CHC Announces Second Quarter Results.Energy Editors/Business Editors ST. JOHN'S, Newfoundland Newfoundland, breed of dog Newfoundland, breed of massive, powerful working dog developed in Newfoundland, probably in the 17th cent., and later perfected in England. It stands from 25 to 28 in. (63.5–71. & LABRADOR Labrador: see Labrador-Ungava; Newfoundland and Labrador, Canada. Labrador Large peninsula, northeastern Canada. Divided between the provinces of Quebec and Newfoundland and Labrador, it occupies an area of about 625,000 sq mi (1,620,000 sq km). , Canada--(BUSINESS WIRE)--Dec. 2, 2003 CHC Helicopter CHC Helicopter Corporation (sometimes known as Canadian Helicopter Corporation, Canadian Helicopters or Hélicoptères Canadiens) (TSX: FLY.SV.A TSX: FLY.MV.B NYSE: FLI) is the world’s largest global commercial helicopter operator. Corporation (the "Company") (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : FLY.A and FLY.B; NYSE NYSE See: New York Stock Exchange : FLI FLI - Flash Lights Impressively. ) today announced financial results (unaudited) for the quarter and six months ended October October: see month. 31, 2003.
Financial Highlights
(in millions of Canadian dollars, except per share amounts)
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Three Months Ended Six Months Ended
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October 31, October 31, October 31, October 31,
2003 2002 2003 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
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Revenue $174.9 $190.7 $346.3 $366.7
EBITDA(1) 29.7 37.3 57.8 70.9
Net earnings
from operations(1) 17.2 18.7 31.9 35.5
Net earnings 15.5 18.7 29.2 27.6
Cash flow
from operations 22.5 26.0 45.9 51.5
Per share information
Net earnings from
operations:(1)
Basic $0.82 $0.90 $1.52 $1.72
Diluted 0.77 0.83 1.42 1.58
Net earnings:
Basic $0.74 $0.90 $1.40 $1.33
Diluted 0.69 0.83 1.30 1.23
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(1) See definitions under Non-GAAP Earnings Measures in Management's
Discussion and Analysis
Highlights
- Revenue for the quarter was $174.9 million compared to $190.7
million in the same quarter last year. Revenue growth was $1.2
million excluding the impact of foreign exchange.
- EBITDA for the quarter was $29.7 million compared to $37.3
million in the same quarter last year. This decline was due
primarily to foreign exchange.
- Net earnings from operations for the quarter were $17.2 million
compared to $18.7 million earned in the same quarter last year.
- Since the start of the second quarter the Company has been
awarded contracts worth approximately $310 million over the life of
the contracts terms. Approximately 40% of this revenue is from new
customers.
- Subsequent to the quarter end, the Company announced that it had
successfully executed a Letter of Intent to acquire 100% of
Schreiner Aviation Group of the Netherlands, for a cash payment of
approximately $129.0 million, including all outstanding debt.
Investor Conference Call The Company's 2nd quarter conference call and webcast will take place Wednesday Wednesday: see week. , December December: see month. 3rd at 10:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . To listen to the conference call, dial 416-695-6140 for local and overseas calls, or toll-free 1-877-888-7019 for calls from within North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . To hear a replay of the conference call, dial 416-695-6030, or toll-free 1-877-244-9049. The replay will be available until 5 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. , December 10, 2003. The financial results and a webcast of the conference call will be available through the Company's website at www.chc CHC Chicago Cubs CHC Community Health Center CHC Chestnut Hill College (Philadelphia, Pennsylvania) CHC Congressional Hispanic Caucus CHC Community Health Council (UK National Health Service) .ca/fiscal.html. The webcast will also be broadcast by CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network at: www.fulldisclosure.com. CHC Helicopter Corporation is the world's largest provider of heavy and medium helicopter helicopter, type of aircraft in which lift is obtained by means of one or more power-driven horizontal propellers called rotors. When the rotor of a helicopter turns it produces reaction torque which tends to make the craft spin also. services to the global offshore oil and gas industry with aircraft operating in 30 countries and a team of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 3,000 professionals worldwide. If you wish to be removed or included on the Company's distribution list, please call 709-570-0749 or email communications@stjohns.chc.ca. This press release and management's discussion and analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial may contain projections and other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "safe harbour" provision of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. While these projections and other statements represent our best current judgment, they are subject to risks and uncertainties including, but not limited to, factors detailed in the Annual Report on Form 20-F and in other filings of the Company with the United States Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , or should underlying assumptions prove incorrect Incorrect means to not be correct and may also refer to:
Management's Discussion and Analysis of Financial Condition and Results of Operations - Three Months Ended October 31, 2003 Overview Net earnings from operations(1) during the quarter were $17.2 million ($0.77 per share, diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) on revenue of $174.9 million compared to net earnings from operations of $18.7 million ($0.83 per share, diluted) on revenue of $190.7 million for the second quarter of last year. The primary factors impacting results for this quarter compared to the same quarter last year include: -- Unfavourable foreign exchange on EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of approximately $7.6 million; -- A net decrease in financing charges of $5.5 million primarily related to net foreign exchange gains; Net earnings during the quarter were $15.5 million ($0.69 per share, diluted) compared to net earnings of $18.7 million ($0.83 per share, diluted) in the same quarter last year. In addition to the above noted decline in net earnings from operations, this year's results include an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $1.7 million related to the consolidation of the Company's European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations and other related activities. Real revenue growth(2) of $1.2 million offset by unfavourable foreign exchange of $17.0 million resulted in a net decrease in revenue of $15.8 million compared to the same period last year. EBITDA decreased from $37.3 million to $29.7 million due primarily to foreign exchange. On December 1, 2003 the Company announced that it had executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. a binding Letter of Intent for the acquisition of 100% of the shares of Schreiner Schreiner is a family name of German origin. Origin Schreiner is an example from the large class of family names that originally derived from the occupations of the people who bore the names. Aviation Group ("Schreiner") for 83 million euros (approximately $129.0 million), inclusive of inclusive of prep. Taking into consideration or account; including. all outstanding debt. Schreiner operates a worldwide fleet of approximately 50 aircraft, providing helicopter and fixed wing aviation services primarily to the offshore oil and gas industry in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Africa and Asia.
Schreiner's Schreiner's A.K.A. Charles Schreiner & Company is a department store located in downtown Kerrville, Texas that is operated by Fort Worth-based Dunlaps. HistoryIn 1858, Charles Schreiner, a former Texas Ranger, purchased a small general store at Camp Verde which was a annual revenues are approximately $155.0 million. (1) See definition under "Non-GAAP Earnings Measures" (2) Real revenue and real EBITDA refer to revenue and EBITDA excluding the impact of foreign exchange. Revenue Total revenue for the quarter was $174.9 million compared to revenue of $190.7 million for the same quarter last year. The following major factors account for the change: -- An increase in real flying revenue of $6.8 million in the Company's International helicopter flying segment due primarily to new oil and gas contracts and increased rates, offset by a $2.6 million decrease in real revenue in the Company's European flying operations due primarily to decreased volume in oil and gas activity; -- An increase in real third-party repair and overhaul revenue of $0.9 million due to an increase in "power-by-the-hour" projects, offset by a real revenue decrease of $4.8 million due to an exceptionally high volume of heavy maintenance projects in the second quarter last year; -- Unfavourable foreign exchange impact on revenue of $17.0 million. Of this, $11.0 million related to the translation of the financial results of the Company's foreign subsidiaries into Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents as a result of the weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. of the
Norwegian Norwegian associated in some way with Norway. Norwegian buhund, Norwegian sheepdog a medium-sized (26-40 lb), spitz-type dog with a short, dense coat in wheaten, black, red or sable, sometimes with black markings on the face, ears kroner and pound sterling, partially offset by the strengthening of the Australian dollar Noun 1. Australian dollar - the basic unit of money in Australia and Nauru dollar - the basic monetary unit in many countries; equal to 100 cents and South African rand “ZAR” redirects here. For the former republic, see South African Republic. The rand is the currency of South Africa. It takes its name from the Witwatersrand (White-waters-ridge . The remainder was due to the translation of U.S. dollar and euro denominated transactions into the reporting currencies Reporting Currency The currency used in published reports and financial documents. Notes: All annual and quarterly reports state the currency in which their results are listed. of the Company's operating divisions.
