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CHC announces fourth quarter results
ST. JOHN'S, NF AND LABRADOR, June 8 /PRNewswire/ -- CHC Helicopter Corporation
(the "Company") (TSX: FLY.A and FLY.B; NYSE: FLI) today announced (unaudited)
financial results for the quarter and year ended April 30, 2004.
Financial Highlights
(in millions of Canadian dollars, except per share amounts)
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Three Months Ended Year Ended
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April 30, April 30,
April 30, 2003 April 30, 2003
2004 (Restated(3)) 2004 (Restated(3))
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
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Revenue $218.4 $174.6 $733.7 $718.3
Consolidated Segment
EBITDA(1) 36.3 36.2 123.3 141.3
Net earnings from
operations(2) 37.6 32.7 82.7 83.3
Net earnings 25.4 22.7 63.7 65.5
Cash flow(2) 15.9 5.9 65.9 81.8
Per share information
Net earnings from
operations:(2)
Basic $1.80 $1.57 $4.00 $4.02
Diluted 1.65 1.45 3.67 3.70
Net earnings:
Basic $1.22 $1.09 $3.08 $3.16
Diluted 1.12 1.01 2.83 2.92
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Highlights
- Revenue for the three months ended April 30, 2004 was $218.4 million,
up $43.8 million from the same quarter last year. The inclusion of
Schreiner Aviation Group ("Schreiner") in the current quarter
contributed $39.2 million of the increase.
- Flying activity in Europe compared to the same quarter last year
increased by 509 hours.
- Contract awards during the quarter were approximately $417.0 million.
- On February 16, 2004 the Company acquired Schreiner for a purchase
price of (euro) 86.7 million.
- During the quarter the Company issued U.S. $250.0 million in ten year
senior subordinated notes at a coupon of 7 3/8%. The proceeds were
used to refinance other indebtedness including (euro) 87.3 million of
existing senior subordinated notes with a coupon of 11 3/4%.
-----------------------------------
(1) See "Review of Segment Revenue and Segment EBITDA" in Management's
Discussion and Analysis.
(2) See definitions under "Non-GAAP Financial Measures" in Management's
Discussion and Analysis.
(3) See Note 3 to the Unaudited Condensed Consolidated Financial
Information.
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Investor Conference Call
The Company's 4th quarter/year end conference call and webcast will take place
Wednesday, June 9, 2004 at 10:30 a.m. EDT. To listen to the conference call,
dial 416-640-4127 for local and overseas calls, or toll-free 1-800-814-4853 for
calls from within North America. To hear a replay of the conference call, dial
416-640-1917, or toll-free 1-877-289-8525 and enter passcode "21050510 followed
by the number sign". The replay will be available until June 12, 2004.
The financial results and a webcast of the conference call will be available
through the Company's website at http://www.chc.ca/ and through Canada NewsWire
at: http://www.cnxmarketlink.com/.
CHC Helicopter Corporation is the world's largest provider of helicopter
services to the global offshore oil and gas industry with aircraft operating in
30 countries and a team of approximately 3,500 professionals worldwide.
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This press release and management's discussion and analysis 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. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially from
those indicated.
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Management's Discussion and Analysis of Financial Condition and Results
of Operations - Three months ended April 30, 2004
Overview
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The financial results include the impact of Schreiner from
February 16, 2004, the date of acquisition.
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Revenue increased by $43.8 million quarter over quarter, including the
unfavourable impact of foreign exchange of $3.2 million. For the year, revenue
increased by $15.4 million. This was driven by revenue growth of $55.3 million
offset by unfavourable foreign exchange of $39.9 million. Schreiner contributed
$39.2 million of the revenue growth, during the seventy-four days since
acquisition, for both the quarter and the year with the remaining revenue
growth primarily due to increased flying activity in the Company's
International flying segment. Consolidated Segment EBITDA for the quarter was
$36.3 million compared to $36.2 million in the same period last year.
Consolidated Segment EBITDA growth of $2.5 million was offset by unfavourable
foreign exchange of $2.4 million. Consolidated Segment EBITDA for the year
declined by $18.0 million from the same period last year, of which $16.9
million was due to unfavourable foreign exchange.
Net earnings from operations for the quarter were $37.6 million ($1.65 per
share, diluted) on revenue of $218.4 million as compared to net earnings from
operations of $32.7 million ($1.45 per share, diluted) on revenue of $174.6
million last year. Included in the current quarter's net earnings from
operations is a tax recovery of $21.0 million ($0.92 per share, diluted), a
significant portion of which is attributable to the reversal of a previously
recorded tax liability that is no longer required in respect of owned aircraft
as a result of refinancing of certain of the Company's European fleet. Last
year's results included a tax recovery of $14.0 million ($0.62 per share,
diluted) related to changes in tax legislation in Australia. Net earnings from
operations for the year ended April 30, 2004 were $82.7 million ($3.67 per
share, diluted) on revenue of $733.7 million compared to $83.3 million ($3.70
per share, diluted) on revenue of $718.3 million for the same period last year.
The primary factors impacting net earnings from operations for the year include
the aforementioned tax recoveries as well as (i) unfavourable foreign exchange
on Consolidated Segment EBITDA of approximately $16.9 million, (ii) increased
amortization expense of $3.3 million, (iii) decreased financing charges of $5.4
million, and (iv) a lower effective income tax rate.
Net earnings during the quarter were $25.4 million ($1.12 per share, diluted)
compared to net earnings of $22.7 million ($1.01 per share, diluted) in the
same quarter last year. In addition to the above noted change in net earnings
from operations, this quarter's results include after tax restructuring and
debt settlement costs of $12.2 million while last year's quarter included an
after tax asset impairment charge related to the Company's composites
manufacturing operation of $9.9 million. The restructuring costs relate to the
restructuring of the Company's European operations and the debt settlement
costs relate to the early retirement of a portion of the Company's 11 3/4%
senior subordinated notes and senior and other credit facilities. Net earnings
for the year ended April 30, 2004 were $63.7 million ($2.83 per share, diluted)
as compared to $65.5 million ($2.92 per share, diluted) for the same period
last year. Net earnings for the year included $19.0 million in after tax
restructuring and debt settlement costs while the year ended April 30, 2003
included after tax debt settlement costs of $7.9 million and an after tax asset
impairment charge of $9.9 million.
Debt Refinancing
In April 2004 the Company issued U.S. $250.0 million 7 3/8% senior subordinated
notes due 2014. As at April 30, 2004 partial proceeds from this debt issue were
used to redeem (euro) 87.3 million or $140.6 million (60% of original principal
amount) of its 11 3/4% senior subordinated notes and repay $143.3 million in
senior and other credit facilities. After tax debt settlement costs of $12.6
million were incurred upon the early termination of the above debt. Subsequent
to year end, an additional (euro) 1.1 million or approximately $1.8 million of
the Company's 11 3/4% senior subordinated notes was redeemed as well as the
$10.4 million 8% subordinated debentures. In July, 2004 the Company will redeem
the remaining outstanding (euro) 5.9 million principal amount related to the 11
3/4% notes.
