UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________
FORM 10-Q
________________________________________
(Mark One)
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ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2013 or
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¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-35701
Era Group Inc.
(Exact Name of Registrant as Specified in Its Charter)
________________________________________
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| | |
Delaware | | 72-1455213 |
(State or Other Jurisdiction of Incorporation or Organization) | | (IRS Employer Identification No.) |
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818 Town & Country Blvd., Suite 200 | | |
Houston, Texas | | 77024 |
(Address of Principal Executive Offices) | | (Zip Code) |
281-606-4900
(Registrant’s Telephone Number, Including Area Code)
________________________________________
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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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| | | | | | |
Large accelerated filer ¨ | | Accelerated filer ¨ | | Non-accelerated filer x (Do not check if a smaller reporting company) | | Smaller reporting company ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý
The total number of shares of common stock, par value $0.01 per share, outstanding as of October 31, 2013 was 20,189,222. The Registrant has no other class of common stock outstanding.
ERA GROUP INC.
Table of Contents
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Part I. | | |
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| Item 1. | | |
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| Item 2. | | |
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| Item 3. | | |
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| Item 4. | | |
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Part II. | | |
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| Item 1A. | | |
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| Item 6. | | |
PART I—FINANCIAL INFORMATION
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ITEM 1. | FINANCIAL STATEMENTS |
ERA GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) |
| | | | | | | |
| September 30,
2013 | | December 31,
2012 |
| (Unaudited) | | |
ASSETS | | | |
Current Assets: | | | |
Cash and cash equivalents | $ | 22,517 |
| | $ | 11,505 |
|
Receivables: | | | |
Trade, net of allowance for doubtful accounts of $3,010 and $2,668 in 2013 and 2012, respectively | 48,152 |
| | 48,527 |
|
Other | 3,244 |
| | 4,713 |
|
Inventories, net | 26,692 |
| | 26,650 |
|
Deferred income taxes | 3,642 |
| | 3,642 |
|
Prepaid expenses and other | 1,278 |
| | 1,803 |
|
Escrow deposits | 9,900 |
| | — |
|
Total current assets | 115,425 |
| | 96,840 |
|
Property and Equipment | 1,014,907 |
| | 1,030,276 |
|
Accumulated depreciation | (255,299 | ) | | (242,471 | ) |
Net property and equipment | 759,608 |
| | 787,805 |
|
Investments, at Equity, and Advances to 50% or Less Owned Companies | 36,113 |
| | 34,696 |
|
Goodwill | 352 |
| | 352 |
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Other Assets | 16,071 |
| | 17,871 |
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Total Assets | $ | 927,569 |
| | $ | 937,564 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current Liabilities: | | | |
Accounts payable and accrued expenses | $ | 16,796 |
| | $ | 15,703 |
|
Accrued wages and benefits | 8,937 |
| | 4,576 |
|
Accrued interest | 4,625 |
| | 1,401 |
|
Current portion of long-term debt | 2,787 |
| | 2,787 |
|
Other current liabilities | 6,894 |
| | 5,232 |
|
Total current liabilities | 40,039 |
| | 29,699 |
|
Long-Term Debt | 240,029 |
| | 276,948 |
|
Deferred Income Taxes | 208,483 |
| | 203,536 |
|
Deferred Gains and Other Liabilities | 5,343 |
| | 7,864 |
|
Total liabilities | 493,894 |
| | 518,047 |
|
Series A Preferred Stock, at redemption value; $0.01 par value, 10,000,000 shares authorized; none issued and outstanding in 2013; 1,400,000 shares issued and outstanding in 2012 | — |
| | 144,232 |
|
Equity: | | | |
Era Group Inc. stockholders’ equity: | | | |
Common stock, $0.01 par value, 60,000,000 shares authorized; 20,189,522 outstanding in 2013 (exclusive of 3,673 treasury shares); none issued and outstanding in 2012 | 202 |
| | — |
|
Class B common stock, $0.01 par value, 60,000,000 shares authorized; none issued and outstanding in 2013; 24,500,000 issued and outstanding in 2012 | — |
| | 245 |
|
Additional paid-in capital | 420,650 |
| | 278,838 |
|
Retained earnings (accumulated deficit) | 12,928 |
| | (4,025 | ) |
Treasury shares, at cost (3,673 and nil in 2013 and 2012, respectively) | (94 | ) | | — |
|
Accumulated other comprehensive income, net of tax | 108 |
| | 20 |
|
| 433,794 |
| | 275,078 |
|
Noncontrolling interest in subsidiary | (119 | ) | | 207 |
|
Total equity | 433,675 |
| | 275,285 |
|
Total Liabilities and Stockholders’ Equity | $ | 927,569 |
| | $ | 937,564 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except share and per share amounts) |
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
| | | | | |
Operating Revenues | $ | 80,997 |
| | $ | 77,989 |
| | $ | 222,961 |
| | $ | 202,026 |
|
Costs and Expenses: | | | | | | | |
Operating | 51,338 |
| | 46,235 |
| | 141,399 |
| | 124,913 |
|
Administrative and general | 9,683 |
| | 10,338 |
| | 28,362 |
| | 27,210 |
|
Depreciation | 11,340 |
| | 10,937 |
| | 34,432 |
| | 31,031 |
|
| 72,361 |
| | 67,510 |
| | 204,193 |
| | 183,154 |
|
Gains on Asset Dispositions, Net | 2,560 |
| | 613 |
| | 17,837 |
| | 3,455 |
|
Operating Income | 11,196 |
| | 11,092 |
| | 36,605 |
| | 22,327 |
|
Other Income (Expense): | | | | | | | |
Interest income | 155 |
| | 184 |
| | 452 |
| | 765 |
|
Interest expense | (4,394 | ) | | (2,543 | ) | | (13,739 | ) | | (6,891 | ) |
SEACOR management fees | — |
| | (500 | ) | | (168 | ) | | (1,500 | ) |
Derivative losses, net | (96 | ) | | (188 | ) | | (78 | ) | | (492 | ) |
Foreign currency gains (losses), net | 409 |
| | (272 | ) | | 465 |
| | 633 |
|
Other, net | 7 |
| | — |
| | 19 |
| | 30 |
|
| (3,919 | ) | | (3,319 | ) | | (13,049 | ) | | (7,455 | ) |
Income Before Income Tax Expense and Equity in Earnings (Losses) of 50% or Less Owned Companies | 7,277 |
