CHC announces fourth quarter results VANCOUVER, June 29
/PRNewswire-FirstCall/ -- CHC Helicopter Corporation (the
"Company") (TSX: FLY.SV.A and FLY.MV.B; NYSE: FLI) today announced
unaudited financial results for the three months and year ended
April 30, 2005. Financial Highlights (in millions, except per share
amounts) Three Months Ended Year Ended
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April 30, April 30, April 30, April 30, 2005 2004 2005 2004
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Revenue $ 226.4 $ 209.4 $ 903.3 $ 720.0 Operating income 29.5 21.2
131.3 94.3 Net earnings from continuing operations 17.0 25.8 73.6
66.3 Net earnings (loss) from discontinued operations 1.8 (0.4)
(11.0) (2.6) Net earnings 18.8 25.4 62.6 63.7 Cash flow from
operations 33.6 28.2 138.2 90.6 Per share information(1) Basic
Weighted average number of shares 42.0 41.8 41.9 41.3 Net earnings
from continuing operations $ 0.40 $ 0.62 $ 1.75 $ 1.60 Net earnings
(loss) from discontinued operations 0.04 (0.01) (0.26) (0.06) Net
earnings 0.44 0.61 1.49 1.54 Diluted Weighted average number of
shares 46.2 45.7 46.0 45.4 Net earnings from continuing operations
$ 0.37 $ 0.57 $ 1.61 $ 1.47 Net earnings (loss) from discontinued
operations 0.04 (0.01) (0.24) (0.06) Net earnings 0.41 0.56 1.37
1.41
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(1) Comparative share information has been adjusted to reflect the
April 2005 2-for-1 stock split. Highlights - Revenue for the fourth
quarter was $226.4 million, an increase of $17.0 million or 8.1%
from the same period last year. This increase was primarily due to
a 61.4% increase in the Company's Repair and overhaul business and
a 17.3% increase in the International flying segment. - Operating
income for the fourth quarter was $29.5 million, an increase of
$8.3 million or 39.2% from the same period last year primarily due
to increases in the Company's International flying segment where
Segment EBITDA increased 73.6% and increases in the Schreiner
segment. - Net earnings from continuing operations include the
following after tax items (in thousands of Canadian dollars, except
per share amounts): Three Months Ended Year Ended
---------------------------------------------- April 30, April 30,
April 30, April 30, 2005 2004 2005 2004
---------------------------------------------- Restructuring costs
$ 5,851 $ 6,403 $ 11,813 $ 6,403 Debt settlement costs 24 5,797
1,337 12,638 Tax adjustments - (21,000) 4,224 (21,000)
---------------------------------------------- Total after tax cost
(recovery) $ 5,875 $ (8,800) $ 17,374 $ (1,959)
----------------------------------------------
---------------------------------------------- Diluted net earnings
per share impact $ 0.13 $ (0.19) $ 0.38 $ (0.04)
----------------------------------------------
---------------------------------------------- - Excluding the
items above, this is the Company's best fourth quarter and fiscal
year. - Substantial progress has been made on the Company's
restructuring project. In fiscal 2006 the Company will report
results of operations under four segments: Global operations,
European operations, Heli-One and Corporate and other. - During the
quarter the Company issued U.S. $150.0 million in 7 3/8% senior
subordinated notes. Investor Conference Call The Company's 4th
quarter and year end conference call and webcast will take place
Thursday, June 30, 2005 at 10:30 a.m. EDT. To listen to the
conference call, dial 416-640-4127 for local and overseas calls, or
toll-free 1-800-814-4890 for calls from within North America. To
hear a replay of the conference call, dial 416-640-1917, or
877-289-8525 and enter passcode "21127047 followed by the number
sign". The replay will be available until July 8, 2005. The
financial results and a live webcast of the conference call will be
available at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal
sign)1156540. The webcast is also available through CHC's website
at http://www.chc.ca/. CHC Helicopter Corporation is the world's
largest provider of helicopter services to the global offshore oil
and gas industry with aircraft operating in more than 30 countries.
If you wish to be removed or included on the Company's distribution
list, please contact .
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This document may contain projections and other forward-looking
statements within the meaning of the "safe harbour" provision of
the United States Private Securities Litigation Reform Act of 1995.
While these projections and other statements represent our best
current judgment, they are subject to risks and uncertainties
including, but not limited to, factors detailed in the Annual
Report on Form 20-F and in other filings of the Company with the
United States Securities and Exchange Commission and in the
Company's Annual Information Form filed with Canadian security
regulatory authorities. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those
indicated.
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FOURTH QUARTER OVERVIEW OF RESULTS The fourth quarter was a strong
quarter for the Company. Revenue for the fourth quarter was $226.4
million, an increase of $17.0 million or 8.1% from the same period
last year. The Company's Repair and overhaul and International
flying segments saw the most significant growth in revenues in the
fourth quarter. Revenue in the Repair and overhaul segment
increased $9.3 million or 61.4% and revenue in the International
flying segment increased $9.1 million or 17.3%. Operating income
for the fourth quarter was $29.5 million, an increase of $8.3
million or 39.2% from operating income of $21.2 million earned in
the same period last year. The Company's operating income increased
primarily due to increases in the Company's International flying
segment where Segment EBITDA increased 73.6% and increases in the
Schreiner segment. Significant Events Debt refinancing In March
2005 the Company issued U.S. $150.0 million in 7 3/8% senior
subordinated notes due in 2014 at a premium to yield approximately
6 3/4% on issuance. The proceeds were used to repay a portion of
amounts owed under a senior credit facility and to pay related fees
and expenses. Organizational restructuring The Company continued
its restructuring initiatives in the fourth quarter. To date the
Company has: - Completed the relocation of its head office and
senior management to Vancouver, Canada, - Proceeded with voluntary
retirement and involuntary severance plans in various
jurisdictions, - Established Heli-One, the world's largest
independent helicopter support company, and - Made substantial
progress towards completing its global restructuring project. In
fiscal 2006 the Company will report results of operations under
four segments: Global operations, European operations, Heli-One and
Corporate and other. In addition to direct cost savings anticipated
from a total reduction in headcount of approximately 180 people
worldwide, the Company anticipates savings to be realized from
improvements in fleet management, working capital management,
procurement, logistics and other areas. These cost savings should