Revenue
Total revenue for the three months ended April 30, 2004 was $218.4 million
compared to $174.6 million for the same period last year. Over the
corresponding twelve month periods total revenue increased from $718.3 million
last year to $733.7 million this year. The change is due primarily to the
following factors:
- Net unfavourable foreign exchange of $3.2 million for the quarter and
$39.9 million for the year. For a discussion on the nature of this
foreign exchange and management's approach to managing foreign
currency exposures, refer to "Foreign Currency" in Management's
Discussion and Analysis,
- Revenue earned by recently acquired Schreiner of $39.2 million,
- An increase, excluding the impact of foreign exchange, in revenue in
the Company's International flying segment of $6.9 million quarter
over quarter and $21.3 million for the year due to additional
contracts and higher flying activity on existing contracts, and
- An increase, excluding the impact of foreign exchange, in revenue in
the Company's European flying segment of $1.4 million quarter over
quarter and a decrease of $5.9 million for the year. Quarter over
quarter flying hours increased by 3% while year over year they
decreased by 2%.
Revenue Summary by Quarter
(in millions of Canadian dollars)
(Unaudited)
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Total
Flying Astec
Inter- Ope- Repair &
Period Europe national Schreiner rations Overhaul Composites Total
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Q1-F2003 $117.0 $45.8 $ - $162.8 $10.9 $1.3 $175.0
Q2-F2003 124.4 44.5 - 168.9 19.6 1.2 189.7
Q3-F2003 115.2 46.4 - 161.6 15.9 1.5 179.0
Q4-F2003 107.6 48.0 - 155.6 16.6 2.4 174.6
Q1-F2004 112.1 43.6 - 155.7 13.3 1.5 170.5
Q2-F2004 111.5 46.7 - 158.2 14.4 1.4 174.0
Q3-F2004 104.7 49.0 - 153.7 15.3 1.8 170.8
Q4-F2004 109.4 52.5 39.2 201.1 15.1 2.2 218.4
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Flying Revenue and Hours
The Company derives its flying revenue from hourly and fixed charges.
Approximately 56% (2003 - 60%) of the Company's fiscal 2004 flying revenue was
derived from hourly charges (including hourly charges on contracts that also
have fixed charges), and the remaining 44% (2003 - 40%) 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 change in revenue.
While flying hours may not correlate directly with revenue, they remain a good
measure of activity level.
The following table provides a quarterly summary of the Company's flying hours
and number of aircraft utilized for the past eight quarters.
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Flying Hours
(Unaudited)
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Flying Hours Number of Aircraft
----------------------------------- --------------------------
Period Europe Int'l Schreiner Total Europe Int'l Schreiner
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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 -
Q3-F2004 19,806 12,066 - 31,872 72 95 -
Q4-F2004 19,939 12,216 5,701 37,856 72 96 38
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The following table shows flying revenue mix by segment and in total by
aircraft type (including the impact of foreign exchange) for fiscal 2004 and
2003. The mix of aircraft type has remained relatively consistent year over
year, except for fixed wing which has increased due to the acquisition of
Schreiner.
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Year to Date Flying Revenue Mix
(in thousands of Canadian dollars)
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Year Ended
April 30, 2004
(Unaudited)
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Heavy Medium Light Fixed Wing Total
---------------------------------------------------
Europe $330,555 $ 80,289 $ - $ - $410,844
International 50,943 119,157 4,353 5,755 180,208
Schreiner 1,857 8,996 473 5,469 16,795
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Total Flying Revenue $383,355 $208,442 $ 4,826 $ 11,224 $607,847
---------------------------------------------------
Total % 63.1% 34.3% 0.8% 1.8% 100%
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Year Ended
April 30, 2003
(Unaudited)
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Heavy Medium Light Fixed Wing Total
---------------------------------------------------
Europe $335,841 $ 89,625 $ - $ - $425,466
International 50,680 118,357 4,273 3,770 177,080
Schreiner - - - - -
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Total Flying Revenue $386,521 $207,982 $ 4,273 $ 3,770 $602,546
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Total % 64.2% 34.5% 0.7% 0.6% 100%
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The following table shows the hourly and fixed flying revenue by segment
(including the impact of foreign exchange) for fiscal 2004 and 2003. Fixed
flying revenue as a percentage of total flying revenue has increased from 40%
last year to 44% this year.
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Flying Revenue - Hourly vs. Fixed
Year Ended April 30,
(in thousands of Canadian dollars)
(Unaudited)
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Hourly Fixed Total
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2004 2003 2004 2003 2004 2003
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Europe $272,536 $303,410 $138,308 $122,056 $410,844 $425,466
International 61,226 57,499 118,982 119,581 180,208 177,080
Schreiner 7,562 - 9,233 - 16,795 -
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Total $341,324 $360,909 $266,523 $241,637 $607,847 $602,546
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The following table shows segment flying revenue by industry sector (including
the impact of foreign exchange) for fiscal 2004 and 2003. For both fiscal
years, the Company derived approximately 86% of its flying revenue from the oil
and gas industry. The revenue from this industry is derived from production
support, 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
Year Ended April 30,
(in thousands of Canadian dollars)
(Unaudited)
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Europe International
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2004 2003 2004 2003
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Oil & Gas $ 383,275 $ 400,765 $ 125,337 $ 119,721
EMS/SAR(4) 21,833 20,513 39,702 36,482
Other 5,736 4,188 15,169 20,877
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Total $ 410,844 $ 425,466 $ 180,208 $ 177,080
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Schreiner Total
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2004 2003 2004 2003
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Oil & Gas $ 14,067 $ - $ 522,679 $ 520,486
EMS/SAR(4) 473 - 62,008 56,995
Other 2,255 - 23,160 25,065
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Total $ 16,795 $ - $ 607,847 $ 602,546
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------------------------------
(4) 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. Activity at this base represents approximately 31%
of total activity in the Company's European operating segment. The following
table provides a quarterly summary of all helicopter passenger traffic at
Aberdeen Airport for fiscal 2000 fiscal to 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 87,588 92,918 114,606 104,381 85,167
Q4 89,975 92,686 108,247 101,166 85,190
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374,547 414,155 467,733 423,797 363,785
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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 Segment Revenue and Segment EBITDA
The Company provides certain financial and related information about its
operating segments and also about their products and services, the geographic
areas in which they operate and their major customers. The Company's objective
is to provide information about the different types of business activities in
which it engages and the different economic environments in which it operates
in order to help users of its consolidated financial statements (i) better
understand its performance, (ii) better assess its prospects for future net
cash flows and (iii) make more informed judgments about the Company as a whole.
In an effort to achieve this objective, information is provided about segment
revenues and Segment EBITDA because these financial measures are used by the
Company's key decision makers in making operating decisions and assessing
performance. Consolidated segment revenue excludes inter-segment revenues and
is therefore identical to reported revenues. Consolidated Segment EBITDA is the
sum of Segment EBITDA from each of the segments, including the "corporate and
other" segment, and therefore includes all operating expenses allocated to
segments. For additional information about segment revenues and Segment EBITDA,
including a reconciliation of these measures to the consolidated financial
statements, see Note 4 to the Unaudited Condensed Consolidated Financial
Information.
The Company includes six reporting segments in its financial statements:
European flying, international flying, Schreiner, Astec repair and overhaul,
composites manufacturing and corporate and other. The primary factors
considered in identifying segments are geographic coverage, which also impacts
the nature of the Company's operations, the type of contracts that are entered
into, the type of aircraft that are utilized, and segments used by management
to evaluate the business.
