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)
--------------------------------------------------- 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
--------------------------------------------------- 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)
--------------------------------------------------- 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 - - - - -
--------------------------------------------------- Total Flying
Revenue $386,521 $207,982 $ 4,273 $ 3,770 $602,546
--------------------------------------------------- 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)
------------------------------------------------------------ Hourly
Fixed Total
------------------------------------------------------------ 2004
2003 2004 2003 2004 2003
------------------------------------------------------------ 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 -
------------------------------------------------------------ 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)
----------------------------------------------- Europe
International ----------------------------------------------- 2004
2003 2004 2003 ----------------------------------------------- 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
----------------------------------------------- Total $ 410,844 $
425,466 $ 180,208 $ 177,080
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Schreiner Total -----------------------------------------------
2004 2003 2004 2003 -----------------------------------------------
Oil & Gas $ 14,067 $ - $ 522,679 $ 520,486 EMS/SAR(4) 473 -
62,008 56,995 Other 2,255 - 23,160 25,065
----------------------------------------------- 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
----------------------------------------------- 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
----------------------------------------------- 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
----------------------------------------------- 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
----------- ----------- ----------- ----------- -----------
----------- ----------- -----------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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 .
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