positively impact margins progressively through fiscal 2006. Total
costs expensed to realize these anticipated savings totalled $8.7
million (after-tax $5.9 million) and $17.6 million (after-tax $11.8
million) in the fourth quarter and year ended April 30, 2005. These
costs primarily consisted of severance, termination, relocation,
planning, consulting and benefit adjustments. It is anticipated
that the majority of remaining costs will be expensed in the first
half of fiscal 2006. Stock split At a special meeting of
shareholders on March 28, 2005, the shareholders approved the
subdivision of CHC's issued and unissued Class A Subordinate Voting
Shares, Class B Multiple Voting Shares and Ordinary Shares all on a
two for one basis. The Class A Subordinate Voting Shares and Class
B Multiple Voting Shares listed on the Toronto Stock Exchange
commenced trading on a post-split basis on April 12, 2005. Class A
Subordinate Voting Shares listed on the New York Stock Exchange
began trading on a post-split basis on April 19, 2005. Segment
Revenue from External Customers - Variance Analysis (in thousands
of Canadian dollars) Fourth Quarter
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Schreiner Corporate Europe Int'l (2) R&O & other(3) Total
----------------------------------------------------------- Three
months ended April 30, 2004 $109,367 $ 52,462 $ 32,490 $ 15,120 $ -
$209,439 Foreign exchange impact (2,352) 122 (202) (1,395) -
(3,827) Revenue increase (decrease) (2,915) 8,973 4,090 10,686 -
20,834 -----------------------------------------------------------
Three months ended April 30, 2005 $104,100 $ 61,557 $ 36,378 $
24,411 $ - $226,446
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----------------------------------------------------------- Total
revenue increase (decrease) $ (5,267) $ 9,095 $ 3,888 $ 9,291 N/A $
17,007 % increase (decrease) (4.8%) 17.3% 12.0% 61.4% N/A 8.1% %
increase (decrease) excluding FX (2.7%) 17.1% 12.6% 70.7% N/A 9.9%
Fiscal Year
-----------------------------------------------------------
Schreiner Corporate Europe Int'l (2) R&O & other(3) Total
----------------------------------------------------------- Year
ended April 30, 2004 $437,631 $191,773 $ 32,490 $ 58,119 $ -
$720,013 Foreign exchange impact 6,693 (6,223) (202) (148) - 120
Revenue increase (decrease) (6,412) 47,966 122,325 19,332 - 183,211
----------------------------------------------------------- Year
ended April 30, 2005 $437,912 $233,516 $154,613 $ 77,303 $ -
$903,344
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----------------------------------------------------------- Total
revenue increase (decrease) $ 281 $ 41,743 $122,123 $ 19,184 N/A
$183,331 % increase (decrease) 0.1% 21.8% N/A 33.0% N/A 25.5% %
increase (decrease) excluding FX (1.5%) 25.0% N/A 33.3% N/A 25.4%
Segment EBITDA Variance Analysis (in thousands of Canadian dollars)
Fourth Quarter
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Schreiner Corporate Europe Int'l (2) R&O & other(3) Total
----------------------------------------------------------- Three
months ended April 30, 2004 $ 19,113 $ 7,645 $ 3,329 $ 10,189 $
(3,765) $ 36,511 Foreign exchange impact 257 356 (777) (335) -
(499) Segment EBITDA increase (decrease) (4,015) 5,271 8,269 321
(132) 9,714
----------------------------------------------------------- Three
months ended April 30, 2005 $ 15,355 $ 13,272 $ 10,821 $ 10,175 $
(3,897) $ 45,726
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----------------------------------------------------------- Segment
EBITDA margin(1) - Last year 17.5% 14.6% 10.2% 19.0% N/A 17.4% -
This year 14.8% 21.6% 29.7% 16.2% N/A 20.2% Total Segment EBITDA
increase (decrease) $ (3,758) $ 5,627 $ 7,492 $ (14) $ (132) $
9,215 % increase (decrease) (19.7%) 73.6% 225.1% (0.1%) (3.5%)
25.2% % increase (decrease) excluding FX (21.0%) 68.9% 248.4% 3.2%
(3.5%) 26.6% Fiscal Year
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Schreiner Corporate Europe Int'l (2) R&O & other(3) Total
----------------------------------------------------------- Year
ended April 30, 2004 $ 72,104 $ 28,285 $ 3,325 $ 41,228 $(19,533)
$125,409 Foreign exchange impact 3,991 (3,517) (777) (915) -
(1,218) Segment EBITDA increase (decrease) (2,038) 21,190 32,544
1,532 (2,045) 51,183
----------------------------------------------------------- Year
ended April 30, 2005 $ 74,057 $ 45,958 $ 35,092 $ 41,845 $(21,578)
$175,374
-----------------------------------------------------------
----------------------------------------------------------- Segment
EBITDA margin(1) - Last year 16.5% 14.7% 10.2% 21.3% N/A 17.4% -
This year 16.9% 19.7% 22.7% 18.7% N/A 19.4% Total Segment EBITDA
increase (decrease) $ 1,953 $ 17,673 $ 31,767 $ 617 $ (2,045) $
49,965 % increase (decrease) 2.7% 62.5% N/A 1.5% (10.5%) 39.8% %
increase (decrease) excluding FX (2.8%) 74.9% N/A 3.7% (10.5%)
40.8%
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(1) Segment EBITDA as a percent of revenue from external customers
except for the R&O segment, which is a percent of total
revenue. (2) Results for the Schreiner Aviation group for the
comparative period are for the period from February 16, 2004 to
April 30, 2004. (3) Corporate and other includes Inter-segment
eliminations. Europe Revenue from the Company's European flying
segment for the fourth quarter was $104.1 million, a decrease of
$5.3 million from the same period last year. This decrease was
primarily attributable to unfavourable foreign exchange of $2.4
million and a decrease in flying revenue of $2.6 million. The
decrease in flying revenue related to the redeployment of aircraft
to support growth in international markets and reduced activity
from expired contracts that have been partially offset by revenue
from new entrants to the North Sea. Flying hours of 19,086
decreased by 853 in the fourth quarter as compared to the same
period last year, and by 626 hours compared to the third quarter.
Segment EBITDA for the fourth quarter was $15.4 million, a decrease
of $3.7 million from the same period last year. This decrease was
primarily attributable to reduced revenue for the reasons
previously noted. In addition, the Company incurred costs totalling
$0.9 million related to the delay in deployment of new aircraft as
described below. Operating income for the fourth quarter was $11.8
million, an increase of $1.5 million from the same period last
year, primarily due to decreased Segment EBITDA offset by reduced
restructuring costs. The Company started a long-term contract in
Norway that required the deployment of two new heavy aircraft at
specific dates in the fourth quarter. This contract commitment was
not met due to the late delivery of the aircraft by the
manufacturer. The Company provided substitute aircraft to meet the
customer's flying requirements. If the new aircraft had been
deployed on the required dates the Company would have realized
additional Segment EBITDA of approximately $2.7 million in the
fourth quarter ($3.0 million year-to-date). Direct costs incurred
in the fourth quarter as a result of this delay included salary,
overtime and related costs totalling approximately $0.9 million.