| | 7,773 |
| | 23,556 |
| | 14,872 |
|
Income Tax Expense | 2,715 |
| | 2,792 |
| | 8,691 |
| | 5,212 |
|
Income Before Equity in Earnings (Losses) of 50% or Less Owned Companies | 4,562 |
| | 4,981 |
| | 14,865 |
| | 9,660 |
|
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax | 526 |
| | 219 |
| | 1,762 |
| | (5,444 | ) |
Net Income | 5,088 |
| | 5,200 |
| | 16,627 |
| | 4,216 |
|
Net Loss Attributable to Noncontrolling Interest in Subsidiary | 116 |
| | — |
| | 326 |
| | — |
|
Net Income Attributable to Era Group Inc. | 5,204 |
| | 5,200 |
| | 16,953 |
| | 4,216 |
|
Accretion of Redemption Value on Series A Preferred Stock | — |
| | 2,099 |
| | 721 |
| | 6,334 |
|
Net Income (Loss) Attributable to Common Shares | $ | 5,204 |
| | $ | 3,101 |
| | $ | 16,232 |
| | $ | (2,118 | ) |
| | | | | | | |
Earnings (Loss) Per Common Share: | | | | | | | |
Basic | $ | 0.26 |
| | $ | 0.13 |
| | $ | 0.79 |
| | $ | (0.09 | ) |
Diluted | $ | 0.25 |
| | $ | 0.13 |
| | $ | 0.79 |
| | $ | (0.09 | ) |
| | | | | | | |
Weighted Average Common Shares Outstanding: | | | | | | | |
Basic | 20,186,013 |
| | 24,500,000 |
| | 20,588,791 |
| | 24,500,000 |
|
Diluted | 20,505,932 |
| | 24,500,000 |
| | 20,588,791 |
| | 24,500,000 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited, in thousands) |
| | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | |
Net Income | | $ | 5,088 |
| | $ | 5,200 |
| | $ | 16,627 |
| | $ | 4,216 |
|
Other Comprehensive Income: | | | | | | | | |
Foreign currency translation adjustments | | 234 |
| | 112 |
| | 135 |
| | 798 |
|
Income tax expense | | (82 | ) | | (39 | ) | | (47 | ) | | (279 | ) |
| | 152 |
| | 73 |
| | 88 |
| | 519 |
|
Comprehensive Income | | 5,240 |
| | 5,273 |
| | 16,715 |
| | 4,735 |
|
Comprehensive Loss Attributable to Noncontrolling Interest in Subsidiary | | 116 |
| | — |
| | 326 |
| | — |
|
Comprehensive Income Attributable to Era Group Inc. | | $ | 5,356 |
| | $ | 5,273 |
| | $ | 17,041 |
| | $ | 4,735 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited, in thousands) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Era Group Inc. Stockholders’ Equity | | Non- controlling Interest In Subsidiary | | Total Equity |
| | Series A Convertible Preferred Stock | | | Class B Common Stock | | Common Stock | | Additional Paid-In Capital | | Retained Earnings (Accumulated Deficit) | | Shares Held In Treasury | | Accumulated Other Comprehensive Income | |
December 31, 2012 | | $ | 144,232 |
| | | $ | 245 |
| | $ | — |
| | $ | 278,838 |
| | $ | (4,025 | ) | | $ | — |
| | $ | 20 |
| | $ | 207 |
| | $ | 275,285 |
|
Accretion of redemption value on Series A preferred stock | | 721 |
| | | — |
| | — |
| | (721 | ) | | — |
| | — |
| | — |
| | — |
| | (721 | ) |
Preferred stock dividend | | (4,953 | ) | | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Recapitalization of Era Group by SEACOR | | (140,000 | ) | | | (245 | ) | | 199 |
| | 140,046 |
| | — |
| | — |
| | — |
| | — |
| | 140,000 |
|
Issuance of Era Group stock options in settlement of SEACOR stock options | | — |
| | | — |
| | — |
| | 706 |
| | — |
| | — |
| | — |
| | — |
| | 706 |
|
Issuance of common stock: | | | | | | | | | | | | | | | | | | |
|
Restricted stock grants | | — |
| | | — |
| | 3 |
| | (3 | ) | | — |
| | — |
| | — |
| | — |
| | — |
|
Proceeds and tax benefits from share award plans | | — |
| | | — |
| | — |
| | 527 |
| | — |
| | — |
| | — |
| | — |
| | 527 |
|
Share award amortization | | — |
| | | — |
| | — |
| | 885 |
| | — |
| | — |
| | — |
| | — |
| | 885 |
|
Stock option amortization | | — |
| | | — |
| | — |
| | 260 |
| | — |
| | | | — |
| | — |
| | 260 |
|
Employee Stock Purchase Plan amortization | | — |
| | | — |
| | — |
| | 25 |
| | — |
| | — |
| | — |
| | — |
| | 25 |
|
Cancellation of restricted stock | | — |
| | | — |
| | — |
| | 87 |
| | — |
| | (94 | ) | | — |
| | — |
| | (7 | ) |
Net income (loss) | | — |
| | | — |
| | — |
| | — |
| | 16,953 |
| | — |
| | — |
| | (326 | ) | | 16,627 |
|
Currency translation adjustments, net of tax | | — |
| | | — |
| | — |
| | — |
| | — |
| | — |
| | 88 |
| | — |
| | 88 |
|
September 30, 2013 | | $ | — |
| | | $ | — |
| | $ | 202 |
| | $ | 420,650 |
| | $ | 12,928 |
| | $ | (94 | ) | | $ | 108 |
| | $ | (119 | ) | | $ | 433,675 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) |
| | | | | | | |
| Nine Months Ended
September 30, |
| 2013 | | 2012 |
| |
Net Cash Provided by (Used in) Operating Activities | $ | 48,399 |
| | $ | (7,091 | ) |
Cash Flows from Investing Activities: | | | |
Purchases of property and equipment | (48,223 | ) | | (91,155 | ) |
Proceeds from disposition of property and equipment | 59,976 |
| | 4,887 |
|
Cash settlements on derivative transactions, net | — |
| | (307 | ) |
Investments in and advances to 50% or less owned companies | — |
| | (11,857 | ) |
Principal payments on notes due from equity investees | 856 |
| | 2,725 |
|
Principal payments on third party notes receivable, net | 592 |
| | 832 |
|
Escrow deposits, net | (9,900 | ) | | — |
|
Net cash provided by (used in) investing activities | 3,301 |
| | (94,875 | ) |
Cash Flows from Financing Activities: | | | |
Issuance of Series B preferred stock | — |
| | 100,000 |
|
Payments on long-term debt | (52,091 | ) | | (102,090 | ) |
Proceeds from issuance of long-term debt | 15,000 |
| | 38,000 |
|
Dividends paid on Series A preferred stock | (4,953 | ) | | (4,447 | ) |
Proceeds and tax benefits from share award plans | 527 |
| | — |
|
Proceeds from SEACOR on the settlement of stock options | 706 |
| | — |
|
Net cash (used in) provided by financing activities | (40,811 | ) | | 31,463 |
|
Effects of Exchange Rate Changes on Cash and Cash Equivalents | 123 |
| | 613 |
|
Net Increase (Decrease) in Cash and Cash Equivalents | 11,012 |
| | (69,890 | ) |
Cash and Cash Equivalents, Beginning of Period | 11,505 |
| | 79,122 |
|
Cash and Cash Equivalents, End of Period | $ | 22,517 |
|
| $ | 9,232 |
|
Supplemental Cash Flow Information: | | | |
Cash paid during the period for: | | | |
Interest, net of amounts capitalized | $ | 9,923 |
| | $ | 6,269 |
|
Income taxes | $ | 52 |
| | $ | 43 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ERA GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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1. | BASIS OF PRESENTATION AND ACCOUNTING POLICY |
