SEC Info - Bristow Group Inc - ‘10KT405’ for 3/31/97

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Bristow Group Inc – ‘10KT405’ for 3/31/97

As of: Wednesday, 7/30/97 · For: 3/31/97 · Accession #: 899243-97-1422 · File #: 0-05232

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 7/30/97  Bristow Group Inc                 10KT405     3/31/97    6:208K                                   Donnelley R R & S… 06/FA

Annual-Transition Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KT405     Form 10-K                                             44    238K 
 2: EX-14       Indemnity Agreement                                   10     54K 
 3: EX-16       Incorporated by Reference Documents                   14     73K 
 4: EX-21       Subsidiaries                                           1      7K 
 5: EX-23       Consent of Independent Public Accountants              1      6K 
 6: EX-27       Financial Data Schedule                                2     11K

10KT405 — Form 10-K
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Business Certain Relationships and Related Transactions Changes In and Disagreements with Accountants on Accounting and Financial Disclosure Competition Current liabilities Customers Directors and Executive Officers of the Registrant Earnings per Share Executive Compensation Exhibits, Financial Statement Schedules, and Reports on Form 8-K Financial Statements and Supplementary Data General Gross Revenue Helicopter Activities International Legal Proceedings Liquidity and Capital Resources Management's Discussion and Analysis of Financial Condition and Results of Operations Market for the Registrant's Common Equity and Related Stockholder Matters Notes to Consolidated Financial Statements Production Management Services Properties Security Ownership of Certain Beneficial Owners and Management Selected Financial Data Signatures Submission of Matters to a Vote of Security Holders Union Activities United States United States Operations
1	1st Page - Filing Submission
3	Item 1. Business
4	Helicopter Activities
5	United States Operations
6	Customers
"	Competition
"	United States
7	International
"	Production Management Services
9	General
"	Union Activities
"	Item 2. Properties
10	Item 3. Legal Proceedings
11	Item 4. Submission of Matters to a Vote of Security Holders
12	Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
"	Item 6. Selected Financial Data
13	Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
16	Liquidity and Capital Resources
18	Item 8. Financial Statements and Supplementary Data
19	Current liabilities
20	Gross Revenue
23	Notes to Consolidated Financial Statements
36	Earnings per Share
40	Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
41	Item 10. Directors and Executive Officers of the Registrant
"	Item 11. Executive Compensation
"	Item 12. Security Ownership of Certain Beneficial Owners and Management
"	Item 13. Certain Relationships and Related Transactions
42	Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
44	Signatures

10KT405 1st Page of 44 TOC ↑Top Previous Next ↓Bottom Just 1st
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

[x] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from July 1, 1996 to March 31, 1997

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 (I.R.S. Employer
incorporation or organization) Identification Number)

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

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

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each Class which registered

NONE NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK ($.01 PAR VALUE)
PREFERRED SHARE PURCHASE RIGHTS
(Title of Class)

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 X NO
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
----

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 30, 1997 was $374,887,303.

The number of shares outstanding of the registrant's Common Stock as of June
30, 1997 was 21,251,633.

================================================================================

10KT405 2nd Page of 44 TOC 1st Previous Next ↓Bottom Just 2nd
OFFSHORE LOGISTICS, INC.
INDEX--FORM 10-K

[Enlarge/Download Table]

PART I
Page

Item 1. Business.................................................................................... 1
Item 2. Properties.................................................................................. 7
Item 3. Legal Proceedings........................................................................... 8
Item 4. Submission of Matters to a Vote of Security Holders......................................... 9

PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters................... 10
Item 6. Selected Financial Data..................................................................... 10
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations....... 11
Item 8. Consolidated Financial Statements and Supplementary Data.................................... 16
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure................................................................................ 38

PART III

Item 10. Directors and Executive Officers of the Registrant......................................... 39
Item 11. Executive Compensation..................................................................... 39
Item 12. Security Ownership of Certain Beneficial Owners and Management............................. 39
Item 13. Certain Relationships and Related Transactions............................................. 39

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......................... 40
Signatures ........................................................................................... 43

10KT405 3rd Page of 44 TOC 1st Previous Next ↓Bottom Just 3rd
PART I

ITEM 1. BUSINESS

Offshore Logistics, Inc. was incorporated in Louisiana in 1969 and its state
of incorporation was changed to Delaware in 1988. Unless the context herein
indicates otherwise, all references to the "Company" refer to Offshore
Logistics, Inc., ("OLOG") and its majority-owned entities and non-majority owned
entities. The Company's executive offices are located at 224 Rue de Jean, Post
Office Box 5-C, Lafayette, Louisiana 70505, and its telephone number is (318)
233-1221.

The Company, through its Air Logistics division ("Air Log") and with its
investment in Bristow Aviation Holdings Limited ("Bristow"), is a major supplier
of helicopter transportation services to the worldwide offshore oil and gas
industry. OLOG acquired 49% of the common stock of Bristow on December 19, 1996.
See Note C in "Notes to Consolidated Financial Statements" for discussion of the
Company's investment in Bristow. At March 31, 1997, Air Log's and Bristow's
operations included 330 aircraft (including 42 aircraft operated through
unconsolidated entities).

During 1993, the Company expanded its operations to include production
management services by acquiring a 50% interest in Seahawk Services Ltd.
("Seahawk") in a transaction in which Seahawk acquired all of the business of
PPI-Seahawk Services, Inc., a company engaged in the production management
services business. In October 1993, the Company exchanged its interest in
Seahawk for a 27.5% interest in Grasso Corporation whose wholly-owned
subsidiary, Grasso Production Management, Inc. ("GPM"), also was engaged in the
production management services business. In September 1994, GPM became a
wholly-owned subsidiary of the Company through a merger of Grasso Corporation
into the Company.

During October 1994, the Company acquired a 75% interest in Cathodic
Protection Services Company ("CPS"). CPS manufactures, installs, and maintains
cathodic protection systems to arrest corrosion in oil and gas drilling and
production facilities, pipelines, and other metal structures. During 1997, the
Company adopted a plan to discontinue CPS, and on July 16, 1997, the Company
completed its agreement to sell CPS to Corrpro Companies, Inc. The Company
expects that the final gain or loss on disposition based on the closing date
sales price will not have a significant impact on the Company's operating
results.

See Note L in "Notes to Consolidated Financial Statements" for information on
the Company's operating revenue, operating profit, and identifiable assets by
industry segment and geographical distribution for the nine month period ended
March 31, 1997 and each of the two years ended June 30, 1996 and 1995.

FISCAL YEAR CHANGE

On May 1, 1997, the Board of Directors approved a change in the Company's
fiscal year end from June 30 to March 31, effective for the nine month period
ended March 31, 1997. A nine month fiscal transition period from July 1, 1996
through March 31, 1997 will precede the start of the new fiscal year cycle.
Other fiscal years presented and referred to in this report are on a June 30
fiscal year basis unless otherwise indicated.

FORWARD LOOKING STATEMENTS

This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements
included herein other than statements of historical fact are forward-looking
statements. Such forward-looking statements include, without limitation, the
statements herein regarding the timing of future events regarding the Company's
operations, the statements under "Helicopter Activities -- United States
Operations" regarding the ability of the Company to react to market conditions,
under "Production Management Services -- Customers" and "Production Management
Services -- Competition" regarding outsourcing and cost structure and the market
for production management operations, under "General -- Union Activities"
regarding the effect of the Company's pilots electing to be represented by a
union, under "Legal Proceedings" regarding the Company's potential liability on
envi-

10KT405 4th Page of 44 TOC 1st Previous Next ↓Bottom Just 4th
ronmental claims, under "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- General" and "Helicopter Activities"
regarding, respectively, concentration and globalization of the helicopter
industry, restructuring of the oil and gas industry, and increased levels of
activity and their effects on the Company's future prospects, and under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" regarding the Company's
anticipated future financial position and cash requirements.

Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct. Important factors that could cause actual
results to differ materially from the Company's expectations ("Cautionary
Statements") may include, but are not limited to, demand for Company services,
worldwide activity levels in oil and natural gas exploration, development and
production, fluctuations in oil and natural gas prices, unionization and the
response thereto of the Company's customers, currency fluctuations, and
international political conditions. All subsequent written and oral forward-
looking statements attributable to the Company or persons acting on its behalf
are expressly qualified in their entirety by the Cautionary Statements.

HELICOPTER ACTIVITIES

Air Log and Bristow charter their helicopters to customers for use in
transporting personnel and time-sensitive equipment from onshore bases to
offshore drilling rigs, platforms, and other installations. The helicopter
charters are for varying periods and, in some cases, may contain provisions for
cancellation prior to completion of the contract. Charges under these charter
agreements are generally based on either a daily or monthly fixed fee plus
additional hourly charges. Helicopter activities are seasonal in nature and
influenced by weather conditions and level of offshore production, exploration,
and construction activity.

The following table sets forth the number and type of aircraft operated by
Air Log and Bristow at the end of the transition period and past two fiscal
years.

PASSENGER SPEED MARCH 31, JUNE 30, JUNE 30,
TYPE CAPACITY (MPH) 1997 1996 1995
---- --------- ----- -------- ------- -------
Tiger AS332L........... 28 160 29 -- --
Sikorsky S-61.......... 24 135 17 -- --
Sikorsky S-76.......... 12 160 36 18 18
Puma SA 330J........... 16 150 2 -- --
Bell 206B Jet Ranger... 4 115 26 25 30
Bell 206L Series....... 6 125 74 70 70
Bell 212............... 12 115 44 11 12
Bell 412............... 12 140 6 6 6
Bell 214ST............. 18 150 5 2 2
Boelkow 105............ 4 125 22 17 12
Aerospatiale Twinstar.. 5 135 10 8 9
Other.................. 17 2 2
--- --- ---
288 159 161
=== === ===

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At March 31, 1997, Air Log and Bristow owned 280 of the 288 aircraft that
they operated. On May 30, 1997, the Company completed the acquisition of four
aircraft previously operated under short term leases. The following table sets
forth certain information concerning the 284 aircraft:

AS OF
MARCH 31, 1997
------------------
NET
TYPE NUMBER BOOK VALUE
---- ------ ----------
(000's)

Tiger AS332L........................... 26 $189,598
Sikorsky S-61.......................... 17 44,174
Sikorsky S-76.......................... 35 50,014
Puma SA 330J........................... 2 3,172
Bell 206B Jet Ranger................... 26 2,527
Bell 206L Series....................... 73 24,382
Bell 212............................... 42 43,897
Bell 412............................... 6 8,428
Bell 214ST............................. 5 12,226
Boelkow 105............................ 22 10,491
Aerospatiale Twinstar.................. 10 2,608
Other.................................. 8 8,389
--- --------
272 399,906
Fixed Wing............................. 8 12,924
--- --------
280 $412,830
=== ========

In addition to the foregoing 280 aircraft, at March 31, 1997, Bristow
operated four aircraft pursuant to operating lease arrangements. Air Log and
Bristow also provide services and technical support to entities that operate 42
helicopters of various types and five fixed wing aircraft.

UNITED STATES OPERATIONS

The United States helicopter activities are conducted primarily from
operating facilities along the Gulf of Mexico. As of March 31, 1997, Air Log
operated 131 aircraft in that area. Air Log also operates ten aircraft in
Alaska. Although the Company's business is primarily dependent upon activity
levels in the offshore oil and gas industry, the existence of a secondary market
for helicopters distinguishes the helicopter business from other segments of the
oil service industry. Other uses for which helicopters are employed include
emergency medical transportation, agricultural and forestry support, and general
aviation activities. These additional uses enable the Company to scale down
operations through the sale of excess equipment to companies in the
aforementioned industries. Because of this ability to react to market
conditions, management believes the helicopter segment of the oil service
industry is less affected by downturns in offshore oil and gas activities.

UNITED KINGDOM/EUROPE OPERATIONS

During 1997, the Company expanded its presence in the United Kingdom and
Europe through its investment in Bristow. As of March 31, 1997, 75 aircraft were
being operated by Bristow in the United Kingdom and Europe, mainly in the
North Sea offshore market. These activities are primarily dependent upon
activity levels in the offshore oil and gas production, exploration, and
construction industries in that area.

Bristow also has a 33% interest in a joint venture that has a 15 year
contract to provide pilot training and maintenance services to the British
military. The joint venture will purchase and specially modify 47 aircraft and
maintain a staff of approximately 600 employees dedicated to conducting these
training activities which began in May 1997.

OTHER INTERNATIONAL OPERATIONS

Utilization of helicopters in international service is dependent on the
worldwide level of oil and gas exploration and development offshore and in
remote areas. This, in turn, is dependent on the funds available to the major
oil companies to conduct such activities and upon the number and location of new
foreign concessions. As of March 31,

10KT405 6th Page of 44 TOC 1st Previous Next ↓Bottom Just 6th
1997, Air Log and Bristow operated 72 of their helicopters in locations outside
the United States and Europe. Air Log operated 22 aircraft in Brazil, Colombia,
Egypt, and Mexico. Bristow operated 26 aircraft in Africa and 24 aircraft
elsewhere throughout the world.

In addition to its direct operations in international areas, Air Log and
Bristow have service agreements with, and equity interests in, entities that
operate 42 aircraft in Europe, Egypt, and Mexico. Air Log and Bristow provide
services and technical support to these entities and, from time to time, lease
aircraft to these entities as additional support for these operations.

CUSTOMERS

The principal customers for the Company's helicopter activities are national
and international petroleum and offshore construction companies. During 1997,
1996, and 1995, no one customer accounted for more than 10% of the Company's
consolidated operating revenues.