Europe
European Flying Segment
(Unaudited)
Millions of Dollars CAD
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Q4-04 Q4-03 YTD-04 YTD-03
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Revenue $ 109.4 $ 107.6 $ 437.6 $ 464.1
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Segment EBITDA $ 18.4 $ 18.8 $ 69.5 $ 88.6
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Segment EBITDA % 16.8% 17.5% 15.9% 19.1%
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Revenue from the Company's European flying segment for the fourth quarter of
this fiscal year was $109.4 million, up $1.8 million from revenue of $107.6
million for the fourth quarter of last year. This $1.8 million increase was
comprised of favourable foreign exchange of $0.4 million and a $5.0 million
increase in flying revenue, offset by a $2.2 million decrease in training
revenue and a $1.4 million decrease in other revenue. The increase in flying
revenue was due to an increase in flying activity of 509 hours and an increase
in fixed flying revenue as a percentage of total flying revenue quarter over
quarter.
Segment EBITDA from the European flying segment was $18.4 million for the
fourth quarter of this fiscal year, down $0.4 million from Segment EBITDA of
$18.8 million for the fourth quarter last year. This decline was caused by a
decrease in Segment EBITDA of $1.1 million partially offset by favourable
foreign exchange of $0.7 million. Factors contributing to this $1.1 million
decline include (i) increased pension expense of approximately $1.0 million,
(ii) Segment EBITDA for the fourth quarter of last year included $0.9 million
earned on a one-time ancillary revenue stream, (iii) lower Segment EBITDA of
approximately $1.8 million related to the decline in training revenue in Norway
offset by (iv) lower than normal maintenance expense quarter over quarter of
approximately $1.9 million and (v) the impact of increased flying. The
increased pension expense was due to an increase in amortization of net
actuarial and experience losses and to assumption changes stemming from last
year's actuarial review.
During the quarter the Company was awarded multi-year contract renewals by
Statoil ASA and Norsk Hydro AS for the provision of heavy helicopter
transportation services in the Norwegian North Sea. The contracts include the
provision of three dedicated new Sikorsky S-92 helicopters, one dedicated Super
Puma MkI, up to four dedicated Super Puma MkII's and back up from the Super
Puma fleet. These contracts have start dates ranging from June 2004 to January
2005 with initial contract periods ranging from three years to seven years.
Including option periods, the total potential contract periods range from five
years to eleven years. Combined annual revenue from these contracts is
approximately $86.0 million.
Effective February 6, 2004, the Company fully implemented a single management
structure in its European operations ("CHC Europe"). All necessary regulatory
approvals have been obtained and all key management personnel are in place. 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. Through
improved information systems, group purchasing leverage, better fleet
utilization and a reduction in personnel costs, the Company believes it will
realize annual Segment EBITDA savings of $12.0 million. To date, actions to
effect $9.0 million of the $12.0 million in anticipated Segment EBITDA savings
have been completed and the remainder is expected to be complete by July 31,
2004.
International
International Flying Segment
Millions of Dollars CAD
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Q4-04 Q4-03 YTD-04 YTD-03
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Revenue $ 52.5 $ 48.0 $ 191.8 $ 184.8
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Segment EBITDA $ 7.5 $ 12.3 $ 27.5 $ 39.9
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Segment EBITDA % 14.3% 25.7% 14.3% 21.6%
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Revenue from the Company's International flying segment was $52.5 million for
the fourth quarter of this fiscal year compared to $48.0 million for the fourth
quarter of last year. This $4.5 million revenue increase was caused by flying
revenue growth of $5.6 million attributable to oil and gas customers and an
increase in other ancillary revenue of $2.4 million, offset by a decrease in
other flying revenue of $1.0 million and unfavourable foreign exchange of $2.5
million. The decrease in other flying revenue was related primarily to the
early termination of a UN contract in Iraq in March 2003.
On a quarter over quarter basis, flying activity from oil and gas customers
increased by 1,499 hours, flying activity from EMS/SAR customers decreased by
373 hours and activity from other customers increased by 23 hours. EMS/SARS
flying revenue was only minimally impacted as the fixed component accounts for
approximately 75% of this revenue steam.
Geographically, the $5.6 million of revenue growth from oil and gas customers
was largely driven by (i) the deployment of additional aircraft to existing
contracts in each of Myanmar, Malaysia, East Timor and Angola generating
incremental revenue of $7.0 million, (ii) new contracts in the Republic of
Georgia, Ecuador, India and Angola producing revenue of $2.3 million, offset by
(iii) the impact of the expiry of contracts in Venezuela and Australia of $2.9
million and (iv) $1.2 million related to reduced activity in Canada and the
Philippines.
Segment EBITDA for the fourth quarter was $7.5 million, down $4.8 million from
Segment EBITDA of $12.3 million for the fourth quarter last year. This decline
was caused by unfavourable foreign exchange of $2.2 million, and a decrease in
Segment EBITDA of $2.6 million. This $2.6 million decrease in Segment EBITDA
was driven by (i) the existence last year of certain contracts with higher than
normal margins that ended in fiscal 2004, (ii) higher than normal maintenance
expense in the current quarter compared to the same quarter last year, (iii)
higher base costs in Africa due to the mobilization of two S76C+ aircraft in
Equatorial Guinea, (iv) increased lease costs and (v) a retroactive wage
settlement with the pilots in Australia. Partially offsetting these items was
the impact of increased revenue quarter over quarter. Segment EBITDA percentage
at 14.3% during the quarter was in line with that reported in the third quarter
at 14.7%.
Schreiner
Schreiner
(Unaudited)
Millions of Dollars CAD
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Q4-04 Q4-03 YTD-04 YTD-03
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Revenue $ 39.2 - $ 39.2 -
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Segment EBITDA $ 3.3 - $ 3.3 -
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Segment EBITDA % 8.4% - 8.4% -
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Schreiner
The Company acquired Schreiner as of February 16, 2004. Schreiner is the
largest helicopter operator in the Dutch sector of the North Sea, operating in
the Netherlands, providing support to the oil and gas industry and emergency
medical services. Schreiner also supports oil and gas operations in Africa and
Asia in addition to operating an aircraft parts business and providing fixed
wing maintenance services. Revenue from Schreiner during the period ended April
30, 2004 was $39.2 million while Segment EBITDA earned during the same period
was $3.3 million. The $39.2 million in revenue was comprised of (i) $16.8
million in flying revenue of which $14.1 million and $2.7 million related to
oil and gas and other customers respectively, (ii) $5.6 million of fixed wing
maintenance revenue, (iii) aircraft parts sales of $8.3 million, and (iv) $8.5
million in other revenue.
Astec Repair and Overhaul
Astec Repair and Overhaul
(Unaudited)
Millions of Dollars CAD
-----------------------------------------------
Q4-04 Q4-03 YTD-04 YTD-03
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Total Revenue $ 53.5 $ 50.0 $ 193.6 $ 204.9
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Third-party Revenue $ 15.1 $ 16.6 $ 58.1 $ 63.0
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Segment EBITDA $ 10.2 $ 9.5 $ 41.2 $ 37.4
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Segment EBITDA %(x) 19.1% 18.9% 21.3% 18.3%
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(x) EBITDA % is calculated on total revenue
Astec
Total revenue from the Company's repair and overhaul segment was $53.5 million
for the fourth quarter this year, up $3.5 million from total revenue of $50.0
million for the fourth quarter last year. Third party revenue from this segment
was $15.1 million for the current quarter, down $1.5 million compared to $16.6
million for the same period last year. This $1.5 million decrease in third
party revenue was attributable to (i) unfavourable foreign exchange of $1.1
million, (ii) a decrease in revenue from heavy maintenance projects of $0.6
million, and (iii) a decrease in revenue from "power-by-the-hour" ("PBTH")
component overhauls of approximately $0.9 million. Partially offsetting these
decreases was $0.2 million in revenue growth as a result of increased customer
flying hours in Europe and Asia, supported by PBTH agreements, and revenue
growth of $0.9 million as a result of the acquisition of Whirly Bird Services
Limited ("WBS") during the quarter. Effective March 5, 2004 the Company
acquired 100% of the shares of WBS. With headquarters in the U.K., WBS is a
global supplier of survival suits and related passenger survival equipment.