The condensed consolidated financial statements include the accounts of Era Group Inc. and its consolidated subsidiaries (collectively referred to as the “Company”). The condensed consolidated financial information for the three and nine months ended September 30, 2013 and 2012 has been prepared by the Company and has not been audited by its independent registered public accounting firm. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the Company’s financial position as of September 30, 2013, its results of operations for the three and nine months ended September 30, 2013 and 2012, its comprehensive income for the three and nine months ended September 30, 2013 and 2012, its changes in equity for the nine months ended September 30, 2013, and its cash flows for the nine months ended September 30, 2013 and 2012. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the U.S. have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the “Company” refers to Era Group Inc. and its consolidated subsidiaries and any reference in this Quarterly Report on Form 10-Q to “Era Group” refers to Era Group Inc.
Prior to January 31, 2013, the Company was wholly owned by SEACOR Holdings Inc. (along with its other majority-owned subsidiaries being collectively referred to as “SEACOR”) and represented SEACOR’s aviation services business segment. On January 31, 2013, SEACOR recapitalized the Company through the exchange of all of its Class B common stock and $140.0 million of its Series A preferred stock for 19,883,583 shares of newly-issued Era Group common stock, par value $0.01 per share (the “Recapitalization”). Following the Recapitalization, the Company had only one class of common stock issued and outstanding and no preferred stock outstanding. On January 31, 2013, SEACOR then completed a spin-off by means of a dividend to SEACOR’s stockholders of all of the Company’s issued and outstanding common stock (the “Spin-off”). The Company filed a Registration Statement on Form 10 with the Securities and Exchange Commission (SEC) that was declared effective on January 15, 2013. Prior to the Spin-off, SEACOR and the Company entered into a distribution agreement and several other agreements that govern their post-Spin-off relationship. Era Group is now an independent company with its common stock listed on the New York Stock Exchange under the symbol “ERA.”
In connection with the Spin-off, the Company entered into an Amended and Restated Transition Services Agreement with SEACOR. Under the terms of the Amended and Restated Transition Services Agreement, SEACOR continues to provide the Company with certain support services, for up to two years from the effective date of the Spin-off, including payroll processing, information systems support, cash disbursement support, cash receipt processing and treasury management.
Revenue Recognition. The Company recognizes revenue when it is realized or realizable and earned. Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Revenue that does not meet these criteria is deferred until the criteria are met. Deferred revenues and related activity were as follows (in thousands):
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| | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
Balance at beginning of period | $ | 15,620 |
| | $ | 9,305 |
| | $ | 8,953 |
| | $ | 123 |
|
Revenues deferred during the period | 9,362 |
| | 8,017 |
| | 27,571 |
| | 18,921 |
|
Revenues recognized during the period | (4,713 | ) | | (6,198 | ) | | (16,255 | ) | | (7,920 | ) |
Balance at end of period | $ | 20,269 |
| | $ | 11,124 |
| | $ | 20,269 |
| | $ | 11,124 |
|
As of September 30, 2013, deferred revenues included $16.9 million related to contract-lease revenues for certain helicopters leased by the Company to Aeróleo Taxi Aero S/A (“Aeróleo”), its Brazilian joint venture. The deferral originated from difficulties experienced by Aeróleo following Petróleo Brasileiro S.A.’s (“Petrobras Brazil”) cancellation of certain contract awards for a number of AW139 medium helicopters under contract-lease from the Company, and the deferral continues as a result of financial difficulties at Aeróleo. The Company will recognize revenues as cash is received or earlier should future collectability become reasonably assured. All costs and expenses related to these contract-leases were recognized as incurred.
As of September 30, 2013, deferred revenues also included $3.4 million related to contract-lease revenues for certain helicopters leased by the Company to a customer in India. The deferral resulted from the customer having its operating certificate revoked for a period of time and therefore being unable to operate. The certificate has since been reinstated but uncertainty still remains regarding the collectability of the contract-lease revenues due to the customer’s short-term liquidity issues. The Company will recognize revenues as cash is received or earlier should future collectability become reasonably assured. All costs and expenses related to these contract-leases were recognized as incurred.
Reclassifications. Certain reclassifications of prior period information have been made to conform to the presentation of the current period information. These reclassifications had no effect on net income, equity or the components of cash flow as previously reported.
| |
2. | FAIR VALUE MEASUREMENTS |
The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
The Company’s financial assets and liabilities that are measured at fair value on a recurring basis were as follows (in thousands): |
| | | | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 |
December 31, 2012 | | | | | |
LIABILITIES | | | | | |
Derivative instruments (included in other current liabilities) (1) | $ | — |
| | $ | 1,025 |
| | $ | — |
|
| | | | | |
September 30, 2013 | | | | | |
ASSETS | | | | | |
Marketable securities (included in other receivables) | $ | 83 |
| | $ | — |
| | $ | — |
|
LIABILITIES | | | | | |
Derivative instruments (included in other current liabilities) (1) | — |
| | 712 |
| | — |
|
____________________
(1) The fair value of the Company’s derivative instruments was estimated using market data gathered by a third party financial institution, adjusted for market and credit risks applicable to the Company.