Revenue Summary by Quarter
(in millions of Canadian dollars)
(Unaudited)
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Total Repair
Helicopter and
Period Europe International Operations Overhaul Composites Total
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Q3-F2002 $95.6 $44.9 $140.5 $11.1 $ - $151.6
Q4-F2002 102.1 46.7 148.8 10.9 - 159.7
Q1-F2003 118.0 45.8 163.8 10.9 1.3 176.0
Q2-F2003 125.4 44.5 169.9 19.6 1.2 190.7
Q3-F2003 116.2 46.4 162.6 15.9 1.5 180.0
Q4-F2003 108.6 48.0 156.6 16.6 2.4 175.6
Q1-F2004 113.0 43.6 156.6 13.3 1.5 171.4
Q2-F2004 112.4 46.7 159.1 14.4 1.4 174.9
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Flying Revenue and Hours The Company derives its flying revenue from two primary types of contracts. Approximately 58% (2003 - 62%) of the Company's year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. flying revenue was derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from hourly charges (including hourly charges on contracts that also have fixed charges), and the remaining 42% (2003 - 38%) was generated by fixed monthly charges. Because of the significant fixed component, an increase or decrease in flying hours may not result in a proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. change in revenue. While flying hours may not correlate directly with revenue, they remain a good measure of activity level and fleet utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be . The following table provides a quarterly summary of the Company's flying hours and number of aircraft for the past eight quarters.
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Flying Hours - Helicopter Operations
(Unaudited)
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Flying Hours Number of Aircraft
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Period Europe Int'l Total Europe Int'l
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Q3-F2002 21,781 11,276 33,057 75 88
Q4-F2002 21,650 10,975 32,625 72 88
Q1-F2003 23,257 11,165 34,422 72 87
Q2-F2003 22,994 10,618 33,612 73 87
Q3-F2003 20,316 11,189 31,505 73 90
Q4-F2003 19,430 11,067 30,497 71 88
Q1-F2004 22,351 11,057 33,408 72 90
Q2-F2004 21,951 11,926 33,877 70 94
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The following table shows flying revenue mix by segment and in
total by aircraft type (includes the impact of foreign exchange)
for year-to-date fiscal 2004 and 2003. The mix of aircraft type
has remained relatively consistent year-over-year.
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Year-to-Date Flying Revenue Mix
(in thousands of Canadian dollars)
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Six Months Ended
October 31, 2003
(Unaudited)
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Heavy Medium Light Total
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Europe $166,979 $41,968 $- $208,947
International 26,042 56,139 4,783 86,964
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Total Flying
Revenue $193,021 $98,107 $4,783 $295,911
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Total % 65% 33% 2% 100%
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Six Months Ended
October 31, 2002
(Unaudited)
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Heavy Medium Light Total
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Europe $176,472 $46,563 $- $223,035
International 27,042 57,110 4,115 88,267
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Total Flying
Revenue $203,514 $103,673 $4,115 $311,302
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Total % 66% 33% 1% 100%
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The following table details the hourly and fixed flying revenue by
segment (includes the impact of foreign exchange) for year-to-date
fiscal 2004 and 2003.
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Flying Revenue - Hourly vs. Fixed
Six Months Ended October 31,
(in thousands of Canadian dollars)
(Unaudited)
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Hourly Fixed Total
2003 2002 2003 2002 2003 2002
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Europe $142,366 $163,123 $66,581 $59,912 $208,947 $223,035
International 28,778 29,567 58,186 58,700 86,964 88,267
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Total $171,144 $192,690 $124,767 $118,612 $295,911 $311,302
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The following table shows segment flying revenue by industry sector
(includes the impact of foreign exchange) for year-to-date fiscal
2004 and 2003. Year-to-date October 31, 2003, the Company derived
approximately 85% of its flying revenue from the oil and gas
industry. The revenue from this industry is derived from production,
which accounts for the majority of the Company's oil and gas revenue,
and from exploration and development activity.
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Flying Revenue - By Industry Sector
Six Months Ended October 31,
(in thousands of Canadian dollars)
(Unaudited)
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Europe International Total
2003 2002 2003 2002 2003 2002
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Oil & Gas $190,367 $204,137 $62,093 $61,226 $252,460 $265,363
EMS/SAR(3) 10,431 10,063 17,620 17,169 28,051 27,232
Other 8,149 8,835 7,251 9,872 15,400 18,707
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Total $208,947 $223,035 $86,964 $88,267 $295,911 $311,302
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(3) EMS/SAR - Emergency Medical Services and Search and Rescue
Services
Aberdeen Airport in the U.K. reports monthly helicopter passenger
traffic at the Company's largest base. The following table provides
a quarterly summary of all helicopter passenger traffic at Aberdeen
Airport for fiscal 2000 to the second quarter of fiscal 2004.
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Aberdeen Airport - Helicopter Passengers
Fiscal Year Ended April 30,
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2004 2003 2002 2001 2000
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Q1 101,757 116,102 121,868 103,874 101,073
Q2 95,227 112,449 123,012 114,376 92,355
Q3 92,918 114,606 104,381 85,167
Q4 92,686 108,247 101,166 85,190
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414,155 467,733 423,797 363,785
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Source: Aberdeen Airport Ltd.
The data in the above table shows that helicopter passenger activity
this quarter has declined from the same period in fiscal 2003, 2002
and 2001. In addition, the data demonstrates the modest level of
seasonality in activity from quarter to quarter.
Review of Operations Europe
European Flying Segment
(millions of CAD dollars)
(Unaudited)
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Q2-04 Q2-03 YTD-04 YTD-03
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Revenue $112.4 $125.4 $225.4 $243.4
EBITDA $17.8 $26.0 $37.3 $49.6
EBITDA % 15.8% 20.7% 16.5% 20.4%
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Revenue from the Company's European flying segment was $112.4 million during the quarter compared to $125.4 million last year. Of the $13.0 million decrease, $10.4 million relates to unfavourable foreign exchange while $2.6 million relates to a net decrease in real revenue. This decline in real revenue was comprised of a decrease in flying revenue of $4.2 million offset by an increase of $1.6 million due to the successful negotiation of retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a price adjustments. Flying activity was lower by 1,043 hours quarter over quarter, comprised of an increase of 167 hours from SAR (Segmentation And Reassembly) The protocol that converts data to cells for transmission over an ATM network. It is the lower part of the ATM Adaption Layer (AAL), which is responsible for the entire operation. See AAL. SAR - segmentation and reassembly and other customers, offset by a decrease of 1,210 hours from oil and gas customers. The revenue decrease was due to general decline in activity primarily from bp and the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of a contract with the consortium Amerada, Statoil Statoil ASA (OSE: STL, NYSE: STO) is a Norwegian petroleum company established in 1972. It is the largest petroleum company in the Nordic countries and Norway's largest company, employing over 25,000 people. and Danish Oil 'Danish oil' or Polymerized Linseed oil is, in its unadulterated/pure state, a non-toxic, wood finishing oil, similar to Tung oil. However, like tung oil, it is often used in various finishes with the addition of solvents or other substances, that are often toxic. and Natural Gas in Denmark Denmark (dĕn`märk), Dan. Danmark, officially Kingdom of Denmark, kingdom (2005 est. pop. 5,432,000), 16,629 sq mi (43,069 sq km), N Europe. . This decrease was partially offset by activity from new entrants into the North Sea sector, including Apache Apache (əpăch`ē), Native North Americans of the Southwest composed of six culturally related groups. They speak a language that has various dialects and belongs to the Athabascan branch of the Nadene linguistic stock (see Native American , Perenco, Venture Production and Paladin Paladin archetypal gunman who leaves a calling card. [TV: Have Gun, Will Travel in Terrace, I, 341] See : Wild West . EBITDA from the European flying segment was $17.8 million for the quarter compared to $26.0 million last year. Of the $8.2 million decrease, $3.7 million relates to unfavourable foreign exchange while $4.5 million represents a net decrease in real EBITDA. This decrease in real EBITDA was due to the above noted revenue impact and additional pension cost of $3.0 million. The pension expense is consistent with the first quarter and the increase over last year's expense is due to an increase in the amortization of net actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin and experience losses and assumption changes as a result of the most recent actuarial review at April 30, 2003. EBITDA as a percentage of revenue was 15.8% compared to 20.8% experienced during the second quarter last year. EBITDA percentage declined due to the factors noted above. In August 2003, the Company was awarded a three-year contract (plus two one-year adj. 1. completing its life cycle within a year. Adj. 1. one-year - completing its life cycle within a year; "a border of annual flowering plants" annual phytology, botany - the branch of biology that studies plants options) with Apache North Sea Ltd. for the provision of offshore helicopter support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services . Utilizing Super Puma AS332L aircraft from its pool of Super Puma helicopters based at Aberdeen Aberdeen, former county, Scotland Aberdeen, former county, Scotland: see Aberdeenshire. Aberdeen, city, Scotland Aberdeen, city (1991 pop. , Scotland Scotland, political division of Great Britain (1991 pop. 4,957,000), 30,414 sq mi (78,772 sq km), comprising the northern portion of the island of Great Britain and many surrounding islands. , the Company will provide crew transportation services for the Forties offshore oil and gas fields in the Central North Sea. The three-year contract commenced in August 2003, and replaces a contract formerly held with bp, which had been due to expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. in August 2004. bp announced the sale of its Forties asset to Apache January January: see month. 