COMPETITION

The helicopter transportation business is highly competitive on a worldwide
basis. Chartering of helicopters is usually done on the basis of competitive
bidding among those having the necessary equipment and resources. The technical
requirements of operating helicopters offshore have increased as oil and gas
activities have moved into deeper water and more sophisticated aircraft are
required to service the market. The number of small helicopter operators in the
Gulf of Mexico has declined over the past several years, as it has become
increasingly difficult to maintain an adequate shorebased infrastructure and
provide the working capital required to conduct such operations, especially when
the associated costs must be spread over a relatively small number of
helicopters. One of Air Log's competitors has substantially more helicopters in
service in the Gulf of Mexico. The harsh conditions in the North Sea demand
larger more sophisticated equipment to conduct operations. Bristow has three
competitors in the North Sea.

INDUSTRY HAZARDS AND INSURANCE

Hazards, such as adverse weather and marine conditions, crashes, collisions,
and fire are inherent in the offshore transportation and supply of such
industry, and may result in losses of equipment, revenues, or death of
personnel.

Air Log and Bristow maintain Hull and Liability insurance which generally
insures them against certain legal liabilities to others, as well as damage to
their aircraft. It is also their policy to carry insurance for or require their
customers to provide indemnification against expropriation, war risk, and
confiscation of their helicopters employed in international operations. There
is no assurance that in the future they will be able to maintain their existing
coverage or that the premiums therefrom will not increase substantially.

GOVERNMENT REGULATION

United States. As a commercial operator of small aircraft, Air Log is
subject to regulations pursuant to the Federal Aviation Act of 1958, as amended,
and other statutes. Air Log carries persons and property in its helicopters
pursuant to an Air Taxi Certificate granted by the Federal Aviation
Administration ("FAA").

The FAA regulates the flight operations of Air Log and, in this respect,
exercises jurisdiction over personnel, aircraft, ground facilities, and certain
technical aspects of its operations. The National Transportation Safety Board
is authorized to investigate aircraft accidents and to recommend improved safety
standards. Air Log is also subject to the Communications Act of 1934 because of
the use of radio facilities in its operations.

Under the Federal Aviation Act, it is unlawful to operate certain aircraft
for hire within the United States unless such aircraft are registered with the
FAA and the operator of such aircraft has been issued an operating certificate
by the FAA. As a general rule, aircraft may be registered under the Federal
Aviation Act only if the aircraft is owned or controlled by one or more citizens
of the United States and an operating certificate may be granted only to a
citizen of the United States. For the purposes of these requirements, a
corporation is deemed to be a citizen of the United States only if, among other
things, at least 75% of the voting interest therein is owned or controlled by
United States citizens. In the event that persons other than United States
citizens should come to own or control more than 25% of the voting interest in
the Company, the Company has been advised that Air Log's aircraft may be subject
to deregistration under

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the Federal Aviation Act and loss of the privilege of operating within the
United States. At March 31, 1997, the Company had approximately 2,267,745 common
shares held by persons with foreign addresses representing approximately 10.8%
of the 21,081,133 common shares outstanding.

The Company's operations are subject to federal, state, and local laws and
regulations controlling the discharge of materials into the environment or
otherwise relating to the protection of the environment. To date, such laws and
regulations have not had a material adverse effect on the Company's business or
financial condition. Increased public awareness and concern over the
environment, however, may result in future changes in the regulation of the oil
and gas industry, which in turn could adversely affect the Company.

United Kingdom. As a commercial operator of aircraft, Bristow is subject to
regulations made under the Civil Aviation Act 1982 and other United Kingdom
statutes. Bristow carries persons and property in its helicopters pursuant to an
operating license granted by the Civil Aviation Authority ("CAA").

The CAA regulates the flight operations of Bristow and, in this respect,
exercises jurisdiction over personnel, aircraft, ground facilities, and certain
technical aspects of Bristow's operations. Accident investigations are carried
out by the Accident Investigation Branch of the Department of Transport. The CAA
often imposes improved safety standards on the basis of a report of the
Inspector.

Under the Licensing of Air Carriers Regulations 1992, the CAA performs the
functions relating to the grant and maintenance of operating licenses laid down
by the European Union. The holder of an operating license must meet the
ownership and control regulations of Council Regulation 2407/92 (i.e. one or
more nationals of the United Kingdom or European Union/European Economic Area
have majority ownership and effective control of the entity that operates under
the license).

Bristow's operations are subject to local laws and regulations controlling
the discharge of materials into the environment or otherwise relating to the
protection of the environment. To date, such laws and regulations have not had a
material adverse effect on Bristow's business or financial condition. Increased
public awareness and concern over the environment, however, may result in future
changes in the regulation of the oil and gas industry.

International. Operations other than in the United States and the United
Kingdom are subject to local governmental regulations and to uncertainties of
economic and political conditions in those areas. Because of the impact of
local laws, these operations are conducted primarily through entities (including
joint ventures) in which local citizens own interests and Air Log or Bristow
hold only a minority interest, or pursuant to arrangements under which the
Company operates assets or conducts operations under contracts with local
entities. There can be no assurance that there will not be changes in local
laws, regulations or administrative requirements, or the interpretation thereof,
any of which could have a material adverse effect on the business or financial
condition of the Company or on its ability to continue operations in certain
regions.

CURRENCY FLUCTUATIONS

Bristow's revenues and expenses are denominated in British Pounds Sterling
("pound"). For the nine months ended March 31, 1997, 41% of consolidated
operating revenues were translated from pounds into the United States Dollar.
In addition, a portion of Bristow's revenues are denominated in other currencies
(including Australian Dollars, French Francs, Nigerian Naira and Trinidad and
Tobago Dollars) to cover expenses in the areas in which such expenses are
incurred. To the extent operating revenues are denominated in the same currency
as operating expenses, the Company can reduce its vulnerability to exchange rate
fluctuations. Because the Company maintains its financial statements in United
States Dollars, it is vulnerable to fluctuations in the exchange rate between
the pound and the United States Dollar.

PRODUCTION MANAGEMENT SERVICES

Beginning in 1993, through Seahawk and, subsequent thereto, through a 27.5%
equity ownership interest in Grasso Corporation and its wholly-owned subsidiary,
GPM, the Company began providing oil and gas production management services. On
September 16, 1994, GPM became a wholly-owned subsidiary of the Company through
the merger of Grasso Corporation into the Company.

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GPM is the leading independent operator of oil and gas production facilities
in the Gulf of Mexico. In addition, GPM also provides services for certain
onshore facilities. In providing these services, GPM operates oil and gas
production facilities for major and smaller independent oil and gas companies.
Typical project assignments may involve full or limited management of operations
of oil and gas production facilities located offshore, particularly in the Gulf
of Mexico. The work involves placing experienced crews, employed by GPM, to
operate the facilities and provide all necessary services and products for the
offshore operations. When servicing offshore oil and gas production facilities,
GPM's employees normally live on the facility for a seven day rotation. GPM's
services include furnishing personnel, production operating services, paramedic
services, and the provision of boat and helicopter transportation of personnel
and supplies between onshore bases and offshore facilities. GPM also handles
regulatory and production reporting, joint interest accounting, and royalty and
working interest revenue disbursement services for certain of its customers.

OPERATIONS

GPM's production management services are conducted primarily from production
facilities in the Gulf of Mexico. As of March 31, 1997, GPM managed or had
personnel assigned to 170 production facilities in the Gulf of Mexico. Although
GPM's business is primarily dependent upon activity levels in the offshore oil
and gas industry, 90% of GPM's production management costs consist of labor
and contracted transportation services. This enables GPM to scale down
operations rapidly should market conditions change. Because of this ability to
react to market conditions, management believes the production management
segment of the oil service industry is less affected by downturns in offshore
oil and gas activities.

CUSTOMERS

GPM's customers are primarily major and small independent oil and gas
companies that own oil and gas production facilities in the Gulf of Mexico.
These companies are increasingly inclined to out-source services provided by
companies such as GPM which are able to operate more efficiently and with a
lower cost structure. This allows the customers to focus their efforts on their
core activities, which is the exploration and production of oil and gas. During
1997, 1996, and 1995, no single GPM customer accounted for more than 10% of the
Company's consolidated operating revenues.

COMPETITION

GPM's business is highly competitive. There are a number of competitors that
are smaller than GPM but maintain a Gulf-wide presence. In addition, there are
many smaller operators that compete on a local basis or for single projects or
jobs. Management of the Company anticipates that the market for oil and gas
production management operations will continue to increase over the next few
years as oil and gas producing companies continue to reduce the size of field
personnel and further utilize outside contractors as efforts to reduce their
operating costs continue. Typically, GPM will be requested to bid on one or
more production facilities owned by an oil and gas producer. The two key
elements in the pricing of the bid are personnel and transportation costs. In
addition to price, an additional consideration is the competence and stability
of the operator since this can greatly affect the revenue flow to the producer
and reduce the risk of possible damage to the production facility. There are no
assurances that an increase in the market for production management will occur.

INDUSTRY HAZARDS AND INSURANCE

GPM's operations are subject to the normal risks associated with working on
an oil and gas production facility. These risks could result in damage to or
loss of property and injury to or death of personnel. GPM carries normal
business insurance including general liability, workers' compensation,
automobile liability, and property and casualty insurance coverages. Management
believes GPM is adequately protected from most business risks normally subject
to insurance.

GOVERNMENT REGULATION

The Mineral Management Service ("MMS") regulates the production operations
of GPM and, in this respect, exercises jurisdiction over personnel, production
facilities, and certain technical aspects of GPM's operations.

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GPM's operations are subject to federal, state, and local laws and
regulations controlling the discharge of materials into the environment or
otherwise relating to the protection of the environment. To date, such laws and
regulations have not had a material adverse effect on GPM's business or
financial condition. Increased public awareness and concern over the
environment, however, may result in future changes in the regulation of the oil
and gas industry, which in turn could adversely affect the Company.

GENERAL

EMPLOYEES

As of March 31, 1997 Air Log, Bristow, and GPM employed 637; 1,878;
and 570 employees worldwide, respectively. The Company's corporate staff
consisted of 24 employees.

UNION ACTIVITIES

In 1983, the Company was petitioned by the Oil, Chemical, and Atomic Workers
Union for representation of its helicopter pilots. This effort was defeated by
election results in February 1984. In 1975, the Company had been petitioned by
the Teamsters Union for an election. However, the Union decided not to seek an
election after several months of union solicitation. Union campaigns in 1970,
1974, and 1980 at Air Log's principal competitor also failed. None of the
companies currently operating in the domestic helicopter service industry are
unionized.

The Company believes that, if the pilots were to elect to be represented by a
union, the Company would be placed at a competitive disadvantage against
existing or future non-unionized competitors in the industry. This could have
a material adverse effect on its revenues from helicopter operations in the Gulf
of Mexico and on its results of operations.

ITEM 2. PROPERTIES

See Business -- Helicopter Activities for a discussion of the number and
types of aircraft operated by Air Log and Bristow.

Air Log leases approximately 11 acres of land in the vicinity of Morgan City,
Louisiana under a lease expiring in 2000, with a renewal option for an
additional ten year period. The Company has constructed a heliport, hangar, and
office facility on the site. The Company is subleasing approximately 50% of the
land to Gulf Offshore Marine, a subsidiary of GulfMark International, Inc., who
acquired the Company's Marine Division.

Air Log leases approximately 8 acres of land at the Acadiana Regional Airport
in New Iberia, Louisiana under a lease expiring in 2030. The Company has
constructed office and helicopter maintenance facilities on the site containing
approximately 44,000 square feet of floor space. The property has access to the
airport facilities, as well as a major highway.

The Company's Corporate offices occupy 14,440 square feet in a building in
Lafayette, Louisiana under a lease expiring in 2000. Other office and operating
facilities in the United States and abroad, including most of the operating
facilities along the Gulf of Mexico, are held under leases, the rental
obligations under which are not material in the aggregate.

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Bristow leases land and facilities at Redhill Aerodrome near London, England
under a lease expiring in 2075. Leases of various hangars, offices, and
aviation fuel facilities at the Redhill Aerodrome expire during 2003.

Bristow leases a helicopter terminal, offices and hangar facilities at
Aberdeen Airport under a lease expiring in 2013 with an option to extend to
2023. Additional hangar and office facilities at the Aberdeen Airport are
maintained under a lease expiring in 2030.

Bristow leases various hangars and terminal access at North Denes Airport in
Great Yarmouth, England and at Gatwick Airport near London, England under leases
expiring in 2014 and 2001, respectively.

Bristow leases office space and hangar facilities at Sumburgh Airport in
Sumburgh, Shetland under a lease expiring in 1999 with renewal options through
2019 and at Unst in Shetland under a lease expiring in 1999 with a renewal
option to 2004.

Bristow owns and leases numerous residential locations near its operating
bases in the United Kingdom, Australia, China, and in the Caribbean primarily
for housing pilots and staff supporting those areas of operation.

GPM's Corporate offices occupy 6,000 square feet in a building in Houston,
Texas, under a lease expiring in 2002. Other office and operating facilities
along the Gulf of Mexico are held under leases, the rental obligations under
which are not material in the aggregate.

ITEM 3. LEGAL PROCEEDINGS

In January 1989, the Company received notice from the United States
Environmental Protection Agency ("EPA") that it is a potentially responsible
party ("PRP") for clean up and other response costs at the Sheridan Disposal
Services Superfund Site in Waller County, Texas. The Company is among
approximately 160 PRPs identified with respect to the site. The EPA has
estimated that the cost of remedial activities at the site will be approximately
$30 million. In August 1989, the Company received a similar notice with respect
to the Gulf Coast Vacuum Services Site, which is near Abbeville, Louisiana. The
Company is among over 300 PRPs identified with respect to this site. The EPA
alleged that the Company is a generator or transporter of hazardous substances
found at the two sites. In February 1991, the Company received a request for
information from the EPA relating to the Western Sand and Gravel Superfund Site
in Rhode Island, as to which the Company had been named a PRP after an earlier
request for information from the EPA issued in 1983 - 1984. During 1997, the
Company executed a consent decree with the EPA and settlement documents with the
Performing Parties with respect to the Company's previous exposure at the D.L.
Mudd site. Costs incurred were nominal.

