SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC  20549


                                 FORM 10-Q


     [ x ]   Quarterly Report Pursuant to  Section 13 or 15(d) of
                   the Securities Exchange Act of 1934
            For the quarterly period ended September 30, 1996

       [  ]    Transition Report Pursuant to Section 13 or 15(d)
                    of the Securities Exchange Act of 1934
                 For the transition period  _____ to  _____

                       Commission File Number 0-5232


                          Offshore Logistics, Inc.
          (Exact name of registrant as specified in its charter)


           DELAWARE                              72-0679819
   (State or other jurisdiction of              (IRS Employer 
   incorporation or organization)            Identification Number)

          224 RUE DE JEAN
  P. O. BOX 5C, LAFAYETTE, LOUISIANA                 70505
(Address of principal executive offices)           (Zip Code)

Registrant's telephone number, including area code:   (318) 233-1221

_______________________________________________________________________
        (Former name, former address and former fiscal year,
                     if changed since last report)

      Indicate by check mark whether the registrant: (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the preceding 12 months, and (2) has been 
subject to such filing requirements for the past 90 days. 

                        Yes [ x ]     No [   ]

                           
     Indicate the number shares outstanding of each of the issuer's 
classes of Common Stock, as of September 30, 1996.

             19,499,501 shares of Common Stock, $.01 par value




             OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES
                   Consolidated Statement of Income
          (thousands of dollars, except per share amounts)
Three Months Ended September 30, _______________________ 1996 1995 ______ ______ GROSS REVENUE Operating revenue $ 41,986 $ 38,991 Gain (loss) on disposal of equipment 231 (224) ---------- ---------- 42,217 38,767 OPERATING EXPENSES Direct cost 30,217 29,872 Depreciation and amortization 2,435 2,153 General and administrative 3,190 3,100 ---------- ---------- 35,842 35,125 ---------- ---------- OPERATING INCOME 6,375 3,642 Earnings from unconsolidated entites 1,255 625 Interest income 1,102 1,001 Interest expense 139 208 ---------- ---------- INCOME BEFORE PROVISION FOR INCOME TAXES 8,593 5,060 Provision for income taxes 2,750 1,472 (Income) loss of minority interest 12 71 ---------- ---------- NET INCOME $ 5,855 $ 3,659 ========== ========== Earnings per common share and common equivalent share $ 0.30 $ 0.19 ========== ========== Common shares and common equivalent shares outstanding 19,764,582 19,766,027 ========== ==========
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES Consolidated Balance Sheet (thousands of dollars)
September 30, June 30, 1996 1996 ____________ ________ ASSETS Current Assets: Cash and cash equivalents $ 69,224 $ 57,072 Investment in marketable securities 15,970 19,967 Accounts receivable 29,662 29,743 Inventories 26,896 26,724 Prepaid expenses 932 694 ------------ ----------- Total current assets 142,684 134,200 Investments in unconsolidated entities 8,783 8,792 Property and equipment - at cost: Land and buildings 2,977 2,977 Aircraft and equipment 136,755 135,613 ----------- ----------- 139,732 138,590 Less: accumulated depreciation and amortization (66,334) (64,401) ----------- ----------- 73,398 74,189 Other assets, primarily goodwill 24,089 24,329 ----------- ----------- $ 248,954 $ 241,510 =========== =========== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Accounts payable $ 3,476 $ 4,872 Accrued liabilities 10,902 8,542 Current maturities of long-term debt 4,850 4,850 ----------- ----------- Total current liabilities 19,228 18,264 Long-term debt, less current maturities 750 750 Deferred credits 1,865 2,487 Deferred taxes 20,518 19,271 Minority interest 1,043 1,055 Stockholders' Investment: Common Stock, $.01 par value, authorized 35,000,000 shares; outstanding 19,499,501 and 19,498,398 at September 30 and June 30, respectively (exclusive of 517,550 treasury shares) 195 195 Additional paid-in capital 95,946 95,934 Retained earnings 109,409 103,554 ------------ ----------- 205,550 199,683 ------------ ----------- $ 248,954 $ 241,510 ============ ===========
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES Consolidated Statement of Cash Flows (thousands of dollars)
Three Months Ended September 30, __________________ 1996 1995 ____ ____ Cash flows from operating activities: Net income $ 5,855 $ 3,659 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,435 2,153 Increase in deferred taxes 1,247 102 (Gain) loss on asset dispositions (231) 224 Minority interest in earnings (12) (71) Decrease in accounts receivable 81 31 Increase in inventories (172) (361) Increase in prepaid expenses and other (332) (828) Increase (Decrease) in accounts payable (1,396) 921 Increase (Decrease) in accrued liabilities 2,360 (620) Decrease in deferred credits (622) (625) ----------- ----------- Net cash provided by operating activities 9,213 4,585 ----------- ----------- Cash flows from investing activities: Capital expenditures (1,391) (1,349) Proceeds from asset dispositions 318 65 Proceeds from maturity of marketable securities 4,000 - ----------- ----------- Net cash provided by (used in) investing activities 2,927 (1,284) ----------- ----------- Cash flows from financing activities: Proceeds from borrowings - 150 Issuance of common stock 12 184 ----------- ----------- Net cash provided by investing activities 12 334 ----------- ----------- Net increase in cash and cash equivalents 12,152 3,635 Cash and cash equivalents at beginning of year 57,072 47,973 ----------- ----------- Cash and cash equivalents at end of quarter $ 69,224 $ 51,608 =========== =========== Supplemental disclosure of cash flow information Cash paid during the period for: Interest $ 134 $ 138 Income taxes 450 1,047
OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1996 NOTE A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. In the opinion of management, any adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 1996, are not necessarily indicative of the results that may be expected for the year ending June 30, 1997. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended June 30, 1996. NOTE B - Bristow Helicopters As previously announced, the Company entered into a letter of intent with each of the two major shareholders of Bristow Helicopter Group Limited ("Bristow"). Upon completion of the transaction, the Company will hold common stock of the new holding company of Bristow, along with a substantial portion of its subordinated debt. Caledonia Investments plc, the remaining shareholder of Bristow, will become a significant shareholder in the Company. The transaction, which values Bristow at approximately $300 million, including its present debt, is subject to final documentation, review of final documentation by the British Civil Aviation Authority ("CAA"), and approval by the respective Boards of Directors. The Company will finance the transaction with a combination of cash, debt, and common stock. NOTE C - New Accounting Pronouncements Effective July 1, 1996, the Company adopted Statement of Accounting Standards ("SFAS") No. 121 - "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The adoption had no impact on the Company's results of operations or financial position. On July 1, 1996, the Company elected to continue to account for its employee stock options in accordance with the provisions of Accounting Principles Board Opinion 25 and, accordingly, adopted the disclosure provisions of SFAS No. 123 - "Accounting for Stock-Based Compensation." MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's most significant area of operation is a major supplier of helicopter transportation services to the worldwide offshore oil and gas industry. The Company also provides production personnel and medical support services to the worldwide oil and gas industry and manufacturers, installs and maintains cathodic protection systems to arrest corrosion in oil and gas drilling and production facilities and other metal structures. A summary of operating results for the applicable periods is as follows:
Three Months Ended September 30, ___________________ 1996 1995 ____ ____ Gross revenue $ 42,217 $ 38,767 Operating expenses 35,842 35,125 --------- --------- Operating income 6,375 3,642 Earnings from unconsolidated entities 1,255 625 Interest income, net 963 793 --------- --------- Income before provision for income taxes 8,593 5,060 Provision for income taxes 2,750 1,472 (Income) loss of minority interest 12 71 --------- --------- Net income $ 5,855 $ 3,659 ========= =========
RESULTS OF OPERATIONS Consolidated: Consolidated operating revenues for the three months ended September 30, 1996, were $42.0 million compared to $39.0 million for the prior year. The increase in revenue is primarily attributable to the improved activity levels in helicopter activities. Consolidated operating expenses for the three months ended September 30, 1996 and 1995, were $35.8 million and $35.1 million, respectively. Operating income (excluding gains on disposal of equipment) for the three months ended September 30, 1996, was $6.1 million, close to a 60% improvement from the prior year. Net income from continuing operations was $5.9 million, the highest in the Company's 27 year history. The improved results in operations is due to several positive factors, including increased helicopter operations in the Gulf of Mexico and internationally as well as improved results from GPM and CPS. Helicopter Activities: Consolidated third party flight hours for the three months ended September 30, 1996, of 28,780 increased approximately 15% compared to the prior year. Strong drilling activity in the Gulf of Mexico increased the demand for the Company's larger crew change aircraft and the Company had 18 aircraft working in international areas during the three months ended September 30, 1996, an increase of four aircraft from the prior year. Operating revenues for helicopter activities for the three months ended September 30, 1996 and 1995, were $25.7 million and $21.7 million, respectively. The 18% increase in revenues is the result of increased flight activity coupled with a small increase in helicopter rates, the first rate increase since 1990. Operating expenses for helicopter activities for the three months ended September 30, 1996 and 1995, were $19.0 million and $17.1 million, respectively, an 11% increase. Gross margin for helicopter activities was 26% and 21% for the three months ended September 30, 1996 and 1995, respectively. Production Management Services: Operating revenues from GPM were approximately $7.6 million for the three months ended September 30, 1996, compared to prior year revenues of $8.7 million, a 12% decrease. Operating expenses for GPM were approximately $7.2 million for the three months ended September 30, 1996, compared to $8.4 in the prior year, a 15% decrease. During the past year GPM focused on improving gross margins by improving its pricing policy and implementing several cost containment measures. The result was a decrease in operations with an improvement in gross margin. Gross