Segment EBITDA for the fourth quarter was $10.2 million, up $0.7 million from
$9.5 million for the same period last year. This $0.7 million increase was
comprised of (i) $0.3 million due to the acquisition of WBS, (ii) Segment
EBITDA growth of $1.3 million due primarily to increased external and internal
component overhauls, offset by (iii) unfavourable foreign exchange of $0.9
million.
Composites
Composites Manufacturing
(Unaudited)
Millions of Dollars CAD
-----------------------------------------------
Q4-04 Q4-03 YTD-04 YTD-03
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Revenue $ 2.3 $ 2.4 $ 7.0 $ 6.4
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Segment EBITDA ($0.2) $ 0.2 ($2.0) ($3.2)
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Composites
Total revenue from the Company's composites manufacturing segment was $2.3
million for the three months ended April 30, 2004, in line with revenue for the
same period last year of $2.4 million. Excluding $1.0 million in government
operating assistance included in revenue in the fourth quarter last year,
revenue has grown quarter over quarter due mainly to initial revenue from a
contract with Aero Vodochody for the manufacture of S76 components.
Segment EBITDA for the current quarter was a loss of $0.2 million compared to
positive Segment EBITDA of $0.2 million for the same period last year.
Excluding the above noted government operating assistance, Segment EBITDA
improved quarter over quarter primarily due to revenue from the Aero Vodochody
contract and cost control measures.
Corporate and Other
The Corporate and other segment recorded costs of $2.9 million in the current
quarter compared to $4.5 million in the same period last year. The improvement
quarter over quarter is due mainly to $3.0 million in lower variable
compensation costs partially offset by the inclusion in the fourth quarter last
year of a $0.6 million reduction in the settlement of an outstanding claim
against the Company and a $0.8 million aviation insurance refund.
Financing Charges
Financing charges for the three months ended April 30, 2004, as detailed below,
decreased by $0.7 million as compared to the same period last year. This
decrease was due mainly to a $4.5 million decrease in foreign exchange losses
on operating activities and working capital revaluation, partially offset by a
$1.9 million increase in other financing charges, a $1.0 million increase in
interest on debt and a $0.9 million decrease in foreign exchange gains on debt
repayments and revaluations. Interest on debt increased quarter over quarter
due to higher debt levels in connection with the acquisition of Schreiner.
Three Months Ended
(Unaudited)
-------------------------
April 30, April 30,
2004 2003
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Interest on debt obligations $ 8,456 $ 7,855
Amortization of deferred financing costs 1,180 814
Foreign exchange (gain) loss from operating
activities and working capital revaluation (2,457) 2,058
Foreign exchange gain on debt repayment (363) (808)
Foreign exchange gain on revaluation of
long-term debt - (494)
Other 969 (958)
-------------------------
$ 7,785 $ 8,467
-------------------------
-------------------------
The average interest rate on the Company's variable-rate senior credit
facilities for the current quarter was approximately 4.1% compared to 4.9% in
the same period last year.
Income Taxes
Total income tax recovery recorded during the quarter was $22.6 million
compared to income tax recovery of $11.6 million recorded in the same quarter
last year. During the quarter the Company recorded an income tax recovery of
$7.0 million on restructuring and debt settlement costs related to the
restructuring of the Company's European operations and early retirement of a
portion of the Company's 11 3/4% senior subordinated notes and senior and other
credit facilities. During the same quarter last year the Company recorded an
income tax recovery of $2.9 million related to the asset impairment charge in
the Company's composite manufacturing operations. Income tax recovery included
in net earnings from operations was $15.6 million for the quarter compared to
$8.7 million for the same quarter last year. The income tax recovery included
in net earnings from operations contained an income tax recovery of $21.0
million, a significant portion of which is attributable to the reversal of a
tax liability previously recorded in respect of owned aircraft that is no
longer required as a result of refinancing of certain of the Company's European
fleet. The remainder of this recovery relates to the reversal of a previously
recorded tax liability that is no longer considered necessary as a result of
the completion of audits in various jurisdictions which confirmed the Company's
filing position on several matters. For the same quarter last year the income
tax recovery included in net earnings from operations reflected an income tax
recovery of $14.0 million related to its Australian operations. The Government
of Australia had introduced legislation that provided wholly-owned corporate
groups with the option to consolidate income taxation from July 1, 2002. The
Company's Australian operations completed an analysis of this option during the
fourth quarter last year and decided to elect to file its income tax returns
under the new consolidation regime. The benefit of $14.0 million is a result of
tax effecting the increase in the tax basis of the assets of each of the
subsidiaries in the consolidated Australian group.
On a year to date basis, income tax recovery on net earnings from operations
was $7.6 million compared to income tax expense of $5.3 million recorded last
year. The difference, other than that explained in the discussion on the
quarter, reflects a decrease in the Company's effective income tax rate
primarily the result of decreased earnings in jurisdictions with higher tax
rates.
Cash Flows, Liquidity and Capital Resources
Operating Activities
Cash flow from operations for the fourth quarter of fiscal 2004 was $13.9
million, up $17.9 million from the fourth quarter of fiscal 2003. This increase
was comprised of a $10.0 million increase in cash flow and a $7.9 million
improvement in working capital management. The increase in cash flow of $10.0
million was comprised primarily of (i) a $4.6 million increase in deferred
revenue due to the relative timing of cash receipts, (ii) a $3.5 million
reduction in financing charges due mainly to foreign exchange on operating
activities and working capital revaluation and (iii) a $5.9 million reduction
in current tax expense, offset by (iv) a $3.8 million increase in the excess of
defined benefit pension plan contributions over pension expense.
Non-cash working capital increased by approximately $2.0 million in the fourth
quarter of fiscal 2004. While the change was not significant, the acquisition
of Schreiner on February 16, 2004 did cause variations within the various
components of working capital. In particular, Schreiner's receivables and
payables at that date were significantly different from their typical month end
balances and this distorted the change in these components of working capital
during the fourth quarter.
In the fourth quarter of fiscal 2003, non-cash working capital increased by
approximately $9.9 million due primarily to a $9.4 million increase in
inventory. This inventory increase occurred largely in the Company's repair and
overhaul segment in support of the Company's flying divisions and external
customers.
Financing Activities
The Company's total net debt(5) increased by $174.8 million during the quarter,
from $272.1 million to $446.9 million. This increase consists of a net debt
increase of $225.1 million, offset by a cash increase of $24.3 million and
favourable foreign exchange of $26.0 million. The $225.1 million net increase
in debt in the fourth quarter was primarily due to the acquisition of
Schreiner. During the quarter, the Company issued U.S. $250 million of 7 3/8%
senior subordinated notes. Proceeds were used primarily to pay down existing
debt and to fund issue costs. The Company recorded deferred financing charges
in the quarter of $12.8 million in connection with such debt issue costs. As
well, the Company incurred debt settlement expenses totaling $19.7 million in
connection with the pay down of existing debt. The favourable foreign exchange
impact of $26.0 million was due primarily to the effect of exchange rate
fluctuations on the Company's euro denominated debt.
---------------
(5) See definition under "Non-GAAP Financial Measures" in Management's
Discussion and Analysis.