Based on presently available information, the Company believes that it
generated only a small portion, if any, of the substances found at the above
described sites. In addition, many of the other PRPs at all of the
aforementioned sites are large companies with substantial resources. As a
result, the Company believes 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.

In addition to notification of PRP responsibility, the EPA notices to the
Company also contained information requests regarding the Company's connection
with the various sites. The responses to the information requests were due in
early March 1989 for the Sheridan site and in early September 1989 for the
Louisiana site. Through oversight, the Company did not respond to the requests
until April and May 1990. The EPA is authorized to seek civil penalties for
failure to respond to its information requests in a timely manner in an amount
up to a maximum of $25,000 per day for each day of continued non-compliance;
however, to date, no such penalties have been sought. While it is not possible
to predict whether any civil penalties might be assessed against the Company for
the delays in responding to the EPA requests, the Company believes the amount of
such penalties, if any, will not have a material adverse effect on its business
or financial condition.

The Company is not a party to any other litigation which, in the opinion of
management, will have a material adverse effect on the Company's business or
financial condition.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

All executive officers hereunder are, in accordance with the By-laws, elected
annually and hold office until a successor has been duly elected and qualified.
There are no family relationships among any of the Company's executive officers.
The executive officers of the Company as of July 30, 1997, were as follows:

Name AGE POSITION HELD WITH REGISTRANT
---- --- -----------------------------
James B. Clement..... 52 Chairman, President, Chief Executive Officer,
and Director
George M. Small...... 52 Vice President, Chief Financial Officer,
Treasurer, Secretary, and Director
Ralph B. Murphy...... 69 Vice President -- Corporate Sales
Gene Graves.......... 48 Vice President -- Domestic Aviation
Hans J. Albert....... 55 Vice President -- International Aviation
Drury A. Milke....... 39 Vice President -- Business Development
Patricia M. Como..... 36 Controller and Assistant Secretary
E. H. Underwood III.. 40 General Counsel

Mr. Clement joined the Company in 1976 as Controller and served in various
financial capacities until 1981 when he was appointed the General Manager --
Marine Division. Mr. Clement was elected President and Chief Operating Officer
of the Company in May 1986, Chief Executive Officer in November 1987, and
Chairman of the Board of Directors in June 1995.

Mr. Small joined the Company in 1977 as Controller and was elected Vice
President -- Treasurer in 1979, and Chief Financial Officer and Secretary in
1986. He is a CPA.

Mr. Murphy joined the Company in 1984 as Vice President -- Corporate Sales.
He received a Bachelor of Science degree from Rice University in 1950. He has
forty-seven years of experience in the oil service industry.

Mr. Graves joined the Company in 1993 as Vice President -- Aviation Marketing
and was appointed Vice President -- Domestic Aviation in 1994. Prior to joining
the Company, Mr. Graves had 26 years experience in the commercial helicopter
service business in the Gulf of Mexico as Vice President -- Marketing and
several operating positions.

Mr. Albert joined the Company in 1972 as a pilot and served in several
operating capacities before being appointed Director of International Aviation
Operations in 1980. He was elected Vice President in 1987. Mr. Albert has
thirty-two years of experience in the aviation industry.

Mr. Milke joined the Company in 1988 as Director of Planning and Development
and was elected Vice President in 1990. Prior to joining the Company, Mr. Milke
was a Manager with Arthur Andersen LLP.

Mrs. Como joined the Company in 1990 as Controller. Prior to joining the
Company, Mrs. Como was a Manager with Arthur Andersen LLP. She is a CPA.

Mr. Underwood joined the Company in 1995 as General Counsel. He received a
Juris Doctorate from Loyola University in 1987 and has a degree in risk
management from the University of Georgia. Prior to joining the Company, Mr.
Underwood was General Counsel for another oilfield service company.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The Common Stock of the Company is traded in the over-the-counter market and
is reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") under the symbol "OLOG". The Company's Common Stock
has been quoted on the NASDAQ National Market System since 1984.

HIGH LOW
---- ---
Transition period ended March 31, 1997
First Quarter.................................. 14 1/2 12 1/4
Second Quarter................................. 20 7/8 14 1/4
Third Quarter.................................. 23 5/8 15 3/8

Fiscal year ended June 30, 1996
First Quarter.................................. 14 1/2 12 3/4
Second Quarter................................. 13 3/4 10 7/8
Third Quarter.................................. 13 3/4 11 3/4
Fourth Quarter.................................. 15 5/8 12 3/8

The approximate number of holders of record of Common Stock as of May 31,
1997 was 2,000.

The Company has not paid dividends on its Common Stock since January 1984.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth certain selected historical consolidated
financial data of the Company and should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements and Notes thereto included
elsewhere herein. The information presented has been restated to reflect CPS as
discontinued operations.

[Enlarge/Download Table]

NINE MONTHS YEAR ENDED JUNE 30,
ENDED MARCH 31, -----------------------------------
1997 (3) 1996 1995 (2) 1994 1993
-------------- ----- -------- ---- ----
(in thousands, except per share data)

Operating revenues......................................... $167,128 $117,289 $118,336 $91,666 $80,201
======== ======== ======== ======= =======
Income from continuing operations.......................... $ 17,625 $ 15,024 $ 18,962 $17,247 $16,043
======== ======== ======== ======= =======
Income before extraordinary item........................... $ 17,232 $ 15,276 $ 18,450 $17,247 $16,043
======== ======== ======== ======= =======
Net income (1)............................................. $ 17,232 $ 15,276 $ 18,450 $17,247 $17,055
======== ======== ======== ======= =======

Earnings per common equivalent share:

Income from continuing operations....................... $ 0.86 $ 0.76 $ 0.98 $ 0.96 $ 0.90
======== ======== ======== ======== ========
Income before extraordinary item........................ $ 0.84 $ 0.77 $ 0.96 $ 0.96 $ 0.90
======== ======== ======== ======== ========
Net income (1).......................................... $ 0.84 $ 0.77 $ 0.96 $ 0.96 $ 0.96
======== ======== ======== ======== ========
Total assets............................................... $674,213 $230,741 $217,983 $174,245 $164,231
======== ======== ======== ======== ========

Long-term obligations:
Long-term debt........................................... $199,631 $ -- $ -- $ 2,000 $ 9,322
======== ======== ======== ======== ========
Cash dividends declared per
common share.............................................. $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========

Weighted average shares outstanding....................... 20,477 19,767 19,313 17,997 17,815
======== ======== ======== ======== ========

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(1) Includes an extraordinary gain of $1,012,000 in 1993. There were no
extraordinary items in 1997, 1996, 1995, or 1994.

(2) Includes financial data for GPM after the effective date of the investment
on September 16, 1994 (See Note E in Notes to Consolidated Financial
Statements).

(3) Includes financial data for Bristow after the effective date of the
investment on December 19, 1996. (See Note C in Notes to Consolidated
Financial Statements).

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

The level of worldwide offshore oil and gas exploration and production
activity has traditionally influenced demand for the Company's services. The
Company expanded its aviation services and related operations through its
investment in Bristow that was completed in December 1996. The Company owns 49%
of the outstanding common stock of Bristow along with a substantial portion of
its subordinated debt (see Note C in the "Notes to the Consolidated Financial
Statements" for a complete discussion of this investment). The Company's
investment in Bristow was influenced by its belief that the globalization of
helicopter operators has begun with the recent acquisitions and consolidations
completed by two of its major international competitors. The Company believes
that this trend will continue and accelerate as helicopter operators seek to
broaden their exposure to international markets in order to better serve their
customers and increase their access and influence with financial markets,
insurance markets and other suppliers. The Company also believes that these
combinations and alliances will allow greater development of "in-house core
expertise" in dealing with manufacturers and suppliers to reduce direct
operating costs, enhance and promote safety of flight considerations, improve
efficiencies to be more competitive in the new global marketplace, and provide a
more fertile environment for future investment and growth opportunities. The
combined helicopter activities of Air Log and Bristow result in an operating
fleet of 330 aircraft servicing the principal oil and gas markets of the world.

GPM provides platform and production management services, offshore medical
support services, and temporary personnel services to the offshore oil and gas
industry. The Company's investment in GPM was influenced by its belief that a
restructuring in the United States oil and gas industry is taking place,
resulting in part from the instability of oil and gas prices over the last
several years. As part of this restructuring, major oil companies have been
reducing the size of their field organizations and concentrating more on foreign
exploration and production. Management believes that this restructuring is
creating opportunities, first, for smaller, independent oil companies as the
major oil companies have been selling properties in the Gulf of Mexico, and,
second, for companies providing production management services to smaller,
independent oil companies, which frequently lack the personnel to operate these
properties. Although there can be no assurances, management believes that,
through its acquisition of GPM, the Company will have the opportunity to take
advantage of any increase in the market for oil and gas production management
services that may occur over the next few years. Management also believes that
the addition of the production management services business may permit the
Company, by providing helicopter services through the production management
services business to smaller, independent companies, to enhance its market share
for its helicopter transportation services in the very competitive and rapidly
changing Gulf of Mexico environment.

CPS manufactures, installs, and maintains cathodic protection systems to
arrest corrosion in oil and gas drilling and production facilities, pipelines,
and other metal structures. During 1997, the Company adopted a plan to
discontinue its investment in CPS, and on July 16, 1997, the Company completed
its agreement to sell CPS to Corrpro Companies, Inc. The Company expects that
the final gain or loss on disposition based on the closing date sales price will
not have a significant impact on the Company's operating results.

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RESULTS OF OPERATIONS

Operating results and other income statement information for the nine month
period ended March 31, 1997 and the two years ended June 30, 1996 and 1995, as
restated for the disposal of CPS, follows (in thousands of dollars):

NINE MONTHS
ENDED YEAR ENDED JUNE 30,
MARCH 31, -------------------
1997 1996 1995

Operating revenues........................ $167,128 $117,289 $118,336

Gain (loss) on disposal of equipment...... 1,222 (446) 586
-------- -------- --------
168,350 116,843 118,922
-------- -------- --------
Direct cost............................... 119,106 85,693 80,708
Depreciation and amortization............. 12,624 8,549 9,200
General and administrative................ 11,406 9,235 8,745
-------- -------- --------
143,136 103,477 98,653
-------- -------- --------
Operating income.......................... 25,214 13,366 20,269
Earnings from unconsolidated entities..... 2,602 4,056 4,050
Interest income (expense), net............ (2,228) 3,725 2,378
-------- -------- --------
Income before provision for income taxes.. 25,588 21,147 26,697
Provision for income taxes................ 7,675 6,123 7,735
Minority interest......................... (288) -- --
Discontinued operations................... (393) 252 (512)
-------- -------- --------

Net income............................... $ 17,232 $ 15,276 $ 18,450
======== ======== ========

HELICOPTER ACTIVITIES

Air Log and Bristow conduct helicopter activities principally in the Gulf of
Mexico and the North Sea, respectively, where they provide support to the
production, exploration, and construction activities of oil and gas companies.
Air Log also charters helicopters to governmental entities involved in
regulating offshore oil and gas operations in the Gulf of Mexico. Bristow also
provides search and rescue work for the British Coast Guard. Air Log's Alaskan
activity is primarily related to providing helicopter services to the Alyeska
Pipeline. Air Log has service agreements with, and equity interests in,
entities that operate aircraft in Egypt and Mexico ("unconsolidated entities").
Air Log and Bristow also operate in various other international areas (including
Australia, Bolivia, Brazil, Brunei, China, Colombia, the Falklands, Mexico,
Nigeria, and Trinidad). These international operations are subject to local
governmental regulations and to uncertainties of economic and political
conditions in those areas.

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The following table sets forth certain information regarding aircraft
operated by Air Log, Bristow, and unconsolidated entities and certain operating
data related to helicopter activities.

[Enlarge/Download Table]

JUNE 30,
MARCH 31, ------------
1997 1996 1995
-------- -------- --------

Number of aircraft operated (excludes unconsolidated entities):
United States - Air Log..................................... 141 143 150
United Kingdom/Europe - Bristow............................. 75 -- --
International............................................... 72 16 11
-------- -------- --------

Total............................................................ 288 159 161
======== ======== ========
Number of aircraft operated by unconsolidated entities 42 27 27
======== ======== ========

[Enlarge/Download Table]

ENDED MARCH 31, ENDED JUNE 30,
------------------ ------------------
1997 1996 1996 1995
-------- -------- -------- --------
(in thousands, except flight hours)

Flight hours (excludes unconsolidated entities):
Air Log................................................... 86,638 79,221 108,330 112,000
Bristow................................................... 25,683 -- -- --
-------- -------- -------- --------
Total Helicopter Activities......................... 112,321 79,221 108,330 112,000
======== ======== ======== ========
Operating revenues:
Air Log.................................................. $ 77,185 $65,866 $ 89,842 $ 89,484
Bristow.................................................. 68,654 -- -- --
-------- -------- -------- --------
Total Helicopter Activities......................... $145,839 $ 65,866 $ 89,842 $ 89,484
-------- -------- -------- --------
Operating expenses:
Air Log................................................. $ 58,323 $ 53,106 $ 72,154 $ 66,699
Bristow................................................. 61,514 -- -- --
-------- -------- -------- --------
Total Helicopter Activities........................ $119,837 $ 53,106 $ 72,154 $ 66,699
-------- -------- -------- --------
Operating income, excluding gain or loss on disposal
of equipment:
Air Log.................................................. $ 18,862 $ 12,760 $ 17,688 $ 22,785
Bristow.................................................. 7,140 -- -- --
-------- -------- -------- --------
Total Helicopter Activities......................... $ 26,002 $ 12,760 $ 17,688 $ 22,785
======== ======== ======== ========
Gross margin, excluding gain or loss on
disposal of equipment:
Air Log.................................................. 24.4% 19.4% 19.7% 25.5%
Bristow.................................................. 10.4% --% --% --%
-------- -------- -------- --------
Total Helicopter Activities......................... 17.8% 19.4% 19.7% 25.5%

Helicopter activities reflected exceptional increases during the 1997 fiscal
period of nine months compared to the similar nine month period in 1996,
primarily as the result of the Company's investment in Bristow.

