Flight Centre Travel (TG:FLI)
Historical Stock Chart
From Jul 2019 to Jul 2024
![Click Here for more Flight Centre Travel Charts. Click Here for more Flight Centre Travel Charts.](/p.php?pid=staticchart&s=TG%5EFLI&p=8&t=15)
CHC announces fourth quarter results
VANCOUVER, June 29 /PRNewswire-FirstCall/ -- CHC Helicopter Corporation (the
"Company") (TSX: FLY.SV.A and FLY.MV.B; NYSE: FLI) today announced unaudited
financial results for the three months and year ended April 30, 2005.
Financial Highlights
(in millions, except per share amounts)
Three Months Ended Year Ended
-------------------------------------------------------------------------
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
-------------------------------------------------------------------------
Revenue $ 226.4 $ 209.4 $ 903.3 $ 720.0
Operating income 29.5 21.2 131.3 94.3
Net earnings from
continuing operations 17.0 25.8 73.6 66.3
Net earnings (loss) from
discontinued operations 1.8 (0.4) (11.0) (2.6)
Net earnings 18.8 25.4 62.6 63.7
Cash flow from operations 33.6 28.2 138.2 90.6
Per share information(1)
Basic
Weighted average number of
shares 42.0 41.8 41.9 41.3
Net earnings from
continuing operations $ 0.40 $ 0.62 $ 1.75 $ 1.60
Net earnings (loss) from
discontinued operations 0.04 (0.01) (0.26) (0.06)
Net earnings 0.44 0.61 1.49 1.54
Diluted
Weighted average number
of shares 46.2 45.7 46.0 45.4
Net earnings from
continuing operations $ 0.37 $ 0.57 $ 1.61 $ 1.47
Net earnings (loss) from
discontinued operations 0.04 (0.01) (0.24) (0.06)
Net earnings 0.41 0.56 1.37 1.41
-------------------------------------------------------------------------
(1) Comparative share information has been adjusted to reflect the April
2005 2-for-1 stock split.
Highlights
- Revenue for the fourth quarter was $226.4 million, an increase of
$17.0 million or 8.1% from the same period last year. This increase
was primarily due to a 61.4% increase in the Company's Repair and
overhaul business and a 17.3% increase in the International flying
segment.
- Operating income for the fourth quarter was $29.5 million, an increase
of $8.3 million or 39.2% from the same period last year primarily due
to increases in the Company's International flying segment where
Segment EBITDA increased 73.6% and increases in the Schreiner segment.
- Net earnings from continuing operations include the following after
tax items (in thousands of Canadian dollars, except per share
amounts):
Three Months Ended Year Ended
----------------------------------------------
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
----------------------------------------------
Restructuring costs $ 5,851 $ 6,403 $ 11,813 $ 6,403
Debt settlement costs 24 5,797 1,337 12,638
Tax adjustments - (21,000) 4,224 (21,000)
----------------------------------------------
Total after tax cost
(recovery) $ 5,875 $ (8,800) $ 17,374 $ (1,959)
----------------------------------------------
----------------------------------------------
Diluted net earnings
per share impact $ 0.13 $ (0.19) $ 0.38 $ (0.04)
----------------------------------------------
----------------------------------------------
- Excluding the items above, this is the Company's best fourth quarter
and fiscal year.
- Substantial progress has been made on the Company's restructuring
project. In fiscal 2006 the Company will report results of operations
under four segments: Global operations, European operations, Heli-One
and Corporate and other.
- During the quarter the Company issued U.S. $150.0 million in 7 3/8%
senior subordinated notes.
Investor Conference Call
The Company's 4th quarter and year end conference call and webcast will take
place Thursday, June 30, 2005 at 10:30 a.m. EDT. To listen to the conference
call, dial 416-640-4127 for local and overseas calls, or toll-free
1-800-814-4890 for calls from within North America. To hear a replay of the
conference call, dial 416-640-1917, or 877-289-8525 and enter passcode
"21127047 followed by the number sign". The replay will be available until July
8, 2005.
The financial results and a live webcast of the conference call will be
available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal
sign)1156540. The webcast is also available through CHC's website at
http://www.chc.ca/.
CHC Helicopter Corporation is the world's largest provider of helicopter
services to the global offshore oil and gas industry with aircraft operating in
more than 30 countries.
If you wish to be removed or included on the Company's distribution list,
please contact .
-------------------------------------------------------------------------
This document may contain projections and other forward-looking
statements within the meaning of the "safe harbour" provision of the
United States Private Securities Litigation Reform Act 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 and in the Company's Annual Information Form filed
with Canadian security regulatory authorities. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially from
those indicated.
-------------------------------------------------------------------------
FOURTH QUARTER OVERVIEW OF RESULTS
The fourth quarter was a strong quarter for the Company. Revenue for the fourth
quarter was $226.4 million, an increase of $17.0 million or 8.1% from the same
period last year. The Company's Repair and overhaul and International flying
segments saw the most significant growth in revenues in the fourth quarter.
Revenue in the Repair and overhaul segment increased $9.3 million or 61.4% and
revenue in the International flying segment increased $9.1 million or 17.3%.
Operating income for the fourth quarter was $29.5 million, an increase of $8.3
million or 39.2% from operating income of $21.2 million earned in the same
period last year. The Company's operating income increased primarily due to
increases in the Company's International flying segment where Segment EBITDA
increased 73.6% and increases in the Schreiner segment.
Significant Events
Debt refinancing
In March 2005 the Company issued U.S. $150.0 million in 7 3/8% senior
subordinated notes due in 2014 at a premium to yield approximately 6 3/4% on
issuance. The proceeds were used to repay a portion of amounts owed under a
senior credit facility and to pay related fees and expenses.
Organizational restructuring
The Company continued its restructuring initiatives in the fourth quarter. To
date the Company has:
- Completed the relocation of its head office and senior management to
Vancouver, Canada,
- Proceeded with voluntary retirement and involuntary severance plans in
various jurisdictions,
- Established Heli-One, the world's largest independent helicopter
support company, and
- Made substantial progress towards completing its global restructuring
project.
In fiscal 2006 the Company will report results of operations under four
segments: Global operations, European operations, Heli-One and Corporate and
other.
In addition to direct cost savings anticipated from a total reduction in
headcount of approximately 180 people worldwide, the Company anticipates
savings to be realized from improvements in fleet management, working capital
management, procurement, logistics and other areas. These cost savings should
positively impact margins progressively through fiscal 2006.