The estimated fair values of the Company’s other financial assets and liabilities were as follows (in thousands):
|
| | | | | | | | | | | | | | | |
| | | Estimated Fair Value |
| Carrying Amount | | Level 1 | | Level 2 | | Level 3 |
December 31, 2012 | | | | | | | |
ASSETS | | | | | | | |
Cash and cash equivalents | $ | 11,505 |
| | $ | 11,505 |
| | $ | — |
| | $ | — |
|
Notes receivable from other business ventures (included in other receivables and other assets) | 925 |
| | 925 |
| | — |
| | — |
|
LIABILITIES | | | | | | | |
Long-term debt, including current portion | 279,735 |
| | — |
| | 283,120 |
| | — |
|
| | | | | | | |
September 30, 2013 | | | | | | | |
ASSETS | | | | | | | |
Cash and cash equivalents | $ | 22,517 |
| | $ | 22,517 |
| | $ | — |
| | $ | — |
|
Notes receivable from other business ventures (included in other receivables and other assets) | 642 |
| | 642 |
| | — |
| | — |
|
LIABILITIES | | | | | | | |
Long-term debt, including current portion | 242,816 |
| | — |
| | 246,670 |
| | — |
|
The carrying values of cash and cash equivalents, accounts receivable, escrow deposits, notes receivable from other business ventures and accounts payable approximate fair value. The fair value of the Company’s long-term debt was estimated using discounted cash flow analysis based on estimated current rates for similar types of arrangements. Considerable judgment was required in developing certain of the estimates of fair value and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
In 2011, the Company entered into two interest rate swap agreements maturing in 2014 and 2015 that call for the Company to pay fixed interest rates of 1.67% and 1.83% on an aggregate notional value of $31.8 million and receive a variable interest rate based on LIBOR on these notional values. The general purpose of these interest rate swap agreements is to provide protection against increases in interest rates, which might lead to higher interest costs for the Company. The fair value of these derivative instruments at September 30, 2013 and December 31, 2012 was a liability of $0.7 million and $1.0 million, respectively. The unrealized change in fair market value was gains of $0.1 million and losses of $0.4 million on these derivative instruments for the three months ended September 30, 2013 and 2012, respectively, and gains of $0.3 million and losses of $0.5 million for the nine months ended September 30, 2013 and 2012, respectively.
In August 2013, the Company entered into agreements for the sale of two S76A++ medium helicopters and a S76C++ medium helicopter for cash proceeds totaling $9.9 million. The sales transactions closed in September 2013 and were each treated as a tax-free like-kind exchange under Section 1031 for tax purposes whereby all of the proceeds are held by a qualified intermediary and thus reflected as an escrow deposit in the consolidated balance sheet. A qualified property has been identified to complete the like-kind exchanges under Section 1031 prior to expiration of the 45-day period subsequent to the closing date.
In February 2013, the Company entered into agreements for the sale of two S76C++ helicopters for cash proceeds totaling $18.0 million. The sales transactions closed in May 2013 and were each treated as a tax-free like-kind exchange under Section 1031 for tax purposes whereby $16.0 million of the proceeds were held by a qualified intermediary and originally reflected as an escrow deposit in the consolidated balance sheet as of June 30, 2013. Qualified properties were not identified to complete the like-kind exchanges under Section 1031 prior to expiration of the 45-day period subsequent to the closing date. As a result, the funds were transferred from the qualified intermediary to the Company and included in the Company’s cash balances, and the sale was treated as a taxable event.
5. EQUIPMENT ACQUISITIONS AND DISPOSITIONS
During the nine months ended September 30, 2013, capital expenditures were $48.2 million and consisted primarily of helicopter acquisitions and deposits on future helicopter deliveries. The Company records helicopter acquisitions in Property and
Equipment and places helicopters in service once all completion work has been finalized and the helicopters are ready for use. A summary of changes to our operating helicopter fleet during the nine months ended September 30, 2013 is as follows:
Equipment Additions. During the nine months ended September 30, 2013, the Company placed three medium helicopters in service, one of which was delivered in the prior year.
Equipment Dispositions. Major equipment dispositions for the nine months ended September 30, 2013 were as follows:
|
| | | |
Light helicopters — twin engine (1) | | 2 |
|
Medium helicopters (2) | | 9 |
|
Heavy helicopters | | 1 |
|
| | 12 |
|
________________________
(1) Includes two light-twin helicopters that had previously been removed from service.
(2) Does not include the AW139 helicopter to be transferred to the manufacturer for trade-in credit as described below.
During the first quarter of 2013, the Company recognized a $5.4 million gain on the sale of an EC225 heavy helicopter. The helicopter was previously on contract-lease to a customer and was damaged in an incident in May 2012, and it was subsequently sold to that customer in March 2013 for cash proceeds of $24.6 million.
During the first quarter of 2013, the Company recognized $2.1 million in insurance proceeds on a S76A helicopter involved in an incident in March 2013, resulting in a gain of $1.2 million.
During the third quarter of 2013, the Company sold or otherwise disposed of property and equipment for proceeds of $10.2 million and recognized gains of $2.6 million.
During the nine months ended September 30, 2013, the Company sold or otherwise disposed of property and equipment, including the transactions described above, for cash proceeds of $60.0 million and net receivables of $0.2 million, resulting in gains of $17.7 million. In addition, the Company recognized previously deferred gains of $0.1 million.
Subsequent to September 30, 2013, the Company reached an agreement with its insurers related to an AW139 medium helicopter involved in an incident in a prior period. Combined with a trade-in credit from the manufacturer of the AW139 helicopter on an “as is” basis, this will result in a gain of approximately $0.3 million upon transfer of the helicopter title to the manufacturer, which is expected to take place before year-end 2013.
| |
6. | INVESTMENTS, AT EQUITY, AND ADVANCES TO 50% OR LESS OWNED COMPANIES |
Combined Condensed Financials. Summarized financial information for Dart Holding Company Ltd., in which the Company has a 50% ownership interest, was as follows (in thousands): |
| | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
Operating Revenues | $ | 9,801 |
| | $ | 8,849 |
| | $ | 31,450 |
| | $ | 33,561 |
|
Costs and Expenses: | | | | | | | |
Operating and administrative | 7,490 |
| | 7,820 |
| | 23,597 |
| | 25,016 |
|
Depreciation | 1,301 |
| | 1,321 |
| | 3,883 |
| | 4,030 |
|
| 8,791 |
| | 9,141 |
| | 27,480 |
| | 29,046 |
|
Operating Income (Loss) | $ | 1,010 |
| | $ | (292 | ) | | $ | 3,970 |
| | $ | 4,515 |
|
Net Income (Loss) | $ | 194 |
| | $ | (254 | ) | | $ | 2,298 |
| | $ | 1,215 |
|
The following table shows the effective income tax rate on continuing operations:
|
| | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
Statutory rate | | 35.0 | % | | 35.0 | % | | 35.0 | % | | 35.0 | % |
Non-deductible expenses (1) | | 0.7 | % | | 0.4 | % | | 0.2 | % | | (0.4 | )% |
Noncontrolling interest | | 0.6 | % | | — | % | | 0.5 | % | | — | % |
State taxes | | 1.0 | % | | 0.5 | % | | 1.2 | % | | 0.5 | % |
Effective Tax Rate | | 37.3 | % | | 35.9 | % | | 36.9 | % | | 35.1 | % |
____________________
(1) Non-deductible expenses are related primarily to share-based payments.