13, 2003. Subsequent to the quarter, the Company was awarded contracts with Technip Technip is a French engineering company, headquartered in La Défense, Paris. It has a workforce of over 21,000 people worldwide, and annual revenues of over 5.3 billion euros (2005, IFRS). Offshore UK Ltd. and Venture Production (North Sea Developments Ltd.). Each contract is for a two year period, plus two option years, with a combined value estimated at $5.4 million over the initial two year period. On November November: see month. 10th the Company announced its plan to implement a single management structure for the Company's European operations ("CHC Europe"). This announcement followed months of evaluation and analysis by management in cooperation with CHC Europe employee representatives. In addition to combining the management structures of the UK and Norwegian operations, the Company believes the new management structure provides an increased focus on the critical areas of the business, such as employee and customer relationships, and better positions the Company for growth in Europe. The transition to the new structure is underway and the majority of key management positions will be filled prior to December 31, 2003. The Company estimates that approximately 120 people will be affected by this transition. Through staff reductions, improved information systems and group purchasing leaverage, combined with better fleet utilization, the Company believes it will realize annual EBITDA savings of $11 million by July July: see month. 31, 2004 with approximately 50% of these measures expected to be complete by May, 2004. This is in addition to the previous cost cutting plan of $10 million in Europe which is substantially complete. The Company expects to record an additional restructuring charge during the third quarter related to the establishment of the new European structure and the associated redundancies, however, until the new management structure is in place, the amount of this charge cannot be reasonably estimated. The Company believes these measures will result in significant improvements in the Company's competitive position in Europe. International
International Flying Segment
(millions of CAD dollars)
(Unaudited)
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Q2-04 Q2-03 YTD-04 YTD-03
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Revenue $46.7 $44.5 $90.3 $90.3
EBITDA $6.4 $8.8 $12.8 $18.6
EBITDA % 13.7% 19.7% 14.2% 20.5%
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Revenue from the Company's International flying segment was $46.7 million during the quarter compared to $44.5 million last year. Of the $2.2 million increase, $7.5 million relates to real revenue growth offset by unfavourable foreign exchange of $5.3 million. The real revenue growth is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a net increase in flying revenue. On a quarter over quarter basis, flying activity from oil and gas customers increased by 1,079 hours and activity from other customers increased by 421 hours, while activity from SAR/EMS customers decreased by 192 hours. EBITDA from the International flying segment was $6.4 million for the quarter compared to $8.8 million last year. Of the $2.4 million decrease, $4.1 million relates to unfavourable foreign exchange partially offset by a $1.7 million increase in real EBITDA. The foreign exchange impact has increased during the quarter due to the expiration of a favourable U.S. dollar forward foreign currency contract. The increase in real EBITDA is due primarily to (i) addition of a third Super Puma to a contract in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , (ii) a general increase in activity in Angola Angola (ăng-gō`lə), officially Republic of Angola (2005 est. pop. 11,191,000), including the exclave of Cabinda, 481,351 sq mi (1,246,700 sq km), SW Africa. , offset by (iii) operating costs operating costs npl → gastos mpl operacionales associated with continued training of new pilots in Australia for upcoming contracts. EBITDA as a percentage of revenue was 13.7% compared to 19.7% during the same quarter last year. The EBITDA percentage decreased due to the factors discussed above. During the quarter new contracts were entered into in expanding markets with a combined revenue of $100.0 million as follows: -- Short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. contract with Daewoo
Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. ; -- Short-term contract with Premier Petroleum in Southeast Asia; -- Five year contract in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. for provision of two Super Puma AS332L1 aircraft; -- Four year contract with Encana in Equador to provide a Bell 212; -- Four year contract with United Helicopters United Helicopters was formed in 1944 as a joint venture between Stanley Hiller and Henry Kaiser[1]. The company made a very wide range of helicopters, including the world's first successful two-seat co-axial helicopter[2] Pvt. Ltd. in India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. for two S76C+ aircraft; and -- Five year contract with Western Australia Western Australia, state (1991 pop. 1,409,965), 975,920 sq mi (2,527,633 sq km), Australia, comprising the entire western part of the continent. It is bounded on the N, W, and S by the Indian Ocean. Perth is the capital. Government Fire and Emergency Authority to provide a newly acquired Bell 412EP. -- Twenty-six month contract with BTC BTC Baku-Tbilisi-Ceyhan (crude oil pipeline) BTC Belgische Technische Coöperatie (Dutch: Belgian Technical Cooperation) BTC Berlinale Talent Campus BTC Business Travel Coalition Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. for the provision of a Bell 212. Also during the quarter, the Company was successful in negotiating renewals on the following contracts with a combined revenue of $124.5 million: -- Additional five years with Unocal Thailand Thailand (tī`lănd, –lənd), Thai Prathet Thai [land of the free], officially Kingdom of Thailand, constitutional monarchy (2005 est. pop. 65,444,000), 198,455 sq mi (514,000 sq km), Southeast Asia. ; -- Additional five years with Total Exploration and Production Company in Southeast Asia; -- Additional two years with Kuwait Kuwait (k wīt`, –wāt) or Kowait (kō`–), officially State of Kuwait, independent sheikhdom (2005 est. pop. Gulf Oil Company and Aramco Aramcoin full Arabian American Oil Company Oil company founded by the Standard Oil Co. of California (Chevron) in 1933, when the government of Saudi Arabia granted it a concession. Other U.S. companies joined after oil was found near Dhahran in 1938. Gulf Operations Ltd. in the Persian Gulf Persian Gulf, arm of the Arabian Sea, 90,000 sq mi (233,100 sq km), between the Arabian peninsula and Iran, extending c.600 mi (970 km) from the Shatt al Arab delta to the Strait of Hormuz, which links it with the Gulf of Oman. ; -- Additional 27 months with Occidental oc·ci·den·tal or Oc·ci·den·tal adj. Of or relating to the countries of the Occident or their peoples or cultures; western. n. A native or inhabitant of an Occidental country; a westerner. Noun 1. Exploration and Production Company in Equador; and Subsequent to the quarter end, the Company was awarded a contract renewal by PTT (1) (Postal, Telegraph & Telephone) The governmental agency responsible for combined postal, telegraph and telephone services in many European countries. (2) See push-to-talk. PTT - Post, Telephone and Telegraph administration Exploration and Production, Thailand for the provision of two Sikorsky S76A++ helicopters. The contract award, effective January 24, 2004, extends the existing relationship under new terms See suggestions for new terms. and conditions and will generate anticipated revenue of approximately $14.1 million over the two-year period. In addition, the Company's division in Africa has won a five-year contract renewal (plus one option year) for the provision of two new, dedicated Sikorsky S76C+ aircraft to Mobil Equatorial Guinea Equatorial Guinea (gĭn`ē), officially Republic of Equatorial Guinea, republic (2005 est. pop. 536,000), 10,830 sq mi (28,051 sq km), W central Africa. Inc. operations off the coast of West Africa West Africa A region of western Africa between the Sahara Desert and the Gulf of Guinea. It was largely controlled by colonial powers until the 20th century. West African adj. & n. . The new aircraft will replace two Bell 212 aircraft currently on the contract. Repair and Overhaul
Repair and Overhaul
(millions of CAD dollars)
(Unaudited)
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Q2-04 Q2-03 YTD-04 YTD-03
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Total Revenue $46.3 $60.3 $89.3 $100.7
Third-Party Revenue $14.4 $19.6 $27.7 $30.5
EBITDA $11.6 $10.7 $19.7 $18.7
EBITDA %(i) 25.1% 17.8% 22.2% 18.5%
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(i) EBITDA % is calculated on total revenue