Total costs expensed to realize these anticipated savings totalled $8.7 million
(after-tax $5.9 million) and $17.6 million (after-tax $11.8 million) in the
fourth quarter and year ended April 30, 2005. These costs primarily consisted
of severance, termination, relocation, planning, consulting and benefit
adjustments. It is anticipated that the majority of remaining costs will be
expensed in the first half of fiscal 2006.
Stock split
At a special meeting of shareholders on March 28, 2005, the shareholders
approved the subdivision of CHC's issued and unissued Class A Subordinate
Voting Shares, Class B Multiple Voting Shares and Ordinary Shares all on a two
for one basis. The Class A Subordinate Voting Shares and Class B Multiple
Voting Shares listed on the Toronto Stock Exchange commenced trading on a
post-split basis on April 12, 2005. Class A Subordinate Voting Shares listed on
the New York Stock Exchange began trading on a post-split basis on April 19,
2005.
Segment Revenue from External Customers - Variance Analysis
(in thousands of Canadian dollars)
Fourth Quarter
-----------------------------------------------------------
Schreiner Corporate
Europe Int'l (2) R&O & other(3) Total
-----------------------------------------------------------
Three months
ended April
30, 2004 $109,367 $ 52,462 $ 32,490 $ 15,120 $ - $209,439
Foreign
exchange
impact (2,352) 122 (202) (1,395) - (3,827)
Revenue
increase
(decrease) (2,915) 8,973 4,090 10,686 - 20,834
-----------------------------------------------------------
Three months
ended April
30, 2005 $104,100 $ 61,557 $ 36,378 $ 24,411 $ - $226,446
-----------------------------------------------------------
-----------------------------------------------------------
Total revenue
increase
(decrease) $ (5,267) $ 9,095 $ 3,888 $ 9,291 N/A $ 17,007
% increase
(decrease) (4.8%) 17.3% 12.0% 61.4% N/A 8.1%
% increase
(decrease)
excluding FX (2.7%) 17.1% 12.6% 70.7% N/A 9.9%
Fiscal Year
-----------------------------------------------------------
Schreiner Corporate
Europe Int'l (2) R&O & other(3) Total
-----------------------------------------------------------
Year ended
April 30,
2004 $437,631 $191,773 $ 32,490 $ 58,119 $ - $720,013
Foreign
exchange
impact 6,693 (6,223) (202) (148) - 120
Revenue
increase
(decrease) (6,412) 47,966 122,325 19,332 - 183,211
-----------------------------------------------------------
Year ended
April 30,
2005 $437,912 $233,516 $154,613 $ 77,303 $ - $903,344
-----------------------------------------------------------
-----------------------------------------------------------
Total revenue
increase
(decrease) $ 281 $ 41,743 $122,123 $ 19,184 N/A $183,331
% increase
(decrease) 0.1% 21.8% N/A 33.0% N/A 25.5%
% increase
(decrease)
excluding FX (1.5%) 25.0% N/A 33.3% N/A 25.4%
Segment EBITDA Variance Analysis
(in thousands of Canadian dollars)
Fourth Quarter
-----------------------------------------------------------
Schreiner Corporate
Europe Int'l (2) R&O & other(3) Total
-----------------------------------------------------------
Three months
ended April
30, 2004 $ 19,113 $ 7,645 $ 3,329 $ 10,189 $ (3,765) $ 36,511
Foreign
exchange
impact 257 356 (777) (335) - (499)
Segment EBITDA
increase
(decrease) (4,015) 5,271 8,269 321 (132) 9,714
-----------------------------------------------------------
Three months
ended April
30, 2005 $ 15,355 $ 13,272 $ 10,821 $ 10,175 $ (3,897) $ 45,726
-----------------------------------------------------------
-----------------------------------------------------------
Segment EBITDA
margin(1)
- Last year 17.5% 14.6% 10.2% 19.0% N/A 17.4%
- This year 14.8% 21.6% 29.7% 16.2% N/A 20.2%
Total Segment
EBITDA
increase
(decrease) $ (3,758) $ 5,627 $ 7,492 $ (14) $ (132) $ 9,215
% increase
(decrease) (19.7%) 73.6% 225.1% (0.1%) (3.5%) 25.2%
% increase
(decrease)
excluding FX (21.0%) 68.9% 248.4% 3.2% (3.5%) 26.6%
Fiscal Year
-----------------------------------------------------------
Schreiner Corporate
Europe Int'l (2) R&O & other(3) Total
-----------------------------------------------------------
Year ended
April 30,
2004 $ 72,104 $ 28,285 $ 3,325 $ 41,228 $(19,533) $125,409
Foreign
exchange
impact 3,991 (3,517) (777) (915) - (1,218)
Segment EBITDA
increase
(decrease) (2,038) 21,190 32,544 1,532 (2,045) 51,183
-----------------------------------------------------------
Year ended
April 30,
2005 $ 74,057 $ 45,958 $ 35,092 $ 41,845 $(21,578) $175,374
-----------------------------------------------------------
-----------------------------------------------------------
Segment EBITDA
margin(1)
- Last year 16.5% 14.7% 10.2% 21.3% N/A 17.4%
- This year 16.9% 19.7% 22.7% 18.7% N/A 19.4%
Total Segment
EBITDA
increase
(decrease) $ 1,953 $ 17,673 $ 31,767 $ 617 $ (2,045) $ 49,965
% increase
(decrease) 2.7% 62.5% N/A 1.5% (10.5%) 39.8%
% increase
(decrease)
excluding FX (2.8%) 74.9% N/A 3.7% (10.5%) 40.8%
-------------------------------------------------------------------------
(1) Segment EBITDA as a percent of revenue from external customers except
for the R&O segment, which is a percent of total revenue.
(2) Results for the Schreiner Aviation group for the comparative period
are for the period from February 16, 2004 to April 30, 2004.
(3) Corporate and other includes Inter-segment eliminations.
Europe
Revenue from the Company's European flying segment for the fourth quarter was
$104.1 million, a decrease of $5.3 million from the same period last year. This
decrease was primarily attributable to unfavourable foreign exchange of $2.4
million and a decrease in flying revenue of $2.6 million. The decrease in
flying revenue related to the redeployment of aircraft to support growth in
international markets and reduced activity from expired contracts that have
been partially offset by revenue from new entrants to the North Sea. Flying
hours of 19,086 decreased by 853 in the fourth quarter as compared to the same
period last year, and by 626 hours compared to the third quarter.
Segment EBITDA for the fourth quarter was $15.4 million, a decrease of $3.7
million from the same period last year. This decrease was primarily
attributable to reduced revenue for the reasons previously noted. In addition,
the Company incurred costs totalling $0.9 million related to the delay in
deployment of new aircraft as described below.