The Company’s borrowings as of the periods indicated were as follows (in thousands): |
| | | | | | | | |
| | September 30, 2013 | | December 31, 2012 |
7.750% Senior Notes (excluding unamortized discount of $3.2 million and $3.4 million, respectively) | | $ | 200,000 |
| | $ | 200,000 |
|
Senior Secured Revolving Credit Facility | | 15,000 |
| | 50,000 |
|
Promissory Notes | | 31,007 |
| | 33,098 |
|
| | 246,007 |
| | 283,098 |
|
Less: Portion due with one year | | (2,787 | ) | | (2,787 | ) |
Less: Debt discount, net | | (3,191 | ) | | (3,363 | ) |
Total Long-Term Debt | | $ | 240,029 |
| | $ | 276,948 |
|
7.750% Senior Notes. On December 7, 2012, the Company issued $200.0 million aggregate principal amount of its 7.750% senior unsecured notes due December 15, 2022 (the “7.750% Senior Notes”) and received net proceeds of $191.9 million. Interest on the 7.750% Senior Notes is payable semi-annually in arrears on June 15 and December 15 of each year.
Senior Secured Revolving Credit Facility. As of September 30, 2013, the Company had $15.0 million of outstanding borrowings under its senior secured revolving credit facility (“Revolving Credit Facility”). As of September 30, 2013, the remaining availability under this facility was $176.3 million, net of issued letters of credit of $8.7 million. During the nine months ended September 30, 2013, the Company had borrowings of $15.0 million and made repayments of $50.0 million.
Promissory Notes. During the nine months ended September 30, 2013, the Company made scheduled payments on other long-term debt of $2.1 million.
| |
9. | COMMITMENTS AND CONTINGENCIES |
Fleet
The Company’s unfunded capital commitments as of September 30, 2013 consisted primarily of agreements to purchase helicopters and totaled $239.7 million, of which $28.0 million is payable during the remainder of 2013 with the balance payable through 2017. The Company also had $2.0 million of deposits paid on options not yet exercised. The Company may terminate $177.6 million of its total commitments (inclusive of deposits paid on options not yet exercised) without further liability other than liquidated damages of $12.2 million in the aggregate.
Included in these commitments are orders to purchase ten AW189 heavy helicopters, three AW139 medium helicopters, and five AW169 light twin helicopters. The AW189 helicopters are scheduled to be delivered in 2014 through 2017. Two of the AW139 helicopters are scheduled to be delivered by year-end 2013, and one is scheduled for delivery in mid-2014. Delivery dates for the AW169 helicopters have yet to be determined. In addition, the Company had outstanding options to purchase up to an
additional ten AW189 helicopters and five AW139 helicopters. If these options were exercised, the helicopters would be scheduled for delivery beginning in 2014 through 2017.
Subsequent to September 30, 2013, the Company exercised an option to acquire an additional AW139 helicopter, which is scheduled to be delivered in the first quarter of 2014. Upon exercise of this option, the unfunded capital commitment for this AW139 helicopter was $13.8 million.
During the third quarter of 2013, the Company incurred a one-time $2.0 million charge related to the operating leases on certain air medical helicopters.
Matters that Could Impact the Company’s Investments
In July 2011, the Company acquired an interest in Aeróleo which was reflected in the Company’s financial statements as an equity investment. Subsequently, Aeróleo has experienced financial difficulties arising from, among other matters, the following:
| |
• | in August 2011, Petrobras Brazil canceled its AW139 award with Aeróleo, and, as a result, these helicopters remained idle from August 2011 until late November 2012; |
| |
• | suspension from flight operations of the EC225 helicopters on a global basis from October 2012 until July 2013; |
| |
• | effective April 1, 2013, suspension of and non-payment by Petrobras Brazil of all EC225 helicopter contracts through late September and October 2013; and |
| |
• | financial difficulties experienced by another customer which could impair its ability to pay its receivables owed to Aeróleo. |
In March 2012, the Company recorded an impairment charge of $5.9 million, net of tax, on its investment in and advances to Aeróleo resulting in a write-down of the investment to nil in 2012. As of September 30, 2013, the Company had deferred the recognition of $16.9 million of revenues owed by Aeróleo as a result of Aeróleo’s financial difficulties, and Aeróleo’s partners have contributed $9.2 million of shareholder debt to Aeróleo since March 2012 to address Aeróleo’s financial challenges. In addition to these operating and financial difficulties, the Company is currently in a dispute with its partner in Aeróleo with respect to the Company’s contractual shareholder rights in connection with any attempted sale or transfer of the partner’s interests, which is being resolved through arbitration. A continuation of any combination of these operating and financial difficulties or the ongoing dispute with the Company’s partner, taken separately or together, may impede Aeróleo’s ability to pay for equipment leased from the Company, necessitate an infusion of capital from the Company to allow Aeróleo to continue to operate and adversely impact the Company’s results of operations.
Other
In the normal course of its business, the Company becomes involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its financial statements related thereto where appropriate. It is possible that a change in the Company’s estimates of that exposure could occur, but the Company does not expect such changes in estimated costs would have a material effect on the Company’s consolidated financial position, results of operations or cash flows.
| |
10. | SERIES A PREFERRED STOCK |
On January 31, 2013, as part of the Recapitalization, SEACOR exchanged its 1,400,000 shares of Series A preferred stock, which represented all of the Company’s Series A preferred stock then outstanding, for shares of newly-issued Era Group common stock. During the first quarter of 2013, the Company paid outstanding accrued dividends of $5.0 million to SEACOR.
| |
11. | EARNINGS (LOSS) PER COMMON SHARE |
Basic earnings (loss) per common share of the Company are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings (loss) per common share of the Company are computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities through the application of the if-converted method and/or treasury method. Dilutive securities for this purpose assumes all common shares have been issued and outstanding during the relevant periods pursuant to the conversion of all outstanding Series A preferred stock, restricted stock grants have vested and common shares have been issued pursuant to the exercise of outstanding stock options.