The customer believes it is entitled to compensation for the delay.
The Company's interpretation of the contract is that no
compensation is payable. Currently the customer and the Company are
in discussions to resolve this issue and therefore the eventual
outcome is presently unknown. Subsequent to the quarter
ConocoPhillips Norway awarded the Company a five-year contract
renewal for the provision of two upgraded Super Puma MK1
helicopters to provide Search and Rescue and shuttle services in
the Ekofisk region of the North Sea. The contract, which commences
September 1, 2006, replaces an existing contract for the provision
of two AS365 N2 helicopters and is valued at approximately $88.0
million over the five-year period. The Company was also awarded a
new five-year contract by Marathon Oil UK, Ltd. for the provision
of helicopter services to the Brae Facilities in the UK North Sea
utilizing Super Puma AS332L2 aircraft from the CHC fleet,
commencing September 1, 2005. Total revenue over the contract term
is estimated at $50.0 million. ConocoPhillips Norway has also
extended an existing crew-change contract to September 1, 2006, but
has announced it will not renew the contract beyond this date.
BP/Talisman has extended a related crew-change contract to December
31, 2005, but has announced it will not renew the contract beyond
this date. These two crew-change contracts utilize a combined three
Super Puma MK2 aircraft plus pool use aircraft, and are currently
valued at a total of $46.0 million per annum. The Company has
identified several potential markets for the redeployment of these
aircraft in 2006 and is confident demand for its aircraft will
continue to grow in the North Sea and in offshore markets around
the world. International Revenue from the Company's International
flying segment for the fourth quarter was $61.6 million, an
increase of $9.1 million from the same period last year. This
increase was primarily attributable to increased flying and lease
revenue of $9.8 million from new and expanded contracts in
Malaysia, India, Venezuela and other countries. Segment EBITDA for
the fourth quarter was $13.3 million, an increase of $5.7 million
from the same period last year. This increase was the result of
increased revenue, the addition of high margin dry lease contracts
in Brazil and Venezuela in the current year, a favourable foreign
exchange impact of $0.4 million and due to the incurrence of
unusually high maintenance costs in the fourth quarter of the prior
year. Operating income for the fourth quarter was $11.1 million, an
increase of $5.0 million from the same period last year. This
increase is the result of increased Segment EBITDA somewhat offset
by increased amortization and restructuring costs incurred in
relation to the global restructuring project currently in progress.
Schreiner The Company acquired Schreiner on February 16, 2004.
Therefore the results of Schreiner are included in the Company's
statements of earnings and financial position subsequent to that
date. Revenue from Schreiner for the fourth quarter was $36.4
million, an increase of $3.9 million from the same period last
year. This increase was primarily the result of an increase in
flying revenue of $8.6 million somewhat offset by a reduction of
revenue from low margin aircraft inventory sales recorded in the
fourth quarter of last year. Segment EBITDA for the fourth quarter
was $10.8 million, an increase of $7.5 million from the same period
last year. This increase was the result of improved operating
margins from reduced support costs and other operational
efficiencies implemented since Schreiner was acquired, an $8.6
million increase in flying revenue as noted above and one-time cost
recoveries of approximately $1.2 million related to maintenance
costs recorded earlier in this fiscal year. The fourth quarter and
annual results include $1.9 million (2004 - $0.9 million) and $6.7
million (2004 - $0.9 million), respectively, of amortization of
below market contract values, which were recognized upon the
acquisition of Schreiner. Operating income for the fourth quarter
was $6.6 million, an increase of $4.6 million from the same period
last year. This increase was primarily the result of higher Segment
EBITDA of $7.5 million offset by $3.2 million in restructuring
costs incurred in the fourth quarter related to the Company's
current restructuring project. Repair and overhaul Revenue from the
Company's Repair and overhaul segment for the fourth quarter was
$24.4 million, an increase of $9.3 million from the same period
last year. This increase was primarily attributable to $5.7 million
in revenue earned in newly acquired businesses (Multifabs Survival
Ltd., Whirly Bird Services Ltd., Aero Turbine Support Ltd. and
Coulson) and increased activity from existing and new customers for
the Astec repair and overhaul facility located in Norway. These
increases were partially offset by an unfavourable foreign exchange
impact of $1.4 million. Segment EBITDA for the fourth quarter was
$10.2 million, which was approximately equal to Segment EBITDA for
the same period last year. This was the combined result of (i)
increased revenue as noted above; (ii) reduced overhaul costs
resulting from insourcing services previously provided by third
parties; offset by (iii) increased parts costs as low cost
inventory acquired on the acquisition of Helicopter Service Group
is now largely depleted; (iv) increased repair and subcontract
costs for parts used to support the Power-by- the-hour fleet; (v)
the decision not to increase prices to internal customers in the
current fiscal year; and (vi) an unfavourable foreign exchange
impact of $0.3 million. Operating income for the fourth quarter was
$6.2 million, a decrease of $3.0 million from the same period last
year. This decrease was primarily the result of a $1.3 million
increase in amortization relating to assets employed in the newly
acquired businesses and an increase of $1.6 million in
restructuring costs from those incurred in the fourth quarter of
last year. Corporate and other Corporate Segment EBITDA (including
Inter-segment eliminations) of $(3.9) million in the fourth quarter
decreased $0.1 million from the same period last year. The primary
reasons for the decrease were higher general and administration
costs of $4.0 million due primarily to increases in variable
compensation costs, a $2.0 million recovery on the Company's stock
appreciation rights plan in the fourth quarter of last year and the
build up of the financial services department in Vancouver, Canada
in anticipation of delivering services to the Company's operating
divisions in the new fiscal year. These increases were
substantially offset by variances in inter-segment eliminations.