Operating income for the fourth quarter was $11.8 million, an increase of $1.5
million from the same period last year, primarily due to decreased Segment
EBITDA offset by reduced restructuring costs.
The Company started a long-term contract in Norway that required the deployment
of two new heavy aircraft at specific dates in the fourth quarter. This
contract commitment was not met due to the late delivery of the aircraft by the
manufacturer. The Company provided substitute aircraft to meet the customer's
flying requirements. If the new aircraft had been deployed on the required
dates the Company would have realized additional Segment EBITDA of
approximately $2.7 million in the fourth quarter ($3.0 million year-to-date).
Direct costs incurred in the fourth quarter as a result of this delay included
salary, overtime and related costs totalling approximately $0.9 million. The
customer believes it is entitled to compensation for the delay. The Company's
interpretation of the contract is that no compensation is payable. Currently
the customer and the Company are in discussions to resolve this issue and
therefore the eventual outcome is presently unknown.
Subsequent to the quarter ConocoPhillips Norway awarded the Company a five-year
contract renewal for the provision of two upgraded Super Puma MK1 helicopters
to provide Search and Rescue and shuttle services in the Ekofisk region of the
North Sea. The contract, which commences September 1, 2006, replaces an
existing contract for the provision of two AS365 N2 helicopters and is valued
at approximately $88.0 million over the five-year period.
The Company was also awarded a new five-year contract by Marathon Oil UK, Ltd.
for the provision of helicopter services to the Brae Facilities in the UK North
Sea utilizing Super Puma AS332L2 aircraft from the CHC fleet, commencing
September 1, 2005. Total revenue over the contract term is estimated at $50.0
million.
ConocoPhillips Norway has also extended an existing crew-change contract to
September 1, 2006, but has announced it will not renew the contract beyond this
date. BP/Talisman has extended a related crew-change contract to December 31,
2005, but has announced it will not renew the contract beyond this date. These
two crew-change contracts utilize a combined three Super Puma MK2 aircraft plus
pool use aircraft, and are currently valued at a total of $46.0 million per
annum. The Company has identified several potential markets for the
redeployment of these aircraft in 2006 and is confident demand for its aircraft
will continue to grow in the North Sea and in offshore markets around the
world.
International
Revenue from the Company's International flying segment for the fourth quarter
was $61.6 million, an increase of $9.1 million from the same period last year.
This increase was primarily attributable to increased flying and lease revenue
of $9.8 million from new and expanded contracts in Malaysia, India, Venezuela
and other countries.
Segment EBITDA for the fourth quarter was $13.3 million, an increase of $5.7
million from the same period last year. This increase was the result of
increased revenue, the addition of high margin dry lease contracts in Brazil
and Venezuela in the current year, a favourable foreign exchange impact of $0.4
million and due to the incurrence of unusually high maintenance costs in the
fourth quarter of the prior year.
Operating income for the fourth quarter was $11.1 million, an increase of $5.0
million from the same period last year. This increase is the result of
increased Segment EBITDA somewhat offset by increased amortization and
restructuring costs incurred in relation to the global restructuring project
currently in progress.
Schreiner
The Company acquired Schreiner on February 16, 2004. Therefore the results of
Schreiner are included in the Company's statements of earnings and financial
position subsequent to that date.
Revenue from Schreiner for the fourth quarter was $36.4 million, an increase of
$3.9 million from the same period last year. This increase was primarily the
result of an increase in flying revenue of $8.6 million somewhat offset by a
reduction of revenue from low margin aircraft inventory sales recorded in the
fourth quarter of last year.
Segment EBITDA for the fourth quarter was $10.8 million, an increase of $7.5
million from the same period last year. This increase was the result of
improved operating margins from reduced support costs and other operational
efficiencies implemented since Schreiner was acquired, an $8.6 million increase
in flying revenue as noted above and one-time cost recoveries of approximately
$1.2 million related to maintenance costs recorded earlier in this fiscal year.
The fourth quarter and annual results include $1.9 million (2004 - $0.9
million) and $6.7 million (2004 - $0.9 million), respectively, of amortization
of below market contract values, which were recognized upon the acquisition of
Schreiner.
Operating income for the fourth quarter was $6.6 million, an increase of $4.6
million from the same period last year. This increase was primarily the result
of higher Segment EBITDA of $7.5 million offset by $3.2 million in
restructuring costs incurred in the fourth quarter related to the Company's
current restructuring project.
Repair and overhaul
Revenue from the Company's Repair and overhaul segment for the fourth quarter
was $24.4 million, an increase of $9.3 million from the same period last year.
This increase was primarily attributable to $5.7 million in revenue earned in
newly acquired businesses (Multifabs Survival Ltd., Whirly Bird Services Ltd.,
Aero Turbine Support Ltd. and Coulson) and increased activity from existing and
new customers for the Astec repair and overhaul facility located in Norway.
These increases were partially offset by an unfavourable foreign exchange
impact of $1.4 million.
Segment EBITDA for the fourth quarter was $10.2 million, which was
approximately equal to Segment EBITDA for the same period last year. This was
the combined result of (i) increased revenue as noted above; (ii) reduced
overhaul costs resulting from insourcing services previously provided by third
parties; offset by (iii) increased parts costs as low cost inventory acquired
on the acquisition of Helicopter Service Group is now largely depleted; (iv)
increased repair and subcontract costs for parts used to support the Power-by-
the-hour fleet; (v) the decision not to increase prices to internal customers
in the current fiscal year; and (vi) an unfavourable foreign exchange impact of
$0.3 million.
Operating income for the fourth quarter was $6.2 million, a decrease of $3.0
million from the same period last year. This decrease was primarily the result
of a $1.3 million increase in amortization relating to assets employed in the
newly acquired businesses and an increase of $1.6 million in restructuring
costs from those incurred in the fourth quarter of last year.
Corporate and other
Corporate Segment EBITDA (including Inter-segment eliminations) of $(3.9)
million in the fourth quarter decreased $0.1 million from the same period last
year. The primary reasons for the decrease were higher general and
administration costs of $4.0 million due primarily to increases in variable
compensation costs, a $2.0 million recovery on the Company's stock appreciation
rights plan in the fourth quarter of last year and the build up of the
financial services department in Vancouver, Canada in anticipation of
delivering services to the Company's operating divisions in the new fiscal
year. These increases were substantially offset by variances in inter-segment
eliminations.