Astec Total revenue from the repair and overhaul business during the quarter was $46.3 million compared to $60.3 million for the same period last year. The decrease in third-party revenue of $5.2 million is attributable to $1.3 million in unfavourable foreign exchange and a $4.8 million decrease in real revenue due to an exceptionally high volume of heavy maintenance projects in the second quarter of last year, offset by a $0.9 million increase in "power-by-the-hour" revenue from new and existing customers quarter over quarter. EBITDA for the quarter was $11.6 million compared to $10.7 million last year, for an increase of $0.9 million. A real increase in EBITDA of $2.2 million was partially offset by unfavourable foreign exchange of $1.3 million. During the quarter Astec established an in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. program for the repair and overhaul of Super Puma MkII dynamic components which had previously been covered by an external "power-by-the-hour" agreement with the aircraft manufacturer. EBITDA includes a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies of approximately $2.2 million related to the cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of the "power-by-the-hour" agreement. Costs increased by $0.5 million representing training hours of personnel for the MkII program. EBITDA as a percentage of revenue was 25.1% and exceeded 17.8% experienced in the same quarter last year due to the factors noted above. In October 2003, the Company's repair and overhaul business in Norway Norway, Nor. Norge, officially Kingdom of Norway, constitutional monarchy (2005 est. pop. 4,593,000), 125,181 sq mi (324,219 sq km), N Europe, occupying the western part of the Scandinavian peninsula. signed an agreement with Sikorsky which enables it to be considered as an approved centre for providing modification A change or alteration in existing materials. Modification generally has the same meaning in the law as it does in common parlance. The term has special significance in the law of contracts and the law of sales. and logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. support to the S-92 being selected by the Norwegian Department of Justice as the SAR helicopter for Norway. The Company has similar arrangements with NH Industries with respect to the NH90 aircraft and is currently in discussion with Westland West·land A city of southeast Michigan, a suburb of Detroit. Population: 86,200. with respect to the EH101 aircraft. Composites
Composites Manufacturing
(millions of CAD dollars)
(Unaudited)
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Q2-04 Q2-03 YTD-04 YTD-03
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Revenue $1.4 $1.3 $2.8 $2.5
EBITDA $(0.4) $(1.6) $(1.1) $(2.6)
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Total revenue from the Company's composites manufacturing segment was $1.4 million compared to $1.3 million generated last year while EBITDA was a loss of $0.4 million compared to a loss of $1.6 million in the same period last year, an improvement of $1.2 million. Work continues on preparing for the start of production on the Aero Vodochody
Aero Vodochody (commonly referred to as Aero; Vodochody is a location) is a Czech (and Czechoslovak) aircraft company notable for producing the L-29 Delfin, L-39 contract for the manufacture of S76 components. Partial deliveries of components are still on schedule for December 2003 with full-scale full-scale adj. 1. Of actual or full size; not reduced: a full-scale model. 2. Employing all resources; not limited or partial: production deliveries scheduled for March 2004. The Company is still exploring strategic alternatives for Composites, including a sale of all or a portion of the business. Corporate and Other The Corporate and other segment recorded costs of $5.7 million compared to $6.6 million in the same quarter last year. The $0.9 million improvement quarter over quarter related primarily to lower compensation costs. Financing Charges Financing charges for the quarter were $4.2 million compared to $9.7 million during the same quarter last year as described in Note 6 to the Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Interim Financial Statements. A $3.8 million foreign exchange gain on the maturity of a forward currency contract and a $2.1 million gain on repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of U.S. debt offset by a $0.4 million decrease in interest on debt obligations accounted for the $5.5 million decrease. The average interest rate on the Company's variable-rate Variable-rate A varible-rate agreement, as distinguished from a fixed-rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. senior credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities for the current quarter was approximately 4.1% compared to 5.4% in the same period last year. Income Taxes Total income tax expense recorded during the quarter was $3.3 million compared to total income tax expense of $4.4 million recorded in the same quarter last year. During the quarter the Company recorded an income tax recovery of $0.8 million on restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs related to the consolidation of the Company's European operations. Income tax expense included in net earnings from operations was $4.1 million for the quarter. For the same quarter last year the Company reported income tax on earnings from operations of $4.4 million. The effective income tax rate on net earnings from operations before income taxes year-to-date October 31, 2003 was 18.8% compared to 21.9% in the prior year. The lower rate this year is primarily the result of decreased earnings in jurisdictions with higher tax rates. Cash Flows, Liquidity and Capital Resources Operating Activities Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the quarter was $22.5 million, a $3.5 million decrease from last year. This decline was driven primarily by (i) reduced EBITDA of $7.6 million due primarily to unfavourable foreign exchange and (ii) a restructuring charge (after tax) of $1.7 million, offset by a $5.5 million reduction in financing charges as noted above. Non-cash working capital decreased by $12.8 million during the quarter in comparison to an increase of $3.8 million in the same quarter last year. The decrease in this quarter was spread evenly over all working capital components. There were no individually material changes and the decline is the result of improved working capital management during the quarter. Financing Activities The Company's net debt (net of cash) decreased by $20.7 million during the quarter, from $294.6 million to $273.9 million. This decrease consists of a real debt increase of $0.3 million, a real cash increase of $14.0 million and favourable foreign exchange of $7.0 million. The real increase in cash of $14.0 million was driven primarily by cash flow from operations of $22.5 million and a reduction in non-cash working capital of $12.8 million, offset by capital expenditures including the purchase of three aircraft for $20.2 million. The foreign exchange impact of $7.0 million was due almost entirely to the effect of exchange rate fluctuations on the Company's pound sterling and euro denominated debt. As at October 31, 2003 the Company had unused credit facilities of $39.1 million and cash of $37.7 million, for a total of $76.8 million.
Change in
Net Debt Position During Q2
(in millions of Canadian dollars)
(Unaudited)
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Opening balance $294.6
Real increase in debt 0.3
Real increase in cash (14.0)
Foreign exchange (7.0)
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Ending balance $273.9
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Investing Activities Capital expenditures of $26.5 million during the quarter included $20.2 million for the purchase of three aircraft, $3.8 million in aircraft modifications A change in the physical characteristics of aircraft, accomplished either by a change in production specifications or by alteration of items already produced. and $2.5 million primarily for other equipment. In addition, the Company incurred expenditures of $1.8 million related to helicopter major inspections. The Company recorded amortization of helicopter component costs of $38.7 million during the quarter compared to component expenditures of $34.6 million for a net of $4.1 million. All major component repair and overhaul expenditures including major inspections are capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. and expensed over their period of future benefit as described in note 1 to the Company's fiscal 2003 audited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . The Company also made deposits during the quarter of $16.5 million toward the purchase of new aircraft. Foreign Currency The Company's reporting currency is the Canadian dollar. However, a significant portion of revenue and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are denominated in pound sterling, Norwegian kroner, Australian dollars and South African rand, the reporting currencies of the Company's principal foreign operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. . In addition, certain revenue and operating expenses are transacted in U.S. dollars and euros. The translation of the financial results of the Company's foreign subsidiaries into Canadian dollars resulted in foreign exchange that reduced revenue by $11 million. This was primarily a result of the weakening of the Norwegian kroner and pound sterling somewhat offset by the strengthening of the Australian dollar and South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. rand quarter over quarter. The impact on revenue due to the translation of U.S. dollar and euro denominated transactions into the reporting currencies of the Company's divisions was unfavourable by $6.0 million, for a total unfavourable foreign exchange impact of $17.0 million. The unfavourable impact of foreign exchange on EBITDA during the quarter was $7.6 million. Of this, $2.7 million was due to the translation of the financial results of the foreign subsidiaries into Canadian dollars and $4.9 million was attributable to the translation of U.S. dollar and euro denominated transactions. Since financing charges, amortization, income tax expense, capital expenditures and debt repayments are also generally in European currencies and U.S. dollars, the net impact of foreign exchange on net earnings and cash flow is not as significant. The Company's overall approach to managing foreign currency exposures includes identifying and quantifying its currency exposures and putting in place the necessary financial instruments, when considered appropriate, to manage the exposures. In managing this risk, the Company may use financial instruments including forwards, swaps, and other derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. . Company policy specifically prohibits the use of derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. for speculative Speculative Securities that involve a high level of risk. speculative Of or relating to an asset or a group of assets with uncertain returns. The greater the degree of uncertainty the more speculative the asset. purposes.