Activity levels in the Gulf of Mexico remained strong during the 1997 fiscal
period. Increases in helicopter rates in 1996 had a positive impact on operating
revenues in the Gulf of Mexico during 1997. Gulf of Mexico flight hours and
operating revenues increased 5% and 17%, respectively, over the similar nine
month period in 1996. Gulf of Mexico operating income increased $5.2 million for
the period, a 68% increase over the similar nine month period in 1996.
Operations in Alaska were relatively unchanged from the prior year.

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Bristow's flight hours were 25,683 for the period from investment (December
19, 1996) to March 31, 1997 and operating revenues for that period were $68.7
million. Operating income attributable to Bristow was $7.1 million for the
period from investment to March 31, 1997. Gross margin percentages for Bristow
are lower than Air Log`s, primarily due to different market environments, size
of equipment and the cost to operate that equipment. As a result the
consolidated gross margin from helicopter activities for the 1997 fiscal period
was lower than the prior year.

International flight activity from Air Log continued to improve during the
nine months ended March 31, 1997. International flight hours and operating
revenues from Air Log increased over 30% from the similar nine month period in
1996. International operating income increased $1.0 million, a 27% increase
over the similar nine month period in 1996.

The high level of activity in the Gulf of Mexico enabled the Company to
obtain additional rate increases on most aircraft operating in that area,
beginning in fiscal 1998. Management believes that the high level of activity
in the Gulf of Mexico, the increase in helicopter rates in that area, as well as
the combined international efforts of Air Log and Bristow will have a positive
impact on the Company's flight activity and operating revenues in the coming
year. A constraint on increased activity is in the availability of equipment
and personnel. This increased demand on equipment and qualified personnel may
result in increased cost of equipment purchases and higher salary costs of
current and future employees.

The decrease in consolidated flight hours from 1995 to 1996 contrasted by a
small increase in operating revenues reflects a change in the mix of aircraft
operating. In 1996, Air Log had a decrease in flight activity for single engine
aircraft, primarily as the result of lost work for production management
companies which compete with GPM. On the other hand, strong drilling activity
in the Gulf of Mexico increased the demand in 1996 for Air Log's larger crew
change aircraft which normally work at higher revenue rates. High demand for
certain aircraft enabled Air Log to obtain some price increases in 1996, the
first since 1990. Operations in Alaska were down in 1996 compared to 1995
resulting from decreased activity from Air Log's major Alaskan customer.
International flight activity was strong during 1996, logging over 25% more
hours than in 1995. The increase in operating expenses of approximately 8% from
1995 to 1996 is primarily related to increases in maintenance and repair
expenditures. Gross margin percentages for 1996 were below the prior year due
to this increase in expenditures.

PRODUCTION MANAGEMENT SERVICES

Operating revenues for GPM were $23.5 million, $31.2 million, and $32.8
million for the nine months ended March 31, 1997, the twelve months ended June
30, 1996, and for the period from consolidation through June 30, 1995,
respectively. Operating expenses for GPM were $22.3 million, $31.4 million, and
$32.6 million, respectively for those periods. GPM operating income was $1.2
million, $(0.2) million, and $0.2 million for the 1997 fiscal period, for 1996,
and for the period from consolidation through June 30, 1995, respectively.

CATHODIC PROTECTION SERVICES

As a result of the pending disposal of CPS, all current and prior year
financial position and results of operations attributable to CPS have been
reclassified as discontinued operations in the accompanying consolidated
financial statements. For the nine months ended March 31, 1997, loss from
discontinued operations for CPS was $0.4 million.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and marketable securities were $30.0 million as of
March 31, 1997, a $47.1 million decrease from June 30, 1996. Working capital as
of March 31, 1997 was $57.5 million, a $63.9 million decrease from June 30,
1996. The decrease in cash and working capital is due to the Company's
investment in Bristow during 1997. Total debt was $250.9 million as of
March 31, 1997. Total debt includes the issuance of $98.0 million of 6%
Convertible Subordinated Notes due 2003 ("6% Notes") as well as $152.5 million
((Pounds)93.1 million) of Bristow debt. All the Bristow related debt is
denominated in pounds and is recourse to Bristow only.

Cash flows provided by operating activities were $16.0 million, $22.9
million, and $30.8 million in 1997, 1996, and 1995, respectively. During 1997,
as a result of the growth in helicopter activities, the Company experienced a
$16.7 million increase in accounts receivables.

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Cash flows used in investing activities were $141.2 million, $12.3 million,
and $8.4 million for 1997, 1996, and 1995, respectively. During 1997, the
Company utilized $155.5 million for the investment in Bristow, including the
issuance of the 6% Notes. Capital expenditures during 1997 of $10.1 million
included three new Bell 407's, one used Sikorsky S-76, three used Boelkow 105's,
and one fixed wing.

Capital expenditures during 1996 of $12.5 million included two new Bell
206L-IV's, four used Boelkow 105's and seven Sikorsky S-76's previously under an
operating lease agreement.

During 1995, the Company utilized $8.2 million for the acquisitions of GPM
and CPS, net of cash on hand for the two subsidiaries. Capital expenditures
during 1995 of $3.2 million included the purchase of one new Bell 206L-IV and
two used Boelkow 105's previously under a lease arrangement.

Cash flows provided by (used in) financing activities were $98.1 million,
$(1.4) million, and $(1.7) million in 1997, 1996, and 1995, respectively. The
Company received $88.4 million from the issuance of the 6% Notes during 1997.
Financing activities during 1996 were primarily for the repayment of debt.
During 1995, repayment of debt was $4.2 million and the Company received $2.5
million from common stock issued, primarily from the exercise of warrants for
200,000 shares of common stock.

In May 1997, the Company acquired five aircraft (including four Super Pumas
which had previously been leased by Bristow under short-term operating leases)
for $32.3 million. The Company used existing cash and incurred an additional
$20.0 million of 7.9% fixed rate financing, that amortizes over five years, to
complete this transaction.

As of March 31, 1997, Bristow had a (Pounds)15 million ($24.5 million)
revolving credit facility with a syndicate of United Kingdom banks that matures
on June 30, 1999. Bristow had (Pounds)5 million ($8.2 million) drawn under this
facility as of March 31, 1997.

As of March 31, 1997, OLOG had a $20 million unsecured working capital line
of credit with a bank that expires on January 31, 1998. The Company plans to
refinance a substantial portion of the current maturities of its indebtedness
($51.2 million as of March 31, 1997) during 1998 at rates similar to current
yields on such debt. There can be no assurance that the Company will be able to
obtain such rates in the coming year. Management believes that normal
operations, as well as the expected refinancing, will provide sufficient working
capital and cash flow to meet debt service in the foreseeable future.

The effective income tax rates from continuing operations were 30%, 29%, and
29% for 1997, 1996, and 1995, respectively. The variance between the Federal
statutory rate and the effective rate for these periods is due primarily to non-
taxable foreign source income and foreign tax credits available to reduce
domestic taxable income.

The Company has received notices from the EPA that it is one of approximately
160 PRPs at one Superfund site in Texas and one of over 300 PRPs at a site 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. See
Item 3 -- Legal Proceedings for additional information regarding EPA notices.

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share" and SFAS No. 129, "Disclosure of Information about Capital Structure"
which are effective for quarters ending after December 15, 1997 and fiscal years
ending after December 15, 1997, respectively. Management believes the
implementation of these statements will not have a material effect on its
results of operations or financial statement disclosures.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of Offshore Logistics, Inc.:

We have audited the accompanying consolidated balance sheets of Offshore
Logistics, Inc. (a Delaware corporation) and subsidiaries as of March 31, 1997
and June 30, 1996, and the related consolidated statements of income,
stockholders' investment, and cash flows for the nine month period ended March
31, 1997 and each of the two years ended June 30, 1996 and 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Offshore Logistics, Inc. and
subsidiaries as of March 31, 1997 and June 30, 1996, and the results of their
operations and their cash flows for the nine month period ended March 31, 1997
and each of the two years in the period ended June 30, 1996 in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

New Orleans, Louisiana,
May 23, 1997

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

MARCH 31, JUNE 30,
-------- -------
1997 1996
(thousands of dollars)
Current assets:
Cash and cash equivalents.............. $ 29,829 $ 56,939
Investment in marketable securities.... -- 19,967
Accounts receivable.................... 88,268 22,210
Inventories............................ 70,827 22,817
Net assets of discontinued operations.. 6,686 7,221
Prepaid expenses....................... 887 484
-------- --------
Total current assets............... 196,497 129,638

Investments in unconsolidated entities... 9,250 8,792

Property and equipment -- at cost
Land and buildings..................... 13,175 2,977
Aircraft and equipment................. 497,672 132,466
-------- --------
510,847 135,443
Less Accumulated depreciation
and amortization...................... (74,465) (63,702)
-------- --------
436,382 71,741
Other assets, primarily goodwill......... 32,084 20,570
-------- --------
$674,213 $230,741
======== ========

LIABILITIES AND STOCKHOLDERS' INVESTMENT

Current liabilities:
Accounts payable......................... $ 31,166 $ 1,404
Accrued liabilities...................... 38,592 6,841
Deferred taxes........................... 17,968 --
Current maturities of long-term debt..... 51,240 --
-------- --------
Total current liabilities............ 138,966 8,245

Long-term debt, less current maturities.... 199,631 --
Deferred credits........................... 622 2,487
Deferred taxes............................. 91,445 19,271
Minority interest.......................... 8,643 1,055
Commitments and contingencies.............. -- --
Stockholders' investment
Common stock, $.01 par value,
authorized 35,000,000 shares;
outstanding 21,081,133 in 1997
and 19,498,398 in 1996 (exclusive
of 517,550 treasury shares)............ 211 195
Additional paid in capital............... 115,346 95,934
Retained earnings........................ 120,786 103,554
Cumulative translation adjustment........ (1,437) --
-------- --------
234,906 199,683
-------- --------
$674,213 $230,741
======== ========

The accompanying notes are an integral part of these statements.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

NINE TWELVE TWELVE
MONTHS MONTHS MONTHS
MARCH 31, JUNE 30, JUNE 30,
--------- -------- --------
1997 1996 1995
(thousands of dollars,
except per share amounts)

Gross revenue:
Operating revenue........................ $167,128 $117,289 $118,336
Gain (loss) on disposal of equipment..... 1,222 (446) 586
-------- -------- --------
168,350 116,843 118,922
-------- -------- --------
Operating expenses:
Direct cost.............................. 119,106 85,693 80,708
Depreciation and amortization............ 12,624 8,549 9,200
General and administrative............... 11,406 9,235 8,745
-------- -------- --------
143,136 103,477 98,653
-------- -------- --------
Operating income........................... 25,214 13,366 20,269
Earnings from unconsolidated entities...... 2,602 4,056 4,050
Interest income............................ 3,300 4,025 2,947
Interest expense........................... 5,528 300 569
-------- -------- --------
Income from continuing operations before
provision for income taxes................ 25,588 21,147 26,697
Provision for income taxes................. 7,675 6,123 7,735
Minority interest.......................... (288) -- --
-------- -------- --------
Income from continuing operations.......... 17,625 15,024 18,962
Discontinued operations:
Income (Loss) from CPS operations........ (393) 252 (512)
-------- -------- --------
Net income................................. $ 17,232 $ 15,276 $ 18,450
======== ======== ========
Income (Loss) per common share:
Continuing operations.................... $ 0.86 $ 0.76 $ 0.98
Discontinued operations.................. (0.02) 0.01 (0.02)
-------- -------- --------
Net income per common share and
common equivalent share................... $ 0.84 $ 0.77 $ 0.96
======== ======== ========
Dividends per common share................. $ -- $ -- $ --
======== ======== ========

The accompanying notes are an integral part of these statements.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT

[Enlarge/Download Table]

CUMULATIVE
FOREIGN
COMMON STOCK ADDITIONAL CURRENCY TOTAL
----------------- PAID IN TRANSLATION RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL ADJUSTMENT EARNINGS INVESTMENT
------ ------ ------- ---------- -------- ------------

BALANCE-June 30, 1994........ 17,602,379 $ 176 $ 71,563 $ -- $ 69,828 $141,567
Net income................. -- -- -- -- 18,450 18,450
Stock options.............. 83,031 1 414 -- -- 415
Warrants exercised......... 200,000 2 1,635 -- -- 1,637
Stock issued for GPM....... 1,498,906 15 21,114 -- -- 21,129
GPM warrants exercised..... 44,466 -- 480 -- -- 480
Restricted stock issued.... 13,332 -- 173 -- -- 173
---------- ------- -------- -------- -------- --------
BALANCE-June 30, 1995........ 19,442,114 194 95,379 -- 88,278 183,851
Net income................. -- -- -- -- 15,276 15,276
Stock options.............. 24,460 -- 197 -- -- 197
GPM warrants exercised..... 26,553 1 286 -- -- 287
Restricted stock issued.... 5,271 -- 72 -- -- 72
---------- ------- -------- -------- -------- --------
BALANCE-June 30, 1996........ 19,498,398 195 95,934 -- 103,554 199,683
Net income................ -- -- -- -- 17,232 17,232
Stock options............. 114,000 1 883 -- -- 884
GPM warrants exercised.... 94,040 1 1,015 -- -- 1,016
Restricted stock issued... 306 -- 4 -- -- 4
Stock issued for Bristow
investment.............. 1,374,389 14 17,510 -- -- 17,524
Translation adjustments... -- -- -- (1,437) -- (1,437)
---------- ------- -------- -------- -------- --------
BALANCE-March 31, 1997....... 21,081,133 $211 $115,346 $(1,437) $120,786 $234,906
========== ======= ======== ======== ======== ========