Cash Flows, Liquidity and Capital Resources
Cash flow from operations for the fourth quarter was $33.6 million, a $5.4
million increase from the same period last year. Defined benefit pension plan
items impacted cash flow from operations in the fourth quarter by $23.4
million. This amount includes a non-cash pension plan curtailment gain related
to Schreiner and an annual funding payment of $22.5 million in Norway. Non-cash
working capital decreased by $31.0 million during the fourth quarter primarily
due to increases in trade and other payables, which were somewhat offset by
other working capital changes.
During the fourth quarter the Company issued U.S. $150.0 million in 7 3/8%
senior subordinated notes due in 2014 to yield 6 3/4% on issuance. Long-term
debt proceeds include net proceeds on this new issuance of senior subordinated
notes totalling $186.6 million.
Additions to property and equipment during the fourth quarter totalled $29.5
million. This was due primarily to the purchase of two previously leased Super
Puma AS332L1 aircraft, the purchase of one Dauphin SA365N2 aircraft and costs
associated with aircraft modifications. The Company also paid $17.5 million in
aircraft deposits in the quarter related to the future delivery of various
aircraft. This was offset by a $22.0 million recovery of deposits on aircraft
which were subsequently leased in the quarter. Proceeds from disposals during
the quarter totalled $13.0 million, which related to the sale of the second of
five Super Pumas under the German Border Guard contract and the sale-leaseback
transaction of a Sikorsky S76C+.
As at April 30, 2005, the Company had unused capacity under its credit
facilities of $232.7 million and cash and cash equivalents of $51.4 million,
for a total of $284.1 million. The Company's total net debt increased by $22.7
million in the fourth quarter, of which $12.8 million was the impact of foreign
exchange and the remainder was used to support investing and other activities.
Net debt is comprised of total debt less cash and cash equivalents.
CHC Helicopter Corporation
Consolidated Balance Sheets
Unaudited
(in thousands of Canadian dollars)
Incorporated under the laws of Canada
As at
---------------------------
April 30,
April 30, 2004
2005 (Note 4)
-------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 51,391 $ 61,079
Receivables 216,810 185,076
Future income tax assets 23,802 12,816
Inventory (Note 4) 216,513 203,365
Prepaid expenses 7,991 11,245
Assets of discontinued operations (Note 7) 12,657 28,937
---------------------------
529,164 502,518
Property and equipment, net (Notes 3 and 4) 851,210 734,405
Investments 58,806 48,242
Intangible assets (Note 6) 6,499 -
Goodwill (Note 6) 8,861 -
Other assets 235,016 178,893
Future income tax assets 50,184 44,312
Assets of discontinued operations (Note 7) 3,495 26,513
---------------------------
$ 1,743,235 $ 1,534,883
---------------------------
---------------------------
Liabilities and shareholders' equity
Current liabilities
Payables and accruals $ 212,965 $ 169,329
Deferred revenue and redelivery obligations 22,574 13,939
Dividends payable 6,404 5,194
Income taxes payable 23,628 6,328
Future income tax liabilities 705 2,212
Current portion of debt obligations 26,812 38,046
Liabilities of discontinued operations
(Note 7) 2,153 23,856
---------------------------
295,241 258,904
Long-term debt 97,543 133,305
Senior subordinated notes (Note 10) 502,760 342,675
Other liabilities 142,507 153,219
Future income tax liabilities 195,692 179,188
Liabilities of discontinued operations (Note 7) 3,493 5,880
Shareholders' equity 505,999 461,712
---------------------------
$ 1,743,235 $ 1,534,883
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation
Consolidated Statements of Earnings
Unaudited
(in thousands of Canadian dollars, except per share amounts)
Three Months Ended Year Ended
----------------------------------------------
April 30, April 30,
April 30, 2004 April 30, 2004
2005 (Note 4) 2005 (Note 4)
-------------------------------------------------------------------------
Revenue $ 226,446 $ 209,439 $ 903,344 $ 720,013
Direct costs (173,537) (169,759) (702,167) (575,971)
General and administration
costs (7,183) (3,169) (25,803) (18,633)
Amortization (7,984) (7,455) (30,533) (25,188)
Restructuring costs
(Note 11) (8,723) (9,181) (17,612) (9,181)
Gain on disposals of assets 516 1,316 4,105 3,307
----------------------------------------------
Operating income 29,535 21,191 131,334 94,347
Debt settlement costs
(Note 11) (36) (10,011) (1,994) (19,716)
Financing charges (Note 10) (8,678) (7,549) (37,120) (28,954)
----------------------------------------------
Earnings from continuing
operations before income
taxes and undernoted items 20,821 3,631 92,220 45,677
Non-controlling interest (121) - (288) -
Equity (loss) in earnings
of associated companies (648) 69 5,481 3,925
Income tax (provision)
recovery (3,095) 22,113 (23,835) 16,648
----------------------------------------------
Net earnings from continuing
operations 16,957 25,813 73,578 66,250
Net earnings (loss) from
discontinued operations
(Note 7) 1,809 (389) (11,019) (2,574)
----------------------------------------------
Net earnings $ 18,766 $ 25,424 $ 62,559 $ 63,676
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per share
Basic
Net earnings from
continuing operations $ 0.40 $ 0.62 $ 1.75 $ 1.60
Net earnings (loss) from
discontinued operations 0.04 (0.01) (0.26) (0.06)
Net earnings 0.44 0.61 1.49 1.54
Diluted
Net earnings from
continuing operations $ 0.37 $ 0.57 $ 1.61 $ 1.47
Net earnings (loss) from
discontinued operations 0.04 (0.01) (0.24) (0.06)
Net earnings 0.41 0.56 1.37 1.41
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation
Consolidated Statements of Shareholders' Equity
Unaudited
(in thousands of Canadian dollars, except per share amounts)
Year Ended
---------------------------
April 30, April 30,
2005 2004
-------------------------------------------------------------------------
Retained earnings, beginning of year $ 229,866 $ 176,676
Net earnings 62,559 63,676
Dividends (12,805) (10,486)
Retained earnings, end of year 279,620 229,866
Capital stock 239,469 238,428
Contributed surplus 3,291 3,291
Foreign currency translation adjustment (16,381) (9,873)
---------------------------
Total shareholders' equity $ 505,999 $ 461,712
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Dividends declared per participating voting
share(1) $ 0.30 $ 0.25
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Adjusted for April 2005 2-for-1 stock split.