Cash Flows, Liquidity and Capital Resources Cash flow from
operations for the fourth quarter was $33.6 million, a $5.4 million
increase from the same period last year. Defined benefit pension
plan items impacted cash flow from operations in the fourth quarter
by $23.4 million. This amount includes a non-cash pension plan
curtailment gain related to Schreiner and an annual funding payment
of $22.5 million in Norway. Non-cash working capital decreased by
$31.0 million during the fourth quarter primarily due to increases
in trade and other payables, which were somewhat offset by other
working capital changes. During the fourth quarter the Company
issued U.S. $150.0 million in 7 3/8% senior subordinated notes due
in 2014 to yield 6 3/4% on issuance. Long-term debt proceeds
include net proceeds on this new issuance of senior subordinated
notes totalling $186.6 million. Additions to property and equipment
during the fourth quarter totalled $29.5 million. This was due
primarily to the purchase of two previously leased Super Puma
AS332L1 aircraft, the purchase of one Dauphin SA365N2 aircraft and
costs associated with aircraft modifications. The Company also paid
$17.5 million in aircraft deposits in the quarter related to the
future delivery of various aircraft. This was offset by a $22.0
million recovery of deposits on aircraft which were subsequently
leased in the quarter. Proceeds from disposals during the quarter
totalled $13.0 million, which related to the sale of the second of
five Super Pumas under the German Border Guard contract and the
sale-leaseback transaction of a Sikorsky S76C+. As at April 30,
2005, the Company had unused capacity under its credit facilities
of $232.7 million and cash and cash equivalents of $51.4 million,
for a total of $284.1 million. The Company's total net debt
increased by $22.7 million in the fourth quarter, of which $12.8
million was the impact of foreign exchange and the remainder was
used to support investing and other activities. Net debt is
comprised of total debt less cash and cash equivalents. CHC
Helicopter Corporation Consolidated Balance Sheets Unaudited (in
thousands of Canadian dollars) Incorporated under the laws of
Canada As at --------------------------- April 30, April 30, 2004
2005 (Note 4)
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Assets Current assets Cash and cash equivalents $ 51,391 $ 61,079
Receivables 216,810 185,076 Future income tax assets 23,802 12,816
Inventory (Note 4) 216,513 203,365 Prepaid expenses 7,991 11,245
Assets of discontinued operations (Note 7) 12,657 28,937
--------------------------- 529,164 502,518 Property and equipment,
net (Notes 3 and 4) 851,210 734,405 Investments 58,806 48,242
Intangible assets (Note 6) 6,499 - Goodwill (Note 6) 8,861 - Other
assets 235,016 178,893 Future income tax assets 50,184 44,312
Assets of discontinued operations (Note 7) 3,495 26,513
--------------------------- $ 1,743,235 $ 1,534,883
--------------------------- --------------------------- Liabilities
and shareholders' equity Current liabilities Payables and accruals
$ 212,965 $ 169,329 Deferred revenue and redelivery obligations
22,574 13,939 Dividends payable 6,404 5,194 Income taxes payable
23,628 6,328 Future income tax liabilities 705 2,212 Current
portion of debt obligations 26,812 38,046 Liabilities of
discontinued operations (Note 7) 2,153 23,856
--------------------------- 295,241 258,904 Long-term debt 97,543
133,305 Senior subordinated notes (Note 10) 502,760 342,675 Other
liabilities 142,507 153,219 Future income tax liabilities 195,692
179,188 Liabilities of discontinued operations (Note 7) 3,493 5,880
Shareholders' equity 505,999 461,712 --------------------------- $
1,743,235 $ 1,534,883
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See accompanying notes CHC Helicopter Corporation Consolidated
Statements of Earnings Unaudited (in thousands of Canadian dollars,
except per share amounts) Three Months Ended Year Ended
---------------------------------------------- April 30, April 30,
April 30, 2004 April 30, 2004 2005 (Note 4) 2005 (Note 4)
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Revenue $ 226,446 $ 209,439 $ 903,344 $ 720,013 Direct costs
(173,537) (169,759) (702,167) (575,971) General and administration
costs (7,183) (3,169) (25,803) (18,633) Amortization (7,984)
(7,455) (30,533) (25,188) Restructuring costs (Note 11) (8,723)
(9,181) (17,612) (9,181) Gain on disposals of assets 516 1,316
4,105 3,307 ----------------------------------------------
Operating income 29,535 21,191 131,334 94,347 Debt settlement costs
(Note 11) (36) (10,011) (1,994) (19,716) Financing charges (Note
10) (8,678) (7,549) (37,120) (28,954)
---------------------------------------------- Earnings from
continuing operations before income taxes and undernoted items
20,821 3,631 92,220 45,677 Non-controlling interest (121) - (288) -
Equity (loss) in earnings of associated companies (648) 69 5,481
3,925 Income tax (provision) recovery (3,095) 22,113 (23,835)
16,648 ---------------------------------------------- Net earnings
from continuing operations 16,957 25,813 73,578 66,250 Net earnings
(loss) from discontinued operations (Note 7) 1,809 (389) (11,019)
(2,574) ---------------------------------------------- Net earnings
$ 18,766 $ 25,424 $ 62,559 $ 63,676
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Earnings (loss) per share Basic Net earnings from continuing
operations $ 0.40 $ 0.62 $ 1.75 $ 1.60 Net earnings (loss) from
discontinued operations 0.04 (0.01) (0.26) (0.06) Net earnings 0.44
0.61 1.49 1.54 Diluted Net earnings from continuing operations $
0.37 $ 0.57 $ 1.61 $ 1.47 Net earnings (loss) from discontinued
operations 0.04 (0.01) (0.24) (0.06) Net earnings 0.41 0.56 1.37
1.41
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See accompanying notes CHC Helicopter Corporation Consolidated
Statements of Shareholders' Equity Unaudited (in thousands of
Canadian dollars, except per share amounts) Year Ended
--------------------------- April 30, April 30, 2005 2004
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Retained earnings, beginning of year $ 229,866 $ 176,676 Net
earnings 62,559 63,676 Dividends (12,805) (10,486) Retained
earnings, end of year 279,620 229,866 Capital stock 239,469 238,428
Contributed surplus 3,291 3,291 Foreign currency translation
adjustment (16,381) (9,873) --------------------------- Total
shareholders' equity $ 505,999 $ 461,712
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Dividends declared per participating voting share(1) $ 0.30 $ 0.25
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(1) Adjusted for April 2005 2-for-1 stock split. See accompanying
notes CHC Helicopter Corporation Consolidated Statements of Cash
Flows Unaudited (in thousands of Canadian dollars) Three Months
Ended Year Ended ----------------------------------------------
April 30, April 30, April 30, April 30, 2005 2004 2005 2004
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Operating activities Net earnings from continuing operations $
16,957 $ 25,813 $ 73,578 $ 66,250 Non-operating items and items not
involving cash: Amortization of major components recorded as
operating expense (Note 4) 14,268 14,580 63,333 56,861 Defined
benefit pension plans (23,368) (18,744) (13,280) (3,462) Other
(5,205) 8,047 7,989 3,976
---------------------------------------------- 2,652 29,696 131,620
123,625 Change in non-cash working capital 30,957 (1,497) 6,580