Change in
Total Net Debt Position During Q4
(in millions of Canadian dollars)
(Unaudited)
---------------------------------
Opening balance $ 272.1
Net increase of debt 225.1
Increase in cash (24.3)
Foreign exchange (26.0)
---------------------------------
Ending balance $ 446.9
---------------------------------
---------------------------------
As at April 30, 2004, the Company has unused credit facilities of $63.4 million
and cash of $67.1 million, for a total of $130.5 million.
During the fourth quarter of the current fiscal year the Company paid dividends
totaling $2.7 million.
Investing Activities
Capital asset additions during the quarter totaled $44.7 million. $31.1 million
of such expenditures were comprised of (i) $20.8 million for the purchase of
three medium helicopters, (ii) $4.3 million for aircraft modifications, (iii)
$1.8 million for major spares, (iv) $1.0 million in connection with buildings
and hangars, and (v) $3.2 million primarily for other equipment. The
aforementioned aircraft expenditures of $20.8 million were comprised of the
combined aircraft purchase price of $24.4 million offset by the application of
deposits of $3.6 million. The Company also made additional deposits during the
quarter of $3.3 million toward future aircraft purchases. Net capital
expenditures during the fourth quarter for helicopter major components totaled
$9.8 million and were comprised of cash expenditures of $25.9 million offset by
amortization of $16.1 million. The Company also spent $3.8 million on
helicopter major inspections during the quarter. These expenditures during the
period were financed from proceeds received on capital asset dispositions and
operating cash flow. Proceeds from disposals during the quarter totaled $42.5
million. This was comprised of $40.2 million received in connection with five
aircraft sale-leaseback transactions and $2.3 million received from
miscellaneous dispositions.
During the quarter, the Company acquired Schreiner and WBS for net cash outlays
of $92.5 million and $4.9 million, respectively. These acquisitions were debt
financed.
Foreign Currency
The Company's reporting currency is the Canadian dollar. However, a significant
portion of revenue and operating expenses are denominated in pound sterling,
Norwegian kroner, Australian dollars, South African rand and euros, the
reporting currencies of the Company's principal foreign operating subsidiaries.
In addition, certain revenue and operating expenses are transacted in
currencies other than the reporting currencies of the subsidiaries, namely U.S.
dollars and euros. Foreign exchange impact on revenue and Consolidated Segment
EBITDA, therefore, is comprised of (i) foreign exchange on the translation of
the financial results of the foreign subsidiaries into Canadian dollars and
(ii) foreign exchange on the translation of U.S. dollar and euro denominated
transactions into the reporting currencies of the subsidiaries.
The translation of the financial results of the Company's foreign subsidiaries
into Canadian dollars resulted in foreign exchange that increased revenue by
$0.8 million for the three months ended April 30, 2004 but reduced revenue by
$20.7 million for the year ended April 30, 2004. Quarter over quarter this
favourable foreign exchange was primarily a result of the strengthening of the
pound sterling, Australian dollar and South African rand somewhat offset by the
weakening of the Norwegian kroner. Year over year the unfavourable foreign
exchange was due to the weakening of the Norwegian kroner and pound sterling
that was somewhat offset by the strengthening of the Australian dollar and
South African rand. The impact on revenue due to the translation of U.S. dollar
and euro denominated transactions into the reporting currencies of the
Company's subsidiaries was unfavourable by $4.0 million for the quarter and
unfavourable by $19.2 million year to date. The total unfavourable foreign
exchange impact on revenue was, therefore, $3.2 million for the three months
ended April 30, 2004 and $39.9 million for the year ended April 30, 2004.
The unfavourable impact of foreign exchange on Consolidated Segment EBITDA
during the quarter was $2.4 million, while the year to date impact was $16.9
million. For the quarter, $0.4 million of this foreign exchange impact was due
to the translation of the financial results of the foreign subsidiaries into
Canadian dollars, with $5.6 million for the year. The remaining $2.0 million
for the quarter was attributable to the translation of U.S. dollar and euro
denominated transactions, with $11.3 million for the year. Since financing
charges, amortization, income tax expense, capital expenditures and debt
repayments are also primarily 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, utilizing natural hedges
where possible and putting in place financial instruments, when considered
appropriate, to manage the remaining exposures. In managing this risk, the
Company may use financial instruments including forwards, swaps, and other
derivative instruments. Company policy specifically prohibits the use of
derivatives for speculative purposes.
-------------------------------------------------------------------------
Annual Average Foreign
Exchange Rates
-------------------------
April 30, April 30,
2004 2003
-------------------------
USD - CAD 1.3434 1.5393
NOK - CAD 0.1916 0.2081
GBP - CAD 2.2997 2.3974
Euro - CAD 1.5916 1.5538
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at April 30, 2004 the Company had designated its new U.S. $250.0 million 7
3/8% senior subordinated note issue as hedges of the Company's various net
investments as follows: (i) U.S. $100.0 million designated as a hedge of the
net investment in the Company's self-sustaining operations in Canada whose
functional currency is the U.S. dollar, (ii) U.S. $93.5 million converted to
pound sterling via a currency swap designated as a hedge of the net investment
in the Company's self-sustaining operations in the U.K., (iii) U.S. $29.7
million converted to euro via a currency swap designated as a hedge of the net
investment in the Company's self-sustaining operations in the Netherlands, and
(iv) U.S. $26.8 million converted to Norwegian kroner via a currency swap
designated as a hedge of the net investment in the Company's self-sustaining
operations in Norway. The Company also had designated its pound sterling and
remaining outstanding euro denominated debt as hedges of its net investments in
its self-sustaining operations in the U.K. and Netherlands, respectively. As a
result of the above effective hedges, revaluation gains and losses on debt and
the net investments are offset in the shareholders' equity section of the
balance sheet in accordance with Canadian generally accepted accounting
principles.
To minimize foreign exchange risk, the Company has denominated its debt in
various currencies to match net operating cash flows with debt service
obligations. As at April 30, 2004, the Company's total net debt was denominated
in the following currencies:
(Unaudited)
-----------------------------
Debt in Canadian
Original Currency Equivalent
Currency (000's) (000's)
-------------------------------------------------------------------------
Euro (euro) 75,825 $ 124,497
Pound sterling pnds stlg 9,927 24,137
U.S. dollar USD 250,000 342,675
Canadian dollar CDN 22,717 22,717
Cash (various currencies) (67,093)
-------------------------------------------------------------------------
Total Net Debt $ 446,933
Fleet
At April 30, 2004 the Company's fleet consisted of 141 owned aircraft and 65
aircraft under operating leases. Eighty-five of these aircraft are employed in
Europe (primarily in the North Sea) with the other 121 employed in other
international markets. In addition, 222 aircraft are employed in the Company's
42.75% owned Canadian onshore helicopter operations, Canadian Helicopters
Limited, the Company's 40% owned helicopter operations, Aero Contractors of
Nigeria, and the Company's 37.8% owned investment in Inaer, the largest onshore
and offshore helicopter operator in Spain, for a combined total of 428
aircraft.
