2017, respectively. We also experienced decreasesan increase in aircraft warranty costs of $1.2$5.4 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, and the reduction in flight hours. Aircraftaddition of a new warranty program for our medium aircraft at the beginning of 2018. Spare parts and repair expense decreased $1.7 million, aircraft maintenance decreased $1.5increased by $5.1 million and component repair expensefuel expenses increased by $2.0 million, in each case principally due to our expanded international operations. Other items decreased $1.4 million. Other decreases included aircraft rent expense of $1.2 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 $15.4 million for the three months ended March 31, 2018, compared to $13.0 million for the three months ended March 31, 2017, compared to $11.7 million for the three months ended March 31, 2016.2017. The $1.3$2.4 million increase was primarilyprincipally attributable to severance costs relateda $1.2 million increase in salaries and services due to our recent HNZ acquisition, a reduction in force at our Lafayette headquarters facility in March, 2017 and $0.6$0.8 million of legal and consulting fees related to a special project. Partially offsetting this increase are decreases in equity-based compensation of $0.8 million.net – There were no gains or lossesNet -The loss on asset dispositions for the three months ended March 31, 2017.2018 was $0.9 million. See Note 8. For the three months ended March 31, 2016,2017, we recorded a loss of $0.4 million resulting from the sale of one light aircraft. See Note 8. – -Equity in the loss of our unconsolidated affiliateaffiliates attributable to ourmid-2011 investment in a Ghanaian entity was less than $0.1 million and $1.0 million for the three months ended March 31, 2018 and 2017, respectively. See Note 13.2017,2018 compared to $0 million for the three months ended March 31, 2016, resulting from increased expenses.Interest Expense – Interest expense was $8.2 million for the three months ended March 31, 2017 and $7.5 million for the three months ended March 31, 2016, principally due to higher average outstanding debt balances.Other Income,other income, net – Other income was of $1.1 million for the three months ended March 31, 2017 compared to $0.6 million for the same period in 2016, and represents primarily interest income. The $0.42017. Interest income decreased $0.8 million increase is primarily attributabledue to an increase in the amount and ratelower investment balances. Exchange losses increased $0.8 million. Losses on sales of return of our short-term investments.Taxes –Tax benefit - Income tax benefit for the three months ended March 31, 20172018 was $7.8$4.5 million compared to income tax expensebenefit of $1.4$7.8 million for the three months ended March 31, 2016.2017. Our $7.8$4.5 million income tax benefit for the three months ended March 31, 20172018 is attributable to our net loss from operations of $23.1$21.5 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%20.9% and 36.2%34.0% for the three months ended March 31, 20172018 and March 31, 2016, respectively.– -Net loss for the three months ended March 31, 20172018 was $15.2$17.0 million compared to net loss of $8.9$15.2 million for the three months ended March 31, 2016.2017. Loss before income taxes for the three months ended March 31, 20172018 was $23.1$21.5 million compared to loss before income taxes of $7.5$23.1 million for the same period in 2016. Losses2017. Loss per diluted share were $0.97was $1.07 for the current quarter compared to lossesloss per diluted share of $0.57$0.97 for the prior year quarter. The increasedecrease in loss before income taxes for the quarter ended March 31, 20172018 is attributable principally to the decreased profits in theimproved performance of our Oil and Gas and Air Medical segments, each of which are segment, as15.715.8 million, and 15.615.7 million weighted average diluted common shares outstanding duringfor the quarter ended March 31, 2018 and 2017, and 2016, respectively. – -Oil and Gas segment revenues were $95.6 million for the three months ended March 31, 2018, compared to $71.7 million for the three months ended March 31, 2017, compared2017. Of this $23.9 million increase, $28.5 million was attributable to $88.4 million forrevenues derived from our newly-acquired HNZ Offshore Business, and the three months ended March 31, 2016,remainder was attributable to a decrease in revenues from our legacy Gulf of $16.7 million.Mexico offshore aircraft, partially offset by an increase in revenues from our legacy international aircraft. 