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Average Foreign Exchange Rates
Three Months Ended
October 31, 2003 October 31, 2002
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USD - CAD 1.3517 1.5683
NOK - CAD 0.1874 0.2100
GBP - CAD 2.2226 2.4476
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The Company has designated its pound sterling and euro denominated debt as hedges of its investment in its self-sustaining self-sus·tain·ing adj. Able to sustain oneself or itself independently. self  -sus·tain European
subsidiaries. As a result, revaluation RevaluationA calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. gains and losses on this debt and the net investments are offset in the shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. section on the balance sheet in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . To minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. foreign exchange risk, the Company has denominated its debt in various currencies to match net operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. with debt service obligations. As at October 31, 2003, the Company's net debt was denominated in the following currencies:
(Unaudited)
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Debt in Canadian
Original Currency Equivalent
Currency (000's) (000's)
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Euro Euros 96,350 $147,608
Pound sterling Pounds Sterling 44,526 99,654
U.S. dollar $17,000 22,435
Norwegian kroner NOK 128,000 23,846
Canadian dollar CDN 18,030 18,030
Cash (various currencies) (37,678)
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Total Reported Net Debt $273,895
Fleet At October 31, 2003 the Company's fleet consisted of 117 owned and 47 operating leased Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. aircraft. An additional 140 aircraft are employed in the Company's 43.5% owned Canadian onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. helicopter operations, Canadian Helicopters Limited, for a total of 304. The Company employs 70 aircraft in Europe, (primarily in the North Sea) and 94 in its other international markets.
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Fleet Summary
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Operating
Heavy Medium Light Total Owned Leased
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Fleet at
July 31, 2003 70 77 15 162 116 46
Increases
(decreases)
during the
period:
Bell 412 2 2 2
Bell 407 (1) (1) (1)
S76C+ 1 1 1
Sale-leaseback
of Super Puma
MkII (1) 1
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- 3 (1) 2 1 1
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Fleet at
October 31,
2003 70 80 14 164 117 47
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Two Bell 412 aircraft were purchased for $13.4 million by the Company's International operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . One of the aircraft is intended to service anticipated growth, while the other aircraft will service a new contract with the Western Australia Government Fire and Emergency Services emergency services Emergency care '…services …necessary to prevent death or serious impairment of health and, because of the danger to life or health, require the use of the most accessible hospital available and equipped to furnish those services' Authority. During the quarter a Bell 407 owned by the Company's Australia division crashed in Australia. Insurance proceeds of $2.1 million were accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. during the quarter resulting in a net loss on disposal of the aircraft of $0.4 million. A S76C+ aircraft was acquired for $5.9 million to service a new contract in India. In addition the Company executed a sale-leaseback sale-lease·back n. See leaseback. on a Super Puma MkII which was purchased last quarter. The transaction resulted in a gain of $4.5 million which has been deferred to be amortized over the term of the lease. During the quarter, the Company made aircraft operating lease payments of $10.3 million compared to $13.0 million in the same period last year. As at October 31, 2003, there were eight additional leased aircraft compared to the same period last year. Although there has been an increase in the number of leased aircraft, this has been offset by lower payments on existing leases due to lower floating interest rates and more favourable foreign exchange rates. The Company has entered into operating leases with third-party lessors in respect of 47 aircraft included in the Company's fleet at October 31, 2003. These leases are long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. with expiry dates expiry date expire n → date f d'expiration; (on label) → à utiliser avant ... expiry date expire n → Ablauftermin m ranging from 2003 to 2011. The Company has an option to purchase the aircraft at market value or agreed amounts at the end of most of the long-term leases, but has no commitment to do so. The future minimum lease payments Rental payments over the lease term including the amount of any bargain purchase option, premium and any guaranteed residual value and excluding any rental relating to costs to be met by the lessor and any contingent rentals. required under these aircraft operating leases are as follows (based on October 31, 2003 interest rates and exchange rates):
Unaudited
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2004 $20.3 million
2005 34.7 million
2006 30.0 million
2007 22.2 million
2008 17.6 million
and thereafter: 26.7 million
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Total $151.5 million
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In addition to aircraft leases, the Company has approximately $4.8 million in annual lease commitments for land, buildings and non-aircraft equipment. As at October 31, 2003, the Company had deposits with Eurocopter The Eurocopter Group is a global helicopter manufacturing and support company formed in 1992 from the merger of the helicopter divisions of French Aérospatiale and German DaimlerChrysler Aerospace AG (DASA). to secure delivery positions on up to four new Super Puma MkII aircraft and two EC225 helicopters through fiscal 2005. Subsequent to the quarter end, the Company accepted delivery of the first of these Super Puma's under an operating lease. The Company has some flexibility built into the delivery schedule for the remainder of these aircraft in order to match acquisitions with new demand. An order has also been placed for ten new medium helicopters for use in international operations for delivery over the next 12 to 18 months. The first four of these aircraft will be used on recently awarded long-term contracts in India, Asia and West Africa starting in the third quarter. The remaining six aircraft are expected to be required for new customers in several locations. Based on an independent appraisal as at April 30, 2003, the fair market value of the Company's owned aircraft fleet at October 31, 2003 is U.S. $382.2 million (CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $504.4 million), exceeding its recorded net book value by approximately CDN $164.8 million (July 31, 2003 - $188.9 million). The change since July 31, 2003 is primarily related to foreign exchange. Defined Benefit Employee Pension Plans At October 31, 2003 the Company had a funding deficit of $64.2 million related to its defined benefit pension plans that require funding by the Company compared to $68.4 million at July 31, 2003, representing an improvement of $4.2 million. The improvement in the funding deficit was primarily due to $10.9 million in actual returns on the plan assets, employer and participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. contributions of $1.4 million and favourable foreign exchange of $0.7 million partially offset by experience losses on the pension obligations of approximately $0.8 million and interest and current period service costs of $8.0 million. The actual return on the plan assets for the quarter exceeded the expected return Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: by approximately $5.8 million to give $15.9 million in excess of expectations year-to-date. Investment performance has been at or above the relevant benchmarks. Of the $64.2 million funding deficit, $46.9 million and $17.3 million are related to plans in the U.K. and Norway, respectively. Additionally, the Company had an obligation of $36.4 million at October 31, 2003 related to plans that do not require funding compared to $33.5 million at July 31, 2003. Defined benefit pension plan expense increased from $3.7 million in the second quarter last year to $6.6 million in the same period this year. This $2.9 million increase was comprised of a real increase of $3.5 million offset by favourable foreign exchange of $0.6 million. Pension expense increased due to assumption changes and increased amortization of net actuarial and experience losses quarter over quarter. While the asset mix varies in each plan, overall the asset mix at October 31, 2003 was 46.8% equities, 30.4% fixed income, and 22.8% money market. Dividend During the quarter the Company's Board of Directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. an annual 50 cent dividend, to be paid quarterly at a rate of 12.5 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. on each of the Class A Subordinate Voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. and the Class B Multiple Voting Noun 1. multiple voting - the act of voting in more than one place by the same person at the same election (illegal in U.S.) balloting, vote, voting, ballot - a choice that is made by counting the number of people in favor of each alternative; "there were only 17 shares. The first quarterly payment will be made on December 2, 2003 as of a November 25, 2003 record date. The total of these quarterly dividend payments is expected to be $10.5 million. Safety Safety is a primary focus of all activities performed by the Company. The Company believes it has one of the best safety records in the industry, as evidenced by its low incident rate and insurance premiums. Unfortunately during the quarter, the Company lost a single engine Bell 407 as a result of a crash in Australia. The accident is currently being investigated. Seasonality The Company's revenues and earnings are primarily derived from oil and gas exploration and production activities and are not subject to significant seasonal variations. There are, however, seasonal variations in earnings from the Company's 43.5% investment in the onshore operations of Canadian Helicopters Limited. Non-GAAP Earnings Measures The Company's continuous disclosure documents may provide discussion and analysis of "EBITDA" and "Net earnings from operations". These earnings measures do not have standard definitions prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by generally accepted accounting principles in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and therefore may not be comparable to similar measures disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). by other companies. The Company has included these Non-GAAP earnings measures because they are used by management, investors, analysts and others as measures of the Company's financial performance. The definitions of these Non-GAAP earnings measures are set forth below: EBITDA is defined as earnings before financing charges, income taxes, large non-recurring items and non-cash items. Net earnings from operations is defined as net earnings before large non-recurring items. Net earning from operations per share is defined as net earnings from operations divided by the weighted average number of shares.