-------------------------------------------------------------------------
Fleet Summary
-------------------------------------------------------------------------
Fixed Operating
Heavy Medium Light Wing Total Owned Leased
----- ------ ------ ----- ----- ----- ------
Fleet at January 31, 2004 71 82 10 4 167 112 55
Increases (decreases)
during the period:
Acquisition of Schreiner 3 24 2 11 40 33 7
S76A++ 1 (1)
S76C (3) 3
S76C+ 2 2 2
S76C+ (2) 2
Bell 212 (1) (1) (1)
365C2 (1) (1) (1)
Kingair (1) (1) (1)
-------------------------------------------------------------------------
Fleet at April 30, 2004 74 106 12 14 206 141 65
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The following aircraft transactions occurred during the fourth quarter of the
current fiscal year:
- One S76A++ aircraft was purchased from the lessor,
- Three S76C aircraft were involved in "lease-out", "lease-in"
transactions,
- Two S76C+ aircraft were purchased and an additional two S76C+ were
sold and leased back,
- One Bell 212 was returned to the lessor, and " Two aircraft were sold,
a 365C2 and a Kingair.
During the quarter, the Company made aircraft operating lease payments of $12.1
million compared to $10.8 million in the same period last year. As at April 30,
2004, there were twenty additional leased aircraft compared to the same period
last year of which seven related to the acquisition of Schreiner. The increase
in lease payments of $1.3 million is due to an increase in the number of leased
aircraft, partially 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 65 aircraft included in the Company's fleet at April 30, 2004. Sixty
of these leases are long-term with expiry dates ranging from 2005 to 2012. 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 required under these aircraft operating
leases are as follows (based on April 30, 2004 interest rates and exchange
rates):
Unaudited
---------
2005 $ 53.4 million
2006 43.5 million
2007 33.9 million
2008 27.0 million
2009 24.1 million
and thereafter: 33.5 million
------------
Total $ 215.4 million
---------------
---------------
As at April 30, 2004, the Company had outstanding deposits for a variety of
aircraft. As part of the repair and overhaul contract with the German Ministry
of Interior the Company will modify and sell five of its own Super Puma MkII
aircraft from its European operations.
Defined Benefit Employee Pension Plan
Defined benefit pension plan expense increased by approximately $2.7 million
quarter over quarter. This $2.7 million increase was due to approximately $1.7
million related to assumption changes, increased amortization of net actuarial
and experience losses quarter over quarter and approximately $1.0 million
related to the inclusion of Schreiner's financial results in the fourth quarter
of fiscal 2004.
Dividend
During the second quarter the Company's Board of Directors declared an annual
50 cent dividend, to be paid quarterly at a rate of 12.5 cents per share on
each of the Class A subordinate voting shares and the Class B multiple voting
shares. The first and second quarterly payments were made December 2, 2003 and
February 4, 2004 for $2.6 million and $2.7 million, respectively. Subsequent to
the quarter end a third payment was made on May 5, 2004 for $2.7 million.
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 42.75% investment in the onshore operations of Canadian
Helicopters Limited and from the Company's 37.8% owned investment in onshore
and offshore helicopter operations of Inaer.
Non-GAAP Financial Measures
The Company's continuous disclosure documents may provide discussion and
analysis of non-GAAP financial measures. These financial measures do not have
standard definitions prescribed by Canadian generally accepted accounting
principles ("Canadian GAAP") and therefore may not be comparable to similar
measures disclosed by other companies. The Company utilizes these measures in
making operating decisions and assessing its performance. Certain investors,
analysts, and others, utilize these measures in assessing the Company's
financial performance and as an indicator of its ability to service debt. These
non-GAAP financial measures have not been presented as an alternative to either
(i) net income in accordance with Canadian GAAP, as an indicator of operating
performance, or (ii) cash flows from operating, investing and financing
activities in accordance with Canadian GAAP.
The following table provides a reconciliation of (i) net earnings from
operations to Canadian GAAP net earnings, (ii) basic and diluted net earnings
from operations per share to Canadian GAAP basic and diluted net earnings per
share, (iii) cash flow to Canadian GAAP cash flow from operations and (iv)
total net debt to total debt.
From the prior fiscal year, the Company has changed its definition of net
earnings from operations. Special income tax recoveries, excluding those
associated with restructuring and debt settlement costs and asset impairment
charges, but including tax recoveries associated with changes in estimates
and/or tax laws are considered operational in nature and thus are included in
the calculation of net earnings from operations. Accordingly, 2003 net earnings
from operations have been revised to reflect this change.
Reconciliation of Non-GAAP Financial Measures
(in thousands of Canadian dollars, except per share amounts)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at and for the As at and for the
Three Months Ended Year Ended
-----------------------------------------------
April 30, April 30,
April 30, 2003 April 30, 2003
2004 (Restated(6)) 2004 (Restated(6))
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------------------------------------------------------------------
Revenue $ 218,386 $ 174,610 $ 733,650 $ 718,313
Operating expenses 182,128 138,398 610,329 577,028
-----------------------------------------------
Earnings before undernoted
items (Consolidated
Segment EBITDA) 36,258 36,212 123,321 141,285
-----------------------------------------------
Undernoted items:
Amortization (7,825) (6,011) (25,922) (22,585)
Gain on disposals
of assets 1,316 2,842 3,307 2,413
Financing charges (7,785) (8,467) (29,510) (34,878)
Equity in earnings
(losses) of
associated companies 68 (611) 3,925 2,340
-----------------------------------------------
(14,226) (12,247) (48,200) (52,710)
-----------------------------------------------
Net earnings from
operations before
income taxes 22,032 23,965 75,121 88,575
Income taxes recovery
(provision) thereon 15,589 8,705 7,596 (5,255)
-----------------------------------------------
Net earnings from
operations(1) 37,621 32,670 82,717 83,320
-----------------------------------------------
Restructuring and debt
settlement costs(2)(3) (19,192) - (28,897) (12,464)
Asset impairment charge - (12,811) - (12,811)
Income tax recovery
thereon 6,992 2,871 9,856 7,420
-----------------------------------------------
(12,200) (9,940) (19,041) (17,855)
-----------------------------------------------
Net earnings $ 25,421 $ 22,730 $ 63,676 $ 65,465
-----------------------------------------------
-----------------------------------------------
Per share
Basic
Net earnings from
operations $ 37,621 $ 32,670 $ 82,717 $ 83,320
Weighted average number
of shares (000's) 20,911 20,829 20,673 20,728
Basic net earnings
from operations
per share(4) $ 1.80 $ 1.57 $ 4.00 $ 4.02
-----------------------------------------------
-----------------------------------------------
Diluted
Net earnings from
operations $ 37,621 $ 32,670 $ 82,717 $ 83,320
Effect of dilutive
securities 123 117 493 478
-----------------------------------------------
$ 37,744 $ 32,787 $ 83,210 $ 83,798
Weighted average number
of shares (000's) 22,865 22,565 22,683 22,621
Diluted net earnings
from operations
per share(5) $ 1.65 $ 1.45 $ 3.67 $ 3.70
-----------------------------------------------
-----------------------------------------------
Cash Flow(6)
Cash flow from operations $ 13,904 $ (3,973) $ 29,724 $ 62,656
Change in non-cash
working capital 2,036 9,898 36,165 19,094
-----------------------------------------------
-----------------------------------------------
$ 15,940 $ 5,925 $ 65,889 $ 81,750
-----------------------------------------------
-----------------------------------------------
Total net debt(7)
Total debt $ 514,026 $ 321,268 $ 514,026 $ 321,268
Cash and cash equivalents (67,093) (58,104) (67,093) (58,104)
-----------------------------------------------
-----------------------------------------------
$ 446,933 $ 263,164 $ 446,933 $ 263,164
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(6) See Note 3 to the Unaudited Condensed Consolidated Financial
Information.
Definitions of Non-GAAP Financial Measures
(1) Net earnings from operations is defined as net earnings before
restructuring costs, debt settlement costs and asset impairment
charges and taxes thereon.