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.17,47420,889 for the most recentrecently completed quarter compared to 20,73717,474 for the same quarter in the prior year, a decreaseyear. Of this increase of 3,263 flight hours. The decline in revenues and3,415 flight hours, is1,934 hours were attributable to fewer aircraft on contractour newly-acquired HNZ operations and lowerthe reminder to higher utilization rates for all model types due to reduced oilof our light and gas exploration and production activities in response to lower prevailing commodity prices.2017, compared to 154 at March 31, 2016.2017. We have sold orterminated leases of two heavy aircrafts and disposed of eleven lightseven medium aircraft and seven mediumone fixed wing aircraft in the Oil and Gas segment since March 31, 2016. Transfers between segments account for2017. We added 9 medium and 2 light aircraft in the remainder.comparedan increase of $14.8 million. We experienced an increase in aircraft warranty costs of $5.2 million as a result of increased flight hours for our heavy aircraft and the addition of a new warranty program for our medium aircraft. Salaries and wages increased by $7.5 million due to $91.9our recent HNZ acquisition. Fuel expense increased $1.4 million and other items increased $0.7 million, net, in each case principally due to our expanded international operations.2016, a decrease of $10.2 million. Employee compensation expense decreased $6.3 million due to a reduction in employees resulting from implementation of our VERPs. See Note 10. There were also decreases in aircraft warranty costs of $1.2 million,2018 and 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 $0.4 million. Other items increased, net $0.8 million.Selling, general and administrative segment expenses were $1.7 million for the three months ended March 31, 20172017. The $3.2 million increase is mainly attributable to an increase in salaries and $1.5wages due to our newly-acquired HNZ international operations.2016. The $0.2 million increase is primarily attributable2018, compared to increased legal fees.Oil and Gas segmenta loss wasof $11.7 million for the three months ended March 31, 2017, compared2017. The $5.9 million decrease in segment loss is attributable to a loss of $5.0$23.9 million increase in segment revenues, partially offset by $18.0 million increase in aggregate segment expenses.2016. The increase in segment loss was due2018, 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 million for the three months ended March 31, 2017, compared2017. This increase of $1.7 million is primarily attributable to $70.1an increase in the independent provider program revenue of $1.2 million and traditional provider program revenue of $0.5 million. Patient transports were 4,399 for the three months ended March 31, 2016. This decrease of $14.7 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 from our independent provider programs primarily resulting from decreased patient transports due principally to adverse weather conditions in our operating markets. Patient transports were 4,297 for the three months ended March 31, 2017,2018, compared to 4,5034,297 for the same period in the prior year.2017 was 1042018 compared to 105104 at March 31, 2016.2017. Since March 31, 2016, we added two light aircraft to2017 our Air Medical segment which were offset by our sale or dispositionadded one medium and one light aircraft. We disposed of four mediumone light aircraft in the Air Medical segment since such date. Changes in customer-owned aircraft and transfers between segments account for the remainder.comparedan increase of $3.0 million. Employee compensation costs increased $3.2 million due to $57.0increased labor costs period over period. Fuel cost increased $0.3 million primarily due to increased flight volume. Other items decreased $0.5 million, net.2016, a decrease of $6.2 million. Employee compensation costs decreased $2.4 million due to a reduction in personnel primarily relating to the termination of our Middle East operations. Component repair costs also decreased $1.0 million as a result of a reduction in scheduled maintenance for certain aircraft. Cost of goods sold decreased $3.3 million related to certain items that were previously billed on a cost plus basis under our former Middle East contract. Other items increased, net $0.5 million.Selling, general2018 and administrative segment expenses were $2.9 million for the three months ended March 31, 2017, compared to $2.62017. The increase is associated with increased contracted labor costs.2016. The $0.3 million increase is primarily due2018, compared to increased promotional and rent expense, as well as employee compensation costs.Air Medicala segment profit wasof $1.6 million for the three months ended March 31, 2017, compared2017. The $1.6 million decrease in