---------------------------------------------------------------------
---------------------------------------------------------------------
Reconciliation of Non-GAAP Earnings Measures
to GAAP Net Earnings
(in thousands of Canadian dollars)
Three Months Ended Six Months Ended
October October October October
31, 2003 31, 2002 31, 2003 31, 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------
Revenue $174,913 $190,739 $346,347 $366,718
Operating expenses 145,182 153,403 288,519 295,850
---------------------------------------------------------------------
EBITDA 29,731 37,336 57,828 70,868
---------------------------------------------------------------------
Recurring items:
Amortization (6,194) (5,577) (11,883) (10,709)
(Loss) gain on
disposals of assets (493) (631) 598 (454)
Financing charges (4,198) (9,666) (11,079) (17,708)
Equity in earnings of
associated company 2,446 1,689 3,776 3,475
---------------------------------------------------------------------
(8,439) (14,185) (18,588) (25,396)
---------------------------------------------------------------------
Net earnings from
operations before
income taxes 21,292 23,151 39,240 45,472
Income taxes thereon (4,075) (4,445) (7,386) (9,959)
---------------------------------------------------------------------
Net earnings from
operations 17,217 18,706 31,854 35,513
---------------------------------------------------------------------
Non-recurring
items:
Restructuring and
debt settlement
costs (2,536) - (3,816) (12,464)
Income tax recovery
thereon 812 - 1,183 4,548
---------------------------------------------------------------------
(1,724) (2,633) (7,916)
---------------------------------------------------------------------
Net earnings $15,493 $18,706 $29,221 $27,597
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Reconciliation of Non-GAAP Earnings Measures
to GAAP Net Earnings (cont'd)
(in thousands of Canadian dollars, except per share amounts)
Three Months Ended Six Months Ended
October October October October
31, 2003 31, 2002 31, 2003 31, 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------
Net earnings from
operations per
share information:
Net earnings from
operations $17,217 $18,706 $31,854 $35,513
Weighted average
number of shares
(000's) 20,911 20,689 20,891 20,683
Basic net earnings
from operations
per share $0.82 $0.90 $1.52 $1.72
---------------------------------------------------------------------
---------------------------------------------------------------------
Net earnings from
operations $17,217 $18,706 $31,854 $35,513
Effect of dilutive
securities 123 125 245 242
---------------------------------------------------------------------
$17,340 $18,831 $32,099 $35,755
Weighted average
number of shares
(000's) 22,610 22,754 22,601 22,666
Diluted net
earnings from
operations
per share $0.77 $0.83 $1.42 $1.58
---------------------------------------------------------------------
---------------------------------------------------------------------
Summary financial data - U.S. Dollars Certain summary financial data from the October 31, 2003 consolidated interim financial statements and the April 30, 2003 consolidated annual financial statements, as detailed below, have been translated into U.S. dollars. This translation is included solely as supplemental information for the convenience of the reader. The data has been translated at the exchange rate at October 31, 2003 of $1.3197 equals U.S. $1.00.
Financial Highlights
(in millions of U.S. dollars, except per share amounts)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Six Months Year
Ended Ended Ended
October October April
31, 2003 31,2003 30, 2003
---------------------------------------------------------------------
Revenue $132.5 $262.4 $547.4
EBITDA 22.5 43.8 107.8
Net earnings from operations 13.0 24.1 53.0
Net earnings 11.7 22.1 50.1
Cash flow from operations 17.0 34.8 59.0
Per Share Information
Net earnings from operations:
Basic $0.62 $1.15 $2.56
Diluted 0.58 1.08 2.36
Net earnings:
Basic $0.56 $1.06 $2.42
Diluted 0.52 0.99 2.23
---------------------------------------------------------------------
---------------------------------------------------------------------
CHC Helicopter Corporation
Consolidated Statements of Earnings
(in thousands of Canadian dollars, except per share amounts)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Ended Six Months Ended
October October October October
31, 2003 31, 2002 31, 2003 31, 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------
Revenue $174,913 $190,739 $346,347 $366,718
Operating expenses 145,182 153,403 288,519 295,850
---------------------------------------------------------------------
Earnings before
undernoted items 29,731 37,336 57,828 70,868
Amortization (6,194) (5,577) (11,883) (10,709)
(Loss) gain on
disposals of assets (493) (631) 598 (454)
Financing charges
(Note 6) (4,198) (9,666) (11,079) (17,708)
Equity in earnings
of associated
company 2,446 1,689 3,776 3,475
Restructuring and
debt settlement
costs (Note 7) (2,536) - (3,816) (12,464)
---------------------------------------------------------------------
Earnings before
income taxes 18,756 23,151 35,424 33,008
Income taxes
provision (3,263) (4,445) (6,203) (5,411)
---------------------------------------------------------------------
Net earnings $15,493 $18,706 $29,221 $27,597
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per share
(Note 9)
Basic $0.74 $0.90 $1.40 $1.33
Diluted 0.69 0.83 1.30 1.23
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation
Consolidated Statements of Shareholders' Equity
(in thousands of Canadian dollars, except per share amounts)
---------------------------------------------------------------------
---------------------------------------------------------------------
Six Months Ended
October October
31, 2003 31, 2002
(Unaudited) (Unaudited)
---------------------------------------------------------------------
Retained earnings, beginning of period $177,862 $115,745
Net earnings 29,221 27,597
Dividends (10,486) (4,138)
---------------------------------------------------------------------
Retained earnings, end of period 196,597 139,204
Capital stock (Note 8) 237,366 236,103
Contributed surplus 3,291 3,291
Foreign currency translation adjustment (28,945) 914
---------------------------------------------------------------------
Total shareholders' equity $408,309 $379,512
---------------------------------------------------------------------
---------------------------------------------------------------------
Dividends per participating voting share $0.50 $0.20
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation
Consolidated Balance Sheets
(in thousands of Canadian dollars)
As at
---------------------------------------------------------------------
---------------------------------------------------------------------
October April
31, 2003 30, 2003
(Unaudited) (Audited)
---------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $37,678 $58,104
Receivables 136,507 139,587
Future income tax assets 11,001 11,001
Inventory 209,303 214,656
Prepaid expenses 11,828 15,481
---------------------------------------------------------------------
406,317 438,829
Property and equipment, net 528,159 537,318
Investments 25,153 21,043
Other assets 139,770 130,503
Future income tax assets 14,965 17,877
---------------------------------------------------------------------
$1,114,364 $1,145,570
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities
Payables and accruals $114,280 $136,743
Income taxes payable 8,137 3,993
Dividend payable 10,486 -
Current portion of debt obligations 17,302 20,369
---------------------------------------------------------------------
150,205 161,105
Long-term debt 140,209 139,374
Senior subordinated notes 144,391 151,111
Subordinated debentures 9,671 10,414
Other liabilities 63,953 59,299
Future income tax liabilities 197,626 210,036
Shareholders' equity 408,309 414,231
---------------------------------------------------------------------
$1,114,364 $1,145,570
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Ended Six Months Ended
October October October October
31, 2003 31, 2002 31, 2003 31, 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------
Operating activities
Net earnings $15,493 $18,706 $29,221 $27,597
Non-operating items
and items not
involving cash:
Amortization 6,194 5,577 11,883 10,709
Loss (gain) on
disposals of assets 493 631 (598) 454
Equity in earnings
of associated
company (2,446) (1,689) (3,776) (3,475)
Future income taxes (2,796) 1,696 (1,770) 1,083
Non-cash financing
charges 682 698 1,679 1,179
Debt settlement - - - 12,464
Defined benefit
pension plans 4,827 2,423 9,381 4,573
Other 48 (2,048) (157) (3,044)
---------------------------------------------------------------------
Cash flow from
operations 22,495 25,994 45,863 51,540
Change in non-cash
working capital 12,812 (3,845) (29,078) (4,920)
---------------------------------------------------------------------
35,307 22,149 16,785 46,620
---------------------------------------------------------------------
Financing activities
Long-term debt
proceeds 5,520 12,911 30,103 19,884
Long-term debt
repayments (5,242) (15,857) (27,006) (99,026)
Debt settlement - - - (9,136)
Realized foreign