The accompanying notes are an integral part of these statements.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

[Enlarge/Download Table]

NINE MONTHS
Ended YEAR ENDED JUNE 30,
MARCH 31, -------------------
1997 1996 1995
-------- ------- -------
(thousands of dollars)

Cash flows from operating activities:
Net income........................................................ $ 17,232 $ 15,276 $ 18,450
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................................... 13,196 9,230 9,670
Increase in deferred taxes....................................... 1,059 1,241 1,121
(Gain) Loss on asset dispositions................................ (1,212) 537 (586)
Equity in earnings from unconsolidated entities
over dividends received......................................... 145 -- (41)
Minority interest in earnings.................................... 67 (36) (415)
Change in assets and liabilities net of effects from investment in
Bristow, GPM, and CPS:
(Increase) Decrease in accounts receivable....................... (16,736) 12 897
Increase in inventories.......................................... (4,168) (558) (1,145)
(Increase) Decrease in prepaid expenses and other................ (2,381) (63) 227
Increase in accounts payable..................................... 5,801 225 1,288
Increase (Decrease) in accrued liabilities....................... 4,833 (3,055) 1,309
Decrease in deferred credits..................................... (1,865) (13) --
-------- -------- --------
Net cash provided by operating activities........................... 15,971 22,796 30,775
-------- -------- --------
Cash flows from investing activities:
Capital expenditures............................................. (10,106) (12,535) (3,208)
Proceeds from asset dispositions................................. 6,026 185 3,046
Investment in marketable securities.............................. -- (11,952) --
Proceeds from sale or maturity of marketable securities.......... 20,001 11,988 --
Bristow investment............................................... (155,451) -- --
Acquisitions, net of cash received............................... (1,675) -- (8,234)
-------- -------- --------
Net cash used in investing activities............................... (141,205) (12,314) (8,396)
-------- -------- --------
Cash flows from financing activities:
Proceeds from borrowings......................................... 96,636 -- --
Repayment of debt................................................ (434) (2,000) (4,235)
Issuance of common stock......................................... 1,899 556 2,532
-------- -------- --------
Net cash provided by (used in) financing activities................. 98,101 (1,444) (1,703)
-------- -------- --------
Effect of exchange rate changes in cash............................. 23 -- --
Net increase (decrease) in cash and cash equivalents................ (27,110) 9,038 20,676
Cash and cash equivalents at beginning of period.................... 56,939 47,901 27,225
-------- -------- --------
Cash and cash equivalents at end of period.......................... $ 29,829 $ 56,939 $ 47,901
======== ======== =========

The accompanying notes are an integral part of these statements.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A -- SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation -- The consolidated financial statements include the
accounts of Offshore Logistics, Inc., a Delaware corporation ("OLOG") and its
majority owned entities and non-majority owned entities including Bristow
Aviation Holdings Limited ("Bristow"), collectively referred to as "the
Company", after elimination of all significant intercompany accounts and
transactions. Investments in 50% or less owned affiliates over which the
Company has the ability to exercise significant influence are accounted for
using the equity method. Investments in which the Company does not exercise
significant influence are accounted for under the cost method.

Nature 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.

Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents -- The Company's cash equivalents includes funds
invested in highly liquid debt instruments with original maturities of 90 days
or less.

Accounts Receivable -- Trade and other receivables are stated at net
realizable value and the allowance for uncollectible accounts was $1,449,000 and
$1,382,000 at March 31, 1997 and June 30, 1996, respectively. The Company grants
short-term credit to its customers, primarily major and independent oil and gas
companies.

Inventories -- Inventories are stated at the lower of average cost or market
and consist primarily of spare parts. The valuation reserve related to obsolete
and excess inventory was $4,074,000 and $4,141,000 at March 31, 1997 and June
30, 1996. There were no related charges to operations in 1997, 1996, or 1995.

Other Assets -- In 1997, $22,283,000 of goodwill, net of accumulated
amortization of $2,890,000, was included in other assets. Goodwill is amortized
using the straight-line method over a period of 20 years. Goodwill is
recognized for the excess of the purchase price over the value of the
identifiable net assets. See Note E. Realization of goodwill is periodically
assessed by management based on the expected future profitability and
undiscounted future cash flows of acquired companies and their contribution to
the overall operations of the Company.

On July 1, 1996, the Company adopted the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of." The adoption had no material effect on the Company's results
of operations or financial position.

Depreciation and Amortization -- Depreciation and amortization are provided
on the straight-line method over the estimated useful lives of the assets.
Estimated residual value used in calculating depreciation of aircraft is
primarily 30% of cost.

Maintenance and repairs are expensed as incurred; betterments and
improvements are capitalized. The costs and related reserves of assets sold or
otherwise disposed of are removed from the accounts and resultant gains or
losses included in income.

Income Taxes -- Income taxes are accounted for in accordance with the
provisions of the SFAS No. 109, "Accounting for Income Taxes". Under this
statement, deferred income taxes are provided for by the asset and liability
method.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Earnings per Common Share -- Earnings per common share is based on the
weighted average number of shares of common stock and common stock equivalents
outstanding during the years (20,476,825 in 1997; 19,767,039 in 1996; and
19,313,276 in 1995) computed on the treasury stock method.

The Company adopted a stockholder rights plan on February 9, 1996, designed
to assure that the Company's stockholders receive fair and equal treatment in
the event of any proposed takeover of the Company and to guard against partial
tender offers, squeeze-outs, open market accumulations, and other abusive
tactics to gain control without paying all stockholders a fair price. The
rights plan was not adopted in response to any specific takeover proposal.
Under the rights plan, the Company declared a dividend of one right ("Right") on
each share of the Company's common stock. Each Right will entitle the holder to
purchase one one-hundredth of a share of a new Series A Junior Participating
Preferred Stock, par value $1.00 per share, at an exercise price of $50.00.
Each Right will entitle its holder to purchase a number of common shares of the
Company having a market value of twice the exercise price. The Rights are not
currently exercisable and will become exercisable only in the event a person or
group acquires beneficial ownership of 10 percent or more of the Company's
common stock. The dividend distribution was made on February 29, 1996 to
stockholders of record on that date. The Rights will expire on February 26,
2006.

Foreign Currency Translation -- Bristow maintains their accounting records in
their local currency (British Pounds Sterling). The currencies are converted to
United States Dollars with the effect of the foreign currency translation
reflected as a component of shareholders' investment in accordance with SFAS No.
52, "Foreign Currency Translation." Foreign currency transaction gains or
losses are credited or charged to income; and such amounts are insignificant for
the periods presented.

Derivative Financial Instruments -- The Company enters into forward exchange
contracts from time to time to hedge known transactional exposures denominated
in currencies other than the functional currency of the business. Foreign
currency positions mature at the anticipated currency requirement date and
rarely exceed three months. The purpose of the Company's foreign currency
hedging activities is to protect the Company from the risk that foreign currency
outflows resulting from payments for services and parts to foreign suppliers
will be adversely affected by changes in exchange rates.

Stock Compensation -- On July 1, 1996, the Company elected to continue to use
the intrinsic value method of accounting for stock-based compensation prescribed
by Accounting Principles Board ("APB") Opinion No. 25 and, accordingly, adopted
the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation."

Fiscal-Year Change -- On May 1, 1997, the Board of Directors approved a
change in the Company's fiscal year end from June 30 to March 31, effective for
fiscal year ended March 31, 1997. A nine month fiscal transition period from
July 1, 1996 through March 31, 1997 will precede the start of the new fiscal
year cycle. Other fiscal years presented and referred to in these consolidated
financial statements and notes thereto are on a June 30 fiscal year basis unless
otherwise indicated.

Effect of Recent Accounting Changes -- In February 1997, the FASB issued SFAS
No. 128, "Earnings per Share" which establishes standards for computing and
presenting earnings per share ("EPS"). Under SFAS No. 128, primary EPS is
replaced with basic EPS. Basic EPS is computed by dividing income available to
common shareholders by the weighted average shares outstanding; no dilution for
any potentially convertible shares is included in the calculation. Fully
diluted EPS, now called diluted EPS, is still required; however, when applying
the treasury stock method, the average stock price is used rather than the
greater of the average or closing stock price for the period. The Company
expects that the basic EPS will be slightly higher than primary earnings per
share and that diluted EPS will not differ materially from primary earnings per
share. SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In March 1997, the FASB issued SFAS No. 129, "Disclosure of Information about
Capital Structure." SFAS 129 is effective for the Company's fiscal year ending
March 31, 1998. Management believes that this pronouncement will not have a
material effect on the Company's financial statements taken as a whole.

B -- LONG-TERM DEBT

Long-term debt at March 31, 1997 consisted of (thousands of dollars):

MARCH 31,
1997
---------
6% Convertible Subordinated Notes due 2003.......... $ 98,000
Term Loan with a syndicate of United Kingdom banks.. 40,983
Series A Guaranteed Deep Discount Loan Note 1997.... 31,568
Series B Guaranteed Deep Discount Loan Note 1998.... 18,413
Unsecured Subordinated Loan Stock................... 34,647
Revolving Credit Facility........................... 8,197
Capital Lease Obligations........................... 13,836
Management Fee Debt (see Note C).................... 4,910
Other............................................... 317
---------
Total debt........................................ 250,871
Less current maturities........................... 51,240
---------
Total long-term debt.............................. $ 199,631
=========

On December 17, 1996, the Company issued $98 million of 6% Convertible
Subordinated Notes ("6% Notes") due 2003. The 6% Notes are convertible at any
time into the Company's Common Stock at a conversion price of $22.86 per share
(equivalent to a conversion rate of approximately 43.74 shares per $1,000
principal amount of 6% Notes). The 6% Notes are redeemable at the option of the
Company beginning December 1999. The Company issued $7.5 million of the 6%
Notes to Caledonia (See Note C) in conjunction with the investment in Bristow.
Proceeds of $88.4 million, after debt issuance costs of $2.1 million, were used
to finance the investment in Bristow.

Bristow has a term loan with a syndicate of United Kingdom banks that is
repayable in semi-annual installments varying from $2.2 to $9.8 million
((Pounds)1.3 to (Pounds)6.0 million) through December 1, 2001, and can be
prepaid by Bristow in minimum increments of (Pounds)0.5 million upon 30 days
notice with no prepayment penalty. The term loan bears interest at 2.0% above
the three or six month London Interbank Offering Rate ("LIBOR"), limited to a
maximum rate of 10.8%. The average interest rate for the term loan during the
period from investment through March 31, 1997 was 8.8%. The term loan is
guaranteed by all United Kingdom subsidiaries of Bristow and is secured by a
negative pledge on all Bristow assets. The balance at March 31, 1997 was $41.0
million ((Pounds) 25.0 million).

Bristow's Series A Guaranteed Deep Discount Loan Note 1997 ("A Note") yields
interest at 8.5% interest resulting in a face value at maturity of $33.9 million
((Pounds)20.7 million). There are no interest or principal payments due on this
debt until its maturity on November 7, 1997. This A Note is guaranteed by
Caledonia. (See Note C).

Bristow's Series B Deep Discount Loan Note 1998 ("B Note") yields interest at
8.5% interest resulting in a face value at maturity of $22.2 million
((Pounds)13.6 million). There are no interest or principal payments due on this
debt until its maturity on November 7, 1998.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Bristow's Subordinated Unsecured Loan Stock ("SULS") yields interest at 8.5%
and matures at various dates through November 7, 2001. Interest is payable
semi-annually. The SULS are held by Caledonia. OLOG and Caledonia have agreed
that OLOG, Bristow, or a designated affiliate can repurchase the SULS held by
Caledonia after the repayment of the A Note due on November 7, 1997.

The A Note, B Note, and SULS have contractual rates of 12.89%, 12.36%, and
18.8%, respectively. The Company, in applying the purchase method of
accounting, valued the yield on this debt at 8.5%.

Obligations under capital leases bear interest at various rates and require
quarterly payments. The leases are secured by the aircraft and the guarantee of
Bristow.

Bristow has a revolving credit facility, with the same syndicate of United
Kingdom banks, as with the term loan, which matures June 30, 1999, and is
available for working capital requirements and general corporate purposes.
Availability under the revolving credit facility is subject to certain borrowing
base limitations based on eligible United Kingdom accounts receivable and
inventory. All advances under the revolving credit facility bear interest at
2.0% above one, three, or six month LIBOR rates. The revolving credit facility
is guaranteed by all United Kingdom subsidiaries of Bristow and is secured by a
negative pledge of all assets. The availability under the revolving credit
facility is $24.5 million ((Pounds)15 million) and reduces to $16.4 million
((Pounds)10 million) on July 31, 1997. Bristow had $8.2 million ((Pounds) 5.0
million) drawn under this revolving credit facility as of March 31, 1997.

As of March 31, 1997, the Company had a $20 million unsecured line of credit
with a U.S. bank that expires on January 31, 1998. There were no borrowings
under this line as of March 31, 1997. The rate of interest payable under the
line of credit is, at the Company's option, prime rate or LIBOR rate plus 1.25%.
The agreement requires the Company to pay a quarterly commitment fee at an
annual rate of .025% on the average unused portion of the line.

Aggregate annual maturities for all long-term debt, including the capitalized
lease, for the next five years are as follows: 1998 -- $51,240,000; 1999 --
$43,965,000; 2000 -- $17,278,000; 2001 -- $18,939,000; and 2002 -- $15,322,000.

Interest paid during the year was $3,620,000; $300,000; and $569,000 for
1997, 1996, and 1995, respectively.