profit is primarily attributable to athe increased expenses described above.profit of $10.4revenues were $7.7 million for the three months ended March 31, 2016. The $8.8 million decrease in profit is attributable to the decreased operating revenues described above, partially offset by decreased expenses.For several years our Air Medical affiliate received substantial benefits under its three-year service contract with a Middle East customer dated September 29, 2012. Pursuant to contract extensions, our Air Medical affiliate continued providing services at reduced levels for another year through September 30, 2016, when the contract expired. Consequently, since September 30, 2016, the overseas revenues and operating results of our Air Medical segment have declined significantly as2018, compared to prior periods. For additional information, see Note 3.Technical Services – Technical Services segment revenues were $7.5 million for the three months ended March 31, 2017, compared to $5.52017. The $0.2 million for the three months ended March 31, 2016. The increase in revenue is due primarily to an increase of technical servicesin revenue from our Antarctica and Helipass operations and parts sales, partially offset by a decrease in revenue provided to a$1.4$0.9 million compared to the prior year three months,month period, principally due to the increased operations.increase in our Antarctica and Helipass operations described above. Technical Services segment earnings was $1.5 million for the three months ended March 31, 2018, compared to segment earnings of $2.3 million for the three months ended March 31, 2017, compared to segment profit of $1.7 million for the three months ended March 31, 2016.10.$3.7$7.4 million at March 31, 2017,2018, compared to $2.6$8.8 million at December 31, 2016.2017. Short-term investments were $276.8$62.0 million at March 31, 2017,2018, compared to $289.8$64.2 million at December 31, 2016.2017. We also had $13.0$12.4 million in restricted investments at March 31, 20172018 and December 31, 2016,2017, respectively, securing outstanding letters of credit and a bond for foreign operations.noted in greater detail above, current weaknessdiscussed further below under “- Short-Term Debt,” beginning in the oilthird quarter of 2016, we have on several occasions sought and gas industry has negatively impactedreceived concessions from our offshore operations sincerevolving credit facility lenders to enable us to remain in compliance with various financial covenants. The most recent of these concessions was granted in the first quarter of 2015, and we expect further reductions in2018, when these lenders granted us a waiver for the operating revenues and net profit of our Oil and Gas segment in future periods. Throughperiod ending March 31, 2017, these negative variances did not materially impact2018 from the requirement to maintain a 2 to 1 ratio of current assets to current liabilities.financial position reported in our consolidated balance sheets, as described in further detail below. Nonetheless, if the current weaknessoutstanding senior notes mature on March 15, 2019. As of the energy industry persists, we expect that it will ultimately have a negative impact on our consolidated operating cash flow and liquidity.Despite our year over year cumulative losses and negative operating cash flows, we expect to be able to fund operations beyond next year due to having significant short-term investments, and we have no debt comingMarch 31, 2018, all of this indebtedness was due within one year.activitiesActivities -Net cash used in operating activities was $8.3$1.4 million for the three months ended March 31, 2017,2018, compared to net cash used of $16.3$8.3 million for the same period in 2016,2017, a decrease of $8.0$6.9 million. Cash receipts from customers were down $16.7 million when compared to same quarter of the prior year, primarily due to a $16.7 millionA decrease in our Oil and Gas segment revenues, related tonet loss adjusted for the downturn in the industry. Although 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. The decrease in cash receipts was offset bynon-cash items accounted for a $21.0$5.9 million decrease in cash required for payroll. This decrease is due to having one less payroll periodused in 2017 due 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.operations. The remaining offset was due$1.0 million of the increase in cash flow from operations is related to a decreasechanges in payments to vendors due to the decreased scope of our operations.activitiesActivities -Net cash provided byused in investing activities was $7.9$4.2 million for the three months ended March 31, 2017,2018, compared to cash usedprovided by investing