(2) Restructuring costs are defined as costs incurred to implement a
fundamental and material change to the operating and/or management
structures of the Company. Restructuring costs may include severance
costs, professional fees, travel costs and other incremental costs
directly associated with the restructuring activities.
(3) Debt settlement costs are defined as costs incurred to retire all, or
a portion of, an existing debt facility before its scheduled maturity
date. Debt settlement costs may include penalties, premiums,
professional fees and other incremental costs directly associated
with the debt settlement activities.
(4) Basic net earnings from operations per share is defined as net
earnings from operations divided by the weighted average number of
shares outstanding for the period.
(5) Diluted net earnings from operations per share is defined as net
earnings from operations divided by the diluted average number of
shares for the period.
(6) Cash flow is defined as cash flow from operations as prescribed by
Canadian GAAP, but excluding the impact of changes in non-cash
working capital.
(7) Total net debt is defined as total debt less cash and cash
equivalents.
Summary financial data - U.S. Dollars
Certain summary financial data from the April 30, 2004 Unaudited Condensed
Consolidated Financial Information has 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 April 30,
2004 of $1.3707 (equal sign) U.S. $1.00.
Financial Highlights
(in millions of U.S. dollars, except per share amounts)
-------------------------------------------------------------------------
Three Months Ended Year Ended
-------------------------------
April 30,
April 30, 2004
2004 (Restated(7))
(Unaudited) (Unaudited)
-------------------------------------------------------------------------
Revenue $ 159.3 $ 535.3
Consolidated Segment EBITDA(8) 26.5 90.0
Net earnings from operations(9) 27.4 60.3
Net earnings 18.5 46.5
Cash flow(9) 11.6 48.1
Per share information
Net earnings from operations(9):
Basic $ 1.31 $ 2.92
Diluted 1.20 2.68
Net earnings:
Basic $ 0.89 $ 2.25
Diluted 0.82 2.06
-------------------------------------------------------------------------
-------------------------------------------------------------------------
---------------------
(7) See Note 3 to the Unaudited Condensed Consolidated Financial
Information.
(8) See "Review of Segment Revenue and Segment EBITDA" in Management's
Discussion and Analysis.
(9) See definition under "Non-GAAP Financial Measures" in Management's
Discussion and Analysis.
CHC HELICOPTER CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)
Incorporated under the laws of Canada
As at
(Restated
Note 3)
April 30, April 30,
2004 2003
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 67,093 $ 58,104
Receivables 193,728 139,587
Future income tax assets 18,955 11,001
Inventory 267,568 214,656
Prepaid expenses 12,123 7,559
----------- -----------
559,467 430,907
Property and equipment, net 680,613 537,318
Investments 49,728 21,043
Other assets 177,557 138,425
Future income tax assets 47,358 17,877
----------- -----------
$1,514,723 $1,145,570
----------- -----------
----------- -----------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities
Payables and accruals $ 200,404 $ 138,390
Dividends payable 5,194 -
Income taxes payable 6,328 3,532
Future income tax liabilities 2,212 -
Current portion of debt obligations 38,046 20,369
----------- -----------
252,184 162,291
Long-term debt 133,305 139,374
Senior subordinated notes 342,675 151,111
Subordinated debentures - 10,414
Other liabilities 143,951 59,299
Future income tax liabilities 180,896 210,036
Shareholders' equity 461,712 413,045
----------- -----------
$1,514,723 $1,145,570
----------- -----------
----------- -----------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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
-----------------------------------------------
-----------------------------------------------
(Restated (Restated
Note 3) Note 3)
April 30, April 30, April 30, April 30,
2004 2003 2004 2003
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Revenue $ 218,386 $ 174,610 $ 733,650 $ 718,313
Operating expenses 182,128 138,398 610,329 577,028
----------- ----------- ----------- -----------
Earnings before
undernoted items 36,258 36,212 123,321 141,285
Amortization (7,825) (6,011) (25,922) (22,585)
Gain on disposals of assets 1,316 2,842 3,307 2,413
Financing charges (7,785) (8,467) (29,510) (34,878)
Equity in earnings (losses)
of associated companies 68 (611) 3,925 2,340
Asset impairment charge - (12,811) - (12,811)
Restructuring and debt
settlement costs (19,192) - (28,897) (12,464)
----------- ----------- ----------- -----------
Earnings before
income taxes 2,840 11,154 46,224 63,300
Income tax recovery 22,581 11,576 17,452 2,165
----------- ----------- ----------- -----------
Net earnings $ 25,421 $ 22,730 $ 63,676 $ 65,465
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share
Basic $ 1.22 $ 1.09 $ 3.08 $ 3.16
Diluted $ 1.12 $ 1.01 $ 2.83 $ 2.92
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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,
2004 2003
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings, beginning of year
as originally stated $ 177,862 $ 115,745
Prior period adjustment (Note 3) (1,186) (518)
----------- -----------
Retained earnings beginning of year, as restated 176,676 115,227
Net earnings 63,676 65,465
Dividends (10,486) (4,016)
----------- -----------
Retained earnings, end of period 229,866 176,676
Capital stock 238,428 236,962
Contributed surplus 3,291 3,291
Foreign currency translation adjustment (9,873) (3,884)
----------- -----------
Total shareholders' equity $ 461,712 $ 413,045
----------- -----------
----------- -----------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Dividends per participating voting share $ 0.50 $ 0.20
----------- -----------
----------- -----------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes
CHC HELICOPTER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)
Three Months Ended Year Ended
-----------------------------------------------
-----------------------------------------------
(Restated (Restated
Note 3) Note 3)
April 30, April 30, April 30, April 30,
2004 2003 2004 2003
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating activities
Net earnings $ 25,421 $ 22,730 $ 63,676 $ 65,465
Non-operating items and
items not involving cash (9,481) (16,805) 2,213 16,285
----------- ----------- ----------- -----------
Cash flow 15,940 5,925 65,889 81,750
Change in non-cash
working capital (2,036) (9,898) (36,165) (19,094)
----------- ----------- ----------- -----------
Cash flow from operations 13,904 (3,973) 29,724 62,656
----------- ----------- ----------- -----------
Financing activities
Change in debt and
debt settlement cost 131,485 (17,860) 116,978 (132,302)
Deferred financing costs (12,775) - (13,200) -
Capital stock issued 891 268 3,289 596
Dividends paid (2,656) - (5,291) (4,016)
----------- ----------- ----------- -----------
116,945 (17,592) 101,776 (135,722)
----------- ----------- ----------- -----------
Investing activities
Capital asset additions (44,664) (13,944) (128,284) (54,011)
Proceeds from disposals 42,481 45,442 126,898 74,865
Aircraft deposits (3,325) (408) (23,574) (6,730)
Investment in
subsidiaries,
net of cash acquired (97,353) - (97,353) -
Other (3,703) (2,803) (1,945) 2,491
----------- ----------- ----------- -----------
(106,564) 28,287 (124,258) 16,615
----------- ----------- ----------- -----------
Effect of exchange rate
changes on cash and
cash equivalents 551 (1,550) 1,747 1,717
----------- ----------- ----------- -----------
Change in cash and
cash equivalents
during the period 24,836 5,172 8,989 (54,734)
Cash and cash equivalents,
beginning of period 42,257 52,932 58,104 112,838
----------- ----------- ----------- -----------
Cash and cash equivalents,
end of year period $ 67,093 $ 58,104 $ 67,093 $ 58,104
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
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See accompanying notes
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CHC Helicopter Corporation
Notes to the Unaudited Condensed Consolidated Financial Information
For the periods ended April 30, 2004 and 2003
(Tabular amounts in thousands)
1. Basis of presentation
The Unaudited Condensed Consolidated Financial Information ("Consolidated
Financial Information"), includes the accounts of CHC Helicopter
Corporation and its direct and indirect controlled subsidiaries
(collectively, the "Company"). This Consolidated Financial Information
has been prepared in accordance with Canadian GAAP. Not all disclosures
required by Canadian GAAP for annual financial statements are presented
and thus the Consolidated Financial Information should be read in
conjunction with the Annual Audited Consolidated Financial Statements. In
the opinion of management, any adjustments considered necessary for a
fair presentation have been included. This Consolidated Financial
Information follows the same accounting policies and methods of
application as the most recent Annual Audited Consolidated Financial
Statements for the fiscal year ended April 30, 2003.