Computations of basic and diluted earnings per common share of the Company were as follows (in thousands, except share data):
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
Net Income (Loss) Attributable to Common Shares | | $ | 5,204 |
| | $ | 3,101 |
| | $ | 16,232 |
| | $ | (2,118 | ) |
Shares: | | | | | | | | |
Weighted average number of common shares outstanding—basic | | 20,186,013 |
| | 24,500,000 |
| | 20,588,791 |
| | 24,500,000 |
|
Assumed conversion of Series A Preferred Stock (1) | | — |
| | — |
| | — |
| | — |
|
Net effect of dilutive stock options and restricted stock awards based on the treasury stock method(2) | | 319,919 |
| | — |
| | — |
| | — |
|
Weighted average number of common shares outstanding—diluted | | 20,505,932 |
| | 24,500,000 |
| | 20,588,791 |
| | 24,500,000 |
|
| | | | | | | | |
Basic Earnings (Loss) per Common Share | | $ | 0.26 |
| | $ | 0.13 |
| | $ | 0.79 |
| | $ | (0.09 | ) |
Diluted Earnings (Loss) per Common Share | | $ | 0.25 |
| | $ | 0.13 |
| | $ | 0.79 |
| | $ | (0.09 | ) |
____________________
(1) Excludes 905,430 for the nine month period ending September 30, 2013, and 7,605,769 and 6,729,167 for the three and nine months ending September 30, 2012, respectively, weighted average common shares for the conversion of Series A preferred stock as the effect of their inclusion would have been antidilutive.
(2) Excludes 232,353 for the nine month period ending September 30, 2013, weighted average common shares for certain share awards as the effect of their inclusion would have been antidilutive. No share awards existed in the respective periods in 2012.
| |
12. | RELATED PARTY TRANSACTIONS |
Prior to the Spin-off, as part of a consolidated group, certain costs and expenses of the Company were borne by SEACOR and charged to the Company. These costs and expenses are included in both operating expenses and administrative and general expenses in the accompanying consolidated statements of operations. The Company entered into various agreements with SEACOR in connection with the separation, including an Amended and Restated Transition Services Agreement, Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement and the Series B Preferred Stock Exchange Agreement. These costs are summarized as follows (in thousands):
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
Payroll costs for SEACOR personnel assigned to the Company and participation in SEACOR employee benefit plans, defined contribution plan and share award plans | | $ | — |
| | $ | 2,291 |
| | $ | 5 |
| | $ | 6,129 |
|
Shared services allocation for administrative support | | — |
| | 714 |
| | 299 |
| | 1,965 |
|
Shared services under the Amended and Restated Transition Services Agreement | | 843 |
| | — |
| | 2,248 |
| | — |
|
| | $ | 843 |
| | $ | 3,005 |
| | $ | 2,552 |
| | $ | 8,094 |
|
During the first quarter of 2013, the Company also paid outstanding accrued dividends of $5.0 million on the Series A preferred stock to SEACOR.
As of September 30, 2013, the Company recorded a payable due to SEACOR of $0.2 million. As of December 31, 2012, the Company recorded a receivable due from SEACOR of $1.0 million.
| |
13. | SHARE-BASED COMPENSATION |
Share Incentive Plans. Effective January 14, 2013, the Company adopted the Era Group Inc. 2013 Employee Stock Purchase Plan (“ESPP”) under which the Company may offer up to a maximum of 300,000 shares of Common Stock, $0.01 par value per share, for purchase by eligible employees at a price equal to 85% of the lesser of (i) the fair market value of Common Stock on the first day of the offering period or (ii) the fair market value of Common Stock on the last day of the offering period. Common Stock is made available for purchase under the ESPP for six-month offering periods. The ESPP is intended to comply with Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”), but is not intended to be subject to Section 401(a) of the Code or the Employee Retirement Income Security Act of 1974. The Board of Directors of the Company may amend or terminate the ESPP at any time; however, no increase in the number of shares of Common Stock reserved for issuance under the ESPP may be made without stockholder approval. The ESPP has a term of ten years.
Effective January 14, 2013, the Company adopted the Era Group Inc. 2012 Incentive Plan (“2012 Plan”) under which a maximum of 4,000,000 shares of common stock, par value $0.01 per share, are reserved for issuance. Awards granted under the 2012 Plan may be in the form of stock options, stock appreciation rights, shares of restricted stock, other share-based awards (payable in cash or common stock) or performance awards, or any combination thereof, and may be made to outside directors, employees or consultants. As of September 30, 2013, 3,363,416 shares remained available for grant under the 2012 Plan.
Share Award Transactions. Transactions in connection with the Company’s share-based compensation plans during the nine months ended September 30, 2013 were as follows: |
| | |
Director stock awards granted | 45,510 |
|
Restricted stock awards granted | 223,800 |
|
Restricted stock awards canceled | 3,673 |
|
Stock option activities: | |
Outstanding as of December 31, 2012 | — |
|
Converted stock options | 169,058 |
|
Granted | 200,000 |
|
Exercised | (40,302 | ) |
Forfeited | (1,784 | ) |
Expired | — |
|
Outstanding as of September 30, 2013 | 326,972 |
|
Total share-based compensation expense, which includes stock options, restricted stock and ESPP purchases, totaled $0.6 million and $1.3 million for the three and nine months ended September 30, 2013, respectively. A portion of the restricted stock awards are performance-based. The Company has assessed the probability of meeting the criteria and has recorded the appropriate expense.
During the nine months ended September 30, 2013, the Company awarded 269,310 shares of restricted stock at an average grant date fair value of $21.24 per share, granted 200,000 stock options and converted 37,900 options to purchase SEACOR common stock held by Company employees and directors prior to the Spin-off into 169,058 options to purchase Era Group common stock. The fair value used for the converted stock options was evaluated before and after the Spin-off and there was no change. The following table shows the assumptions used to compute the share-based compensation expense for stock options granted during the nine months ended September 30, 2013:
|
| | | |
Risk free interest rate | | 0.81 | % |
Expected life (years) | | 5 |
|
Volatility | | 50 | % |
Dividend yield | | — | % |
Weighted average exercise price of options granted | | $19.04 per option |
|
Weighted average grant-date fair value of options granted | | $7.87 per option |
|
| |
14. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
On December 7, 2012, the Company issued $200.0 million aggregate principal amount of its 7.750% Senior Notes. The Company’s payment obligations under the 7.750% Senior Notes are jointly and severally guaranteed by all of the Company’s existing wholly-owned U.S. subsidiaries that guarantee the Revolving Credit Facility and its future U.S. subsidiaries that guarantee the Revolving Credit Facility or other material indebtedness the Company may incur in the future (the “Guarantors”). All the Guarantors currently guarantee the Revolving Credit Facility. The guarantees of the Guarantors are full and unconditional.