See accompanying notes
CHC Helicopter Corporation
Consolidated Statements of Cash Flows
Unaudited
(in thousands of Canadian dollars)
Three Months Ended Year Ended
----------------------------------------------
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
-------------------------------------------------------------------------
Operating activities
Net earnings from
continuing operations $ 16,957 $ 25,813 $ 73,578 $ 66,250
Non-operating items and
items not involving cash:
Amortization of major
components recorded as
operating expense
(Note 4) 14,268 14,580 63,333 56,861
Defined benefit pension
plans (23,368) (18,744) (13,280) (3,462)
Other (5,205) 8,047 7,989 3,976
----------------------------------------------
2,652 29,696 131,620 123,625
Change in non-cash working
capital 30,957 (1,497) 6,580 (33,018)
----------------------------------------------
Cash flow from operations 33,609 28,199 138,200 90,607
----------------------------------------------
Financing activities
Long-term debt proceeds 199,652 488,140 384,474 496,862
Long-term debt repayments (197,120) (318,772) (243,582) (342,001)
Debt settlement - (37,883) (1,765) (37,883)
Dividends paid (3,202) (2,656) (11,596) (5,291)
Capital stock issued 133 891 1,117 3,289
Deferred financing costs (2,892) (13,200) (5,598) (13,200)
----------------------------------------------
(3,429) 116,520 123,050 101,776
----------------------------------------------
Investing activities
Additions to property and
equipment (29,474) (31,053) (197,596) (116,881)
Helicopter major
inspections (3,611) (3,768) (15,539) (9,237)
Helicopter components (15,246) (24,423) (63,254) (59,027)
Proceeds from disposal of
assets 12,966 42,481 90,940 126,898
Aircraft deposits 4,455 (3,325) (52,983) (23,574)
Investments in subsidiaries,
net of cash acquired - (97,540) (17,984) (97,540)
Restricted cash (4,141) (817) (5,323) (9,826)
Other (1,280) 544 (6,307) 3,019
----------------------------------------------
(36,331) (117,901) (268,046) (186,168)
----------------------------------------------
Effect of exchange rate
changes on cash and cash
equivalents (529) 551 (3,821) 1,747
----------------------------------------------
Cash provided by (used in)
continuing operations (6,680) 27,369 (10,617) 7,962
Cash provided by (used in)
discontinued operations (3,657) (2,533) 929 (4,987)
----------------------------------------------
Change in cash and cash
equivalents during the
period (10,337) 24,836 (9,688) 2,975
Cash and cash equivalents,
beginning of period 61,728 36,243 61,079 58,104
----------------------------------------------
Cash and cash equivalents,
end of period $ 51,391 $ 61,079 $ 51,391 $ 61,079
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation
Notes to the Unaudited Consolidated Interim Financial Statements
For the periods ended April 30, 2005 and 2004
(Unless otherwise indicated, tabular amounts in thousands of Canadian
dollars, except per share amounts)
1. Basis of presentation
These financial statements follow the same accounting policies and
methods of application as the most recent annual audited consolidated
financial statements for the fiscal year ended April 30, 2004, except as
disclosed in Note 2 with respect to hedging relationships and
derivatives.
Financial results for the three months ended April 30, 2005 are not
necessarily indicative of financial results for the full year.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2. Change in accounting policies
Hedging relationships and derivatives
Effective May 1, 2004, the Company prospectively adopted Canadian
Accounting Guideline 13 ("AcG-13") with respect to hedging relationships
as it relates to the identification, designation, documentation and
effectiveness of hedging relationships for the purpose of applying hedge
accounting.
The Company also adopted at May 1, 2004, the Canadian Emerging Issues
Committee Abstract 128 ("EIC-128"). Under EIC-128, if a derivative
financial instrument is not part of a qualifying hedging relationship,
the Company is required to record such instrument on the balance sheet at
fair value, with changes in fair value recognized in current earnings.
The Company did not apply AcG-13 or EIC-128 retroactively.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
3. Change in accounting estimates
Effective May 1, 2004, based on the Company's review of its amortization
policy with respect to aircraft airframes, the percentage of aircraft
costs attributable to certain airframes has been decreased from 30% to
25% and the estimated useful life of such airframes has been increased
from 15 years to 25 years. The effect of these accounting estimate
changes has been accounted for prospectively in fiscal 2005 resulting in
a decrease in amortization for the three months and year ended April 30,
2005 of $1.2 million and $3.8 million, respectively.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
4. Comparative figures
Certain comparative figures have been reclassified to conform to the
current period's presentation. The most significant changes include:
a) The reclassification of $52.4 million of inventory at April 30, 2004
to property and equipment. This reclassification relates to certain
inventory items on hand in the Company's Repair and overhaul segment
that are intended to be used and capitalized with respect to future
internal major component overhaul work;
b) The reclassification in the consolidated statements of cash flows for
the three months and year ended April 30, 2004 of $14.6 million and
$56.9 million respectively for the non-cash impact of the
amortization of major components and redelivery obligation costs
recorded as operating expense from helicopter components in investing
activities to items not involving cash in operating activities. As
well, deferred revenue and redelivery obligations now include the
reclassification of the current portion of redelivery obligations on
leased aircraft. The long-term portion of these obligations is
included in other liabilities;
c) The comparative consolidated balance sheet, statements of earnings
and cash flows have been reclassified to reflect the results of
businesses held for sale (discontinued operations) consistent with
the current year's presentation (Note 7); and
d) The reclassification of $6.0 million of cash at April 30, 2004 to
other assets. This reclassification relates to certain cash that was
subject to restrictions that prevent its use for current operating
purposes.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
5. Variable interest entities
At April 30, 2005 the Company operated 19 aircraft (2004 - 23 aircraft)
under operating leases with seven entities that would be considered
variable interest entities ("VIEs") under Canadian and U.S. GAAP. These
leases have terms and conditions similar to those of the Company's other
operating leases over periods ranging from 2006 to 2012.
At April 30, 2003 U.S. GAAP FASB Interpretation No. 46 ("FIN 46") was
effective for all VIEs created after January 31, 2003 and was effective
for those VIEs created prior to January 31, 2003 for the Company's
interim period which commenced November 1, 2003. The Canadian guidance
("AcG-15") applies to all annual and interim periods beginning on or
after November 1, 2004 and is essentially consistent with the provisions
contained in U.S. GAAP with regard to the disclosure and consolidation
requirements for VIEs.
As at April 30, 2005, under FIN 46, the revisions under FIN 46-R and
AcG-15, the Company has concluded that it is not the primary beneficiary
of any of the aforementioned VIEs and that it is not required to
consolidate any of these VIEs in its consolidated financial statements.
The application of FIN 46, FIN 46-R and AcG-15 has not had any impact on
the Company's consolidated financial statements.