exchange loss on
hedged debt (46) - (723) -
Dividends paid - (4,138) - (4,138)
Capital stock issue 342 54 403 95
---------------------------------------------------------------------
574 (7,030) 2,777 (92,321)
---------------------------------------------------------------------
Investing activities
Property and
equipment
Additions (26,523) (12,512) (47,462) (21,865)
Helicopter major
inspections (1,794) (2,751) (4,517) (5,993)
Helicopter
components, net 4,125 326 9,473 1,536
Proceeds from
disposals 17,103 (134) 19,201 2,224
Aircraft deposits (16,508) (3,898) (15,000) (3,898)
Other 1,739 1,224 (370) (304)
---------------------------------------------------------------------
(21,858) (17,745) (38,675) (28,300)
---------------------------------------------------------------------
Effect of exchange
rate changes on
cash and cash
equivalents (328) 183 (1,313) 2,110
---------------------------------------------------------------------
Change in cash and
cash equivalents
during the period 13,695 (2,443) (20,426) (71,891)
Cash and cash
equivalents,
beginning of period 23,983 43,390 58,104 112,838
---------------------------------------------------------------------
Cash and cash
equivalents, end of
period $37,678 $40,947 $37,678 $40,947
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation Notes to the Consolidated Interim Financial Statements For the periods ended October 31, 2003 and 2002 (Unaudited) (Unless otherwise indicated, tabular tab·u·lar adj. 1. Having a plane surface; flat. 2. Organized as a table or list. 3. Calculated by means of a table. tabular resembling a table. amounts in thousands of Canadian dollars, except per share amounts) 1. Basis of presentation The consolidated interim financial statements (the "Statements") have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). Not all disclosures required by Canadian GAAP for annual financial statements are presented and thus the Statements should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the annual audited consolidated financial statements. Certain amounts on the Statements for the periods ended October 31, 2002 and April 30, 2003 have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the presentation in the current period. These Statements follow the same accounting policies and methods of application as the most recent annual audited consolidated financial statements of April 30, 2003. 2. Variable interest entities At October 31, 2003 the Company operated sixteen aircraft under operating leases with seven entities that would be considered Variable Interest Entities ("VIEs") under U.S. GAAP. These leases are at terms and conditions similar to the Company's other operating leases over periods maturing from 2005 to 2010. Canadian guidance on accounting for VIEs (Accounting Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. 15) is essentially consistent with the provisions contained under U.S. GAAP with regard to disclosure and consolidation requirements. U.S. GAAP (FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). Interpretation No. 46 ("FIN fin, organ of locomotion characteristic of fish and consisting of thin tissue supported by cartilaginous or bony rays. In some fish, e.g., the eel, a single fin extends from the back, around the tail, and along the ventral surface. 46")) was effective for all VIEs created after January 31, 2003. However, U.S. GAAP has deferred the effective date for those VIEs created prior to February February: see month. 1, 2003 until the Company's interim period ending on January 31, 2004. The Canadian guidance applies to all annual and interim periods beginning on or after November 1, 2004. Included in the sixteen aircraft leased from VIEs at October 31, 2003 are four aircraft leased from a VIE that was created subsequent to January 31, 2003. The Company is not required to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. this VIE in its consolidated financial statements under the relevant accounting standards based on the underlying facts and conditions. The remaining twelve aircraft are leased from six VIEs created on or before January 31, 2003. The application of GAAP in effect for these VIEs had no impact on the Company's financial statements. The Company will complete an analysis of the effects of FIN 46 on these VIEs during the quarter ending January 31, 2004 based on the terms and conditions then in effect and account for them accordingly. Based on the analysis completed to date, the Company does not anticipate that the application of FIN 46 and Accounting Guideline 15 to these VIEs will have any significant impact on the Company's consolidated financial statements. The fair market value of the sixteen aircraft leased from the VIEs at October 31, 2003, based on an independent appraisal at April 30, 2003, was $206.7 million (July 31, 2003 - $220.7 million). The Company has provided junior loans, advance rentals and asset value guarantees in connection with operating leases with these VIEs. The Company's maximum exposure to loss related to the junior loans, advance rentals and asset value guarantees as a result of its involvement with the VIEs is $16.7 million (July 31, 2003, $17.5 million). 3. Cash flow information Cash interest paid during the quarter was $5.9 million (2003 - $6.5 million) while cash taxes paid were $3.5 million (2003 - $2.7 million). 4. Segment information The Company's operations are segregated into five reportable segments. The segments are European flying operations, International flying operations, Repair and overhaul operations, Composites manufacturing and Corporate and other.
Three Months Ended Six Months Ended
October October October October
31, 2003 31, 2002 31, 2003 31, 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------
Revenue - external
Europe(1) $112,432 $125,373 $225,441 $243,401
International(2) 46,710 44,522 90,327 90,328
Repair and overhaul(3) 14,418 19,559 27,738 30,488
Composites(4) 1,353 1,285 2,841 2,501
---------------------------------------------------------------------
174,913 190,739 346,347 366,718
---------------------------------------------------------------------
Inter-segment
revenues
Europe 4,251 3,916 7,629 8,183
International 2,830 3,280 5,494 6,494
Repair and overhaul 31,892 40,709 61,532 70,236
Corporate and other(5) 3,414 3,463 6,565 6,926
---------------------------------------------------------------------
42,387 51,368 81,220 91,839
---------------------------------------------------------------------
EBITDA(6)
Europe 17,844 26,018 37,266 49,624
International 6,399 8,773 12,791 18,550
Repair and overhaul 11,552 10,723 19,743 18,656
Composites (397) (1,586) (1,126) (2,595)
Corporate and other (5,667) (6,592) (10,846) (13,367)
---------------------------------------------------------------------
$29,731 $37,336 $57,828 $70,868
---------------------------------------------------------------------
Notes:
1. Europe - includes flying operations in the U.K., Norway, Ireland
and Denmark.
2. International - includes operations in Australia, Africa and Asia
and offshore work in eastern Canada and in other locations around
the world.
3. Repair and overhaul - includes helicopter repair and overhaul
operations based in Stavanger, Norway and Aberdeen, Scotland.
4. Composites - includes composite and metal aviation component
manufacturing operations in Canada.
5. Corporate and other - includes corporate head office activities
and applicable consolidation eliminations.
6. EBITDA represents "Earnings before undernoted items" on the
Consolidated Statements of Earnings.
5. Employee pension plans The Company maintains either defined benefit or defined contribution pension plans for substantially all of its employees. Selected summary information about the Company's defined benefit pension plans as at October 31, 2003, as compared to July 31, 2003 and April 30, 2003, is as follows:
As at
---------------------------------------------------------------------
October July April
31, 2003 31, 2003 30, 2003
(Unaudited) (Unaudited) (Audited)
---------------------------------------------------------------------
Benefit obligations $419,697 $420,087 $423,902
---------------------------------------------------------------------
---------------------------------------------------------------------
Fair value of plan assets $319,048 $318,207 $316,674
---------------------------------------------------------------------
---------------------------------------------------------------------
Funded status
Defined benefit plans -
funded(1) $(64,221) $(68,417) $(72,829)
Defined benefit plans -
unfunded(2) (36,430) (33,463) (34,399)
---------------------------------------------------------------------
Total (100,651) (101,880) (107,228)
Unrecognized net actuarial and
experience losses, prior
service costs and transition
amounts 150,200 158,838 172,272
Pension guarantee deposits 2,515 2,612 2,767
---------------------------------------------------------------------
Net asset recognized on the
balance sheet $52,064 $59,570 $67,811
---------------------------------------------------------------------
---------------------------------------------------------------------
(1) Funded plans require contributions to be made by the Company.