(33,018) ---------------------------------------------- Cash flow
from operations 33,609 28,199 138,200 90,607
---------------------------------------------- Financing activities
Long-term debt proceeds 199,652 488,140 384,474 496,862 Long-term
debt repayments (197,120) (318,772) (243,582) (342,001) Debt
settlement - (37,883) (1,765) (37,883) Dividends paid (3,202)
(2,656) (11,596) (5,291) Capital stock issued 133 891 1,117 3,289
Deferred financing costs (2,892) (13,200) (5,598) (13,200)
---------------------------------------------- (3,429) 116,520
123,050 101,776 ----------------------------------------------
Investing activities Additions to property and equipment (29,474)
(31,053) (197,596) (116,881) Helicopter major inspections (3,611)
(3,768) (15,539) (9,237) Helicopter components (15,246) (24,423)
(63,254) (59,027) Proceeds from disposal of assets 12,966 42,481
90,940 126,898 Aircraft deposits 4,455 (3,325) (52,983) (23,574)
Investments in subsidiaries, net of cash acquired - (97,540)
(17,984) (97,540) Restricted cash (4,141) (817) (5,323) (9,826)
Other (1,280) 544 (6,307) 3,019
---------------------------------------------- (36,331) (117,901)
(268,046) (186,168) ----------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (529)
551 (3,821) 1,747 ----------------------------------------------
Cash provided by (used in) continuing operations (6,680) 27,369
(10,617) 7,962 Cash provided by (used in) discontinued operations
(3,657) (2,533) 929 (4,987)
---------------------------------------------- Change in cash and
cash equivalents during the period (10,337) 24,836 (9,688) 2,975
Cash and cash equivalents, beginning of period 61,728 36,243 61,079
58,104 ---------------------------------------------- Cash and cash
equivalents, end of period $ 51,391 $ 61,079 $ 51,391 $ 61,079
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See accompanying notes CHC Helicopter Corporation Notes to the
Unaudited Consolidated Interim Financial Statements For the periods
ended April 30, 2005 and 2004 (Unless otherwise indicated, tabular
amounts in thousands of Canadian dollars, except per share amounts)
1. Basis of presentation These financial statements follow the same
accounting policies and methods of application as the most recent
annual audited consolidated financial statements for the fiscal
year ended April 30, 2004, except as disclosed in Note 2 with
respect to hedging relationships and derivatives. Financial results
for the three months ended April 30, 2005 are not necessarily
indicative of financial results for the full year.
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2. Change in accounting policies Hedging relationships and
derivatives Effective May 1, 2004, the Company prospectively
adopted Canadian Accounting Guideline 13 ("AcG-13") with respect to
hedging relationships as it relates to the identification,
designation, documentation and effectiveness of hedging
relationships for the purpose of applying hedge accounting. The
Company also adopted at May 1, 2004, the Canadian Emerging Issues
Committee Abstract 128 ("EIC-128"). Under EIC-128, if a derivative
financial instrument is not part of a qualifying hedging
relationship, the Company is required to record such instrument on
the balance sheet at fair value, with changes in fair value
recognized in current earnings. The Company did not apply AcG-13 or
EIC-128 retroactively.
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3. Change in accounting estimates Effective May 1, 2004, based on
the Company's review of its amortization policy with respect to
aircraft airframes, the percentage of aircraft costs attributable
to certain airframes has been decreased from 30% to 25% and the
estimated useful life of such airframes has been increased from 15
years to 25 years. The effect of these accounting estimate changes
has been accounted for prospectively in fiscal 2005 resulting in a
decrease in amortization for the three months and year ended April
30, 2005 of $1.2 million and $3.8 million, respectively.
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4. Comparative figures Certain comparative figures have been
reclassified to conform to the current period's presentation. The
most significant changes include: a) The reclassification of $52.4
million of inventory at April 30, 2004 to property and equipment.
This reclassification relates to certain inventory items on hand in
the Company's Repair and overhaul segment that are intended to be
used and capitalized with respect to future internal major
component overhaul work; b) The reclassification in the
consolidated statements of cash flows for the three months and year
ended April 30, 2004 of $14.6 million and $56.9 million
respectively for the non-cash impact of the amortization of major
components and redelivery obligation costs recorded as operating
expense from helicopter components in investing activities to items
not involving cash in operating activities. As well, deferred
revenue and redelivery obligations now include the reclassification
of the current portion of redelivery obligations on leased
aircraft. The long-term portion of these obligations is included in
other liabilities; c) The comparative consolidated balance sheet,
statements of earnings and cash flows have been reclassified to
reflect the results of businesses held for sale (discontinued
operations) consistent with the current year's presentation (Note
7); and d) The reclassification of $6.0 million of cash at April
30, 2004 to other assets. This reclassification relates to certain
cash that was subject to restrictions that prevent its use for
current operating purposes.
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5. Variable interest entities At April 30, 2005 the Company
operated 19 aircraft (2004 - 23 aircraft) under operating leases
with seven entities that would be considered variable interest
entities ("VIEs") under Canadian and U.S. GAAP. These leases have
terms and conditions similar to those of the Company's other
operating leases over periods ranging from 2006 to 2012. At April
30, 2003 U.S. GAAP FASB Interpretation No. 46 ("FIN 46") was
effective for all VIEs created after January 31, 2003 and was
effective for those VIEs created prior to January 31, 2003 for the
Company's interim period which commenced November 1, 2003. The
Canadian guidance ("AcG-15") applies to all annual and interim
periods beginning on or after November 1, 2004 and is essentially
consistent with the provisions contained in U.S. GAAP with regard
to the disclosure and consolidation requirements for VIEs. As at
April 30, 2005, under FIN 46, the revisions under FIN 46-R and
AcG-15, the Company has concluded that it is not the primary
beneficiary of any of the aforementioned VIEs and that it is not
required to consolidate any of these VIEs in its consolidated
financial statements. The application of FIN 46, FIN 46-R and
AcG-15 has not had any impact on the Company's consolidated
financial statements. Based on appraisals by independent helicopter
valuation companies as at April 30, 2005, the estimated fair market
value of the aircraft leased from VIEs was $169.6 million as at
April 30, 2005 (2004 - $245.3 million). The Company has provided
junior loans and loans receivable in connection with operating
leases with these VIEs. The Company's maximum exposure to loss
related to the junior loans and loans receivable as a result of its
involvement with the VIEs was $13.0 million as at April 30, 2005
(2004 - $18.8 million).