margin for GPM was 6% for the three months ended September 30, 1996, compared to 3% for the prior year. Cathodic Protection Services: Operating revenues from CPS were approximately $9.3 million for the three months ended September 30, 1996, compared to prior year revenues of $9.8 million, a 5% decrease. Operating expenses for CPS were approximately $9.2 million for the three months ended September 30, 1996, compared to $9.9 in the prior year, a 7% decrease. Operating income from CPS was $0.1 million for the three months ended September 30, 1996, compared to an operating loss of $0.1 million in the prior year. Liquidity and Capital Resources: Cash, cash equivalents, and marketable securities were $85.2 million as of September 30, 1996, an $8.2 million increase from fiscal year end 1996. Total debt was $5.6 million as of September 30, 1996, all related to CPS and recourse to CPS only. CPS maintains a revolving credit facility with a maximum borrowing limit of $7.5 million. As of September 30, 1996, the Company had another $10 million of credit available under an unsecured working capital line of credit from a bank. Management believes that normal operations will provide sufficient working capital and cash flow to meet debt service for the foreseeable future. As previously announced, the Company entered into a letter of intent with each of the two major shareholders of Bristow. Upon completion of the transaction, the Company will hold common stock of the new holding company of Bristow, along with a substantial portion of its subordinated debt. Caledonia Investments plc, the remaining shareholder of Bristow, will become a significant shareholder in the Company. The transaction, which values Bristow at approximately $300 million, including its present debt, is subject to final documentation, review of final documentation by the CAA, and approval by the respective Boards of Directors. The Company will finance the transaction with a combination of cash, debt, and common stock. The effective income tax rates were 32% and 29% for the three months ended September 30, 1996 and 1995, and is based on the Company's projected effective tax rate for the fiscal year then ended. The increase in the projected tax rate for fiscal 1997 is primarily the result of higher projected domestic income for the year. The Company has received notices from the United States Environmental Protection Agency that it is one of approximately 160 potentially responsible parties ("PRP") at one Superfund site in Texas, one of over 300 PRPs at two sites in Louisiana, and a PRP at one site in Rhode Island. The Company believes, based on presently available information, that its potential liability for clean up and other response costs in connection with these sites is not likely to have a material adverse effect on the Company's business or financial condition. Forward Looking: The Company cannot predict the future prices of crude oil or natural gas nor the future level of drilling activity. However, if current drilling activity levels continue in the Gulf of Mexico, management is optimistic that the high demand for the Company's helicopter activities will continue. In addition, management is optimistic about the possibility of increasing the Company's worldwide helicopter operations through its investment in Bristow. Although no assurances can be made, management believes that this transaction will close before December 31, 1996. There are statements contained herein that are forward-looking and are based on factors including, among other things, the prices of crude oil and natural gas, the level of offshore drilling activity, and the worldwide oil and gas market, which could cause actual results to differ materially from such expectations. PART II Item 6. Exhibits and Reports on Form 8-K (a) Listed below are the documents filed as exhibits to this report: Exhibit 11 - Computation of Earnings Per Share Exhibit 27 - Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended September 30, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OFFSHORE LOGISTICS, INC. BY: /s/ James B. Clement __________________________________ JAMES B. CLEMENT Chairman of the Board, President, and Chief Executive Officer, DATE: November 13, 1996 BY: /s/ George M. Small __________________________________ GEORGE M. SMALL Vice President and Chief Financial Officer DATE: November 13, 1996 EXHIBIT 11 Computation of Earnings Per Share
Three Months Ended September 30, ____________________ 1996 1995 ____ ____ PRIMARY: Weighted average shares outstanding 19,498,820 19,450,726 Net effect of dilutive stock warrants based on the Treasury Stock method using average market price 19,387 29,024 Net effect of dilutive stock options based on the Treasury Stock method using average market price 246,375 286,277 ---------- ---------- 19,764,582 19,766,027 ========== ========== FULLY DILUTED: Weighted average shares outstanding 19,498,820 19,450,726 Net effect of dilutive stock warrants based on the Treasury Stock method using end of period market price 28,491 31,024 Net effect of dilutive stock options based on the Treasury Stock method using end of period market price 316,404 298,476 ---------- ---------- 19,843,715 19,780,226 ========== ========== (thousands of dollars, except per share data) Net income $ 5,855 $ 3,659 ========== ========== Per share amount - Primary $ 0.30 $ 0.19 ========== ========== Per share amount - Fully diluted $ 0.30 $ .19 ========== ==========
 

5 1,000 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 69,224 15,970 29,662 0 26,896 142,684 139,732 66,334 248,954 19,228 750 0 0 195 205,355 248,954 41,986 42,217 30,217 35,842 0 0 139 8,593 2,750 5,855 0 0 0 5,855 .30 .30