(2) Unfunded plans do not require contributions from the Company
Of the net asset recognized on the balance sheet at October 31, 2003, $70.3 million (July 31, 2003 - $76.7 million) related to the funded plans is recorded in other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. and $18.2 million (July 31, 2003 - $17.2 million) related to the unfunded plans is recorded as an accrued pension obligation in other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. . The significant weighted average actuarial assumptions adopted in measuring the Company's net defined benefit pension plan expense year-to-date October 31, 2003 compared to fiscal 2003 are as follows:
Six Months Ended Year Ended
October 31, 2003 April 30, 2003
(Unaudited) (Audited)
---------------------------------------------------------------------
Discount rate 5.78% 6.59%
Expected long-term rate of return
on plan assets 6.92% 7.27%
6. Financing Charges
Three Months Ended
---------------------------------------------------------------------
October 31, October 31,
2003 2002
(Unaudited) (Unaudited)
---------------------------------------------------------------------
Interest on debt obligations $6,977 $7,342
Amortization of deferred financing costs 786 807
Foreign exchange loss from operating activities
and working capital revaluation 2,159 775
Foreign exchange gain on debt repayment (2,137) (2)
Foreign exchange gain on revaluation
of long-term debt - (182)
Foreign exchange gain on foreign
currency agreement (3,785) -
Other 198 926
---------------------------------------------------------------------
Total $4,198 $9,666
---------------------------------------------------------------------
---------------------------------------------------------------------
7. Restructuring and debt settlement costs During the quarter the Company incurred $2.5 million (after tax, $1.7 million) in costs related to compensation upon the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of employees as a result of the consolidation of the Company's European operations and other related activities. 8. Capital stock
Authorized:
Unlimited number of each of the following:
First preferred shares, issuable in series
Second preferred shares, issuable in series
Class A subordinate voting shares
Class B multiple voting shares
Ordinary shares
Number of Shares
000's
As at,
---------------------------------------------------------------------
October 31, April 30, October 31,
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
---------------------------------------------------------------------
Issued:
Class A subordinate voting
shares 18,017 17,918 17,713
Class B multiple voting
shares 2,955 2,955 2,978
Ordinary shares 11,000 11,000 11,000
Class A subordinate voting
shares that would be issued
upon conversion of the
following:
Class B multiple voting
shares 2,955 2,955 2,978
Share options 1,766 1,996 2,076
Convertible debt 690 690 795
---------------------------------------------------------------------
9. Per share information
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Ended October 31, 2003
(Unaudited)
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted
average
number of Net
Net shares earnings per
earnings (000's) share
---------------------------------------------------------------------
Basic $15,493 20,911 $0.74
Effect of potential
dilutive securities:
Share options - 934
Convertible debt 123 690
---------------------------------------------------------------------
15,616 22,535
Anti-dilutive impact - 75
---------------------------------------------------------------------
Diluted $15,616 22,610 $0.69
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Ended October 31, 2002
(Unaudited)
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted
average
number of Net
Net shares earnings per
earnings (000's) share
---------------------------------------------------------------------
Basic $18,706 20,689 $0.90
Effect of potential
dilutive securities:
Share options - 1,270
Convertible debt 125 795
---------------------------------------------------------------------
Diluted $18,831 22,754 $0.83
---------------------------------------------------------------------
---------------------------------------------------------------------
Per share amounts are calculated under the treasury stock method. Under this method, the proceeds from the exercise of options are assumed to be used to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. the Company's stock on the open market. The difference between the number of shares assumed purchased and the number of options assumed exercised is added to the number of basic shares outstanding to determine diluted shares outstanding for purposes of calculating diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . Therefore, the number of shares in the diluted earnings per share calculation will increase as the share price increases. 10. Share option plan The table below presents pro-forma net earnings, basic earnings per share and diluted earnings per share had the fair value method been used to account for share options. These pro-forma disclosures pertain to pertain to verb relate to, concern, refer to, regard, be part of, belong to, apply to, bear on, befit, be relevant to, be appropriate to, appertain to stock options granted in fiscal 2003 upon adoption of the new stock-based compensation standards on May 1, 2002. These pro-forma disclosures exclude any options granted in fiscal 2004 for which compensation expense is recorded using the fair value method.
Three Months Ended Six Months Ended
October 31, October 31, October 31, October 31,
2003 2002 2003 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------
Net earnings
As reported $15,493 $18,706 $29,221 $27,597
Pro-forma 15,412 18,537 29,080 23,711
Basic earnings per share
As reported $0.74 $0.90 $1.40 $1.72
Pro-forma 0.74 0.90 1.39 1.15
Diluted earnings per share
As reported $0.69 $0.83 $1.30 $1.58
Pro-forma 0.68 0.82 1.29 1.05
The Black Scholes option pricing model was used to fair value the
options using the following estimates and assumptions:
Expected life 5 years
Expected dividend yield 0.6%
Risk-free interest rate 5.0%
Stock volatility 40.0%
As at October 31, 2003 total outstanding options were 1,766,206 (October 31, 2002 - 2,075,706). At October 31, 2003 1,607,790 of the share options were exercisable (October 31, 2002 - 1,680,539). The weighted average exercise price of the total outstanding options at October 31, 2003 was $13.43 compared to $13.52 at October 31, 2002. 11. Guarantees The Company has given guarantees to certain lessors in respect of operating leases. If the Company fails to meet the senior credit facilities' financial ratios or breaches any of the covenants of those facilities and, as a result, the senior lenders accelerate their debt, the leases provide for a cross-acceleration that could give the lessors and financial institutions the right to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. the leases and require return of the aircraft and payment of the present value of all future lease payments and certain other amounts. If the realized value of the aircraft is insufficient in·suf·fi·cient adj. 1. Not sufficient. 2. Incapable of proper functioning. to discharge To liberate or free; to terminate or extinguish. A discharge is the act or instrument by which a contract or agreement is ended. A mortgage is discharged if it has been carried out to the full extent originally contemplated or terminated prior to total execution. the indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. due to those lessors in respect of the present value of the future lease payments, the financial institution could obtain payment of that deficiency A shortage or insufficiency. The amount by which federal Income Tax due exceeds the amount reported by the taxpayer on his or her return; also, the amount owed by a taxpayer who has not filed a return. from the Company under these guarantees. The Company has provided limited guarantees to third-parties under some of its operating leases in connection with a portion of the aircraft values at the termination of the leases. The leases have terms expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. between 2004 and 2011. The Company's exposure under the asset value guarantees including guarantees in the form of junior loans, deferred payments and advanced rentals is approximately $38.1 million. The resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. market for the aircraft type for which the Company has provided guarantees remains strong, and as a result, the Company does not anticipate incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. any liability or loss with respect to these residual value Residual value Usually refers to the value of a lessor's property at the time the lease expires. residual value The price at which a fixed asset is expected to be sold at the end of its useful life. guarantees. The Company has performance guarantees with two customers of a third-party lessee One who rents real property or Personal Property from another. A lessee of land is a tenant. Cross-references Landlord and Tenant. lessee n. the person renting property under a written lease from the owner (lessor). . These guarantees have been in effect since August 1995 and November 1998 and relate to the provision of helicopter transportation services involving three heavy aircraft leased to the third-party. In the event of non-performance by the third-party lessee, the guarantee may require the Company to continue the provision of services under the contract as it is the lessor One who rents real property or Personal Property to another. A lessor of land is a landlord. Cross-references Landlord and Tenant. lessor n. the owner of real property who rents it to a lessee pursuant to a written lease. to the third-party lessee of the three helicopters. No loss is anticipated as a result of these guarantees. 12. Subsequent Event On December 1, 2003 the Company announced that it had executed a binding Letter of Intent for the acquisition of 100% of the shares of Schreiner Aviation Group for a purchase price of 83 million euros, approximately CDN$129.0 million, inclusive of all outstanding debt. This acquisition which will be debt financed, is subject to confirmatory due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. , negotiation of final agreements of purchase and sale regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval. 13. Reconciliation to accounting principles generally accepted in the United States In certain respects, Canadian GAAP differs from U.S. GAAP. If U.S. GAAP were employed, the consolidated statements of earnings for the periods indicated would be adjusted as follows:
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Three Months Ended Six Months Ended
October 31, October 31, October 31, October 31,
2003 2002 2003 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
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Net earnings according
to Canadian GAAP $15,493 $18,706 $29,221 $27,597
Pre-operating
expenses 472 873 813 790
Loss (gain) on sale of
assets/amortization
expense 515 (10) 505 (20)
Ineffective portion
of net investment
hedge (605) - (7,507) -
Effect of foreign
currency contracts (3,778) - (5,284) -
Internal-use software
expenses - - (52) -
Decrease in income
tax expense 894 (185) 2,428 833
Other - - - (2,715)
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Net earnings according
to U.S. GAAP 12,991 19,384 20,124 26,485
Other comprehensive
earnings, net of
income tax:
Foreign currency
translation
adjustment (7,732) 2,460 (25,061) 24,920
Ineffective portion
of net investment
hedge 485 - 6,020 -
Minimum pension
liability
adjustment 8 (465) 29,071 (685)
Interest rate swap
adjustment 827 (293) 1,953 (2,067)
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Comprehensive earnings
according to U.S. GAAP $6,579 $21,086 $32,107 $48,653
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Basic net earnings
per share according
to U.S. GAAP $0.62 $0.94 $0.96 $1.28
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Diluted net
earnings per share
according to U.S.
GAAP $0.58 $0.86 $0.89 $1.18
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The consolidated balance sheet would vary in some respects when
restated for U.S. GAAP purposes. The most significant variances
pertaining to the October 31, 2003 balance sheet are listed below:
- Current assets would increase by $4.3 million to recognize the fair
value impact of forward foreign currency contracts and lease
guarantee on net earnings.
- Other assets would increase by $1.7 million to recognize the fair
value impact of an aircraft lease guarantee on net earnings.
- Future income tax liabilities would decrease by $6.7 million to
tax-effect adjustments to net earnings and comprehensive earnings
under U.S. GAAP.
- Other liabilities would increase by $17.5 million to recognize the
minimum pension liability and interest rate swap adjustments
recorded in comprehensive earnings as well as the fair value impact
of forward foreign currency contracts and lease guarantee on net
earnings.
- Accumulated other comprehensive earnings would be recorded at
($36.7) million under U.S. GAAP for foreign currency translation,
minimum pension liability and interest rate swap adjustments in
addition to the impact of the ineffective portion of the net
investment hedge.
- Retained earnings would be increased by $5.7 million to reflect the
cumulative effect of Canadian and U.S. GAAP differences.
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