In the Company's opinion, based on the borrowing rates currently available to
the Company and Bristow for loans with similar terms and maturities, total debt
at March 31, 1997 approximates the fair value of the debt.

C -- INVESTMENT IN BRISTOW

On December 19, 1996, OLOG acquired 49% of the common stock and a significant
amount of Bristow subordinated debt as detailed below. Bristow is incorporated
in England and holds all of the outstanding shares in Bristow Helicopter Group
Limited ("BHGL"). Bristow provides helicopter services to the North Sea oil and
gas industry. Services consist of short and long range crew change flights,
offshore-based and inter-platform shuttle operations, and search and rescue
missions. Bristow also operates aircraft in Australia, Brunei, Cambodia, China,
Nigeria, South America, and Vietnam among others.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Bristow was organized with three different classes of ordinary shares (common
stock) having disproportionate voting rights. The Company, Caledonia
Investments plc and its subsidiary, Caledonia Industrial & Services Limited
(collectively, "Caledonia"), and a Norweign investor (the "E.U. Investor"), own
49%, 49%, and 2%, respectively, of Bristow's total outstanding ordinary shares.

The Company paid (Pounds)80.2 million (approximately $132 million) in cash
(funded from existing cash balances and the proceeds of the 6% Notes), issued
$7.5 million of the 6% Notes to Caledonia and issued 1,374,389 shares of common
stock on December 19, 1996. In addition, the Company acquired (Pounds)5.0
million ($8.4 million) principal amount of BHGL's subordinated debt for cash of
approximately (Pounds)5.4 million ($8.9 million) including accrued interest.
Caledonia received 1,300,000 shares of the common stock and BHGL's management
received 74,389 shares.

In addition to its ownership of 49% of Bristow's outstanding ordinary shares
and (Pounds)5.0 million principal amount of Bristow's subordinated debt, the
Company acquired (Pounds)91.0 million (approximately $150 million) principal
amount of subordinated unsecured loan stock (debt) of Bristow bearing interest
at an annual rate of 13.5% and payable semi-annually. Bristow has the right to
defer payment of interest on such debt until January 31, 2002. Any such
deferred interest would also accrue interest at an annual rate of 13.5%.

The Company, Caledonia, the E.U. Investor, and Bristow entered into a
shareholders' agreement respecting, among other things, the composition of the
board of directors of Bristow. On matters coming before Bristow's board,
Caledonia's appointees have a total of five votes and the four other directors
have one vote each. So long as Caledonia has a significant interest in the
shares of Common Stock issued to it pursuant to the transaction or maintains its
voting control of Bristow, Caledonia will have the right to nominate two persons
to the board of directors of the Company and to replace any such directors so
nominated.

Caledonia, the Company, and the E.U. Investor also entered into a Put/Call
Agreement whereunder, upon giving specified prior notice, the Company has the
right to buy all the Bristow shares held by Caledonia and the E.U. Investor,
who, in turn, each has the right to sell such shares to the Company. Under
current United Kingdom law, the Company would be required, in order for Bristow
to retain its operating license, to find a qualified European investor to own
any Bristow shares it has the right to acquire under the Put/Call Agreement. Any
put or call of the Bristow shares will be subject to the approval of the Civil
Aviation Authority ("CAA"). Caledonia will receive management fees from Bristow
that will be payable semi-annually in advance ranging from (Pounds)500,000 to
(Pounds)900,000 annually for the next seven years.

The investment was accounted for by the purchase method of accounting under
Accounting Principals Board Opinion No. 16, as amended, and accordingly, the
results of operations of Bristow for the period from December 19, 1996 are
included in the accompanying consolidated financial statements. The total
consideration has been allocated to Bristow's assets and liabilities based on
the estimated fair market value as of December 19, 1996. The purchase price
allocation is based on preliminary estimates of fair value and may be revised at
a later date.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following unaudited pro forma financial information for the Company gives
effect to the Bristow investment as if it had occurred on July 1, 1995. These
pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations which actually would have
resulted had the acquisitions occurred on the date indicated, or which may
result in the future. The pro forma results follow (in thousands, except per
share data):

[Download Table]

NINE MONTHS TWELVE MONTHS
MARCH 31, 1997 JUNE 30, 1996
(UNAUDITED) (UNAUDITED)
-------------- -------------

Gross revenue........................................... $296,094 $357,249
======== ========
Income from continuing operations....................... $ 19,348 $ 19,821
======== ========
Earnings per common share and common equivalent share
Income from continuing operations:
Primary........................................ $ 0.91 $ 0.94
======== ========
Fully diluted.................................. $ 0.87 $ 0.93
======== ========

D -- INVESTMENTS IN UNCONSOLIDATED ENTITIES

The Company has two principal unconsolidated entities that are accounted for
on the cost method as the Company is unable to exert significant influence over
the operations.

The Company has a 49% investment in Hemisco Helicopters International, Inc.
("HHII") and related venture companies. The Company's investment in HHII was
$2,637,000 at March 31, 1997 and June 30, 1996. In the following unaudited
table, HHII represents $3,492,000 and $3,755,000 of the assets and $2,230,000
and $2,241,000 of the equity for March 31, 1997 and June 30, 1996, respectively.
HHII also represents $9,806,000; $10,727,000; and $13,685,000 of revenues and
$2,702,000; $1,834,000; and $(305,000) of net income for the nine month period
ended March 31, 1997 and the fiscal years ended June 30, 1996, and 1995,
respectively. During 1997, 1996, and 1995, $1,539,000; $1,556,000; and
$1,550,000, respectively, in dividends were received from HHII.

The Company has a 25% investment in an Egyptian helicopter venture. The
Company's investment in the venture was $5,986,000 at March 31, 1997 and at June
30, 1996 and 1995. During 1997, 1996, and 1995, $1,827,000; $2,500,000; and
$2,500,000, respectively, in dividends were received from the venture. During
1997, the venture's Board of Directors approved a cash dividend, of which the
Company's share applicable to fiscal year 1998 is approximately $2,250,000.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of unaudited financial information of these principal
unconsolidated entities is set forth below (thousands of dollars):

MARCH 31, JUNE 30,
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)

Current assets........................... $ 58,162 $ 48,418
Non-current assets....................... 26,858 29,521
-------- --------
Total assets........................ $ 85,020 $ 77,939
======== ========

Current liabilities...................... $ 10,063 $ 8,769
Non-current liabilities.................. 1,931 3,335
Equity................................... 73,026 65,835
-------- --------
Total liabilities and equity........ $ 85,020 $ 77,939
======== ========

TWELVE MONTHS ENDED
NINE MONTHS JUNE 30,
ENDED -------------------
MARCH 31, 1997 1996 1995
-------------- ---- ----
(UNAUDITED) (UNAUDITED) (UNAUDITED)

Revenues.................... $ 41,026 $ 51,629 $ 54,180
======== ======== ========
Gross profit................ $ 14,122 $ 20,229 $ 18,859
======== ======== ========
Net income.................. $ 9,918 $ 12,537 $ 11,135
======== ======== ========

During 1997, 1996, and 1995, respectively, revenues of $4,673,000;
$5,169,000; and $5,295,000 were recognized for services provided to these
affiliates by the Company.

In 1996, Bristow, with two partners, formed FBS Limited ("FBS") which was
awarded a contract to provide pilot training and maintenance services to Defense
Helicopter Flying School ("DHFS"), a newly established training school for all
branches of the British military, under a fifteen year program valued at
approximately (Pounds)500 million. FBS will purchase and specially modify 47
aircraft and maintain a staff of approximately 600 employees dedicated to
conducting these training activities which began in May 1997. Each of the
partners owns one-third (33%) of FBS. Prior to FBS, Bristow had provided
similar pilot training and maintenance services to the British Army Air Corp.
since 1963. Bristow's partners in FBS had similar experience at providing
training service to other branches of the British military. At March 31, 1997,
Bristow had advanced FBS (Pounds)7.3 million ($11.9 million) for its share of
the acquisition of aircraft. Subsequent to year end, Bristow advanced FBS an
additional (Pounds)3.0 million ($4.9 million) to acquire aircraft for this
contract. FBS is finalizing its long term financing of these aircraft and
expects to repay this advance by August 31, 1997. Bristow and its partners have
given joint and several guarantees related to the performance of this contract.

E -- PRODUCTION MANAGEMENT SERVICES

The Company expanded its operations in July 1992 to include production
management services. During fiscal 1993 and until October 29, 1993, the Company
owned 50% of Seahawk Services Ltd. ("Seahawk"), a company which provided
platform and productiion management services, offshore medical support services,
and temporary personnel to the oil and gas industry. On October 29, 1993, the
Company further expanded its interest in production management services when the
Company exchanged its 50% investment in Seahawk for a 27.5% interest in Grasso
Corporation whose wholly-owned subsidiary, Grasso Production Management, Inc.
("GPM"), also was engaged in the production management services business.
Revenues of approximately $1,556,000 were recognized for helicopter

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

services provided To GPM during 1995, prior to consolidation. The Company's
share of net income related to production management services was not material.

On September 16, 1994, GPM became a wholly-owned subsidiary of the Company in
a merger in which the Company acquired the remaining 72.5% interest in Grasso
Corporation by issuing .49 of a share of the Company's common stock for each
share of Grasso Corporation common stock owned. In addition, holders of Grasso
Corporation Class B Warrants received similar warrants for shares of the
Company's common stock. The warrants expired on December 22, 1996. The merger
was treated as a purchase for accounting purposes which resulted in goodwill of
approximately $22.3 million after stepping up the assets and liabilities of
Grasso Corporation. The goodwill is being amortized over a 20 year period.

The following summarized unaudited income statement data reflects the impact
the GPM merger would have had on the Company's results of operations for 1995
had the transaction taken place on July 1, 1994:

PROFORMA RESULTS FOR THE
YEAR ENDED JUNE 30, 1995
------------------------
(UNAUDITED)

Gross Revenue........................................... $152,866
========
Income from continuing operations....................... $ 17,924
========
Earnings per common share and common equivalent share:
Income from continuing operations................... $ 0.91
========

F -- DISCONTINUED OPERATIONS

In May 1997, the Company adopted a plan to discontinue its investment in
Cathodic Protection Services Company ("CPS"). CPS manufactures, installs and
maintains cathodic protection systems to arrest corrosion in oil and gas
drilling and production facilities, pipelines, oil and gas well casings,
hydrocarbon processing plants, and other metal structures. As a result of the
Company's adoption of the plan, the consolidated financial statements of the
Company and the related Notes to Consolidated Financial Statements and
supplemental data have been adjusted and restated to reflect the results of
operations and net assets of CPS as a discontinued operation in accordance with
generally accepted accounting principles. Assets and liabilities of CPS at
March 31, 1997 primarily consist of trade accounts receivable, inventory, fixed
assets and current payables, accruals and debt. Revenues of CPS totalled $24.6
million, $39.5 million, and $25.3 million for 1997, 1996, and 1995,
respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

G -- UNAUDITED SUPPLEMENTAL DATA FOR THE NINE MONTHS ENDED
MARCH 31, 1996

During 1997, the Company changed its fiscal year end from June 30 to March
31. Therefore, the Company's fiscal year end for 1997 is a nine month period.
The following table represents unaudited data for the nine month period ended
March 31, 1996.

Operating revenue................... $86,694
=======
Operating income.................... $ 9,774
=======
Income taxes........................ $ 4,494
=======
Income from continuing operations... $10,991
=======
Net Income.......................... $11,226
=======
Earnings per common share........... $ 0.57
=======

H -- INVESTMENT IN MARKETABLE SECURITIES

Under the provisions of SFAS No. 115, investments in debt and equity
securities are required to be classified in one of three categories:
held-to-maturity, available-for-sale, or trading. As of March 31, 1997, the
Company had no such investments. There were $12,001,000 sales of investments in
U.S. Treasury investments during the nine month period ended March 31, 1997.
The proceeds approximated the carrying cost of the investments. There were
$3,985,000 sales of investments in U.S. Treasury investments for the year ended
June 30, 1996, and no sales of investments in U.S. Treasury investments for the
year ended June 30, 1995.

I -- COMMITMENTS AND CONTINGENCIES

The Company has noncancelable operating leases in connection with the lease
of certain equipment, land, and facilities. Rental expense incurred under these
leases was $1,925,000 in 1997; $1,998,000 in 1996; and $2,195,000 in 1995. As
of March 31, 1997, aggregate future payments under noncancelable operating
leases are as follows: 1998 -- $1,937,000; 1999 -- $1,858,000; 2000 --
$1,798,000; 2001 -- $1,554,000; and 2002 -- $1,522,000. These amounts do not
include future payments related to the four aircraft under operating lease at
March 31, 1997 and purchased subsequent to that date.

The Company's employees are not represented by unions. However, in May 1997,
the Office and Professional Employees International Union filed with the
National Mediation Board an application for representation of Offshore
Logistics' pilots. A similar application has also been filed against Air Log's
principal competitor in the United States in what appears to be an effort to
organize the pilots of all major helicopter operators in the Gulf of Mexico.
The Company believes that if the pilots were to elect to be representd by a
union, the Company would be placed at a competitive disadvantage against
existing or future non-unionized competitors in the industry. This could have a
material adverse effect on its revenues from helicopter operations in the Gulf
of Mexico and on its results of operations. At this point, the Company is unable
to predict the probable outcome of any election.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

J -- INCOME TAXES

The components of deferred tax assets and liabilities are as follows
(thousands of dollars):

MARCH 31, JUNE 30,
1997 1996
---------- ---------
Deferred Tax Assets:
Foreign tax credits...................... $ 111,650 $ --
Other.................................... 13,183 2,823
Valuation allowance...................... (53,783) --
--------- --------
Total deferred tax assets............. 71,050 2,823
--------- --------
Deferred Tax Liabilities:
Property and equipment................... (155,699) (17,518)
Inventories.............................. (12,197) --
Accrual for repairs and maintenance...... (5,771) --
Other.................................... (6,796) (4,576)
--------- --------
Total deferred tax liabilities........ (180,463) (22,094)
--------- --------

Net deferred tax liabilities............... $(109,413) $(19,271)
========= ========

A valuation allowance of $53,783,000 was established as of March 31, 1997 for
the deferred tax asset related to foreign tax credits. Companies may use
foreign tax credits to offset the United States income taxes due on income
earned from foreign sources. However, the credit is limited by the total income
on the United States income tax return as well as by the ratio of foreign source
income in each statutory category to total income. Excess foreign tax credits
may be carried back two years and forward five years. As of March 31, 1997, the
Company did not believe it was more likely than not that it would generate
sufficient foreign sourced income within the appropriate period to utilize all
the foreign tax credits.