As a result of the guarantee arrangements, the Company is presenting the following condensed consolidating balance sheets, statements of operations, comprehensive income and cash flows for Era Group Inc. (“Parent Company Only”), for the Guarantors and for our other subsidiaries (“Non-Guarantor Subsidiaries”).
Supplemental Condensed Consolidating Balance Sheet as of September 30, 2013 |
| | | | | | | | | | | | | | | | | | | | |
| | Parent Company Only | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | (in thousands, except share data) |
ASSETS | | | | | | | | | | |
Current Assets: | | | | | | | | | | |
Cash and cash equivalents | | $ | 7,890 |
| | $ | 13,462 |
| | $ | 1,165 |
| | $ | — |
| | $ | 22,517 |
|
Receivables: | | | | | | | | | | |
Trade, net of allowance for doubtful accounts of $3,010 | | — |
| | 48,012 |
| | 140 |
| | — |
| | 48,152 |
|
Other | | 189 |
| | 3,161 |
| | — |
| | (106 | ) | | 3,244 |
|
Intercompany receivables | | 543,821 |
| | 11,436 |
| | — |
| | (555,257 | ) | | — |
|
Inventories, net | | — |
| | 26,692 |
| | — |
| | — |
| | 26,692 |
|
Deferred income taxes | | 3,908 |
| | — |
| | — |
| | (266 | ) | | 3,642 |
|
Prepaid expenses and other | | 23 |
| | 1,255 |
| | — |
| | — |
| | 1,278 |
|
Escrow deposits | | — |
| | 9,900 |
| | — |
| | — |
| | 9,900 |
|
Total current assets | | 555,831 |
| | 113,918 |
| | 1,305 |
| | (555,629 | ) | | 115,425 |
|
Property and Equipment | | — |
| | 1,003,407 |
| | 11,500 |
| | — |
| | 1,014,907 |
|
Accumulated depreciation | | — |
| | (253,746 | ) | | (1,553 | ) | | — |
| | (255,299 | ) |
Net property and equipment | | — |
| | 749,661 |
| | 9,947 |
| | — |
| | 759,608 |
|
Investments, at Equity, and Advances to 50% or Less Owned Companies | | — |
| | 36,113 |
| | — |
| | — |
| | 36,113 |
|
Investments, at Equity in Consolidated Subsidiaries | | 100,308 |
| | — |
| | — |
| | (100,308 | ) | | — |
|
Goodwill | | — |
| | 352 |
| | — |
| | — |
| | 352 |
|
Other Assets | | 5,657 |
| | 10,414 |
| | — |
| | — |
| | 16,071 |
|
Total Assets | | $ | 661,796 |
| | $ | 910,458 |
| | $ | 11,252 |
| | $ | (655,937 | ) | | $ | 927,569 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | |
Accounts payable and accrued expenses | | $ | 953 |
| | $ | 15,795 |
| | $ | 48 |
| | $ | — |
| | $ | 16,796 |
|
Accrued wages and benefits | | — |
| | 8,937 |
| | — |
| | — |
| | 8,937 |
|
Accrued interest | | 4,607 |
| | 18 |
| | — |
| | — |
| | 4,625 |
|
Intercompany payables | | 10,633 |
| | 527,907 |
| | 11,442 |
| | (549,982 | ) | | — |
|
Current portion of long-term debt | | — |
| | 2,787 |
| | — |
| | — |
| | 2,787 |
|
Other current liabilities | | — |
| | 7,000 |
| | — |
| | (106 | ) | | 6,894 |
|
Total current liabilities | | 16,193 |
| | 562,444 |
| | 11,490 |
| | (550,088 | ) | | 40,039 |
|
Long-Term Debt | | 211,809 |
| | 28,220 |
| | — |
| | — |
| | 240,029 |
|
Deferred Income Taxes | | — |
| | 209,238 |
| | — |
| | (755 | ) | | 208,483 |
|
Deferred Gains and Other Liabilities | | — |
| | 3,780 |
| | — |
| | 1,563 |
| | 5,343 |
|
Total liabilities | | 228,002 |
| | 803,682 |
| | 11,490 |
| | (549,280 | ) | | 493,894 |
|
| | | | | | | | | | |
Equity: | | | | | | | | | | |
Era Group Inc. stockholders’ equity: | | | | | | | | | | |
Common stock, $0.01 par value, 60,000,000 shares authorized; 20,189,522 issued and outstanding in 2013 (exclusive of 3,673 treasury shares) | | 202 |
| | — |
| | — |
| | — |
| | 202 |
|
Additional paid-in capital | | 420,650 |
| | 99,845 |
| | 496 |
| | (100,341 | ) | | 420,650 |
|
Retained earnings (accumulated deficit) | | 12,928 |
| | 7,050 |
| | (734 | ) | | (6,316 | ) | | 12,928 |
|
Treasury shares, at cost (3,673 in 2013) | | (94 | ) | | — |
| | — |
| | — |
| | (94 | ) |
Accumulated other comprehensive loss, net of tax | | 108 |
| | — |
| | — |
| | — |
| | 108 |
|
| | 433,794 |
| | 106,895 |
| | (238 | ) | | (106,657 | ) | | 433,794 |
|
Noncontrolling interest in subsidiary | | — |
| | (119 | ) | | — |
| | — |
| | (119 | ) |
Total equity | | 433,794 |
| | 106,776 |
| | (238 | ) | | (106,657 | ) | | 433,675 |
|
Total Liabilities and Stockholders’ Equity | | $ | 661,796 |
| | $ | 910,458 |
| | $ | 11,252 |
| | $ | (655,937 | ) | | $ | 927,569 |
|
Supplemental Condensed Consolidating Balance Sheet as of December 31, 2012 |
| | | | | | | | | | | | | | | | | | | | |
| | Parent Company Only | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | (in thousands, except share data) |
ASSETS | | | | | | | | | | |
Current Assets: | | | | | | | | | | |
Cash and cash equivalents | | $ | 2,258 |
| | $ | 8,558 |
| | $ | 689 |
| | $ | — |
| | $ | 11,505 |
|
Receivables: | | | | | | | | | | |
