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CHC Helicopter Reports Revenue of $447m, EBITDAR of $126m in Fiscal-2013 Second Quarter

-- Revenue Up 6 Percent, EBITDAR Jumps 17 Percent -- Seventh Consecutive Quarter of Revenue and EBITDAR Increase -- Flying and MRO Business Segments Both Post Gains

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec 11, 2012) - Revenue and earnings were up in CHC Helicopter''s fiscal second-quarter 2013, as the company continues to transform itself into the most capable and efficient global helicopter-services operator.

CHC''s revenue for the quarter, which ended Oct. 31, increased 6 percent from the same period a year ago, to $447 million. It was the seventh straight quarter of higher revenue and earnings since the company started its ambitious transformation. Net earnings were $7 million, compared with a net loss of $6 million in the FY12 second quarter.

Earnings before interest, taxes, depreciation, amortization and aircraft rental costs (EBITDAR), were $126 million, up 17 percent from the year-ago quarter. EBITDAR is CHC''s primary measure of operational profitability.

Second Quarter

Year-to-Date

(U.S.$ in millions)

FY13

FY12

Change(ii)

FY12

FY11

Change(ii)

Revenue

$

447

$

423

6%

$

863

$

833

4%

EBITDAR(i)

$

126

$

107

17%

$

227

$

208

9%

EBITDA(i)

$

77

$

65

19%

$

130

$

124

4%

(i) Non-GAAP financial measure. See reconciliation to applicable GAAP measure below.

(ii) All growth rates in this release are year-over-year unless otherwise noted.

The continued improvement spanned both CHC''s flying and Heli-One business segments. Flying revenue rose 5 percent and EBITDAR grew 13 percent. For Heli-One, which provides maintenance, repair and overhaul (MRO) services, third-party customers sales were 11 percent higher and EBITDAR increased 48 percent.

William Amelio, CHC''s president and chief executive officer, said the second quarter showed how the company is transforming its tools, systems and processes. Those changes are contributing to improving operating performance.

"Our people are also making sure we deliver on our purpose: to provide unmatched helicopter services that enable customers to go further, do more and come home safely," said Mr. Amelio. "The second quarter provided two vivid illustrations - one involving superb in-flight management of a crippled aircraft, the other an extraordinary evacuation of more than 270 customers from a North Sea oil-production platform that was in distress.

"Our objective isn''t simply for CHC to be the largest and most profitable helicopter-services company. We''re determined to be the best at all that we do for our customers."

BUSINESS HIGHLIGHTS

Helicopter Services (flying):

  • Flying results were driven by revenue and EBITDAR gains in the Americas (mainly Brazil), Western North Sea (United Kingdom) and Africa Euro-Asia. Sales were also up in Asia-Pacific.

  • Significant wins in the period included new contracts with Marathon in the U.K., Eni in Australia and Petronas in Mozambique.

  • During the quarter, Atlantic Aviation - a partnership between Jagal Group and CHC - received its long-awaited Air Operating Certificate in Nigeria. Atlantic Aviation has twin-engine Sikorsky S76C+ medium-lift helicopters to begin its support of Nigeria''s fast-growing oil-and-gas industry.

Heli-One (MRO):

  • Among notable contracts secured in the second quarter, AAR, a global aerospace and defense supplier, selected Heli-One to complete 20 engine overhauls.

  • During the quarter the company delivered the first of three customized Super Puma aircraft commissioned by the Los Angeles County Sheriff''s Department.

  • Heli-One further broadened its range of services by adding four-year inspections of AW139s to capabilities at the Stavanger, Norway, operation.

About CHC

CHC Helicopter is a leader in enabling customers to go further, do more and come home safely, including oil and gas companies, government search-and-rescue agencies and organizations requiring helicopter maintenance, repair and overhaul services through the Heli-One division. The company is headquartered in Vancouver and operates more than 240 aircraft in about 30 countries around the world.