Income before provision for income taxes for the nine months ended
March 31, 1997 and the two years ended June 30, 1996 and 1995 was as follows
(thousands of dollars):

NINE MONTHS FOR THE YEAR
ENDED ENDED JUNE 30,
MARCH 31, ---------------------
1997 1996 1995
--------- --------- ---------
Domestic.................... $ 13,774 $ 9,791 $ 16,295
Foreign..................... 11,814 11,356 10,402
--------- --------- ---------
Total....................... $ 25,588 $ 21,147 $ 26,697
========= ========= =========

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The provision for income taxes for the nine month period ended March 31, 1997
and the two years ended June 30, 1996 and 1995 consisted of the following
(thousands of dollars):

NINE MONTHS FOR THE YEAR
ENDED ENDED JUNE 30,
MARCH 31, ---------------------
1997 1996 1995
--------- --------- ---------

Current....................... $ 5,005 $ 4,882 $ 6,614
Deferred...................... 2,670 1,241 1,121
--------- --------- ---------
Total......................... $ 7,675 $ 6,123 $ 7,735
========= ========= =========

The reconciliation of Federal statutory and effective income tax rates is
shown below:

NINE MONTHS
ENDED FOR THE YEAR
MARCH 31, ENDED JUNE 30,
1997 1996 1995
--------- --------- ---------

Statutory rate................ 35% 35% 35%
Utilization of foreign tax
credits...................... (3)% (5)% (7)%
Additional taxes on foreign
source income................ 5% 2% 3%
Foreign source income not
taxable...................... (6)% (7)% (4)%
State taxes provided.......... 2% 2% 3%
Other, net.................... (3)% 2% (1)%
--------- --------- ---------
Effective tax rate............ 30% 29% 29%
========= ========= =========

The Internal Revenue Service has examined the Company's Federal income tax
returns for all years through 1994. The years have been closed through 1993,
either through settlement or expiration of the statute of limitations. The
Company believes that it has made adequate provision for income taxes that may
become payable with respect to open tax years.

Unremitted foreign earnings reinvested abroad upon which deferred income
taxes have not been provided aggregated approximately $18.8 million at March 31,
1997. Due to the timing and circumstances of repatriation of such earnings, if
any, it is not practicable to determine the unrecognized deferred tax liability
relating to such amounts. Withholding taxes, if any, upon repatriation would
not be significant.

Income taxes paid during 1997, 1996, and 1995 were $8,454,000; $5,656,000;
and $3,843,000, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

K -- EMPLOYEE BENEFIT PLANS

SAVINGS AND RETIREMENT PLANS

The Company currently has two qualified defined contribution plans which
cover substantially all employees other than Bristow employees.

The Offshore Logistics, Inc. Employee Savings and Retirement Plan ("OLOG
Plan") covers Corporate and Air Log employees. Under the OLOG Plan, except for
those employees working in the state of Alaska, the Company matches each
participant's contributions up to 3% of the employee's compensation. In
addition, if net income exceeds 10% of stockholders' investment at the beginning
of the year, the Company contributes funds to acquire Company stock up to an
additional 3% of the employee's compensation, subject to a scheduled vesting
period. Under the OLOG Plan, for Air Log employees working in the state of
Alaska, the Company matches each participant's contributions up to 4% of the
employee's compensation.

The Grasso Production Management, Inc. Thrift & Profit Sharing Trust covers
eligible GPM employees. The Company matches 25% of each participant's
contributions up to 6% of the employee's compensation.

Bristow has a defined benefit retirement plan which covers all full-time
employees of Bristow. The plan is funded by contributions partly from employees
and partly from Bristow. Members contribute up to 7.5% of pensionable salary
(as defined) and can pay additional voluntary contributions to provide
additional benefits. The benefits are based on the employee's annualized
average of employees' last three years pensionable salaries. Plan assets are
held in separate trustee administered funds which are primarily invested in
United Kingdom and other overseas equities and bonds.

The following table sets forth the plan's funded status and pension costs
recognized by the Company:

Actuarial Present Value of Benefit Obligations (thousands of dollars):

MARCH 31, 1997
--------------

Vested benefit obligation................... $ (164,750)
Accumulated benefit obligation.............. $ (164,750)

Projected benefit obligation................ $ (179,995)
Plan assets at fair value................... 184,762
-----------
Plan assets in excess of projected
benefit obligation......................... 4,767
Unrecognized net gain....................... (4,767)
Prior service cost not yet recognized
in net periodic pension cost............... --
Unrecognized net obligation being
recognized over 15 years................... --
-----------
Accrued pension asset....................... $ --
===========

Net periodic pension cost for the nine months ended March 31, 1997 was
approximately $1,200,000.

Actuarial assumptions used to develop these components were as follows:
Discount rate -- 8%, expected long-term rate of return on assets -- 9.5%, and
rate of increase in Pension benefits over United Kingdom statutory benefits --
3.5%.

The Company's contributions to the three plans were $2,575,000; $680,000; and
$1,074,000 for the nine month period ended March 31, 1997 and the years ended
June 30, 1996 and 1995, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INCENTIVE AND STOCK OPTION PLANS

Under the 1994 Long-Term Management Incentive Plan ("1994 Plan"), a total of
900,000 shares of Common Stock, or cash equivalents of Common Stock, are
available for awards to officers and key employees. Awards granted under the
1994 Plan may be in the form of stock options, stock appreciation rights,
restricted stock, deferred stock, other stock-based awards or any combination
thereof. Options become exercisable at such time or times as determined at the
date of grant, and expire no more than ten years after the date of grant.
Incentive stock option prices are determined by the Board and cannot be less
than fair market value at date of grant. Non-qualified stock option prices
cannot be less than 50% of the fair market value at date of grant.

The Annual Incentive Compensation Plan ("Annual Plan") provides for an annual
award of cash bonuses to key employees based on pre-established objective
measures of Company performance. Participants are permitted to receive all or
any part of their annual incentive bonus in the form of shares of Restricted
Stock in accordance with the terms of the 1994 Plan. The amount of bonuses
related to this plan were $565,000; $124,000; and $407,000 for the nine month
period ended March 31, 1997 and the years ended June 30, 1996 and 1995,
respectively. As of March 31, 1997 there were 18,908 shares of Restricted Stock
outstanding.

The 1991 Non-qualified Stock Option Plan for Non-employee Directors ("1991
Plan") provides for 200,000 shares of Common Stock to be reserved for issuance
pursuant to such plan. As of the date of each annual meeting each non-employee
director, who meets certain attendance criteria, will automatically be granted
an option to purchase 2,000 shares of the Company's Common Stock. The exercise
price of the options granted shall be equal to the fair market value of the
Common Stock on the date of grant and are exercisable not earlier than six
months after the date of grant.

Under the Company's stock option plans there were 1,650,000 shares of Common
Stock reserved for issue at March 31, 1997.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which is effective for the Company's fiscal year beginning
July 1, 1995. Under SFAS No. 123, companies can either record expense based on
the fair value of stock-based compensation upon issuance or elect to remain
under the APB 25 method whereby no compensation cost is recognized upon grant if
certain requirements are met. The Company elected to continue to account for its
stock-based compensation under APB 25. However, pro forma disclosures as if the
Company adopted the cost recognition requirements under SFAS No. 123 are
presented below.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Had compensation cost been determined based on the fair value at the grant
date consistent with the provisions of SFAS No. 123, the Company's net income
and earnings per common share would have approximated the pro forma amounts
below:

NINE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, 1997 JUNE 30, 1996
----------------- -------------------
Net Income (in thousands):

As reported................... $ 17,232 $ 15,276
Pro forma..................... $ 16,607 $ 14,800

Earnings per share:

As reported..................... $ 0.84 $ 0.77
Pro forma....................... $ 0.81 $ 0.75

The pro forma effect on net earnings for 1997 and 1996 is not representative
of the pro forma effect on net earnings in future years because it does not take
into consideration pro forma compensation expense related to grants prior to
July 1, 1995.

A summary of the Company's stock options as of March 31, 1997 and June 30,
1996 and 1995 and changes during the periods ended on those dates is presented
below:
NUMBER
WEIGHTED-AVERAGE OF
EXERCISE PRICE SHARES
-------------- ----------

Balance at June 30, 1994.......... $ 7.98 721,500
Granted......................... 11.54 244,391
Exercised....................... 5.00 (83,031)
Expired or cancelled............ 11.31 (19,900)
-------- ---------
Balance at June 30, 1995.......... 9.20 862,960
Granted......................... 12.70 164,000
Exercised....................... 8.03 (24,460)
Expired or cancelled............ 10.97 (14,000)
-------- ---------
Balance at June 30, 1996.......... 9.78 988,500
Granted......................... 15.48 366,500
Exercised....................... 7.75 (114,000)
Expired or cancelled............ 12.94 (10,000)
-------- ---------
Balance at March 31, 1997......... $ 11.64 1,231,000
======== =========

As of March 31, 1997, June 30, 1996 and 1995, the number of options
exercisable under the stock option plans was 864,500; 838,500; and 699,960,
respectively; and the weighted average exercise price of those options was
$10.02, $9.25 and $8.32, respectively.

The weighted average fair value at date of grant for options granted during
1997 and 1996 was $5.30 and $4.35 per option, respectively. The fair value of
options granted during the periods presented is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions: (a)
dividend yield of 0.00%; (b) expected volatility of 40%; (c) risk-free interest
rate of 6.4%; and (d) expected life of 3 years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes information about stock options outstanding as
of March 31, 1997:

[Download Table]

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------ ---------------------
WGTD. AVG. WGTD. AVG. WGTD. AVG.
RANGE OF NUMBER REMAINING EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING CONTR. LIFE PRICE EXERCISABLE PRICE
----------------- ----------- ----------- --------- ----------- ---------

$ 6.75 - $ 8.25 416,500 4.05 $ 7.16 416,500 $ 7.16
$ 11.50 - $ 13.00 642,500 7.71 $ 12.53 438,000 $ 12.61
$ 15.44 - $19.625 172,000 9.57 $ 19.16 10,000 $ 15.44
$ 6.75 - $19.625 --------- 6.73 $ 11.64 -------- $ 10.02
1,231,000 864,500
========= ========

L -- SEGMENT INFORMATION

The Company operates principally in two business segments: Helicopter
Activities and GPM. Air Log and Bristow are major suppliers of helicopter
transportation services to the worldwide offshore oil and gas industry. GPM
provides production management services, contract personnel, and medical support
services to the domestic and international oil and gas industry. The
information presented has been restated to reflect CPS as discontinued
operations. Identifiable assets include net assets relating to CPS of $6.7
million, $7.2 million, and $6.3 million as of March 31, 1997 and June 30, 1996
and 1995, respectively. The following shows industry segment information for
the nine months ended March 31, 1997 and the twelve months ended June 30, 1996
and 1995 (in thousands):
TWELVE MONTHS
NINE MONTHS -------------------
MARCH 31, JUNE 30, JUNE 30,
1997 1996 1995
--------- --------- ---------
Operating Revenues: (1)
Helicopter Activities............... $ 143,647 $ 86,080 $ 85,526
GPM................................. 23,481 31,209 32,810
--------- --------- ---------
Total............................ $ 167,128 $ 117,289 $ 118,336
========= ========= =========
Operating Profit (loss):
Helicopter Activities............... $ 27,142 $ 17,612 $ 24,079
GPM................................. 1,182 (183) 223
--------- --------- ---------
Total segment operating profit... $ 28,324 $ 17,429 $ 24,302

Corporate overhead.................... (3,110) (4,063) (4,033)
Earnings from unconsolidated
entities........................... 2,602 4,056 4,050
Interest income, net.................. (2,228) 3,725 2,378
--------- --------- ---------
Pretax income......................... $ 25,588 $ 21,147 $ 26,697
========= ========= =========

(1) Net of Inter-Segment revenues of $2,246,000; $3,823,000 and $4,428,000 for
March 31, 1997 and June 30, 1996 and 1995, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CAPITAL
EXPENDITURES
------------------------------
1997 1996 1995
-------- -------- --------

Helicopter Activities................ $ 9,835 $ 11,908 $ 2,609
GPM.................................. 112 99 198
-------- -------- --------
Total............................ $ 9,947 $ 12,007 $ 2,807
======== ======== ========

DEPRECIATION
AND AMORTIZATION
------------------------------
1997 1996 1995
-------- -------- --------

Helicopter Activities................ $ 11,531 $ 7,083 $ 7,357
GPM.................................. 1,003 1,347 1,727
Corporate............................ 90 119 116
-------- -------- --------
Total............................ $ 12,624 $ 8,549 $ 9,200
======== ======== ========

IDENTIFIABLE ASSETS
------------------------------
1997 1996 1995
-------- -------- --------

Helicopter Activities................ $607,458 $164,560 $152,150
GPM.................................. 26,279 26,684 30,529
Corporate and other.................. 40,476 39,497 35,304
-------- -------- --------
Total............................ $674,213 $230,741 $217,983
======== ======== ========

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Segment information by geographic areas for the nine month period ended
March 31, 1997 and the years ended June 30, 1996 and 1995 is as follows
(thousands of dollars):

TWELVE MONTHS ENDED
NINE MONTHS JUNE 30,
ENDED -------------------
MARCH 31, 1997 1996 1995
-------------- -------- --------
Operating Revenue:
United States....................... $ 83,875 $102,072 $104,545
United Kingdom/Europe............... 41,736 -- --
International....................... 41,517 15,218 13,791
-------- -------- --------
$167,128 $117,289 $118,336
======== ======== ========

OPERATING PROFIT:
United States....................... $ 16,602 $ 12,655 $ 19,736
United Kingdom/Europe............... 4,067 -- --
International....................... 7,655 4,774 4,566
-------- -------- --------
$ 28,324 $ 17,429 $ 24,302
======== ======== ========
Identifiable assets:
United States....................... $163,766 $170,081 $165,510
United Kingdom/Europe............... 336,693 -- --
International....................... 173,754 60,660 52,473
-------- -------- --------
$674,213 $230,741 $217,983
======== ======== ========

During 1997, 1996, and 1995, Air Log and Bristow conducted operations in
approximately ten foreign countries as well as in the United States and the
United Kingdom. Due to the nature of the principal assets of the Company, they
are regularly and routinely moved between operating areas (both domestic and
foreign) to meet changes in market and operating conditions. Revenue earned
from any single customer did not exceed 10% of total revenues during 1997, 1996,
or 1995. Equipment registered in one country is chartered to other operating
areas from time to time at rates sufficient to cover costs plus a reasonable
return. These revenues ($7,063,000 in 1997; $7,441,000 in 1996; and $7,118,000
in 1995) have been eliminated in the amounts shown above.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

M -- QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following quarterly financial data has been restated to reflect CPS as
discontinued operations.