Trade, net of allowance for doubtful accounts of $2,668 | | — |
| | 48,217 |
| | 310 |
| | — |
| | 48,527 |
|
Other | | 971 |
| | 3,742 |
| | — |
| | — |
| | 4,713 |
|
Due from SEACOR and affiliates | | 560,327 |
| | — |
| | — |
| | (560,327 | ) | | — |
|
Inventories, net | | — |
| | 26,650 |
| | — |
| | — |
| | 26,650 |
|
Deferred income taxes | | 4,625 |
| | — |
| | — |
| | (983 | ) | | 3,642 |
|
Prepaid expenses and other | | — |
| | 1,803 |
| | — |
| | — |
| | 1,803 |
|
Total current assets | | 568,181 |
| | 88,970 |
| | 999 |
| | (561,310 | ) | | 96,840 |
|
Property and Equipment | | — |
| | 1,018,776 |
| | 11,500 |
| | — |
| | 1,030,276 |
|
Accumulated depreciation | | — |
| | (241,436 | ) | | (1,035 | ) | | — |
| | (242,471 | ) |
Net property and equipment | | — |
| | 777,340 |
| | 10,465 |
| | — |
| | 787,805 |
|
Investments, at Equity, and Advances to 50% or Less Owned Companies | | — |
| | 34,696 |
| | — |
| | — |
| | 34,696 |
|
Investments, at Equity in Consolidated Subsidiaries | | 100,101 |
| | 9,782 |
| | — |
| | (109,883 | ) | | — |
|
Goodwill | | — |
| | 352 |
| | — |
| | — |
| | 352 |
|
Other Assets | | 5,958 |
| | 24,374 |
| | — |
| | (12,461 | ) | | 17,871 |
|
Total Assets | | $ | 674,240 |
| | $ | 935,514 |
| | $ | 11,464 |
| | $ | (683,654 | ) | | $ | 937,564 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | |
Accounts payable and accrued expenses | | $ | — |
| | $ | 15,618 |
| | $ | 85 |
| | $ | — |
| | $ | 15,703 |
|
Accrued wages and benefits | | — |
| | 4,576 |
| | — |
| | — |
| | 4,576 |
|
Accrued interest | | 1,357 |
| | 44 |
| | — |
| | — |
| | 1,401 |
|
Intercompany payables | | 5,491 |
| | 560,323 |
| | 10,965 |
| | (576,779 | ) | | — |
|
Current portion of long-term debt | | — |
| | 2,787 |
| | — |
| | — |
| | 2,787 |
|
Other current liabilities | | 1,445 |
| | 3,787 |
| | — |
| | — |
| | 5,232 |
|
Total current liabilities | | 8,293 |
| | 587,135 |
| | 11,050 |
| | (576,779 | ) | | 29,699 |
|
Long-Term Debt | | 246,637 |
| | 30,311 |
| | — |
| | — |
| | 276,948 |
|
Deferred Income Taxes | | — |
| | 204,520 |
| | — |
| | (984 | ) | | 203,536 |
|
Deferred Gains and Other Liabilities | | — |
| | 7,864 |
| | — |
| | — |
| | 7,864 |
|
Total liabilities | | 254,930 |
| | 829,830 |
| | 11,050 |
| | (577,763 | ) | | 518,047 |
|
Series A Preferred Stock, at redemption value; $0.01 par value, 10,000,000 shares authorized; none issued and outstanding in 2013; 1,400,000 shares issued and outstanding in 2012 | | 144,232 |
| | — |
| | — |
| | — |
| | 144,232 |
|
Equity: | | | | | | | | | | |
Era Group Inc. stockholders’ equity: | | | | | | | | | | |
Class B common stock, $0.01 par value, 60,000,000 shares authorized; 24,500,000 issued and outstanding | | 245 |
| | — |
| | — |
| | — |
| | 245 |
|
Additional paid-in capital | | 278,838 |
| | 109,674 |
| | 496 |
| | (110,170 | ) | | 278,838 |
|
Accumulated deficit | | (4,025 | ) | | (4,217 | ) | | (82 | ) | | 4,299 |
| | (4,025 | ) |
Accumulated other comprehensive income, net of tax | | 20 |
| | 20 |
| | — |
| | (20 | ) | | 20 |
|
| | 275,078 |
| | 105,477 |
| | 414 |
| | (105,891 | ) | | 275,078 |
|
Noncontrolling interest in subsidiary | | — |
| | 207 |
| | — |
| | — |
| | 207 |
|
Total equity | | 275,078 |
| | 105,684 |
| | 414 |
| | (105,891 | ) | | 275,285 |
|
Total Liabilities and Stockholders’ Equity | | $ | 674,240 |
| | $ | 935,514 |
| | $ | 11,464 |
| | $ | (683,654 | ) | | $ | 937,564 |
|
Supplemental Condensed Consolidating Statement of Operations for the Three Months Ended September 30, 2013 |
| | | | | | | | | | | | | | | | | | | | |
| | Parent Company Only | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | (in thousands) |
Operating Revenues | | $ | — |
| | $ | 80,701 |
| | $ | 296 |
| | $ | — |
| | $ | 80,997 |
|
Costs and Expenses: | | | | | | | | | | |
Operating | | — |
| | 51,142 |
| | 196 |
| | — |
| | 51,338 |
|
Administrative and general | | 1,665 |
| | 8,016 |
| | 2 |
| | — |
| | 9,683 |
|
Depreciation | | — |
| | 11,167 |
| | 173 |
| |
| | 11,340 |
|
| | 1,665 |
| | 70,325 |
| | 371 |
| | — |
| | 72,361 |
|
Gains on Asset Dispositions, Net | | — |
| | 2,560 |
| | — |
| | — |
| | 2,560 |
|
Operating Income (Loss) | | (1,665 | ) | | 12,936 |
| | (75 | ) | | — |
| | 11,196 |
|
Other Income (Expense): | | | | | | | | | | |
Interest income | | 28 |
| | 127 |
| | — |
| | — |
| | 155 |
|
Interest expense | | (4,143 | ) | | (251 | ) | | — |
| | — |
| | (4,394 | ) |
Intercompany interest | | 8,072 |
| | (7,916 | ) | | (156 | ) | | — |
| | — |
|
Derivative losses, net | | — |
| | (96 | ) | | — |
| | — |
| | (96 | ) |
Foreign currency gains, net | | 1 |
| | 408 |
| | — |
| | — |
| | 409 |
|
Other, net | | 7 |
| | — |
| | — |