Segment Performance (Unaudited)

(U.S.$ in thousands)

Segment Third Party Revenue

For the three months ended
October 31,

For the six months ended
October 31,

2012

2011

2012

2011

Helicopter Services

$

402,617

$

383,279

$

792,521

$

756,573

MRO

42,488

38,409

67,034

73,297

Corporate and Other

1,681

1,312

3,300

2,779

Consolidated totals

$

446,786

$

423,000

$

862,855

$

832,649

EBITDAR and EBITDA Summary

For the three months ended
October 31,

For the six months ended
October 31,

2012

2011

2012

2011

Helicopter Services

$

120,931

$

107,000

$

223,554

$

202,688

MRO

28,082

18,935

41,746

39,949

Corporate and Other

(22,916)

(18,473)

(38,304)

(35,106)

Consolidated EBITDAR(i)

126,097

107,462

226,996

207,531

Less: aircraft lease and associated costs

(48,797)

(42,604)

(97,227)

(83,100)

Consolidated EBITDA(i)

$

77,300

$

64,858

$

129,769

$

124,431

(i) See reconciliations to GAAP measures below.

Consolidated Statement of Earnings (Unaudited)

(U.S.$ in thousands)

For the three months
ended

For the six months
ended

October 31,
2012

October 31,
2011

October 31,
2012

October 31,
2011

Revenue

$

446,786

$

423,000

$

862,855

$

832,649

Operating Expenses

Direct costs

(351,397)

(343,346)

(697,484)

(679,987)

Earnings from equity accounted investees

825

625

1,837

1,221

General and administrative costs

(18,914)

(15,421)

(37,439)

(29,452)

Amortization

(27,635)

(25,429)

(55,945)

(52,532)

Restructuring costs

(1,797)

(7,080)

(3,727)

(11,884)

Recovery (impairment) of receivables and funded residual value guarantees

143

63

(572)

47

Impairment of intangible assets

(6,339)

(1,717)

(5,818)

(1,825)

Impairment of assets held for sale

(3,650)

(4,251)

(9,297)

(11,632)

Impairment of assets held for use

-

-

(660)

-

Gain (loss) on disposal of assets

(3,026)

(316)

(4,617)

3,741

(411,790)

(396,872)

(813,722)

(782,303)

Operating income

34,996

26,128

49,133

50,346

Interest on long-term debt

(30,075)

(29,516)

(59,958)

(60,186)

Foreign exchange gain

10,562

2,446

3,161

2,639

Other financing charges

(3,449)

(6,491)

(11,603)

(6,235)

Income (loss) from continuing operations before tax

12,034

(7,433)

(19,267)

(13,436)

Income tax recovery (expense)

(5,022)

8,638

(6,303)

12,485

Income (loss) from continuing operations

7,012

1,205

(25,570)

(951)

Earnings (loss) from discontinued operations, net of tax

467

(7,526)

812

(8,312)

Net earnings (loss)

$

7,479

$

(6,321)

$

(24,758)

$

(9,263)

Net earnings (loss) attributable to:

Controlling interest

$

6,999

$

(11,420)

$

(26,106)

$

(19,793)

Non-controlling interest

480

5,099

1,348

10,530

Net earnings (loss)

$

7,479

$

(6,321)

$

(24,758)

$

(9,263)

Consolidated Statement of Cash Flows

(Expressed in thousands of United States dollars)

For the three months ended

For the six months ended

October 31,
2012

October 31,
2011

October 31,
2012

October 31,
2011

Cash provided by (used in):

Operating activities:

Net earnings (loss)

$

7,479

$

(6,321)

$

(24,758)

$

(9,263)

Less: earnings (loss) from discontinued operations, net of tax

467

(7,526)

812

(8,312)

Earnings (loss) from continuing operations

7,012

1,205

(25,570)

(951)

Adjustments to reconcile net earnings (loss) to cash flows provided by (used in) operating activities:

Amortization

27,635

25,429

55,945

52,532

Loss (gain) on disposal of assets

3,026

316

4,617

(3,741)

Asset impairments

9,846

5,905

16,347

13,410

Non-cash leasing and financing costs

(140)

(492)

(304)

(1,306)

Earnings from equity accounted investees

(825)

(625)

(1,837)

(1,221)

Deferred income taxes

(512)

(6,356)

(6,252)

(13,953)

Pension contributions, net of pension expense

(5,690)

(7,898)

(17,436)

(15,560)

Increase to deferred lease financing costs

(216)

(2,774)

(1,489)

(7,488)

Foreign exchange gain (loss)