QUARTER ENDED
-------------------------------------
SEPT. 30 DEC. 31 MAR. 31 JUNE 30
-------- -------- -------- -------
(thousands of dollars, except
per share amounts)
1997
Gross revenue.......................... $ 32,872 $ 41,459 $ 94,019 N/A
Gross profit........................... 8,690 9,347 18,583 N/A
Income from continuing operations...... 5,781 5,522 6,322 N/A
Income from discontinued operations.... 74 86 (553) N/A
Net income............................. $ 5,855 $ 5,608 $ 5,769 N/A

Net income (loss) per common share:
Income from continuing operations.... $ 0.30 $ 0.28 $ 0.29 N/A
Income from discontinued operations.. -- -- (0.02) N/A
-------- -------- --------
Net income....................... $ 0.30 $ 0.28 $ 0.27 N/A
======== ======== ========
1996
Gross Revenue.......................... $ 28,959 $ 29,143 $ 28,592 $30,149
Gross profit........................... 6,001 4,877 5,883 5,840
Income from continuing operations...... 3,693 3,238 4,060 4,033
Income from discontinued operations.... (34) 218 51 17
Net income............................. $ 3,659 $ 3,456 $ 4,111 $ 4,050

Net income (loss) per common share:
Income from continuing operations.... $ 0.19 $ 0.17 $ 0.21 $ 0.20
Income from discontinued operations.. -- 0.01 -- --
-------- -------- -------- -------
Net income....................... $ 0.19 $ 0.18 $ 0.21 $ 0.20
======== ======== ======== =======
1995
Gross revenue.......................... $ 26,225 $ 32,561 $ 30,175 $29,961
Gross profit........................... 7,691 7,414 6,640 7,269
Income from continuing operations...... 5,018 5,120 4,258 4,566
Income from discontinued operations.... -- 99 (377) (234)
Net income............................. $ 5,018 $ 5,220 $ 3,880 $ 4,332

Net income (loss) per common share:
Income from continuing operations.... $ 0.28 $ 0.26 $ 0.22 $ 0.23
Income from discontinued operations.. -- 0.01 (0.02) (0.01)
-------- -------- -------- -------
Net income....................... $ 0.28 $ 0.27 $ 0.20 $ 0.22
======== ======== ======== =======

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

NONE

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

There is incorporated by reference herein the information under Item 5 and
Exhibit 99.1 contained in the registrant's Form 8-K dated July 30, 1997.

ITEM 11. EXECUTIVE COMPENSATION

There is incorporated by reference herein the information under Item 5 and
Exhibit 99.2 contained in the registrant's Form 8-K dated July 30, 1997.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

There is incorporated by reference herein the information under Item 5 and
Exhibit 99.3 contained in the registrant's Form 8-K dated July 30, 1997.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There is incorporated by reference herein the information under Item 2
contained in the registrant's Form 8-K dated December 19, 1996, and Item 5 and
Exhibit 99.2 contained in the registrant's Form 8-K dated July 30, 1997.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) 1. Financial Statements --

Report of Independent Public Accountants
Consolidated Balance Sheet -- March 31, 1997 and June 30, 1996
Consolidated Statement of Income for the nine months ended March 31, 1997
and the two years ended June 30, 1996
Consolidated Statement of Stockholders' Investment for the nine months ended
March 31, 1997 and the two years ended June 30, 1996
Consolidated Statement of Cash Flows for nine months ended March 31, 1997
and the two years ended June 30, 1996
Notes to Consolidated Financial Statements

All schedules have been omitted since the information required is included in
the financial statements or notes or have been omitted as not applicable or not
required.

[Enlarge/Download Table]

INCORPORATED BY
REFERENCE TO
REGISTRATION OR FORM OR EXHIBIT
EXHIBITS FILE NUMBER REPORT DATE NUMBER
-------- --------------- ------- ---- -------

(3) Articles of Incorporation and By-laws
(1) Delaware Certificate of Incorporation 0-5232 10-K June 1989 3(10)
(2) Agreement and Plan of Merger dated 0-5232 10-K June 1989 3(11)
December 29, 1987
(3) Certificate of Merger dated 0-5232 10-K June 1990 3(3)
December 29, 1987
(4) Certificate of Correction of Certificate 0-5232 10-K June 1990 3(4)
of Merger dated January 20, 1988
(5) Certificate of Amendment of Certificate 0-5232 10-K June 1990 3(5)
of Incorporation dated November 30, 1989
(6) Certificate of Amendment of Certificate 0-5232 8-K Dec. 1992 3
of Incorporation dated December 9, 1992
(7) Rights Agreement and Form of Rights 0-5232 8A Feb. 1996 4
Certificate
(8) Amended and Restated By-laws 0-5232 8-K Feb. 1996 3(7)
(9) Certificate of Designation of Series A 0-5232 10-K June 1996 3(9)
Junior Participating Preferred Stock
(10) First Amendment to Rights Agreement 0-5232 8-A/A May 1997 5

(4) Instruments defining the rights of security
holders, including indentures
(1) Indenture dated as of December 15, 1996, 0-5232 10-Q Dec. 1996 4(1)
between Fleet National Bank and the Company
(2) Registration Rights Agreement dated 0-5232 10-Q Dec. 1996 4(2)
December 17, 1996, between the Company
and Jefferies & Company, Inc., Simmons
& Company International, and Johnson
Rice & Company L.L.C.
(3) Registration Rights Agreement dated 0-5232 10-Q Dec. 1996 4(3)
December 19, 1996, between the Company
and Caledonia Industrial and Services
Limited

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[Enlarge/Download Table]

INCORPORATED BY
REFERENCE TO
REGISTRATION OR FORM OR EXHIBIT
EXHIBITS FILE NUMBER REPORT DATE NUMBER
-------- --------------- ------- ---- -------

(10) Material Contracts
(1) 1978 Stock Option and Stock Apprecia- 33-14800 S-8 June 1987 4(a)
tion Rights Plan, as amended*
(2) Employee Incentive Award Plan* 0-5232 10-K June 1981 10(5)
(3) Executive Severance Agreement, similar 0-5232 10-K June 1989 10(12)
contract omitted pursuant to Instruction
2 to Item 601 of Regulation S-K*
(4) Executive Welfare Benefit Agreement, 33-9596 S-4 Dec. 1986 10(ww)
similar agreement omitted pursuant to
Instruction 2 to Item 601 of Regulation
S-K*
(5) Executive Welfare Benefit Agreement, 33-9596 S-4 Dec. 1986 10(xx)
similar agreements are omitted pursuant
to Instruction 2 to Item 601 of Regulation
S-K*
(6) Offshore Logistics, Inc. 1989 0-5232 10-K June 1990 (28)
Incentive Plan*
(7) Offshore Logistics, Inc. 1991 Non- 33-50946 S-8 Aug. 1992 4.1
qualified Stock Option Plan for Non-
employee Directors*
(8) Agreement and Plan of Merger dated as 33-79968 S-4 Aug. 1994 2(1)
of June 1, 1994, as amended
(9) Shareholders Agreement dated as of 33-79968 S-4 Aug. 1994 2(2)
June 1, 1994
(10) Proposed Form of Non-competition 33-79968 S-4 Aug. 1994 2(3)
Agreement with Individual Shareholders
(11) Proposed Form of Joint Venture Agree- 33-79968 S-4 Aug. 1994 2(4)
ment
(12) Offshore Logistics, Inc. 1994 Long- 33-87450 S-8 Dec. 1994 84
Term Management Incentive Plan*
(13) Offshore Logistics, Inc. Annual Incen- 0-5232 10-K June 1995 10(20)
tive Compensation Plan*
(14) Indemnity Agreement, similar agreements
with other directors of the Company are
omitted pursuant to Instruction 2 to
Item 601 of Regulation S-K
(15) Master Agreement dated December 12, 1996 0-5232 8-K Dec. 1996 2(1)
(16) Incorporated by reference documents

* Compensatory Plan or Arrangement

Agreements with respect to certain of the Company's long-term debt are not
filed as Exhibits hereto inasmuch as the debt authorized under any such
Agreement does not exceed 10% of the Company's total assets. The Company
agrees to furnish a copy of each such Agreement to the Securities and Exchange
Commission upon request.

(21) Subsidiaries of the registrant.

(23) Consent of Independent Public Accountants

(27) Financial Data Schedule

(b) Reports on Form 8-K

The Company filed a Form 8-K dated December 19, 1996. Information reported
was under Item 2 -- Acquisition or Disposition of Assets related to the
Company's investment in Bristow Aviation Holdings Limited.

The Company filed a Form 8-K dated May 1, 1997. Information reported was
under Item 5 -- Other Events related to the First Amendment to the Rights
Agreement and Item 8 -- Change in Fiscal Year.

10KT405 Last Page of 44 TOC 1st Previous Next ↓Bottom Just 44th
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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/ George M. Small
--------------------------------
George M. Small
Vice President--Chief Financial
Officer (Principal Financial
and Accounting Officer)

July 30, 1997

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

/s/ Peter N. Buckley
-------------------------------- DIRECTOR JULY 30, 1997
PETER N. BUCKLEY

/s/ Jonathan H. Cartwright
-------------------------------- DIRECTOR JULY 30, 1997
JONATHAN H. CARTWRIGHT

/s/ James B. Clement
-------------------------------- CHAIRMAN OF THE BOARD, JULY 30, 1997
JAMES B. CLEMENT PRESIDENT, CHIEF EXECUTIVE
OFFICER, AND DIRECTOR

/s/ Louis F. Crane
-------------------------------- DIRECTOR JULY 30, 1997
LOUIS F. CRANE

/s/ David S. Foster
-------------------------------- DIRECTOR JULY 30, 1997
DAVID S. FOSTER

/s/ David M. Johnson
-------------------------------- DIRECTOR JULY 30, 1997
DAVID M. JOHNSON

/s/ Kenneth M. Jones
-------------------------------- DIRECTOR JULY 30, 1997
KENNETH M. JONES

/s/ Harry C. Sager
-------------------------------- DIRECTOR JULY 30, 1997
HARRY C. SAGER

/s/ George M. Small
-------------------------------- VICE PRESIDENT, CHIEF JULY 30, 1997
GEORGE M. SMALL FINANCIAL OFFICER, AND DIRECTOR

/s/ Howard Wolf
-------------------------------- DIRECTOR JULY 30, 1997
HOWARD WOLF

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10KT405’ Filing	Date	First	Last	Other Filings

	2/26/06	24
	1/31/02	27
	12/1/01	25
	11/7/01	26
	6/30/99	17	26	10-Q
	11/7/98	25
	3/31/98	25		10-K
	1/31/98	17	26
	12/15/97	17	24
	11/7/97	25	26
	8/31/97	29
	8/6/97	9
	7/31/97	26
Filed on:	7/30/97	11	44	8-K
	7/16/97	3	13
	6/30/97	1		10-Q
	5/31/97	12
	5/30/97	5
	5/23/97	18
	5/1/97	3	43	8-K
For Period End:	3/31/97	1	42	10-Q/A
	12/22/96	30
	12/19/96	3	43	8-K
	12/17/96	25	42
	12/15/96	42
	7/1/96	1	24
	6/30/96	3	42	10-K405
	3/31/96	31		10-Q
	2/29/96	24		8-K
	2/9/96	24		10-Q
	7/1/95	28	36
	6/30/95	3	39	10-K405
	9/16/94	7	30
	7/1/94	30
	6/30/94	21	36
	6/1/94	43
	10/29/93	29
	12/9/92	42
				List all Filings

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Filing Submission 0000899243-97-001422 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Bristow Group Inc – ‘10KT405’ for 3/31/97

As of: Wednesday, 7/30/97 · For: 3/31/97 · Accession #: 899243-97-1422 · File #: 0-05232

Annual-Transition Report — [x] Reg. S-K Item 405 — Form 10-KFiling Table of Contents

10KT405 — Form 10-KDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Annual-Transition Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents

10KT405 — Form 10-K
Document Table of Contents