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6. Acquisitions On August 17, 2004, the Company acquired 100% of
the shares of Multifabs Survival Ltd. ("Multifabs"), an Aberdeen
based company specializing in the production of cold water survival
suits for military forces, emergency services and offshore oil and
gas companies around the world, and on September 23, 2004, a
majority of the shares of Aero Turbine Support Ltd. ("ATSL"). ATSL
is an independent aircraft engine repair and overhaul company
servicing General Electric CT58/T58 and Pratt & Whitney Canada
PT6T turboshaft engines. On January 13th, 2005 the Company also
acquired the assets and capabilities of Coulson Aero Technologies
Ltd. ("Coulson"), a British Columbia based helicopter component and
turbine engine maintenance repair and overhaul ("MRO") provider.
The total purchase price to acquire these companies, assets,
capabilities and associated contracts was $21.3 million, including
the assumption of debt. These acquisitions were financed through
existing operating facilities. These acquisitions were accounted
for using the purchase method with results of operations included
in the consolidated financial statements from the acquisition
dates. Under the purchase method of accounting, the total estimated
purchase price was allocated to the assets acquired and liabilities
assumed based on their estimated fair market values as of the date
of the completion of the acquisition as follows. ATSL & Coulson
Multifabs Total
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Cash $ 860 $ 4 $ 864 Other current assets 1,780 4,730 6,510
Intangible assets(1) 1,040 6,092 7,132 Goodwill(2) 1,079 7,782
8,861 Property and equipment 2,612 1,810 4,422 Current liabilities
(1,083) (2,108) (3,191) Long-term debt - (2,498) (2,498) Other
liabilities - (670) (670) Non-controlling interest (240) - (240)
Future income tax liabilities (337) (2,005) (2,342)
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$ 5,711 $ 13,137 $ 18,848
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(1) Of the $7.1 million of acquired intangible assets, $3.6 million
was assigned to customer contracts and relationships, $2.2 million
for patents and registered designs and $1.3 million to other
intangibles. The intangible assets will be amortized on a
straight-line basis over their estimated useful lives ranging from
4 - 10 years. (2) Goodwill of $8.9 million is not expected to be
deductible for tax purposes and is related to businesses included
in the Repair and overhaul segment.
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7. Businesses held for sale (discontinued operations) During the
year the Company sold two non-core components of the Schreiner
business segment legally operating as Schreiner Canada Ltd.
("Schreiner Canada") and Schreiner Aircraft Maintenance B.V.
("SAMCO") and realized a net gain on sale of $8.6 million which
included adjustments of $1.1 million in the fourth quarter relating
to loan proceeds received that were previously provided for. The
potential sale of the remaining business held for sale, CHC
Composites Inc. ("Composites"), to any potential acquirer will be
contingent on the acceptance of certain terms and conditions by the
Government of Newfoundland and Labrador. The sale of Composites has
not yet been consummated and therefore the disposal has not been
reflected in these statements nor have the long-term assets and
liabilities of this business been reclassified as current at April
30, 2005. The assets and liabilities of this business were measured
at the lower of their carrying amounts and their estimated fair
value less costs to sell. As a result, a fair value adjustment of
$14.3 million was recorded in the current fiscal year and allocated
to long-term assets of this business. This fair value estimate is
subject to adjustment as the sale of this remaining business is
consummated or as assumptions used in the valuation change. The
fair value adjustment on Composites and the gain on sale of
Schreiner Canada and SAMCO have been recorded in earnings from
discontinued operations along with operating results from these
discontinued businesses. Operating results from discontinued
businesses include imputed interest on debt assumed by the buyer or
required to be repaid as a result of the proposed disposal
transaction. The following tables present the consolidated balance
sheets and consolidated statements of earnings of the businesses
held for sale (discontinued operations) included in the
consolidated financial statements: As at ----------------------
April 30, April 30, 2005 2004
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Assets Receivables $ 5,455 $ 10,138 Future income tax assets -
6,139 Inventory 6,804 11,782 Prepaid expenses 398 878
---------------------- 12,657 28,937 Property and equipment, net
3,495 18,789 Intangible assets - 4,678 Future income tax assets -
3,046 ---------------------- 16,152 55,450 ----------------------
Liabilities Payables and accruals 2,153 23,856 Other liabilities
3,493 4,172 Future income tax liabilities - 1,708
---------------------- 5,646 29,736 ---------------------- Net
assets of discontinued operations $ 10,506 $ 25,714
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Three Months Ended Year Ended
---------------------------------------------- April 30, April 30,
April 30, April 30, 2005 2004 2005 2004
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Revenue $ 2,282 $ 8,948 $ 21,641 $ 13,637
---------------------------------------------- Net earnings (loss)
from discontinued operations(1) $ 1,809 $ (389) $ (11,019) $
(2,574) ----------------------------------------------
---------------------------------------------- (1) Includes a net
gain on disposal of $1.1 million for the current quarter and $8.6
million for the current fiscal year and a fair value adjustment of
$14.3 million for the current fiscal year.