Based on appraisals by independent helicopter valuation companies as at
April 30, 2005, the estimated fair market value of the aircraft leased
from VIEs was $169.6 million as at April 30, 2005 (2004 -
$245.3 million). The Company has provided junior loans and loans
receivable in connection with operating leases with these VIEs. The
Company's maximum exposure to loss related to the junior loans and
loans receivable as a result of its involvement with the VIEs was
$13.0 million as at April 30, 2005 (2004 - $18.8 million).
-------------------------------------------------------------------------
-------------------------------------------------------------------------
6. Acquisitions
On August 17, 2004, the Company acquired 100% of the shares of Multifabs
Survival Ltd. ("Multifabs"), an Aberdeen based company specializing in
the production of cold water survival suits for military forces,
emergency services and offshore oil and gas companies around the world,
and on September 23, 2004, a majority of the shares of Aero Turbine
Support Ltd. ("ATSL"). ATSL is an independent aircraft engine repair and
overhaul company servicing General Electric CT58/T58 and Pratt & Whitney
Canada PT6T turboshaft engines. On January 13th, 2005 the Company also
acquired the assets and capabilities of Coulson Aero Technologies Ltd.
("Coulson"), a British Columbia based helicopter component and turbine
engine maintenance repair and overhaul ("MRO") provider. The total
purchase price to acquire these companies, assets, capabilities and
associated contracts was $21.3 million, including the assumption of debt.
These acquisitions were financed through existing operating facilities.
These acquisitions were accounted for using the purchase method with
results of operations included in the consolidated financial statements
from the acquisition dates. Under the purchase method of accounting, the
total estimated purchase price was allocated to the assets acquired and
liabilities assumed based on their estimated fair market values as of the
date of the completion of the acquisition as follows.
ATSL &
Coulson Multifabs Total
-------------------------------------------------------------------------
Cash $ 860 $ 4 $ 864
Other current assets 1,780 4,730 6,510
Intangible assets(1) 1,040 6,092 7,132
Goodwill(2) 1,079 7,782 8,861
Property and equipment 2,612 1,810 4,422
Current liabilities (1,083) (2,108) (3,191)
Long-term debt - (2,498) (2,498)
Other liabilities - (670) (670)
Non-controlling interest (240) - (240)
Future income tax liabilities (337) (2,005) (2,342)
-------------------------------------------------------------------------
$ 5,711 $ 13,137 $ 18,848
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Of the $7.1 million of acquired intangible assets, $3.6 million was
assigned to customer contracts and relationships, $2.2 million for
patents and registered designs and $1.3 million to other intangibles.
The intangible assets will be amortized on a straight-line basis over
their estimated useful lives ranging from 4 - 10 years.
(2) Goodwill of $8.9 million is not expected to be deductible for tax
purposes and is related to businesses included in the Repair and
overhaul segment.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
7. Businesses held for sale (discontinued operations)
During the year the Company sold two non-core components of the Schreiner
business segment legally operating as Schreiner Canada Ltd. ("Schreiner
Canada") and Schreiner Aircraft Maintenance B.V. ("SAMCO") and realized a
net gain on sale of $8.6 million which included adjustments of
$1.1 million in the fourth quarter relating to loan proceeds received
that were previously provided for.
The potential sale of the remaining business held for sale,
CHC Composites Inc. ("Composites"), to any potential acquirer will be
contingent on the acceptance of certain terms and conditions by the
Government of Newfoundland and Labrador. The sale of Composites has not
yet been consummated and therefore the disposal has not been reflected in
these statements nor have the long-term assets and liabilities of this
business been reclassified as current at April 30, 2005. The assets and
liabilities of this business were measured at the lower of their carrying
amounts and their estimated fair value less costs to sell. As a result, a
fair value adjustment of $14.3 million was recorded in the current fiscal
year and allocated to long-term assets of this business. This fair value
estimate is subject to adjustment as the sale of this remaining business
is consummated or as assumptions used in the valuation change.
The fair value adjustment on Composites and the gain on sale of Schreiner
Canada and SAMCO have been recorded in earnings from discontinued
operations along with operating results from these discontinued
businesses. Operating results from discontinued businesses include
imputed interest on debt assumed by the buyer or required to be repaid as
a result of the proposed disposal transaction.
The following tables present the consolidated balance sheets and
consolidated statements of earnings of the businesses held for sale
(discontinued operations) included in the consolidated financial
statements:
As at
----------------------
April 30, April 30,
2005 2004
-------------------------------------------------------------------------
Assets
Receivables $ 5,455 $ 10,138
Future income tax assets - 6,139
Inventory 6,804 11,782
Prepaid expenses 398 878
----------------------
12,657 28,937
Property and equipment, net 3,495 18,789
Intangible assets - 4,678
Future income tax assets - 3,046
----------------------
16,152 55,450
----------------------
Liabilities
Payables and accruals 2,153 23,856
Other liabilities 3,493 4,172
Future income tax liabilities - 1,708
----------------------
5,646 29,736
----------------------
Net assets of discontinued operations $ 10,506 $ 25,714
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Year Ended
----------------------------------------------
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
-------------------------------------------------------------------------
Revenue $ 2,282 $ 8,948 $ 21,641 $ 13,637
----------------------------------------------
Net earnings (loss)
from discontinued
operations(1) $ 1,809 $ (389) $ (11,019) $ (2,574)
----------------------------------------------
----------------------------------------------
(1) Includes a net gain on disposal of $1.1 million for the current
quarter and $8.6 million for the current fiscal year and a fair value
adjustment of $14.3 million for the current fiscal year.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
8. Segment information
The Company's operations are segregated into five reportable segments.
The segments are European flying, International flying, Schreiner, Repair
and overhaul and Corporate and other.