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2. Comparative figures
Certain comparative figures have been reclassified to conform to the
current period's presentation.
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3. Prior period of adjustment
During fiscal 2004, Norwegian tax authorities assessed commodity tax on
certain of the Company's transactions including aircraft fuel recharged
to customers and inter-company management fees. The assessment related to
fiscal years 1997 to 2004. The commodity tax assessed for fiscal years
prior to 2004 has resulted in a restatement of the Company's comparative
financial statements. The impact of the assessment on the fiscal 2003
financial statements was a reduction in opening retained earnings of
$0.5 million, a decrease in net earnings of $0.7 million, and an increase
in current liabilities of $1.2 million.
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4. Segment information
The Company's operations are segregated into six reportable segments.
The segments are European flying operations, international flying
operations, Schreiner, Astec repair and overhaul operations, composites
manufacturing and corporate and other.
Three Months Ended April 30, 2004
---------------------------------------------------------------
Astec
repair Corporate
European Int'l and Compo- and
flying flying Schreiner overhaul sites other Total
--------- -------- -------- -------- -------- -------- --------
Total
revenue $113,715 $ 55,283 $ 39,164 $ 53,534 $ 2,377 $ 3,885 $267,958
Less:
Inter-
segment
revenues 4,348 2,821 - 38,414 104 3,885 49,572
--------- -------- -------- -------- -------- -------- --------
Revenue
from
external
customers 109,367 52,462 39,164 15,120 2,273 - 218,386
Operating
expenses 91,008 44,967 35,883 4,931 2,478 2,861 182,128
--------- -------- -------- -------- -------- -------- --------
Segment
EBITDA $ 18,359 $ 7,495 $ 3,281 $ 10,189 $ (205)$ (2,861) 36,258
--------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- --------
Amort-
ization (7,825)
Gain on
disposals
of assets 1,316
Financing
charges (7,785)
Equity in
earnings of
associated
companies 68
Restructuring
and debt
settlement
costs (19,192)
--------
Earnings
before
income taxes 2,840
Income tax
recovery 22,581
--------
Net earnings $ 25,421
--------
--------
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Notes:
1. Segment EBITDA is defined as segment earnings before amortization,
gain (losses) on disposals of assets, financing charges, equity in
earnings (losses) of associated companies, asset impairment charge,
restructuring and debt settlement costs, and income taxes.
2. Europe - includes flying operations in the U.K., Norway, Ireland and
Denmark.
3. International - 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 including
aircraft parts sales and fixed wing repair and overhaul.
5. Repair and overhaul - includes helicopter repair and overhaul
operations based in Stavanger, Norway and Aberdeen, Scotland.
6. Composites - includes composite and metal aviation component
manufacturing operations in Canada.
7. Corporate and other - includes corporate head office activities and
applicable consolidation eliminations.
Three Months Ended April 30, 2003
-----------------------------------------------------------
Astec
repair Corporate
European Int'l and Compo- and
flying flying overhaul sites other Total
-------- -------- -------- -------- -------- --------
Total
revenue $112,143 $ 51,169 $ 50,020 $ 2,419 $ 3,463 $219,214
Less:
Inter-segment
revenues 4,579 3,151 33,411 - 3,463 44,604
-------- -------- -------- -------- -------- --------
Revenue from
external
customers 107,564 48,018 16,609 2,419 - 174,610
Operating
expenses 88,796 35,698 7,147 2,262 4,495 138,398
-------- -------- -------- -------- -------- --------
Segment
EBITDA $ 18,768 $ 12,320 $ 9,462 $ 157 $ (4,495) 36,212
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Amortization (6,011)
Gain on
disposals
of assets 2,842
Financing
charges (8,467)
Equity in
losses of
associated
companies (611)
Asset
impairment
charge (12,811)
--------
Earnings before
income taxes 11,154
Income tax
recovery 11,576
--------
Net earnings $ 22,730
--------
--------
Year Ended April 30, 2004
---------------------------------------------------------------
Astec
repair Corporate
European Int'l and Compo- and
flying flying Schreiner overhaul sites other Total
-------- -------- -------- -------- -------- -------- --------
Total
revenue $453,788 $202,820 $ 39,165 $193,609 $ 7,258 $ 13,577 $910,217
Less:
Inter-
segment
revenues 16,157 11,047 - 135,490 296 13,577 176,567
-------- -------- -------- -------- -------- -------- --------
Revenue
from
external
customers 437,631 191,773 39,165 58,119 6,962 - 733,650
Operating
expenses 368,148 164,261 35,884 16,891 9,006 16,139 610,329
-------- -------- -------- -------- -------- -------- --------
Segment
EBITDA $ 69,483 $ 27,512 $ 3,281 $ 41,228 $ (2,044)$(16,139) 123,321
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Amortization (25,922)
Gain on
disposals
of assets 3,307
Financing
charges (29,510)
Equity in
earnings of
associated
companies 3,925
Restructuring
and debt
settlement
costs (28,897)
--------
Earnings before
income taxes 46,224
Income tax
recovery 17,452
--------
Net earnings $ 63,676
--------
--------
Year Ended April 30, 2003
-----------------------------------------------------------
Astec
repair Corporate
European Int'l and Compo- and
flying flying overhaul sites other Total
-------- -------- -------- -------- -------- --------
Total
revenue $481,452 $197,686 $204,850 $ 6,426 $ 13,852 $904,266
Less:
Inter-segment
revenues 17,338 12,902 141,861 - 13,852 185,953
-------- -------- -------- -------- -------- --------
Revenue from
external
customers 464,114 184,784 62,989 6,426 - 718,313
Operating
expenses 375,500 144,917 25,599 9,601 21,411 577,028
-------- -------- -------- -------- -------- --------
Segment
EBITDA $ 88,614 $ 39,867 $ 37,390 $ (3,175) $(21,411) 141,285
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Amortization (22,585)
Gain on
disposals
of assets 2,413
Financing
charges (34,878)
Equity in
earnings of
associated
companies 2,340
Asset impairment
charge (12,811)
Debt settlement
costs (12,464)
--------
Earnings before
income taxes 63,300
Income tax
provision 2,165
--------
Net earnings $ 65,465
--------
--------
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DATASOURCE: CHC Helicopter Corporation
CONTACT: Jo Mark Zurel, Senior Vice-President & Chief Financial
Officer,(709) 570-0567; Derrick Sturge, Vice-President, Finance & Corporate
Secretary, (709) 570-0713; Chris Flanagan, Director of Communications,
(709) 570-0749; If you wish to be removed or included on the Company's
distribution list, please call (709) 570-0749 or email
.