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8. Segment information The Company's operations are segregated into
five reportable segments. The segments are European flying,
International flying, Schreiner, Repair and overhaul and Corporate
and other. Three Months Ended April 30, 2005
--------------------------------------------------- European Int'l
Repair and flying(2) flying(3) Schreiner(4) overhaul(5)
------------ ------------ ------------ ------------ Revenue from
external customers $ 104,100 $ 61,557 $ 36,378 $ 24,411 Add:
Inter-segment revenues 5,246 2,863 - 38,248 ------------
------------ ------------ ------------ Total revenue 109,346 64,420
36,378 62,659 Direct costs 93,991 51,148 25,557 52,484 General and
administration - - - - ------------ ------------ ------------
------------ Segment EBITDA(1) 15,355 13,272 10,821 10,175
Amortization (2,394) (2,394) (1,535) (1,461) Restructuring costs
(804) (263) (3,188) (2,401) Gain (loss) on disposals of assets
(397) 522 510 (119) ------------ ------------ ------------
------------ Operating income (loss) $ 11,760 $ 11,137 $ 6,608 $
6,194 ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ Corporate
Inter-segment and other(6) eliminations Consolidated ------------
------------ ------------ Revenue from external customers $ - $ - $
226,446 Add: Inter-segment revenues 4,020 (50,377) - ------------
------------ ------------ Total revenue 4,020 (50,377) 226,446
Direct costs 1,955 (51,598) 173,537 General and administration
7,183 - 7,183 ------------ ------------ ------------ Segment
EBITDA(1) (5,118) 1,221 45,726 Amortization (200) - (7,984)
Restructuring costs (2,067) - (8,723) Gain (loss) on disposals of
assets - - 516 ------------ ------------ ------------ Operating
income (loss) $ (7,385) $ 1,221 29,535 ------------ ------------
------------ ------------ Debt settlement costs (36) Financing
charges (8,678) ------------ Earnings from continuing operations
before income taxes and undernoted items 20,821 Non-controlling
interest (121) Loss in earnings of associated companies (648)
Income tax provision (3,095) ------------ Net earnings from
continuing operations 16,957 Net earnings from discontinued
operations 1,809 ------------ Net earnings $ 18,766 ------------
------------ Three Months Ended April 30, 2004(7)
--------------------------------------------------- European Int'l
Repair and flying(2) flying(3) Schreiner(4) overhaul(5)
------------ ------------ ------------ ------------ Revenue from
external customers $ 109,367 $ 52,462 $ 32,490 $ 15,120 Add:
Inter-segment revenues 4,348 2,821 - 38,414 ------------
------------ ------------ ------------ Total revenue 113,715 55,283
32,490 53,534 Direct costs 94,602 47,638 29,161 43,345 General and
administration - - - - ------------ ------------ ------------
------------ Segment EBITDA(1) 19,113 7,645 3,329 10,189
Amortization (3,231) (1,556) (1,126) (190) Restructuring costs
(7,114) - (849) Gain (loss) on disposals of assets 1,491 24 (199) -
------------ ------------ ------------ ------------ Operating
income (loss) $ 10,259 $ 6,113 $ 2,004 $ 9,150 ------------
------------ ------------ ------------ ------------ ------------
------------ ------------ Corporate Inter-segment and other(6)
eliminations Consolidated ------------ ------------ ------------
Revenue from external customers $ - $ - $ 209,439 Add:
Inter-segment revenues 3,885 (49,468) - ------------ ------------
------------ Total revenue 3,885 (49,468) 209,439 Direct costs
3,142 (48,129) 169,759 General and administration 3,169 - 3,169
------------ ------------ ------------ Segment EBITDA(1) (2,426)
(1,339) 36,511 Amortization (1,352) - (7,455) Restructuring costs
(1,218) - (9,181) Gain (loss) on disposals of assets - - 1,316
------------ ------------ ------------ Operating income (loss) $
(4,996) $ (1,339) 21,191 ------------ ------------ ------------
------------ Debt settlement costs (10,011) Financing charges
(7,549) ------------ Earnings from continuing operations before
income taxes and undernoted items 3,631 Non-controlling interest -
Equity in earnings of associated companies 69 Income tax recovery
22,113 ------------ Net earnings from continuing operations 25,813
Net loss from discontinued operations (389) ------------ Net
earnings $ 25,424 ------------ ------------ Year Ended April 30,
2005 --------------------------------------------------- European
Int'l Repair and flying(2) flying(3) Schreiner(4) overhaul(5)
------------ ------------ ------------ ------------ Revenue from
external customers $ 437,912 $ 233,516 $ 154,613 $ 77,303 Add:
Inter-segment revenues 22,710 11,916 - 145,919 ------------
------------ ------------ ------------ Total revenue 460,622
245,432 154,613 223,222 Direct costs 386,565 199,474 119,521
181,377 General and administration - - - - ------------
------------ ------------ ------------ Segment EBITDA(1) 74,057
45,958 35,092 41,845 Amortization (11,428) (7,500) (5,501) (4,537)
Restructuring costs (2,864) (1,358) (5,646) (3,307) Gain (loss) on
disposals of assets 2,212 1,493 510 (110) ------------ ------------
------------ ------------ Operating income (loss) $ 61,977 $ 38,593
$ 24,455 $ 33,891 ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Corporate Inter-segment and other(6) eliminations Consolidated
------------ ------------ ------------ Revenue from external
customers $ - $ - $ 903,344 Add: Inter-segment revenues 17,398
(197,943) - ------------ ------------ ------------ Total revenue
17,398 (197,943) 903,344 Direct costs 13,525 (198,295) 702,167
General and administration 25,803 - 25,803 ------------
------------ ------------ Segment EBITDA(1) (21,930) 352 175,374
Amortization (1,567) - (30,533) Restructuring costs (4,437) -
(17,612) Gain (loss) on disposals of assets - - 4,105 ------------
------------ ------------ Operating income (loss) $ (27,934) $ 352
131,334 ------------ ------------ ------------ ------------ Debt
settlement costs (1,994) Financing charges (37,120) ------------
Earnings from continuing operations before income taxes and
undernoted items 92,220 Non-controlling interest (288) Equity in
earnings of associated companies 5,481 Income tax provision
(23,835) ------------ Net earnings from continuing operations
73,578 Net loss from discontinued operations (11,019) ------------
Net earnings $ 62,559 ------------ ------------ Year Ended April
30, 2004(7) ---------------------------------------------------
European Int'l Repair and flying(2) flying(3) Schreiner(4)
overhaul(5) ------------ ------------ ------------ ------------
Revenue from external customers $ 437,631 $ 191,773 $ 32,490 $
58,119 Add: Inter-segment revenues 16,157 11,047 - 135,490
------------ ------------ ------------ ------------ Total revenue
453,788 202,820 32,490 193,609 Direct costs 381,684 174,535 29,165
152,381 General and administration - - - - ------------
------------ ------------ ------------ Segment EBITDA(1) 72,104
28,285 3,325 41,228 Amortization (12,371) (5,715) (1,126) (644)
Restructuring costs (7,114) - - (849) Gain (loss) on disposals of
assets 2,245 1,333 (199) - ------------ ------------ ------------
------------ Operating income (loss) $ 54,864 $ 23,903 $ 2,000 $
39,735 ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ Corporate
Inter-segment and other(6) eliminations Consolidated ------------
------------ ------------ Revenue from external customers $ - $ - $
720,013 Add: Inter-segment revenues 13,577 (176,271) - ------------
------------ ------------ Total revenue 13,577 (176,271) 720,013
Direct costs 14,494 (176,288) 575,971 General and administration
18,633 - 18,633 ------------ ------------ ------------ Segment
EBITDA(1) (19,550) 17 125,409 Amortization (5,332) - (25,188)
Restructuring costs (1,218) - (9,181) Gain (loss) on disposals of
assets (72) - 3,307 ------------ ------------ ------------
Operating income (loss) $ (26,172) $ 17 94,347 ------------
------------ ------------ ------------ Debt settlement costs
(19,716) Financing charges (28,954) ------------ Earnings from
continuing operations before income taxes and undernoted items
45,677 Non-controlling interest - Equity in earnings of associated
companies 3,925 Income tax recovery 16,648 ------------ Net
earnings from continuing operations 66,250 Net loss from
discontinued operations (2,574) ------------ Net earnings $ 63,676
------------ ------------ Notes: 1. Segment EBITDA is defined as
segment earnings before amortization, restructuring costs, gain
(loss) on disposals of assets, debt settlement costs, financing
charges, non-controlling interest, equity in earnings of associated
companies, and income tax (provision) recovery. 2. European flying
- includes flying operations in the U.K., Norway, Ireland and
Denmark. 3. International flying - includes operations in
Australia, Africa and Asia and offshore work in eastern Canada and
in other locations around the world. 4. Schreiner - includes flying
operations primarily in the Netherlands, Africa and Asia and
includes other ancillary businesses. 5. Repair and overhaul -
includes helicopter repair and overhaul operations based in Norway,
the U.K., and Canada and the survival suit and safety equipment
production businesses. 6. Corporate and other - includes corporate
head office and other activities. 7. Comparative information has
been reclassified to reflect the results of businesses held for
sale (discontinued operations) (Note 7) and other adjustments.