Three Months Ended April 30, 2005
---------------------------------------------------
European Int'l Repair and
flying(2) flying(3) Schreiner(4) overhaul(5)
------------ ------------ ------------ ------------
Revenue from
external customers $ 104,100 $ 61,557 $ 36,378 $ 24,411
Add: Inter-segment
revenues 5,246 2,863 - 38,248
------------ ------------ ------------ ------------
Total revenue 109,346 64,420 36,378 62,659
Direct costs 93,991 51,148 25,557 52,484
General and
administration - - - -
------------ ------------ ------------ ------------
Segment EBITDA(1) 15,355 13,272 10,821 10,175
Amortization (2,394) (2,394) (1,535) (1,461)
Restructuring costs (804) (263) (3,188) (2,401)
Gain (loss) on
disposals of assets (397) 522 510 (119)
------------ ------------ ------------ ------------
Operating income
(loss) $ 11,760 $ 11,137 $ 6,608 $ 6,194
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Corporate Inter-segment
and other(6) eliminations Consolidated
------------ ------------ ------------
Revenue from
external customers $ - $ - $ 226,446
Add: Inter-segment
revenues 4,020 (50,377) -
------------ ------------ ------------
Total revenue 4,020 (50,377) 226,446
Direct costs 1,955 (51,598) 173,537
General and
administration 7,183 - 7,183
------------ ------------ ------------
Segment EBITDA(1) (5,118) 1,221 45,726
Amortization (200) - (7,984)
Restructuring costs (2,067) - (8,723)
Gain (loss) on
disposals of assets - - 516
------------ ------------ ------------
Operating income
(loss) $ (7,385) $ 1,221 29,535
------------ ------------
------------ ------------
Debt settlement costs (36)
Financing charges (8,678)
------------
Earnings from
continuing operations
before income taxes
and undernoted items 20,821
Non-controlling
interest (121)
Loss in earnings of
associated companies (648)
Income tax provision (3,095)
------------
Net earnings from
continuing operations 16,957
Net earnings from
discontinued operations 1,809
------------
Net earnings $ 18,766
------------
------------
Three Months Ended April 30, 2004(7)
---------------------------------------------------
European Int'l Repair and
flying(2) flying(3) Schreiner(4) overhaul(5)
------------ ------------ ------------ ------------
Revenue from
external customers $ 109,367 $ 52,462 $ 32,490 $ 15,120
Add: Inter-segment
revenues 4,348 2,821 - 38,414
------------ ------------ ------------ ------------
Total revenue 113,715 55,283 32,490 53,534
Direct costs 94,602 47,638 29,161 43,345
General and
administration - - - -
------------ ------------ ------------ ------------
Segment EBITDA(1) 19,113 7,645 3,329 10,189
Amortization (3,231) (1,556) (1,126) (190)
Restructuring costs (7,114) - (849)
Gain (loss) on
disposals of assets 1,491 24 (199) -
------------ ------------ ------------ ------------
Operating income
(loss) $ 10,259 $ 6,113 $ 2,004 $ 9,150
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Corporate Inter-segment
and other(6) eliminations Consolidated
------------ ------------ ------------
Revenue from
external customers $ - $ - $ 209,439
Add: Inter-segment
revenues 3,885 (49,468) -
------------ ------------ ------------
Total revenue 3,885 (49,468) 209,439
Direct costs 3,142 (48,129) 169,759
General and
administration 3,169 - 3,169
------------ ------------ ------------
Segment EBITDA(1) (2,426) (1,339) 36,511
Amortization (1,352) - (7,455)
Restructuring costs (1,218) - (9,181)
Gain (loss) on
disposals of assets - - 1,316
------------ ------------ ------------
Operating income
(loss) $ (4,996) $ (1,339) 21,191
------------ ------------
------------ ------------
Debt settlement costs (10,011)
Financing charges (7,549)
------------
Earnings from
continuing operations
before income taxes
and undernoted items 3,631
Non-controlling
interest -
Equity in earnings of
associated companies 69
Income tax recovery 22,113
------------
Net earnings from
continuing operations 25,813
Net loss from
discontinued operations (389)
------------
Net earnings $ 25,424
------------
------------
Year Ended April 30, 2005
---------------------------------------------------
European Int'l Repair and
flying(2) flying(3) Schreiner(4) overhaul(5)
------------ ------------ ------------ ------------
Revenue from
external customers $ 437,912 $ 233,516 $ 154,613 $ 77,303
Add: Inter-segment
revenues 22,710 11,916 - 145,919
------------ ------------ ------------ ------------
Total revenue 460,622 245,432 154,613 223,222
Direct costs 386,565 199,474 119,521 181,377
General and
administration - - - -
------------ ------------ ------------ ------------
Segment EBITDA(1) 74,057 45,958 35,092 41,845
Amortization (11,428) (7,500) (5,501) (4,537)
Restructuring costs (2,864) (1,358) (5,646) (3,307)
Gain (loss) on
disposals of assets 2,212 1,493 510 (110)
------------ ------------ ------------ ------------
Operating income
(loss) $ 61,977 $ 38,593 $ 24,455 $ 33,891
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Corporate Inter-segment
and other(6) eliminations Consolidated
------------ ------------ ------------
Revenue from
external customers $ - $ - $ 903,344
Add: Inter-segment
revenues 17,398 (197,943) -
------------ ------------ ------------
Total revenue 17,398 (197,943) 903,344
Direct costs 13,525 (198,295) 702,167
General and
administration 25,803 - 25,803
------------ ------------ ------------
Segment EBITDA(1) (21,930) 352 175,374
Amortization (1,567) - (30,533)
Restructuring costs (4,437) - (17,612)
Gain (loss) on
disposals of assets - - 4,105
------------ ------------ ------------
Operating income
(loss) $ (27,934) $ 352 131,334
------------ ------------
------------ ------------
Debt settlement costs (1,994)
Financing charges (37,120)
------------
Earnings from
continuing operations
before income taxes
and undernoted items 92,220
Non-controlling
interest (288)
Equity in earnings of
associated companies 5,481
Income tax provision (23,835)
------------
Net earnings from
continuing operations 73,578
Net loss from
discontinued operations (11,019)
------------
Net earnings $ 62,559
------------
------------
Year Ended April 30, 2004(7)
---------------------------------------------------
European Int'l Repair and
flying(2) flying(3) Schreiner(4) overhaul(5)
------------ ------------ ------------ ------------
Revenue from
external customers $ 437,631 $ 191,773 $ 32,490 $ 58,119
Add: Inter-segment
revenues 16,157 11,047 - 135,490
------------ ------------ ------------ ------------
Total revenue 453,788 202,820 32,490 193,609
Direct costs 381,684 174,535 29,165 152,381
General and
administration - - - -
------------ ------------ ------------ ------------
Segment EBITDA(1) 72,104 28,285 3,325 41,228
Amortization (12,371) (5,715) (1,126) (644)
Restructuring costs (7,114) - - (849)
Gain (loss) on
disposals of assets 2,245 1,333 (199) -
------------ ------------ ------------ ------------
Operating income
(loss) $ 54,864 $ 23,903 $ 2,000 $ 39,735
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Corporate Inter-segment
and other(6) eliminations Consolidated
------------ ------------ ------------
Revenue from
external customers $ - $ - $ 720,013
Add: Inter-segment
revenues 13,577 (176,271) -
------------ ------------ ------------
Total revenue 13,577 (176,271) 720,013
Direct costs 14,494 (176,288) 575,971
General and
administration 18,633 - 18,633
------------ ------------ ------------
Segment EBITDA(1) (19,550) 17 125,409
Amortization (5,332) - (25,188)
Restructuring costs (1,218) - (9,181)
Gain (loss) on
disposals of assets (72) - 3,307
------------ ------------ ------------
Operating income
(loss) $ (26,172) $ 17 94,347
------------ ------------
------------ ------------
Debt settlement costs (19,716)
Financing charges (28,954)
------------
Earnings from
continuing operations
before income taxes
and undernoted items 45,677
Non-controlling
interest -
Equity in earnings of
associated companies 3,925
Income tax recovery 16,648
------------
Net earnings from
continuing operations 66,250
Net loss from
discontinued operations (2,574)
------------
Net earnings $ 63,676
------------
------------
Notes:
1. Segment EBITDA is defined as segment earnings before amortization,
restructuring costs, gain (loss) on disposals of assets, debt
settlement costs, financing charges, non-controlling interest, equity
in earnings of associated companies, and income tax (provision)
recovery.