activities of $9.2$7.9 million for the same period in 2016.2017. Net salespurchases of short-term investments provided $12.8used $1.9 million of cash during the three months ended March 31, 2017,2018, compared to $1.5$12.8 million usedprovided by net sales in the comparable prior year period. There were no grossGross proceeds from asset dispositions were $0.8 million during the three months of 2017,2018, compared to $0.9 millionnone for the same period in 2016.2017. Capital expenditures were $4.8$6.7 million for the three months ended March 31, 2017,2018, compared to $8.5$4.8 million for the same period in 2016. Capital expenditures for aircraft and aircraft improvements accounted for $3.4 million and $8.0 million of these totals for the three months ended 2017 and 2016, respectively. During the first quarter of 2017, we did not add any aircraft to the fleet. During the same period of 2016, we took delivery of one heavy aircraft for which payment was funded in the second quarter of 2016.activities – Activities -Financing activities during the three months ended March 31, 2018 included net borrowings of $4.3 million on our revolving credit facility. Financing activities during the first quarter of 2017 included net borrowings of $1.5 million onunder our revolving credit facility and $0.1 million used to repurchase shares of ournon-voting common stock to satisfy withholding tax obligations of employees. Financing activities during the first quarter of 2016 included net borrowings of $30.2 million on our revolving credit facility and $0.5 million used to repurchase shares of ournon-votingemployees. common stock to satisfy withholding tax obligations of employees.Long-Term 2017,2018, we owed $635.5$621.5 million under our total long-termshort-term debt, consisting of $500.0 million principal amount of 5.25% Senior Secured Notes due March 15, 2019 (excluding debt issuance costs) and $135.5$121.5 million borrowed under our revolving credit facility. – - We have an amended and restated revolving credit facility (our “credit“revolving credit facility”) that matures on October 1, 2018.March 7, 2019. Under our revolving credit facility, we can borrow up to $150.0$130.0 million at floating interest rates based on either the London Interbank Offered Rate plus 225 basis points or the prime rate (each as(as defined in our revolving credit facility), at our option.plus 275 basis points. Our revolving credit facility includes usual and customary covenants and events of default for credit facilities of its type. Our ability to borrow under the revolving 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 to1to 1 if our short-term investments fall below $150.0 million, and consolidated net worth of at least $450.0$500.0 million (with all such terms or amounts as defined in or determined under ourthe revolving credit facility).credit facility. At the same date in 2016, we had $87.7 million in borrowings under ourrevolving credit facility. We also have outstanding a letterletters of credit for $7.6 million issued under our $150.0 millionrevolving 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 $13.0$12.4 million letters of credit outstanding at March 31, 2018 and December 31, 2017.long-term debt,senior notes and letters of credit, see Note 5.2017,2018, 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. WeAs noted in Note 5, we believe we were in compliance with the covenants applicable to these contractual obligations as of March 31, 2017.2018. As of March 31, 2017,2018, 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 2019 2020 2021 2022 Thousands of dollars Aircraft lease obligations $ 168,420 $ 26,662 $ 31,245 $ 27,406 $ 27,272 $ 26,758 $ 29,077 Other lease obligations 25,896 6,904 4,362 3,122 1,639 362 9,507 621,500 — 621,500 — — — 26,250 13,125 13,125 — — — $ 842,066 $ 46,691 $ 670,232 $ 30,528 $ 28,911 $ 27,120 $ 38,584 (1) Payments due during the last nine months of 20172018 only.(2) “ Long-term debt”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.
2017.
See Note 4.
Period | Total Number of Shares Purchased | Average Price Paid per Share | ||||||
March 1, 2017 – March 31, 2017 | 7,016 | $ | 14.27 | |||||
| Total Number of | Average Price | |||
| Period | Shares Purchased | Paid per Share | ||
| March 1, 2018 - March 31, 2018 | 4,158 | $10.43 | ||
Results of Annual Meeting
| | ||
| 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 | |
| PHI, Inc. | ||||||
| May | 4, 2018 | By: | /s/ Al A. Gonsoulin | |||
| Al A. Gonsoulin | ||||||
| Chairman and Chief Executive Officer | ||||||
| May | 4, 2018 | By: | /s/ Trudy P. McConnaughhay | |||
| Trudy P. McConnaughhay | ||||||
| Chief Financial Officer | ||||||
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