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9. Employee pension plans The Company's pension plans are described
in the notes to the Consolidated Financial Statements dated April
30, 2004. The Company's net defined benefit pension plan expense
was as follows: Three Months Ended Year Ended
---------------------------------------------- April 30, April 30,
April 30, April 30, 2005 2004 2005 2004
---------------------------------------------- Current service cost
$ 4,854 $ 6,440 $ 19,508 $ 17,050 Interest cost 7,239 6,716 29,015
24,233 Expected return on plan assets (7,940) (6,460) (29,589)
(22,057) Amortization of net actuarial and experience losses 1,976
2,534 7,985 9,773 Amortization of prior service costs (52) 151
(375) 603 Amortization of transition amounts 67 99 267 395
Participation contributions (808) (2,137) (3,595) (2,899)
---------------------------------------------- Total $ 5,336 $
7,343 $ 23,216 $ 27,098
----------------------------------------------
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10. Financing charges During the quarter the Company issued U.S.
$150.0 million in 7 3/8% senior subordinated notes due in 2014 at a
premium to yield approximately 6 3/4% on issuance. The proceeds
were used to repay a portion of amounts owed under a senior credit
facility and to pay related fees and expenses.
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11. Restructuring and debt settlement costs a) Restructuring costs
During the three months and year ended April 30, 2005, the Company
expensed restructuring costs of $8.7 million (after-tax $5.9
million) and $17.6 million (after-tax $11.8 million) respectively
in connection with restructuring activities. These restructuring
costs related to general organization planning, relocation of the
Company's head office to Vancouver, Canada and additional
restructuring activities. Restructuring costs were comprised of
severance, termination, relocation, planning, consulting and
benefit adjustments. Of the $17.6 million incurred to date, $9.1
million relates to severance and termination costs. Additional
costs are expected to be expensed in relation to these
restructuring initiatives with the majority of future costs
relating to termination, severance, consulting and other costs. The
timing and final amount of these additional costs are dependent on
a number of factors that are not yet known or determinable. During
the three months and year ended April 30, 2004 the Company incurred
$9.2 million (after-tax $6.4 million) in costs in connection with
the consolidation of its European operations and other related
activities. The following table provides a reconciliation of the
Company's restructuring cost accrual for the three months and year
ended April 30, 2005: Three Months Year Ended Ended April 30, April
30, 2005 2005 ---------- ---------- Restructuring accrued,
beginning of period $ 3,288 $ 1,833 Additional restructuring cost
accrued during the period 8,723 17,612 Restructuring cost paid
during the period (4,333) (11,767) ---------- ----------
Restructuring accrued, end of period $ 7,678 $ 7,678 ----------
---------- b) Debt settlement costs During the three months ended
April 30, 2005, the Company expensed a small amount of debt
settlement costs. For the year ended April 30, 2005 the Company
expensed $2.0 million (after-tax $1.3 million) of debt settlement
costs in connection with the senior credit facility revision and
the redemption of its remaining 11 3/4% senior subordinated notes
and the remaining 8% subordinated debentures. During the three
months and year ended April 30, 2004 the Company expensed debt
settlement costs of $10.0 million (after-tax $5.8 million) and
$19.7 million (after-tax $12.6 million) in connection with the
retirement, in April 2004, of $140.6 million (Euro 87.3 million) of
its 11 3/4% notes and $143.3 million in senior credit facilities
and term loans. The debt settlement costs expensed in the current
and prior fiscal years were comprised of premiums, professional
fees, write-off of deferred financing costs and other incremental
costs directly associated with debt settlement activities.
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12. Guarantees The Company has provided limited guarantees to third
parties under some of its operating leases in connection with a
portion of the aircraft values at the termination of the leases.
The leases have terms expiring between 2005 and 2012. The Company's
exposure under the asset value guarantees including guarantees in
the form of junior loans, loans receivable and deferred payments
was approximately $40.1 million at April 30, 2005 compared to $33.3
million at April 30, 2004. The resale market for the aircraft type
for which the Company has provided guarantees remains strong and,
as a result, the Company does not anticipate incurring any
liability or loss with respect to these guarantees.
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13. Contingent liability The Company entered into a contract that
required the deployment of new aircraft during the fourth quarter.
This contract commitment was not met due to the late delivery of
the aircraft by the manufacturer. The Company was able to
substitute aircraft to meet the customer's flying needs. The
customer believes it is entitled to compensation for the delay. The
Company's interpretation of the contract is that no compensation is
payable. Currently the customer and the Company are in discussions
to resolve this issue and therefore, the amount and potential
outcome are presently unknown. As a result, no amounts have been
accrued in relation to this issue at April 30, 2005.
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DATASOURCE: CHC Helicopter Corporation CONTACT: please contact: Jo
Mark Zurel, Senior Vice-President & Chief Financial Officer,
(604) 279-2451; Rick Davis, Vice-President, Financial Reporting,
(604) 279-2471; Chris Flanagan, Director of Communications, (604)
279-2493 or 340-7659; Archived images on this organization are
searchable through CNW Photo Archive website at
http://photos.newswire.ca/. Images are free to accredited members
of the media. To request a free copy of this organization's annual
report, please go to http://www.newswire.ca/ and click on
reports@cnw.
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