(19,893)

5,404

2,382

2,068

Other

2,816

(868)

5,319

(1,640)

Increase (decrease) in cash resulting from changes in operating assets and liabilities

(900)

34,657

(55,480)

(32,226)

Cash provided by (used in) operating activities

22,159

53,903

(23,758)

(10,076)

Financing activities:

Sold interest in accounts receivable, net of collections

674

530

8,917

40,082

Proceeds from issuance of capital stock

-

60,000

-

60,000

Proceeds from the issuance of senior secured notes

202,000

-

202,000

-

Long-term debt proceeds

165,076

125,000

390,229

405,000

Long-term debt repayments

(319,871)

(116,826)

(471,824)

(390,539)

Increase in deferred financing costs related to the revolver and notes

(3,793)

-

(3,793)

-

Cash provided by financing activities

44,086

68,704

125,529

114,543

Investing activities:

Property and equipment additions

(95,600)

(121,964)

(142,267)

(164,751)

Proceeds from disposal of property and equipment

46,188

43,117

93,413

91,120

Aircraft deposits, net of lease inception refunds

(10,845)

(34,429)

(40,926)

(36,115)

Restricted cash

38

2,320

5,384

753

Distribution from equity investments

-

-

-

936

Cash used in investing activities

(60,219)

(110,956)

(84,396)

(108,057)

Cash provided by (used in) continuing operations

6,026

11,651

17,375

(3,590)

Cash flows provided by (used in) discontinued operations:

Cash flows provided by (used in) operating activities

467

(1,019)

812

(1,488)

Cash flows provided by (used in) financing activities

(467)

1,019

(812)

1,488

Cash provided by (used in) discontinued operations

-

-

-

-

Effect of exchange rate changes on cash and cash equivalents

5,677

(6,605)

(4,144)

(10,804)

Increase (decrease) in cash and cash equivalents during the period

11,703

5,046

13,231

(14,394)

Cash and cash equivalents, beginning of period

57,075

49,481

55,547

68,921

Cash and cash equivalents, end of period

$

68,778

$

54,527

$

68,778

$

54,527

Consolidated Balance Sheets (Unaudited)

(U.S.$ in thousands)

October 31, 2012

April 30, 2012

Assets

Current Assets:

Cash and cash equivalents

$

68,778

$

55,547

Receivables, net of allowance for doubtful accounts

304,701

266,115

Income taxes receivable

25,078

20,747

Deferred income tax assets

9,361

8,542

Inventories

95,740

90,013

Prepaid expenses

20,069

21,183

Other assets

38,039

33,195

561,766

495,342

Property and equipment, net

1,041,490

1,026,860

Investments

25,466

24,226

Intangible assets

205,493

217,890

Goodwill

432,059

433,811

Restricted cash

20,353

25,994

Other assets

410,986

363,103

Deferred income tax assets

49,020

48,943

Assets held for sale

63,295

79,813

$

2,809,928

$

2,715,982

Liabilities and Shareholder''s Equity

Current Liabilities:

Payables and accruals

$

356,519

$

363,064

Deferred revenue

20,775

23,737

Income taxes payable

40,169

43,581

Deferred income tax liabilities

13,073

11,729

Current facility secured by accounts receivable

55,317

45,566

Other liabilities

20,155

23,648

Current portion of long-term debt

14,039

17,701

520,047

529,026

Long-term debt

1,401,504

1,269,379

Deferred revenue

50,221

43,517

Other liabilities

189,820

191,521

Deferred income tax liabilities

18,943

20,072

Total liabilities

2,180,535

2,053,515

Redeemable non-controlling interests

4,489

1,675

Capital stock: Par value 1 Euro;

Authorized and issued:

1,228,377,770 and 1,228,377,770, respectively

1,607,101

1,607,101

Contributed surplus

55,541

55,318

Deficit

(966,137)

(940,031)

Accumulated other comprehensive loss

(71,601)

(61,596)

$

2,809,928

$

2,715,982

Non-GAAP Financial Measures:

This earnings release includes non-GAAP financial measures, segment earnings before interest, taxes, depreciation, amortization and aircraft lease rent and associated costs ("segment EBITDAR (adjusted)") referred to above as EBITDAR and earnings before interest, taxes, depreciation and amortization ("EBITDA") that are not required by, or presented in accordance with GAAP. These non-GAAP measures are not performance measures under U.S. generally accepted accounting principles and should not be considered as alternatives to net earnings (loss) or any other performance or liquidity measures derived in accordance with GAAP. In addition, these measures may not be comparable to similarly titled measures of other companies. CHC has provided a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure. CHC has chosen to include segment EBITDAR (adjusted) as we consider this to be a significant indicator of our financial performance and use this measure to assist us in allocating available capital resources. We have also included EBITDA as this measure is useful to our debt holders as it is a proxy of Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA provides useful information to investors as it is a measure to calculate certain financial covenants related to our revolving credit facility and certain covenants in the indenture. CHC has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure below and has presented a detailed discussion of its reasons for including non-GAAP financial measures and the limitations associated with those measures as part of the "Management''s Discussion and Analysis of Financial Condition and Results of Operations" contained in the Quarterly Report on Form 10-Q. CHC encourages investors to review the reconciliation and the non-GAAP discussion in conjunction with our presentation of these non-GAAP financial measures.

Reconciliation of Non-GAAP Financial Measures

(U.S.$ in thousands)

For the three months ended October 31,

For the six months ended
October 31,

2012

2011

2012

2011

Helicopter Services

$

120,931

$

107,000

$

223,554

$

202,688

MRO

28,082

18,935

41,746

39,949

Corporate and Other

(22,916)

(18,473)

(38,304)

(35,106)

Consolidated EBITDAR

126,097

107,462

226,996

207,531

Less: aircraft lease and associated costs

(48,797)

(42,604)

(97,227)

(83,100)

Consolidated EBITDA

77,300

64,858

129,769

124,431

Amortization

(27,635)

(25,429)

(55,945)

(52,532)

Restructuring costs

(1,797)

(7,080)

(3,727)

(11,884)

Recovery (impairment) of receivables and funded residual value guarantees

143

63

(572)

47

Impairment of intangible assets

(6,339)

(1,717)

(5,818)

(1,825)

Impairment of assets held for sale

(3,650)

(4,251)

(9,297)

(11,632)

Impairment of assets held for use

-

-

(660)

-

Gain (loss) on disposal of assets

(3,026)

(316)

(4,617)

3,741

Operating income

34,996

26,128

49,133

50,346

Interest on long-term debt

(30,075)

(29,516)

(59,958)

(60,186)

Foreign exchange gain

10,562

2,446

3,161

2,639

Other financing charges

(3,449)

(6,491)

(11,603)

(6,235)

Income (loss) from continuing operations before tax

12,034

(7,433)

(19,267)

(13,436)

Income tax recovery (expense)

(5,022)

8,638

(6,303)

12,485

Income (loss) from continuing operations

7,012

1,205

(25,570)

(951)

Earnings (loss) from discontinued operations, net of tax

467

(7,526)

812

(8,312)

Net earnings (loss)

$

7,479

$

(6,321)

$

(24,758)

$

(9,263)

Cautionary Note on Forward-Looking Statements:

This press release contains forward-looking statements and information within the meaning of certain securities laws, including the "safe harbor" provision of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. All statements, other than statements of historical fact included in this presentation, regarding our strategy, future operations, projections, conclusions, forecasts and other statements are "forward-looking statements". While these forward-looking statements represent our best current judgment, the actual results could differ materially from the conclusions, forecasts or projections contained in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection in the forward-looking information contained herein. Such factors include, but are not limited to, the following: exchange rate fluctuations, industry exposure, inflation, inability to enter into new contracts or the loss of existing contracts, inability to maintain government issued licenses, inability to obtain necessary aircraft or insurance, competition, political, economic and regulatory uncertainty, loss of key personnel, work stoppages due to labor disputes, accidents, mechanical failures, regulatory actions and future material acquisitions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. The Company disclaims any intentions or obligations to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. Please refer to our annual report on Form 10-K, our quarterly reports on Form 10-Q, and other filings, in particular any discussion of risk factors or forward-looking statements, which are filed with the SEC and available at the SEC''s website (www.sec.gov), for a full discussion of the risks and other factors that may impact any estimates or forward-looking statements made herein.

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