2. European flying - includes flying operations in the U.K., Norway,
Ireland and Denmark.
3. International flying - includes operations in Australia, Africa and
Asia and offshore work in eastern Canada and in other locations
around the world.
4. Schreiner - includes flying operations primarily in the Netherlands,
Africa and Asia and includes other ancillary businesses.
5. Repair and overhaul - includes helicopter repair and overhaul
operations based in Norway, the U.K., and Canada and the survival
suit and safety equipment production businesses.
6. Corporate and other - includes corporate head office and other
activities.
7. Comparative information has been reclassified to reflect the results
of businesses held for sale (discontinued operations) (Note 7) and
other adjustments.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
9. Employee pension plans
The Company's pension plans are described in the notes to the
Consolidated Financial Statements dated April 30, 2004. The Company's net
defined benefit pension plan expense was as follows:
Three Months Ended Year Ended
----------------------------------------------
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
----------------------------------------------
Current service cost $ 4,854 $ 6,440 $ 19,508 $ 17,050
Interest cost 7,239 6,716 29,015 24,233
Expected return
on plan assets (7,940) (6,460) (29,589) (22,057)
Amortization of net
actuarial and
experience losses 1,976 2,534 7,985 9,773
Amortization of
prior service costs (52) 151 (375) 603
Amortization of
transition amounts 67 99 267 395
Participation contributions (808) (2,137) (3,595) (2,899)
----------------------------------------------
Total $ 5,336 $ 7,343 $ 23,216 $ 27,098
----------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
10. Financing charges
During the quarter the Company issued U.S. $150.0 million in 7 3/8%
senior subordinated notes due in 2014 at a premium to yield approximately
6 3/4% on issuance. The proceeds were used to repay a portion of amounts
owed under a senior credit facility and to pay related fees and expenses.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
11. Restructuring and debt settlement costs
a) Restructuring costs
During the three months and year ended April 30, 2005, the Company
expensed restructuring costs of $8.7 million (after-tax $5.9 million) and
$17.6 million (after-tax $11.8 million) respectively in connection with
restructuring activities. These restructuring costs related to general
organization planning, relocation of the Company's head office to
Vancouver, Canada and additional restructuring activities. Restructuring
costs were comprised of severance, termination, relocation, planning,
consulting and benefit adjustments. Of the $17.6 million incurred to
date, $9.1 million relates to severance and termination costs.
Additional costs are expected to be expensed in relation to these
restructuring initiatives with the majority of future costs relating to
termination, severance, consulting and other costs. The timing and final
amount of these additional costs are dependent on a number of factors
that are not yet known or determinable.
During the three months and year ended April 30, 2004 the Company
incurred $9.2 million (after-tax $6.4 million) in costs in connection
with the consolidation of its European operations and other related
activities.
The following table provides a reconciliation of the Company's
restructuring cost accrual for the three months and year ended April 30,
2005:
Three
Months Year
Ended Ended
April 30, April 30,
2005 2005
---------- ----------
Restructuring accrued, beginning of period $ 3,288 $ 1,833
Additional restructuring cost
accrued during the period 8,723 17,612
Restructuring cost paid during the period (4,333) (11,767)
---------- ----------
Restructuring accrued, end of period $ 7,678 $ 7,678
---------- ----------
b) Debt settlement costs
During the three months ended April 30, 2005, the Company expensed a
small amount of debt settlement costs. For the year ended April 30, 2005
the Company expensed $2.0 million (after-tax $1.3 million) of debt
settlement costs in connection with the senior credit facility revision
and the redemption of its remaining 11 3/4% senior subordinated notes and
the remaining 8% subordinated debentures. During the three months and
year ended April 30, 2004 the Company expensed debt settlement costs of
$10.0 million (after-tax $5.8 million) and $19.7 million (after-tax
$12.6 million) in connection with the retirement, in April 2004, of
$140.6 million (Euro 87.3 million) of its 11 3/4% notes and
$143.3 million in senior credit facilities and term loans. The debt
settlement costs expensed in the current and prior fiscal years were
comprised of premiums, professional fees, write-off of deferred financing
costs and other incremental costs directly associated with debt
settlement activities.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
12. 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
between 2005 and 2012. The Company's exposure under the asset value
guarantees including guarantees in the form of junior loans, loans
receivable and deferred payments was approximately $40.1 million at
April 30, 2005 compared to $33.3 million at April 30, 2004. The 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 any liability or loss with respect to these
guarantees.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
13. Contingent liability
The Company entered into a contract that required the deployment of new
aircraft during the fourth quarter. This contract commitment was not met
due to the late delivery of the aircraft by the manufacturer. The Company
was able to substitute aircraft to meet the customer's flying needs.
The customer believes it is entitled to compensation for the delay. The
Company's interpretation of the contract is that no compensation is
payable. Currently the customer and the Company are in discussions to
resolve this issue and therefore, the amount and potential outcome are
presently unknown. As a result, no amounts have been accrued in relation
to this issue at April 30, 2005.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
DATASOURCE: CHC Helicopter Corporation
CONTACT: please contact: Jo Mark Zurel, Senior Vice-President & Chief
Financial Officer, (604) 279-2451; Rick Davis, Vice-President, Financial
Reporting, (604) 279-2471; Chris Flanagan, Director of Communications,
(604) 279-2493 or 340-7659;
Archived images on this organization are searchable through CNW Photo Archive
website at http://photos.newswire.ca/. Images are free to accredited members of
the media.
To request a free copy of this organization's annual report, please go to
http://www.newswire.ca/ and click on reports@cnw.